37.601
General
Performance-based service contracts must include a performance work statement, measurable standards, and, where appropriate, performance incentives aligned with those standards.
Overview
FAR 37.601 outlines the general requirements for structuring solicitations and contracts under performance-based acquisition (PBA) for services. It allows agencies to use either a performance work statement (PWS) or a statement of objectives (SOO) in solicitations. For performance-based service contracts, the regulation mandates inclusion of a PWS, measurable performance standards (covering aspects like quality, timeliness, and quantity), and, where appropriate, performance incentives that align with those standards. These requirements are designed to ensure that service contracts are outcome-focused and that contractor performance can be objectively assessed and incentivized.
Key Rules
- Use of PWS or SOO in Solicitations
- Solicitations for service contracts may use either a performance work statement or a statement of objectives.
- Mandatory Elements in Performance-Based Contracts
- Contracts must include a PWS, measurable performance standards, and, when appropriate, performance incentives tied to those standards.
Responsibilities
- Contracting Officers: Must ensure solicitations and contracts include the required elements (PWS, standards, incentives) and that performance incentives are properly aligned with standards.
- Contractors: Must understand and comply with the PWS and meet or exceed the measurable performance standards.
- Agencies: Oversee the development and implementation of performance-based contracts and ensure compliance with FAR requirements.
Practical Implications
- This section ensures service contracts are structured to focus on results and accountability.
- Contractors must be prepared to deliver measurable outcomes and may be eligible for incentives based on performance.
- Common pitfalls include unclear standards, misaligned incentives, or insufficient methods for assessing performance.