Guerra: Performance-based acquisition is not working

Seven Steps to Performance-Based Services Acquisition

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The Office of Management and Budget is pleased with agencies’ progress on the use of performance-based contracts and was encouraging them to put the contracting concept to even more use in the future, according to a May 25 FCW.com article, “OMB to agencies: Use more performance-based contracts.”

Truth be told, performance-based acquisition is not working. What should have been reported is that agencies are calling their contracts performance-based more often than in the past. If OMB were to look under the covers, it would see that, for the most part, agencies are issuing the same prescriptive contracts and using the label “performance-based statements of work” for what used to be prescriptive management and technical specifications.

Even worse, the agencies then hide behind calling a request for proposals performance-based by refusing to answer questions of clarity. When industry offerors ask about discrepancies in prescriptive requirements between sections C, L and M, agencies respond, “This is a performance-based contract; vendors are to describe their proposed solution to meet agency requirements.” How is industry supposed to do that when agencies are creating discrepancies by mandating prescriptive requirements while calling the RFP performance-based?

There is a huge problem with performance-based acquisitions: They are hard to do. We don’t like to do hard things in our community. We like to do things the way we always have, call it something different and declare success.

If performance-based acquisition is going to work, we need philosophical and strategic changes from industry and government.

The government needs to start telling industry what it is trying to accomplish, not what it wants. Often, what an agency says it wants in an RFP is really more of what it has but at a lower price. Agencies need to make statements of objectives, not statements of work. In a performance-based statement of work, an agency is still telling industry what to do, not what to accomplish. As Chip Mather, a partner at Acquisition Solutions, often reminds us, “If you tell industry what to do and not what to accomplish, who’s at fault if it doesn’t work?”

Industry needs to spend more time understanding agencies’ needs and developing solutions to meet those needs, and less time selling the same old technology. Industry program managers need to be compensated based on meeting agencies’ mission goals, not revenues and margins. Industry needs to offer agencies specific, meaningful measures and metrics that directly correlate to missions, not the same old “timeliness of delivery” that worked in the past.

Everyone agrees that OMB is correct in directing agencies to use performance-based contracting methodologies. Frankly, we have all read and reread the “Seven Steps to Performance-Based Services Acquisition” in the past three years. The issue is not the mechanics of the process. The issue is inculcating the concepts and philosophy of performance-based acquisition into everything we do.

Guerra is a partner at Guerra Kiviat.

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