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Strategic
Sourcing
Strategic Sourcing is a strategic plan that calls for both our installations and
operating forces to seek cost reductions and operating
efficiencies. The Marine Corps is committed to maximizing
the efficiencies achieved through competitive sourcing
and privatization. We will utilize a wide range of
measures to achieve these cost reductions and
efficiencies, to include OMB Circular A-76 competitions,
regionalization of functions, and better contracting and
accounting policies and procedures.
The savings we accrue from Strategic
Sourcing will be used to fund
modernization, sustain our installations, equip our
forces, compensate mandated budget reductions and assist
our personnel who may be adversely affected. This
initiative will affect every base, station and Marine
unit throughout the entire Marine Corps. This will streamline the way we conduct operations and business
throughout the Marine Corps.
The Department of Defense has directed that all
services review their business procedures relative to
commercial, contractual activities. As a result, all
Marine Corps commands and activities are involved in a
wide range of Strategic Sourcing initiatives. A study is
currently underway to determine what functions, if any, might best
be performed by outside contractors. An Installation Strategic Sourcing Initiative Team is now in place to
conduct reviews for establishing better business
practices. This team will examine opportunities for
reorganization, privatization, regionalization, process reengineering and competitive sourcing.
The
A-76 Process
The A-76 process, taken from
Office of Management and Budget Circular Number A-76 is OSD's primary
vehicle for identifying savings through competition. A-76 is a complex
but valid and commonly accepted process for all U.S. government
activities to compete functions that do not have to be performed
exclusively by government officials. The key to A-76 is competition:
in very simplified terms, the existing government workforce works to
achieve its ''most efficient organization'', then competes to perform
functions against private industry.
Most Efficient Organization (MEO) is a term used under OMB A-76. It
is an organizational plan, including numbers and types of Full Time
Equivalents (FTEs), that is developed as the most economical and
effective means of carrying out work specified in a performance work
statement. The MEO is the basis for the in-house cost estimate, which
competes under A-76 with the private-sector bid.
Full Time Equivalents (FTEs) are equal to one work-year for a given
job. We compete based on FTEs instead of positions in order to
standardize the amount of work we expect to be accomplished by the
given job and to account for work that is regularly done part-time or
with overtime.
The Commercial Activities (CA) Program implements a change that the
Government will rely on the private sector for goods and services when
it is proper and economical to do so. The objective of the CA Program
is to improve management and productivity through fair competition by
determining whether Government generated goods and services are
produced as efficiently and cost effectively as similar or identical
goods and services in the private sector. The program works to
establish cost-effective methods of obtaining goods and services,
whether by streamlining in-house performance or contracting out the
function to the private sector.
Strategic Sourcing and the A-76 process are complicated
and require extensive studies, thorough research and detailed
preparation through the collective efforts of managers, contracted
advisors and commanders throughout the Marine Corps. As executors of
base commercial activities, Installation Commanders are best suited to
determine what base support functions should be competed. The U.S. Marine Corps Forces,
Atlantic and Pacific commands will coordinate the development
of plans to consolidate delivery of services on a regional basis.
Headquarters Marine Corps program sponsors will facilitate this
process. As stewards for the entire Marine Corps, Headquarters Marine
Corps is best situated to nominate functions for regional or Marine
Corps-wide competition.
The actual A-76 process cannot begin until a formal announcement
of "functions for potential review" is given to Congress.
Marine Corps Order 4860.3D directs installation commanders to notify
affected employees and their representative unions upon receipt of the
message from CMC authorizing commencement of a commercial activities
study under A-76. As information has become available to base/station
commanders and supervisors on the future implementation of the A-76
process or any other BMI, communications plans have been developed to
inform the base/station employees of the potential consequences. All
military and civilian employees will be kept well informed as we
evaluate our internal business practices and identify ways to
streamline, reorganize, outsource and privatize functions. More
importantly, they will be intimately involved with the honest
evaluation of our business practices.
Implementing Strategic Sourcing was mandated by the 1997 Defense Reform Initiative
Directives. The increasing costs of aging equipment and facilities,
forces the Marine Corps to identify support functions that could be
performed by the private sector for a better price, without
sacrificing quality, and reinvesting those savings into procurement
and manning.
The current
Marine Corps goals are 18-24 months to complete a multi-function CA
study. This competition is conducted through use of a contract
solicitation. The first step is the preparation of the Performance
Work Statement (PWS). The PWS is the heart of the contract
solicitation and will define the tasks that must be accomplished.
Based on the requirements in the PWS, the Government will conduct a
Management Study to design and develop its MEO to perform the work in
the PWS, and, based on MEO structure, the Government then computes its
bid. Once the solicitation is issued, prospective contractors will
submit their proposals, describing how they will perform the PWS work
and how much they will charge to do so. A Technical Evaluation Board (TEB)
will evaluate contractor proposals. The evaluation process will
determine which contractor best meets the established evaluation
factors and that contractor's bid will be compared with the
Government's bid. If the contractor's bid does not beat the
Government's bid by at least 10% of the in-house personnel related
cost or $10 million (whichever is lower) over the period of the
performance, the function will be performed by the Government.
By carefully analyzing the lessons learned from previous business
practices, and having the ability to accurately track and compare
costs, we will be better prepared to make the complex and difficult
decisions required in the competitive sourcing process.
Commercial Activities Competition
It is conceivable that all active duty Marines and our
civilian employees could be impacted by the effort to support the
Marine Corp's force modernization requirements. Our civilian employees
are dedicated, skilled, and hardworking. We will do for our civilian
employees what we do for our Marines and provide them with the
training and tools to make them more efficient and better able to
compete with the private sector. A-76 ensures that competitions
between public and private sectors occur on a level playing field. The
Marine Corps will keep all in-house bids close hold to ensure that we
do not place our civilians at a disadvantage in the bidding process.
If the Government wins, action will be taken to implement the MEO
as it is described in the management study. If the MEO contains less
than the current number of positions performing the function, or the
grade structure is different, management will rely on the full range
of available personnel actions (e.g. attrition, voluntary early
retirement authority/voluntary separation incentive pay (VERA/VSIP),
reduction-in-force (RIF), reassignments, etc.) to meet the MEO's
staffing requirement.
If the Contractor wins, the contractor will perform the function
with its work force displacing all affected Government employees.
However, Federal Acquisition Regulation (FAR) 52.207-3 (Right of First
Refusal of Employment) states "The contractor shall give
Government employees who have been or will be adversely affected or
separated as a result of award of this contract the right of first
refusal for employment openings under the contract in positions for
which they are qualified." This FAR clause will be included in
the contract solicitation. While it does not require the contractor to
hire any government employee it does prohibit the contractor from
hiring anyone else without first offering vacant positions to
qualified displaced government employees. This applies only to job
openings for which displaced employees are qualified. The right of
first refusal does not apply when employees would otherwise be
prohibited from such employment by the government's post-employment
conflict of interest rules. Historically, qualified displaced
Government employees are hired by the incoming contractor. Prior to
actually instituting a change, those involved will be briefed on what
and how things are going to change and how the change will benefit the
base.
Any reduction in civilian force will be handled in accordance with
existing regulations and negotiated agreements. The Commandant's
intent is to use attrition, retraining, and reassignment to the
maximum extent possible. We fully expect - and experience has shown -
that the government sector will win a significant portion of these
competitions. But when it does, it will be because it provides the
best service at the best price.
Negotiated labor agreements associated with individual commercial
activities may vary. However, the following benefits may be available
to adversely affected employees: severance pay; registration in the
DoD Priority Placement Program, registration in the Defense
Outplacement Referral System; placement on the DoD Reemployment
Priority List; Incentive Payment; and Voluntary Early Retirement
Authority. Employees should contact their HRO representative for more
information on what specific benefits may apply to them.
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