The Government Printing Office has awarded a contract to Harris, an international communications and information technology company, to develop the agency’s first Web-based document distribution system. The contract, more so than the project for which GPO awarded it, has procurement analysts talking.

GPO created a performance-based, cost-plus-award contract that some analysts say should be a model for other agencies. The agency “spelled out its expectations in an almost mathematical way,” said Alan Chvotkin, senior vice president and counsel at the Professional Services Council. The contract “looks like a very solid, although somewhat complicated, award-fee plan,” he added. The one-year contract is worth $9.6 million initially and has optional extensions that could make it worth $29 million by the time the project ends in 2008. Officials at the agency, which is responsible for distributing all official government information, refer to the project as the Future Digital System.

GPO expects basic system functions to be delivered by July 2007 and enhancements by July 2008. The contract’s payment structure should give both parties flexibility to accommodate changing technology, GPO officials said.

The agency issued a cost-plus-award-fee contract, in which the prime contractor is paid for doing the work and receives an additional award fee or bonus for good performance. Under such an agreement, the contractor is entitled to payment for unexpected costs that arise after signing the agreement if GPO thinks those extra costs are justified.

That means the contract costs could exceed the expected $29 million, said Mike Wash, GPO’s chief technical officer.

“The counterbalance of that is we have well-defined requirements of what we want,” he said. “There’s also been a lot of due diligence on Harris’ part on reviewing those requirements, which gives us comfort that [our estimates] are very accurate.”

Wash said GPO will rely on earned value management (EVM), a project oversight method that compares current project status to original cost and timeline projections. “They are at risk for losing their bonus if they don’t deliver on time or even exceed expectations,” Wash said.

Other procurement experts say GPO created a contract safety net for what many acknowledge is a risky project. “The downside of [cost-plus-award] contracts is that they require more managerial oversight by the government and the contractor,” said Ray Bjorklund, senior vice president and chief knowledge officer at Federal Sources, a market research firm.