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SDLC Guide - Statements of Work

VIEWS: 12 PAGES: 67

									       SDLC Guide
   Statements of Work




          UNITED STATES MINT
Office of the Chief Information Officer (OCIO)
         DRAFT – August 25, 2003




                                        Version:
                                           Date:
                                  SDLC Guide – Statements of Work



                                 Revision History
  Date       Version            Description         Custodian/Organization
mm/dd/yyyy     1.0     Initial publication.          / OCIO




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                                                         Table of Contents

Overview................................................................................................................................... 1
 Three Types of SOWs ........................................................................................................... 2
   Design/Detailed Specification Statement of Work .............................................................. 2
   Level-of-Effort Statement of Work ...................................................................................... 2
   Performance-Based Statement of Work ............................................................................. 2
 SOW Considerations ............................................................................................................. 3
   Advance Planning............................................................................................................... 3
   Market Research ................................................................................................................ 4
 A Systems Approach ............................................................................................................. 4
   Jobs as Systems ................................................................................................................ 4
   Parts and Subparts ............................................................................................................. 5
   Results of the Systems Approach....................................................................................... 7
 A Team Approach .................................................................................................................. 7
   Responsibilities................................................................................................................... 7
   Relationship in Contracting Out .......................................................................................... 9
 Developing a Performance SOW and a Surveillance Plan: An Overview ............................ 10
   Performing a Job Analysis ................................................................................................ 10
   Writing the SOW ............................................................................................................... 11
   Writing a Surveillance Plan ............................................................................................... 12
Writing the Statement of Work ............................................................................................. 14
 Performance (Based) Work Statements .............................................................................. 15
    Guidelines for Writing a PWS ........................................................................................... 17
 Performance Standards ....................................................................................................... 22
    Outcome or Output ........................................................................................................... 22
    Performance Standards .................................................................................................... 22
    Progress/Performance Measurement ............................................................................... 24
    Performance Requirements Summary (PRS) ................................................................... 24
    Project Surveillance Plan (PSP) ....................................................................................... 25
 Performance Incentives ....................................................................................................... 27
    Incentive Criteria............................................................................................................... 27
Quality Control and Pre-Award Surveys .............................................................................. 29
 Quality Control Clause ......................................................................................................... 29
 Pre-Award Survey (PAS) ..................................................................................................... 30
   Pre-Award Survey Clause ................................................................................................ 30
   Pre-Award Survey Method ............................................................................................... 32
   Pre-Award Survey Team .................................................................................................. 32
   Outside Office and the Acquiring Activity Perform the PAS .............................................. 32
   Technical Evaluation ........................................................................................................ 33
   Outside Office Performs the PAS ..................................................................................... 35

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Composing the Statement of Work ...................................................................................... 36
 Style ..................................................................................................................................... 36
 Language ............................................................................................................................. 36
 Ambiguity ............................................................................................................................. 36
 Misused Words and Phrases ............................................................................................... 36
 Spelling ................................................................................................................................ 37
 Punctuation .......................................................................................................................... 37
 Abbreviations and Acronyms ............................................................................................... 37
 Sentences ............................................................................................................................ 37
 Paragraphs .......................................................................................................................... 38
 Using the SOW Checklist ..................................................................................................... 38
Completing the SOW Template ............................................................................................ 39
 Overview .............................................................................................................................. 39
 Background .......................................................................................................................... 39
 Scope ................................................................................................................................... 39
 Performance Requirements ................................................................................................. 39
   For New and/or Conversion Software Development ......................................................... 40
   For New Software Development ....................................................................................... 40
   For Conversion Software Development ............................................................................ 40
 Performance Standards ....................................................................................................... 41
 Quality Assurance Plan ........................................................................................................ 41
 Incentives ............................................................................................................................. 41
 Evaluation Criteria................................................................................................................ 42
 Performance Requirements Summary ................................................................................. 42
 Data Requirements .............................................................................................................. 54
 Deliverables ......................................................................................................................... 54
A.        SOW Checklist ............................................................................................................ 56




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Tables and Figures
Table 1. Responsibilities ............................................................................................................ 8
Table 2. PBC Roadmap ........................................................................................................... 16
Table 3. PRS, Non-Routine Requirement for Aerospace Systems .......................................... 25


Figure 1. Contractor-Operated System ...................................................................................... 5
Figure 2. Transportation (Partial) ............................................................................................... 6
Figure 3. Relationships in Contracting ....................................................................................... 9
Figure 4. Overview of Analysis Steps ...................................................................................... 10
Figure 5. Sample Quality Control Clause................................................................................. 30
Figure 6. Sample Pre-Award Survey Clause ........................................................................... 31
Figure 7. Computing the Estimate of the Contract Price .......................................................... 34




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Overview
The United States Mint requires project managers to prepare a Statement of Work (SOW) for
all projects, regardless of the project’s classification—complex, moderate, or simple.
Statements of Work are the most essential documents in any Federal solicitation or contract. A
SOW specifies the work requirements for a project or program and, in conjunction with
specifications and standards, is used as a basis for a contract. Because Government and
industry personnel with diverse backgrounds read and interpret SOWs, you must write the
SOWs so that technical and non-technical readers can understand them during the solicitation,
award, and administration phases of the acquisition cycle. An initial investment of time and
effort to write a clear and high-quality Statement of Work:
      Enables offerors to clearly understand the United States Mint’s requirements and needs
      Allows offerors to more accurately cost or price their proposal and submit higher quality
       technical proposals
      Provides a baseline for the development of other parts of the solicitation, particularly the
       evaluation criteria, technical proposal instructions, and independent cost estimate
      Minimizes the need for change orders which can increase the cost or price and delay
       completion
      Allows both the United States Mint and the contractor to assess performance
      Reduces claims and disputes under the contract
When the United States Mint contracts a job, it is entitled to receive quality services. The SOW
accurately identifies and states the United States Mint’s minimum performance requirements,
defining and measuring quality.
The Government’s policy in service contracting is:
      The most qualified persons available must write the SOW and the surveillance plan;
       standardized Government documents, when available, provide valuable basic
       information
      The performance-oriented Statement of Work (SOW) for a service contract includes the
       standards of performance and acceptable quality levels
      A performance-oriented SOW must not contain detailed procedures unless absolutely
       necessary; rely on a statement of the required service as an end product
      Standards must be measurable
      Surveillance plans are an acceptable way of performing quality assurance
      Quality control is a contractor responsibility

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      References to directives should be minimal

Three Types of SOWs
There are three major types of Statements of Work (SOW):
      Design/detailed specification
      Level-of-effort
      Performance-oriented (performance-based)

Design/Detailed Specification Statement of Work
This type of SOW tells the contractor how to do the work. It can include precise
measurements, tolerances, materials, quality control requirements, and other United States
Mint requirements that control the contractor’s processes. There are wide variances in
application of this type of SOW—as varied as the requirements that are acquired under them.
The point is that the United States Mint, to a large degree, requires the contractor to follow the
United States Mint’s way of performing the task or making a product. This causes the United
States Mint to bear the risk of performance. For example, if the contractor builds and/or
performs a task and follows the United States Mint's SOW exactly, and the product or service
is faulty, who is to blame? Absent malfeasance or shoddy workmanship, it is the United States
Mint's process that the contractor was implementing, so the contractor cannot be faulted.
Although this type of SOW is primarily used for manufacturing or construction, other work
efforts are described in this rigid format.

Level-of-Effort Statement of Work
You can write a level-of-effort SOW for almost any type of service unless it is inherently a
United States Mint function. The real deliverable under this type of contract is an hour of work.
Deliverables are normally associated with task order and delivery order contracts, and services
or products are acquired via individual orders issued by the contracting office. The SOWs are
usually very broad and describe the general nature, scope, or complexity of the services or
products to be procured over a given period of time. When writing these SOWs, it is important
to ensure that you sufficiently cover all work items. You can only issue task orders or delivery
orders in those areas specifically covered in the SOW. You must use a separate procurement
action to acquire all activities outside of the SOW.

Performance-Based Statement of Work
This SOW type is the preferred method of stating needs. A performance-based Statement of
Work:
      Structures all aspects of an acquisition around the purpose of the work to be performed

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      Does not dictate how the work is to be accomplished, which maximizes contractor
       control of work processes and allows for innovation in approaching various work
       requirements
      Is written to ensure that contractors are given the freedom to determine how to meet the
       United States Mint's performance objectives
      Emphasizes performance that can be contractually defined, allowing the United States
       Mint to measure the results of the contractor's effort in terms of technical and quality
       achievement, schedule progress, or cost performance
      Provides for payment only when the results meet or exceed the stated objectives
The goals of PBC (performance-based contracting) are to:
      Save money by reducing contract costs from elimination of unnecessary effort, through
       innovation by the contractor, and by reducing United States Mint surveillance
      Enable the United States Mint to shift its emphasis from processes to outputs
      Hold contractors accountable for the end results
      Ensure that contractors are given the freedom to determine how to meet the United
       States Mint's performance objectives

SOW Considerations

Advance Planning
Attention to the early stages of program and procurement planning is critical to achieving a
successful acquisition.
      Identify and contact your contracting officer (CO) or contracting officer’s technical
       representative (COTR). Inform them of what you are planning and ask for any
       suggestions.
      Keep your CO and COTR informed as you progress. There may be items that relate to
       your SOW—reporting requirements, market research, appropriateness of contract type,
       and the incorporation of effective incentive provisions—that the contracting office can
       help you with.
      The amount of planning you do should be proportional to the complexity of the
       contemplated procurement.
      Program and project offices must determine what work United States Mint employees
       will perform and what work contractors will perform.
     You should structure the SOW so that it is conducive to efficient performance. You must
      give contractors and United States Mint employees complete and severable pieces of
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       work for which they are accountable. It is much easier to write a SOW around the
       required output if you turn over a complete task to the contractor.

Market Research
Part 10 of the Federal Acquisition Regulation (FAR) requires that the United States Mint
identify legitimate needs and evaluate trade-offs to acquire items that meet those needs.
      You must perform market research to determine if commercial or non-developmental
       items are available to meet the United States Mint's needs.
      Market research can include the project officer's knowledge of the marketplace,
       information gleaned from prior acquisitions, or from formal sources-sought synopses
       such as those published in the Commerce Business Daily (CBD).
      FAR Parts 11 and 12 require the United States Mint to buy a commercial product or
       service if feasible. If a commercial item is not available, the United States Mint must
       review the requirement to see if they can revise it to encompass commercial items.

A Systems Approach
The design of a SOW and the surveillance plan is based on a systematic analysis of the
function to be put under contract or already under contract. The procedure for deriving these
two products is called job analysis. The procedure consists of a step-by-step review of the
requirement to arrive at the specific output services and associated standards.

Jobs as Systems
The analysis assumes that an operation is a system. An operation can be called a system
because it consists of a job or a combination of jobs carried out by people, and sometimes
machines, for a certain purpose. The parts of a system are usually called input, work, output,
and control loops. These parts are shown in Figure 1.




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                                                        Contract
                                       Adjust
                                                        Monitor


                                                                             Standard


              Resource
                                   Transform            Specific
             Acceptance
                                   Resources            Services
             Information




                                                      Government
               Inform
                                                        Monitor


Figure 1. Contractor-Operated System



From a contractor’s view, the system consists of taking people, facilities, material, and the
SOW, and inputting it into a work process. The result of this work is a contract output.
Two major control loops are at work in this system. Both loops use standards as the basis for
determining acceptability. The contractor quality loop feeds back information from the output
into the work process so that the contractor can adjust performance to meet the standard
specified. The United States Mint’s quality assurance looks at the output and determines its
acceptability. This information then becomes an input for contractor management to adjust the
quality control function.

Parts and Subparts
You can view every service contract operation as a system. Further, you can break down each
major system into small parts or subsystems. For example, if the system portrayed in Figure 1
was called transportation, you could break down the major system into small parts called
vehicle operations, vehicle maintenance, and traffic management. Further, you could break
down each of these parts into the smaller parts or subparts that make up that part, as shown in
Figure 2.




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                                                    Output:
      Input:             Work:
                                                 Transportation
    Resources        Transportation
                                                    Services


                                                         Work:                    Output:
                                       Input:
                                                        Vehicle             Vehicle Maintenance
                                     Resources
                                                      Maintenance                 Services


                         Work:
      Input:                                         Output:
                        Vehicle
    Resources                                    Vehicle Services
                       Operations


                                                     Output:
      Input:             Work:
                                                 Vehicle Dispatch
    Resources       Vehicle Dispatch
                                                    Services


      Input:             Work:                      Output:
    Resources         Taxi Dispatch               Taxi Services



                                               Input:                  Work:                Output:
                                             Resources            U-Drive Dispatch      U-Drive Services

Figure 2. Transportation (Partial)



Note that the transportation work area leads to vehicle operations, which leads to vehicle
dispatch, which leads to taxi dispatch and U-Drive dispatch. Each work area has its own set of
inputs and outputs. This chart does not contain all of the work areas associated with
transportation; rather, it shows an example of how you can break down a system into its parts.
The chart looks a great deal like a standard organizational chart, except that this chart shows
each thing that happens rather than who performs the task. Further, by showing an input, it
shows what must be there for something to take place. It shows that each job must have an
output that you can measure in some way.




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Results of the Systems Approach
To arrive at a performance-oriented SOW and a means of measuring the service, you must
view a proposed contract effort in a systematic way. A systematic approach to analysis:
      Permits the analyst to identify outputs
      Permits the analyst to separate the outputs from the specific procedures required to
       create them
      Produces a quality assurance surveillance plan that tells the United States Mint if the
       contractor provides the service as specified
      Results in an enforceable, clear SOW
When the United States Mint specifies a given procedure, it assumes responsibility for
ensuring that the design or procedure will result in the desired output. On the other hand, if it
specifies the output performance and its quality standard, the contractor must then use the
best management to achieve that level of performance.
Systematic analysis gives a clear picture of what input is needed to get the job done. This data
is most useful in analyzing a contract bid price, conducting a pre-award survey, creating a list
of Government-furnished property, and making payment deductions in case of non-
performance.

A Team Approach
The development of a quality SOW is a result of team effort. The leading members of the team
are the functional office, the United States Mint’s contracting office, and the manpower/
management engineering office. The latter can provide previous manpower studies to assist in
determining jobs performed.

Responsibilities
During the contracting cycle, responsibilities are assigned as shown in Table 1. This table
shows the major functions that occur during the contracting cycle, and the important actions
that take place during each function. The columns on the right show who is responsible at
each stage of the purchase cycle.




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Table 1. Responsibilities

  Functions                 Actions              Functional      Manpower /         Contracting
                                                 Area Chief      Management           Office
                                                                  Engineer
 Define          Prepare SOW                     Responsible         Assist            Assist
                 Prepare Surveillance Plan       Responsible         Assist            Assist
                 Perform cost study                  Assist       Responsible          Assist
 Source          Develop sources                     Assist                         Responsible
                 Prepare solicitation                Assist                         Responsible
                 Conduct pre-bid conference          Assist                         Responsible
 Buy             Analyze bids                        Assist          Assist         Responsible
                 Conduct pre-award survey            Assist                         Responsible
                 Award contract                      Assist                         Responsible
 Qualify         Surveillance of SOW             Responsible         Assist            Assist
                 Request modifications           Responsible                           Assist
 Administer      Make modifications                  Assist                         Responsible
                 Non-SOW surveillance                Assist                         Responsible
                 Conduct progress meetings           Assist                         Responsible
 Release         Inspection                      Responsible                           Assist
                 Acceptance                      Responsible                           Assist


The functional area chief should be considered the team leader, exercising authority and
responsibility for the function that will be under contract. Functional persons state the service
that will be delivered, measure the quality of service, and accept the service.
The contracting office is the means of getting a contract and enforcing its provisions. The
contracting office also provides the necessary authority and technical experience in contracting
to make the contract a workable document.
The manpower/management engineering office performs the cost studies required by OMB
Circular A-76.




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Relationship in Contracting Out
Figure 3 shows the lines of authority and responsibility that exist when a function is contracted
out.



                                                               Contracting
                             Agency Chief
                                                                Authority



                                                       Contracting
                       Functional Area                  Buyer
                        Functional Area Chief          Contracting Officer
                        Quality Assurance              Contract
                                                          Administrator


                                             Contracted
                                              Function



                                                   Authority
                                                   Responsibility

Figure 3. Relationships in Contracting



When a given function is performed in-house with United States Mint personnel, the line of
authority flows from the agency chief, to the functional area chief, and then to the function.
However, when authority is delegated in the contract environment, the contracting office (and
especially the contracting officer) become a part of the authority line.
By law, only a contracting officer can make a contract and can direct a contractor. Therefore,
the functional area chief must act through the contracting officer to obtain and manage a
service contract.
In a contract function, responsibility does not follow the line of authority. Rather, the functional
area chief has overall responsibility to see that the service is provided, but works through the
contracting officer’s authority. Two major tools for that use are a well-defined, high-quality
SOW and a surveillance plan.




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Developing a Performance SOW and a Surveillance Plan: An Overview
The method and the relationship of the tasks are shown in Figure 4 and described below.
Succeeding chapters explain in detail how to accomplish each step or task in the method.


                    Analysis Phase                            Performance Phase


                                            Write
                                         Specification


                    Job Analysis                               Do Surveillance


                                            Write
                                       Surveillance Plan


Figure 4. Overview of Analysis Steps




Performing a Job Analysis
In this phase, you start with information on how the job is being done and end with the
performance that will be required of a contractor. The analysis consists of:
   1. Organizational Analysis. You review the current organization and identify the services
      it provides.
   2. Tree Diagram. You create a tree diagram, which breaks a job into smaller and smaller
      parts. Each part brings about a final result or service.
   3. Work Analysis. You take each part of the tree diagram and break it into:
          Input—what is needed to do the job
          Work—what steps are needed to do the job
          Output—what the work produces
       During this step you decide, with management, what outputs the contractor will provide
       and what work will remain in-house.
   4. Data Gathering. After selecting which services in the tree diagram the contractor will
      supply, you collect data on how much input will be required to do the job and how often
      the output will be provided.

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   5. Performance Analysis. You assign a performance value to each service proposed for
      contract, and decide how the service can be measured. With management, you
      determine what standards apply and determine an acceptable quality level.
   6. Directives Analysis. You decide what directives, if any, apply to the service to be
      provided. Directives are classified as mandatory or advisory. You should keep directives
      to a minimum.
   7. Deduct Analysis. You work with the manpower/management engineering office to
      prepare the estimated contractor cost of each specific service. For a formally advertised
      procurement, you state these costs in the SOW as a percentage of total contract cost,
      and use them as the basis for deductions for non-performance. In a negotiated
      procurement, you include the actual negotiated costs in the SOW, and use them to
      evaluate contractor proposals.


             For detailed information about job analysis, see SDLC Guide – Job Analysis.



Writing the SOW
You perform the previous steps in job analysis for the dual purpose of writing a SOW and a
surveillance plan.
With a proper job analysis, the writing tasks are relatively easy. Neither writing task is truly
independent—what you write in the SOW influences what you put into the surveillance plan,
and the surveillance plan forces you to make sure that outputs and procedures in the SOW are
measurable.
Writing the SOW consists of:
      Expressing the contract-desired output in clear, simple, concise, and legally enforceable
       terms
      Determining what level of detail to include in the SOW, including whether to quote from
       a mandatory regulation or refer to it
      Using a format that presents the specified tasks in an easily understood manner (see
       the explanation in the next section, Writing the Statement of Work)
      Determining what exhibits will help convey to the contractor the job that needs to be
       done




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Writing a Surveillance Plan
The surveillance plan helps to ensure that systematic quality assurance methods are used. It
assumes that the contractor is responsible for managing and controlling the output of service.
The United States Mint’s surveillance plan seeks to determine if contractor-provided service
meets the quantity and quality standards. The development of the plan involves these major
steps:
      Identifying key performance indicators. The job analysis phase identified many
       performance indicators. Not all of these indicators are critical to the service being
       provided. During this step, you must decide which indicators to include in the plan, using
       as criteria:
       o The criticality of the process and its output
       o The availability of quality assurance manpower
       o The adaptability of each indicator to overlap and check many kinds of outputs
      Identifying information sources. Each plan uses many sources of information (for
       example, existing management information systems, customer complaints, and random
       sampling).
      Developing tools. When writing the surveillance plan, you have many tools:
         o The Sampling Guide. The sampling guide is a written procedure that states
             what will be checked, the standard of performance, and how the checking will be
             done. (For a sample guide, see SDLC Guide – Surveillance). The sampling
             guides used in this regulation are based on statistical techniques called for in
             Military Standard 105D, Sampling Procedures and Tables for Inspection by
             Attributes. By randomly sampling a small part of the total service, the QAE can
             accept or reject the service based on the standard.
         o Decision tables. When you reject a service, you must decide who is at fault (the
             contractor or the United States Mint). To make the determination, you use a
             decision table, which identifies different kinds of unsatisfactory performance,
             probable cause factors, and the things from which these factors could result.
         o Checklist. You use checklists to record what has been checked by a sampling
             guide, and to record information on contract items not covered by sampling.




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Surveillance. The final step is doing surveillance; that is, taking the written surveillance plan
and using it on a daily basis. In this step, you draw random samples, make schedules of
quality assurance inspections made, document contractor discrepancies, and take corrective
action. If appropriate, the contracting officer deducts money from the contractor’s payment.


             For detailed information about writing the surveillance plan and doing
             surveillance, see SDLC Guide – Surveillance.




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Writing the Statement of Work
Considering all the data gathering, analysis, and decisions that you have done to this point,
writing the SOW should be easy. All that remains is to use OAD’s SOW template to compose
words that you will use to express the requirement. The SOW template gives you the
framework to provide all necessary elements of the Statement of Work:
      Introduction - provides a broad overview of the SOW
      Scope of Work - describes the tasks that are within the scope of work for this project,
       and relates them to the key objectives
      Performance Requirements - for each of the tasks in the project, describes the
       associated performance requirements
      Performance Standards - explains the performance levels that the United States Mint
       requires
      Quality Assurance Plan - serves as a tool to assure consistent and uniform assessment
       of the contractor’s performance
      Incentives - defines standard performance, maximum performance, and negative
       performance incentives, and establish the units of measurement
      Performance Requirements Summary - summarizes all performance requirements for
       this project
      Roles and Responsibilities - details all the roles and responsibilities associated with this
       project
      Government-Furnished Materials - describes any property or services the United States
       Mint will provide to the contractor for their use in providing the required services to the
       United States Mint
      Period of Performance - fully describes the period of performance for this project
      Additional Information - provides any additional information that may help prospective
       offerors prepare their proposals
      Evaluation Criteria - presents the elements you will use to evaluate the technical
       proposals and describes how you will evaluate proposals in terms of technical merit and
       costs
      Oral Presentation and Discussions - provides instructions for the preparation and
       delivery of the prospective offerors’ technical and business (cost) proposals, and
       explains the oral presentation/discussion process and the anticipated duration of each
       oral presentation/discussion


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The section Completing the SOW Template provides more details about the content of each
section in the OAD SOW template.

             All Statements of Work must clearly state that:
                    Contractors must follow the most current version of the United States Mint’s System
                     Development Life Cycle (SDLC) process.
                    Contractors must use the most current versions of the United States Mint’s System
                     Development Life Cycle (SDLC) templates.
                    Contractors must use the most current version of the United States Mint’s Timekeeper
                     system to record all hours charged against the contract.
                    The United States Mint will have exclusive ownership of all versions of contractor work
                     products.



         Do not repeat material in the SOW that is already included in other parts of the
         contract (for example, General Provisions, Special Provisions, and so on).



Performance (Based) Work Statements
Performance-based contracting (PBC) means structuring all aspects of an acquisition around
the purpose of the work to be performed–not to dictate how the work is to be accomplished. It
is designed to ensure that:
      Contractors are given the freedom to determine how to meet the United States Mint's
       performance objectives
      Contractors achieve the appropriate performance levels
      The United States Mint pays the contractor only for results that meet these levels
It maximizes contractor control of work processes and allows for innovation in approaching
various work requirements. Remember, when contractors are not told "how" to do the job, their
ingenuity may surprise you.
PBC emphasizes performance that you can contractually define so that you can measure the
results of the contractor's effort in terms of technical and quality achievement, schedule
progress, or cost performance. The significant steps in the PBC process include:
   1. Emphasizing contract performance requirements that you can measure by a meaningful
      performance evaluation
   2. Selecting contractors that provide "best value" with proven past performance

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    3. Providing positive incentives for good performance
    4. Determining contract type and incentives in accordance with a fair assessment and
       assignment of performance risk
    5. Performing contract surveillance and administration for insight only into essential areas
       of contractor performance
    6. Being mindful of the need for conserving United States Mint resources
The goal of PBC is to:
           Save money by reducing contract costs (by eliminating unnecessary effort and through
            innovation by the contractor), and also by reducing United States Mint surveillance
           Enable the United States Mint to shift its emphasis from processes to outputs
           Hold contractors accountable for the end results
           Ensure that contractors are given the freedom to determine how to meet the United
            States Mint's performance objectives
Use the decision table shown in Table 2 to draft the contractual requirements.


Table 2. PBC Roadmap

 If . . .                                               Then . . .
 The United States Mint can assign                      Write a performance-based contract
 performance responsibility to the contractor,
 and performance can be validated against a
 performance standard
 Discrete portions of the effort can be assigned        Specify performance standards in the
 to the contractor for performance                      contract
 responsibility, and performance against those
 portions can be validated against performance
 standards
 Otherwise                                              Specify critical processes in the contract or
                                                        contract-referenced documents


To be considered PBC, a PWS must include meaningful measurable performance standards
and the quality level that the United States Mint expects the contractor to provide. There are
two categories of PBC-type contracts: contracts of a routine nature and contracts of a non-
routine nature.

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Routine Services - In contracting for services of a routine nature, whether high-tech or low-
tech (for example, computer service, guard service, or janitorial), it is essential to avoid under-
specifying the United States Mint's requirements. Work that you inadvertently omit may later be
construed to be outside the requirements of the contract and could require a contract change
and increased costs. Even worse, omissions outside the scope of the contract could require a
significant effort from the United States Mint; a new competition, or a Justification for Other
Than Full and Open Competition (JOFOC).
You usually write the PWS for routine services to require output. In the absence of a
performance-based standard, the United States Mint may not be able to ensure that the
contractor completes the work at an acceptable level. In that event, the United States Mint may
be obligated to accept whatever product or service the contractor provides, or to make
changes in the work requirements and pay more to acquire what the United States Mint
actually needs.
There is usually a significant amount of data available for routine services plus a competitive
marketplace with several suppliers; consequently, a firm-fixed price contract with deduction
schedules (which are applied when performance is inadequate) is commonly used.
Non-Routine Requirements - When acquiring supplies, engineering, or unique non-routine
services (including studies, analyses, or R&D efforts), performance-based specifications must
avoid over-specifying the United States Mint’s requirements. Accordingly, you usually write the
PWS for non-routine work to require an outcome. The policy limits the involvement of United
States Mint employees, and provides contractors maximum flexibility in meeting the United
States Mint’s need. If that you succinctly define that need, you should entrust the contractor to
fulfill that need.

Guidelines for Writing a PWS
The contract is a completion form (something is accomplished) as opposed to a term/level-of-
effort form.
To the maximum extent practicable (FAR Part 11.002), state the requirements in terms of
functions to be performed or performance required.


          The PWS must include performance requirements and verification requirements
          that are measurable or quantifiable.

Without specifying how to perform the work, the PWS must clearly indicate the expected
outcomes or outputs from the contractor, so that you can measure contractor performance
against the performance standards in the PWS. You must define standard performance,
maximum positive and negative performance incentives, and the units of measurement in the
SOW. These definitions will vary from contract to contract and are subject to discussion during
source selection.
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To aid in continuity and to avoid confusion, the PWS format must conform to the numerical
coding of the related task elements of the CWBS. The coded task descriptions clearly define
each deliverable end item, product, and task.
Hardware or End-Item Deliverables - The PWS/specification describes, at the highest
practicable level, what the end product must do (performance) and any critical constraints (for
example, size, weight). It eliminates process-oriented (how to) requirements and includes only
minimally essential reporting requirements. You must clearly communicate the contract
requirements and incentives. Actual demonstrated performance of the end item is normally
one of the measures—in some cases the only measure.
Performance-Based Specification - A major effect of acquisition reform is that you should
increase the number of performance statements and decrease the number of detailed, design-
solution statements. To the greatest extent practicable, you should use a performance
specification—which describes the work broadly by form, fit, and function—instead of using
detailed drawings, specifications, and standards. Offerors are free to meet the requirements in
any way they can. This increases the United States Mint’s access to commercial, state-of-the-
art technology. You should express requirements in terms of minimum acceptable
performance standards and place maximum responsibility for performance on the contractor.
You can reference additional information, such as standards, as information to providers to
improve understanding, but you should clearly distinguish/separate it from requirements.
A performance specification also requires results, with criteria for verifying compliance without
stating methods for achieving the required results. By not specifying an approach in
manufacturing, design, or quality assurance to be used by the contractor, it permits a wide
variety of contractor methods, thereby potentially increasing the number of contractors who
can satisfy the requirement. Contractors can use their creative and innovative skills to the
maximum.
Nevertheless, PBC emphasis does not preclude highly descriptive specifications, which (if
expressed in performance terms) accurately and inclusively describe what the United States
Mint wants the contractor to do or deliver.
In writing performance-based specifications, avoid:
      Performance specified at the subsystem or component level when it could be more
       appropriately specified at a higher level; for example, specify the reliability of the system
       or vehicle instead of specific components with the system
      Requirements that are not measurable or verifiable
      Statements that constrain the solution to a single solution; for example, "shall be
       fabricated from composite material"
      Orphan requirements; that is, requirement statements that are not traceable to a
       specific performance or verification requirement statement in the specification

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      Requirement statements that are not appropriate for an effort in this phase of
       development or production
      Specifications that rely solely on directives, not the mission requirements, to define
       performance
      Citing standards and processes when performance standards can be developed
      Citing mandatory standards without justification
      Requirements that are vague (for example, "in accordance with commercial practices"
       in lieu of citing a commercial standard)
      Language in the specification that belongs in the PWS
Listed below are key elements you should consider in preparing specifications and the related
technical requirements.
      Description of supplies or data that identifies the requirement. When appropriate,
       describe requirements broadly by form, fit, and function.
      Quantity (and unit).
      Packaging and marking requirements.
      Inspection, acceptance, and quality assurance. You must express the concern for
       quality by providing standards which result in proposals that offer credible responses
       concerning the ability to perform quality work. For example, if a surface must not contain
       imperfections exceeding .01 inch, specifically state this as the assessment of quality.
      Place of delivery, performance and delivery dates, period of performance, and f.o.b.
       point. You should make every effort to give prospective contractors adequate time to
       produce the item or to provide the required service.
      Other information as necessary.
Major System Contracts - Contracts for definition and development of major systems have
short, concise outcome PWSs that do not necessarily go into great detail. There is usually a
specification/contract deliverable requirements list associated with these contracts, which may
contain specific requirements for the products. The PWS must, however, state all requirements
necessary to complete each task element of the WBS and be complete enough to allow the
contractor to generate all information necessary to design, prototype, test, and verify.
A good approach for the acquisition of major systems is to acquire the effort in phases, with
each phase having a limited but clear objective (see NFS Sub Part 1834.005-1). This approach
also is a safeguard against prematurely committing scarce resources to an effort.
For study and preliminary definition contracts, the PWS must allow the contractor wide latitude
for creativity, innovation, and research. Describe the efforts necessary to supplement existing

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information and bring present knowledge to a point where further detailed study for the most
promising systems can be made.
Support Services - The PWS generally describes all of the services to be performed and
includes explicit, measurable performance standards, surveillance procedures, and incentives.
It includes only minimally essential reporting requirements, but you will hold the contractor
accountable for failure to meet those minimum requirements. The outline will be similar to the
following:
   1. Introduction
   2. Scope of Work
   3. Management Administration
   4. Description of Services
      4.1 Performance Standards
      4.2 Performance Requirements Summary
   5. Contract Deliverables
   6. Minimally Essential Reporting Requirements
   7. Appendices
   8. Special Terms and Conditions
In preparing a PWS or a task assignment, consider:
      The PWS clearly describes the specific requirements the contractor is required to meet
       in performance of the contract. Specify the minimum required level of performance and
       quality, failing which, the objective of the contract or task will not be met.
      Since the United States Mint is purchasing a result/service or some requirement which
       includes not only the contractor's labor, but also its expertise in the services to be
       provided and the management of those services:
          o Avoid over-defining the contractor's responsibilities in terms of methods or
            procedures
          o Place the responsibility for success on the contractor, not the United States Mint
      Provide enough information to define clearly and precisely the magnitude and
       complexity of the outcome/output desired. This will slightly restrict the contractor in
       managing their work force, but will help ensure that all bidders clearly visualize the
       extent of effort required.
In addition to the desired outputs or outcomes:
      Specify the schedules of accomplishment and/or time limitations in which all services
       must be completed.

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      Provide a list of mandatory operating and safety procedures that the contractor must
       follow.
      Provide historical data on previous contracts or work by in-house personnel. You need
       to be careful to avoid specifying staffing levels and so on.
In those cases where the United States Mint can provide only a broad description, consider
using a task order contract. You can write individual task orders that include all essential tasks,
clearly define each deliverable end item or product, and include performance standards and
incentives.
Research and Development (R&D) Contracts - Unlike contracts for supplies and services,
most R&D contracts are directed toward specified objectives and knowledge where you cannot
precisely describe the work or methods in advance. It is difficult to judge the probabilities of
ultimate success or required effort for technical approaches. R&D PWSs can be difficult to
write if the contract's objectives are not defined sufficiently, yet they must be flexible enough to
allow contractors the freedom to exercise innovation and creativity. The most important
performance-based element is to clearly define the requirements and/or the schedule so that
you can measure the contractor’s performance. Following is a sample outline:
   1. Introduction
   2. Scope of Work
   3. Description of Tasks to Be Performed/Outputs Desired
   4. Schedule
   5. Reporting Requirements
   6. Attachments, Appendices, and Exhibits
Typically for R&D, the contractor has a cost-type contract and, therefore, has no cost risk.
However, if the contractor receives a small fee for performing "best efforts," you must tie the
substantive portion of any fee to successful performance—an objective measurement is
preferred; however, at times a subjective determination could be meaningful and acceptable.
Basic Research - In basic research, you cannot determine results in advance and often no
deliverable is required except for a final report. In that case, the performance standards may
be focused on timeliness, organization and thoroughness of the report, comprehensive
bibliography, and so on. These performance standards shall be used to "gate" contractor
eligibility for fee, if any.
When the principle purpose of the research is for the direct benefit or use of the United States
Mint, you must use a contract. When not a direct benefit to or for use by the United States
Mint, the proper procurement vehicle is usually a grant or cooperative agreement.



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Performance Standards
A PBC must contain performance standards—the criteria for determining whether the work
requirements are met. You must assign a performance standard to essential or critical (but not
incidental) tasks or products.
Establish a baseline composed of three elements:
      Outcome or Output. The desired result, or necessary effort, being acquired.
      Performance Standard. The measurement threshold or limit that establishes that point
       at which successful performance has been accomplished.
      Surveillance. The monitoring and verification of performance.
Continuous improvement from this baseline will be sought over the life of the contract.

Outcome or Output
An outcome measure is an assessment of the results of a program activity compared to its
intended purpose. An outcome-based contract is often ideal for non-routine efforts.
An output measure is the tabulation, calculation, or recording of activity or effort and you can
express it in a quantitative or qualitative manner. For routine efforts an output contract may be
more desirable.
Describe the outcome/output, but do not give specific procedures or instructions on how to
produce the outcome/output unless absolutely necessary. When the United States Mint
specifies a procedure (how to do it), the United States Mint assumes responsibility for ensuring
that the design or procedure will end with the desired result. However, if the United States Mint
specifies the outcome/output performance and its quality standard, the contractor must then
use its best judgment in determining how to achieve that level of performance. A key tenet of
PBC is that the contractor is assigned responsibility for meeting the United States Mint's
requirements, together with the flexibility to decide how it will meet those needs. The United
States Mint then evaluates the contractor's performance against the standard. In many cases,
the final arrangement can be a hybrid contract with a limited number of critical specifications
being imposed on the contractor.

Performance Standards
For a contract to be considered performance based, you must include explicit, measurable
performance standards in the PWS or specification. Under PBC, the United States Mint
expresses its willingness to accept the contractor solution as long as it meets performance
requirements.
A performance standard states requirements in terms of required results, with criteria for
verifying compliance but without stating the methods for achieving required results. It defines

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the requirements for the item and/or services, the environment in which it must operate, and
interface and interchangeability characteristics. Performance standards must be:
      Meaningful. An objective measurement is preferred; however, at times a subjective
       determination could be meaningful and acceptable.
      Understandable, and clearly communicated to the contractor.
      Realistically achievable.
      True indicators of outcome or output.
      Reflective of actual United States Mint needs.
Typical standards are rates (for example, cost per pound to orbit), limits (for example, not more
than and not less than), and criteria (for example, fit and other forms of external interface
standards, power, weight, volume, life, accuracy).
Identification of systemic performance standards is recommended. The more critical the result
is to objective accomplishment, the more appropriate it is to develop a performance standard
to evaluate that result. The level of detail must correspond to that expectation. You need not
explicitly identify performance standards if you state the requirement so clearly that you have
unmistakably established a standard for performance in the PWS or specification.
Always consider the cost. Applying performance standards appropriately should actually
reduce overall costs as you identify performance deficiencies and the contractor makes
improvements to these processes. Nevertheless, performance standards must be very
selective and at the appropriate level. Do not spend money for performance standards you do
not really need. Ask the questions:
      Is this level of detail necessary?
      What performance can I measure by querying the contractor's data system?
      What is the risk of not having this level of performance?
"Best value" is a combination of competitive pricing and improved performance. You should
encourage offerors to propose improvements above the minimum requirements and to
propose lower cost alternatives that meet the performance criteria.
Standards should be published and well recognized. OMB Circular A-119 requires preference
for national, international, or industry-wide standards. If technically suitable voluntary
consensus standards are not available, you can use standards developed by the United States
Mint with industry input. You can do this through public meetings, public comment, or a
Solicitation for Information per FAR 15.405.




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Progress/Performance Measurement
You can measure results by both progress and performance. Both are critical to effective
management.
      Progress measurement identifies what the contractor did, not necessarily how well they
       did it. The most typical example is milestone completion. For managing progress, either
       maintain or achieve a specific and definable performance level and/or requirement.
      Performance measurement identifies achievement of outcome or output in terms of
       quality, quantity, timeliness, and cost productivity.
You measure performance by comparing the performance level against the range identified in
the performance standards. The standards must require performance reflecting the United
States Mint's minimum (or minimum and maximum) needs, failing which the objective of the
contract will not be met. Standards cannot be level-of-effort or procedures. This approach has
an inherent advantage because it allows far greater contractor flexibility in how to satisfy these
performance requirements.
The performance goal is a target level of performance that you express as a tangible,
measurable objective, against which you can compare actual achievement. You can express a
performance goal as an absolute or as a range of acceptable performance (usually expressed
in percentages); for example, “For launches, the goal shall be 100%” or “97% (3% of all tests
completed on time, with a Minimum Acceptable Performance of 94% of the tests completed on
time.”
Such a measurement process could include multiple data points over time, be as quantitatively
measurable as possible, and provide early identification of potential problems with the process,
product, or service allowing management intervention. It often facilitates continuous
improvement.

Performance Requirements Summary (PRS)
If there are a number of tasks and deliverables, summarize them in a PRS, as shown in Table
3. List the contract and work requirements considered to be most critical to satisfactory
contract performance, such as tasks, deliverables, and quality levels. Provide the minimum
performance standard for each.




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Table 3. PRS, Non-Routine Requirement for Aerospace Systems

                               Task                                    Minimum             Goal
                                                                      Performance
                                                                       Standard
 Optimize the computational time and memory usage efficiency
 of developed deterministic or non-deterministic dynamics and
 control analysis.
 Develop simulation and computer programs that implement                  10%              25%
 improvements for validation.                                         improvement      improvement
 Perform simulations with one defined test case to demonstrate
 the accuracy and efficiency of the optimized algorithms.



Project Surveillance Plan (PSP)
The United States Mint shall, to the maximum extent practicable, assign contractors full
responsibility for quality performance and shall avoid cumbersome and intrusive process-
oriented inspection and oversight programs to assess that performance (OFPP Policy Letter
91-2). You must do this for each major PWS task with formal, measurable performance
standards. The contractor must achieve United States Mint-established performance quality
levels, and must be rewarded only for services that meet or exceed those levels.
The contractor's quality plan shall be part of the contract. It shall describe how the contractor
will assure quality. The United States Mint’s surveillance plan shall not be made part of the
contract, but a copy will be provided to the contractor. It shall balance oversight and insight
methods of surveillance and may be modified as necessary.
Before the United States Mint can process a contractor's invoice for payment, the United
States Mint is responsible for determining whether or not the contractor has performed to the
standards of the contract. PSPs provide a systematic approach to evaluate the contractor's
performance. PSPs set forth United States Mint’s responsibilities in determining whether
contractor performance is acceptable.
Insight Method - Insight refers to the process of gathering a minimum set of product or
process data that provides adequate visibility into the integrity of the product or process. You
can acquire the data from contractor records, usually in a non-intrusive parallel method.
Oversight Method - Oversight is an intrusive process of gathering contractor product or
process data through on-site, in-series involvement in the process (for example, we don't do
the welding, rather surveillance of the welding process). Oversight entails very detailed
monitoring of the process itself. Oversight is an in-line involvement in an activity, principally

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through inspection with review and approval authority implicit to the degree necessary to
assure that a process or product's key characteristics are stable and in control.
One of the initiatives of OFPP letter 91-2 is that the United States Mint refrain from obtrusive
in-process surveillance. PBC is based on the premise that the contractor has the ability to
execute the job without considerable United States Mint oversight. Because of this premise,
United States Mint surveillance programs would not require oversight to be as intense or as
frequent after the product quality is considered to be acceptable. In most cases, the United
States Mint will conduct insight (rather than oversight) surveillance to assure that the United
States Mint has received what it requested at the time it was requested. A project-specific
surveillance plan defines how the United States Mint will accomplish "insight."
The United States Mint initially creates the PSP as a draft document in concert with the project
PWS/RFP. It very explicitly describes the project manager's overall strategy to execute a
surveillance program. It reduces project risk by focusing insight activities on contract
performance areas with the greatest potential to disrupt or prevent successful completion of
the program. You then revise the plan to reflect contractor response to the RFP and the final
negotiated agreement. As the program evolves, it continues to be a dynamic, living, and
changeable document. At the beginning of work, a fully formed United States Mint PSP must
be in place that identifies strategy, activities, metrics, and control limits.
Contractors are responsible for providing quality control, and these plans ensure that the
contractor maintains a proper level of performance. It is important to select a contractor with a
proven record of quality performance.
Hybrid Approach – You can institute a hybrid surveillance approach at a contractor's facility
when you do not have a high level of confidence that the contractor is able to identify, manage,
and control programmatic risks. This may occur when the United States Mint is acquiring new
technology or a contractor is using unproven processes. In this situation, you conduct intense
oversight until you have data sufficient to demonstrate the contractor has all critical processes
under control. The oversight activities usually impose mandatory United States Mint inspection
points in-series with the contractor's manufacturing processes. Only after the contractor's
demonstration of risk mitigation capabilities will the United States Mint consider transitioning to
insight activities that rely predominantly on internal contractor data. You generally conduct
insight activities in parallel to contractor processes, and you do not impose control functions
over the processes. The transition period between oversight to insight activities is hybrid and
accomplished incrementally, depending on contractor performance.
The PSP is further described in NHB 7120.5, Management of Major System Programs and
Projects.




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Performance Incentives
          A contractor who meets only the minimum performance standards merits only a minimum fee.


Performance-based contracting must assure that the United States Mint obtains the products,
services, and cost savings that it wants by providing tangible incentives that motivate the
contractor to achieve levels of performance that exceed the minimum and benefit the United
States Mint. As the United States Mint moves into this environment, the basic business
premise requires that the contract results in a mutual value for both partners. Many contractors
will not necessarily move into this higher-risk performance-based business realm unless they
can anticipate a reward. Incentives must make it worthwhile to the contractor to find ways to
improve performance.
Incentives are tools to improve the probability of better performance when the tasks are
complex, critical, or have a history of performance or cost-overrun problems. A contract may
include technical performance incentives when performance beyond the minimum is desirable,
is potentially achievable, and withstands the test of cost-benefit analysis.
The earning of incentives must be based on a meaningful rating of the contractor's
performance. Normally, an objective measurement is preferred; however, some circumstances
would allow for a subjective assessment. Where meaningful objectively measurable outcome
criteria exist, combine cost incentives (CPIF and FPIF) and performance incentive provisions
in preference to cost-plus-award-fee (CPAF).
For service-type contracts, you can use reduction schedules where appropriate.
You must include a performance incentive in all cost-reimbursable contracts where the primary
deliverable is hardware and where total estimated cost and fee is greater than $25 million
unless it is determined that the nature of the acquisition (for example, commercial off-the-shelf
computers) would not effectively lend itself to performance incentives. (Refer to NFS Part
1816.402. You must use the criteria listed in §202b to establish the right incentives.)

Incentive Criteria
Incentive criteria must be focused on program/project objectives. You must use the draft RFP
process to obtain contractor input.
You must use explicit, predefined criteria to measure the contractor's performance in meeting
major program objectives:
      Incentives must be relevant to performance. You must follow up to ensure that desired
       results are achieved; that is, establish measures to determine the extent to which
       performance is actually achieved.
     The criteria for incentives must center on the areas of value to the United States Mint
      and those of high risk that are within the contractor’s control. Do not provide the
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       contractor an incentive for work that is the responsibility of United States Mint
       personnel.
      You must establish reasonable and attainable targets, and clearly communicate them to
       the contractor.
      The United States Mint must benefit significantly from performance above the minimum.
      The cost of the incentives must be less than or equal to the added value of the
       enhanced performance.
      The criteria must be consistent with contract requirements and other program
       documents.
      The criteria must be measurable and the measurement systems must be reliable.
      The contractor should not earn a big incentive for a small, easily reached achievement.
NFS Subpart 1816.402-270(b) describes the use of United States Mint technical performance
incentives, as follows:
   "When a performance incentive is used, it shall be structured to be both positive and
   negative based on hardware performance after delivery and acceptance. In doing so, the
   contract shall establish a standard level of performance based on the salient mission
   performance requirement. This standard performance level is normally the contract's
   minimum performance requirement. No incentive amount is earned at the standard
   performance level. Discrete units of measurement based on the same performance
   parameter shall be identified for performance both above and below the standard. Specific
   incentive amounts shall be associated with each performance level from maximum
   beneficial performance (maximum positive incentive) to minimal beneficial performance or
   total failure (maximum negative incentive). The relationship between any given incentive,
   both positive and negative, and its associated unit of measurement must reflect the value to
   the United States Mint of that level of hardware performance. Contractors are not to be
   rewarded for above-standard performance levels that are of no benefit to the United States
   Mint."




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Quality Control and Pre-Award Surveys
Two final components are critical to a SOW: a quality control clause and a pre-award survey.

Quality Control Clause
Each standard SOW contains a contractor quality control clause, as shown in the example in
Figure 5. This clause provides specific implementation of the standard Inspection of Services
clause normally present in service contracts.
Contracting officers must pay particular attention to this requirement during the pre-award
survey and must make sure that the contractor provides a written quality control program prior
to the contract start date.
To aid contractors in developing a quality control program, the contracting officer must provide
the United States Mint Quality Assurance (QA) Surveillance Plan along with the Invitation for
Bids or Request for Proposal.
Make sure to mark the QA Surveillance Plan with the statement: “For Information Purposes
Only. This Quality Assurance Surveillance Plan is not part of the Request for Proposal or
Invitation for Bids, nor will it be made part of any resulting contract.” Use this statement since
the United States Mint must retain the right to change or modify inspection methods.




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Quality Control. The contractor shall establish a complete quality control program to assure
the requirements of the contract are provided as specified. One copy of the contractor’s basic
quality control program shall be provided to the Contracting Officer at the pre-award survey
conference or not later than at the pre-performance conference if a pre-award survey is not
conducted. An updated copy must be provided the Contracting Officer on contract start date
and as changes occur. The program will include, but not be limited to:
      An inspection system covering all the services stated in the Performance Requirements
       Summary of the Statement of Work. It must specify areas to be inspected on either a
       scheduled or unscheduled basis and the individuals who will do the inspection.
      A method of identifying deficiencies in the quality of services performed before the level
       of performance is unacceptable.
      A file of all inspections conducted by the Contractor and the corrective action taken.
       This documentation shall be made available to the United States Mint during the term of
       the contract.
Quality Assurance. The United States Mint shall monitor the Contractor’s performance under
this contract using the quality assurance procedures specified in the Performance
Requirements Summary of the Statement of Work.

Figure 5. Sample Quality Control Clause




Pre-Award Survey (PAS)
A SOW and a sound quality assurance surveillance plan go a long way toward making sure
that quality results come from a contract. The other essential ingredient is a good contractor.
The pre-award survey helps the United States Mint ensure that it awards the contract to a
qualified bidder. In other words, the contractor must be responsible as well as having the
lowest price (or lowest evaluated price) before the United States Mint makes award. The pre-
award survey is a method to determine responsibility.

Pre-Award Survey Clause
Include a clause like the sample shown in Figure 6, but adapted to the specified SOW.




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Financial and Technical Ability
If a bid submitted in response to this solicitation is favorably considered, the United States Mint
may perform a two-part pre-award survey to determine the bidder’s ability to perform. Part One
will be conducted by (Insert name of office), who may contact you to determine your financial
capability to perform. Current financial statements and pertinent data should be available at
that time. Shortly after bid opening, United States Mint personnel will conduct Part Two of the
survey at (Name/Location).
If the United States Mint conducts a pre-award survey, you will be requested to have
management officials of the appropriate level represent your firm. In addition, your proposed
project manager should be available to respond to questions raised during the pre-award
survey. You should also be prepared to present a briefing regarding the manner in which you
intend to accomplish your contractual obligations. As a minimum, you should address the
following items of information in your presentation (a written copy of the presentation with the
backup data below must be submitted to the contracting officer five work days before the
presentation):
      Startup and phase-in schedule.
      Key personnel letters of intent and resumes.
      Availability of labor force, plan for recruiting, type and extent of training.
      The role of the project manager and the extent of his/her authority.
      Organizational and functional charts reflecting line of management responsibility.
      Manning charts in a format requested by the contracting officer (only to be used to
       ensure that you understand the workload).
      Plans and management procedures for logistical administrative support of all functions;
       that is, contractor-furnished supplies and equipment and procedures for timely payment
       of personnel.
      Procedures to be used to ensure that contract requirements are met (quality control
       program).
      Corporate experience, as evidenced by past and present contracts.
      Other purchases for which you have bid and for which you are apparent low bidder.

Figure 6. Sample Pre-Award Survey Clause




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Some negotiated and two-step forms of contracting use technical proposals to determine how
well someone understands the Statement of Work. Adapt the clause above and include it as
evaluation factors in the solicitation.

Pre-Award Survey Method
The contracting officer makes the decision to conduct a pre-award survey based on knowledge
of the bidder’s past performance. When the contracting officer decides to conduct a pre-award
survey, the guidelines in the following sections of this chapter apply:
         Pre-Award Survey Team
         Outside Office and the Acquiring Activity Perform the PAS
         Technical Evaluation
         Outside Office Performs the PAS
These guidelines are not hard and fast procedures; the contracting officer must adapt them to
the specific survey requirements.

Pre-Award Survey Team
This team can be composed of acquiring activity, outside office support such as the Defense
Contract Administration Service (DCAS) in the Department of Defense, or both. The PAS has
two parts—financial and technical. The acquiring activity or the outside office can run the
technical part; the acquiring activity should supplement the team with appropriate persons,
such as the buyer, functional experts, and so on.

Outside Office and the Acquiring Activity Perform the PAS
When an outside office performs the financial PAS and the acquiring activity performs the
technical PAS, the buyer takes the following actions as soon after bid opening as possible:
   1. Requests that the outside office perform the financial part of the PAS.
   2. Requests information required by Financial and Technical Ability clauses from the
      bidder. See the Pre-Award Survey Clause section in this chapter.
   3. Sends blank manning charts to the bidder for submission during the PAS.
   4. Emphasizes to the bidder the importance of having a detailed quality control program
      for presentation at the PAS.
   5. Reminds the functional person to have estimated manning charts available for the PAS.
      These charts must estimate what contractor manning would be required to perform the
      requirement. They may not estimate what it would take United States Mint personnel to
      accomplish the tasks.

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   6. Coordinates the date of the PAS with the technical PAS team chief and the contractor.
      Notifies the contractor of the finalized date and location of the PAS.
   7. Performs the PAS, including all tasks in the next section, Technical Evaluation.

Technical Evaluation
The technical evaluation includes the following tasks.
   8. Evaluate the adequacy of the financial PAS performed by the outside office. Check all
      financial statements that the bidder submitted.
   9. Thoroughly analyze manning charts that the bidder submitted. The following procedures
      apply:
         Validate the United States Mint-prepared contractor manning estimates. Make sure
          the United States Mint did not overestimate.
         Compare the bidder’s charts to the United States Mint estimate. Ensure that:
          o Bidder’s total manning is comparable to the estimate. You should consider as
            suspect a variance of more than twenty percent.
          o The bidder has the right classes of employees on duty at the appropriate times.
          o The bidder has sufficient personnel on duty during peak or key workload periods.
   10. Analyze the contractor’s net bid to see if it will support the level of manning proposed.
       Compute total man-hours for each labor category in the wage determination. Use a
       format similar to the one shown in Figure 7 to compute the estimate of the contract
       price.


       Labor Category        Total Hours          Hourly Rate            Personnel Cost
                                             x    $ ----         =       $ ----
                                             x    $ ----         =       $ ----
                                             x    $ ----         =       $ ----
       Supervisory Costs      Total Direct Labor Cost                    $ ----
       Leave Costs                                                       $ ----
                                                                         $ ----
                                                                         _______
                              Total Labor Cost                           $ ----




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        Payroll Tax & Insurance                                         $ ----
        Health & Welfare (Hours times dollar rate)                      $ ----
        Material, Supplies & Equipment                                  $ ----
                                                                        _______
        Total Direct Costs                                              $ ----

        Overhead                                                        $ ----
        General & Administrative Costs                                  $ ----

                                                                        _______
                              Total Costs                               $ ----

        Profit                                                          $ ----
                                                                        _______
                              Total Estimated Price                     $ ----
      Figure 7. Computing the Estimate of the Contract Price



The bid price frequently may not support the total number of direct labor hours that the bidder
proposed on the manning charts. Ask to see the bidder’s bid preparation sheets. The bidder
doesn’t have to show them, but usually will if you explain that you need the data to verify that
they did not underestimate direct costs (labor, material, and so on). After the bidder provides
this information, retain it; it may be helpful in the event of future negotiations.
Make sure to have the latest supply consumption data if the bidder is going to furnish the
supplies. Compare this with bidder’s information (when provided) to ensure that the bidder did
not underestimate supplies.
A serious underestimation of total costs, or a serious misapplication of the man-hours
proposed, indicates a lack of understanding of contract requirements. This is where the
technical representative goes to work. Interview the bidder and find out whether or not the
bidder understands the job.
Besides the total estimate, financial PAS, and general evidence of competence, the next most
important factor is the bidder’s proposed quality control plan. This plan should be detailed
enough for the PAS team to evaluate and determine that the bidder actually knows what to do.
The bidder’s performance history is also a very important subject that the PAS team should
thoroughly cover. Establish complete and thorough documentation if a determination of non-
responsibility is going to be based upon lack of tenacity, perseverance, or integrity.
PAS reports must state the facts, draw a conclusion based upon those facts, and end with a
recommendation to the contracting officer.

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Outside Office Performs the PAS
If an outside office, such as DCAS, is going to perform the financial and technical PAS, the
buyer:
      Asks the office to perform the PAS
      Indicates which particular acquiring activity will assist in the PAS
      Names the personnel in the request; for example, buyer, food services officer, and so
       on
      Provides all acquiring activity team members written guidance as to duties and
       responsibilities, and provides it in enough time for members to study and fully
       understand their responsibilities
      Ensures that acquiring activity team members understand that the outside office is
       running the PAS, and that acquiring activity team members’ input is very important (the
       outside office may be lacking in a particular area of expertise that the acquiring activity
       provides)




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Composing the Statement of Work
The SOW becomes a part of the contract and is a contractually binding document on both the
contractor and the United States Mint. Since the written words translate into cost and profit,
you should scrutinize every word in the document so that the contractor’s advantage does not
become the United States Mint’s disadvantage.

Style
Style is the mode of construction or development that you use to achieve an end product.
Technical style is the way you express ideas and technical information in phrases, sentences,
and paragraphs, then assemble them into an exact statement of facts. SOW style revolves
around the necessity for technical accuracy. You must strive to include all the essential
information in the simplest presentation.

Language
The language in a SOW must be exact and concise. You must make every effort to use the
simplest words, phrases, and sentences possible, so that anyone who reads it can understand
its meaning, and so that you avoid the risk of misinterpretation.

Ambiguity
Perhaps one of the biggest causes of disagreement in a SOW results from the use of
indefinite, ambiguous terms, and words with a double-meaning. If an SOW is ambiguous, a
court generally holds the party that drew up the contract responsible. Since the United States
Mint writes its contracts, it is responsible for any ambiguity that may arise.

Misused Words and Phrases
The misuse of certain words and phrases can inadvertently change an intended meaning in
the SOW. The following tips are designed to eliminate some of the misuse.
       Use of “shall” and “will”. Use the term “shall” to specify that a provision is binding.
        Use the word “will” to express declaration of future action on the part of the purchaser.
       Use the emphatic form of the verb. Tell the contractors they must or must not do
        something. The emphatic form of the verb ensures that you are giving directions, not
        suggestions, to the contractor.
       Do not use “any”, “either”, “and/or”. These words imply a choice that the contractor
        can make. It is better to avoid them unless a choice is to be made. You can often
        substitute the word “both” for these words.


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      Use of Pronouns. The use of pronouns is usually regarded as dangerous in the SOW.
       It is better to repeat the noun and avoid misinterpretation.
      Consistent Terminology. You must use the same words and phrases throughout the
       SOW. This is especially true when referring to technical terms and items; for example,
       always refer to a particular part by the same name.
      Numerals. When you use numerals on the drawings and illustrations, use them in the
       SOW, rather than spelling out the number.

Spelling
Most words have only one acceptable spelling; however, throughout the English language
there are words that can be spelled several ways. To avoid misunderstanding, adopt the
standard spelling (the first spelling listed in a dictionary).

Punctuation
To keep the SOW clear, use simple, short, and concise sentences so that you need only
minimal punctuation. As a rule, when extreme punctuation is necessary, rewrite the sentence.

Abbreviations and Acronyms
Abbreviations (like “sec.”) and acronyms (like CPAF) serve as a form of shorthand and can
make complex terms easy and precise. However, many misunderstandings arise from the use
of abbreviations and acronyms because the reader is not always familiar with them. The first
time you use an abbreviation or acronym in text, show it in parenthesis immediately after the
spelled-out word or phrase. This defines the abbreviation or acronym for further use.

Sentences
Sentences in a SOW are often spiced with legal phrases and high-sounding words. This type
of writing is difficult to read and understand.
Your overriding concern should be clarity. You must try to construct logical sentences that are
exact and concise. It is better to eliminate a long and involved sentence by rearranging it into
two or three short, simple sentences that are limited to a single idea or thought.
Good writing of any type is also dependent on natural order. The word order of a sentence tells
the reader the function of each word in the sentence. The simple sentences you should strive
for in a SOW are based on the traditional order of subject-verb-complement or object.




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Paragraphs
Use a paragraph to state a single idea and elaborate on it. Even though it can appear
anywhere in the paragraph, it is best to state the idea (topic sentence) at the beginning so that
the reader can grasp it immediately. The topic sentence, then, is the framework to which you
add other sentences to develop and support the original idea. The ideal length of a paragraph
will vary; however, it is generally accepted that the maximum should be from 80 to 100 words.


Using the SOW Checklist
Prior to forwarding the SOW for approval, review the checklist in Appendix A. The provided
checklist is a guide only; you should add or delete items to tailor it to your specific SOW.




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Completing the SOW Template
Before starting to write the SOW, read this overview of the structure and contents of OAD’s
SOW template.

Overview
This section includes a brief description of the purpose of the contract. It provides descriptions
of the United States Mint's organizational structure, where the services are to be provided, the
importance of the software development effort, and the hardware and software resources in
use. This section can also include United States Mint- or organization-specific information
about Government-furnished items, working hours, Federal holidays, and a glossary to define
terms used within the body of the work statement.

Background
This section summarizes the historical information that is necessary to understand the current
requirement, including any previous efforts germane to this effort. It allows the contractor to
understand how and why the requirement evolved and where this requirement is headed.

Scope
This section defines how the contracting effort fits within the existing or intended customer
environment both technically and organizationally. Examples of items to include here are a
detailed description of the software development requirements, the number and location of
users, the target processing environment including operating systems, system and data
architectures, communications topology, and any other pertinent information.

Performance Requirements
Performance requirements are statements describing the required services in terms of output.
Use clear, concise, commonly used, easily understood, measurable terms to express the
outputs. Do not include detailed procedures that dictate how the work is to be accomplished.
For each requirement, include a corresponding standard, a statement of the maximum
allowable degree of deviation from the standard, the method of surveillance to determine
whether the standard is met, and a positive and/or negative incentive based on adherence to
the standard.
The following statements are examples of the kinds of information you should include in the
performance requirements section:




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For New and/or Conversion Software Development
      During the life of the contract, verify conformance with United States Mint-specific
       information processing standards and functional requirements. Prior to delivery of new
       software, demonstrate the operational capability of the system software.
      Interfaces must contain compatibility among system components in the operational
       environment.
      Documentation for deliverables must match the United States Mint-specific system
       processing and operational procedures.
      Meet the following delivery dates/milestones; phasing is an optional approach. Dates
       are specified according to United States Mint delivery requirements.
      Training may vary according to user levels/needs (for example, end users,
       administrators, analysts, help desk support, management, and so on).
      Security - meet all Government- and United States Mint-specific requirements.


For New Software Development
      For new software development, delivery of fully operational systems conforming to the
       operational environment and specified user requirements.
      Newly developed software shall not adversely affect system performance.
      New releases of software must maintain previously provided functionally, while
       providing enhanced capabilities or systems corrections.


For Conversion Software Development
      For software conversion projects, provide an inventory of programs and a description of
       the complexity of the existing systems and programs for transfer to another processing
       system or hardware and software platform operational environment including but not
       limited to databases, files, programs, lines of code, and interdependencies.
      For software conversion efforts involving re-hosting to another platform, architecture,
       operating system, database, programming language, and/or communications system,
       provide an inventory of system and application programs, descriptions of the current
       hardware and software environment, and (if applicable) data distribution methods.
      For conversion projects of mission-critical systems, provide parallel processing and/or
       system validation of the old and new systems prior to implementation.

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Performance Standards
The performance standards establish the performance levels that the United States Mint
requires. These standards are driven by the application system(s) being converted or
developed. You should ensure that each standard is necessary, is carefully chosen, and not
unduly burdensome. (See Performance Requirements Summary for a listing of examples of
standards.)

Quality Assurance Plan
The quality assurance plan gives the United States Mint flexibility in measuring performance
and serves as a tool to assure consistent and uniform assessment of the contractor's
performance. This plan is primarily focused on what the United States Mint must do to ensure
that the contractor has performed in accordance with the performance standards. It defines
how the performance standards will be applied, the frequency of surveillance, the maximum
acceptable defect rate(s), and the value of each performance requirement as a percentage of
the overall contract. A good quality assurance plan should include a surveillance schedule and
clearly state the surveillance methods that will be used to monitor the contractor's
performance.
The acceptable quality level, as defined in the quality assurance plan, establishes a maximum
allowable error rate or variation from the performance standard(s). Depending on the policy
and procedures established by the United States Mint and your organization, you may or may
not have to include the quality assurance plan as part of the performance work statement in
the contract; however, you must include the methodology for evaluating performance of the
contract.

Incentives
You should use incentives—either positive, negative, or a combination of both—when they will
encourage better quality performance. However, you do not need to include incentives as an
additional fee structure in every performance-based contract. In a fixed price contract, you
would include the incentives in the pricing, which would allow the contractor to either maximize
profit through effective performance or have payments reduced because of failure to meet the
performance standard.
       Positive Incentives - Actions to take if the work exceeds the standards. Standards
       should be challenging, yet reasonably attainable.
      Negative Incentives - Actions to take if work does not meet standards.




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You should establish the definitions of standard performance, maximum positive and negative
performance incentives, and the units of measurement in the solicitation. They will vary from
contract to contract and are subject to discussion during a source selection. It is necessary to
balance value to the United States Mint and meaningful incentives to the contractor. Incentives
should correlate with results. Follow-up is necessary to ensure that desired results are
realized; that is, to ensure that incentives actually encourage good performance and
discourage unsatisfactory performance.

Evaluation Criteria
The evaluation criteria are defined under Section M in the solicitation document, and they are
based on the requirements of the specific project. Section L of the solicitation document
contains instructions for the preparation of the prospective offerors' technical and business
proposals.
You use this section of the SOW to describe how the United States Mint will evaluate
proposals in terms of technical merit and costs. You must identify critical areas discussed in
the performance-based work statement and the relative order of importance assigned to each
of these areas. You must include past performance as a criterion. You can present the
elements as a matrix to be used in evaluating the technical proposals.

Performance Requirements Summary
You can use a matrix similar to the one below to present the performance requirements
summary. You could also include this type of chart in the performance work statement or place
it elsewhere in the contract to summarize the requirements and display the relationships of
each of the elements in the performance work statement. The summary chart is a tool that
allows you to easily present the elements provided in the performance work statement. Notice
that for each requirement you can:
      Present one or more standards
      Define the maximum allowable degree of deviation from the standard(s)
      Explain the method(s) of surveillance to determine adherence to the standard(s)
      Identify the positive and negative incentives for meeting, exceeding, or failing to meet
       the standard(s)




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   Performance           Performance          Maximum           Method of          Maximum
   Requirement            Standard            Allowable          Quality          Percentage
                                              Degree of         Assurance        Payment for
                                            Deviation from                      Meeting the AQL
                                             Requirement
                                                (AQL)
1. During the life of   Functionality of    All requirements   Independent      100% payment
the contract, verify    the software to     mandated by law    verification     for meeting all
conformance with        meet required       or regulation      and validation   mandated
United States Mint-     systems             must be 100%       (IV&V) for       requirements.
specific information    architecture and    compliant.         testing new      Nonconformance
processing              processing                             releases of      is unacceptable.
standards and           capabilities.       Functionality      software to
functional                                  defined in the     determine        Payment is
requirements. Prior                         requirements       that previous    contingent on
to delivery of new                          must be            functionality    amount or degree
software,                                   prioritized and    is maintained.   of functionality
demonstrate the                             tolerances for                      delivered,
operational                                 deviation         Customer          according to
capability of the                           assigned for      satisfaction      priority of each
system software.                            each component. as measured         function. Note
                                                              through           that value is
                                            % of operational limited            detemined by the
                                            capability is     validated         United States
                                            acceptable, as    customer          Mint’s
                                            determined by     complaints,       requirements, on
                                            the Quality       feedback,         a case-by-case
                                            Assurance Plan. and surveys.        basis. Percentage
                                            Note that value                     of payment for
                                            is determined by For                each component
                                            the United States conversion        shall be
                                            Mint's            projects,         determined in the
                                            requirements, on independent        Quality
                                            a case-by-case    verification      Assurance plan.
                                            basis.            and validation
                                                              (IV&V) for
                                                              developing or
                                                              maintaining
                                                              system
                                                              processing/
                                                              benchmark
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   Performance         Performance          Maximum         Method of          Maximum
   Requirement          Standard            Allowable        Quality          Percentage
                                            Degree of       Assurance        Payment for
                                          Deviation from                    Meeting the AQL
                                           Requirement
                                              (AQL)
                                                           during
                                                           parallel
                                                           processing.


2. Interfaces must    Service Levels      No deviation     Customer         100% payment
maintain              for software:                        satisfaction
compatibility among                                        as measured
system                Throughput in                        through
components in the     terms of                             limited
operational           processing                           validated
environment           response time,                       customer
                      number of                            complaints,
                      transactions                         feedback and
                      processed per                        surveys.
                      second; volume
                      of data                              Operational
                      processed over                       monitoring by
                      time.                                use of system
                                                           statistics and
                      Compatibility
                                                           logs
                      with particular
                      hardware and
                                                           Independent
                      software within
                                                           verification
                      the existing
                                                           and validation
                      processing
                                                           (IV&V) for
                      environment.
                                                           testing new
                      Functionality of                     software,
                      software to                          including
                      meet required                        verifying
                      systems                              results to
                      architecture and                     determine
                      processing                           that
                      capabilities.                        requirements
                                                           and

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   Performance          Performance          Maximum            Method of          Maximum
   Requirement           Standard            Allowable           Quality          Percentage
                                             Degree of          Assurance        Payment for
                                           Deviation from                       Meeting the AQL
                                            Requirement
                                               (AQL)
                                                               specifications
                                                               are met.


3. Documentation       Documentation       % of deviation.     Independent    100% payment
for deliverables       meets United        Note that value     verification
must match the         States Mint-        is determined by    and validation
agency specific        specific formats    the United States   (IV&V) for
system processing      for accuracy        Mint's              determining
and operational        and                 requirements, on    that
procedures             completeness        a case-by-case      documentatio
                                           basis.              n delivered by
                                                               the contractor
                                                               matches the
                                                               system
                                                               processing
                                                               and
                                                               operational
                                                               procedures.
4. Meet the            Delivery dates      % of deviation.   100%               Early delivery
following delivery     are met, or         Note that value   inspection         bonus. Note that
dates/milestones       exceeded            is determined by                     value is
(phasing is an                             the United States                    determined by the
optional approach)                         Mint's                               United States
- Dates are                                requirements, on                     Mint's
specified according                        a case-by-case                       requirements, on
to agency (delivery)                       basis.                               a case-by-case
requirements                                                                    basis.
                                                                                There may be
                                                                                excusable delays
                                                                                in which it may be
                                                                                in the United
                                                                                States Mint's best
                                                                                interest to grant

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   Performance         Performance         Maximum            Method of         Maximum
   Requirement          Standard           Allowable           Quality         Percentage
                                           Degree of          Assurance       Payment for
                                         Deviation from                      Meeting the AQL
                                          Requirement
                                             (AQL)
                                                                             forbearance, on a
                                                                             case-by-case
                                                                             basis.
                                                                             Forbearance or
                                                                             excusable delays
                                                                             to be considered
                                                                             on a case-by-
                                                                             case basis
5. Training (may      Proficiency        % of students       Surveys         Proportional
vary according to     levels on          not performing at                   reduction in
user levels/needs)    software           required level of   Proficiency     contract line item
(for example end      required for job   proficiency         exams           price, or overall
users,                performance                                            contract value,
administrators,       (%) of students                        Validated       attributable to
analysts, help desk   at level of                            customer        training.
support,              competency).                           calls to help
management, and       Note that value                        desk
so on)                is determined by
                      the United                             Random
                      States Mint's                          evaluation of
                      requirements,                          training
                      on a case-by-
                      case basis.
                      (Levels:
                      Knowledge,
                      Comprehension,
                      Application,
                      Analysis)




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   Performance        Performance       Maximum         Method of           Maximum
   Requirement         Standard         Allowable        Quality           Percentage
                                        Degree of       Assurance         Payment for
                                      Deviation from                     Meeting the AQL
                                       Requirement
                                          (AQL)
6. Security          Meet all         No deviation     100%              100% payment
                     Government-                       inspection to
                     and United                        ensure that
                     States Mint-                      all
                     specific                          Government-
                     requirements.                     and United
                                                       States Mint-
                                                       specific
                                                       requirements
                                                       have been
                                                       met.

                                                       Independent
                                                       verification of
                                                       security
                                                       procedures -
                                                       defined by
                                                       the United
                                                       States Mint
                                                       (could be
                                                       performed by
                                                       a third party
                                                       or another
                                                       agency
                                                       according to
                                                       current
                                                       security
                                                       regulations
                                                       and
                                                       measures)




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   Performance         Performance          Maximum            Method of           Maximum
   Requirement          Standard            Allowable           Quality           Percentage
                                            Degree of          Assurance         Payment for
                                          Deviation from                        Meeting the AQL
                                           Requirement
                                              (AQL)
7. For new software   Service levels      All requirements    Customer          100% payment
development,          for software:       mandated by law     satisfaction is   for meeting all
delivery of fully                         or regulation       measured          mandated
operational           Throughput in       must be 100%        through           requirements.
systems               terms of            compliant.          limited
conforming to the     processing                              validated         Payment is
operational           response time,       Functionality      customer          contingent on
environment and       number of           defined in the      complaints,       amount or degree
specified user        transactions        requirements        and surveys.      of functionality
requirements.         processed per       must be                               delivered
                      second; volume      prioritized and     Independent       according to
                      of data             tolerances for      verification of   priority of each
                      processed over      deviation           software          function. Note
                      time.               assigned for        functionality     that value is
                                          each component.     to meet           determined by the
                      Compatibility
                                                              required          United States
                      with particular
                                          % of operational    systems           Mint's
                      hardware and
                                          capability is       architecture      requirements, on
                      software within
                                          acceptable as       and               a case-by-case
                      the existing
                                          determined by       processing        basis.
                      processing
                                          the Quality         capabilities.
                      environment.                                           Percentage of
                                          Assurance Plan.                    payment for each
                      Functionality of    Note that value     Operational    component shall
                      software to         is determined by    monitoring by be determined in
                      meet required       the United States   use of system the Quality
                      systems             Mint's              statistics and Assurance Plan.
                      architecture and    requirements, on    logs.
                      processing          a case-by-case
                      capabilities.       basis.




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   Performance        Performance          Maximum            Method of          Maximum
   Requirement         Standard            Allowable           Quality          Percentage
                                           Degree of          Assurance        Payment for
                                         Deviation from                       Meeting the AQL
                                          Requirement
                                             (AQL)
8. Newly developed   Standards           Baseline            Operational      100% payment
software shall not   affecting system    functionality is    monitoring by    for meeting all
adversely affect     performance         met at 100%         use of system    mandated
system               include but are                         statistics and   requirements.
performance.         not limited to:     Non-critical        logs             Nonconformance
                     response time       functionality is                     is unacceptable.
                     for resolving       met at %. Note
                     problems, CPU       that value is                        Payment is
                     busy, response      determined by                        contingent on
                     time, memory        the United States                    amount or degree
                     utilization,        Mint's                               of functionality
                     storage             requirements, on                     delivered,
                     utilization.        a case-by-case                       according to
                                         basis.                               priority of each
                                                                              function. Note
                                                                              that value is
                                                                              determined by the
                                                                              United States
                                                                              Mint's
                                                                              requirements, on
                                                                              a case-by-case
                                                                              basis.
                                                                              Percentage of
                                                                              payment for each
                                                                              component shall
                                                                              be determined in
                                                                              the Quality
                                                                              Assurance Plan.




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   Performance          Performance       Maximum           Method of          Maximum
   Requirement           Standard         Allowable          Quality          Percentage
                                          Degree of         Assurance        Payment for
                                        Deviation from                      Meeting the AQL
                                         Requirement
                                            (AQL)
9. New releases of     Software adds    Baseline          Independent       100% payment
software must          value and        functionality is  Verification      for meeting all
maintain previously    improves         met at 100%.      and               mandated
provided               existing                           Validation        requirements.
functionality, while   functionality    Non-critical      (IV&V) for        Nonconformance
providing enhanced     without          functionality is  testing new       is unacceptable.
capabilities, or       negatively       met at %. Note    releases of
systems                impacting the    that value is     software to       Payment is
corrections.           existing         determined by     determine         contingent on
                       operational      the United States that previous     amount or degree
                       environment.     Mint's            functionality     of functionality
                                        requirements, on is improved.       delivered,
                                        a case-by-case                      according to
                                        basis.            Customer          priority of each
                                                          satisfaction is   function. Note
                                                          measured          that value is
                                                          through           determined by the
                                                          validated         United States
                                                          customer          Mint's
                                                          complaints        requirements, on
                                                          and surveys.      a case-by-case
                                                                            basis.
                                                                            Percentage of
                                                                            payment for each
                                                                            component shall
                                                                            be determined in
                                                                            the Quality
                                                                            Assurance Plan.




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   Performance          Performance          Maximum            Method of          Maximum
   Requirement           Standard            Allowable           Quality          Percentage
                                             Degree of          Assurance        Payment for
                                           Deviation from                       Meeting the AQL
                                            Requirement
                                               (AQL)
10. For software       Inventories shall   Less than % of      Independent      100% payment
conversion             be complete         inventory           verification     for meeting all
projects, provide an   and accurate.       omissions. Note     and validation   mandated
inventory of           Systems             that value is       (IV&V) of the    requirements.
programs and a         descriptions        determined by       software
description of the     accurately          the United States   inventory and    Proportional
complexity of the      identify the        Mint's              system           reduction in
existing systems       existing systems    requirements, on    descriptions.    contract line item
and programs for       complexity.         a case-by-case                       price, or overall
transfer to another                        basis.              For              contract value,
processing system      Adhere to                               conversion       attributable to
or hardware and        United States                           projects,        inventory
software platform      Mint                                    Independent      omissions.
operational            configuration                           verification
environment            management                              and validation
including, but not     standards.                              (IV&V)
limited to:                                                    adherance to
databases, files,                                              United States
lines of code and                                              Mint
interdependencies.                                             configuration
                                                               management
                                                               standards.




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   Performance           Performance          Maximum            Method of           Maximum
   Requirement            Standard            Allowable           Quality           Percentage
                                              Degree of          Assurance         Payment for
                                            Deviation from                        Meeting the AQL
                                             Requirement
                                                (AQL)
11. Software            Service Levels      Baseline            Customer          100% payment
conversion effort for   for software:       functionality is    satisfaction is   for meeting all
rehosting from one                          met at 100%.        measured          mandated
platform,               Throughput in                           through           requirements.
architecture,           terms of            Non-critical        limited
operating system,       processing          functionality is    validated      Proportional
database,               response time,      met at %. Note      customer       reduction in
communication           number of           that value is       complaints     contract line item
system,                 transactions        determined by       and surveys.   price, or overall
programming             processed per       the United States                  contract value,
language, and/or        second; volume      Mint's              Independent    attributable to
data distribution       of data             requirements, on    verification   loss in
method to another.      processed over      a case-by-case      and validation functionality, or
                        time.               basis.              (IV&V) for     degraded system
                                                                testing new    performance.
                        Compatibility
                                                                releases of
                        with particular
                                                                software to    % of overall
                        hardware and
                                                                determine      contract payment
                        software within
                                                                that previous will be witheld
                        the existing
                                                                functionality  until a specific
                        processing
                                                                is maintained. number of
                        environment.
                                                                               production
                        Functionality of                        For            processing
                        required                                conversion     cycles, as
                        systems                                 projects       determined by the
                        architecture and                        Independent    United States
                        processing                              verification   Mint's
                        capabilities.                           and validation requirement.
                                                                (IV&V) for
                        Delivery dates                          developing or
                        are met or                              maintaining
                        exceeded.                               system
                                                                processing/
                                                                benchmarkin
                                                                g during
                                                                parallel
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   Performance         Performance          Maximum         Method of          Maximum
   Requirement          Standard            Allowable        Quality          Percentage
                                            Degree of       Assurance        Payment for
                                          Deviation from                    Meeting the AQL
                                           Requirement
                                              (AQL)
12. For conversion    Service Levels      Data must be     Pre-             100% payment
projects of mission   for software:       100% accurate.   production       for meeting all
critical systems,                                          testing of all   mandated
provide parallel      Throughput in                        functional       requirements.
processing and/or     terms of                             components       Nonconformance
system testing of     processing                           within the       is unacceptable
the old and new       response time,                       processing
systems prior to      number of                            environment
implementation.       transactions                         (that is,
                      processed per                        hardware,
                      second, volume                       software
                      of data                              operating
                      processed over                       system,
                      time.                                interfaces,
                                                           and so on)
                      Compatibility
                      with particular
                                                           Independent
                      hardware and
                                                           verification
                      software within
                                                           and validation
                      the existing
                                                           (IV&V) for
                      processing
                                                           testing new
                      environment.
                                                           software
                      Functionality of                     including
                      software to                          verifying
                      meet required                        results to
                      systems                              determine
                      architecture and                     that
                      processing                           requirements
                      capabilities.                        and
                                                           specifications
                                                           are met.




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Data Requirements
Minimize the data requirements. Buy only the data that the United States Mint needs to make a
decision and/or comply with a higher-level requirement. Reduce costs by requesting data that
will normally be created in performance of the contract. Avoid contractor-proprietary
information management or technical data systems that hinder Government oversight or create
a sole source problem in follow-on procurements. Don't request reports that the United States
Mint can generate on its own from contractor data.
Be sure to prepare a list of all data to be delivered under the contract, including the time and
frequency of delivery. This includes information on the status of the contractor effort,
information needed to support, manage, and operate the system, and using contractor formats
or those common to the contractor's customers, if feasible.

Deliverables
This section contains information on what the contractor is to provide to the United States Mint
and when it is required. Identify only those outputs that are essential and a part of the
performance requirement's summary. Express the outputs in concise, easily understood,
measurable terms.
Clearly state which party will perform each task by delineating a division of responsibilities
between the United States Mint, the contractor, and others.
If review is to be provided by the United States Mint, set a time limit must be set within which
review/comment must be provided. Each time the contractor suspends activity to wait for the
United States Mint's response, time and money are expended. To avoid a breach of contract
by the United States Mint, the contract should state "the contractor shall presume "no
comment" and proceed if comment is not provided within _______________________" (a
specified period).
You must avoid clauses or statements that make contractor performance dependent on the
United States Mint. A contract must clearly state the intended effect of interim reviews to avoid
releasing the contractor from subsequent liability. For example, if the contractor's overall
obligation is to design and build an item that meets a final specification but the United States
Mint's review of the design is required before proceeding, such review should not be
considered as an approval. Courts have generally held that an approval transfers responsibility
to the approving party. Beware of the contractor giving accountability back to the United States
Mint while they are being paid to be accountable. A contractor may readily agree or even
request the United States Mint's review and approval of their plans and procedures. Do not do
it! Make contractors accountable.
Provide a realistic delivery schedule for contract performance and completion. Schedules that
are unnecessarily short or difficult to attain tend to restrict competition and result in higher
contract prices. Provide sufficient information for the contractor to establish its own milestones

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against which its progress can be measured. Be sure this section is consistent with the rest of
the solicitation.




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A.     SOW Checklist
You should review the checklist below prior to forwarding the SOW for approval. It is a guide
only, and you should add or delete items to tailor it to your specific document.


                                                          Yes   No          Remarks
 1.0 Introduction
 Does the introduction provide a quick reference to
 what you are procuring?
 Is it easy to distinguish the introductory information
 from the background and scope sections?
 Have you removed work requirements or
 information that is contained in other sections of the
 SOW?
 2.0 Background
 Does this section summarize the historical
 information that is necessary to understand the
 current requirement? That is, will the offeror
 understand how and why the requirement evolved
 and where this requirement is headed, if
 appropriate?
 Is it easy to distinguish the background information
 from the introduction and scope sections?
 Are the facts accurate?
 Have you eliminated from this section all directions
 to the contractor to perform tasks, specifications of
 reporting requirements, and descriptions of
 deliverable products?
 3.0 Scope
 Will the reader understand the magnitude of the
 requirement and have a basic understanding of the
 requirement?
 Is it easy to distinguish the scope information from
 the introduction and background sections?


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Is the scope consistent with the tasks and activities
specified, and with the end result to be obtained?
Does this section emphasize the most important
aspects (that is, an overview) of the technical
requirements rather than minor details?
Have you eliminated from this section all directions
to the contractor to perform tasks, specifications of
reporting requirements, and descriptions of
deliverable products?
4.0 Applicable Documents
When necessary to reference another document, is
the proper reference document described and
cited?
Is the entire document pertinent to the task, or
should only portions be referenced? If only portions
of the document apply, have you clearly stated
which portions apply?
Do any standard specifications or paragraphs apply
in whole or in part? If so, are they properly cited?
Is the document cross-referenced to the applicable
SOW task element?
5.0 Technical Requirements
Is it easy to distinguish the contractor’s
responsibilities from the introduction, background,
and scope sections?
Does the SOW identify only minimum requirements;
that is, have you eliminated all “nice to haves”?
Have you presented the major tasks and subtasks
in chronological order or some logical order?
Is the SOW specific enough to allow you as the
author to estimate the probable cost and the
proposer to determine the levels of expertise,
manpower, and other resources needed to
accomplish the tasks?



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Have you written the sentences so there is no
question of whether the contractor is obligated to
perform certain tasks (for example, “the contractor
shall do this work” instead of “this will shall be
required” – active voice versus passive voice)?
Are the contractor’s responsibilities stated in such a
way that he/she knows what is required and the
United States Mint can tell whether the contractor
has complied?
Is the SOW too restrictive? Does it tell contractors
how to run their business?
Are proper quantities and delivery dates indicated
for each deliverable?
Can you give the contractor full management
responsibility and hold them accountable for the
end results?
Can you perform a meaningful evaluation of
performance?
Are the performance criteria necessary?
Are the performance criteria realistic?
Are the performance criteria specific?
Are the performance criteria verifiable?
Are the performance criteria objective?
Are the performance criteria measurable?
Have all elements of quality assurance been for the
life of the contract?
Does the SOW cover any design or process control
requirements required by the United States Mint?
Does the SOW cover any specific United States
Mint requirements for inspection and testing?
Does the SOW provide for corrective/preventive
action by the contractor in the event the product
delivered is non-conforming to the specified
product?

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Does the SOW identify the title of data or other
deliverables in parentheses after the task that
generated the data or deliverable?
If the SOW orders data/reports, have you eliminated
all descriptions (format and content) of that data?
Does the SOW establish a delivery schedule?
(Please note that the SOW should not establish a
delivery schedule but, for clarity, can include
significant milestones. The contract will establish a
delivery schedule or period of performance.)
Does the SOW cover the requirements imposed on
the contractor's quality system to ensure that
products conform to requirements?
If applicable, have you included all control or
decision points?
Does the SOW require the contractor to get
permission from or provide something to someone
other than the contracting officer or the contracting
officer’s technical representative? If so, have you
provided specific authorizations and instructions to
avoid contractual problems?
If you have used elapsed time, have you specified
either calendar days or work days?
Have you researched and referenced appropriate
United States Mint and industry standards in the
SOW, as necessary?
Have you limited requirements to use United States
Mint standards to those where it is impractical to
use non-United States Mint standards?
Are requirements specified adequately to obtain
sufficient data to permit competition for anticipated
follow-on procurements
Have you provided the contractor the option to
recommend suitable replacement of United States
Mint standards with non-United States Mint
Standards?

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Are all safety, reliability, quality assurance, and
security requirements defined for the total life of the
contract?
6.0    Data Requirements
Have you used a separate Data Requirements
section to specify all requirements for data?
Does the SOW cover the requirements imposed on
the contractor's quality system to ensure that
products conform to requirements?
Have you eliminated all extraneous data
requirements?
Are requirements specified adequately to obtain
sufficient data to permit competition for anticipated
follow-on procurements?
Have you researched and referenced appropriate
United States Mint and industry standards in the
SOW, as necessary?
Have you limited requirements to use United States
Mint standards to those where it is impractical to
use non-United States Mint standards?
Have you provided the contractor the option to
recommend suitable replacement of United States
Mint standards with non-United States Mint
Standards?
Are all safety, reliability, quality assurance, and
security requirements defined for the total life of the
contract?
7.0    General
Did you write the SOW using the recommended
template? If not, provide your rationale in the
Remarks column.
Have you eliminated extraneous information; that is,
does the material tell what the contractor is
responsible for, and is the material necessary in
order for the United States Mint to obtain the
desired results?
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Have you eliminated all proposal preparation
instructions, evaluations, and references to “The
proposal shall”?
If this SOW is for commercial purposes, have you
adequately identified requirements so that the
United States Mint can acquire them on other than
a cost-reimbursable basis?
Do the SOW requirements create an organizational
conflict of interest such that the contractor (offeror)
be placed in a position where it cannot provide
impartial advice and assistance? (For example,
does the SOW require the contractor to review its
own work?)
Do the SOW requirements create an organizational
conflict of interest such that the contractor (offeror)
receive an unfair competitive advantage on this
acquisition or future acquisitions based on its
performance under past or present acquisitions?
For example, are there requirements for the
contractor to prepare a SOW that will subsequently
be competitively procured?
Is more than one interpretation (throughout the
SOW) impossible?
Have you checked the SOW for format? If not,
provide your rationale in the Remarks column.
Are subheadings compatible with the subject matter
of the heading and the text compatible with the title?
Are all terms used consistently throughout, and
adequately defined, including "industry-wide"
terms?
Have you checked the SOW for grammatical
usage?
Have you spell checked the document?




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NOTE: If Government-furnished property will be provided, in the procurement request package
you should state the nomenclature, quantity, estimated value, serial number (if appropriate),
and the location and date of delivery to the contractor




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