Skip to main content. Federal Acquisition Regulatory Council. My Favorites. Training Acquisition Systems. Part Federal Acquisition Regulations System. Definitions of Words and Terms. Required Sources of Supplies and Services. Acquisition of Commercial Items. Simplified Acquisition Procedures. Application of Labor Laws to Government Acquisitions. Protection of Privacy and Freedom of Information.
Other Socioeconomic Programs Reserved. Cost Accounting Standards Administration. Contract Cost Principles and Procedures. Protests, Disputes, and Appeals. The strategy could evolve over time and should always reflect the current status and desired mission outcome. The following are key outcomes of the Acquisition Strategy:. Review your market research results, how competitive is the market, what are small business opportunities, can this service be acquired using FAR Part 12, Acquisition of Commercial Items, how are other organizations acquiring this type of service?
When reviewing external acquisition options, you should examine your agencies external acquisition policies to make sure there are no potential conflicts. If no other viable option is available you will need to develop an effective business case that supports the most effective way to achieve your mission requirements. The business strategy involves selecting the right contract type, incentive structure and contractor selection process that will best deliver mission results.
Developing your strategy must be a thoughtful, integrated team effort defined by the specifics of your mission requirement. Either best value selection process involves a significant investment in manpower to develop the selection criteria and conduct the technical and cost evaluations. Make sure you have resource commitments in both people and facilities to conduct your proposal evaluations.
People involved in the technical evaluations should have good technical backgrounds, yet be open to new approaches they may see in contractor proposals. The acquisition plan is prescribed by the FAR and it spells out the business case for the selected acquisition approach.
It utilizes all the information generated from the planning phase such as the nature of the requirement, risk areas, customer concerns, and market analysis to support the plan. Acquisition plans for services must also describe strategies for implementing PBA methods or provide a rationale for not using them and provide a rationale if contract type is other than firm-fixed price FFP. These authorities will likely ask the following questions:. The acquisition plan and the acquisition strategy serve as a permanent record of decisions made regarding the acquisition strategy for future reference.
The source selection plan outlines the membership, evaluation factors, and provides a description of the evaluation process, including specific procedures and techniques to be used in evaluating contractor proposals. Both documents require approvals in accordance with agency procedures. Issuing a draft RFP is an effective way to get industry feedback.
The draft RFP contains both the requirement and the proposed business strategy that you are contemplating. You can request feedback on both. Drafts provide any interested party with an opportunity to provide comments before the actual acquisition process starts. The government can benefit from this process by considering the industry feedback and how it could improve the acquisition. The primary disadvantage is the time required to issue the draft and evaluate industry comments, so plan accordingly if you anticipate using this very effective technique.
The FAR does not make any recommendation on the type of contract to be used when contracting for services. However, the selection of contract type must be reflective of the nature of the service requirement and risks associated with performance.
Selection of a contract type should motivate the contractor to deliver optimum performance. Your observations during market research provide a good basis for analyzing commercial practices, level of competition, maturity level of the service, to guide the selection of contract type.
There are two basic types of contract types, fixed price types and cost reimbursable types. As a general rule, contracts for routine services, or efforts involving stable requirements, manageable performance risk, are normally a fixed-price type. Work must meet minimum stated performance standards. Service must be delivered within a specified time and meet the performance standards in the contract. Price should be supported by robust competition or recent competitive pricing history.
The contract price represents full payment for the work. This type of contract is used when technical and cost can be accurately estimated i. It is also the most appropriate type of contract to use when work can be clearly defined or when the requirement is constant with no need for flexibility.
The contractor bears full responsibility for the performance costs and resulting profit or loss. Cost type contracts are used when requirements cannot be accurately defined and performance risk is not easily quantified or managed. Reasonable, allowable, allocable costs will be reimbursed, up to the total estimated amount specified in the contract.
This amount represents an estimate of total costs, including fee, as a not-to-exceed ceiling that cannot be exceeded without contracting officer approval.
When using a cost type contract ensure that the contractor has an adequate accounting system and the government monitoring during performance provides assurance of efficient methods and effective cost controls. Cost contracts place more risk on the government because the contractor bears less responsibility for completing the performance requirement within the established cost ceiling. Incentives will drive behavior so one of the keys to effective incentives involves recognizing that the actions of the private sector are motivated by profit.
The government relies on industry to provide customers with products and services. We have regulations, policies, and procedures that allow industry to be compensated for these efforts. It is important to understand the cause and effect relationship between contractor performance and the type of incentive used.
In another words, whatever your team decides to incentivize, that is the area in which the contractor will focus or concentrate on, so your team needs to assure that you are creating a behavior that will deliver the right mission results. For example, link the incentive program to high priority or high risk performance requirements with measureable metrics. Then, incorporate share-in-savings strategies that reward the contractor for suggesting innovations that improve performance and reduce total overall cost.
Develop an acquisition approach that aligns the interests of both parties. In other words develop a strategy in which both the contractor and the government benefit from economies, efficiencies, and innovations delivered during contract performance.
If the incentives are right, and if the contractor and the agency share the same goals, risk is largely controlled and effective performance is almost the inevitable outcome. These are incentives designed to relate profit or fee to results achieved by the contractor in relation to identified cost-based, performance or schedule based targets. In each year of a five-year contract the contractor delivered cost savings earning additional fee for the contractor and cost savings for the installation.
This incentive structure also put the contactors base fee at risk if performance suffered as a result of cost cutting. Schedule incentives focus on getting a contractor to exceed delivery expectations with either quality, or timeliness.
These can be important on construction or maintenance requirements. They can be defined in terms of calendar days or months, attaining or exceeding milestones, or meeting urgent requirements.
This type of incentive uses an award fee plan that contains the criteria for earning the incentive. Generally, award fee contracts should only be used when objective incentive targets are not feasible for critical aspects of performance, judgmental standards can be fairly applied, and potential award fees would provide a meaningful incentive to motivate the service provider to perform.
Past performance documentation and reporting is a no cost incentive for the government. Maintaining a record of good past performance always motivates contractors.
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