The way to better contracts

Writing performance-based contracts might take longer in the short run, but the long-term benefits are more than worth it

Steve Kelman is professor of public management at Harvard University’s Kennedy School of Government and former administrator of the Office of Federal Procurement Policy.

One of the most frustrating things about my almost 20-year involvement in the efforts to improve the quality of government contracting is the slow progress in moving toward performance-based contracting for services.

There has been a push for it for a long time now. It began under Al Burman, my predecessor as administrator of the Office of Federal Procurement Policy during George H.W. Bush's administration. That push continued while I was OFPP administrator from 1993 to 1997 and has remained a focus since. The government has made some progress, but it has been excruciatingly slow.

There is one obvious reason for this: If you haven’t included performance metrics in your contract, it involves a lot of work to change it into a performance-based contract when you go to recompete it. And there are other reasons. Sometimes it is genuinely difficult to develop relevant performance metrics for contractors, just as it is for in-house activities — for example, what are relevant outcome-based metrics for State Department diplomacy? Finally, there is the sometimes vexing issue of changing and adding to performance metrics during the life of a long contract as technology and user requirements change.

However, the second and third explanations don't really account for the frequent statements one hears about how hard performance-based contracting is. One is left with the depressing conclusion that we’ve made far less progress than we should have mostly for the first reason — which is the worst of the three.

I am one of the world’s biggest fans of streamlining contracting and shortening the time to award. But program managers need to recognize that some of the things that add to the time it takes to get a contract awarded are good investments that ensure faster and better execution of the contract in the long run. In that case, the evidence is overwhelming that using performance metrics — whether for in-house or contracted activities — can improve performance by motivating and focusing employees and facilitating feedback, which is a necessary tool for organizational learning. We need to bring those benefits to contracting.

To counter the government's long and somewhat depressing track record, new approaches are necessary. I recently heard about a good one from Deborah Broderick, the FBI’s energetic and innovative new senior procurement executive.

She realized that generic training for program managers in how to do performance-based contracting was producing scant improvement in actually doing it, so she decided to try a new approach. When program managers are developing a request for proposals, she brings in trainers to work with them, the contracting officers and the contracting officer's technical representatives. The effort is not an abstract performance-based contracting lesson but a hands-on development of performance metrics and other contract provisions that are specific to the bid in question.

So far, she’s taken this approach on about 15 requests for proposals, and she reports that her program customers are pleased with the innovation. They are producing true performance-based RFPs, and although it's still early, their satisfaction with contractors' performance on the awarded contracts is high.

Frankly, we should all be ashamed that we haven’t made more progress in 20 years on this issue. Let’s put our collective heads together and come up with more ideas like Broderick’s so we can move forward on performance-based contracting.

About the Author

Kelman is professor of public management at Harvard University’s Kennedy School of Government and former administrator of the Office of Federal Procurement Policy. Connect with him on Twitter: @kelmansteve

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