We See The Forest...And The Trees

LMI Annual Report 2012

B

We get the details right

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16

10

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Highlights

32 Corporate Governance

33 LMI Officers

34 LMI Consulting Services

Partnership

Transitions

Innovation

Leadership

18 Reinvesting in Innovation

38 LMI by the Numbers

40 LMI Locations

26 Bright Minds Focused on Getting the Details Right

27 Employee Engagement Survey

20 ASM—Cutting Edge Then; State of the Art Now

24Teamwork

6 General Services Administration— Maximizing every IT dollar invested

8 Centers for Medicare and Medicaid Services— Establishing the mechanisms needed to expand affordable healthcare

12 Department of State— Offering our expertise during the transition to diplomacy in Afghanistan

14 U.S. Transportation Command—Identifying the strategic direction for a command in flux

28 LMIers Flex Their Mental Muscles

29 Among the Best—and Healthiest— Places to Work

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Letter from the CEO and Chairman of the Board

LMI had a great year in 2012. Our finan-cial performance was outstanding, with record bookings and revenue and solid additions to our reserves. But financial performance is secondary to our ability to help clients achieve their missions.

For several years, we have been strategi-cally expanding our locations and offerings, and deepening our capabilities whenever we believed there was a genuine need. Our growth has been strong and steady.

In 2012, as government programs faced an uncertain future, we continued making invest-ments so we would be in a position to help federal agencies just when they needed us most. Our investments have been chiefly in our peo-ple. Their desire to make a difference and their drive to innovate have allowed us to develop expertise and tools that our clients can count on.

The solutions we offer are not only technically correct, they are usable—timely and appropriate to an agency’s requirements and resources. For example, last year LMI helped GSA consolidate a plethora of information technology projects and save millions of dollars. We’re also helping to

develop the mechanisms needed to implement the requirements of the Affordable Care Act.

For DoD, we facilitated the development of the U.S. Transportation Command’s 5-year strategic plan to transition from a wartime footing. And as the drawdown of military forces continues in Afghanistan, LMI is providing strategic and operational planning and logistics expertise to aid in the transition to an enduring diplomatic presence in the region.

We continued our geographic growth as well, adding a new team in Huntsville and more space for our thriving operations in San Anto-nio, St. Louis, and the Tidewater area. The LMI Research Institute continued to stretch, hosting the first Launch My Idea Weekend, extending research support to academic partners, and strengthening investment in the ideas and inno-vations of our staff.

LMI is entering this potentially turbulent period on a sound foundation and well positioned to fulfill our mission of helping to improve the management of government.

Hear what Nelson Ford, CEO, sees as the secret of LMI’s success in 2012. Visit www.lmi.org/ar2012 or scan this QR code.

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Mike Daniels, Chairman of the Board, and Nelson Ford, President and CEO

We get the details right

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Partnership

Everything is possible when

the partnership is strong.

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Using Enterprise Architecture to Maximize GSA’s Investment

LMI’s customers rely on us for thoughtful analysis and smart solutions. We dig into our customers’ problems, focusing on the details so the solutions we suggest are not only sound, they can be imple-mented in light of the realities on the ground.

In 2012, the Acting Admin-istrator of the General Ser-vices Administration, Dan Tangherlini, testified before Congress about his commit-ment to promote efficiency and reduce costs throughout GSA. At the time, the agency’s chief information officer managed only one-third of GSA’s information technology spending; the vast majority of IT projects and spending was managed by several other business organizations. An integrated GSA and LMI team of enterprise architects and portfolio management experts

developed the basis for a data-driven analysis of the agency’s IT assets (applications, infra-structure, and staff) to make a case for consolidation.

LMI demonstrated how appli-cation rationalization and the use of a vendor management office, or VMO, to focus the $250 million the agency spent each year on professional IT consulting services would achieve greater economies of scale and strengthen relation-ships with strategic suppliers. By restructuring business applications and enabling IT service portfolios, GSA is bet-ter equipped to

• select the best information technology solutions,

• provide oversight and increase transparency,

• reduce costs and increase return on investment,

• promote tighter collabora-tion, and

• align proposed technology solutions with the agency’s strategic goals.

LMI supported GSA, as the enterprise architecture mem-ber of the CIO’s consolidation team, and developed the ini-tial models for consolidating services and service delivery approaches. We redefined enterprise approaches to IT governance and helped GSA stand up a vendor manage-ment office. Through IT governance reviews, LMI also helped the Public Buildings Service reallocate $6.5 million to high-priority investments and save $10 million from the overall IT budget.

LMI continues to provide GSA communication and change management support services to foster program acceptance and facilitate any transition efforts related to consolidation. We track investments and report

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Spend Tracker—an innovation to help keep GSA in the black

LMI was pivotal in establishing GSA’s Spend Tracker, a formal web-based process for reviewing information technology funding requests. In the first 6 weeks using Spend Tracker, GSA avoided nearly $11 million in unnecessary spending. As of August 2012, all GSA information technology purchases go through Spend Tracker before being approved for funding.

Praise for GSA’s consolidation efforts

The well-respected Federated Enterprise Architecture Certification Institute (FEAC) presented to GSA the 2012 civilian government award for Leadership in Enterprise Architecture Driven Results in recognition of the agency’s enterprise architecture best practices and their effect on achieving efficiencies, greater ef-fectiveness, transparency, increased collaboration, and innovation in solutions.

Helping Agencies with zero-based budgeting

LMI worked with GSA’s chief information officer to document a formal, easy-to-follow zero-based budget-ing process. The basic premise of zero-based budgeting is to justify budget requests for every budgeting cycle. When managers develop a budget, they begin with nothing and must justify why they need to spend money on each activity or project. New or old, problems are treated equally.

With the LMI-developed budgeting framework and business process models, GSA can better manage the budget cycle and standardize data collection. With high-quality budget data, GSA managers can make those difficult budgeting decisions.

project-specific data to the GSA IT gover-nance bodies. The goal is to provide guid-ance, reviews, and recommendations to curb unnecessary spending during all phases of a project’s life cycle.

GSA underwent significant change in 2012. Hear Kristina Olanders as she details how LMI helped the agency weather the budgetary pres-sures and identify changes that make sense. Visit www.lmi.org/ar2012 or scan this QR code.

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Ensuring Access to Affordable Healthcare

The Affordable Care Act establishes several mecha-nisms that are expected to expand access to health-care services and reduce the cost of their deliv-ery. In 2012, LMI was involved in the develop-ment and implementation of two such mechanisms: health insurance market-places and accountable care organizations.

Developing the Systems Needed to Offer a Range of OptionsHealth insurance market-places will help individuals and workers in smaller com-panies to obtain a better range of affordable health insur-ance products. States and the federal government will be launching these marketplaces in October 2013, when open enrollment begins.

LMI is helping to develop the systems and procedures that will be used in the federally facilitated marketplace and the state partnership model. Such systems will permit consumers to purchase health insurance in states that have not established a state-based marketplace.

In 2012, LMI laid the ground-work for the health insurance marketplaces, focusing on the policy that will ensure pro-posed health insurance plans

meet the standards outlined in the Affordable Care Act (ACA) and comply with federal guidelines so they can be offered as qualified health plans.

The Affordable Care Act requires each qualified plan to cover essential health benefits, or EHBs, across 10 benefit cat-egories that are comparable to typical employer health plans. We identified and mapped EHB data to each benefit cat-egory. We then collected and reviewed EHB benchmarks to ensure all categories were covered and were not discrim-inatory.

LMI also adapted a U.S. Phar-macopeial Convention map-ping of drugs to therapeutic categories and classes so that qualified health plans can offer formularies that include a minimum number of drugs in each category and class.

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Monitoring Compliance and Identifying Best Healthcare PracticesAccountable care organiza-tions will help move the nation away from the cur-rently fragmented healthcare delivery system engendered by the fee-for-service system. The ACA established two new models of care—shared savings and pioneer ACOs—that test the extent to which organized systems of care and the assumption of greater financial risk will improve the quality and efficiency of the healthcare provided.

We established audit pro-grams to determine if ACOs comply with ACA standards. Compliance areas cover governance, legal entity, physicians, and providers, as well as public reporting and marketing.

We developed a data monitoring method to help identify large program risks (such as avoidance of at-risk beneficiaries, stinting of care, and overutilization) that could affect beneficia-ries and lead to widespread dissatisfaction.

We created a cluster method that will allow the Centers for Medicare and Medicaid to effectively analyze the behavior of accountable care organiza-tions, ascertain the implica-tions of those behaviors, and ultimately identify best practices that should be shared among the more than 250 ACOs.

We also developed proce-dures that ensure the 20 ACOs that have requested additional infrastructure development funding meet the revenue prerequi-sites for acceptance. This helped ensure an upfront federal investment of nearly $10 million was spent only on allowable charges.

Learn about how LMI’s Health Systems Management group is helping to reduce the cost of healthcare without sacrificing quality. Visit www.lmi.org/ar2012 or scan this QR code.

In 2012, LMI collected and analyzed a wealth of data to ensure the ACOs were fulfilling their obligations to the nation.

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Transitions

Change can be daunting...

a leap of faith made easier

when you have a trusted guide.

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Supporting the Transition to Diplomacy in Afghanistan

By December 31, 2014—at the conclusion of the drawdown of NATO’s International Security Assistance Force and transition to the interna-tional train, advise, and assist mission—the U.S. Department of State must have in place an endur-ing diplomatic presence in Afghanistan.

The size and structure of the U.S. diplomatic presence is still to be determined. Also unknown is the range of operational and logistical sup-port and the obstacles asso-ciated with providing such support. The Department of State (DoS) is working with the U.S. Embassy, Kabul, to most effectively plan for its enduring presence, including the synchronization or trans-fer of operational and sup-port responsibilities from the

Department of Defense to the Department of State.

DoS asked LMI to support this important transition effort. We provided two teams to help establish a diplomatic presence, and transition operational and logistics sup-port from Defense to State.

Team 1—Planning for TransitionThe first team began work in the formative stages of Afghan

transition planning. The team’s initial goals were to provide planning support and apply the lessons LMI learned dur-ing the Iraq transition a year earlier.

After helping to define the scope of transition plan-ning, the first LMI team recommended DoS establish, through the Executive Office for Near Eastern Affairs/South and Central Asian Affairs (NEA-SCA/EX), a second transition planning presence within the U.S. Embassy, Kabul. The team also advised the Department of State to develop a project management plan to structure and track the myriad transition tasks. (An important benefit of this tool is that it enables senior DoS leadership to identify the time frame for and linkages among critical transition planning decisions.)

LMI employees Gerry Guerrero, Kim Enderle, and Tim Haider supported our presence in Afghanistan.

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Team 2—Getting the Job Done The second LMI team deployed to Kabul to support transition planning directly. Soon after arrival, the team helped the Embassy establish a management transition office to act as a focal point and facilitator for transition planning. The office grew to include U.S. For-eign Service officers, military liaison officers, and additional LMI transition planners and project managers.

Providing Support during Transition The Washington-based LMI team, now des-ignated the Afghanistan Transition Program Office, is focused on expanding program management support. The team includes two strategic planners, a senior advisor on military affairs, and an equipment program manager.

The group’s responsibilities include strategic planning, program management, tracking the status of transition tasks, supporting func-tional working groups, identifying problems, and recommending solutions to mitigate risks associated with the post-2014 transition plan.

The work to establish long-term diplomatic presence in a conflict zone is off to a good start, but more remains to be done. With critical LMI assistance, NEA-SCA/EX and DoS have established a structured transition management plan that is supported by proven management processes and tools to guide and synchronize all efforts. The goal is a smooth transition to a secure, sustainable, and afford-able enduring presence in Afghanistan for 2015 and beyond.

Bill Smith knows firsthand the complexities in-volved in transitioning to the “train, advise, and assist” mission. Hear how he applied his knowl-edge of international capacity development and logistics to help the Department of State estab-lish an enduring presence in Afghani-stan. Visit www.lmi.org/ar2012 or scan this QR code.

I will not play down the difficulties. But many Afghans are working hard for a better future, and we will continue to support the Afghan government and

people...in the hard work needed to bring the security, development, and stability which the Afghan people so earnestly desire after decades of violence.

—Testimony of James B. Cunningham, then Ambassador-Designate to Afghanistan, before the Senate Foreign Relations Committee (July 31, 2012)

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Identifying a Strategic Narrative for a Changing World

The U.S. Transporta-tion Command—with its people, trucks, trains, railcars, aircraft, ships, information systems, and infrastructure—provides the U.S. military with a responsive strategic mobil-ity capability. The com-mand has long recognized the need to change its priorities, processes, and organizational culture to accommodate the reali-ties of the current budget environment and adapt to ongoing withdrawals from Iraq and Afghanistan.

Over the past 8 years, LMI has helped the U.S. Transportation Command develop strategic guidance memorandums, strategic plans, and other high-level command docu-ments, including the 2009 and 2011 strategic plans. In 2012, we continued that sup-port and helped prepare the strategic narrative, Transform-ing to Meet Future Demand. The command’s strategic plan development team used this conceptual lens to more clearly understand the criti-cal operational factors, key stakeholders, relevant oppor-

tunities, and pressing chal-lenges that relate to full-scale transformation.

LMI went on to help USTRANSCOM develop its most comprehensive 5-year strategic plan ever.

We helped form the collab-orative team that explored all available resources and requirements. We also facili-tated several town hall–style meetings to inform staff and key stakeholders about what the team learned and to amass feedback from across the command. The result was

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the identification of four command priorities that would form the basis for the command’s strategic 5-year plan:

• The need to preserve readiness capability

• The drive for excellence in information technology management

• The alignment of resources and processes for mission success

• The development of customer-focused professionals.

Before publishing the strategic planning results, LMI validated these four strategic priorities with major defense transportation system stakeholders. The priorities were well received, and work began on describing how USTRANSCOM will fulfill these priorities as it provides global mobility and enabling capabili-ties whenever and wherever they are needed.

LMI managed all aspects of the print produc-tion of USTRANSCOM’s strategic plan, deliv-ering it on time and well within budget. The comprehensive plan, Our Story: 2013–2017, was introduced in October 2012 by the Commander, USTRANSCOM, at a major rollout meeting with staff and component commands.

Major transformations are never easy, something Doug VanWiggeren was keenly aware of as he helped the U.S. Transportation Command in its journey of discovery as it defined its command-wide priorities. Visit www.lmi.org/ar2012 or scan this QR code to watch a short video.

At a time of unprecedented change, it is important that we have clarity on the direction to

go. We have that now.—Brig. Gen. Michel, USTRANSCOM,on the release of Our Story: 2013–2017

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Innovation

Always mindful of the

past and present,

we never stop looking

toward the future

and imagining

what could be.

Analyst homage to René Magritte

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Reinvesting in Innovation

As budgets decrease and resources are realigned, finding new practices, technologies, and oppor-tunities to reduce costs and improve services will be essential. That is why LMI reinvests a large portion of its revenue in research and development and innovation efforts.

A Home for Innovative ThinkingMuch of the work we do for our clients is focused on inno-vation; that is why we created the LMI Research Institute. We fund the institute’s activities to ensure we are ready with the right solutions when a prob-lem first arises. In 2012, we invested in a number of new processes, tools, and methods that address specific challenges faced by many of our clients.

Competitive research grants are open to any employee with a good idea and the passion to research. Applications are rig-orously evaluated and awarded annually to teams or individu-als. The availability of internal funding means our staff can pursue vexing challenges that may be beyond the scope of a particular project or contract.

The institute also manages LMI’s academic partnerships with Penn State, Howard Uni-

versity, George Mason Uni-versity, George Washington University, Virginia Tech, and Saint Louis University. With our university partners, we fund research efforts that help us better understand emerging issues and new technologies that improve management efficiency and increase effec-tiveness. The results of our university research projects are then used as input to our inno-vation projects or introduced directly to our clients.

How Innovation Has GrownOver the past several years, we have increased our inter-nal research and development funding and expanded our academic partnerships. This commitment to intellectual revitalization and innovation has helped LMI remain on the leading edge in areas of inven-tory management, cybersecu-rity, data management, health-care analytics, sustainability, and other fields.

We have expanded our innova-tion investment as our capabilities have expanded. Learn more about the programs of the LMI Research Institute. Visit www.lmi.org/ar2012 or scan this QR code.

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Secure Mobile Wireless—LMI’s Intelligence Programs group (in col-laboration with the Systems Develop-ment group) developed a secure, mobile wireless environment within LMI that is capable of protecting proprietary and sensitive federal government infor-

mation at all security levels.

Fee-for-Service Claims Analysis—Our Health Systems Management group advanced LMI’s expertise in analyzing healthcare claims data. Already

expert in scrutinizing managed care data, LMI is now well-posi-tioned to analyze Centers for Medicare and Medicaid

Services claims data for both managed and fee-for-service care.

Risk Management Guide—Risk is inevitable. But how do you know whether you

are taking the right risks and managing those risks effectively? LMI’s Operational Logistics and Perfor-mance Accountability and Resource Management groups have a risk management solution that in-cludes procedures, process flows, and templates.

In 2012, we began writing a comprehensive guide to the implementation and

sustainment of this risk man-agement system that

our clients can follow.

Resource Requirements Model—Our Perfor-mance Accountability and Resource Management group de-

veloped a better method for determining requirements. The process immediately proved its value when it was applied by a current LMI client to

organize the management of disparate program requirements.

R&D

LMI WeekendInnovative ideas can come from many sources. That is why, in 2012, we held our inaugural Launch My Idea (or LMI) Weekend.

LMI Weekend is an opportunity for anyone at LMI to share their groundbreaking ideas. In the course of 3 days, participants form teams around the ideas they think are the most viable. At the weekend’s close, the teams present their ideas to the LMI officers and vie for project funding.

The first LMI Weekend resulted in three cross-functional projects that could have direct application for our clients:

• Interactive visual displays of information

• The viability and applicability of 3D printing

• The relationship of environment to the fragility of developing countries.

A small sampling of the research and development projects funded by LMI in 2012.

LAUNCH MY IDEA WEEKEND

2012

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ASM�Cutting Edge Then;State of the Art Now

In March 1987, LMI launched the Aircraft Sustainability Model® (ASM®).1 This model applied readiness-based sparing techniques to some of the U.S. Air Force’s toughest budget and availability chal-lenges. Since then, we have expanded the model’s state-of-the-art capabilities to support many other federal and commercial customers. Validated across 25 years of practical application, the model continues to grow in sophistication and address an expanding range of complex spare parts challenges.

Extending Readiness-Based Sparing to New FrontiersWhile the ASM model was originally developed for aircraft, it can be applied to identifying the best parts mix for any complex sys-tem. For example, the model significantly improves spares modeling within the system-of-systems framework of unmanned aerial systems. The ASM model balances the spares requirements for the UASs’ airborne and ground components while accounting for the intrinsic reliabilities and redundancies of each component.

The model was also recently applied to ground support systems for the National Aero-nautics and Space Administra-tion. NASA saw the new Space Launch System as an oppor-tunity to extend systems-based sparing capabilities to

its most critical ground sup-port systems. In a 2012 pilot project, LMI demonstrated the benefits of applying readiness-based sparing techniques to launch-critical systems. LMI also proved that using the ASM model to develop support strategies and parts recommendations for NASA ground systems was not only practical, it was also extremely cost-effective.

The sparing model provides logistical planners with a well-documented and repeatable analytical process for answer-ing fundamental inventory management questions. These logistics professionals now have a pragmatic and inde-pendent “analytical sandbox” to better quantify the trade-offs between system support requirements and the associ-ated inventory management policies and practices.

1 Aircraft Sustainability Model and ASM are registered trademarks of the Logistics Management Institute.

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Ensuring Sustainability While Managing Life-Cycle CostsIn the biggest DoD procurement in recent history, three U.S. military services (Air Force, Navy, and Marine Corps) are procuring nearly 2,500 Joint Strike Fighter (JSF) aircraft, with additional procurements for at least eight inter-national partners. Billions of dollars of funding will be required for spare parts to support the JSF’s operation over an anticipated 25-year pro-duction run and a 50-year life cycle.

In 2012, the JSF program office was asked two critical questions:

• How much will the sparing for JSF cost?

• What innovations can be applied to reduce long-term support costs?

To answer these questions, we examined a range of supportability issues using the LMI model to forecast the annual life-cycle spares

budgets for all of the military services and JSF partners. The model provided the analytical framework needed to address the JSF’s multi-dimensional sparing problem (which spans three basic aircraft configurations), peacetime (steady-state) and deployment (dynamic) spares requirements, hundreds of operational locations, and thousands of propulsion and air vehicle parts.

Using the ASM model’s unique capabilities, LMI’s team provided in-depth cost analyses and tailored recommendations to fit each JSF partner’s anticipated operations. Program deci-sion makers are gaining better insights into what requirements can be met and the best way to fine-tune constrained, multinational inventory investments—reducing costs without sacrificing the mission.For more information about the real-world application of the ASM model, visit www.lmi.org/ar2012 or scan this QR code.

READINESS-BASED SPARING

Readiness-based sparing is a math-ematical approach for determining the optimal mix of spares for a system. RBS directly relates investment in parts to system readiness, providing a logical way to fine-tune inventory investments. For example, the ASM sparing model can provide the maxi-mum system availability for a specific budget allocation, or it can identify the minimum cost for a given system availability target.

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25 Years of Practical Application (1987–2012)In 1987, LMI researchers Randy King and Michael Slay developed the ASM sparing model to optimize U.S. Air Force spares investment,

factoring in variable operational activity levels and the use of aircraft cannibalization. Soon thereafter, the ASM model was incorporated

into the Requirements/Execution Availability Logistics Module of the Air Force’s Weapon System Management Information System for both

inventory computations and unit readiness assessments. Today, more than 30 different weapon systems across 570 different spares kits that

support more than 3,000 aircraft use the LMI model to assess their mission readiness and determine what spares to take on deployments.

Over the last quarter century, the ASM model has evolved to address sparing challenges for NASA, other nations’ air forces, and commercial

aircraft manufacturers. As the LMI sparing model grew in sophistication, it became the analytical standard for readiness-based spares

requirements and assessments. The longevity and loyalty of the ASM user community attests to the model’s maturity and usefulness: the

U.S. Air Force (25 years), the Israel Air Force (16 years), NASA (12 years), Lockheed Martin (9 years), and Pratt and Whitney (8 years), to

name just a few.

LMI’s Suite of Inventory Management ToolsLMI has other modeling and simulation tools to help develop inventory management strategies for items with very high demand variability

(frequency or quantity):

• Peak Policy targets items with infrequent demand.

• Next Gen addresses items with frequent, yet highly variable demands.

• FINISIM models the decisions of Peak Policy and Next Gen, as well as a wide range of traditional inventory approaches, and assesses

the performance such decisions would have produced.

Depending on your organization’s specific priorities, our tools can help you develop strategies that mitigate the risks associated with excess

inventory, customer backorders, a large number of procurement actions, or other performance measures…often accomplishing multiple

objectives simultaneously.

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Month20 25 30

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ands

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ands

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Frequent Demand Low Variability

Frequent Demand High Variability

Infrequent Demand

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A Brief History of ASM

Number of different

weapon systems that use ASM

Number of different

USAFspares kits

that use ASM

ASM used to optimize USAF spares investment

19931987

1999ASM model used to estimate the minimum required mass of spare parts for future human space missions

2006 2007

ASM assesses readiness for Arleigh Burke-class destroyers

2011 2009ASM used for USMC RBS prototype with LAV-25

570

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ASM used for Space Station Freedom

F-22

AWACS

C-5

DDG-51

LAV-25

F-35

ASM supports F-35 spares modeling for 2006–2013

REALM ASM used for AWACS, C-5 spares

The ASM sparing model’s greater efficiency can lead to savings in spares inventory of 20%–30% over traditional methods.

2012UAS

ASM used to op-timize spares for UAS operations

2003ASM used for F-22 maintenance planning

NASA

NASA

NAVY

ARMY

MARINE CORPS

AIR FORCE

AIR FORCE

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Teamwork

We accomplish far more

working together

than we do struggling

alone.

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Bright Minds Focused on Getting the Details Right

For our clients, LMI is synonymous with quality analysis and innovative thinking. For our staff, we are about public service, a collegial workplace, and creative problem solving. LMI is really about very smart people working together to find solutions, apply technology, analyze information, and change processes—all for the betterment of the public sector.

LMI employees find fulfill-ment in both the work they do and who they work with. Our consultants come from industry, the military services, government agencies, and aca-demia, with backgrounds in operations research, engineer-ing, data analytics, enterprise architecture, infrastructure management, financial and budget analysis, supply chain

and inventory processing, and organizational change man-agement. Their past experi-ence provides the necessary context to develop new ideas and solutions to our clients’ emergent problems.

LMI employees also work together across the organiza-tion to bring unrelated exper-tise to find the most appro-

Jeremey Alcorn developed Applied Resilience, a predictive tool that analyzes risk for nation-states across several interconnect- ed fragility factors, such as the environmental effects of climate change. For more information, visit www.lmi.org/ar2012/resilience or scan this QR code.

99%98%97%94%

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priate answers. This collaboration is possible because of LMI’s flat organizational structure. A consultant may work on several projects at the same time, serving different roles on each task—team member, project leader, subject matter expert, quality reviewer, or sounding board. Such flexibility encourages interaction across multiple client areas, a broader knowl-edge of company capabilities, and, ultimately, a more productive workplace.

Professional and Personal DevelopmentOur employees come to LMI to develop pro-fessionally and build careers. To support their development, we offer a range of career devel-opment options. All LMI staff are eligible to participate in an extensive professional devel-opment program, which includes a mix of consulting skills workshops, leadership and management training, certification training, and technical skills development.

The LMI co-op program gives college students the chance to integrate coursework with mean-ingful employment and networking opportuni-ties. Students enrolled in graduate programs at participating universities are eligible for LMI’s Public Policy Fellows program, a yearlong professional development opportunity for out-standing new graduates. LMI also offers tuition assistance for degree programs as well as certi-fication and licensure assistance. As a registered education provider for the Project Management Institute® (PMI®), LMI can offer project man-agement–related training classes and bestow professional development unit (PDU) credits for PMP training.

Are proud to work for LMI

Feel motivated to go beyond their formal job responsibilities

Feel they are treated with respect as individuals

Agree LMI is committed to quality and focused on the customer

In my opinion, LMI’s results are very impres-

sive. In most of the survey categories, LMI exceeds

the benchmark set by high performing—and well

respected—companies. We rarely see the consistently

high scores that LMI earned again this year.

—Jodi Simco, Principal, Hay Group

Employee Engagement Survey

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Our employees also take advantage of a number of LMI-sponsored extracurricu-lar activities, like yoga, fun runs, and a number of sports leagues. We have a dynamic wellness program that includes regular health-related programs and lectures, and we offer flexible work arrange-ments, such as telecommuting and flextime. By encouraging a suitable balance between work and personal time, we sustain a healthy, happy, and engaged workforce.

Our staff is offered a range of opportuni-ties to get out of their offices and engage both mentally and physically. The LMI softball team—a tradition that dates back more than 35 years—placed second in its division in 2012.

LMIers flex their mental muscles—with a little friendly competition to make it interesting.

What is the maxi-mum number of parts into which a circle may be divided by drawing four straight lines?

See www.lmi.org/ar2012/trivia for the answers.

LMIQ

Q

Q

Q In a deck of cards, which king (suit) does not have a moustache?

These were among the questions asked at LMI’s inaugural trivia contest, the LMIQ. Teams answered a series of questions in three hotly competed

rounds. The winning team, from the Maintenance and Readiness Manage-ment group, earned not only bragging rights but also $3,000 for their

charity, Fallen Heroes Project.

What is the only U.S. state bordered on both east and west entirely by rivers?

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LMI’s Commitment to the Men and Women of the Armed Forces For nearly 2 decades, LMI has participated in the Train-ing with Industry program. The resident fellows—mili-tary personnel and federal employees—take part in the complete study process, from devel-oping proposals to briefing clients on results and prepar-ing final reports.

LMI is a strong supporter of the Wounded Warriors career program and actively seeks to hire capable, creative, and experienced rehabilitated veterans to support LMI’s work. We extended our sup-port in 2012 with the launch of our Wounded Warriors Fellowship Initiative, a new program for veterans with service-related disabilities who are now pursuing higher education. The program is designed to provide wounded

veterans with the skills they need for success in the civilian workforce and to augment the abilities they gained during their military service.

Student participants work a flexible schedule depending on their individual needs and

interests. Each is assigned a men-tor from

LMI, someone with a military background who can help with the transition to the busi-ness environment. Program completion may lead to year-round, part-time, or even full-time employment when the student finishes their studies.

The Wounded Warriors Fel-lowship Initiative is available at LMI’s McLean, VA, head-quarters, along with LMI’s regional offices in San Anto-nio, TX, Huntsville, AL, and St. Louis, MO.

Among the Best—and Healthiest—Places to Work

LMI was the only company in 2012 to be named by The Washington Business Journal as one of the DC area’s “Best Places to Work” and one of the “Healthiest Employers.” The awards alone were impressive, but the heartfelt comments made by LMI employees explain why LMI was chosen for these honors.

“[The] sense of camaraderie and teamwork is what makes LMI different and such a great place to work.”

“Consistently challenging us to look for ways to improve our products while providing us with opportunities to

improve and refresh our skills.”

As CEO Nelson Ford notes,

“It is a great honor for LMI to be considered one of this community’s best places to work; it is a tradition we intend to continue.”

36% LMI employees who are former military

For more information, see our website: www.lmi.org/wwfi

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Leadership

Good leaders know

the path to take

and when to take it.

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Corporate GovernanceRobert T. Dail President of Supreme Group, USA Former Director of DLA Former Deputy Commander, USTRANSCOM

Michael A. 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 NVTC Former Senior Vice President of SAIC

Nelson M. 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

Steven Kelman 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

Kenneth J. 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

Jonathan B. Perlin 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

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

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

Michael A. Daniels, Steven Kelman, Nelson M. Ford, Kenneth J. Krieg, Patricia McGinnis, James E. Sweetnam, Robert T. Dail, Robert F. Raggio, Jonathan B. Perlin, and David McCurdy.

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LMI Officers

Anthony J. Provenzano, Senior Vice President, CFO, and Treasurer; William B. Moore, Executive Vice President of Business Devel-opment and Infrastructure Management; Catherine A. Nelson, Senior Vice President of Resource Management; Nelson M. Ford, President and Chief Executive Officer; Manik K. Rath, Senior Vice President, General Counsel, and Corporate Secretary; and Jeffery P. Bennett, Senior Vice President of Logistics Management.

Projects managed each year

LMI’s officers chart our strategic direction and are involved in the day-to-day operations of LMI. They closely track the execution and quality of the products and services being delivered, ensuring the solutions we offer are useful and appropriately reflect the realities of the customer’s environment.

LMI employees

7001,015

Reports published in 2012

U.S. government agencies supported

17940

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Tran

spor

tatio

n &

Dis

trib

utio

n

Logi

stic

sSy

stem

s

Operatio

nal

Logist

ics

Logistics

Services

StrategicLogistics

LogisticsAnalysis

Maintenance

& Readiness

Management

Supply Chain

Managem

ent

Information

Managem

entOpe

ratio

ns &

Cost

Ana

lysi

s

Org

aniza

tiona

l &

Human

Cap

ital

Solu

tions

Perform

ance

Accountability

& Resource

Management

Systems

Development

InfrastructureAnalytics

Energy &Environment

Health Systems

Managem

ent

Intelligence

Programs

Acquisition & Financial

Management

Organizational Improvement

Logistics

Defense

Energy &Environment

Intelligence

Civil Government

HomelandSecurity

Healthcare

Information Management

Policy & Program Support

InfrastructureManagement

LMI Consulting ServicesLMI provides consulting services through three operating units: Infrastructure Management, Logistics Management, and Resource Manage-ment. Employees, managers, and directors regularly reach across operating units and program groups to find solutions of enduring value.

For an interactive model, visit www.lmi.org/ar2012 or scan this QR code.

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Infrastructure Management

W. David Helms, Director of the Center for Health Reform; John B. Handy, Program Director for Health Systems Management; David R. Gallay, Vice President for Infrastructure Analytics; John R. Selman, Program Director for Energy and Environment; Christopher L. Alligood, Program Director for Intelligence Programs; and Roger M. Ervin, Vice President of International, Commercial, and Civil Government.

Energy and Environment, John R. Selman, Program Director. 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.

Health Systems Management, John B. Handy, Program Director. 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, David R. Gallay, Vice President. Facilities management, construction project management, engineering economics and cost engineering, infrastructure outsourcing and privatization, federal installation management, and military base operating support.

Intelligence Programs, Christopher L. Alligood, Program Director. 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.

International, Commercial, and Civil Government, Roger M. Ervin, Vice President. Strategic business development to expand LMI consulting services into new markets ranging from federal, state, and international civil government segments to commercial opportunities in which LMI offers competitive products.

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Logistics Management

William R. Ledder, Vice President for Logistics Technology and Transportation and Distribution; Mark W. Hendon, Program Director for Logistics Systems; Ray A. Schaible, Vice President for Operational Logistics; Debra L. Deville, Program Director for Strategic Lo-gistics; Robert W. Schmitt, Program Director for Supply Chain Management; Eric L. Gentsch, Program Director for Logistics Analysis; William S. Crowder, Program Director for Logistics Services; and David M. Oaks, Program Director for Maintenance and Readiness Management.

Logistics Analysis, Eric L. Gentsch, Program Director. Logistics research and development, logistics business case analysis, acquisition logistics strategy and implementation, integrated logistics support planning, logistics engineering, performance-based logistics design and implementa-tion, operations and support cost analysis, and emergency management logistics.

Logistics Services, William S. Crowder, Program Director. Operational contract support integration; worldwide logistical doctrine development, planning, and operations support; logistics concepts of operations and sustainment for new technologies; advanced statistical analysis for casualty estimation; logistics war-gaming; and modeling and simulation.

Logistics Systems, Mark W. Hendon, Program Director. Logistics and financial enterprise resource planning implementation; strategic planning; technical requirements development and analysis; system acquisition, integration, implementation, and testing; system deployment, sustain-ment, and training support.

Maintenance and Readiness Management, David M. Oaks, Program Director. 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, Raymond A. Schaible, Vice President. Force projection and distribution policy; strategic mobility programs and studies; interagency, multinational, and coalition logistics; defense export and cooperation policy; defense strategy and policy; capacity development; and support of Department of State and Department of Defense transition planning in Iraq and Afghanistan.

Strategic Logistics, Debra L. Deville, Program Director. Strategic planning, logistics transformation planning and program support, joint logistics capability portfolio management, force design and development, and National Guard and Reserve equipping and resourcing analysis.

Supply Chain Management, Robert W. Schmitt, Program Director. Supply chain resources; supplier relationship management, green procurement, supply chain risk management, spares optimization, demand forecasting, inventory modeling, costing and level setting, material manage-ment IT solutions; supply chain performance management and metrics; and supply chain training.

Transportation and Distribution, William R. Ledder, Vice President. Distribution and transportation business processes, automatic identification technology, satellite and other in-transit tracking applications, and asset visibility.

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Resource Management

Edgar E. Stanton, Senior Advisor for Resource Management; Sue E. Nicholas, Program Director for Organizational and Human Capital Solutions; Shahab Hasan, Program Director for Operations and Cost Analysis; Louise C. Campanale, Program Director for Performance Accountability and Resource Management; Joseph M. Zurlo, Program Director for Systems Development; and Thomas P. Hardcastle, Program Director for Information Management.

Information Management, Thomas P. Hardcastle, Program Director. 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, Shahab Hasan, Program Director. Operations research, airline operations and air traffic modeling, cost estimation and analysis, cost-benefit and business case analysis, cost research and modeling, technology portfolio analysis, and advanced modeling and simulation.

Organizational and Human Capital Solutions, Sue E. Nicholas, Program Director. Strategic planning, organizational design and assessment, continuous process improvement, human capital strategic planning, workforce planning and modeling, training and leadership develop-ment, performance management, communications and change management, and graphic facilitation.

Performance Accountability and Resource Management, Louise C. Campanale, Program Director. Planning, program-ming, 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; digital data management; and change management.

Systems Development, Joseph M. Zurlo, Program Director. 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 collec-tion, and economic and statistical analysis.

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LMI by the Numbers

0

40

80

120

160

200

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

160

120

80

40

0

200

LMI’s revenues have more than doubled in the last decade, steady growth that reflects our corporate goal to extend sup-port to a broader range of government managers. The total revenue for FY2012, $209 million, represents an increase of 10 percent over the previous year.

Revenue 2003–2012

Clients

Other National Security

Intelligence

DoDHealthcare

Energy & EnvironmentOther Civilian

Sep. 30, 2012 Dollars (in millions)

Assets 152.5

Liabilities (39.3)

Net Assets 113.2

Balance Sheet

DoD Breakdown

Army

Sub on DoD

NavyAir Force

JCS/CCs

Defense Agencies

OSD

The strength of our balance sheet is the result of our con-servative management and focus on long-term stability.

LMI serves 40 government agencies, which gives us a broad, whole-of-government perspective.

Note: As percentage of bookings.

Dolla

rs (in

mill

ions

)

Note: JCS/CCs = Joint Chiefs of Staff/combatant commands.

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Industry Average

Staff Education

Turnover Rates

AssociatesPhD

Bachelors

Masters

With nearly 60 percent of LMI’s consult-ing staff holding a master’s degree or doctorate, we have remarkable subject matter depth to complement our broad experience.

0%

5%

10%

15%

20%

25%

2008 2009 2010 2011 2012

Industry AverageLMI

LMI’s annual turnover rate is extremely low in relation to other consulting firms. We maintain such low turnover rates, in all economic conditions, which ensures our customers have a stable, secure, and dependable LMI team.

Note: Industry average (government contractor) from Human Resources Association of the National Capital Area.

Client Satisfaction

LMI’s commitment to details and customer satisfaction is proven by the high satisfaction scores we receive from our customers. 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.” When assigning scores, our customers consider LMI’s familiarity with and responsiveness to their needs, the technical quality of our work, the substance and timeliness of deliverables, our objectiv-ity, and the overall value of the work.

LMI

2008 2009 2010 2011 2012

25%

20%

15%

10%

5%

0%

85%

90%

95%

100%

2008 2009 2010 2011 2012

100%

95%

90%

85%

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LMI Locations

Washington, DCBaltimore, MDAberdeen, MD

Mechanicsburg, PA

Petersburg, VAHuntsville, AL

San Antonio, TX

Newport News, VA

St. Louis, MO

In February, LMI acquired Bel-zon, Inc., a small veteran-owned company in Huntsville, AL, which operates as LMI Consulting, Inc., a subsidiary to LMI.

Headquarters2000 Corporate RidgeMcLean, Virginia 22102-7805Toll Free: 800.213.4817Main: 703.917.9800

Satellite OfficesAberdeen, Maryland4696 Millennium Drive, Suite 200Belcamp, Maryland 21017POC: Clark SpencerPhone: 410.273.2607Fax: 410.273.7587

Baltimore, MarylandPark View Center I7104 Ambassador Road, #280Baltimore, Maryland 21244 POC: Tim CarricoPhone: 410.594.7300Fax: 410.265.0011

Fort Lee, Virginia130 Temple Lake Drive, Suite 2 Colonial Heights, Virginia 23834POC: Karen LeDouxPhone: 804.957.6610 Fax: 804.957.9508

Mechanicsburg, Pennsylvania5010 Ritter Road, Suite 123Mechanicsburg, Pennsylvania 17055POC: Linda NovakPhone 717.796.1122Fax: 717.796.9977

Newport News, Virginia11837 Rock Landing Drive, Suite 200Newport News, Virginia 23606 POC: Donna SimkinsPhone: 757.591.8836Fax: 703.917.7102

Midwest RegionScott AFB, Illinois703 Seibert Road, Suite 1Scott AFB, Illinois 62225POC: Russ DulaneyPhone: 618.744.1426 ext. 662020Fax: 618.632.3794

Southeast RegionHuntsville, Alabama6767 Old Madison Pike, Suite 275Huntsville, Alabama 35806 POC: Mike CardenPhone: 256.461.6039Fax: 256.461.6067

Southwest RegionSan Antonio, Texas1777 NE Loop 410, Suite 808San Antonio, Texas 78217POC: Eric StephensPhone: 210.526.8100Fax: 210.820.2630

Regional Directors

Russ DulaneyDirector

Midwest Region

Mike CardenDirector

Southeast Region

Eric StephensDirector

Southwest Region

New in 2012

To better support our clients, LMI has a presence in five satellite offices and three regional offices across the country.

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LMI’s greatest strength...its people. Competence, integrity, trustworthiness, a commitment to life-long learning, educated

people that are sharing a common sense—a common purpose—with their client base in the United States government.

When a client...comes to LMI they’re going to get a committed workforce, integrity, trustworthiness. People who are going to find the right solutions, who are going to have the right values, who are going to have a shared sense of purpose, who are going

to have a focus on the mission that’s rooted in LMI’s long history of not-for-profit and the pursuit of good governance.

—LTG Robert T. Dail, USA (Ret.), former Director of DLA, former Deputy Commander, USTRANSCOM,

and current member of the LMI Board of Directors

We get the details right

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www.lmi.org2000 Corporate RidgeMcLean, VA 22102-7805

LMI.org @LMI.org Follow us on LinkedIn

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