Agencies work to get a handle on contracting for results

By Richard W. Walker

Connecting state and local government leaders

| November 3, 2003

Only a quarter of government procurement managers in a special GCN Management e-mail survey said they fully understand what procurement-based contracting is and how to write a performance-based contract.

Only a quarter of government procurement managers in a special GCN Management e-mail survey said they fully understand what procurement-based contracting is and how to write a performance-based contract.An additional 34 percent said they understand performance-based contracting 'for the most part.' But another 30 percent indicated a limited understanding, and 12 percent said they don't get it at all.Despite those disparities in understanding, the majority of respondents, 79 percent, reported that their agencies use performance-based techniques to acquire IT services.And 67 percent felt that an Office of Management and Budget interagency task force's suggested target of making 50 percent of federal services' contract dollars performance-based by 2005 is realistic.Among the 33 percent minority who disagreed that OMB's goal is practical, some offered their opinions.'Program offices do not want to give up control and cannot develop objective evaluation criteria,' one procurement official said.'The government is reducing staff, therefore there are fewer people to manage contracts,' another respondent said.'There are too many contracts to convert' to performance-based methods, another official said.'I don't believe OMB has thoroughly assessed the requirements that are out there and whether enough are appropriate to performance-based contracting,' a Defense Department official said.'Not all agencies understand the concept and its practical application,' a Capitol Hill manager said.'The culture change will take more time,' said an official from an independent agency in Washington.Asked about the biggest stumbling blocks to performance-based contracting, 62 percent identified a lack of understanding of what it is, and 51 percent named the familiar encumbrance of culture change'the difficulties of government transitions to new ways.Forty-seven percent cited writing a statement of objectives, a key element in many performance-based solicitations, as a hurdle.'No one has the time to develop the objectives to be met,' said an executive agency official. 'Many times the program office doesn't even know what needs to be done.'In verbatim comments, several officials said that getting program offices on board the performance-based acquisition train is a major challenge.'There is a need to convince the program managers that [performance-based contracting] is in the best interest of the contracting departments,' a Defense respondent said. 'We need buy-in from the requirements folks before the procurement folks can implement it. The contracting officers are willing. We need to push the program officers.'In other comments, several respondents disagreed on whether performance-based acquisition saves money for agencies.'We switched from cost-plus to performance-based in April 2000, and the immediate impact was an 18 percent savings in contract cost,' a civilian agency official said. 'Moreover, the administration of a PB contract now takes less than half the time it took to administer a cost-plus contract. It's a win-win for both government and contractors.'But another civilian agency manager said, 'Our experience so far, after six years of working with performance-based contracting, is that it has significantly raised the costs of service contracts.'An official at another civilian agency complained that performance-based contracts are 'too much of a headache to monitor. It's a good idea for very basic work, but the more complex it is, the worse performance-based is as a choice.'In other comments, however, several respondents were much more sanguine about the use of performance-based acquisition in government.Said the independent-agency official in Washington: 'I would like to see all contracts as performance-based. I believe we can get there, but it's going to take some hard work.'Added a Defense manager: 'It is the best practice that could have been created. Hopefully, it will eliminate government employees telling contractors how to do their jobs.'

Only a quarter of government procurement managers in a special GCN Management e-mail survey said they fully understand what procurement-based contracting is and how to write a performance-based contract.

Related Links