LMI 2013 Annual Report

From a Different Angle

2013 Annual Report

Online Content

www.lmi.org/ar2013

Connect with Us PNG Inventory Tool

Innovation

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20 Years with NASA

People

i Cover photo: Matthew Borkoski; photos on pages 2, 27–29, and 31–33: Cade Martin.

ii

Contents 3 4

Letter from the Chairman of the Board Letter from the CEO

Scanning the Horizon for Opportunity 7–9 10–11 12–13

National Aeronautics and Space Administration U.S. Transportation Command Defense Logistics Agency

A Focus on Every Step 15–16 17

Architect of the Capitol

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Interview: Sharing a Commitment to Public Service

20 21

U.S. Army Civilian Workforce Transformation

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Department of Defense

Inspired by Our Clients’ Aspirations

“LMI has done an outstanding job providing

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National Climatic Data Center

Seeing All the Facets

23 24–25

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LMI Research Institute LMI People: Celebrating the Ingenuity of Each Other

us with all aspects of program development, management, and oversight support. I am par-

Always Looking Ahead

ticularly impressed with LMI’s ability to provide

27 28 29 30 31 32 33 34–35 36–37

government the highest value possible with a combination of full-time, onsite subject matter experts and strong reach back capabilities.”

Loren Flossman Director of Border Patrol Facilities and Tactical Infrastructure U.S. Customs and Border Protection

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Board of Directors Officers Sector Leadership LMI Consulting Services Infrastructure Management Logistics Management Resource Management LMI by the Numbers LMI Locations 1

Pictured left, at the construction site for LMI’s new corporate headquarters: Nelson Ford, President and CEO Pictured right: Mike Daniels, Chairman of the Board of Directors 2

Letter from the Chairman of the Board LMI’s solid financial performance in 2013 leaves no doubt that the fundamental qualities of our company—our capacity for taking the long view, our ability to get the details right, and, always, the work ethic and impeccable execution of our employees—are the reasons we continue to succeed despite a tough and turbulent market. These same qualities that allow us to serve our clients so well (as evidenced by our significant repeat business and excellent client satisfaction ratings) also translate into impressive organizational performance for LMI. We don’t intend to lose our momentum. LMI is always moving forward, guided by top talent at all levels. To that end, we were happy to welcome retired U.S. Army General Ann Dunwoody to the LMI Board of Directors in FY13.

General Dunwoody came to LMI after a distinguished 37-year Army career, which culminated in her becoming the first woman in U.S. military history to achieve a four-star officer rank. LMI also welcomed Chief Financial Officer, Lori Becker, who has provided solid leadership to numerous corporations, including serving as chief financial officer at Deltek where she completed “go private” and recapitalization transactions.

“A company on the move” took on quite a literal meaning for us in FY13. We spent the year preparing to move our headquarters to our new “Tysons Overlook” building, which currently is being built (see the cover of this report and page 5). We view the new building as more than just a new physical space for us. When our existing lease approached the end of its term, we decided to shape our future from the ground up by building a space that fully supports the evolving needs of our people and clients at a lower cost.

Moreover, we know our new space will enable us to capitalize on how we develop and integrate services to position our clients to meet current and future missions. Working with Gensler, a world-class architecture firm, we have designed every aspect of our new headquarters to enhance the work we do. Reconfigurable working spaces will increase flexibility for project teams and encourage collaboration, especially with our clients. State-of-the-art meeting facilities and abundant natural light will inspire innovation.

The building itself reflects LMI’s commitment to an environmentally aware approach. Our new location in Tysons Corner provides much easier access to metrorail and into Washington, DC, while allowing us to maintain our roots in the community we have valued for decades. The design meets the Leadership in Energy and Environmental Design (LEED) rating system’s CS-Gold level standards for new construction and will bring many benefits to LMI in terms of health, safety, and efficiency. Most of all, in attaining this certification, we hope to mirror and be a model for the sustainability efforts of our clients.

Looking forward, LMI will remain true to what has brought us success all along: a sharp focus on providing practical, efficient solutions to our clients. We keep pushing forward, striving for continued success. I am confident we will keep meeting the challenges in our marketplace head-on and that LMI will emerge strong, sustainable, and always, committed to the idea that helping government work better is something worth doing.

Michael Daniels Chairman of the Board of Directors 3

Letter from the CEO 2013 was, quite simply, LMI’s best year ever.

We continue to grow, with over $230 million in revenues, a 10 percent increase over FY12, and maintain a strong balance sheet. And, while the government consulting market is experiencing challenging times, we are seeing new opportunities that allow us to continue to serve our clients and expand.

LMI’s success is due to our unwavering commitment to improve the management of government and our passion for providing practical solutions to our clients’ complex problems. In 2013, we extended relationships with longstanding clients and developed new business with others. We renewed key contracts to provide advanced analytics to the Intelligence Community and supply chain management to the Department of Defense. We also won significant new tasks, for instance supporting Centers for Medicare & Medicaid Services’ efforts to implement new health insurance marketplaces.

Our aim is to prepare government to respond more nimbly to future exigencies. For example, we are helping the U.S. Transportation Command prepare for future deployments in low-access areas (pages 10–11). And we are growing our international presence, drawing on our capabilities (page 19). We remain committed to research that has bottom-line relevance to government managers. Our work for the Defense Logistics Agency sparked the development of our inventory control suite, Peak NextGen (PNG), and shows how the LMI Research Institute makes a real impact (pages 12, 13, and 23).

As always, our marketplace success arises from the extraordinary relationships that our employees forge with our clients, and we give much care to supporting our employees in all facets of their lives. For example, in 2013, we asked employees to go the extra mile and improve their physical fitness. More than 200 employees took up the challenge, cumulatively walking over 366 million steps. This same spirit was evident during our annual LMIQ, a “trivial pursuit” event where we competed fiercely for cash prizes that go to our favorite charities—who said “nerds” aren’t competitive?

We keep developing our minds and our talents, too. LMI spent more than $830,000 on tuition assistance and certifications last year for about 15 percent of our staff, and we launched “Pathways,” a 2-year program to develop leadership skills for high-potential junior professionals. Our Wounded Warriors Fellowship provides a path to private-sector careers through a thoughtful program of education, mentorship, and support, and our very first participant in the initiative is now a full-time employee, developing software to support public-sector clients in our San Antonio office.

All of these investments exemplify LMI’s commitment to helping our employees deliver exceptional service to our clients. We recognize the best opportunities are realized only when LMI people embody our mission to improve the management of government. We believe our future is bright. While 2013 was an exceptional year, we know that we have not yet reached the pinnacle—and we keep raising our sights.

Nelson Ford President and CEO 4

Architectural rendering of new corporate headquarters, scheduled to open in 2015.

VIDEO: Find out more about LMI’s approach to public purpose partnerships at www.lmi.org/ar2013 .

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Scanning the Horizon for Opportunity

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National Aeronautics and Space Administration “Within the next two decades we must advance aircraft and system efficiency to allow more people to utilize air travel— while reducing aviation’s environmental impact. As NASA’s lead organization for aeronautics research, the Aeronautics Research Mission Directorate has relied on LMI for R&D support over a period of 20 years.”

Dr. Jaiwon Shin Associate Administrator for the Aeronautics Research Mission Directorate, NASA

$1 TRILLION

AVIATION’S CONTRIBUTION TO U.S. GDP (>5%)

880 BILLION FORECASTED AIRLINE PASSENGERS BY 2020

15 MILLION COMMERCIAL AIRLINE OPERATIONS MANAGED

BY U.S. AIRPORTS BY 2020

DATA SOURCE: FAA

What first may come to mind when thinking about the National Aeronautics and Space Administration (NASA) is the agency’s mighty accomplishments in space. But NASA also plays a crucial role in creating a safer, more efficient, and environmentally friendly air transportation system (ATS). Its stakeholders include airlines, cargo carriers, the Federal Aviation Administration (FAA), and millions of people who fly every day.

Specifically, NASA is looking to advance ATS performance—for example, increasing the number of aircraft that can safely move through airspace and using better weather information to minimize delays—through new policies and technology.

It is a tricky challenge. Traditionally, NASA has tried to improve ATS using a systems-oriented approach to develop solutions to problems. But the complexity of ATS—literally systems within

systems—muddies the picture of how FAA policies and incentives should influence NASA’s technology research and design. Moreover, the large number of stakeholders that interact with ATS makes it hard to predict the impact of new incentives, mandates, and technology.

NASA asked LMI to find a new approach: one that acknowledges that the challenge in instituting change often lies less in the policy or technology itself, but more in how stakeholders respond to it. LMI worked with NASA to develop a new research tool that models stakeholder reactions to new policies and technology.

The modeling tool simulates the decisions and actions of the diverse, independent entities, or agents, within ATS. Agents follow predefined and often simplified rules that emulate the behaviors of their real-world counterparts, such as airlines or passengers.

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NASA continued By modeling simple behaviors at the agent level, the tool reveals how ATS as a whole is affected as agents interact with each other, particularly as technology and policy changes are introduced into the system.

Notably, the tool allows more complex modeling for the entities that drive ATS’ overarching system—the airlines—by using adaptive agents. For instance, the airline agents’ strategic and tactical behavior may change

through shifts in airfare pricing and scheduling.

NASA now uses the model to understand how airlines interrelate with current and even future stakeholders (such as operators of unmanned aircraft systems). Accounting for factors such as market demand, competition, and operational constraints, NASA can test how various policy and technology scenarios affect the entire ATS.

This shift in approach gives NASA better insight into how its technology research and development will be incorporated into ATS, guides policy and incentive formation to balance system performance with stakeholder perspectives, and reduces risks and uncertainties. Ultimately, it provides insight on how to motivate desirable behavior among all ATS stakeholders to achieve a more efficient, robust, and safer ATS.

8 BWI Marshall Airport / Greg Pease

LMI and NASA Aeronautics: 20 Years and Counting...

Over the past 20 years, LMI has provided steadfast support to all of NASA’s aeronautics research centers and programs. Our infographic shows the key projects we have supported over this timespan. We have offered all of our analysis capabilities— which include performance, economic, safety, and environmental impact—to align with NASA’s changing requirements and help it accomplish its goals.

Key Projects AATT: Advanced Air Transportation Technologies AILS: Airborne Information for Lateral Spacing ASAC: Aviation System Analysis Capability CTD: Concepts and Technology Development DAG-TM: Distributed Air/Ground Traffic Management

JPDO: Joint Planning and Development Office NextGen: Next Generation Air Transportation System SAA: Strategy, Architectures, and Analysis SAIE: Systems Analysis, Integration, and Evaluation TAP: Terminal Area Productivity

TAP, AILS & Synthetic Vision

2014

ASAC Concept, Models & Studies AATT & DAG-TM 3 Pillar Goals JPDO

201 3

20 12

NextGen Airspace, Airportal, CTD & SAIE HQ Program Mgmt. Support

19 90

20

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NASA Research Announcements SAA

20 0

96 19

20 05

1994 5 199

2007 20 06

1993

2008

1992

9 200

199 1

10 20 4

03 20

2 200

2001 2000

1999

199 8

1 9 97

VIDEO: Hear from Shahab Hasan as he explains how LMI helps NASA evaluate new technologies at www.lmi.org/ar2013 .

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U.S. Transportation Command Every year, the United States Transportation Command (USTRANSCOM) takes a hard look at how to develop its future deployment capabilities. With resources always limited, USTRANSCOM seeks the best investment opportunities for improving its ability to rapidly and effectively deploy to and operate within austere locations. The tool USTRANSCOM uses is a Future Deployment and Distribution Assessment (FDDA), and for the past 3 years, USTRANSCOM has asked LMI to conduct it.

The first year of our involvement (FDDA I), LMI collaborated with the science community and business sector to assess potential airlift and sealift platforms that enable joint and service concepts. For FDDA II, LMI delivered insights on USTRANSCOM’s deployment capabilities in contested environments.

This past year on FDDA III, our efforts focused on seabasing—how joint forces generate and project combat power from the sea. Seabasing employs a variety of platforms at sea to allow joint force commanders to operate without relying on infrastructure ashore.

We identified USTRANSCOM’s seabasing needs for the next quarter century and offered a frank assessment of current Army, Navy, Marine Corps, and joint efforts to achieve operating capabilities. We asked the question, “How can future seabasing capabilities support and sustain forces in anti-access or area-denial situations?”

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We explored possible platforms, connectors, and enablers that could operate on the water or over the beach to provide the military access to remote or denied areas. We assessed solutions singly and in combination against critical measures of effectiveness. By repeatedly rating and ranking them, we were able to find solutions offering the most value for deployment and distribution. Joint logistics-over-the-shore (JLOTS) operations were of particular interest to FDDA principals and stakeholders. Our report on common platforms for joint seabasing and JLOTS included an assessment of progress over the past decade and a detailed comparison of current and future joint seabasing and JLOTS capabilities.

USTRANSCOM and its partners may now leverage these insights and solutions to steer and validate R&D investment decisions for issues that move beyond budget years. Recognizing LMI’s expertise and versatility, USTRANSCOM has already asked us to tackle the commander’s top focus area in next year’s FDDA study—synchronizing global distribution.

“Future challenges will demand transformational new capabilities to ensure that ready forces can move the last tactical mile, even in harsh environments.”

Association of the United States Army Torchbearer National Security Report, July 2013

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Defense Logistics Agency Even the best commercial inventory control software cannot help organizations manage items with extreme demand volatility. The Defense Logistics Agency (DLA), America’s combat logistics agency, faces high stakes if it fails to meet customer needs. While DLA does not want inventory sitting idle, it cannot afford to have mission-critical items out of stock.

Certain items within DLA’s inventory, such as spare parts, are impossible to predict, due to DLA’s highly dynamic operating environment. In the face of budget and inventory reductions, DLA asked LMI to find a better way to manage these items. Our approach needed to deliver excellent customer service without driving up inventory.

We first looked to clearly define DLA’s problem. We wanted to know why performing the basics of inventory control—getting the right quantity, at the right time, at the right location— was so difficult for items with highly variable demand.

We found that some of DLA’s items are needed infrequently and sporadically. Demand for these items may come months or even 2, 3, or 4 years apart. The best forecast on most of these items is zero. However, since many of these types of items are critical to warfighting,

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DLA must have some stock. The question is how much?

For other items, the demand may be frequent, but still highly variable. For example, some months 5 units may be needed; other months, 500 may be needed. Commercial forecasting and planning software, however sophisticated, can have errors as large as 100–200 percent for these items, and statistical safety stock math does not fit the data. The result is bad business outcomes.

When we looked to the demand side of DLA’s market, we found customers have difficulty when attempting to accurately predict when they need spares, due to a highly uncertain operating environment. Nor could we find opportunity to shrink lead-time with suppliers. Many of DLA’s spare items have long leadtimes of

months or even years. DLA’s inability to predict demand for some items had created a situation where DLA’s suppliers could not adequately respond without losing profit. LMI realized just-in-time delivery was not an option, because of these supply-side factors.

From all our analysis, we determined that the real problem for DLA is controlling inventory without forecasting.

A Shift to Risk Management We decided to develop a radically new way of quantifying the risks of inventory management—such as the risk of not satisfying the customer and the risk of holding too much inventory. Our new mathematical approach weighs different kinds of risks to drive highly accurate decision-making without the need for forecasting.

We developed an inventory control suite, Peak NextGen (PNG), which uses new algorithms to provide superior inventory control. With PNG, significant savings accrue over time as more and more unnecessary purchases are avoided.

Note: The project highlighted in this story was sponsored by the Defense Supply Center Philadelphia, Philadelphia, PA, and the Defense Logistics Agency, Fort Belvoir, VA.

PNG performs simulations using client data to create optimal decision curves.

These curves enable decision makers to make tradeoffs across inventory, wait time, and workload—rapidly, and based on their own organizational goals (see graph).

Initial Results Results show Peak reduces inventory costs by 30 percent compared to the competition, with no negative impact on customer service. Peak also increases fill rates from 70 percent to 90–95 percent, without increasing inventory value. Meanwhile, in a test simulation with 85,000 items, NextGen reduced wait time by 20 percent without increasing inventory. It also reduced inventory costs by $1 billion while maintaining customer service.

Each curve shows tradeoffs between inventory and wait time for a given workload.

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Customer Wait Time (Days)

For sporadic demand, “normal” means no demand. So we sought cost-effective protection against the “risk” of demand levels that might occur. We developed inventory control algorithms, Peak Policy, that balance protection against demand spikes with affordability. Far more data about what drives frequent, but highly variable demand exist, such as the time between orders and order size.

We developed the Next Generation Inventory Model, NextGen, which uses mathematical algorithms based directly on these data.

PNG enables decisions to trade off inventory, customer service, and buyer workload to fit business objectives.

Baseline

14 13 12

13% inventory $ reduction 9% wait time reduction 32% workload reduction

Buyer Workload

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19.2k PR/yr (-64%) 21.4k PR/yr (-60%) 23.6k PR/yr (-56%) 28.0k PR/yr (-48%) 36.8k PR/yr (-32%) 54.3k PR/yr (1%) 53.8k PR/yr (baseline)

10 9 8 360

370

380

390

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5% inventory $ reduction 22% wait time reduction 48% workload reduction

On-Hand Inventory Value ($M)

DLA’s Office of Operations Research and Resource Analysis independently tested PNG against more than 25 world-class forecasting methods.

The other solutions overreacted for items with volatile demand, causing DLA to either buy too much or too little.

Since deploying PNG, DLA’s key business metrics are moving in the right direction, a first for items with highly variable demand (see sidebar).

Purchasing recommendations are down by 30 percent, which means procurement managers have more time to analyze more technical requests. Most important, DLA is enabling the military to perform its mission effectively using fewer taxpayer dollars.

PEAK

MATERIAL AVAILABILITY IMPROVED 6 POINTS UNFILLED ORDERS DECREASED

10,000

NextGen

MATERIAL AVAILABILITY IMPROVED 2.5 POINTS UNFILLED ORDERS DECREASED

9,000

INVENTORY REDUCED

14%

VIDEO: Learn more about how PNG helps clients make the right inventory decisions at www.lmi.org/ar2013 .

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A Focus on Every Step

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National Climatic Data Center “NCDC’s data may be classified as ‘big’ in every sense of the term—high volume, high velocity, and high variety. Most important, however, it’s high value.”

1,000, 000,000, 000,000 OR 1015 = 1 PETABYTE

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AMOUNT OF DATA IN NCDC’S ARCHIVE

5.315

AMOUNT OF DATA DOWNLOADED BY NCDC’S CUSTOMERS IN FY13 DATA SOURCE: NCDC

The National Oceanic and Atmospheric Administration’s (NOAA’s) National Climatic Data Center (NCDC) stores all of NOAA’s weather and climate data and monitors and reports on the Earth’s climate as it varies and changes over time.

At over 13 petabytes (roughly the amount of information encoded on more than 160 years’ worth of nonstop HD-TV), NCDC has the largest climate data archive in the world—with records ranging from centuries to minutes old.

Certainly, NCDC’s data may be classified as “big” in every sense of the term—high volume, high velocity, and high variety. Most important, however, it’s high value—an indispensable source of information. Governments, businesses, and communities use NCDC data to make decisions that affect our daily lives.

If data is NCDC’s core, then accuracy is its mandate. LMI understands the criticality of getting the details right, and we take great pride in helping NCDC deliver top performance. Our relationship has many facets—from formulating high-level strategy to management of budgets—but always it is distinguished by a deep appreciation for NCDC’s mission and keeping what matters to NCDC front and center.

For example, public law requires regular production of a national climate assessment report, a massive scientific and technical undertaking that draws heavily on NCDC data. As a highly influential scientific document, the report necessitates extreme care with every fact and figure. NCDC has trusted LMI in the production of this critical report, and LMI takes this trust to heart. We have worked side by side with our federal and academic colleagues to bolster the report with highly detailed figures and to ensure all references, which can soar into the thousands, are accurate and traceable.

From a strategic standpoint, NCDC engaged LMI in its planning process as a trusted advisor. When NCDC wanted a fresh perspective on its 5-year strategic vision, we stepped in and helped leadership define the top priorities for the future of the center.

LMI has also been providing senior program management support for NCDC’s Climate Data Records Program, which 15

NCDC continued stitches together enormous data sets from satellites and other sources. The goal is to provide a long-term, scientifically sound record of key climate variables that can be used to inform climate-relevant decisions. We offer NCDC robust program management assistance as well as strategic guidance on managing risk and improving performance—all underscored by our in-depth understanding of the scientific aspects of the program.

From an operations standpoint, LMI helps NCDC continuously improve processes and communications. We developed an automated system to facilitate the management of actions between NCDC leadership and the rest of the organization, and a daily operations monitor for greater transparency.

We also played a key role in the redesign of NCDC’s website. As part of this effort, we helped implement a content management system that supports the management of site information and we developed business practices for NOAA to manage the site.

By first seeking to understand, then committing ourselves to our client’s priorities, we are building a trusted relationship with NCDC—one focused on improving NCDC’s ability to preserve and provide the information that shapes our planet’s future.

16 ©Sterling Elmendorf

Architect of the Capitol The Architect of the Capitol (AOC) manages 286 acres of property that include the United States Capitol, the U.S. Supreme Court, the Library of Congress, and the U.S. Botanic Garden.

Historic structures, monuments, and artifacts sit within a landscape of impeccably groomed lawns.

(PMOT) to meet AOC’s objectives and challenges. PMOT provides managers an integrated approach to real property management so that all actions and resources within a program, from staffing to purchasing inventory, align with strategic goals and performance measures.

Annually, nearly 30,000 occupants and millions of tourists enjoy the splendor that AOC creates. Meeting customer expectations through maintenance and improvement is in itself an immense undertaking. But AOC also must ensure buildings and grounds meet modern sustainability standards.

Working closely with AOC, we evaluated all aspects of Capitol Grounds management: policies, staffing, processes, procedures, and data used to make decisions. On a strategic level, we developed an annual work plan to integrate work management processes, asset inventory criteria, resource requirements, and performance measures. By measuring current AOC capabilities against PMOT standards, we identified ways to improve project management at every step, from planning to operations and maintenance.

Managing real property on this scale requires the ability to handle large, complex projects with thousands of moving pieces. Recently, AOC asked LMI to develop a model plan for better management of the property under its jurisdiction.

We started with AOC’s three main goals: to implement more effective facilities management, to preserve historical and horticultural assets, and to improve leadership and administration.

Once we established AOC’s baseline of operations in these areas, our subject matter experts explored ways AOC could push performance to meet or surpass industry standards.

We adapted LMI’s proprietary Program Management Optimization Tool

From an operational standpoint, we organized management tasks into intuitive groupings across asset categories, such as horticulture, historical structures, infrastructure, and events. We then restructured how AOC manages and controls costs, from the receipt of new work requests to closeout. Finally, we adapted the PMOT to AOC’s existing facilities management system, as well as to handheld devices, to track performance.

“While meeting customer expectations through maintenance and improvement is in itself an immense undertaking, AOC also must ensure its buildings and grounds meet modern standards for sustainability.” and managing all projects and operations from a time, schedule, and performance perspective. LMI has helped AOC define its workload requirements with greater accuracy and establish better baselines for future operations and budgeting. As a result, AOC already is seeing more accurate reporting of labor and other resources, which is allowing it to identify and address areas for improvement. For example, as it upgrades its irrigation systems to prevent storm water pollution, it also is meeting efficiency targets for water consumption.

AOC has been pleased with the results, which have garnered attention. LMI now is replicating its PMOT approach for other governments, both within the United States and internationally, in the Middle East and North Africa.

Capital Grounds managers are now making requirements-based decisions

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Seeing All the Facets

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Interview: Sharing a Commitment to Public Service Roger Ervin, International Sector Vice President, talks about how LMI engages with governments around the world.

Looking to the future, what do government agencies need most to deliver on their missions?

A global movement is afoot, with leaders everywhere trying to discern how government should function in the 21st century. Their issues may differ. For example, developed nations are coping with changes in population size. Many, including the United States, are trying to manage assets in a resource-starved environment. Meanwhile, developing countries are dealing with broader challenges, such as how to establish new types of governments and gain the trust of the people.

But commonalities exist for all nations. Leaders are asking, “How do we collect revenue and manage assets to benefit the public? How do we manage large institutions with limited resources and workforces in flux? This is where LMI comes in.

We have been answering these questions for more than 53 years.

How is LMI uniquely positioned to help agencies improve service delivery?

We have served developed nations, such as Sweden, Japan, and Brazil, with our logistics offerings and developing nations, such as Bangladesh, Burkina Faso, and Pakistan, with our health offerings. Elsewhere, we have helped in peacekeeping missions, financial management, and developing human capital. We are known for reliability, superior service, and a commitment to the public. We work hand in hand with our clients. We put the mission of our clients first, above profit, keeping our clients’ best interest in mind.

How does LMI help government agencies worldwide, strategically and operationally?

We go where the clients are—directly to their sites. We sit with them to gain an understanding of their context, including their position and standing in the organization—an often neglected first step. Then, we apply best practices from other government agencies, as well as the commercial sector. We help leaders understand how to plan, strategically and operationally, and measure performance.

How does LMI go about addressing the diverse needs of agencies from different countries?

We strive to learn the nuances of each agency’s cultural and financial contexts. As we engage with clients, we educate ourselves, acclimate to their environment, and listen. But most of all we try to make ourselves obsolete. We transfer our skills and help clients build internal capacity. In every case, our final goal is a self-sufficient government that can deliver the services its people need and deserve.

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U.S. Army Civilian Workforce Transformation Plans to decrease the size of the U.S. Army to pre-World War II levels will mean heightened reliance on the Army’s civilian workforce. Increasingly, Army leaders at all levels will be looking to its civilians to take on greater responsibilities for maintaining maximum preparedness of the operating force.

To cultivate the needed civilian workforce, the Army must identify, develop, sustain, and readily access the right skills. These include an ever-changing set of technical skills, as well as managerial and leadership skills at both the functional and enterprise levels.

This already considerable challenge is complicated by the fact that some future missions (and needed capabilities) have not even been defined yet.

For example, the recently established U.S. Army Cyber Command requires civilian workers not only to maintain an evolving set of skills, certifications, and competencies, but also to develop the Army’s capability in this area.

For the past 5 years, LMI has been a key player in the Army’s Civilian Workforce Transformation (CWT) Initiative. With the Army’s vision as our starting point, we worked with Army leadership to refine and implement the CWT strategy to create the organizational infrastructure and intellectual capital to ready the civilian workforce for future missions. We closely assessed existing Army career programs

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to identify strengths and gaps. We also created benchmarks for the Army to track the civilian workforce’s development, and systems and processes to make collecting and analyzing career data more efficient.

Our contribution included considerable human capital management support.

For example, we helped define career development plans for 31 newly organized capabilities-based career programs and helped create career maps and develop competency models for nearly 500 occupational series.

To buttress these career programs, LMI helped develop the business rationale for creating and retaining career program managers and program staffs, even in the face of a downturn.

The managers provide workforce planning, competency analysis, and professional development help for each of the career programs. Now, 100 percent of the civilian workforce belong to career programs that provide essential human capital management capabilities (up from 34 percent previously).

LMI also helped implement the Army Senior Enterprise Talent Management (SETM) Program, which provides senior education, professional development, and onthe-job learning opportunities. The civilian workforce has a standard,

centralized program to identify and train high potential employees for enterprise-wide capabilities.

The CWT Initiative not only enables the Army to meet congressional mandates for strategic human capital planning, but also is addressing recruitment and retention issues. Most important, it has created a capabilities-based system enabling individuals to pursue career success in ways that align to the U.S. Army’s goals.

Department of Defense During the past decade, Department of Defense (DoD) spending has more than doubled for contract services, outpacing outlays for major weapon systems. As major service procurements have grown across wide-ranging areas like transportation, logistics, facilities, and communications, so too has the risk associated with DoD not

receiving needed services in a timely manner or potentially paying for more services than necessary.

LMI has helped DoD find smarter ways to manage enterprise-wide spending by developing and disseminating a set of practical tools and training for DoD and its partners to manage the service acquisition process more efficiently— from requirements development to performance assessment.

Given the extent and the variety of DoD’s procurements each year, managing purchases for major services not only is daunting, but also requires in-depth knowledge of how services are used and measured.

Therefore, contracting professionals at DoD rely on partnerships with requiring organizations to define and manage service purchases.

Requiring organizations know the

technical complexities of services, measure performance, and determine whether or not a contractor is fulfilling requirements.

Taking a multipronged approach, we helped to establish policy guidance across the entire DoD enterprise. We are implementing simple, flexible management frameworks to enable leaders from requiring and contracting communities to collaborate and steer “services” programs toward stability and affordability. We established a management structure to guide the development, review, acquisition, and post-award performance management for contracted services. This helps managers ensure programs meet statutory and regulatory requirements for service acquisition. Our tools also provide managers access to reliable information—including accurate, useful spending data—to make smarter decisions about their spending on contracted services.

DoD is leveraging our efforts as it creates a new position—senior manager for services acquisition—and a new Services Acquisition Directorate to champion enterprise-wide excellence.

As the new directorate and acquisition leadership refine service procurement, LMI will continue to offer insight into appropriate utilization, costeffectiveness, and alignment of contracted services to help the world’s mightiest military benefit from smart spending that enables mission success.

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Inspired by Our Clients’ Aspirations

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LMI Research Institute Through internal research and development (R&D) and innovation, the LMI Research Institute addresses emerging and urgent challenges before they become issues for our clients.

Inspired by our clients’ needs and goals, we strive to develop long-lasting tools and methods that not only are effective, but are easy to learn and implement.

R&D Projects In 2013, the Research Institute funded 30 R&D projects across LMI’s core offerings of logistics management, infrastructure management, and resource management. From developing risk-based inventory management (see PNG story, pages 12–13) to using economic models to improve succession planning, to securing data on mobile devices, all of our projects reflected the leading edge of management practice and technology application, as well as the breadth of LMI’s expertise.

Notable projects this past fiscal year include LMI’s Airspace Conflict Analysis Simulation (ACAS), which features a 3D simulation tool to help identify and quantify collision risks between aircraft in flight, and our Analytic Tradecraft Training program, which offers experiential modules for less experienced analysts to learn how to collect robust intelligence quickly and present it effectively.

Distinguished Speakers Series Each year, the Research Institute invites leading subject matter experts to engage LMI employees in dialogue on important R&D topics. In 2013, our focus was big data. Leaders from government and academia joined LMI’s data analytics experts to discuss the management implications of using large sets of unstructured data, as well as advanced data mining and analytics. Our seven speakers hailed from the National Intelligence Council, the Central Intelligence Agency, the Office of the Under Secretary of Defense, and George Mason University.

Launch My Idea (LMI) Weekend Developed to inspire a spirit of innovation across the organization, LMI Weekend is an opportunity for any employee to compete for R&D funding. In 2013, LMI employees pitched 30 projects during LMI Weekend.

Nine projects were peer selected for development, and the winning project, Local Vendor Development Initiative, focused on improving the capacity for U.S. agencies to partner with local vendors in foreign countries by training local vendors to navigate the procurement process.

Academic Partnerships Since 2011, the LMI Research Institute has developed partnerships with universities across the United States to engage in relevant R&D. In 2013,

we partnered with a number of highly regarded universities on projects with implications for public health, sustainability, and national security. For example, through our partnership with the University of Texas at San Antonio, we are collaborating to address some of the nation’s most critical challenges in energy and cyber security.

2013 ACADEMIC PARTNERSHIPS GEORGE MASON UNIVERSITY GEORGE WASHINGTON UNIVERSITY HOWARD UNIVERSITY PENNSYLVANIA STATE UNIVERSITY ROCHESTER INSTITUTE OF TECHNOLOGY SAINT LOUIS UNIVERSITY UNIVERSITY OF MICHIGAN UNIVERSITY OF TEXAS AT SAN ANTONIO VIRGINIA POLYTECHNIC INSTITUTE AND STATE UNIVERSITY VIDEOS: Learn more about Innovation at LMI, including our 3D Airspace Conflict Analysis Simulation at www.lmi.org/ar2013 .

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LMI People: Celebrating the Ingenuity of Each Other At LMI, inspiration comes from all quarters. When we work with our clients, when we work with each other—we take that inspiration and grow it into solutions that bloom.

Rinku Deol Consultant, Healthcare When did a client inspire you?

My clients, who administer Medicare plans, inspire me daily through their strong leadership.

This year, I have been working closely with my LMI team to design a quality control process to enhance the accuracy of all Medicare health plan reviews. The new process will make it easier to identify areas of improvement.

The client really liked the idea but expressed some concern over junior staff conducting complex reviews. I took this to heart, and the following day I proposed a solution that would engage experienced LMI staff earlier in the review process, which promptly eased the client’s worry.

This experience gave me new insight into our client’s priorities—and how much the client values the knowledge, experience, and expertise of LMI staff.

How about a time when you helped inspire a different view for a client?

We help shape our clients’ perspectives daily through analyses and systems support that enlighten and inform them, and help manage their workload. The type of skills and tools we bring has helped our Medicare client operate more efficiently, and has helped us build a strong relationship.

For example, we created a mailbox tool to help our clients provide guidance to health plans as requirements evolve. The tool created significant efficiencies, like cutting response time to industry questions in half and providing our clients a systems-based “warehouse” of questions and answers that inform future guidance. In January of this year, we launched a similar tool for my clients’ sister organization.

To help facilitate acceptance among users—who had never used the tool before—we suggested hands-on meetings. My systems development colleague and I met with staff members individually to address their concerns and demonstrate the tool’s remarkable capabilities. When they saw what the tool could do firsthand, they envisioned results rather than challenges.

Since then, the response time for the new mailbox has dramatically improved, and the team and leadership now enjoy the full benefits of the new business process the mailbox supports.

VIDEO: Find out more about what it is like to work at LMI at www.lmi.org/ar2013 .

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Kerry McCarthy Analyst, Supply Chain Management Group Coordinator of LMI Integration and Networking Connection (LINC) Coach, LMI Softball Team How did you find your way to LMI? My first contact with LMI was with Senior Vice President Jeff Bennett at the University of Pittsburgh’s co-op fair. LMI was my first stop, and I spent half an hour talking with Jeff about the organization. What he told me about LMI’s smaller size and its interesting variety of project work intrigued me. Another classmate and I were part of LMI’s coop program’s first year. That program now has grown to include many top engineering schools, and LMI usually has 10 to 15 co-ops at a time.

Much of my initial work related to industrial engineering and operations research.

I handled tasks with NATO, such as developing business processes for logistics. I also analyzed the cost of corrosion and helped design animal disease outbreak exercises for the U.S. Department of Agriculture. I had a great time and great mentors at LMI, and chose to stay. For me, the opportunities and mentorship have remained just as strong ever since.

What does LMI gain from its co-ops?

Including co-ops on my tasks has ensured that new ideas are brought forward to help solve the government’s most complex problems. Co-ops are always eager to help and giving them the opportunity to do so has really paid off. Another thing LMI can learn from co-ops is clear communication. When you try to explain a complex topic to a co-op, you realize how important clear and understandable communication is.

Tell us about LINC. LMI is full of interesting people who do great things inside and outside of work, and LINC is a group that promotes LMI employees getting to know each other and sharing great ideas. For example, LINC hosted the LMI Impact Talks, which were modeled after the TED Talks. We brought together folks from all across LMI to participate in a series of 10-minute talks—from helping K–12 students gain computer literacy to managing hurricane shelters. We learned about new ideas and projects and started a lot of internal conversation about how we could apply the new knowledge to help our own clients.

What insights can you offer to new employees?

Get to know everyone around you and work on a variety of projects to build your skill set. LMI is full of talented people who are willing to help others grow personally and professionally if you ask them. Utilize LINC to network and get involved outside of work.

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Always Looking Ahead

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Back row: David McCurdy, Robert Raggio, Kenneth Krieg, Michael Daniels, Nelson Ford, Steven Kelman, Robert Dail, and Ann Dunwoody.

Front row: Patricia McGinnis, Jonathan Perlin, and James Sweetnam.

Board of Directors Michael Daniels

Chairman of the Board

Chair of the Executive Committee Former Chairman of Network Solutions Former Chairman and CEO of Mobile365 Former Chairman of the Northern Virginia Technology Council Former Senior Vice President of SAIC

Nelson Ford President and Chief Executive Officer

Former Under Secretary of the Army Former Assistant Secretary of the Army for Financial Management and Comptroller Former Principal Deputy Assistant Secretary of the Army for Financial Management and Comptroller Former Deputy Assistant Secretary for Health Budgets and Financial Policy in the Department of Defense

Robert Dail President of Supreme Group, USA Former Director of the Defense Logistics Agency Former Deputy Commander, USTRANSCOM

Ann Dunwoody President, First 2 Four Former Commanding General of Army Materiel Command

Steven Kelman

Jonathan Perlin

Weatherhead Professor of Public Management at Harvard University’s John F. Kennedy School of Government Former Administrator of the Office of Federal Procurement Policy in the Office of Management and Budget

Chair of the Human Resources and Compensation Committee President, Clinical and Physician Services Group Chief Medical Officer, Hospital Corporation of America Former Under Secretary for Health in the Department of Veterans Affairs

Kenneth Krieg Chair of the Audit and Finance Committee Founder and Head of Samford Global Strategies Former Under Secretary of Defense for Acquisition, Technology, and Logistics

David McCurdy President and CEO of the American Gas Association Former President of the Alliance of Automobile Manufacturers Former U.S. Representative from Oklahoma

Patricia McGinnis Chair of the Governance and Nominating Committee Distinguished Professor of Practice at George Washington University’s Trachtenberg School of Public Policy and Public Administration Former President and CEO of the Council for Excellence in Government

Robert Raggio Executive Vice President of Dayton Aerospace Former Commander, U.S. Aeronautical Systems Center

James Sweetnam Independent Director of Lubrizol Corporation Former President and CEO of Dana Holding Corporation Former CEO of the Truck Group at Eaton Corporation

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Officers

Back row: Lori Becker, Senior Vice President, CFO, and Treasurer; Jeffery Bennett, Senior Vice President of Logistics Management; Nelson Ford, President and Chief Executive Officer; and Catherine Nelson, Senior Vice President of Resource Management.

Front row: Manik Rath, Senior Vice President, General Counsel, and Corporate Secretary; and William Moore, Executive Vice President of Business Development and Infrastructure Management.

LMI Had Another Award-Winning Year!

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Sector Leadership

Edgar Stanton III, Defense Sector Vice President; Dennis Bowden, Intelligence Sector Account Executive; and Roger Ervin, International Sector Vice President.

LMI was a Finalist for the Supply Chain Innovation Award from the Council of Supply Chain Management Professionals

For the second year in a row, LMI has placed in Washington Business Journal’s Best Places to Work and Healthiest Employers. LMI ranked as the 17th best employer for veterans in a Military Times survey of 1,000 companies, including BAE Systems, Inc., General Electric, and Lockheed Martin. Our San Antonio office was awarded Top Workplaces 2013 by San Antonio Express News. Finally, LMI presented its innovative tool, Peak NextGen (PNG), as a finalist for the Council of Supply Chain Management Professionals’ Supply Chain Innovation Award (see pages 12–13 to learn more about PNG).

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Acquisition Management Grants Management Operations & Cost Analysis

Acquisition & Financial Management

Budget Formulation Financial Compliance Financial Planning & Process Improvement Financial System Modernization Planning Program Management Support Internal Control

IT Program Management Enterprise Architecture

Information Management

Systems Development IT Governance Information Assurance & Cybersecurity Surveys

Public Works Project Management

Infrastructure Management

Real Property Management & Services Engineering Economics & Cost Engineering Outsourcing & Privatization

Consulting Services

Planning

Logistics

Acquisition Transportation & Distribution In-Theater Support

Strategy

Organizational & Human Capital Solutions

Continuous Process Improvement Human Capital & Talent Management Change Management & Communications Performance Management Organizational Networks Management

Defense Intelligence

Policy & Program Support

Healthcare Homeland Security Energy & Environment International Capacity Development

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Infrastructure Management

Back row: David Gallay, Vice President for Infrastructure Analytics; Kellene Ecker, Director for Intelligence Programs; and John Selman, Program Director for Energy and Environment.

Front row: Adam Korobow, Director for Computational Analytics; and John Handy, Vice President for Healthcare.

Energy and Environment. Energy program planning and management; climate change and sustainability; greenhouse gas management and reporting; chemical and biological program support; environmental and safety management systems; and occupational health and safety planning and management.

Healthcare. Analysis and assessment of the Medicare Advantage program; medical logistics planning and support; public health emergency planning and response; agricultural emergency planning and response; management of healthcare services delivery; wounded warrior support programs; and healthcare management.

Infrastructure Analytics. Facilities management; construction project management; engineering economics and cost engineering; infrastructure outsourcing and privatization; federal installation management; and military base operating support.

Intelligence Programs. Intelligence capabilities within national security organizations; use of Government 2.0 social software in the Intelligence Community; tradecraft and analytic methods; training in core Intelligence Community functions; and intelligence program management and policy advice.

Computational Analytics. Leveraging the power of computation combined with algorithms to elicit key insights from data that can be used to inform business decisions.

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Logistics Management

Back row: William Ledder, Vice President for Logistics Technology and Transportation and Distribution; Mark Hendon, Vice President for Logistics Systems; Karen LeDoux, Program Director for Army Logistics Systems; Eric Gentsch, Program Director for Logistics Analysis; Robert Schmitt, Program Director for Supply Chain Management; and Ray Schaible, Vice President for Operational Logistics.

Front row: David Oaks, Program Director for Maintenance and Readiness Management; and William Dinnison, Program Director for Joint Logistics.

Joint Logistics. Deployment and distribution doctrine, policy, and process improvement; strategic mobility programs; operational contract support integration; contingency program management; worldwide logistical policy, planning, and programming support; logistics concepts of operations and sustainment for new technologies; advanced statistical analysis for casualty estimation; logistics war-gaming; and logistics modeling and simulation.

Logistics Analysis. Logistics research and development; logistics business case analysis; acquisition logistics strategy and implementation; integrated logistics support planning; logistics engineering; performance-based logistics design and implementation; operations and support cost analysis; and emergency management logistics.

Logistics Systems. Logistics and financial enterprise resource planning implementation; strategic planning; technical requirements development and analysis; system acquisition, integration, implementation, and testing; and system deployment, sustainment, and training support.

Maintenance and Readiness Management. Weapon system and equipment maintenance policy, requirements, and operations analysis; corrosion impact assessment; public- and private-sector integration and partnering; sustainment industrial base analysis; manufacturing resource planning; repair capability establishment; and weapon system readiness analysis and reporting.

Operational Logistics. Strategic planning; logistics transformation planning and program support; force design and development; National Guard and Reserve Component equipping and resourcing analysis; defense strategy and policy; international ministerial capacity development; interagency, multinational, and coalition logistics; defense export and cooperation policy; and support of Department of State and Department of Defense transition planning in Iraq and Afghanistan.

Supply Chain Management. Supply chain resources; supplier relationship management; green procurement; supply chain risk management; spares optimization; demand forecasting; inventory modeling, costing, and level setting; material management IT solutions; supply chain performance management and metrics; and supply chain training.

Transportation and Distribution. Distribution and transportation business processes; automatic identification technology; satellite and other in-transit tracking applications; and asset visibility.

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Resource Management

Back row: Sue Nicholas, Program Director for Organizational and Human Capital Solutions; and Louise Campanale, Program Director for Performance Accountability and Resource Management.

Front row: Shahab Hasan, Program Director for Operations and Cost Analysis; and Tom Hardcastle, Program Director for Information Management.

Information Management. Information technology program management; independent verification and validation; enterprise architecture; capital planning and investment control; strategic planning and business case analyses; earned value management; data management; and information assurance.

Operations and Cost Analysis. Operations research; airline operations and air traffic modeling; cost estimation and analysis; costbenefit and business case analysis; cost research and modeling; technology portfolio analysis; and advanced modeling and simulation.

Organizational and Human Capital Solutions. Strategic planning; organizational design and assessment; continuous process improvement; human capital strategic planning; workforce planning and modeling; training and leadership development; performance management; communications and change management; and graphic facilitation.

Performance Accountability and Resource Management. Planning, programming, budgeting, and execution; program analysis and evaluation; acquisition strategy, planning, and execution; grants management; cost restructuring and shared service analytics; operational efficiencies; controls, compliance, and auditability; performance measurement and improvement; enterprise risk management; and digital data management.

Systems Development. Life-cycle software development; systems integration; mobile and social computing; “Big Data� analysis; semantic technology; cloud migration and cybersecurity; virtual data center consulting; scientific surveys and data collection; and economic and statistical analysis.

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LMI by the Numbers Revenue

Client Satisfaction

LMI’s revenues have increased over the past 5 years, steady growth that reflects our goal to support a broader range of government managers. The total revenue for FY13, $230 million, represents an increase of 10 percent over the previous year.

2013

$230 million

$250

$200

$150

99%

$100

Our commitment to helping clients achieve their goals is proven by our high client satisfaction scores. For the last 5 years, 99 percent of our customers have been satisfied with our work, with the vast majority being “more than satisfied” or “extremely satisfied.”

$50

FY09

FY10

FY11

FY12

FY13

Clients LMI serves 40 government agencies, which gives us a broad, whole-of-government perspective. We have been working with many clients for decades. At the same time, we are agile in meeting the needs of agencies around the world.

Total civilian

Healthcare

Defense Other national security

Intelligence 34

Average Turnover

Staff Education PhD 5.2%

Government consulting companies

9.5%

13% Masters 47.7%

LMI LMI’s annual turnover rate is extremely low in relation to other consulting firms, which ensures our clients have a stable, secure, and dependable LMI team.

Bachelors 31.5%

Data from TechSociety Research.

Associates 15.6%

With nearly 53 percent of LMI’s consulting staff holding a master’s degree or doctorate, we have remarkable subject matter depth to complement our broad experience.

Average Years Employment Government consulting companies

3.3

LMI 6.3

Companies with 200–999 employees

4.3

LMI’s has staff members with longer tenure than other government consulting firms and similarly sized companies. We are committed to hiring, developing, and keeping top talent, so that our clients receive the expertise they need to solve complex problems.

Data from TechSociety Research.

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Where We Work

Clients around the world value LMI’s objective analysis and commitment to public service. LMI has worked in 58 countries with both civilian and military agencies.

U.S. Locations Scott AFB, IL Mechanicsburg, PA Aberdeen, MD Baltimore, MD HQ, Washington, DC Newport News, VA Fort Lee, VA Huntsville, AL

San Antonio, TX

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Regional Offices and Satellite Locations Regional Directors

Russ Dulaney

Mike Carden

Eric Stephens

Director Midwest Region

Director Southeast Region

Director Southwest Region

LMI goes where our clients are. We have established offices in more than a dozen locations across the United States to fully support our clients’ missions. Possessing exceptional talent and deep expertise, our regional teams provide outstanding service, as well as reach back to leverage LMI’s collective knowledge, talent, and capabilities.

Headquarters 2000 Corporate Ridge McLean, Virginia 22102-7805 Toll Free: 800.213.4817 Main: 703.917.9800

Satellite Offices Aberdeen, Maryland 4696 Millennium Drive, Suite 200 Belcamp, Maryland 21017 POC: Clark Spencer Phone: 410.273.5095 Fax: 410.273.7587

Baltimore, Maryland Park View Center I 7104 Ambassador Road, #280 Baltimore, Maryland 21244 POC: Tim Carrico Phone: 410.594.7300 Fax: 410.265.0011

Fort Lee, Virginia 130 Temple Lake Drive, Suite 2 Colonial Heights, Virginia 23834 POC: Karen LeDoux Phone: 804.957.6610 Fax: 804.957.9508

Mechanicsburg, Pennsylvania 5010 Ritter Road, Suite 123 Mechanicsburg, Pennsylvania 17055 POC: Linda Novak Phone 717.796.1122 Fax: 717.796.9977

Newport News, Virginia 11837 Rock Landing Drive, Suite 201 Newport News, Virginia 23606 POC: Donna Simkins Phone: 757.591.8836 Fax: 703.917.7102

Midwest Region Scott AFB, Illinois 703 Seibert Road, Suite 1 Scott AFB, Illinois 62225 POC: Russ Dulaney Phone: 618.744.1426 ext. 662038 Fax: 618.744.1468

Southeast Region Huntsville, Alabama 6767 Old Madison Pike, Suite 275 Huntsville, Alabama 35806 POC: Mike Carden Phone: 256.461.6039 Fax: 256.461.6067

Southwest Region San Antonio, Texas 1777 NE Loop 410, Suite 808 San Antonio, Texas 78217 POC: Eric Stephens Phone: 210.526.8100 Fax: 210.820.2630

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