The government-wide commitment was supported by four industry associations representing more than 1,000 companies. They pledged to use dispute resolution mechanisms to avoid protests and disputes, identify services that can be converted into performance-based contracts on a fixed price basis, work with the government to remove barriers to the implementation of this initiative, and identify commercial contractual practices that can be used by the government. However, in certain circumstances (perhaps in high-risk situations or when a lot of unsupervised work is required), it may be helpful to enter into performance agreements with all members of your team. When you think about it, make sure your team members are familiar with the approach and make sure you don`t rely solely on them to manage performance. Everyone needs a good level of trust, respect and communication from their boss! You sit down with Bill to discuss his performance. Again. Performance contracts are a great addition to a performance management system. They improve the accountability of workers and managers and set clear expectations that allow employees to take responsibility for their own performance. Definitions of standard performance, maximum positive and negative performance incentives and units of measurement should be set out in the call.
They vary from contract to contract and are discussed during a source selection. Care must be taken to ensure that the incentive structure reflects both the value of different levels of performance for the government and a significant incentive for the entrepreneur. Performance incentives should be difficult and yet reasonably achievable. The goal is to reward entrepreneurs for outstanding work, but not to punish them for completely satisfying work, but less than exceptional. Under the Navy`s aircraft maintenance contract, the contractor is bound by a performance standard and is authorized to apply best performance practices and management innovations. The contract does not specify how many aircraft captains, mechanics or paratroopers must be part of a crew or at work. OTP Policy Letter 91-2 established the policy for the use of a performance-based approach to contracting for services. Appendix 2 contains a copy of the policy letter. PBSC emphasizes objective and measurable performance requirements and quality standards in the development of service descriptions, the selection of contractors, the determination of contract type and incentives, and contract management. Appendix 3 provides a checklist of key elements of PBSC acquisitions.
If the results of the monitoring are working well on a consistent basis, the scope of the monitoring should be adjusted accordingly. This saves the government money, reduces the contractor`s oversight burden, and recognizes the contractor`s performance. All potentially relevant government policies should be reviewed to determine which should be used in whole or in part. Guidelines that are not necessary or that are only partially applicable should not be referenced or included in their entirety. Negative effects of excessive or inappropriate use of specifications include: confusion or errors in the performance of the work; undermine the government`s ability to apply the required performance; unjustified increases in the cost of services; unjustified dictation of how the work should be done and deterring or preventing contractors from using innovative or cost-effective performance methods. Incentives should be used when they produce better performance and can be positive, negative or a combination of both. They should be applied selectively to motivate the contractor`s efforts that might not otherwise be highlighted and to prevent inefficiency. Incentives should apply to the most important aspects of the work and not to all tasks. Employers should indicate the consequences of achieving or failing to achieve the objectives of the performance agreement. Employees who meet the company`s expectations can be rewarded with a bonus or continuous employment. The Air Force used PBSC for the purchase of a product design.
With a billion-dollar procurement, the streamlined process reduced administrative lead time to procurement by 66%, program staff by 75%, and costs by almost 40%. The tender was only 100 pages long, compared to a previous tender for a similar requirement, which was 1,000 pages long. The program team was reduced from 80 to 100 people to a cross-functional team of 20 people. The draft requirements were communicated to industry and, when the call for tenders was published, the contractors had only one month to respond, which was sufficient given their previous bids. Simple performance requirements, competition and collaboration have been used to create relationships and incentives that have led to exceptional results. Employers should avoid “dictating” their expectations to the employee. Progress is made more quickly if both parties jointly set the objectives before they are defined in the performance agreement. Within the Department of Defense (DOD), the Army Corps of Engineers has implemented a partnership program with its subcontractors and has achieved improved cost, schedule, and performance targets. DOD believes that the use of partnerships in its contracts improves relations and communication between government and industry. Where appropriate, agencies may either specify a specific performance standard or allow the contractor to propose different target levels of service standards and the corresponding price adjustment. This gives entrepreneurs the opportunity to offer what they believe to be the most profitable level of performance. In order to properly assess the alternative levels of standards proposed by the contractor, agencies must carry out market studies on the feasibility of accepting these alternative standards, i.e.
discuss with commercial companies their contractual methods and acceptable levels of standards for the same type of service. The creation of a partnership agreement signed by all parties – contract agent, QAE/COTR, program office and contractor – creates a “buy-in” to the overall goal of satisfactory performance on time, within budget and without any claims. .