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As major preference power customer in the Mid-Pacific (MP) Region, SMUD was initially inclined to support the selection of workload distribution Alternative 1 as compared to Alternative 2; however it seems that maybe a hybrid of the two would be a better option to pursue, if an alternative has to be selected at all. Overall, from a customer perspective it would seem that we need to be concerned about another layer of bureaucracy being established with the commencement of the Commissioner's Coordination and Oversight Group (COG). It appears that the COG will require more staffing time for sure. As a Preference Power customer in the MP region that has a good working relationship with the MP staff, and has been successfully using the CVP O&M Funding Agreement for the past ten years with a lot of success, we keep asking ourselves what is so broken in MP Region that things need to be fixed. In the MP Region, we do not need a COG to oversee what we already do now via the O&M Funding Program, as well as through other customer/agency forums. For example, we may want to get something done to improve efficiency; but if the distribution of the workload is centralized, we may have to compete for particular projects with other Regions on a Reclamation-wide basis; at least that appears to be the case for Replacements, Additions, and Extra-Ordinary (RAX) items. Unfortunately, Reclamation may determine our requested work as a lesser priority (power already has a low priority); and therefore, the requested item does not get the necessary funding. Hence, we in the MP Region have developed the O&M Funding Program, whereby the Preference Power Customers advance fund selected activities and Projects, and they then are guaranteed to be accomplished, provided Reclamation has adequate technical staff and crews to accomplish the work; and when they do not, we have a voice in when and how much they spend to outsource the work. To take a broader perspective, and upon close scrutiny, neither distribution alternative may ultimately meet the customer-expressed goal of moving more toward decentralization. The choice to maintain technical expertise locally within the Regional or Area Offices should be so attractive (good value for cost; but, most importantly, strong technical expertise) that the program office would likely use them without being so "directed" as the Business Model would otherwise do. There is no way a Preference Power customer would want to be forced to use Reclamation’s Technical Service Center (TSC) staff, located in Denver, if they were inexperienced or cannot perform the work in a timely manner. It appears that the TSC’s costs are significantly lower than that of most consulting firms; so, TSC costs are not the problem. The problem is they are currently understaffed with experienced engineers; and, that is a problem since they then as a result cannot prosecute assigned work in a timely manner. It may be best to have the applicable Reclamation Directive and Standard (D&S) simply state that the Area Offices and/or Regions are required to use TSC for major design activities and save the need for a regulatory/policeman type of function that the COG would provide. If Reclamation believes that it is important to implement workload distribution Alternative 1, Alternative 2, or some other alternative that eventually is developed and recommended, then we provide the following analysis and comments. Per the draft Team 12 report, Alternative 1 is weighted toward achieving the objective of predictable workload, building on the recognized success of the Dam Safety Program. It also seems to apply well to the objectives of maintaining core capability and outsourcing strategically. However, it conflicts with the objective to empower the Regions. Using Alternative 1, compared to Alternative 2, would avoid a lot of otherwise required communications (phone calls and/or e-mail messages), meetings, presentations, reporting, and decisions at several levels. Alternative 2 is weighted more toward the objective to empower the Regions or Area Offices, but it does not address as well a predictable workload, core capability retention, and strategic outsourcing; however, it could provide for increasing the shared accountability for cost effectiveness and efficiency if reliable consultants or contractors are selected when outsourcing is used. This alternative would create the need for meetings, reports, bid requests, analysis, procurement, and much other paperwork. Alternative 2 may only lead to the further demise of the TSC. A hybrid of Alternatives 1 and 2 that combines some of the features from each alternative may be best, as one of the SMUD’s listed expectations is an "Ability to Focus on Primary Mission Activities" (that is, Reclamation needs to minimize its procedural activities and simplify reporting and recoding activities, to allow its staff to focus more on enhancing reliable production and the delivery of water and power supplies to its stakeholders). A possible hybrid scenario would be to use Alternative 1 as a starting point, but to default to Alternative 2 procedures when the existing processes fail to work. An example of this is mentioned in one of the SMUD listed expectations titled "Streamline Procurement Activities"(that is, Reclamation should move to streamline its Procurement Activities and allow the Customers to procure materials and equipment when rapid deployment is required or when Reclamation's procurement procedures would otherwise bog down getting a project back into service). The problem with using this type of hybrid scenario may be that it is difficult to benchmark the point when the use of Alternative 1 is no longer applicable for a specific project or task, and it is time to switch over to Alternate 2 procedures. One of the major decisions to come out of the next M4E Meeting is to make a decision of how the workload distribution should be handled. In that regard, it would be good if the all power and water users agreed on a position for this matter. For now, SMUD is leaning towards simply having the Directive and Standards (D&S) state that the Regions are required to use TSC for major design activities. If that is not acceptable to Team 12, then the use of a hybrid process as described above would be our recommendation; however, we recognize that a hybrid alternative would require further development. Thank you for considering our comments.	11/02/2007

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As major preference power customer in the Mid-Pacific (MP) Region, SMUD was initially inclined to support the selection of workload distribution Alternative 1 as compared to Alternative 2; however it seems that maybe a hybrid of the two would be a better option to pursue, if an alternative has to be selected at all.

Overall, from a customer perspective it would seem that we need to be concerned about another layer of bureaucracy being established with the commencement of the Commissioner's Coordination and Oversight Group (COG). It appears that the COG will require more staffing time for sure. As a Preference Power customer in the MP region that has a good working relationship with the MP staff, and has been successfully using the CVP O&M Funding Agreement for the past ten years with a lot of success, we keep asking ourselves what is so broken in MP Region that things need to be fixed. In the MP Region, we do not need a COG to oversee what we already do now via the O&M Funding Program, as well as through other customer/agency forums. For example, we may want to get something done to improve efficiency; but if the distribution of the workload is centralized, we may have to compete for particular projects with other Regions on a Reclamation-wide basis; at least that appears to be the case for Replacements, Additions, and Extra-Ordinary (RAX) items. Unfortunately, Reclamation may determine our requested work as a lesser priority (power already has a low priority); and therefore, the requested item does not get the necessary funding. Hence, we in the MP Region have developed the O&M Funding Program, whereby the Preference Power Customers advance fund selected activities and Projects, and they then are guaranteed to be accomplished, provided Reclamation has adequate technical staff and crews to accomplish the work; and when they do not, we have a voice in when and how much they spend to outsource the work.

To take a broader perspective, and upon close scrutiny, neither distribution alternative may ultimately meet the customer-expressed goal of moving more toward decentralization. The choice to maintain technical expertise locally within the Regional or Area Offices should be so attractive (good value for cost; but, most importantly, strong technical expertise) that the program office would likely use them without being so "directed" as the Business Model would otherwise do. There is no way a Preference Power customer would want to be forced to use Reclamation’s Technical Service Center (TSC) staff, located in Denver, if they were inexperienced or cannot perform the work in a timely manner. It appears that the TSC’s costs are significantly lower than that of most consulting firms; so, TSC costs are not the problem. The problem is they are currently understaffed with experienced engineers; and, that is a problem since they then as a result cannot prosecute assigned work in a timely manner. It may be best to have the applicable Reclamation Directive and Standard (D&S) simply state that the Area Offices and/or Regions are required to use TSC for major design activities and save the need for a regulatory/policeman type of function that the COG would provide.

If Reclamation believes that it is important to implement workload distribution Alternative 1, Alternative 2, or some other alternative that eventually is developed and recommended, then we provide the following analysis and comments.

Per the draft Team 12 report, Alternative 1 is weighted toward achieving the objective of predictable workload, building on the recognized success of the Dam Safety Program. It also seems to apply well to the objectives of maintaining core capability and outsourcing strategically. However, it conflicts with the objective to empower the Regions. Using Alternative 1, compared to Alternative 2, would avoid a lot of otherwise required communications (phone calls and/or e-mail messages), meetings, presentations, reporting, and decisions at several levels.

Alternative 2 is weighted more toward the objective to empower the Regions or Area Offices, but it does not address as well a predictable workload, core capability retention, and strategic outsourcing; however, it could provide for increasing the shared accountability for cost effectiveness and efficiency if reliable consultants or contractors are selected when outsourcing is used. This alternative would create the need for meetings, reports, bid requests, analysis, procurement, and much other paperwork. Alternative 2 may only lead to the further demise of the TSC.

A hybrid of Alternatives 1 and 2 that combines some of the features from each alternative may be best, as one of the SMUD’s listed expectations is an "Ability to Focus on Primary Mission Activities" (that is, Reclamation needs to minimize its procedural activities and simplify reporting and recoding activities, to allow its staff to focus more on enhancing reliable production and the delivery of water and power supplies to its stakeholders).

A possible hybrid scenario would be to use Alternative 1 as a starting point, but to default to Alternative 2 procedures when the existing processes fail to work. An example of this is mentioned in one of the SMUD listed expectations titled "Streamline Procurement Activities"(that is, Reclamation should move to streamline its Procurement Activities and allow the Customers to procure materials and equipment when rapid deployment is required or when Reclamation's procurement procedures would otherwise bog down getting a project back into service). The problem with using this type of hybrid scenario may be that it is difficult to benchmark the point when the use of Alternative 1 is no longer applicable for a specific project or task, and it is time to switch over to Alternate 2 procedures.

One of the major decisions to come out of the next M4E Meeting is to make a decision of how the workload distribution should be handled. In that regard, it would be good if the all power and water users agreed on a position for this matter. For now, SMUD is leaning towards simply having the Directive and Standards (D&S) state that the Regions are required to use TSC for major design activities. If that is not acceptable to Team 12, then the use of a hybrid process as described above would be our recommendation; however, we recognize that a hybrid alternative would require further development.

Thank you for considering our comments.

11/02/2007