The PM's Role in Capturing, Bidding, and Winning Performance-Based Contracts

Transcription

1 The PM's Role in Capturing, Bidding, and Winning Performance-Based Contracts P R E S E N T E D BY: D R. J O H N G. P I C A R E L L I, P R E S I D E N T B U S I N E S S D E V E LO P M E N T A S S O C I AT E S, L L C J P I C A R E L L U R A S S O C I AT I O N. C O M / A P R I L 1 4,

2 Topics A. How Has the Game Changed Under Performance-Based Contracting? B. What Are the PM-related Challenges in Bidding and Winning Performance-Based Contracts? C. PM's Need to Understand and Contribute to Winning and Workable Solutions 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 2

3 Topics A. How Has the Game Changed Under Performance-Based Contracting? B. What Are the PM-related Challenges in Bidding and Winning Performance-Based Contracts? C. PM's Need to Understand and Contribute to Winning and Workable Solutions 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 3

4 Introduction and Background 1997 FAR amended to implement performancebased contracting Current Guidance: 1996 DoD Handbook for Preparation of SOW, MIL-HNBK-245D 1997 NASA Guidance for Writing Statements of Work, NPG B 1998 OFPP A Guide to Best Practices for Performance Based Service Contracting 2000 DOD Guidebook for Performance Based Services Acquisition in the Department of Defense 2002 GSA Seven Steps to Performance- Based Services Acquisition (guide and website) More Current Guidance: 2010 GPRA Modernization Act of 2010 (Public Law ); Updates 1993 Law and defines a performance framework to connect Plans/Programs/Performance Information expect flow down to PBSAs 2012 Better Buying Power 2.0 initiatives including: institute a system to measure cost performance of programs; in LPTA, define Technically Acceptable to include needed quality; increase use of Performance-Based Logistics; and improve requirements definition (more tools and training in writing PWSs, QASPs, and PRSs. 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 4

5 Performance Based Services vs. Traditional Services Contracting What s the Difference? Performance Based Services Contracting Statement of Objectives (SOO)/ Performance Work Statement (PWS) the What Performance Requirements Summary (PRS) Performance Measures and Standards Quality Assurance Surveillance Plan (QASP) Fixed Price, could have Incentives and Disincentives Performance and Results Focused Traditional Services Contracting Statement of Work (SOW) the How Specified Labor Categories; Level of Effort; Deliverables; Acceptance Criteria How Much Monthly Status Reports on Progress/Problems Cost-based or T&M Process and Activity Focused 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 5

6 Understanding the Governing FAR Clauses FAR 37.1 Service Contracts FAR (Policy) Performance-based acquisition is the preferred method for acquiring services. Use a performance-based acquisition approach to the maximum extent possible for all services except construction, A&E, supply, purchasing, and utilities. FAR (b)(4) states that the Contracting Officer must provide rationale if a performance based contract will not be used or if a performance based contract other than Firm-Fixed Price (FFP) is planned. 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 6

7 Understanding the Government FAR Clauses (continued) FAR 37.6 Performance-Based Acquisition FAR (b) Performance-based contracts for services shall include: A performance work statement (PWS). Measurable performance standards (i.e., quality, timeliness, quantity, etc.). The method of assessing contractor performance against performance standards. Performance incentives where appropriate. When used, performance incentives shall correspond to the performance standards set forth in the contract. 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 7

8 Understanding the Government FAR Clauses (continued) FAR 37.6 Performance-Based Acquisition (continued) FAR (a) A PWS may be prepared by the Government or result from a Statement of Objectives (SOO) prepared by the Government where the offeror proposes the PWS. Agencies shall, to the maximum extent possible, Describe the work in terms of the required results rather than either how the work is to be accomplished or the number of hours to be provided; Enable assessment of work performance against measurable performance standards; and Rely on the use of measurable performance standards and financial incentives in a competitive environment to encourage competitors to develop and institute innovative and cost-effective methods of performing the work. 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 8

9 Understanding the Governing FAR Clauses (continued) FAR 37.6 Performance-Based Acquisition (continued) FAR (a) Performance standards establishes the performance level required by the Government to meet the contract requirements. The standards shall be measurable and structured to permit an assessment of the contractor s performance. FAR Requirements for a Quality Assurance Surveillance Plan (QASP) are in FAR Subpart 46.4 (Government Contract Quality Assurance). The government may either prepare the QASP or require the offeror to submit a proposed QASP for the Government s consideration. 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 9

10 Understanding the Governing FAR Clauses (continued) FAR Definitions of Words and Terms Performance-based Acquisition (PBA) means an acquisition structured around the purpose of the work to be performed (results to be achieved), as opposed to the manner (the how ) by which the work is to be performed. Performance Work Statement (PWS) means a statement of work for performance-based acquisitions that describes the required results in clear, specific and objective terms with measurable outcomes. Statement of Objectives (SOO) means a Government-prepared document incorporated into the solicitation that states the overall performance objectives. It is used in solicitations when the Government intends to provide the maximum flexibility to each offeror to propose an innovative approach. 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 10

11 Six Reasons Why Performance-Based Contracts are so Hard to Make Work* 1. It s hard to measure performance. 2. Agencies are nervous about rigid performance expectations, even if they are for their contractors. 3. Too much pressure is put on vendors that have friendly relationships with Agency officials who may not want to rock the boat. 4. A poorly negotiated contract can put financial strain on vendors. 5. It s difficult to specify the outcome desired, and defining success can be elusive. 6. Agencies often lack the capacity and skills needed to negotiate these oftencomplex contracts. * Source: IBM Center for the Business of Government blog by Katherine Barrett and Richard Greene (Quoted in Washington Technology, April 2011, page 6). 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 11

12 Topics A. How Has the Game Changed Under Performance-Based Contracting? B. What Are the PM-related Challenges in Bidding and Winning Performance-Based Contracts? C. PM's Need to Understand and Contribute to Winning and Workable Solutions 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 12

13 Source of the Challenges Federal Acquisition Officials are not consistent in the use of terminology nor in assuring the quality of solicitations Government training may be standardized, but the learning and application are anything but standardized All performance-based solicitations need extensive and careful analysis and interpretation to develop winning and workable solutions 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 13

14 The Seven Steps to Performance-Based Services Acquisition* 1. Form the Team. Establish the integrated solutions team 2. Define the Need. Describe the problem that needs solving/analyze the job for results needed 3. Research the Market. Examine private-sector and public-sector for solutions 4. Define the Requirements. Develop a PWS or SOO 5. Develop the Acquisition and Business Strategy. Decide how to measure and manage performance Focus is on performance, improvement, innovation; not just contract compliance. 6. Execute the Strategy. Select the right contractor 7. Manage Performance. Build the relationship and monitor *From the General Services Administration (GSA) 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 14

15 The Seven Steps to Performance-based Acquisition (continued) Mission Requirement 1. Form the Team Leadership Support Build the Team Plan 2. Define the Need Conduct Historical Analysis Define Stakeholder & Customer Needs Mission Results 7. Manage Performance Monitor Performance Build & Manage Relationship Execute QA Reps CORs Buyers Resource Mgt Users Stakeholders Acquisition Team Legal PEOs Proj. Mgr PCO Tech SB 6. Execute the Strategy Select Right Contractor Award Contract Roll Out Strategy 3. Research the Market Analyze Market Identify Suppliers 4. Define the Requirements Draft Requirements Roadmap Build the SOO or PWS/QASP 5. Develop the Strategy Business Strategy Acquisition Strategy Develop (Adapted from Defense Acquisition University/University of Tennessee) 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 15

16 Implications of the Challenges Implementation has been widespread, but results in terms of performance improvement and cost savings are not clearly established More of an art than a science. There are no cookbook methods, just best practices and guidelines Challenge comes in trying to apply PBSA to long-term, complex services that are not amenable to complete specification of results, fixed pricing, and definitive standards of quality Nonetheless, performance based services acquisition (PBSA) is part of the law and the Federal Acquisition Regulations (FARs), and cannot be avoided As they say, Live with it! 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 16

17 Typical Content of a Performance-Based Solicitation Description of Purpose and Objectives Performance Requirements in terms of outputs and results Performance Standards required by the Government Performance Measurement Techniques to be used to evaluate quality and performance vs. standards (Incentives and) Disincentives correlated to required results Statement of Objectives (SOO) the Offeror prepares the PWS Performance Requirements Summary (PRS) the Offeror prepares the QASP Section B Price Schedule for CLINs Section L Proposal Preparation Instructions Section M Proposal Evaluation Criteria and Process 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 17

18 How to Evaluate the Solicitation for a Performance-Based Services Acquisition Read and Analyze the Solicitation looking for Key Elements o SOO / PWS / PRS / QASP / CLINs / Performance Standards / Schedule Check Alignment of Requirements with Performance Standards Identify Potential Risks Develop Innovative Approaches to Save Time, Labor, and Money Evaluate What Competitors Can or Will Do. Reconcile Inconsistencies within the Solicitation Determine How to Perform and Manage the Work, and Get Paid Recommend Bid or No-Bid 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 18

19 Handling the Challenges Taking the Government viewpoint vs. contractor viewpoint Working with a Government-generated PWS and PRS. Evaluating and ensuring internal consistency between and among the PWS, CLINs, QASP, WBS, and PRS Working with a lack of workload metrics or limited data to support Staffing Plan analysis and pricing under a PWS Working with an incumbent s staffing level Proposing FFPs/CLINS for labor, deliverables and/or service delivery under a PWS Developing and proposing Service Level Agreements (SLAs) with limited historical data on current SLA performance Documenting assumptions Evaluating and assessing the performance risks key to the bid/no-bid decision 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 19

20 Topics A. How Has the Game Changed Under Performance-Based Contracting? B. What Are the PM-related Challenges in Bidding and Winning Performance-Based Contracts? C. PM's Need to Understand and Contribute to Winning and Workable Solutions 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 20

21 How to Respond to a Performance-Based Solicitation High-Level Approach Analyze the SOO, Deliverables, etc. Develop the WBS with Deliverables Develop the PWS - QASP and PRS - Pricing and Payments (CLINs) tied to Deliverables 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 21

22 How to Respond to a Performance-Based Solicitation (continued) Work Breakdown Structure (WBS) Provides the underlying framework of a PWS Breaks the work down into manageable/measurable elements (tasks)* Takes each task and identifies/ breaks down the work into subtasks and subsubtasks. Use as many levels as you need. Ensures that, at each level of breakdown, the tasks are mutually exclusive (no overlap) and collectively exhaustive (nothing left out) of the next higher level *TIP: MS Project can be used to build the WBS and facilitate staffing each element with labor categories and hours. Task Subtask 1. A TASK 1 Sub-subtask 1.A.1 1.A.2 1.B 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 22

23 How to Respond to a Performance-Based Solicitation (continued) Writing a PWS Given a Statement of Objectives Background/Scope: What is the problem as related to the mission Performance: What is to be done and when (includes tasks, deliverables, due dates, and schedule/milestones Personnel: Types and Qualifications CLINs: Results/Deliverables and Milestones Performance Measures: Define how performance is to be measured Performance Standards: Define the acceptable level of quality Operating Constraints: On or offsite, clearances, etc. Applicable References/Directives/Documents Other Information/Special Requirements: GFE; Security; Workload Data; 508 Compliance, etc. TIP: Your PWS must be clear, consistent, complete, specific, precise, and understandable in defining the requirements. 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 23

24 How to Respond to a Performance-Based Solicitation General PWS Format General Format for a PWS* Organization Mission/Background Scope of Work Technical Requirements (Task Areas) Deliverables Performance Measures Performance Standards Operating Constraints Other Requirements (Government Property; Security; 508 Compliance; Phase In/ Phase Out; etc.) References/Directives/Documents *Note: The format of the SOO will generally be retained in the PWS developed from it. 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 24

25 How to Respond to a Performance-Based Solicitation Develop a Quality Assurance Surveillance Plan (QASP) Make sure it works well in conjunction with the proposed Quality Management Approach/Quality Control Plan Avoid ambiguous statements To the Contracting Officer s or COTR s satisfaction In accordance with industry best practices (or best commercial practices; or standard engineering practices) As judged by the Contracting Officer (or COTR) Highest standards of quality and workmanship Defect free 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 25

26 How to Respond to a Performance-Based Solicitation General QASP Format General Format of a QASP Introduction Purpose Roles and Responsibilities Methods of Surveillance Quality Assurance Methodology Performance Requirement Summary Tasks Performance Measures Performance Standards Acceptable Quality Levels (AQLs) Surveillance Method(s)/ Frequency Incentives / Disincentives 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 26

27 References Websites The Seven Steps to Performance-Based Services Acquisition, Office of Federal Procurement Policy (OFPP) Website: The Acquisition Center of Excellence, Defense Acquisition University Website: Documents Performance Work Statements, by Philip E. Salmeri; published by Management Concepts, 2007 Performance-Based Contracting, by Gregory A. Garrett; published by Management Concepts, 2007 The Government Manager s Guide to the Statement of Work, by Michael Martin, ManagementConcepts Press, /14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 27

28 References (continued) GWAC/IDIQ Ordering Guides Alliant GWAC Ordering Guide, October 1, 2010 http// practices EAGLE Ordering Guide, Version 2.3, September 2008, Appendix F Additional guidance on Performance-Based Service Acquisition; ( NITAAAC (NIH Information Technology Acquisition and Assessment Center) ITES-2S (Army GWAC) Ordering Guidelines, 1/23/07 (draft), Attachment 3 Performance Based Service Acquisition (PBSA); 2s/ITES%202S%20Ordering%20Guidelines.pdf 4/14/2014 BUSINESS DEVELOPMENT ASSOCIATES, LLC 28