(Effective 1st July 2022)
The Performance Based Contract (PBC) Policy and Guidelines which has been published as PK 1.8 by the Government of Malaysia effective 1st July 2022 is crucial in order to further enhance the implementation of the PBC method in Government Procurement especially in Maintenance, Repair, and Overhaul (MRO) Contracts to all Government Agencies.
Policy can be downloaded here or directly at the Portal Pekeliling Perbendaharaan
To know more about PBC, please write to pbc.cor@tda.my
PBC is an outcomes based contracting method that ties a range of monetary and non-monetary consequences to the contractor based on their accomplishment of measurable and non achievable performance.
The idea behind Performance-Based Contracting is one buys the result of a product use (e.g. value creation), not the part of repair services required to restore or maintain a product.
The simplified PBC Model shows the PBC process helps to determine the outcome and Performance Management Framework (PMF) resulting in a stronger strategic partnership between agency & contractor.
PBC model has evolved from the First and Second Generation PBC and currently into Third Generation PBC with additional new features which comprise of:
This has transformed the contractor from a mere “seller” to “supplier” and ultimately “partner” to the Government (See Figure 1).
Depending on the type of contact, there is 4 stages of PBC application to produce the desired operational performance
Monthly Monitoring
Quarterly Monitoring
Half Yearly Monitoring
Traditional way of writing a contract is no longer valid, where relevant stakeholder must be involved in drafting a PBC
To ensure performance measures that precisely evaluate the contract outcome & contractor’s behavior are incorporated in a PBC, a working group comprising of personnel from various disciplines are required.
Based on experience, successful PBCs have proven its benefits by:
Enhanced ability to meet operational needs through consistent availability and reliability
Establish long-term relationships to ensure sustainable asset retention
Motivating contractors to achieve the levels set
Reduced Total Cost of Ownership