Feds fail Contracting 101

A recent General Accounting Office report reveals that agencies still do not understand performance-based contracting, which does not bode well for federal managers.

In March 2001, the Office of Management and Budget directed government agencies to use "performance-based" techniques on at least 20 percent of all service contracts worth more than $25,000 in fiscal 2002.

Under this approach, the contracting agency specifies the outcome or result it desires and leaves it up to the contractor to decide how best to achieve this.

Performance-based contracts should clearly describe the government's required results, set performance standards, detail how the contractor's performance will be evaluated and outline incentives for achieving goals.

It's pathetic that government agencies need to be told to do what would seem to be intuitively obvious. And sadly, a recent GAO report found that few agencies are heeding this direction or understand it.

GAO officials asked five major government agencies — the departments of Energy, Treasury and Defense, NASA and the General Services Administration — to identify contracts that they considered to be models of performance-based service contracting. On the basis of the contract type and service provided, GAO then reviewed 25 contracts to assess whether they exhibited performance-based attributes.

The results? Only nine contracts clearly exhibited all of the attributes. These were contracts for services widely performed in the commercial sector, such as custodial services, building maintenance and advertising, which are easier to measure.

Twelve contracts for more unique and complex services lacked appropriate performance-based attributes and were excessively prescriptive. The idea is to tell the contractor what you want done but not how to do it. Those 12 contracts failed that test.

Agency officials pointed to the need for better guidance on performance-based contracting and better criteria on which contracts should be called performance-based. The Office of Federal Procurement Policy provided oral comments on a draft of the GAO report and generally concurred with its views. That doesn't say much for OFPP officials, because they're the ones who are supposed to issue procurement guidance and training to federal agencies.

But GAO's findings also suggest that government managers don't know how to procure goods and services from the private sector. That's bad news for feds who are trying to hold onto their jobs as the Republicans take control of Congress and press for more outsourcing.

If government managers aren't savvy enough to procure the goods and services they need, what good are they, critics can — and will — say. This report provides ammunition for those who favor drastic cuts in the federal workforce because feds are inept, and the GAO report offers little defense of federal managers. Not a good outcome for feds!

Zall is a retired federal employee who since 1987 has written the Bureaucratus column for Federal Computer Week. He can be reached at milt.zall@verizon.net.


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