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Buying Results Through Service Level Agreements: Best Practices in Performance- Based Acquisition

Breakout Session # 1411


Robert F. Watts, Senior Consultant, ESI International
Date: April 16 Time: 2:40 3:40 PM

Performance Based Acquisition -Still a Challenge


Recent Acquisition Advisory Panel study determined that more than half the contracts designated as PBA in the Federal Procurement Data System-Next Generation were not performancebased

Its All About Mindset


Mindset

Characteristics
Focused on process and activities -- how requirements need to be accomplished Often lacks confidence in contractors quality control practices Prefers to micromanage the company's technical processes Focused on personnel - who needs to accomplish requirements Often lacks confidence in contractors human resource and management practices Prefers to micromanage the company's personnel Focused on results and mission accomplishment - what needs to be accomplished Has confidence in contractors technical, quality, human resources, and management practices Prefers to manage outcomes and customer satisfaction and not to micromanage the companys processes and personnel

Process

Personnel

Performance

Performance Work Statement or SOO

Incentive Plan

PBA

Performance Requirements Summary

Quality Assurance Surveillance Plan

What is a Service Level Agreement (SLA)?


A performance-based technique where a written agreement is established between the customer and service provider that defines key service objectives, metrics, and acceptable quality levels (AQLs)
Primarily used in information technology (IT) procurements Expanding into other sustainment-type services

Example SLA Outline


Service Level Agreement
(Title of Agreement) 1.0 Introduction 1.1 Statement of Need 1.2 Background 2.0 Service Objectives 4.0 Service Level Metrics/AQLs 3.0 Applicable Directives 3.1 Compliance 3.2 Reference 4.0 Constraints and Assumptions 5.0 Data Deliverables 6.0 Government Furnished Property (GFP)

Equivalent to PWS/SOO and Performance Requirements Summary

Service Objectives
Example
Do what?

Provide, implement, operate and maintain a fully-functional, reliable Service Desk

Service Desk
.for successfully recording, triaging, troubleshooting and resolving/ redirecting customer support requirements and ensuring minimum user downtime.

To accomplish what?

Service Level Metrics/AQLs


Title: Service Desk Objective: Provide, implement, operate and maintain a fully-functional, reliable Service Desk for successfully recording, triaging, troubleshooting and resolving/ redirecting customer support requirements and ensuring minimum user downtime. Metrics: Response: Percentage of inbound calls answered within 20 seconds. First Call Resolution: Percentage of inbound calls handled to resolution at Tier-1. Quality: Percentage of customers surveyed expressing a satisfactory or better quality of service rating. Acceptable Quality Levels: Response: 80% First Call Resolution: 70% Quality: 80%

Service Level Metrics: Possible Areas to Measure


Network Performance
Availability: Percent of time the network is available to users (percentage)

Hosting
Server Availability: Percent of time the server is available to users (percentage)

Application
User Interactions: Percent of successful user interactions (downloads, data requests, and so forth) Data Transfer: Acceptable time lapse between user request for data and moment data screen appears (seconds) Ease of Use: Quality of customers experience in using the application (customer survey)

User Support
Help Desk: Response time and accuracy in resolving trouble tickets

Throughput: Capacity of the backbone connections within the networks core (bits/sec)

Administration of Servers: Acceptable response times for restoring failed servers (period of time)

User Training: Quality of user training, such as classroom, online, and so forth (customer survey) Needs Assessment: Quality and thoroughness of program for assessing ongoing user needs

Connection: Acceptable data losses and data latency, plus bandwidth provisioning (percent of packet delivery rates) Security: Protection of applications, data, and services in transit (levels of encryption, number of breaches, and so forth)

Data Backup and Storage: Scheduled data backups that will be conducted (percent of completion)

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What is the QASP?


An internal plan used by the customer that describes the performance monitoring methods they will use to evaluate the contractors progress and success in meeting service level metrics and AQLs contained in the SLA

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Some Techniques to Monitor Contractor Performance


Example Performance Monitoring Approaches

100% inspection

Random sampling
Automated Reporting Customer surveys On-site spot checks

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Contractor Monitoring (Example)


Title: Service Desk Objective: Provide, implement, operate and maintain a fully-functional, reliable Service Desk for successfully recording, triaging, troubleshooting and resolving/ redirecting customer support requirements and ensuring minimum user downtime. Metrics: Response: Percentage of inbound calls answered within 20 seconds. First Call Resolution: Percentage of inbound calls handled to resolution at Tier-1. Quality: Percentage of customers surveyed expressing a satisfactory or better quality of service rating. Method of Government Monitoring: Response: Weekly audit of Service Desk reports First Call Resolution: Weekly audit of Service Desk reports Quality: Automated email customer satisfaction survey Acceptable Quality Levels: Response: 80% First Call Resolution: 70% Quality: 80%

Monitoring Officials: COTR; Performance Monitors

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Automated Email Survey


How satisfied are you that the Service Desk responded quickly to your problem? Very Dissatisfied Dissatisfied Satisfied Very Satisfied

Comments: How satisfied are you that the Service Desk was professional and customeroriented in resolving your problem? Very Dissatisfied Dissatisfied Satisfied Very Satisfied

Comments: How satisfied are you in the overall quality of the Service Desks final resolution of your problem? Very Dissatisfied Dissatisfied Satisfied Very Satisfied

O
Comments:

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Incentive Plan
Rewards and/or penalties assessed against the contractor based on their success in achieving service level metrics and AQLs in the SLA

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Possible Incentive Structures


Award Fee
Pool of dollars awarded at specified periods to contractor based on performance of SLA

Award Term
Additional contract terms awarded to contractor based on performance of SLA

Past Performance Ratings


Formally documented ratings of contractor performance of SLA

Milestone Payments
Linkage of contractor payments to successful completion of milestones contained in SLA

Options
Linkage of follow-on options to contractor based on successful performance of SLA

Invoice Adjustments
Adjustments to contractor billings based on performance of SLA

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Some Best Practices in Developing SLAs


Keep it simple!
Look at the overall mission and develop a small set of key service level metricsfind things that are measurable, meaningful and have real impact on the bottom line

Stay focused on mission success and customer satisfaction


Leave measuring of activities and processes to the contractor

Manage AQL expectations be realistic


The closer to 100% perfection you require, then the higher the price -be practical and realistic

Performance standards cannot exist in a vacuum; there must be a forum for discussion and negotiation

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Case Study

Chicago adjusts on the fly to make its contract perform

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