Agencies to plunge into incentive-based contracting

The Army and the General Services Administration are among the leading agencies that plan to take advantage of a new incentive-based approach to buying technology products and services.

The share-in-savings method generally reduces the amount of money an agency pays up front to a contractor by basing payment on the actual savings or increased revenue that results from the use of technology.

The Army hopes to take advantage of share in savings with its $1 billion logistics modernization project, although the concept will not be built into the procurement, said Kevin Carroll, program executive officer at the Standard Army Management Information Systems Office, Fort Belvoir, Va.

The request for proposals for the Army's Wholesale Logistics Modernization Program contract, released late last month, originally included wording to make it a share-in-savings contract, said Carroll, speaking today at a breakfast sponsored by the Armed Forces Communications and Electronics Association.

But internal concerns about using an untried contracting method and arguments over where the saved money would go forced the contracting office to only include a clause that will allow bidders to propose a share-in-savings-type solution, Carroll said. The share-in-savings solution from the winning vendor will be considered once the contract is awarded, he said.

Meanwhile, GSA, which has been charged by Congress to lead the governmentwide share-in-savings initiative, is now looking at five to eight possible pilots out of 35 proposals from agencies, said Kenneth Buck, assistant to the commissioner at GSA's Federal Technology Service. FTS is currently evaluating each proposal against a set of model guidelines that is being reviewed by the Office of Federal Procurement Policy.

GSA also is working with several agencies to add share-in-savings components to existing governmentwide acquisition contracts, including the National Institutes of Health. NIH manages several GWACs, including Chief Information Officer Solutions and Partners, ImageWorld and the Electronic Computer Store II, Buck said.