Guidebook
fFor
Performance- Based Servicess Acquisition
(PBSA)
Iin the Department of Defense
December 2000
Signed Foreword
TOP-LEVEL GUIDING PRINCIPLES
To the maximum extent practicable, agencies shall use performance-based methods for acquiring services.
Fixed-price, performance-based commercial service acquisitions are complementary strategies that encourage commercial contractors to conduct business with DoD.
Utilize a multi-functional acquisition team to the maximum extent practicable. Support it with a knowledge management infrastructure.
Early planning is essential in determining requirements and assessing market conditions, and it should include the user and as many relevant acquisition team members as possible.
To maximize returns for all stakeholders, acquisition strategies should be tailored on the basis of experience, market research, and risk. Performance-Based Services Acquisition (PBSA) is not a “one size fits all” process.
Strive to define requirements in clear, concise language. Focus on specific work outcomes and ensure that they are measurable to the greatest extent practicable.
Templates are only a partial solution. Sample work statements should be individually tailored to the requirement, and for more complex requirements, work statements should be uniquely crafted.
Through market research, public meetings, and draft solicitations, seek industry comment and suggestions regarding performance objectives, standards, and incentives.
Incentives should motivate a contractor to achieve performance levels of the highest quality consistent with economic efficiency. Ensure that incentives are effective and that they reflect value both to the government and to the contractor.
Contractor performance assessments (the process known as “quality assurance”) should focus on outcomes rather than on contractor processes. Focus on insight of the contractor performance, not oversight.
Periodic assessment of contractor performance should emphasize clear communication, with the objective of encouraging and maintaining high standards of performance, and it should be consistent with past performance assessments.
Acquisition of services has become an increasingly significant component of DoD procurements. Several buying activities have taken initiative to develop guidelines and training tools in the past to ensure we acquire services effectively and efficiently. However, many of these training tools concentrate their focus on the procurement function of the service acquisition process instead of the acquisition process as a whole.
This guidebook seeks to achieve several goals. It strives not only to provide guidance in acquiring services but to also provide guidance to the other players in the acquisition team. It is important to recognize that performance based services acquisition is a comprehensive process that includes many team members from the user, financial managers, legal community, program (project) managers and industry to name a few. It is highly beneficial for “other than contracting” players to understand the value and necessity that their contributions provide to the contracting process. Additionally, special efforts were made to develop performance work statement and quality assurance plan templates to aid in the performance based services acquisition process. Finally, while this guidebook serves to assist you with PBSA, it is simply a tool to help you with the nuances that often arise in the acquisition process, as seldom are any two acquisitions completely alike. While keeping statutes, regulatory and any agency-specific policy requirements in check, you are encouraged to maximize efficiencies and effectiveness through open communication, creativity and innovation.
Acknowledgements
INDEX
INTRODUCTION
Policy
PBSA Definition
Objectives of PBSA
PBSA Team
The Business Relationship with the Contractor
MARKET RESEARCH
Introduction
Benefits of Market Research
Market Research and the PBSA Process
Roles and Responsibilities in Market Research
Conducting Market Research
Sample Survey Questions
DEVELOPING A PERFORMANCE-BASED WORK STATEMENT AND ESTABLISHING MEASURABLE PERFORMANCE STANDARDS
Introduction
Performance Requirement Analysis
Examples of Performance Standards
Performance Requirements Summary
The Performance Work Statement (PWS)
Manpower Requirements and Labor Category Descriptions
Historical and Projected Workload Data
Performance Work Statement Review Considerations
INCENTIVES AND REMEDIES
Introduction
Types of Incentives
Considerations When Contemplating Incentives
Remedies for Non-Performance
CONTRACTOR PERFORMANCE MANAGEMENT
Introduction
Performance Assessment Plan
Quality Control Plan
Assessment Methods
Performance Assessment Plan Development
Some Considerations for Determining the Appropriate Assessment Method
Suggested Performance Assessment Plan Outline
SOURCE SELECTION CONSIDERATIONS
Introduction
Best Value
Instructions to Offerors
Evaluation Factors
Past Performance Information
CONTRACT ADMINISTRATION AND OTHER CONSIDERATIONS
Introduction
Postaward Orientation
Documenting Contractor Performance Assessments
APPENDIXES
APPENDIX A – TREE DIAGRAM
APPENDIX B – PERFORMANCE REQUIREMENTS SUMMARY MATRIX
APPENDIX C – SAMPLE PERFORMANCE REQUIREMENTS
APPENDIX D – INCENTIVES EXAMPLES
APPENDIX E – WORKLOAD DATA SAMPLE
APPENDIX F – HELPFUL PERFORMANCE ASSESSMENT METHODS
APPENDIX G – MARKET RESEARCH WEB SITES
APPENDIX H – PERFORMANCE WORK STATEMENT (PWS) WRITING TIPS
APPENDIX I – AWARD TERMS
APPENDIX J – WRIGHT BROTHERS PERFORMANCE-BASED SPECIFICATIONS
APPENDIX K – REFERENCES AND WEBSITES
TABLE OF CONTENTS
Foreword......
Acknowledgements......
Introduction Statement......
Policy......
Definition......
Guiding Principles......
PBSA guiding principles......
Roles and Responsiblities......
PBSA Team......
Contracting Officer......
Quality Assurance Personnel......
Discussion on Partnering......
1.Writing a Performance-Based Work Statements or Objectives......
Writing Performance Based Statements Of Work......
Objective:......
Describing the Work......
Elements of Performance Based SOWs......
Writing a Performance Based SOW......
Outcome Analyses......
Performance Analyses......
Requirements Analyses......
Historical and Projected Workload Data......
Writing the Statement of Work......
Alternative Methods......
Market Research......
2.How Do We establish Measurable performance Standards for the PB SOO? 23
3.How to Establish and Incorporate incentives and disincentives: equitable adjustment (specify procedures) for failure to meet performance? 23
Contractor Performance Incentives...... 23
Objective:...... 23
Why use incentives in Performance-Based Service Acquisition?...... 23
Role of the PBSA team in developing incentives...... 23
Application of Incentives...... 24
Different types of incentives...... 24
Additional information on incentives...... 24
Different categories of incentives...... 25
Award Term...... 26
Reduced surveillance....... 26
Reduced government surveillance to motivate the contractor...... 26
4.How to develop a QA plan based upon measurable performance standards? 28
5.How to Evaluate the Contractors performance?...... 28
CONTRACT ADMINISTRATION...... 28
Objectives:...... 28
Post Award Orientation...... 29
Purpose of a post-award orientation...... 29
When should the post-award orientation be held and who should attend?...... 29
Is a formal post-award conference always necessary?...... 30
Past Performance Information...... 30
Collecting and maintaining PPI...... 30
Forward...... ii
Acknowledgements...... iii
Policy...... 6
Definition...... 6
Introduction Statement...... 6
What are the major principles of PBSA?...... 6
What is the role of the PBSA team?...... 8
What are the responsibilities of the PBSA team?...... 8
What is the role of the Contracting Officer?...... 8
What are the responsibilities of the Contracting Officer?...... 9
What is the role of Quality Assurance Personnel?...... 9
What are the responsibilities of Quality Assurance Personnel?...... 9
Partnering...... 10
What is partnering?...... 10
What are the benefits of partnering?...... 10
What is the government’s role in partnering?...... 11
What are some issues surrounding partnering agreements?...... 11
Guiding Principles...... 13
Roles and Responsibilities of the PBSA team throughout the acquisition life cycle...... 13
What are the roles and responsibilities of the PBSA team?...... 13
Summary...... 14
How is team membership determined and what are the minimum requirements?...... 14
1.How do We Write a performance- Based SOO?...... 15
Writing Performance Based Statements Of Work...... 15
Objective:...... 15
Describing the Work...... 15
What are the elements of Performance Based SOWs?...... 15
How do I write a Performance Based SOW?...... 16
What is involved in Outcome Analysis?...... 16
What is a Performance Analysis?...... 17
What is a Requirements Analysis?...... 17
Historical and Projected Workload Data...... 21
Writing the Statement of Work...... 21
Where can I find more sample Statements of Work?...... 22
Alternative Methods...... 23
Market Research...... 23
Objective:...... 23
2.How Do We establish Measurable performance Standards for the PB SOO? 27
3.How to Establish and Incorporate incentives and disincentives: equitable adjustment (specify procedures) for failure to meet performance? 27
Contractor Performance Incentives...... 27
Objective:...... 27
Why use incentives in Performance-Based Service Acquisition?...... 28
What is the role of the PBSA team in developing incentives?...... 28
Application of Incentives...... 28
What are the different types of incentives?...... 28
Where can I find additional information on incentives?...... 29
What are the different categories of incentives?...... 29
Award Term...... 30
Reduced surveillance....... 31
How does reduced government surveillance motivate the contractor?...... 31
4.How to develop a QA plan based upon measurable performance standards? 32
5.How to Evaluate the Contractors performance?...... 32
CONTRACT ADMINISTRATION...... 32
Objectives:...... 32
Post Award Orientation...... 33
What is the purpose of a post-award orientation?...... 33
When should the post-award orientation be held and who should attend?...... 34
Is a formal post-award conference always necessary?...... 34
Past Performance Information...... 35
How do I collect and maintain PPI?...... 35
FORWARD...... ii
ACKNOWLEDGEMENTS...... iii
Definition...... 1
Policy...... 1
PHILOSOPHY OF PERFORMANCE BASED SERVICES ACQUISITION...... 2
Objectives...... 2
Philosophy of Performance Based Service Acquisition...... 2
Why change the philosophy of Service Contracting to Acquisition?...... 2
What are the major principles of PBSA?...... 3
What is the role of the PBSA team?...... 4
What are the responsibilities of the PBSA team?...... 4
What are the responsibilities of the personnel assigned to the PBSA team?...... 4
What is the role of the Contracting Officer?...... 4
What are the responsibilities of the Contracting Officer?...... 5
What is the role of Quality Assurance Personnel?...... 5
What are the responsibilities of Quality Assurance Personnel?...... 5
Partnering...... 6
What is partnering?...... 6
What are the benefits of partnering?...... 6
What is the government’s role in partnering?...... 7
What are some issues surrounding partnering agreements?...... 7
Where can I obtain additional information on partnering?...... 8
GUIDING PRINCIPLES...... 9
Principles of Service Contracting...... 10
What is a service contract?...... 10
What is A-76 and how does PBSA relate to it?...... 10
Key Regulations and Manuals...... 10
Where do I find regulatory guidance regarding service contracts, standards of behavior and quality assurance? 10
Contract Law...... 11
What is the difference between government contract law and the uniform commercial code?11
How can the government contract for services?...... 11
Who has the legal authority to contract for the government?...... 11
Where do Quality Assurance Personnel (PBSA team member) derive their authority?.....12
What if someone other than the contracting officer enters into an agreement with a contractor? 13
Can an unauthorized commitment be corrected?...... 13
When can the ratifying authority ratify an unauthorized action?...... 14
Release of Information...... 14
General Information...... 14
Advance Acquisition Information...... 15
What is the Freedom of Information Act?...... 15
PERFORMANCE BASED SERVICES ACQUISITION TEAM...... 17
Objectives:...... 17
Performance Based Services Acquisition (PBSA team)...... 17
What is the purpose of the PBSA team?...... 17
How is team membership determined and what are the minimum requirements?...... 17
How does the PBSA team membership interact?...... 18
What if the PBSA team needs assistance from outside agencies?...... 18
Roles and Responsibilities of the PBSA team throughout the acquisition life cycle.....19
What are the roles and responsibilities of the PBSA team?...... 19
Summary...... 19
CONTRACTOR PERFORMANCE INCENTIVES...... 21
Objectives:...... 21
Why use incentives in Performance-Based Service Acquisition?...... 21
What is the role of the PBSA team in developing incentives?...... 21
Application of Incentives...... 21
What are the different types of incentives?...... 21
Where can I find additional information on incentives?...... 22
What are the different categories of incentives?...... 22
Contract Types...... 24
What is contract type?...... 24
How do you decide which contract type is right?...... 24
What is the difference between profit and fee?...... 25
What are the choices and why is one better than another?...... 25
When would you use a combination of contract types?...... 26
Why do I, as a PBSA team memeber, care about contract type?...... 26
Other Performance Incentives...... 26
Is money the only way to motivate a contractor?...... 26
Award Term...... 28
Reduced surveillance....... 29
How does reduced government surveillance motivate the contractor?...... 29
Incentive Summary....... 30
MARKET RESEARCH...... 32
Objectives:...... 32
What is a commercial item?...... 36
WRITING PERFORMANCE BASED STATEMENTS OF WORK...... 37
Objectives:...... 37
Describing the Work...... 37
What are the elements of Performance Based SOWs?...... 37
How do I write a Performance Based SOW?...... 38
What is involved in Outcome Analysis?...... 38
What is a Performance Analysis?...... 39
What is a Requirements Analysis?...... 39
Historical and Projected Workload Data...... 42
Writing the Statement of Work...... 43
Where can I find more sample Statements of Work?...... 44
Including References...... 44
How should applicable publications and forms be cited in the SOW?...... 44
Where should publications be cited?...... 45
Are contractors responsible for updates to publications?...... 46
Alternative Methods...... 46
CONTRACT ADMINISTRATION...... 47
Objectives:...... 47
Post Award Orientation...... 47
What is the purpose of a post-award orientation?...... 47
When should the post-award orientation be held and who should attend?...... 48
Is a formal post-award conference always necessary?...... 48
What is the quality assurance personnel’s role in contract administration?...... 49
Payments...... 49
What is the relationship monitoring service contracts and payment to the contractor?...... 49
What is the basis for payment under a contract?...... 49
Past Performance Information...... 50
How do I collect and maintain PPI?...... 50
Government Furnished Property...... 51
Who is required to furnish property for use under a government contract?...... 51
Contract Modifications...... 51
How are changes in a contract effected?...... 51
Who has the authority to issue contract modifications?...... 52
What is a unilateral modification?...... 52
What is an Administrative Change?...... 52
What is a Change Order?...... 52
What is meant by “within the general scope” of a contract?...... 53
What is meant by “definition of services to be performed?...... 53
What is meant by “time of performance?”...... 53
What is meant by Place of Performance?...... 54
Will the contractor be reimbursed for these unilateral changes?...... 54
What is a bilateral modification?...... 54
How are Quality Assurance Personnel involved in the modification process?...... 54
What if the contractor does not agree with the Contracting Officer’s decision?...... 55
Alternate Dispute Resolution...... 56
What is ADR?...... 56
How does the government end a contract prior to expiration of the term of that contract?...57
When does the Contracting Officer Terminate for Default?...... 57
Under what authority does the Contracting Officer Terminate for Default?...... 57
When would the government terminate a contract for convenience?...... 58
When does the contracting officer terminate for cause?...... 58
1
INTRODUCTION STATEMENT
Policy
“It is the policy of the Department of Defense that performance-based acquisition strategies are to be used when acquiring services where ever possible, in order to maximize performance, innovation, competition, and achieve cost savings. While not all acquisitions for services can be conducted in a performance-based manner, the vast majority can. The cases in which performance-based strategies are not employed should become the exception.It is the policy of the Department of Defense that, in order to maximize performance, innovation and competition, often at a savings, performance based strategies for the acquisition of services are to be used wherever possible. While not all acquisitions for services can be conducted in a performance-based manner, the vast majority can. Those cases in which performance-based strategies are not employed should become the exception. In order to ensure that the Department continually realizes these savings and performance gains, the DoD establishes, at a minimum, that 50 percent of service acquisitions, measured in both dollars and actions, are to be performance-based by year 2005.” – Under Secretary of Defense, Acquisition, Technology Logistics (USD, (AT&L)), April 5, 2000.
PBSA Definition
PBSA encompasses involves acquisition strategies, methods, and techniques for acquiring services that describe and communicate the measurable outcomesdesired end result rather than dictating direct detailed performance processes. It is structured around defining a service requirement in terms of performance objectives and is designed to providinge contractors the liberty latitude to determine how to meet those performance objectives. Simply put, it is a method for acquiring process for acquiring what iswewant required and leaving placing the responsibility for how to accomplishit is accomplished itonto the contractor.
TAnIn order for an acquisition should contain, at a minimum, the following elements to be consideredtruly performance- based,:, it an acquisition should contain, at a minimum, the following elements must also contain four elements as prescribed by policy set forth by the Office of Federal Procurement Policy.
- PPerformance requirements must define the erformance work statement—D - describes the requirement asin terms of measurable outcomes rather than by means of prescriptive methods in measurable, mission-related terms. In other words, as you define your requirement, keep in mind that it must be stated in clear, measurable terms,. that enables you to determine whether the contractor met your requirement.
- Measurable pPerformance standards— (i.e., quality, quantity, and timeliness) must be tied to the performance requirement.To determine whether performance outcomes have been met, – defines what is considered acceptable performance to determine whether performance outcomes have been met.
3.The contract must include a Government quality assurance plan that describes how the contractor’s performance will be measured against the performance standard.
- Remedies— – Pprocedures that address how to manage performance that does not meet performance standards. While not mandatory, incentives should be used, where appropriate, to encourage performance that will exceed performance standards. Remedies and incentives work complementary to each other.
- Performance Assessment Plan— – Ddescribes how contractor performance will be measured and assessed against performance standards. (Quality Assurance Plan or Quality Assurance Surveillance Plan).
4.Positive and negative incentives must be tied to the Government quality assurance plan if the acquisition is either critical to the agency mission or requires relatively large expenditures of funds. Incentives, in this context, simply means that a performance based services contract must contain some mechanism for rewarding good performance as well as alternatives to address less than satisfactory performance.