LMI 2009 Annual Report by LMI

I M P ROV I N G GOVERNMENT PERFORMANCE

2 0 0 9 A N N U A L R E P O RT

Complex Problems. Practical Solutions.

LMI.ORG

Complex Problems. Practical Solutions.

LMI

S AT E L L I T E O F F I C E S :

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ASSET MANAGEMENT I N F O R M AT I O N A N D T E C H N O L O G Y LOGISTICS O R G A N I Z AT I O N A L I M P R O V E M E N T RESOURCE MANAGEMENT P O L I C Y A N D P RO G R A M S U P P O RT

I M P ROV I N G G OV E R N M E N T PERFORMANCE

TABLE OF CONTENTS

Letter from the Chairman and the CEO

LMI Research Institute

Year in Review

Corporate Governance

Management

Capabilities

Financial and Other Data

2009 ANNUAL REPORT

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L E T T E R F RO M THE CHAIRMAN AND THE CEO

Nelson M. Ford, P reside n t a n d C h i e f E xe c u t i ve O f f i c e r, a n d Wi l l i a m S . N o r m a n , C h a i r m a n o f t h e B o a rd .

LMI had a ver y rewarding 2009: • We continued to offer our clients practical solutions to address their most pressing problems and attain their agencies’ objectives. • We continued expanding our client base far beyond our Defense Depar tment roots. We now ser ve nearly ever y federal depar tment and agency. 2

• We added new skills and capabilities to our extraordinar y work force , enabling us to respond even more effectively to clients’ concerns. • We increased our revenue by an impressive 9 percent over 2008, reaching a record level of nearly $177 million.

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Our work continues t o a dvance the management of government. For example , LMI has turned lessons learned from U.S. militar y operations in Iraq and Afghanistan into practical plans for equipping o ur forces in t he f uture . We helped the Centers for Medicare and Medicaid Ser vices analyze thousands of Medicare Advantage benefits packages to ensure t hat they meet rules and regulations and do not discriminate against cer tain classes of beneficiaries. For the U.S. Depar tment of Agriculture , we h elped p lan, coordinate , facilitate , and evaluate a multi state exercise to test logistical responses to an o utbreak o f foot-and-mouth disease . For Amtrak, we i dentified o ppor tunities for improving the effectiveness and efficiency of its acquisition practices to improve the

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management of its capital assets and infrastructure , while ensuring t hat proper c ontrols are in place to meet regulator y m andates. The impact o f our work is felt across t he government, with positive implications for the people t he government ser ves. Other examples of t his work are highlighted in the following pages. While our business operation is focused on meeting our m ission to improve t he management of government, the LMI Research Institute c ontinues to sponsor research that allows our work force to e xpand its intellectual c apital by developing ideas, methods, processes, a nd frameworks that bring more precision and p redictability t o public-sector m anagement. A mong o ther projects, the institute recently funded the creation of a Capacity Development Assistance Model that p rovides the foundat ion for the government’s t hinking a bout how t o navigate t he complex i ssues that arise in capacity development a nd includes a p lan for directing capacity development e ffor ts, with in-dep th analysis o f t he enabling environment, and refined monitoring and evaluation. We also u se the institute to suppor t sharing t he results o f o ur employees’ work through internal publications and ar ticles i n respected i ndustr y journals. We a re p roud of our histor y and our a ccomplishments in 2009, but we a re not c omplacent. Right now, our reputation for high-quality c onsulting ser vices is demonstrated by our stable backlog and our success in a competitive market. Our staff is highly respected a nd k nown for premium performance . A s always, our growth will result f rom finding oppor tunities for using our exper tise to make a difference and from our continuing c ommitment to research in the public interest. LMI’s mission and vision have not changed. We a spire to be the “ best-value” c onsulting firm, providing independent analysis and practical solutions to the difficult challenges facing government managers today. It’s an exciting t ime , and we l ook forward t o b uilding o n the momentum of 2009 as we pursue our historic mission. W i l l i a m S . N o r m a n , Ch a i r m a n o f t h e B o a rd , an d Ne l s o n M . Fo rd , P re s i d e n t a n d C h i e f E xe c utive O fficer

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LMI RESEARCH INSTITUTE

T 4

o advance our public-ser vice mission, LMI reinvests a por tion of its revenue ever y ye a r i nto self-directed research and d eve l opment effor ts. These effor ts a re managed by the LMI Research I n s t i t ute , which solicits research i d e a s and awards funding t o effor ts t h a t a ddress the most complex issues facing government managers. T h ro ugh this internally driven and s p o n s ored research, L MI p ursues t h o u g ht leadership in areas of i m p o r tance to our clients and for t h e g eneral p ublic good, today and t o m o rrow.

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The LMI Research Institute recently funded Capacity Development Assistance Model: A Guide to Building Minister ial Capacity . This repor t, w ritten by LMI’s public policy fellows, describes a “whole-of-LMI” approach to improving capacity development effor ts. The United Nations Development Programme defines capacity development as a process in w hich a nation’s abilities a re obtained, strengthened, adapted, a nd m aintained over time . Nations have capacity when they have functional processes that are both selfsustaining and producing positive , enduring outcomes. At its core , c apacity development m eans helping government agencies or ministries enact sound policies and repeatable processes via a multilayered approach with interagency par ticipation. Because the

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United States relies on nations with functioning governments to foster peace i n t heir regions, increasing foreign government capacity also helps U.S. national security interests and mitigates humanitarian crises. Many i nternational government a nd nongovernment o rganizations, as well as multinational organizations, have been involved in capacity development. To guide their e ffor ts, they have developed d ifferent philosophies and frameworks. L MI’s framework a nd approach t o capacity development draws on the strengths of t hese o rganizations’ approaches, b ut focuses o n specific government needs and leverages LMI’s f unctional and t echnical exper tise . LMI’s Capacity Development Assistance Model addresses the four phases of capacity development: define capacity d evelopment requirements, develop a capacity d evelopment plan, implement the plan, and monitor and evaluate progress. It a lso features in-depth a nalysis o f the enabling environment, an analytical framework, and a monitoring a nd evaluation model. The CDAM framework provides the foundation for thinking a bout and navigating the complex issues that arise in capacity development. LMI’s monitoring and evaluation model focuses on identifying, recording, and assessing the maturity a nd outputs of specific p rocesses within a government.

LMI’s capacity development approach draws f rom i nternationally recognized best p ractices, but our approach is unique in its central focus on identifying and improving the day-to-day ministerial processes that lead to essential government outputs and sustainable capacity.

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YEAR IN REVIEW

his section highlights several projects that demonstrate our continuing commitment to i m p roving government performance by p roviding practical solutions to t h e p ublic s ector’s most complex p ro b l ems. We under took t hese projects for a wide range of government d e p a r tments a nd a gencies, i ncluding the Depar tment of Homeland S e c u rity, G eneral S er vices A d m i nistration, Centers for Medicare a n d M edicaid Ser vices, U.S. Postal S e r v i ce , D epar tment o f A g riculture , a n d Depar tment of Defense .

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ESTIMATING THE LIFE-CYCLE COST OF COUNTERING MAN PORTABLE AIR DEFENSE SYSTEMS Man Por table Air Defense Systems— the g eneric name for shoulder-launched, surface-to-air missile systems—are potential threats to commercial aircraft when landing o r taking off. Following a MANPAD a ttack o n a commercial aircraft in Africa, Congress asked the Depar tment of Homeland Security to devise near-term solutions for protecting U.S. commercial aircraft from similar attacks. In response , DHS competitively selected two contractors that manufacture countersystems for use on

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militar y aircraft to develop several prototype countersystems for use on commercial aircraft. DHS’s Counter-MANPADS Program Office then assessed the suitability of the prototypes by exercising them in commercial ser vice o n American Airlines a nd FedEx aircraft. In those assessments, the program office thoroughly a ddressed the cost, reliability, availability, a nd performance of each prototype . We had a pivotal role in the program o ffice’s a ssessments. As the l ead l ife-cycle c ost analysts on the government’s d emonstration-evaluation i ntegrated p roduct team, we p roposed a quar terly cost-estimate cycle , review, and revision, c onsistent with recommended best p ractices. We established new repor ting and attribution standards for t he cost estimate and m igrated a broad, optimistic program cost estimate into a vendor-specific quar terly update , which referenced engineering cost estimates that were sensitive to alternatives analyses and provided substantial insight i nto programmatic decisions. W hile c arr ying o ut t hose effor ts, we became the team’s exper ts on reliability, including the levels o f reliability for different c omponents and their failure modes; the extent of improvement t hat c ould reasonably b e expected in a reliability improvement program; and the cost impact on fielded systems. The DHS exercises resulted in reliability, performance , and suitability improvements t o the prototypes and a road map to i mplementation. DHS, with our assistance , t hen submitted a repor t to Congress d etailing its progress, findings, and recommendations for t he u se of counter-MANPAD systems.

ASSESSING MAINTENANCE EFFECTIVENESS IN IRAQ AND AFGHANISTAN The Assistant Deputy Under Secretar y of Defense for Maintenance Policy and Programs requested that we assess the Defense Depa r tment’s m aintenance experience in Iraq and A fghanistan. The objectives of this assessment included identifying lessons that could apply across the entire maintenance community; affect doctrine , policy, a nd procedures; and enable DoD and t he militar y ser vices to prepare more effectively a nd efficiently for t he next major conflict. We used three case studies to frame our assessment: engine maintenance challenges caused by the harsh deser t environment, evolution of g round a nd aviation maintenance c apabilities a t Joint Base B alad, and v iability of the aviation m aintenance strateg y going into South west Asia, excluding unmanned aerial vehicles.

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We found that applying the lessons learned from Operation Deser t S torm and exercises at the National Training Center clearly resulted i n making M 1 tank engines f ar more robust; we fur ther found that maintenance of T700 helicopter engines, w hile effective , still needed improvement. We also found that the planning and placement of maintenance capabilities did not ful ly a ddress Operation Iraqi Freedom challenges a nd possible scenarios: a n expeditionar y m aintenance capability would have e nabled a smoother inser tion a nd expansion of d epot a nd general suppor t maintenance , as well as better integration o f o rganic a nd contractor maintenance . Finally, we noted that the transition of a conflict from shor t-term to sustained operations necessitated highly interdependent decisions about aviation reset, rotation of equipment f rom t he theater, and augmentation of i n-theater maintenance capabilities. U nfor tunately, these decis ions were often incremental and reactive . We recommended that the M aintenance E xecutive S teering C ommittee form two working groups. O ne working group would validate best practices for m etrics and analysis c apabilities, predeployment management and standards, methods to continuously review operations and anticipate requirements, and the structure a nd o bjectives for f leet governance . The other would identify analytical methods that suppor t more robust maintenance planning, with a focus o n a better balance of rotated equipment and stay-behind equipment, a dvantages a nd d isadvantages of movement forward of maintenance functions, and reset policies and p rocedures. We a lso recommended that the Joint Staff, J-4 Maintenance D ivision, revise Joint P ublication 4-0, Joint Logistics, to address coordination of m aintenance operations, incorporate joint maintenance planning c onsiderations, and provide g uidance on a lead ser vice for t he maintenance of common equipment.

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DEVELOPING AN ATTRIBUTE-BASED TOOL FOR IDENTIFYING PARTS

UPGRADING GOVERNMENT TRAVEL POLICIES The

General

Ser vices

Administration

establishes and administers the government’s travel policies for civilian employees through the Federal Travel Regulation. The Defense Travel

Management

responsibilities

Office

for

has

similar

uniformed

ser vice

members, w hich it exercises through t he Joint Federal Travel Regulation. In response to a joint request f rom GSA and DTMO, we comprehensively reviewed the travel policies governing civilian employees and uniformed ser vice members. We identified several oppor tunities for upgrading the government’s travel policies and business practices. Those oppor tunities include

strengthening

governance

GSA’s

s tructures,

a nd

using

DoD’s

h igh-level

committees to set strategic direction for the government’s travel p olicy, clarifying t he roles a nd responsibilities of s taff o ffices, simplifying a nd streamlining p olicies, and standardizing government-wide regulations. We

recommended

specific

a ctions

for

GSA a nd DoD to t ake advantage o f t hose oppor tunities,

and

captured

t hose

actions in an implementation plan. That plan specified the organizations responsible for

the

actions,

proposed

schedules,

and identified the actions requiring new legislation. several

Our

common

recognized

recommendations

had

characteristics:

they

i ndustr y

trends,

leveraged

industr y best practices to the government’s advantage , s tressed c onsistency o f travel policies

for

manage ment

all and

t ravelers,

and

administration

eased through

standard, government-wide regulations and a realigned governance structure .

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The Defense Logistics Agency sought an automated means for identifying and comparing par ts to reduce back orders through substitutions and to avoid the assignment of duplicative par t numbers. In response to DLA’s request for assistance , we identified a webbased par t- comparison tool—Pin Point—that appeared to have most of the desired features. It uses advanced data mining technolog y to extract par t attributes from disparate public and militar y data sources—including legacy databases and documents, original equipment manufacturers’ websites and product data sheets, and militar y and nongovernment specifications and standards—and then relates those attributes to specific government national stock numbers or commercial par t numbers. The primar y value of this approach is that it suppor ts aggregation of par t proper ties from all available sources, while providing full traceability to original sources of par t information. We installed a beta version of Pin Point in DLA’s three hardware supply centers: Columbus, OH, Philadelphia, PA, and Richmond, VA. The tool enabled center product specialists, engineers, and item-reduction personnel to complete searches for par ts in minutes; previously, searches took days or weeks, or largely went undone . Pin Point also allowed them to search by NSN or commercial par t number and to compare par ts by their technical and physical attributes. They could also easily share these comparisons with other organizations, such as engineering suppor t activities. As an example of Pin Point’s benefits, Defense Supply Center Philadelphia decreased the number of back orders, shor tened lead-times, reduced procurement workload, and lowered item costs for many of the 43,000 different O-ring NSNs that it manages. Similar benefits are expected from Pin Point’s application to other par ts.

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PROVIDING ANALYTICAL SUPPORT TO THE CENTERS FOR MEDICARE AND MEDICAID SERVICES More t han 10 million seniors obtain Medicare coverage through managed-care organizations operating as Medicare Advantage providers. The Medicare Advantage plans provide the same basic benefits as fee-for-ser vice Medicare plans a nd, in m ost cases, h ave extra funds available that are used to reduce cost sharing from fee-for-ser vice levels and add benefits. For t he past 13 years, we have been helping t he Centers for M edicare a nd Medicaid Ser vices enhance its stewardship of Medicare Advantage plans. I n 2 009, we analyzed t he benefits packages from m ore than 5,000 d istinct plans t o ensure that t hey s atisfied C MS r ules a nd regulations and d id not discriminate agains t cer tain classes of b eneficiaries. We a lso performed ad hoc evaluations at the request of CMS leadership, a long w ith o ur a nnual c omprehensive assessment of the program’s underlying key m etrics. The results from that annual assessment a re published in the “Green Book,” which the CMS staff uses as a reference m anual. Our 2009 evaluations included analyzing the benefits and cost sharing of chronic care special needs plans; analyzing the degree of competition i n m arkets ser ved by cost health maintenance organizations; c ollecting, analyzing, a nd developing “ fair m arket” c ommission l imits for health insuran ce brokers and agents used by t he p lans; determining, by c ounty o r m etropolitan statistical area, the number of Medicare Advantage c oordinated c are h ealth p lans t hat compete with Medicare Advantage private fee-for-ser vice health plans; and identifying health plans that offered duplicative benefit designs, or had l ow enrollments, for p ossible elimination f rom t he program. The key to performing these analyses w as AskMar ty, a proprietar y t ool we developed to retrieve data quickly from more than 40,000 unique u ploads o f h ealth plan data received d uring the last 4 years . Given that each upload contains a s m any as 6 ,000 data elements, o ur ability to quickly access and use 240 million data elements to answer specific questions or conduct in-depth analyses is a valuable resource for CMS leadership.

10 10

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IMPROVING FUTURE DEPLOYMENT AND DISTRIBUTION CAPABILITIES The Commander, U.S. Transpor tation Command, has m ade the identification, assessment, and employment of improved deployment and distribution capabilities and technologies a priority initiative . We suppor ted that impor tant effor t t hrough t he Future Deployment a nd Distribution Assessment. Our most recent project under the FDDA umbrella included synthesizing and vett ing future capability gaps in the Joint Deployment a nd Distribution Enterprise , identifying science a nd technolog y initiatives to fill gaps or i mprove deployment a nd distribution capabilities, a nd suppor ting a forum and process for shaping science and technolog y effor ts to enhance JDDE capabilities. We also i nvestigated the impact o n Army m obility of the shift in g lobal basing posture . Our study revealed that the Army s hould expect l ittle strategic mobility impact o n d eployments from the continental United States and that ongoing basing changes will have mini mal effect on requirements for strategic sealift. These and other findings from this project are par t of the analytic baseline for FDDA, which, when complete , will provide U STRANSCOM with input to the Guidance for the Development of the Force and Quadrennial Defense Review, data for joint and ser vice war games and exercises, and source material for t he development o f Joint Capabilities Integration and Development System documentation and other analyses.

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CRAFTING AN ACQUISITION STRATEGY FOR DEFENSE BASE ACT INSURANCE The Defense Base Act provides workers-compensation-type insurance coverage for contractor employees performing under government contracts outside the United States. Under a companion lawâ&#x20AC;&#x201D;the War Hazard Compensation Actâ&#x20AC;&#x201D;the government essentially self-insures for those instances of an injur y to or death of a DB A-covered worker from a war risk hazard. With the significant and unprecedented buildup of contractors suppor ting the wars in Afghanistan and Iraq, the market for DB A insurance has increased substantially, and premiums have grown more than 20-fold since 2002. Since the cost for DB A insurance is reimbursable under government contracts, concerns have been expressed about the premium rates being charged for coverage , the level of minimum premiums being quoted, and the availability of coverage for new or small businesses. In response , DoD established a pilot program under the U.S. Army Corps of Engineers that was modeled largely on a Depar tment of State program, where a single insurance provider was competitively selected and a set of predetermined premium rates was agreed to with no minimum premiums charged. In 2008, Congress held hearings on the financial aspects of the DB A program. Information from the top four insurers implied that the single-provider programs of DOS and the U.S. Agency for International Development offered an affordable approach to acquiring DB A coverage . Par tly as a result of those hearings, the National Defense Authorization Act for Fiscal Year 2009 included a requirement that DoD adopt an acquisition strateg y for DB A insurance that minimizes the cost of such insurance for both DoD and its contractors; it also required DoD to submit a repor t on its acquisition strateg y. DoD, with our assistance , gathered detailed information from both industr y and DoD contracting organizations with self-insurance arrangements for workers compensation. Our analysis of that information showed that the weighted average rates in the open market were significantly lower than those in the single-provider program for all locations worldwide . In fact, the singleprovider rates were 51 percent higher for contractors in Afghanistan and Iraq, and a striking 90 percent higher for those in other locations. Although DoD concluded that an open market for DB A insurance was preferable to a single- provider arrangement, it also concluded that the open-market approach could still be improved. The repor t to Congress, which we had a major role in preparing, contained several recommendations for such improvements and also strongly recommended that the government seriously pursue self-insuring for this coverage .

We are now advising a Depar tment of Laborâ&#x20AC;&#x201C;led task force that is planning for the eventual congressional hearings and is developing the underlying statutor y and regulator y language and the cost estimates necessar y for government-wide implementation of the self-insurance alternative .

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STRENGTHENING NEW YORK CITY’S BRIDGE RECONSTRUCTION PROGRAM New York City’s Depar tment of Transpor tation has created a large capital reconstruction program to ensure the safety and functionality of bridges in all boroughs. Over the past 6 years, it has invested more than $3 billion in bridge maintenance and reconstruction, and it has an additional $2 billion in bridge capital projects slated to begin within the next 2 years. To help ensure successful execution and integrity of NYC’s capital projects for bridges, the American Association of State Highway and Transpor tation Officials, with our assistance , conducted a comprehensive review of the Division of Bridges’ management controls for its procurement, payment, and change-order activities. In carr ying out that review, we compared the division’s organization, processes, and activities with industr y and government standards and best practices to identify possible gaps. For example , we based our assessment of the division’s procurement practices on Government Accountability Office and Office of Management and Budget guidance; we used the Construction Management Association of America’s Construction Management Standards of Practice and the associated Construction Management Core Competencies when assessing change orders; and we adapted the U.S. Depar tment of Transpor tation’s Office of the Inspector General risk assessment practices in our evaluation of payment practices.

We found that the management controls for the procurement, change-order, and payment areas were generally effective and provided reasonable assurance of timely program ser vice deliver y. However, we also identified several oppor tunities for strengthening controls and proposed actions that leveraged past and ongoing improvement effor ts. Those actions included instituting the use of project management plans on all capital construction projects to define roles and responsibilities, eliminating unnecessar y delays by ensuring that all inquiries are sent directly to the responsible engineers and responses are sent to the originators, preparing formal guidelines to ensure that cost estimates are independently and consistently prepared, and purchasing off-the-shelf software or mandating the standard use of NYC’s Computerized Engineers Estimate System software for capital construction projects to achieve uniformity when tracking payments.

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STANDARDIZING INSTALLATION DEPLOYMENT PROCESSES In today’s operating environment, Army forces are constantly on the move , which gives a larger number of installations critical roles in suppor ting unit deployments. Historically, installations have had little consistency in their deployment processes and organizations. However, with the implementation of Army Force Generation and the reality that almost all installations have deployed or will deploy units, those disparities are no longer acceptable , because they could negatively affect training requirements and deployment efficiencies. In response to a request from the Deployment Process Modernization Office , we reviewed the deployment processes of Army installations. Our review included an extensive literature search for background information, visits to various Army installations for firsthand assessments of current practices, and use of an online sur vey to obtain additional insight from a broader community of interest. In close cooperation with DPMO representatives, we used the information gained from those effor ts to prepare a “Deployment Templates” document that offers standard procedures for installations when meeting their deployment responsibilities. We recommended that Army leadership publish the templates, synchronize deployment processes with ARFORGEN, adopt standard deployment technologies, institute many of the best practices we identified in such areas as information sharing and equipment modifications, and launch a cohesive effor t to decrease the use of local terminologies and forms.

This project was a critical first step in standardizing and improving the Army’s deployment and redeployment processes, even though it focused on only one segment of the deployment process: from deployment planning through depar ture from the origin installation. Ensuing segments—seapor t of embarkation operations and the redeployment process—require the same detailed analysis to ensure that the Army uses its valuable resources as effectively as possible.

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REFINING THE GENERAL SERVICES ADMINISTRATION’S ENTERPRISE ARCHITECTURE The General Ser vices Administration, through its enterprise architecture initiative , seeks to develop useful and consistent EA products that will make it easier for agencies to do business with GSA, promote the sharing of common ser vices across GSA, eliminate duplicate systems, ensure continual alignment of technolog y investments with business needs, and establish a common basis for strategic analyses. For the past several years, we have been providing technical and program management suppor t to GSA’s EA Program Office . That suppor t, based on industr y best practices, included independently verifying and validating EA blueprinting projects, maintaining an EA repositor y, and helping execute EA projects. We also used our proprietar y LMI Enterprise Architecture Practice , or LEAP™, method to ensure that GSA’s information technolog y applications, data, and system platforms are aligned with its mission and business needs. In addition, we employed structured analysis to capture and maintain GSA-wide information about strategic goals, EA and business segments, and IT investments to develop an EA sequencing plan and demonstrate the direct connection between strategic intent and the investments. The benefits of our suppor t have been far-reaching. GSA’s Ser vices and Staff Offices are developing EAs that use the GSA EA as the star ting point and will result in applications aligned with GSA’s business vision and shared IT infrastructure . Moreover, with more detailed process analysis based on the GSA EA, the SSOs will be able to improve their workflows and avoid unnecessar y redundancy in business operations. In addition, this greater level of detail will enable GSA to identify ser vice components that can be automated and to facilitate the establishment of interfaces among legacy and new application systems to mitigate redundancy in systems and data.

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PREDICTING MEDICAL SUPPORT REQUIREMENTS In anticipation of the new strategic focus and force surge , the U.S. Central Command needed to reassess its medical suppor t arrangements in Afghanistan. CENTCOM requested that we assist with that reassessment by providing a comprehensive casualty estimate of hospital admissions for a complex multinational force: U.S. forces and cer tain NATO and Afghan forces in high-risk regions.

We responded to CENTCOM’s request by estimating hospital admissions for all U.S. forces in Afghanistan, for select NATO forces in Regional Command South, and for Afghan security forces in Regional Command South and Regional Command East. Our estimate defined casualties over a 19-month time frame by unit, month, and casualty type , including battle casualty admissions as well as admissions for disease and nonbattle injur y. The key to developing our estimate was an extensive description of historical casualty-rate patterns for modern forces in varied operational settings—the Benchmark Rate Structure—which we had created previously and around which we had built our casualty-estimation planning tool, SABERS (System to Automate the Benchmark Rate Structure). We validated obser ved rate patterns with detailed theater data, updating casualty rates for both Afghanistan and Iraq into 2009; we also reviewed CENTCOM’s force and operations planning projections for 2009–2010. Our estimate bracketed planning options with pessimistic and optimistic projections, and it defined a recommended planning profile , which enabled CENTCOM to assess its patient workload by region and hospital.

Emerging actual casualty counts were remarkably close to our estimate , especially for wounded admissions, the principal medical workload component. CENTCOM found our estimate to be a tangible , operationally focused product that suppor ted its major commands’ needs to validate current assets and determine new requirements. The estimate became the analytic foundation that enabled CENTCOM, in coordination with NATO, to formulate improved plans—ahead of the new Afghanistan cur ve—for hospital suppor t and related manning, patient movement, and logistics.

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PROVIDING BUSINESS IMPROVEMENT SERVICES TO THE INTELLIGENCE COMMUNITY The Corporate Resources and Infrastructure o rganization, a government shared ser vices platform, delivers an integrated suite o f administrative a nd suppor t ser vices to the Director of Nati onal Intelligence and multiple Intelligence Community agencies at the Liber ty Crossing campus in McLean, VA. To ensure t hat it continues t o provide those ser vices effectively a nd efficiently, CRI requested assistance with identifying improvements t o i ts business processes. In responding to that request, we used multidisciplinar y teams to review various C RI business processes. We designed and helped implement a performance program that c ulminated in a low-cost metrics â&#x20AC;&#x153;dashboardâ&#x20AC;? for C RI m anagers. We a lso provided C RI management with t he capability to fully comprehend the cost of providing ser vices t o multiple a gency customers, including the ability to reconcile five separate funding streams and expenditures with multiple ser vice c ontracts down to the detailed ser vice level. As par t of this effor t, we helped translate financial and budgetar y terminolog y into language familiar to functional s er vice providers, ensuring all s takeholders have complete knowledge o f t he true costs of doing business. Building on the cost-of-ser vices effor t, CRI fur ther entrusted us w ith developing i ts f utureyear program funding model. The model will replace an outdated Office of Management and Budget funding model and ensure that CRI customers contribute funding commensurate with their ser vice consumption. In still a nother e ffor t, we a dvised CRI o n a nalyzing and repor ting results of its customer satisfaction sur vey program.

17 In these and other effor ts, we routinely worked c losely w ith C RI f unctional branch chiefs to develop action plans that reinforce success and improve their business processes. Our primar y goal in suppor ting CRI is to provide independent analyses and sound recommendations that ser ve as critical enablers to CRIâ&#x20AC;&#x2122;s achieving its vision of becoming the premier standard for mission suppor t and ser vice excellence w ithin the i ntelligence community.

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ASSESSING LOGISTICS RESPONSE TO A POTENTIAL MULTISTATE OUTBREAK OF FOOTAND-MOUTH DISEASE In 2009, representatives from the Animal and Plant Health Inspection Ser vice National Veterinar y Stockpile and the Multi-State Par tnership for Security in Agriculture par ticipated in a foot-and-mouth disease exercise with officials from 13 midwestern states and Canada. The objective of this exercise was to review, test, and evaluate logistical responses to an FMD outbreak in the United States. The exercise consisted of a tabletop exercise followed by four fullscale exercises, three in the Midwest and one in Canada. The objectives of the tabletop exercise included educating par ticipants; identifying gaps in state , industr y, and NVS capabilities to respond to an FMD outbreak; and improving multiagency coordination during an outbreak. The objectives of the full-scale exercise were more functionally oriented: deploy NVS material and a dummy vaccine to multiple locations simultaneously, validate the accuracy of NVS truck and container manifests, evaluate the use of the NVS push packs, and verify U.S. Depar tment of Agriculture and Canadian Food Inspection Agency procedures and permits for bringing FMD vaccine into Canada from the United States.

Because of our past suppor t to NVS, we led the effor ts to plan, coordinate , facilitate , and identify gaps in procedures and processes. In addition, we prepared the after-action repor t and improvement plan. We also proposed corrective actions, including creating guidelines for state and federal responsibilities for vaccine management, updating NVS’s inventor y management tool, identifying sources for accurate temperature monitoring devices, and developing procedures for mobile logistics team representatives to repor t discrepancies to NVS’s deployment management team.

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UPGRADING ARMY TRANSPORTATION PLANNING FACTORS In preparation for its Total Army Analysis, the U.S. Army Combined Arms Suppor t Command asked us to review two of the Army’s transpor tation planning factors—miles in the hour and task vehicle availability rate , or TVAR—and recommend revisions. These factors are key in estimating the warfighter’s requirements for truck companies. As an integral par t of our review, we developed a spreadsheet-based planning tool for conducting sensitivity analyses of a wide range of transpor tation-related variables. The intent of this tool was to give combat developers a desktop capability that could potentially replace the Force Requirements Generator model in testing the sensitivity and interrelationships of variables in different operational environments. We found that the miles-in-the-hour factor was misleading and complicated. As corrective action, we recommended using the cargo movement rates and applying factors that directly affected truck unit productivity: vehicle speed, distance , and delays. The Army currently uses a vehicle availability rate of 99 percent, but we concluded that this factor neither adheres to doctrine nor reflects actual availability in a field environment. Considering our examination of current guidance and field experience , we recommended that the Army set TVAR targets for each type of Army truck, such as an 80 percent availability rate for the heavy equipment transpor ter and 88 percent for the medium tactical vehicle . We also developed a user-friendly spreadsheet planning tool (with detailed instructions) to assess truck requirements in different operational environments. This project called for a major rethinking of how the Army models its truck requirements. We proposed a new set of factors that use operational realities, as opposed to Cold War–era factors based on outdated doctrine.

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IMPROVING PRODUCTIVITY OF THE FEDERAL MEDICAL STATION PROGRAM The Depar tment of Health and Human Ser vices established the Federal Medical Station program to provide temporar y healthcare facilities to communities affected by catastrophic health events, such as hurricanes or floods. U nder the FMS program, t he Centers for Disease Control and Prevention receives i nventor y components in a central warehouse , assembles them into usable hospital s ets, and then ships the sets t o designated sites during emergencies. Our suppor t to the FMS program included both program management and operational ser vices. In the area of program management, we were i nstrumental in d eveloping and evaluating t he initial FMS prototype , drafting the original requirements document a nd concept o f o perations, improving i nventor y m anagement processes, facilitating m anagement o f FMS supply chain par tners, proposing and implementing an F MS cache storage and distribution regionalization strateg y, and developing processes for returning a nd reclaiming u nused or u nopened material following emergencies.

Many of our operational ser vices have focused on preparing for and responding to national emergencies. We have managed m aterial deployments from w arehouses as well as led deployments of FMS teams to set up temporar y hospitals in response to national emergencies. We a lso par ticipated in multiple exercises a nd national special security events, such as the 2009 p residential inauguration. We are continuing t o provide subject matter exper tise to CDCâ&#x20AC;&#x2122;s crisis action and deliberate planning effor ts. The FMS program was recently selected for the 2009 COTPER (Coordinating Office for Terrorism Preparedness and Emergency Response) Honor Award. That award recognizes the contributions of an individual staff m ember o r team whose work has s ignificantly i mproved a work process or has i ncreased efficiency o r productivity with a direct impact o n a dvancing COTPE Râ&#x20AC;&#x2122;s vision, mission, o r goals.

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ENHANCING THE PERFORMANCE OF AMTRAK’S SUPPLY CHAIN With a significant increase in ridership and revenue , a nd a n influx o f f unding a s a result of the American Recover y and Reinvestment Act, Amtrak is positioned to i nvest significantly in a cquisitions to make long-needed i mprovements to i ts c apital assets and infrastructure . Amtrak’s l ogistics organization will have a c rucial role in managing the requirements for and procurement of those goods and ser vices, while ensuring t hat p roper controls are in place to m eet regulator y mandates. To help execute that role , the chief l ogistics o fficer requested our assistance with identifying best practices t hat would improve Amtrak’s supply chain performance in suppor t of the enterprise’s business goals. We began by assessing Amtrak’s business practices a nd policies. We t hen c ompared its procurement organization with industr y benchmarks t o identify oppor tunities for i mp rovement, including a set of best practices applicable t o Amtrak’s operational m odel a s an asset-intensive ser vice provider. Our recommendations for i mprovement i ncluded t aking a two-pronged approach to upgrade the effectiveness a nd efficiency of Amtrak’s logistics business p ractices. In the near term, we recommen ded t hat Amtrak adopt best practices to manage day-to-day procurement activities, lowering t he a ssociated costs a nd improving responsiveness. In the longer term, A mtrak’s l ogistics organization should transition t o a m ore strategic approach to p rocurement and s upply mana gement. We f ur ther recommended t hat Amtrak streamline its procurement organization by eliminating t he use of purchase o rders as much a s possible , reduce the number of s uppliers to lower a dministrative costs and establish stronger relationships, employ an evaluation process that emphasizes best value rather than price , and a dopt an organizational construct that integrates t he p rocesses of establishing requirements, p lanning, sourcing, contracting, and administration.

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DEVELOPING AN ARMY INTEGRATED LOGISTICS STRATEGY The Headquar ters, Depar tment of the Army, G-4, continues to develop and integrate a logistics strateg y that can sustain the Army under the stressful conditions of prolonged conflict and the ongoing transformation of both the operational Army and the associated business processes that suppor t it. For the past several years, we have been providing analytic suppor t to the Army G-4 to develop, execute , and communicate this strateg y through campaign objectives that will rebalance the Armyâ&#x20AC;&#x2122;s logistics framework within a joint, interagency, and multinational environment.

Our suppor t i ncluded developing t he Logistics annex t o the Army C ampaign Plan a nd f acilitating a governance s tructure that d irects the execution of t he tasks included i n that a nnex. We also provided analytic suppor t to logistics governance forums that enabled the Army logistics community to quantify and prioritize myriad l ogistics infrastructure improvement projects, leading to a more c ompelling justification for major c onstruction funding. We fur ther helped craft the logistics message for A rmy strategic planning documents, such a s the Army Posture Statement, A rmy Campaign Plan, and Army Modernization Strateg y. This coherent message allowed the Army G-4 to present a cogent argument for the resources required to suppor t reset, responsible d rawdown, logistics modernization, a nd sustainment p rograms.

We recently p rovided analytic s uppor t t o a n ew G -4 initiative t hat aided in identifying top equipment shor tfalls affecting readiness, determining the root cause for the shor tages, a nd recommending resolution s trategies. We also mapped the Armyâ&#x20AC;&#x2122;s retrograde p rocess, identified critical gaps i n asset visibility throughout t he retrograde f low, and worked w ith key stakeholders to develop a plan to mitigate those information gaps. This plan is now being tested by the U.S. Central Command.

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C O R P O R AT E GOVERNANCE

Back Row: Joseph E. Ka s p u t y s ; Jo n a t h a n B . Pe r l i n ; Pa t r i c i a M c G i n n i s ; Ke n n e t h J . Kr i e g ; Da n i e l P. B u r n h a m ; R o b e r t F. Ra ggio; Joseph S. Nye J r.; a nd S t eve n Ke l m a n . Front Row: Douglas K. B e re u t e r ; M i c h a e l A . Da n i e l s ; Ne l s o n M. Fo rd , Pre s i d e n t an d C h i e f E xe c u t i ve O f f i c e r ; W i l l i a m S. Norman, Chairman of the Board ; A l i c e C . M a ro n i ; a n d R o b e r t T. D a i l .

O 22

ur Board of Trustees had several changes in 2009. Nelson M. Ford, former U n d e r S ecretar y o f t he Army, joined t h e B oard upon his appointment as L M I â&#x20AC;&#x2122;s President a nd Chief Executive O f f i c er in Januar y 2009. Rober t T. D a i l , former Director of the Defense L o g i s t ics A gency, and S teven Kelman, We a t herhead Professor of Public M a n a gement a t H ar vard University, a l s o j oined the Board in 2009.

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Two members retired in 2009 aft er several years of ser vice: Joseph E. Kasputys, a member of the Board since 1999 and Chair of the Audit and Finance Committee , and Joseph S. Nye Jr., a member since 1997 and former Chair of the Human Resources and Compensation Committee . Their guidance and counsel will be sorely missed.

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MEMBERS OF THE BOARD • William S. Norman, Chairman of the Board and Chair of the Executive Committee . Former President and Chief Executive Officer of t he Travel Industr y Association o f America, a lso former Executive V ice President of Amtrak. • Doug las K. Bereuter. President of the Asia Foundation, former 13-term U.S. Representative from Nebraska. • Daniel P. Burnham, Chair of the Human Resources and C ompensation Committee . Former Chairman and Chief Executive Officer of Raytheon Company, also former Vice C hairman a nd member of the Board of Directors o f AlliedSignal, I nc . • Rober t T. Dail. Former Director o f the Defense Logistics Agency; also former Deputy Commander, U.S. Transpor tation Command. • Michael A . Daniels, Chair of the Audit a nd Finance C ommittee . Former Chairman o f N etwork Solutions, also former Chairman and C hief Executive Officer of Mobile365. • Nelson M. Ford, President and C hief Executive Officer. Former Under Secretar y of the Army, also former Assistant Secretar y of the Army for Financial Management and Comptroller. • Joseph E. Kasputys. Chairman, IHS G lobal Insight; former President a nd C hief E xecutive Officer of P rimark Corporation. • Steven Kelman. Weatherhead P rofessor o f Public Management a t the John F. Kennedy School of Government, Har vard U niversity; former Administrator of the Office of Federal Procurement Policy in the Office of Management and Budget. • Kenneth J . K rieg. Founder of Samford Global S trategies; former U nder Secretar y of Defense for Acquisition, Technolog y a nd L ogistics. • Alice C . Maroni. Chief Financial Officer of t he Smithsonian Institution, former Principal Depu ty Under Secretar y of D efense (Comptroller). • Patricia McGinnis, Chair of the B oard G overnance a nd N ominating C ommittee . Former President and Chief Executive Officer of t he C ouncil for Excellence in G overnment, also cofounder and former Principal of the FBR Group. • Joseph S. Nye Jr. Former Dean a nd D on K. Price Professor of Public Policy at the John F. Kennedy School of Government, H ar vard University; a lso former Assistant S ecretar y o f Defense for International Security Affairs. • Jonathan B. Perlin. Chief Medical Officer and President, Clinical Ser vices for HC A; former Under Secretar y for Health, Depar tment o f Ve terans Affairs.

• Rober t F. Raggio. Executive Vice President o f D ayton Aerospace; former Commander, U.S. Air Force Aeronautical Systems Ce nter.

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MANAGEMENT

Back Row: Jeffer y P. Be n n e t t , Se n i o r V i c e Pre s i d e n t , Lo g i s t i c s M a n a g e m e n t ; W i l l i a m B . M o o re , E xe c u t i ve V i c e P re s i d e n t , Infrastructure Managem e n t ; M a n i k K . R a t h , S e n i o r V i c e P re s i d e n t , G e n e r a l C o u n s e l , a n d C o r p o r a t e S e c re t a r y ; and Anthony J . Provenz a n o, S e n i o r V i c e P re s i d e n t , C h i ef F i n a n c i a l O f f i c e r, a n d Tre a s u re r. Front Row: Nelson M. Ford, President and Chief Executive Officer, and Donna D. Bennett, Senior Vice President, Resource Management.

CORPORATE OFFICERS

MANAGEMENT TEAM

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David R. G a l l ay

S t eve n J . S t o n e

Jo h n B . H a n d y

Te resa L. Smetzer

Sue E. Tard i f

R ay m o n d A . S c h a i b l e

J a m e s A . We i s s

Pe t er J. Thede

Eric L. Ge n t s c h

W i l l i a m R. L e dd e r

D e n n i s J . Wi g h t m a n

D avid P. Keller

Thomas P. H a rd c a s t l e

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Shahab Hasan

W i l h e l m A . H a n s e n Jr.

Jo s eph M. Zurlo

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C A PA B I L I T I E S LMIâ&#x20AC;&#x2122;S CORPORATE OFFICERS GUIDE AND DIRECT ALL OF OUR ACTIVITIES. WE PROVIDE O UR CONSULTING S ERVICES THROUGH THREE OPERATING UNITS: INFRASTRUCTURE MANAGEMENT, L OGISTICS MANAGEMENT, AND RESOURCE MANAGEMENT. THIS SECTION HIGHLIGHTS THE GENERAL STRUCTURE AND C APABILITIES OF THOSE UNITS. INFRASTRUCTURE MANAGEMENT Our Infrastructure Management operating unit consists of five program groups. Infrast ructure and Engineering Management, David R. Gallay, Vice President. Areas of focus include facilities management, c onstruction project m anagement, e ngineering e conomics a nd cost en gineering, i nfrastructure outsourcing a nd privatization, federal installation management, and militar y base operating suppor t. Energy and Environment, Steven J. Stone , Program Director. Areas of focus include energ y program planning and management, c limate change a nd sustainability, g reenhouse gas management and repor ting, chem ical and biological p rogram suppor t, environmental and safety management systems, militar y preventive medicine , and o ccupational h ealth and safety planning and ma nagement. Health Systems Management, John B . Handy, Program Director. Areas of focus include medical logistics planning and suppor t, public health emergency p lanning a nd response , agricultural emergency planning and response , healthcare deliver y ser vices contracting, wounded warrior s uppor t p rograms, a nd healthcare m anagement. Intelligence Programs , Teresa L. Smetzer, Program Director. Areas of focus include intelligence capabilities w ithin national security o rganizations, use o f Government 2 .0 social software in the Intelligence Community, tradecraft and a nalytic methods, t raining in c ore Intelligence Community functions, and intelligence p rogram a nd p olicy a dvice . Organizational Improvement, Sue E. Tardif, Program Director. Areas of focus include strategic business and h uman c apital planning, emergency preparedness, b usiness continuity, disaster recover y, organizational d esign and assessment, communications and change management, a nd compensation. LOGISTICS MANAGEMENT Our Logistics Management operating unit consists of seven program groups.

Operational Logistics , Raymond A. Schaible , Vice President. Areas of focus include force projection and distribution policy, strategic m obility p rograms a nd s tudies, l ogistics advanced technologies, logistics concept of operations, weapon s ystem logistics, casualty estimation, multinational and coalition logistics, defense expor t a nd cooperation p olicy, d efense strateg y and p olicy, and capacity development.

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Combatant Logistics , James A. Weiss , Program Director. Areas of focus include combatant command j oint operational planning, contingency contracting policy and procedures, Army a nd Marine Corps doctrine development, Army prepositioning program, Army force g eneration, logistics war-gaming, and logistics m odeling a nd s imulation. Strategic Logistics , Peter J. T hede , Program Director. Areas of focus include logistics strategic planning, l ogistics transformation planning a nd program suppor t, j oint logistics capability por tfolio management, logistics force design a nd development, a nd National Guard and Reser ve equipping and resourcing analysis. Logistics Analysis , Eric L. Gentsch, Program Director. Areas of focus include logistics research and development business case analysis, performance-based logistics design and implementation, life-cycle operations and suppor t cost strategies, and working capital fund management. Logistics Technology, William R. Ledder, Program Director. Areas of focus include distribution and transpor tation business processes, automatic identification technolog y, satellite and other in-transit tracking applications, asset visibility, and logistics information system program suppor t. Maintenance and Readiness Management, Dennis J. Wightman, Program Director. Areas of focus i nclude weapon s ystem and equipment m aintenance , weapon system a nd equipment readiness analysis and repor ting, performance-based logistics, public- a nd private-sector integration, and manufacturing resource planning. Supply Chain Management, David P. Keller, Program Director. Areas of focus include supply chain benchmarking and performance assessment, supply chain p erformance management and metrics, supply chain business c ase a nalysis, distribution a nd inventor y management, inventor y theor y, and modeling of logistics processes. RESOURCE MANAGEMENT Our Resource Management operating unit consists of four program groups. Information Management, Thomas P. Hardcastle , Program Director. Areas of focus include information technolog y program m anagement, independent verification a nd validation, enterprise architecture , c apital planning and investment c ontrol, strategic p lanning a nd business case a nalyses, e arned v alue management, and i nformation a ssurance . Investment and Cost Analysis , Shahab Hasan, Program Director. Areas of focus include technolog y assessment, l ife-cycle cost estimates, cost-benefit a nalysis, business case analysis, systems analysis and analysis of alternatives, a nd methods for estimating system c ost a nd schedule risk. Financial, Acquisition, and Resource Management, Wilhelm A. Hansen Jr., Program Director. Areas of focus include resource m anagement strategies, a cquisition p olicy, contracting, grants management, standardization p olicies a nd procedures, budget formulation and execution, financial management policies, financial system c ompliance , a nd working c apital f und analysis.

Systems Development, Joseph M. Zurlo, Program Director. Areas of focus include life-cycle systems development, systems integration, k nowledge management, c lient hosting s olutions, cloud computing, vir tual data center consulting, information technolog y s ecurity and cybersecurity, sur veys and d ata collection, and economic a nd s tatistical analysis.

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FINANCIAL AND O T H E R D ATA $185.9

$200

$150

$100

$82.7

N o t e : F u n d i n g i s i n $ m i l l i o n.

$50 FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

LMIâ&#x20AC;&#x2122;s funding has grown 125 percent over the past d ecade , in line with our corporate mission to extend o ur suppor t to a broad range of government managers.

FY08

FY09

Other Public Sector $0.7

Other Federal $27.8

LMIâ&#x20AC;&#x2122;s client base now includes vir tually ever y depar tment and agency in the federal government.

Homeland Security $10.1 Civilian Healthcare $21.8

Civilian Intelligence $10.2 Civilian Energy/Environment $14.5 Other National Security $2.7

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Department of Defense $98.0

N o t e : F u n d i ng is in $ million.

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Dayton, OH Aberdeen, MD

Honolulu, HI

Mechanicsburg, PA Baltimore, MD Washington, DC Newport News,VA Petersburg,VA Huntsville, AL Montgomery, AL San Antonio, TX Tampa, FL St. Louis, MO

For the c onvenience of our clients, a nd t o better suppor t t hem, LMI has established offices in more than a dozen locations across the countr y.

Associate 1%

PhD 4%

No Degree 7%

Bachelor’s 24%

With approximately 70 p ercent of LMI’s consulting staff holding a master’s degree or doctorate , we h ave remarkable subject matter depth to complement o ur broad experience .

Master’s 64%

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25%

20%

Our turnover rate of less than 10 percent, one-third less than the i ndustr y average , e nsures that o ur c lients have a stable , secure , and dependable LMI team.

15%

10%

2006

2007

2008

2009

G ove r n m e n t c o n t r a c t o r s i n th e Wa s h i n g t o n , D C , a re a , a s re p o r t e d i n a s u r vey by t h e H u m a n R e s o u rc e A s s o c i a t i o n o f t h e N a t i o n a l C ap i t a l A re a LMI consulting staff

100%

LMIâ&#x20AC;&#x2122;s comm itment to e xcellence and client satisfaction is proven by the high satisfaction scores we receive from our clients. In customer satisfaction sur veys, our clients have continually scored us above 99 percent since 2006. When a ssigning scores, our clients consider LMIâ&#x20AC;&#x2122;s familiarity with and responsiveness to their needs, the technical q uality of our work, the substance and timeliness of deliverables, our o bjectivity, and the overall value of the work.

99%

98%

97%

96%

95%

94%

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FY04

FY05

FY06

FY07

FY08

FY09

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LMI

S AT E L L I T E O F F I C E S :

2 0 0 0 C O R P O R AT E R I D G E M C L E A N , VA 2 2 1 0 2 - 7 8 0 5 703-917-9800 800-213-4817 I N F O R M AT I O N @ L M I . O R G

ASSET MANAGEMENT I N F O R M AT I O N A N D T E C H N O L O G Y LOGISTICS O R G A N I Z AT I O N A L I M P R O V E M E N T RESOURCE MANAGEMENT P O L I C Y A N D P RO G R A M S U P P O RT

I M P ROV I N G GOVERNMENT PERFORMANCE

2 0 0 9 A N N U A L R E P O RT

Complex Problems. Practical Solutions.

LMI.ORG

Complex Problems. Practical Solutions.