PERFORMANCE BASED CONCEPTS FOR
TELEPHONE CALL CENTER CONTRACTING

PERFORMANCE-BASED SERVICE CONTRACTING (PBSC)
WORK STATEMENT

The National Performance Review (NPR) and the Office of Management and Budget's Office of Federal Procurement Policy (OFPP) coordinated an interagency working group to develop performance-based concepts for government agencies to use in the procurement of call center services. This effort combines the initiatives of improved customer service across government with the streamlining and reform of procurement. The performance-based concepts are presented in Section 4.

The American people have become accustomed to toll-free 800 numbers as an efficient way to request and receive services in all aspects of their lives. Responding to telephone calls is a top priority in customer service all across the government. More Americans contact the government by phone than any other way. Toll-free, or "800" telephone numbers are contracted through the Federal Telecommunications Service and are used by many agencies who maintain call centers. These call centers are either managed in-house or contracted out and provide a variety of services. They include:

The Environmental Protection Agency (EPA) Safe Drinking Water Hotline provides access to information specialists who can help the regulated community, State and local officials and the public to understand the regulations and programs developed in response to the Safe Drinking Water Act. Approximately 3,000 to 5,000 calls per month are handled by this hotline. This hotline has been contracted out since 1988.

The General Services Administration (GSA) Federal Information Center is a toll-free answer line for callers with inquiries about federal agencies, programs, and services. It responds to 175,000 calls a month. The service has been contracted out since 1990.

The Consumer Product Safety Commission (CPSC) hotline provides callers with up-to-date safety and recall information and has the capability for the public to report problems with products. Approximately 15,000 calls per month are handled by this hotline. It has been contracted out since 1989.

The NPR Report: Putting Customers First-Serving the American Public: Best Practices in Telephone Services, dated February 1995, discusses the importance of telephone access and the reasons why call center services are a good target for improvement. Telephone services can be a very cost-effective method of serving people, especially in a time of declining budgets.

Call center services are suitable for Performance-Based Service Contracting (PBSC):

• PBSC, with its emphasis on standards for customer service, incentives, and measurement of performance, offers an excellent opportunity to save money while obtaining improved performance in areas where the government directly interacts with the public.
  

• While the customer base served and the information and specific services provided are different for each call center, the function of providing access and serving customers is not. There are hundreds and thousands of call centers both in industry and government and standards of excellence and best practices exist.
  

• The service to be provided is relatively manageable and predictable. Anticipated call center activity can be objectively defined and measured in terms of the number of calls expected, the type of service provided, and the acceptability of answers which can be provided. For call centers, historical data can be used to forecast routine call loads and to anticipate periodic surges in activity. The kinds and level of service that the call center will provide can be specified, i.e. providing consumer information, technical assistance, case management, making referrals, taking complaints, ordering documents, etc. The questions which can be answered by a call center will depend on specific customer needs and the mission of the program providing the information. Acceptable answers can be defined in terms of limited subject areas and level of service to be provided.
  

• The "end product" is relatively straightforward. Callers need access to information and services which are available from the agency. Agencies need a reliable service which allows them to interact with their customers, provides a low maintenance way to measure and predict the quality of that interaction, and provides them with enough feedback to adjust to changing customer needs.
  

• PBSC focuses on results rather than process.
  

The working group's objectives were to develop a document for program and acquisition officials to assist them in drafting:

• performance requirements (what needs to be done),
  

• performance standards (how well it needs to be done),
  

• measurement techniques (how performance will be assessed versus standards),
  

• positive and negative incentives (tied to quality assurance measurements) and
  

• evaluation criteria (technical selection factors).
  

This document is not intended to be a statement of work, but a generic description of PBSC concepts as they might apply to a call center operation; neither is it intended to communicate the level of detail that would be needed to place a contract.

Agencies are encouraged to contract for call center services using PBSC, and to use these generic requirements, standards, incentives, QA plans, and evaluation criteria to develop program requirements and contract language. A working group consisting of technical and procurement personnel from the Departments of Energy and Health and Human Services, CPSC, EPA, GSA, NPR, and OFPP have developed this document for use as a reference source for agency voluntary use.

PBSC structures an acquisition around the purpose of the work to be performed as opposed to the manner in which the work is to be performed or through broad or imprecise statements of work. It is designed to ensure that contractors are given freedom to determine how to meet the government's performance objectives, that appropriate performance quality levels are achieved, and that payment is made only for services that meet these levels. It emphasizes objective, measurable performance requirements and quality standards in developing statements of work.

Examples of performance-based requirements can vary. PBSC can be used for fairly simple, low tech requirements such as grounds maintenance. Performance requirements for grounds maintenance of a large government site could be to maintain the lawn between two and three inches, prevent tree limbs from touching utility wires or buildings, and maintain lawns and sidewalks free from branches and clippings, rather than "how to" requirements such as mow lawn weekly, prune trees each fall and remove clippings after each mowing. In an example of applying PBSC to a highly complex set of requirements, a performance requirement for software development could be to develop documentation for deliverables that meets agency standards of accuracy and completeness.

The use of PBSC methods has been demonstrated to result in significant cost savings. There is a major governmentwide PBSC pilot program in effect at the present time. Twenty-three agencies are participating in this effort; cost savings of fifteen percent have been realized so far with improved contractor performance.

Use of PBSC methods should have the net effect of shifting some of the manageable performance risk from the government to the contractor. Contractors will be given more latitude for determining methods of performance with more responsibility for performance quality.

PBSC is consistent with the principles of streamlining and innovation of the NPR as well as the Government Performance and Results Act.

For additional information on PBSC, refer to A Guide to Best Practices for Performance-Based Service Contracting dated April 1996. This guide may be obtained from the Executive Office of the President's Publications Office by calling 202-395-7332 or by using Acquisition Reform Network (ARNET) at www. arnet.gov.

There are five essential elements of PBSC:

Performance Requirements

One of the first steps in developing a performance work statement (PWS) is identifying the agency's needs and addressing those needs with performance requirements. Performance requirements will be unique to each agency and the customers it serves. These requirements are statements describing the required services in terms of output. The requirements should be stated in clear, concise, commonly used, easily understood, measurable terms. Detailed procedures should not be included that dictate how the work is to be accomplished; rather, the requirements should allow the contractor the latitude to work in a manner best suited for innovation and creativity.

Performance Standards

Performance standards establish the performance level required by the government. Each agency should ensure that each standard is necessary, is carefully described, and not unduly burdensome. Failure to do so can result in unnecessarily increased contract costs. Discretion must also be exercised in establishing the quality level at which performance standards are set. The minimum acceptable performance standard should rarely be 100 percent, since the standard directly affects the cost of the service. If the quality level is too low, it may act as a disincentive to good contract performance. Standards should pass a common sense test (i.e. if they are too rigid, neither the government nor the contractor will have the flexibility to accommodate infrequent but uncontrollable events or changing circumstances). Standards may be published or well recognized industrywide standards, or may be developed by the agency based on past workload, best practices or customer needs. Agency standards should have industry input to ensure that they are realistic and effective.

Measurement Techniques

Measurement techniques should be clearly stated in the quality assurance plan (QAP). The QAP defines what the government must do to ensure that the contractor has performed in accordance with the PWS performance standards. It is needed to ensure the government receives the quality of services called for under the contract, and pays only for the acceptable level of services received. A good QAP should include a surveillance schedule and clearly state the surveillance method(s) to be used. Section 4 suggests the methods that can be used in monitoring the contractor's performance. In selecting the appropriate method, take into consideration task criticality, surveillance period, performance requirements and standards, and available resources.

Incentives - Positive and Negative

Incentives should be used when they will encourage better quality performance and may be either positive, negative, or a combination of both. Positive incentives are actions to take if the work exceeds the standards. Negative incentives are actions to take if work does not meet standards. Incentives should be challenging yet reasonably attainable. Incentives should be applied selectively to motivate contractor efforts that might not otherwise be emphasized, and to encourage efficiency. The definitions of standard performance, maximum positive and negative performance incentives, and the units of measurement should be established in the solicitation. They will vary from contract to contract and are subject to discussion during a source selection. Incentives should correlate with results. Follow-up is necessary to ensure that desired results are realized, i.e., ensure that incentives actually encourage good performance and discourage unsatisfactory performance. Where negative incentives are used, the deduction should represent as closely as possible the value of the service lost. Avoid rewarding contractors for simply meeting minimum standards of contract performance, and create a balance between cost, performance, and schedule incentives.

Incentives are not strictly monetary; the use of past performance is a powerful incentive. Past performance "report cards" should reflect adherence to performance requirements when a performance-based work statement has been used. Performance under PBSC provides better data for evaluation of past performance for other solicitations. A strong incentive of excellence and customer satisfaction is created when contractors know their performance will influence future award decisions.

Evaluation Criteria

Evaluation criteria that are used to assess offeror's proposals and select the contractor should typically strive to select the offeror that will most likely provide the best value (combination of price and performance) to the agency. Evaluation criteria should be kept to a minimum to help ensure that selection decisions are based on significant determinants, and each of the criteria used should receive a significant weighting. However, the relative emphasis given to each of the criteria must be determined by the agency.

Sample performance requirements, standards, and measurements

REPORTING TO THE GOVERNMENT

Performance Requirement	Performance Standard	Performance Measurement
Provide timely notification on items requiring Government action.	No more than x (OR x%) of the reports to appropriate Government contact may be later than the specified time period. AND/OR No more than x (OR x%) of required situations may go unreported.	Review operational logs, data bases, or statistics.
Deliver required reports.	No more than x (OR x%) of the reports to appropriate Government contact may be later than the specified time period.	Review reports, contract logs.
Gather required information from callers.	Report every month (quarter, etc.) on the statistical or other information that has been gathered. At least x% of the information gathered must be relevant and accurate.	Review records and reports; make test calls; randomly verify process on-site.

PROVIDING ACCESS TO THE SERVICE

Performance Requirement	Performance Standard	Performance Measurement
Maintain customer access to automated information during established hours	Service must not be closed to public access more than x minutes during the month (day, hour).	Random inspection (site visits, telephone calls); review automated telephone system reports; review contractor reports.

SUPPORTING THE CALL CENTER OPERATIONS

Performance Requirement	Performance Standard	Performance Measurement
Maintain Government-furnished or Contractor-furnished equipment and materials that function as required	Equipment failures, non-availability, or maintenance shall not interfere with operations for more than x minutes during a month (day, etc.).	Random inspection; audit or review by third party.
Develop and conduct a liaison program.	Contact (phone, visit, etc.) at least x% of the required offices each month, with at least X% of the offices having been contacted at the end of each year.	Perform random verification of list of contacts.
Develop and conduct a public outreach program.	Perform at least x% of the required program each month, with at least X% of the program having been completed at the end of each year. Produce constant (increased, decreased) call volume within x% of target volume.	Review contractor records, sample products; review the effect on call volume in call records.
Assure continuous quality improvement in service and technology.	Report every month (quarter, etc.) on improvements in service and technology that could be implemented.	Review recommendations.
Assure that customers are satisfied with quality of service.	At least x% of customers contacted (or potential customers contacted) must be satisfied with service.	Review and validate customer surveys; conduct independent surveys.

MAINTAINING THE INFORMATION DATA BASE

Performance Requirement	Performance Standard	Performance Measurement
Maintain an electronic information data base.	The inquiry-response data base may not contain more x% of incorrect, inaccessible, or inappropriate lines of information.	Review random portions of data base for accuracy, appropriateness, and accessibility of information.

RESPONDING TO INQUIRIES

Performance Requirement	Performance Standard	Performance Measurement
Provide accurate and current responses tailored to the individual needs of the caller and to agency requirements.	Provide at least x% acceptable responses during the month. OR Receive no more than x valid complaints about service during the month. [Refer to standards in contract that relate to accuracy and currency.]	Make sample or test calls; review call logs (if kept); review standard scripts (if any); review complaint logs; review quality control activities and results; review results of Government-run customer survey.
Respond to all incoming telephone inquiries during the operating hours within standard call load.	Respond to at least x% of incoming telephone calls. OR Respond to at least x% of incoming telephone calls within x seconds.	Review of automated telephone system data; review of reports.
Respond to surges of telephone inquiries, that is calls that exceed the standard call range per day (month, etc.).	Respond to at least x% (less than the percentage in the standard above) of incoming telephone calls in a "surge." OR Within x minutes(hours) of the beginning of a "surge," respond to at least x% (the same percentage as in the standard above) of incoming telephone calls.	Review of automated telephone system data; review of reports.
Response to inquiries must be delivered in a timely manner.	All employees must be able to respond to any inquiry within x minutes OR At least x% of callers must receive a final response from the first contact.	Make sample or test calls.
Provide courteous service.	Receive no more than x valid complaints during the month.	Make sample or test calls, review complaint logs, review quality control activities and results, review results of Government-run customer survey.

The approaches taken in these examples, including any numeric values, are intended to illustrate some possibilities for a few, specific performance requirements. Because they may or may not apply to an individual contract, the contracting and program offices will have to jointly develop appropriate techniques for all performance requirements.

Requirement:

Answer all calls offered within operating hours.

Standard:

Respond to at least 90% of the incoming calls within 2 minutes.

Measurement:

Review reports and review data generated by automated telephone system.

Incentive:

If 95% or more of calls are answered within 2 minutes, contractor receives 5% increase in portion of monthly payment assigned to call answering.

If 85% to 75% of calls are answered within 2 minutes, portion of contractor's payment assigned to call answering is reduced by 5%. If fewer than 75% of calls are answered within 2 minutes, portion of contractor's payment assigned to call answering is reduced by 10%.

Evaluation Criterion:

Ask for and examine equivalent data in performance in previous contracts. Also ask for and review the offeror's specific plan to meet the standard. If offeror has not collected data in previous activities or does not present adequate plan, may reject proposal.

Requirement:

Maintain the electronic information data base used to respond to public inquiries.

Standard:

No more than 2% of the lines reviewed may contain incorrect, inaccessible, or inappropriate information.

Measurement:

Download and review randomly selected portions of the data base.

Incentive:

If more than 2% of the information reviewed is incorrect, inaccessible, or inappropriate, deduct portion of payment assigned to data base maintenance.

Evaluation Criterion:

Ask for and review portion of similar data base used in previous contracts. Also ask for and review the offeror's specific plan to maintain this contract's data base. If offeror has not maintained similar data base or does not present adequate plan, may reject proposal.

Requirement:

Maintain call volume at historic levels.

Standard:

Monthly call volume may not be less than 80% of monthly average. Annual call volume may not be less than 90% of yearly goal.

Measurement:

Review records from both local and intercity telecommunications providers.

If public outreach program has been implemented, review interview records, publicity materials, etc.

Incentive:

If call volume is below standard for 2 consecutive months, contractor must implement a public outreach program within 15 days. Program must remain in effect until call volumes have returned to required levels.

If yearly target is not met, report details on "past performance report card."

Evaluation Criterion:

Ask for and review description of public outreach program used in previous contracts. Also ask for and review the offeror's specific approach to public outreach in this contract. If offeror has not performed public outreach previously or does not present suitable approach, may reject proposal.

Requirement:

Provide courteous service.

Standard:

No more than 10 valid complaints about the service may be received during a month.

Measurement:

Make test calls.

Review complaint logs and related corrective activities.

Review results of Government-run customer survey.

Incentive:

If contractor receives fewer than 3 valid complaints for 5 consecutive months, Government will reduce the number of test calls. If complaints return to higher level, standard oversight will resume.

If contractor receives more than 10 valid complaints about service in a month, deduct 10% of portion of contractor's payment assigned to call answering. If contractor receives more than 10 valid complaints in 3 consecutive months, contractor shall implement remedial education program for all public-contact employees. Training shall continue until fewer than 10 complaints have been received for at least 2 consecutive months.

Evaluation Criterion:

Ask for and review description of quality assurance program used in previous contracts. Also ask for and review the offeror's specific approach to courtesy in this contract. If offeror has not performed quality assurance previously or does not present suitable approach, may reject proposal.

Key to the successful use of any factor in the source selection process is the establishment of a clear relationship between the performance work statement (PWS), Section L (instructions to offerors) and Section M (evaluation criteria). The factors chosen for evaluation should track back to the requirements in the PWS. They should be reasonable, logical, and coherent.

The Federal Acquisition Regulation (FAR) 15.605(b)(1) establishes past performance as one of two mandatory evaluation factors, along with price or cost, for all competitively negotiated acquisitions expected to exceed $100,000, unless the contracting officer documents in the contract file the reasons why past performance should not be evaluated. The use of past performance as an evaluation factor in the contract award process enables agencies to better predict the quality of, and customer satisfaction with, future work. It also provides contractors with a powerful incentive to strive for excellence.

Past performance factors should be tailored to the key performance criteria in the PWS. When the PWS is performance-based, the past performance factors and questions to ask references can specifically address the contractors' capability of meeting the performance standards. For example, the ability of a contractor to forecast and schedule call center staffing and activity is very important to successful management of a center. Therefore, if one of the performance standards on a call center contract is that the contractor must respond within 2 minutes when answering specific questions, the past performance evaluation can objectively address how well the contractor met equivalent standards on past contracts.

Offeror's proposed technical performance - Under PBSC, offerors may use quite different approaches to address how performance standards will be met and how the level of quality will be achieved. Offerors' proposals may be written, oral or a combination thereof.

Cost realism is another evaluation factor that should be considered. Proposals should be reviewed for cost realism to assess the offeror's understanding of the requirements, consistency with their technical proposals, and risk.