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Supplying Principles and Practices > USPS Supplying Practices Process Process Step 5: Measure and Manage Supply > Evaluate Contract Effectiveness
Evaluate Contract Effectiveness
Evaluation of Postal Service contract effectiveness is an assessment of
whether the contract met the identified needs and expectations of the Client.
It also addresses how the contract has generated revenue or loss and
determines what corrective action needs to be taken to prevent future losses,
if any. It is critical for the Postal Service to ensure that all deadlines are being
met as scheduled. Contract performance information is used by the Postal
Service for future purchases to guarantee that the proper investments are
being made and that best value has been obtained.
Contract effectiveness evaluations help to ensure that all Suppliers and
Subcontractors are performing in a satisfactory manner. Contract
effectiveness information is also used by the Postal Service for follow-on
purchases, to guarantee that only the top performers are considered.
Additional information can be found in the Perform Risk Analysis on Supplier
Proposals topic of the Evaluate Proposals task of Process Step 2: Evaluate
Sources.
It is critical for the Postal Service to evaluate its contract management.
Evaluating contract management is an assessment of how the Postal Service
has managed a contract, including:
• How did the Postal Service's behavior during the initiative hinder
or help the completion of the project?
• How well did the Supplier (including Subcontractors) perform, and
was there a positive response to the Postal Service?
• Did the contract generate revenue or loss, and what corrective
action needs to be taken to prevent future losses, if any?
The Performance Evaluation Team evaluates both the Supplier's
performance and the Postal Service's management of the contract. Members
should be from the Purchase/SCM Team, other Postal Service specialists
(e.g., Financial or Legal Counsel), or external experts. Depending on the
characteristics and complexity of the purchase, the Performance Evaluation
Team may consist of the Purchase/SCM Team, or may incorporate other
stakeholders and individuals as appropriate. Ideally, those involved will have
previous experience working with Postal Service contracts of a similar nature,
scale, and complexity.
It is the responsibility of the Performance Evaluation Team to evaluate
contract effectiveness. Depending on the contract, the Performance
Evaluation Team may choose to focus on the factors that are critical to the
overall success of the contract when evaluating Supplier and Subcontractor
performance, such as:
• Adherence to schedules - this is the project's planned start and
finish date; all commitments are to be met on the agreed-upon
due date
• Forecasting/controlling costs - an assessment of the costs
associated with the contract; keeping within the budget
• Overall satisfaction - Postal Service evaluates how satisfied it is
with the Suppliers
Contract effectiveness evaluations are conducted at the discretion of the
Performance Evaluation Team, which serves as an incentive for Suppliers to
maximize their performance and Client satisfaction. Evaluations of contract
effectiveness become part of the Supplier's contract performance history, and
they should be readily available on an ongoing basis. Evaluations are readily
accessible on an internal basis, and this information may be leveraged for
future contract award considerations.
Indicators are specified to monitor performance of the contract requirements.
Target performance measures are assigned for each indicator and are the
basis for determining whether the contract is providing the best value for the
Postal Service. The performance work statement (PWS), statement of work
(SOW), or statement of objectives (SOO) describes the effort in terms of
measurable performance standards (outputs). A quality assurance plan
(QAP) is used to determine whether the Postal Service is meeting the
applicable contract requirements. Additional information can be found in the
Start Request for Proposals (RFP) Development topic of the Prepare Project
task of Process Step 2: Evaluate Sources and in the Execute Quality
Assurance Plan topic of the Manage Delivery and Contract Performance task
of Process Step 5: Measure and Manage Supply.
Performance standards establish the required performance level for Postal
Service contracts. Correspondingly, the target measure establishes a
maximum allowable error rate or variation from the standard. Failure to
perform within this target results in an examination of whether the contract is
beneficial to the goals and objectives of the Postal Service. Examples of
standards include quality of work, productivity, and cost-efficiency. The
Purchase/SCM Team should ensure that each standard is necessary and
carefully chosen.
A quality assurance plan (QAP) directly corresponds to the performance
standards and measures contract performance. The QAP ensures that the
Client receives the quality called for in the contract and pays only for what is
received. The QAP should include an examination schedule and clearly
stated examination method(s). Examination allows the observation of
contract-related activities to ensure that the Supplier is performing
satisfactorily.
Ongoing inspections are recommended, and discussions regarding
performance should be held with the Supplier frequently. The Contracting
Officer is responsible for engaging the Supplier in dialogue and offering
opportunities for improvement and explanation as problems arise.
Substandard quality levels mandate corrective action, and the Contracting
Officer will establish deadlines by which corrective action must be taken.
Ineffective or problematic contract performance should be identified on an
ongoing basis.
When the Performance Evaluation Team collects and rates data pertinent to
contract performance, the Supplier should be given access to the data
collected and have the opportunity to explain, clarify, or rebut negative
information.
Start Request for Proposals (RFP) Development topic, Prepare Project task,
Process Step 2: Evaluate Sources
Review and Finalize Request for Proposals (RFP) topic, Perform
Solicitation-Related Activities task, Process Step 2: Evaluate Sources
Perform Risk Analysis on Supplier Proposals topic, Evaluate Proposals task,
Process Step 2: Evaluate Sources
Execute Quality Assurance Plan topic, Manage Delivery and Contract
Performance task, Process Step 5: Measure and Manage Supply
Clause B-18: Subcontracts
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