CHAPTER 5 PERFORMANCE MEASUREMENT AND …

1 5-1 CHAPTER 5 PERFORMANCE MEASUREMENT AND ASSESSMENTWHAT ARE THE BASICPRINCIPLES AND OBJECTIVESOF PERFORMANCEMEASUREMENT ANDASSESSMENT?WHY IS PERFORMANCEMEASUREMENT ANDASSESSMENT IMPORTANT? This CHAPTER informs contract administrationteam members about the functions, roles,and responsibilities and differing uses forperformance assessment based on results. The purpose of Contract Administration is topromote outstanding contractor performancein an effective and efficient manner. DOE G states that performancemeasurement provides measurable results sothe Department can demonstrate progresstowards goals and objectives. Progress ismeasured by providing specificmeasurement results that aggregate toDepartment of Energy (DOE)-widemeasures. PERFORMANCE MEASUREMENT alsodetermines the effectiveness of each contracttowards meeting the Department smission, vision, and goals.

2 The Department gathers and maintainsinformation on contractors PERFORMANCE androutinely uses this information, as well aspast PERFORMANCE information available fromother sources. Use current information toassess contractor PERFORMANCE when making: Extend or compete decisions, Evaluations of offerors, Exercise of option decisions, and Fee determinations, PERFORMANCE MEASUREMENT andassessment improves the managementand delivery of products and services,improves communications, helps justifyprograms and their costs, anddemonstrates accountability of Federalstewardship of taxpayer Business systems PERFORMANCE andoversight adhere to the Department Partnering of the ContractingOfficer s Representative (COR) andContracting Officer (CO) enhances theproper management of performanceobjectives and Assessments determine whetherperformance measures and incentiveshave been Evaluation of current and pastperformance increases the likelihood ofsuccessful future contract Cost reductions achieve measurablecost savings without adversely IS A GENERALDESCRIPTION OF THEPROCESSES UNDERPERFORMANCEMEASUREMENT ANDASSESSMENT?

3 A. How is the Department s StrategicManagement System tied to performancemeasurement?The Government PERFORMANCE and ResultsAct of 1993 changed the way thegovernment manages, measures, and fundsitself. It now focuses greater oversight andaccountability on achieving program goalsand other improvements -- instead of theprocesses, resources, and practices used. The Government PERFORMANCE and ResultsAct is also the foundation for the FederalAcquisition Streamlining Act in linkingprogram needs and budgets to contracts andcontract PERFORMANCE . The GovernmentPerformance and Results Act requires theDepartment to submit, as part of the annualbudgeting process, its five year strategicplan, indicating the PERFORMANCE goals andprogram activities to be achieved, how theywill be accomplished, and how it will bemonitored and measured.

4 It also requires thedepartment to later report back on a previousyear s PERFORMANCE , discussing progressmade against the plans and measures Department implemented theGovernment PERFORMANCE and Results Act in1996 with the Department s StrategicManagement System. It provides theframework by which the GovernmentPerformance and Results Act and otherfinancial and management legislatedrequirements are satisfied. See Figure goal of DOE s Strategic ManagementSystem is to: Ensure operational planning drivesresource allocation, Provide for regular evaluation ofresults, and Provide feedback. PERFORMANCE measures are the mainelements in all recent management andprocurement reform initiatives. Theyestablish the link between Departmentplanning, budgeting, contracting, the new federal results/performancemeasures construct, performancerequirements are to flow: From more general DOE Strategic Plangoals and objectives; Through all Departmentalorganizational levels; To more specific contract requirements, PERFORMANCE measures and incentives.

5 DOE s Strategic Plan determines the 5-yeardirection the Department will take towardachieving stated goals. The strategic goalsare long-term, broad, and outcome-oriented. Program offices and Field/OperationsOffices flow down, as applicable, many ofthe Department s goals into their ownstrategic plans. Annual PERFORMANCE Plans state thedelivered results expected during the fiscalyear. In planning, PERFORMANCE is defined interms of measurable results. The measurescontained within annual plans will clearlylink to the strategic goals, objectives, andstrategies contained in the Strategic Plan. Budget Formulation allocates fiscal andpersonnel resources against priorities. It is critical that the PERFORMANCE commitmentsmade in the Department s planning andbudget formulation processes be clearlycommunicated, understood, and agreed to byProgram Offices, Field Offices andContractors.

6 Information on the BudgetFormulation process may be obtained underorder DOE O , Budget Formulation. Budget Execution uses the Department sappropriated funds to deliver goods andservices to customers. The work ispredominantly accomplished throughperformance-based contracts administeredby DOE Field organizations. Information onthe Budget Execution process may beobtained under order DOE O , BudgetExecution - Funds Distribution andControl. Program Evaluation includes performancemeasurement and tracking, analysis, andreporting of what is delivered. Measuringand tracking provide the data for analysesnecessary for management to make informeddecisions for the current fiscal year as wellas future plans and budgets. Reporting is thedocumentation and sharing of performancemeasurement and evaluation informationwith customers and stakeholders to supportdecision-making and for improvement.

7 PERFORMANCE reviews at multipleorganizational levels provide feedback toensure progress and accountability. 5-4 Ultimately, PERFORMANCE measurementprovides a path of accountability betweenthe Department s long-term vision and theday-to-day activities of individual Federaland contractor What are Best Practices for aPerformance MEASUREMENT System?Many approaches to performancemeasurement are being tried in both theprivate and public sectors. One of theDepartment s laboratories has suggested thatWorld Class PERFORMANCE MeasurementSystem best practices might include thefollowing: Balanced approach to performancemeasurement and the infrastructure tosupport its implementation; Extensive use of comparative data toevaluate PERFORMANCE , set performancetargets, and keep measures current withnational standards; A metrics weighting system thatprovides the organization with a morecomprehensive analysis of PERFORMANCE ; Robust processes in place to ensuremeasures are kept current withchanging business needs.

8 And Ongoing review and refinement ofmetrics used to indicate achievement ofobjectives with leading , it is important to remember, whencreating PERFORMANCE measures arising outof various requirements, directives, andpolicies, that a balanced approach needs tobe maintained. It is very possible that (indeveloping PERFORMANCE measures fromcontract PERFORMANCE requirements,directives, or policies) performancemeasures could be developed which conflictwith other directives, policies, etc. Careshould be taken to step back and view therequirements as a whole in order to ensurethat resulting PERFORMANCE measures arebalanced and work in concert with June 1997, the National PerformanceReview published the Serving theAmerican Public: Best Practices inPerformance MEASUREMENT .

9 The reportDocuments the team s findings and is usefulfor leaders and managers in identifying andapplying best-in-class performancemeasurement and PERFORMANCE managementpractices. The study findings include: Leadership is critical in designing anddeploying effective performancemeasurement and management systems; A conceptual framework is needed forthe PERFORMANCE MEASUREMENT andmanagement system; Effective internal and externalcommunications are the keys tosuccessful PERFORMANCE MEASUREMENT ; Accountability for results must beclearly assigned and well-understood; PERFORMANCE MEASUREMENT systemsmust provide intelligence for decision-makers (not just compile data);5-5 Compensation, rewards, andrecognition should be linked toperformance measurements; PERFORMANCE MEASUREMENT systemsshould be positive, not punitive.

10 And Results and progress toward programcommitments should be openly sharedwith employees, customers, can I read more of the NationalPerformance Review report, Serving theAmerican Public: Best Practices inPerformance MEASUREMENT ? This report may be reached at the followingweb page which is also listed in AppendixB: National PERFORMANCE Review (NPR)reports may be accessed at the NPR s webpage listed in Appendix B of this How are PERFORMANCE measures andtheir associated incentives developed?1. Planning starts with the DOE StrategicPlan and flows through several plans,including Program Strategic Plans and Annual Site Plans. Planning occurs fromDOE Headquarters down through theField/Operations Offices. Planning takesplace across all programs and functionalareas.