Evaluate contractor processes vs. detailed inspections
Use outcome-based metrics to gauge contractor success
What’s Industry Doing?
DOD increasing reliance on PBCs; see policy and guidelines at (http://www.abm.rda.hq.navy.mil/navyaos/content/view/full/139)
Air Force utilizes PBC see market research web site at http://www.afcesa.af.mil/search/index.asp
Navy launching full scale effort to overhaul Facility Service Contracting
Private sector uses PBC, usually with preferred vendor in long term relationships
Fixed-price contracts, by their nature, include positive monetary incentives. If it costs the contractor less to perform, his profit margin goes up. A negative incentive can also be included in case the desired results are not achieved (deduction should be equal to the value of the service lost).
Cost-plus-incentive-fee (CPIF) or fixed-price-incentive-fee (FPIF) contracts can be used when there is some latitude in achieving the desired results. The ability to succeed or fail is controlled by the Contractor; the Government’s ability to influence contractor performance is limited to specific areas.
CPIF with multiple incentives contracts include setting a target cost, along with minimum and maximum values for cost, fee, technical performance, and schedule. Funds available for fees are divided into pools so that there is no overlap.
Monetary Incentives (Continued)
Cost-plus-award-fee (CPAF) and fixed-price-award-fee (FPAF) contracts are used when a mechanism to motivate a contractor is desired, but performance cannot be measured objectively or where the Government’s performance objectives can only be stated in general terms. Both types require an award-fee plan as a part of the contract. Incremental adjustments to the criteria in work authorizations can be made.
Positive performance evaluation
Automatic extension of contract term or option exercise (FAR Part 17 still applies)
More frequent payments
Lengthened contract term (award term contracting) or purchase of extra items (award purchase)
Publish article(s) in agency newsletter or speak at agency seminars
Letters of appreciation to individual employees may translate to bonuses
Use trade space for licensing, access to agency officials, etc.
Use those FAR clauses that can be negotiated to your advantage
Development of practical, meaningful, and measurable metrics improves the PBC process for the Government and its Contractors.
Develop metrics definitions based on industry best practices with performance target ranges based on historical averages
Include business impact measures as well as operations measures
Quantifiable and verifiable metrics ensure the quality of the measurements
Don’t raise the bar higher then a level which we can perform
Minimum Suggested Government Requirements for a Public Sector Solicitation
Performance requirements that define the work in measurable, missionrelated terms.
Performance standards (i.e., quality, quantity, timeliness) tied to the performance requirements.
Government quality assurance (QA) plan that describes how the contractor's performance will be measured against the performance standards.
If the acquisition is either critical to agency mission accomplishment or requires relatively large expenditures of funds, positive and negative incentives tied to the Government QA plan measurements.
Minimum Suggested Government Requirements for a Public Sector SOW
Proposed statement of work and the satisfaction of all objectives set forth in the Statement of Objectives
Performance measures and metrics and the correlation of the performance measures and metrics to the achievement of the Statement of Objectives
Incentives and/or disincentives and their correlation to the achievement of the Statement of Objectives
The methodology for tracking and reporting results from the system of measures and metrics
The approach to continuous performance improvement, and
The approach to minimizing the burden to the Government of administering the performance based system
The Interagency Task Force on Performance-Based Service Acquisition modified the Federal Acquisition Regulation (FAR) to give agencies flexibility in applying PBSA. This is recommendation number one of six:
Recommendation: Modify the FAR Part 2 to include definitions for: 1) performance work statement, 2) quality assurance surveillance plan, 3) statement of objectives, and 4) statement of work to support changes to Part 37. Modify FAR Parts 11 and 37 to broaden the scope of PBSA and give agencies more flexibility in applying PBSA to contracts and orders of varying complexity .
Try not to take severe punishments-contrary to partnering
Put as much work as possible into Firm Fixed Price
Use our work schedule to plan QAE evaluation locations
Work can slip without QAE presence
Need dedicated QAE’s -full time
Ensure QAE’s are trained
Partnering helps the QA process
QAE issue resolution matrix is important
Electronic QA input does save QAE time
Insure Quality Management Plan addresses QC and QA
Need Government Insight not Oversight
Government needs to develop consistent, uniform service metrics
Government culture can hamper trust and true partnership with Contractors