Measuring Service Contract Performance: Preliminary Findings on Effects of Service Complexity, Managerial Capacity, and Prior Relationship

Abstract

Services contracts have a distinct set of challenges relating to the uncertainty and the challenges of measuring performance. Past researchers identified three overarching characteristics of interest: service contract complexity, contract management capacity, and the relationship between the buyer and the contractor. Researchers have often turned to surveys of government contracting personnel to take on the challenge of measuring service contract performance. This report takes a large-dataset, quantitative approach to looking at service contract outcomes derived from information in the publicly available Federal Procurement Data System. The report found that the relationship between vendor and customer, as measured by the number of how many of the past seven years involved interaction, had the most consistent positive effects on performance across multiple metrics. Secondarily, the service code invoice derived from the Inventory of Contracted Services, was used as a proxy for service contract complexity and estimated likelihood and sizes of ceiling breaches as well as a greater likelihood that all options on a contract would be exercised, among contracts with some exercised options.