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The most efficient organization misperception. (Views on Logistics).

So XYZ Air Force Base recently completed an A-76 cost comparison study. Five different contractors submitted proposals in hopes of winning the contract. Among them, a contracting officer chose one contractor as having the most advantageous proposal. Manpower professionals then compared the cost of this proposal to the cost of conducting the operation if the team were comprised of civil service employees. This team, also known as the most efficient organization (MEO), and the five contractors based their costs on the statement of work (SOW). The result: the most efficient organization won the competition. The next step? Throw the SOW out the window. Does this really happen? Is the MEO held to the same performance standards as a contractor would have been? While this misperception may arise from base to base and study to study, on the contrary, the MEO is required to comply with the SOW. The key difference is that the MEO does not have a contract per se that uses funds (and the threat of withholding them) to mo tivate contract compliance. Instead, other avenues are available to enforce compliance with the SOW.

The issue is critical because the Air Force needs someone--regardless if it is the contractor or the MEO--to satisfy the requirements found in the SOW. The only question that an A-76 study answers is, who can do it cheaper? Either way, the job still needs to get done. This issue is also important because of the fairness involved in competing out the noninherently governmental activity with private industry. Contractors who bid on the solicitation would want to ensure that the winning MEO did not underbid the contract.

Contrary to popular belief, the MEO monitors its own performance in terms of compliance with the SOW. According to Air Force Instruction (AFI) 38-203, Commercial Activities Program, the MEO is required to maintain a quality control program, which is:

An internal program used by functional managers to ensure that MEOs are being effectively and efficiently accomplished on a daily basis based on the requirements and quality standards established in the PWS [same term as the SOW]. The authorizations necessary to staff this quality control program are included and costed in the MEO staffing. (1)

In addition to the quality control personnel within the MEO, functional commanders have oversight of the MEO. (2) The functional commander is responsible for the SOW operation, regardless of whether the function is conducted by a contractor or an MEO.

On a local level, if issues are raised about an MEO's performance, then the functional commanders need to be contacted to seek clarification and correction. For example, if one has a complaint about an MEO that is presumably not correctly performing its mess attendant duties at a dining facility, the customer should consult the functional commander for the dining facility.

Functional commanders have many different means of controlling the MEO's performance. They can motivate individuals with performance appraisals, time-off awards, performance cash awards, and quality-step-increase promotions. For unacceptable performance, they can place individual employees into a management plan or simply provide extra management attention on problem areas.

Installation commanders are required to hear a semiannual briefing on the health of the services contract program. (3) Functional commanders are typically invited to brief the status of their service contract performance. For those who do not believe MEOs are required to comply with the SOW, why not include the status of the MEO's performance in these briefings as well?

The functional commanders are entrusted with ensuring that MEOs have been implemented in accordance with the SOW, and the MEO is subject to scrutiny by outside organizations as well. Post-MEO reviews are required, per AFI 38-203. (4) They will be conducted annually on at least 20 percent of the MEOs that have been implemented throughout the Air Force. The post-MOE reviews determine if the MEOs have performed within the requirements of the SOW, as measured by workload, responsiveness, and quality of work. The Air Force Audit Agency (AFAA) determines which MEOs will be audited. An organization could recommend that the AFAA include a particular MEO in its review.

Further, the servicing manpower and organization office monitors the MEO's compliance with the SOW. However, current manning authorizations do not provide adequate support for the the servicing manpower and organization office to provide day-to-day oversight of the SOW. Air Force Manpower, Reserve Affairs, Installations, and Environment allocates authorizations for contract administration, (5) but the Air Force instruction is silent on allocating authorizations for MEO administration. Therefore, the servicing manpower and organization office most likely reverts to the least manpower-intensive quality assurance method: customer complaint. While AFI 63-124, Performance-Based Service Contracts, directs quality assurance personnel to rely on this method (6) (this method best reflects customer commitment), a quality assurance surveillance plan typically uses a variety of methods--not just one--to determine if contract requirements are being met. If the servicing manpower and Major Kehrley is commander, 7th Munitio ns Squadron, Dyess AFB, Texas.

organization office had sufficient manning to use them, the other methods include trend analysis, periodic inspections, contractor metrics, random sampling, customer complaint, third-party audits, 100-percent surveillance, and a quality index. (7) However, even with sufficient manning to perform quality assurance, they do not have a mechanism to enforce SOW compliance.

Therefore, some people have suggested that the MEO could be treated like a contractor operation. In other words, could one apply the same contract enforcement mechanisms to the MEO? To implement this approach, the contracting officer needs to control the civilian pay funds. Money is the motivator for contractors to comply with the contract requirements. If the requirements are not met, then the contracting officer may use the inspection of services clause (8) to direct the contractor to reperform the services (at no additional expense), thereby conforming to contract requirements. This is the preferred course of action. If reperformance is not reasonable (for example, not enough time is available to do the job again), then the contracting officer may reduce the contract price to reflect the fact that services were not performed in accordance with the contract. It would not be prudent to pay for services when they were not received. However, there would certainly be legal or union problems associated with redu cing government civilian salaries for work already performed.

While the inspection of services clause is a negative motivator, a positive motivator exists, and it can be used regardless of whether civilian pay funds are given to the contracting officer. If the MEO were treated like a contractor, then a suitable reward for outstanding performance could be the award term. This arrangement rewards the service provider with additional contract duration for performance that exceeded the contract terms. However, current policy does not specifically address an award-term arrangement. While it states that the MEO is valid for 5 years, (9) an award-term arrangement would require some flexing of the 5-year period to provide the incentive. The award-term arrangement is almost possible; perhaps the next revision of AFI 38-203 would allow the opportunity to treat MEOs even more like contractors in this regard.

For those who do not believe an MEO is required to comply with the SOW, it is time to open the window and retrieve the contract. There are many faces (the functional commander, manpower office, outside audit agencies, and possibly the contracting officer) that exist to ensure the MEO is performing. After all, the A-76 study is supposed to result in cheaper cost, not cheaper performance.


(1.) AFI 38-203, Commercial Activities Program, 1 Aug 00, para, 98.

(2.) API 38-203, para 19.2.5, 200.

(3.) AFI 63-124, Performance-Based Service Contracts, 1 Apr 99, para, 3.

(4.) AFI 38-203, para 20.2.2, 205.

(5.) AFI 38-203, para 19.5.2, 203.

(6.) AFI 63-124, para 4.1.5, 7.

(7.) Ibid.

(8.) Federal Acquisition Regulation, Part 52.246-4.

(9.) AFI 38-203, para, 200.

Captain Wright is in the Logistics Career Broadening Program at Oklahoma Air Logistics Center, Tinker AFB, Oklahoma.
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Article Details
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Author:Wright, Jonathan L.
Publication:Air Force Journal of Logistics
Date:Sep 22, 2002
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