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CHAPTER I I I System Acquisition In its previous report the panel summarized its advice on the development process as follows: Development and implementation of the future SSA process should be in the hands of top management within the agency. Responsi- bility for the planning, development, and implementation of the process cannot -be bestowed on or abdicated to a contractor. One major task for the top management is to organize a coherent and expert team. Other tasks include strengthening and utilizing in-house SSA knowledge and expertise, making good use of consultants, and contracting for support and equipment from companies in the computer, communications, and system architect- engineering fields. The entire program to modernize the process needs to be closely monitored and controlled by the SSA. The panel is sanguine about the inherent capability of computer and communications technology to support the future process. Yet, because of repeated examples of grossly mismanaged large- scale systems, the panel considers it essential that able people and good management structure be mobilized to carry out this development with a maximum guarantee against schedule slippages, cost overruns, and transition problems. During the review that formed the basis for this second report, the panel examined the SSA's developing acquisition strategy and its planning for the management and control of the development process. ACQUISITION STRATEGY The SSA has determined that its acquisition of an advanced data processing system to support the future process is within the purview of OMB Circular A-109. Conformance to the policies enunciated in A-109, however, is by no means a matter of merely following to the letter definitive procedures that have been worked out over many implementations of the policy. On the contrary, Circular A-109 is a new policy, never before applied to an acquisition of the kind that SSA is planning. SSA's future process is something of a test case in which experience will be gained in the application of A-109 to large human-service systems. 10
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11 Accordingly, SSA should continue to pursue the objective of an acquisi- tion strategy that is not only consistent with the OMB policy but that will result in the most effective and responsive service delivery. Circular A-lO9 provides that federal agencies issue a solicitation to industry at the beginning of the exploration of alternative design concepts, and that the solicitation outline the overall acquisition strategy, the specific evaluation criteria for the initial contracting phase, and the criteria for follow-on phases. If enough proposals are deemed meritorious, evaluation of them will result in the selection of two or more contractors to develop and define in detail their recommended system design concepts. The acquisition strategy that was under consideration by the SSA during the period of the panelts review is outlined in Table 1 (page 12) Essentially the strategy provides for the competitive selection of several vendors to perform preliminary work in two competitive phases at government expense. During the first phase, these vendors will be required to develop detailed designs, and during the second, to demonstrate a "first module." At the end of the two competitive phases the winning vendor will be selected to implement the system. The acquisition strategy that will actually be adopted by SSA will be reflected in its Request for Proposal (RFP), expected to be released in 1979. This has not been reviewed by the panel. PLANNING FOR ACQUISITION Circular A-lO9 imposes several requirements on agencies that plan to acquire a major system. These include · Development of a mission needs statement o Designation of a program manager · Development of an acquisition strategy · Establishment of clear lines of authority The panel concludes that to satisfy these requirements, and to ensure the continuity of SSA operations during the transition, the SSA should formalize the interrelated planning that will need to be accomplished by several components of the SSA organization, and that this should be done through two plans or internal contracts: A Management Plan to establish overall policy guidance o A Project Plan to articulate the acquisition strategy and to detail the plan of action for acquiring the new system. Both plans could be viewed as contracts--the Management Plan as a contract between the Commissioner of Social Security and the Secretary of Health, Education, and Welfare, and the Project Plan as a contract between the Commissioner of Social Security and the program manager e .
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12 TABLE 1 SSA' s ACQUISITION STRATEGY PHASE ACTION (Duration in Months) Preparation SSA prepares REP and solicits informal reaction. (6) Issuance SSA formally issues an REP for a "conceptual (6) architectural design." Proposals Vendors submit proposals. (6) Selection SSA selects multiple vendors (using Criterion #1*) with highest levels of capability for design of future process. Competitive Multiple vendors refine their detailed system Design architectures and detailed designs of the first (12) module. During last 9 months, SSA selects out vendors not achieving requisite performance capabilities (using Criterion #2**~. Competitive Vendors demonstrate a prototype first module (if Demonstration necessary). SSA selects the future process system (6) designer (using Criterion #3***) to design and implement the total system. Implementation Selected vendor designs and tests prototypes of subsequent modules, integrates efforts of other vendors and government organizations, undertakes development of the applications software, and bids on hardware. CRITERION #l: Vendors will be judged on a sound and rational architectural design; modeling outputs that verify the architecture's performance; experience with projects of similar size and complexity, and the results of detailed cost and risk analyses. ** CRITERION #2: Evaluation will be based on comparison of detailed designs to SSA modeling outputs; technical performance analysis; satisfying performance specifications; risk analysis (machine costs, benefits analysis, life-cycle costs, etc.), and ability to manage the effort in terms of logistics support, control, staffing, and project management. ***CRITERION #3: The assessment will be based on an actual demonstration of systems capability, including hardware independence of software.
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13 THE MANAGEMENT PLAN The Management Plan should establish . Overall objectives for service levels, cost, and time to accomplish Mission needs statement Constraints on future system design · Relationships between the present and future systems Assignment of responsibilities to the program manager and others in the SSA Guidance for supporting plans 0 Management approach · The resources plan · The management review schedule: Management reviews would normally be held upon completion of significant project events and would not necessarily be tied to procurement actions or budget cycles. Examples of such events include critical design completion and module demonstration. Controlled items: These items include items requiring approval at senior management levels before they can be changed and items that would trigger project reviews whenever they deviated significantly from the plan. THE PROJECT PLAN The panel considers the development of a comprehensive, fully integrated Project Plan, prior to the commencement of any procurement action, to be the essential prerequisite to successful acquisition. During the preprocurement stage, this is a paramount responsibility and priority of the program manager and his staff. The Office of Advanced Systems issued the "Master Plan for The Development of The Future SSA Process" in June 1975 3/ and the "Recommended Design Concept for the Future SSA Process" in April 1977.2/ The SSA has engaged in extensive study, analysis, and evaluation of various factors that enter into the planning for its future process. The panel holds that SSA should now proceed with the development of a formal Project Plan to set forth the programmatic, technical, and managerial intentions of SSA. The Project Plan should include: 0 Project Plan Summary: A summary of project technical and management approaches, objectives, cost, personnel
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14 requirements, procurement strategy, schedules, environ- mental considerations, review and approval requirements, and major issues for management consideration. Project and Mission Objectives: An outline of specific project and mission objectives and the relationship of such objectives to the basic SSA program needs, missions, and goals. This outline should reflect the mission need statement developed under OMB Circular A-109. Related Studies and Activities: A summary of previously conducted studies and related activities and the implica- tions of the results of such efforts for the proposed project. Summary of Technical Plan: A summary of the technical considerations essential to the achievement of the project objectives. (This panel's previous report outlined such technical considerations.) · Procurement Approach: A summary of the approach for procuring major project elements of hardware, software, and other support. This section should address compliance with requirements of Circular A-109 and Federal Procurement Regulations, Title 41, Subpart 1-4.11, "Procurement and Contracting for Government-Wide Auto- mated Data Processing Equipment, Software, Maintenance Services and Supplies.'' PROJECT CONTROL It will be helpful to think of project control as a system--the information system that provides the primary management data for progress assessment, performance prediction, plan variance or problem identification, and informed decision making. Generally, it consists of the review of budgets, schedules, technical performance, and costs. An appropriate project control system will evolve directly from the planning and will be essential to the evaluation of progress toward achieving the project's principal objectives. The controls will constitute the primary means of assessing progress and will provide a basis for estimating the performance of the ultimate system in comparison with the principal program objectives. The controls should be intimately related to the acquisition strategy for the project and to the performance requirements imposed on the development contractors. To be useful and effective, the controls employed by the SSA should be both compatible and relevant. Project control data should be on a common basis and compatible for the program management of both SSA and the contractors. One of the best ways to assure compatibility is to organize controls on the basis of a specified work breakdown structure. A single common baseline is essential to provide a meaningful relationship between the various elements of
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15 project control data in order to avoid duplication and prevent diverse conclusions from different bases. When the SSA imposes requirements on the contractor for data regarding progress and schedules, it should consider the practices of the industry and of the particular contractor so that the same data can serve the internal management purposes of both the agency and the contractors. To achieve relevance, controls imposed on a contractor should be structured to measure the salient features (technical, schedule, and cost) of his particular concept to achieve the project objectives of the SSA. An REP should identify the management information needs broadly and should specify the basic criteria that the project control system must meet. The range and depth of data required for project management should be directly related to the respective performance responsibilities of the SSA and the contractor. Thus, wherever responsibility shifts to a contractor, the role of SSA would become less a matter of direction and more of detailed monitoring, and the project control system should provide information for assuring proper progress and technical feasibility, rather than for providing unilateral government direction. The current acquisition strategy of the SSA contemplates competi- tive development of alternative concepts followed by increasingly detailed demonstrations of concept capability to fulfill the agency's objectives. The purpose of the demonstration phase is twofold: a competitive winnowing and a concommitant, progressive increase of confidence that the surviving proposal will fulfill the mission needs. The end result of this strategy is the selection of a demonstrated concept that offers the greatest value to the SSA. In any phased procurement, the purpose of the project control system will change during the acquisition process. In the initial concept competition, the project control system should be tailored to provide data to enhance the SSA's understanding during the evalua- tion and selection of the competitors' concepts. After the ultimate selection of a single concept for development, test, and installation, the purpose of the project control system will change to a progres- sively more detailed assessment of that concept against the SSA's mission objectives. The management of change is at the heart of successful project management. Changes in the future system are certain over its develop- ment cycle, and their accommodation must be comprehensive, uniform, and efficient. Effective change control is vital to assure the integrity and usefulness of a project control system. For best results, change management should be fully integrated with work authorization and work breakdown structure control. RECOMMENDATIONS The panel offers the following recommendations: · On the basis of the extensive study it has already per- formed on major technical, procurement, and managerial considerations, the SSA should proceed with the !
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16 development of formal management and project plans for the acquisition and introduction of its future process e · For clear communication between the SSA and the contractors and as a means of assessing status and pre- dicting achievement, the SSA should establish suitable project controls, the character and extent of which should be influenced by (a) the usefulness of their product to SSA, (b) the practices of the industry/ contractor, and (c) the relative responsibilities of the SSA and the contractors for system development.
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