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Performance-Based Contracts at Architect of the Capital, Thesis Paper Example

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Thesis Paper

Abstract

The study examined performance-based contracting at the Architect of the Capitol, which oversees construction works and maintenance works of the Washington Capitol Complex. The Complex has high-level government departments, and the AOC manages the facilities and resources that are critical to operations of the United States Congress and the Supreme Court. The study applied a qualitative methodology with primary research and secondary reviews of documents published on the AOC’s contracting practices. The study finds that the Architect of the Capitol applies a fragmented approach to PBC and in an ineffective manner, leading to issues of poor resource management, delays in deliveries, high costs, inefficient management of PBC, and bureaucratic challenges that lead to inadequate capacity to adapt PBC holistically. The fragmented approach to PBC and ineffective handling of performance in contracting is a significant issue at the AOC because the agency has not embraced the PBCs as the significant way to handle its contracts. The agency relies on contractors to fast-track performance-based contracting elements, but this only exacerbates challenges in costing, timely delivery, quality problems, and compensation of poorly performing contractors. The study recommends the AOC embrace PBC through more rigorous training, stricter terms for contractors to perform within PBC specifications, and establishing a PBC framework.

Performance-Based Contracts at Architect of the Capital

Premise

The Architect of the Capitol is responsible for maintaining the structures in the capital of the United States. The responsibility implies that the agency manages critical infrastructure and resources that impact governance in the US. Crucial meetings occur in the capital, and high-level leaders operate in the structures and grounds that the AOC maintains. Furthermore, the US capital has national symbolism, hence the need for high performance in maintaining it. Therefore, performance-based contracts are essential to ensure that the Architect of the Capitol meets its targets for the many initiatives that characterize operations, resource maintenance, and missions to improve the facilities.

The paper addresses the challenges that characterize performance-based contracts regarding assessing or measuring them and managing them, and it applies the Architect of the Capitol as an exemplary case to demonstrate such issues. Since performance is multifaceted in such a large institution, measuring it is possible to encounter challenges because one would be dealing with harmonizing the proper metrics to resemble overall performance. The Architect of the Capitol manages the entire DC Capital Complex, which indicates the complexity and diversity of resources that are part of its responsibility. The nature of activities that it manages varies widely, and they include design, construction, quality management, safety and risk management, beautification and decorations, managing vast human resources, and preparing grounds and spaces for some significant events, among other initiatives. Therefore the scope of performance is broad and complicated.

Very large-scope operations mean that the Architect of the Capitol’s need for a robust approach to performance in contracts is critical to the organization’s overall performance. In the comparative scenario of individual projects that deal with the construction and maintenance of a single building, it is usually practical to manage different aspects of performance under separate domains, e.g., separating engineering construction works from finishes and interior design or gardening and other dissimilar projects. The Architect of the Capitol has many such overarching initiatives within its mandate, which makes it crucial to understand and solve problems with contract performance measurement. Therefore, the study will also analyze ways to improve the efficiency of the agency’s performance-based contracts.

Service performance is a significant area for managing the Architect of the Capitol’s organizational outcomes, including timely delivery of services, the quality of the services, and adequacy of the services. The Architect of the Capitol has to optimize its service delivery mechanisms through multiple domains, including human resource management, service design, and service management. The usual information that the agency applies to obtain data on service delivery includes client or user feedback and internal audits. It would be crucial to understand whether the current approaches address all essential areas of delivery, quality, and adequacy in performance-based contracting. In examining PBC in supply chains for government services, van Strien, Gelderman & Semeijn (2019) demonstrated two exemplary approaches for mitigating low-performance risks and risks, including accurate forecasts and effective negotiation with contractors and the alternative of phased growth paths when forecasts prove to be problematic. Therefore, technical and tactical solutions to effective PBC exist, and it may be possible for the Architect of the Capitol to optimize its areas of performance and service delivery.

Several case studies have looked into performance-based contracting (PBC) during the contract monitoring period. Singh, Ravache, & Sartor (2018) demonstrated the focus on a performance framework for the maintenance of buildings where they defined metrics in three domains: financial, environmental, and comfort. The researchers also identified four primary sources of influence on how a contractor may define performance, including the impacts of policy, engineering works, architectural, and environmental dimensions. Therefore, managing performance in maintenance is multifaceted. As a result, it creates the need to examine the organization’s broader terms and contexts in question – the Architect of the Capitol for the current study.

Many aspects of PBC relate to the issues of cost and time. The internal burdens of cost and time occur to the organization and external effects on the community via various projects and operations. Cherobini (2020) demonstrated that the Turn-around-Time (TAT) and repair costs (RC) helped model metrics for performance-based contracts, and organizations faced significant challenges when they re-defined the metrics during the monitoring period, i.e.,,, mid-project. Such findings underscore the criticality of proper planning and specifications for PBC, especially when immense resources and valuable time are at stake. The Architect of the Capitol inarguably deals with tremendous resources, and timeliness is also essential given the Capitol Complex’s critical nature. Therefore, it is crucial to examine the context challenges and potential solutions to PBC at the Architect of the Capitol, including proper performance specifications, a conducive environment of performance, proper quality management, clear timelines, and ways to ensure practical completion, closure, and timely payments for proven performance.

Situation Analysis

The organization is the US capitol, and it is responsible for maintaining the Washington Capitol grounds, structures, and facilities or the US Capitol Complex. The Architect of the Capitol employs about 2,300 employees, some that are under different contracting terms, which also underscores the need for a structured approach to performance. More importantly, the Architect of the Capitol manages immense resources, including buildings with room space that totals 16.5 million sq. ft. and land area that spans over 450 acres. The recent annual budget is about 781 million USD. Therefore, performance-based contracts at the Architect of the Capitol are crucial to improve the utilization and management of such incredible resources.

The targeted beneficiaries of operations by the Architect of the Capitol are primarily US taxpayers. The Architect of the Capitol should use the funds and resources that come from US taxpayers’ contributions. The expectation indicates that the institution’s approach to contracts should demonstrate integrity and concern for US citizens’ aspirations. The institution also has indirect impacts on the international community because it maintains the US Capitol to be presentable and symbolize or project the US’s ideals and its role in the international scene.

The Architect of the Capitol reports to the US Supreme Court and US Congress, which indicates that performance goals should not violate expectations set by these two organs. The liaison between the Architect of the Capitol and the US Supreme Court primarily lies in the coordination between the organizations, architects, planners, and employees to facilitate smooth constructions and maintenance of safe and functional structures. The Architect of the Capitol oversees the Supreme Court and Congress architects and other related works in these areas. The Supreme Court and US Congress may also preside over matters regarding resource allocation and usage by the Architect of the Capitol concerning legislative and judicial matters.

The other characteristic elements of the situation in which the Architect of the Capitol’s performance occurs include the legal, environmental, social, political, technological, and economic factors. The primary population using the US Capitol complex emerges from political institutions, including elected leaders and their offices’ employees. The Architect of the Capitol has to ensure that they have convenient access to their places of work and the organization has to be impartial in designing its performance to serve everyone. The economic dimension deals with resource budgeting, whereby; the Architect of the Capitol should optimize its resource planning and the budget that comes from taxpayers’ money.

The social element refers to the Architect of the Capitol’s people and staff, and the organization should maintain a diverse and fair environment for its clients, suppliers, contractors, and workers. The technological aspect also refers to the need to utilize state-of-art technologies in improving the Architect of the Capitol’s operational efficiency and how it manages contracts for optimal performance. The environmental dimension is also crucial as the Architect of the Capitol maintains millions of land acreage, which includes biodiversity and human operations that impact the environment. Therefore, the organization is meant to meet high environmental standards of operation and resource utilization. The legal aspect includes demonstrating a commitment to the US Constitution and operating within Congress’s laws and the mandates drawn by the Supreme Court.

The Architect of the Capitol requires performance-based service contracting in maintenance & repair on buildings that fall under its jurisdiction. Such services occur uniquely for the agency because they are part of its daily operations, and most of the issues that would be occasional for smaller projects occur more frequently for the Architect of the Capitol. It would be useful to establish how the agency deals with the sourcing and installation of inputs that would otherwise be problematic in other contexts of managing these services. The need for clear and unambiguous declarations of work and assessments for the supplier’s discharge is also critical, including measurements or metrics that apply to performance.

Performance-based service contracting (PBSC) stresses that all features of purchase be organized around the nature of the work instead of the style in which the task is carried out or far-reaching, vague reports of concern that prevent an impartial valuation of work performance. It is intended to certify that contractors are assumed the liberty to govern how to achieve the government’s performance objectives, ensure suitable performance quality ranks are attained, and that compensation is done merely for services that match these heights. Therefore, the study will establish an understanding of the approaches to providing proper performance specifications, a conducive environment of performance, proper quality management, clear timelines, and ways to ensure effective completion, closure, and timely payments for proven performance.

Performance specifications take many forms depending on the domain or area of performance. The terms that apply to specifications also vary across industries and fields of professional activity. Some fields have more concrete terms and practices, e.g., engineering specifications where accuracy and non-negotiable deliverables are crucial to the people’s safety that inhabit or use structures and avoid catastrophic losses. When it comes to the Architect of the Capitol’s works, the fields of performance are diverse, and engineering works intersperse with wide-ranging human factors, social, environmental, legal, and political elements. Congress may set specific performance specifications in budgetary specifications or unique legislative acts, introducing a political and legal dimension to performance specifications. Some of the performance targets may be explicit in the legal requirements that come with specific resources. However, the Architect of the Capitol still enjoys adequate flexibility in defining unique performance specifications, and these should be unambiguous and measurable.

It is also crucial to understand how the Architect of the Capitol could benefit from a conducive environment of performance by providing adequate freedom and support to contractors. Furthermore, the institution’s quality management is bound to impact PBC, and it is necessary to understand this too. PBC should also reflect clear timelines, and it is crucial to establish whether there are significant problems related to this factor. The Capitol Architect should also provide effective means to ensure practical completion of tasks and projects, their proper closure, and timely payments for proven performance, and the study examines these elements.

Disclaimer

The current document expresses the author’s academic and professional ideas and does not represent a position of any United States agency or the US Government. The document does not reflect any policy position of the author’s supervisor or the educational institution that the author is attending and submitting this work. Only the author may grant permission for publication of this document.

Research Methodology

Primary and secondary research suits this study. The research will also focus on Performance-based service contracts organized based on the motivation of the task to be achieved unlike how the task is to be carried out or broad, rough accounts of work that impede an unbiased valuation of constructor undertaking. Contractors are given the autonomy to control by what means to meet the authority’s performance goals, certifying that desired performance quality heights are realized and that compensation is only completed for services that correspond to these standards.  A questionnaire has been developed that will allow the use of information to support this paper’s premise.

Primary & Secondary Research

In the primary research, the researcher contacts people at the US Capitol and administers an open-ended questionnaire to understand the application and impact of performance-based contracting.  The researcher distributes the questionnaires to personnel dealing in contracts and their management within the Architect of the Capitol (AOC).  The range of targeted roles that they may be involved in to suffice the project’s informational requirements are broad. The study targets personnel with experience in performance-based contracting at any substantial level, including contract negotiations, specifications, activities in implementation, performance design and management, procurement, procurement management, performance reviews and appraisals, and related domains of PBC. In scenarios where it is possible to conduct interviews, the researcher uses similar questions in the questionnaire and in the open-ended format to provide more details from this data collection mode. The paper uses information on long-term managers in construction projects and contract management. Such respondents have the competency and experience with will be used to provide relevant facts for this paper.  Contracting personnel have knowledge on steps that apply to the requirements, reporting on performance in work procedures, managing proposal processes, documenting, and managing various elements of contracts.

The sampling process was through strategic sampling, where the researcher sampled from a list of close contacts that referred other contacts in the areas of acquisitions, contracting, and procurement. The researcher contacted the respondents and explained the type of data that could apply to the study, and asked respondents if they could relate to the context of the research topic. The researcher also established consent by detailing the terms of participation to the participants, including voluntary participation, the sole academic purpose of the data collection, the researcher’s responsibility and effort to secure the data, the elimination of personalizing data, and how the researcher would guard the privacy of participants, and the terms under which the researcher destroys the raw data, i.e., after completion of the project. After obtaining consent, the researcher proceeded to disseminate the open-ended questionnaires. The researcher also asked the respondents to go through the questions and select to either fill it or participate in a remote interview via a teleconferencing app or telephone call.

In the secondary research, the study compiles sources exploring the issue of performance-based contracts by the AOC.  Secondary research involves a review and analysis of facts from publications, including documentation by the AOC, committees, panels, and researchers who have analyzed performance in the agency’s contracting procedures. The advantage of this kind of research is that it improves access to data that may not be accessible through direct observations or primary research investigations. The researcher focused on documents that emerge from the AOC’s online repository, the Government Accountability Office website (GAO), and from search results on Google Scholar, Ebsco, ProQuest, and the search engines. The search strategy involved an initial search using the keywords from the topic and terms such as “performance-based contracting” or “PBC” combined with such other ones as “the Architect of the Capital” or “the AOC,” performance-based procedures, “contracting for performance at the AOC,” “contract performance at the Architect of the Capitol,” and related terms. The researcher tried different combinations of the terms in searching the databases and online repositories. The most relevant documents focused on performance-based contracting or the management or performance for contracts at the Architect of the Capitol. The researcher compiles such data and analyzes it thematically to arrive at core themes for the paper’s results in detail.

Questionnaire

  1. Please state how long you have worked with the Architect of the Capitol?
  2. Which area or line of work were you working or are you working at this institution?
  3. What is your job title or main responsibilities?
  4. When it comes to performance-based contracts and contracting, what were the main problems you observed at this institution?
  5. In what way do the problems in contracting or with contractors relate to the training that you receive at the AOC?
  6. How do you plan for contract performance that the AOC defines?
  7. How do you measure this performance?
  8. Are performance specifications clear? Please elaborate.
  9. How would you describe the level of support that the AOC gives to contractors?
  10. Please describe the quality management criteria.
  11. What issues arise concerning timelines for contractors? In what ways does the AOC help or motivate the performance in its contracts?
  12. How does the AOC do to provide ways to ensure practical completion of contracted projects?
  13. In what ways does the AOC evaluate and appraise performance?
  14. How would you describe accountability for contractors’ performance?
  15. Does the AOC compensate contractors on time? Please elaborate.
  16. What are the potential areas for improving performance in contracts at the AOC?

Project Development Plan

     Project Development Plan
Item Implementation Initiation Date Duration Completion Date
Establishing the Topic Reviewing and discussing the topic 19-Mar-21 8 26-Mar-21
Final agreement on the topic 26-Mar-21 10 4-Apr-21
Planning and Background Work Cover background material on the premise, situation analysis, and disclaimer 27-Mar-21 10 5-Apr-21
Draft the outline 26-Mar-21 6 31-Mar-21
Design and Drafting Establish a work plan and methodology 28-Mar-21 11 7-Apr-21
Design the questionnaire 1-Apr-21 2 3-Apr-21
Final outline of activities 2-Apr-21 9 11-Apr-21
Outline the contents of the write-up (Content Table) 7-Apr-21 5 11-Apr-21
Data Collection Contact participants and distribute the questionnaires 7-Apr-21 3     10-Apr-21
Conduct sample interviews 10-Apr-21 10 20-Apr-21
Data Processing and Analysis 20-Apr-21 7 27-Apr-21
Project Development Project plan and Gantt chart 20-Apr-21         4 24-Apr-21
Abstract 15-Apr-21          8 22-Apr-21
First Draft of the Report 6-Apr-21 15 21-Apr-21
Final Review, Update and Submission Final Report Draft 21-Apr-21 10 15-May-21

Gantt chart

Results and Discussion

Most of the participants worked in the AOC’s acquisitions and procurement, and they described their experience with PBC at the organization as substantial. Three participants also described scenarios of PBC where they had engagements with clients and provided a detailed account of performance practices at the AOC. Two participants had also participated in drafting contracts with performance specifications. The areas or line of work that they dealt with included various acquisitions and procurement domains, and their professions ranged from procurement, management, construction works, and architecture to supplies management.

The main problems that the participants describe concerning performance-based contracts and contracting included unclear specifications, insufficient training, costly delays in project completion, the need to switch contractors, and bureaucratic challenges that lead to poor relationships with unpaid contractors. The AOC makes a substantial effort to provide support and management for its contracts with the existing departments, and effectiveness primarily depends on the selection of contractors and suppliers and the relationships that ensue in dealing with them. Therefore, the PBC challenges fall within the scope of AOC’s resource capacities, but they sometimes overwhelm its technical and management capacities.

Contracting Practices and Performance

The Architect of the Capitol applies a range of contracting practices compatible with performance-based contracts. The overall procedures of PBC that it establishes do not often translate to how it conducts PBC. Nevertheless, the agency has established the procedures to guide contractors and the implementation largely depends on contractor compliance. The first procedure describes work requirements based on results instead and leaving performance methods flexible for the contractor. The AOC’s practices are not optimal in this area as it fails to achieve an accurate and specific definition of performance metrics and standards, and there are many gaps in the quality and timeliness of vital material elements in its contracts. The agency does not have a robust plan for quality assurance and lacks quality management.

The other area that the AOC defines but fails to optimize in PBC is the procedural specification on cost optimization. The documented approach entails specifying price reduction mechanisms in contracting for low-valued services and products. Despite this requirement, the AOC still experiences resource mismanagement and delayed delivery of services without revising the pricing for such performance. Performance incentives are common but penalizing low performance is relatively uncommon. Contractors still get away with delays and are able to follow through on total compensation for original specifications on timelines. The AOC loses funds when such contractors succeed in their lawsuits because the original contracts are weak in reinforcing performance specifications. Therefore, the agency’s approach is limited by its weak contracting procedures that fail to bind contractors on specific costing agreements.

The other practice that the AOC documents for contractors and make a substantial effort to implement is regular statements of work. The AOC deploys a large staff to provide reports at an individual level of observation, and the reports identify the specific work that they assess or perform and for a given period of performance. Progress reports are in common use, and the agency has made them part of its routine operations. Some of the reports help to fast-track performance when the contractors make serious considerations in adapting the feedback to improve performance. The AOC recognizes the need for measurable performance standards in reporting on the completion of various works, which should also reflect narrow requirements that performance managers and their supervisors can successfully monitor and fast-track. However, the agency itself fails to detail most of its performance requirements and leaves most items as broad specifications.

The other area for PBC at the AOC is quality assurance and surveillance, which are meant to help regulate the quality of services and deliveries that contractors provide to the agency. The AOC conducts audits for significant contracts that have a definitive deadline for completion but falls short in long-term contracts with indefinite completion. Most maintenance projects usually lack a substantial completion, and contractors are likely to get renewed contracts once they master the performance environment (Alyami et al., 2015). The situation presents a challenge to the AOC in reinforcing contractors’ compliance to PBC because the contractor has much room for different compliance modes because of the broad specifications that the AOC establishes. One approach to minimize low performance is through feedback from regular inspections, but this also increases operational costs for the AOC.

The contracting approaches include construction management constructors (CMCs), bid invitations, purchase orders, proposal-based procurement, construction management agents, and indefinite-delivery or quantity (IDIQ). Sultanate al. (2013) found such approaches relevant to construction and maintenance in public works. In exemplary IDIQ PBCs, the Architect of the Capitol contracts service providers in construction management for the entire Capitol Complex. The areas of performance are extensive, and they include managing constructions for the Senate and House buildings, the Capitol building, Library of Congress, the Supreme Court buildings, botanic gardens, and all other significant structures in the Capitol. GAO (2019) reports that the AOC requires a formal and more strategic approach to manage performance across its various jurisdictions systematically. Having specific documentation of performance thresholds and formalizing the approach to performance can help improve ion performance practices.

The extensive breadth of the contractual specifications necessitates dealing with experienced and well-equipped contractors that also support the AOC in complying with various acquisition standards. The AOC targets to optimize performance in one overarching domain to affect technical performance in other critical domains, e.g., constructions and design projects.  In the example of contracting for management services, the AOC applies optimal market pricing and defines deliverables for the contracted firm or agency to manage. The contracted firm’s performance is assessed and evaluated by quality managers, and the AOC can affect performance-based contracts by revising the awarded contracts when timelines and quality expectations are unmet. In most cases, contracted firms can engage the AOC’s limitations concerning extending deadlines or reviewing performance expectations through negotiations, but the AOC makes the final determination based on its internal controls.

Performance Specifications and Guidance to Contractors

The AOC defines broad performance specifications when dealing with contractors, and some of the top specifications are in the domains of facility condition, energy, and sustainability. Most contractors deal with specifications on facility condition, including the defined performance for particular components of the construction, maintenance, supplies, and management. The joint document that contractors refer to in designing their performance at the AOC is the Construction Contractor Appraisal Support System (CCASS). The CCASS helps contractors understand the performance management procedures to support their efforts in harmonizing their approaches with those of the AOC. In the CCASS, performance specifications emerge across successive domains of performance, ranging from training performers to the evaluation of outcomes over such a harmonized index as the dollar value threshold.

The initial areas of specifications focus on the competencies or capacities for performance, and the AOC defines them for training purposes. Contractors can apply specifications on training to establish a workforce that meets the technical specifications of deliverables targeted by the AOC. The example is an engineering installation that would require a contractor to demonstrate the sufficiency of skills in personnel that understand the AOC’s structures and designs of the targeted installation. In training their personnel, contractors aim to demonstrate competencies and outcomes that match the AOC’s expectations. The AOC conducts very minimal contractor training, but the option presents an option for optimizing performance in the technical domains. Contractor training results reflect on performance through time of training, resources of funds used in training, and the effectiveness of assessments in proving competencies and transferring them to the domain of task performance.

The other area of technical specifications in the AOC’s contract performance is regulatory compliance. The agency targets the regulation of contracts to meet optimal legal standards. Since the agency’s contracts are highly lucrative, there are risks of fraud. Problems can occur concerning assured compensation and potential for expansion; many contractors target to get the contracts at the AOC. As a result, the agency has many demands for assessing the contractor’s viability for performing within the legal thresholds that the AOC targets. The AOC expends substantial personnel resources to assess the contractors’ legal standing and analyze their terms for performance. The contracting officer’s performance reflects directly on how they can facilitate regulatory compliance of the contractors.

The AOC also makes specifications on monitoring and control of performance by establishing evaluation protocols accessible to contractors. Monitoring and control of performance should follow the technical specifications and the terms that performance managers establish for the contractors. The contractors have access to manuals for evaluating and reporting performance, which usually reflects the AOC’s interpretation of the CCASS. In most cases, contractors enjoy the flexibility of defining their methods for implementing performance protocols because the AOC leaves adequate room for contractor’s custom adoption of the specifications.

Resource Management and Costs in PBC

The AOC applies procurement vehicles to fast-track PBC, focusing on the delivery of material, personnel, equipment, management, and quality control for all projects. Officials report that they do not prioritize project costs as a top performance indicator, highlighting the lack of an optimal approach to resource management in the organization’s PBC. The AOC does not require precise cost estimates from its jurisdictions when selecting contractors because the jurisdictions can proceed with their cost specifications and deal with contractors on relatively subjective terms. Such estimates are critical to PBC that leverages competitiveness in the market (Hypko et al., 2010). The central administration at the AOC does not sufficiently support the individual jurisdictions in cost optimization, which creates a scenario of non-standardized approaches to costing in PBC.

The AOC’s distinctive approach to performance valuations leads to a scenario where differences in contractor’s performance with the core administration’s expectations remain unaddressed. The AOC fulfills its obligations to support its jurisdictions by availing funds and even increasing funding for projects not completed within initial resource estimates. The approach indicates that the agency exercises a very limited mandate in guiding contractors on resource management. In an exemplary project of installing ventilation systems, the AOC’s employees lacked the specialized skills to perform some of the tasks or manage the project, and the AOC made wrong decisions on minimizing costs to optimize performance in its contracts. The agency failed to establish the comparative costs of training its internal staff versus relying on a contractor who has a readily trained workforce to complete the project. As a result, the project took longer, and higher costs occurred due to employees’ training in skills that apply to one-time or occasional projects.

Support to Contractors and Performance Delivery

The AOC mainly supports contractors through documentation and communication of its guidelines on how to comply with the agency’s regulations and laws that govern its contracting procedures. In many cases, the AOC translates the Federal Acquisition Regulation (FAR) stipulations in guiding contractors on compliance. However, the agency is not bound by the FAR because it also operates as a branch of the legislative branch of government. Therefore, contractors have to remain acquiesced with the developments in the US Congress. Staying updated helps them understand any changes to terms of contracting in their particular operations. The AOC provides informational support in contract planning and liaises with some contractors in training, prototyping, and establishing the match between the contractors’ provisions and the agency’s needs.

In some contracts, the AOC seeks to support PBCs by providing market research on optimal performance in quality, pricing, and delivery. The agency has developed substantial internal capacity for conducting market research, and the procurement staff can coordinate such research. The agency applies market research for specific solicitations to ensure that they do not exceed its dollar thresholds, i.e., to guide contractors on general pricing requirements. However, this does not translate to specific cost standardization for its divisions. Such standardization is critical to all PBC (Essig et al., 2016; Hypko et al., 2010). The agency also applies market research to establish the availability and practical sourcing of specific items and materials. The approach ensures sufficient information on the availability of common items that apply to the AOC’s operations, which helps inform the strategies used in contracting procedures. In some cases, the AOC performs preliminary market research to establish the availability of items in the market and then proceeds to advertise contracts to select contractors that have access to most of these items. The approach minimizes the chances of botched delivery or delays in performance.

The AOC has low competitiveness in PBC because it has not fully embraced competition-based contracting. The agency did collect and maintain competition data until 2012, and it only applies competition-based contracting in about 50% of its contracts. Comparatively, the entire federal government applies competitive contracting for more than two-thirds of its contracts. Low competitiveness in contracting implies that the AOC needs to assess its capacity to maintain competition data and apply the best mechanisms to optimize performance and objectives that reflect market efficiency. Such approaches require more managerial competency in the areas of market research, procurement, and contracting.

The AOC monitors contractor performance for all its projects through the mandates of contracting officers, technical representatives, and administrators in acquisitions and procurement. The agency does not have a robust performance management system, but it conducts regular audits based on the performance managers’ reports. Therefore, the performance managers fall into different categories and have titles that match their particular niches of operation. On-site representatives compose one category of officials that help manage contractor performance. The on-site representatives provide reports detailing the performance for observable and recordable aspects of projects. The representatives work in close coordination with contractors and provide detailed performance reports. On-site performance management also applies to managing most of the projects that the AOC implements, including constructions on different buildings and structures, maintaining such structures, the grooming, and upkeep of the Capitol grounds, among other undertakings.

The AOC also achieves PBC goals through performance management of daily operations. Contractors are expected to submit their daily performance progress reports to project managers at the AOC. The reports are fairly detailed and include information on on-site personnel counts, performance issues, planned disruptions to people using the Capitol Complex, and government-related delays to works. The approach is compatible with the AOC’s mode of operation because it has an internal procedure for daily reporting as part of the routine work that its staff performs. The daily reports take the most diverse forms because most employees submit a report that goes to a pool of daily reports. The effectiveness of such reports in PBC depends on how the management in various operational niches processes the reports and coordinates the performance to reflect overall progress for contracted works. Since the AOC deals in multiple contracts at any given time, the volume of daily reports is enormous and hence the need for speedier processing of reports to reflect summary elements of the performance.

Discussion of Overall PBC at the AOC and Recommendations for Improvement

The AOC has a high technical capacity for establishing detailed PBCs, but the agency depicts suboptimal performance in implementing PBCs. It is clear that the AOC has established formal contracting procedures but failed to advance its performance protocols. The existing approaches to performance-based contracting are limited by numerous factors, including bureaucracy, limited personnel in performance management, and contract terms that limit the contractor. The AOC provides routine procedures for monitoring contractors’ performance (The AOC, 2019). However, these are limited by their fragmented nature, and they are not fully harmonized to establish a system for PBC.

The lack of a system dedicated to PBC at the AOC shows that the agency is highly likely to remain dependent on the regular performance management approaches in contracting, which leads to long-term underutilization of resources. The agency can achieve better results through a dedicated system that translates federal procedures and customizes the performance process to the AOC. The AOC has the potential to utilize such a system in routine maintenance because most of the projects are circular in nature and can be integrated into a system for performance-based contracting. There is limited know-how on the proper automation of PBC because people in the administration of contracts and acquisitions express their lack of understanding of systematic management of key elements that could influence performance-based contracts. The example is the focus on defining the implementation mechanisms for low-level projects while failing to define and optimize cost elements precisely. As a result, contractors are constrained with regard to gaining flexibility in implementing projects, and they can increase costs to adjust to the AOC’s demands. The AOC tends to be lenient in regulating costs for contractors, which shows that contractors can exploit its regular procedures for performance management.

Resource management is an area of low performance in the AOC’s PBC, and it includes issues of product substitution by contractors and waste of crucial resources, including time and money. The AOC has faced such problems for a long time, and it has not been able to create a comprehensive solution to manage them. The agency faces the challenge of product substitution by contractors in construction and maintenance projects, which leads to paying premium rates for cheap substitutes. As a result, the AOC’s resource management is hampered at the level of project implementation. Furthermore, the agency has not moved towards establishing a proper mechanism for managing the quality of materials and works to minimize fraud. The lenient approach is worsened by the tendency to repeatedly contract similar firms or establish long-term contracts with firms that have performed poorly in terms of accountability and performance. The agency is limited in its efforts to audit contractors’ suitability, and the contractors often contest administrative actions through lawsuits. Therefore, resource management is an area of serious concern for the AOC, and it hinders the effectiveness of performance-based contracting.

Poor performance management in PBC is the biggest problem at the AOC because the agency has insufficient systems for designing and managing performance. The AOC lacks a comprehensive and clear PBC framework, and it varies its expectations for PBC based on the contractors’ practices. The lack of a PBC framework leads to a scenario where the AOC is under-equipped to implement the defined procedures for tracking, measuring, and achieving performance. Lacking a trained staff in its procurement and acquisitions is one of the primary issues leading to the ineffective PBC approaches. The other challenges occur through bureaucratic approaches that obscure the value of PBC as different administrators prefer their own ways of managing performance, which could stem from their different experiences with contractors. As a result, the AOC does not achieve a high standard of PBC compliance, and the administrators at various levels are able to accommodate contractors’ modes and levels of performance, which complicates the performance environment.

One approach to remedy the situation at the AOC and improve its use of performance-based contracting is through technical training. Technical training of administrators and key employees in the areas of performance management in PBC can transform the environment of performance. Such training can include the AOC staff and contractor training. Engaging both administrators and the performance managers can help establish a PBC framework, which would boost chances of implementing more robust performance-based contracting at the agency. Technical training in PBC would also target engineers and architects at the AOC, and these are the people that determine the nature of cooperation with many contractors. The highly technical employees should get rigorous training in PBC to improve their capacity for leadership in this area and improve the performance approaches of contractors. The agency can also equip such employees with tools to report on the adoption of PBC and establish forums for boosting PBC practices at the AOC.

The AOC can also develop internal capacities for performance-based contracting and establish a PBC framework that aligns with such capacities. Shrestha (2020) elaborates on such a framework, which includes elements of planning, procurement, and implementation of contracts. The AOC can examine and establish the most significant and perpetual needs in contract-related performance and determine the best PBC framework to match such needs. The planning phase of such frameworks usually includes all aspects of preparation and sourcing for resources that are relevant to performance-based contracts. The agency will have to also coordinate with top industry players in the areas where it often establishes contracts and determine the most practical framework elements that match its specific needs. In implementing contracts, the AOC should adjust its current practices to performance-based approaches and apply the compatible requirements and trends in PBC. The agency should also maintain a competition database to maintain track of the different common contractors’ capacities and communicate the standards for rating them, which would encourage competition. The quality management approach should also be aligned to resource management to minimize poor delivery and avoid overcompensating the underperforming contractors.

Conclusion

The study examined performance-based contracting at the Architect of the Capitol, an agency that is responsible for the construction and maintenance of the Capitol Complex. The agency manages critical infrastructure and resources that the legislative arm of government and the Supreme Court use in their daily operations. The study applied a qualitative methodology with both primary and secondary investigations. The study’s findings indicate that the Architect of the Capitol applies PBC to a suboptimal extent, and it has many weaknesses in how it implements its fragmented PBC approach. In most cases, the Capitol Architect does not follow through on PBC adoption because it lacks adequate internal procedures and is inconsistent in applying the PBC protocols that it has defined in its manuals. The defined protocol is general, and the AOC has not applied it to develop its internal capacities for performance-based contracting. The agency also relies on contractors to deal with most expectations for performance-based contracting, and internal administrators differ in how they view the optimization of holistic performance. Therefore, challenges occur in managing costing, timely delivery, reducing quality problems, and compensating contractors based on proper performance. The AOC recommended that the AOC improve its PBC approaches through training, having a PBC framework, and stricter terms for contractors to perform within PBC specifications.

References

Alyami, Z., & Tighe, S. L. (2013). Development of maintenance and rehabilitation program: pavement assets under performance-based contracts. Transportation Research Record, 2361(1), 1–10. https://doi.org/10.3141/2361-01.

Cherobini, D. (2020). Inherent jeopardy of performance-based contracting metrics: A simulation experiment. Semantics Scholar. https://www.semanticscholar.org/paper/Inherent-Jeopardy-of-Performance-Based-Contracting-Cherobini/b325d41b0c1a10dfa81b67a1f4d29c28ce784e25.

Essig, M., Glas, A., Selviaridis, K., & Roehrich, J. (2016). Performance-based contracting in business markets. Industrial Marketing Management, 59. 5-11. 10.1016/j.indmarman.2016.10.007.

Hypko, P.,  Tilebein, M., & Gleich, R. (2010). Clarifying the concept of performance-based contracting in manufacturing industries. Journal of Service Management. 21. 625-655. 10.1108/09564231011079075.

GAO. (2019). A Formalized Process Could Improve Management of the Construction Division’s Workforce and Workload.

Singh, R., Ravache, B., & Sartor, D. (2018). Building Innovation: A Guide for High-Performance Energy Efficient Buildings in India. Berkeley Lab’s Energy Technologies Area. https://eta.lbl.gov/publications/building-innovation-guide-high.

Shrestha, K., & Shrestha, P. (2020). Framework development of performance-based striping maintenance contracts. Journal of Legal Affairs and Dispute Resolution in Engineering and Construction, 12. 11. 10.1061/(ASCE)LA.1943-4170.0000385.

Sultana, M., Rahman, A., & Chowdhury, S. (2013). A Review of performance-based maintenance of road infrastructure by contracting. International Journal of Productivity and Performance Management, 62. 10.1108/17410401311309186.

The AOC. (2019). Contracting Manual. https://www.aoc.gov/sites/default/files/documents/basic-page/aoc-order-34-1-contracting-manual-2019-03.pdf.

van Strien, J., Gelderman, C. J., & Semeijn, J. (2019). Performance-based contracting in military supply chains and the willingness to bear risks. Journal of Defense Analytics and Logistics 3(1): 83-107. https://doi.org/10.1108/JDAL-10-2017-0021.

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