# Presentation: 524105

## Performance-Based Acquisition Lunch Time Learning SessionPresented by Julia Wise, Office of Federal Procurement Policy,Gregg Garrett, Acquisition Solutions, Inc. on behalf of the OFPP PBA Interagency Working GroupMarch 20, 2008

**Performance-Based Acquisition Lunch Time Learning Session*****Presented by ******Julia Wise, Office of Federal Procurement Policy,******Gregg Garrett, Acquisition Solutions, Inc. ******on behalf of the ******OFPP PBA Interagency Working Group******March 20, 2008***

**Notes:**
Performance-based contracting gives us an opportunity to transform the nature of service delivery, and enable the federal government to tap the creative and innovative nature of private industry by allowing them to propose their best solutions for our desired outcomes.  

## Agenda 

**PBA policy, goals, and training**
**OFPP Interagency Working Group Activities --> improve PBA guidance**
**Seven Steps to Performance-Based Acquisition Overview and Discussion**

## OFPP Focus: Increase the appropriate use and management of PBA 

**OFPP Focus: Increase the appropriate use and management of PBA**** **

**Provide PBA guidance to help agencies **
**Determine appropriate use of SOO and PWS for their PBA**
**Understand appropriate performance incentives to use for PBA **
**Establish performance measures appropriate for their service requirement. **
**Build a network of PBA experts across government agencies to institutionalize PBA knowledge and skills within agencies.  **
**Provide PBA sample documents for various service categories.    **
**Current samples are available on the Seven Steps web site at www.acquisition.gov/sevensteps**
**             **

**Notes:**

Other PBA related tasks
Review agency 5-Year PBA Management Plans and will issue a memo highlighting agency best practices.

Evaluate the SARA Panel’s 10 PBA recommendations and implement as appropriate.

## PBA 

- Is an Acquisition Strategy used to structure _all_ aspects of an acquisition around the purpose of the work to be performed to obtain an innovative solution to meet the government’s objective.  (FAR)
- Align acquisition objectives with agency objectives. (GPRA)
- Use the PBA strategy to the _maximum extent practicable_ on eligible service requirements (FASA).
- 		Agencies are not required to use PBA_ _on: A&E, 	construction, utility services, services incidental to 	supplies, R&D, professional medical services, 	tuition, registration, and membership Fees.
- Use PBA and FAR Part 12, commercial procedures, when certain conditions exist (SARA).
- FPDS PBA Reporting Requirement:  Report on eligible service acquisitions awarded as PBA $25,000 and above.

**Notes:**
The FAR defines PBC, requires the use of PBC methods where practicable, dictates a contract type precedence for PBC and requires agencies to better match their acquisition and contract administration strategies to the specific requirements. Essentially, PBSC requires structuring the acquisition around "what" is required as opposed to "how" the contractor should do the work. PBSC is based on the development of a performance work statement, which defines the work in measurable, mission-related terms. Performance standards (i.e., quantity, quality, timeliness) are assigned to the performance requirements, and a Government quality assurance (QA) plan describes how the contractor’s performance will be assessed against the standards. Positive and negative incentives, based on the QA measurements, are assigned to stimulate desired performance. 

A contract or order structured around the solutions or results desired. FAR 2.101
Problem to be solved?
Outcome to be achieved?
Requires upfront time/planning

A contract that describes the agencies needs in terms of what is to be achieved, not how it is to be done.  FAR 2.101 says performance-based contracting" means 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. 

Besides all the policy in place that says we will do PBC.  

We are moving to a performance based environment because 
There is increased scrutiny and emphasis from Congress. They are looking to ensure that we are contracting for results. 
It increases innovation and leverages contractor expertise. Industry wants to offer their best solution to the Government and PBC allows them to do that. 
Shifts the government toward commercial business practices. 
Increases performance and quality. Service acquisitions are increasing in frequency and complexity and we need to ensure we are getting the best performance we can obtain from the contractor.
PBC moves the focus from process to results.  

However, PBC is not a “one size fits all” process. It emphasizes the use of performance requirements and quality standards in defining your requirement.  

## PBA Performance Goals

**PBA Performance Goals**

| Fiscal Years | Target Achievement Goals (eligible service contract dollars over $25,000 should be performance-based)  | Actual PBA Goal (Average Government-wide PBA Goal achieved) | DOI Performance Actual Data (based on FPDS data) |
| --- | --- | --- | --- |
| 2001 | 10% | 26% | 21% |
| 2002 | 20% | 34% | 31% |
| 2003 | 30% | 35% | 37% |
| 2004 | 40% | 41% | 30% |
| 2005 | 40% | 51% | 18% |
| 2006 | 40%+ | 49% | 30% |
| 2007  | 45%+ | 45%  + projected | 27% projected |
| 2008 | 50% | 50%  + projected | 5% increase above FY 2007  |

## PBA Elements

- Performance Work Statement (PWS) or Statement of Objectives (SOO) describes the requirements in terms of results or outcome;
- Measurable performance standards (MPS) (e.g. quality, timeliness, quantity, etc.) used to determine whether the contract work requirements have been met;
- Performance Incentives (e.g. negative or positive or monetary or non-monetary) gives the contractor an incentive to provide superior, faster, or more service to achieve your results.  Of course, poor, slower, or less service than expected will lessen their profits and will not afford them an incentive.
- Quality assurance (QA) provisions should be included in all contracts and is the method of assessing the contractor’s performance in meeting the standards. (e.g. warranty, inspection and acceptance clauses, etc.) are not unique to PBA. The type and extent of the contract quality requirement depends on the acquisition.

**MPS**

**PWS**
**or SOO**

**QA or QASP**

**PBA-**
**Cust/Ktr**
**Relationship**

**Incentives**

**Results**

**Notes:**
The FAR defines PBC, requires the use of PBC methods where practicable, dictates a contract type precedence for PBC and requires agencies to better match their acquisition and contract administration strategies to the specific requirements. Essentially, PBSC requires structuring the acquisition around "what" is required as opposed to "how" the contractor should do the work. PBSC is based on the development of a performance work statement, which defines the work in measurable, mission-related terms. Performance standards (i.e., quantity, quality, timeliness) are assigned to the performance requirements, and a Government quality assurance (QA) plan describes how the contractor’s performance will be assessed against the standards. Positive and negative incentives, based on the QA measurements, are assigned to stimulate desired performance. 

A contract or order structured around the solutions or results desired. FAR 2.101
Problem to be solved?
Outcome to be achieved?
Requires upfront time/planning

A contract that describes the agencies needs in terms of what is to be achieved, not how it is to be done.  FAR 2.101 says performance-based contracting" means 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. 

Besides all the policy in place that says we will do PBC.  

We are moving to a performance based environment because 
There is increased scrutiny and emphasis from Congress. They are looking to ensure that we are contracting for results. 
It increases innovation and leverages contractor expertise. Industry wants to offer their best solution to the Government and PBC allows them to do that. 
Shifts the government toward commercial business practices. 
Increases performance and quality. Service acquisitions are increasing in frequency and complexity and we need to ensure we are getting the best performance we can obtain from the contractor.
PBC moves the focus from process to results.  

However, PBC is not a “one size fits all” process. It emphasizes the use of performance requirements and quality standards in defining your requirement.  

## The Integrated Acquisition  or Project Team

*PBA involves the entire acquisition team -FAR Part 1.102-3.  *

- Technical
- Community

- Program Manager

- Business/
- finance

- End-user

- Contracting

- Industry

- Legal

- Quality
- Assurance

***Roles/Responsibilities***

**Notes:**
The Acquisition Team must include the right people!!!  Program personnel have the responsibility for preparing technically adequate and accurate PWSs.  Contracting personnel, however, must carefully review them to make sure they comply with the FAR.  The easier method is to work together to develop the PWS.  In writing the PWS.

This process has to involve the right people, right place, right time, and the right project.  The process has to move from an individual functional focus on products/services, to one based on an outcome managed by multi-disciplined teams.   Emphasis is on insight and partnering with the contractor. Involve industry and promote the use of the commercial marketplace, adapt best practices and lessons learned. 

The FAR (1) recognizes that the teams begin with the customer and ends with the contractor and (2) outlines procurement policies and procedures that are used by members of the acquisition team. It specifically states that contracting officers "should take the lead in encouraging business process innovations and ensuring that business decisions are sound."
Each person on the team has an important role. Accordingly, each member of the Team is responsible and accountable for the wise use of public resources as well as acting in a manner which maintains the public's trust. Fairness and openness require open communication among team members, internal and external customers, and the public.
The team should work together to:  
Identify the requirement and meet on a regular basis. 
Develop PBC elements and that includes the PWS or SOO, the standards, acceptable quality levels and monitor performance.
Get as much training in PBC as you can as a team.  
And again do market research.  It is so crucial to your requirement.  Know what’s out there in the market!

## PBA FAR References

- FAR 1.102, Statement of Guiding Principles – highlights PM role*.
- FAR Part 2, Definition - new definitions*.
- FAR Part 7 Acquisition Planning
- FAR Part 8, Federal Supply Schedules
- FAR Part 10, Market Research
- FAR Part 11, Describing Agency Requirements
- FAR Part 16, Types of Contracts
- FAR Part 37, Service Contracting – recognizes use of SOO when PWS is not suitable*.
- FAR Part 46, Quality Assurance. – not listed because it is not stated as the only contract quality requirement that can be used per FAR*.

**Notes:**
FAR 1.102 Statement of Guiding Principles for the Federal Acquisition System -states that the FAR is to deliver on a timely basis the best value product or service to the customer while maintaining the public’s trust and fulfilling public policy objectives.  The participants in this process should work together as a team and should be empowered to make decisions within their area of responsibility.
FAR Part 2 is the definition section and defines PBC.  

FAR Part 7, Acquisition Planning (notably Subpart 7.5- Inherently Governmental Functions – For example:  make sure you are not asking a contractor to determine what supplies or services are to be acquired by the Government and provisions at 7.105  Contents of an Acquisition Plan - (6) Product or service descriptions. Explain the choice of product or service description types (including performance-based contracting descriptions) to be used in the acquisition. 

FAR Part 10, Market Research prescribes policies and procedures for conducting market research 
FAR Part 11, Describing Agency Requirements  (11.106- Purchase descriptions for service contracts and 11.101 Order of precedence for requirements documents. 
(a) Agencies may select from existing requirements documents, modify or combine existing requirements documents, or create new requirements documents to meet agency needs, using the following order of precedence.  
(1) Documents mandated for use by law. 
(2) Performance-oriented documents. 
(3) Detailed design-oriented documents. 
(4) Standards, specifications and related publications issued by the Government outside the Defense or Federal series for the non-repetitive acquisition of items. 

## Obstacles to implementing PBA 

- Lack of
- Commitment from senior leadership;
- Knowledge of PBA acquisition strategy;
- Limited resources (to include people and money);
- time; and
- effective PBA training for all members of the acquisition workforce

## 	PBA Benefits

**	****PBA Benefits**

- Innovative solutions from industry to meet agency mission/needs.
- Better competition in terms of price and solutions.
- Quality and improved service.
- Increases customer satisfaction.

**Notes:**
PBA enables the contractor to perform the way they normally perform in the commercial world which often affords us better prices and performance. The contractor has more flexibility on how he achieves the desired results. The Government has a variety of solutions from which to choose 

Contractors are motivated to be innovative, provide quality service, and to save money.
The Government is released from having to develop detailed specifications and define the process.
We achieve better value and enhanced performance from the contractor.
Better competition: not just contractors, but solutions. 
Less day-to-day surveillance is required but you do have to MANAGE.
Partnerships are formed - Contractor buy-in and shared interests 

Some other benefits of PBA:  
Focus on intended results, not process 
Less performance risk 
Shared incentives permit innovation and cost effectiveness 
Less likelihood of a successful protest 
By using PBA methods, agencies have an opportunity to further the goals of streamlining and reinvention and of their agencies’ mission. The PBA process requires agencies to re-evaluate their workload to determine what really needs to be done and how best to do it. Once a requirement has been subjected to this process, future performance-based contracting will be easier, and agency needs will be better defined and manageable. This creates a "win/win" situation for both agencies and contractors.

By using PBA methods, agencies have an opportunity to further the goals of streamlining and reinvention and of their agencies’ mission. The PBA process requires agencies to re-evaluate their workload to determine what really needs to be done and how best to do it. Once a requirement has been subjected to this process, future performance-based contracting will be easier, and agency needs will be better defined and manageable. This creates a "win/win" situation for both agencies and contractors.

PBA has many benefits and the results from OFPP’s 1998 PBA pilot project captured the benefits.  From their project, the average 15% price reduction and comparable increase in agency satisfaction with contractor performance occurred across all price ranges and types of services for the contracts surveyed. These results created a significant potential for savings and mission attainment in service contracts that must not be ignored. Contractors not only provide support to Government operations, but are increasingly providing services directly to the public. The cost and performance of service contracts determine to a large extent how well many agencies are able to fulfill their missions. The potential billions of dollars in savings and enhanced contractor performance will greatly contribute to furthering program objectives within agency budgets.

## PBA Training Requirements

**PBA Training Requirements**

**All agency personnel are encouraged to complete a PBA training course.**
**The Federal Acquisition Certification (FAC) for Contracting Officer Technical Representatives (November 26, 2007) **
**The FAC-Program/Project Managers certification (OFPP April 25, 2007 memorandum) **
**The FAC in Contracting Program (January 20, 2006) **
**http://www.whitehouse.gov/omb/procurement/workforce/ fed_acq_cert_042507.pdf. **
**	**

## FAI PBA Training Opportunities

**FAI PBA Training Opportunities**

- FAI offers PBA training courses at various locations around the country.  This training is funded by AWTF is available at no-charge on a first-come, first serve basis.
- Students should register online at www.fai.gov.  Questions about this training should be directed to FAI student services at 703-805-2300.
- The Seven Steps to PBSA Guide includes a list of suggested Training Providers for federal employees at  http://www.acquisition.gov/comp/seven_steps/training_providers2.html

**Notes:**
FUNDING IS UNCERTAIN FOR FY08 – TRAINING FUND IS ANOTHER SARA PROVISION THAT EXPIRES 9/30/2007

## DAU PBA Training Resources

**DAU PBA Training Resources**

**“**Mission Focused Service Acquisitions,” course no. ACQ265, and two online learning modules:  CLC 013, Performance-Based Services Acquisitions and CLM 013, Work Breakdown Structure
- PBA Community of Practice (https://acc.dau.mil/pba), includes the above PBA training information as well as other training opportunities, policy and guidance, tools and related links.
- The Acquisition Center of Excellence for Services Community of Practice resides on DoD website at:  https://acc.dau.mil/ace.

## PBA On-line Resource Guide

**PBA On-line Resource Guide**

**Website:  www.acquisition.gov/SevenSteps **

**Notes:**
Purpose of the Guide

Develop a FAR-based online accessible knowledge management tool that 
is a universal one-stop resource guide for all PBSA information; and 
aids the user in planning, soliciting, evaluating, awarding and managing performance-based service acquisitions.

## Seven Steps to PBA Guide

**Seven Steps to PBA Guide**

-                **Establish an Integrated ****	****	****	****  Project Team**
-                **Describe the Problem that ****	****	****	****  Needs Solving**

**Notes:**
Guide is broken down into 7 basic steps - go thru them briefly

STEP 1: Establish the team.  Get sr. mngmt buy-in, define
  roles & responsibilities, EMPOWER team members to
  make decisions, identify & involve stakeholders, take
  some action to incentivize team by linking mission of 
  acquisition to team member performance
STEP 2: Describe the problem.  This is where we decide
  what outcome/result we’re seeking, at a high level.  Decide
  what constitutes success.  Benchmark current perf. Level
Remember we are buying the outcome not the solution.  
STEP 3: Market research.  Examine private & public solu-
  tions to problem, meet 1-on-1 w/ industry reps, get help on
  how to structure solicitation.

##   Seven Steps to PBA Guide

-   **Seven Steps to PBA Guide**

-                **Conduct Market Research**
**    ****	****     ****	****Develop a Performance Work ****	****  ****	****     ****	****Statement  (PWS) or Statement of ****	**** ****	****Objectives (SOO)**

**Notes:**
STEP 4: Develop PWS or SOO.  define SOO and SOO and
  SOO approach.  Once you have outcome statements, you
  can figure out what tasks have to be done to get there (not
  how, just what).  Take another look - anything that doesn’t
  get you to the outcome should be deleted.

## Developing the PWS

**Developing the PWS**

**Conduct an analysis.**
**Apply the “so-what?” test.**
**Capture the results of the analysis in a matrix.**
**Write the PWS.**
**Let the contractor solve the problem.**

**Notes:**
When you begin preparing the PWS, you start with the analytical process 
which is generally referred to as the job analysis.  This is where you 
examine the agency’s requirement and it tends to be a bottom-up assessment.  
Once you perform this task it forms the basis for establishing performance 
requirements, developing performance standards, writing the PWS and 
producing the QASP.  DOD uses another analytical process which is described 
in detail their PBSA Guidebook wherein  they define the desired outcomes, 
conduct an outcome analysis, and conduct a performance analysis. 
An analysis of the requirement is by its nature an analysis of the process and 
how things are done. We want to be careful that we do not end up adding this 
type of detail into the PWS so we apply the so-what test.  By this we mean ask 
questions such as Who needs the output; Why is the output needed; What is done 
with it; What occurs as a result; Is it worth the effort and cost; Would a different 
output be preferable? 
Once all the information is gather compile the information onto the performance 
matrix which I will discuss in a moment. Your matrix will include desired outcomes, required services, performance standards, AQL, Monitoring methods and Incentives/Disincentives.

There is no standard for format for writing a PWS.  The FAR only requires 
to describe requirements in terms of results rather than the process; use 
measurable performance standards and QASP; provide for reductions of 
fees or price; and include performance incentives where appropriate.
OFPP ‘s guides says that the key elements of a PWS are the statement of the
 required services in terms of output; measurable performance standard for the 
output and an AQL or allowable error rate.
Again, remember, we want the contractor to the solve the problem so do not 
write the PWS so tight that you get the same solution from each contractor or 
that you solve your problem yourself and the contractor’s end-up repeating your solicitation back to you.  If this happens, you didn’t write a performance work 
statement. 

## PBA TEMPLATE 

**PBA TEMPLATE **

## GUARD SERVICES

**GUARD SERVICES**

## Using a SOO

**Using a SOO**

**Develop the background – include agency or organizational mission**
**Begin with the acquisition’s “elevator message”**
**Describe the scope**
**Write the performance objectives**
**Identify constraints**
**Make the final checks and balances**
**There is no mandatory format; shorter is usually better**

**Notes:**
Begin with the acquisition’s “elevator message”. If you were in an 
elevator with someone and only had a couple of seconds to describe your 
acquisition and your objective, what would you say.   So by this step  we mean, 
upfront describe an explanation of how the acquisition relates to the agency’s 
program or mission need and what problems needs solving.
Describe the scope – summarize the scope to give the contractors a sense of the 
size and range of the service needed. 
Write the performance objectives. Decide what problems need to be solved.  
When accomplishing this task, make sure the government and the contractor 
share the objectives.  When this happens, the possibility of success increases significantly.
Identify constraints. You want to give the contractor flexibility in proposing 
varied solutions but there may be some Government constraints 
that must be incorporated such as 508 constraints, unique security
 requirements, or if a task has to be done in accordance with a particular
law, regulation, policy, etc.
Develop the background. This step includes important information and 
gives the contractor a frame of reference. 
Make the final checks and balances.  Once the SOO is compiles, the team 
should go back and examine the entire SOO document and remove anything 
that is not relevant or essential.  

## Seven Steps to PBA Guide

**Seven Steps to PBA Guide**

**Decide how to measure and ****	****manage performance**
-                **Select the right contractor**

**Notes:**
STEP 5: Decide how to measure and manage performance.
  Where will we set the bar? Rely on commercial stds.  Have
  offerors propose QAP, incl. Metrics; select only a few
  meaningful measures (measure what’s impt); try to find a
  pos. incentive, along w/ required neg.  Power of profit!  
  Manage the relationship!  You are measuring the process with 
process the process measures.
STEP 6: Pick the right partner! Best value, oral presenta-
  tions, due diligence, past performance is key.  We are 
Buying a promise and the confidence that they will perform/solve the problem.

## Seven Steps to PBA Guide

**Seven Steps to PBA Guide**

-                 **Manage Performance**
**Keep the team together**
**Communicate early and often**
**Ensure COTR or COR is assigned in the contract and understands roles and responsibilitites**
**Conduct performance assessments as planned - document all findings**
**Use QASP to determine how well KTR performed**
**Use the EVMS tool to manage schedule and cost performance **

**Notes:**
COMMUNICATE, COMMUNICATE, COMMUNICATE!

To the extent possible, keep team together

Assign roles and  responsibilities, and assign accountability

Formal kick-off meeting

Have regular performance improvement working group 
  meetings.  IPT’s!!!  Reassess metrics at least annually.

Document performance so no surprises at annual and end-
of-contract evaluation

## Case Study:  FEMA’s National Flood Insurance Program

**Case Study:  FEMA’s National Flood Insurance Program**

** ****FEMA was able to measurably improve performance under its Advertising and Marketing Services Contract, expanding growth in the number of “Policies in Force” each year to nearly double their stated growth objective of 5% annually in only the third year of performance.**
** ****They have been particularly successful in partnering with the contractor to measure performance - almost “in real time” – so they can make adjustments and refine their approach on the go, which has helped them achieve the current streak of 27 consecutive months of growth.**
** ****FEMA personnel identified the real and close collaboration between the government and the contractor as one of the key benefits and points of emphasis of successfully implementing PBA.**

## Case Study: NOAA’s National Weather Service

**Case Study: ****NOAA’s National Weather Service**

-  **Used PBA for their Advanced Weather Interactive Processing System (AWIPS) to help streamline their pre-award activities and cut down significantly on the number of “specs” they needed in the RFP by using the SOO approach (from something like 4000 down to 90).**
** ****Training the government [integrated project] team in PBA was deemed especially important and useful in getting everybody on the same page, increasing understanding of the concepts of PBA and improving results.**
** ****NOAA cites the sense of “immediate partnership” with the contractor that resulted from using PBA as a significant advantage over traditional contracting, where true partnership is typically only achieved over longer periods of time, if ever.**

## Case Study: FEMA’s Map Modernization Program

**Case Study: ****FEMA’s Map Modernization Program**

-  **The Map Mod program was considered developmental and therefore risky, but measures success by the lives they can save and the property damage they can prevent.**
** ****Using PBA, the Map Mod program was able to cut the map developing process down from 5 years to 2.5 years, to reach a single quality standard for mapping and achieve a single platform for distribution.**
** ****In doing so, FEMA became the first federal agency to implement a national geospatial distributed system that is able to exchange information with other federal, state and local communities.**
** ****Rather than being a “silver bullet” to solve all problems, PBA proved to be the right framework to help meet and address the challenges that emerge.**

## QUESTIONS

***Julia Wise – (202)395-7561 or jwise@omb.eop.gov***
***Gregory Garrett – (703)253-6623 or ggarrett@acqsolinc.com***
***THANK YOU FOR WORKING DILIGIGENTLY TO USE THE PBA STRATEGY TO ACHIEVE RESULTS!!!***