Effective Contract Management Planning

1. Effective ContractManagement Planning For Performance-Based Contracting

2. It’s 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? • Government Protocols 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 • Performance Based Contracting Guides – provides guidance on structuring effective incentives

5. The Performance-Based Contract • What are the elements of Performance-Based Contracting? (cont.) • In 1997 Rules 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? • Other Contracting Rules Require: • 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. Contract Management at Governement Entities • Contract Management • Government Agencies major site and facility contracts are usually long-term and involve a complex mix of sponsors and stakeholders • Integrated Team Members • Government Contract Management Focus Areas • Project Management, change control, baseline management, technology, performance, quality assurance, fee and incentive management, contractor human resources, etc.

9. Key Contract ManagementResponsibilities and Focus Areas • Contract Management Responsibilities • Ensuring performance of all necessary actions for effective contracting • 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 Government’s rights when necessary.

10. The Contract Management Team • Success Depends on an Integrated Team! • Contracting Officer (CO), 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

11. Key Tools of Contract Management • Quality Assurance Surveillance Plan • Contract Management Planning • Earned Value Management

12. Ensuring the Quality of Performance • QASP • Develop early - during the early stages of the RFP (SOW) • Tool to evaluate contractor’s 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

13. 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

14. Contract Management Planning • When is a Contract Management Plan (CMP) Required? • For all M&O & Major Site and Facility Contracts • Contracts subject to Government Regulation • 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 (equipment, receiverships, etc.)

15. 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

16. 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.

17. 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

18. 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

19. Contract Management Planning • What is the CO - Contracting Officer’s 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

20. Thanks and Kindest Regards, AAPM