Annex A: NATO security investment programme project life cycle

This text and the following table are aimed at explaining the steps taken in the preparation, approval, contract, delivery, and acceptance of NSIP procurement. This should help new industry participants to quickly understand many of the basic terms used and likely program timeframes.

The process has several optional steps (shown in italics in the process table). The actual steps used on a particular program are chosen on a case by case basis. The choice depends on the complexity, novelty, value and the procurement method being used. The steps are decided dynamically by the Host Nation as the program proceeds depending on the perceived risks and uncertainty that need to be managed.

A project originates from a capability gap which the Bi-Strategic Commands (Bi-SCs: ACT and ACO) have identified. This is then considered by the Resource Policy & Planning Board, who gives formal confirmation of eligibility and affordability of a Capability Package (the Investment Committee has the delegated authority to confirm eligibility for Common Funded AOM projects).

1. Establishing the capability need

• Bi-SCs identify capability gap

The Bi-SCs (ACO/ACT) identify/capture capability gaps that need to be addressed through modification/enhancement of existing equipment or facilities, or the acquisition of new capabilities.

• Requirements defined and implementing Host Nation (HN) appointed

After the requirements are formally analyzed and refined, the Bi-SCs propose an implementing Host Nation. This will be either a Territorial Host Nation or a NATO Agency.

• HN develops project plan

The Host Nation will develop an initial plan to deliver the project. The International Staff from the NATO Office of Resources will review the plans to ensure they are realistic and have taken account of other NATO capabilities and any related projects.

• HN request to Investment Committee for Advance Planning Funds

The Host Nation will present the outline project for consideration by the Investment Committee. The purpose of this initial screening is to formally confirm the HN and release Advance Planning Funds. This allows the HN to commit resources to undertake the necessary preparatory work of clarifying the requirements.

2. Project initiation

In this phase, the Host Nation works on clarifying the requirements both in terms of the detailed requirements, refining the project timelines and funding profile.

• Preparation and approval of Type B Cost estimate (TBCE)

The Type B Cost Estimate (TBCE) is the proposed costed solution prepared by the Host Nation. It will be coordinated with the Bi-SCs (ACT and ACO) to ensure the requirements align with other capabilities and can be supported in service. The Host Nation then prepares the Type B Cost Estimate, articulating a technical solution, which takes account of the Bi-SCs views. Large complex programs may take many months to complete these activities. Type B Cost Estimates are currently screened by the Working Group of National Technical Experts (WGNTE), which is chaired by the NATO Office of Resources (NOR).

• Market Survey (when held) [In parallel with TBCE preparation]

The Host Nation may approach national Delegations to seek advice on which companies may have the necessary capability to participate in specific program. This activity is likely to be considered when a niche skill or specialist product is required, and the HN may issue a market survey with a list of questions to help them clarify what technology is currently available.

• Information Day (when held) [In parallel with TBCE preparation]

This is an opportunity for the Host Nation to brief Industry on the program and the approach being taken. This can also be a good opportunity for companies to consider partnering opportunities.

• Industry Workshop (when held) [In parallel with TBCE preparation]

This is an opportunity for Industry to discuss the requirement and their views on the technology that could be offered. This helps the Host Nation to refine the TBCE, taking account of current Industrial capability. Because there is no formal contractual process at this point, holding of one-to-one discussions are permitted and can be a valuable way of improving mutual understanding.

• Technical project screening by WGNTE

The Host Nation presents the TBCE to the Working Group National Technical Experts (WGNTE). This is often in two stages, an information briefing followed by the formal screening. The WGNTE screens the proposal and considers the detailed technical solution and issues such as interoperability and conformance with Minimum Military Requirement, concluding with an endorsed technical proposal. The WGNTE works in support of the NATO Office of Resources (NOR); the NOR chairs the WGNTE, who prepares a report on each TBCE to the Investment Committee for consideration and approval. The WGNTE membership includes the National Technical Experts (NATEX) from the nations or, where a nation has no NATEX, their Senior Staff Officer Communications and Electronics.

• HN Request to Investment Committee for 1st stage Authorization

A screening report prepared by the NATO International Staff, the NOR, will be considered by the Investment Committee. If the program passes IC scrutiny, and the physical scope and procurement strategy are agreed, then approval is given to the Host Nation to proceed in preparing the statement of work. This does not constitute authority to issue the Invitation for Bid (IFB).

3. Project execution

During this stage the project has received full financial approval and authority to proceed. Industry can now be made aware of the requirement and timescales.

• Host Nation prepares, co-ordinates and obtains approval for statement of work

The Host Nation will fully articulate the requirement and finalize the procurement strategy.

• Notice of Intent (NOI) to Issue Bids

At this time, the program aspects are more closely scoped and certain. The NOI is a brief summary of the program that signals to industry an upcoming procurement opportunity. The Host Nation releases the NOI to the National Delegations who in turn promulgate the NOI to their industry. The Canadian Delegation makes the NOI available to industry via the PWGSC Buyandsell.gc.ca website. Companies interested in bidding on the particular opportunity must reply to the NOI by a set deadline. Those companies that reply to the NOI will have a Declaration of Eligibility (DOE) raised on their behalf by the Canadian Delegation and sent to the Host Nation. Companies are reminded that they need a Declaration of Eligibility (DOE) for each and every NOI i.e., for each and every procurement opportunity. Only those companies that reply to the NOI, and therefore have a DOE raised on their behalf, will be eligible to receive the Invitation for Bid. It should also be pointed out that there is no cost to receive the IFB and no obligation to bid so if in doubt whether to respond to the NOI, it is recommended to do so.

• Request For Bidders' Views (RFBV) [Draft IFB document] (when authorized)

The Host Nation may seek Bidders' views to help reduce risk in the program. A draft Invitation for Bid will be issued under the IFB process to support this activity. This allows bidders to see and comment on the technical detail, proposed approach, terms and conditions, etc. This is a valuable process that helps NATO decrease the risks of programs.

• Host Nation request to Investment Committee for authority to Issue the IFB (A2IFB)

This authority from the Investment Committee allows a managed release of NSIP funding. At this point, the IC grants the Host Nation the authority to issue the IFB in line with the agreed procurement strategy and includes formal authorization of the physical scope, financial scope and funds. If given, this is the point where NATO has a binding commitment to fund a particular project, providing that it stays within an indicated profile and that the MMR remains valid.

• Release of Invitation to Bid (IFB) (within 3 months of A2IFB)

Invitations for bids are sent by the Host Nation to those companies identified by a DOE (see NOI above).The IFB has to be released within 3 months of the A2IFB or IC approval re-confirmed if the IFB release is delayed. Again, only those companies that have had a Declaration of Eligibility (DOE) raised on their behalf by their national delegation will receive the IFB.

• Bidders’ Conference (when held)

With more complex projects, these conferences are used to engage with industry to explain details of the final requirements and to formally capture clarification issues.

• Bid closing

Dates are usually closely adhered to – extensions are rare and require strong justification. Any company requesting an extension must do so via its national delegation. Before you submit your bid you need to ensure that you have followed all instructions precisely on the content and format of the proposals, and answered the specific requirements. Providing options that are more technically advanced than the required statement of work is acceptable, but your bid must address how it will fill only the stated MMR in order to be both credible and compliant.

• Host Nation evaluates bids and selects source

The Host Nation will form an evaluation board for each bid. Members of the Investment Committee do not sit on any evaluation board. This process can be lengthy especially for large, complex programs competed on Best Value basis.

• Notification to nations of winning bid and imminent contract award

Nations are alerted by the Host nation that one of their suppliers has won the specific bid and that contract award is imminent. This allows the management of any formal announcements.

• Host Nation conducts final negotiations with winner and awards contract

The Host Nation will conclude any final negotiations on the contract terms and conditions with the winning contractor and award the contract.

• Production and delivery of capability in line with A2IFB timelines

This includes the actual execution of the project through to delivery and acceptance procedures. Depending on the nature of the program this may last for several months, or more often, years. The Host Nation will monitor the program and ensure timelines remain on track. If any change in the A2IFB timelines is identified, the Investment Committee must be informed to confirm affordability.

4. Project closure

Upon completion, NATO projects require formal certification (of system acceptance) to verify the required capability has been delivered and to audit the financial elements of the project. This is a contractual milestone. These activities may occur some considerable time after the final delivery from the suppliers as the performance of the capability in the hands of the user may require long term evaluation.

• HN request for JFAI

Once a project has been satisfactorily completed, the Host Nation will request the NATO Office of Resources to arrange a Joint Final Acceptance Inspection (JFAI).

• NOR performs JFAI

The NATO Office of Resources performs the Joint Final Acceptance Inspection (JFAI) of the project. This ensures that the work undertaken is in accordance with the scope of work authorized. As soon as this report is accepted by the Investment Committee, the project deliverable is added to the NATO inventory.

• HN and NOR complete COFFA

The Host Nation and NATO Office of Resources initiate the financial acceptance of the project. This is undertaken by the International Board of Auditors for NATO (IBAN) who will audit the project. Once successfully audited, a Certificate of Final Financial Acceptance is produced that sets out the amounts established by the audit and certify the expenditure for the audited project.

 

Project Life cycle

NATO common funded investment projects