Federal Acquisition Service U.S. General Services Administration Performance-Based Acquisition

2 Learning Objectives Identify the elements and benefits of Performance-Based Acquisition (PBA) Recognize roles and responsibilities in implementing PBA Describe seven steps of the PBA process

33 PBA FAR References FAR 1.102Statement of Guiding Principles Part 2Definition Part 7Acquisition Planning SubPt 8.4Federal Supply Schedules Part 11Describing Agency Requirements Part 16 Types of Contracts Part 37Service Contracting (esp. 37.6) Part 46 Quality Assurance Requirements (esp QASP)

4 PBA & PBSC Defined Performance-Based Acquisition: “structured around the results to be achieved as opposed to the manner by which the work is to be performed.” (FAR 2.101) [note: includes products too!] Performance-Based [Service] Contracting: “structuring all aspects of an acquisition around the purpose of the work to be performed as opposed to either the manner by which the work is to be performed or broad and imprecise statements of work.” (FAR )

5 PBA Regulatory Background (FAR ) From “maximum extent practicable” to “PBA is the preferred method” Established order of precedence 1. Fixed-price performance-based 2. Not fixed-price but performance- based 3. Not performance-based

66 Performance Based Services Acquisition Performance-based contracts for services shall include—  (1) A performance work statement (PWS);  (2) Measurable performance standards (i.e., in terms of quality, timeliness, quantity, etc.) and the method of assessing contractor performance against performance standards; and  (3) Performance incentives where appropriate. When used, the performance incentives shall correspond to the performance standards set forth in the contract (see ).

7 PBA Applies to GSA Schedule Task Orders Too! “The ordering activity shall document the rationale for using other than a performance-based order.” FAR (e)(7)(ii)

88 Why Performance-Based? Achieve innovative solutions from industry Maximizes competition Increases customer satisfaction because results are improved Shifts the risk to the contractor Improves the contractor’s performance through incentives Encourages commercial practices Simplifies contract administration if used correctly

99 Seven Steps to PBA 1. Establish the team 2. Decide what problem needs solving 3. Examine private-sector and public- sector solutions 4. Develop a PWS or SOO 5. Decide how to measure and manage performance 6. Select the right contractor 7. Manage performance

10 Establish the Team Ensure senior management involvement & support Tap multi-disciplinary expertise Define roles & responsibilities Develop rules of conduct Empower team members Identify stakeholders and nurture consensus Develop and maintain the knowledge base over the project life Incentives for team members

11 Describe the Problem to Solve Link acquisition to mission and performance objectives Define (at a high level) desired results Decide what constitutes success Determine the current level of performance

12 Examine Private-Sector & Public- Sector Solutions Take a team approach to market research Spend time learning from public-sector counterparts (MAC? Schedule? GWAC? higher-priority source?) Talk to private sector before structuring the acquisition Consider one-on-on meetings with industry Look for existing contracts Document market research

13 Develop the PWS Conduct job analysis Apply the “so-what?” test Capture the results of the analysis in a matrix Desired outcome Performance standard Acceptable quality level Monitoring method

14 Job Analysis Performance Work Statement (PWS) Quality Assurance Surveillance Plan (QASP) Positive & Negative Incentives Task Standard Acceptable Surveillance Incentives Quality Methods/ Level Measures Performance Requirements Summary (PRS) PBSC Methodology

15 Conduct Job Analysis Process: Job Analysis to PWS to QASP Systematic approach to analyzing a task Step-by-step review of the requirement from contractor perspective Inputs (people, facilities, material) Process (work performed using those inputs) Output

16 Conduct Work Analysis (WBS) Use tree diagram to break tasks into subtasks, organized from the general to the specific. Looks organizational, but is functional. Shows the task, not who performs the task. Captures required tasks from organizational analysis, not extraneous tasks. Limit to top three levels to avoid defining method of accomplishment.

17 Work Breakdown Structure – Tree Diagram Prepare Standard Reports Document Maintenance Actions Perform Remedial Maintenance Prepare Malfunction Reports Perform IT Maintenance Perform Preventative Maintenance Inputs Outputs

18 Work Breakdown Structure – Another Tree Diagram Clean Bathroom Fixtures Clean Hard Floors Clean Carpeted Floors Perform Custodial Service Dust Horizontal Surfaces Shampoo Carpet Vacuum Carpet Wax Hard Floors Mop Hard Floors Sweep Hard Floors Clean Carpet Clean Floors

19 Use Tree Diagram in Work Analysis For each box in the tree diagram (e.g., “4.1.1”), prepare a work (activity) analysis in three sections: Input (what starts a job) Work (task performed using those inputs) Output (all the things or services produced, which can be an input for another numbered task)

20 Work Analysis Example INPUTWORKOUTPUT Equipment Repair Request 1. Determine Request Validity  Form XXX “Work Pending” 2. Document Request * Telephone3. Dispatch Repair Person  Form YYY “Repairs In- Process” * Written4. Diagnose Malfunction * Walk-in5. Repair Malfunction * Equipment Repaired Complete “Service Log “ Form #ZZZ Task 4.1.1: Perform Requested Remedial Equipment Maintenance

21 Develop the PWS (continued) Write the PWS Let the contractor solve the problem

22 PWS Pitfalls “Let’s start with the old SOW.” (cut-and-paste) “Contractor shall do X when directed by the Government.” [or “to the satisfaction of the COR.”] “We need a sample SOO from another agency.” “We need to place a task order against a MOBIS 874 Schedule contract. Please provide the sample MOBIS PWS.” “We are unique…”

23 Develop the Statement of Objectives (SOO) Begin with the acquisition’s “elevator message” Describe the scope Write the (shared) performance objectives Identify constraints Develop the background Make the final checks and maintain perspective

24 Content of the Statement of Objectives (SOO) Purpose Scope or Mission Period and Place of Performance Background Performance Objectives (required results) Any Operating Constraints

25 Decide How to Measure and Manage Performance Review the success determinants Rely on commercial quality standards Have the contractor propose the metrics and the QA plan Select only a few meaningful measures on which to judge success Carefully apply contract-type order of precedence

26 FAR Order of Precedence 1. Fixed-price performance-based 2. Not fixed-price but performance-based 3. Not performance-based

27 Decide How to Measure and Manage Performance (continued) Use incentive-type contracts or include performance/delivery incentives in contracts Consider “award term” Consider other incentive tools (cost and non-cost)

28 Select the Right Contractor Compete the selection; use down- selection Use oral proposals/quotes and other opportunities to communicate Emphasize past performance in evaluation Require and evaluate contractor’s QC plan Use best-value evaluation and source selection Prevent conflicts of interest

29 Preparation and Planning Phase Initial Evaluation Phase Award Without Discussions Competitive Range Determination Discussions Phase Final Evaluations Phase Decision Phase Select the Right Contractor Source Selection Process NOTE: COMPLEX FAR PART 15 PROCESS NOT APPLICABLE TO GSA SCHEDULE ORDERS

30 Manage Performance Assign accountability for managing contract performance (COR/COTR/QAE) Conduct “Kick Off” meeting Regularly review performance Continue asking the right questions Adjust surveillance to strengths, weaknesses, and risks Report on the contractor’s performance

31 Job Analysis – Performance Analysis Conduct Performance Analysis Determine performance indicators and standards (objective vs. subjective) Determine Maximum Error Rate (MER) or Acceptable Quality Level (AQL) Define number of unacceptable outcomes government will accept Consider cost trade-offs (zero tolerance is expensive) Failure to meet will trigger re-performance or deduction

32 Job Analysis – Performance Analysis Operational Cost/Mile $0.3020% Response Time4 min.5% Accidents/Mile00% Taxi In-Service Rate 80%10% Performance StandardAQL Indicator

33 Good Performance-Based Contracts Describe requirements in terms of results rather than methods of performance Use measurable performance standards (quality, timeliness, etc.) and quality assurance surveillance plans Include performance incentives, including reductions in price to fixed-price contract when services do not meet contract requirements, where appropriate

34 But PBA is Not Complicated What do I need from the contractor? How do I know its good when I get it?

35 Problems with Non-PBSA Contracts Buying time, not performance Government-contractor relationship may evolve to personal services Government may never know the reasonable price of the work Contractor’s obligation is to provide labor hours or “best effort.” No guarantee of performance or delivery Re-performance is at Government’s expense

36 Training in PBA DAU Classroom Training ACQ 265 (5 days) Mission Focused Service Acquisitions DAU (Online) Continuous Learning Modules CLC 106 COR with a Mission Focus CLC 013 Performance Based Services Acquisition CLC 004 Market Research CLC 007 Contract Source Selection Federal Acquisition Institute ( Classroom Training Performance-Based Acquisition (3 days)