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Performance Based Contracting Needs a Continued Push through Acquisition 2.0

Why has it been so difficult to execute performance-based contracting? Certainly the complexities of modern-day service contracting play a part, but as Steve Kelman, former administrator of the Office of Federal Procurement Policy points out, it has been a frustrating and slow moving initiative making little headway in proper execution of these methods.

…There is one obvious reason for this: If you haven’t included
performance metrics in your contract, it involves a lot of work to change it into a performance-based contract when you go to recompete it. And there are other reasons. Sometimes it is genuinely difficult to develop relevant performance metrics for contractors, just as it is for in-house activities — for example, what are relevant outcome-based metrics for State Department diplomacy? Finally, there is the sometimes vexing issue of changing and adding to performance metrics during the life of a long contract as technology and user requirements change…

The issue is beyond metrics, as it starts with understanding the outcomes and
objectives of what performance-based contracting is all about. It requires a different mind-set, a different set of skills and capabilities, but most important, it involves understanding that culture is probably the biggest barrier of all. The tools of the Acquisition 2.0 community can have a role in changing this culture, as one of the central tenets of this methodology is about collaboration, specifically between industry and the government. Using initiatives such as the Better Buy Project, outside parties, as well as those inside the government, can add value to the dialogue:

…Program managers need to recognize that some of the things that add to
the time it takes to get a contract awarded are good investments that ensure faster and better execution of the contract in the long run. In that case, the evidence is overwhelming that using performance metrics — whether for in-house or contracted activities — can improve performance by motivating and focusing employees and facilitating feedback, which is a necessary tool for organizational learning. We need to bring those benefits to contracting…

Of course, determined leaders acting as change agents will always be needed
to push for new ways of doing business. Deborah Broderick, the FBI’s new senior procurement executive, seems to understand these responsibilities and has taken a lead in changing the culture at FBI and its mixed track records of procurement

One of her approaches was to actively engage training where it counts, to
help program managers, contracting officers, and the contracting officer’s technical representatives in developing proper performance-based contracts with objectives at the time of actually writing the bid. This approach has allowed for innovation, and the ability to focus on outcomes. Further, the approach measures those outcomes through development of proper performance metrics and other contract provisions specific to the procurement in question and not generic metrics made for manufacturing or other boilerplate metrics that are used for the sake of speed and cutting corners. As Dr. Kelman points out, these methods will take time, and leaders must help offset the pressure for speed and sacrificing doing what is right. This pressure is often short-sighted, and may help contribute to the status quo; cost, schedule, and performance issues.

Acquisition 2.0 tools can help aggregate the ideas for performance metrics
through crowd sourcing, as both industry and government know what has worked, but more importantly, what has not worked. We have to understand that performance-based contracting is not a silver bullet. However, when investments are made in these techniques, the return on that investment has the potential to be great, and go a long way in improving government management overall.

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Jaime Gracia

Hopefully third time is the charm. PBC, or any other initiative involving proper contract and program management, requires performing due diligence to do things right. The constant complaint is not having enough time, which is exacerbated by resourcing issues. However, the path of least resistance often leads to complications down the road and ultimately does a disservice to the taxpayer and leads to poor outcomes.

Andrew Krzmarzick

Hi Jaime – I’m thinking that formal project management training would help. I managed a project under a performance-based contract – while getting my PMP certification. My ability to perform as Project Manager before and after the 6-7 months of training was night and day. After being inundated with the PMBOK, I was much more equipped to manage the project. And it requires more than a one-off training or a half-day workshop…it’s a whole new mindset/culture!

Jaime Gracia

Andy – I think the VA has a good approach. After Sec. Shinseki got it handed to him by Congress for a dismal performance report on many of the IT projects under review, they have instituted a training program for PMs that will hopefully help drive performance through continuous learning and the development of action plans that follow formal PM training as part of mandatory FAC-C (PM) certification. I hope this continuous training and performance methodology catches on.