GOOD
CONTRACTS
START WITH
WELL-DEFINED
REQUIREMENTS:
THE ART BEHIND THE ARRT
BY
PHIL SALMERI,
LYLE EESLEY,
& MATT WILSON
A proven approach to defining
requirements based on outcomes
and results by taking a workflow
approach to improve services
acquisition requirements using
the Acquisition Requirements
Roadmap Tool (ARRT) Suite.
58
Contract Management | May 2015
Contract Management | May 2015
59
I
n many U.S. federal
government agencies,
service acquisitions account
for over half of annual
spending, yet the Government
Accountability Office and
others maintain that there
are significant opportunities
to improve the quality, value,
and results currently obtained
from service contracts.
Federal Acquisition Regulation Part 1 speaks
of the acquisition team—that participants
should work together as a team and be
empowered to make decisions within their
areas of responsibility. To achieve success,
the acquisition team needs a common vision, a clear understanding of the acquisition process, and agreement on what they
are trying to accomplish.
One successful approach, developed by
the Defense Acquisition University (DAU),
has been the use of “Service Acquisition
Workshops” (SAWs). These facilitated
sessions gather together all members of
an acquisition team responsible for the
development, award, and performance
monitoring of a contracted service requirement. Many times, these SAWs provide the
first opportunity for all members of a team
to be in the same room together. SAWs
facilitate an understanding of the requirement, customers, mission needs, and past
experience, enabling the development of a
common vision of what the team needs to
accomplish. They also give the team some
dedicated time away from the daily press
of phone calls and e-mails to focus exclusively on their requirement. Because SAWs
have been effective in developing better
requirements, Defense Procurement and
Acquisition Policy has mandated their use
on service acquisitions over $1 billion, and
the U.S. Army has lowered that threshold to
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Contract Management | May 2015
$250 million. A number of civilian agencies
are even using SAWs for task orders down to
the $100,000 level.
The process used in a SAW follows the same
steps contained in the Department of Defense (DOD) Guidebook for the Acquisition of
Services, as outlined in FIGURE 1 on page 61.
Each step in this process is important for a
successful effort, but getting the requirement right during Step 4 (“Requirements
Definition”) is vital for delivering the results
that the customer needs. The best acquisition strategy, source selection, and contract
in the world cannot save a poorly defined requirement. To this end, the majority of time
spent in a SAW focuses on defining the requirement. This seven-step process defines
the workflow required to get from customer
need to delivered results. SAWs also utilize
the “Acquisition Requirements Roadmap
Tool” (ARRT) Suite, sponsored by DAU, to develop a team’s performance work statement
(PWS), performance requirements summary
(PRS), and quality assurance surveillance
plan (QASP) as a starting point. The ARRT
Suite is designed to provide users with tools
to generate specific work products throughout the workflow in order to develop and
utilize original requirements data. The
benefit is a “create once, use many times”
system to achieve the purposes, as outlined
in FIGURE 2 on page 63.
It’s important to understand that each of
these tools utilizes a common database
engine (the ARRT), simply moving the
information created in Step 4 (“Requirements Definition”) into the other components based on the specific function being
performed. This “create once, use many
times” system is significantly more efficient.
Using the ARRT Suite ensures alignment
and consistency between all the documents
created, but it must begin with defining the
right requirement.
The remainder of this article will focus on
the process of developing clear, concise
requirements documents. The use of the
ARRT Suite ensures that the SOW/PWS, PRS,
QASP, statement of objectives (SOO), source
selection plan, performance assessment,
and independent government cost estimate
are consistent, since all of these documents
are generated using the same requirements
definition from Step 4.
Your requirements document, whether it’s a
PWS, SOW, or SOO, is a communication device. It communicates your needs to industry, your customers, the contracting officer,
and approving officials. Done effectively, it
will result in increased competition, better
pricing, and will be much easier to administer after contract award. Done poorly, it
will result in delays, confusion, increased
costs, and will require much more time
GOOD CONTRACTS START WITH WELL-DEFINED REQUIREMENTS: THE ART BEHIND THE ARRT
Figure. 01
Customer
Customer Mission
Mission
Acquisition T
ea
Requirement
1.1. Form
Form the
the Team
Team
PLAN
- Leadership Support
- Build the Team
2.
2. Review
Review Current
Current Strategy
Strategy
m
- Conduct Historical Analysis
- Define Stakeholder & Customer needs
Stakeholders
QA
QA
Reps
Customer
Customer Mission
Mission
Results
Buyers
Users
Users
Proj.
Projj. Mgr
Mgr
PCO & CORs
HQ
Legal
Legall
Performance
Management
77.. P
erformance M
anagement
EXECUTE
3.
3. Market
Market Research
Research
- Leadership Support
- Build the Team
DEVELOP
Tech
SB
Resource
Resource
Mgt
- Build & Manage Relationship
- Assess Performance
A) Result(s).
4.
4. Requirements
Requirements Definition
Definition
- Develop Requirements Roadmap
- Draft PWS and QASP
5.
5. Acquisition
Acquisition Strategy
Strategy
6.
6. Execute
Execute Strategy
Strategy
- Business Strategy
- Source Selection Strategy
- Select Right Contractor
- Award Contract
- Roll out Strategy
and effort to administer. Developing a good
requirement takes a thoughtful, disciplined
approach, and not merely a cut-and-paste
from the last contract.
The Requirements
Development Process
Put simply, developing a performance
requirement involves building a “work
breakdown structure” (WBS) for your
requirement. It starts with your vision (WBS
Level 1)—describing a desired outcome
that invokes a vivid mental picture of your
ultimate goal. It offers inspiration, energy,
and a destination. Next are “high-level
objectives” (HLOs)—use them as the key
organizing components of your requirement. Performance tasks (WBS Level 3)
and sub tasks (WBS Level 4) are the results
and actions required to support each HLO.
When using a SOO, the performance tasks
are often left off allowing the contractor’s
proposal to describe in detail how they will
support each HLO. The charts in FIGURE 3
on page 64 depict a PWS or SOO WBS. It is
important to provide sufficient detail in your
PWS so that potential contractors understand the results you need without being
told how to achieve them—focus on results.
The “requirements development” component of the ARRT utilizes the “requirements
roadmap” to assist you in a step-by-step
process to build your PWS. It captures the
information in a database by asking a sequence of questions (“A–H”) that walk you
through the thought process necessary for
creating your PWS and QASP. The steps of
the “A–H” process in the ARRT are outlined
in FIGURE 4 on page 64, followed by the
requirements roadmap depicted in FIGURE 5
on page 65.
Notice that the roadmap includes not only
the performance elements of task (i.e., standards and acceptable quality level (AQL), but
also the inspection/assessment elements
of monitoring performance (i.e., the QASP
portion). This is because as you are defining
the performance results and standards,
you are in the best position to define how
each task will be inspected or assessed (e.g.,
“what,” “how,” and “who”). This process
ensures alignment of the requirement with
the inspection and assessment approach. It
also helps you define tasks with standards
that are capable of inspection.
Developing Performance
Tasks (“A–C”)
Good requirements start with clearly stated
results. Defining results seems to be the
most difficult part of this process, which is
why it’s the first question to ask when defining a task. PWS task statements have three
components:
B) The context for the result.
C) The actions the contractor is to take to
achieve the results.
Follow this “A, B, C” process and you have
the elements of your PWS task statement.
The ARRT tool will automatically rearrange
them (e.g., “C, A, B”) to form a clear requirements statement.
A result (“A”) is usually a noun describing
the outcome or work product needed. The
context (“B”) provides the setting, or what
the result pertains to (often nouns). Actions
(“C”) describe what the contractor has to
perform in order to achieve the result (normally verbs). Let’s look at a few examples:
§§
The contractor shall (provide and maintain (“C”)) (taxi service (“A”)) within the
(XX installation (“B”)).
§§
The contractor shall (perform and document (“C”)) (initial inspections (“A”)) for
(newly received vehicles and equipment (“B”)).
§§
The contractor shall (evaluate, participate, and prepare (“C”)) (program management reviews, technical reviews,
and audits (“A”)) for (the transportation office (“B”)).
Create as many task statements as you need
to fully support each HLO.
The Service Acquisition Mall (SAM) website includes a tool for you to practice
this “ABC” process (http://sam.dau.mil/
skilldevelopmentcenter.aspx).
Performance Standards
and AQL (“D”)
The next step (“D”) is to define the required
performance standards needed to accomplish the task. Simply put, how good do you
want it to be? Performance standards fall
into three categories:
Contract Management | May 2015
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NCMA offers a full spectrum of e-courses so you can get the knowledge
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GOOD CONTRACTS START WITH WELL-DEFINED REQUIREMENTS: THE ART BEHIND THE ARRT
§§
Quality (performance), and
§§
Timeliness.
The ARRT asks the question: What level of
performance (standard) is required to successfully accomplish this task? The ARRT has
a drop-down list of sample standards used
in previous SAWs to aid you with suggested
performance standards.
Each PWS task statement may have several
different performance standards, but remember that each standard must be related
to the actions and results required by the
task statement. For example, there may be
standards such as regulations or technical
orders compliance, quality or frequency
standards, completion or timeliness standards, etc. Use as many standards for each
task as necessary to fully define how well
the task must be accomplished to meet your
mission requirements. Remember, standards are cost drivers, so avoid “gold-plating”
standards, as this will drive up costs.
The AQL is a feature that recognizes that
variations can happen, and that perfect
performance is not always possible. Use
good judgment in determining if an AQL is
appropriate for each standard. For example,
a typical standard for on-installation taxi
service is to pick up the passenger within
10 minutes of the call being received by the
contractor—this means 100 percent of the
time. Ask yourself: Is it absolutely necessary
to meet the 10-minute standard all of the
time? What are the risks to the activity if
the 10-minute standard is not met? Using
your risk assessment process should help
in determining both standards and AQLs. In
this case, perhaps meeting the 10-minute
standard 80 percent of the time is acceptable performance. Then, our AQL would be
80 percent with no pickups to exceed 30
minutes. There are many instances such as
environment, technical orders, laws, etc.
where 100-percent compliance is absolutely
essential. Conducting a good risk analysis
will provide some help in determining if and
at what level an AQL should be established.
Tool\
Job Aid
Cost,
Work
Product(s)
§§
Process
Work Flow
Figure. 02
Plan
Develop
Execute
Steps
Step
Step
Step
Step
1-3
4
5
6
7
Requirements
Definition
Cost Estimate
(IGCE)
Evaluation Factors
(Section M)
Performance
Assessment
Source
Selection
Plan
Performance
Tracking
SAM
Skill Dev. Center
Team Charter
Project Plan
Communication Plan
Stakeholder Analysis
Market Reserch ARRT
PWS/ QASP
SOO/
SOW
IGCE
Performance Inspection
and Assessment (“E–H”)
Now that you’ve defined your PWS task
statement (steps “A–C”) and established
standards for them (step “D”), you need
to decide, “How am I going to know if it is
“The AQL is a feature
that recognizes that
variations can happen,
and that perfect
performance is not
always possible.”
good when I get it?” (i.e., inspection). Since
you just captured the requirement, you are
likely in a good position to specify how you
intend to inspect and assess performance.
To do this, we capture what will be inspected, how it will be inspected (method),
and who will inspect it.
In the ARRT’s step-by-step process (i.e., “E”
= “what,” “F” = “how,” and “G” = “who”),
the “E” question focuses on what you will
inspect. This should be directly related to
the result of your task statement. Often,
the “what” is simply your answer to the “A”
question (results) from your task statement.
From our examples earlier, that might
be the taxi service, initial inspections, or
program management reviews, technical
reviews, and audits. When deliverables are
required, such as reports, they will most
Annual CPARS Input
likely be “what” you will inspect. Once a
deliverable is created, it is tied to the task
and reflected in the deliverables section of
the PWS, the PRS, and the QASP. If, after
looking at your task statement, you are unable to determine “what” you will inspect,
you should go back and work on the task
statement to define a result that can be
inspected.
The next question (“F”) is how will you inspect it? There are many methods that can
be used to inspect and assess performance,
such as 100 percent review, periodic inspection, random sampling, trend analysis, customer feedback, and third-party audits. Your
risk analysis will be very valuable in helping
you determine the level and frequency of
inspections required for each task.
Next is question “G”: who is going to inspect
this? This responsibility normally falls on
the contracting officer’s representative, but
it can also be augmented with a subject
matter expert in coordination with the
contracting officer’s representative. You can
be as specific as you need to be in defining
the positions responsible for conducting the
inspections. This should define a position
or competency, and not necessarily state a
person by name. The objective is to begin to
plan for contract execution and administration as early as possible. Inspection requires
resources, so ask yourself: “Do I have the
resources necessary to inspect everything
that will be necessary for my requirement?”
Note that the information you identify for
Contract Management | May 2015
63
GOOD CONTRACTS START WITH WELL-DEFINED REQUIREMENTS: THE ART BEHIND THE ARRT
Figure. 03
Work Breakdown Structure For Service
Performance Work Statement (PWS)
WBS Level 1: Vision
WBS Level 2:
High Level Objectives
WBS Level 3:
Performance Taks
HLO 1
Work Breakdown Structure for
Statement of Objectives (SOO)
PWS
HLO 2
WBS Level 1: Vision
HLO 3
HLO 4
Task
Task
Task
Task
Task
Task
Task
Task
Task
Task
Task
Task
Task
WBS Level 2:
High Level Objectives
Task
Task
inspection is going into the QASP, which is
not usually included as part of the contract.
The last question to ask for each task is:
“Are there any incentives/remedies beyond
documenting past performance for the
contractor if they exceed/fail to meet the
performance standards for this task?” This
is question “H” in the ARRT. Capturing and
documenting contractor performance is a
requirement for all government contracts,
and is reported and captured in the “Contractor Performance Assessment Reporting
System.” Past performance is always an incentive for a contractor. Question “H” gets
at the specifics of incentives for a particular
task, and can be influenced by the type of
contract used for this effort. In a fixedprice contract, the contractor has agreed
to meet all the performance standards
for the price they have specified. If their
performance fails to meet the standard, the
government is entitled to a remedy, such as
having the contractor re-perform the task
at no additional cost or taking a monetary
deduction from the contractor’s invoice if
re-performance is not possible. If a payment
deduction is used, the parameters and calculations of that deduction must be clearly
outlined in the contract. If a cost-type contract or time-and-materials contract is used,
be careful with “re-work” penalties because
you may pay twice for the same service. The
incentive/remedy information must be included in the contract and is captured in the
PRS, which is included as part of the PWS.
To capture this information in the ARRT, simply capture it in step “H.” This ensures that
contractors are aware of any remedies when
they submit their proposals.
Creating Your PWS
and QASP Documents
Every PWS consists of many common sections outside of the WBS defined through
HLO 1
HLO 2
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Contract Management | May 2015
HLO 3
HLO 4
Contractor proposes the WBS structure of tasks
and standards necessary to meet each HLO Objective
Government must evaluate the effectiveness of
each solution in achieving the required
performace outcomes
the “A–H” process described earlier, such
as the background and scope of an effort,
and non-task-related requirements such as
security, facilities, personal vs. nonpersonal
services, and travel provisions. By default,
the ARRT uses a generalized PWS and QASP
template for these sections. If your organization uses its own document structure,
the template can be configured into any
structure you need that conforms to how
you want to organize your PWS. Once saved,
these templates can be used for all future
requirements. For example, you can create
templates for task orders under indefinite
delivery/indefinite quantity contracts or
other unique contract vehicles.
Once you’re satisfied with the WBS you’ve
built by using the “A–H” process and the
other PWS section contents, you simply
export the finished document to Microsoft
Word for routing, review, and coordination.
Figure. 04
A. Results of your task
B. The context of the task results
C. Actions (verbs) for the task
D. Performance standards
E. What will you inspect?
F. How will you inspect it?
G. Who will inspect it?
H. Incentives or remedies
SOO
Task Statement
Inspection
GOOD CONTRACTS START WITH WELL-DEFINED REQUIREMENTS: THE ART BEHIND THE ARRT
Figure. 05
ABOUT THE AUTHORS
Requirements Roadmap
Performance
Performance
High
Level
High L
evel
Objective
Objective
A: Result
B: Context
C: Action
PHIL SALMERI, CPCM, has over 40 years of
experience in the contracting profession. He
Assessment/Inspection
Assessment/Inspection
Standard
D: Cost, Quality,
Timeliness
D:
AQL
E:
What will
be inspected
F:
How will it
be Assessed/
Inspected
G:
Who is
responsible
H:
Incentive
or
Remedy
is the president and CEO of M&M H Design
Inc. He is a recognized subject matter expert
for performance-based services acquisition and best value source selection. He has
authored several publications, including
Negotiation Strategies, Tactics and Counter-
Tasks
Alignment
moves, and is also the author of Management Concepts’ “Action Packs on Best Value
Procurement” and “Performance Work Statements.” In 1995, he developed the roadmap
tool that the ARRT is based on.
COL. LYLE EESLEY, USAF (RET.), NCMA
FELLOW, participated in multiple acquisi-
Conclusion
Following a standard, repeatable process
to define and develop services requirements can reduce acquisition lead times,
obtain better competition, and reduce
costs. The ARRT Suite represents a process
to capture and define requirements more
accurately and clearly, and ensures alignment between the requirement and what
is being inspected. With the budgetary
and performance challenges facing the
U.S. federal government today, we all
need to work hard on improving the effectiveness and efficiency of the service
acquisition process.
The ARRT Suite is a free, downloadable
Microsoft Access file available from DAU at
http://sam.dau.mil/arrt. ARRT training for
DOD agencies is available from DAU. Videos are also available in the SAM that will
provide more detailed information on each
step of the seven-step acquisition process
and on using the ARRT.
The ARRT Suite continues to expand and
improve with the recent release of an
evaluation factors capability to develop
source-selection factors and evaluation
criteria, and coming capabilities for doing
cost estimation (independent government
cost estimate) and contractor performance
assessment during contract execution. CM
tion assignments during his career. He is also
a retired DAU professor of contract management. He led the development of the ARRT
Suite of tools and service acquisition training
courses while at DAU and is now a consultant
with government and industry to improve services acquisitions.
MATT WILSON is the vice president of Tools
and Technology at SimVentions with over
25 years of software and technology leadership experience. He is the primary technology
innovator and early developer of the ARRT
software and now oversees the design and
development of the ARRT suite for DAU and
several other innovative tools at SimVentions.
Send comments about this article to
[email protected].
Contract Management | May 2015
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