Procurement’s Function at NASA

Posted by Matthew York on June 29th, 2015
Stored in Articles, Events, General, People, Process, Strategy

Over the past several months, Ardent Partners and IBM-Emptoris have worked to bring together several best-in-class chief procurement officers around specific themes with the express aim of garnering the best ideas, strategies, and practices that these industry-renowned experts use to drive top-flight results at their respective enterprises. Each roundtable is conducted via phone, recorded, and provided as a podcast for listeners to take advantage of the insights.

We were fortunate to have Bill McNally, assistant administrator for procurement and deputy chief acquisition officer at NASA, who directs procurement across the entire space agency, join our CPO Roundtables discussion. I was also able to sit down with him and dive deeper into NASA’s unique procurement needs and operations. Today’s article will take a closer look at how McNally and his team of acquisition and procurement professionals at NASA support the space agency’s mission.

Procurement’s Function at NASA

Credits: NASA/Bill Ingalls

For McNally, NASA’s Office of Procurement has a pretty straightforward role: support the agency by sourcing the goods and services required to conduct its various missions, be they aeronautics research, space science research, human exploration and operations in space, or space technology. McNally’s team of acquisition and procurement professionals execute on orders that flow to the buying offices at each of NASA’s 10 geographically-dispersed Centers — from New York to California, and Northern Ohio to Central Florida — which then contract with industry partners to provide goods and services.

When it comes to source selection, NASA does things quite differently than other organizations. The International Space Station (ISS) for example, operates in low-Earth orbit, is manned by a rotating staff, and requires regular spacecraft supply delivers  and maintenance (which is frequently performed in spacesuits outside the orbiting laboratory) in order to perform the vital research from which we all benefit.

“What’s really important is communication with industry,” adds McNally. “That’s something that I promote continuously. How can we improve communication with industry?”

In 2005, NASA forever changed the dynamic of this communication by opening a dialogue with industry partners about how the agency could continue to get critical supplies to the space station once its shuttle fleet was retired.

Ultimately, NASA procurement decided, instead of choosing one provider for a complex and high-risk service, on competitive solicitation and awarded contracts to two commercial providers. The bold decision to pursue such a strikingly new business model with the commercial space sector has allowed NASA to focus more resources on deep-space exploration, while shifting low-Earth orbit operations – something the agency mastered years ago – to a newly burgeoning sector of our economy. This move has proven to be a win-win for the nation and the agency as it progresses on its journey to Mars.

How Cost and Performance Assessments Figure into Source Selection

Every contract that NASA procurement competes includes an independent cost estimate that informs the budget request. Procurement uses the budget request to firm up the cost of the project and issue an award. When it comes to evaluating suppliers, McNally and his team look at past performance to assess supplier suitability and risk. It goes beyond the very technical, direct procurement aspect to the routine, indirect side for things like building maintenance, human capital management, information technology, security, and other goods and services. They conduct what they call a “full trade-off source-selection process,” wherein they compare the tradeoffs on performance, capability and price of a given supplier. They assess not only a contractor’s past performance on contracts (inside or outside of NASA), but also the relevance of this past work to the contract to be awarded. The company’s technical and management capabilities also are considered in assessing their suitability for performing the work. Lastly, they assess on price.

Looking Forward

McNally believes that, with regular and thoughtful scrutiny, they will succeed in developing a procurement culture of constant improvement and refinement.  This means continually asking questions.

  • Are we getting the most efficient, effective, and secure service for the best price?
  • Can we get our contracts maximized with the budget we have?
  • Can we increase our buying power?
  • Can we be more efficient in doing our contracts?

In the near future, he and his team will conduct a more formal deep-dive to find the answers that will maximize buying decisions at NASA. One would expect nothing less from an agency that effectively funds innovation and keeps the United States at the forefront of aeronautic research and space exploration.

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