## CHANGE REQUEST COVER SHEET

## Change Request Number: 04-35 

## 

## Date Received: 4/5/04

**Title:** Performance Based Service Contracting

# **Name:** Giles D. Strickler

**Routing Symbol:** ATO-A (ASU-370)

**Phone:** 267-8794

**Policy OR Guidance:** Guidance

**Section/Text Location Affected:** Procurement Toolbox T3.8.2.A.6

**Summary of Change:** To align guidance with policy and to ensure
compliance with contract terms regarding contractor personnel
qualifications requirements, and to discourage the use of explicit
qualification descriptions of personnel, with the exception of key
personnel needed certifications

.

**Reason for Change:** In response to the DOT OIG's cited deficiencies
related to management and oversight controls for cost-reimbursable
contracts (Source: OIG Report \# QC-2004-008, 12/19/03), the FAA CFO
defined an agency milestone to establish internal control procedures to
ensure compliance with contract terms establishing minimum contractor
position qualification requirements. These recommended changes are part
of the ATO's action plan to reach the milestone and remedy the DOT OIG
cited deficiencies.

**Development, Review, and/or Concurrence:** ASU-370, ASU-300, ASU-1,
ATO-VP of Acquisition and Business Services, and the DOT OIG.

**Target Audience:** All AMS Users

**Potential Links within FAST for the Change:** ASU-370 website's
Standard Operating Procedure (SOP) for Ensuring Compliance with
Contractor Personnel Qualifications Requirements.

#### Attachments: Language of change

### Briefing Planned: None 

**ASAG Responsibilities:** None

# [Change 04-35]{.underline}

[Language of Change:]{.underline}

# 

# AMS PROCUREMENT GUIDANCE

> New Text:

## 

## Procurement Guidance / T3.8.2 Service Contracting

# 

# A. Service Contracting

> **6. PERFORMANCE BASED SERVICE CONTRACTS** ~(Revised\ 04/2004)~
>
> a\. *Performance Based Service Contracts (PBSC).* Performance based
> contracting is a method for structuring all aspects of an acquisition
> around the purpose of the work to be performed with the contract
> requirements set forth in clear, specific, and objective terms with
> measurable outcomes as opposed to either the manner by which the work
> is to be performed or broad and imprecise statements of work. It is
> the preferred method for describing work in service contracts and
> should be used whenever it is appropriate because it is expected to
> provide improved contractor performance and lower prices. PBSC
> typically includes the following elements:
>
> \(1\) Performance requirements that define work in measurable,
> mission-related terms where the accomplishment of the effort is
> measurable;
>
> \(2\) Performance standards (i.e., quality, quantity, and timeliness)
> tied to the performance requirements;
>
> \(3\) A Government quality assurance (QA) plan that describes how the
> contractor's performance will be measured against the performance
> standards;
>
> \(4\) 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.
>
> b\. *Statements of Work* - When preparing statements of work, agencies
> shall, to the maximum extent practicable-

(1) Describe the work in terms of \"what\" is to be the required output
    rather than either \"how\" the work is to be accomplished or the
    number of hours to be provided;

(2) Establish [minimum]{.underline} position requirements but avoid
    explicit qualification descriptions of personnel (i.e. years
    experience, degree(s), certification(s), etc.), with the exception
    of "key" personnel. If "key" personnel and qualification
    descriptions are included in a contract, administration of the
    contract shall be in accordance with ASU Standard Operating
    Procedure (SOP) - Ensuring Compliance with Contractor Personnel
    Qualifications Requirements (found at the ASU-300 Intranet,
    <http://intranet.asu.faa.gov/asu300/index.htm>, or the Regional
    Office equivalent).

(3) Enable assessment of work performance against measurable performance
    standards;

(4) Rely on the use of measurable performance standards and financial
    incentives in a competitive environment to encourage competitors to
    develop and institute innovative and cost-effective methods of
    performing the work; and

(5) Avoid combining requirements into a single acquisition that is too
    broad for the agency or a prospective contractor to manage
    effectively.

> c\. *PBSC Resource Information.* The Office of Federal Procurement
> Policy (OFPP) has published information and checklists related to PBSC
> accessible on the Internet. A general discussion of PBSC is located on
> the Internet at: <http://www.arnet.gov/BestP/PPBSC/BestPPBSC.html> .
> In addition, a checklist tool useful in determining if PBSC is
> appropriate in a specific situation is located on the Internet at:
> <http://www.arnet.gov/References/Policy_Letters/pbscckls.html> .
> Finally DOD has a guide on performance based acquisition at:
> <http://www.acq.osd.mil/ar/doc/pbsaguide010201.pdf> 
> ~(Revised\ 04/2001)~
>
> d\. *The IPT Responsibility*. Integrated Product Teams (IPTs) should
> consider PBSC as the preferred method to obtain services and should
> use this method whenever appropriate. The IPT should consult the
> Internet resources referenced above as early in the acquisition cycle
> as possible to determine the feasibility of PBSC.
>
> e\. *Existing contracts.* There are active contracts that may be
> appropriate for PBSC. Whenever possible, the IPT should consider the
> feasibility of converting such contracts to be performance-based, or
> if possible to issue performance-based tasks pursuant to these
> contracts.

## 

## [Red-Line Text]{.underline}:

## 

## Procurement Guidance / T3.8.2 Service Contracting

# 

# A. Service Contracting

> **6. PERFORMANCE BASED SERVICE CONTRACTS** ~(Revised\ 04/2004)~
>
> a\. *Performance Based Service Contracts (PBSC).* Performance based
> contracting is a method for structuring all aspects of an acquisition
> around the purpose of the work to be performed with the contract
> requirements set forth in clear, specific, and objective terms with
> measurable outcomes as opposed to either the manner by which the work
> is to be performed or broad and imprecise statements of work. It is
> the preferred method for describing work in service contracts and
> should be used whenever it is appropriate because it is expected to
> provide improved contractor performance and lower prices. PBSC
> typically includes the following elements:
>
> \(1\) Performance requirements that define work in measurable,
> mission-related terms where the accomplishment of the effort is
> measurable;
>
> \(2\) Performance standards (i.e., quality, quantity, and timeliness)
> tied to the performance requirements;
>
> \(3\) A Government quality assurance (QA) plan that describes how the
> contractor's performance will be measured against the performance
> standards;
>
> \(4\) 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.
>
> b\. *Statements of Work* - When preparing statements of work, agencies
> shall, to the maximum extent practicable-

(1) Describe the work in terms of \"what\" is to be the required output
    rather than either \"how\" the work is to be accomplished or the
    number of hours to be provided;

(2) Establish [minimum]{.underline} position requirements but avoid
    explicit qualification descriptions of personnel (i.e. years
    experience, degree(s), certification(s), etc.), with the exception
    of "key" personnel. If "key" personnel and qualification
    descriptions are included in a contract, administration of the
    contract shall be in accordance with ASU Standard Operating
    Procedure (SOP) - Ensuring Compliance with Contractor Personnel
    Qualifications Requirements (found at the ASU-300 Intranet,
    <http://intranet.asu.faa.gov/asu300/index.htm>, or the Regional
    Office equivalent).

(3) Enable assessment of work performance against measurable performance
    standards;

(4) Rely on the use of measurable performance standards and financial
    incentives in a competitive environment to encourage competitors to
    develop and institute innovative and cost-effective methods of
    performing the work; and

(5) Avoid combining requirements into a single acquisition that is too
    broad for the agency or a prospective contractor to manage
    effectively.

> c\. *PBSC Resource Information.* The Office of Federal Procurement
> Policy (OFPP) has published information and checklists related to PBSC
> accessible on the Internet. A general discussion of PBSC is located on
> the Internet at: <http://www.arnet.gov/BestP/PPBSC/BestPPBSC.html> .
> In addition, a checklist tool useful in determining if PBSC is
> appropriate in a specific situation is located on the Internet at:
> <http://www.arnet.gov/References/Policy_Letters/pbscckls.html> .
> Finally DOD has a guide on performance based acquisition at:
> <http://www.acq.osd.mil/ar/doc/pbsaguide010201.pdf> 
> ~(Revised\ 04/2001)~
>
> d\. *The IPT Responsibility*. Integrated Product Teams (IPTs) should
> consider PBSC as the preferred method to obtain services and should
> use this method whenever appropriate. The IPT should consult the
> Internet resources referenced above as early in the acquisition cycle
> as possible to determine the feasibility of PBSC.
>
> e\. *Existing contracts.* There are active contracts that may be
> appropriate for PBSC. Whenever possible, the IPT should consider the
> feasibility of converting such contracts to be performance-based, or
> if possible to issue performance-based tasks pursuant to these
> contracts.