One of the most important challenges facing agencies today is the need for widespread adoption of performance-based acquisition to meet mission and program needs. By memorandum, this Administration has set a goal for civilian agencies to apply performance-based acquisition methods on 40 percent (as measured in dollars) of eligible service actions (including contracts, task orders, modifications, and options) over $25,000 in Fiscal Year 2006. The Department of Defense has a goal of 50 percent.

Although policies supporting performance-based contracting have been in place for more than 25 years, progress has been slow. The single most important reason for this is that the acquisition community is not the sole owner of the problem, nor can the acquisition community implement performance-based contracting on its own. The changes made to FAR 37.6 in February 2006 put more of the onus on the program office community - they're the ones with the performance-based budgeting requirement in the President's Management Agenda.

Laws, policies, and regulations have dramatically changed the acquisition process into one that must operate with a mission-based and program-based focus. Because of this, many more types of people must play a role in acquisition teams today. In addition to technical and contracting staff, for example, there is "value added" by including those from program and financial offices. These people add fresh perspective, insight, energy, and innovation to the process -- but they may lack some of the rich contractual background and experience that acquisition often requires.

This guide, geared to the greater acquisition community (especially program offices), breaks down performance-based service acquisition into seven simple steps.

1. Establish an integrated project team
2. Describe the problem that needs solving
3. Examine private-sector and public-sector solutions
4. Develop a performance work statement (PWS) or statement of objectives (SOO)
5. Decide how to measure and manage performance
6. Select the right contractor
7. Manage performance

The intent is to make the subject of performance-based acquisition accessible and logical for all and shift the paradigm from traditional "acquisition think" into one of collaborative, performance-oriented teamwork with a focus on program performance, improvement, and innovation, not simply contract compliance. Performance-based acquisition offers the potential to dramatically transform the nature of service delivery, and permit the federal government to tap the enormous creative energy and innovative nature of private industry. Let the acquisitions begin!