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Chat with Lisa! What incentives will motivate your firm to maintain superior levels of quality service at a reasonable price?

The Integrations business case continues to make its way through the Federal Acquisition Service approval process. It is currently with the FAS Controller who is considering all aspects of the business case including GSA's ability to recoup its costs.

In the meantime, I received several thoughtful suggestions for renaming Integrations. Thank you for participating. You may continue to submit new ideas as you think of them.

This week, I would like to move the conversation in a different direction. We are all operating in a unique and challenging economic environment. Most of you are also aware that the Office of Management and Budget is requiring agencies to reduce spending on management support services this fiscal year and in the immediate future. However, after taking these factors into account, our research shows that the opportunity is still considerable in this arena.

My question is this: What incentives will motivate your firm to maintain superior levels of quality service at a reasonable price? Given that GSA is anticipating moving into the cost-reimbursable realm with this potential acquisition (a decision that significantly expands the opportunity), is the opportunity enough to keep your firm motivated to meet very high standards of quality? If not, what non-monetary incentives might GSA consider when structuring the solicitation?


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Integrations Blogger
<p><font size="2">Thank you Ms. Godlove for responding to my follow-on questions. I like the innovation of your approach. &nbsp;Innovation and best-in-class are some of the objectives we are trying to achieve through the Integrations vehicle. Rest assured that we will seriously consider your recommendations as we proceed with our acquisition strategy. Please continue to be part of the conversation.</font></p>
<p>Thank you for the opportunity to provide information and interaction! In response to your questions:</p><p><strong>Under what conditions would your firm expect to be given preference (either put on a preferred list or included in a select group)?&nbsp;</strong> A direct reward for quality work and performance would be the <em>inclusion on a list of top performers</em>, which could be derived from CPARs or PPIRS or other measures.&nbsp; This is definitely a benefit to&nbsp;companies who desire to grow their market base, but are virtual unknowns within&nbsp;certain Agencies.&nbsp; It is often difficult to gain in-roads without the support and sponsorship of incumbents. Lists would reduce any concern with&nbsp;preferential treatment.&nbsp;</p><p><strong>Are there specific performance metrics and standards that you believe you should be expected to achieve?</strong>&nbsp;&nbsp;Generally, contract performance metrics address QASP standards, e.g., Quality, Accuracy, Timeliness, Clarity, etc.&nbsp; We advise our clients that these should be&nbsp;&quot;given&quot; just as you expect a general contractor to build a structural sound home, on time, and within your architectural specifications.&nbsp;&nbsp; It does require&nbsp;direct management and consideration by the Government related to contract modifications for changes in scope or Government imposed delays.&nbsp; That being said, standards that promote innovation, efficiency, and efficacy are mutually beneficial as they provide a direct value to the Government and enable the contractor to bring best practices and/or innovation.&nbsp; Performance that provides direct benefit back to the Government in terms of savings, increased productivity, and/or enhancement could be rewarded by&nbsp;the Government publicizing the benefits.&nbsp;</p><p><strong>How do you envision that the preference would work in real terms under fair opportunity? &nbsp;</strong>We are not necessarily suggesting a preference list, but rather promoting&nbsp;information sharing across Agencies related to positive contracting experiences.&nbsp; &nbsp;Many Agencies are concerned about taking a chance on unknown consultants/contractors.&nbsp; Awards, &quot;Top X Performers,&quot; and other lists help to ease these concerns&nbsp;when a Federal constituent is willing to name contractors who have performed well .&nbsp; Buyer substantiated claims mean so much more than&nbsp;an industry press release or white paper.&nbsp;</p><p><strong>What form do you envision for the industry award?</strong> We envision recognition for great performance through &quot;Top X&quot;&nbsp;lists within&nbsp;large contracts, umbrella programs, or by Agency, e.g., &quot;Top X Innovators,&quot; &quot;Top X Management Consultants,&quot; or &quot;Top X Performers with NAICS Code X.&quot;&nbsp; These would depend on the size of the contract, number of participants, contract scope, etc.&nbsp; A &quot;Top 10&quot; list where there are only 10 contractors is meaningless, but very powerful within a contract like 8(a) STARS II.</p><p>Happy Holidays!</p>
Integrations Blogger
<p>Ms. Godlove - thank you so much for a balanced and thoughtful response to GSA&#39;s questions regarding superior quality and incentivizing outstanding performance. I am particularly intrigued by the section entitled Industry Recognition as it contains ideas we had not considered. Under what conditions would your firm expect to be given preference (either put on a preferred list or included in a select group)? Are there specific performance metrics and standards that you believe you should be expected to achieve? How do you envision that the preference would work in real terms under fair opportunity? &nbsp;What form do you envision for the industry award? Please continue to give us the benefit of your, clearly significant, experience in the days ahead. It is much appreciated.</p>
<h2><strong><em>What incentives will motivate your firm to maintain superior levels of quality service at a reasonable price?</em></strong></h2><p>Generally, contractors who compete on quality and reputation are incented to maintain high standards of quality for their clients.&nbsp; Contractor success is directly tied to the success of their clients&rsquo; efforts resulting in several positive outcomes: a general sense of satisfaction in assisting a client in solving a difficult problem to further a client&rsquo;s mission, ability to attract and retain creative talent based on company past successes, positive word of mouth regarding contractor performance within the industry and repeat business based on past performance. Additionally, with government source selection teams utilizing CPARS/PPIRS more for past performance validation within solicitations, contractors are now more than ever motivated to maintain high quality and client satisfaction standards to receive good past performance assessment reports in CPARs. &nbsp;In this challenging economic period, everyone from the public to the private sector is seeking creative solutions to solve problems, which appear both insurmountable and costly to fix.&nbsp; Given these circumstances, GSA may want to consider the use of recognition-based incentives to motivate contractor performance.</p><h2><strong><em>Given that GSA is anticipating moving into the cost-reimbursable realm with this potential acquisition, is the opportunity enough to keep your firm motivated to meet very high standards of quality?</em></strong></h2><p>Yes. Overall, contractors are favorably inclined towards the use of cost reimbursable contracts for Professional Services as scope definition is often hard to solidify at the onset of an engagement. The challenge for GSA is in identifying the right mix of cost reimbursable contract elements to properly incent contractors while establishing a reasonable level of monitoring as required by the government.</p><p>The risk in a cost reimbursable contract is more heavily borne by the government however; the degree of risk depends upon the type of cost reimbursable contract.&nbsp;&nbsp; We do understand that the Obama Administration prefers contracts be executed with an agreed-to price which helps to minimize risk.&nbsp; However, this can be difficult to identify when the government struggles with the ability to accurately define the scope and high-level requirements for the work to be performed, especially on Professional Services efforts.</p><p style="margin-left: 1.5pt">Regardless of the contract type, we recommend that GSA use a Performance-based Services Acquisition (PBSA) with a Performance Work Statement (PWS) and definitive performance metrics backed by a Quality Assurance Surveillance Plan (QASP).&nbsp; This approach will ensure that performance and quality are monitored and discussed by the government and the contractor on a regular, consistent basis.&nbsp; Within the cost reimbursement realm, we do not recommend a Cost Contract or Cost Plus Fee (CPF) Or Cost Plus Percentage of Cost (CPPC) as they provide little or no motivation to contain costs without significant government oversight.&nbsp; A Cost Sharing Contract is not tangible within Professional Services, as it requires the government to adopt and implement the recommended changes to realize the savings.&nbsp; We recommend a Cost Plus Fixed Fee Contract (CPFF) or Cost Plus Incentive Fee Contract (CPIF) for this service type.</p><h2><strong><em>&nbsp;If not, what nonmonetary incentives might GSA consider when structuring the solicitation?</em></strong></h2><p>It is important for the government to provide specific motivators to keep contracts on track while ensuring that the government is not being overly charged for services. We recommend the usage of the following either as a stand-alone or bundled non-monetary incentive(s):</p><ul><li><strong>Award-Term</strong>: Similar to award-fee contracts, however, instead of money as compensation for quality performance, the contractor is awarded additional periods of performance. If performance is habitually below standard, the period of performance can be shortened.</li><li><strong>Past Performance</strong>: Past performance information can affect decisions to exercise options or to make future contract awards. Thus, past performance assessments are a quick way to motivate or reinforce improved performance.</li><li><strong>Industry Recognition:</strong> If a contractor executes the work to meet or exceed the government&rsquo;s satisfaction on the contract, the contractor has the ability to be:</li></ul><ul><li>Part of a more select group of contractors to bid on additional work</li><li>Placed on a preferred contractors&rsquo; list accessible by other agencies with similar contract needs</li><li>Given some specific non-monetary industry award which recognizes the contractor as an approved provider of these services in the industry</li><li>Fulfillment of Contractor Performance Assessment Reporting System (CPARS) and Past Performance Information Retrieval System (PPIRS) records; more Agencies are using CPARS/PPIRS for past performance evaluations, but some are lax in fulfilling these records for their contractors.</li></ul><p><strong><span face="">Contract Check Points:</span></strong> One of biggest challenges in properly incenting contractors under this type of contract is ensuring that they manage their costs effectively so that costs do not grow exponentially during the contract period even with the contract ceiling.&nbsp; This challenge can often be fueled by an unanticipated increase in scope by the government.&nbsp; We recommend building in formal &ldquo;checkpoint&rdquo; meetings (i.e., monthly Program Management Reviews) initiated by the Contracting Officer at specified periodic times during the Period of Performance to monitor contractor costs as well as maintain open lines of communication regarding scope.</p>
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