Performance-based acquisitions have been around in some form for many years, and they have been a mandate in government since the early 1990s. But agencies have only recently started to embrace the concept, longtime practitioners in the field say.

That's encouraging, said Chip Mather, co-founder and partner of Acquisition Solutions and a 20-year government contracting veteran.

Although the words "performance based" have been a part of contract language for a while, Mather said, it's been a form of pressure rather than a form of acquisition.

"That is still mostly the case today, though it's starting to change," he said. "And industry is also starting to react. They are trying to work out how to respond to performance-based contracts."

Mather and others offered some tips for companies to adjust to performance-based contracting.

Get started

Getting started is hard for agencies and contractors, Mather said, because performance-based acquisitions seem intimidating compared with more traditional procurement forms. Failures and bumps in the road will occur at least in the beginning, he said.

"Get together with people who have already done it," Mather said. "Talk to those who have already gone down the path and see what lessons they've learned."

Examples of successful performance-based acquisitions that people can learn from abound, Mather said, adding that tools exist for helping with the first step.

The Office of Federal Procurement Policy, for example, publishes a seven-step beginners' guide to performance-based acquisitions, complete with case studies.

"It's the 90/10 rule," said Andrea White, vice president of contracts and support services at Robbins-Gioia, a consulting firm. "You get 90 percent of the work done in 10 percent of the time, and it's that final 10 percent that takes most of the effort. But if you wait until you are 100 percent sure, it will never get done."

Performance-based acquisition is not a blackboard subject, Mather said. "You can learn the principles in the classroom," but the rest is based on experience, he said. "Performance-based acquisition is a hands-on thing."

Tie payment closely to performance

Agencies and contractors struggle to correlate payment and performance because it means moving away from paying for labor and time expended, which is the more familiar and comfortable payment method.

"It's fairly tricky because sometimes the results of a contract won't be known for a considerable time, but agencies can't expect the contractor to shoulder all of the costs until results are achieved," Mather said.