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Julia Wise, Office of Federal Procurement Policy Lyle Eesley, Defense Acquisition University Phil Salmeri, President of

IMPLEMENTING PERFORMANCE-BASED ACQUISITION FOR SERVICES. Julia Wise, Office of Federal Procurement Policy Lyle Eesley, Defense Acquisition University Phil Salmeri, President of Salmeri Seminars Date: November 8, 2007 Time: 2:10 to 3:10.

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Julia Wise, Office of Federal Procurement Policy Lyle Eesley, Defense Acquisition University Phil Salmeri, President of

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  1. IMPLEMENTING PERFORMANCE-BASED ACQUISITION FOR SERVICES Julia Wise, Office of Federal Procurement Policy Lyle Eesley, Defense Acquisition University Phil Salmeri, President of Salmeri Seminars Date: November 8, 2007 Time: 2:10 to 3:10

  2. Success Story: Agencies continue to increase their use of Performance-Based Acquisition (PBA) methods. Target: FY 2001 - 10% FY 2006 – 40% + Actual: FY 2001 – 26% FY 2006 – 45% + OFPP is Encouraging agencies to continue to appropriately use PBA methods. Working with agencies to obtain good PBA samples to share – all samples should be submitted to www.acquisition.gov.sevensteps. Enhance existing PBA Guidance, as necessary, to address problem areas. Providing on-site PBA lunch-time learning sessions for agency acquisition professionals. OFPP’s View on PBA

  3. OFPP Interagency PBA Working Group Tasks – SARA Panel’s Recommendations Develop an illustrative guide or decision tree to help agencies determine when to use PBA; Develop a performance incentive matrix; Develop a “Best Practices Guide on Performance Measures;” Develop a checklist that reflects how well an acquisition works within the Seven Steps process; and Review and evaluate PBA samples and examples to incorporate in the Seven Steps to PBA Guide. Agency senior management should Emphasize the use of PBA on eligible service acquisitions to obtain innovative solutions (FASA). Align acquisition objectives with agency objectives to achieve results. (GPRA) Ensure PBA and FAR Part 12 are used when certain conditions exist (SARA). 4

  4. An acquisition strategy used to structure all aspects of an acquisition around the purpose of the work to be performed as opposed to the manner in which it will be performed. The Government states: “The What” The Contractor states: “The How” PBA is used to obtain innovative solutions from industry to measure acceptable performance, and monitor performance to ensure the outcome is achieved. PBA is …

  5. Used to the maximum extent practicable on eligible services except on: A&E, Construction, Utility services, Services incidental to supplies. Additional exclusions in the OFPP September 7, 2004 memo: - R&D to include Basic and Applied Research, Advanced Technology Development, Demonstration and Validation, and Engineering and Manufacturing Development; - Professional Medical Services (not facility-related); and - Tuition, Registration, and Membership Fees. Note: Only 50% of the overall contract dollar value has to be devoted to PBA. PBA should be …

  6. (1) Performance Work Statement (PWS) or Statement of Objectives (SOO) Measurable Performance Standards Performance Incentives - Negative or Positive - Monetary or Non-monetary 37.604  Quality assurance surveillance plans - Requirements for quality assurance and quality assurance surveillance plans are in Subpart 46.4. The Government may either prepare the quality assurance surveillance plan or require the offerors to submit a proposed quality assurance surveillance plan for the Government’s consideration in development of the Government’s plan. PBA Elements

  7. PBA involves the entire acquisition team -FAR Part 1.102-3. PBA Team Players End-user Technical Community COTR Program Manager COR Industry Quality Assurance Roles/Responsibilities Legal Business/ finance Contracting Officer

  8. PBA Benefits Allows innovative solutions from industry to meet agency mission; Maximizes competition in terms of solution and price; Increases customer satisfaction; Encourages the contractor and the agency to focus on achieving the mission via a partnership; Improves the Contractor’s performance; Encourages frequent communication between the CO/COR/COTR and the contractor; and Ensures results are achieved with good contract management. After award, it’s “we” and “us!” 9

  9. FAR 1.102, Statement of Guiding Principles – highlights PM role FAR Part 2, Definition - new definitions FAR Part 7 Acquisition Planning FAR Part 10, Market Research FAR Part 11, Describing Agency Requirements FAR Part 16, Types of Contracts FAR Part 37, Service Contracting – recognizes use of SOO when PWS is not suitable FAR Part 46, Quality Assurance PBA FAR References

  10. Seven Steps to PBSA website:www.acquisition.gov -go to the library to see vetted samples Government-wide PBA Resource

  11. PBA Training Requirements All agency personnel are encouraged to complete a PBA training course FAC-PM certification (OFPP April 25, 2007 memorandum) See http://www.whitehouse.gov/omb/procurement/workforce/ fed_acq_cert_042507.pdf. Agency acquisition workforce policy may include these PBA training requirements at the appropriate level for all members of the acquisition workforce. 12

  12. FAI PBA Training Opportunities FREE three-day workshop on PBA  just-in-time solution for acquisition teams from various agencies. Participants are encouraged to bring their current PBA documents and are given a chance to refine these documents in the training class. FREE training at various locations around the country. Students should register online at www.fai.gov. Questions about this training should be directed to FAI student services at 703-805-2300. 13

  13. DAU PBA Training Resources “Mission Focused Service Acquisitions,” course no. ACQ265, and two online learning modules: CLC 013, Performance-Based Services Acquisitions and CLM 013, Work Breakdown Structure PBA Community of Practice (https://acc.dau.mil/pba), includes the above PBA training information as well as other training opportunities, policy and guidance, tools and related links. The Acquisition Center of Excellence for Services Community of Practice, at https://acc.dau.mil/ace. Additionally, many private sector firms offer PBA training. See http://acquisition.gov/SevenSteps. DAU also has BPAs with 4 firms for PBA training. 14

  14. PBA a way forward Lyle Eesley, Director, Learning Center of Excellence for Service Acquisition Defense Acquisition University Lyle.Eesley@dau.mil Date 8 Nov 2007 Time 14:10

  15. Lack of “Up Front” Investment Tactical Acquisition primary focus Requires Strategic Business Planning Where is Contracting during the critical requirements planning process? We’re busy come back later… Why isn’t PBA catching on….?

  16. You got to be very careful if you don't know where you're going, because you might not get there. - Yogi Berra

  17. Develop the Vision and the case for change Leadership commitment and support Communicate the Vision Overcoming the resistance to change Build teams capable of exploring alternatives Understand the Mission improvement opportunities Create execution strategies Develop in depth understanding of the Mission Objective and Market Place. PBA is about communicating the Art of the possible and the need for change

  18. Performance Paradox How Trust affects Mission Results? Mission Results Mission Results Open to Industry Input More Trust Less Government Control But Verify Performance Standards and Outcomes PWS or SOO Industry created value thru innovation Reduced Oversight Specs & Gov defined process SOW Compliance focus Increased Oversight

  19. Performance Paradox How Trust affects Mission Results? Mission Results Mission Results Government Concerns Mission commitment Nature of the requirement Jobs, Change Open to Industry Input More Trust Less Government Control But Verify Performance Standards and Outcomes SOO or PWS Industry created value thru innovation Reduced Oversight Specs & Gov defined process SOW Compliance Increased Oversight

  20. Performance Paradox How Trust affects Mission Results? Mission Results Mission Results Government Concerns Mission commitment Nature of the requirement Jobs, Change Open to Industry Input More Trust Less Government Control But Verify Performance Standards and Outcomes SOO or PWS Industry created value thru innovation Reduced Oversight Contractor Concerns What’s been left out Who’s carrying the risk Is this another price shoot out or are they looking for value Are they good partners Specs & Gov defined process SOW Compliance Increased Oversight

  21. Performance Paradox How Trust affects Mission Results? Mission Results Government Concerns Mission commitment Nature of the requirement Jobs, Change Mission Results Trust Dividend Increases Mission Results Trust Tax Decreases Mission Results Open to Industry Input More Trust Less Government Control But Verify Performance Standards and Outcomes SOO or PWS Industry created value thru innovation Reduced Oversight Contractor Concerns What’s been left out Who’s carrying the risk Is this another price shoot out or are they looking for value Are they good partners Specs & Gov defined process SOW Compliance Increased Oversight

  22. 4 Day classroom course for requirements and contracting communities Start with old SOW and develop new PWS or SOO Teams develop sections of requirements document Develop performance standards and AQL Performance Requirements Summary and QASP Develop Business strategy with proposed contract type and incentive arrangement if warranted Develop Section L and M of RFP AQC 265 Mission Focused Services

  23. And I know to measure the work that is addressed by the standards! PBA requires linking Mission Objective with results to be achieved Objective Result 1 Standard 1 Standard 2 I know what’s important…the results that satisfy my objective! Result 2 Standard 1 Standard 2 … Standard n Source: Performance-Based Service Acquisition: Measure What You Manage by Booz Allen and Hamilton

  24. Approach 1—The Trivial Many Software lines of code written, per developer, per day (coding efficiency) number of software coding errors per 1000 lines of code (coding error rate) mix of senior and junior developers percent of development time required for documentation hours required to implement each requirement number of software defect reports from end-users Approach 2—The Critical Few schedule performance percent of time required for re-work number of software defect reports from end users Focus On The Results Achieved • In a result-driven strategy, the right measures are those that focus on the results achieved, rather than the processes used. For example…

  25. PBA requires linking Mission Objective with results to be achieved Objective Result 1 Standard 1 Measurement Method Standard 2 Measurement Method I know what’s important…the results that satisfy my objective! Result 2 Measurement Method Standard 1 Measurement Method Standard 2 … Measurement Method Standard n Source: Performance-Based Service Acquisition: Measure What You Manage by Booz Allen and Hamilton

  26. Knowledge Sharing Market Intelligence driving Best Service Acquisition Practices and Principles in Industry and Government Learning assets focused on Service Acquisition Service Acquisition Workshops (SAW) Team Building and Communication Developing performance outcomes and metrics Acquisition and Source Selection Learning and job support assets Service Acquisition Mall Performance Support SAW focused on specific requirement and acquisition team DAU - Learning Center Of Excellence for Service Acquisition

  27. On going joint University of Tennessee and DAU effort Interview over a dozen companies Focused on three areas Maintenance and Equipment Repair Real Property Maintenance Advisory and Assistance Services Will result in SAW workshop and commercial practices data Market Intel Commercial Practices Research

  28. Service Acquisition Mall Product Service CodesA - Research and DevelopmentB - Special Studies and Analyses - Not R&DC - Architect and Engineering - ConstructionD - Automatic Data Processing and TelecommunicationE - Purchase of Structures and FacilitiesF - Natural Resources and ConservationG - Social ServicesH - Quality Control, Testing, and InspectionJ - Maintenance, Repair, and Rebuilding of EquipmentK - Modification of EquipmentL - Technical RepresentativeM - Operation of Government Owned FacilitiesN - Installation of EquipmentP - Salvage ServicesQ - Medical ServicesR - Professional, Administrative and Management SupportS - Utilities and Housekeeping ServicesT - Photographic, Mapping, Printing, and PublicationsU - Education and TrainingV - Transportation, Travel and RelocationW - Lease or Rental of EquipmentX - Lease or Rental of FacilitiesY - Construction of Structures and FacilitiesZ - Maintenance, Repair or Alteration of Real Property Team or Individual selects the specific Product Service Code (PSC) for their requirement PSC Code Decide how to measure and manage performance Develop PWS or SOO Select Right Contractor Form the Team Define the Problem Market Intelligence Manage Performance Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Using Seven Steps to PBSA as guide Learning assets and Knowledge specific to that PSC are provided to Team or individual. Using Aircraft Maintenance as an example J015…

  29. Service Acquisition Mall PSC Code J015 Maintenance-Repair of aircraft Decide how to measure and manage performance Develop PWS or SOO Select Right Contractor Form the Team Define the Problem Market Intelligence Manage Performance Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Policy Issues Samples/Examples: Team Charter Learning Assets CLMs: Effective Team Building Project Mgt for Service Acq Seven Step Process First Person Accounts:

  30. Service Acquisition Mall PSC Code J015 Maintenance-Repair of aircraft Decide how to measure and manage performance Develop PWS or SOO Select Right Contractor Form the Team Define the Problem Market Intelligence Manage Performance Step 3 Step 1 Step 2 Step 4 Step 5 Step 6 Step 7 Current Market Intel for JO15: Commercial Government Common Performance Measures: Commercial Government Sourcing Options: AF Contracts Army Contracts Navy Contracts Learning Assets CLMs: Market research First Person Accounts: Professional Associations:

  31. Service Acquisition Mall PSC Code J015 Maintenance-Repair of aircraft Decide how to measure and manage performance Develop PWS or SOO Select Right Contractor Form the Team Define the Problem Market Intelligence Manage Performance Step 4 Step 1 Step 2 Step 3 Step 5 Step 6 Step 7 Training: When do I use PWS or SOO? Answer these questions: JO15 Performance Outcomes Samples/ Examples: Army Navy Air Force NASA Coast Guard JO15 PWS Samples/ Examples: Army Navy Air Force NASA Coast Guard JO15 SOO Samples/ Examples: Army Navy Air Force NASA Coast Guard First Person Accounts:

  32. Questions and Answers

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