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What are the elements of a PBA?

To be considered performance-based, an acquisition should contain, at a minimum, the following elements:

1. Performance work statementdescribes the requirement in terms of measurable outcomes rather than prescriptive methods.

2. Measurable performance standardsto determine whether performance outcomes have been met, defines what is considered acceptable performance.

3. Remediesprocedures that address how to manage performance that does not meet performance standards. While not mandatory, incentives should be used where appropriate to encourage performance that will exceed performance standards. Remedies and incentives complement each other.

4. Performance assessment plandescribes how contractor performance will be measured and assessed against performance standards. This is often referred to as a quality assurance plan or quality assurance surveillance plan.

What are the overall objectives of PBA?

By describing requirements in terms of performance outcomes, agencies can help achieve the following objectives:

Maximize performance: PBA enables a contractor to deliver the required service by following its own best practices. The use of incentives further motivates contractors to furnish the best performance of which they are capable.

Maximize competition and innovation: Encouraging innovation from the supplier base by using performance requirements maximizes opportunities for competitive alternatives in lieu of government-directed solutions.

Encourage and promote the use of commercial services: The vast majority of service requirements are commercial in nature. Use of FAR Part 12 (Acquisition of Commercial Items) procedures minimizes the reporting burden and reduces the use of government-unique contract clauses and similar requirements, which can help attract a broader industry base.

Shift the risk: Much of the risk is shifted from the government to industry because contractors become responsible for achieving the objectives in the work statement through the use of their own best practices and processes.

Achieve savings: Experience in both government and industry has demonstrated that use of performance requirements results in cost savings.

What are some examples of performance standards?

The following are just a few examples of general performance standards that might be adapted to specific requirements:

Response times, delivery times, timelinessmeeting deadlines or due dates, adherence to schedule

Error ratesnumber of mistakes/errors allowed in meeting the performance standard

Accuracy ratessimilar to error rates, but most often stated in terms of percentages

Completion milestone rates"x" percent complete at a given date

Cost controlkeeping within the estimated cost or target cost (applies in cost-reimbursement contract arrangements).

What are some of the different types of incentives that can be used in PBA?

Incentives are an essential part of PBA and can be monetary, non-monetary, positive, or negative. They can be based on cost, schedule, or quality of performance. Regardless of the final composition and structure of the incentives, the goal is to encourage and motivate the best-quality performance. Some different types of incentives are:

Cost-based incentives. Performance incentives are designed to relate profit or fee to results achieved by the contractor in relation to identified cost-based targets.

Award-fee contract arrangements. Using evaluation factors established in an award fee plan, award-fee contracts are a tool for subjectively assessing contractor performance for a given evaluation period. (See Questions 137 and 140 for further details regarding these types of contracts.)

Schedule incentives. Schedule incentives focus on getting a contractor to exceed delivery expectations. They can be defined in terms of calendar days or months, attaining or exceeding milestones, or meeting rapid-response or urgent requirements.

Past performance. Past performance information can affect decisions to exercise options or to make future contract awards. Thus, past performance assessments are a quick way to motivate improved performance or to reinforce exceptional performance.

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