Foreword

Table of Contents

Introduction

Planning & Contract Placement

Statements of Work

Contract Provisions

Labor Category Descriptions

Proposal Preparation Instructions

Source Selection

Samples

PLANNING & CONTRACT PLACEMENT

The need to place a services contract should never come as a surprise to the program manager or contracting officer. This type of requirement can be anticipated and properly planned with minimal expenditure of time and effort. Unfortunately, many acquisition professionals focus on the hardware side of the program, almost to the exclusion of the services, which are also critical. The prudent program manager will review service contracting status as part of the monthly or quarterly program review with the program team.

The contracting office and each Procuring Contracting Officer (PCO) should keep an inventory of open service contracts by customer for ready reference and as an aid in the initiation of planning for follow-on contracts. A graphic inventory of activities looking out for at least two years is most appropriate where many contracts are involved. This is the only practical way to ensure that planning will commence in sufficient time to allow for overlapping coverage. Sufficient time must be allowed for the delays and resolution of problems which may be encountered in contract placement, and a two month phase-in, phase-out period should be built into the schedule to enable a smooth transition in the event of a change in contractors. While there is no fixed format for a graphic inventory, the following approach has proved to be an extremely valuable tool for a contracting office with dozens of services contracts to track and manage:

Build an electronic matrix array in landscape format. The first 4 columns are labeled: customer, contract number, company name, and expiration date. The next 36 columns are cells representing each month in this year, next year, and the following year. The columns are filled in with letter codes to indicate: expiration date (X), option due (O), target award (A), option not exercised (N), planned early option exercise (P), etc. The following is a highly truncated example of this contract management tool:

Periodic reviews of such a graphic inventory will enable workload planning and scheduling, along with timely option exercises and initiation of follow-on contracts. A PCO with a dozen or more active services contracts can not provide quality support to customers without such a tool. DFARS Part 207 requires a written acquisition plan for the acquisition of services estimated at $30 million or more for all years or $15 million or more for any one year. The content of written acquisition plans is specified in FAR 7.105 and DFARS 207.105. It should be noted that FAR 7.105 requires acquisition plans for services, "describe the strategies for implementing performance-based contracting methods or shall provide rationale for not using those methods." In preparing the written acquisition plan, some items delineated in the regulations will be not applicable to services. Such items should simply be designated as "not applicable". This will allow the acquisition team to focus on the items in the acquisition plan that are very important, such as: acquisition streamlining, competition, source selection procedures, inherently governmental functions, and milestones for the acquisition cycle.

Most service contracts will be below the threshold for a written acquisition plan. Being below the threshold only relieves the acquisition team of preparing a written plan that will be signed and approved - it does not relieve them of the planning function. Planning for a follow-on services contract should be underway a year before the present contract expires. Use extreme care here: If the utilization has been heavier than anticipated, resulting in the early exercise of options or the early expenditure of ceiling, the contract will expire earlier than anticipated - plan accordingly. In planning for the follow-on contract, the acquisition team should review customer satisfaction with the current contract and the emerging program requirements:

Is a different strategy appropriate?

Is the current contract performance-based?

Are the requirements somewhat different than they were when the current contract was written?

Are there best practices or lessons learned to be incorporated?

Was the current contract sized correctly?

Are there contingencies that should be built into the follow-on contract?

Was real competition obtained on the current contract or did something in the solicitation inhibit real competition?

In short, the acquisition team should take a critical look backward before moving forward. Another reason for the critical look backward is that the acquisition team will most likely be different people than were on board when the current contract was planned and awarded. While upward mobility and promotions are great for the individuals, they wreak havoc with the corporate memory in many organizations. It will seldom be appropriate for the follow-on contract to look exactly like the current contract. The follow-on contract should be better than the current contract as a result of lessons learned and acquisition streamlining. Mr. Douglass briefly addressed this issue in a memorandum for distribution of 27 January 1998:

"As a former contracting officer, I know how easy it is to just mimic prior RFPs. It takes time and work to sift through all the issues and eliminate old and unnecessary RFP clauses and requirements. In fact, just as Dr. Gansler, I have noted a tendency for us to allow RFPs to grow in size and complexity. We can and must see that this does not happen."

The acquisition team planning for a new services requirement will face different challenges, lacking a current contract to improve upon or baseline for correct contract sizing and strategy. In this situation it is a good idea to use the activity's most recently awarded services contract as a departure point, consult with other programs of similar size and complexity regarding contract sizing and labor mix, and take full advantage of the samples, lessons learned and sage wisdom of experience which is available.

The magnitude and skill mix of the service contracting requirement must be defined early on. A high degree of realism, judgment and conservatism is required at this point of the acquisition planning. There is some strange fascination with dramatic overstatement of requirements on the extremely popular indefinite quantity contracts: The contract is written for many times a reasonable expectation of the requirement, with a miniscule minimum guarantee. Working with an average fully burdened rate of $35 per hour, the scenario plays out as follows: The real requirement is 100,000 hours, but the contract maximum is written as 1,000,000 hours with a 30,000 hour minimum guarantee. The budget of $3.5 Million supports the real requirement. The budget will cover more than three times the minimum guarantee, but is an order of magnitude short of the contract ceiling. What has been accomplished in this scenario? The Program Manager will boast of having a million-hour contract (and put it on his resume). The Contractor's CFO will boast of having a million-hour contract (and assign it to the bank to secure a huge line of credit). The taxpayer is a big loser in this scenario, because the proposal preparation costs, which will be recovered under General and Administrative expenses, and the proposal evaluation time and costs will be radically increased by the overstated requirement. If the contract is cost reimbursement type, the contractor may staff up in anticipation of a larger requirement and pass these costs on to the Government. This overstatement of requirements may also become the basis of a future claim. In one such case, a prudent contractor staffed up to the contractually stated estimate of the requirement, hiring and moving dozens of employees coast to coast at a cost of millions of dollars to the Navy. When it became obvious that the contractually stated estimate was exaggerated by a factor of five, the staff was reduced and relocated. Upon establishing the true magnitude of the requirement, a meaningful minimum guarantee must be established. It is important to strike a delicate balance between the competing interests of affordability and economy. A higher minimum guarantee will increase industry interest in participating in the competition; the turnover of personnel will be lower due to the anticipation of stable contract utilization; and the quality of contract performance will be enhanced. One contracting office routinely writes contracts with a 50% minimum guarantee after thoroughly wringing out the requirements with the Program Manager and Business Financial Manager. These contracts experience routine utilization of 80% - 100%, providing an environment of stability and predictability in which outstanding quality services are provided to the Navy. This stability and predictability enhances the industry's ability to plan, manage, and make a profit.

Bundling is an important issue that must be addressed early in the planning cycle. Bundling relates to the consolidation or combination of requirements into one contract. Conversely, unbundling - breaking a requirement into several pieces - may be a strategy worthy of exploration. Bundling has the potential to run contrary to public policy, thus inviting congressional assistance and additional legislation. Public Law 102-366 was enacted 4 September 1992 with the intent of prohibiting bundling which would have negative impact on the small business community, and the FY-1998 Defense Authorization Act requires congressional notification of any decision to bundle depot work. While the GAO has been fairly receptive to acquisition reform initiatives, there is indication that the GAO considers bundling to be an anti-competitive initiative. The GAO ruled against the General Services Administration in one bundling protest, B-265751.2. By the end of this fiscal year, the GAO will rule on a bundling protest against the U.S. Air Force: B-280194. A decision to sustain this latter protest will clearly put acquisition professionals on notice to be more judicious in avoiding bundling.

In addition to small business and anti-competitive concerns, preservation of the business base may be a significant consideration in avoiding bundling. In one case, a Navy contracting office combined the requirements from a dozen different contracts into one. This strategy was touted as an initiative in efficiency and economy; however, the impact on the local contractor base was devastating, especially to the small business community.

The Naval Surface Warfare Center (NSWC) reported successful bundling of food service and desk clerk support at Wallops Island. This procurement was set aside for Small Disadvantaged Businesses, generated additional competitive interest, was awarded on a greatest value basis, yielded considerable cost savings, and has resulted in superior contractor performance. The Naval Air Warfare Center Training Systems Division (NAWCTSD) Engineering Support Services Contract Team reported the successful combination of two requirements into a best value small business set aside, which resulted in the award of three contracts under multiple award procedures. The Aegis support services competition team reported successful unbundling of requirements. Their acquisition strategy was to break the existing omnibus support services contract into two components to both increase competition and structure a higher technical contract necessary to support emerging technologies and weapon system concepts.

Small business has some role in every Navy services acquisition. An important element in the acquisition strategy for each service contract is determination of what role small business will play. (While this guide uses the term "Small Business", the comments and strategies discussed also encompass Small Disadvantaged and Woman-Owned Small Businesses, and Historically Black Colleges, Universities and Minority Institutions.) A review of the size standard threshold by Standard Industrial Classification (SIC) is in order to determine how large a firm can be and still be considered a "small business" for your acquisition. (The SIC for many professional services will be found in Major Group 87, "Engineering, Accounting, Research, Management and Related Services".) For some codes, the threshold is $20 Million per year in sales, which can represent a firm of about 200 employees.

In addition to being politically correct, setting aside service contracting work for small business is an extremely efficient and effective way to fulfill the requirements.

Small business strategies include total set asides, partial set asides, and required subcontracting. For a relatively small requirement (consuming no more than half the SIC annual threshold) that does not require a wide variety of technical disciplines, the preference would be a total set aside. To illustrate the converse: If the size standard is $20 Million per year in sales and the acquisition being planned is budgeted at $15 Million per year, the relative size should discourage a small business set aside.

One strategy for a partial set aside is depicted by SAMPLE 10 in the section of this guide entitled, "Source Selection". In this sample multiple awards are anticipated: one unrestricted, one to small business, and one to a section 8(a) firm. Strategies for requiring small business subcontracting in performance of the contract are provided in "Proposal Preparation Instructions" SAMPLE 7 and "Source Selection" SAMPLE 12.

Consider the historic record for the requirement: If we are planning a follow on to a contract awarded four years ago as a set aside - and only one technically acceptable proposal was received - the best strategy is most likely a full and open competition. If the contract was awarded to a small business four years ago as a result of a full and open competition, the best strategy is most likely a set aside. If the incumbent contractor has graduated from the small business or 8(a) program and has provided quality services to the Navy, consider conducting the follow on competition in such a manner that the incumbent contractor can participate.

Contract type is an appropriate topic for discussion in developing the strategy and planning for award of a service contract. Contract type should be viewed as a wide spectrum, a continuum, rather than a binary issue. While types may be viewed as fixed price or cost reimbursement, there are many variations between the extremes that provide sound business approaches to service contracting. FAR Part 16, Types of Contracts, or a contracting textbook should be consulted as a reference if the practitioner is not highly experienced in this area. The preferred type is firm fixed price, but it may be impracticable to draft a statement of work that precisely describes and defines the parameters for performance over the entire contract term. A close variation would be the fixed price menu, which establishes firm fixed prices for each small segment of the statement of work, with the contractor being paid for the number of segments performed. As an example, one aircraft maintenance contract contains a fixed price menu for engine overhaul, propeller overhaul, aircraft inspection, aircraft repainting, aircraft preservation/depreservation, oil analysis and landing gear overhaul. This is an extremely appropriate way to address payment for performance based statements of work that will not be compensated based on the hours worked. The old phrase "piece work" is somewhat descriptive of this approach, with the "piece" being a job, a day, a month, a class, an aircraft, etc.

Other variations on the fixed price theme include time and materials contracts with fixed fully burdened labor rates and fixed burden rates for cost reimbursable line items; time and materials contracts with fixed fully burdened labor rates which include the travel and other direct costs; time and materials contracts with fixed fully burdened labor rates and cost reimbursable travel, other direct costs, and their burdens; and fixed price level of effort contracts. Cost reimbursable contracts, especially Cost Plus Fixed Fee level of effort, should be avoided as they provide a strong disincentive for cost control, efficiency, and professional management. If 90% of the requirement can be precisely described and defined, make that majority of the contract fixed price, and include a cost reimbursable line item to catch the small portion which is not susceptible to fixed pricing. Segregate the unavoidable portion of the contract that has to be cost type.

Competitive acquisition should be the only way to place our Navy service contracts, and the best value approach is the only way to conduct these competitions. Best value will not be addressed in detail in this desk guide, because it is being done fairly well and numerous solid references are available. Policy is provided in ASN (RD&A) memo of 22 March 1991, "Best Value Contracting Policy", and helpful hints are available on the Navy Acquisition Reform Office Home Page at www.acq-ref.navy.mil/turbo/13.htm. Best Value involves making the source selection decision based on factors in addition to cost. In contracting for professional services, such factors will most likely include the quality of the key personnel being proposed. This quality is readily measured in terms of education and experience against benchmark labor category descriptions. Under the theory of best value, we are willing to pay a price premium for a proposal that exceeds the benchmark. In service contracting this means key personnel who have additional education and/or experience, for which they earn premium compensation. These key personnel are the cadre that will make contract performance highly successful or cause it to be mediocre. Key personnel will represent less than 20% of the direct labor hours. In excess of 20%, virtually everyone is called "key", the contract is not performance based, and the contract is at risk of violating personal services prohibitions.

It is not uncommon to pay a substantial price premium to obtain quality services in best value competitive source selections. In one case, a Navy contracting office paid a premium in excess of 40% to select the best value offeror, and successfully defended vigorous GAO protests by lower priced offerors. Stability of personnel is essential to quality performance of service contracts; however, if we paid a price premium to obtain higher qualified key personnel, it is critically important that higher qualified personnel work on our contract. SAMPLE 7, SAMPLE 8, and SAMPLE 9 in the section of this guide entitled "Contract Provisions" provide examples of language to guard against trading down from what was competitively proposed in terms of key personnel qualifications. The language in these samples effectively raises the bar on qualifications from those stated in the labor category descriptions:

"Proposed substitutions of key personnel shall meet or exceed the qualifications of personnel for whom they are proposed to replace."

"All proposed substitutes shall have qualifications equal to or higher than the qualifications of the person being replaced."

"Any proposed substitute must have qualifications equal to or superior to the qualifications of the incumbent."

The theme is consistent: high quality is important to the customer at source selection and in every day of performance throughout the contract term.

The strong preference for multiple awards of larger and longer-term service contracts was included in FAR Part 16 as a result of the Federal Acquisition Streamlining Act (FASA):

"If an indefinite-quantity contract for advisory and assistance services exceeds three years and $10,000,000, including all options, multiple awards shall be made unless-(A) The contracting officer or other official designated by the head of the agency determines in writing, prior to issuance of the solicitation, that the services required under the task order contract are so unique or highly specialized that it is not practicable to award more than one contract. This determination may also be appropriate when the tasks likely to be issued are so integrally related that only a single contractor can reasonably perform the work;
(B) The contracting officer or other official designated by the head of the agency determines in writing, after the evaluation of offers, that only one offeror is capable of providing the services required at the level of quality required; or (C) Only one offer is received."

Realizing that this strategy represented a new way of doing business, The OFPP issued "Best Practices for Multiple Award Task and Delivery Order Contracting" in July 1997 to assist acquisition professionals with this acquisition reform initiative. Advantages of multiple award contracts were cited by the OFPP as follows:

"In order for agencies to take continuous advantage of the benefits of competition after contract award, FASA provides that agencies may make multiple awards of task and delivery order contracts for the same or similar supplies or services (and from the same solicitation) to two or more sources. The use of multiple award contracts allows agencies to take continuous advantage of the competitive forces of the commercial marketplace which will result in lower prices, better quality, reduced time from requirements identification to award, and improved contractor performance in satisfying customer requirements."

In the few years this strategy has been available, there have been more horror stories than success stories. This strategy, touted as an acquisition streamlining initiative, has actually resulted in the expenditure of additional time and significant additional costs in many cases. There is also evidence of abuse of this tool by some Government employees. In some cases, formal source selections are being conducted for each order placement. This is unconscionably expensive and time consuming to both the Government and industry participants. A collateral issue for the "unsuccessful offerors" is how they should recover their bid and proposal costs - their multiple award contract requires them to participate in the order placement competitions, but most such arrangements only compensate the costs of the "successful offeror." Should these contractors (they are holders of multiple award contracts, making them Government contractors) submit claims to recover the cost of each unsuccessful competition for an order? One law firm has issued a client alert regarding costly and rigorous competitions for orders.

The Naval Air System Command's Computer Based Training Integrated Product Team reported successful use of multiple awards for training of personnel who will perform maintenance on 15 types of aircraft. A Statement of Objectives was utilized in the competitive process to provide the maximum flexibility to offerors. In another application of this strategy, the tactical computers and displays division of the Naval Sea Systems Command reported dissatisfaction with the use of multiple award indefinite delivery indefinite quantity contracts.

The following guidance is provided for acquisition professionals desiring to pursue a multiple award strategy:

a. Award no more than three contracts. The stated intent of this strategy is continuing competition. This objective is facilitated in an effective and efficient manner without awarding contracts to every offeror who participates in the original competition.

b. Use lower ceilings and higher minimum guarantees. Consider an extension of the earlier example in this section regarding correct contract sizing. In the earlier example, the real requirement was 100,000 hours, but the contract maximum was written as 1,000,000 hours. If three contracts were then awarded under a multiple award strategy, Government contracts would be executed for 3,000,000 hours (thirty times the known requirement and budget).

c. Include a provision to directly reimburse contractors for their bid and proposal costs on orders, and/or include a provision to allow contractors to no bid individual orders.

d. Make the order placement process as simple and streamlined as possible for both the Government and the contractors. Oral proposals and streamlined procedures are in order. Having conducted a best value competition in the award of multiple contracts, a simple firm fixed price quote for the order is most appropriate.

e. Include a simple and straightforward approach to order placement, consulting SAMPLE 12, SAMPLE 13, and SAMPLE 14 in the section of this guide entitled "Contract Provisions".

f. Be mindful that the FAR 16.505 statement, "each awardee shall be provided a fair opportunity to be considered for each order" means that customers may not designate a preferred source.

The General Services Administration (GSA) has established several Federal Supply Schedules (FSS) for services, which should be considered in developing the acquisition strategy for a services contract. GSA's Information Technology (IT) Professional Services and GSA's Management, Organizational and Business Improvement Services (MOBIS) schedules may be reviewed at: pub.fss.gov/ services. MOBIS includes consulting, facilitation, surveys, training, and support products. The best application of these schedules is to acquire services to address a specific problem through the assistance of a "consultant," obtain fixed term or interim services; or to obtain services quickly when no other vehicle is available. The order placement time in using a FSS should be similar to the time it takes to place a delivery order under an IDIQ contract.

The GSA has synopsized, competed, considered set asides (large, small, and 8(a) businesses are on the FSS), and determined reasonableness in listing vendors on the FSS. The ordering office is responsible for preparing a performance based statement of work or a statement of objectives (SOO), justifying the selection of the vendor based on best value (three quotes should be requested), evaluating the level of effort and labor mix, and determining that the resulting price is fair and reasonable.

The General Services Administration lists the following advantages of Federal Supply Schedules, most of which are equally true of IDIQ contract vehicles:

• Establish BPAs and negotiate even better pricing
• Commercially Available Services
• Volume Discount Pricing
• Selection of Vendors
• Multiple Award for varying requirements
• Contractor / Customer direct relationship
• All applicable laws and regulations have been applied
• CBD synopsis is not required
• Competition requirements have been met
• Prices have been determined fair and reasonable
• In some instances, the Government credit card can be utilized
• New services are continually made available
• Maximum order limitations have been removed
• Ease of Ordering

No discussion of service contracting strategy would be complete without a discussion of commercial contracting. FAR Part 12, "Acquisition of Commercial Items", states that agencies shall acquire commercial items when they are available to meet the needs of the agency, and the FAR directly addresses the potential for services to be commercial items.

Commercial items are used for non-governmental purposes, have evolved from items used for non-governmental purposes, are modifications of items available commercially, or are a combination of items customarily sold to the public. Installation, maintenance, repair, training, and other services in support of commercial items and services sold in the commercial marketplace should be acquired through the streamlined commercial practices of FAR Part 12. Some Contracting Officers are avoiding commercial contracting because they are uncomfortable with the fixed pricing of services. The commercial world does service contracting on a fixed price basis, and Government Contracting Officers should follow the lead of the private sector. This typifies the resistance to change noted in the foreword and introduction of this guide. The author believes that significantly more service contracting should be done as commercial contracting and urges the application of sound business acumen in an initiative to do so.

Numerous sample statements of work in the following section of this guide were acquired successfully using commercial contracting practices. Contracting Officers fixed priced these SOWs by the job, by the day, by the month, by the class, etc. The following are examples of commercial contracting: SAMPLE 1 PBSC SOW for installation of furniture. SAMPLE 2 PBSC SOW for ship husbanding - laundry service and trash removal. SAMPLE 3 PBSC SOW for maintenance during lease to own. SAMPLE 5 PBSC SOW for stevedoring - ship loading / unloading. SAMPLE 8 PBSC SOW for computer network maintenance. SAMPLE 9 PBSC SOW for developing and teaching course. SAMPLE 12 PBSC SOW for medical care. Other Navy / Marine Corps examples of commercial contracting, which were reviewed but not used as SOW samples in this guide include: maintenance of water cooling systems, laundry services, meals and lodging, and cargo transportation (trucking).

Commercial contracting practices utilize a highly streamlined solicitation, which is generally only one quarter the size of a standard Government services solicitation. The standard time frames can be compressed, proposals and evaluations are highly streamlined, and commercial pricing is obtained. The utilization of these practices must become more widespread in support of acquisition reform. Increased usage of statements of objectives instead of statements of work should be part of this initiative.

This section on Planning & Contract Placement concludes with some thoughts on a service contracting acquisition strategy being implemented by the United States Marine Corps. While this strategy is not related to commercial contracting, it has significant value as acquisition reform initiatives. The USMC Direct Reporting Program Manager, Advanced Amphibious Assault (DRPM AAA) recently completed a large competitive services acquisition. The author noted three key points in this metrics-based acquisition which are unique and should be considered - together or separately - by acquisition professionals who are procuring professional services for major programs.

1. The DRPM AAA applied a high level of professionalism, sophistication and rigor in defining the requirements and planning their contract for professional services. The planning effort commenced very early with active program office participation. Priorities, emerging requirements, historical requirements, and industry capabilities were researched, evaluated and balanced. This was clearly not a "cookie cutter" approach or a copy of the last DRPM AAA services contract. There was clear recognition that the program was advancing toward production - building prototypes and working the engineering and manufacturing development - during the term of this contract, and that different skill mixes would be required in the future than had been utilized in the past. They were successfully anticipating the requirement - five years out!

2. This is an Indefinite Delivery Indefinite Quantity contract, utilizing firm fixed price, time and materials, and cost plus fixed fee task orders. The sustaining support, consisting of 37 people in 15 different labor categories, will be ordered for each year under a firm fixed price delivery order. Sustaining support provides day to day accomplishment of common and recurring requirements in the various functional areas. Discrete support, consisting of as much as 50,000 hours can be ordered under firm fixed price, time and materials or cost plus fixed fee delivery orders. The program has not been satisfied with the support provided under their last CPFF services contract and will likely avoid the use of CPFF orders on this contract. Discrete support provides as required, critical or unique program needs, which can not be defined in advance. The contract also contains a labor hours surge option of as much as 100,000 hours as a contingency. Other direct costs, travel and per diem are established as separate cost reimbursement line items. The contract provision for issuance of task orders for this contract is illustrated in SAMPLE 15 of the section of this guide entitled "Contract Provisions."

3. The new DRPM AAA services contract is structured for one year of performance with four option years, which is the optimum strategy for service contracts. Five-year contracts should be avoided, as they lack flexibility and put the Government at severe risk in the event of program redirection or termination. (As an example, a professional services contract supporting a major weapon system was not at risk when the program was terminated, because the services contract was structured as one year with four option years.) The unique aspect of the DRPM AAA approach is a definitive plan to revisit the requirements, and adjusted the contract by mutual agreement if necessary, before the exercise of each option year. Envision this as an ECP on a service contract. The majority of acquisition professionals view a services contract option exercise as binary - you either exercise it or you live without support. Keep in mind there is an opportunity to exercise the changes clause by mutual agreement prior to exercise of each option. This approach to sequential adaptation will serve the AAA program well as it moves toward production.

The AAA Program Office shares the following thoughts on Metrics-Based Acquisition in the Reform Culture:

Transitioning from the Program Definition Risk Reduction (PDRR) to Engineering and Manufacturing Development (EMD) phase, the DRPM AAA approached the acquisition of engineering and analytical support services using a metrics-based requirements definition strategy that would easily translate complex requirements into a performance-oriented solicitation. Essential to the effectiveness of the planning was the logical identification of transitional program priorities; essentially, these represented requirements that offered marginal latitude for compromise without incurring significant risk exacerbation. On the other side of the spectrum was the identification of baseline performance parameters; represented by successful, recurring performance on the incumbent contract, as well as with similar engineering-intensive contracts awarded across the Government marketplace during the past two years. These elements of the acquisition strategy provided a set of measurable performance factors, effectively bracketing the "emerging requirements" range, while establishing a baseline of historical cost/performance criteria.

Emerging requirements were identified as those factors without specific risk or performance impact associations. Critical path milestone events, technology challenges, cost/schedule elements, and similar activities likely to create a need for specific support services were identified across the functional program areas within the DRPM AAA. By analyzing performance rates, extracting quality measures, and considering market dynamics, a resulting set of working assumptions was aligned with the planning inputs. The working time for this process was approximately three weeks, resulting in the definition of an acquisition strategy that could be presented to industry with the objective of validating the base assumptions, while concurrently advertising the contract opportunity.

The DRPM AAA has enjoyed a long-standing reputation for open communications with industry, illustrated most effectively by its outstanding Internet site. At the conclusion of the user requirements identification phase, this web site opened a section devoted to pending acquisition. In addition to advertising specific goals of the procurement action, relevant information from the recent Interim Systems Review (ISR-1), encompassing the entire scope of technical and business requirements, was posted for downloading. The sources sought advertisement in the Commerce Business Daily (CBD) included hot links to this web site, in addition to a dedicated e-mail for industry firms to correspond with DRPM AAA contracts and technical sponsors. The CBD notice invited firms to provide a capabilities statement, along with their marketing materials, addressing program support requirements. Further, a follow-on period for face-to-face meetings with respondents was identified.

Guidance provided in the recently revised Federal Acquisition Regulation (FAR) parts 10 and 15, emphasize the necessity for effective market research. The DRPM AAA developed a script that outlined key performance areas, categorized under three principal topics (e.g., corporate/ business, management, and technical). Approximately one hundred sixteen responses were received, representing all aspects of industry. Material was reviewed by the working group and qualified respondents, representing a sixteen percent sample range, were randomly selected for face-to-face meetings.

Important to the meetings was the use of the script, which provided a range of quantifiable performance/risk elements, that could be plotted accordingly. This approach continued to build upon the use of metrics and provided a quantifiable basis for establishing the final acquisition strategy. This approach further supported the validation of assumptions that formed the basis for the planning framework, providing corroboration of rates/performance, market dynamics impacting risk, and associated support capabilities within each industry segment. Validation of assumptions provided the input for establishing benchmarks, correlated with DRPM AAA mission/technical drivers, while concurrently establishing the threshold for performance. This threshold, effectively, translates into the "standards" for effective performance, while the benchmarks represent logical discriminators of that performance.

Again, the timeframe to accomplish this was approximately three weeks, although DRPM AAA planning parties agree that the time saved using the process would probably represent several times that duration using conventional methods. In effect, a commitment of nine working weeks had quantified program requirements, provided a basis for the Independent Government Cost Estimate, established inputs for solicitation evaluation criteria, and accomplished conclusive market research through effective industry communications.

The DRPM AAA metrics-based approach allows the relationship between its requirements and industry capabilities to be defined in both quantitative and qualitative terms. In addition to developing logical predictors of future performance costs and risk, this application allowed for redefinition of labor category qualifications to reflect market dynamics. Qualifying years of experience, areas of specialization, and overall descriptions for engineering and analytical skills were completely revised, resulting in significant improvements to while further achieving an overall reduction in pricing. As a result, the number of labor categories was reduced, allowing industry to develop its pricing models with greater accuracy. Using a performance work statement, revamped labor categories, and reduced evaluation criteria, the DRPM AAA was able to provide industry with draft solicitation materials within twelve weeks of beginning its planning. Requirements were defined under a firm fixed price (FFP) sustaining base, equating to a number of guaranteed labor hours, as well as by undefined time and material (T&M) labor hours to be acquired on an as-needed basis.

A three-week comment period was provided, culminating in a presolicitation conference that attracted one hundred thirty interested parties. At the conference, DRPM AAA directors provided overviews of their requirements, focusing on the total hours of support required, emerging priorities and key technologies, and critical path events. This planning framework supported the continuing use of performance statements to define requirements, while encouraging potential industry offerors to use broad latitude in developing their solutions.

An additional two-week comment period followed the conference, resulting minor revisions and clarifications to solicitation sections. . . . . The DRPM AAA is confident that their planning actions will result in three significant accomplishments: Robust industry competition, effective teaming by offerors, and effective pricing of critical technical skills.

REFERENCES:

ASN (RD&A) Memo, Best Value Contracting Policy, 22 March 1991

Defense Federal Acquisition Regulation Supplement (DFARS), Part 207 Acquisition Planning

Federal Acquisition Practitioner, "Mini Source Selections" Under Multiple Award Task Order Contracts, October 1997

Federal Acquisition Regulation (FAR), Part 6 - Competition Requirements

Federal Acquisition Regulation (FAR), Part 7 - Acquisition Planning

Federal Acquisition Regulation (FAR), Part 12 - Acquisition of Commercial Items

Federal Acquisition Regulation (FAR), Part 16 - Types of Contracts

Federal Acquisition Regulation (FAR), Subpart 8.4 - Federal Supply Schedules

General Services Administration (GSA), Management, Organizational and Business Improvement Services Schedule, Multiple Award 10/1/97 through 9/30/02

Navy Acquisition Procedures Supplement, Part 5205 - Acquisition Planning

Navy Acquisition Reform Office, Best Value, www.acq-ref.navy.mil/turbo

OFPP, Best Practices for Multiple Award Task and Delivery Order Contracting, July 1997

OFPP Memorandum, Proposed changes to FAR Subpart 16.5 Relating to Competition Under Multiple Award Task and Delivery Order Contracts, 21 April 1998

OMB Memorandum, Competition Under Multiple Award Task and Delivery Order Contracts, 21 April 1998

Paul, Hastings, Janofsky & Walker LLP, Client Alert, Government Contracts: Do the rewards justify the risks?, June 1998

U.S. Marine Corps, DRPM AAA, Metrics-Based Acquisition in the Reform Culture, 20 March 1998