Open Thread: Share-in-Savings & Incentive-based Contracting

We’re excited for our upcoming webinar on Share-in-Savings and incentive-based contracting techniques as they apply to modernizing legacy systems.

We intend for this webinar to be a collaborative & interactive affair, so in that spirit I’m opening this discussion thread so that we can begin to collect some feedback from our community on the questions and concerns they might have.

The more discussion and questions we collect, the more responsive we can make this topic. So, I’ll start us out with a question:

What comes to mind when you hear the term Share-in-Savings contract?

——————————
Frank McNally
Director, Learning & Content Development
——————————

0

Replies

  1. ΓÇïRichard, you’re right to pose that┬áquestion — profit is surely too difficult to try to measure as a cost element. I guess I meant to say that the┬áeffects on┬áthe contractor’s profit would be a secondary effect. That is, the cost target┬áformula adjusts┬áthe┬áprice, and then, when billing for the work, the contractor has to decrease the profit that’s been loaded into that price. Those changes (and the business decisions behind them) are invisible to the principal.

    The formula is Price =┬áK+(1-╬╗)X, where K is the fixed fee, X is the accounted project cost, and ╬╗ is the contractor’s sharing ratio. The contractor’s profit from the project is then given by K ΓÇô ╬╗X.┬áThe┬á”sharing ratio,” then, is basically a price reduction per dollar of cost overruns, so it┬áincentivizes the contractor to avoid overruns. Maybe, too, it incentivizes the contractor┬áto reduce┬áoperational costs and even to help the rest of the project team get more efficient. And since it’s a linearly decreasing formula, there’s less opportunity for the contractor to try to “game” an exit.

    Of course, there’s still some extra accounting work involved. The estimated project cost and sharing ratio have to be strategically developed prior to award, either by a good analyst or with contractor input during competition and negotiation. And some honest math needs to be done if the award is┬ábased on a trade-off of different proposed sharing ratios. And then, during the project, the principal has to track and publish cumulative project costs. (That process, which gives┬áthe contractor some visibility into the principal’s costs, is a┬ásort of a reverse of the cost analysis troubles you were hinting at!) But as long as there are only direct cost centers (and no consideration for “soft” costs) and the principal has┬áan enterprise┬áaccounting system, that part shouldn’t be too complicated. Well, not in theory, at least. I know that any small level of complexity in price and billing can lead to disproportionate┬áconfusion and errors. Some operational procedure and user training may be necessary.

    ——————————
    Mark Nadeau
    ——————————
    ——————————————-
    Original Message:
    Sent: 03-23-2018 08:31
    From: Richard Pennington
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Christian, I have a question.┬á Your model clause has a decreasing “risk” share that regressed to 0% at 140% of target cost.┬á So I’m assuming that was the “savings” share as the project cost increased.┬á Do you also have a risk share for recovery of the amount by which the target cost is exceeded, so the parties split 50/50 (or another ratio) also on the overrun amount (apart from the savings)?

    Mark, you talk of profit.┬á But at least in state and local government contracting in the U.S., while profit may be a negotiation topic, there typically is very little visibility into individual elements of cost like profit and indirect costs.┬áHaving that visibility requires fairly sophisticated cost accounting systems┬áthat align with the cost principles established by the public entity, i.e. for tracking allowable costs. ┬áFrom what I’ve seen, provisional billing and indicative fixed-price contracts in Agile use burdened rates like labor hours┬áfor pricing and apply incentive provisions to those “costs” using those rates.┬á So how do you apply incentives to profit?

    The other conceptual approach I’ve seen is managing the price target collaboratively through scope tradeoffs.┬á Christian, as you get deeper into your project, does the opportunity for scope tradeoffs evaporate?┬á It seems like in construction, for example, scope tradeoffs become very difficult late in the project as a way to meaningfully control cost.┬á I wonder if the same is true of software development.

    Great discussion.

    ——————————
    Richard Pennington
    General Counsel
    NASPO ValuePoint
    Denver, CO
    ——————————

    Original Message:
    Sent: 03-22-2018 05:40
    From: Christian Gronnerod
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Further to question on use of the sample contract clause in practice – the project is ongoing and still have some months to go before implementation will be completed.
    So far the discussions have been around target price, i.e. when it was established we included a long range of options and during the sprints we have identified issues that were not covered (or incorrectly covered) which leads to an adjustment of the target price. These adjustments have been decrease (de-scoping or alternate solution that took less hours), no change or increase (additional scope to get functionality that originally was excluded in the target price).

    The clause does lead to drop offs, so de facto the contractor will do more and more work for less cost, and ultimately work for free, and there is of course an incentive for the contractor to stay within brackets.

    I have not used a similar clause in construction projects, in a previous role we did unit prices per task, adding up to a sum, negotiated a lump sum discount to get a firm fixed price. Subsequent changes were based on the original cost per task, so if cost was x$/sqm for something then additional works of 10 sqm would be 10x $. This was fixed for the duration of the contact, and we had an overall cap on the potential changes.

    ——————————
    Christian Gronnerod
    Danish Refugee Council

    Original Message:
    Sent: 03-21-2018 01:05
    From: Mark Nadeau
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Thanks for sharing the sample clause, Christian. It’s interestingly different than what I’ve used in the construction industry. For vaguely-scoped construction contracts, it seems best to use the Target Price * (1-lambda) formula, which gives a linearly changing (decreasing) profit in proportion to overruns. I think this formula was developed for large military development contracts. And in the construction of public works, at least, it’s been shown that a risk percentage of around 85% (that’s the lambda part) is bearable for the contractor. (This is what I recall from a study that I read – I’ll share it with you if you’re interested.) Well, I’ve long thought that it was the best and only model for any project work but it’s possible that IT development requires an entirely different method. Yours seems to be based on brackets, so profits will take strong steps downward at certain cumulative costs. I suppose that works well enough to incentivize completion (and discourage extensions and overruns). And yours may be easier than mine to calculate payments – I’ve found that even experienced buyers get flustered at having to pay a calculated price that’s not already listed on the Schedule. Do you have any anecdotes about this clause in action?

    ——————————
    Mark Nadeau

    Original Message:
    Sent: 03-20-2018 09:24
    From: Christian Gronnerod
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Just to illustrate how a clause can be structured (this is from an industry standard contract for agile implementation of a cloud ERP system). The percentages are of course negotiable:

    • Consequence of Target Price: The Supplier shall practice professional management and administrate its resources so that the System to the extent possible is established in accordance with the Agreement’s requirements without exceeding the Target Price. The Parties have agreed on risk sharing for unexpected consumption of resources. Should it prove necessary with an additional consumption of resources, the following rules apply for reduction of the Supplier’s price for invoicing in each of the listed intervals:

    Invoicing interval

    Hourly rate in % of the agreed hourly rate

    0 ΓÇô 100 % of Target Price

    100 %, and the saving from Invoicing to 100%, is split 50/50 between Customer and Supplier

    100,01 – 110 % of Target Price

    100 %

    110,01 – 120 % of  Target Price

    75 %

    120,01 – 130 % of ┬áTarget Price

    50 %

    130,01 – 140 % of  Target Price

    25 %

    >140 % of Target Price

    0 %

     

     

     

     

    ——————————
    Christian Gronnerod
    Danish Refugee Council

    Original Message:
    Sent: 03-16-2018 18:54
    From: Richard Pennington
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    From what I’ve read about Agile contracts for iterative software development and implementation projects, shared savings contracts are used after an initial learning period of a few sprints after which the original indicative or soft fixed-price is negotiated to be a firm fixed-price range. Above the range there is a risk share, and below there can be and incentive share. But they don’t use cost-reimbursement, T&M instead. (I’m still trying to get my arms around the Agile sort-of-fixed-price ┬ámodel.

    ——————————
    Richard Pennington
    General Counsel
    NASPO ValuePoint
    Denver CO

    Original Message:
    Sent: 10-20-2017 11:03
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Here’s a version of the proposed FAR rule from 2004 in a google document. I copied it over to make it more readable, but also to enable comments and annotations. I plan to spend some time later today and into next week reading through this proposed rule and making comments and insights directly to the google doc, and invite everyone to do the same.

    [Federal Register Volume 69, Number 127 (Friday, July 2, 2004)]

    It will be great to see what questions and insights our community has as we get ready for next week’s webinar, Modernizing IT Through Share-in-Savings contracts. Register today!

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-14-2017 18:42
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    One thing that immediately jumps to mind as a former contracting officer is the FAR authority. Share in savings style contracts are discussed in value engineering contracts (but these proposals only pertain to awarded contracts).

    Dr. Ken Buck, who will be joining our upcoming webinar on Agile Share-in-Savings approaches worked on a proposed rule change to the FAR back in 2004, when the E-Government Act was still in effect. Looking forward to reading through this.

    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)

    Gpo remove preview
    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)
    Assist contracting officers in determining what clauses need to be included in SIS contracts. One commenter urged that the final FAR implementation make clear that some of the basic elements of SIS contracting are not dependent on the express authority provided by section 210 and therefore do not expire when section 210 sunsets.
    View this on Gpo >

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-12-2017 15:55
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    We’re excited for our upcoming webinar on Share-in-Savings and incentive-based contracting techniques as they apply to modernizing legacy systems.

    We intend for this webinar to be a collaborative & interactive affair, so in that spirit I’m opening this discussion thread so that we can begin to collect some feedback from our community on the questions and concerns they might have.

    The more discussion and questions we collect, the more responsive we can make this topic. So, I’ll start us out with a question:

    What comes to mind when you hear the term Share-in-Savings contract?

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    0
  2. Christian, I have a question.┬á Your model clause has a decreasing “risk” share that regressed to 0% at 140% of target cost.┬á So I’m assuming that was the “savings” share as the project cost increased.┬á Do you also have a risk share for recovery of the amount by which the target cost is exceeded, so the parties split 50/50 (or another ratio) also on the overrun amount (apart from the savings)?

    Mark, you talk of profit.┬á But at least in state and local government contracting in the U.S., while profit may be a negotiation topic, there typically is very little visibility into individual elements of cost like profit and indirect costs.┬áHaving that visibility requires fairly sophisticated cost accounting systems┬áthat align with the cost principles established by the public entity, i.e. for tracking allowable costs. ┬áFrom what I’ve seen, provisional billing and indicative fixed-price contracts in Agile use burdened rates like labor hours┬áfor pricing and apply incentive provisions to those “costs” using those rates.┬á So how do you apply incentives to profit?

    The other conceptual approach I’ve seen is managing the price target collaboratively through scope tradeoffs.┬á Christian, as you get deeper into your project, does the opportunity for scope tradeoffs evaporate?┬á It seems like in construction, for example, scope tradeoffs become very difficult late in the project as a way to meaningfully control cost.┬á I wonder if the same is true of software development.

    Great discussion.

    ——————————
    Richard Pennington
    General Counsel
    NASPO ValuePoint
    Denver, CO
    ——————————
    ——————————————-
    Original Message:
    Sent: 03-22-2018 05:40
    From: Christian Gronnerod
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Further to question on use of the sample contract clause in practice – the project is ongoing and still have some months to go before implementation will be completed.
    So far the discussions have been around target price, i.e. when it was established we included a long range of options and during the sprints we have identified issues that were not covered (or incorrectly covered) which leads to an adjustment of the target price. These adjustments have been decrease (de-scoping or alternate solution that took less hours), no change or increase (additional scope to get functionality that originally was excluded in the target price).

    The clause does lead to drop offs, so de facto the contractor will do more and more work for less cost, and ultimately work for free, and there is of course an incentive for the contractor to stay within brackets.

    I have not used a similar clause in construction projects, in a previous role we did unit prices per task, adding up to a sum, negotiated a lump sum discount to get a firm fixed price. Subsequent changes were based on the original cost per task, so if cost was x$/sqm for something then additional works of 10 sqm would be 10x $. This was fixed for the duration of the contact, and we had an overall cap on the potential changes.

    ——————————
    Christian Gronnerod
    Danish Refugee Council
    ——————————

    Original Message:
    Sent: 03-21-2018 01:05
    From: Mark Nadeau
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Thanks for sharing the sample clause, Christian. It’s interestingly different than what I’ve used in the construction industry. For vaguely-scoped construction contracts, it seems best to use the Target Price * (1-lambda) formula, which gives a linearly changing (decreasing) profit in proportion to overruns. I think this formula was developed for large military development contracts. And in the construction of public works, at least, it’s been shown that a risk percentage of around 85% (that’s the lambda part) is bearable for the contractor. (This is what I recall from a study that I read – I’ll share it with you if you’re interested.) Well, I’ve long thought that it was the best and only model for any project work but it’s possible that IT development requires an entirely different method. Yours seems to be based on brackets, so profits will take strong steps downward at certain cumulative costs. I suppose that works well enough to incentivize completion (and discourage extensions and overruns). And yours may be easier than mine to calculate payments – I’ve found that even experienced buyers get flustered at having to pay a calculated price that’s not already listed on the Schedule. Do you have any anecdotes about this clause in action?

    ——————————
    Mark Nadeau

    Original Message:
    Sent: 03-20-2018 09:24
    From: Christian Gronnerod
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Just to illustrate how a clause can be structured (this is from an industry standard contract for agile implementation of a cloud ERP system). The percentages are of course negotiable:

    • Consequence of Target Price: The Supplier shall practice professional management and administrate its resources so that the System to the extent possible is established in accordance with the Agreement’s requirements without exceeding the Target Price. The Parties have agreed on risk sharing for unexpected consumption of resources. Should it prove necessary with an additional consumption of resources, the following rules apply for reduction of the Supplier’s price for invoicing in each of the listed intervals:

    Invoicing interval

    Hourly rate in % of the agreed hourly rate

    0 ΓÇô 100 % of Target Price

    100 %, and the saving from Invoicing to 100%, is split 50/50 between Customer and Supplier

    100,01 – 110 % of Target Price

    100 %

    110,01 – 120 % of  Target Price

    75 %

    120,01 – 130 % of ┬áTarget Price

    50 %

    130,01 – 140 % of  Target Price

    25 %

    >140 % of Target Price

    0 %

     

     

     

     

    ——————————
    Christian Gronnerod
    Danish Refugee Council

    Original Message:
    Sent: 03-16-2018 18:54
    From: Richard Pennington
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    From what I’ve read about Agile contracts for iterative software development and implementation projects, shared savings contracts are used after an initial learning period of a few sprints after which the original indicative or soft fixed-price is negotiated to be a firm fixed-price range. Above the range there is a risk share, and below there can be and incentive share. But they don’t use cost-reimbursement, T&M instead. (I’m still trying to get my arms around the Agile sort-of-fixed-price ┬ámodel.

    ——————————
    Richard Pennington
    General Counsel
    NASPO ValuePoint
    Denver CO

    Original Message:
    Sent: 10-20-2017 11:03
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Here’s a version of the proposed FAR rule from 2004 in a google document. I copied it over to make it more readable, but also to enable comments and annotations. I plan to spend some time later today and into next week reading through this proposed rule and making comments and insights directly to the google doc, and invite everyone to do the same.

    [Federal Register Volume 69, Number 127 (Friday, July 2, 2004)]

    It will be great to see what questions and insights our community has as we get ready for next week’s webinar, Modernizing IT Through Share-in-Savings contracts. Register today!

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-14-2017 18:42
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    One thing that immediately jumps to mind as a former contracting officer is the FAR authority. Share in savings style contracts are discussed in value engineering contracts (but these proposals only pertain to awarded contracts).

    Dr. Ken Buck, who will be joining our upcoming webinar on Agile Share-in-Savings approaches worked on a proposed rule change to the FAR back in 2004, when the E-Government Act was still in effect. Looking forward to reading through this.

    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)

    Gpo remove preview
    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)
    Assist contracting officers in determining what clauses need to be included in SIS contracts. One commenter urged that the final FAR implementation make clear that some of the basic elements of SIS contracting are not dependent on the express authority provided by section 210 and therefore do not expire when section 210 sunsets.
    View this on Gpo >

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-12-2017 15:55
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    We’re excited for our upcoming webinar on Share-in-Savings and incentive-based contracting techniques as they apply to modernizing legacy systems.

    We intend for this webinar to be a collaborative & interactive affair, so in that spirit I’m opening this discussion thread so that we can begin to collect some feedback from our community on the questions and concerns they might have.

    The more discussion and questions we collect, the more responsive we can make this topic. So, I’ll start us out with a question:

    What comes to mind when you hear the term Share-in-Savings contract?

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    0
  3. Further to question on use of the sample contract clause in practice – the project is ongoing and still have some months to go before implementation will be completed.
    So far the discussions have been around target price, i.e. when it was established we included a long range of options and during the sprints we have identified issues that were not covered (or incorrectly covered) which leads to an adjustment of the target price. These adjustments have been decrease (de-scoping or alternate solution that took less hours), no change or increase (additional scope to get functionality that originally was excluded in the target price).

    The clause does lead to drop offs, so de facto the contractor will do more and more work for less cost, and ultimately work for free, and there is of course an incentive for the contractor to stay within brackets.

    I have not used a similar clause in construction projects, in a previous role we did unit prices per task, adding up to a sum, negotiated a lump sum discount to get a firm fixed price. Subsequent changes were based on the original cost per task, so if cost was x$/sqm for something then additional works of 10 sqm would be 10x $. This was fixed for the duration of the contact, and we had an overall cap on the potential changes.

    ——————————
    Christian Gronnerod
    Danish Refugee Council
    ——————————
    ——————————————-
    Original Message:
    Sent: 03-21-2018 01:05
    From: Mark Nadeau
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Thanks for sharing the sample clause, Christian. It’s interestingly different than what I’ve used in the construction industry. For vaguely-scoped construction contracts, it seems best to use the Target Price * (1-lambda) formula, which gives a linearly changing (decreasing) profit in proportion to overruns. I think this formula was developed for large military development contracts. And in the construction of public works, at least, it’s been shown that a risk percentage of around 85% (that’s the lambda part) is bearable for the contractor. (This is what I recall from a study that I read – I’ll share it with you if you’re interested.) Well, I’ve long thought that it was the best and only model for any project work but it’s possible that IT development requires an entirely different method. Yours seems to be based on brackets, so profits will take strong steps downward at certain cumulative costs. I suppose that works well enough to incentivize completion (and discourage extensions and overruns). And yours may be easier than mine to calculate payments – I’ve found that even experienced buyers get flustered at having to pay a calculated price that’s not already listed on the Schedule. Do you have any anecdotes about this clause in action?

    ——————————
    Mark Nadeau
    ——————————

    Original Message:
    Sent: 03-20-2018 09:24
    From: Christian Gronnerod
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Just to illustrate how a clause can be structured (this is from an industry standard contract for agile implementation of a cloud ERP system). The percentages are of course negotiable:

    • Consequence of Target Price: The Supplier shall practice professional management and administrate its resources so that the System to the extent possible is established in accordance with the Agreement’s requirements without exceeding the Target Price. The Parties have agreed on risk sharing for unexpected consumption of resources. Should it prove necessary with an additional consumption of resources, the following rules apply for reduction of the Supplier’s price for invoicing in each of the listed intervals:

    Invoicing interval

    Hourly rate in % of the agreed hourly rate

    0 ΓÇô 100 % of Target Price

    100 %, and the saving from Invoicing to 100%, is split 50/50 between Customer and Supplier

    100,01 – 110 % of Target Price

    100 %

    110,01 – 120 % of  Target Price

    75 %

    120,01 – 130 % of ┬áTarget Price

    50 %

    130,01 – 140 % of  Target Price

    25 %

    >140 % of Target Price

    0 %

     

     

     

     

    ——————————
    Christian Gronnerod
    Danish Refugee Council

    Original Message:
    Sent: 03-16-2018 18:54
    From: Richard Pennington
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    From what I’ve read about Agile contracts for iterative software development and implementation projects, shared savings contracts are used after an initial learning period of a few sprints after which the original indicative or soft fixed-price is negotiated to be a firm fixed-price range. Above the range there is a risk share, and below there can be and incentive share. But they don’t use cost-reimbursement, T&M instead. (I’m still trying to get my arms around the Agile sort-of-fixed-price ┬ámodel.

    ——————————
    Richard Pennington
    General Counsel
    NASPO ValuePoint
    Denver CO

    Original Message:
    Sent: 10-20-2017 11:03
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Here’s a version of the proposed FAR rule from 2004 in a google document. I copied it over to make it more readable, but also to enable comments and annotations. I plan to spend some time later today and into next week reading through this proposed rule and making comments and insights directly to the google doc, and invite everyone to do the same.

    [Federal Register Volume 69, Number 127 (Friday, July 2, 2004)]

    It will be great to see what questions and insights our community has as we get ready for next week’s webinar, Modernizing IT Through Share-in-Savings contracts. Register today!

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-14-2017 18:42
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    One thing that immediately jumps to mind as a former contracting officer is the FAR authority. Share in savings style contracts are discussed in value engineering contracts (but these proposals only pertain to awarded contracts).

    Dr. Ken Buck, who will be joining our upcoming webinar on Agile Share-in-Savings approaches worked on a proposed rule change to the FAR back in 2004, when the E-Government Act was still in effect. Looking forward to reading through this.

    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)

    Gpo remove preview
    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)
    Assist contracting officers in determining what clauses need to be included in SIS contracts. One commenter urged that the final FAR implementation make clear that some of the basic elements of SIS contracting are not dependent on the express authority provided by section 210 and therefore do not expire when section 210 sunsets.
    View this on Gpo >

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-12-2017 15:55
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    We’re excited for our upcoming webinar on Share-in-Savings and incentive-based contracting techniques as they apply to modernizing legacy systems.

    We intend for this webinar to be a collaborative & interactive affair, so in that spirit I’m opening this discussion thread so that we can begin to collect some feedback from our community on the questions and concerns they might have.

    The more discussion and questions we collect, the more responsive we can make this topic. So, I’ll start us out with a question:

    What comes to mind when you hear the term Share-in-Savings contract?

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    0
  4. Yes, the initial learning period is useful, particularly if that couldn’t be done in a competitive environment. Of course, if the project is modular enough, you might be able to leverage multiple contractors against each other, in a competitive pool. I think that’s one of the ingredients that can make Agile very useful. With a competive pool at the ready for the next round, all the risk of learning is on the contractor, but they should be happy to assume it. There’s a slightly higher premium for this dynamic, but I think it’s well worth it in the long run. Whether the contractor’s first effort ends up red or black, they’ll still be better positioned to compete for future work.

    ——————————
    Mark Nadeau
    ——————————
    ——————————————-
    Original Message:
    Sent: 03-16-2018 18:54
    From: Richard Pennington
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    From what I’ve read about Agile contracts for iterative software development and implementation projects, shared savings contracts are used after an initial learning period of a few sprints after which the original indicative or soft fixed-price is negotiated to be a firm fixed-price range. Above the range there is a risk share, and below there can be and incentive share. But they don’t use cost-reimbursement, T&M instead. (I’m still trying to get my arms around the Agile sort-of-fixed-price ┬ámodel.

    ——————————
    Richard Pennington
    General Counsel
    NASPO ValuePoint
    Denver CO
    ——————————

    Original Message:
    Sent: 10-20-2017 11:03
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Here’s a version of the proposed FAR rule from 2004 in a google document. I copied it over to make it more readable, but also to enable comments and annotations. I plan to spend some time later today and into next week reading through this proposed rule and making comments and insights directly to the google doc, and invite everyone to do the same.

    [Federal Register Volume 69, Number 127 (Friday, July 2, 2004)]

    It will be great to see what questions and insights our community has as we get ready for next week’s webinar, Modernizing IT Through Share-in-Savings contracts. Register today!

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-14-2017 18:42
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    One thing that immediately jumps to mind as a former contracting officer is the FAR authority. Share in savings style contracts are discussed in value engineering contracts (but these proposals only pertain to awarded contracts).

    Dr. Ken Buck, who will be joining our upcoming webinar on Agile Share-in-Savings approaches worked on a proposed rule change to the FAR back in 2004, when the E-Government Act was still in effect. Looking forward to reading through this.

    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)

    Gpo remove preview
    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)
    Assist contracting officers in determining what clauses need to be included in SIS contracts. One commenter urged that the final FAR implementation make clear that some of the basic elements of SIS contracting are not dependent on the express authority provided by section 210 and therefore do not expire when section 210 sunsets.
    View this on Gpo >

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-12-2017 15:55
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    We’re excited for our upcoming webinar on Share-in-Savings and incentive-based contracting techniques as they apply to modernizing legacy systems.

    We intend for this webinar to be a collaborative & interactive affair, so in that spirit I’m opening this discussion thread so that we can begin to collect some feedback from our community on the questions and concerns they might have.

    The more discussion and questions we collect, the more responsive we can make this topic. So, I’ll start us out with a question:

    What comes to mind when you hear the term Share-in-Savings contract?

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    0
  5. Thanks for sharing the sample clause, Christian. It’s interestingly different than what I’ve used in the construction industry. For vaguely-scoped construction contracts, it seems best to use the Target Price * (1-lambda) formula, which gives a linearly changing (decreasing) profit in proportion to overruns. I think this formula was developed for large military development contracts. And in the construction of public works, at least, it’s been shown that a risk percentage of around 85% (that’s the lambda part) is bearable for the contractor. (This is what I recall from a study that I read – I’ll share it with you if you’re interested.) Well, I’ve long thought that it was the best and only model for any project work but it’s possible that IT development requires an entirely different method. Yours seems to be based on brackets, so profits will take strong steps downward at certain cumulative costs. I suppose that works well enough to incentivize completion (and discourage extensions and overruns). And yours may be easier than mine to calculate payments – I’ve found that even experienced buyers get flustered at having to pay a calculated price that’s not already listed on the Schedule. Do you have any anecdotes about this clause in action?

    ——————————
    Mark Nadeau
    ——————————
    ——————————————-
    Original Message:
    Sent: 03-20-2018 09:24
    From: Christian Gronnerod
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Just to illustrate how a clause can be structured (this is from an industry standard contract for agile implementation of a cloud ERP system). The percentages are of course negotiable:

    • Consequence of Target Price: The Supplier shall practice professional management and administrate its resources so that the System to the extent possible is established in accordance with the Agreement’s requirements without exceeding the Target Price. The Parties have agreed on risk sharing for unexpected consumption of resources. Should it prove necessary with an additional consumption of resources, the following rules apply for reduction of the Supplier’s price for invoicing in each of the listed intervals:

    Invoicing interval

    Hourly rate in % of the agreed hourly rate

    0 ΓÇô 100 % of Target Price

    100 %, and the saving from Invoicing to 100%, is split 50/50 between Customer and Supplier

    100,01 – 110 % of Target Price

    100 %

    110,01 – 120 % of  Target Price

    75 %

    120,01 – 130 % of ┬áTarget Price

    50 %

    130,01 – 140 % of  Target Price

    25 %

    >140 % of Target Price

    0 %

     

     

     

     

    ——————————
    Christian Gronnerod
    Danish Refugee Council
    ——————————

    Original Message:
    Sent: 03-16-2018 18:54
    From: Richard Pennington
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    From what I’ve read about Agile contracts for iterative software development and implementation projects, shared savings contracts are used after an initial learning period of a few sprints after which the original indicative or soft fixed-price is negotiated to be a firm fixed-price range. Above the range there is a risk share, and below there can be and incentive share. But they don’t use cost-reimbursement, T&M instead. (I’m still trying to get my arms around the Agile sort-of-fixed-price ┬ámodel.

    ——————————
    Richard Pennington
    General Counsel
    NASPO ValuePoint
    Denver CO

    Original Message:
    Sent: 10-20-2017 11:03
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Here’s a version of the proposed FAR rule from 2004 in a google document. I copied it over to make it more readable, but also to enable comments and annotations. I plan to spend some time later today and into next week reading through this proposed rule and making comments and insights directly to the google doc, and invite everyone to do the same.

    [Federal Register Volume 69, Number 127 (Friday, July 2, 2004)]

    It will be great to see what questions and insights our community has as we get ready for next week’s webinar, Modernizing IT Through Share-in-Savings contracts. Register today!

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-14-2017 18:42
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    One thing that immediately jumps to mind as a former contracting officer is the FAR authority. Share in savings style contracts are discussed in value engineering contracts (but these proposals only pertain to awarded contracts).

    Dr. Ken Buck, who will be joining our upcoming webinar on Agile Share-in-Savings approaches worked on a proposed rule change to the FAR back in 2004, when the E-Government Act was still in effect. Looking forward to reading through this.

    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)

    Gpo remove preview
    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)
    Assist contracting officers in determining what clauses need to be included in SIS contracts. One commenter urged that the final FAR implementation make clear that some of the basic elements of SIS contracting are not dependent on the express authority provided by section 210 and therefore do not expire when section 210 sunsets.
    View this on Gpo >

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-12-2017 15:55
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    We’re excited for our upcoming webinar on Share-in-Savings and incentive-based contracting techniques as they apply to modernizing legacy systems.

    We intend for this webinar to be a collaborative & interactive affair, so in that spirit I’m opening this discussion thread so that we can begin to collect some feedback from our community on the questions and concerns they might have.

    The more discussion and questions we collect, the more responsive we can make this topic. So, I’ll start us out with a question:

    What comes to mind when you hear the term Share-in-Savings contract?

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    0
  6. Just to illustrate how a clause can be structured (this is from an industry standard contract for agile implementation of a cloud ERP system). The percentages are of course negotiable:

    • Consequence of Target Price: The Supplier shall practice professional management and administrate its resources so that the System to the extent possible is established in accordance with the Agreement’s requirements without exceeding the Target Price. The Parties have agreed on risk sharing for unexpected consumption of resources. Should it prove necessary with an additional consumption of resources, the following rules apply for reduction of the Supplier’s price for invoicing in each of the listed intervals:

    Invoicing interval

    Hourly rate in % of the agreed hourly rate

    0 ΓÇô 100 % of Target Price

    100 %, and the saving from Invoicing to 100%, is split 50/50 between Customer and Supplier

    100,01 – 110 % of Target Price

    100 %

    110,01 – 120 % of  Target Price

    75 %

    120,01 – 130 % of ┬áTarget Price

    50 %

    130,01 – 140 % of  Target Price

    25 %

    >140 % of Target Price

    0 %

     

     

     

     

    ——————————
    Christian Gronnerod
    Danish Refugee Council
    ——————————
    ——————————————-
    Original Message:
    Sent: 03-16-2018 18:54
    From: Richard Pennington
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    From what I’ve read about Agile contracts for iterative software development and implementation projects, shared savings contracts are used after an initial learning period of a few sprints after which the original indicative or soft fixed-price is negotiated to be a firm fixed-price range. Above the range there is a risk share, and below there can be and incentive share. But they don’t use cost-reimbursement, T&M instead. (I’m still trying to get my arms around the Agile sort-of-fixed-price ┬ámodel.

    ——————————
    Richard Pennington
    General Counsel
    NASPO ValuePoint
    Denver CO
    ——————————

    Original Message:
    Sent: 10-20-2017 11:03
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Here’s a version of the proposed FAR rule from 2004 in a google document. I copied it over to make it more readable, but also to enable comments and annotations. I plan to spend some time later today and into next week reading through this proposed rule and making comments and insights directly to the google doc, and invite everyone to do the same.

    [Federal Register Volume 69, Number 127 (Friday, July 2, 2004)]

    It will be great to see what questions and insights our community has as we get ready for next week’s webinar, Modernizing IT Through Share-in-Savings contracts. Register today!

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-14-2017 18:42
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    One thing that immediately jumps to mind as a former contracting officer is the FAR authority. Share in savings style contracts are discussed in value engineering contracts (but these proposals only pertain to awarded contracts).

    Dr. Ken Buck, who will be joining our upcoming webinar on Agile Share-in-Savings approaches worked on a proposed rule change to the FAR back in 2004, when the E-Government Act was still in effect. Looking forward to reading through this.

    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)

    Gpo remove preview
    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)
    Assist contracting officers in determining what clauses need to be included in SIS contracts. One commenter urged that the final FAR implementation make clear that some of the basic elements of SIS contracting are not dependent on the express authority provided by section 210 and therefore do not expire when section 210 sunsets.
    View this on Gpo >

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-12-2017 15:55
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    We’re excited for our upcoming webinar on Share-in-Savings and incentive-based contracting techniques as they apply to modernizing legacy systems.

    We intend for this webinar to be a collaborative & interactive affair, so in that spirit I’m opening this discussion thread so that we can begin to collect some feedback from our community on the questions and concerns they might have.

    The more discussion and questions we collect, the more responsive we can make this topic. So, I’ll start us out with a question:

    What comes to mind when you hear the term Share-in-Savings contract?

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    0
  7. From what I’ve read about Agile contracts for iterative software development and implementation projects, shared savings contracts are used after an initial learning period of a few sprints after which the original indicative or soft fixed-price is negotiated to be a firm fixed-price range. Above the range there is a risk share, and below there can be and incentive share. But they don’t use cost-reimbursement, T&M instead. (I’m still trying to get my arms around the Agile sort-of-fixed-price ┬ámodel.

    ——————————
    Richard Pennington
    General Counsel
    NASPO ValuePoint
    Denver CO
    ——————————
    ——————————————-
    Original Message:
    Sent: 10-20-2017 11:03
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Here’s a version of the proposed FAR rule from 2004 in a google document. I copied it over to make it more readable, but also to enable comments and annotations. I plan to spend some time later today and into next week reading through this proposed rule and making comments and insights directly to the google doc, and invite everyone to do the same.

    [Federal Register Volume 69, Number 127 (Friday, July 2, 2004)]

    It will be great to see what questions and insights our community has as we get ready for next week’s webinar, Modernizing IT Through Share-in-Savings contracts. Register today!

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    Original Message:
    Sent: 10-14-2017 18:42
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    One thing that immediately jumps to mind as a former contracting officer is the FAR authority. Share in savings style contracts are discussed in value engineering contracts (but these proposals only pertain to awarded contracts).

    Dr. Ken Buck, who will be joining our upcoming webinar on Agile Share-in-Savings approaches worked on a proposed rule change to the FAR back in 2004, when the E-Government Act was still in effect. Looking forward to reading through this.

    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)

    Gpo remove preview
    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)
    Assist contracting officers in determining what clauses need to be included in SIS contracts. One commenter urged that the final FAR implementation make clear that some of the basic elements of SIS contracting are not dependent on the express authority provided by section 210 and therefore do not expire when section 210 sunsets.
    View this on Gpo >

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-12-2017 15:55
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    We’re excited for our upcoming webinar on Share-in-Savings and incentive-based contracting techniques as they apply to modernizing legacy systems.

    We intend for this webinar to be a collaborative & interactive affair, so in that spirit I’m opening this discussion thread so that we can begin to collect some feedback from our community on the questions and concerns they might have.

    The more discussion and questions we collect, the more responsive we can make this topic. So, I’ll start us out with a question:

    What comes to mind when you hear the term Share-in-Savings contract?

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    0
  8. It’s nice to hear discussion about the benefits of different approaches. The decision-makers and policy-makers with whom I work seem to be oblivious to these possibilities, even though the majority of their spending is a perfect candidate for incentives and shared-savings methods. They don’t realize that, come right down to it, every contract is a game, and if you don’t play your hand carefully you’re going to lose your entire stake. Alright – you can’t play every hand carefully. Then at least make some rules that will ensure some care.

    Generally, I think the share of savings concept is flawed because of the ambiguous nature of “savings.” Nobody’s ever going to produce a holistic, total cost picture of savings. The number is going to be cooked to whatever bias is necessary, and a court is never going to be able to get to the bottom of that muck. (I’m an engineer who’s both cooked up cost savings estimates and prepared legal cases, so I know all the tricks!) To me, the value of “potential savings” has to be front-loaded in the contract pricing as much as possible. That means using cost targets that will automatically de-incentivize profits in proportion to opportunism. Or maybe that means viewing the project in a more modular way – such that a contractor’s guaranteed term is a brief “scrum” (to use the one Agile approach that I consider valuable) and the project can easily be continued using a competitor. Of course, that means actively managing a contractor pool, a task for which many organizations don’t have an appetite or skill set. But if there are the right resources, as well as some higher-level “system-thinking” strategy, there may not really be a point in pursuing shared savings methods at all.

    ——————————
    Mark Nadeau
    ——————————
    ——————————————-
    Original Message:
    Sent: 11-13-2017 15:25
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Here’s some more input from our working team on the termination liabilities question. The first entry comes from Robert Read, Chief Scientist at Skylight and a participant in our earlier recorded webinar on Modernizing Gov Tech through Share in Savings contracts:

    With Agile SiS as described in our blogposts (where the firms are in a pool and are awarded a “Future Agile Share in Savings” Asset), we must consider three types of “termination”:
    1) Suppose the Government shuts down the WHOLE program against which savings have been made. For example, we have tried to save on administering National Parks, and the government decides to sell them all and get out of the Park business.┬á Suppose the government also says, “Since we have no Parks/submarines/spaceships/whatever, we are are saving no money.┬á So we are NOT going to treat this as “Costs have dropped to zero, you saved us a ton, because we are now spending zero on the Parks” but rather “Savings are zero because costs are zero, so we are not honoring our Future Agile Share in Savings Assets”. I think the firms DO need to be protected from this.┬á However, some programs, this is unlikely—for example, a new ship for the Navy might be canceled, but hopefully the parks won’t be. However, I would hope the Agencies would be able to continue to honor the savings for a limited period of time, if for no other reason than that the cancellation decreases other outflows.┬á
    2) The government decides to stop the program that is being funded by Agile SiS.┬á That is, the government is keeping the parks, but decides not to try to save money. (It sounds funny when you say it like that, but it certainly could happen.)┬á The questions becomes: If we are 2 years in a firm has a Future Agile Share in Savings Asset entitling them to 13% of the savings for the next 3 years, does the government intend to keep paying this or reneg on this agreement? I would claim firms should NOT negotiate away this Termination Liability.┬á However, from the governments point of view, it is ONLY required to pay out something from measured savings (if you follow the principles in our blog posts—admittedly this is not a cake walk.)┬á In that case, I would hope the Agency could argue to Congress and the IGs office that they DON’T need to escrow any money because structurally they pay out money ONLY as a fraction of savings.
    3) The government decides that in fact no money is being saved. They thus declare the Future Agile Share in Savings Assets to payout zero for this year, and assert they expect it to pay out zero in the remaining years.┬á This would probably result in lawsuits—but no more so than any controversial decision. If TRULY no money is being saved, the government has every right to pay zero.┬á The firms should have accepted this risk, that the modernization may not save money.┬á The firms should not accept the risk that the government whimsically or fraudulently moves the bar, perhaps by asking the new system to do 3 times as much as the old.

    -Robert L. Read

    Dr. Ken Buck, also a participant in the earlier recorded webinar, responded to Rob as follows:

    Robert- each scenario is a legitimate possibility.┬á The SiS concept is somewhat contrary to the current law regarding the government’s future payment obligations to a contractor. The Anti Deficiency Act (ADA) prohibits:

    “Executive officers, unless otherwise┬áauthorized by law, from making contracts involving the Government in obligations for expenditures or liabilities beyond those contemplated and authorized for the period of availability of and within the amount of the appropriation under which they are made;┬á

    And to keep all the departments of the Government, in the matter of incurring obligations for expenditures, within the limits and purposes of appropriations annually provided for conducting their lawful functions, and to prohibit any officer or employee of the Government from involving the Government in any contract or other obligation for the payment of money for any purpose, in advance of appropriations. “

    The eGov Act provided special authorization that superseded the ADA’s requirement of upfront appropriations. Many argue that similar legislation would be needed to implement SiS.┬á
     
    A possible alternative might be to use existing contract types like Fixed Price Incentive and/or an evaluation model where prospective offerors could indicate what costs they would need to recover should the government terminate for convenience before they recovered their costs. 
     
    However, this suggestion would have to be vetted with OMB and attorneys who specialize in appropriations law. 

    -Kenneth J. Buck

    ________________________________________

    Still waiting for some brave community members to weigh in here!

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    Original Message:
    Sent: 11-09-2017 16:58
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    After a successful delivery of our first webinar on Agile Share-in-Savings contracts, we’re getting the band back together for a second event. While the details are still being worked out in rehearsal, we’re on a pretty good groove that’s suggesting a “reverse industry day” style session where vendors can communicate their hopes, dreams & concerns as they pertain to Share-in-Savings contracts to an audience of procurement professionals.

    As we think through the next event (stay tuned to our Events page, Insights newsletter, and social media accounts for details), we’re having an interesting discussion about termination liabilities as they relate to the SiS contracting mechanic. I thought it would be worth relating here in case others in the community wanted to weigh in.

    On background, termination liabilities refer to an amount the government must pay to a contractor after it terminates that contract for convenience. In these cases, the contractor (whose contract is not being terminated for any fault of its own – rather the convenience of the government) has a legitimate claim to certain costs it has incurred in performance of the contract to date (as well as limited, reasonable future costs), and in most cases a profit on those costs (although generally. profit on future costs is not permitted).

    These “costs” represent the government’s termination liability.

    As we learned from our webinar, one of the defining characteristics of Share-in-Savings contracts is the government’s ability to award contracts with little or no upfront funding. If a contract is awarded with no funding, there may not be sufficient funds to cover its liability costs in the event of a termination for convenience.

    When the government cannot pay for contractually obligated charges, it is considered anti-deficient. And that is a HUGE no-no for CFOs and CPOs, and pretty much everyone involved.

    The (now-expired) E-Government Act of 2002, which authorized Share-in-Savings contracts, dealt with this issue by superseding Anti-Deficiency Act requirements such that agencies could legally fund contracts without upfront funding, but that authority does not exist today.

    As you’ll see from this discussion thread, the vendor’s perspective is absolutely critical here. If a vendor truly wants to enter an SiS contract, they may have to be comfortable with releasing the government agency from its liability to pay the contractor appropriate claims in the event of a termination for convenience.

    I’m not going to attribute names here, but rather attempt to summarize the issues at hand and invite others to weigh in. The gist is this:

    Agency initiates Share-in-Savings contract for little or no cash, agreeing to share a pre-determined percentage of the savings that the contractor’s solution will generate, in the current fiscal year and the out years.

    Since the government always ALWAYS has the right to terminate for convenience (T4C), how would a contractor have any recourse if they spend money and time on a better solution if unforeseen circumstances lead to the T4C?

    Several of us have countered that with an agile approach, this may be more tenable as the participating contractor can cleave off a smaller chunk of work initially, thereby lowering their overall performance risk.

    And then, within the business case & evaluation model we are developing, there’s been talk of adding a column for Termination costs to the equation, so that a contractor could actually offer the termination liability as a part of the proposal.

    Lots of inside baseball going on here – but I know there are some procurement wonks in our community that would find this conversation engaging, so please weigh in if you’d like!

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-24-2017 16:09
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Today we conducted a dry run for this Thursday’s webinar on IT Modernization through Share-in-Savings contracts. It was a great discussion as to be expected with such a stellar panel.

    And given it was a dry run, we were able to run down tangential paths that we won’t be able to do on Thursday. One such path was a deeper discussion into Martin Fowler’s Strangler Pattern theory for modernizing legacy systems.

    Robert Read gave a fantastic analogy & summary of the underlying theory that I won’t be able to do justice here (but tune in on Thursday for the webinar and you might get it directly from the source!), so I asked him to share any resources for continued study.

    This is a case study from Paul Hammant’s blog that is a particularly good read, so I wanted to share it here.

    Legacy Application Strangulation : Case Studies

    Paulhammant remove preview
    Legacy Application Strangulation : Case Studies
    Strangulation of a legacy or undesirable solution is a safe way to phase one thing our for something better, cheaper, or more expandable. You make something new that obsoletes a small percentage of something old, and put them live together. You do some more work in the same style, and go live again (rinse, repeat).
    View this on Paulhammant >

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-20-2017 11:03
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Here’s a version of the proposed FAR rule from 2004 in a google document. I copied it over to make it more readable, but also to enable comments and annotations. I plan to spend some time later today and into next week reading through this proposed rule and making comments and insights directly to the google doc, and invite everyone to do the same.

    [Federal Register Volume 69, Number 127 (Friday, July 2, 2004)]

    It will be great to see what questions and insights our community has as we get ready for next week’s webinar, Modernizing IT Through Share-in-Savings contracts. Register today!

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-14-2017 18:42
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    One thing that immediately jumps to mind as a former contracting officer is the FAR authority. Share in savings style contracts are discussed in value engineering contracts (but these proposals only pertain to awarded contracts).

    Dr. Ken Buck, who will be joining our upcoming webinar on Agile Share-in-Savings approaches worked on a proposed rule change to the FAR back in 2004, when the E-Government Act was still in effect. Looking forward to reading through this.

    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)

    Gpo remove preview
    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)
    Assist contracting officers in determining what clauses need to be included in SIS contracts. One commenter urged that the final FAR implementation make clear that some of the basic elements of SIS contracting are not dependent on the express authority provided by section 210 and therefore do not expire when section 210 sunsets.
    View this on Gpo >

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-12-2017 15:55
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    We’re excited for our upcoming webinar on Share-in-Savings and incentive-based contracting techniques as they apply to modernizing legacy systems.

    We intend for this webinar to be a collaborative & interactive affair, so in that spirit I’m opening this discussion thread so that we can begin to collect some feedback from our community on the questions and concerns they might have.

    The more discussion and questions we collect, the more responsive we can make this topic. So, I’ll start us out with a question:

    What comes to mind when you hear the term Share-in-Savings contract?

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    0
  9. Here’s some more input from our working team on the termination liabilities question. The first entry comes from Robert Read, Chief Scientist at Skylight and a participant in our earlier recorded webinar on Modernizing Gov Tech through Share in Savings contracts:

    With Agile SiS as described in our blogposts (where the firms are in a pool and are awarded a “Future Agile Share in Savings” Asset), we must consider three types of “termination”:
    1) Suppose the Government shuts down the WHOLE program against which savings have been made. For example, we have tried to save on administering National Parks, and the government decides to sell them all and get out of the Park business.┬á Suppose the government also says, “Since we have no Parks/submarines/spaceships/whatever, we are are saving no money.┬á So we are NOT going to treat this as “Costs have dropped to zero, you saved us a ton, because we are now spending zero on the Parks” but rather “Savings are zero because costs are zero, so we are not honoring our Future Agile Share in Savings Assets”. I think the firms DO need to be protected from this.┬á However, some programs, this is unlikely—for example, a new ship for the Navy might be canceled, but hopefully the parks won’t be. However, I would hope the Agencies would be able to continue to honor the savings for a limited period of time, if for no other reason than that the cancellation decreases other outflows.┬á
    2) The government decides to stop the program that is being funded by Agile SiS.┬á That is, the government is keeping the parks, but decides not to try to save money. (It sounds funny when you say it like that, but it certainly could happen.)┬á The questions becomes: If we are 2 years in a firm has a Future Agile Share in Savings Asset entitling them to 13% of the savings for the next 3 years, does the government intend to keep paying this or reneg on this agreement? I would claim firms should NOT negotiate away this Termination Liability.┬á However, from the governments point of view, it is ONLY required to pay out something from measured savings (if you follow the principles in our blog posts—admittedly this is not a cake walk.)┬á In that case, I would hope the Agency could argue to Congress and the IGs office that they DON’T need to escrow any money because structurally they pay out money ONLY as a fraction of savings.
    3) The government decides that in fact no money is being saved. They thus declare the Future Agile Share in Savings Assets to payout zero for this year, and assert they expect it to pay out zero in the remaining years.┬á This would probably result in lawsuits—but no more so than any controversial decision. If TRULY no money is being saved, the government has every right to pay zero.┬á The firms should have accepted this risk, that the modernization may not save money.┬á The firms should not accept the risk that the government whimsically or fraudulently moves the bar, perhaps by asking the new system to do 3 times as much as the old.

    -Robert L. Read

    Dr. Ken Buck, also a participant in the earlier recorded webinar, responded to Rob as follows:

    Robert- each scenario is a legitimate possibility.┬á The SiS concept is somewhat contrary to the current law regarding the government’s future payment obligations to a contractor. The Anti Deficiency Act (ADA) prohibits:

    “Executive officers, unless otherwise┬áauthorized by law, from making contracts involving the Government in obligations for expenditures or liabilities beyond those contemplated and authorized for the period of availability of and within the amount of the appropriation under which they are made;┬á

    And to keep all the departments of the Government, in the matter of incurring obligations for expenditures, within the limits and purposes of appropriations annually provided for conducting their lawful functions, and to prohibit any officer or employee of the Government from involving the Government in any contract or other obligation for the payment of money for any purpose, in advance of appropriations. “

    The eGov Act provided special authorization that superseded the ADA’s requirement of upfront appropriations. Many argue that similar legislation would be needed to implement SiS.┬á
     
    A possible alternative might be to use existing contract types like Fixed Price Incentive and/or an evaluation model where prospective offerors could indicate what costs they would need to recover should the government terminate for convenience before they recovered their costs. 
     
    However, this suggestion would have to be vetted with OMB and attorneys who specialize in appropriations law. 

    -Kenneth J. Buck

    ________________________________________

    Still waiting for some brave community members to weigh in here!

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————
    ——————————————-
    Original Message:
    Sent: 11-09-2017 16:58
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    After a successful delivery of our first webinar on Agile Share-in-Savings contracts, we’re getting the band back together for a second event. While the details are still being worked out in rehearsal, we’re on a pretty good groove that’s suggesting a “reverse industry day” style session where vendors can communicate their hopes, dreams & concerns as they pertain to Share-in-Savings contracts to an audience of procurement professionals.

    As we think through the next event (stay tuned to our Events page, Insights newsletter, and social media accounts for details), we’re having an interesting discussion about termination liabilities as they relate to the SiS contracting mechanic. I thought it would be worth relating here in case others in the community wanted to weigh in.

    On background, termination liabilities refer to an amount the government must pay to a contractor after it terminates that contract for convenience. In these cases, the contractor (whose contract is not being terminated for any fault of its own – rather the convenience of the government) has a legitimate claim to certain costs it has incurred in performance of the contract to date (as well as limited, reasonable future costs), and in most cases a profit on those costs (although generally. profit on future costs is not permitted).

    These “costs” represent the government’s termination liability.

    As we learned from our webinar, one of the defining characteristics of Share-in-Savings contracts is the government’s ability to award contracts with little or no upfront funding. If a contract is awarded with no funding, there may not be sufficient funds to cover its liability costs in the event of a termination for convenience.

    When the government cannot pay for contractually obligated charges, it is considered anti-deficient. And that is a HUGE no-no for CFOs and CPOs, and pretty much everyone involved.

    The (now-expired) E-Government Act of 2002, which authorized Share-in-Savings contracts, dealt with this issue by superseding Anti-Deficiency Act requirements such that agencies could legally fund contracts without upfront funding, but that authority does not exist today.

    As you’ll see from this discussion thread, the vendor’s perspective is absolutely critical here. If a vendor truly wants to enter an SiS contract, they may have to be comfortable with releasing the government agency from its liability to pay the contractor appropriate claims in the event of a termination for convenience.

    I’m not going to attribute names here, but rather attempt to summarize the issues at hand and invite others to weigh in. The gist is this:

    Agency initiates Share-in-Savings contract for little or no cash, agreeing to share a pre-determined percentage of the savings that the contractor’s solution will generate, in the current fiscal year and the out years.

    Since the government always ALWAYS has the right to terminate for convenience (T4C), how would a contractor have any recourse if they spend money and time on a better solution if unforeseen circumstances lead to the T4C?

    Several of us have countered that with an agile approach, this may be more tenable as the participating contractor can cleave off a smaller chunk of work initially, thereby lowering their overall performance risk.

    And then, within the business case & evaluation model we are developing, there’s been talk of adding a column for Termination costs to the equation, so that a contractor could actually offer the termination liability as a part of the proposal.

    Lots of inside baseball going on here – but I know there are some procurement wonks in our community that would find this conversation engaging, so please weigh in if you’d like!

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    Original Message:
    Sent: 10-24-2017 16:09
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Today we conducted a dry run for this Thursday’s webinar on IT Modernization through Share-in-Savings contracts. It was a great discussion as to be expected with such a stellar panel.

    And given it was a dry run, we were able to run down tangential paths that we won’t be able to do on Thursday. One such path was a deeper discussion into Martin Fowler’s Strangler Pattern theory for modernizing legacy systems.

    Robert Read gave a fantastic analogy & summary of the underlying theory that I won’t be able to do justice here (but tune in on Thursday for the webinar and you might get it directly from the source!), so I asked him to share any resources for continued study.

    This is a case study from Paul Hammant’s blog that is a particularly good read, so I wanted to share it here.

    Legacy Application Strangulation : Case Studies

    Paulhammant remove preview
    Legacy Application Strangulation : Case Studies
    Strangulation of a legacy or undesirable solution is a safe way to phase one thing our for something better, cheaper, or more expandable. You make something new that obsoletes a small percentage of something old, and put them live together. You do some more work in the same style, and go live again (rinse, repeat).
    View this on Paulhammant >

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-20-2017 11:03
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Here’s a version of the proposed FAR rule from 2004 in a google document. I copied it over to make it more readable, but also to enable comments and annotations. I plan to spend some time later today and into next week reading through this proposed rule and making comments and insights directly to the google doc, and invite everyone to do the same.

    [Federal Register Volume 69, Number 127 (Friday, July 2, 2004)]

    It will be great to see what questions and insights our community has as we get ready for next week’s webinar, Modernizing IT Through Share-in-Savings contracts. Register today!

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-14-2017 18:42
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    One thing that immediately jumps to mind as a former contracting officer is the FAR authority. Share in savings style contracts are discussed in value engineering contracts (but these proposals only pertain to awarded contracts).

    Dr. Ken Buck, who will be joining our upcoming webinar on Agile Share-in-Savings approaches worked on a proposed rule change to the FAR back in 2004, when the E-Government Act was still in effect. Looking forward to reading through this.

    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)

    Gpo remove preview
    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)
    Assist contracting officers in determining what clauses need to be included in SIS contracts. One commenter urged that the final FAR implementation make clear that some of the basic elements of SIS contracting are not dependent on the express authority provided by section 210 and therefore do not expire when section 210 sunsets.
    View this on Gpo >

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-12-2017 15:55
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    We’re excited for our upcoming webinar on Share-in-Savings and incentive-based contracting techniques as they apply to modernizing legacy systems.

    We intend for this webinar to be a collaborative & interactive affair, so in that spirit I’m opening this discussion thread so that we can begin to collect some feedback from our community on the questions and concerns they might have.

    The more discussion and questions we collect, the more responsive we can make this topic. So, I’ll start us out with a question:

    What comes to mind when you hear the term Share-in-Savings contract?

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    0
  10. After a successful delivery of our first webinar on Agile Share-in-Savings contracts, we’re getting the band back together for a second event. While the details are still being worked out in rehearsal, we’re on a pretty good groove that’s suggesting a “reverse industry day” style session where vendors can communicate their hopes, dreams & concerns as they pertain to Share-in-Savings contracts to an audience of procurement professionals.

    As we think through the next event (stay tuned to our Events page, Insights newsletter, and social media accounts for details), we’re having an interesting discussion about termination liabilities as they relate to the SiS contracting mechanic. I thought it would be worth relating here in case others in the community wanted to weigh in.

    On background, termination liabilities refer to an amount the government must pay to a contractor after it terminates that contract for convenience. In these cases, the contractor (whose contract is not being terminated for any fault of its own – rather the convenience of the government) has a legitimate claim to certain costs it has incurred in performance of the contract to date (as well as limited, reasonable future costs), and in most cases a profit on those costs (although generally. profit on future costs is not permitted).

    These “costs” represent the government’s termination liability.┬á

    As we learned from our webinar, one of the defining characteristics of Share-in-Savings contracts is the government’s ability to award contracts with little or no upfront funding. If a contract is awarded with no funding, there may not be sufficient funds to cover its liability costs in the event of a termination for convenience.┬á

    When the government cannot pay for contractually obligated charges, it is considered anti-deficient. And that is a HUGE no-no for CFOs and CPOs, and pretty much everyone involved.

    The (now-expired) E-Government Act of 2002, which authorized Share-in-Savings contracts, dealt with this issue by superseding Anti-Deficiency Act requirements such that agencies could legally fund contracts without upfront funding, but that authority does not exist today. 

    As you’ll see from this discussion thread, the vendor’s perspective is absolutely critical here. If a vendor truly wants to enter an SiS contract, they may have to be comfortable with releasing the government agency from its liability to pay the contractor appropriate claims in the event of a termination for convenience.┬á

    I’m not going to attribute names here, but rather attempt to summarize the issues at hand and invite others to weigh in. The gist is this:┬á

    Agency initiates Share-in-Savings contract for little or no cash, agreeing to share a pre-determined percentage of the savings that the contractor’s solution will generate, in the current fiscal year and the out years.┬á

    Since the government always ALWAYS has the right to terminate for convenience (T4C), how would a contractor have any recourse if they spend money and time on a better solution if unforeseen circumstances lead to the T4C?

    Several of us have countered that with an agile approach, this may be more tenable as the participating contractor can cleave off a smaller chunk of work initially, thereby lowering their overall performance risk.

    And then, within the business case & evaluation model we are developing, there’s been talk of adding a column for Termination costs to the equation, so that a contractor could actually offer the termination liability as a part of the proposal.

    Lots of inside baseball going on here – but I know there are some procurement wonks in our community that would find this conversation engaging, so please weigh in if you’d like!

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————
    ——————————————-
    Original Message:
    Sent: 10-24-2017 16:09
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Today we conducted a dry run for this Thursday’s webinar on IT Modernization through Share-in-Savings contracts. It was a great discussion as to be expected with such a stellar panel.

    And given it was a dry run, we were able to run down tangential paths that we won’t be able to do on Thursday. One such path was a deeper discussion into Martin Fowler’s Strangler Pattern theory for modernizing legacy systems.

    Robert Read gave a fantastic analogy & summary of the underlying theory that I won’t be able to do justice here (but tune in on Thursday for the webinar and you might get it directly from the source!), so I asked him to share any resources for continued study.

    This is a case study from Paul Hammant’s blog that is a particularly good read, so I wanted to share it here.

    Legacy Application Strangulation : Case Studies

    Paulhammant remove preview
    Legacy Application Strangulation : Case Studies
    Strangulation of a legacy or undesirable solution is a safe way to phase one thing our for something better, cheaper, or more expandable. You make something new that obsoletes a small percentage of something old, and put them live together. You do some more work in the same style, and go live again (rinse, repeat).
    View this on Paulhammant >

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    Original Message:
    Sent: 10-20-2017 11:03
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Here’s a version of the proposed FAR rule from 2004 in a google document. I copied it over to make it more readable, but also to enable comments and annotations. I plan to spend some time later today and into next week reading through this proposed rule and making comments and insights directly to the google doc, and invite everyone to do the same.

    [Federal Register Volume 69, Number 127 (Friday, July 2, 2004)]

    It will be great to see what questions and insights our community has as we get ready for next week’s webinar, Modernizing IT Through Share-in-Savings contracts. Register today!

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-14-2017 18:42
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    One thing that immediately jumps to mind as a former contracting officer is the FAR authority. Share in savings style contracts are discussed in value engineering contracts (but these proposals only pertain to awarded contracts).

    Dr. Ken Buck, who will be joining our upcoming webinar on Agile Share-in-Savings approaches worked on a proposed rule change to the FAR back in 2004, when the E-Government Act was still in effect. Looking forward to reading through this.

    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)

    Gpo remove preview
    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)
    Assist contracting officers in determining what clauses need to be included in SIS contracts. One commenter urged that the final FAR implementation make clear that some of the basic elements of SIS contracting are not dependent on the express authority provided by section 210 and therefore do not expire when section 210 sunsets.
    View this on Gpo >

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-12-2017 15:55
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    We’re excited for our upcoming webinar on Share-in-Savings and incentive-based contracting techniques as they apply to modernizing legacy systems.

    We intend for this webinar to be a collaborative & interactive affair, so in that spirit I’m opening this discussion thread so that we can begin to collect some feedback from our community on the questions and concerns they might have.

    The more discussion and questions we collect, the more responsive we can make this topic. So, I’ll start us out with a question:

    What comes to mind when you hear the term Share-in-Savings contract?

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    0
  11. Today we conducted a dry run for this Thursday’s webinar on IT Modernization through Share-in-Savings contracts. It was a great discussion as to be expected with such a stellar panel.

    And given it was a dry run, we were able to run down tangential paths that we won’t be able to do on Thursday. One such path was a deeper discussion into Martin Fowler’s Strangler Pattern theory for modernizing legacy systems.

    Robert Read gave a fantastic analogy & summary of the underlying theory that I won’t be able to do justice here (but tune in on Thursday for the webinar and you might get it directly from the source!), so I asked him to share any resources for continued study.

    This is a case study from Paul Hammant’s blog that is a particularly good read, so I wanted to share it here.

    Legacy Application Strangulation : Case Studies

    Paulhammant remove preview
    Legacy Application Strangulation : Case Studies
    Strangulation of a legacy or undesirable solution is a safe way to phase one thing our for something better, cheaper, or more expandable. You make something new that obsoletes a small percentage of something old, and put them live together. You do some more work in the same style, and go live again (rinse, repeat).
    View this on Paulhammant >

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————
    ——————————————-
    Original Message:
    Sent: 10-20-2017 11:03
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    Here’s a version of the proposed FAR rule from 2004 in a google document. I copied it over to make it more readable, but also to enable comments and annotations. I plan to spend some time later today and into next week reading through this proposed rule and making comments and insights directly to the google doc, and invite everyone to do the same.

    [Federal Register Volume 69, Number 127 (Friday, July 2, 2004)]

    It will be great to see what questions and insights our community has as we get ready for next week’s webinar, Modernizing IT Through Share-in-Savings contracts. Register today!

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    Original Message:
    Sent: 10-14-2017 18:42
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    One thing that immediately jumps to mind as a former contracting officer is the FAR authority. Share in savings style contracts are discussed in value engineering contracts (but these proposals only pertain to awarded contracts).

    Dr. Ken Buck, who will be joining our upcoming webinar on Agile Share-in-Savings approaches worked on a proposed rule change to the FAR back in 2004, when the E-Government Act was still in effect. Looking forward to reading through this.

    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)

    Gpo remove preview
    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)
    Assist contracting officers in determining what clauses need to be included in SIS contracts. One commenter urged that the final FAR implementation make clear that some of the basic elements of SIS contracting are not dependent on the express authority provided by section 210 and therefore do not expire when section 210 sunsets.
    View this on Gpo >

    ——————————
    Frank McNally
    Director, Learning & Content Development

    Original Message:
    Sent: 10-12-2017 15:55
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    We’re excited for our upcoming webinar on Share-in-Savings and incentive-based contracting techniques as they apply to modernizing legacy systems.

    We intend for this webinar to be a collaborative & interactive affair, so in that spirit I’m opening this discussion thread so that we can begin to collect some feedback from our community on the questions and concerns they might have.

    The more discussion and questions we collect, the more responsive we can make this topic. So, I’ll start us out with a question:

    What comes to mind when you hear the term Share-in-Savings contract?

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    0
  12. Here’s a version of the proposed FAR rule from 2004 in a google document. I copied it over to make it more readable, but also to enable comments and annotations. I plan to spend some time later today and into next week reading through this proposed rule and making comments and insights directly to the google doc, and invite everyone to do the same.

    [Federal Register Volume 69, Number 127 (Friday, July 2, 2004)]

    It will be great to see what questions and insights our community has as we get ready for next week’s webinar, Modernizing IT Through Share-in-Savings contracts. Register today!

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————
    ——————————————-
    Original Message:
    Sent: 10-14-2017 18:42
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    One thing that immediately jumps to mind as a former contracting officer is the FAR authority. Share in savings style contracts are discussed in value engineering contracts (but these proposals only pertain to awarded contracts).

    Dr. Ken Buck, who will be joining our upcoming webinar on Agile Share-in-Savings approaches worked on a proposed rule change to the FAR back in 2004, when the E-Government Act was still in effect. Looking forward to reading through this.

    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)

    Gpo remove preview
    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)
    Assist contracting officers in determining what clauses need to be included in SIS contracts. One commenter urged that the final FAR implementation make clear that some of the basic elements of SIS contracting are not dependent on the express authority provided by section 210 and therefore do not expire when section 210 sunsets.
    View this on Gpo >

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    Original Message:
    Sent: 10-12-2017 15:55
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    We’re excited for our upcoming webinar on Share-in-Savings and incentive-based contracting techniques as they apply to modernizing legacy systems.

    We intend for this webinar to be a collaborative & interactive affair, so in that spirit I’m opening this discussion thread so that we can begin to collect some feedback from our community on the questions and concerns they might have.

    The more discussion and questions we collect, the more responsive we can make this topic. So, I’ll start us out with a question:

    What comes to mind when you hear the term Share-in-Savings contract?

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    0
  13. One thing that immediately jumps to mind as a former contracting officer is the FAR authority. Share in savings style contracts are discussed in value engineering contracts (but these proposals only pertain to awarded contracts). 

    Dr. Ken Buck, who will be joining our upcoming webinar on Agile Share-in-Savings approaches worked on a proposed rule change to the FAR back in 2004, when the E-Government Act was still in effect. Looking forward to reading through this.

    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)

    Gpo remove preview
    Federal Register, Volume 69 Issue 127 (Friday, July 2, 2004)
    Assist contracting officers in determining what clauses need to be included in SIS contracts. One commenter urged that the final FAR implementation make clear that some of the basic elements of SIS contracting are not dependent on the express authority provided by section 210 and therefore do not expire when section 210 sunsets.
    View this on Gpo >

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————
    ——————————————-
    Original Message:
    Sent: 10-12-2017 15:55
    From: Frank McNally
    Subject: Open Thread: Share-in-Savings & Incentive-based Contracting

    We’re excited for our upcoming webinar on Share-in-Savings and incentive-based contracting techniques as they apply to modernizing legacy systems.

    We intend for this webinar to be a collaborative & interactive affair, so in that spirit I’m opening this discussion thread so that we can begin to collect some feedback from our community on the questions and concerns they might have.

    The more discussion and questions we collect, the more responsive we can make this topic. So, I’ll start us out with a question:

    What comes to mind when you hear the term Share-in-Savings contract?

    ——————————
    Frank McNally
    Director, Learning & Content Development
    ——————————

    0
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