The recent change of name from the Department of Defense to the Department of War (DoW) signaled the start of a new mission for the agency and the millions of Americans who serve their country. With a greater integration and dependence on technology in pursuit of the mission and mission success, the DoW needs to become more agile and be able to access the most innovative technology the country has to offer. While the Defense Industrial Base (DIB) has been dominated by a handful of companies for the last 50 years, or more, today’s DIB needs to reflect not just the Big Five, but mid-size organizations and small-scale startups. The other challenge the DoW faces as it changes its relationship with industry is to find a better contracting model that enables the rapid acquisition of tools and technologies, not five years from now when they’re obsolete, but in real time.
This is where outcomes based contracting plays an essential role in revolutionizing procurement and moving from concept to deployment in months, not decades. If you’re ready to learn more about outcomes based contracting, keep reading below, or scroll down to watch the video at the end; we’ve got you covered.
For federal agencies, the contracting process is often fraught with massive cost overruns, failure to deliver, and criticism and demands for accountability from the White House, Congress, and constituents. With a renewed focus on eliminating fraud, waste, and abuse from both defense and civilian agencies over the last 18 months, agencies are considering the merits of outcomes based contracting.
Widely used in healthcare, pharmaceuticals, and education, outcomes based contracting shifts the focus from traditional measures of success such as hours worked to focus on mission impact or value achieved. In short, the contract doesn’t pay out because time has elapsed or a certain number of hours have been worked; what matters is that what has been promised contractually is delivered in actuality.
According to Mike Raker, Chief Technology Officer at Maximus, there are other benefits as well. In an episode of Federal News Network’s Forward-Thinking Government series, he shared that “we’re mutually aligned in terms of incentives. If a project fails, we fail together. And there’s no debate as to whether or not it was a success.” While success in delivering the contract is obviously the desired outcome for both parties, the trust that is built through the transparency, accountability, and shared risk and reward builds its own value. As contractors and agencies work within this model it allows them to deepen relationships, identify other avenues for collaboration, and encourages continual investment in tools and technologies, enabling the government to move more rapidly and adopt innovative solutions in real-time.
While all signs point to ‘yes’ when it comes to adoption of an outcomes based contracting model, Raker does caution that it’s not as easy as pulling together new contract language. As Maximus moved to this model, Raker tracked what worked and where there were friction points and created a 6-step roadmap to make the transition between inputs/outputs contracting to outcomes based contracting.
To help you get started, we’ve included a summary of the first three steps on Raker’s roadmap below.
Step 1: Start with Clear Outcomes
From the get-go, agencies should establish a shared understanding of the desired mission or business impact — not just technical goals — and vendors should help with that, Raker said.
“One of the first steps with any good customer relationship is making sure that we have a clear view of what the outcome is that we’re trying to deliver,” he said. “You have to start with a clear identification of what are those outcomes that determine success.”
Step 2: Use Multidimensional Metrics
Agencies will also want to employ layered variables to define success, cost, innovation, uptime, quality — and then rank their relative importance. Again, Raker pointed to this being a joint effort between the government and its contractors.
“Often, what we’ll do is talk about the different attributes of the outcomes,” he said.
For instance, it might make sense to create a radar diagram that details the multiple elements that contribute to the success of the outcome, he said. That can help prioritize the tactics but still push the vendor to drive a great solution, Raker said. “It may be more important to deliver the same service at a lower cost, but at the same time, we want to bring innovation to the table with the agility to change and adapt overtime based on the needs and priorities of the customer.”
Step 3: Run Stakeholder Workshops
Next, agencies will want to bring together decision makers, end users, and operators together to identify true beneficiaries and relevant metrics.
“We often facilitate workshops with our customers and our customer experience…”
Click here to all the steps over on Federal News Network or watch the video above.