GAO names winners, losers in performance-based contracting

GAO names winners, losers in performance-based contracting

Agencies spent $28.6 billion last fiscal year on performance-based service contracting'a money-saving trend since the early 1990s, the General Accounting Office said today in a report to the House Government Reform Subcommittee on Technology and Procurement Policy. The total represents 21 percent of the $135.8 billion agencies spent on services.

Subcommittee chairman Tom Davis (R-Va.) had asked GAO to find out how many performance-based contracts in fact described the outcome agencies wanted rather than detailing how to do the work. That is the main characteristic of a performance-based contract, along with metrics and positive and negative incentives, GAO said.

In studying 25 contracts at five large agencies, GAO found nine contracts with all the right attributes. They provide online education, recruitment and custodial services for the military branches, maintenance and repairs for the General Services Administration, and tour guides and firearms services for Treasury Department bureaus.

At the other end of the spectrum, GAO called 12 performance-based contracts risky, such as operation of Energy Department laboratories and NASA's space, science and engineering work. 'Such complex situations may require strong government oversight,' GAO said. Although Energy, for example, tried to build in performance-based attributes, it found it could not give up a strong role in saying how the work should be done and overseeing it.

Overall, GAO concluded that agencies do not fully understand performance-based contracting and need better criteria for designing the vehicles. The Office of Federal Procurement Policy is developing new guidance on the subject, GAO said.

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