2-16.3 Key Elements of Performance-Based Contracts

Client objectives and goals must be clear to ensure the success of the contract. Indicators are specified to monitor performance of the requirements. Requirements should be clearly defined and stated in terms of results required, rather than the method of performing the work. A WBS can be utilized to assign requirements to tasks.

Target performance measures are assigned for each indicator and are the basis to financially reward or sanction suppliers. Incentives should be put in place to motivate the supplier’s performance. The PWS or SOO describes the effort in terms of measurable performance standards (outputs). Additional information on PWS and SOO can be found in the Start Request for Proposal Development topic of the Prepare Project task of USPS Supplying Practices Process Step 2: Evaluate Sources. A QAP determines whether supplier services meet the applicable statements’ contract requirements.