Buy Lines:Contract in trouble? Don't ditch it ? transform it

Bob Dickson

As contractor and government teams prepare and evaluate proposals, we are reminded that federal agencies increasingly depend on contractors to fulfill their missions. But what can be done when the contract isn't going well, and the contractor and government teams find themselves in situations that aren't working?

Termination and recompetition are not the only answers. There is contract transformation, a facilitated process of converting an underperforming contract arrangement into a performance-based one that provides an enhanced set of common expectations based on the agency's goals and objectives.

Contract transformation offers an effective alternative to traditional methods for resolving difficult problems and getting projects moving in the right direction.

For several reasons -- changing missions, budget constraints, switching from compliance to results, performance problems -- acquisition leaders are transforming existing contracts to true performance-based contracts. This is especially important when major contracts are early in deployment but are not yet producing results.

Transformations can be very challenging and intense, but in a relatively short period of time, through concentrated effort, they can produce dramatic results. For example, in recent years the Education Department's Office of Federal Student Aid saved millions of dollars and improved performance when it transformed several contracts. The move resulted in up to 22 percent savings and increased employee and customer satisfaction.

Contract transformation has four basic steps. The first is planning and preparation. During this phase, facilitators meet with key players and stakeholders. Often, two facilitators take part: the first a specialist in organizational dynamics, the second an expert in acquisitions and related solutions.

Through individual and group sessions, the facilitators lay the groundwork for meaningful change and set the agenda for the next step, the actual transformation sessions.

These sessions, usually done offsite, include a written commitment from all parties to complete the whole process and produce a modified contract within 30 or 60 days. The sessions include refining the agency's vision for the program, defining roles and responsibilities, proposing a management plan and restructuring metrics and incentives.

The actual contract modification is the third step, and compared to the others, it is relatively straightforward and simple. Building on the results of the transformation sessions and the written commitments of the contractor and the customer, the contracting staff writes a formal modification to the existing contract. The formalized modification codifies the new approach to performance management and the related metrics and incentives.

The final step -- perhaps the most challenging of all -- is walking the talk. At this phase, both the government and the contractor are obligated to operate under the new model and work in greater partnership. They commit to producing the results identified during the transformation process. Continuing facilitation is often required to advance and solidify contract performance through change management. These results can be measured in terms of quality, delivery time, cost savings and customer satisfaction.

Having invested so much time and "sweat equity," the parties are far more likely to achieve results than under the old model. The transformation process itself helps to produce the baseline for a solid partnership and mission accomplishment.

Contract transformations are not for everyone. They require a commitment to work in partnership and a willingness to change. But for some programs early in their contract cycles or at severe risk of failure, transformations offer a meaningful, attractive alternative to both government and industry. Most importantly, they offer the promise of delivering results far more effectively than traditional contract administration and enforcement methods.

Bob Dickson is vice president of Acquisition Solutions Inc., Chantilly, Va. His e-mail address is

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