THE DEPUTY SECRETARY OF TRANSPORTATION
WASHINGTON, D.C. 20590

August 25, 1999


The Honorable Michael Deich
Associate Director
General Government and Finance
Office of Management and Budget
Washington, DC 20503

Dear Mr. Deich:

Thank you for your letter, cosigned by Deidre Lee, Acting Deputy Director for Management, concerning Performance-Based Service Contracting (PBSC) and for the feedback, on the U.S. Department of Transportation's (DOT) recent PBSC efforts. I fully support this initiative and believe DOT can reap substantial benefits by expanding its use of PBSC.

I have asked Melissa Allen, DOT's Assistant Secretary for Administration, and DOT's senior leadership team to develop and implement a comprehensive PBSC initiative with the goal of ingraining PBSC as a part of DOT's acquisition culture. This initiative will include elements strengthening the participation of program offices in the operating administrations, measuring the use of PBSC through our Contract Information System, and developing a quality program to ensure that PBSC techniques are being used properly. The Department will make PBSC a ONE DOT priority and include it in its FY 2000 performance agreement. I will also speak personally with the Administrators whose organizations have only been making minimal efforts to implement PBSC.

More details of this initiative will be provided in the next PBSC quarterly report in October. DOT will continue to work with you and your staff to ensure the most effective use of this critical acquisition tool. Melissa Allen (202-366-2332) and David Litman, DOT's Senior Procurement Executive (202-366-4263), will be our points of contact for implementing this initiative.

An identical letter has been sent to Ms. Lee.

Sincerely,




{original signed by}
Mortimer Downey