Contract Efficiency Assessments (CEAs)
A Contract Efficiency Assessment (CEA) provides multi-functional teams (MFTs) performing services acquisitions a repeatable process for ensuring the government receives the appropriate level of service required to effectively meet its mission at the best possible net cost to the government.
The CEA process uses defined playbooks for a given services portfolio group with targeted recommendations for the requiring activity, contracting office and other multifunctional team (MFT) members to generate reductions in contract costs while maintaining appropriate levels of service. The playbooks define processes and techniques initially developed for the commercial marketplace that DoD can apply to positively impact services contracts and their acquisition outcomes. Conducting a CEA requires an approach that considers mission needs, the desires of the stakeholders, the state of the current contract, expected changes to future demand, and any adjustments necessary to incentivize increased contractor efficiency and cost reductions.
CEA Guiding Principles:
• Ensure the government receives the appropriate level of service required to effectively meet its mission
• Ensure service provided is delivered at the best possible net cost to the government
• Ensure contractor profit is reasonable
Expected benefits:
• Increase productivity and quality of services
• Improve processes and procedures
• Identify savings for reprioritization
The approach, shown below, consists of four steps including: 1) Identify and Coordinate with Stakeholders, 2) Evaluate Contract Requirements and Strategy, 3) Conduct Cost Analyses, and 4) Develop Targeted Recommendations. The sub-steps are:
1.1. Meet with requirements owners and stakeholder groups
1.2. Identify historical Demand, required service levels and acquisition strategy
1.3. Review desired outcomes
2.1. Review previous solicitation
2.2. Conduct market research
2.3. Understand requirements
2.4. Review acquisition strategy
2.5 Identify improvements
3.1. Identify cost components
3.2. Benchmark component costs
3.3. Build should and could cost models
3.4. Quantify Net cost impacts
3.5. Identify initial findings
4.1. Summarize recommendations
4.2. Validate with stakeholders
4.3. Finalize recommendations
4.4. Share benefits with stakeholders
The CEA effort is designed to augment existing service acquisition processes and supplement the procurement. The process culminates in the MFT reassessing which service levels and performance standards will be required in the resulting contract, adjusting the contract structure and type, and finalizing demand data to provide in the solicitation to inform potential bidders. A few examples follow:
- Reassessing service levels and performance standards. Use market research to determine what is available commercially and if better pricing may be obtained by adjusting quality or timeliness standards. For example, does a vendor offer savings if the service is performed every other day (M-W-F-Tu-Th) as opposed to M-W-F? Can the requiring activity accept this schedule?
- Adjust contract structure and type. If possible, combine like work into one CLIN to achieve savings. Assess whether a fixed price or cost reimbursable type contract is most advantageous.
- Demand data. Too often only the incumbent contractor knows the demand patterns and demand quantities. The MFT needs to communicate demand data in the solicitation to obtain competition and offers appropriately priced.
Development of appropriate performance tasks and standards requires an understanding of the stakeholder’s needs, as well as the environment where the contractor will provide the services. Following the compilation of the improved cost estimates, it is critical that stakeholders consider and implement appropriate trade-offs of their requirements, performance levels and budget considerations.