FREQUENTLY ASKED QUESTIONS
- WHAT IS PERFORMANCE BASED SERVICE CONTRACTING (PBSC)?
PBSC is structuring all aspects of an acquisition around the purpose of the work to be performed. It emphasizes objective, measurable performance requirements and quality standards in developing statements of work, selecting contractors, determining contract type and incentives, and performing contract administration. The main idea is to pay for results, not just best efforts. Only contracts that meet the criteria of FAR 37.601 are to be considered PBSC.
- WHAT IS THE OBJECTIVE WITHIN DOT?
The Deputy Secretary has asked all of us to look at requirements as they are coming up for renewal and consider using the PBSC approach, if appropriate. Our goal is to ensure that by the end of FY 2004, 80% of all applicable service contract actions and 80% of applicable service contract dollars will meet the criteria of PBSC.
- WHAT SERVICES ARE TO BE CONSIDERED FOR CONVERSION TO PBSC?
All services, except true construction and A&E are to be considered as possible candidates for PBSC. In establishing the performance agreement goals with the Administrators, the Deputy Secretary acknowledged that there would be instances when a PBSC approach would not be appropriate for all services. As a result, he established a goal of ensuring that 80% of applicable service contract actions and 80% of applicable service contract dollars will meet the PBSC criteria by 2004. The 20% factor covers situations where it is determined that using PBSC is inappropriate. There are no blanket exceptions such as R&D, commercial services, emergency services, personal services etc. Each potential requirement for services needs to be looked at to see whether it is appropriate to use the PBSC approach. We should be looking for opportunities to further this initiative when and if it is determined appropriate.
- CAN COMMERCIAL ITEMS BE CONVERTED TO PBSC?
When looking at commercial services, the standards of the industry need to be reviewed. If there are no performance standards for a specific sector, a determination needs to be made as to whether it is worthwhile to develop your own. DOT has not identified any blanket exceptions for commercial items.
- CAN EMERGENCY SERVICES (SUCH AS OIL SPILLS) BE PBSC?
While we understand the nature of emergency services, in each situation a determination needs to be made as to whether a PBSC approach will work for the required service. There are no blanket exceptions identified for emergency services.
- RESEARCH and DEVELOPMENT IS DIFFERENT AND NOT APPROPRIATE FOR PBSC?
While we acknowledge that basic R&D may not be appropriate as a PBSC, each case needs to be reviewed individually by the acquisition team.
- HOW MUCH DETAIL IS NEEDED IN PBSC SPECIFICATIONS?
Quoting Robert J. Wehrle-Einhorn, Associate Professor of Gov't Contract Law and Contract Management, AFIT, in an article published in the National Contract Management Journal--
"The basic reason for preferring performance-based specifications in contracting for supplies is to avoid over specifying the government's contractual requirements. The policy is intended to limit the involvement of government employees and to provide contractors maximum flexibility in meeting the government's actual needs. As long as the government's need for an item is defined well enough to be capable of fulfillment, how to fulfill that need is entrusted to the contractor. In contrast, the basic reason for preferring performance based specifications in contracting for services is to avoid under specifying the government's contractual requirements. Unlike a supply contract, the risk is that in the absence of a performancebased standard for a service, the government will fail to define its need well enough to be capable of fulfillment. In that event the government may be obligated to accept whatever service it receives, or to make changes in the work requirements (with increased contractor compensation) in order to acquire the services it actually needs. Thus OFPP Policy letter 912 actually seeks to enhance government control over the contractor's activities in performing the contract, principally by avoiding broad and imprecise SOWs, which by their nature impair or even preclude effective management of contract performance."