Measuring Service Contract Performance: Using Terminations, Ceiling Breaches, and Exercised Options
Abstract
Whether carried out by public or private organizations, efficiently managing services contracts is a challenge. When contracting for products, organizations can directly test the quality of the goods produced or calculate unit cost. Managing and evaluating services contracts is inherently more imprecise, particularly when a contract is providing intangibles, like technical advisory support. The difficulty in measuring service contract performance also makes it challenging for industry to appropriately tailor its approach for the government market. Past researchers have often turned to surveys of government contracting personnel to take on the challenge of measuring service contract performance. This report seeks a complementary, but underexplored, alternative approach of looking at outcomes derived from information in the Federal Procurement Data System (FPDS), a publicly available database of federal contracts. This approach provides depth of coverage focused on a small number of metrics, which allows for a sample size of at least hundreds of thousands of contracts. This research project seeks to answer two questions. First, under what circumstances are services contracts likely to succeed or fail, as measured by terminations, cost ceiling breaches, and the exercising of options? Second, what services contracting policy choices influence these outcomes, for better or worse? This proposed research would unfold in three stages. During the first stage, CSIS would conduct an extensive literature review to develop a classification schema and hypotheses that are relevant to contracts both inside and outside of government. The study team would also conduct research on services-related policy initiatives and integrate new information on services contracts from other sources, primarily the DoD services contract inventory. During the second phase, CSIS would finalize hypotheses, variables, and performance metrics and implement them within the data set. Techniques for evaluating two of the metrics, termination and cost ceiling breaches, have already been developed by the study team. During this phase CSIS would develop a third metric, unexercised options, which represent a missed opportunity for a contractor even if they do not necessarily reflect customer dissatisfaction. During the third and final phase, the study team will test hypotheses, analyze the results, and prepare, present, and submit final deliverables. This proposed research effort will neither involve nor require any substantial involvement by the Government. The outcome of this study would inform overall contracting and economic research with a special concentration in operations and risk management topics. These results could be applied in the private sector, both by organizations that seek to better understand the performance of their own services contracts and by vendors who work for federal, state, or local government and wish to understand the drivers of risk. Finally, the dataset created for this research would be made available to other researchers who could use the metrics to take the next steps to understanding service contracting.
Document Details
- Document Type
- DoD Grant Award
- Publication Date
- Nov 20, 2019
- Source ID
- HQ00341810009
Entities
People
- Andrew Hunter
Organizations
- Center for Strategic and International Studies
- Office of the Secretary of Defense
- Washington Headquarters Services