What went wrong?

You are the PMO Director for World of Wonder. One of the programs managed by the company is a high visibility both for the government and your company valued at $1B. Your company currently does not have a contractor management process and your program has three subcontractors.  Define processes as covered in this Unit to assist World of Wonder to properly manage the subcontractors. You must provide a 20 slide PowerPoint presentation. Follow the rubric to make sure you cover the vendor/contractor relationships functional model and scorecard example.

What went wrong?

The government decided to divide the contract for the design, development and production of a new radio into two separate contracts. One contract would be for the design and prototype development of the radios and it would be led by a Lead System Integrator (LSI) company. This was Contract A. The second contract, Contract B, would be issued upon completion of Contract A and would be to produce multiple units of the selected prototype. 

Both contracts would be re-competed so vendors who won Contract A were not necessarily guaranteed to produce the radio during Contract B.  At the time the contract was let, the requirements were not finalized.  World of Wonder was selected to be the LSI. The company, World of Wonder (WW),  had extensive defense and lead systems integration experience. WW was collocated with the government customer, so it made it easy to participate in weekly status reviews and be able to resolve any issues. Three companies were selected as subcontractors. Two subcontractors were selected for the design and prototype development phase of now two different radios.   Both had extensive hardware experience and defense expertise.  Both companies were known defense competitors who had great interest of being LSI under contract B and be able to win the production of their own radio.  Both companies had no interest in having WW be part of the management team during Contract B.

The company, Nanotech, would develop a version of the radio at a contract value of $400M.  They had a local presence.  The company, DistributeX, would develop the second radio.  They were remote with no local presence.  They received a contract valued at $400M. The third subcontractor would generate all the logistic support requirements.  This subcontractor was a business unit from a separate company under WW, named MiniWorld.  The contract value for Miniworld was $25M.  The remaining Contract Value was allocated to WW. The government would then choose the design that would go into production.  The third subcontractor was a division of the LSI within a separate company. The contract was valued at $1B and it was a Cost Plus Award Fee. 

The LSI named a Vice President to lead the complex technical program.  There were three subcontract program managers who reported to the Director of Subcontract Management. The Director of Subcontract Management reported to the Program Vice President. The subcontract managers would manage the day to day interaction with Nanotech, Distribute X, and MiniWorld.  As time progressed both contractors developing the radios were running over in cost and behind schedule, according to Earned Value Management metrics.

The Director of Subcontract Management spent most of his time addressing fire drills with the VP.  Every day there was a different issue.  The VP was known for throwing temper tantrums. All internal reviews turned into shouting matches.  Both Nanotech and Distribute X started running into design problems. WW’s costs were also increasing because they believed they had to micromanage Nanotech and DistributeX closely to be able to contain the cost and meet schedule.  Earned value was assessed on a weekly basis. 

WW also ran into relationship problems with the customer.  Funding was not flowing to WW as expected,  which in turn meant that funding to all subcontractors was also late. Nanotech was managed by a seasoned program manager who was not afraid to hold Nanotech accountable or speak her mind at executive meetings.  She properly balanced the views of the subcontractor and the views of her company.  The VP would have preferred she always agree with him at all costs, however.

Distribute X was managed by a subcontract manager who lived in Arizona, but during the week, returned to San Diego to managed the contractor.  He was notorious for attending meetings but avoiding action. Overtime was not in his schedule. 

MiniWorld was managed by a relocated program manager who had been in the company for close to twenty years and was counting down days to his retirement.  He never volunteered to take up the slack from anyone else on the team.  There was no method in place to rate the performance of the subcontractors.  All three subcontract managers had a good relationship with WW Director, but the Director lacked backbone to tell the VP when he disagreed with his approach and back up his team. At least four subcontract program managers were victims of the execution of the contracts. The program was re-baselined twice in a course of two years;  all CPI and SPI was reset. Upon execution of both re-baselined efforts, within a couple of months once again, all subcontractors were having cost, technical and schedule problems.  Yet, Nanotech had been able to develop a limited prototype which included only 5 of the 8 communication requirements. Nanotech also had a habit of communicating directly with customer without going thru WW.  Many times WW was requested to meet with the customer based on information provided by Nanotech. Both Nanotech and Distribute X issued stop work orders whenever their funding was late.  Both Nanotech and DistributeX were subcontractors to each other for a portion of their individual contracts.  It was a web full of horrors.  Nanotech hired Distribute X’s testing division and DistributeX hired Nanotech’s metal construction division. After three years of challenges with cost, technical and schedule problems, the program was eventually cancelled.  The director was demoted and the government representative retired.

What went wrong? What could have been done internally at WW?  What could have been done to properly managed the subcontractors?