performance based acquisition | The Contracting Education Academy

May 10, 2018 By AMK

DoD’s IG: 11 of 14 IT service contracts were not properly awarded

The Department of Defense Office of the Inspector General (DoD IG) recently published a nonstatistical sample of 14 Defense Contract Management Agency (DCMA) IT service contracts, valued at $72 million.

The report presented the IG’s findings with respect to the question of whether DCMA properly awarded and administered the contracts. DoD IG found that for 11 of the 14 IT service contracts reviewed, valued at $61 million, DCMA contracting officials did not properly award the contracts.

The IG concluded that DoD awarded $56.4 million in IT services on contracts with poorly defined or nonexistent performance work statements, risking that the services may not meet the performance needs required to successfully execute the DCMA mission.

The problems encountered included:

Failure to properly define requirements that included measurable performance standards for 8 contracts;
Failure to develop an acquisition plan for one contract;
Failure to submit offers for two contracts awarded through the 8(a) program for Small Business Association (SBA) acceptances; and
Using flexible ordering agreements to award five of the 14 contracts, which violated Federal Acquisition Regulation (FAR) system requirements.

Keep reading this article at: http://www.mondaq.com/unitedstates/x/698384

December 21, 2017 By AMK

‘Reinventing government,’ 25 years later

We are coming up next year on the 25th anniversary of the country’s first and perhaps only governmentwide management reform program organized around a coherent theme: the Clinton administration’s “reinventing government” effort.

In 1993, the first year of the Clinton administration, I went on leave from my job at Harvard University’s Kennedy School, where I was a professor of public management, to take a Senate-confirmed position in the Office of Management and Budget as administrator of the Office of Federal Procurement Policy. That office of 30-odd civil servants did not buy anything itself but had the lead role in formulating governmentwide procurement policy.

At the beginning of the 1990s, the thinking about how to manage well in government began to turn toward performance. As political scientists William Gormley and Steven Balla have written, “The concept of performance came to rival accountability as a standard for evaluating executive branch agencies.”

Keep reading this article at: https://fcw.com/articles/2017/12/06/kelman-25-years-of-acquisition-reform.aspx

December 6, 2017 By AMK

Improving government outcomes through an agile contract format

Although it doesn’t get as much attention in the conversation around improving government acquisitions, one area that really does matter is the style of solicitation documents.

The format and structure of contracts has a huge impact on vendor participation, the competition process, finding qualified vendors, and, therefore, contract outcomes. When I started as a contract specialist, I was given hand-me-downs of past solicitations. It’s a fairly common practice to start the acquisition process by asking others for their documents, or just searching the internet or document repositories like FedBizOpps to replace names and dates.

Unfortunately, this practice means new contracts often repeat the shortcomings that are inherent in the structure of previous contracts. To improve outcomes, contracting officers should move away from these habits in favor of something that better fits the work to be done. The Technology Transformation Services’ Office of Acquisition has been developing an Agile Contract Format (ACF) to produce simple, effective contracts that also take advantage of post-award agile methods.

The role of the Uniform Contract Format

If you’ve ever been involved in the government acquisition process, you’ve almost certainly encountered the Uniform Contract Format (UCF), whether you realize it or not. Though the UCF is common, the Federal Acquisition Regulation (FAR) only requires the use of the UCF to create a solicitation in very limited circumstances — mainly FAR Part 15. For almost any type of IT acquisition, using FAR Part 15 – Contracting by Negotiation should be avoided at all cost. Using the UCF in conjunction with FAR Part 15 is the reason why so many government acquisitions involve a timeline of 18 to 24 months when another format could be much faster.

Using the UCF for a contract causes the government to issue solicitations thicker than great works of literature, but far less enjoyable. The crux of the problem rests with the UCF’s use of a Statement of Work (SOW) to describe the government’s need, or what acquisition professionals call the “requirements.” SOWs are the least desirable format for the government to communicate its requirements for industry’s services because it tells companies how to do something not what needs to be done. Making SOWs prescriptive rather than descriptive, is like telling a doctor what surgery you want before there’s even been a diagnosis. Additionally, SOWs don’t account for pivots or design changes based on user feedback. What this usually means is that the government tries to imagine everything that may possibly happen or be needed and add it to the UCF’s SOW like a wish list.

An advantage of agile work methods is that they focus on discovering a solution to a problem after the contract is awarded, that is, during post-award execution, rather than specifying the detailed solution up front as with Part 15. An agile contract tries to specify problems requiring detailed solutions, often as Product Backlog Items that describe high level contract delivery areas.

Understanding this problem, the Office of Management and Budget and Office of Federal Procurement Policy directed agencies to stop using SOWs and shift to using a Performance Work Statement (PWS) for acquiring services. A PWS “should state requirements in general terms of what (result) is to be done, rather than how (method) it is done” Good contracting officers advise agencies that by buying expert services, it implies that you’re not the most knowledgeable in “how” work is done. As the mission owner, you are the expert in “what,” must get accomplished, but conflating the two puts your mission at risk and makes it harder for a contract to provide value.

Rather than make this substantive shift from how to what, some government buyers just retitle their old Statements of Work to be a “Performance Work Statement.” This helps agencies comply with oversight mandates, but doesn’t actually change the nature of their requests to industry. The length and complexity remains the same, so industry continues to lose time and effort just getting through documents to try and understand what the government wants from it. The government gets to be in the perennial position of saying, “That’s not what I wanted.” There’s an easier way to get started, especially when it comes to agile development.

What the Agile Contract Format (ACF) improves

Contracting officers can avoid the negative side effects of using SOWs by instead structuring solicitations into Statements of Objectives (SOO). Despite being around for a long time, SOOs are infrequently used across government even though they make it much easier to write solicitations that center on outcomes instead of process. A SOO is the core of the ACF.

A SOO is:

A summary of key agency goals, outcomes, or both, that is incorporated into performance-based service acquisitions so that competitors may propose their solutions, including a technical approach, performance standards, and a quality assurance surveillance plan based upon commercial business practices.

FAR 37.602(c) provides that a SOO only requires a few sections:

Purpose;
Scope or mission;
Period and place of performance;
Background;
Performance objectives, i.e., required results; and
Any operating constraints.

By focusing on the information that vendors need to deliver, a TTS project team is able to rapidly discover discrete chunks of value for developing useful software features.

How to make an ACF

At 18F, we typically do our work in four person teams comprised of an agile coach, product lead, technical lead, and contracting lead. This team works together from start to finish. The cross-functional nature allows each group to write documents collaboratively, as opposed to waiting on input from other teams.

We meet with the agency we’re partnering with for a multi-day workshop that is designed with three objectives in mind:

Establish a baseline of vocabulary and knowledge about agile product development methods.
Create initial, high-level user personas and a product backlog that describes the major features of the system to be built and identify the scope of the first modular contract.
Create a draft of the first solicitation.

At the end, we get something that looks like this:

SOO Section	Agile Output
Scope or mission	Product Vision or MVP Statement
Performance objectives, i.e., required results	Product Backlog
Any operating constraints	Non-functional Requirements or Definition of Done

At the end of the workshop, there is a draft solicitation ready for release. We go from a process that people typically expect will take months to something that takes a few days.

Learning the hard way

I’ve been a contract specialist for over five years now, and I’ve been involved in awarding hundreds of millions of dollars in contract awards. Awarding contracts for waterfall IT projects has been the norm despite incredibly low success rates in terms of cost, schedule, and performance. Using the same traditional contract methods for agile methods is inappropriate and unnecessarily burdensome. To fix this, all you need are a few adjustments already available from the FAR.

Instead of years and back and forth, by going through agile workshops and using the ACF for solicitations, we can finish the requirements gathering and drafting parts of the acquisition process in days with value being delivered in months not years.

Towards better contracting

Delivery is the strategy here at the TTS Office of Acquisition. The contract is the means not the end. Writing down every possible future requirement you can think of can feel like it reduces risk and ensures the project will succeed. But that’s not borne out by the evidence of years of government contracting.

This is one piece towards a broader method of contracting for agile development services. Through this method, you can save time, reduce risk, improve quality, and avoid agilefall by allowing industry to apply their expertise. That’s why you’re contracting in the first place.

If you’re looking for examples we’ve done to date go here, and if you’re interested in chatting with TTS on how we may be able to help email us at inquiries18F@gsa.gov.

Source: https://18f.gsa.gov/2017/11/30/improving-government-outcomes-through-an-agile-contract-format/

August 15, 2017 By AMK

Agencies can deliver better results for less money by using outcome-based contracting model

As the Trump administration continues to set its agenda for the federal government, it is emphasizing accountability, efficiency and tangible results. The message is clear: agencies must deliver better results with fewer resources.

With budget cuts, hiring freezes and greater scrutiny of program funding, we need a fundamental shift in the way agencies acquire services and deliver on their missions to citizens. Outcomes-based contracting, which promotes a tight collaboration between agencies and their contractors, is a natural fit for this environment. With the administration’s business-centric approach to problem-solving, it would make sense for agencies to tie contractors’ compensation to their ability to deliver defined program outcomes.

The Opportunity

In an outcomes-based contracting model, companies are paid for the results they deliver. It’s an approach that has already gained popularity within the technology industry, so much so that Gartner predicts that by 2018, one-third of all IT contracts will be based on program outcomes, replacing traditional cost-plus contracts that pay based on the completion of individual tasks or activities.

Outcomes-based contracting has enormous potential beyond IT procurements. Amid growing skepticism about the effective implementation of both large and small public programs, outcomes-based contracts help to ensure that agencies are good stewards of taxpayer funds by directly aligning contractor compensation with program goals.

Keep reading this article at: http://www.govexec.com/excellence/promising-practices/2017/07/how-agencies-can-deliver-better-results-less-money/139756

February 27, 2017 By AMK

Energy Dept. updates its acquisition guide for management and operating contracts

The U.S. Dept. of Energy (DOE) has updated its guidance for the administration of management and operating (M&O) contracts.

M&O contracts are unique to DOE and central to the department’s business model. The term was first adopted in 1983 by the Secretary of Energy. In actuality, M&O contracts predate the formal adoption of the term by more than thirty-five years, dating to contracts awarded by the Army Corps of Engineers during World War II as well as other contracts awarded by the Atomic Energy Commission (AEC).

M&O contracts are often referred to as on-site contracts, operating contracts, major cost-type contracts, or other comparable terms.

Over the years, the Government Accountability Office (GAO) has criticized DOE for its management of M&O contracts, in particular for not holding the M&O contractors accountable for their performance. As a result, DOE previously published an accountability rule intended to hold contractors liable for negligent acts under the contract. DOE undertook a “contract reform” initiative in 1994 (entitled “Making Contracting Work Better and Cost Less”) to improve its management of M&O contracts. That initiative included nearly 50 reforms including: 1) using performance-based contracts, 2) increasing competition for contracts, 3) improving management and cost controls, and 4) making performance-based criteria and other incentives part of DOE contracts.

FAR 17.601 defines an M&O contract as “an agreement under which the Government contracts for the operation, maintenance, or support, on its behalf, of a Government-owned or -controlled research, development, special production, or testing establishment wholly or principally devoted to one or more major programs of the contracting Federal agency.”

FAR 17.604 provides a list of basic criteria to be used in identifying a requirement that is appropriate for use of the M&O form of contract. Among the criteria are the use of Government-owned or -controlled facilities and the necessity of a special, close relationship with the contractor and the contractor’s personnel in important functions. Examples of this includes factors such as safety, security, cost control, site conditions, the performance of the contract is substantially separate from the contractor’s other business, the work is closely related to the agency’s mission and is of a long-term or continuing nature, and for special protection covering the orderly transition of personnel and work in the event of a change in contractors.

FAR 17.603 places certain limitations on the types of functions M&O contractor personnel may perform, e.g., the employees may not supervise or control Government personnel or determine basic Government policies.

Subsequent to 1994 acquisition reforms, DOE undertook a detailed review of the then existing M&O contracts to determine if the requirements remained appropriate for use of the M&O form of contract. The result of that review was that the M&O list was reduced from approximately 52 contracts to 29. Among those contracts dropped from the M&O list were many tracing their histories to early in the AEC’s operations.

In the guidance issued February 2017, an evaluation of the history of DOE’s M&O contracts resulted in the identification of the following indicators for their use:

Generally, the contractor assumes multi-program scientific and technical responsibilities and work under a broad statement of work.
The requirement is continuing with no foreseeable end.
The contractor is responsible for integration of scientific and technical and infrastructure functions.
The contractor performs the substantial portion of scientific and technical responsibilities with its own workforce.
The contractor’s workforce is large, remaining at the site despite change of contractors. This results in the need for DOE to assume stewardship of employee relations and workplace labor conditions.
DOE oversees security, health, and safety at the site.
Work takes place at very large, Government-owned reservations and facilities.
DOE requires the successful offeror to form a corporate entity specifically for and dedicated to the performance of the DOE M&O contract. The contractor may accept work only directly from DOE or as allowed specifically under the M&O contract.
The contractor must link its accounting system with the Department’s, and integrate its budget process with the Department’s; usually the budgets for M&O contracts are line items in the Department’s budget.

DOE’s updated guidance includes this historically-fascinating description of the origin of M&O contracting:

What today are known as DOE’s Management and Operating contracts began during World War II. The Manhattan Engineer District was the governmental entity responsible for the design, development, and production of the first atomic bombs, an undertaking, to that time, without precedent. This massive effort achieved its challenging objective on a schedule that was almost unimaginable. Over a two year period the theoretical science was advanced, the technology necessary to produce the necessary components was developed and applied, and some of the most complex and largest manufacturing facilities the world had known were designed, constructed, and brought into full operation in remote, and previously undeveloped, locales within the United States. The successful completion of the Manhattan Project resulted from the Government’s substantial reliance upon private industry and educational and other nonprofit institutions for the critical scientific and business expertise.

In 1946, following on the success of the Manhattan Project, Congress created the Atomic Energy Commission to design and produce nuclear weapons, to develop nuclear energy as a source of electricity, and to research the use of nuclear energy in medicine. The legislative history of the Atomic Energy Act of 1946 indicates the basic principle that underlies M&O contracts was that the AEC, a predecessor of DOE, was to employ highly capable companies and educational institutions to carry out the actual performance of the agency’s mission; that is, these contractors were to perform the agency’s mission as opposed to the agency’s using civil servants. “Wherever possible, the committee endeavors to reconcile Government monopoly of the production of fissionable material with our traditional free-enterprise system. Thus, the bill permits management contracts for the operation of Government-owned plants so as to gain the full advantage of the skill and experience of American industry.”

Thus — based on the Corps of Engineers role as project manager, reliance on scientists from academia, and the engineering and construction skills of industry — the Manhattan Engineer District successfully concluded the production of atomic bombs, and Congress decided to carry that scientific, technical, and business model forward into the AEC and today’s DOE.

View the DOE’s updated guidance on M&O contract administration at: https://energy.gov/sites/prod/files/2017/02/f34/Acq%20Guide%2017-602%20Origin%20Characteristics%20and%20Significance%20of%20DOE%20Management%20and%20Operating%20Contracts%20Feb%202017.pdf