OFPP: Half of contracts must be performance-based in '08

Officials expect agencies to make half their contracts performance-based acquisitions in fiscal 2008, an increase from the goal for 2007, according to a new memo. Paul Denett, administrator of the Office of Federal Procurement Policy, raised the goal from 45 percent to 50 percent “to continue to motivate agencies to use the [acquisition] strategy,” the Dec. 5 memo states. OFPP said it expects agencies to exceed 2007's 45 percent goal based on the data compiled in the Federal Procurement Data System. Agencies are still reporting their 2007 numbers, and OFPP can’t affirmatively say until January that agencies met the 45 percent goal. As of Nov. 30, the government spent about $140 billion on services in 2007, the memo states. Denett added he prefers using performance-based acquisition for services. Performance-based acquisition makes agencies and contractors focus on the end results of a contract. Mirroring commercial practices, this strategy offers incentives to contractors for good performance, and it benefits government with better prices and better performance from contractors. Denett wrote that this approach to buying brings the government competitive pricing, innovative solutions and better services. More important than meeting the goals, Denett wrote that agencies should make sure their employees understand performance-base acquisitions and get better results.