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News | Feb. 8, 2017

Manufacturing, production employees slash delinquent contract schedules

By Justin Zaun DCMA Garden City

GARDEN CITY, N.Y., Feb. 8, 2017 — When the Defense Contract Management Agency’s leadership identified reducing delinquent contracts as a priority last year, DCMA Garden City mobilized employees to confront the task.

DCMA Garden City Director Neil Mintz challenged manufacturing and production employees in the Engineering Division to develop a comprehensive strategy to reduce delinquent contract schedules. By the end of 2016, the group had reduced delinquent schedules by 17 percent overall relative to its 2015 baseline total. In addition, from fiscal year 2015 to 2016, DCMA Garden City achieved a 52-percent reduction in schedules that had been delinquent more than one year.

“The (contract management office) took on the cause as a priority,” said Anthony Cuffaro, supervisory industrial specialist. “It could not have happened without the involvement of the entire office.”

One of the biggest concerns with delinquent schedules is that the customer may not have received the supplies or services that were contracted for, said Charles Hurley, an industrial engineer and a member of the DCMA Eastern Region Manufacturing staff.

“That is why it is important that our industrial specialists investigate delinquent schedules to determine if the supply or service was provided or not,” Hurley said.

The effort to reduce delinquent schedules was a multi-pronged approach that included performing comprehensive data reviews, establishing additional metrics, reconciling databases, visiting contractor facilities more frequently and working with customers and contractors to verify shipments.

The manufacturing and production employees also conducted teleconferences with procuring contracting officers, coordinated with administrative contracting officers to remove unliquidated contract balances, which are any funds remaining on a contract after the final invoice, and examined Material Inspection and Receiving Reports, also known as DD Form 250, which are used to document and confirm the inspection, acceptance, receipt and delivery of products.

Steven Ostapow, a supervisory industrial specialist, said a major component of the effort to reduce the delinquencies was establishing and maintaining relationships with contractors through regular site visits. If a shipment delay was attributed to the contractor, he said, industrial specialists worked with the company to determine the best options for resolving the delinquency. When applicable, the company was urged to pursue contract modifications to extend delivery dates, which helped drive down delinquencies.

In some instances, the delinquencies were due to necessary delays by the government, such as first article testing and production lot testing not being timely approved.

“When we encountered those situations, we communicated with the buying activities to determine the cause and helped facilitate a solution,” Cuffaro said.

Some of the delinquent schedules involved contracts for services that had been performed, but the contracts were incorrectly identified as unfulfilled in the Mechanization of Contract Administration Services, also known as MOCAS, database and related DCMA tools that track contract status and payments. Unlike contracts for supplies, a shipping confirmation report such as a DD Form 250 is generally not required for service contracts, said Cuffaro, which can sometimes make it difficult to determine if the services were performed.

“One aspect of the problem involved data integrity issues,” Cuffaro said. “Sometimes it may be difficult to get all the paperwork for service-type contracts, so we may have to ask the contractor to provide us with a letter stating the contract had been satisfied and no further billing was forthcoming.”

After receiving the letter, and before proceeding to close out the contract, DCMA teams contacted the PCO to validate all services were received in a satisfactory manner.

“In some cases, we issued Notices of Completion, which are basically notifications to prove that the contract line item was satisfied,” Cuffaro said. “There were just so many administrative actions that needed to be done.”

Manufacturing and production team leaders also created internal metrics to enable more effective data analysis to track and eliminate delinquent schedules. In addition to tracking delinquencies per the standard metrics, employees tracked contracts with missing delivery dates, contracts with expired estimated dates and physically complete contracts incorrectly labeled as active contracts.

“After we established metrics, we started working as a team, which was important,” Ostapow said. “You need the PCO, the ACO, the industrial specialist and the quality assurance specialist all pulling together, and that is the only way we were able to resolve these issues. We also needed help from the contractors to determine if a delinquency was legitimate. It was a group effort.”

DCMA Garden City’s Keystones also contributed to the effort by analyzing all service contract line items and determining the reasons behind any delinquencies.

“We followed the money to see which contract line items were being paid out of what (accounting contract reference number), and we looked at the invoices, which was tedious,” said Talerie Boyd, a Keystone industrial specialist.

Man Phan, a former Keystone industrial specialist who is now a contract administrator, said the Keystones focused as a team on the contractors with the most delinquent schedules by examining shipments and invoices, and conducting contract receipt and review.

“It is a very time-consuming process, but it is worth it,” he said. “It has to be a team effort. One person cannot do it.”

Hurley visited Garden City in July 2016 to learn more about its processes to reduce delinquent schedules so he could capture the details and share the information with other contract management offices across the Eastern Region.

“DCMA Garden City has done a great job of reducing delinquent schedules,” Hurley said. “Thanks to Garden City, I have some good lessons-learned information regarding reduction of aging delinquencies and improving on-time delivery posted on my Region Manufacturing DCMA 360 website.”

He said reducing aging delinquencies is a priority, and the agency instituted a 15 percent reduction goal to the Eastern Region commander and contract management office commanders and directors.

“Our ultimate goal is to prevent schedules from becoming delinquent in the first place so our customers receive their product on time, and our downstream administrative effort to close the contract can be accomplished more efficiently,” Hurley said.

Mintz praised the collaboration among the office’s functional groups as a crucial component of reducing delinquent contracts.

“It was a great team effort,” he said. “Our employees stepped up to the challenge, and we received outstanding support from the Eastern Region staff.”

By working with the contractors to mitigate risk and reduce delinquencies and contract cycle times, the agency can improve on-time delivery, which leads to the warfighters getting the parts they need, said Cuffaro.

“That is what it comes down to,” he said.