Excellence in Performance-Based Acquisition: Awarding Outstanding Achievement in Government Contracting General Services Administration The Performance Institute
   

Nomination Package for
Brendon J. Johnson
     

U.S. Patent and Trademark Office
Chief Financial Officer and Chief Administrative Officer

March 19, 2004

The Performance Institute
Excellence in Performance-Based Services Acquisition
1515 North Courthouse Road, Suite 600
Arlington, VA 22201

Subject: Nomination of Mr. Brendon J. Johnson, Contracting Officer, USPTO for Excellence in Performance-Based Service Acquisition Award

Dear Performance Institute:

It is with great pleasure that I submit this nomination package to you for the government-wide Excellence in Performance-Based Services Acquisition Award.

The nominee, Mr. Brendon J. Johnson, has exceeded in every element of the “Seven Steps to Performance-Based Services Acquisition”. Through his personal leadership, Mr. Johnson has helped to transform the USPTO from a buyer of services on the basis of labor hours and “best effort” to a strategic acquisition organization and business advisor focused on acquiring best value and measurable performance.

Mr. Johnson’s accomplishment in the fiscal year 2003 Human Resources Operations and Customer Service Support Acquisition is a textbook example of Performance-Based Services Acquisition. Mr. Johnson led the acquisition team through planning, contract formation, and contract performance in ways exemplifying proactive and innovative contract management. The services delivered under this contract are helping the USPTO to meet its goals in the USPTO 21st Century Strategic Plan and the President’s Management Agenda. Specifically, the contract has produced significantly decreased turnaround times for all personnel actions, a reduction in backlog, and excellent data entry, coding, and filing accuracy. The contract is endowed with carefully selected performance standards, performance measures, and performance incentives. As you will see in the following narrative, this could not have happened without Mr. Johnson’s leadership.

Mr. Johnson satisfies the eligibility requirements for this award. He is a Contracting Officer with the USPTO, a Bureau of the Department of Commerce. The USPTO is an Agency subject to the Federal Acquisition Regulations and the acquisition for which I am nominating him took place in fiscal year 2003. Finally, as the Office Director and Senior Bureau Procurement Official, I supervise Mr. Johnson and his chain of command.

Please accept my deepest thanks for your sponsorship of this award and consideration of this nomination.

Sincerely,

Michael J. Anastasio, Jr.
Director, Office of Procurement
United States Patent and Trademark Office

1. A description of how the acquisition addresses the elements of PBC as referenced in FAR 37.6 and integrated the process outlined in “Seven Steps to Performance-Based Services Acquisition”.

The United States Patent and Trademark Office (USPTO), Office of Procurement has assumed lead responsibility for carrying out performance-based services acquisition (PBSA). In fiscal year 2003, the USPTO instituted a new Acquisition Strategy Review Process to proactively improve support for the USPTO’s 21st Century Strategic Plan and mission critical initiatives. Among these initiatives is PBSA. The new review process was necessitated by the significant changes in business practices required to meet the 21st Century Strategic Plan objectives. This includes internal process changes and increased reliance on performance measurements to both meet Agency needs and incentivize performance. These factors have significant impacts on USPTO’s current and future contracts, especially the acquisition strategies. The premise of the new review process is to ensure that all procurements are optimally positioned to support strategic initiatives and leverage commercial capabilities and technology.

Under the review process, the USPTO Office of Human Resources (OHR) Operations and Customer Service Support contract recompetition was identified as a fresh opportunity to apply the “Best Practices” of the Federal Acquisition Regulations (FAR) Subpart 37.6 and the “Seven Steps to Performance-Based Services Acquisition”. In previous Human Resources acquisitions, the USPTO has relied on time-and-materials or labor-hour contracts. While these contracts did include some quality measures, the basis of performance and payment was tied to “best effort” and defined processes not outcomes and performance metrics. This type of contractual relationship did not fully satisfy the requirements of the USPTO to have timely and accurate Human Resources (HR) services. The previous USPTO OHR contract provided document processing, data entry, coding, filing, auditing, quality review, and customer service. The contract required the contractor to adhere to rigidly structured processes that were not consistently defined in terms of level of accuracy, speed, or performance.

A team was formed to restructure the OHR acquisition to a PBSA. The team drew on multi-disciplinary expertise in human resources, program management, labor relations, law, business, and procurement. The team defined roles and responsibilities between team members through setting realistic milestones and division of responsibilities. Team members were empowered to make important decisions without requiring the constant input of senior management. Senior management was continuously updated and supportive of the acquisition team, providing the resources necessary to transform the contract. At all steps of the planning process, the team was careful to ensure consensus on the key elements of the solicitation and the source selection, such as the proposed contract type and the source selection criteria.

The acquisition team needed to redefine the USPTO OHR requirement to fully support the 21st Century Strategic Plan. This was accomplished by changing the overarching mission statement to one of making the USPTO OHR a high- performance organization. A careful review of the previous contract processes helped lead to a new definition of the OHR needs and the development of a focus on quality.

Detailed market research focused on scanning for best practices and capabilities in the existing Federal HR market. The primary contract vehicles discovered during market research were time-and-materials and labor-hour contracts. Additionally, the acquisition team looked towards GWACs and GSA for possible solutions. The team also reviewed incentive structures and quality assurance plans on which to model the Performance Work Statement (PWS). In the end, the team abandoned the labor-hour model and designed a fixed-price acquisition modeled after the PBSA Best Practices and the Seven Steps. This led to expanded market research into performance measures and application of quality assurance surveillance plans. Since the previous OHR contract had been in the 8(a) arena, the team focused on finding available vendor solutions within the small business and 8(a) community. While there was some concern about the capability of PBSA for HR in the 8(a) community this was quickly dispelled by the multitude of vendors discovered in market research.

Intense efforts were devoted towards development of the PWS. This began with a detailed work breakdown structure, which helped to define the requirements in terms of outcomes and not procedures or processes. In certain cases, the procedure was retained when it was decided to be of value and necessary to meet regulatory requirements. The work breakdown was matched with desired standards and measures to create the Performance Requirements Summary (PRS). The acquisition team envisioned allowing offerors to propose the Acceptable Quality Level (AQL), the PWS, and the incentive structure. Using statistical tools, the team developed suggested performance standards, monitoring methods, incentives and disincentives. This approach empowered the contractor to define the solution to get to these outcomes and standards.

In deciding how to measure performance, the team looked for commercially available standards such as the ISO 9000 series. The RFP allowed offerors to propose the metrics and the contract quality assurance plan. Additionally, the RFP included provisions and terms to allow for future changes in the contract for improved metrics, measures, and price incentives. Recognizing profit as a motivator, the acquisition team suggested a tiered-pricing format tied to the AQL and allowed the contractors to propose a solution that offered the best combination of quality and monetary incentives. The Source Selection Plan (SSP) was a best-value approach with criteria in order of preference, beginning with the quality assurance plan, followed by the management plan, key personnel, past performance, and price. The acquisition team contemplated an indefinite-delivery-indefinite-quantity (IDIQ) contract with delivery orders for fixed-priced deliverables, such as an SF-50 processed or an SF-50 filed.

Market research suggested that there was abundant capability in the 8(a) community. Use of a pre-proposal conference and onsite visit helped to clarify expectations. Structuring the RFP and SSP with the focus on quality supported the selection of the right contractor. In the best value continuum, quality and technical factors were significantly more important than price. Past performance was also a key factor in evaluation. Past performance measures were geared towards finding a responsible source with experience in PBSA and HR. Discussions and the use of a competitive range also assisted in making a better source selection determination. The Source Selection Team and the Source Selection Official (SSO) selected Catapult Technology, Ltd, an 8(a) Service Disabled Veteran Owned business following a best-value tradeoff decision. A price premium was considered warranted for the significantly superior solution offered by Catapult in terms of quality control and incentives.

The key in managing contract performance is developing teamwork and a relationship with all stakeholders. This includes the contractor and all members of the Government team. A good relationship started with a contract kickoff meeting and continues with regular in-progress reviews (IPRs). The team (including the contractor) continuously seeks improvements to the contract. The result is a flexible contractual relationship based on producing outcomes and measurable performance with the possibility for greater rewards to the Government in terms of higher quality and increased profit for the contractor. The team is continually questioning the requirements, the metrics, and the assurance plan and continually seeking better solutions. This includes ensuring that the contract requirements are aligned with strategic goals. The results have been phenomenal. Within the first two months of performance the contractor reduced over six months of backlog in personnel documentation. The contractor has performed at 100% timeliness and has achieved performance well above the AQL for the past three months of rating in all measured CLINs. In fact, the error rates for all CLINs have dropped to below 1% for accuracy. The quality has helped the USPTO OHR become a high-performing organization and has significantly enhanced overall OHR performance.

2. A description of the nominee’s accomplishments in one or more of the Seven Steps.

Mr. Johnson advised and coordinated with the USPTO Office of Human Resources to plan for a performance- based services contract (PBSC) addressing requirements for Human Resources Operations and Customer Service Support. Using PBSA for this type of a requirement was a groundbreaking approach for the USPTO. Recognizing an opportunity to both support our small business community and ensure use of PBSA, Mr. Johnson applied PBSA for use with our small business community under the 8(a) program. The competition was limited to eligible 8(a) concerns.

Mr. Johnson was instrumental in harnessing a cross-functional team combining expertise in HR, law, business processes, and procurement. Mr. Johnson was crucial in ensuring successful implementation of a performance-based approach. Upon short notice, Mr. Johnson formed and led this cross-functional team to plan, compete, and award an 8(a) contract under a FAR 15 based competition limited to eligible 8(a) concerns for Human Resources Operations and Customer Service Support. This is one of the first true PBSC contracts in the USPTO Office of Procurement that fully incorporates the use of all PBSA tools.
With little outside guidance, Mr. Johnson assisted the Program Office in developing a work breakdown structure, through workload analysis, and was crucial in the formation of the PWS. Mr. Johnson also implemented new authorities under the Patent and Trademark Acquisition Guidelines (PTAG) by using an innovative contract hybrid format to develop CLINs for each specific service or deliverable and tying each CLIN to an acceptable quality level (AQL).

Using program management, as well as research and design techniques, Mr. Johnson helped to develop the AQL through quantitative statistical analysis of historical workflow and the incorporation of customer service goals and OPM regulations. Mr. Johnson helped develop the QASP for Government oversight of contractor performance to ensure a second independent means of sample verification and review. Mr. Johnson also drafted a tiered payment plan based on measured performance. As a PBSC, the contract PWS was designed to offer the best combination of incentives to achieve an AQL of 98% for both timeliness and accuracy in each CLIN for an evaluated period. Performance at the AQL is paid at the contract price. Performance below or above the AQL is rewarded with a tiered system of positive and negative price- adjustment incentives. The pricing and incentive model was offered for contractor proposal and change. Contractors were provided with the opportunity to propose alternate or improved quality plans and incentive structures. Contractors were provided with interface and industry input through this form of RFP and through an on-site pre-proposal walk-through meeting. Both of the highly-rated offerors in the competitive range decided to adopt the proposed quality levels and incentive structure. Additionally, in order to validate the AQLs, the performance measures, the QASP and the tiered- payment structure, Mr. Johnson opened these elements of the PWS for contractor proposals and innovations under the RFP. This is a clear departure from the industry standard for HR services acquisitions, most of which rely primarily on time-and-materials or labor-hour type contractual instruments.

The Source Selection Official and the Source Selection Team made a tradeoff decision to award the contract at a price premium based on the vastly superior Quality Control/Quality Assurance plan, and the vastly superior Management Plan of the successful offeror. Quality was identified as the most important selection factor based on the requirement to perform OHR's mission in support of the USPTO’s 21st Century Strategic Plan. The acquisition plan was innovative as it also incorporated use of the new USPTO Procurement Guidelines available under the Patent and Trademark Acquisition Guidelines (PTAG) to include planning for the use of hybrid contract types.

This contract represents one of the first PBSC IDIQ contracts in Federal Human Resources with tailored performance measures to meet HR needs. Mr. Johnson successfully led the USPTO in negotiations with offerors in the competitive range resulting in negotiated savings of $1.9 Million. A $9.7 million dollar 5 year contract was awarded to an 8(a) Service Disabled Veteran Owned Company. For his superior performance in this acquisition, Mr. Johnson received a Letter of Commendation from the Director of the Office of Human Resources. The contract was awarded to Catapult Technology Ltd. (An 8(a) Service Disabled Veteran Owned Company) on September 10, 2003 as a hybrid IDIQ/labor hour contract with one 1-year base period, and four 1-year options.

Successful implementation of a PBSA requires cooperation and flexibility throughout all phases of the acquisition. The Acquisition Team (OHR, Procurement, and Catapult) continually strives to seek improvements through a sustainable and mutually beneficial relationship. Currently the team is working to clarify error definitions and incorporate these definitions into the contract through modification. Dialogue/discussions between the contractor, the COTR, and the CO have been ongoing. The Acquisition Team is also discussing elimination of some duplicative CLINs. Dialogue/discussions between the contractor, the COTR, and the CO have been ongoing to address value engineering change approaches that may result in contract incorporation of a volume discount pricing plan and several quality control and quality assurance improvements.

3. A description of how the performance-based approach lowered costs or prices and/or improved the quality of contractor performance or less contract surveillance required.

Through the design of a PBSA contract, with CLINs tied to outcomes and not processes, the contract has been a clear success. The stress on quality and outcomes has led to a dramatic drop in wait-times and errors in document processing and data entry. Contractor performance is excellent. This contract impacts the entire organization and helps to meet the USPTO’s goals in its 21st Century Strategic Plan and specifically its goal to become a high-performance organization. Catapult has performed above the AQL of 98% for time and accuracy in all CLINs in the last three monthly reviews.

The result has been highly improved quality in data entry, personnel-action coding, document processing, document filing, audit review, and quality review. The USPTO OHR is not longer struggling to keep up with a mountain of paperwork and personnel actions. They are also not scrambling to adjust to seasonal fluctuations. The responsibility and incentive for performance is shared between the contractor and the USPTO, but with this kind of contract, more responsibility has been placed squarely on the contractor. Monetary incentives have helped to motivate the contractor. The Contractor has met 100% of the standard for timeliness in all CLINs for all monthly reviews of performance. The Contractor has brought the overall performance from a 2% error rate in the first monthly review in three CLINS to an error rate of below 1% in all CLINs for the past three monthly reviews. This means that all OHR documents are within a 99.00% to 100% rate of accuracy and 100% within time standards. The contractor has also been an invaluable partner working together with the USPTO to find optimal performance-based solutions to the USPTO’s requirements. This includes continuous scrutiny and evaluation of the outcomes, the standards, the measures, and the review process. This is accomplished through regular IPRs. This relationship and this contract have been a model for other contracts in the USPTO.