According to the May 22 issue of Federal Contracts Report, Angela Styles, President Bush's nominee to be OFPP Administrator, told senators at her confirmation hearing that there is no consensus as to what constitutes a performance-based service contract.

If a prospective OMB official is willing to acknowledge that there is no consensus about what is a performance-based service contract, then what should agencies do about meeting OMB's goal of obligating 20 percent of FY 2002 service contract obligations in excess of $25,000 on performance-based service contracts?

P.S. This is not an invitation to a gripe session, but a search for solid ideas.

By duh on Tuesday, June 05, 2001 - 12:02 pm:

Please clarify.

Are you saying that OMB has set a goal without a satisfactory definition of what will satisfy that goal? How will agencies know what will satisfy that goal and how will OMB determine if agencies met the goal?

By ex-fed on Tuesday, June 05, 2001 - 12:51 pm:

Of course he is "duh." That is how such muddled policy gets clarified. Those without a clue grab a "good idea" and "promulgate policy" then let it refine itself out of the sweat and corpses of the rank and file.

Faced with such gray areas a useful approach is to seize the opportunity to define the parameters for yourself. First establish the areas of agreement for the characteristics of such a contract. For example, absence of over specification, "how to" and other characteristics that are not within the envelope. A few days of intensive research of what guidance, other agencies and outside comments say about these things should lead to a commonly acceptable subset.

Then define reasonable characteristics that the agency or perhaps even program want in such a contract. Make sure none seriously violate the commonly accepted subset or build a sound argument why they make sense in this case. Combine all into a well organized set and then essentially publish it. If possible make sure those who may be in a position to judge later have a reasonable time to state serious objections, but try to avoid opening the door to eternal swirl.

That last is where art and luck become major players. One approach is to demonstrate a realistic time limit. For example, a covering statement that important service contracts are pending and in order to comply we have defined the attached parameters. Unless we receive serious objections by a certain date we will proceed using them for those urgent contracts.

Formulate a reasonable approach honoring commonly accepted practices. Make the reasonable extensions you must and document them. Build support elsewhere if possible. State what you are going to do, why it is a reasonable approach and why perhaps popular options were discarded. Give a finite opportunity for serious objections. Forge ahead.

Such approaches often work, as long as they are reasonable, in forging a way through the fog of bureaucracy. Contractors in development work sometimes use a form by stating assumptions when they feel the government hasn't been entirely clear and in fact may not quite know what it means itself.

Subsequent quibbling and kibitzing from the periphery is very often squelched by a well organized answer. That applies even if it turns out some of the approach needs correction from experience or better vision as the fog clears. In general, despite efforts by some particularly negative bystanders, serious damage seems to be rarely inflicted upon those who can answer the rock throwing with coherent answers.

More than likely such action will not bring acclaim and hosts of loyal allies. It is better than milling about like the rest of the sheep waiting to be slaughtered. Who knows, you might even escape such fate and have some amusement doing so. Either way, it will contribute to fog clearing and assist "policy" in defining what it really wants.

By Anonymous on Tuesday, June 05, 2001 - 04:11 pm:

The definition of Performance Based Contracting is now set forth in FAR 2.101.

Before this definition was added to FAR, however, the "best" definition was found in OFPP's 21-item Performance-Based Service Contracting (PBSC)
Solicitation/Contract/Task Order Review Checklist located at:
http://www.arnet.gov/References/Policy_Letters/pbscckls.html

You'll note that the Checklist is much, much broader. Even the four mandatory components of a PBSC are broader than what ended up in the FAR. Not to mention the other items.

Bottom line: OFPP has a history of NOT defining Performance Based Contracting. And has used the lack of definition to question the agencies' implementation of the preference. After several years of this, the FAR definition (a workable definition, I think) comes out. But by now, OFPP itself doesn't know what Performance Based Contracting means.

By duh on Tuesday, June 05, 2001 - 04:12 pm:

ex-fed:

Our HCA has the attributes of a box turtle. Whenever the HCA senses movement, the HCA retreats into the shell.

How do you move forward with the boss cowering in a shell?

By ex-fed on Tuesday, June 05, 2001 - 11:31 pm:

Well duh, there is this old saying about it being better to have a lion leading an army of sheep than a sheep leading an army of lions. I guess a box turtle is even worse than a sheep as there can be long periods of no movement, even outward sign of life, in a box turtle.

Real reform would identify and ruthlessly remove those human box turtles and sheep from so called "management," "executive" and "leadership" posts.

Actually, that is a misnomer for all too many government people assigned those terms. They are instead "weather vanes" and "administrators" who couldn't manage, execute or lead an army of T. rex, tigers and lions out of a paper bag.

A government that behaves more like an efficient business in its business areas will not get there with the culture that has been encouraged by Civil Service. If Congress ever gets serious about efficiency it may well find the much maligned statement from Vietnam has application here. You know, the one about it being necessary to destroy the village to save it. So far the Legislative and Executive have only played with tinkering about the edges. I don't expect to see it in my lifetime, but it sure would provide great amusement.

By bob antonio on Wednesday, June 06, 2001 - 05:41 am:

Anonymous, ex-fed, duh:

This process must begin in the Office of Management and Budget (OMB). The Office of Federal Procurement Policy (OFPP) should be limited to a fact gathering and early draft-producing body.

When OMB wishes to exercise its authority, it finds itself with the authority for implementation of the Government Performance and Results Act and procurement policy. I don't think they ever put it together yet.

The first thing they need to do is accept just about anything for their current goal. They don't know what they want so they should accept anything that approaches their concept of it. If the OFPP document listed above interferes with efficient government, it should be scrapped.

Here are the basics. There is an agency strategic plan with goals and objectives. This is what the agency wants to accomlish. They have legislated missions to accomplish. An agency level strategic plan is supported by annual plans, performance based budgets, and annual performance reports. Each contract specialist should have a copy of this law and these documents. That is the beginning of acting as a business leader.

The agency strategic plan is too broad. It must be supported by lower level strategic, annual plans, budgets, etc. For example, Goddard Space Flight Center shoulkd have a site strategic plan, annual plan, budget, etc. Those plans and documents should be directly linked to the agency's documents. The contract specialists there should be familiar with it.

By understanding these plans and budgets, the contract specialist can work with the program to develop contract performance goals that fulfill the annual plan or strategic plan. These contract goals that are written to implement the facility's legislated mission are part of the business aspects of the process. The contract specialist, by being familiar with the agency and program missions, can determine if the contract work is critical. If it is, they should make sure that the contract performance goals, and incentives if there are any needed, are linked directly to either annual or strategic goals. In less critical work, they will notice that the contract goals function as support for a broader overall goal.

OMB's entire efforts should be wrapped around this overall process. Having some poorly conceived document for a bureaucrat to fall back on is not the answer. Until OMB manages the government, forget it.

By formerfed on Wednesday, June 06, 2001 - 07:36 am:

Bob,

You thoughts/statements make a lot of sense. If OMB said that and just left things alone, we wouldn't have a problem. However, my guess is someone wanted to keep pushing the concept of PBSC, even at the expense of the majority not understanding it in the context your described. The mandate seemed to be "just do PBSC". That happened and OMB looked at said "what we see is not PBSC. We don't know how to describe what we want either but we will get the PEC to do it." Then the PEC thought they needed some very specific criteria to make the test a go/no-go for FPDS coding. Thus we see the four mandatory components including the ridiculous "payment reduction" and "QA surveillance plans". How those two tie into whether the contract supports fulfilling GPRA measures alludes me, but maybe the PEC can explain the logic.

By Anonymous on Wednesday, June 06, 2001 - 09:59 am:

To Anonymous of June 5 at 4:11pm:

Question: In the definition of performance-based contracting that you cite, and in the one in the OFPP checklist, does "meausurable" mean quantified? If not, what does it mean?

By ex-fed on Wednesday, June 06, 2001 - 10:50 am:

I believe it was Vern Edwards long ago on a different forum who pointed out how the rule and guidance making bodies failed to do the necessary preparation. With that lack they were not quite clear themselves what they wanted, but a rule was needed. Out came the rule, backed by murky concepts and even muddier writing, to the confusion of all. Poor preparation and abdication of responsibility causes waste for all.

By Vern Edwards on Wednesday, June 06, 2001 - 12:26 pm:

All:

Read the definition of performance-based contracting in FAR 2.101. Read it carefully. Here it is:

"Performance-based contracting means structuring all aspects of an acquisition around the purpose of the work to be performed with the contract requirements set forth in clear, specific, and objective terms with measurable outcomes as opposed to either the manner by which the work is to be performed or broad and imprecise work statements."

Most of that definition came from OFPP policy letter 91-2; the phrase "with the contract requirements set forth in clear, specific, and objective terms with measurable outcomes," was added recently.

There are many things wrong with that definition, beginning with the notion that people are able to specify their requirements for long-term, complex services -- clearly, specifically, in objective terms and with measurable outcomes -- before performance begins. More than 40 years of scholarship in economics, law, and public administration -- not to mention practical experience and common sense -- have shown that people cannot do that very well if at all.

A more basic complaint is that the definition is a classic example of bureaucratese. Why not define PBC more simply as follows:

"Performance-based contracting means specifying a contractor's main performance obligations in terms of the results that the contractor must achieve."

Isn't that clearer?

Why main performance obligations? Why not all? Because sometimes process or procedure (how to) matter as secondary concerns and should be the subject of agreement.

Why not use the terms "objective" and "measurable"? Because the quality of a service is often a matter of subjective assessment, as when attributes such as "courtesy," "patience," "alertness," etc. are important to success, and because to many people "measurable" means quantified, and effective quantification of intangible result attributes, while helpful, is difficult. (Isn't it interesting that the FAR requires "measurable" performance standards, yet so many contracting professionals disparage the use of numerical scoring in the source selection process.)

Here's the thing: Political appointees often feel that they have to get as much done as possible in the potentially short time available to them, which explains OMB's 20 percent goal for PBC in 2001. Such appointees know that if they try to clarify their ideas and indoctrinate the working level before they take action their time in office may be up before they can claim any achievement. To such people, official policy utterances and statutory enactments are evidence of concrete achievement; they are no illusion about what's really happening. There's no point in complaining about this; it's the way things are and they're not going to change.

It's up to the professionals to make sense of these things and then do the best they can. The important question for the pros is not what does the FAR definition mean, but what should it mean. In light of what we know about the nature of services, what makes sense?

By bob antonio on Wednesday, June 06, 2001 - 12:44 pm:

Vern:

The "measurable outcomes" phrase was most likely taken from the Government Performance and Results Act. Unfortunately, the simple concepts in the law and its requirements were fodder for the bureaucrats. The process has been papered to death.

It is OMB, the institution, at fault here. The current Director's goal is not the problem. OMB is responsible for implementing performance management, performance contracting, and performance budgeting. It has been their job since 1993. Until they get their act together, they have no reason to expect success.

By ex-fed on Wednesday, June 06, 2001 - 01:31 pm:

Vern's comments about the need to make a rule were once stated by Congressman James O'Hara as "It is more important to have a rule to go by than what the rule actually says."

His other comments about "'objective' and 'measurable'" seem to me to be one of the key flaws in this area. Suppose the service is cleaning restrooms or kitchens. Is clean measured by eye? Not objective and a seemingly spotless area may contain high concentration of infectious agents. Microscopic examination of random one inch sample areas for particulate and organic matter? Objective, but then someone walks into a sterile enough area and finds "a mess" - in their eye.

It is more difficult to objectively define a service than most seem to think.

By Vern Edwards on Wednesday, June 06, 2001 - 02:04 pm:

Bob:

The requirement for measurable performance standards in performance-based contracts predates the Government Performance and Results Act of 1993. The requirement appeared in OFPP Policy Letter 91-2, which was published in 1991, as follows:

"Agencies shall develop formal, measurable (i.e., in terms of quality, timeliness, quantity, etc.) performance standards and surveillance plans to facilitate the assessment of contractor performance... ."

You can trace the requirement for measurable standards back even further to OFPP Pamphlet No. 4, which was published in 1980, and even further to Air Force Regulation 400-28 (no longer in effect), which I think was published in the late 1970s.

There is nothing inherently wrong with quantifying service requirements, if you can do it. However, it is usually impracticable in the case of long-term, complex services.

By bob antonio on Wednesday, June 06, 2001 - 02:23 pm:

Vern:

In the case of performance contracting, OMB was responsible at least as far back as 1980--OFPP had been there since 1974. If I remember correctly, the OFPP Pamphlet No. 4 was part of the A-76 Circular. A-109 had a similar OFPP pamphlet attached to it.

I will finish later. Must run to a meeting.

By Vern Edwards on Wednesday, June 06, 2001 - 02:50 pm:

Bob:

You are right that OMB has been responsible all along. You are also right that OFPP Pamphlet No. 4 was a part of OMB Circular A-76.

Even so, OFPP Pamphlet No. 4 was written by contracting professionals, not by OFPP officials. In fact, two of the authors of OFPP Pamphlet No. 4, Darlene Druyun and Ken Gerkin, had been my supervisors.

It is up to contracting professionals to implement OMB's policies in practical and effective ways.

By Anonymous on Wednesday, June 06, 2001 - 03:57 pm:

I think I may have read the pamphlet years ago but when the government was describing the method as well as the outcome it all seemed perfectly logical. Do you all consider that outcome based contracting is so insignificant a change as to require no concomitant change in established guidance?

By Vern Edwards on Wednesday, June 06, 2001 - 04:29 pm:

Anonymous:

I think that we need new guidance, but we're not going to get it from the people who work in OMB or OFPP. What do they know? Most of them have little if any hands-on contracting experience, and my impression is that they aren't familiar with current legal or economic theory either -- theory about relational and incomplete contracts.

No, we're going to have to figure PBC out for ourselves, by gathering facts, getting up to speed on the latest theoretical work, and thinking hard on the basis of our experience and practical know-how. The staff people at OMB and OFPP have given us all the guidance that they have to give.

Here's a place to begin: "The Characteristics and Challenges of Relational Contracts," by Richard E. Speidel, in Northwestern University Law Review, Spring 2000.

By joel hoffman on Wednesday, June 06, 2001 - 04:50 pm:

Defining performance oriented contract requirements isn't limited to Government acquisition. The Construction Specifications Institute has, for a long time (How long? I don't know),defined a pure performance specification as "a statement of required results with criteria for verifying compliance." Also: "Performance specifying necessitates clear, definitive communication of required results, but should not unnecessarily limit the products, methods, or means of achieving those results." (CSI Manual of Practice, SP/090).

The CSI Manual discusses the comparison/contrast between performance specifying and prescriptive specifying.

For most construction projects, design criteria or solutions "are expressed in terms of characteristics against which prospective offerors can propose. Many characteristics can be described as functional or performance related, in their nature. 'Functional characteristics' are used to define results. In doing so, they define the task or desired result by focusing on what is to be achieved. They do not describe the method of achieving the desired result."

"Performance characteristics are logical extensions of functional characteristics. They define the required performance parameters of the user by identifying details of operating inputs and outputs. In an analogous manner to functional characteristics, they do not state 'how' this performance will be achieved by the contractor."

"Prescriptive specifications then are a 'means', while performance specifications are an 'end'."

In practice, even on a design-build construction project, which is arguably the construction industry's closest form of "performance based contracting", a combination of performance and prescriptive design criteria are usually specified. We refer to design-build as "performance oriented specifying". The Design-Build Institute of America advises that there are adaptations to pure performance specifying, which provide verifiable results. One adaptation is to specify all allowable alternatives, citing industry standards; or conversely, citing unallowable options within industry standards.

I don't know who first defined these concepts, government or industry. I just know that the concepts are not unique to government service contracting.

It seems to me that the principles and concepts of performance specifying or performance oriented specifying are what are really important, not being hung up on specific rules or SOP's for implementing performance based contracting. Rules and SOP's only stifle creativity and imagination... Happy Sails! Joel

By Vern Edwards on Wednesday, June 06, 2001 - 05:02 pm:

Joel:

Very well, let me ask you in principle: Should performance-based requirements for services necessarily be quantified? Is clear verbal (meaning non-numercial) description acceptable?

By joel on Wednesday, June 06, 2001 - 10:47 pm:

Vern, In my opinion,yes. Criteria fulfillment need only be "verifiable", not necessarily requiring numerical measures of verification. Happy Sails! joel

By bob antonio on Thursday, June 07, 2001 - 08:52 am:

Vern and All:

OFPP Pamphlet was developed at Gunter AFB by the individuals Vern named and a fellow who is and has been at OFPP for decades (at least he was there a year ago). Actually, the fellow at OFPP pushed the concepts of Performance Oriented Work Statements for a long time. You can find the basics at this link by looking at acknowledgements.

http://www.wifcon.com/ofppp4_con.htm

I converted the Pamphlet to html because it is easier to download than a clumsy Word document.

In 1989, I wrote a report on Civilian Agency Contracting for my employer and the Department of Defense Inspector General had completed one at that agency. I spoke with the Administrator of OFPP about the report and the fellow that was hot-to-trot about the 1980 pamphlet. The fellow's eyes lit up when I told them that contracting officers and program officers could not tell us what they attempted to acquire in their contracts.
They used those reports to push Performance-based contracting. You will see that documented in one of OFPP's 70 or 80 page publications from that time. I don't know if it is online. In 1993, the Pamphlet was given new impetus with the Government Performance and Results Act. That is the beginning of Performance based contracting on a government-wide basis.

Performance-based government is a fact of life. In concept, it sounds great. Although the paper-mongers and jargonites litter these concepts with their droppings, the idea is simple. It asks: (1) What are you trying to do?, (2) How are you going to do it?, and (3) How will you know if you did it? That is it. Now getting that into practice--WHEN IT IS APPROPRIATE--is the difficult part.

All government agencies have legislated missions. They then set long-term goals to fulfill their mission (strategic plan). Under our annual budget process, the agencies must submit annual plans to show what they plan to achieve with their budget request (annual plan). Their budget request, either does, or will have goals listed with the funds requested (performance-based budget). At the end of a fiscal year, the agencies must tell Congress what they achieved with the funds they were given by the taxpayers (annual performance report). Did they accomplish what they said they would? That is the Government Performance and Results Act of 1993. It is basic business concepts shaped into something for our federal government.

If everything runs perfectly in government, it works. Let's just say it needs a few tweaks.

Assuming an agency had competent individuals writing their strategic and annual plans, the contracting activity will see what the agency is trying to achieve with the funds they want to obligate. At that point, the contract specialist can work with the program in developing contract performance goals that are linked to the strategic plan and maybe even the annual plan. It is here that the contract specialist needs to have the training and guidance to help. Sometimes you will see an obvious contract goal. At other times, you will not.

Will this work? Here is a brief note from the mid 1990s. The Department of Energy (DOE) was forced to complete a 10-year plan to clean up their facilities. That could serve as the strategic plan. The Office of Environmental Management (EM) at DOE was developing a nice system (not complete) that could tell what needed to be done each year at every facility to meet the 10-year plan. (The defense organization had something similar.) The contracting offices developed performance contracts to meet the work scheduled for that year and in accordance with the 10-year plan.

One of the problems that occurred at DOE was the timing of budgets, annual plans, and contract negotiations. If I remember correctly, the contract annual goals were negotiated at the start of a fiscal year. However, the approved budgets were always late. As a result, contract negotiations lingered for months into the performance year. After a few months into the new fiscal year, the contract performance was placed into the contracts. This is one problem unrelated to the writing of performance goals. However, it is a real problem.

I don't know if this will ever work right. However, the only organization that can tie all this together is the Office of Management and Budget (OMB). In this process, OMB is like an engine in an automobile that does not work. Until OMB gets the engine running (with important assistance from Congress), any effort by contract specialists to do performance contracting is just rotating the tires on a car that is going nowhere.

By formerfed on Thursday, June 07, 2001 - 10:01 am:

Others disagree with me, but I see the the task you described - contract specialist working with programs in developing contact performance goals linked to strategic and annual plans - as essential to the future of 1102s. We, as 1102's, need to increasingly bring value to programs and our customers. This is one key area where programs will look to the acquisition community for guidance. If we say "that's not our job" or "I don't know how", programs will find someone else. Getting in on potential acquisitions on the ground floor in the planning and budget formulation stages is the key to positively influencing acquisitions and have a stake in the outcome. The alternative is wait until the action becomes a procurement (strategy already defined, SOW/spec complete, and perhaps the vendor picked) before we get involved. This is just one of several things we can do to become more valued in our profession.

By The Original Anonymous on Thursday, June 07, 2001 - 10:33 am:

Excuse me, but some of you are drifting from the subject, getting into issues like long term planning and the future of 1102s. (I'm beginning to think that for 1102s all subjects come down to the future of 1102s.)

Forgive my single-mindedness, but the issue is the nature of performance-based service contracts. Angela Styles said that there's no consensus about that. Can we talk about that?

Who agrees with Joel? Who doesn't? What should we be writing in our service contracts?

By joel hoffman on Thursday, June 07, 2001 - 11:49 am:

My original comments really were meant to reflect that "performance based specifying" isn't restricted to government or to service contracts. Industry also defines and uses the concepts. I believe what is most important for success is to understand the profound differences in principle between prescriptive specifying and performance specifying, be it for service, supply, or construction.

Once one gets beyond the idea that we have the only or best solution, the trick is how to prepare your statement of work to achieve your end goal or mission requirement. Part of the challenge is determining how compliance or fulfillment of the performance requirement can be verified.

One must also understand that there are trade-offs involved in performance oriented specifying. One big one is that the level of proposal cost, proposal details and corresponding effort and cost to evaluate proposals is directly proportional to the degree of performance orientation of your specs or statement of work. The more prescriptive, the less proposal info and evaluation needed and vice versa. In addition, there are contract management and oversight issues to consider.

These can be big disadvantages, not worth the value added by allowing innovative approaches or solutions in some cases. One must determine if performance based specifying is the correct approach for each project or acquisition, rather than simply jumping on the PBSC bandwagon because the term is in Vogue. happy sails!

By Vern Edwards on Thursday, June 07, 2001 - 12:24 pm:

Joel:

You've said something very interesting:

"[T]he level of proposal cost, proposal details and corresponding effort and cost to evaluate proposals is directly proportional to the degree of performance orientation of your specs or statement of work. The more prescriptive, the less proposal info and evaluation needed and vice versa."

That statement appears to indicate that you think that the use of a performance-based SOW requires the solicitation and evaluation of more detailed technical proposals than the use of a how-to SOW. Is that what you think? If so, why?

By joel hoffman on Thursday, June 07, 2001 - 02:04 pm:

Vern, yes, I believe, as a general rule of thumb, this to be true. I also believe that performance oriented specifications involve more cost to prepare a FFP, competitive proposal than a how-to SOW - even if the owner doesn't ask for technical proposals. You didn't specifically ask that question, but it is related to your question. So I want to also explain the basis of that opinion.

I have been involved in several source selections for service or systems contracts (8-10), but most of my source selection experience has been with construction and design-build (~80 or so). My opinion is colored by my own experience.

I will concede that one can prepare an RFP for a service contract in which performance is simply a contract requirement, without evaluating the adequacy of the offerors' proposed approach or proposed solution. I would also suggest such approach might limit the usefulness of best value acquisition. If you primarily evaluate past performance, experience and price, "the proof will be in the pudding". The owner will discover after award whether or not the contractor's selected technical approach is practical, realistic or executable. Not evaluating a technical approach also reduces the usefulness of give and take discussions, where the owner can point out excesses, weaknesses or deficiencies in the proposed technical approach or aspects which it just doesn't like for some reason. Service contracts for straightforward, repetitive or simple requirements probably lend themselves to an acquisition approach where the owner asks for little or no technical proposal.

I personally believe that a performance oriented contract, where there are numerous options or choices of how to meet a requirement, generally requires more effort to prepare a proposal. In my opinion, this is true, if the owner doesn't ask for technical proposal information. The firm has to internally select and develop a technical approach to base its bid or proposal on. It would seem evident that this effort involves additional cost over simply estimating cost to cover a prescribed solution. Time and effort generally always cost any firm money.

It IS a general rule in FFP design-build construction that the more innovation allowed, the more expense and effort involved in preparing a proposal. In fact, both parties have their own separate reasons.

The design-build firm has to establish a proposal team. The team must invest in some level of design development to be able to prepare competitive cost estimates in which the team has some risk confidence, with the least contingency. I would say that this is a comparable need to a service contract proposal team. It doesn't matter whether the owner asks for a detailed proposal, the team must still expend the time and effort in developing their design solution to a point to estimate it.

Good design-build teams concentrate their bid and proposal efforts on projects where they feel they have a competitive advantage, due to the cost involved. How do they convey their technical advantages to the owner so it will select them? Yes, a good reputation helps, but design-builders also like to tout the advantages of their design approach.

In addition, in D-B, the owner must clearly understand what the offeror intends to provide, before award, not afterward. For FFP contracts, there must be a meeting of the minds concerning what will be furnished. The owner always wants to pick and choose the best trade-off between design and construction approaches and cost.

That is why I think that use of a performance-based SOW generally requires the solicitiation and evaluation of more detailed tech proposals than a how-to SOW. Happy Sails! joel

By joel hoffman on Thursday, June 07, 2001 - 02:21 pm:

My last post perhaps omitted discussion of several other advantages of evaluation and the chance to discuss a proposed technical approach. The owner can ask for clarification if it doesn't understand the proposed solution. Both parties have a basis to begin discussions on how to modify the SOW, if proposals come in too high.

My last post reads as though the owner has all the answers - in a performance-based acquisition, it looks to the offerors for answers! It's just nice to know how they intend to meet my functional and performance needs. happy sails!

By Vern Edwards on Thursday, June 07, 2001 - 03:15 pm:

Joel:

Let me say at the outset that I think design-build construction presents a somewhat unique problem, because the objective is really to get a material end product. The design (which is how-to) descibes that end product and the owner wants to know what it's going to look like. In any event, the performance-based contracting policies in FAR Part 37 do not apply to A-E or construction contracting.

With regard to other services, the problem that I have with what you say is that if we're supposed to specify results and not how-to, and inspect and accept the contractor's performance based on results, then why evaluate how it plans to do the job?

If you make the contractor's how-to proposal part of the contract, then the contract is not performance-based. If you don't, then the contractor is not required to do the job the way they said they would do it in their proposal, so what's the point? (You didn't say whether you would make the contractor's proposal part of the contract.) The same goes for discussions: Why discuss their how-to approach if they won't be bound to it? If they are going to be bound to it, then we won't have a performance-based contract, will we?

(If you want to have offerors describe their approaches (how-to) in order to determine whether or not they really understand the requirement, then how about oral presentations instead of written proposals?)

While I agree with you that offerors must make some plans in order to propose a price, there is a difference between planning for pricing purposes and planning in order to make binding how-to commitments. A contractor need not plan in as much detail if it's not going to be bound to its plans, but only to the required result. If it's not bound to its plans it can always look for cheaper ways to achieve the required result after contract award.

All the same, I understand the desire to know how a contractor is planning to do the job. It just seems like too much of a risk to choose the contractor on the basis of promises about results without getting more information about how-to. I think that's one of the dilemmas of performance-based contracting. We just aren't ready to really trust contractors and to relinquish control over processes. It seems too risky. I am not altogether unsympathetic with those concerns and I think that this issue is one of the more interesting problems arising out of performance-based contracting.

Vern

By joel hoffman on Thursday, June 07, 2001 - 03:50 pm:

Vern, I don't really disagree with anything you said. Your third paragraph is particularly interesting, and certainly does point out the difficulty in achieving "pure" performance based - contracting. We simply don't want to trust that the offeror will pull it off, without being able to evaluate a promised or planned approach. Once you formalize an approach, it limits flexibility after award. happy sails! joel

By Susan Hopkins on Tuesday, June 19, 2001 - 01:00 pm:

We are struggling with this issue also, particularly as it affects contracts for technical services which do not easily fit the "PBSC" mold. I'm referring to services where the product is a report, not a clean room, or an efficient computer system. We used to say that we wanted the contractor to analyze some information and write a report. If we disagreed with some of the findings, or if we wanted more clarification, we'd ask the contractor to revise the report - at his cost.

Now, for that same report, we need a quality surveillance plan, and procedures to reduce the fee or the price (if we write a fixed price contract). OFPP samples in their "Best Practices" guide do not seem to address this type of requirement. We're slowly but surely losing our minds here in the procurement office and our technical staff is understandably frustrated.

I don't know if I'm looking for suggestions, or a "shoulder to cry" on. In either case, thanks for the collective "shoulder" and any suggestions would be appreciated.

By Anonymous on Tuesday, June 19, 2001 - 01:22 pm:

"If we disagreed with some of the findings, or if we wanted more clarification, we'd ask the contractor to revise the report - at his cost." Now that is an interesting concept! A contract for technical services with the job being analysis of a data set, but if the contractor does not come to the conclusion the government wants they shall "come to it" at their expense! Sounds more like ghost writing than analysis and "technical services" to me.

I can see that application if the contractor failed to cover required points, evidently failed to examine the full range of required data or failed to cover the basis of conclusions, but failed to reach the "right" conclusion? Not unless the contract specified the conclusion to be reached! Then it would be a sham.

By formerfed on Tuesday, June 19, 2001 - 02:23 pm:usan,

I would say away from PBSC in the situation you described. It's obviously not a fit, so don't even try to make it work.

I also think any time a quality surveillance plan is needed, the benefits of PB likely is diminished or goes away completely. In most cases, it means too many things are measured in too much detail.

If you have doubts on whether PB might/might not work, market research (talking with industry) is a good test. Let industry come back and tell you the possibilities.

By Susan Hopkins on Tuesday, June 19, 2001 - 03:09 pm:

Anynomus - mea culpa.