Intermediate Systems Acquisition Course. Understanding the Contracting Process

Transcription

1 Understanding the Contracting Process DHS has limited in-house capability to develop and field new capabilities and systems, therefore the majority of the work gets done when DHS translates its needs and requirements into contracts. DHS uses the best value source selection process to find the most qualified contractors to provide those capabilities and to select proposals that represent the best value for the Government. DHS then awards and administers contracts to ensure that users get the hardware, software, and services they need to keep our homeland safe. The contracting process is a team effort. It requires active participation from the entire acquisition workforce, which includes the Program Management Office (PMO), the contracting office, and all individuals who are substantially involved in defining, determining, and managing requirements. From the first identification of a requirement to contract closeout, the program manager (PM) and the contracting officer (CO) must work together to make smart business decisions that lead to program success. In this lesson, you will learn the respective roles they play throughout the contracting process to plan, and execute, an acquisition program. You may print the Understanding the Contracting Process lesson or save it for future reference. Page 1 of 33

2 Objectives Upon completion of this lesson, you should be able to: Compare the principal roles of the program manager and the contracting officer in the contracting process Identify the critical documentation required at each phase of the contracting process Identify the characteristics of a performance-based acquisition (PBA) Page 2 of 33

3 Program Manager and Contracting Officer Roles The PM and CO have different roles and responsibilities in the contracting process. The PM has overall responsibility to deliver the desired product or capability to the ultimate user, while bringing the program to completion on time and within budget. The authority of the PM comes from DHS Acquisition Management Instruction The CO is responsible for all contracted actions in the program and is the business advisor to the PM. He or she handles the acquisition process from pre-solicitation through contract award and signs the contract on behalf of the Government. After contract award, a contracting officer's representative (COR) or contracting officer's technical representative (COTR) may be appointed to assist in monitoring the contractor's performance. However, the CO still has ultimate responsibility for the contract until the work is complete and the contract is closed out. The PM and the CO work as a team to ensure that the contract fully supports a successful program. Page 3 of 33 In accordance with Federal Acquisition Regulation (FAR) 2.101, the COR is an individual, including a COTR, designated and authorized in writing by the contracting officer to perform specific technical or administrative functions.

4 Program Manager and Contracting Officer Roles (continued) Here is a table comparing the management focus and organizational structures for the PM and CO. Program Manager Contracting Officer Management Focus Technical Business Organization Program Management Office Matrix from Contracting Organization Page 4 of 33

5 Contracting Officer Authority COs have the authority to enter into, administer, or terminate contracts and make related determinations and findings. COs may bind the Government only to the extent of the authority delegated to them. The CO derives his or her authority from a written certificate of appointment known as a warrant. A warrant is issued by the head of contracting activity (HCA) delegating this authority to each individual CO. Limitations of authority are set for each CO based on factors such as experience in acquisition, education, knowledge of acquisition methods, satisfactory completion of required acquisition training, understanding of acquisition laws and regulations, and personal integrity and professional conduct. Possible limitations include contract type, the dollar value limit up to which the CO is permitted to obligate funds, and process authority to operate only in a particular phase (i.e. procure, administer, or terminate contracts). Some senior COs have been granted unlimited warrants, which means they can sign a contract of any dollar amount, any contract type, and during any phase. Only a warranted CO has the authority to: Enter into a contract Administer a contract Terminate a contract Page 5 of 33

6 Knowledge Review Who is held responsible for the overall success of an acquisition program? A. Head of contracting activity (HCA) B. Contracting officer (CO) C. Program manager (PM) D. User Correct! The program manager has and maintains responsibility for program performance throughout the acquisition life cycle. Page 6 of 33

7 The Contracting Process The contracting process occurs throughout the Acquisition Lifecycle Framework (ALF). In both the Need Phase and the Analyze/Select Phase, contracts may be awarded for studies and analyses. In the Obtain Phase, contracts are often used for development, integration, and testing of systems. In the Produce/Deploy/Support/Dispose Phase, contracts are the usual means for producing, operating and/or maintaining DHS systems. No matter which phase of the ALF a program is in, the contracting process itself goes through the same series of three phases: Acquisition planning Contract formation Contract administration The PM and the CO work as a team throughout the entire process. D Page 7 of 33 A graphic titled the contracting process, with the Government on one side and the contractor on the other. An arrow pointing from the Government to the contractor indicates the flow of dollars, while an arrow pointing from the contractor to the Government indicates the flow of products and services. Below all is a line labeled at intervals with the phases of the contracting process; acquisition planning, contract formation, and contract administration.

8 Acquisition Planning Phase The main elements of the acquisition planning phase of the contracting process are: Identifying and describing requirements Determining the best methods for meeting those requirements Planning the acquisition and contracting strategies necessary for implementation The PM describes the requirements and determines the overall acquisition strategy for the program, while the CO plans the contracting activities needed to support the program. D Page 8 of 33 Reprise of the contracting process graphic with the acquisition planning phase highlighted.

9 Acquisition Planning Phase: The Acquisition Team Another important step in the acquisition planning phase is assembling the acquisition team. In the early stages, the acquisition team begins as an integrated program/project team (IPT). This IPT evolves over time into the full acquisition team. For a major or complex acquisition, participants normally include the PM, CO, user, project engineer, financial manager, and legal counsel. However, this team can be tailored to meet specific program needs. The PM remains responsible for the overall outcome of acquisition planning and is supported by the CO. Page 9 of 33

10 Acquisition Planning Phase: Contracting Personnel For large acquisitions, the CO may be supported by a staff of contract specialists. These contracting personnel, who report to the CO, help to plan the contracting actions needed to support the program. They advise on policies and strategies for: Enhancing competition Minimizing costs Reducing lead-times Determining economic order quantities Establishing a tentative schedule of purchases Contracting personnel normally support the Program Management Office (PMO) via a matrix organization and are either dedicated to one program or shared to support multiple programs. Page 10 of 33

11 Acquisition Planning Phase: PM During the acquisition planning phase, the PM ensures that the technical, logistics, and other staff members prepare program plans, develop cost estimates, establish schedules, and determine priorities to include: Necessary resources Estimated completion time Required systems, subsystems, equipment, components, and facilities Required Government-furnished property (GFP) Required services during the program life cycle Documentation and data requirements The PM is responsible for the overall outcome of acquisition planning. Page 11 of 33

12 Acquisition Planning Phase: Documentation Various documents must be prepared during each of the contracting phases. In the acquisition planning stage, one of the most important documents is the acquisition plan (AP). The AP documents the overarching strategy for managing the separate contracts that make up the overall acquisition program. It addresses issues such as competition and prospective sources, and it provides direction for the execution of each contractual action. You will learn about the contents and approval process for the AP in Lesson 2.9 Planning the Acquisition. Page 12 of 33

13 Knowledge Review Which of the following activities is the responsibility of the program manager during the acquisition planning phase? A. Determine the overall acquisition strategy B. Advise on strategies for enhancing competition C. Advise on policies for minimizing costs D. Oversee the contracting process Correct! The PM is responsible for determining the overall acquisition strategy for the program. Page 13 of 33

14 Contract Formation Phase: Contracting Personnel The second phase of the contracting process is contract formation, during which preparations are made to solicit and evaluate proposals and award a contract. In this phase, the CO: Identifies acquisition related data Reviews and organizes all contract planning elements Obtains concurrence and approvals from the legal, finance, and other support offices Along with the PM, determines the appropriate contract type (e.g., fixedprice, cost-reimbursement, indefinitedelivery, etc.) Develops a plan of action and milestones for significant contracting actions Synopsizes the requirement Assembles and releases the solicitation package Negotiates the terms and conditions of the contract D Page 14 of 33 Reprise of the contracting process graphic with the contract formation phase highlighted.

15 Contract Formation Phase: PM During the contract formation phase, the PM ensures the technical support staff performs the following: Identify technical actions required to successfully complete project and acquisition milestones Identify the overall acquisition technical requirements and associated program budget Describe the program and any constraints placed on the acquisition Describe market research results, including previous acquisitions, related projects, and historical problems as they affect technical issues Work with the CO to identify contract planning elements Identify deliverable quantities and options Identify the requirements for the contract statement of objectives (SOO), statement of work (SOW), performance work statement (PWS), specification(s), data submittal list, and schedule milestones Provide technical evaluations of contractor proposals Page 15 of 33 A statement of objectives (SOO) is an alternative way to develop a statement of work (SOW). The SOO states the Government's requirements in terms of the desired result or outcome, and then the contractor develops the SOW based on the SOO. The SOO is not contractually binding. It has no specified format, but is much shorter than a SOW, sometimes only a few pages long. It is most appropriate in acquisitions where a new process and/or product design is needed or where the tasking is relatively high in complexity. A statement of work (SOW) is the detailed description of the work effort to be performed by the contractor. For a highly complex system, this could exceed 100 pages plus drawings. A performance work statement (PWS) is a description of the work a contractor will perform in order to achieve the objectives of the buying activity. It should describe in specific terms: The outcome(s) expected How the outcome will be measured The metrics that will be employed to define the acceptable quality level (AQL) Any deliverables mandated by the request for proposal (RFP) The PWS states what will be done in order to accomplish the desired outcome(s).

16 Contract Formation Phase: Documentation The source selection plan (SSP) is developed, during the contract formation phase, by the CO and other members of the acquisition team. It lays out the details of how to accomplish a fair and impartial evaluation of offers, including the people involved and the criteria for evaluating proposals. When contracting by negotiation, a request for proposal (RFP) is finalized and released in this phase. The RFP must be consistent with the SSP. The CO prepares it based on input from the acquisition team and posts it on the Federal Business Opportunities (FEDBIZOPS) website. Businesses interested in the opportunity respond to the RFP by submitting an offer, called a proposal, to the CO in compliance with the instructions provided in the post. Page 16 of 33

17 Contract Formation Phase: Uniform Contract Format COs shall prepare Federal Acquisition Regulation (FAR) based solicitations and resulting contracts using the uniform contract format. Solicitations using the uniform contract format shall include Parts I, II, III, and IV outlined below (see also FAR through FAR ). Select this link for a description of each section in the Uniform Contract Format. Part I: The Schedule A. Solicitation/Contract Form B. Supplies or Services & Prices or Costs C. Description/Specification/SOO/SOW/ORD D. Packaging & Marking E. Inspection & Acceptance F. Deliveries or Performance G. Contract Administration Data H. Special Contract Requirements Part II: Contract Clauses I. Contract Clauses Part III: List of Documents, Exhibits, & Other Attachments J. List of Attachments Part IV: Representations & Instructions K. Representations, Certifications, & Other Statements of Offerors or Respondents L. Instructions, Conditions, & Notices to Offerors or Respondents M. Evaluation Factors for Award Page 17 of 33

18 UNIFORM CONTRACT FORMAT The following Uniform Contract Format is used throughout the Government for standardization in accordance with FAR It is simply a table of contents of what is in the solicitation. Uniform Contract Format (used for all RFPs and Contracts) Section Title Part I. The Schedule A B C D E F G H Solicitation/contract form Supplies or services and prices/costs Description/specification/work statements Packaging and marking Inspection and acceptance Deliveries and performance Contract administration data Special contract requirements Part II - Contract Clauses I Contract clauses Part III - List of Documents, Exhibits, and Other Attachments J List of attachments Part IV - Representations and Instructions K L M Representations, certifications, and other statements of offerors Instructions, conditions, and notices to offerors or respondents Evaluation factors for award

19 Sections A through J will be the same format and contain relatively the same information for both the RFP and the resulting contract. However, the contract will not contain Section K (representations, certifications, and other statements of offerors or quoters), Section L (instructions, conditions, and notices to offerors or quoters), and Section M (evaluation factors for award). These three sections are only found in the RFP because they give directions to the offerors on how to respond to the Government s solicitation. Once a contract is awarded, these directions are no longer relevant. However, the Government does retain these three sections in the source selection files. Special Contract Requirements H Contract Administration Data Deliveries or F Performance G Inspection & Acceptance E Packaging and Marking D Description/Specification/ Statement of work C Supplies or Services & Prices/Costs B Solicitation/Contract Form A PART I THE SCHEDULE PART I The Schedule Section A, Solicitation/contract form, is the first page of the RFP. It is a Standard Form that gives the RFP number, explains what type of solicitation it is (Sealed Bid--IFB or Negotiated--RFP), who issued the solicitation, address of the interested party receiving the solicitation, where proposals or bids are to be delivered, closing date and time, contractors name and address, and a brief description of the items or services to be performed. This form will be signed by the contractor and returned with their proposal. Section B, Supplies or services and prices/costs, is a listing of the deliverable supplies or services. There is a brief description of the supplies or services, the quantities, and costs of the item(s). Deliverables can be hardware, software, data, labor, or a combination of any or all of these items. At the

20 solicitation stage, Section B will have blanks for the cost; the contractor fills in their proposed costs and profit when sending their offer to the Government. Data can be printed material (paper reports, documents, etc.), information captured electronically (computer disc, floppy, transmitted information using electronic data interchange) or a combination of both. In some DHS Components, data requirements are stated in a Contract Data Requirements List (CDRL) and referenced in Section B. This list tells contractors what data to deliver, when and how data will be accepted, where to look for preparation instructions, where in the contract the preparation effort is required; and other information. To eliminate needless reporting and contractor quality assurance, it is incumbent on every program office to ensure that they require only that data which is essential to managing the program. Whenever possible, contractors should deliver data electronically and in their own format to save the time and effort required to convert it to Government formats. Data delivered in formats specified by the Government can be highly expensive--recent estimates indicate that data can cost upwards of up to $1000 per page! Section C, Description/specifications/work statement, tells the contractor the actual tasks or outcomes to be performed. Depending on the acquisition, this section may be a Statement of Objectives (SOO), Performance Work Statement (PWS), or Statement of Work (SOW). If the acquisition requires a SOW or a PWS, the document may contain a Work Breakdown Structure (WBS). Statement of Objectives (SOO). A SOO is a broad statement of the Government s high-level objectives or desired outcomes. The SOO is released with a RFP and asks the contractor to develop and propose a PWS or SOW according to the guidelines of the SOO. The use of a SOO is most appropriate in acquisitions where a new process and/or product design is needed or where the tasking is relatively high in complexity. Performance Work Statement (PWS). A PWS identifies what the Government objectives or desired outcomes are but not does not specify how to do the work (unlike the SOW). It also contains the standards of performance for determining if the requirements have been met. The PWS gives contractors flexibility to propose alternate solutions to meet requirements. It is most often used for the acquisition of services. Statement of Work (SOW). A SOW defines the efforts to be accomplished by the contractor. It describes requirements in detail, establishes non-specification tasks, and identifies the scope of the contractor s effort. The SOW can be provided in full text or incorporated by reference (then listed in Section J). Both the Government and the contractor look to the SOW as a key document defining the responsibilities of both parties. After contract award, SOW requirements (and

21 associated specifications) constitute the standard for the contractor's effort, providing the baseline against which progress and subsequent contractual changes are measured. The SOW can be used for acquisitions ranging from small a research study to the development of a complex security system. [G.P.1] Note: "Shall" and "will" are not interchangeable in terms of being contractually binding. When we need the contractor to perform a task, we must use the word "SHALL" for that tasking to be legally binding. Whether the Government or the contractor writes the SOW or PWS, or we ask the contractor to prepare it based on a SOO, it is important that the work statement be clear, concise, and complete. The more elaborate the wording, the greater possibility of miscommunication between the Government and the contractor about the Government s requirements or objectives. Section D, Packaging and marking, provide packaging and marking requirements, if any. Section E, Inspection and acceptance, includes inspection, acceptance, quality assurance, and reliability requirements. Section F, Deliveries or performance, specifies the requirements for place, and method of delivery or performance. Section G, Contract administration data, relays accounting and appropriation data and any required contract administration information or instructions other than those on the solicitation form. It also includes a statement that the offeror should include the payment address in the proposal, if it is different from that shown for the offeror. Section H, Special contract requirements, conveys any unique special contract requirements such as options, warranties, government furnished equipment and incentives. These special clauses must be clear and concise. Because these are not standard clauses, the information is written in full text and not incorporated into the RFP by reference.

22 CONTRACT CLAUSES I PART II CONTRACT CLAUSES PART II Contract Clauses Section I, Contract clauses, includes standard clauses. Most of the clauses are incorporated by reference. Clause selection varies by the nature of the requirement (supplies, services, construction) and the type of contract (Fixed Priced types or Cost Reimbursement types). Most are required by public law and have mandatory requirements to be performed by the contractor. Compliance is a must and can have serious legal ramifications on the contractor and the Government. List of Attachments J PART III LIST OF DOCUMENTS EXHIBITS, & OTHER ATTACHMENTS PART III List of Documents, Exhibits, and Other Attachments Section J, List of attachments, lists all the documents that are included in the RFP but attached as stand-alone documents. The contracting officer lists the title, date, and number of pages for each attached document, exhibit, and other attachment. Cross references to material in the other contractual sections may be inserted as appropriate. An example of a stand-alone document is the System Specification.

23 Evaluation factors for award Instructions, conditions & notices to offerors or respondents L M Representations, certifications & other statements of offerors K PART IV REPRESENTATIONS AND INSTRUCTIONS PART IV Representations and Instructions Section K, Representations, provides representations, certifications and other statements that must be completed by the offeror (e.g., small business size, equal employment opportunity compliance, OSHA compliance). These documents are completed and submitted with the offeror s proposal. Section L, Instructions, conditions, and notices to offerors or respondents, provides guidance to the offerors or respondents in preparing proposals or responses to requests for information. Prospective offerors or respondents may be instructed to submit proposals or information in a specific format, including how to organize the proposal, e.g., Administrative, Management, Technical, Past Performance, and Cost or Pricing data. The contractor should not be required to provide data that will not be evaluated, nor should the Government have source selection evaluation criteria they have not asked the contractor to address in their proposal. Section M, Evaluation factors for award, identifies all significant factors and any significant subfactors that will be considered in awarding the contact. In accordance with FAR Part , Section M also lists the relative order of importance of those factors and subfactors and how the non-cost factors relate to cost. It is important to remember that source selection planning begins prior to RFP development and must be coordinated with the development of the RFP to ensure an effective evaluation of well-organized proposals. The Source Selection Plan should be signed before the release of the RFP. In order to ensure an effective and defensible evaluation of proposals, the Source Selection Plan must be

24 followed to the letter by everyone involved with the source selection. The RFP Section L (providing instructions to the offerors) and Section M (addressing the evaluation factors and subfactors and the manner in which they will be evaluated) must mirror the same areas of the Source Selection Plan that address the information to the offerors and list the evaluation factors and subfactors. By ensuring that these areas contained in Source Selection Plan are replicated in the RFP, and that the members of the Source Selection team adhere to the Source Selection Plan, the Government and the contractors can be assured of fair, unbiased evaluations of the proposals.

25 Contract Formation Phase: Getting to Contract Award In a competitive environment, after the CO issues the RFP and receives offers, the Government must select the proposal that offers the best value. (The source selection process is covered in another lesson in this course. Whether competitive or sole source, the CO negotiates the terms and conditions of the contract and ensures that the price is fair and reasonable. He or she confirms that the contractor's understanding of key contract provisions matches the Government's stated requirements. Finally, the CO signs the contract and the contract is officially awarded. Page 18 of 33

26 Knowledge Review You are tasked to evaluate contractor proposals for temporary housing shelters for the Federal Emergency Management Agency (FEMA). In which section of the request for proposals (RFP) would you find the specification for the shelters? A. Part I, Section A B. Part I, Section C C. Part I, Section B D. Part I, Section D Correct! Part I, Section C of the RFP addresses descriptions, specifications, and work statements. Page 19 of 33

27 Contract Administration Phase The final phase of the contracting process is contract administration. After contract award, cooperation must continue between the program management and contracting team members to ensure program success. D Page 20 of 33 Reprise of the contracting process graphic, with contract administration highlighted.

28 Contract Administration Phase: Contracting Officer During this phase, the CO and contracting personnel: Conduct post-award conferences Confirm that the contractor's understanding of key contract provisions matches the Government's stated requirements Participate in technical or program reviews to ensure contract compliance In the contract administration phase, should there be a need to adjust the original contract, any modifications shall be made by the CO, who will: Review any proposed modifications against the scope of work Review any proposed modifications against availability of funds Determine whether to modify the contract Execute the modification, if appropriate In many cases, the CO delegates responsibility for contract administration to the Administrative Contracting Office (ACO). In some cases the ACO could be from a Government department outside DHS. Page 21 of 33

29 Contract Administration Phase: Help from DoD Many DHS Components have a memorandum of understanding (MOU) with the Department of Defense (DoD) that authorizes COs to get assistance with, or delegate responsibility for, contract administrative functions. See Homeland Security Acquisition Manual (HSAM) for guidance on contract administration services. The Defense Contract Management Agency (DCMA) works directly with contractors to help ensure that supplies and services are delivered on time, at projected cost, and meet all performance requirements. DCMA can provide in-plant Government representatives to monitor contractor performance and management systems. The Defense Contract Audit Agency (DCAA) may provide contract audit services. This includes both pre-award and post-award audits, as well as audits of the contractor's internal control systems. After all the work of the contract has been done, the CO or his/her staff will manage the details of contract closeout. Page 22 of 33 A MOU is a memorandum that defines general areas of understanding between two or more parties. MOUs explain what each party plans to do; however, what each party does is not dependent on what the other party does (e.g., does not require reimbursement or other support from the receiver). It is sometimes confused with a memorandum of agreement (MOA), which is a memorandum that defines general areas of conditional agreement between two or more parties what one party does depends on what the other party does (e.g., one party agrees to provide support if the other party provides the materiel). MOAs that establish responsibilities for providing recurring reimbursable support should be supplemented with support agreements that define the support, basis for reimbursement for each category of support, the billing and payment process, and other terms and conditions of the agreement. The 2016 National Defense Authorization Act (NDAA), signed into Law in November 2015, prohibits the Defense Contract Audit Agency (DCAA) from providing audit support for agencies outside the Department of Defense (DoD) unless the Secretary of Defense certifies that the backlog for incurred cost audits is less than 18 months of incurred cost inventory. To implement this requirement, DCAA issued audit guidance, dated January 7, 2016, on what DCAA can and cannot perform for its nondod (reimbursable) customers.

30 Contract Administration Phase: PM During the contract administration phase, the PM ensures that the technical support staff: Support the CO in post-award conferences Perform surveillance of contractor activities and quality assurance activities Identify issues, such as apparent contractor misinterpretations of technical requirements which may affect program risks and expectations for mitigation Manage design reviews Review contractor reports and concur/disagree with the contractor's recommended corrective action in conformance with the contract Review and recommend approval or disapproval of any deliverables When the need arises to make a change to the contract, the PM's staff will: Prepare Government estimates for proposed contract modifications Evaluate the proposed contract modification for technical content Consult the CO on all changes or additions as needed Page 23 of 33

31 Contract Administration Phase: Documentation During the contract administration phase, invoices will be received from the contractor to bill the Government for work performed, or products delivered. It is important for the COR or the COTR to verify that the work or products received were satisfactory, and promptly forward those invoices for payment or notify the CO of any issues, or concerns. During this phase, there may be modifications to the contract. For example, the contractor may submit engineering change proposals (ECPs) recommending technical changes to the original contract. These ECPs and their associated costs will be reviewed by the PM from a technical perspective. They may also be evaluated by a configuration control board before being forwarded to the CO for action. If the CO determines that the change is within the scope of the contract and sufficient funds are available, he or she will modify the contract. Adding work outside the scope of the existing contract is generally not allowed. However, in rare cases, new work may be added to the contract through a bilateral modification, also known as a supplemental agreement, with the appropriate justification and approval. Page 24 of 33 Configuration Control Board: A formal group responsible for evaluating, approving (or disapproving), and coordinating changes to system design, and make recommendations to the PM. A bilateral modification (supplemental agreement) is a contract modification that is signed by the contractor and the CO, used for negotiating equitable adjustments resulting from the issuance of a change order; definitizing letter contracts; and to reflect other agreements of the parties modifying the terms of contracts [see FAR (a)].

32 Knowledge Review Which of the following contract modification activities is the responsibility of the contracting officer after contract award? A. Evaluate a proposed contract modification for technical content B. Review a proposed contract modification against the scope of work C. Prepare a cost estimate for a proposed contract modification Correct! The contracting officer is responsible for comparing a proposed contract modification against the contract scope of work. Page 25 of 33

33 Performance-Based Acquisition Performance-based acquisition (PBA) is an overarching contracting strategy that is oriented towards the outcome of the work to be accomplished. PBA states what is required, not how the work is to be performed. This approach promotes innovation and creativity. Current Government policy in FAR (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 The Office of Management and Budget (OMB) requires that 50% of all service contracts be performance-based. "Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity." George S. Patton Page 26 of 33

34 Major Tenets PBA is not a contract type but a contracting strategy that can be applied to different types of contracts. When soliciting proposals using PBA, several tenets must be followed: Structure all aspects of the acquisition around the results to be achieved Be outcome oriented tell "what"not"how" Describe contract requirements in clear, objective terms Provide measurable outcomes Make good business sense Require the contractor to manage performance Promote innovation and creativity Page 27 of 33

35 PBA and the Seven Step Process The Federal Government has endorsed the Seven Steps to Performance-Based Acquisitions process. Below is an illustration of the process. For detailed information on each step, you may download and save the PDF: Seven Steps to Performance-Based Services Acquisition. D Page 28 of 33 A chart showing a series of linked boxes, representing the seven steps to performance-based acquisitions. Step 1: Establish the Team. Step 2: Decide what problem needs solving. Step 3: Examine private-sector and public-sector solutions. Step 4: Develop a PWS or SOO. Step 5: Decide how to measure and manage performance. Step 6: Select the right contractor. Finally, Step 7: Manage Performance.

36 PBA and the Seven Step Process: PWS or SOO Let s take a closer look at Step 4 of the PBA process. There are two ways to develop specifications for performance-based acquisitions: Performance work statement, or contractor generations from a statement of objectives. PWS - A document describing the desired outcomes and minimum requirements for performance of tasks under a contract and standards of performance for determining if the requirements have been met. This approach gives contractors flexibility to propose solutions which meet requirements where the approach is tailored to their optimal technical/business approach. SOO - A very short document (usually under 10 pages) that provides the basic, high-level objectives of the acquisition. It is provided in the solicitation in lieu of a Government-written SOW or PWS. This essentially turns the acquisition process around and requires competing contractors to develop the PWS or SOW, which will be incorporated into the resulting contract. Both the PWS and the SOO state "what" and not "how." The bottom line in PBA is not the service, but the results. Page 29 of 33

37 PBA Example: The Bag The Border Patrol acquired 100 vehicular-mounted medium machine guns from the Army and plans to use them in SWAT-like situations at the border. They intend to convert the machine guns for use by agents on the ground. The Border Patrol needs a bag to stow and protect these weapons. The Border Patrol issued an RFP with a SOW that calls for the bag to meet specific, detailed standards. The SOW describes in detail, the type and weight of fabric, the weight of the thread, the length of each stitch, and even the number of stitches per inch. Is this necessary? If you said no, you are correct. The Border Patrol should have provided a PWS or SOO. The officer in the field (the user) just wants a bag that will support the weight of the gun and protect it in its intended environment. Who has the expertise to make the bag the Government or the contactor? Of course, the company in the bag-making business should know best how to fabricate the bag. The whole concept of performance-based acquisition is to tell the contractor what we want but not how to do the work. Leave it up to the contractor to make those determinations. Page 30 of 33

38 Knowledge Review You are working on a statement of objectives (SOO) for Transportation Security Administration (TSA). The user needs a power source for a new portable weapon/metal detection device. Of the following list of requirements, which one is stated best in performance terms? A. Use size "D" lithium-ion batteries B. Be rectangular in shape C. Weigh less than 2 pounds D. Power the device for 10 continuous hours Correct! This requirement is high level and tells "what" the power source must be able to do. Page 31 of 33

39 Summary The PM and the CO work together as a team to plan and execute contracts for an acquisition program. Each has different responsibilities during the three phases of contracting: acquisition planning, contract formation, and contract administration. The PM has overall responsibility for accomplishing the program, while the CO has the authority to enter into and modify contracts to support the program. D Page 32 of 33 Reprise of the contracting process graphic, with the Government on one side and the contractor on the other. An arrow pointing from the Government to the contractor indicates the flow of dollars, while an arrow pointing from the contractor to the Government indicates the flow of products and services. Below all is a line labeled at intervals with the phases of the contracting process; acquisition planning, contract formation, and contract administration.

40 Summary (continued) Each phase of the contracting process involves documentation. In the first phase, acquisition planning, the acquisition plan (AP) lays out the overall contracting strategy for a program. In the second phase, contract formation, the source selection plan (SSP) spells out the details of how the best value contractor will be determined for a competitive acquisition. In either a competitive or sole source environment, the request for proposal (RFP) is prepared and provided to industry to solicit proposals to accomplish the work. Modifications are negotiated and incorporated into the contract to make changes as needed. In the final phase, contract administration, invoices are received from the contractor for work performed, and are paid by the Government. Performance-based acquisition (PBA) is a strategy in which the Government states requirements in terms of results to be achieved, not in descriptions of how to do the work. The performance work statement (PWS) describes minimum requirements for performance along with standards of performance for determining if the requirements have been met. The statement of objectives (SOO) briefly describes what is needed, and then the contractor proposes a PWS or statement of work (SOW). As a result, the contractor has maximum flexibility to determine how best to meet our needs. You may print the Understanding the Contracting Process lesson or save it for future reference. Page 33 of 33