By Daniel P. Elkins, Mission and Installation Contracting Command Public Affairs OfficeJanuary 21, 2016
JOINT BASE SAN ANTONIO-FORT SAM HOUSTON, Texas -- (Jan. 21, 2016) The implementation of metrics to measure the rate of closing out contracts coupled with holding contracting leaders in the field more accountable for the performance of that contract management step is allowing the Mission and Installation Contracting Command to lead the Army effort.
This data-driven approach has focused MICC contracting officers and contract specialists to make great strides in closing out both current and over-age contracts over the last two fiscal years that not only served to champion the Army Contracting Command effort but also captured the attention of DOD acquisition officials in helping solve a problem that has plagued the department for years.
"An organization's readiness is tied directly to its fiscal ability to acquire the contracted resources vital in carrying out its operations in support of the warfighter," said Brig. Gen. Jeffrey Gabbert, the MICC commanding general. "Prioritizing contract closeout as an equally essential step in the contract lifecycle not only returns funding to our customers for use elsewhere but also lessens the administrative management that's burdened our offices year after year."
In a 2012 report to the U.S. Senate's Committee on Armed Services on DOD contracting, the development of contract closeout data and establishment performance measures by the military departments were among the recommendations from the Government Accountability Office to help reduce the backlog of over-age contracts. The audit, GAO-13-131, went on to identify the lack of an implementation plan by the Army following its announcement of a goal to close out more than 475,000 contracts by September 2014.
Annette Logan, a contract specialist at the command headquarters here, serves as the MICC Command Contracting Operations Metrics champion for contract closeouts. Contract closeout is among 18 indicators tracked by metrics that offer a snapshot of the command's execution of fundamental, end-to-end contracting. Implemented across the command in the second quarter of fiscal 2014, she said metric ratings performance is illustrated in red, amber or green, depending on the percentage of achievement, and shared throughout the organization to drive behaviors.
"We've made considerable progress, because our offices can now see the improvement they're making," said Logan. "However, we still have work to do."
Rick Miller, a procurement analyst at the MICC headquarters, said the command has closed out more than 72,500 current and over-age contracts valued at $27 billion since the start of fiscal 2014. He added that the command had almost 55,000 over-age contracts for which it was responsible to close at the start of fiscal 2014. Contracts are considered over age if they are not closed in accordance with procedures outlined in the Federal Acquisition Regulation.
"Since the start of fiscal 2014, the MICC has reduced over-age contracts from 54,953 to 24,022, a reduction of 30,931, or 56 percent," said Miller.
The FAR governs the timelines for closing out contracts. For most simplified acquisitions, contracts are considered closed after the receipt of supplies or services and final payment. Fixed-priced contracts should be closed within six months after completion, and cost-type contracts should be closed within 36 months of the month in which the contracting officer receives evidence of physical completion.
The measure of MICC contract closeouts is captured by a set of two metrics -- one tracking contracts that were physically complete before Oct. 1, 2014, and a second, more aggressive metric for those completed on or after that date in order to prevent the sowing of contracts measured by the first metric.
"Contracting offices must achieve a 96-percent closure rate on contracts physically complete after Oct. 1, 2014, in order to meet the metric expectation," Logan said, adding that most of the contracts completed before that date should be closed by the end of this fiscal year based on individual contract closeout plans submitted by the contracting brigades and field directorate office.
In addition to the implementation of metrics, the transfer of contracting office directors in pay plans at the direction of the command leadership placed greater accountability in the performance of meeting those metrics. Directors in the field were moved from the General Schedule pay plan to the DOD Civilian Acquisition Workforce Personnel Demonstration Project, or AcqDemo, pay band in 2015.
"By being held more accountable for their metrics, there is greater incentive to achieve their goals," Logan said.
AcqDemo was developed for the DOD acquisition community to enhance organizational effectiveness through an appraisal process that links contributions to salary. By aligning command metrics with performance objectives under the appraisal process, leaders responsible for the success of their respective contracting operations are encouraged to meet or exceed command expectations.
The increased accountability now tracked by metrics has led to a significant drop in over-age contracts, but that success is also driven by constant communication between the MICC headquarters and field contracting offices. Logan, who has been immersed in this effort for the past two years and took on the job as metric champion this fiscal year, said it has taken a cultural change throughout the organization.
"It's been a challenge to get here," she admitted. "To go from not having to focus on contract closeout as part of your recurring process to now it being placed in the forefront, it has been quite a challenge for some offices, but they are making considerable progress."
She is engaged daily with the contracting support brigades, field directorate office and installation-level contracting offices, some of which have identified individuals to take on the responsibility of contract closeout at their respective levels. Logan identifies priorities on a list of over-age contracts that require the field's attention that is incorporated into a weekly report.
"The reports allow contracting offices to see where they are at the end of every week," Logan said. "We give them a list of contracts that we're tracking at the headquarters level that need to be closed. As long as they close out what we're tracking, they're doing well."
She added that most offices are headed in the right direction for tracking purposes, but some challenges related to a mix of staffing, workload and number of over-age contracts remain at a few of the command's 32 contracting offices. Best practices from offices at Fort Drum, New York, Fort Campbell, Kentucky, and Fort Bliss, Texas, have been shared with other offices for possible implementation as an alternate solution.
As metric champion, Logan along with Miller are sharing the command's approach to success as part of a contract closeout task force established by the Army's deputy assistant secretary for procurement. While the DASA(P) task force meets annually, information and best practices are shared throughout the year with team members that also include stakeholders from the Medical Command, Army Contracting Command and Army Corps of Engineers.
As the number of over-age contracts are reduced, so too are the fiscal risks of unliquidated obligations for the Army. Pat Hogston, the director of the MICC Contracting Operations Directorate, said this is critical for MICC-supported organizations.
"If unliquidated obligations are not taken care of prior to the funds expiring, then MICC-supported organizations must redirect current-year monies to satisfy those unliquidated obligations," he said.
Hogston added that the closeout of over-age contracts accomplished by the command over the last two years has eliminated approximately $60 million in unliquidated obligations.
Funding provided to the Army is closed out on a five-year cycle by the Defense Finance and Accounting Service.
Headquartered on Joint Base San Antonio-Fort Sam Houston, the MICC is made up of more than 1,500 military and civilian members responsible for contracting for Soldiers. In fiscal 2015, the command executed more than 36,000 contract actions valued at more than $5.2 billion across the Army, including $2.25 billion to American small businesses. The command also managed more than 600,000 Government Purchase Card Program transactions in fiscal 2015 valued at an additional $747 million.