OMB loosens up on performance-based goals

The Office of Management and Budget's Office of Federal Procurement Policy is softening its stance on goals for implementing performance-based contracting across the government.

An OFPP interagency task force on performance-based services acquisition recently recommended that executive agencies be expected to apply performance-based techniques to at least 50 percent of their eligible services contract dollars by 2005.

'Because there is so much momentum for [performance-based contracting] now, the group supports the idea of goals,' said the task force's report, which was issued in July.

By adopting the 2005 goal, the group said, OFPP would be in line with current procurement policy at the Defense Department, which has set a firm goal of 50 percent by 2005.

But the office is taking a cautious approach.

'We're really still thinking about it,' said an OFPP official who asked not to be identified. 'We definitely want agencies to increase the use of performance-based acquisition, but we don't have any real firm goals. But we certainly want to encourage its use, and we're very committed to it.'

The official said that OMB doesn't want agencies to become obsessed with goals. 'We're more interested in agencies doing it right rather than trying to meet some arbitrary goal or target,' the official said.

In March 2001, then-OMB deputy director Sean O'Keefe directed agencies to award contracts using performance-based techniques for at least 20 percent of services contracting dollars by fiscal 2002.

OFPP backed off

But last year, OFPP officials backed away from that target when they realized that many agencies wouldn't be able to meet it.

'A lot of these goals were just to try to jump-start the whole initiative and get increased attention to the initiative,' the official said.

In its report, the interagency task force also recommended that agencies be allowed to set their own interim goals, in addition to pursuing the 2005 goal.

At Defense, Deidre Lee, director of procurement and acquisition policy, thinks that the department's own 50 percent goal by 2005 is attainable.

'I have a lot of confidence in our people,' Lee said. 'We've been talking about this concept for six or seven years now, and I see people moving. I see them really thinking about structuring their requirements in a more mission-oriented support method. We're going to count on people's talent, strategy and business acumen, and they will do it.'

In addition, modifications to the Federal Acquisition Regulation that make it easier for agencies to use performance-based acquisition are likely on the way.

The task force recommended changes to the FAR that would give agencies more flexibility in applying performance-based techniques, alter reporting requirements to make sure that those techniques are applied appropriately, and improve the quality, currency and availability of guidance on performance-based contracting.

The report, Contracting for the Future, is available at www.whitehouse.gov/omb/procurement/0703pbsat.pdf.

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