Federal Acquisition Service

U.S. General Services Administration

Performance-Based AcquisitionPerformance-Based AcquisitionPerformance-Based AcquisitionPerformance-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

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PBA FAR References

FAR 1.102 Statement of Guiding Principles

Part 2 Definition

Part 7 Acquisition Planning

SubPt 8.4 Federal Supply Schedules

Part 11 Describing Agency Requirements

Part 16 Types of Contracts

Part 37 Service Contracting (esp. 37.6)

Part 46 Quality Assurance Requirements

(esp. 46.4 QASP)

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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 37.101)

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PBA Regulatory Background(FAR 37.102)

• 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

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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 16.402-2).

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PBA Applies to GSA Schedule Task Orders Too!

“The ordering activity shall document the rationale for using other than a performance-based order.” FAR 8.405-2(e)(7)(ii)

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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

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Seven Steps to PBA

1. Establish the team2. Decide what problem needs solving3. Examine private-sector and public-

sector solutions4. Develop a PWS or SOO5. Decide how to measure and

manage performance6. Select the right contractor7. Manage performance

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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

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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

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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

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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

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Job Analysis

PerformanceWorkStatement (PWS)

Quality AssuranceSurveillance Plan (QASP)

Positive & NegativeIncentives

Task Standard Acceptable Surveillance Incentives Quality Methods/ Level Measures

Performance Requirements Summary (PRS)

PBSC Methodology

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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

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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.

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Work Breakdown Structure – Tree Diagram

PrepareStandard Reports

Document Maintenance Actions

PerformRemedialMaintenance

PrepareMalfunction Reports

Perform ITMaintenance

PerformPreventativeMaintenance

1

23

4

3.1 3.2

3.1.1 3.1.2 3.1.3 3.2.1 3.2.2 3.2.3

Inputs

Outputs

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Work Breakdown Structure – Another Tree Diagram

Clean Bathroom Fixtures

Clean Hard Floors

Clean Carpeted Floors

Perform Custodial Service

DustHorizontal Surfaces

1

23

4

Shampoo Carpet

Vacuum Carpet

Wax Hard Floors

Mop Hard Floors

Sweep Hard Floors

Clean Carpet

Clean Floors

3.1 3.2

3.1.1 3.1.2 3.1.3 3.2.1 3.2.2

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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)

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Work Analysis Example

INPUT WORK OUTPUT

Equipment Repair Request

1. Determine Request Validity

Form XXX“Work Pending”

2. Document Request

* Telephone 3. Dispatch Repair Person

Form YYY“Repairs In-Process”

* Written 4. Diagnose Malfunction

* Walk-in 5. Repair Malfunction

* Equipment Repaired

Complete “Service Log “ Form #ZZZ

Task 4.1.1: Perform Requested Remedial Equipment Maintenance

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Develop the PWS (continued)

•Write the PWS

•Let the contractor solve the problem

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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…”

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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

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Content of the Statement of Objectives (SOO)

• Purpose

• Scope or Mission

• Period and Place of Performance

• Background

• Performance Objectives (required results)

• Any Operating Constraints

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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

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FAR 37.102 Order of Precedence

1. Fixed-price performance-based

2. Not fixed-price but performance-based

3. Not performance-based

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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)

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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

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Preparation and Planning Phase

Initial Evaluation Phase

Award Without Discussions

Competitive Range Determination

Discussions Phase

Final Evaluations Phase

Decision Phase

Select the Right ContractorSource Selection Process

NOTE: COMPLEX FAR PART 15 PROCESS NOT APPLICABLE TO

GSA SCHEDULE ORDERS

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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

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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

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Job Analysis – Performance Analysis

Operational Cost/Mile

$0.30 20%

Response Time 4 min. 5%

Accidents/Mile 0 0%

Taxi In-Service Rate

80% 10%

Performance Standard AQLIndicator

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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

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But PBA is Not Complicated

• What do I need from the contractor?

• How do I know its good when I get it?

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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

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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 (www.fai.gov) Classroom Training

• Performance-Based Acquisition (3 days)