Program Managers Must "Turn Loose" for Performance-Based Contracting to Work Government program managers will have to give up some control if performance-based contracting is to work, says David Eary, president of the consulting firm Government Contract Services Co. in Pleasant Hill, CA. “Program managers like it done their way,” he said in an interview. “It’s hard for the government to turn loose.” An interagency working group under the Office of Management and Budget has urged that performance-based acquisition be used in at least half of all services contracts by fiscal 2005. The Defense Department has already adopted that 50% goal. The 2004 Defense Authorization Act gives agencies new incentives to use performance-based acquisition by incorporating provisions of the Services Acquisition Reform Act (SARA). When services are purchased through a performance-based contract worth up to $25 million, those services can be considered commercial items and can be acquired using the simplified provisions of Part 12 of the Federal Acquisition Regulation. While performance-based contracting is simple to explain – the government tells contractors what it wants and the contractors propose the best way to do it – it is difficult to implement. Eary said some solicitations masquerade as performance-based, but adds, “I have yet to see one that’s real.” He says contracting officers and program managers should “summarize in one paragraph what (they) want done, then establish milestones and standards that have to be met.” For contractors, a key requirement is to make sure that the performance standards “are attainable, measurable and objective,” he said. The OMB working group, in its July report, recommended changes in the Federal Acquisition Regulation to give agencies more flexibility in using performance-based techniques. OMB officials have said that new rules are being drafted. Robert Burton, acting administrator of federal procurement policy at OMB, says the rules should clear up some confusion and inconsistencies in how different agencies define their terms. (SAA, 11/28) Implementing the techniques “requires a definite shift in the way government thinks,” Eary said. The working group’s report is at http://www.whitehouse.gov/omb/procurement/0703pbsat.pdf. OMB’s guides to performance-based contracting are at www.arnet.gov.