FEDERAL
SECTOR REPORT
July 2000
(c) P2C2 Group,
Inc.
FEDERAL ACQUISITION REFORM BRINGS NEW RULES FOR
WINNING
The Government Wants to
Buy Performance
Performance
measures are at the core of federal procurement reform. Today,
the government wants to buy results
...
not just hours of effort. This new focus can pay off for both
government
customers and smart contractors.
Second in a Series on
Acquisition Reform
The article
about performance measures is part of our series on Federal Acquisition
Reform: New Rules for Winning. The previous discussion is in the January newsletter, and an earlier article
about Statements of Objectives is in the December
1999 newsletter. They both can be found at our website in the
Articles section.
Performance
Specifications
A performance
specification, according to the Navy's
acquisition reform site, is a statement of required results
with criteria for verifying compliance--without stating methods for
achieving
the required results. It defines the functional requirements for the
item,
the environment in which it must operate, and its interface
requirements.
"The opposite of a performance specification is a detailed
specification"
that gives design solutions such as how a requirement is to be achieved
or
how work is to be performed. For example:
- "Provide 500 megabytes of
computer mass storage for 24 months with 100%
uptime and 100% data reliability" is a performance specification
- "Provide
500 megabytes of mass storage on a Compaq/Digital
server with RAID 5, Microsoft Windows NT, 24/7 staffing, and a UPS
power
supply with 5 hours of backup capacity" is a detailed specification.
With
performance specifications, a contractor has more
flexibility ... and responsibility. Particularly on fixed-price
contracts,
the flexibility may provide options that increase profitability and
still
lower the competitive bid price. Of course, the successful contractor's
solution
must work, because failure to meet performance specifications is often
coupled
with financial penalties.
Under acquisition
reform, the whole idea is for the government
to buy carefully-defined results on the most advantageous terms.
You may be able
to win a bid competition by: (1) achieving
the results in a shorter period of time, (2) offering a lower price,
(3)
persuade the customer that your technical solution will increase the
certainty
of achieving the specification (thereby reducing risk), and/or (4) use
your
past performance data on other contracts to document that you can
achieve
compliance with specifications.
Performance
measurement is the objective methodology
used to determine the degree to which a contractor achieves the
performance
specifications. In many cases, the government defines these in Quality
Assurance Surveillance Plans (QASPs), which are being attached to
many
Requests for Proposals. The QASP defines the measures to be used as
well
as the frequency. Under the QASP, the government is responsible for
inspecting
the results on a predefined frequency ... which may range from random
sampling
... to daily, weekly or monthly inspections ... to 100% inspection. In
many
cases, the contractor is responsible for maintaining the recordkeeping
and
tracking systems that the government uses to execute its QASP.
Project Management
Project
managers should pay strict attention to performance
measures, because these are becoming the basis for successful contract
performance.
Focusing on how to meet all performance standards at a managed cost can
increase
profitability, provided that you continue to maintain positive customer
relations.
What's more, a project manager who meets or exceeds performance
standards
will also generate past performance history that can help win future
contracts.
PWS, SOO, and Other
Procurement Documents
There are
plenty of traditional Statements of Work being
issued by government agencies, but the trend is toward Performance Work
Statements
(PWS) and Statements Of Objectives (SOO). A friend ... Jerry Klever ...
has been on a team that has converted over 200 HUD procurement
documents
into Performance Work Statements. This year, I have been using PWS and
SOO
formats for almost all of the procurement documents at the Executive
Office
of the President.
All of these
newer formats are oriented toward performance
criteria. Even traditional Statements of Work are weaving in
performance
standards ... frequently linked to QASPs. Most have positive and
negative
incentives ... that is, rewards and/or punishments depending on how
well
the contractor performs.
Some RFPs also
require bidders to propose metrics for
contract performance. This is a contractor proposed/government
approved
approach to defining and monitoring performance. A proposal with a
credible
approach to defining, recording, and reporting quantitative performance
indicators
may have an edge on winning the contract.
Bottom Line
The government
wants to buy results. Bidders must be prepared
to propose and manage contracts that achieve the defined performance
standards.
A good project manager will achieve the performance standards, make a
profit,
and leave a "past performance" track record that can be used to win
future
contracts. Of course, all of this is easier said than done.
PERSONAL HAPPENINGS
I have just
completed my latest engagement at the Executive
Office of the President ... which began with writing Performance Work
Statements
and Statements of Objectives ... then went through an IT policy
development
phase ... and concluded with pre-planning for the the Presidential
Transition
(i.e., transferring Clinton White House records to the National
Archives
and preparing to support the next Administration).
Elena and I
spent our second 4th of July on the White
House south lawn. The fireworks were great.
