SPI Performance Based Contract Block Change Guideance

Dated: 8/28/98

This document provides guidelines for preparation of SPI proposals and contract changes in performance language per USD(A&T) Memorandum, "The Single Process Initiative - A Long Term Perspective," 3 June 1998.

Definition:

A Performance Based Contract Block Change states process requirements in terms of specified results with criteria for verifying compliance, without stating methods and procedures for achieving the results. Performance Based Block Change modifications change "how-to" contract requirements to results-oriented requirements allowing greater contractor flexibility. It may affect functional, interface, interchangeability, or other performance requirements for the desired output(s).

Acquisition Reform Principle:

An overarching goal of acquisition reform is to reduce costs, remove barriers, and promote business efficiencies between government and industry. SPI is the mechanism for implementing block changes to existing contracts. Use of Performance Based Contract Block Changes, in lieu of government imposed specifications, standards, processes, and management systems, places increased responsibility on the contractor for meeting contract requirements. Performance-based requirements provide industry the flexibility to seek innovative solutions and supports DoD's goal of civil/military integration.

Performance Based Contract Block Change Application:

Look to apply the following (when developing SPI proposals and Performance Based Contract Block Changes):

• Requirements stated in terms of results and criteria for verifying compliance.
• Block changes that clearly state "what we need" and not "how to."
• Technical and schedule requirements stated in terms of results.
• Contractor flexibility on how to achieve specified results.
• Criteria and methods of performance measurement.
• Clearly defined deliverables and reporting requirements.
• Appropriate use of warranties and incentives (positive or negative) tied to process and product performance.
• Key characteristics, interface requirements, and performance parameters.
• Flexible language that allows contractor process improvement, and use of best practices and advanced technologies.
• Manageable and acceptable risk.

Look to avoid the following:

• Detailed processes, work methods, or procedures defining "how" a design, manufacturing, or management requirement is to be achieved or performed.
• Requirements that are not measurable or verifiable.
• Language that constrains the contractor to a single approach.
• Mandatory processes or management systems that restrict flexibility or innovation.
• Inappropriate application of MIL-SPECS or MIL-STDS.
• Adverse impact on performance and supportability (e.g., function, interface, interchangeability, reliability, maintainability).

Additional Guidelines:

• Management Councils should not apply Performance Based Contract Block Change guidelines retroactively to redo previously approved block changes unless proposed by the contractor.
• Performance based standards, interface standards, and standard practices (defined in the DoD Index of Specifications and Standards (DODISS), may be used when appropriate, in Performance Based Contract Block Changes. Also, a Performance Based Block Change does not restrict use of processes directed by DoDD 5000.1, DoD 5000.2-R, FAR, DFARS, or public law.