Contract management professionals stand to gain great insight from DAU’s “Effectively Evaluating Risks through Factors” webcast. In the August 5 session, Professor of Contract Management John Wahl used a hand-and-glove approach to teach participants how to identify upfront and early risks in contracting and how to effectively evaluate Best Value determinants in relation to source selection.
During the webcast, he said the most effective fundamental framework for evaluating risks starts with forming integrated product teams who are ready to go to WAR. The application sounds drastic -- that’s exactly what Wahl intended in relaying the importance of being prepared while providing an easy method by which to remember the process: Willing, Able and Ready (WAR). He further added that successfully integrated product teams must be willing to do the work, have the knowledge and skills for the job and respond quickly. Another component in contract management is being able to distinguish the types of source selection and development in competitive acquisition.
“[Source development] is a systematic investigation,” said Wahl. “Back to the acronym of WAR, and when we talk about source selection, it’s a process.”
According to Wahl, there are five steps of risk associated with source selection: process planning, identification, analysis, mitigation/correction, and monitoring. The first step, process planning, entails assessing program risks and issue management processes. Identification answers the question of what has, can or will go wrong while analysis explores the likelihood of risk and consequence of risk and issue. Meanwhile, mitigation/correction asks what if anything, will be done about risk or issue. Step five — monitoring, finally determines how the risk of issue has changed.
“Source selection is about risk mitigation,” he stated.
One example of risk Wahl used was experiencing a high turnover percentage of direct labor during life of contract. To mitigate it, Wahl recommended reviewing retention rates, employee climate surveys and competitive compensation. Another example given was a hypothetical scenario in which a contractor lacked the right mix of skill sets and staffing during life of contract. In this scenario, the best way to mitigate the risk is by modifying staffing plans per performance work statement tasks to include R&R, KSA, FTE(s) hours, in addition to considering an employee’s education and years of experience.
Ultimately, Wahl emphasized the impact of source selection is broader than just the contract in question — it comes down to the industry as a whole.
“We want to continue to build and maintain trust within industry,” Wahl said.
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