Deepwater Takes on Performance-Based Contracting and Public/Private Partnership

Rear Adm. Gary Blore, Executive Office of the Deepwater Program, U.S. Coast Guard, Leo Mackay, President of Integrated Coast Guard Systems and James Edwin Kee, Professor at the GW School of Public Policy and Public Administration took a hard look at the challenges of performance-based contracting and public private partnership in the Coast Guard's Deepwater program.

A big challenge in the public/private partnership between the Coast Guard and ICGS is shifting responsibility for systems integration to industry while the Coast Guard remains the keeper of deep "Concept of Operations" knowledge. Industry needs to tap into the Coast Guard understanding of its operational imperatives in order to design systems that meet those objectives.

A pitfall of performance-based contracting that grows out of this new mode of acquisition occurs when the government specifies a requirement, and the government knows what it means, but the industry partner isn't quite speaking the same language. For example, when the Coast Guard says it needs a cutter that can operate in 12-foot seas, it means that it needs a cutter than can perform all mission critical operations in 12-foots seas, not just operate under limited capabilities until it reaches 10-foot seas.

Given this need to "translate" what the government needs into terms that industry can understand and execute against, it was suggested that a critical success factor of public/private partnerships is having a sufficient number of former government employees working on the industry side.

On the critical question of whether performance-based contracting has led to better acquisition results than the old military specification method, the answer is to some degree, so far, so good, but check back with Deepwater in ten years since they've only been at it for four years. That said, one critical difference already evident is that, under the old model, the standard approach would have been a 1-to-1 replacement of existing assets, i.e. a cutter for a cutter. Through Deepwater, on the other hand, it's not just individual assets that are being replaced but rather entire operational systems. By focusing on operational objectives, Deepwater has let to innovations like the use of unmanned areal vehicles and streaming video of live engagements back to operational command.

Asked for advice on how other government organizations can take the huge leap to performance-based contracting and public/private partnership, it was observed that it may take a new generation of program leaders to fully complete the transition.