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Strategic Sourcing: Measuring and Managing Performance

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Under pressure to improve performance and reduce expenditures, the Air Force is reexamining the source of provision of many of its support activities such as installation services. This documented briefing describes how innovative commercial customers and world-class providers of facility management services (analogous to base operating support services) use performance metrics in their sourcing decisions. These firms use performance metrics to inform the original make/buy decision, to guide the source selection, to manage the customer/provider relationship, and to improve the provision of services over time. Although the practices of innovative commercial firms differ dramatically from the Air Force's traditional approach to sourcing, they are broadly compatible with current Air Force efforts to extend the benefits of acquisition reform to services acquisition. In addition to using performance metrics to focus its limited sourcing resources on those activities that offer the highest potential returns in performance and cost, to guide the source selection decision, and to better manage its relationships with external providers, the Air Force can use performance metrics to improve the performance of its in-house provider organizations.