Contract Management Planning for Performance-based Contracts


Published on

Published in: Business, Technology
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Contract Management Planning for Performance-based Contracts

  1. 1. Effective Contract Management Planning For Performance-Based Contracting
  2. 2. It’s a Different Contracting World! <ul><li>Performance-Based Acquisition fundamentally changed contract formation and administration </li></ul><ul><li>Objectives structured into contracts and multiple incentive arrangements </li></ul><ul><li>Contractors and Federal staff adjusting to a cultural change </li></ul>
  3. 3. When does Contract Management start? <ul><li>Old View </li></ul><ul><ul><li>Started at contract award </li></ul></ul><ul><ul><li>Embodied a post-award orientation </li></ul></ul><ul><li>New View </li></ul><ul><ul><li>Effective contract administration starts early with contract management planning </li></ul></ul><ul><ul><li>Begins during the acquisition planning phase </li></ul></ul><ul><ul><li>Recognizes the performance-based elements of the contract </li></ul></ul><ul><ul><li>The Contract Management Plan is in place before or shortly after the time of award </li></ul></ul>
  4. 4. The Performance-Based Contract <ul><li>What are the elements of Performance-Based Contracting? </li></ul><ul><ul><li>FAR 37.6, 16.402 and DEAR 917.601 require: </li></ul></ul><ul><ul><ul><li>Establish requirements in a results oriented manner </li></ul></ul></ul><ul><ul><ul><li>Ensure that Contract measures and expectations are measurable and correspond to work requirements </li></ul></ul></ul><ul><ul><ul><li>Ensure that Quality Assurance Surveillance Plans are tailored to contract objectives </li></ul></ul></ul><ul><ul><ul><li>Incorporate cost constraints or cost incentives </li></ul></ul></ul><ul><ul><li>Acquisition Guide, Chapter 70.8 </li></ul></ul><ul><ul><ul><li>Performance Based Contracting Guide – provides guidance on structuring effective incentives </li></ul></ul></ul>
  5. 5. The Performance-Based Contract <ul><li>What are the elements of Performance-Based Contracting? (cont.) </li></ul><ul><ul><li>In 1997 OFPP mandated that PBCs </li></ul></ul><ul><ul><ul><li>Requirements are structured in a results or outcome oriented manner </li></ul></ul></ul><ul><ul><ul><li>Positive and/or negative incentives are included </li></ul></ul></ul><ul><ul><ul><li>Quality Assurance Surveillance Plans are required </li></ul></ul></ul>
  6. 6. What are the Contracting Officers Responsibilities in Performance-Based Contracting? <ul><li>FAR 37.106 and 37.602-4 </li></ul><ul><ul><li>Ensure that performance-based contracting used to the maximum extent practicable. </li></ul></ul><ul><ul><li>Use contract types that best fits the work and likely to motivate contractors. </li></ul></ul><ul><ul><li>Use positive or negative performance incentives to the maximum extent practicable. </li></ul></ul><ul><ul><li>Quality assurance surveillance plan shall contain measurable inspection and acceptance criteria corresponding to the performance standards of the SOW. </li></ul></ul>
  7. 7. Get Results! <ul><li>Results </li></ul><ul><ul><li>Identify incentives that support program and site priorities </li></ul></ul><ul><ul><ul><li>Project specific </li></ul></ul></ul><ul><ul><ul><li>Integrated efforts (intra-site or inter-site) </li></ul></ul></ul><ul><ul><ul><li>Technology Development </li></ul></ul></ul><ul><ul><ul><li>Infrastructure/Facilities Maintenance </li></ul></ul></ul><ul><ul><li>Contractor Motivation (fee, more work, Peer recognition, past performance assessments) </li></ul></ul><ul><ul><li>Incentivize Results! Review lessons learned! </li></ul></ul>
  8. 8. Performance-Based Contracting at DOE <ul><li>Major Site and Facilities Contracts </li></ul><ul><ul><li>General Work scope (M&O ) </li></ul></ul><ul><ul><ul><li>Spallation Neutron source </li></ul></ul></ul><ul><ul><ul><li>National Ignition Facility </li></ul></ul></ul><ul><ul><li>Major projects </li></ul></ul><ul><ul><ul><li>Site Clean-up (Rocky Flats, Mound, Fernald) </li></ul></ul></ul><ul><li>Services </li></ul><ul><ul><li>Guard services, information technology and janitorial </li></ul></ul><ul><li>Contract Type & Incentive Structure </li></ul><ul><ul><li>Select contract type and incentive structure that best fits the requirements </li></ul></ul>
  9. 9. Contract Management at DOE <ul><li>Contract Management </li></ul><ul><ul><li>DOE’s major site and facility contracts are usually long-term and involve a complex mix of sponsors and stakeholders </li></ul></ul><ul><ul><li>Integrated Team Members (CO, COR, Technical Monitor, Federal Project Director, HCA, Headquarter, CFO, contractor, etc.) </li></ul></ul><ul><li>DOE Contract Management Focus Areas </li></ul><ul><ul><li>Project Management, change control, baseline management, technology, performance, quality assurance, fee and incentive management, contractor human resources, etc. </li></ul></ul>
  10. 10. Key Contract Management Responsibilities and Focus Areas <ul><li>CO Contract Management Responsibilities </li></ul><ul><ul><li>Ensuring performance of all necessary actions for effective contracting (FAR Part 42), </li></ul></ul><ul><ul><li>Ensuring compliance with the terms of the contract, </li></ul></ul><ul><ul><li>Safeguarding the interests of the contractual relationships, </li></ul></ul><ul><ul><li>Requesting and considering advice of specialists in audit, law, engineering, and other fields, as appropriate, </li></ul></ul><ul><ul><li>Monitoring Performance, and </li></ul></ul><ul><ul><li>Enforcing the Government’s rights when necessary . </li></ul></ul>
  11. 11. The Contract Management Team <ul><li>Success Depends on an Integrated Team! </li></ul><ul><ul><li>Contracting Officer, COR, Project Director, etc. </li></ul></ul><ul><ul><li>Effective administration of PBCs relies heavily on the integration efforts of groups of people representing many functional areas, customers, and stakeholders </li></ul></ul><ul><ul><li>Past problems can be traced to lack of an integrated effort in managing contract performance </li></ul></ul><ul><li>Manage the contract not the people or the process </li></ul>
  12. 12. Key Tools of Contract Management <ul><ul><li>Quality Assurance Surveillance Plan </li></ul></ul><ul><ul><li>Contract Management Planning </li></ul></ul><ul><ul><li>Earned Value Management </li></ul></ul>
  13. 13. Ensuring the Quality of Performance <ul><li>QASP </li></ul><ul><ul><li>Develop early - during the early stages of the RFP (SOW) </li></ul></ul><ul><ul><li>Tool to evaluate contractor’s performance </li></ul></ul><ul><ul><li>Provides a structured approach to performing quality inspections and surveillance </li></ul></ul><ul><ul><li>Establishes frequency and types of inspections </li></ul></ul><ul><ul><li>Focuses on results - quality and timeliness </li></ul></ul><ul><li>QASP linked with Performance Evaluation Management Plans (PEMPs) </li></ul><ul><ul><li>PEMPs establish the performance evaluation process and fee determination process </li></ul></ul><ul><ul><li>PEMPs may be used to fulfill QASP requirement </li></ul></ul>
  14. 14. Contract Management Planning <ul><li>Why Plan for Contract Management? </li></ul><ul><ul><li>Challenges by GAO, IG and internal DOE reviews </li></ul></ul><ul><ul><li>More sophisticated contracting models </li></ul></ul><ul><ul><ul><li>Performance-based contracting </li></ul></ul></ul><ul><ul><ul><li>More rigorous contract types, i.e. CPIF </li></ul></ul></ul><ul><ul><li>DOE Contract Administration Study </li></ul></ul><ul><ul><ul><li>Little interface between all parties managing the contract </li></ul></ul></ul><ul><ul><ul><li>Infrastructure/culture not keeping pace with PBCs </li></ul></ul></ul><ul><ul><ul><li>Lack of “game plan” for managing contracts </li></ul></ul></ul><ul><ul><li>To develop a “corporate oversight strategy” for ensuring contract success </li></ul></ul>
  15. 15. Contract Management Planning (AL2003-02) <ul><li>When is a Contract Management Plan (CMP) Required? </li></ul><ul><ul><li>For all M&O & Major Site and Facility Contracts </li></ul></ul><ul><ul><li>Contracts subject to DOE O 413.3 </li></ul></ul><ul><ul><li>Desirable for service contracts that are complex., high risk with a high $$ value </li></ul></ul><ul><li>How do we develop an effective corporate oversight strategy/CMP? </li></ul><ul><ul><li>Begin planning during the earliest stages of the RFP preparation </li></ul></ul><ul><ul><li>Review the contract and identify key governmental responsibilities (GFI, equipment, receiverships, etc.) </li></ul></ul>
  16. 16. Contract Management Planning <ul><li>How do we develop an effective corporate oversight strategy/CMP? (cont.) </li></ul><ul><ul><li>Get input from the contractor to ensure critical areas are identified </li></ul></ul><ul><ul><li>Identify key contract vulnerabilities or performance risk areas that are inherent in the contract </li></ul></ul><ul><ul><li>Develop a strategy for managing unique terms and conditions (award term, incentives, etc.) </li></ul></ul><ul><ul><li>Develop a proactive approach for managing the governmental responsibilities and for mitigating any identified risk areas </li></ul></ul><ul><ul><li>Formally identify the key contract management team, include their names, responsibilities, authorities and limitations </li></ul></ul>
  17. 17. Contract Management Planning <ul><li>How do we develop an effective corporate oversight strategy/CMP? (cont.) </li></ul><ul><ul><li>Develop training and guidance to help the culture (infrastructure/people) evolve if site is managing a new contract type (CPIF), </li></ul></ul><ul><ul><li>Develop an approach for managing the incentive fee arrangements of the contract, and </li></ul></ul><ul><ul><li>Ensure that other critical focus areas are included - management of contractor litigation, partnering agreements, records management, and other site specific challenges. </li></ul></ul>
  18. 18. Contract Management Planning <ul><li>How can we use the CMP to ensure successful contract performance? </li></ul><ul><ul><li>Coordinate and solicit input from all staff involved in contract management </li></ul></ul><ul><ul><li>Conduct a special session with the contractor on the goals and objectives of the CMP and name the individuals (CO, COR, TM, etc.) responsible for its implementation </li></ul></ul><ul><ul><li>Meet with all concerned parties on a regular basis to address issues </li></ul></ul><ul><ul><li>Track performance and assess progress against the QASP </li></ul></ul><ul><ul><li>Address performance risks or deficiencies early </li></ul></ul><ul><ul><li>Update the CMP as necessary </li></ul></ul>
  19. 19. Assessing Contractor Performance <ul><li>Earned Value Management </li></ul><ul><ul><li>Contractor use EVM to control cost and schedule performance as well as report progress against the contract </li></ul></ul><ul><ul><li>DOE uses EVM to: </li></ul></ul><ul><ul><ul><li>Monitor and verify progress on contract costs and schedule performance </li></ul></ul></ul><ul><ul><ul><li>Monitor and validate contractor accomplishments on specific fee and PBI incentives </li></ul></ul></ul><ul><ul><ul><li>Early warning system to identify deficient progress </li></ul></ul></ul>
  20. 20. Contract Management Planning <ul><li>What is the Contracting Officer’s role in EVM? </li></ul><ul><ul><li>The CO is responsible for ensuring that EVM is a requirement in the RFP (when applicable) </li></ul></ul><ul><ul><li>After award, the CO is responsible for receiving the contract performance reports, approving changes to the system, and generally ensuring that the system requirements are being met </li></ul></ul><ul><ul><li>The CO relies on subject matter experts for advice on the integrity of the system </li></ul></ul><ul><ul><li>The CO is responsible for enforcing the terms of the contract and requesting corrective action as necessary </li></ul></ul>