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To Contents	Performance based contracting and OMB's role
By formerfed on Friday, May 11, 2001 - 09:24 am: Don't get me wrong - I think performance based contracting is great. But I constantly read how OMB is taking a good concept (actually a good tool available to CO's to use), and creating all sorts of rules and tests. Apparently OMB feels agencies won't use it unless it is forced on agencies. In March, the OMB Deputy Director send a memo saying 20% of service contracts must use it. Then they wait literally months to answer the simple question of whether it applies to actions over $25,000 or $100,000. If that wasn't enough, they feel agencies aren't competent enough to know what is performance-based and what isn't, so they asked the PEC to come up with measures to check. Is it just me or do other feel OMB has gone way to far (no pun intended!) to force this? Or putting it another way, if the concept is so good, shouldn't it sell itself? By Anonymous on Friday, May 11, 2001 - 10:05 am: I read the same article--my heartburn is with the standards. Especially the payment reduction requirement. I have always thought of the Schedule of Deductions as a variant of liquadated damages- problem is the thought process required to include LQs in a contract are ignored when this "princip[le" is adhered to. I find it especially onerous in a commercial PBSC. It takes a great deal of work,often does not represent actuals and in some cases ,can reward contractors for not performing. I think that the reduction standard should be dropped ,and in commercial contracts, ,specific performance required. By formerfed on Friday, May 11, 2001 - 10:34 am: Another standard that perhaps makes me shudder more is quality assurance surveillance plans. They aren't needed in every case. In fact, this implies that a few simple measures won't suffice. The requirement can detract from what makes performance based so good - concentrate on what the purpose really is, and how do you know when that purpose is met. So some agency gets creative and contracts out a service requirement using commercial best practices. The contract is very simple. Let's say it's for debt collection. The contractor gets to keep a share of money it recovers based on what they have at the end of each period. This fails to meet three of the four standards - no QA plan, no performance incentive, and no reductions. By anon 10:05 on Friday, May 11, 2001 - 11:13 am: I agree.Plus the amount of paperwork and the number of people involved place a very good idea in "the juice ain't worth the squeeze" dustbin.Why don" we apply the basic "outcome" concept of the contract to the standards as well. Standards are methods--they are not outcome oriented. By Anonymous on Friday, May 11, 2001 - 12:52 pm: It's funny how OMB applied a performance standard of 20% to it's objective of forcing use of PBSA. Perhaps they should have used another acquisition tool of market research to find out why it's not going as fast as they want. A former head of OFPP used to obtain insight by simply asking questions in the rank and file. I guess whoever is in charge now just wants to dictate outcomes. Wonder what would happen if successful risk-takers got rewarded? How about cash rewards recognition in a noteworthy forum, lunch with the Director of OMB, promotions, or a special assignment? If PBSA produces measurable benefits, how about sharing the savings with those responsible. Seems to me that might be more of an incentive that dictating a percentage of awards. And on top of that, only those that meet the standards qualify. Just because the four standards are met doesn't guarantee favorable outcomes. By anon 10:05 on Friday, May 11, 2001 - 01:35 pm: I would argue that if the four standards were met you would be precluded from favorable outcome. By Hastur on Friday, May 11, 2001 - 03:10 pm: In addition to conducting focus groups/market research among the rank and file, and not just the PEC(rrrr), OMB should have commissioned an advisory and assistance study to determine the cost/benefit test applicable to guage the merits of applying PBSCs @ different $ thresholds. Show me the money before pontificating - please. It seems the shotgun approach/ready-fire-aim is still alive and well. Sorry Charlie, we're just not that sophisticated --> are not supported in the manner necessary to put this unfunded edict into effect. How many of the following represent a herculian effort? Shall I refuse to solicit/award contracts because I can't meet the obligations @ 1.602-1 (b), that reads: "b) No contract shall be entered into unless the contracting officer ensures that all requirements of law, executive orders, regulations, and all other applicable procedures, including clearances and approvals, have been met." Minimum Mandatory PBSC Requirements OK 1. Performance requirements that define the work in measurable, mission-related terms. OK 2. Performance standards (i.e., quality, quantity, timeliness) tied to the performance requirements. ISO and AWARD FEE CRAP 3. A Government quality assurance (QA) plan that describes how the contractor’s performance will be measured against the performance standards. Tie our hands to damages (don't correct the term damages) 4. If the acquisition is either critical to agency mission accomplishment or requires relatively large expenditures of funds, positive and negative incentives tied to the Government QA plan measurements. Typical, but usually very flawed 5. An historic workload analysis is performed, or the workload is estimated if historic data is unavailable, to aid in determining the performance requirements and standards, Government QA plan, and incentives. Duh. 6. The solicitation and contract/task order convey a logical, easily understood flow among performance requirements, performance standards, Government QA, and performance incentives. Don't specify means and methods of performance...okay, duh. EXCEPT that certain standards build confidence and reduce risk. 7. Process-oriented requirements (e.g., job descriptions, education requirements, level-of- effort) and reports are eliminated to the maximum feasible extent. Create a good COTR course. 8. Government QA performance evaluators assigned to assess contractor performance are trained in PBSC. Ok. 9. Commercial and/or industry-wide performance standards, where available, are relied upon. Ok, in big games. 10. The marketplace and other stakeholders are provided the opportunity to comment on draft performance requirements and standards, the Government QA plan, and performance incentives. It's not size that matters people, it's the nature of the requirement that should dictate this. 11. If the size of the requirement justifies the resource expenditures, potential offerors are given the opportunity to learn more about the "as is" operation to facilitate their ability to develop intelligent proposals. Tks. for the small box. 12. The contract/task order is fixed price. Ok. 13. The contract/task order is completion type (vs. term type or level-of-effort). Have another drink. 14. Multi-year contracting authority is used where available. Let's see, hurry and do this since 1/2 of us are eligible for retirement w/in 5 years. 15. Experience and lessons learned from predecessor acquisitions are used to convert recurring requirements to PBSC. Other Considerations Fancy. Measure outcomes and learn from outcomes. 16. Past performance evaluations are based on the results of contract QA measurements and incentives, and QA plans are consistent with past performance factors. Farce. 17. For recurring requirements that have been converted to PBSC, the effects of conversion are measured (e.g., price, performance). 8(a)? 18. The contract/task order is awarded competitively. I can't do performance based on LCTA? Why not? Show me statuatory basis. Oops, you're beyond that. 19. Best value evaluation/selection methods are used to award the contract/task order. Tea costs $.23 a bag in China. 20. Informal conflict resolution methods are utilized (e.g., alternative dispute resolution, ombudsman, formal partnering agreements). Left field. 21. An umbrella-type contract that has demonstrated significant performance problems, cost overruns, or has included an amount of work that is too great or diverse to be effectively managed by either the Government or the contractor, is broken up into multiple contracts. By Pvt. Joker on Monday, May 14, 2001 - 12:48 pm: Dear Hastur: That's all well and good, but do you like PBSC or don't you? By Hastur on Monday, May 14, 2001 - 03:09 pm: Alea jacta est. Sed quis custodiet ipsos custodes? By Anonymous on Monday, May 14, 2001 - 04:04 pm: HUH? YOU FROM OMB?

Performance based contracting and OMB's role

By formerfed on Friday, May 11, 2001 - 09:24 am:

Don't get me wrong - I think performance based contracting is great. But I constantly read how OMB is taking a good concept (actually a good tool available to CO's to use), and creating all sorts of rules and tests. Apparently OMB feels agencies won't use it unless it is forced on agencies. In March, the OMB Deputy Director send a memo saying 20% of service contracts must use it. Then they wait literally months to answer the simple question of whether it applies to actions over $25,000 or $100,000. If that wasn't enough, they feel agencies aren't competent enough to know what is performance-based and what isn't, so they asked the PEC to come up with measures to check.

Is it just me or do other feel OMB has gone way to far (no pun intended!) to force this? Or putting it another way, if the concept is so good, shouldn't it sell itself?

By Anonymous on Friday, May 11, 2001 - 10:05 am:

I read the same article--my heartburn is with the standards. Especially the payment reduction requirement. I have always thought of the Schedule of Deductions as a variant of liquadated damages- problem is the thought process required to include LQs in a contract are ignored when this "princip[le" is adhered to. I find it especially onerous in a commercial PBSC. It takes a great deal of work,often does not represent actuals and in some cases ,can reward contractors for not performing. I think that the reduction standard should be dropped ,and in commercial contracts, ,specific performance required.

By formerfed on Friday, May 11, 2001 - 10:34 am:

Another standard that perhaps makes me shudder more is quality assurance surveillance plans. They aren't needed in every case. In fact, this implies that a few simple measures won't suffice. The requirement can detract from what makes performance based so good - concentrate on what the purpose really is, and how do you know when that purpose is met.

So some agency gets creative and contracts out a service requirement using commercial best practices. The contract is very simple. Let's say it's for debt collection. The contractor gets to keep a share of money it recovers based on what they have at the end of each period. This fails to meet three of the four standards - no QA plan, no performance incentive, and no reductions.

By anon 10:05 on Friday, May 11, 2001 - 11:13 am:

I agree.Plus the amount of paperwork and the number of people involved place a very good idea in "the juice ain't worth the squeeze" dustbin.Why don" we apply the basic "outcome" concept of the contract to the standards as well. Standards are methods--they are not outcome oriented.

By Anonymous on Friday, May 11, 2001 - 12:52 pm:

It's funny how OMB applied a performance standard of 20% to it's objective of forcing use of PBSA. Perhaps they should have used another acquisition tool of market research to find out why it's not going as fast as they want. A former head of OFPP used to obtain insight by simply asking questions in the rank and file. I guess whoever is in charge now just wants to dictate outcomes.

Wonder what would happen if successful risk-takers got rewarded? How about cash rewards recognition in a noteworthy forum, lunch with the Director of OMB, promotions, or a special assignment? If PBSA produces measurable benefits, how about sharing the savings with those responsible. Seems to me that might be more of an incentive that dictating a percentage of awards. And on top of that, only those that meet the standards qualify. Just because the four standards are met doesn't guarantee favorable outcomes.

By anon 10:05 on Friday, May 11, 2001 - 01:35 pm:

I would argue that if the four standards were met you would be precluded from favorable outcome.

By Hastur on Friday, May 11, 2001 - 03:10 pm:

In addition to conducting focus groups/market research among the rank and file, and not just the PEC(rrrr), OMB should have commissioned an advisory and assistance study to determine the cost/benefit test applicable to guage the merits of applying PBSCs @ different $ thresholds.

Show me the money before pontificating - please. It seems the shotgun approach/ready-fire-aim is still alive and well.

Sorry Charlie, we're just not that sophisticated --> are not supported in the manner necessary to put this unfunded edict into effect.

How many of the following represent a herculian effort? Shall I refuse to solicit/award contracts because I can't meet the obligations @ 1.602-1 (b), that reads:

"b) No contract shall be entered into unless the contracting officer ensures that all requirements of law, executive orders, regulations, and all other applicable procedures, including clearances and approvals, have been met."

Minimum Mandatory PBSC Requirements
OK 1. Performance requirements that define the work in measurable, mission-related terms.

OK 2. Performance standards (i.e., quality, quantity, timeliness) tied to the performance requirements.

ISO and AWARD FEE CRAP 3. A Government quality assurance (QA) plan that describes how the contractor’s performance will be measured against the performance standards.

Tie our hands to damages (don't correct the term damages) 4. If the acquisition is either critical to agency mission accomplishment or requires relatively large expenditures of funds, positive and negative incentives tied to the Government QA plan measurements.

Typical, but usually very flawed 5. An historic workload analysis is performed, or the workload is estimated if historic data is unavailable, to aid in determining the performance requirements and standards, Government QA plan, and incentives.

Duh. 6. The solicitation and contract/task order convey a logical, easily understood flow among performance requirements, performance standards, Government QA, and performance incentives.

Don't specify means and methods of performance...okay, duh. EXCEPT that certain standards build confidence and reduce risk. 7. Process-oriented requirements (e.g., job descriptions, education requirements, level-of- effort) and reports are eliminated to the maximum feasible extent.

Create a good COTR course. 8. Government QA performance evaluators assigned to assess contractor performance are trained in PBSC.

Ok. 9. Commercial and/or industry-wide performance standards, where available, are relied upon.

Ok, in big games. 10. The marketplace and other stakeholders are provided the opportunity to comment on draft performance requirements and standards, the Government QA plan, and performance incentives.

It's not size that matters people, it's the nature of the requirement that should dictate this. 11. If the size of the requirement justifies the resource expenditures, potential offerors are given the opportunity to learn more about the "as is" operation to facilitate their ability to develop intelligent proposals.

Tks. for the small box. 12. The contract/task order is fixed price.

Ok. 13. The contract/task order is completion type (vs. term type or level-of-effort).

Have another drink. 14. Multi-year contracting authority is used where available.

Let's see, hurry and do this since 1/2 of us are eligible for retirement w/in 5 years. 15. Experience and lessons learned from predecessor acquisitions are used to convert recurring requirements to PBSC.

Other Considerations
Fancy. Measure outcomes and learn from outcomes. 16. Past performance evaluations are based on the results of contract QA measurements and incentives, and QA plans are consistent with past performance factors.

Farce. 17. For recurring requirements that have been converted to PBSC, the effects of conversion are measured (e.g., price, performance).

8(a)? 18. The contract/task order is awarded competitively.

I can't do performance based on LCTA? Why not? Show me statuatory basis. Oops, you're beyond that. 19. Best value evaluation/selection methods are used to award the contract/task order.

Tea costs $.23 a bag in China. 20. Informal conflict resolution methods are utilized (e.g., alternative dispute resolution, ombudsman, formal partnering agreements).

Left field. 21. An umbrella-type contract that has demonstrated significant performance problems, cost overruns, or has included an amount of work that is too great or diverse to be effectively managed by either the Government or the contractor, is broken up into multiple contracts.

By Pvt. Joker on Monday, May 14, 2001 - 12:48 pm:

Dear Hastur:

That's all well and good, but do you like PBSC or don't you?

By Hastur on Monday, May 14, 2001 - 03:09 pm:

Alea jacta est.

Sed quis custodiet ipsos custodes?

By Anonymous on Monday, May 14, 2001 - 04:04 pm:

HUH? YOU FROM OMB?