The Acquisition Communitys Role in Capital Planning and Investment Control

1
The Acquisition Communitys Role in Capital
Planning and Investment Control

• Patricia E. Corrigan
• DOI Office of Acquisition and Property Management
• U.S. Department of the Interior Business
  Conference
• Hunt Valley, Maryland
• May 25, 2006

2
Office of Management and Budget Circular A-11,
Preparing, Submitting, and Executing the Budget

• The Circular applies to all Executive departments
  and establishments, and it is updated annually.
  OMB Circular A-11 is structured as follows
• Part 1 General Information
• Part 2 Preparation and Submission of Budget
  Estimates
• Part 3 Selected Actions Following Transmittal of
  the Budget
• Part 4 Instructions on Budget Execution
• Part 5 Federal Credit
• Part 6 Preparation and Submission of Strategic
  Plans, Annual Performance Plans, and Annual
  Program Performance Report
• Part 7 Planning, Budgeting, Acquisition and
  Management of Capital Assets
• - Supplement to Part 7 Capital Programming
  Guide
• Part 8 Appendices

3
Capital Asset Defined

• Capital assets are
• - land (including parklands),
• - structures,
• - equipment including fleet, and
• - intellectual property
• that are used by the Federal Government and have
  an estimated useful life of two years or more.
• The cost of a capital asset is its full
  life-cycle costs, including all direct and
  indirect costs for planning, procurement
  (purchase price and all other costs incurred to
  bring it to a form and location suitable for its
  intended use), operations and maintenance,
  including service contracts, and disposal.
• Capital assets may or may not be capitalized
  (i.e., recorded on an entitys balance sheet)
  under Federal accounting standards.

4
Capital Programming/Capital Planning and
Investment Control

• The Clinger-Cohen Act of 1996 sought to improve
  agencies mission performance by requiring
  agencies to clearly define and implement a
  Capital Programming/Capital Planning and
  Investment Control (CPIC) process for selecting,
  controlling, and assessing IT investments.
• However, with annual investments of over 800
  million in IT assets and services, and 1.2
  billion on construction projects, DOI has joined
  other agencies in applying CPIC to construction
  investments.
• The CPIC process is useful for all long-term
  investments in capital assets. However, as
  recommended in the OMB Capital Programming Guide,
  agencies should consider the significance of the
  investment to the agency both in costs and in
  its strategic importance in determining the
  level of effort devoted in capital programming.

5
Full Analysis and Management Should be Applied to
Capital Assets (Including Major Modifications or
Enhancements to Existing Systems) That Meet the
Criteria for a Major Project as Defined Below

• Major IT Investments
• Total lifecycle costs greater than 35 million
• Financial systems with a life cycle cost greater
  than 500,000
• Multiple-bureau and/or agency projects
• Mandated by legislation or Executive Order, or
  identified by the Secretary as critical
• Requires a common infrastructure investment
• Department strategic or mandatory-use system
• Significantly differs from or affects the
  Department infrastructure, architecture, or
  standards guidelines
• High risk as determined by OMB, GAO, Congress
  and/or the CIO
• Directly supports the Presidents Management
  Agenda items of high executive visibility
• E-Government in nature and uses e-business
  technologies (must be identified as major
  projects regardless of the costs

• Major Construction Investments
• Total design and construction costs greater than
  10 million
• Directly supports the Presidents Management
  Agenda items of high executive visibility
• Multiple-bureau and/or agency projects
• Other significant projects requested by OMB

6
Strategic Investments

• The above investments are considered to be
  strategic for the Department, and thus require
  greater documentation as well as Departmental
  CPIC review and approval.
• They are reported to OMB through an Exhibit 300
  and included in the DOI capital investment
  portfolio.

7
CPIC Process at DOI

• Five sequential phases
• Pre-Select Phase Senior bureau decision makers
  assess each proposed investments support of
  DOIs strategic and mission goals and incorporate
  it into a multi-year investment plan. Project
  stakeholders compile the information necessary
  for developing a preliminary business case
  supporting multi-year plans. Individual project
  proposals are assessed and prioritized in a
  multi-year plan by each bureau and the Department
  through executive decision-making bodies.
• Select Phase Bureaus prepare comprehensive
  business and investment analyses for proposed IT
  and construction investments that are thoroughly
  reviewed within the bureau. Department sponsored
  executive decision-making bodies review and
  approve the major IT and construction projects
  that best support the mission of the
  organization, strategic plans, and support DOIs
  approach to enterprise architecture. Approved
  investments are entered in the budget process or
  alternative funding sources are identified.

8
CPIC Process at DOI

• Control Phase DOI and its bureaus ensure,
  through timely oversight, quality control, and
  executive review that IT and construction
  initiatives are executed (e.g., contracts
  awarded) and managed in a disciplined and
  consistent manner and are meeting cost, schedule,
  and performance goals. Corrective action plans
  are required for investments that exceed pre-set
  variances for cost, schedule, and performance
  goals.
• Evaluate Phase Actual results of the implemented
  projects are compared to performance goals to
  assess investment performance. This is done to
  assess the projects contribution to carrying out
  DOI and bureau missions and identify any project
  changes or modifications that may be needed.
• Steady-State Phase All capital investments are
  assessed to ascertain their continued
  effectiveness in supporting mission requirements,
  evaluate the cost of continued maintenance,
  assess potential life cycle improvement
  opportunities, and consider retirement or
  replacement options. (For construction
  investments, this phase is also referred to as
  Facility Maintenance.)

9
QUIZ

• In which of the following phases does acquisition
  enter the picture?
• a. Pre-Select Phase
• b. Select Phase
• c. Control Phase
• d. Evaluate Phase
• e. Steady-State Phase

10
Who is a Stakeholder? What is a Business Case?

• Stakeholder Anyone whose interests may be
  affected, either positively or negatively, as a
  result of a project.
• Business Case Document containing the analysis
  and results of business assessments providing the
  justification to pursue a project.

11
Business Case Exhibit 300

• Provides a comprehensive profile/assessment of a
  project including
• - Summary of Spending for Project Stages
• - Project Description
• - Justification
• - Performance Goals and Measures
• - Identifies Integrated Project Management
  Team
• - Alternatives Analysis
• - Risk Inventory and Assessment
• - Acquisition Strategy
• - Description of Performance Based Management
  System
• - Original Baseline
• - Proposed Baseline/Current Baseline

12
Acquisition Strategy

• The Exhibit 300 prefaces the Acquisition Strategy
  section by stating
• In order to adequately address this area of the
  business case and
• capital asset plan you must employ a strong
  acquisition strategy
• that mitigates risk to the Federal government,
  such as using
• performance based contracts and statements of
  work. If you are not
• using performance based contracts and statements
  of work, your
• acquisition strategy should clearly define the
  risks that prompted
• use of other than performance based contracts
  and SOWs. Finally,
• your implementation of the Acquisition Strategy
  must be clearly
• defined.

13
Acquisition Strategy Exhibit 300

• Asks questions such as
• Will you use a single contract or several
  contracts to accomplish this project?
• What is the type of contract/task order if a
  single contract is used?
• If multiple contract/task orders will be used,
  discuss the type, how they relate to each other
  to reach the project outcomes, and how much each
  contributes to the achievement of the project
  cost, schedule and performance goals. Also
  discuss the contract/task order solicitation or
  contract provisions that allow the contractor to
  provide innovative, transformational solutions.
• For other than firm-fixed price,
  performance-based contracts, define the risk not
  sufficiently mitigated.
• Will you use financial incentives to motivate
  contractor performance?
• Discuss the competition process used for each
  contract/task order.
• Will you use commercially available COTS products
  for this investment?
• What prevented the use of COTS without
  modification?
• What is the date of your acquisition plan?

14

• Early and Active Participation by the Acquisition
  Community in Integrated Project Teams is Key to
  Successful Projects!

15
CPIC Contacts

• IT Sally Good-Burton, DOI OCIO
• Construction Dave Campbell, BLM
• Lynn Evers-Ertman, BIA
• Marshall Wright, FWS
• Bob Springer, USGS
• Mike LeBorgne, NPS
• Bob Bochar, BOR
• Bob Jarcho, DOI - PAM