STP 8-A-02: LTC Negotiation Analytics (LNA) Final Report
Accenture Federal Services Arlington United States
The focus of the Long Term Contract LTC Negotiation Analytics LNA project was to evaluate the benefit of a self-service analytics capability that aids DLA Acquisition in deriving the best value from long-term contracts while minimizing risk. This project defined an integrated decision support tool to calculate predictive measures for ideal contract parameters e.g., length of base contract, minimum order requirements, guaranteed quantities, etc. as well as risk profile metrics. The initial evaluation of the self-service analytics capability provided favorable results and a six month pilot study was authorized to evaluate the tool, and if successful, incorporate the tool into Advanced Acquisition Analytics AAA.The LNA project discovered that there is additional value that can be gained through LTC preparation, solicitation, and negotiation. The LNA tool recommends the following key contract parameters for LTCs Guaranteed Contract Minimums, Delivery Order Minimums and Maximums, and Estimated Annual Quantities. These contract parameters are calculated by sourcing historical demand for an item and using advanced forecasting techniques to create a probabilistic forecast of demand for one year. This forecast can then be extrapolated over the entire length of the contract, which is typically three base years and two option years.Once the tool was designed and developed, Accenture and DLA partnered to conduct a pilot phase analysis that tested the tool in-market with LTCs that were representative of various LTC characteristics. The results of the pilot phase have shown that compared to the status quo contract parameters, LNAs contract parameters can provide immediate value to DLA, experienced through lower vendor quoted unit pricing.