Money Saved, Acquisitions Made

Case_3_Navy.pdf

Problem

The Department of the Navy has been a huge user of information technology (IT) items.  (These items are: computer hardware and software, operating systems, telephones and other telecommunications products, video equipment and multimedia products, information kiosks and office products such as photocopiers and fax machines.) Its needs for these items has been much the same as for any other large, multi-national organization. However, the Department was challenged when it came to acquiring these items (known as Commercial-off-the-shelf or COTS items) in a timely and efficient manner.

The acquisition process has become resource intensive and difficult; putting at risk the ability of the Navy to meet its continuing requirements for IT.  The regulations driving the process were outdated and many were time redundant.  In 2004, the Assistant Secretary of the Navy for Research, Development, and Acquisition (ASN (RDA)), put in place goals meant to expedite the acquisition process that would require the acquisition community to take a hard look at these processes and find improvement opportunities.

The COTS IT products that were most at risk to be bogged down in the acquisition process were those that apply to business functions that extended across multiple organizations; thereby creating a level of complexity that required higher technical expertise. Many of the problems faced by acquisition personnel were the result of using the Integrated Defense Acquisition, Technology, and Logistics Life Cycle Management Framework that defined the activities, processes and products required to acquire applications that affected operations at the multi-organization level. The required Framework instructions created a complex matrix that specifies documentation, evaluation, justification and decision-making support primarily for weapon systems where requirements had to be highly specified to ensure an exact product outcome.   In the case of business IT acquisitions, the Framework instructions were overly restrictive due to the fact that the business functions in the organizations involved would most likely change as a result of the implementation of new IT. Therefore, the exact product solution was less defined and this was found to be acceptable. The impacts resulting from using the approach prescribed by the Framework instructions have been significant. For example, according to the Navy, delays in implementing improved IT solutions cost $165,000 per day in reductions to the return on investment for the Navy Standard Integrated Personnel System (NSIPS) and $3 million per month for the Defense Integrated Military Human Resources System (DIMHRS).

Approach

In response to these challenges, the ASN (RDA) provided guidance in the report, Navy Marine Corps Acquisition Source Document – Blueprint for the Future, that specified how improvements to the acquisition process were to be made.  Several of the guidelines required the use of LSS to cut the volume of acquisition documents by 50% and shorten the cycle time for approved documents within the Navy Enterprise to no more than 90 days.

The Navy’s Program Executive Office – Information Technology (PEO-IT) began its use of LSS on the Acquisition Documentation Coordination and Review Process to find improvements to meet the ASN (RDA)’s goal of 90 day cycle time for approval of acquisition documents. PEO-IT began by value stream mapping the Review and Coordination process to understand what activities were being performed and how was value created and moved throughout the process. (See Figure 8.)

Figure 8: Navy management for acquisition of IT items created a value stream map to show the process for coordination and review of required documentation. The map identified significant wait times between all major steps in the process and five major rework areas. All of this waste was subsequently eliminated.

The PEO-IT team then chartered a group of process improvement specialists known as Green Belts to analyze each of the activities within the value steam. Each Green Belt’s project focused on the identification and elimination of waste within the activities that create delays and inefficiency.

Results

What the Green Belts were able to accomplish was dramatic—a 64% elimination of waste by reducing the process from seven to four steps. This waste elimination shortened the cycle time of the process from an inconsistent 60 to 220 working days to a reliable 46 working days – a 23% to 80% improvement. Using the return on investment estimates, this cycle time improvement delivered $2.3 to $28.7 million dollars of savings on a single acquisition back to the Navy. The other major solution discovered was the development of a common business process that controls the initiation, development, coordination and review of acquisition documents. This process, along with standardized tools to support it, provides new capability for acquisition personnel to identify cost and schedule impacts and the ability to proactively control the cost of the acquisition process.