Overview
FAR Subpart 37.6 establishes the policies and procedures for Performance-Based Acquisition (PBA), a method of contracting for services that prioritizes outcomes and results over specific processes. This subpart ensures that the government defines "what" needs to be accomplished rather than "how" the contractor should perform the work, utilizing measurable standards and financial incentives to drive innovation and efficiency.
Key Rules
- Mandatory Elements: Every performance-based service contract must include a Performance Work Statement (PWS), measurable performance standards (quality, quantity, timeliness), and a defined method for assessing performance.
- Outcome-Oriented Descriptions: Agencies are required, to the maximum extent practicable, to describe requirements in terms of results rather than specific labor hours or work methods.
- The Statement of Objectives (SOO): Agencies may use a SOO to describe the mission and objectives, allowing offerors to propose their own PWS. While the SOO informs the proposal, it does not become part of the final contract.
- Measurable Standards: Performance standards must be clear and measurable to allow for an objective assessment of the contractor's work.
- Incentives: Performance incentives (such as financial bonuses or penalties) should be used where appropriate and must align directly with the measurable standards established in the contract.
- Quality Assurance: Contracts must be supported by a Quality Assurance Surveillance Plan (QASP) to monitor contractor compliance with the PWS standards.
Responsibilities
- The Government (Agencies/Program Offices):
- Responsible for preparing the SOO or PWS.
- Must establish the "purpose, scope, mission, and constraints" when using a SOO.
- Responsible for evaluating any performance standards or PWSs proposed by contractors.
- Must develop and implement a QASP (though they can request input from the contractor).
- The Contracting Officer (CO):
- Ensures that the solicitation and contract include the required PBA components (PWS, standards, assessment methods).
- Determines the appropriateness of performance incentives.
- Offerors (Contractors):
- Develop and propose the PWS and performance standards when responding to a SOO.
- May be required to submit a proposed QASP for the government's consideration.
- Must innovate "how" to meet the government's "what."
Practical Implications
- Shift in Risk and Innovation: By focusing on results, the government shifts the operational risk to the contractor. This encourages contractors to use modern technology or proprietary processes to complete tasks more efficiently than a government-mandated "how-to" guide would allow.
- Reduced Oversight vs. Increased Monitoring: While the government spends less time managing daily activities (the "how"), it must be more rigorous in monitoring outcomes. If the performance standards are poorly defined, the government may end up paying for services that meet the letter of the contract but not the actual mission need.
- Competitive Advantage through PWS Development: In a SOO-based procurement, the contractor who can propose the most efficient, measurable, and cost-effective PWS gains a significant competitive edge, as they are effectively writing the technical roadmap for the contract.
- Objective Evaluations: The reliance on measurable standards reduces subjectivity in performance evaluations (CPARS), making it easier for both parties to agree on whether the contractor succeeded or failed to meet requirements.