Wc16 A09 The Subcontract Management Body of Knowledge The Competitive Edge

The Subcontract Management
Body of Knowledge (ScMBOK©):

The Competitive Edge
Breakout Session #: A09 - Track 3. Post-Award
(CMBOK 3.0)
M. Subcontract Management
Presented by: The Subcontract Management Institute

(ScMI™)
Date: Monday, July 25

Time: 11:15-12:30 AM
DEDICATED TO REDUCING PERFORMANCE RISK IN THE EXECUTION OF PUBLICLY-FUNDED CONTRACTS
Combines Certification with Qualification
The Subcontract Management Body of Knowledge©:
Panelists:
ScMBOK – What’s unique?
Dan Jacobs, Chairman, ScMI™; NCMA Fellow, CPCM, Past National
President, Honorary Life Member. Charles A. Dana Distinguished Service
Award; Director, Procurement Round Table; Certified Management
Consultant (CMC/IMC- ISO)
The Subcontract Management Team
Lenn Vincent, RADM USN (Ret.) Vice Chair, ScMI™; NCMA
Fellow, Past National President, Roback Award; Commander, DCMA;
Commandant, Defense Systems Management College (DAU); NDIA
Industry Chair, DAU; Director, Procurement Round Table
Competitive Pricing
Vic Avetissian, CFO, ScMI™; NCMA Fellow, Past National President,
Honorary Life Member, Charles A. Dana Distinguished Service Award,
Outstanding Fellows Award and Director, Procurement Round Table
Winning & High Performance
Tom Reid, JD, President, ScMI™; NCMA Fellow, CPCM, Former
National Director; Outstanding Fellow Award and National Achievement
Award
2
The Subcontract Management Body of Knowledge©
(ScMBOK) defines the essential knowledge, skills and
competencies for successfully managing subcontracts
in publicly funded contracts.
To Gain the Competitive Edge:

 It is important, even necessary to develop standards
(world wide), determine consistency, competencies,
and develop useable training curriculum, etc.;
 Individuals/organizations can use the ScMBOK to

learn, train, ensure compliance, consistent processes
AND be more competitive and profitable...
60-80% of all Federal Acquisition $
are spent with
SUBCONTRACTORS
3
THE SUBCONTRACT MANAGEMENT ICEBERG EFFECT
The majority of activities occur at the

Subcontract level
Public, Private, Commercial, Large,
Medium, Small, and Foreign Companies 4
WHAT LEADERSHIP MUST DO TO AFFECT CHANGE
Focusing on just the prim e’s efforts is insufficient in today’s

environm ent, w here the bulk of the w ork lurks below
Traditional Focus – The
Increasing Decreasing
Prime Contractor Interface
Work Government
Content Insight
Tier I The Needed Paradigm –

(Major Subs)
Leadership with a
“value chain”
Tier II
perspective that is
Tier III
focused where the work
is performed
“What’s below the water level?” 5

TAKEAWAYS:
1. Importance of subcontract management
as a strategic management decision to
achieving business and mission outcomes.
2. The impact and major price-related
factors that contribute to program
success.
3. Targeted and strategic decisions on
developing subcontract management
talent and pricing expertise to meet key
organizational and program objectives.
6
As indicated in the Packard Commission Report

(1986), the single greatest risk factor in the
acquisition process is the failure of the using
activity to adequately define its requirements from
the outset.
The second greatest risk factor is the failure of the
prime contractor to adequately manage its
subcontractors with whom the federal government
has no privity (no contractual arrangement).
Approximately 60-80% of all acquisition dollars are

expended with subcontractors.
THAT RISK STILL EXISTS
UNTIL NOW, THERE WAS NO INDUSTRY STANDARD FOR

SUBCONTRACT MANAGEMENT OF PUBLICLY-FUNDED
CONTRACTS.
7
ScMI™ CHARTER
The purpose of The Subcontract Management Institute

(ScMI™), a non-profit organization, 501c(3), is to:
1. Establish and maintain the Global Standard for Subcontract
Management and Administration to include the Subcontract
Management Body of Knowledge© (ScMBOK™);
2. Provide the contractor with knowledge, skills, competencies,
tools and techniques to execute subcontracts more effectively,
reduce performance risk and deliver value to company
shareholders and taxpayers; and
3. Provide organizations and individuals the opportunity to
become certified to enhance productivity, profitability and
their value proposition.
8
ScMBOK – What’s unique?
BEST PRACTICES
The Competitive Edge – Pricing & Performance
Enterprise-wide focus on Subcontracts! 9
Copyright © The Subcontract Management
Institute
Lenn Vincent, RADM USN (Ret.) Vice Chair, ScMI™;

NCMA Fellow, Past National President, Roback Award;
Commander, DCMA; Commandant, Defense Systems
Management College (DAU); NDIA Chair, DAU; Director,
Procurement Round Table
10

Program
Manager
Government
Contracts
Customer
Financial
Supply Chain
Manager
Marketing &
Business
Development Global Business
Manager
Manufacturing Subcontract Risk

Management Manager
a Project Planning
Legal Team Effort And
Scheduling
Personnel Process
Design
Subcontract
Manager
Estimating Engineering
Technical
Subcontractors Purchasing
Representatives
11
Three Teaming Perspectives:
Prime, Sub, and Government
• Prime Contractor
– Contractual relationships are often rocky, and hard to manage, but
subcontracting is critical for success in the global market place
– The prime contractor accepts the total contract risk, but must
design business arrangements where the risk for subcontracted
work is further allocated to the subcontractor
• Subcontractor
– The prime-subcontractor relationship is critical and growing in
importance in a dynamic global market shaped by fewer
opportunities as a result of declining budgets and a much tougher
business environment
– Just as negotiations occur between government and the prime
contractor on risk, liabilities, and warranties, there are also vigorous
negotiations among teammates and subcontractors on the degree of
risk that will be accepted at each level
• Government
– Expects industry to pay very close attention to the selection of
subcontractors from management, technical, execution and risk
perspectives
– Strong teaming and collaboration… no surprises
12

Managing a Contract/Subcontract typically includes:
 Identifying requirements
 Addressing various needs, concerns, expectations
 Balancing the competing constraints (unique per
contract) including but not limited to:
 Scope
 Quality
 Schedule
 Budget (Cost)
 Resources,
 Issues (problems) SCHEDULE
 Risks (potential problems) “The Triple Constraint”
13
Must Plan for Success
10 Questions the Team Should Ask When Planning for
Success:
1. How should subcontractor management be handled in our office?
2. Who will be the focal point for subcontractor issues?
3. How will we find the right people and train them sufficiently in
subcontractor management? What tools do they need in order to
be successful?
4. What should my counterpart and I discuss regarding

subcontractor / supplier management? What do we need to
agree upon? How will we share this with the rest of the team?
5. How will the government and the prime collectively define ―key --
critical, and ― major subcontractors / suppliers? How or will they
be managed differently?
14
Must Plan for Success
10 Questions the Team Should Ask When Planning for
Success:
6. How often should key/critical/major subcontractors and suppliers

be visited?
7. What sorts of things will be measured? Can we ensure the metrics

are linked (between the subcontractors / suppliers, the prime, and the
Program Office)?
8. How will we include key/critical/major subcontractors / suppliers in

various reviews?
9. How will the team respond when problems arise? Is there a response
plan in place? How is it triggered?
10. At what point should a joint team be sent to investigate the root
cause of significant problems?
15
COMPETITIVE PRICING
Vic Avetissian, CFO, ScMI™; NCMA Fellow, Past
National President, Honorary Life Member, Charles A. Dana
Distinguished Service Award, Outstanding Fellows Award and
Director, Procurement Round Table
16
COMPETITIVE PRICING
• Subcontract Selection Process

• Cost Analysis
• Commercial Item Price Determination
17
COMPETITIVE PRICING
SUBCONTRACT SELECTION PROCESS
• Financial Capability
• Past Performance
• Technical Capability
• Approved Business Systems
18
COMPETITIVE PRICING
SUBCONTRACT COST ANALYSIS
• The Proposed Cost is Realistic for Work To Be

Performed
• It is Consistent With the Technical Proposal
• It Supports Clear Understanding Of All The

Requirements
19
COMPETITIVE PRICING
SUBCONTRACTOR COMMERCIAL
ITEM PRICE DETERMINATION
• Obtaining Sufficient Data To Support

Determination Of Commercial Item and Price
Analysis
• Determination “Of A Type”
• Modification To Meet Contract Requirement
20

Tom Reid, JD, President, ScMI™; NCMA Fellow,
CPCM, Former National Director; Outstanding
Fellow Award and National Achievement
Award
21
Discipline!!
Managing a subcontract is similar
to a prime contract EXCEPT:
– The sub contract is a UCC governed
contract
– The prime contract dictates additional
clauses and requirements
– Commercial remedies differ from
government remedies.
– The prime must be conscious of those
non-mandatory flow downs that it needs.
22
Good SCM is a Competitive Advantage
• If 50%+ of your prime costs flows to

subs, are you devoting 50%+ of your
management attention to the subs?
• 100% of subcontract problems will be
yours to resolve
• ScMI provides the industry standard for

subcontract management of publicly-
funded contracts.
23
Organizations that embrace and

institutionalize the knowledge and
skills enterprise-wide, take a
proactive, problem avoidance
approach and realize
greater efficiencies and higher
profitability.
24
1. Importance of subcontract management as a

strategic management decision to achieving
business and mission outcomes.
2. The impact and major price-related factors

that contribute to program success.
3. Targeted and strategic decisions on

developing subcontract management talent
and pricing expertise to meet key
organizational and program objectives.
25
DEDICATED TO REDUCING PERFORMANCE RISK IN THE
EXECUTION OF PUBLICLY-FUNDED CONTRACTS
Combines Certification with Qualification
The Subcontract Management Institute

3509 Connecticut Avenue NW, Suite 1112
Washington, DC 20008
Ph: 202-594-3147
Fax: 202-594-3148
Contact ScMI™ Today!
For more information:

http://www.sc-m-i.org
202-594-3147
26

Wc16 A09 The Subcontract Management Body of Knowledge The Competitive Edge

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Wc16 A09 The Subcontract Management Body of Knowledge The Competitive Edge

Uploaded by

Copyright:

Available Formats

The Subcontract Management

Body of Knowledge (ScMBOK©):

Presented by: The Subcontract Management Institute

Date: Monday, July 25

To Gain the Competitive Edge:

 Individuals/organizations can use the ScMBOK to

The majority of activities occur at the

Focusing on just the prim e’s efforts is insufficient in today’s

Tier I The Needed Paradigm –

“What’s below the water level?” 5

As indicated in the Packard Commission Report

Approximately 60-80% of all acquisition dollars are

UNTIL NOW, THERE WAS NO INDUSTRY STANDARD FOR

The purpose of The Subcontract Management Institute

The Subcontract Management Team

Lenn Vincent, RADM USN (Ret.) Vice Chair, ScMI™;

The Subcontract Management Team

Manufacturing Subcontract Risk

The Subcontract Management Team

 Risks (potential problems) “The Triple Constraint”

1. How should subcontractor management be handled in our office?

2. Who will be the focal point for subcontractor issues?

4. What should my counterpart and I discuss regarding

6. How often should key/critical/major subcontractors and suppliers

7. What sorts of things will be measured? Can we ensure the metrics

8. How will we include key/critical/major subcontractors / suppliers in

• Subcontract Selection Process

• Commercial Item Price Determination

SUBCONTRACT SELECTION PROCESS

SUBCONTRACT COST ANALYSIS

• The Proposed Cost is Realistic for Work To Be

• It is Consistent With the Technical Proposal

• It Supports Clear Understanding Of All The

• Obtaining Sufficient Data To Support

• Determination “Of A Type”

• Modification To Meet Contract Requirement

Winning & High Performance

Winning & High Performance

Good SCM is a Competitive Advantage

• If 50%+ of your prime costs flows to

• ScMI provides the industry standard for

Winning & High Performance

Organizations that embrace and

Winning & High Performance

1. Importance of subcontract management as a

2. The impact and major price-related factors

3. Targeted and strategic decisions on

The Subcontract Management Institute

For more information:

You might also like