April 17, 1997


SUBJECT: One Pubs and Performance Based Contracting

Dear Offerors:

     This contract is significant because the U.S. Department of Education (ED) will be for the
first time centralizing their dissemination function for all of its principal offices.  Key features of
the One Pubs center will be an 800 line from which customers can request any ED publication, a
state of the inventory system, data base searches, publication storage, effective mail handling,
referral capabilities, and maintenance of mailing lists.  

     Previously the Government acquired much of its support services on a cost reimbursable
basis using for the most part cost plus fixed fee contracts.  In many cases this was simply a level
of effort contract in which the contractor was paid for hours incurred and not realistically for
work accomplished as a result of those hours incurred.  Under Performance Based Contracting
methodology, the contractor will be paid based on END RESULTS.  The Government plans to
award a firm fixed contract with incentive and deduct provisions.     The Government is in fact
purchasing the services of the contractor to provide specific "OUTPUTS".  The services or
products are well defined, have distinct objectives, and measurable deliverables.

     All offerors are urged to read carefully  OFPP Circular Number 4 on Performance Work
Statements.  Note specifically the section on Deduct Analysis.  The Government has a right to
make deductions including costs (not just fee) when there is a lack of performance.  In One Pubs,
ED reserves the rights to change the surveillance plan periodically.  The Contractor shall be given
reasonable notice of any changes ahead of time.  The government reserves the right to take
whatever actions are necessary to address continued non performance. Remedial actions may
include legal remedies.

     The One Pubs contract contains a performance based statement of work, a sophisticated
surveillance plan, and incentive and deduct provisions written into the performance requirement
summary.  The Department with this performance based methodology is anticipating the
contractor will come forth with creative ideas to improve ED's information product distribution
efficiency.  We expect that One Pubs will be a state of the art, one stop information products
center.

                              Sincerely,



                              Helen M. Chang
                              Contracting Officer