Rocketdyne Propulsion and Power, an operating location of Boeing in Canoga Park, California is under contract with NASA's Marshall Space Flight Center (MSFC) in Huntsville, Alabama for design, development, production, and mission support of Space Shuttle Main Engines (SSMEs). The contract was restructured in 1996 to emphasize a mission contracting environment under which Rocketdyne supports the Space Transportation System launch manifest of seven flights a year without the need for a detailed list of contract deliverables such as nozzles, turbopumps, and combustion devices. This contract structure is in line with the overall Space Shuttle program goals established by the NASA to fly safely, meet the flight manifest, and reduce cost. Rocketdyne's Contracts, Pricing, and Estimating team has worked for the past several years with representatives from MSFC, the local Defense Contract Management Command, and the DCAA to improve the quality of cost proposals to MSFC for contract changes on the SSME. The contract changes on the program result primarily from engineering change proposals for product enhancements to improve safety, maintainability, or operability in the space environment. This continuous improvement team effort has been successful in improving proposal quality, reducing cycle time, and reducing cost. Some of the principal lessons learned are highlighted here to show how proposal improvements can be implemented to enhance customer satisfaction and ensure cost proposals can be evaluated easily by external customers

Dunn, F.

English

NASA Technical Reports Server

Proposal Improvements That Work
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Rocketdyne Propulsion and Power, an operating location of Boeing in Canoga
Park, California is under contract with NASA's Marshall Space Flight Center (MSFC)
in Huntsville, Alabama for design, development, production, and mission support of
Space Shuttle Main Engines (SSMEs). The contract was restructured in 1996 to
emphasize a mission contracting environment under which Rocketdyne supports the
Space Transportation System launch manifest of seven flights a year without the
need for a detailed list of contract deliverables such as nozzles, turbopumps, and
combustion devices. This contract structure is in line with the overall Space Shuttle
program goals established by the NASA to fly safely, meet the flight manifest, and
reduce cost.
Rocketdyne's Contracts, Pricing, and Estimating team has worked for the past
several years with representatives from MSFC, the local Defense Contract
Management Command, and the DCAA to improve the quality of cost proposals to
MSFC for contract changes on the SSME. The contract changes on the program
result primarily from engineering change proposals for product enhancements to
improve safety, maintainability, or operability in the space environment. This
continuous improvement team effort has been successful in improving proposal
quality, reducing cycle time, and reducing cost. Some of the principal lessons
learned are highlighted here to show how proposal improvements can be
implemented to enhance customer satisfaction and ensure cost proposals can be
evaluated easily by external customers.
https://ntrs.nasa.gov/search.jsp?R=19980231076 2020-06-18T00:38:15+00:00Z
Understand your customer's most important requirements--Cost proposals are
provided to government customer's to establish a basis for an increase in contract
value and fee. The government customer's have requirements to perform a
technical review, conduct fact-finding, gather audit reports, and prepare a
negotiation position which must be approved by government management
personnel in procurement and the program office. It is essential that the contractor
prepare proposals which are clear and concise and provide an audit trail for the
various government personnel who evaluate the proposal. The contractor must
listen to the voice of the customer and strive to prepare proposals which exceed
stated requirements. The proposal must give the evaluators the information they
need whether it be information on rates and factors, estimating methods, actual
costs identified in the proposal, supplemental data, subcontract cost analysis, the
bill of material, the manufacturing method, or the test approach. Customer
requirements can be identified during formal reviews, informal discussions, surveys,
technical interchange meetings, or other ways. The point to remember is that the
government customer has special requirements to evaluate the proposal within a
certain time frame, and it is important to plan, organize, and structure the proposal
presentation so they can find the information they need in a format that is easy to
follow.
Establish advance agreements on work content--On the SSME program, the
business resources teams from Rocketdyne and MSFC meet quarterly to review
financial topics such as the Program Operating Plan, the earned value performance,
the cost estimates to complete, proposal status, and special topics. During these
face-to-face meetings informal agreements have been reached regarding the
proposal approach, the work content, and the estimating methodology. These
informal agreements have been very effective at building effective team
relationships and paving the way for subsequent fact-finding and negotiation with a
minimum of contentious issues. For example on a recent proposal, the Rocketdyne
team presented a methodology for determining the number of test seconds
expended to certify a new engine component. After extensive discussions and
consideration of several alternatives, an informal agreement was reached on this
methodology. This agreement will ensure that the customer will be receptive to the
proposal, and the significant costs associated with a major proposal rework or
difficult and protracted negotiations will be avoided. Another example on the SSME
program is advance agreement on the use of logistics models to forecast hardware
requirements based on mean time between failures for major engine components.
These advance agreements are not binding on the government; however, they are
extremely helpful in enabling the contractor to provide proposals which the
government evaluators will find meaningful.
Plan proposals to ensure success--The Plan of Action meeting is the key to
successful proposals. A core team comprised of the proposal manager, the contract
administrator, the pricer should conduct a pre-Plan of Action meeting to plan
proposal resources, establish a proposal preparation schedule, and identify a
detailed bill of material for the proposal. The proposal manager should review all
schedules for the effort to be proposed to ensure consistency across the program.
All proposal information should be available during the Plan of Action meeting to the
estimators assigned to the proposal team. The contract administrator should
maintain a record of all proposal information and act as the clearing house for the
inevitable proposal changes. This duty is essential as it maintains discipline during
proposal preparation to ensure that all proposal participants are working to the same
pricing instructions, ground rules, make or buy plan, hardware quantities and types,
and program schedules. It ensures that the proposal leadership team maintains
control, and it keeps all proposal team members focused on the objective of
providing a quality proposal, on time, and fully responsive to customer requirements.
A key duty of the pricer is to work with the core team at the beginning of the
proposal preparation cycle to establish an outline and format for the final proposal.
Specific assignments should be made for completing special sections such as the
program overview, the pricing instructions, the program schedule, the test plan, and
any disclosures or supplemental pricing data. Text descriptions should be planned
for each of the pricing formats to ensure they are clear to the reader. Planning for
the cost proposal should include integrating text and pricing runs so the final product
is easy to follow and conveys a clear description of the estimated resources.
Build relationships with trust--Effective team-building is essential to proposal
success. The proposal team should include the customer's procurement staff and
technical personnel as well as other government evaluators. The team should
understand their requirements and needs and tailor the proposal to facilitate
technical evaluation and audit. Internally, it is essential that all proposal team
members communicate any special requirements associated with their estimates
and take actions to resolve issues. Changes to items such as parts types and
quantities, schedules, make or buy determinations, and planned suppliers should be
coordinated with the proposal manager and communicated by the contract
administrator through a Plan of Action amendment. For a major proposal, daily
coordination meetings may be required to identify and resolve issues, to
communicate changes to the original proposal instructions, and to ensure proposal
activities progress on schedule. It is advisable for team members to be aligned with
specific customer counter-parts to pre-coordinate estimates or estimating
approaches to minimize issues during formal fact-finding and evaluation.
Pay attention to details--Dudng the proposal preparation cycle, the estimators
should structure the various estimates so they can be understood and evaluated by
the customer. Care must be taken to ensure that each task is adequately defined
and the method of estimate and basis of each estimate are clear. It is important that
write-ups be tailored to the work content being addressed and that descriptions of
work processes are current. The proposal manager and contract administrator
should review the organization of the cost proposal to ensure that the estimates flow
logically from each proposal section to the next. Special attention should be given
to features such as a Work Breakdown Structure, a subcontract cost analysis, a
description of rates and factors, or presentation of the bill of material to ensure the
proposal is well organized and logical. Charts, graphs, and tables including pricing
runs should be accompanied by text to explain the message and show how the
separate estimates build up to the total estimated cost. The proposal team should
take the time to proof the final product to ensure that the estimates match the pricing
runs for each section of the proposal. If cost estimating relationships are used, it is
important to cross reference the data so the estimating base can be identified in the
proposal. The overall intent is to ensure that all estimates can be understood and
evaluated by the government team.
Use red teams-- A "red team" proposal review should be held with red team
members who are not associated with the proposal effort to ensure the proposal will
make sense to the customer representatives assigned to fact-finding, audit, and
negotiation. The red team should be instructed to make constructive suggestions
for improvement rather than just highlight areas for criticism. If a section of the
proposal requires a re-write, the red team member should assist in the re-write in
consultation with the proposal preparation team. The red team is an invaluable
source of lessons learned for future proposals, and results of the red team should
be maintained. Further, the use of a red team provides added credibility for the
proposal during management review and final approval.
Streamline management reviews--For major proposals with firm deadlines, the
management review process should be stream-lined in order to allow as much time
as possible for preparation and pricing of the estimates. The proposal team should
communicate proposal status to the management team in advance with particular
emphasis on proposal issues, total estimated cost, and the proposal rationale and
estimating approach. As the separate estimates are compiled and forwarded to
pricing, the estimators should review the task descriptions, basis of estimate, and
method of estimate with their product management. The proposal manager should
take responsibility for conducting formal reviews with Engineering, Production, and
other areas as required by company procedures in advance of final sign-off.
Briefings should be held with the financial lead and management approval authority
for the proposal in advance so their concerns about strategy, commitments,
approach, technical performance, schedule risk, facility requirements, capital
investment, financial returns, and resources are addressed in advance. Together,
these actions will minimize unnecessary delays associated with final approval of the
proposal and ensure on-time delivery to meet customer expectations.
Document Lessons Learned--After the proposal is submitted, the team should
document lessons learned to ensure the improvements are incorporated into future
proposals. In some instances procedures may have to be revised or proposal team
members may need training to reinforce the improvements or share them with
proposals in other business areas. Of particular importance is information from the
red team evaluators which may need to be shared across product lines or kept for
reference in future proposals within the business area. After the proposal is
submitted, it is advisable to review the schedule for proposal preparation activities to
see how more time could be made available to the estimators and how time could
be reduced from the management review within the overall time limitations from the
customer for proposal submittal. Improvements to the cycle time can be
documented for use on future proposals.
Solicit customer feedback--Customer feedback is vital to ensure that cost proposals
clearly communicate resource estimates for labor, material, subcontract effort,
travel, and other costs in a format that can be readily understood and evaluated.
Formal feedback is normally provided by the customer during the quarterly business
reviews which were referred to earlier. Informal feedback is obtained on a regular
basis through discussions with customer counter-parts. Other feedback can be
obtained by analysis of fact-finding questions presented during the technical
evaluations of proposals. Customer surveys can provide insight into specific areas
for proposal improvement. Surveys should be sent to the customer's procurement
representative with each proposal. As distribution of the proposal is made at the
customer site, the surveys can be provided to technical evaluators so their feedback
can be obtained directly. In each instance a postage-paid envelope is provided to
ensure the survey data is returned. An example of a customer survey for cost
proposals is shown below.
SSME Contracts & Pricing
Customer Survey
Purpose: To permit you, the customer, an opportunity to evaluate
this cost proposal. Your response will provide us some
insight on where we can make improvements to our
process which will enable us to be more responsive to your
needs•
• Was this proposal easy to understand? Yes I--]
If not, please explain.
1 What suggestions would you like to make for our consideration in
the preparation of future proposals to MSFC?
o If you had specific questions, were you given the name and phone
number of Rocketdyne's point of contact for clarification?
Yes [-] No I-7
, What is your overall assessment of this proposal: (check one)
Excellent I--1 Good r--I Fair I-7 Poor I--1
FROM:
Share negotiation results with the proposal team--After the negotiations for each
cost proposal are completed, the contract administrator enters the data into the
contract database and issues a general order to notify program personnel and the
accounting department that the work is formally on contract. The program office
prepares a program directive to issue budgets and schedules. The product teams
use the data for cost account planning, earned value assessments, and preparation
of internal and external cost estimates at completion.
Our proposal improvement team determined that some elements of the
business system were not clearly understood by the program team members at
Rocketdyne. As an aid to program planning, we instituted post-negotiation briefings
to share information with product team members about what proposal areas
incurred negotiation losses and to provide insight into why the losses occurred.
Insight into negotiation losses is particularly important to the business office
personnel who prepare program directives and to the product team members
responsible for performance of the proposal effort. In some instances it was evident
that the negotiation losses resulted directly from proposal information that was not
clear to the customer's technical evaluators. This knowledge can lead to
improvements in future proposals to present information more clearly and reduce
losses in negotiations.
Summary--Together these initiatives highlight simple and effective ways to improve
proposals. They provide a focus on customer satisfaction as an important
component of program success. Improved proposal quality accompanied by
reduced cycle time and reduced cost will result in improved morale among members
of the proposal team, enhanced management confidence in the proposal process,
and increased customer satisfaction with the proposals submitted to them for
evaluation and audit. As you implement proposal improvements, you can have the
satisfaction of knowing that you made a difference, and you will know that your
results are appreciated by your co-workers, your management, and your customer.
Biographical data--
Fred Dunn is the Integrated Product Team Manager for Contracts,
Pricing, and Estimating on the Space Shuttle Main Engine Contract
at Boeing's Rocketdyne Propulsion and Power Business Unff. He is
an instructor in the management area at the University of Phoenix
Southern California campus and a member of the San Fernando Valley
Chapter of NCMA.


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