Department of Health and Human Services

[]{#__RefHeading___Toc133993348 .anchor}National Institutes of Health

[]{#__RefHeading___Toc133993349 .anchor}Competitive Sourcing Guidebook

Section H - Performance and Accountability

[National Institutes of Health i](#__RefHeading___Toc133993348)

[Competitive Sourcing Guidebook i](#__RefHeading___Toc133993349)

[Section H: Performance and Accountability
1](#performance-and-accountability)

[H.1. Policy 1](#policy)

[H.1.1 OMB Circular A-76 1](#omb-circular-a-76)

[H.1.2 NIH Policy 3](#nih-policy)

[H.2. Roles and Responsibilities 4](#roles-and-responsibilities)

[H.3. Procedures 11](#procedures)

[H.3.1 Key Definitions 11](#key-definitions)

[H.3.2 Tracking Competitions 12](#tracking-competitions)

[H.3.3 Milestones and Administrative Information
13](#milestones-and-administrative-information)

[H.3.4 Performance Monitoring 14](#performance-monitoring)

[H.3.5 Costs 18](#costs)

[H.3.6 OMB Reporting 21](#omb-reporting)

[H.3.7 Ad Hoc Reports 23](#ad-hoc-reports)

[H.3.8 Performance Actions 24](#performance-actions)

[H.3.9 Potential Pitfalls 26](#potential-pitfalls)

[H.4. Exhibits 26](#exhibits)

# Performance and Accountability

  -------------- -----------------------------------------------------------------
  **Objectives   
  for this       
  Section**      

  ****          Policy

  ****          Roles and Responsibilities

  ****          Procedures

  ****          Tracking Competitions

  ****          Milestones and Basic Information

  ****          Monitoring Performance

  ****          Costs

  ****          OMB Reporting

  ****          Ad Hoc Reports

  ****          Performance Actions

  ****          Potential Pitfalls
  -------------- -----------------------------------------------------------------

## Policy

### OMB Circular A-76

The following are specific sections of Office of Management and Budget
(OMB) Circular A-76 (revised) that are associated with the period of
time after a performance decision. These sections are mandatory and must
be followed in all Post-Competition work. ***If you are unfamiliar with
the terms used in this Section, please refer to Section A, Competitive
Sourcing Overview, and to the rest of this chapter, which covers the
requirements in more detail.***

> ATTACHMENT B, SECTION E. POST COMPETITION ACCOUNTABILITY FOR
> STREAMLINED AND STANDARD COMPETITIONS.
>
> 1\. Best Practices and Lessons Learned. Agencies shall post best
> practices and lessons learned resulting from a streamlined or standard
> competition process on SHARE A-76! at
> http://emissary.acq.osd.mil/inst/share.nsf/. An agency shall maintain
> the accuracy and currency of their agency's information, including
> links, on SHARE A-76!
>
> 2\. Execution Tracking of Streamlined and Standard Competitions.
> Agencies shall maintain a database to track the execution of agency
> streamlined and standard competitions. Agencies shall maintain a
> database that (1) assigns a unique tracking number to each streamlined
> and standard competition, (2) includes data fields as defined on the
> OMB web site at www.omb.gov, (3) tracks each streamlined and standard
> competition as events occur (real-time) from the date of public
> announcement through either completion of the last performance period
> or cancellation of the competition, and (4) retains historical records
> of streamlined and standard competitions after the last performance
> period has been completed.
>
> 3\. Competitive Sourcing Quarterly Report. An agency shall submit a
> Competitive Sourcing Quarterly Report to OMB, by the end of each
> fiscal quarter (December, March, June, September), that includes the
> following (1) in-progress streamlined and standard competitions (i.e.,
> competitions with start dates and pending performance decisions); and
> (2) completed streamlined and standard competitions (i.e.,
> competitions with performance decisions). The required format for
> these reports can be found on the OMB web site at www.omb.gov.
>
> 4\. Monitoring Performance. Regardless of the selected service
> provider, after implementing a performance decision, an agency shall
> (1) monitor performance for all performance periods stated in the
> solicitation; (2) implement the quality assurance surveillance plan;
> (3) retain the solicitation and any other documentation from the
> streamlined or standard competition as part of the competition file;
> (4) maintain the currency of the contract file, consistent with FAR
> Subpart 4.8, for contracts, MEO letters of obligation, and
> fee-for-service agreements; (5) record the actual cost of performance
> by performance period; and (6) monitor, collect, and report
> performance information, consistent with FAR Subpart 42.15, for
> purposes of past performance evaluation in a follow-on streamlined or
> standard competition. To record the actual cost of performance for a
> specific performance period, the agency shall adjust actual costs for
> scope, inflation, and wage rate adjustments made during a specific
> performance period. The agency shall compare the actual costs to the
> costs recorded on SCF Lines 6 and 7 when the performance decision was
> made.
>
> 5\. Option Years of Performance and Follow-on Competition.
>
> a\. Option Years of Performance. The CO shall make option year
> exercise determinations for agency, public reimbursable, and private
> sector performance decisions in accordance with FAR 17.207. Consistent
> with the FAR, the CO shall not approve performance periods that exceed
> the total number of years specified in the solicitation used in the
> standard competition.
>
> b\. Follow-on Competition. For agency or public reimbursable
> performance decisions, an agency shall complete another streamlined or
> standard competition of the activity by the end of the last
> performance period on the SCF or SLCF unless a specific exemption is
> granted by the CSO (without delegation) before the end of the last
> performance period. The CSO may extend the performance period for a
> high performing organization if the CSO (a) determines that continued
> cost savings justifies the extension; (b) documents these cost savings
> through the use of a COMPARE generated SCF or SLCF; (c) limits the
> extension to no more than 3 years after the last performance period;
> and (d) makes a formal announcement of the extension via
> FedBizOpps.gov. For private sector performance decisions, the CO shall
> comply with the FAR for follow-on competition.
>
> 6\. Terminations.
>
> a\. Terminations Based on Failure to Perform.
>
> \(1\) Notification. Consistent with FAR Part 49, the CO shall notify a
> service provider (i.e., private sector contractor, public reimbursable
> provider, or MEO) of poor performance through cure notices and show
> cause notices. The CO shall inform the head of the requiring activity
> of such notices.
>
> \(2\) Termination. If the CO determines that a service provider (i.e.,
> private sector contractor, public reimbursable provider, or MEO) has
> failed to perform to the extent that a termination for default is
> justified, the CO shall issue a notice of termination, consistent with
> FAR Part 49. Upon terminating an MEO letter of obligation, an agency
> shall change the inventory coding to reflect that the activity is no
> longer performed by an MEO and shall perform either a streamlined or
> standard competition.
>
> \(3\) Temporary Remedies. If the CO terminates a contract,
> fee-for-service agreement, or MEO letter of obligation for the service
> provider's failure to perform, an agency may use interim contracts,
> public reimbursable sources, or government personnel on an emergency
> basis. An agency shall not allow these temporary remedies to be used
> for longer than one year from the date of termination.
>
> b\. Terminations Based on Reasons Other than Failure to Perform. If an
> agency determines that performance by a service provider (i.e.,
> private sector contractor, public reimbursable, or MEO) is to be
> terminated for reasons other than failure to perform, the CSO (without
> delegation) shall approve such terminations, in writing, and provide a
> copy to OMB before the termination. Examples of these terminations
> include, but are not limited to, elimination of an agency requirement
> through divestiture, privatization, reorganization, restructuring,
> national defense, or homeland security.

### NIH Policy

The following are additional post-competition policies set by NIH in
order to implement the Circular in the NIH environment.

Post-Competition cost monitoring, quality assurance, and workload
tracking are required for all competitions, regardless of size or type,
and regardless of the selected IHSP.

## Roles and Responsibilities

The following individuals and groups play an ongoing role in the
performance and oversight of an IHSP. These roles and responsibilities
are essentially the same as the roles and responsibilities in Section G.

-   *Deputy Director for Management (DDM)*: The DDM has the ultimate
    responsibility for the A-76 program at the NIH, as delegated by the
    NIH Director, who serves as the NIH Competitive Sourcing Official
    (CSO). The DDM may bring issues that require higher-level review to
    the NIH Steering Committee, Management and Budget Working Group, the
    NIH Deputy Director, or the NIH Director, as appropriate.

-   *Executive Officers (EO):* The EO is normally the highest-level IC
    point of contact for an IHSP; however, the EO may or may not be in
    the Supervisory chain of IHSP personnel and operations, depending on
    the specific structure of the IHSP. The EO certifies all A-76 data
    provided by his or her IC to anyone outside the IC. The EO approves
    IC nominees for A-76 related roles. The EO provides feedback to the
    Project Officer regarding requests for PWS/RD modifications and MEO
    deviations. The EO may provide supporting documentation or initiate
    tracking of new work to justify a modification. The EO coordinates
    with the IHSP Manager, Supervisor, PO, or CO as necessary regarding
    potential modifications and deviations, or services to their IC. The
    EO is responsible for ensuring that all new work that is within the
    scope of an IHSP is directed to the IHSP, rather than other contract
    or in-house vehicles for the performance of work.

-   *Commercial Activities Steering Committee (CASC):* The CASC's
    responsibility, by charter, is to recommend policy to the DDM and
    make operational decisions to ensure that NIH successfully meets its
    responsibilities under the FAIR Act and under the Competitive
    Sourcing component of the President's Management Agenda, as outlined
    in OMB Circular A-76. The CASC will arbitrate and recommend
    resolution of disputes that cannot be settled by the PO, with the
    input of the Management Advisory Board. The PO or a majority of the
    Management Advisory Board have the authority to bring matters to the
    CASC for resolution.

-   *Commercial Activities Review Team (CART):* The CART Representatives
    are the NIH overall project leaders of the A-76 process. The CART
    provides assistance to the Implementation Team throughout the
    process, develops implementation policy, gathers and analyzes the
    data necessary for NIH-wide A-76 program reporting, and provides
    technical guidance to the Project Officer for developing tracking
    systems. On an exception basis, the CART provides staff support to
    the Project Officer for performance of quality assurance,
    performance tracking, and cost monitoring. This includes
    clarification of reporting and processes, guidance, and direction on
    timelines and schedules

-   *Contracting Officer (CO):* The CO awards the contract or
    establishes the LOO with the IHSP. The CO, as the overall authority
    of the contract or LOO, monitors the Implementation and performance
    of the Service Provider, approves all modifications and deviations,
    verifies that the work performed meets the standards in the PWS or
    RD, monitors costs, makes option year determinations, issues notices
    of termination, and maintains the contract and competition files.

-   *Project Officer (PO):* The PO assists the Contracting Officer in
    overseeing the Implementation and Stand Up process. The PO serves as
    the primary technical representative assigned to monitor the overall
    performance of the MEO and is the main point of contact between the
    Contracting Officer and the MEO Manager. The PO has delegated
    contract-related authority and responsibility for ongoing
    performance monitoring, cost tracking, and other contract-type
    oversight. The PO serves as the chair of the Advisory Group, when
    needed. The PO oversees development and recommends approval of all
    modifications to the PWS/RD and resources required to complete work.
    The PO reviews new and changed requirements to determine potential
    changes to the scope of the PWS or RD.

-   *IHSP Advisory Group:* The IHSP Advisory Group advises the PO on
    management issues associated with performance, staffing, and
    services provided by the implemented organization. The PO is the
    chair of the Advisory Group. The IHSP Advisory Group is different
    than the Decision Implementation Team and provides an additional
    resource to the Project Officer when making decisions, particularly
    when such issues affect multiple ICs. An Advisory Group will not
    normally be set up for an MEO that is whole or mostly contained
    within a single IC.

-   *In-House Service Provider (IHSP):* The term used to describe the
    MEO or "as-is" organization after a decision in favor of the
    Government's proposed organization has been made.

-   *Responsible Official*: The official responsible for signing the
    Letter of Obligation (LOO) and leading the implementation effort;
    the individual ultimately responsible for the MEO. The RO provides
    information to the community regarding IHSP services and lines of
    work. In many cases, the Agency Tender Official (ATO) becomes the
    Responsible Official, or could be the MEO Manager or Project
    Officer. The term "ATO" is typically not used after the award
    decision or after an MEO Manager or Project Officer is named.

-   *MEO Manager/Supervisors:* The MEO Manager is the highest position
    or supervisor in the MEO. The MEO Manager may be the original signer
    of the LOO or may have this responsibility delegated to him or her.
    The MEO Manager usually serves as the chair of the Implementation
    Team and oversees day-to-day efforts to ensure that the MEO performs
    within the limits proposed by the Agency Tender to accomplish the
    work in the PWS/RD. The MEO Manager provides reports to the PO
    regarding IHSP work counts and overall work being provided. The MEO
    Manager gathers cost data and provides quarterly cost monitoring
    reports to the Project Officer. The MEO Manager documents deviations
    from the PWS/RD, MEO, and Technical Proposal, monitors staffing and
    resource requirements, and reports deviations to the PO. The MEO
    Manager responds to comments, complaints, requests for modification,
    and other customer input.

-   *Office of Human Resources (OHR):* OHR is responsible for checking
    all hiring actions to ensure that they are not for work that is
    within the scope of an IHSP's work, but outside the IHSP
    organization.

The CART and CO are the primary resources for questions and concerns
regarding the monitoring of IHSP performance. This section will outline
the responsibilities of each involved party, and detail how to track the
performance of the IHSP for both internal and external reporting.

The relationships between major post-competition roles are particularly
important; these personnel play an ongoing role in the IHSP's
performance. Post-competition roles are modeled after a standard
contract relationship; the Circular defines an essentially contractual
relationship for performance of work after A-76 cost comparison. This
involves an administration effort (known as the IHSP administration)
that will be comprised of the Contracting Officer, the Project Officer,
and Quality Assurance Evaluator(s) and an IHSP effort that involves the
Responsible Official, IHSP Managers and Supervisors, and the IHSP staff.

A formalized relationship between these two groups is created when the
Letter of Obligation is issued by the Contracting Officer and signed by
the Responsible Official. The rest of the interactions between the
groups derive from the LOO, from the delegation of IHSP administration
authority from the Contracting Officer to the Project Officer and
Quality Assurance Evaluators, and in the supervisory relationships
within the IHSP. Figure H-1 shows the relationships between these
parties. The DDM, CASC, and CART coordinate and oversee resolution of
issues that arise between the IHSP administration and IHSP elements of
post-competition performance, with the DDM serving as the final arbiter
of disputes.

Figure H-1: Post-Implementation "Contractual" Relationships

Supervisory relationships are not shown in Figure H-1; there are
multiple possible supervisory relationships that may arise depending on
the specific structure of the IHSP and the organizations it supports.
For example, two likely scenarios arise for a centralized IHSP. In the
first instance, shown in Figure H-2, the Project Officer and Responsible
Official both report to a higher-level Management Official within an IC.
The Contracting Officer, DDM, CART, and CASC are all outside of this
formal supervisory chain, but maintain their working relationships for
the purposes of completing post-competition tasks.

In each case, there are certain separations that should be maintained.
Although there are no formal requirements to maintain a firewall or
separation in the Circular or the Federal Acquisition Regulation, there
is still a need to ensure that there is no real or apparent conflict of
interest between the IHSP and the IHSP Administration. Because of this,
it is NIH policy that the Project Officer must not report to the
Responsible Official. In addition, officials on the administration side
of an IHSP may not serve on the performance side of an IHSP, and vice
versa. The Responsible Official and Project Officer must be separate.
Roles cannot be combined across the IHSP/LOO Administration line. On
each side of the line, roles may be combined. For example, the
Responsible Official may be the MEO Manager, and the Project Officer may
perform the duties of a Quality Assurance Evaluator.

Figure H-2: Post-Implementation Supervisory Relationships in a
Centralized IHSP (Example 1)

In the second example, shown in Figure H-3, the Project Officer
supervises the Responsible Official, and the rest of the relationships
remain the same.

Figure H-3: Post-Implementation Supervisory Relationships in a
Centralized IHSP (Example 2)

The structure of a decentralized IHSP (shown in Figure H-4) leads to a
more complex management structure and set of relationships. The
structure in Figure H-4 illustrates reporting and coordination
requirements required when a function continues to be performed in
multiple ICs without consolidation or restructuring. The Points of
Contact listed in the IHSP are supervisors or managers who are over the
IHSP. In the example shown, the POCs are not a direct part of the IHSP.
This will allow the EO or management official to designate one person as
the POC for multiple studies, if he or she chooses to do so. IC POCs may
also be in-scope managers and supervisors for an IHSP. Under most
circumstances, the Project Officer and Quality Assurance functions
should be located in the IC with the preponderance of the IHSP effort.

Figure H-4a: Post-Implementation Supervisory Relationships in a
Decentralized IHSP (Alternative 1: Project Officer and Quality Assurance
under one EO)

Figure H-4b: Post-Implementation Supervisory Relationships in a
Decentralized IHSP (Alternative 2: Project Officer and Quality Assurance
centralized under the CART)

## Procedures

While it may seem that implementing the winning IHSP is the end of the
Competitive Sourcing process, it is in many respects just the beginning.
Now the IHSP must perform its functions successfully while LOO
administration tracks and monitors IHSP performance. In tracking
performance, it is important to ensure that:

-   The IHSP provides the required services to the specified standards
    as stipulated in the PWS.

-   NIH achieves (and reports to OMB) the results of the competition,
    particularly the savings achieved through the competition.

-   The IHSP meets the PWS/RD requirements within the costs proposed
    throughout the performance periods.

This is referred to as the "Post Competition Accountability" phase of
the process. The Government has always monitored contractor performance
when competitive sourcing studies resulted in a private sector decision;
all contracts are monitored to ensure that the Government is getting
what it is paying for. The revised Circular (May 29, 2003, Attachment B,
sub-section E) includes a requirement for post competition
accountability, and specifies that the performance of
**[all]{.underline}** Service Providers (in-house and private sector)
must be monitored and reported. Accountability and monitoring is a
formal requirement (i.e., it must be documented and auditable), which
assigns significant responsibility to the Contracting Officer, Project
Officer, and quality assurance staff.

### Key Definitions

Before reading the tasks for performance and accountability, here are
some key definitions to review for terms and acronyms that will be found
in this section.

-   *In-House Service Provider (IHSP).* The term used to describe the
    MEO or "as-is" organization after a decision is made in favor of the
    in-house proposed organization.

-   *Cost Monitoring*. The required effort to monitor costs incurred by
    an IHSP in the course of performing work under the requirements of
    an PWS/RD.

-   *Quality Assurance.* Surveillance and monitoring of the IHSP by the
    LOO Administration to ensure that NIH is receiving the products and
    services required by the PWS/RD.

-   *Quality Control.* Internal monitoring of performance conducted by
    the IHSP within its own organization.

-   *COMPARE:* The software tool that is used to generate costs using
    A-76 costing methodologies. The use of this tool is mandated by the
    Circular to develop cost estimates in all A-76 studies. The Agency
    Cost Estimate (ACE) document is generated using this software.
    Updates to the IHSP's A-76 costs are calculated in COMPARE as well.

### Tracking Competitions

The Circular specifies that agencies maintain a database of streamlined
and standard studies and track data. NIH has developed a mechanism for
meeting the Circular requirements using the OMB guidance for reporting
as a guide (see Section H.3.6). Tracking begins at the start of the
competition process and continues for the duration of performance. The
specific items that are tracked differ by phase of the process. The CART
arranges and may assist with training on the use of the NIH data
collection processes, which are described below. Additional information
is available at <http://a-76.nih.gov/> and from <a76@od.nih.gov>.

The items to be tracked, monitored, and reported include milestones,
performance, costs, and modifications or deviations. Modifications and
deviations are explained in [Section J](#_Scope_Changes_and); the
remainder is addressed in the following sections.

### Milestones and Administrative Information

The CART tracks milestones beginning with pre-planning and continuing
through the competition, implementation, and actual periods of
performance.

OMB and HHS request updates to competition information in real time; it
is important for personnel responsible for performance and
administration of an IHSP (the RO, CO, and the PO) to update the CART
with changes to the items listed below regularly. At a minimum, updates
shall be provided quarterly. Currently, the CART tracks the following
during post-competition monitoring:

-   *Functions studied*

-   *ICs included in the IHSP*

-   *Number of FTE and contractor-equivalent FTE associated with each
    study*

-   *Stand-up Dates*

-   *Option Year Dates*

-   *Name and contact information for the Contracting Officer,
    Responsible Official, Project Officer, MEO Manager, and CART
    representative*

See Exhibit H-1 for the format the CART uses to track this information.

In addition to the above data, the Contracting Officer is required to
track each competition from the date of public announcement through
either the completion of the last performance period or cancellation of
the competition in accordance with the FAR requirements for documenting
LOO performance. Historical records of competitions must be kept by the
Contracting Office even after the last performance period has been
completed. Records should be kept and maintained in accordance with both
Federal and NIH guidance.

### Performance Monitoring

One key aspect of post competition accountability is how to measure and
monitor the performance of the IHSP against the performance standards
listed in the RD or PWS.

Performance monitoring determines whether the IHSP is performing
adequately against the standards that were defined during the
competition. Monitoring an in-house organization is similar to
monitoring a private sector organization.

#### The Quality Assurance Program

The following is a review of how quality is managed, both internal and
external to the IHSP organization. Quality Assurance (QA) is a LOO
administration responsibility and is performed by personnel
*[external]{.underline}* to the IHSP. Quality Control (QC) is the
responsibility of the IHSP and is performed *[internal]{.underline}* to
the IHSP organization. The chart below gives a brief overview of the
differences.

+-----------------------------------+-----------------------------------+
| **What is Quality Control?**      | **What is Quality Assurance?**    |
+===================================+===================================+
| -   IHSP responsibility           | -   LOO administration            |
|                                   |     responsibility                |
+-----------------------------------+-----------------------------------+
| -   Purpose: Manage quality in    | -   Purpose: Measure and document |
|     performance of the processes  |     quality of the IHSP's outputs |
|     that ultimately lead to the   |     (products and services)       |
|     IHSP outputs (products and    |                                   |
|     services)                     |                                   |
+-----------------------------------+-----------------------------------+
| -   Evaluates day-to-day          | -   Evaluates outputs as well as  |
|     processes and operations to   |     effectiveness of IHSP QC      |
|     ensure outputs meet PWS       |     Program and Management        |
|     standards and avoid problems  |                                   |
|     that could lead to output     |                                   |
|     deficiencies                  |                                   |
+-----------------------------------+-----------------------------------+
| -   Based upon IHSP's Quality     | -   Based on Quality Assurance    |
|     Control Plan (QCP) to monitor |     Surveillance Plan (QASP) to   |
|     and improve internal          |     monitor IHSP overall          |
|     processes and performance     |     performance                   |
+-----------------------------------+-----------------------------------+
| -   Ensures all PWS requirements  | -   Ensures all PWS requirements  |
|     are being met in accordance   |     are being met in accordance   |
|     with standards                |     with standards                |
|                                   |                                   |
| -   Ensures that IHSP processes   |                                   |
|     produce consistent, reliable  |                                   |
|     results with a minimum of     |                                   |
|     risk of failure.              |                                   |
+-----------------------------------+-----------------------------------+
| -   Ensures customer satisfaction | -   Documents customer feedback   |
+-----------------------------------+-----------------------------------+

Quality Assurance Evaluators (QAEs) designated by the CO begin
monitoring the IHSP during the first full period of performance, and
continue monitoring for the duration of all performance periods stated
in the requirements document or solicitation. Once the IHSP has assumed
responsibility for performing the function, the Project Officer will be
responsible for monitoring performance and costs. (The Implementation
Team and the Project Officer must work closely at the beginning of the
first performance period to ensure that the Project Officer has all the
information he or she needs.)

#### The Quality Assurance Surveillance Plan

The Quality Assurance Surveillance Plan (QASP) is completed during PWS
or RD development, prior to the performance decision. The QASP guides
the personnel responsible for conducting inspections and other contract
surveillance activities. It describes the relative importance of the
various products and services to be performed, the frequency of
inspection to be performed on those products and services, and how those
products and services should be monitored. The development process for
the QASP is described in detail in Section C.

The PO reviews, refines, and implements the QASP during the
Implementation phase. During IHSP performance, the PO reviews and
consolidates quality assurance reports, discusses the results with the
Responsible Official or IHSP Manager, provides the reports to the
Contracting Officer, and may perform actual contract surveillance during
IHSP performance. Most direct monitoring for large IHSPs will be
completed by QAEs, while small IHSP monitoring is likely to be completed
by the PO.

#### The Quality Assurance Surveillance Program

The following are key steps in the Quality Assurance Program:

-   Scheduling surveillance (e.g., monthly inspections and validation of
    customer complaints)

-   Measuring performance (e.g., collecting and analyzing data)

-   Documenting performance (e.g., surveillance logs, complaint records,
    and discrepancy reports)

-   Updating the QASP (e.g., collection method modification,
    reduced/increased inspections)

The PO begins implementing the Quality Assurance Program during the
implementation phase. In that time, the PO outlines a schedule of
surveillance and identifies sources of monitoring data (i.e., work logs,
databases). This should be completed prior to standup, if possible.

Implementation continues after standup with initial surveillance
activities, including inspections and documentation of performance via
logs, complaint records, and evaluation worksheets. There are several
different types of surveillance that can be used; see Section C for
additional information regarding the specific types of surveillance and
how they are used in QASPs. In addition, the QASP itself may provide
detailed information on the methods of surveillance that are to be used.

The Quality Assurance Program must be fully implemented by the end of
the fiscal quarter during which standup occurred, with revisions and
improvements allowed at any time.

The initial surveillance activities may highlight areas where additional
refinement may be useful, and the PO and QAEs should evaluate the
results of the initial sets of surveillance with the goal of completing
an update to the QASP methods within a few months of standup.

In addition to monitoring products and services, most Quality Assurance
Programs include ongoing monitoring of the IHSP's Quality Control
Program to assess whether it has been implemented and whether it is
effective. The monitoring should determine whether the IHSP's Quality
Control activities ensure that internal processes result in products and
services that meet the PWS/RD performance and technical requirements. It
may also be possible to determine a correlation between a lack of QC and
poor performance of services and products.

#### Quality and Performance Meetings

A second early effort occurs when the Project Officer and QAEs define
and establish lines of communication and responsibility between QA, IHSP
QC, and other IHSP functions. The following is a generic outline of the
communication lines and responsibilities of each area. This format may
be customized to fit specific organizations and needs.

The Project Officer, Contracting Officer, and Responsible Official (or
MEO Manager, if the RO delegates this responsibility) should meet on a
quarterly basis to discuss quality, issues that may be impacting the
IHSP's ability to perform (i.e., lack of GFP availability), and other
mutually beneficial topics. These meetings should be part of the overall
Quality Assurance Program. The frequency of meetings should be adjusted
based on the IHSP's performance and NIH's satisfaction with that
performance.

#### Quality Assurance Review of Key Documents

The Project Officer and QAEs should be very familiar with the key
documents of the organization and study. This includes the PWS or RD,
Agency Tender, QCP, QASP, and, where needed, the Agency Cost Estimate.
It also includes all modifications to the PWS/RD and the associated
changes to the MEO or Agency Cost Estimate.

These documents are the basis for all monitoring and comparison that
will be conducted during the performance periods. All of these documents
should also become a part of the official contract file, and any changes
(see [Section J](#_Scope_Changes_and)) to any of these documents should
also be noted in the official competition file.

#### Quality Assurance Reporting

QAEs perform surveillance based on the schedules developed by the PO.
They report their surveillance findings to the PO monthly. If there has
been a performance problem or other change that indicates an increased
reporting requirement, the PO will determine how often the QAEs will
report.

Quality Assurance reports are statements of fact, documenting
[objective]{.underline} inspection findings regarding the IHSP's
performance. The findings should tie directly to the PWS performance and
quality standards and should not be based on the QAE's perception of
what the IHSP should be doing. Over time, the QAEs should also conduct
in-depth analysis and identify performance trends, re-occurring
deficiencies, and to help the PO determine the overall quality of
contract performance. It is the responsibility of the PO and CO to
determine actual contract performance deficiencies and take any
necessary corrective actions.

The Project Officer should provide a Progress Report to the CO on a
quarterly basis to show how the IHSP is performing overall and against
individual performance standards. The Project Officer should note any
deviations or deficiencies in performance and the corrective action that
should be or is taking place.

### Costs

Cost tracking and monitoring requirements apply to all organizations
resulting from an A-76 competition, including Streamlined Competitions
that used the "as is" organization.

The following terminology will help understanding the following tasks
and requirements.

-   *Actual A-76 Costs:* The A-76 cost of the organization based on the
    resources expended in the organization that has been implemented as
    a result of an A-76 competition. The actual A-76 costs are
    calculated using the A-76 costing rules outlined in the Circular.

-   *Operating Budget Costs:* The operating costs of the organization
    developed using NIH budgeting rules and reported through the
    standard NIH budget reporting channels.

In other words, there are two different operating costs: one for NIH and
one for OMB. The Responsible Official and MEO Manager will be interested
in, and report, both costs, albeit through separate reporting
mechanisms. Actual A-76 costs are reported through the MEO Manager or
Responsible Official to the Project Officer and from the Project Officer
to the CO and the CART, with certification by the EO. Operating budget
costs are handled using the standard NIH budget processes.

In order to complete the cost monitoring reports, the RO and PO will
need hard copies or electronic PDF files of the most recent version of
the winCOMPARE Agency Cost Estimate (ACE) from the competition. If this
information is not already in their possession, it can be obtained from
the CO. If the RO and PO have the Agency Cost Estimate winCOMPARE file,
they may need support from the CO, CART, or a consultant to access the
needed information.

All resources used to support work in the PWS/RD must be included in the
quarterly reports. Resources that were originally assigned to support
PWS/RD requirements, but which have been reassigned to other efforts,
should not be included. For example, if an IHSP employee is detailed to
another organization that does not perform PWS/RD requirements, that
employee's time should not be captured in the cost monitoring reports.
Regular vacation and sick leave should be included in the IHSP
employee's reported time to the same proportion that the employee is
assigned to the IHSP. (So if the employee is 25% in the IHSP, then 25%
of his or her vacation time would also be an IHSP resource.) Unusual
leave situations, such as long-term sick leave, should not be reported
as part of the IHSP's support.

If resources have been added to the IHSP, such as hiring a new employee
or changing the contract level of support, these changes should be
reported at their current actual levels of support to the PWS/RD. In
addition, all changes to the IHSP's structure should be documented as
deviations; see Section J for more information.

In order to complete the cost monitoring report, the MEO Supervisor
compiles a list of the personnel who are supporting the PWS/RD. If this
information has not already been obtained, it may be necessary to
collaborate with the HRA to obtain specific information on the IHSP
personnel. The completed and finalized Implementation Staffing Status
Form referenced in section G (also provided in Exhibit G-8) provides the
initial list of IHSP staff and can be used as a starting point for
gathering the personnel information.

Data Warehouse is a mechanism which allows NIH managers and
administrators to collect data and create and save queries and reports.
It can also be a good resource for generating reports that may be
helpful in obtaining information for some of the items bulleted below.

-   Acquisition and Contract Management

-   Budget and Finance

-   Budget Tracking

-   Staff Training and Development

-   Financial and Human Resources Analysis tools

-   HR-- Personnel Costs

-   HR-- Workforce Demographics and Personnel Actions

-   Workforce Trending

For each employee, whether fully or partially in the IHSP (and including
supervisors included in the IHSP), the following information is needed:

-   Last Name

-   First Name

-   Position Title

-   Position Type

-   Pay Plan and Grade

-   Organization (MEO) Name

-   Proposed FTE

-   Actual FTE

-   Regular Scheduled Tour of Duty

-   Premium Pay Hours (OT, Sunday, Holiday, Night or Shift work,
    Environmental or Hazardous work) and Awards

-   Personnel Actions (accessions, separations, and promotions)

The MEO Supervisor enters the information collected in the Personnel
Costs Tracking Form provided in Exhibit H-2. If an employee was out on
extended leave and his or her work has been reassigned on a temporary
basis, the MEO Supervisor documents the change on the form and does not
report the employee who is on extended leave as a part of the IHSP
costs. This exception is to be used only for long-term leave, and is not
to be utilized in the case of vacations or short-term illnesses.

In addition, an MEO Supervisor identifies and gathers additional costs
incurred while performing work within the scope of the PWS/RD. These
include subcontracts, travel, training, supplies, and equipment. The
types of included additional costs should match those that were included
in the Agency Tender/Cost Estimate. For example, equipment may be
government furnished (and not included in the Agency Tender/Cost
Estimate), but a new piece of equipment purchased by the IHSP for
performance of PWS/RD work may be a cost that needs to be reported.
These costs should be entered on the Additional Costs Tracking Form
provided in Exhibit H-3.

Both tracking forms are to be completed and submitted each fiscal
quarter by all implemented IHSPs. The CART will issue quarterly
reminders with updated pre-populated tracking forms to the Project
Officer. All pre-populated information should be reviewed for accuracy
by the RO or MEO Manager prior to distribution to the MEO Supervisors
for completion.

The MEO Supervisor should complete the form for their respective part or
employees within the IHSP. After the MEO Supervisor completes the form,
the approval chain varies somewhat depending on the IHSP's structure. In
each case, however, the following individuals must provide their
approval before the forms are submitted to the Contracting Officer and
the CART:

-   MEO Supervisor

-   IC POC, if required

-   Responsible Official or MEO Manager (if one has been designated)

-   Executive Officer, if required

-   Project Officer

Since every IHSP organization is different, the approval chains for the
forms also differ. Some studies may have the same person designated as
the MEO Manager and the MEO Supervisor. In rare exceptions, the PO and
MEO Manager may also be the same person. If this occurs, the person
serving in dual roles should sign all lines associated with his or her
multiple roles. It is necessary to obtain the signature of the EO
because they must provide approval before any information is submitted
outside the IC. The EO may choose to delegate this responsibility, but
this approval step must be included.

> As an example, for a decentralized organization it may be necessary
> for the MEO Manager to rely on Supervisors to initially fill out the
> Personnel Cost Tracking Form. However, for a centralized organization,
> the MEO Manager may be able to complete the Form herself.
>
> Once approval is obtained from the Supervisor, EO, and the MEO
> Manager, the PO reviews the Form and approves the information. The PO
> is then responsible for submitting the completed and signed forms to
> the CO and the CART.
>
> Once the information has been collected, the CART will complete an
> analysis of the current costs of the IHSP. These data will be sent to
> the Project Officer for review and corrections, if any are needed, and
> then the corrected data will be provided to the Contracting Officer
> and the EOs associated with the IHSP. The EOs will have only the data
> associated with their portion of an IHSP, not the entire IHSP. The
> data will then be used to populate the contract file and to complete
> the reports (discussed below) required by the NIH Director, HHS, and
> OMB.

### OMB Reporting

It is necessary to track the status of the competition and keep the
information up to date in order to accurately compile and submit the
mandated reports to OMB in a timely manner. OMB is interested in much of
the data discussed above, consolidated and at a higher level. Normally,
OMB requests a quarterly "snapshot" of the progress of the competitive
sourcing program, with occasional ad-hoc requests regarding specific
data. The OMB focus is on the results of completed studies, which they
primarily measure in terms of resource savings.

#### Competitive Sourcing Quarterly Report

OMB requires each agency to submit a Competitive Sourcing Quarterly
Report at the end of each fiscal quarter. With the assistance of the PO
and Responsible Official or MEO Manager, the CART gathers individual
study information and prepares NIH "feeder" reports for HHS. HHS then
submits the agency's aggregate quarterly report to OMB. The compiled HHS
data are the basis for OMB preparing the Competitive Sourcing
"scorecard" for the President's Management Agenda (PMA). (Section A of
this guidebook provides more information on the PMA and "scorecard.")
The PMA scorecard reports both an agency's [current status]{.underline}
(red, yellow, or green) in meeting the PMA Competitive Sourcing
objectives as well as its [progress towards]{.underline} meeting those
objectives. Thus, the color codes for the scorecard are ultimately
derived from the data provided on the agency's specific studies. This
required data covers two main categories:

-   Announced/In-progress streamlined and standard competitions
    (including those with start dates or pending performance decisions)

-   Completed streamlined and standard decisions

OMB has created a number of spreadsheets. Some of these are worksheets
and others are the summary or reporting spreadsheets to be used in
developing the Quarterly Report. The formatted spreadsheets for the
Competitive Sourcing Quarterly Report can be found on the OMB web site
([www.omb.gov](http://www.omb.gov/)); also, a sample completed report in
Exhibit H-3. The following summary table of the OMB spreadsheets will
help explain what OMB is requesting.

Table H-1: Summary table of the OMB Spreadsheets

+----------+-----------------------------+-------+---------+---------+
| **Sprea  | **Definition**              | **    | **Rec   | **Sub   |
| dsheet** |                             | Prepa | eiver** | mission |
|          |                             | rer** |         | Tim     |
|          |                             |       |         | eline** |
+==========+=============================+=======+=========+=========+
| **W      | Worksheet for gathering the | CART  | Su      | Qu      |
| orksheet | data pertaining to each     |       | bmitted | arterly |
| W.1**    | completed competition,      |       | to      |         |
|          | including the function,     |       | comp    |         |
| C        | type of competition, FTE    |       | etitive |         |
| ompleted | studied, results, cost of   |       | s       |         |
| Comp     | conducting the studies,     |       | ourcing |         |
| etitions | estimated and actual        |       | o       |         |
|          | savings, and other          |       | fficial |         |
|          | performance improvements.   |       | at DHHS |         |
|          | These data elements are     |       |         |         |
|          | summarized first by type of |       |         |         |
|          | competition then rolled up  |       |         |         |
|          | to totals for all           |       |         |         |
|          | competitions.               |       |         |         |
+----------+-----------------------------+-------+---------+---------+
| **W      | This worksheet is for       | CART  | Su      | Qu      |
| orksheet | gathering data on studies   |       | bmitted | arterly |
| W.2**    | that have been announced    |       | to      |         |
|          | but are not yet completed.  |       | comp    |         |
| A        | It merely provides a        |       | etitive |         |
| nnounced | snapshot of what studies    |       | s       |         |
| Comp     | are in progress and which   |       | ourcing |         |
| etitions | will eventually appear on   |       | o       |         |
|          | worksheet W.1 as completed  |       | fficial |         |
|          | in the future.              |       | at DHHS |         |
+----------+-----------------------------+-------+---------+---------+
| *        | This spreadsheet summarizes | DHHS  | DHHS    | A       |
| *Summary | the data from the various   |       | submits | nnually |
| S.1**    | W.1 worksheets.             |       | to OMB  | by      |
|          |                             |       |         | Fiscal  |
| C        |                             |       |         | Year    |
| ompleted |                             |       |         |         |
| Comp     |                             |       |         |         |
| etitions |                             |       |         |         |
+----------+-----------------------------+-------+---------+---------+
| *        | This spreadsheet summarizes | DHHS  | DHHS    | A       |
| *Summary | the data from the various   |       | submits | nnually |
| S.2**    | W.2 worksheets              |       | to OMB  | by      |
|          |                             |       |         | Fiscal  |
| A        |                             |       |         | Year    |
| nnounced |                             |       |         |         |
| Comp     |                             |       |         |         |
| etitions |                             |       |         |         |
+----------+-----------------------------+-------+---------+---------+
| *        | This spreadsheet is really  | DHHS  | DHHS    | A       |
| *Summary | a specialized (i.e.         |       | submits | nnually |
| S.3**    | abbreviated) summary of the |       | to OMB  | by      |
|          | data presented in the S.1   |       |         | Fiscal  |
| Savings  | Completed Competitions      |       |         | Year    |
| and      | Summary. As the title       |       |         |         |
| Per      | suggests, the focus of this |       |         |         |
| formance | report is savings, with     |       |         |         |
| Update   | performance improvement as  |       |         |         |
|          | a secondary concern. (An    |       |         |         |
|          | example of a completed      |       |         |         |
|          | quarterly report is         |       |         |         |
|          | provided in Technical       |       |         |         |
|          | Exhibit H-3.)               |       |         |         |
+----------+-----------------------------+-------+---------+---------+

Comments on performance improvements should not be overlooked,
especially if an MEO or IHSP's organization has resulted in improved
customer service or other beneficial operational performance. This is
important information to share with OMB when documenting the overall
results of the competition.

The CART will visit the OMB website prior to preparing the quarterly
report to determine if there have been any updates to the various
spreadsheets. (Typically, HHS sends updates and instructions via e-mail;
however, it is good practice to verify.)

### Ad Hoc Reports

OMB may request information from NIH at any time regarding the status of
a competition or performance following a decision, and NIH leadership or
competitive sourcing officials may request data with very short
turnaround times. In order to meet these short deadline requirements,
the MEO Manager, Project Officer, and CO should all maintain complete
and accurate files that include:

-   Milestone and administrative data

-   Quality Assurance reports and data

-   Cost reports and data

-   Modification and deviation information

### Performance Actions

#### Option Periods

The Circular states that option periods will be exercised in accordance
with the FAR, regardless of the Service Provider. This will entail a
substantial change to the way an organization operated before it became
an IHSP.

The CO, in conjunction with the NIH PO, will make option year exercise
determinations for NIH in-house organizations in accordance with the
basic criteria of the FAR. Exercise of options is discussed in FAR Part
17.202. Similar to a contract, the IHSP must meet the performance
standards of the PWS/RD and the cost levels in its Agency Cost Estimate
or the CO [should not]{.underline} exercise the upcoming optional period
of performance.

The documentation done during the performance monitoring, including
quality assurance and cost documentation in particular, will help the CO
make a valid and appropriate decision.

The following are the steps for exercising an IHSP's option:

-   Determine the effect of changes in A-76 costing (pay scales,
    inflation factors, etc.) on the option year cost

-   Ensure that:

    -   Funds are available

    -   The requirement fulfills an existing Government need (wherever
        possible, use documentation of current work requirements)

    -   Exercising the option is the most advantageous method of
        fulfilling the government's need, considering price, the
        Government's need for continuity of operations, potential costs
        of disrupting operations, and other factors

-   Make the determination to exercise the option based on one of the
    following:

    -   A new solicitation fails to produce a better price or more
        advantageous offer than that offered by the option. (Use this
        only when the IHSP is expected NOT to win a new competition.)

    -   An informal analysis of prices or examination of the market
        indicates that the option price is better than prices available
        in the market, of that the option is the more advantageous
        offer.

    -   The time between the award of the LOO and the exercise of the
        option is so short that the option price is likely to be the
        lowest price obtainable or the more advantageous offer,
        considering market stability and the usual duration of contracts
        for similar services.

-   Make a written determination for the contract file that exercise is
    in accordance with the terms of the option, the Circular, FAR Part
    17.202, and FAR Part 6 (regarding full and open competition).

-   Notify the Responsible Official in writing that the option has been
    exercised.

#### Follow-On Competitions 

Even if the MEO wins the initial A-76 competition, the CO must conduct a
follow on competition at the end of the period of performance (commonly
5 years)while ensuring no discontinuity of services occurs. The CO
cannot approve performance periods that exceed those specified in the
solicitation used in the competitive sourcing process. This means even
for in-house performance, the function must be re-competed once all of
the option periods of performance have been exercised. There are special
situations where a high performing activity can have their performance
extended by no more than three years, but this is a decision made by the
CSO.

Depending on the needs of customers and how the function has evolved
over the duration of the performance periods, a follow-on competition
may be as simple as fine-tuning the solicitation to reflect current
workload, mission, and other tasks, issuing a new solicitation in
accordance with the FAR and the Circular, and ultimately awarding a
contract to a private sector firm or a LOO to the IHSP prior to the end
of the last performance period.

However, in some cases it may mean a more in-depth analysis of the tasks
needed and also a full analysis of the workforce to determine how to
improve the IHSP, or the development of a new IHSP structure to compete
with the private sector.

Regardless of the provider, another Streamlined or Standard Competition
of the activity must be completed by the end of the final performance
period.

#### Terminations

The Circular specifies that the IHSP is to be treated similarly to a
contractor if there is cause for termination. The Responsible Official
and MEO Manager must be aware of the Circular's policy, and be proactive
in preventing failure of the organization. The IHSP must be fully aware
of mission realignments, changes in workload or customer base, and
anything else that affects the organization's ability to meet the work
and cost standards in the PWS/RD and Agency Tender/Agency Cost Estimate.
The IHSP make the PO and CO aware of such changes as soon as they are
discovered or realized. Section J (Scope Changes and Modifications)
provides steps on how to identify and address these issues without
risking organizational failure.

If there is cause to terminate an IHSP, the process follows the FAR
relatively closely. The IHSP is notified of the termination, and a
follow-on A-76 competition is performed to determine who will perform
the work after termination. Termination due to failure to perform will
result in a poor past performance rating for the IHSP and will reduce
the IHSP's chances of success in a re-competition.

Terminations may also occur for other reasons, such as the elimination
of an agency requirement through divestiture, privatization,
reorganization, restructuring, or national defense or homeland security
decisions. If HHS determines that such a situation exists, the HHS CSO
must approve the termination, in writing, and provide a copy to OMB
before the termination takes place. Contact the CART for additional
guidance if a termination is being contemplated.

### Potential Pitfalls

There are some pitfalls to avoid in the performance and accountability
stage of the process. Make sure the necessary information is gathered
regularly, as reports to HHS and OMB must be timely. Furthermore, the
information gathered is critical to future competitive sourcing efforts
and not doing a thorough job can impede NIH's competitive sourcing
success.

Be sure to keep QA and QC separate. The terms are easy to mix up, but it
is very important that the functions remain distinct.

Ensure that cost data are gathered, tracked, and maintained in a
readable and readily accessible format. They are referenced very often.

## Exhibits

######### Contact Information and Data for A-76 IHSPs

######### Cost Tracking Worksheets

######### Competitive Sourcing Quarterly Report (Sample)

######### OMB Report Summary Table

######### Key Position Summaries

#  {#section .unnumbered}