Performance Based Service Acquisition (PBSA)

1. Performance Based Service Acquisition (PBSA) Treasury Industry Day July 20, 2005 Patty Hoover IRS Office of Procurement Policy Naomi Marechal TE/GE BSP Acquisition Project Manager

2. Performance Based Service Acquisition • PBSA Definition/Overview • PBSA Goal/How Is IRS Performing • Types of Contracts • What We’re Asking Vendor Community To Do/How We Evaluate • How Do We Get From Here to There?

3. Definition "Performance-based contracting" means structuring all aspects of an acquisition around the purpose of the work to be performed with the contract requirements set forth in clear, specific, and objective terms with measurable outcomes as opposed to either the manner by which the work is to be performed or broad and imprecise statements of work. [Source: FAR 2.101]

4. PBSA Overview • Outcome oriented performance work statement or statement of objective • Measures • Quality assurance surveillance plan • Incentives, as appropriate

5. PBSA Goal/Guidance • OMB Requires That 40% of Eligible Service Dollars for Actions Over $25K Be Performance-Based • Treasury Acquisition Bulletin 04-03 Implements the OMB Requirement • Deputy Commissioner’s Memorandum

6. Where Is IRS In The PBSA Initiative? FY 2004 – 26% of Eligible Service Dollars Were Awarded Performance Based FY 2003 – 9.5% of Eligible Service Dollars Were Awarded Performance Based FY 2002 – 14% of Eligible Service Dollars Were Awarded Performance Based

7. Types of Contracts • Firm Fixed Price • Cost-Reimbursement a. Completion b. Term • Time and Materials/Level of Effort

8. What Are We Asking You To Do? • Thoroughly become familiar with the requirement • Ask questions • Suggest incentives • Possibly develop the QA Plan • Possibly develop the measures • Be ready to be part of the integrated team • COMMUNICATE

9. What Are We Evaluating? • Best Value • Understanding the requirement • Past Performance • Risk Always review and respond to Sections L and M of a Uniform Contract Solicitation or Clauses 52.212-1 and 52.212-2 in a Commercial Solicitation!

10. For More Information… Patty Hoover IRS Procurement Policy (202) 283-1275 patricia.v.hoover@irs.gov http://www.arnet.gov/Library/OFPP/BestPractices/pbsc/home.html

11. How do we get from here to there?

12. PBSA Implementation by a Program • Operating Division: TE/GE • Key TE/GE program participants • Director Business Systems Planning (BSP) • DIO (MITS) • Acquisition Project Manager (Naomi Marechal) • Project Managers (Business & Technical) for Two Non-Majors in Investment Portfolio • COTR • Broad team with IRS Procurement & Contractors

13. Acquisition Vehicles • Existing TIPSS-2 Cost Plus Fixed Fee Term Task Orders with option years delivering • Program & Project Management and Systems Integration • Design, Development and Maintenance • Requirements Development • Supported by 4 different contractors • Use Work Requests to task work • Also used TCV BPA

14. Program Lessons Learned • Incremental steps to incorporate PBSA can improve performance as well as build foundation for implementing broad initiative • Expect team members and stakeholders to have varying degrees of PBSA knowledge and acceptance • Partner with IRS Procurement

15. Program Lessons Learned contd. • Understand & document critical customer and stakeholder objectives & expected results • Understand contractor’s corporate philosophy re: PBSA and understand their business motivators • Develop strategies to deal with funding constraints, such as MITS (PAC 3B) mid-year cuts and Continuing Resolutions

16. PBSA Incorporation Examples • Unable to convert Task Order & Contract type until Level 4 Requirements available • All Work Requests now include specific deliverables & due dates for critical deliverables or work products • Eliminate “see project schedule” references • Contractually binds contractor to deliver • Internalized by contractor resources as PBSA on Task Order that does not have QASP • Helps project managers articulate required services and expected outcomes

17. Incorporation Examples contd. • Implemented Monthly Performance Reviews with standard reporting template used by all Contractors • Uses same data as TIPSS-2 monthly report to IRS Procurement to avoid two sets of data • Review Planned vs. Actual Hours & Costs and Activities at Work Request level • Review Risks, Contract needs, & Action Items

18. QASP Example • Included a QASP in CPFF TIPSS-2 TO for System & Software Design, Development & Implementation • Quality, Schedule, Timeliness and Cost Performance Standard for every Required Service • Required Services tasked in Work Request, such as • Deliver iterative system designs based on Use Cases, Level 1, 2, 3 & 4 Requirements for Government approval • Demonstrate Proof of Concept for recommended BRE and test results in order for Government to make technology and acquisition decision • Deliver a solution for Release 2a – storage and retrieval of EDS Determination letters into/from TEDS image repositories • Using non-financial incentives now; as requirements and process mature, evaluate feasibility of financial

19. For More Information… Naomi Marechal TE/GE BSP Acquisition Project Manager (202) 283-9936 naomi.l.marechal@irs.gov