Panel: Performance-based contracting not a panacea

Increased federal reliance on performance-based contracting won't cure all the problems that often plague big government information technology projects, participants in a panel discussion said Thursday.

Both Congress and the Office of Management and Budget have encouraged greater use of performance-based contracting. Under this approach, agencies specify desired results, as opposed to methods. In theory, this affords contractors greater agility and makes them share in the accompanying risks.

But, "Just saying what your project is might not really get you what you really need," said Ed Meagher, chief technology officer of the Veterans Affairs Department. If agencies fail in concisely defining their requirements, they might end up with "a Campbell soup can and a piece of taunt string" as a communications solution, he said.

Agency workers need better training to oversee performance-based contracts, Meagher said at a morning panel discussion sponsored by the Bethesda, Md., chapter of AFCEA International.

While the concept of performance-based contracting is simple, the technique is difficult to implement, another panelist said. To be successful, departments must find precise ways to measure vendor performance, said Mark Krzysko, assistant deputy undersecretary of Defense for strategic sourcing and acquisition processes.

One civilian agency that notably has shifted to performance-based contracting is the Internal Revenue Service, which is using the method for its ongoing information technology modernization effort.

But Richard Spires, the IRS' associate chief information officer for business systems modernization, said performance-based contracting doesn't solve every problem. "That's not my experience at all," he said.

Likewise, another acquisition management tool gaining popularity, earned value management, was not the entire answer to managing project implementation risk, panelists said.

Earned value management systems track a project's progress measured against its projected cost and schedule. OMB gave agencies until December 2005 to craft a plan for using it for major information technology projects.

"Earned value … is like being a Methodist," Meagher said. "It's a religion, it's a good religion, it's a wonderful religion. But we used to be Lutheran, we used to be 'balanced score card.' That was another religion."

Earned value management is a good management tool, but converting people from yesterday's surefire management solution to today's takes time, Meagher said, and does not fix everything. Another danger of earned value management is that agencies begin to spend too many resources on the process of monitoring implementation processes, Spires said.