Effective Contract Management Planning

1
Effective Contract Management Planning

• For Performance-Based Contracting

2
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

3
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

4
The Performance-Based Contract

• What are the elements of Performance-Based
  Contracting?
• FAR 37.6, 16.402 and DEAR 917.601 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, Chapter 70.8
• Performance Based Contracting Guide provides
  guidance on structuring effective incentives

5
The Performance-Based Contract

• What are the elements of Performance-Based
  Contracting? (cont.)
• In 1997 OFPP 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

6
What are the Contracting Officers
Responsibilities in Performance-Based
Contracting?

• FAR 37.106 and 37.602-4
• 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.

7
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!

8
Performance-Based Contracting at DOE

• Major Site and Facilities Contracts
• General Work scope (MO)
• Spallation Neutron source
• National Ignition Facility
• Major projects
• Site Clean-up (Rocky Flats, Mound, Fernald)
• Services
• Guard services, information technology and
  janitorial
• Contract Type Incentive Structure
• Select contract type and incentive structure that
  best fits the requirements

9
Contract Management at DOE

• Contract Management
• DOEs major site and facility contracts are
  usually long-term and involve a complex mix of
  sponsors and stakeholders
• Integrated Team Members (CO, COR, Technical
  Monitor, Federal Project Director, HCA,
  Headquarter, CFO, contractor, etc.)
• DOE Contract Management Focus Areas
• Project Management, change control, baseline
  management, technology, performance, quality
  assurance, fee and incentive management,
  contractor human resources, etc.

10
Key Contract ManagementResponsibilities and
Focus Areas

• CO Contract Management Responsibilities
• Ensuring performance of all necessary actions for
  effective contracting (FAR Part 42),
• Ensuring compliance with the terms of the
  contract,
• Safeguarding the interests of the contractual
  relationships,
• Requesting and considering advice of specialists
  in audit, law, engineering, and other fields, as
  appropriate,
• Monitoring Performance, and
• Enforcing the Governments rights when necessary.

11
The Contract Management Team

• Success Depends on an Integrated Team!
• Contracting Officer, COR, 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

12
Key Tools of Contract Management

• Quality Assurance Surveillance Plan
• Contract Management Planning
• Earned Value Management

13
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

14
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

15
Contract Management Planning (AL2003-02)

• When is a Contract Management Plan (CMP)
  Required?
• For all MO Major Site and Facility Contracts
• Contracts subject to DOE O 413.3
• 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 (GFI, equipment, receiverships,
  etc.)

16
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 limitations

17
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.

18
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

19
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

20
Contract Management Planning

• What is the 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