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Contract Surveillance

TRICARE Management Activity. HEALTH AFFAIRS. Contract Surveillance. Acquisition Management and Support (AM&S) Contract Operations Division – Falls Church (COD-FC). Agenda. Contract Surveillance Goals Quality Assurance Surveillance Plan (QASP) Surveillance – Execution

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Contract Surveillance

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  1. TRICARE Management Activity HEALTH AFFAIRS Contract Surveillance Acquisition Management and Support (AM&S) Contract Operations Division – Falls Church (COD-FC)

  2. Agenda • Contract Surveillance Goals • Quality Assurance Surveillance Plan (QASP) • Surveillance – Execution • Contract Monitoring Techniques • Surveillance by Contract Type • Documenting Surveillance • Surveillance and the role of Communication

  3. Contract Surveillance – GoalsWhy Conduct Contract Surveillance? • Proper surveillance protects the Government's interest by ensuring that the contractor complies with conditions of the contract • Surveillance facilitates early identification of cost or technical execution issues • Surveillance identifies those areas where the contractor’s obligations are or are not met • Allows for a proactive response • Allows enhanced visibility into how the contract is being executed • Ensures accurate status is available for decision makers • Accurately documents contractor performance • Provides appropriate feedback to the contractor

  4. Conducting SurveillanceWhat to Monitor? • Monitor contractor performance • Focus on the measurements inherent in the performance standards, not on the steps or procedures the contractor employs to provide the service • There are three general performance areas to monitor • Schedule • Cost • Quality (often the most difficult area to measure) • Also monitor other areas that are of interest to the Government, such as Organizational Conflicts of Interest(OCI)

  5. Monitoring for QualityThe Quality Assurance Surveillance Plan • The Quality Assurance Surveillance Plan (QASP) is a key tool to help the Government attain its contract surveillance goals • The QASP is a document that provides a systematic, structured process for the Government to evaluate services that contractors are required to furnish. • Serves as a mechanism to assess and assure contract compliance • Details how and when the Government will observe, test/sample, evaluate, and document contractor performance.

  6. Why is a QASP Important? • The FAR directs that the Government shall perform quality assurance at such times as may be necessary to determine that supplies or services conform to contract requirements. (FAR 46.4) • Recent DoD IG reports cite the lack of QASP as a major factor contributing to insufficient oversight of DoD service contracts, and • Contracting activities supporting TMA (such as USAMRAA) require a QASP to be developed by the Requiring Activity as a key acquisition planning step and forwarded with the acquisition package

  7. How is a QASP Used? • The COR uses the QASP as a planning and communication tool • The QASP spells out methods and metrics to insure consistency and objectivity in the surveillance process • The QASP supports systematic collection and documentation of contractor performance information • Support for performance appraisals • Input on award fees, incentives, and penalties • When shared with the contractor, the QASP can serve as a communication tool, allowing both COR and contractor to focus on what is most important to the Government • The QASP is not required to be incorporated into the contract

  8. Preparation of the QASP • IAW FAR 46.401, the QASP should be prepared in conjunction with the preparation of the statement of work or performance work statement (PWS), and should specify: • All work requiring surveillance, and • The method of surveillance • The QASP and the PWS are two separate documents • However, the QASP includes a portion of the PWS (i.e. the Performance Standards Summary Matrix) • AM&S COD-FC has developed a QASP Template, available as an Appendix on all of the Task Order templates • The Government may review and revise the QASP, consistent with the terms of the contract

  9. Preparation of the QASP(continued) • The activity responsible for technical requirements is also responsible for preparing the QASP. (FAR 46.103) • The Government may either: • Prepare the QASP entirely on its own, or • Require each offeror to submit a proposed QASP for consideration in development of the Government’s QASP (FAR 37.604) • Either way, the Government has the final say • The QASP may be completed in two stages to ensure it captures all of the quality measures in the final contract

  10. Surveillance – Execution • Contract surveillance must be: • Timely • Comprehensive • Systematic • Well documented • May use a surveillance checklist • Where surveillance results show good performance consistently, the amount of surveillance may be adjusted accordingly

  11. Surveillance – Execution (cont.) • Select appropriate techniques for monitoring • Besides deliverables - meetings, phone calls, reports, and contact with other Government officials all play a role in surveillance • When performance is deficient, promptly notify KO

  12. Monitoring Techniques • While surveillance is required by the DFARS, specific methods are not prescribed • Need careful selection of appropriate surveillance method to determine the amount of resources and costs needed to perform the surveillance • Cumbersome and intrusive surveillance methods should be avoided • The Government should seek to gain insight into, not provide oversight for, performance based contracts

  13. Monitoring Techniques- Cont’d • Surveillance techniques include: • Random sampling (works best when number of instances of services being performed is very large) • 100% inspection (use for written deliverables and stringent requirements) • Periodic inspection, judgmental inspection or planned sampling (for evaluation of tasks on other than a pure random basis) • Customer feedback (contact with other Government officials)

  14. Who Participates in Monitoring • The KO has overall responsibility for: • Actions in support of effective contract administration • Compliance with the contract terms • Safeguarding interests of the Government • Ensuring impartial, fair and equitable treatment • COR responsibilities include: • Technical contract administration on behalf of the KO • Ensuring proper Government surveillance • Others who may be involved in contract monitoring • Technical Specialists / Inspectors • Program Manager / Division Chief • Other personnel as assigned or in the course of their duties

  15. Surveillance by Contract Type • Different contract types may require different surveillance approaches • Tailor your approach by contract type so key factors contributing to Government risk or cost are monitored closely • Do careful reviews for all contract types

  16. Level of Effort Monitoring • Applies to cost-reimbursable, time and material (T&M), and labor hour contracts that procure a “level of effort” versus firm fixed price (FFP) • These are “Best Effort” contracting approaches • Contractor is paid based on number of hours worked • Contractor is not required to produce a deliverable at a set price • Surveillance entails ensuring that the Government is in fact getting the level of effort the contractor is billing

  17. Cost-ReimbursableLevel of Monitoring • Number of staff charged to project • Individual hours charged to project • Monthly progress report • Other direct costs • Be familiar with applicable FAR limitation of cost clause (e.g. FAR 52.232-20) requiring the contractor to notify the Government as their expenditures exceed 75% of the cost ceiling

  18. Time and Materials Level of Monitoring • Number of staff charged to project • Individual hours charged to project • Monthly progress report • Must be monitored closely by the government • FAR Part 16.6(b)(1) • No positive incentive for cost control Note: T&M contracts are the least preferred method of contracting in DoD. According to a recent AT&L DPAP memo the use of T&M contracts requires Contracting Activity's HCA approval for POP's over 3 years. Instead, consider using a cost type contract (e.g. CPFF) if the PWS can not be definitive enough to allow FFP.

  19. Firm Fixed Price Level of Monitoring • Quality of services at delivery point(s) • Do services meet Government standards • As specified in the contract • Requires familiarity with applicable industry or Government standards and specifications • Were products delivered on time Note: FFP contracts are the preferred method of contracting in DoD.

  20. Cost Monitoring Level of Monitoring • Under D/SIDDOMS-3, T/AARMS, and TEAMS, TMA contractors are to report costs by task categories • For other contracts, use the AM&S COD-FC suggested format for contractor cost reporting and contract “burn rate” monitoring

  21. Documenting Surveillance Efforts and Results • The best surveillance efforts are insufficient unless they are well documented • Surveillance should be documented as it is performed • COR surveillance documentation: • Is particularly essential for performance based service contracts • Must be accurate, timely and complete • Includes copies of all reports, evaluations, recommendations, surveillance checklists, and any actions related to performance of the Government’s surveillance function • Becomes part of the official contract file • Is the basis for evaluating adequacy of surveillance activity

  22. Potential Dangers of Insufficient Documentation • If surveillance activities are not well documented, the government can incur the following risks: • May have limited assurance that the contract requirements are being met • Risks paying for a level of effort that is not acceptable • May lack sufficient documentation to support their past performance assessment of the Contractor • May be unable to defend a protest • May lose credibility at other “after the fact” hearings

  23. Surveillance and the Role of Communication • Effective surveillance requires clear, mutual, and constant communication between the Government and the contractor • Ongoing communication helps facilitate the following desirable outcomes: • Contractor understands the requirements and roles/responsibilities of government officials who will administer the contract • Attempts to control contractor efforts do not occur except as specifically authorized in contract • Avoids unauthorized personal services relationship • Maintains good lines of authority • Reduces possibility of future misunderstandings

  24. Questions ?

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