Transcript Chapter 1 Orientation to Performance-Based Acquisition Performance-Based Acquisition What’s It All About? PBA Concept “Never tell people how to do things.

Chapter 1
Orientation to Performance-Based
Acquisition
Performance-Based Acquisition
What’s It All
About?
PBA Concept
“Never tell people how to do things. Tell them
what to do and they will surprise you with
their ingenuity.”
George S. Patton
Performance-Based Acquisition…
Structures all aspects of an acquisition
around the results to be achieved
Describes contract requirements in clear,
objective terms
Contains measurable outcomes
-FAR 2.101
What is Performance-Based Acquisition?

An acquisition strategy
 Not a contract type
 Strategy applied to the contract type of your choice
 Outcome-oriented
 “What” not “How”
 Good business sense
 Requires the contractor to manage performance
 Promotes innovation and creativity
Best practices, leverage,
competition, trends
• Marriott’s need for efficient room cleaning led to
the development of the back-pack vacuum
cleaner rather than the common vacuum
cleaners that roll on the ground!
Performance-Based Acquisition
Recognizes contractor’s ability to
manage work and perform
efficiently
Links contractor payment to
contractor performance through
measurable performance
standards
How did we get here?
Federal budget changes
 DoD service acquisition increased 106%
• $62B (1993) → $127.4 B (2004)
Predicted Federal workforce changes
 Personnel eligible for full retirement climbs from
32% (2010) to 54% (2015)
Existing problems with Government service
acquisition
In the beginning…
The concept of
Performance-Based
Acquisition isn’t new…
PBA has been around for a while
Contract for Production of a Coat of Mail:
“One coat of mail, insignum of power which will protect,
is to be made by the woman Mupagalgagitum, daughter of
Qarikhiya, for Shamash-iddin, son of Rimut. She will deliver
in the month of Shebat one coat of mail, which is to be
made and which will protect.”
Taken from clay tablet
dated in the thirty-fourth year Darius I
(488 B.C.)
Then came Policy…
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OFPP Pamphlet (guide) 1980
OFPP Policy Letter 91-2
Government Performance Results Act 1993
Federal Acquisition Streamlining Act and National Performance Review of 1994
– OFPP Pilot Project for PBSC 1994
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OFPP Guide for Best Practices for Past Performance 1995
FAR Case 95-311, Final Rule 1995
Federal Acquisition Reform Act (Clinger-Cohen) 1996
OFPP A Guide to Best Practices for Performance-Based Service Contracting 1998
Guidebook for PBSA in the DoD 2000
USD AT&L (Gansler) Memo 2000
– Seven Steps to Performance-Based Services Acquisition 2001
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Defense Authorization Act 2001
User’s Guide to Performance-Based Payments 2001
USD AT&L (Aldridge) Memo 2002
USD AT&L (Wynne) Memo 2003
Dir, DPAP (Lee) Memo 2004
OMB (Burton) Memo 2004
Dir, DPAP (Cipicchio) Memo 2006
OMB Memo (Burton) 2006
Dir, DPAP (Assad) Memo 2006
USD AT&L (Krieg) Memo 2006
Dir, DPAP (Assad’s 5 Points) 2006
Current Government PBA Policy
FAR 37.102(a) states that PBA:
• Is the preferred method for acquiring services
• Must be used to “maximum extent practicable”
except for:
• Architect-engineer services, Construction, Utility
services, and services incidental to supply purchases
DoD’s latest perspective on
Performance-Based Acquisition
 Continue goal of 50% of eligible service actions exceeding
$25,000 with concentration on the quality of execution
 Focus on:
 Clear, performance-based requirements
 Identifiable and measurable cost, schedule and performance
outcomes
 Properly planned and administered outcomes consistent with
customer’s need(s)
 Business arrangements in the best interest of DoD and in
compliance with statues, regs, policies, etc.
 Strategic, enterprise-wide approaches applied to planning and
execution of the acquisition
 PBA training
How can Policy become Reality?
Start with the terminology
Mission Results/Outcomes
Integrated Process Teams
Work Breakdown Structures
Performance Metrics
Quality Assurance
Acceptable Quality Level
Performance Standards
Incentives
Focus on Mission Results
in Performance-Based Acquisition
Mission Results = T (M2 + P2)
Team
 Participants involved in the acquisition
 Must function as a single, integrated and mission focused unit
Mission Knowledge
 Stable or Changing, Funding Criticality
Market Knowledge
 Best practices, leverage, competition, trends
Process Knowledge
 Roles and Responsibilities, planning-execution-assessmenteffectiveness
Performance Knowledge
 Ability to align Mission outcomes with performance requirements
7 Step Process to PBA
1.
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7.
Establish an Integrated Solutions Team
Describe the Problem that Needs Solving
Examine Private-Sector and Public Sector Solutions
Develop PWS or SOO
Decide How to Measure and Manage Performance
Select the Right Contractor
Manage Performance
7 Step Process to PBA
(1) Establish
the Team
(2) Decide what
problem needs solving
(3) Examine private-sector
and public-sector solutions
(4) Develop
PWS or SOO
(5) Decide how to Measure
& Manage Performance
(6) Select the right
Contractor
(7) Manage
Performance
Step 1
Establish an Integrated Solutions Team
 Ensure senior management involvement and
support
 Tap multi-disciplinary experts
 Define roles and responsibilities
 Develop rules of conduct
 Empower team members
 Identify stakeholders and nurture consensus
 Develop and maintain the project knowledge base
 Incentivize the team – link program mission and
team members’ performance
Step 2
Describe the problem that needs solving
 Link acquisition to mission and performance objectives
 Define (at a high level) desired results
 Decide what constitutes success
 Determine the current level of performance
Step 3
Examine private-sector and public-sector
solutions
 Take a team approach to market research
 Spend time learning from public-sector counterparts
 Talk to private-sector companies before structuring the
acquisition
 Consider one-on-one meetings with industry
Step 4
Develop PWS
Conduct an analysis
Apply the “so what?” test
Capture the results of the analysis in a matrix
Write the performance work statement
Let the contractor solve the problem
including the labor mix
OR
Step 4 (cont’d)
Develop SOO
Explain how the acquisition relates to the
agency’s mission need
Describe the scope
Write the performance objectives into the SOO
Make sure the Government and the Contractor
share objectives
Identify the constraints
Develop the background
Make the final checks and maintain perspective
Step 5
Decide how to measure and manage performance
 Review the success determinants
Where do I want to go and how do I know I’m there?
 Rely on commercial quality standards
 Have contractor propose metrics and quality assurance
plan
 Select only a few meaningful measures to judge success
And…
Step 5 (cont’d)
Include contractual language for negotiated
changes to metrics and measures
Apply contract type order of precedence
Use incentive-type contracts
 Consider other incentive tools
 Recognize the power of profit as a motivator
Consider the relationship
 Create and maintain mutual benefit and value
Step 6
Select the right contractor
Compete the solution
 Let the contractors solve the problem
Use downselection and “due diligence”
Use oral presentations and other opportunities to
communicate
Emphasize past performance in evaluation
Use best-value evaluation and source selection
Assess solutions for issues of conflict of interest
Step 7
Manage Performance
Keep the team together
Adjust roles and responsibilities
Assign accountability for managing contract
performance
Include the contractor in a post-award meeting
Regularly review performance
Ask the right questions
Report on the contractor’s “past performance”
PBA Elements
 Requirements Analysis
Identify Desired Outcomes
Data Assembly
 Performance Analysis
Standard
Acceptable Quality Level
 Incentive Analysis
Positive
Negative
 Surveillance Analysis
Measurement Methodology
Surveillance Schedule
This is a concurrent, iterative process
Performance Requirements Summary
Outcome
Performance
Standard
AQL
Measurement Incentive
Method
What keeps you up at night?
Mission Success depends on Mission Knowledge
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Are the stakeholders actively involved?
Have all risks been addressed?
Is there stability in the mission?
Is there flexibility in the plan?
The elements of the PRS are tools used to ensure
that the stakeholder needs are identified and met
PBA Bottom Line
“In this business, I do not buy a service,
I buy a….
RESULT”
- Miami Vice
Dec 2006