Evangelist for past performance

You won't hear John Delane complain about procurement reform. "Our company is alive and well today because the government now uses past performance in choosing contractors. Period," he said. Delane runs the family-owned, California-based contracting firm Del-Jen Inc. In 1994, the company's sales were $18 million, and it was on the ropes financially. But by last year, sales reached $108 million.

Del-Jen is not in information technology: It does military base operations support, repairs and renovates military buildings and runs Job Corps centers. But the lessons of its turnaround are relevant to smaller firms competing in a procurement reform environment, especially those dealing in IT services.

Procurement reform is the best thing that ever happened to Del-Jen, because it rewarded employees for what they specialize in — satisfying customers. As an employee wrote in the staff magazine, "No union can guarantee us a job, no contract can guarantee us a job, not even the company president can guarantee us a job. Only the customer can guarantee we'll be here tomorrow."

Smaller firms are particularly equipped to offer the customer responsiveness that produces outstanding performance ratings.

Del-Jen has always competed based on service because Delane's dad didn't feel he could be true to his personal standards any other way. But for years, this approach was seldom rewarded because Del-Jen was only occasionally the low bidder.

Using past performance to award contracts, which began seriously with procurement reform, meant the government could reward Del-Jen. Delane listed situations where the firm won contracts in recent years because of past performance, even though it wasn't the low bidder.

In one case, Del-Jen unseated the incumbent, a large defense contractor, for an Army base operations contract based on its performance on other contracts. A year later, Del-Jen was named Army Support Services Contractor of the Year for work at the base, where the prior contractor had performance problems. Recognizing that employee engagement is crucial to how a services company excels, Del-Jen shares most award money with employees working on the contract.

Delane has this advice to the government (taken from an article he wrote in Contract Management magazine) about past performance:

First, look at all contracts. "Consistently high-quality performance is what [the government] should expect," he said. "When a contractor is allowed to pick and choose the contracts that are provided for evaluation, the presented description does not provide a complete picture of how the contractor performs."

Second, don't make all past- performance scores the same. "If all the reports about competing contractors provide good or excellent ratings, thus leveling the playing field, then research did not go far enough," he said. "Surely, someone or some team is better than the others, and the [government's] job is to find out which team or player is best."

This is advice worth listening to in the procurement reform movement.

Kelman, administrator of the Office of Federal Procurement Policy from 1993 to 1997, is Weatherhead Professor of Public Management at Harvard's John F. Kennedy School of Government.


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