The document discusses performance-based acquisition (PBA), which focuses on defining desired outcomes and measuring contractor performance based on results achieved rather than processes followed. It provides an overview of PBA concepts and guidelines, including establishing integrated teams, describing problems to be solved, examining solutions, developing performance work statements, selecting meaningful performance measures, and managing contractor performance to ensure desired outcomes are achieved. The document emphasizes linking acquisition strategies to mission needs and outcomes.

1. NCMA Norfolk Chapter – 23 January 2008 Performance-Based Acquisition Overview Jeff Brunner, U.S. Joint Forces Command

2. PBA Concept “Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity.” George S. Patton

3. Why the Focus on Service Acquisition FY 05 Over Half DOD Contract Dollars DOD Total: $ 269.20 Billion DOD Services: $141.62 Billion

4. Performance-Based Acquisition… Goals of PBA Link Mission performance results with measurable acquisition performance results Description in FAR 2.101 Structures all aspects of an acquisition around the results to be achieved Describes contract requirements in clear, objective terms Contains measurable outcomes Objectives measures Subjective measures

5. What is Performance-Based Acquisition? An acquisition strategy Not a contract type Strategy applicable to most contract types Results-oriented “ What” not “How” Good business sense Requires the contractor to manage performance Promotes innovation and creativity Drives accountability for results

6. Performance Based Examples Examples of Performance Based Strategies Exxon Mobile Marriott Aircraft Engine Performance Space Launch Aircraft Tires Performance Based Logistics

7. Performance-Based Acquisition Recognizes contractor’s ability to manage work, and perform efficiently Encourages innovation and performance improvement thru effective incentives Links contractor payment to contractor performance through measurable performance standards

8. In the beginning… The concept of Performance-Based Acquisition isn’t new…

9. PBA has been around for a while Contract for Production of a Coat of Mail : “ One coat of mail, insignum of power which will protect, is to be made by the woman Mupagalgagitum, daughter of Qarikhiya, for Shamash-iddin, son of Rimut. She will deliver in the month of Shebat one coat of mail, which is to be made and which will protect.” Taken from clay tablet dated in the thirty-fourth year Darius I (488 B.C.)

10. Then came Policy… OFPP Pamphlet (guide) 1980 OFPP Policy Letter 91-2 Government Performance Results Act 1993 Federal Acquisition Streamlining Act and National Performance Review of 1994 OFPP Pilot Project for PBSC 1994 OFPP Guide for Best Practices for Past Performance 1995 FAR Case 95-311, Final Rule 1995 Federal Acquisition Reform Act (Clinger-Cohen) 1996 OFPP A Guide to Best Practices for Performance-Based Service Contracting 1998 Guidebook for PBSA in the DoD 2000 USD AT&L (Gansler) Memo 2000 Seven Steps to Performance-Based Services Acquisition 2001 Defense Authorization Act 2001 User’s Guide to Performance-Based Payments 2001 USD AT&L (Aldridge) Memo 2002 USD AT&L (Wynne) Memo 2003 Dir, DPAP (Lee) Memo 2004 OMB (Burton) Memo 2004 Dir, DPAP (Cipicchio) Memo 2006 OMB Memo (Burton) 2006 Dir, DPAP (Assad) Memo 2006 USD AT&L (Krieg) Memo 2006 Dir, DPAP (Assad) Basic Tenets 2006

11. Current Government PBA Policy FAR 37.102(a) states that PBA: Is the preferred method for acquiring services Must be used to “maximum extent practicable” except for: Architect-engineer services, Construction, Utility services, and services incidental to supply purchases

12. DoD’s latest perspective on Performance-Based Acquisition Focus on: Clear, performance-based requirements Identifiable and measurable cost, schedule and performance outcomes Properly planned and administered outcomes consistent with customer’s mission need(s) Business arrangements in the best interest of DoD and in compliance with statues, regs, policies, etc. Strategic, enterprise-wide approaches applied to planning and execution of the acquisition PBA training

13. Enterprise or Strategic Sourcing Process Profile Commodity Conduct Supply Market Analysis Develop Commodity Strategy Issue RFx & Negotiate Implement & Manage Performance 1 2 3 4 5 Baseline Analysis Overview of Commodity (definition, usage, stakeholders, mission criticality, etc.) Spend Summary Existing Sourcing Strategy and Initiatives Existing Contracts Analysis Existing Sourcing Strategy & Initiatives Business Process and Policy Total Cost of Ownership Commodity Requirements Customer Needs Analysis/Requirements Socio-Economic Requirements Regulatory and Process Related Requirements Estimated Volume Requirements Market Analysis Findings and Opportunities Market overview (segments, size) Key trends Small Business Capabilities Comparison of market capabilities to requirements Potential Sourcing Levers SUMMARY OF ANALYSES PERFORMED Commodity Goals and Objectives (Includes scope, usage, mission criticality) Business Need/Case for Change Requirements “ As Is” Environment (sourcing strategy, process, technology) “ To Be” Environment (sourcing strategy, process, technology) Benefits Commodity Sourcing Strategy (strategy and tactics) Business Case Acquisition Strategy Implementation Plan COMMODITY STRATEGY

14. Focus on Mission Results in Performance-Based Acquisition Team Participants involved in the acquisition Must function as a single, integrated and mission focused unit M ission Knowledge Stable or Changing, Funding Criticality M arket Knowledge Best practices, leverage, competition, trends P rocess Knowledge Roles and Responsibilities, planning-execution-assessment-effectiveness P erformance Knowledge Ability to align Mission outcomes with performance requirements Mission Results = T ( M 2 + P 2 )

15. http://acquisition.gov/comp/seven_steps/index.html Seven Step PBA Process

16. Step 1 Establish an Integrated Solutions Team Ensure senior management involvement and support Tap multi-disciplinary experts Define roles and responsibilities Develop rules of conduct Empower team members Identify stakeholders and nurture consensus Develop and maintain the project knowledge base Incentivize the team – link program mission and team members’ performance

17. Step 2 Describe the problem that needs solving Link acquisition to mission and performance objectives Define (at a high level) desired results Decide what constitutes success Determine the current level of performance

18. Step 3 Examine private-sector and public-sector solutions Take a team approach to market research Spend time learning from public-sector counterparts Talk to private-sector companies before structuring the acquisition Consider one-on-one meetings with industry

19. Step 4 Performance Work Statement (PWS) Conduct an analysis. Apply the "so what?" test. Capture the results of the analysis in a matrix. Write the performance work statement. Let the contractor solve the problem, including the labor mix. Statement of Objectives (SOO) Begin with the acquisition's "elevator message." Describe the scope. Write the performance objectives into the SOO. Make sure the government and the contractor share objectives. Identify the constraints. Develop the background. Make the final checks and maintain perspective. Develop the PWS or SOO

20. Step 5 Decide how to measure and manage performance Review the success determinants Where do I want to go and how do I know when I’m there? Rely on commercial quality standards Have contractor propose metrics and quality assurance plan Select only a few meaningful measures to judge success And…

21. Step 5 (cont’d) Include contractual language for negotiated changes to metrics and measures Use contracting approach that promotes effective partnership Use incentive-type contracts Consider other incentive tools Recognize the power of profit as a motivator Consider the relationship Create and maintain mutual benefit and value

22. Step 6 Select the right contractor Compete the solution Let the contractors solve the problem Use downselection and “due diligence” Use oral presentations and other opportunities to communicate Emphasize past performance in evaluation Use best-value evaluation and source selection Assess solutions for issues of conflict of interest

23. Step 7 Manage Performance Keep the team together Adjust roles and responsibilities Assign accountability for managing contract performance Include the contractor in a post-award meeting Regularly review performance Ask the right questions Report on the contractor’s “past performance”

24. Focus on Mission Results in Performance-Based Acquisition Team Participants involved in the acquisition Must function as a single, integrated and mission focused unit M ission Knowledge Stable or Changing, Funding Criticality M arket Knowledge Best practices, leverage, competition, trends P rocess Knowledge Roles and Responsibilities, planning-execution-assessment-effectiveness P erformance Knowledge Ability to align Mission outcomes with performance requirements Mission Results = T ( M 2 + P 2 )

25. PBA Elements This is a concurrent, iterative process Identify Desired Results Data Assembly Requirements Analysis Performance Analysis Performance Standards Acceptable Quality Level Measurement Methodolgy Surveillance Schedule Surveillance Analysis Incentive Analysis Positive Negative

26. What keeps your customer up at night? Mission Success depends on Mission Knowledge Are the stakeholders actively involved? Have all risks been addressed? Is there stability in the mission? Is there flexibility in the plan? The elements of the PRS are tools used to ensure that the stakeholder needs are identified and met

27. What about Professional Services? Repetition and Context distinguish Professional Services from “commodity services” Repetition Commodity services have high levels of repetitive tasks Professional services vary with specific nature of the task Context Commodity services tend to be more repetitive, similar outcomes, and independent of context Professional service outcomes vary with tasking and are highly dependent on the context of task

28. How do we approach PBA Recognize that Professional Services are different, but a Performance Based Approach can be used Focus on Performance Results to be achieved Set the right performance standards “What problem are we trying to solve?” Define results that will meet our performance needs “How will I know if we’ve solved the problem?” Properties of the solution produce the needed results

29. Assessing Professional Services Requires a combination of objective and subjective performance factors Objective Measures Timeliness Cost Subjective Measures Quality Effectiveness Unbounded vs Bounded subjectivity Must create balanced set of performance expectations Promotes effective partnership

30. Maintain line of sight Linkage between Mission Outcomes & Results during Planning Mission Outcomes Performance Requirements Performance Standards Performance Measures Acquisition Strategy Performance Assessment Strategy Mission Results Mission outcomes that rely on an outside service provider to accomplish that enable successful execution of the primary mission Develop measurable Performance Requirements must be accomplished to achieve necessary mission outcomes. What are the critical few rather than the insignificant many Define the performance standards or levels that must be achieved to support mission outcomes. Standards drive cost, choose wisely Describe performance measures and methods to assess supplier performance in meeting mission outcomes Integrate business strategy, contract type and incentive structures to deliver innovation and best value mission support Implement team based, integrated, performance focused assessment strategy Assess and measure results, make honest, fact base decisions, include service provider in decisions. Surveillance is the Government’s main job MISSION SUPPORT PLANNING MISSION PLANNING EXECUTION MISSION PERFORMANCE ASSESSMENT

31. Be careful with infusing, overpowering, or defeating the project with some traditional elements that may contradict a PB approach----- Many specific, required labor categories Overly detailed personnel qualifications Contract management at the labor category level Source selection plans that do not reward innovation and creativity (Government risk aversion)

32. PBA Bottom Line “ In this business, I do not buy a service , I buy…. -”Miami Vice” Dec 2006 RESULTS”