Effective ContractEffective Contract Management Management PlanningPlanning

For Performance-Based For Performance-Based ContractingContracting

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It’s a Different Contracting World!It’s a Different Contracting World!

Performance-Based Acquisition fundamentally Performance-Based Acquisition fundamentally changed contract formation and administrationchanged contract formation and administration

Objectives structured into contracts and Objectives structured into contracts and multiple incentive arrangementsmultiple incentive arrangements

Contractors and Federal staff adjusting to a Contractors and Federal staff adjusting to a cultural changecultural change

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When does Contract Management When does Contract Management start?start?

Old ViewOld View– Started at contract awardStarted at contract award– Embodied a post-award orientationEmbodied a post-award orientation

New ViewNew View – Effective contract administration starts early with Effective contract administration starts early with

contract management planningcontract management planning– Begins during the acquisition planning phaseBegins during the acquisition planning phase– Recognizes the performance-based elements of the Recognizes the performance-based elements of the

contractcontract– The Contract Management Plan is in place before or The Contract Management Plan is in place before or

shortly after the time of awardshortly after the time of award

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The Performance-Based Contract The Performance-Based Contract

What are the elements of Performance-Based What are the elements of Performance-Based Contracting?Contracting?Government Protocols Require:Government Protocols Require:

Establish requirements in a results oriented mannerEstablish requirements in a results oriented mannerEnsure that Contract measures and expectations are measurable and Ensure that Contract measures and expectations are measurable and

correspond to work requirementscorrespond to work requirementsEnsure that Quality Assurance Surveillance Plans are tailored to Ensure that Quality Assurance Surveillance Plans are tailored to

contract objectives contract objectives Incorporate cost constraints or cost incentivesIncorporate cost constraints or cost incentives

Acquisition GuideAcquisition Guide Performance Based Contracting Guides – provides Performance Based Contracting Guides – provides

guidance on structuring effective incentivesguidance on structuring effective incentives

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The Performance-Based ContractThe Performance-Based Contract

What are the elements of Performance-Based What are the elements of Performance-Based Contracting? (cont.)Contracting? (cont.) In 1997 Rules mandated that PBCsIn 1997 Rules mandated that PBCs

Requirements are structured in a results or outcome Requirements are structured in a results or outcome oriented manneroriented manner

Positive and/or negative incentives are includedPositive and/or negative incentives are includedQuality Assurance Surveillance Plans are requiredQuality Assurance Surveillance Plans are required

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What are the Contracting Officers What are the Contracting Officers Responsibilities in Performance-Based Responsibilities in Performance-Based

Contracting?Contracting?

Other Contracting Rules Require:Other Contracting Rules Require:– Ensure that performance-based contracting used to the Ensure that performance-based contracting used to the

maximum extent practicable. maximum extent practicable.

– Use contract types that best fits the work and likely to Use contract types that best fits the work and likely to motivate contractors.motivate contractors.

– Use positive or negative performance incentives to the Use positive or negative performance incentives to the maximum extent practicable.maximum extent practicable.

– Quality assurance surveillance plan shall contain Quality assurance surveillance plan shall contain measurable inspection and acceptance criteria measurable inspection and acceptance criteria corresponding to the performance standards of the SOW. corresponding to the performance standards of the SOW.

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Get Results!Get Results!

ResultsResults Identify incentives that support program and site Identify incentives that support program and site

prioritiesprioritiesProject specificProject specific Integrated efforts (intra-site or inter-site)Integrated efforts (intra-site or inter-site)Technology DevelopmentTechnology Development Infrastructure/Facilities MaintenanceInfrastructure/Facilities Maintenance

Contractor Motivation (fee, more work, Peer recognition, Contractor Motivation (fee, more work, Peer recognition, past performance assessments)past performance assessments)

Incentivize Results! Review lessons learned!Incentivize Results! Review lessons learned!

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Contract Management at Contract Management at Governement EntitiesGovernement Entities

Contract ManagementContract Management Government Agencies major site and facility Government Agencies major site and facility

contracts are usually long-term and involve a contracts are usually long-term and involve a complex mix of sponsors and stakeholderscomplex mix of sponsors and stakeholders

Integrated Team MembersIntegrated Team MembersGovernment Contract Management Focus Government Contract Management Focus

AreasAreas Project Management, change control, baseline Project Management, change control, baseline

management, technology, performance, quality management, technology, performance, quality assurance, fee and incentive management, assurance, fee and incentive management, contractor human resources, etc.contractor human resources, etc.

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Key Contract ManagementKey Contract ManagementResponsibilities and Focus AreasResponsibilities and Focus Areas

Contract Management ResponsibilitiesContract Management Responsibilities Ensuring performance of all necessary actions for effective Ensuring performance of all necessary actions for effective

contracting contracting Ensuring compliance with the terms of the contract,Ensuring compliance with the terms of the contract,

Safeguarding the interests of the contractual relationships,Safeguarding the interests of the contractual relationships,

Requesting and considering advice of specialists in audit, Requesting and considering advice of specialists in audit, law, engineering, and other fields, as appropriate, law, engineering, and other fields, as appropriate,

Monitoring Performance, andMonitoring Performance, and Enforcing the Government’s rights when necessaryEnforcing the Government’s rights when necessary ..

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The Contract Management TeamThe Contract Management Team

Success Depends on an Integrated Team!Success Depends on an Integrated Team! Contracting Officer (CO), Project Director, etc. Contracting Officer (CO), Project Director, etc. Effective administration of PBCs relies heavily on the Effective administration of PBCs relies heavily on the

integration efforts of groups of people representing many integration efforts of groups of people representing many functional areas, customers, and stakeholdersfunctional areas, customers, and stakeholders

Past problems can be traced to lack of an integrated effort Past problems can be traced to lack of an integrated effort in managing contract performancein managing contract performance

Manage the contract Manage the contract notnot the people or the process the people or the process

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Key Tools of Contract Key Tools of Contract ManagementManagement

Quality Assurance Surveillance PlanQuality Assurance Surveillance Plan

Contract Management PlanningContract Management Planning

Earned Value ManagementEarned Value Management

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Ensuring the Quality of PerformanceEnsuring the Quality of Performance

QASPQASP Develop earlyDevelop early - during the early stages of the RFP (SOW) - during the early stages of the RFP (SOW) Tool to evaluate contractor’s performanceTool to evaluate contractor’s performance Provides a structured approach to performing quality Provides a structured approach to performing quality

inspections and surveillanceinspections and surveillance Establishes frequency and types of inspectionsEstablishes frequency and types of inspections Focuses on results - quality and timelinessFocuses on results - quality and timeliness

QASP linked with Performance Evaluation QASP linked with Performance Evaluation Management Plans (PEMPs)Management Plans (PEMPs) PEMPs establish the performance evaluation process and PEMPs establish the performance evaluation process and

fee determination processfee determination process PEMPs may be used to fulfill QASP requirementPEMPs may be used to fulfill QASP requirement

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Contract Management PlanningContract Management Planning

Why Plan for Contract Management?Why Plan for Contract Management? Challenges by GAO, IG and internal DOE reviewsChallenges by GAO, IG and internal DOE reviews More sophisticated contracting modelsMore sophisticated contracting models

Performance-based contractingPerformance-based contractingMore rigorous contract types, i.e. CPIFMore rigorous contract types, i.e. CPIF

DOE Contract Administration StudyDOE Contract Administration StudyLittle interface between all parties managing the contractLittle interface between all parties managing the contract Infrastructure/culture not keeping pace with PBCs Infrastructure/culture not keeping pace with PBCs Lack of “game plan” for managing contracts Lack of “game plan” for managing contracts

To develop a “corporate oversight strategy” for ensuring To develop a “corporate oversight strategy” for ensuring contract successcontract success

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Contract Management Planning Contract Management Planning

When is a Contract Management Plan (CMP) When is a Contract Management Plan (CMP) Required?Required? For all M&O & Major Site and Facility ContractsFor all M&O & Major Site and Facility Contracts Contracts subject to Government RegulationContracts subject to Government Regulation Desirable for service contracts that are complex., high risk with Desirable for service contracts that are complex., high risk with

a high $$ valuea high $$ value

How do we develop an effective corporate oversight How do we develop an effective corporate oversight strategy/CMP?strategy/CMP? Begin planning during the earliest stages of the RFP Begin planning during the earliest stages of the RFP

preparationpreparation Review the contract and identify key governmental Review the contract and identify key governmental

responsibilities (equipment, receiverships, etc.)responsibilities (equipment, receiverships, etc.)

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Contract Management PlanningContract Management Planning

How do we develop an effective corporate How do we develop an effective corporate oversight strategy/CMP? (cont.)oversight strategy/CMP? (cont.) Get input from the contractor to ensure critical areas are Get input from the contractor to ensure critical areas are

identifiedidentified Identify key contract vulnerabilities or performance risk areas Identify key contract vulnerabilities or performance risk areas

that are inherent in the contractthat are inherent in the contract Develop a strategy for managing unique terms and conditions Develop a strategy for managing unique terms and conditions

(award term, incentives, etc.)(award term, incentives, etc.) Develop a proactive approach for managing the governmental Develop a proactive approach for managing the governmental

responsibilities and for mitigating any identified risk areasresponsibilities and for mitigating any identified risk areas Formally identify the key contract management team, include Formally identify the key contract management team, include

their names, responsibilities, authorities and limitationstheir names, responsibilities, authorities and limitations

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Contract Management PlanningContract Management Planning

How do we develop an effective corporate How do we develop an effective corporate oversight strategy/CMP? (cont.)oversight strategy/CMP? (cont.) Develop training and guidance to help the culture Develop training and guidance to help the culture

(infrastructure/people) evolve if site is managing a new (infrastructure/people) evolve if site is managing a new contract type (CPIF), contract type (CPIF),

Develop an approach for managing the incentive fee Develop an approach for managing the incentive fee arrangements of the contract, andarrangements of the contract, and

Ensure that other critical focus areas are included - Ensure that other critical focus areas are included - management of contractor litigation, partnering management of contractor litigation, partnering agreements, records management, and other site agreements, records management, and other site specific challenges.specific challenges.

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Contract Management PlanningContract Management Planning

How can we use the CMP to ensure successful How can we use the CMP to ensure successful contract performance?contract performance? Coordinate and solicit input from all staff involved in Coordinate and solicit input from all staff involved in

contract managementcontract management Conduct a special session with the contractor on the goals Conduct a special session with the contractor on the goals

and objectives of the CMP and name the individuals (CO, and objectives of the CMP and name the individuals (CO, COR, TM, etc.) responsible for its implementationCOR, TM, etc.) responsible for its implementation

Meet with all concerned parties on a regular basis to Meet with all concerned parties on a regular basis to address issuesaddress issues

Track performance and assess progress against the QASPTrack performance and assess progress against the QASP Address performance risks or deficiencies earlyAddress performance risks or deficiencies early Update the CMP as necessaryUpdate the CMP as necessary

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Assessing Contractor PerformanceAssessing Contractor Performance

Earned Value ManagementEarned Value Management Contractor use EVM to control cost and schedule Contractor use EVM to control cost and schedule

performance as well as report progress against the performance as well as report progress against the contractcontract

DOE uses EVM to:DOE uses EVM to:Monitor and verify progress on contract costs and schedule Monitor and verify progress on contract costs and schedule

performanceperformanceMonitor and validate contractor accomplishments on specific Monitor and validate contractor accomplishments on specific

fee and PBI incentivesfee and PBI incentivesEarly warning system to identify deficient progressEarly warning system to identify deficient progress

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Contract Management PlanningContract Management Planning

What is the CO - Contracting Officer’s role in EVM?What is the CO - Contracting Officer’s role in EVM? The CO is responsible for ensuring that EVM is a The CO is responsible for ensuring that EVM is a

requirement in the RFP (when applicable)requirement in the RFP (when applicable) After award, the CO is responsible for receiving the contract After award, the CO is responsible for receiving the contract

performance reports, approving changes to the system, and performance reports, approving changes to the system, and generally ensuring that the system requirements are being generally ensuring that the system requirements are being metmet

The CO relies on subject matter experts for advice on the The CO relies on subject matter experts for advice on the integrity of the systemintegrity of the system

The CO is responsible for enforcing the terms of the contract The CO is responsible for enforcing the terms of the contract and requesting corrective action as necessaryand requesting corrective action as necessary

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