Running head: SENIOR LEADERSHIP CHALLENGE

Performance Based Service Contracting Impediments POINT PAPER
PERFORMANCE BASED SERVICE CONTRACTING
PROBLEM
In last 10 years, the priority of the Federal Government has been to expand the use of Performance Based Service Acquisition (PBSA). Unfortunately, as whole, the Federal Government has been unable to achieve any of the PBSA targeted quotas as set forth by the Office of Management and Budget.
BACKGROUND
Performance Based Service Acquisition is a procurement method of contracting. It is structured around performance outcomes, objectives and measurable goals. The strategy of PBSA arose as a result of evolving Government practices to align with commercial business practices. PBSA employs a number of techniques, strategies and frameworks for the definition of program requirements, acquisition planning, competition management, performance measurement, contract structure, payment structure, and post-award contract monitoring and management. (“SARA Panel Draft Report,” 2006) In PBSA, the contractor is provided a Performance Work Statement (PWS) or a Statement of Objectives (SOO) in which the Government describes the end result. The contractor is also provided a Quality Assurance Surveillance Program (QASP) which specifies how and when the Government will assess the contractor’s performance of the tasks set forth in the PWS or SOO. (“Performance Based Service Acquisition,” 2009) In some cases, the contractor may be provided with the SOO and the contractor responds with a PWS and a QASP which is submitted for consideration in the development of the Government QASP. A Government-wide policy letter was issued by the Office of Federal Procurement (OFPP) in April 1991 directing maximum use of PBSA practices. It wasn’t until Fiscal Year 2001 that PBSA became a Presidential initiative in which the National Defense Authorization Act was signed and enacted into law. As a part of this act, Performance Based Service Contracting was established as the preferred method of service acquisition.
DISCUSSION
The Government Accountability Office (GAO) began reviewing contracts that were identified as performance based contracts. As a result of their review, GAO released a study in 2002 which concluded that the study “raises concern as to whether agencies have a good understanding of performance-based contracting and how to take full advantage of it.” (Contract Management: Guidance Needed for Using Performance-Based Service Contracting,” 2002) Since then, there have been many working groups, task forces, panels, etc charged with the responsibility to identify the problem and provide potential resolutions as to the inability to implement PBSA as envisioned or in some cases, utilize PBSA appropriately. The common diagnosis is the Federal Government simply lacks the understanding of PBSA. Other impediments that could preclude PBSA from consistently being utilized throughout DoD are leadership buy-in and limited resources.
 Lack of Understanding PBSA o Uncertain when to use PBSA strategies
 Inadequate training
 Unclear Procedures
 Users focused on the processes rather than results
 Leadership Buy-in o Managers view PBSA strategy as giving the contractor too much control or leeway to achieve the desired outcome, a.k.a. giving away the farm o Resistance to change
 PBSA is a preferred method, not a mandatory method of acquisition
 Don’t change what already works for their requirement
 Limited Resources o Not enough people, time, and money to administer PBSA contracts
 Improper administration of contracts
 Reduced budgets don’t allow for additional people on PBSA team o Increased demand for Acquisition Professionals
 Contracting Officer’s Technical Representatives (COTRs) and Contracting Officer’s Representatives (CORs) have oversight for numerous contracts
 Spread too thin to adequately perform/enforce the QASP functions o Viewed as valuable time and resources wasted on surveillance—why not just tell the contractor what we want and how to get it done?
 Reduce Government effort, utilizing fewer resources
ALTERNATIVES
The question the Federal Government has been grappling with is how can DoD meet or exceed the established goals efficiently and effectively? Looking back at the three main impediments, we have identified a set of alternatives to neutralize the problem. These alternatives are training, teaming, identifying local points of contact, and establishing an award program. It is acknowledged these alternatives will not remedy the entire problem; however, it is believed it will guide us on a path of eliminating the concerns as addressed in the GAO study.
 Training o Current state: elective online training and possibly informal unit training o Recommendation: mandatory training for achieving any DAWIA certification o Pros: Increased understanding of PBSA may lead to increased implementation o Cons: Costly and time consuming
 Teams o Current state: contracting professionals expected to execute requirement without prior involvement of contracting o Recommendation: As soon as a requirement is known, establish an acquisition team to determine the best way of achieving the desired outcome o Pros: Ownership, better understanding of the requirement, roles & responsibilities of each team member is clear defined o Cons: Unmotivated team member
 Local Point of Contact o Current state: Procurement package is received with either a PWS, SOO, or SOW already written which typically steers the contract specialist in that direction o Recommendation: Appoint a local PBSA Advocate who recommends whether or not a requirement should utilize PBSA method of contracting o Pros: Local Subject Matter Expert; readily able to determine if goals are met o Cons: Costly; if authority to increase workforce isn’t granted , it would have to taken from within

 Award Program o Current state: a GSA Excellence in PBSA Award and a Government-wide Award for Excellence in PBSA o Recommendation: local awards o Pros: increased morale, results seen o Cons: time and funds to manage the award program
RECOMMENDATION
Just like PBSA, there are many ways to accomplish the goal. We must first understand what PBSA is, then tailor the “how” to meet the objective: FY 08=50% goal, by FY11=70% goal. 1) We recommend DoD Publicize goals throughout each Service all the way down to the Activity; 2) Activities hold mandatory unit training sessions for every member of the acquisition team, not just contracting; 3) Leaders must be held accountable at all levels. The first two recommendations are straight forward, the third requires a little more effort and monitoring on the part of the Activity in order to be successful. Leaders must be able to persuade and enforce the positive aspects of PBSA. This could potentially change the mind set by sharing success stories and the advantages of PBSA. Leaders in both the acquisition and technical communities should openly discuss and mutually agree upon requirements as PBSA or non-PBSA. The responsibility of monitoring and ensuring adherence to the PBSA goals could be accomplished through PBSA Advocate. The roles and responsibility would be along similar lines as the Small Business Advocate. So, just as we have small business goals that must be achieved, we also have PBSA goals that must be achieved. In addition, DoD should consider applying different PBSA goal percentages by the Services.

CONCLUSION In conclusion, evolving DoD into a preferred method of acquisition is clearly a daunting task to undertake. DoD as whole has been unable to attain the PBSA goal based on the number of working groups/task forces investigating why DoD is not utilizing PBSA to extent intended. We must keep in mind that PBSA is not a one size fits all method of contracting. If we use this logic, it like trying to apply a one size fits all to the entire agency. REFERENCES
Office of Federal Procurement Policy Performance-Based Service Acquisition (December 5, 2007). FY08 Performance-Based Performance Goal. Retrieved March 19, 2009 from http://georgewbush-whitehouse.archives.gov/omb/procurement/index_pbsa.html Office of Federal Procurement Policy Performance-Based Service Acquisition (July 2003). Performance-Based Service Acquisition. Retrieved March 19, 2009 from http://georgewbush-whitehouse.archives.gov/omb/procurement/0703pbsat.pdf National Academy of Public Administration (May 16, 2006). Standing Panel on Public Service and Executive Organization and Management. Retrieved March 19, 2009 from http://www.napawash.org/aa_e_o_management/meetings_minutes/05_19_06.htm The Under Secretary of Defense (January 2, 2001). Performance Based Service Acquisition. Retrieved March 19, 2009 from http://www.dau.mil/pubs/misc/PBSA_GUIDEBOOK.pdf 106th Congress (October 30, 2001). Public Law 106-398. Retrieved on March 19, 2009 from http://frwebgate.access.gpo.gov/cgibin/getdoc.cgi?dbname=106_cong_public_laws&docid=f:publ398.106

U.S. GAO (September 2002). Contract Management: Guidance Needed for Using Performance-Based Service Contracting. Retrieved on April 30, 2009 from http://www.gao.gov/new.items/d021049.pdf

Defense Acquisition University (September 2002). PBA recommendations in the the SARA Panel Draft report, see Chapter 2. Retrieved on April 30, 2009 from
http://acqnet.gov/comp/aap/documents/Chapter%202.pdf