Performance-based contracting
Part of this year’s budget development process emphasized tying spending in state contracts to positive results. State agencies were asked to identify activities that could benefit from the use of a performance contract.
Although many agencies are already incorporating performance elements into their contracts, Governor Gregoire is interested in strengthening performance-based contracting efforts across Washington state government.
Through Executive Order 10-07, the Governor has directed all state cabinet agencies to meet performance-based contracting standards in all new contracts for products and services, and to review existing contracts prior to renewal and update as necessary to reflect these standards. The Executive Order also requires all state cabinet agencies to ensure performance-based contracts are actively managed to meet performance-based standards.
What is a performance-based contract?
Performance-based contracts identify expected deliverables, performance measures or outcomes; and payment is contingent on their successful delivery. Performance-based contracts also use appropriate techniques, which may include but are not limited to, consequences and/or incentives to ensure that agreed upon value to the state is received.
Characteristics of a performance-based contract:
- Emphasize results related to output, quality and outcomes rather than how the work is performed;
- Specify deliverables, performance standards and/or an outcome orientation and clearly defined objectives and timeframes;
- Use quality assurance plans, measurable performance standards and/or outcomes;
- Provide performance incentives and/or consequences for non-performance; and
- Tie payment to deliverables, performance measures and/or outcomes.
Applicable policies
- SAAM 15.40: Personal Service Contracts - Contract Award, Management and Monitoring
- SAAM 16.20: Client Service Contracts - Contract Award, Management and Monitoring
Guidance
- Government Management Accountability and Performance (GMAP) reporting:
- Guide to reporting on performance-based contracting (UPDATED- 10/4/11)
- Clarification for master contract reporting (5/9/11)
- Performance-based contracting reporting template (v1.1)
- Performance-based contracting questions and answers (3/22/11)
- Basics of performance-based contracts training PowerPoint slides (PDF version) (5/31/11)
- State Auditor's Office (SAO) "Idea in Brief: Results-Based Contracting, State Government Performance Review" (5/31/11)
Examples of performance-based contracting
The table below contains some examples of performance-based contracting. These are examples only and are not required for agency use. Additional examples will be posted in the table below as DES Enterprise Contracts receives them.
| Contract Type | Category | Example(s) |
|---|---|---|
Client service |
||
Personal service |
||
| IT personal service contracts | (1) IT personal service work order for application development (2) IT personal service contract- statement of work only (3) Department of Licensing Master Licensing Service Extension project |
|
Purchased service |
IT purchased service contracts | IT purchased service contract for system support on critical IT equipment- statement of work only (Note: Example only not standard language.) |
