Allow the contractor to perform and report on

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Allow the contractor to perform and report on surveillance of services as part of their quality
assurance system. Some form of oversight (government QA, third party audit) is needed to confirm
surveillance results.
Remember the following key aspects. Performance metrics are negotiable and, wherever possible,
address quality concerns by exception not inspection. Also, when contractors propose the metrics and
the QAP, these become true discriminators among the proposals in best-value evaluation and source
selection.
STEP
5
: Decide how to measure & manage performance.

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Select only a few meaningful measures on which
to judge success.
Whether the measures are developed by the proposing contractor or by the integrated solutions
team, it is important to limit the measures to those that are truly important and directly tied to the
program objectives. The measures should be selected with some consideration of cost. For example, the
team will want to determine that the cost of measurement does not exceed the value of the informa-
tion... and that more expensive means of measurement are used for only the most risky and mission-
critical requirements.
The American Productivity and Quality Center website* states that performance measures come in
many types, including economic and financial measures such as return on investment, and other quan-
titative and qualitative measures. "Organizations are investing energy in developing measures that
cover everything from capital adequacy and inventory turns to public image, innovation, customer
value, learning, competency, error rate, cost of quality, customer contact, perfect orders, training hours,
and re-engineering results." Each measure should relate directly to the objectives of the acquisition.
Include contractual language for negotiated
changes to the metrics and measures.
One important step the integrated solutions team can take is to reserve the right to change the
metrics and measures. One effective way to do this is for the agency and the contractor to meet regularly
to review performance. The first question at each meeting should be, "Are we measuring the right
thing?"
This requires that the contractual documents include such provisions as value engineering change
provisions, share-in-savings options, or other provisions preserving the government's right to review
and revise.
Apply the contract-type order of precedence
carefully.
Under law and regulation, there is an order of preference in contract types used for performance-
based contracting, as follows:
(i) A firm-fixed price performance-based contract or task order.
(ii) A performance-based contract or task order that is not firm-fixed price.
(iii) A contract or task order that is not performance-based.