Effective Contract Management Planning

For Performance-Based Contracting

Its a Different Contracting World!

Performance-Based Acquisition fundamentally changed contract formation and administration Objectives structured into contracts and multiple incentive arrangements Contractors and Federal staff adjusting to a cultural change

When does Contract Management start?

Old View
Started at contract award Embodied a post-award orientation

New View
Effective contract administration starts early with contract management planning Begins during the acquisition planning phase Recognizes the performance-based elements of the contract The Contract Management Plan is in place before or shortly after the time of award 3

The Performance-Based Contract

What are the elements of Performance-Based Contracting?
Government Protocols Require:
Establish requirements in a results oriented manner Ensure that Contract measures and expectations are measurable and correspond to work requirements Ensure that Quality Assurance Surveillance Plans are tailored to contract objectives Incorporate cost constraints or cost incentives

Acquisition Guide Performance Based Contracting Guides provides guidance on structuring effective incentives

The Performance-Based Contract

What are the elements of Performance-Based Contracting? (cont.)
In 1997 Rules mandated that PBCs Requirements are structured in a results or outcome oriented manner Positive and/or negative incentives are included Quality Assurance Surveillance Plans are required

What are the Contracting Officers Responsibilities in Performance-Based Contracting? Other Contracting Rules Require:
Ensure that performance-based contracting used to the maximum extent practicable. Use contract types that best fits the work and likely to motivate contractors. Use positive or negative performance incentives to the maximum extent practicable. Quality assurance surveillance plan shall contain measurable inspection and acceptance criteria corresponding to the performance standards of the SOW. 6

Get Results!
Results

Identify incentives that support program and site

priorities
Project specific Integrated efforts (intra-site or inter-site) Technology Development Infrastructure/Facilities Maintenance

Contractor Motivation (fee, more work, Peer

recognition, past performance assessments)

Incentivize Results! Review lessons learned!

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Contract Management at Governement Entities

Contract Management

Government Agencies major site and facility

contracts are usually long-term and involve a complex mix of sponsors and stakeholders Integrated Team Members

Government Contract Management Focus Areas

Project Management, change control, baseline

management, technology, performance, quality assurance, fee and incentive management, contractor human resources, etc.
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Key Contract Management Responsibilities and Focus Areas

Contract Management Responsibilities

Ensuring performance of all necessary actions for

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

Safeguarding the interests of the contractual

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

Enforcing the Governments rights when necessary.

The Contract Management Team

Success Depends on an Integrated Team!

Contracting Officer (CO), Project Director, etc. Effective administration of PBCs relies heavily on the
integration efforts of groups of people representing many functional areas, customers, and stakeholders Past problems can be traced to lack of an integrated effort in managing contract performance

Manage the contract not the people or the process

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Key Tools of Contract Management

Quality Assurance Surveillance Plan Contract Management Planning Earned Value Management

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Ensuring the Quality of Performance

QASP

Develop early - during the early stages of the RFP

(SOW) Tool to evaluate contractors performance Provides a structured approach to performing quality inspections and surveillance Establishes frequency and types of inspections Focuses on results - quality and timeliness

QASP linked with Performance Evaluation Management Plans (PEMPs)

PEMPs establish the performance evaluation process

and fee determination process PEMPs may be used to fulfill QASP requirement

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Contract Management Planning

Why Plan for Contract Management?

Challenges by GAO, IG and internal DOE reviews More sophisticated contracting models
Performance-based contracting More rigorous contract types, i.e. CPIF

DOE Contract Administration Study

Little interface between all parties managing the contract Infrastructure/culture not keeping pace with PBCs

Lack of game plan for managing contracts

To develop a corporate oversight strategy for ensuring

contract success
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Contract Management Planning

When is a Contract Management Plan (CMP) Required?

For all M&O & Major Site and Facility Contracts Contracts subject to Government Regulation Desirable for service contracts that are complex., high
risk with a high $$ value

How do we develop an effective corporate oversight strategy/CMP?

Begin planning during the earliest stages of the RFP

preparation Review the contract and identify key governmental responsibilities (equipment, receiverships, etc.)
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Contract Management Planning

How do we develop an effective corporate oversight strategy/CMP? (cont.)

Get input from the contractor to ensure critical areas are

identified Identify key contract vulnerabilities or performance risk areas that are inherent in the contract Develop a strategy for managing unique terms and conditions (award term, incentives, etc.) Develop a proactive approach for managing the governmental responsibilities and for mitigating any identified risk areas Formally identify the key contract management team, include their names, responsibilities, authorities and 15 limitations

Contract Management Planning

How do we develop an effective corporate oversight strategy/CMP? (cont.)

Develop training and guidance to help the culture

(infrastructure/people) evolve if site is managing a new contract type (CPIF), Develop an approach for managing the incentive fee arrangements of the contract, and Ensure that other critical focus areas are included management of contractor litigation, partnering agreements, records management, and other site specific challenges.
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Contract Management Planning

How can we use the CMP to ensure successful contract performance?

Coordinate and solicit input from all staff involved in

contract management Conduct a special session with the contractor on the goals and objectives of the CMP and name the individuals (CO, COR, TM, etc.) responsible for its implementation Meet with all concerned parties on a regular basis to address issues Track performance and assess progress against the QASP Address performance risks or deficiencies early Update the CMP as necessary

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Assessing Contractor Performance

Earned Value Management

Contractor use EVM to control cost and schedule

performance as well as report progress against the contract DOE uses EVM to:
Monitor and verify progress on contract costs and schedule

performance Monitor and validate contractor accomplishments on specific fee and PBI incentives Early warning system to identify deficient progress

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Contract Management Planning

What is the CO - Contracting Officers role in EVM?

The CO is responsible for ensuring that EVM is a

requirement in the RFP (when applicable) After award, the CO is responsible for receiving the contract performance reports, approving changes to the system, and generally ensuring that the system requirements are being met The CO relies on subject matter experts for advice on the integrity of the system The CO is responsible for enforcing the terms of the contract and requesting corrective action as necessary

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