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Section 1 provides the bill's short title for the Performance-Based Organization (PBO). A PBO is a discrete unit of a department that commits to clear management objectives, measurable goals, customer service standards, and specific targets for improved performance. This unit remains within a department under the policy guidance and direction of the Secretary. It is still subject to governmentwide regulations, rules, policies, and procedures, unless specific waivers are granted. A PBO focuses on programmatic operations, not policy-making functions.
A PBO will have a Chief Operating Officer (COO) and greater managerial flexibilities in personnel, procurement and other specified areas which will enable the PBO to improve organizational performance. The COO will be selected for managerial experience, for a fixed term, and will sign an annual performance agreement with the Secretary and be accountable for meeting the organization's performance improvement goals.
Subsection (a) of section 2 provides for the selection, reappointment, and removal of the Chief Operating Officer (COO). The COO will be selected by the Secretary for a fixed-term appointment of [3 to 5] years. The COO will not be a career employee or political appointee but, rather, will be selected from a pool of highly qualified and experienced managers from either the private or public sector. The Secretary may reappoint the COO to subsequent terms, if he or she has met or exceeded organizational and individual performance goals. The COO may be removed by the President at will, or by the Secretary for misconduct or failure to meet the goals set forth in the COO's performance agreement, described in subsection (b).
Subsection (b) of section 2 requires the development and implementation of a performance agreement. The Secretary and the COO will enter into an annual performance agreement which shall set forth measurable organization and individual goals for the COO in key operational areas. The agreement will be subject to review by the Director of the Office of Management and Budget prior to execution. Once the performance agreement is signed, it will be available to the public from the department.
Subsection (c) of section 2 provides for the COO's compensation. The Secretary would be authorized to pay the COO a base salary up to the maximum rate of the basic pay of the Senior Executive Service, Level ES-6 with any applicable locality-based comparability payment. The incentive bonus of the COO could be up to 50 percent of the agreed-upon base salary. The COO's aggregate salary (base pay plus incentive bonus) for a calendar year cannot equal or exceed the amount of the President's salary.
Subsection (d) of section 2 requires the COO to prepare an annual management report. The COO will prepare an annual management report for the Secretary and Congress containing information prescribed by the Director of the Office of Management and Budget. This accountability report will include, at a minimum, the results of an independent financial audit; the financial and performance requirements of the Chief Financial Officers Act of ___ and the Government Performance and Results Act of 1993; and information on the [name of the PBO]'s compensation systems, salary levels, bonuses and awards, as well as information regarding the comparability of compensation paid to employees of [name of PBO] relative to other organizations in the Federal Government that perform similar work. The department will make the report available to the public.
Subsection (a) of section 3 exempts [name of PBO] from any personnel ceilings relating to the number or grade of its employees.
Subsection (b) of section 3 emphasizes that the flexibilities authorized by sections 4 through 6 must conform to provisions of title 5, U.S. Code, governing merit system principles and prohibited personnel practices, veterans preference, the aggregate limitation on pay, and labor-management relations. This subsection highlights the continuing applicability of provisions which would apply to [name of PBO] even if they were not cited here. All provisions of title 5 continue to apply to [name of PBO] except as specifically provided otherwise in this bill or another statute.
Subsection (b) also provides that the exercise of any authorities under sections 4 through 6 shall be subject to oversight by the Office of Personnel Management (OPM) to the same extent as authorities delegated to agencies under 5 U.S.C. 1104(a)(2).
Subsection (c) of section 3 ensures that the use of the flexibilities provided in the bill will be treated like a demonstration project described in 5 U.S.C. 4703(a), insofar as labor-management relations are concerned. This means that [name of PBO] will not be able to implement any flexibility provided in sections 4 through 6 unless it has a written agreement, providing for the exercise of that flexibility, with the labor organization that is the exclusive representative of the affected employees.
If the use of a particular flexibility would affect employees in more than one bargaining unit affiliated with the same national union, [name of PBO] may exercise that flexibility according to the terms of an agreement between [name of PBO] and the national labor organization. Similarly, if employees in more than one bargaining unit affiliated with more than one national union would be affected by the use of a particular flexibility, [name of PBO] must have a written agreement with all of the national unions involved, or separate agreements with each local union representing employees in each affected bargaining unit, in order to use that flexibility.
Paragraph (3) of subsection (c) clarifies that the agreements referred to in the preceding paragraphs are voluntary agreements and not decisions of the Federal Services Impasses Panel, which are sometimes called "ordered agreements." In other words, either labor and management will enter voluntarily into a written agreement regarding the implementation of a flexibility, or the flexibility will not be used. A disagreement between labor and management regarding the use of a flexibility authorized by sections 4 through 6 cannot be taken to the Impasses Panel for a resolution.
Subsection (d) of section 3 identifies which flexibilities may be used without prior approval by OPM and which flexibilities require a specific plan to be submitted to OPM for approval. [name of PBO] may exercise the following authorities without OPM's prior approval:
Subsection (a) of section 4 requires [name of PBO] to establish a performance management system which both maintains individual accountability and strengthens [name of PBO] 's effectiveness in certain specified ways. This system must maintain individual accountability by--
Subsection (c) of section 4 provides certain flexibilities for addressing poor performance. Paragraph (1) permits [name of PBO] to shorten the notice period for performance-based actions under 5 U.S.C. 4303 and adverse actions under 5 U.S.C. 7513 from 30 days to 15 days. Paragraph (2) bars an employee who has been denied a periodic step increase under 5 U.S.C. 5335 from appealing the denial to the Merit Systems Protection Board.
Section 5 provides flexibilities relating to classification and pay.
Subsection (a) of section 5 allows [name of PBO] to establish, subject to criteria to be prescribed by OPM, one or more broad-banded systems covering employees who would otherwise be under the General Schedule.
Subsection (b) of section 5 permits [name of PBO] , to pay its employees who remain subject to the General Schedule (instead of being placed under a broad-banded system) without regard to the 10-step structure of the General Schedule. OPM will establish criteria for setting the pay of employees covered by this "stepless" General Schedule. Performance-contingent increases, equivalent to one-ninth of the difference between the maximum and minimum rates for the employee's grade, may be granted in conformance with OPM criteria.
Subsection (c) of section 5 allows [name of PBO] , with advance approval of OPM, to establish one or more alternative job evaluation systems that include employees in one or more of the following groups:
Under an alternative job evaluation system that includes one or more employees who would otherwise be paid under the General Schedule or the FWS, an individual's rate of basic pay would be capped at the rate for grade 15, step 10, of the General Schedule. Under an alternative job evaluation system that includes employees who would otherwise be paid under 5 U.S.C. 5376, an individual's rate of basic pay would be capped at the rate of basic pay of the COO.
Subsection (d) of section 5 allows [name of PBO] , with the advance approval of OPM, to provide for variations from the provisions of title 5, U.S. Code, governing grade and pay retention, with respect to employees covered by a broad-banded system or an alternative job evaluation system.
Subsection (e) of section 5 allows [name of PBO] , with OPM's approval, to provide for variations from the provisions of 5 U.S.C. 5753 and 5754, concerning recruitment and relocation bonuses and retention allowances, respectively.
Section 6 provides certain flexibilities relating to staffing.
Subsection (a) of section 6 allows certain term employees in [name of PBO] to be converted to permanent appointments using internal merit promotion procedures. To be eligible for conversion, the individual must have completed 2 years of current continuous service under one or more term appointments made under competitive procedures. The employee's performance under the term appointment or appointments must have been satisfactory, and the vacancy announcement for the term appointment from which the employee is converted must have stated that there was a potential for subsequent conversion to a permanent appointment. Finally, the conversion must be to a position in the same line of work as a position in which the employee served under a term appointment.
Subsection (b) of section 6 permits [name of PBO] to establish category rating systems for evaluating job applicants instead of assigning numerical ratings to individual applicants. Qualified candidates would be divided among two or more quality categories, based on an evaluation of their knowledge, skills, and abilities relative to those required for the job. Preference eligibles would be listed ahead of other applicants, within each quality category. Preference eligibles with a compensable service-connected disability of 10 percent or more would be listed in the highest quality category, except for scientific and professional positions at GS-9 or higher. Any applicant from the highest quality category could be selected, except that a preference eligible in the same or higher quality category could not be passed over unless permitted under current criteria in title 5.
Subsection (c) of section 6 exempts [name of PBO] from the 120-day limit on details.
Subsection (d) of section 6 permits [name of PBO] to establish a probationary period of up to 3 years for any position if it determines that, because of the nature of the work, a shorter period is insufficient to demonstrate complete proficiency.
Subsection (e) of section 6 makes clear that no provision of section 6 relieves [name of PBO] from any obligations under Presidentially-directed priority placement programs for surplus and displaced employees, or from any obligations under court orders relating to its employment practices.
Two-phase selection procedures.
While the Competition in Contracting Act did much to instill the concept of openness in the procurement process, it has proven too rigid in certain respects to provide contracting officers with the tools to take advantage of this openness in an efficient manner. For instance, contracting officers are effectively precluded from seeking information short of a "proposal" once an open competition begins and may not exclude offerors without fully evaluating their offers in terms of the significant factors and subfactors identified in the solicitation in accordance with 41 U.S.C. 253a and 253b and 10 U.S.C. 2305.
Subsection (b)(1) would provide broad authority for contracting officers to conduct a "two-phase" selection where competition is initiated with a streamlined process that avoids the submission of formal proposals detailing an offered solution ("phase I") and from which a limited number of sources would be selected to submit formal offers as part of a further competition ("phase II").
General authorization to conduct two-phase selection would be a central tool for combining competition and efficiency for larger procurements. It would allow the PBO to initiate competitions without the submission of formal proposals and to efficiently make "downselect" decisions based on less detailed vendor submissions. This would save firms the cost of unnecessarily preparing detailed proposals and save the government the time spent evaluating them, when a simpler submission could effectively permit the government to select those sources that are likely to submit the most competitive offers. It would also allow firms to understand their weaknesses earlier in the process, thus giving them more time to strengthen their position as they prepare to compete for future procurement opportunities.
The process would begin with the contracting officer publishing widespread notice giving a general description of the scope or purpose of the acquisition and any additional information determined to be appropriate. Any interested source would be given a full opportunity to compete in the first phase of competition, but would not necessarily be asked to submit a "proposal." Rather than going through the time and expense of conceiving a detailed solution to meet the government's needs, they would be asked to focus on how their capabilities might fit with what the government is generally looking for. Past performance information, including past performance on pricing or cost control, would generally also be sought at this phase. Proposals with formal offers would be sought only in the second phase from those sources (which could be as few as two)that were selected based on information provided in the first phase.
Before submitting proposals, the offerors selected in the first phase could be invited to participate in an open communications process in which vendors examine the problem to be solved in depth and develop specific competing solutions. The second phase of competition would be conducted in accordance with the procedural requirements set forth in 303A and 303B of the Federal Property and Administrative Services Act or, alternatively, 2305 of title 10, if applicable.
The section would also authorize the PBO to establish, from a phase-one selection, a verified list of vendors who would compete for multiple procurements within the general scope of the initial competition based on business practices, product or service quality, and past performance (including past performance on price or cost). Provided lists were opened periodically to add or substitute sources, this authority would enable a PBO to utilize the competitive process much more effectively.
Application of Simplified Procedures to Commercial Items.
The Clinger-Cohen Act authorizes the establishment of special simplified procedures in the Federal Acquisition Regulation on a three-year test period for the acquisition of commercial items between $100,000 and $5,000,000 where the contracting officer expects commercial items to be offered. Subsection (b)(2) would remove the caveats placed on use of this authority and permit the PBO to use this authority as implemented in the Federal Acquisition Regulation without regard to any dollar limitations or expiration date consistent with guidance established by the Administrator for Federal Procurement Policy. The PBO could also develop, consistent with guidance established by the Administrator, alternative procedures for the acquisition of commercial items to address particular mission needs. The broadest use of these flexibilities would give the PBO a further incentive to take advantage of the economies and innovations offered by the commercial marketplace. Vested with this additional procedural discretion, contracting officers would be able to reduce proposal costs for offerors and administrative costs for the government.
While development of detailed specifications and formal evaluations may be needed under certain circumstances, they are largely unnecessary in commercial item buys in any amount. The rigors of the commercial market already help to ensure that vendors offer proven products. The use of streamlined procedures would enable contracting officers to avoid many of the burdensome formalities of the current process. Examples of flexibilities include issuing a solicitation without subfactors or identifying the relative weights of factors; foregoing a competitive range determination; having discussions on an "as needed" basis only with those offerors where communication would be beneficial to the government; conducting functional product testing without a formal test plan; evaluating offerors informally without establishing specific schemes for specific factors; and conducting comparative evaluation of offers. Use of these simplified procedures can save agencies the time and expense of designing detailed evaluation schemes to analyze lengthy proposals, and can save vendors the cost of describing in a detailed proposal what can be effectively communicated through customary commercial marketing tools (e.g., existing product literature and samples).
Exemption from Wait Period When Using Detailed Synopsis.
Subsection b(3) would provide an exception to the current requirement of a 15-day waiting period between the date a synopsis is published by the Secretary of Commerce and the date the solicitation is issued. The 15-day wait period serves no purpose when the synopsis provides the information required to be in a solicitation. In those instances, potential offerors already have all the information they need to decide whether to submit offers. The detailed synopsis would be available to all potential offerors, with complete information required for submission of offers. All potential offerors would have equal time to evaluate the government requirement and to prepare and submit offers.
The Clinger-Cohen Act provides some relief from this inflexible deadline, but only with respect to the acquisition of commercial items. Elimination of the mandatory 15-day wait period would streamline the procurement process when mission needs could not be met with commercial items and allow the PBO to be more cost effective in the conduct of its procurement programs. The PBO would be expected to establish response times that are consistent with international agreements.
Recompetitions for Continuing Requirements.
Where the COO certifies that the incumbent contractor has met or exceeded the cost, schedule, and performance goals established in the contract, and the incumbent wishes to compete for additional work where there is a continuing requirement, it may be more efficient and effective to rely upon adequate competition. Subsection (b)(4) would permit the conduct of adequate competition under these circumstances. Inclusion of a successfully performing incumbent in a recompetition, along with a limited number of highly qualified contractors, would help ensure that the recompetition is vigorous.
Modular Contracting for Information Technology.
The Clinger-Cohen Act recognizes that a modular buying approach may be an effective strategy for ensuring that major acquisitions of information technology are better managed and streamlined. Breaking large procurements into smaller more manageable pieces has many advantages, including:
Streamlined Acquisition of Services from Small Businesses.
Subsection (b)(6) would provide the PBO with additional flexibility in the acquisition of services up to $1 million that do not meet the definition of commercial item set forth in section 4(12) of the Office of Federal Procurement Policy Act, when such procurements are conducted as small business set-asides and if supply items are expected to constitute less than 20 percent of the total value of the contract. It would authorize the PBO to use the special simplified procedures applicable to procurements below the simplified acquisition threshold as set forth in the Federal Acquisition Regulation. A large pool of highly qualified small business service contractors exists that can compete for service requirements in this dollar range. The combination of simplified procedures (where, among other things, the conduct of discussions, formal evaluation plans and scoring are not required) and spirited competition among small businesses (whose low overhead and favorable wage structures can enable them to offer competitive bids) can result in lower costs to the government and reduce acquisition lead times. This authority would also provide the PBO with a viable alternative to aggregating services into large single award task order contracts simply to avoid the burdensome procedures for competing individual requirements. This authority does not apply to the acquisition of construction.
