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Performance Based Contracting (PBC)
DGS/DPS Procurement Forum 12Donald R. Rainey, Sr., CPPB/VCO
Director, Office of General ServicesVirginia Department of Social Services
AGENDABackground/HistoryWhat is PBC?Steps to PBCPBC for Social ServicesQ & A
BACKGROUND/HISTORYGovernment Performance & Results Act 1993Federal Acquisition Streamlining Act of 1994Clinger-Cohen Act of 1996
All of these laws sent an important message about “Performance” in federal programs and acquisitions.
PBC isn’t newFederal government policy for agencies to
use PBC to the maximum extent possible when acquiring services.
What is PBC?Performance – At the state and local
government levels, performance is generally taken to mean outputs, quality and outcomes of government programs and services.(1) Outputs (the amount of service provided)(2) Quality (the quality of the service provided)(3) Outcomes (the results, impacts or accomplishments)
Performance Focus = Outputs + Quality + Outcomes
What is PBC?Performance Based Contracting – A contract
that focuses on the outputs, quality and outcomes of service provision and may tie at least a portion of a contractor’s payment as well as any contract extension/renewal to the contractor accomplishments or performance.
PBC is an “umbrella” term that incorporates a variety of different approaches that can vary depending on the level of government and the type of service.
Steps to PBCEstablish a Team
- Ensure senior management involvement- Involve multi-disciplinary SMEs- Define roles and responsibilities- Develop rules of conduct- Empower team members- Identify stakeholders- Maintain the knowledge base over the project life
Steps to PBCDescribe the problem that needs Solving
- Link the procurement to mission and performance
objectives- Define desired outcomes- Decide what constitutes success- Determine current level of success
Steps to PBCExamine Private & Public Sector Solutions
- Conduct a market survey (team approach)- Learn from public sector counter-parts- Take with private sector companies- Look for existing contracts- Document your research
Steps to PBCDevelop a Performance Work Statement
(PWS) or a Statement of Objectives (SOO)- Write the PWS- Let the contractor solve the problem- Describe the scope in the SOO- Write the performance objectives- Identify constraints- Develop the background
Steps to PBCDecide How to Measure & Manage Performance
- Rely on commercial quality standards- Have the contractor propose metrics and quality
assurance plan- Select only a few meaningful measures to judge
success- Use incentive-type contracts- Recognize the power of profit as a motivator
Steps to PBCSelect the right Contractor
- Compete the requirement- Use Oral Presentations- Emphasize past performance- Use best-value evaluation and source selection
Steps to PBCManage Performance
- Maintain team integrity- Adjust roles and responsibilities- Assign a Contract Administrator- Host a Post-Award Conference (Kick-Off)- Regularly contractor performance- Report on contractor’s performance
PBC Social ServicesIncrease in contracting for services delivery –
vs- agency employees- Rise is expected to continue- 80% of all Human Service (HS) funding involves
performance language- Subject to Federal audits of HS programs- All providers are not the same- Demand for evidence based practices
PBC Social ServicesTraditional focus on inputs and process
measures rather then outcomes
Shifting toward increased accountability- Performance of contractors- Public pressure to justify spending with measurable
performance
PBC Social Services (Concepts)Emphasizes results related to output, quality
and outcomes –vs- process or methodHas an outcome orientation and clearly
defined objectives and timeframesUses measureable performance standards
and quality assurance plansProvides performance incentives and ties
payment to outcomes
PBC Social Services (Benefits)Reward is based on outcomes and performance
resulting in:- Improvement and delivery of better services supporting improved outcomes- Clarity of goals and expectations- Fiscal flexibility for providers to achieve desired
results- Sets the groundwork for program evaluation and
monitoring- Encourages the contractors to develop and implement
innovative and cost effective service delivery- Less frequent but more meaningful monitoring
PBC Social Services (Dynamics)Amount and timing of paymentsExtent to which incentives and disincentives
are offeredLevel of financial risk assumed by the
contractorTypes of information collected and frequency
of reports on performanceContractor involvement in performance
measure developmentReinvestment of saving
PBC Social ServicesContract Monitoring
Most critical and most challenging- Define what actions the agency will take in order to
ensure contract standards are met- Develop well in advance of contract award- Focus on outputs and outcomes not routine tasks- Enforce penalties for not meeting standards
PBC Social Services (Success Factors)Define SuccessSelection of Performance MeasuresCollaboration with ProvidersCapacity of ProvidersStaff and Contractor TrainingInternal Management Systems
Q & A
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