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The Foundation of Successful Contract Performance
June 3, 2021
The Foundation of Successful Contract Performance
Why They Can Miss the Mark, and How to Make Them More Effective
Work statements are the foundation of any successful contract. Whether they result in groundbreaking prototypes or the delivery of vital information technology (IT) services, the effective development and definition of work statements pay significant dividends to agencies or organizations for current and future needs. Not only do work statements describe the scope of requirements and tasks, but they also bind us to other aspects of contracts; in their “Cost Estimating and Assessment Guide,” the Government Accountability Office (GAO) emphasizes the importance of work statements for maintaining costs that are traceable and based on a work statement’s Work Breakdown Structure (WBS). Work statements are essential in scope, cost, or any other aspect of a contract. So, what is a work statement exactly?
Contracting professionals are most familiar with three types of work statements. Each differs in the level of detail it provides. The Statement of Work (SOW) clearly defines an agency or organization’s requirements to produce goods or services; often, an SOW defines the outcome and the method by which work must be completed. On the other hand, a Performance Work Statement (PWS) grants the contractor additional flexibilities—a PWS defines results in clear, specific, and objective terms with measurable outcomes. However, the contractor is free to employ methods that achieve results if they are within the bounds of quantifiable outcomes. Lastly, the Statement of Objectives (SOO) maximizes contractor potential whereby agencies or organizations establish high-level performance objectives where contractors can develop a wide range of innovative approaches and solutions.
Despite the differences in these work statements and the methods used to define and bind contract performance, contracting professionals may frequently re-analyze a contract work statement post-award and question its accuracy and efficacy. Even when an Integrated Product Team (IPT) of contracting professionals, technical stakeholders, and Subject-Matter-Experts (SMEs) develops the work statement before the award to describe aspects, such as methodologies, metrics, and scope, the IPT’s development efforts will not meet expectations. Why does this happen?
Why do work statements go wrong?
Contracting professionals may sometimes find themselves in the uncomfortable position of repairing the work statement of a poorly performing contract—the risk of additional costs increases by fixing or incorporating uncaptured elements in a work statement post-award. However, incorporating uncaptured or omitted requirements in a work statement can present legal challenges if these changes deviate significantly from the original solicitation (significant changes to a work statement may deem it a completely new requirement altogether). A completely unblemished work statement is unlikely for any requirement, but failing to incorporate critical elements or present specific undesirable characteristics within a work statement can lead to its downfall. What are some of the ways work statements go wrong? Some aspects as to why a work statement can fail to meet expectations are as follows:
No Clear Purpose — The first step in creating a work statement is understanding the requirement and the impetus needed to establish a contract for a requirement. It should be specific, concise, clear, and outcome-oriented. Work statements cannot define aspects like the WBS; cost elements cannot tie back to work statement elements without a defined purpose and impetus.
Lack of Logical Structure: For contractors to propose solutions, work statements must follow a logical structure of tasks and sub-tasks. Work statements needing a logical structure present difficulty for contractors to accurately estimate the amount of work to be done, the price, and the best delivery method. Work statements lacking a logical structure can result in misaligned personnel and resources, such as IT tools.
Overly Specific — Over-specification occurs when work statements describe tasks and sub-tasks beyond what potential contractors need to understand the work statement and competitively bid. This can happen when a work statement steers a requirement to a specific contractor, agency, or organization that lacks confidence in the market or uses jargon and methods unique to an agency or organization. As a result, delivery costs increase, and flexibility decreases in an industry that requires agility. Furthermore, overly specific requirements can restrict competition, leading to a pre-award protest since contractors with past performances at a particular agency or organization will be most familiar with their needs.
Ambiguity — When the work statement does not provide enough details to adequately and accurately propose and develop pricing, contractors make assumptions or interpret what is needed, often to the detriment of the awarding agency or organization. Post-award ambiguities can present legal challenges to an agency and organization whereby ambiguities within a work statement work against the agency and organization.
Contradictions — This is common among IPTs where multiple technical experts draft elements of a work statement. If reviews are not conducted, these contradictions will create confusion, require corrections, and hurt competition by driving off contractors unwilling to go after the work.
Misalignment — Personnel misalignment occurs when position descriptions, such as for Key Personnel, do not align with the work activities required. In some instances, agencies and organizations use historical documents to create position descriptions that are no longer relevant.
Unrealistic Delivery Schedule — If the delivery schedule is created to meet internal deadlines not based on validated or historical work or industry estimates. Agencies and organizations may also require an overwhelming number of deliverables beyond the minimum necessary for successful performance and monitoring of contract services. Rather than focusing on the execution of critical tasks, contractors focus on delivering work products that may provide no additional value.
Flawed Level-of-Effort — When the stakeholders focus a requirement’s level-of-effort (e.g., work hours) on a specific budget, work statements are bound to financial figures rather than actual needs. In this instance, the developers of a work statement may lack the knowledge needed to create an effective work statement and may not consult with technical experts and SMEs. Aligning requirements within a work statement to a specific budget can result in misaligned resources and impact contractors’ ability to propose accurately. If a work statement describes a level of effort that is too low for the nature of work, it will drive capable contractors away and hurt competition.
Internal vs. External Priorities — When the requirement is for a product or service with end users or customers, the IPT focuses on internal needs versus the ultimate recipients of goods and services. Although internal needs may be effectively captured, an IPT may lack sufficient information for internal needs (e.g., performance metrics). In this case, the IPT does not sufficiently address the needs of the ultimate consumers of a product or service.
Unsupported Technical Requirements —This occurs when the work statement identifies technical requirements but does not include the supporting technical references needed to fully understand, design a solution, or make a product. Including technical concerns is critical to the contractor’s ability to propose a product or solution.
What are the required elements of effective work statements?
Although contracting professionals may be most familiar with the three types of work statements, many will find that the structure, elements, and level of detail within a work statement can vary depending on agency and organization. For example, rather than explicitly defining each of the required features of a PWS, the Federal Acquisition Regulation 37.602 (FAR) recommends to
Describe the work in terms of the required results rather than how the work is to be accomplished or the number of hours to be provided; Enable assessment of work performance against measurable performance standards; Rely on the use of measurable performance standards and financial incentives in a competitive environment to encourage competitors to develop and institute innovative and cost-effective methods of performing the work.
Without regard for agency or organization-specific requirements, work statements can vary widely in detail as long as they describe the necessary work. Although this may grant some flexibility to the authors of work statements, a lack of well-established or explicit guidelines may serve as a detriment to contracting professionals when certain elements are omitted or forgotten. Contracting professionals should generally incorporate the following details in their work statements to ensure a sufficiently described requirement.
Introduction and Background: Contracting professionals should describe the reasons behind a contract action. This section should provide historical information and a general description pertinent to the organization and requirement. It should define reasons why this effort is required. When a requirement supplements or complements an existing contract action, contracting professionals should include this information in this section.
Scope: Scope identifies what work needs to be completed in the project to accomplish a requirement’s objectives. Within this section of a work statement lies a detailed summary of each of the work statement’s performance elements.
Performance Elements: Sometimes described as “task areas,” performance elements often serve as the “heart” of a work statement. Here, the contractor must perform specific results, actions, and outcomes to define the results. Some may specify the steps the contractor must complete to ensure successful delivery.
Deliverables: These items must be completed during or at the end of a contract’s performance period. Deliverables are often organized into a “schedule” that describes each deliverable and due date. The deliverables schedule generally describes, in detail, quantity, format, and other relevant aspects of a deliverable. Ideally, deliverables should be appropriate to the task and deliver value to agencies and organizations.
Performance Standards: Performance standards measure the effectiveness of a contract. Agencies and organizations should recognize their success measures and incorporate them as performance standards within their work statements. Performance standards should align with performance elements and be expressed clearly and measurably.
How can you write a more effective work statement?
Whether it is the role of a Contracting Officer, Contract Specialist, or Acquisition Program Manager, contracting professionals find themselves leading IPTs in developing work statements. This is an essential foundation of any contract performance. As technical experts within their unique functional area, IPT stakeholders may not understand the importance a well-defined work statement has on the execution of their operational requirements. Although achieving a completely faultless work statement is unlikely, there are steps to deliver a better product. What are some of the paths we can take to develop more effective work statements?
Do you need clarification about your requirements, or are they evolving? Consider the SOO.
An established performance history may compel organizations to pursue a defined work statement, whether an SOW or PWS, in their solicitations. SOWs clearly define the work and methodologies, and PWSs identify the outcomes. Still, performance methodologies can vary as long as they achieve the desired results within established performance standards. As technologies evolve, procedures change and existing processes are eschewed in favor of newer ones, agility is required of the contractor. Tried and true approaches may lead to significant gaps in capabilities. A work statement might insufficiently capture the capability if a market environment changes substantially. As a result, work statements may lead to poor contract performance due to insufficient capture of the current market environments.
So how can organizations mitigate this issue?
A SOO solicits the unique and specialized knowledge of experts in the commercial industry to address performance gaps and produce a PWS. Organizations may feel reluctant to pursue and solicit the SOO method due to the perceived lack of control—rather than defining every aspect of a work statement, an agency or organization will solicit industry for high-level objectives. Depending on their understanding of a requirement, this may also include the type and structure of performance standards, deliverables, WBS, and other aspects. Rather than defining the requirements for the industry, the industry can use SOOs to aid agencies and organizations in improving upon or refining outdated capabilities or adopting innovative approaches.
Target existing ambiguities and clearly define them
Despite the best efforts of contracting professionals and IPTs, it is unlikely to achieve a perfect work statement. Unavoidably, capabilities change, and technologies emerge during a contract’s performance. To minimize gaps, broadly defined language and ambiguous terms and phrases are tempting for contracting professionals and IPTs. These language ambiguities find their way into work statements. Examples of such words may include:
“Including but not limited to…”
“As required…”
“Other duties as assigned…”
Those less familiar with the contracting process may feel that “all-encompassing” phrases, such as those above, sufficiently capture any new and emerging requirements during a contract’s performance; however, we must remain aware of the concept of contra proferentem (“against the offeror”), which construes an ambiguous term against the party that imposed the inclusion of the term in the contract during negotiation or drafting.[3] When drafting our work statements, attention to clarity and detail is critical. Questions such as, should this deliverable be in calendar vs. business days? And how are we defining “acceptability” (i.e., what elements, at a minimum, must the report include?) must be asked.
Incorporate technical exhibits into your work statement
In some instances, describing a requirement through text may not sufficiently communicate the needs of an agency or organization. In these instances, contracting professionals should incorporate technical exhibits within the work statement document itself or as separate attachments to the work statement. These technical exhibits should be relevant to the required product or service and better enable contractors to submit their proposals. Examples of technical exhibits can include historical workload information, processes that must be followed to complete performance elements, environmental documents, or samples of deliverable formats that contractors must follow.
Document gaps throughout the lifecycle
Despite the best efforts of IPTs, technical experts, contracting professionals, and other stakeholders, work statements will have gaps in capabilities that are not initially captured. Rather than seeing these gaps as failures or shortcomings, they must be viewed as opportunities for improvement and success. Throughout a contract’s lifecycle, contracting professionals should document and identify these gaps as soon as possible to consider in-scope modifications to existing contracts or incorporate them into follow-on contracts. Not only can this mitigate shortcomings within existing contracts, but it can also improve future requirements’ performance.
Manage expectations with technical stakeholders
Contracting professionals must possess diplomatic skills to address and alleviate the concerns of stakeholders unsatisfied with their work statement. Rapidly evolving fields, such as IT products and services, may see substantial changes in the work statement over its life. Stakeholders may feel tempted to prematurely abandon a contract and its existing work statement. Contracting professionals should alleviate those concerns by managing expectations and recommending alternative solutions, such as in-scope determinations to incorporate emerging requirements.
Solid Foundations Enable Successful Performance
Work statements play a vital role and serve as a key foundation in any contract’s performance, yet are fragile documents where elements can easily be omitted, preventing effective contract performance. While achieving an unblemished work statement is problematic, contracting professionals can take steps to minimize risks and ensure work statements sufficiently capture stakeholders’ requirements. By considering the factors contributing to poorly written work statements and employing methodologies to ensure more effective development, work statements can better serve agencies and organizations during contract performance.