Performance-based acquisitions (PBAs) are intended to make sure you buy what you need, and you get what you pay for. But establishing this value can only be determined upon delivery. PBAs have two distinct but strongly related parts: “buy” and “delivery.”

Agencies meet the first goal through the acquisition process. However, the second goal—getting fair value—can be accomplished only when the contractor has completed the work, and the quality and cost of the delivered products and services are compared with the original expectations.

This is not meant to imply that PBAs are not currently being managed. It’s just that the management focus is usually on the wrong aspects. In the typical scenario, an agency establishes a PBA using performance metrics that don’t directly point to the outcomes vital to program success. Most of the reporting required of the contractors is centered on labor hours and expenditures. Managing labor factors tells you a lot about what the work costs but almost nothing about what it produces.

Similarly, many performance metrics are selected because they are an obvious measure of the processes being used, or are relatively easy to collect and report. Too often, these metrics end up being the “trivial many” rather than the “critical few,” to paraphrase management consultant Mark Graham Brown.

The value-deliver portion of performance management is a three-step process: 1) Deciding what things absolutely need to go well to avoid harm, 2) Identifying the measures of performance that inform management and 3) Deciding appropriate actions to take in response to the performance measures.

Metrics to inform management and management processes must be geared to respond to changes. Too often, performance metrics are viewed apart from program or project management and used simply as a means of testing the quality of the contractor’s work. Here’s how it should work: Suppose an agency is soliciting bids for a study to provide decision support for a major IT upgrade project. To serve as an effective decision support vehicle, the study must provide a thorough description of how it was designed and implemented, in addition to letting agency officials compare the conclusions with their own findings. Under these circumstances, a study report might require these critical measures of performance:

• Describe the criteria used to select items in the study
• Define the criteria used for the analysis
• Provide a detailed a comparative analysis of each item in the study
• Supply a detailed rationale for each recommendation.