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PBSA at the Pentagon.

Acquisition in the federal government is in the midst of an immense change. Contracting for services is increasing, as are outsourcing and the technological complexity of requirements. Further, as agency procurement budgets have declined, customers expect acquisition managers to provide improved performance with reduced staffs. To cope with these trends, acquisition managers must be skilled not only in the basics of contracting, but also in the application of leading-edge practices that enable them to perform their jobs more efficiently in a rapidly changing environment. One such practice is performance-based services acquisition (PBSA).

The Pentagon Renovation Program (PENREN) team, which is responsible for renovating 6.5 million square feet of office space at the Pentagon, used a PBSA approach for its acquisition of information technology (IT) telecommunications services. For the purposes of this renovation effort, the Pentagon has been divided into five "wedges." As a result of the September 11, 2001, terrorist attack, nearly a third of the building, or 2 million square feet, was damaged by fire, smoke, water, and toxic mold. Within that area, the 400,000 square feet of office space that was directly damaged by the airplane collision required complete demolition and reconstruction. Half of the damaged area was within Wedge 1, which had been newly renovated just prior to September 11, and the other half was within Wedge 2, where renovations were under way.

The PENREN team worked around the clock to meet a self-imposed September 11, 2002, deadline for having the 2 million square feet of damaged office space rebuilt, reopened, and ready for business. Indeed, what they have accomplished is an unforgettable story.

The PENREN acquisition team used a PBSA approach to provide a total systems performance integrator to design, build, integrate, and make operational a modem IT solution for the tenants in wedge 2. The systems integrator is required to provide responsive, customer-focused service. A key performance goal for the acquisition is providing smooth, seamless, transparent, and efficient transition services for tenants.

PBSA Defined

A PBSA is one that "involves strategies, methods, and techniques for acquiring services that communicate the desired end result rather than dictating detailed performance processes. [It is] a method for acquiring what is required and placing responsibility for how it is accomplished on the contractor."

A major objective of PBSA is to save money. An added objective is to give contractors the freedom to determine how best to meet the government's requirements. This freedom fuels innovation.

PBSA results in a contract that specifies what is required and makes the contractor responsible for determining the best method for accomplishing that end result. To be performance-based, a contract must:

* describe what is required;

* establish performance standards and acceptable quality/service levels;

* identify assessment/evaluation techniques that will be used; and

* prescribe, if appropriate, any applicable incentives.

The Change Management Center

In today's environment, with fewer people to do the work and extra emphasis on doing more with less, it is common to find overloaded acquisition managers, who are less motivated to attend formal training. Even when these managers attend formal training, it is not always relevant to their jobs.

The U.S. Department of Defense (DOD) Change Management Center (CMC) uses an innovative, time-saving delivery process called applied action learning. Delivered through "Action Workshops," applied action learning uses facilitated processes to assist multifunctional acquisition teams in drafting performance-based statements of work.

The facilitators use individual and group exercises to draw out a team's knowledge and expertise. Then, the facilitators and team together draft the performance-based documents underlying the specific solicitation and contract. This process "maximizes learning outcomes while minimizing valuable time spent off the job," according to Greg Macfarlan, a Logistics Management Institute senior research fellow and Action Workshop facilitator.

Through preliminary online training courses, the CMC familiarizes participants with the principles and practices they will apply in an Action Workshop. In essence, the CMC combines applied learning and just-in-time training for multifunctional teams that require retooling of both skills and processes to implement PBSA.

Meeting the Pentagon's Needs

Recently, the CMC facilitated an Action Workshop for the DOD'S PENREN team. The program manager of PENREN oversees the complex, multiyear renovation program that affects every aspect of the Pentagon's infrastructure, from restoring the offices damaged on September 11 to renovating the entire building structure, including designing, developing, and implementing a integrated telecommunications system and infrastructure. The U.S. Army's program executive officer for enterprise information systems (PEO/EIS) is assisting in PENREN's telecommunications upgrade.

These organizations sought the CMC's help to restructure an existing indefinite-delivery/indefinite-quantity (IDIQ) contract supporting the telecommunications upgrade to a performance-based contract vehicle. The original IDIQ contract lacked performance measures and contained an unwieldy 80-page statement of work. The restructured statement of work now consists of 20 pages and is written in plain, performance-based language. With the CMC's help, the team revamped the award-fee plan to bring it more in line with industry standards and to set aside a portion for flow-down from PENREN to the prime contractor and its subcontractors.

During the workshop attended by PENREN and PEO/EIS personnel, as well as representatives from the contractor and subcontractor communities, the CMC staff steered this diverse, cross-functional team. The focus was on desired outcomes such as customer satisfaction with telecommunications services both during and after renovation. The team couched requirements to engender customer satisfaction; for example, there is now a requirement for the telecommunications network to sustain an overall availability of 99.99 percent.

In keeping with the tenets of PBSA, the contract's "how-to" is left to the contractor, thereby allowing it to employ an evolutionary strategy that takes advantage of foreseen technologies and incorporates them into the new telecommunications infrastructure. Furthermore, the contractor is required to identify and incorporate future technologies with a well conceived technology assessment and insertion strategy.

The Payoff

The CMC Action Workshop improved the team's activities in support of PENREN by helping it:

* convert to a total system performance responsibility requirement,

* increase opportunities for cost savings,

* develop performance standards and measures,

* improve understanding of PENREN's objectives, and

* increase customer satisfaction.

Under the new performance-based contract, customer satisfaction will increase, the award fee is measurable and manageable, and contractors can be held accountable to the performance standards they helped to develop.

Engage the CMC for Your Program

For more information or to engage the Change Management Center (CMC), contact the Change Management Center, Office of the Secretary of Defense, at 703/614-7523. Or visit the CMC online at


(1.) Department of Defense Change Management Center, "Glossary of Terms," DOD Change Management Center Action Workshop Attendees Information Packet, July 2002.

About the Authors

JOHN B. JENNINGS and CLYDE P. JACKSON, JR., CPM, APR are research fellows at the Logistics Management Institute in McLean, Virginia. Jackson is a member of the Capital Area Chapter. Send comments on this article to
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Author:Jennings, John B.; Jackson, Clyde P., Jr.
Publication:Contract Management
Date:Dec 1, 2002
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