Performance contracts need culture change

ORLANDO, Fla. — Although performance-based contracting will likely one day become the norm, the relationship between the government and industry must be defined and built, a panel of experts said.

There has to be a culture change to convince everyone involved that performance-based contracting can work well, said Ed Meagher, deputy chief information officer for the Department of Veterans Affairs.

"Someone needs to tell the contracting officers that this is OK," he said, speaking March 3 on a panel at the Information Processing Interagency Conference sponsored by the Government Information Technology Executive Council. "They run scared. There are some institutional problems that need to be addressed."

Performance-based contracting processes have not been perfected, Meagher said, and many officials continue to be skeptical. Although the experts agreed that a relationship between the agency and the contractor is essential, it is debatable how much trust and confidence the two partners have in each other before the work on the contract has begun.

"The partnership has to develop after you're married," he said. "If it happens before, the thing is going to stop."

Mark Day, director of the Office of Technology, Operations and Planning at the Environmental Protection Agency, said sharing a project's risk will help develop that partnership. By assuming responsibility on both sides, that link can then strengthen.

Developing a governance structure and defining the expected results and the performance metrics is important, said Chip Mather, founder of Acquisition Solutions Inc. Rather than manage the contract, agencies and contractors should manage the relationship. "The moment that contract is awarded, it has to be 'We.' How are we going to succeed?"

However, officials must understand the culture and about performance-based contracting, Meagher said. The key is to start small, using the process on projects such as those involving infrastructure, because the agency knows what to measure and what protections are in place, he said.

"We need suspenders for a while," Meagher said. "You do a little trusting, a little testing, but still need the contractual vehicles to convince people to come along.

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