# Presentation: 857017

*Begin with the end in sight!*
*Julia Wise, Director*
*Contract Policy Division*
*General Services Administration*

**GSA Office of Acquisition Policy**

**Performance-Based Acquisition**

## Performance Based Acquisition

- What, Who, When, Why, How
- Sample of PBSA using Seven Steps Framework
- Current Initiatives

## Current PBSA Initiatives

- FAR Case 2003-018 issued to implement some of the
- Recommendations in the OFPP July 2003 PBSA Report
- FAR Case 2004-004 -  SARA PBC change (SARA signed 11-24-03).
- Section 1431 and Section 1433
- treat certain performance-based orders and contracts as commercial items if certain conditions are met; and
- report on these contracts and orders in FPDS.
- OFPP Issued a September 7, 2004 memo highlighting changes – goals, reporting requirement, incentives, etc.  _[www.acqnet.gov](http://www.acqnet.gov/)__._
- DAU and FAI Government-wide PBSA Training Course.

## What is PBC?

- A contract or order structured around the solutions or results desired. FAR 2.101

- FAR

**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 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.  

## Who’s involved in the PBC Process?

- The Acquisition Team – FAR 1.102-3
- Program Office
- Technical community
- Business and financial
- User Community
- Contracting
- Industry
- Legal
- Quality Assurance

**Notes:**
PBC is a behavioral change. Therefore, you should involve all acquisition individuals early in the process and establish your team. The teams needs to start building some synergy with the acquisition – becoming one with the acquisition.

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!

## When to use PBC? (FAR 37.102)

- PBC is used to the maximum extent practicable when acquiring services.
- Use the following order of precedence-
- FFP PBC or task order
- A PBC or task order that is not FFP
- A contract or task order that is not PB.

**Notes:**
Performance based contracting is used to the maximum extent practicable when acquiring services except for on:  A-E services, Constructions services, Utility services, and Services incidental to supply purchases.
Performance based contracting can be used  when acquiring services such as   
Telephone call center operations.
Training.
Software maintenance support.
Non-technical support.
Operation and maintenance of facilities.
Computer maintenance.
Administrative and clerical support.
Aircraft maintenance and test range support
Transportation, travel, and relocation services.
Medical services.
Additional services that offer significant opportunities for using PBC methods are:
Environmental remediation.
Software development.
Management support.
Studies and analyses.
Surveys.

Fixed price contracts are preferred; the risks to the Government and to the contractor are manageable because the PWS or SOO can be objectively prepared. The Contracting Officer is bound by the order of precedence in the FAR which states that they shall use to maximum extent practicable:
A firm-fixed price performance-based contract or task order. 
A performance-based contract or task order that is not firm-fixed price. 
A contract or task order that is not performance-based. 

Cost reimbursement contracts can be used when the desired outcome is less clear, making the performance risk greater.  Remember to use commercial item/service contracts to the greatest extent possible. 

## What are the Elements (FAR 37.601)?

- 	(1)  PWS or SOO.
- 	(2)  MPS
-    (3)  QASP (FAR 46.013 and  46.401(a))
-    (4)  PI  (FAR 46.407)
- TIP:  Try the SOO approach.

**Notes:**
Knowing how to put together PBC is not an easy task; it is a learning experience.  It involves knowing how to write and/or review the PBC elements.  Before you get started you should understand the method of PBC, know your requirement and the complexity involved, possible constraints and risk involved and know funding availability for the requirement.
A PBC will consist of the following elements.
The performance work statement (PWS) or the statement of objectives (SOO). The 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.

1.  Tell the contractor, in clear specific objective terms, what services it is to perform and what deliverables it is to provide. Use concise language-focused on outcomes not processes.

2.  Prepare work statements which describes the work in terms of “what” the output must be. Stay away from telling the contractor “how” the work is to be accomplished.     

Consider the issuance of draft solicitations as a means of refining work statements The feedback you get from this may help you determine or define your requirement.  

4. List specific tasks which the contractor must accomplish in order to satisfy the Government’s need.
The establishment of specific standards for acceptance of each task.

Emphasis on the use of specified deliverables a means of imparting a tangible, measurable nature to services.

Establish a program to validate acceptance of deliverables and services and to take contractually entitled remedial action when the standards are  not met. 
Note:  A SOO is an emerging techniques that turns the acquisition process around and requires competing contractors to develop the statement of work, performance metrics and measurement plan, and quality assurance plan... all of which should be evaluated before contract award. 
2. Measurable performance standards for the outcome;
3. Positive and negative incentive plan.  The financial arrangement or type can be and should be consistent with the desired outcome or required service. 
4. Quality assurance plan to ensure that the contractor performs in accordance with the standards. 
TIP:  Try the SOO approach.  In using this approach you establish your statement of objective but you are essentially asking industry to propose the best solution.  

## Using Seven Steps to PBSA Framework for Training Services

-       Establish an Integrated Solutions 			Team – team included CS, PM, Legal.
-       Describe the Problem that Needs         	Solving – Commercial PBSA Course for
-       	GSA employees
-       Conduct Market Research – talk to 	industry, talk to other agencies.

**Notes:**
STEP 1: Establish the team. Acquisition Starts with a Vision of 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. Streamline the problem and brainstorm the “real” desired outcome. Know what you want as an outcome.  This is where we decide what outcome/result we’re seeking, at a high level.  Decide what constitutes success.  Benchmark current perf. Level
STEP 3: Market research.  Examine private & public solutions to problem, meet 1-on-1 w/ industry reps, get help on how to structure solicitation. Conduct Meaningful Market Research Best Practices (Gov and Commercial), Performance Measures and Metrics, Incentive Plans.

##  Developing PWS or SOO

- SOO approach chosen for training requirement.
- Process
- Write Outcomes (Statement of Objectives)
- Offerors propose SOW and Performance Measures and Standards
- Replaces Performance Work Statement
- Where Knowledge Exists
- Government – Problem and Constraints
- Industry – Solutions
- Simplified Definition
- Structuring All Aspects of Acquisition Around Outcomes and Results!

## PERFORMANCE MATRIX 

**PERFORMANCE MATRIX **
**FOR**
**GSA-wide PBSA Training Course**

| Outcomes | Required
Services | Performance Standards | Monitoring Methods |   + or -
Incentives |
| --- | --- | --- | --- | --- |
| Provide PBSA Training to the GSA Acquisition Community | 1. Provide commercial PBSA course.
2. Test the students to ensure students know how to implement PBSA techniques.
3. Maintain and update course material in accordance with regulations.  | 1. Personnel must be know PBSA topic and contracting.
2. Students should receive at least 80% on test.  
3. Course should be current with the regulations.   | 1. GSA PM to monitor courses periodically and review evaluations.
2. Review test scores.
4. PM periodically evaluate course material.     | 1. Past performance evaluation
2. Past performance evaluation
3. Past performance evaluation |

## Sample SOO Format

- Purpose.
- Scope.
- Period of Performance.
- Place of Performance.
- Background.
- Program Objectives.
- Constraints.

## Decide how to measure and manage performance 

- Review the success determinants
- Involve industry - Rely on commercial quality standards
- Have the contractor propose the metric/quality assurance plan
- Select meaningful measures
- Define your metrics - measure the contractor’s performance.
- Standards must be measurable, easy to apply and attainable.
**(FAR Part 16 and 46)**

**Notes:**
Decide how to measure/manage performance 
(FAR Part 16 and 46)
Review the success determinants
Rely on commercial quality standards
Have the contractor propose the metric/quality assurance plan
Select meaningful measures

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!

## Select the right contractor 

*Compete the solution*
*Use down-selection/due diligence*
*Use oral presentations*
*Emphasize past performance*
*Use best value evaluation/source selection  *
**(FAR Part 15, 16, 42.15)**

**Notes:**
Select the right contractor (FAR Part 15, 16, 42.15)
Compete the solution
Use down-selection/due diligence
Use oral presentations
Emphasize past performance
Use best value evaluation/source selection
Best value, oral presentations, due diligence, past perf. is key

## Contract Award is The Start;  Not The End Milestone
Use the QASP to manage contractor’s performance to ensure the project is on schedule and meeting the outcome. 
Mission Success Is What is Being Acquired!
Keep the team together, if possible.
Communicate early and often.
Make sure the COR/COTR is monitoring the contractor’s performance. 

Improved Performance – Reduced Cost
Conduct performance assessments as planned - document all findings
Conduct past performance evaluations.
Shared Goals and Objectives Achieved!

***Use the QASP to manage contractor’s performance to ensure the project is on schedule and meeting the outcome. ***
***Mission Success Is What is Being Acquired!***
***Keep the team together, if possible.***
***Communicate early and often.***
**Make sure the COR/COTR is monitoring the contractor’s performance. **
***Improved Performance – Reduced Cost***
***Conduct performance assessments as planned - document all findings***
***Conduct past performance evaluations.***
***Shared Goals and Objectives Achieved!***

**Manage Performance**
**(FAR Part 42) **

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

To the extent possible, keep team together.Assign roles and  responsibilities, and assign accountability Have 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

## PBA Benefits

- Improved customer satisfaction.
- Competition Increased.
- Innovative solutions and quality services.
- No detailed specifications.
- Better value and enhanced performance.
- Less day-to-day surveillance.
- Shifts risk to the contractor.
- Communication improved.
- Results achieved!

**Notes:**
By using PBC methods, agencies have an opportunity to further the goals of streamlining and reinvention and of their agencies’ mission. The PBC 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.

PBC has many benefits and the results from OFPP’s 1998 PBC 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 Sources

**1.  GSA PBC Website:**
**	****-**_[www.gsa.gov/performancebasedcontracting](http://www.gsa.gov/performancebasedcontracting)_
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**2.  Seven Steps to PBSA website:**
**	**_[www.acqnet.gov](http://www.acqnet.gov/)_
**	****-go to the Library to see vetted samples**
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