What Does "Performance Based" Mean? Please Give an Example.
The best way to illustrate the difference is through example.

Traditional SOW for Chocolate Chip Cookies:

Ingredients
  • 1 cup butter (or 3/4 cup butter and 1/4 cup butter-flavored Crisco)
  • 2 1/4 cups all purpose flour
  • 1 cup dark brown sugar
  • 1/2 cup granulated sugar
  • 2 large eggs, beaten
  • 2 teaspoons real bourbon vanilla extract
  • 12 ounces semi-sweet chocolate chips
  • 1 cup Diamond shelled walnuts
  • 1 teaspoon milk
  • 1/2 teaspoon water
  • 1 teaspoon baking soda
  • 1/2 teaspoon salt
Directions
  1. Preheat your oven to 325 degrees (F).
  2. Use an electric mixer to mix sugars and butter in a large bowl. Add the other wet ingredients, mixing well. Then mix in flour, baking soda, and salt. Finally, mix in chocolate and nuts.
  3. Place tablespoon-sized balls of cookie dough on an ungreased baking sheet, and cook for about 11 minutes (your cooking times may vary). The cookies will be extremely soft when removed from the oven. Carefully lift the cookies with a spatula and place them on a rack to cool.
Packaging should provide adequate moisture protection so that the cookies remain fresh and no more than 5% of the delivered cookies experience breakage.

Delivery must be made not later than 7 days after contract award, at the Washington Navy Yard, Bldg 171, on the lobby of the 5th floor.

Acceptance will be made by Program Manager and Contracting Officer after tasting a random sample.


Performance Based SOW:
  • What - Chocolate Chip Cookies
  • When - one week from today
  • Where - Washington Navy Yard, Bldg 171, Lobby of 5th floor
  • How many - 5 dozen (60 cookies) 
  • How well - Must taste good and not be broken

The contract statement of work, which is referred to as the Performance Work Statement (PWS), is the foundation of performance-based service contracting. The traditional SOW outlines exactly how the contractor shall perform the work, providing precise direction (ingredients, temperature and process) and little flexibility. The PBSC PWS describes the effort in terms of measurable performance standards (outputs = chocolate chip cookies). These standards should include such elements as "what, when, where, how many, and how well," leaving the contractor to establish their own "recipe" or processes to produce the desired output.

Although the cookie example is simplistic, the premise is sound: by providing the contractor with clear direction as to the program manager's desired output and allowing the contractor to utilize its own established processes, program managers will recognize cost savings and increased satisfaction with the quality of the contractor's product.