I forgot to respond in my last message about what Share in Savings is about. There are several variations of the concept around. Essentially the most notable and visible examples came from Department of Education where they awarded a no cost task order to a company. The contractor developed a new capability/system for the agency. The agency then implements the system. If savings result, they split them with the contractor. It's a way for the agency to acquire something they couldn't afford for free. If it works, the contractor gets money.

By joel hoffman on Thursday, March 07, 2002 - 11:01 am:

The Corps of Engineers also awards these type contracts for energy savings and for privatization of utilities at military installations. There is a program office located in Huntsville, AL., accessible through the following link:

www.hnd.usace.army.mil

happy sails! joel

By alexreb on Friday, March 08, 2002 - 12:39 pm:

Thanks for the info.

By Vern Edwards on Monday, March 11, 2002 - 02:46 pm:

One thing that is not clear in the bill is what its authors intend with regard to the contractor's compensation--whether the contractor's share in savings is to be its exclusive compensation or whether it may be in addition to other contract payments. The statute would define "share-in-savings contract" in part as meaning, "a contract under which... the executive agency pays the contractor an amount equal to a portion of the savings derived by the agency... ." That could be interpreted in different ways.

By Vern Edwards on Monday, March 11, 2002 - 07:24 pm:

The following quote is from the comments of Angela Styles (Administrator of OFPP) to the House Subcommittee on Technology and Procurement Policy. She is talking about SARA's proposed expanded use of share-in-savings:

"[T]he authority should remain as a pilot for IT until there are demonstrable benefits. To date, we have not seen results. In fact, our sense is that agencies will need to gain greater experience in developing baselines. Proper baselines, in combination with guaranteed savings clauses, are critical to ensuring savings can be validated and realized. As one procurement official recently told me: 'We are struggling to do PBSC well. Share-in-savings is like graduate level PBSC. You gotta walk before you can run.'"

Right on, and good commonsense, too. I like this woman better all the time.

By anonymous52 on Monday, March 11, 2002 - 08:46 pm:

I attended a Defense Acquisition University 'Executive Contracting Seminar' ("Contracting 301"), in Crystal City, last December. It was interesting how Ms. Styles was described as "out of date", "too conservative", etc., etc. Her deputy addressed the class, right before a luncheon presentation by the Director of GSA's acquisition. The instructor stated that he wanted to show the contrast between the two acquisition executives' philosophies.

By Vern Edwards on Monday, March 11, 2002 - 08:58 pm:

anon52:

Just out of curiosity, who thought Ms Styles was out of date? Some DAU instructor? And what were his or her explanations for that thought?

To me, Ms Style's two great achievements thus far have been: (1) admitting that performance-based contracting is ill-defined and (2) resisting attempts by Congress to pass new procurement legislation.

Did the instructor pass out copies of her public statements and discuss them with the class?

By Anonymous on Monday, March 11, 2002 - 09:31 pm:

had trouble sending this message

1. The DAU instructor, attempting to influence the class.

2. The explainations run roughly along the lines of what you consider to be her two great achievements.

3. I believe he handed out copies of a couple of her public statements and discussed them.

By Anonymous on Monday, March 11, 2002 - 09:34 pm:

above is from anon 52. keep getting error message

By formerfed on Tuesday, March 12, 2002 - 10:22 am:

Vern,

Here's a link to a Fed Computer Week article on Education/Accenture's initial share in savings arrangement.

http://www.fcw.com/fcw/articles/2002/0107/pol-edu-01-07-02.asp

This quotes a savings of $1 million per month although it doesn't mention the accuracy. I know Education has already made some payment that confirmed the actual savings. I'll keep looking for further information.

By Vern Edwards on Tuesday, March 12, 2002 - 08:11 pm:

Formerfed:

Thanks for the link. The article quotes a government manager who says that the contractor is saving $1 million per month. While this is interesting, the article refers to no audit report or other documentation of independent verification of that claim. I want to see independent confirmation by the GAO or the department IG. Also, I would like to know how the savings were measured and against what baseline.

I am jaded when it comes to agency success claims.

By bob antonio on Monday, March 25, 2002 - 11:25 am:

As I was going over all the threads, I found the original Education press release about the Share in Savings contract. After the change in Administrations, the site was changed to exclude earlier news releases but the webmaster did not clean out the files on the server so here it is.

http://www.ed.gov/PressReleases/07-2000/0726_3.html