Performance contracts gain ground

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"Performance basis"

Agencies are continuing to develop performance-based contracts and are growing more comfortable with a practice that seemed novel just a few years ago. But there is still a need to change old habits, according to federal officials who spoke at a panel discussion today. The Bethesda chapter of AFCEA International hosted the breakfast event.

In performance-based contracts, agencies set goals and let contractors develop solutions for them rather than dictating what technologies the contractors must use. Agency officials, often in collaboration with contractors, develop service-level agreements and performance measures to gauge how well the contractor is meeting the needs. Often, monetary incentives like bonuses or withheld payments inspire greater performance.

As agencies have become more aggressive and confident about using such contracts, it is now the contractors who are sometimes risk-averse in their proposed solutions, said Steve Hufford, program manager for systems engineering in a division of the Environmental Protection Agency.

One area that continues to challenge agencies and contractors is choosing performance measurements and developing service-level agreements, said Glenn Perry, director of contracts and acquisitions management at the Education Department. They have to be meaningful.

For example, a contract could require that the contractor file a monthly progress report, he said. However, if the report states the contractor accomplished nothing that month, the mere filing of it would comply with the stated requirement, but would accomplish little.

"Service-level agreements used to be vague," said Lisa Schlosser, chief information officer at the Department of Housing and Urban Development. "What you're going to start seeing is very specific service-level agreements."

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