Chapter 1 Orientation to Performance-Based Acquisition

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Chapter 1Orientation to Performance-Based
Acquisition
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Performance-Based Acquisition

• Whats It All About?

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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

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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

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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

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Best practices, leverage, competition, trends

• Marriotts 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!

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Performance-Based Acquisition

• Recognizes contractors ability to manage work
  and perform efficiently
• Links contractor payment to contractor
  performance through measurable performance
  standards

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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

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In the beginning
The concept of Performance-Based Acquisition
isnt new
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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.)

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Then came Policy

• 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
• 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 ATL (Gansler) Memo 2000
• Seven Steps to Performance-Based Services
  Acquisition 2001
• Defense Authorization Act 2001
• Users Guide to Performance-Based Payments 2001
• USD ATL (Aldridge) Memo 2002
• USD ATL (Wynne) Memo 2003
• Dir, DPAP (Lee) Memo 2004
• OMB (Burton) Memo 2004
• Dir, DPAP (Cipicchio) Memo 2006

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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

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DoDs 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 customers 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

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Performance-Based Acquisition
Student Exercise
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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

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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-ass
  essment-effectiveness
• Performance Knowledge
• Ability to align Mission outcomes with
  performance requirements

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7 Step Process to PBA

1. Establish an Integrated Solutions Team
2. Describe the Problem that Needs Solving
3. Examine Private-Sector and Public Sector
   Solutions
4. Develop PWS or SOO
5. Decide How to Measure and Manage Performance
6. Select the Right Contractor
7. Manage Performance

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7 Step Process to PBA
(3) Examine private-sector and public-sector
solutions
(1) Establish the Team
(2) Decide what problem needs solving
(4) Develop PWS or SOO
(5) Decide how to Measure Manage Performance
(6) Select the right Contractor
(7) Manage Performance
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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

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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

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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

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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

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Step 4 (contd)

• Develop SOO
• Explain how the acquisition relates to the
  agencys 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

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Step 5

• Decide how to measure and manage performance
• Review the success determinants
• Where do I want to go and how do I know Im
  there?
• Rely on commercial quality standards
• Have contractor propose metrics and quality
  assurance plan
• Select only a few meaningful measures to judge
  success
• And

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Step 5 (contd)

• 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

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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

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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 contractors past performance

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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-ass
  essment-effectiveness
• Performance Knowledge
• Ability to align Mission outcomes with
  performance requirements

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PBA Elements
This is a concurrent, iterative process
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Performance Requirements Summary
Outcome Performance Standard AQL Measurement Method Incentive





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What keeps you up at night?

• Mission Success depends on Mission Knowledge
• 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
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PBA Bottom Line
In this business, I do not buy a service, I
buy a. - Miami Vice Dec
2006
RESULT