Breakout Session # 807 Philip E. Salmeri, President Salmeri Seminars Date 27 April 2004

1. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

2. Seven Steps to Performance-Based Services Acquisition Breakout Session # 807 Philip E. Salmeri, President Salmeri Seminars Date 27 April 2004 Time 2:45 – 3:45 pm NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

3. Seven Steps to Performance-Based Services Acquisition • This session will review the seven steps for performance-based services acquisition. A brief discussion will focus on each step’s tasks, features & best practice. From the establishment of the Team through the management of contractor performance, this session will relate real world scenarios to each of the seven steps. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

4. Seven Steps to Performance-Based Services Acquisition • Establish the team. • Describe the problem. • Examine private-sector & public-sector solutions • Develop PWS or SOO. • Decide how to measure & manage performance. • Select the right contractor. • Manage Performance. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

5. Seven Steps to Performance-Based Services Acquisition • Step 1 -Establish an Integrated Solutions Team: Engage the stakeholders and define the roles and responsibilities of the acquisition team. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

6. Seven Steps to Performance-Based Services Acquisition •Step 2 - Describe the Problem that Needs Solving: Ask questions: What is the problem the agency needs to solve? What results are needed? Will it meet the organization’s mission objectives? What constitutes success? NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

7. Seven Steps to Performance-Based Services Acquisition Step 3 - Examine Private-Sector and Public-Sector Solutions: • Explore the market from an industry and government perspective. • The guide recommends several tactics, such as one-on-one meetings with industry to explore commercial best practices, innovative delivery methods, and incentive programs. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

8. Seven Steps to Performance-Based Services Acquisition Step 4 - Describe the Problem that Needs Solving By Developing a Performance Work Statement: • Develop a Performance Work Statement (PWS) or Statement of Objectives (SOO), a concept espousing that the Government state objectives simply and concisely, and allow industry to propose a solution. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

9. Seven Steps to Performance-Based Services Acquisition Step 5 - Decide How to Measure and Manage Performance: • Use measurements that are important to accomplishing the objectives of the requirement. When possible, use commercial quality standards, such as ISO9000 and CMM, or request that the contractor develop performance metrics and quality assurance plans for the proposed solution. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

10. Seven Steps to Performance-Based Services Acquisition Step 6 - Select the Right Contractor: • Employ recommended best practices when selecting the contractor, including competing the requirement, using the “downselect” process to work with a manageable number of vendors, and using oral presentations, past performance checks, and best value for source selection decisions. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

11. Seven Steps to Performance-Based Services Acquisition Step 7 - Manage Performance: • Keep the team together by assigning accountability for managing contract performance, conducting formal kick-off meetings, and regular contract performance and monitoring meetings. Actively manage the important contractor/Government relationship, and maintain continual honest and constructive feedback, with the goal of continuous improvement. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

12. PBSC STEP 1 Establish an Integrated Solutions Team: Tasks, Features, & Best Practices • Ensure senior management involvement and support. • Tap multi-disciplinary expertise. • Define roles and responsibilities. • Develop rules of conduct. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

13. PBSC STEP 1 Establish an Integrated Solutions Team: Tasks, Features, & Best Practices, (con’t) • Empower team members. • Identify stakeholders and nurture consensus. • Develop and maintain the knowledge base over the project life. • "Incent" the team: Establish Link between program mission and team members’ performance. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

14. PBSC Step 2 Describe the Problem that Needs Solving Tasks, Features, & Best Practices • Link acquisition to mission and performance objectives. • Define (at a high level) desired results. • Decide what constitutes success. • Determine the current level of performance. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

15. PBSC Step 3Examine private-sector & public-sector solutions Tasks, Features, & Best Practices • Take a team approach to market research. • Spend time learning from public-sector counterparts. • Talk to private-sector companies before structuring the acquisition. • Consider one-on-one meetings with industry. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

16. PBSC Step 4 Develop PWS or SOO Tasks, Features, & Best Practices (PWS) • Conduct an analysis. • Apply the "so what?" test. • Capture the results of the analysis in a matrix. • Write the performance work statement. • Let the contractor solve the problem, including the labor mix. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

17. PBSC Step 4 Develop PWS or SOO Tasks, Features, & Best Practices (SOO) • Begin with the acquisition's "elevator message." • Describe the scope. • Write the performance objectives into the SOO. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

18. PBSC Step 4 Develop PWS or SOO Tasks, Features, & Best Practices (SOO con’t) • Make sure the government and the contractor share objectives. • Identify the constraints. • Develop the background. • Make the final checks and maintain perspective. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

19. PBSC Step 5Decide how to measure & manage performance. Tasks, Features, & Best Practices • Review the success determinants. • Rely on commercial quality standards. • Have the contractor propose the metrics and the quality assurance plan. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

20. PBSC Step 5Decide how to measure & manage performance. Tasks, Features, & Best Practices (con’t) • Review the success determinants. • Rely on commercial quality standards. • Have the contractor propose the metrics and the quality assurance plan. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

21. PBSC Step 5Decide how to measure & manage performance. Tasks, Features, & Best Practices (con’t) • Select only a few meaningful measures on which to judge success. • Include contractual language for negotiated changes to the metrics and measures. • Apply the contract-type order of precedence carefully. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

22. PBSC Step 5Decide how to measure & manage performance Tasks, Features, & Best Practices (con’t) • Use incentive-type contracts. • Consider "award term." • Consider other incentive tools. • Recognize the power of profit as motivator. • Most importantly, consider the relationship. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

23. PBSC Step 6Select the right contractor. Tasks, Features, & Best Practices • Compete the solution • Use down-selection and "due diligence." • Use oral presentations and other opportunities to communicate. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

24. PBSC Step 6Select the right contractor. Tasks, Features, & Best Practices (con’t) • Emphasize past performance in evaluation. • Use best-value evaluation and source selection. • Assess solutions for issues of conflict of interest. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

25. PBSC Step 7Manage Performance Tasks, Features, & Best Practices • Keep the team together. • Adjust roles and responsibilities. • Assign accountability for managing contract performance. • Add the contractor to the team at a formal "kick-off“ meeting. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

26. PBSC Step 7Manage Performance Tasks, Features, & Best Practices (con’t) • Regularly review performance in a Contract Performance Improvement Working Group. • Ask the right questions. • Report on the contractor's "past performance." NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”