Performance-based acquisition is a method of contracting wherein government program managers describe the results they seek to achieve, rather than tell the contractor how to do the work. A simple example would be a requirement for bumpers on passenger vehicles to withstand a 10-mile-per-hour impact with no structural damage to the vehicle. In this case, the result or objective has been identified, but how to achieve that result is left to the contractor, who is likely more expert than the government in how to design a bumper. In a performance-based approach, the government does not specify how the results are to be achieved, and-most importantindustry is free to devise unique and ingenious solutions.
A Defense Department-wide goal required that 50% of Fiscal Year 2005 dollars for eligible services be awarded by way of performance-based contracts and task orders. While the goal for Fiscal Year 2006 has not yet been set, it will likely stay the same or rise further. For program managers with limited budgets to achieve their goals, it is important for them to be aware of the potential that performance-based acquisition offers toward maximizing results.