[Chapter 21 pdf]

Chapter highlights:

Purpose: This chapter covers performance-based contracting and service level agreements used in the acquisition of information technology goods and services.

Key points:

  • Performance-based contracting (PBC) is a procurement method that structures all aspects of the procurement around the purposes of the work to be performed instead of describing the manner by which the work is to be performed.
  • The most important element of a PBC, and what distinguishes it from other contracting methods, is the results that are desired.
  • The agency should determine at least one performance indicator and standard for each task and deliverable and link them to a description of acceptable quality.
  • Performance incentives may be positive or negative and may be monetary or non-monetary--based on cost control, quality, responsiveness or customer satisfaction.


21.1 Performance-based contracting
21.10 Service level agreements (SLAs)
21.2 Elements of PBCs
21.3 Performance measures
21.5 The PBC statement of work (SOW)
21.9 Selecting the PBC incentive strategy