"It's Not An Entry-Level Job"

NASA Enterprise Pricing Office Director Rochelle Overstreet and Deputy Director Lawrence Miller share the challenges and benefits of cost and pricing analysis.

Rochelle Overstreet is the Director of the Enterprise Pricing Office (EPO), at National Aeronautics and Space Administration (NASA) Headquarters. Lawrence L. Miller is the Deputy Director. Together, they stood up the new office in 2022, and since then have been touring NASA centers to explain how it functions and can support contracting officers. Both are decorated contracting professionals with high-profile experience.

Overstreet began her federal career in 2004 as a keystone intern at the Defense Contract Management Agency (DCMA). There, she served as an administrative contracting officer and managed more than $350 billion in Department of Defense (DoD) contingency services and supply contracts in support of the Iraq War.

Before becoming the Enterprise Pricing Director, Overstreet was a Senior Procurement Analyst and NASA’s Lead Administrative Contracting Officer, Audit Services Manager, and Contract Closeout Program Manager. In this role, she managed the budget and negotiated corporate level agreements with partnering agencies including DCMA, the Defense Contract Audit Agency (DCAA), and the Department of the Interior (DOI). At Johnson Space Center (JSC), she served as a pricing team lead.

Among many honors, Overstreet received the Future of Pricing Award and was featured in the September 2022 edition of Pricing Magazine. She was recognized as a 2021 NASA Headquarters Honor Award Recipient and by the NASA Administrator for Contract Closeout Initiatives and Successful Outcomes in 2020. She also won annual Distinguished Performance awards from 2014 to 2023, and received an Outstanding Performance Recognition Award in 2016.

Miller began his career in 2010 at JSC as a contract specialist supporting the Orion Program. He also was an International Team Lead/Commercial Lower Earth Orbit (LEO) Lead Contracting Officer at JSC, leading a team of contracting professionals and providing acquisition support to maximize science utilization on the International Space Station. He was the primary contact for negotiations and procurement management review meetings with international partners.

In 13 years with NASA, he has been a budget analyst, grant and cooperative agreements officer, and contracting officer. He has received Source Selection Evaluation Board Awards, Space Flight Awareness Awards, and the NASA Silver Achievement Medal. The dynamic duo of Overstreet and Miller often appears at pricing and contracting conferences to speak and encourage contracting professionals to build their cost and pricing skills. They interviewed one another in August 2023 for Contract Management. They discussed the contract pricing career field; the burden of cost and accounting standards, especially for emerging companies; the critical importance of forensic contracting in safeguarding taxpayer dollars; and their biggest savings achievements. The transcript of their conversation has been edited for clarity and brevity.

Lawrence Miller (LM): Rochelle, can you believe it’s been a year already since we stood up the NASA Enterprise Pricing Office? Can you share how we got here?

Rochelle Overstreet (RO): Before 2022, all of the cost price analysts across NASA’s enterprise were fragmented. We were individually supporting each center and their varied local policies and procedures; NASA has 10 centers. We looked across our enterprise to see how we could streamline and innovate our pricing process to establish enterprise policy and procedures, create standardized templates, and offer pragmatic pricing solutions and guidance that would help our contracting officers make the best cost and pricing decisions. In August 2022, we matrixed all cost price analysts from every center to the enterprise pricing office, which you and I lead. We don’t just do pricing, though. The EPO portfolio also covers contract closeout and audit services. NASA is the Cognizant Federal Agency (CFA) for about 153 companies. CFA is based on FAR Part 42, and makes an agency responsible for entities that receive most of their revenue from it. If a company receives most or all of its federal revenue from NASA, we then become the CFA for it. We are responsible for providing audit and administrative contracting officer (ACO) services to those companies. Then, a NASA ACO will negotiate final indirect rates, establish provisional billing rates, resolve cost accounting standards issues, and determine the adequacy of the company’s accounting system. A lot of people don’t even know NASA has this capability, which has contributed to several million in cost savings and cost avoidance for the agency. NASA collaborates routinely with its partnering agencies to ensure there is no duplication of work with the same contractor.

LM: This isn’t a new requirement. Before the enterprise cost and pricing organization, how did we accomplish this?

RO: A provision in the 2016 National Defense Authorization Act said the Defense Contract Audit Agency (DCAA) could no longer support non-DoD agencies until the DCAA backlog was completed. NASA is a civilian organization, so when DCAA could no longer support us, everything just came to a halt. We used that as an opportunity to say we never again want to be caught in a position like that. We decided to stand up our own fortress to protect ourselves. We’ve extended our audit service network to include seven certified public accountant (CPA) firms, the continued use of the DCAA, and the Department of Interior as a result of that National Defense Authorization Act.

LM: What are the top duties for EPO staff?

RO: Our office comprises auditors, administrative contracting officers, and cost/price analysts. The vast majority of the workload is for source selection evaluation boards where we are providing pricing capability – cost realism in the case of cost-type procurements and price analysis for firm-fixedprice procurements. We produce cost/ price reports that accompany the contracting officer’s file so that they can further substantiate selections. Our cost/price analysts greatly depend on the work of the auditors, both internal and external to NASA, to help support their analysis. By having a crosscutting support function, such as EPO, we can offer audit services and tie all of this back to contract closeout where you need final indirect rates to close out contracts. It is a model that allows us to extend the agency’s knowledge beyond a singular contract to the contractor by having in-house and external auditors. NASA saves on average $3 million to $5 million per year and about $15 million in cost avoidance by securing its own audit services. Additionally, audit services contributed to NASA reducing its contract closeout backlog by 50% over a two-year period.

Sole-Source Savings

LM: A lot of our cost/price analysts are involved in source evaluation boards, but where we see room for cost savings to the government is in sole-source negotiations. I think it would be great if we had more vendor management personnel who know the ins and outs of each vendor. Regardless of the center where they worked, they would provide a common thread to help develop pricing strategies to support the contracting officer’s negotiation.

RO: You and I have been discussing creating a vendor management role to support the space where we believe the government has the greatest vulnerability: sole-source procurements. The greatest risk comes when we choose to continuously work with the same vendor to have continuity of service. To have more insight into contractors’ rates, their business systems, and how they do business as a whole is most helpful in sole-source evaluations. Absent insight into this information, government evaluations are prolonged. We know that competition drops price, so without that competition, we don’t get a look behind the curtain. I definitely support vendor management, and it is a critical function that we are working to implement. Were you thinking of vendor management of one vendor? I’m thinking of it for all of the vendors that have sole-source work with NASA. How do you envision the responsibility of that role?

LM: I would love vendor management for all vendors, but we have to look at our resources. You always want to focus on higher risk areas. For us, that is contracts with the highest value and the most complexity. I would look at our top 20 to 25 vendors with which we have cost-reimbursable or firm-fixed-price contracts. Those types of contracts can put us in a sole-source position where we do not have competition to rely on to drive fair and reasonable prices. Overall, we want a fair and reasonable price. We want to create win-win situations with our vendors and build trusting relationships across the federal enterprise. For example, a vendor manager would manage an original requirement that was competitively awarded to support one of our high-profile programs, where, as engineering changes come about, we are put in a sole-sourcing position. We’re adding additional requirements that were not awarded in the base contract. Ideally, we would like the vendor contracting staff to be very familiar with our vendor manager, regardless of which center they’re dealing with or the contractual vehicle. There are so many benefits with vendor management. From the cost savings standpoint, we will have someone who can ask, “Why are we paying $500 for a hammer on one contract versus another contract, where we’re paying $100 for the same item?” Instead of operating at the centers in silos, we would be able to operate collectively as one unified front. At times, contractors can be confused as to why they are allowed to apply X, Y, or Z practice on one contract, but on similar contracts across the agency, we are levying additional requirements. Vendor management helps us with consistency and efficiency. It helps us build trusting relationships because you have an individual who understands the overall construct of vendor organizations and business practices. It improves our negotiating power since we typically don’t have insight into all of these contracts across the agency. Additionally, it helps create consistencies in evaluation across the federal enterprise. We’re looking to bring all of that wealth to the table.

RO: I just wanted to add that vendor management also provides a contractor a dedicated point of contact who has deep knowledge of their rates. We’ve gotten feedback from industry that different centers do things differently. Part of standing up the enterprise model is to streamline the pricing capability so whatever experience you’re having at Kennedy Space Center, you’re having at Goddard Space Flight Center, you’re having at Johnson Space Center, and so forth. Once the structure and process are stood up within NASA, then we can share that information with other agencies. Already, we are actively sharing information with the Defense Contract Management Agency (DCMA). Digging Into Costs

LM: Let’s talk about what cost and pricing analysts must be able to do.

RO: I always like to start with the foundation of things. The foundation is that the Federal Acquisition Regulation (FAR) currently speaks to the function of conducting cost/price analysis as inherent to the role of the contracting officer. A lot of people don’t even know that. The nuts and bolts of cost and pricing are being able to determine that a price is fair and reasonable. Where this gets sticky and interesting is that different types of procurements or contract instruments require different sorts of analysis.

For instance, for cost-type procurements, we are seeking to have contractors have adequate accounting systems that allow a peek into the build of their labor and indirect rates, etc. The FAR directs how to analyze specific contract types. There are certain reviews that must happen, and these are the responsibility of the contracting officer. NASA took it a step further. We’re so interested in being able to determine fair and reasonable pricing for the billions and billions of dollars we spend on contracts that we created an enterprise capability to support contracting officers in performing the analysis. We want to be intentional and deliberate about how we’re evaluating each procurement.

LM: The first element is cost analysis. You need to have great analytical skills to be able to identify when you don’t have the information you need. You have to look at various cost elements when you can’t determine a bottom-line price to be fair and reasonable. You must be able to dig into the individual cost elements. The other piece is being able to do price analysis. If something is commercially available, for example my laptop, I can do price analysis on that. I don’t need to do cost analysis on the material and things that went into the manufacturing of the laptop because I can compare it with existing products in the market to determine a fair and reasonable price. Another key duty is data validation. You need to be able to assess data, ensure that it’s valid, and be able to examine historical records. You need to dig into contracts with similar complexity and skill mixes and be able to validate based on historical records and compliance reviews. You need to ensure that we have the right reviews in place to make sure that what’s being proposed is in compliance. We always document what we do in the event of an audit, so anyone is able to pick up our file and understand everything we did and the intent we had. You always want to communicate because you don’t want to award a contract with the intent of doing modifications. So, we negotiate and issue final proposal revisions ahead of time, and we communicate, openly and honestly. Acquisition and Audit

RO: Lawrence just went through a great deep dive into some of the mechanics of a day in the life of a cost/price analyst. Bottom line, when someone asks why are cost and price important, there are two reasons. One, the government aims to obtain an accurate depiction of the costs associated with goods and services thereby preventing overpricing, waste, and potential fraud. Two, as stewards of taxpayer dollars, we have to make informed decisions. Effectively analyzing cost and price data in alignment with the FAR allows us to prioritize best value and fulfill our responsibility of fiscal management. What makes the best cost/price analyst? For me, it’s someone who has a background in acquisition. In order to be effective as a pricer, you have to understand the art of negotiation and how to transform the technical requirement into layman’s terms so that you can understand it from a realistic perspective. This helps you understand the general terms and conditions of what you are pricing. What would make you even stronger as a cost/price analyst is to have an acquisition and auditing background. That is the optimal cost/price analyst. An auditing background gives you a different lens through which to evaluate information so you can understand the contractor, not just the contract. Contractors have rates. We have contracts that will utilize those rates. But what’s even more important is to understand a contractor, not just on a particular contract, but across multiple contracts. And that’s what the auditor tends to bring to the table.

RO: Lawrence, would you like to add anything there?

LM: Many people think that as a cost/ price analyst, you have a different job series, but a contracting officer and a cost/price analyst are both a part of the 1102 job series, the contracting series. Analytical skills, financial acumen, and regulatory knowledge are key. Communication also is vital. The source selection authority must understand your analysis. When the government’s and the contractor’s positions are not in alignment, you have to reach some level of agreement to move forward. The job requires problem-solving skills. There’s a lot of working in the gray, as Rochelle noted. So when the regulations say one thing but industry is facing another, we need to be able to provide sound solutions. It’s not an entry-level job.

RO: That’s why you come in as a contracting officer and migrate to this as a specialty. NCMA CONTRACT MANAGEMENT NOVEMBER 2023 33 Believe it or not, when I entered federal service, the DoD actually had pricers and they had a job series. Then, with budget cuts, DoD made a decision to get rid of pricers. Subsequently they decided to slowly bring them back, realizing cost is a bottom-line issue for every requirement.

LM: One area cost/price analysts look at closely is indirect costs. What is directly being charged for this action, and then what is being charged for the overall function of your company? Who’s paying for the CEO’s salary, and how’s that charged? We look at and assess those charges.

RO: I would add that FAR Part 2 speaks to cost-pricing data as factual, nonjudgmental, and also verifiable. In other words, to Lawrence’s point, we’re looking to make sure that contractors are not misusing federal dollars. FAR Part 31 speaks to unallowable costs. We’re making sure that you’re not going to take the money and do something frivolous or something that you shouldn’t be doing with taxpayers' dollars. We account for taxpayer dollars as they are attributed to each contract. We are looking at data in terms of traceability to make sure that they’re allocating and tracking federal dollars accordingly. Avoiding Cost Accounting

LM: A whole camp of vendors have the philosophy that they just can’t account for every minute of their employees’ workday, so they only bid on firm-fixed-price solicitations. They don’t want to break out all of their cost elements in coming up with a bottom-line price. They don’t want to comply with our cost accounting standards. Although we still can request additional cost data as needed if we can’t verify their price is fair and reasonable, what really drives it is price competition. Let’s talk about electric vehicles – there are not that many. If we wanted to procure an electric vehicle that can crab walk, we could put out the solicitation with our unique requirements and intent to award it as a firm-fixed-price contract due to it being commercially available. In this situation, the government is one of many customers and the market could help drive price. There is a firm-fixed pricing model, but it doesn’t go into full pricing. It addresses overall labor and the total amount of hours, but it doesn’t go into all the finite details. It talks about overall high-level cost elements that build to a bottom-line price. Profit and everything are built into that price.

RO: I would just add that FAR Part 15 is very explicit as to what contractors need to submit for either contract type. We know that for a cost-type contract you have to have an adequate accounting system. If the procurement is for more than $50 million, chances are that means it is covered by the Cost Accounting Standard (CAS). The reason is that when we release a cost-type contract, we’re essentially releasing a blank check. We’re checking costs after the fact to determine them to be allocable, allowable, and reasonable. So that is part of why there’s so much scrutiny when it comes to releasing a cost-type contract.

LM: There’s a lot of buzz lately about artificial intelligence (AI) and the effects it will have within acquisition and the pricing community. I think we’re going to start relying more on cost/price and past Overstreet and Miller joined the NASA Historically Black Colleges and Universities/Minority Serving Institution Technology Infusion Road Tour at Texas Southern University along with NASA’s Procurement, STEM Engagements, and Small Business Programs offices. 34 CONTRACT MANAGEMENT NOVEMBER 2023 NCMA performance due to the advancement of large language models. You now can have AI build a whole narrative technical proposal without necessarily having the skills and the background described. There’s some AI out there that can give you the 90% answer. I think we’re going to start getting more proposals that pass the technical acceptability gate. As a result, we’ll be placing more emphasis on cost/price and also past performance.

RO: That’s an excellent point, Lawrence, and what I would add is that what we’re really lacking is prices-paid technology. We probably would not have to ask for as much information if we had a database that could provide information about what was previously paid across the federal government. For example, it would be nice to have technology that would show what DoD paid for a requirement that was similar to a NASA requirement. This would give us insight into pricing trends and cost that could help us more effectively analyze whether the price we’re being offered is fair and reasonable. If artificial intelligence can produce prices-paid technology, sign me up. You still would need humans to analyze the data, but it would give us some insight. If you’re doing the same custodial service for NASA that you’re doing at DoD and in the same location, but NASA is getting a price that is 30% more, why is that? That would help the federal government as a whole, and it would help contractors. With such a system in place, contractors would not have to constantly justify who they are and their business platform to every agency they enter business with. It really would be beneficial to both parties. Forensic Contracting

RO: Part of the cost and pricing job is forensic contracting. Taking a deep dive to understand a proposal from a pricing perspective and how that relates to the requirement. Right now, there isn’t a system on the market that will look across the federal government to see what one contractor has charged NASA versus another federal agency. There’s nothing to do other than making a phone call to say, “Hey guys, what did you get charged?” There’s nowhere I can see that someone else’s requirement looks a lot like mine and do some comparison. If I were an IT expert, I’d build it in a minute.

LM: What is the biggest challenge facing cost and pricing professionals today?

RO: The biggest challenge in the pricing community right now is the Truth in Negotiations Act (TINA), 10 United States code chapter 271. For every action above $2 million, a contractor is required to submit certified cost and pricing data. When there are recurring changes on a requirement, the contractor repeatedly has to do a sweep internally for the data and certify and sign off on it. When we get constant changes to the contract, it requires them to submit the information over and over. They want a break on having to submit it. But it’s the law and we can’t bend or deviate from it.

LM: We have a lot of new vendors that want to play in the space economy even though they don’t have federally compliant accounting systems. We want them to play in this arena because we want to promote competition. Many new emerging entrants are raising funds outside of the government. The government is one of many customers; they are not standing up their organizations to fulfill the government’s requirements. Their accounting practices and their business structures are not set up to mirror what the government seeks. TINA has been in place for a very long time, and we still are required to levy these requirements on vendors that are not set up only to do business with the federal government. We would Overstreet and Miller led a team of NASA cost/pricing analysts to the 2023 Government Contract Pricing Summit in San Diego. NCMA CONTRACT MANAGEMENT NOVEMBER 2023 35 love to do business with them. We want innovation. We want to be on the cutting-edge of technology. It has been a real challenge for us, not the original contract awards, but the revisions. The base is competitive, but then we have engineering changes. Our engineers are used to changing things, and we don’t always know our full requirement upfront. One program may change, which may cause another program’s requirements to change.

RO: This law came out many moons ago and the way we did business back then was very different. It’s a new day, so one of the things that I would recommend is that companies should be getting together to have a conversation with Congress about the law and how it’s affecting their ability to do business. Otherwise, these companies will only be able to play in fixed-price environments, so they will have to forgo some of the sexier procurements. I was thinking about hosting a reverse industry day to have a pricing discussion to seek feedback from industry and to learn more about the major impacts. It’s interesting that one of the findings of the section 809 panel (the Advisory Panel on Streamlining and Codifying Acquisition Regulations released its findings in 2019) was about TINA. It noted that, “DoD overuses cost and pricing data and should change its practice to attract commercial companies to the federal market and help streamline the procurement process.” I agree with those sentiments for NASA. The logic was spot on. It’s mostly overused when we have recurring changes. If I’ve got 20 changes in one year to a contract that requires certified cost or pricing data, the contractors may have to shut down two to three weeks each time to get that data. If the requirement is recurring and the rates are pretty static during one year, then why levy that requirement? Zero-Dollar Deals

LM: We shouldn’t overlook the savings that cost/price analysts bring to the government and taxpayers.

RO: There’s so much fraud, waste, and abuse across the federal government. If people really understood that, I think they would have a greater appreciation for what cost/price analysts bring to the table. Cost/price analysts play a critical role in efficient resource allocation, negotiation leverage with contractors, risk mitigation, compliance assurance, and long-term fiscal responsibility. By meticulously evaluating proposals and contracts, cost/price analysts facilitate better decision-making and cost savings, ensuring the government optimizes expenses without compromising on quality or compliance, ultimately benefiting taxpayers and supporting the organization’s mission.

LM: I could give you some examples where I’ve saved the government lots of funds. For instance, things that are already built in for which contractors have us paying double. If we have a general and administrative (G&A) charge and then we have another line item called “management,” we’re getting charged for management up here and then we’re getting charged for overall G&A? Removing that could save the government tons of funds.

RO: When I was at Johnson Space Center a few years back, I was recognized by the engineering program, which was very hard as a minority female. I had successfully negotiated parachute assembly testing in exchange for data at zero cost to the government. The program was planning to pay $5 million to get this data. Now, we’re exchanging a service for a service, creating a win-win for both parties.

LM: In another example of a barter agreement negotiated two years ago, I did a hybrid while working on the International Space Station (ISS). The trick is figuring out what you can do to operate in the gray. Every time I went to Russia, I would think of trying new things. On the U.S. ISS segment, we had a food warmer we no longer needed, and we were getting ready to get rid of it. The Russians had always used it, and they asked what we were going to do with it. I realized they had an interest in this food warmer. At the same time, we needed sustainability engineering for the functional cargo block, a power module for the ISS. We took the cost of the food warmer and in a barter exchange only paid for the delta between that and the engineering. CM