Guest Post: IT Applications Service Provider Panel – Performance Framework

The Department of Finance Archive

The content on this page and other Finance archive pages is provided to assist research and may contain references to activities or policies that have no current application. See the full archive disclaimer.

I’m Tania Walsh, IT Application Services Panel Project Manager for the Enterprise Applications Branch of the Australian Taxation Office (ATO). AGIMO has invited me to post as a guest blogger to seek your views and input on our ATO IT Apps Panel – Performance Framework.

We are seeking a broad range of Application professional IT Services across the ATO standard Operating Environment. These services particularly relate to development and support of applications.

The intent of the Performance Framework is to allow and encourage supportive and collaborative behaviours between the ATO and the Apps Service Providers, across multiple Service Providers and platforms. It seeks to ensure a standard in quality of service delivery by a performance incentive framework.

The Performance Framework is designed to achieve a performance based arrangement that:

  • Focuses the ATO and the Apps Service Providers on service delivery
  • Addresses and balances priorities, risks and opportunities and
  • Enables continuous improvement

You can look at the full suite of documents on AusTender.

As this is a relatively new concept for an Applications Panel arrangement, we welcome any feedback that you might have in regards to the performance elements in the Incentive Framework.

Overview of Performance Framework

The Performance Framework is built on tiers and the key high level performance elements include:

  1. Incentives Framework,
  2. Scorecard Framework (lynchpin to the model),
  3. Performance at Risk Framework,
  4. Performance Measure Framework, and
  5. Reporting Framework
Scoring Scale

The following performance levels are defined for each Performance Measure and will be measured against a performance Scoring Scale of 1 - 5, where:

  • a score of 5 represents Excellent Performance
  • a score of 4 represents Good Performance
  • a score of 3 represents Required Performance
  • a score of 2 represents Poor Performance, and
  • a score of 1 represents Very Poor Performance.

The Incentive Framework consists of key elements and incentives and is set out as follows:

a. Performance Payment

Apps Service Provider will receive a performance payment when they achieve an overall score of ≥3.1 from the Annual Review process. The overall score is an average of all work for the Contract Year and this score will be measured against the performance payment scale to work out the performance payment. A score of 3 or below will not be eligible for a Performance Payment.

b. Ability to increase personnel rates

The ATO will consider the Apps Service Provider’s overall performance under the Scorecard for an increase in personnel rates in subsequent Contract Years. The Apps Service Provider will be required to obtain a ≥3.0 score to be eligible to obtain this increase.

c. Ability to gain future work

Bidding for new work will include an evaluation matrix to have past performance as part of the overall Value For Money assessment – (the worse you perform the less your chances of winning future business).

d. Option further contract extension

The ATO will consider the Apps Service Provider’s overall performance under the Scorecard during the Initial Term. The Apps Service Provider will be required to obtain a ≥3.0 score to be considered on extending further Contract extension.

e. Removal from Panel

The ATO will consider the Apps Service Provider’s overall performance under the Scorecard. Where the Apps Service Provider’s overall score is <3 the ATO may remove the Apps Service Provider from the panel.

f. Performance At Risk

The ATO has the option to assign “Performance At Risk Amounts” to a high risk, priority or complex Work Order. The ATO will determine an allocated percentage (ranging from 1% to 10 % of the total Work Order cost as a “Performance At Risk”. The “At Risk Amount %” will be determined at the work order stage. The ATO will impose the Performance at Risk amount if the Apps Service Provider fails to score a 3 or higher on the Work Order. The Scorecard Framework consists of the following Scorecard of Outcomes and Performance Metrics:

Scorecard of Outcomes and Performance Metrics Supporting Business Change Value of Outcome 1 =   50% Ongoing Business Value Value of Outcome 2 = 10% Performance Measure Value of Performance Measure Performance Measure Value of Performance Measure Project delivered to document (quality) requirements 35% Accuracy of invoice 10% Project delivered to schedule 35% Variation to Work Order 60% Software quality - software errors 30% Compliance with legislation, guidelines and documentation 30% Partnering for Outcomes Value of Outcome 3 = 20% Sustainable Business Value of Outcome 4 = 20% Performance Measure Value of Performance Measure Performance Measure Value of Performance Measure ATO Contract Manager Satisfaction 50% Resource IT Application Capability 30% Communicates effectively 20% Resource Turn Over 35% Collaboration and co-design 30% Maintain resources 35% Performance at Risk

A Performance at Risk, is an ‘at risk’ amount based on a percentage (1-10%) of the total cost of the Official Order (Work Order), the ATO will decided the percentage depending on the risk, priority and complexity.

The Performance at Risk will be allocated per Official Order and will be applied annually by the ATO in respect of Performance Measures.

Performance at Risk will be relieved when the Apps Service Provider achieves an overall score for a work order score of ≥3.

The Performance at Risk can be allocated in any Contract Year in respect of the following constraints:

  • the total of the Performance at Risk against all Official Orders for a Contract Year cannot exceed an amount equal to 15% of the Total Contract Year charges.
  • the Performance at Risk is allocated in a Contract Year against any individual Official Order cannot exceed an amount equal to 10% of the Total Contract Year charges.
  • the Performance At Risk is allocated by the ATO to the Official Order Performance Measures within a Contract Year and will be accrued on a notional basis until a determination is made in relation to the overall scorecard score which is determined at the Annual Review.

Comments (2)

Hi Tania,

3.1 as the minimum performance metric seems low to me. Can you explain why that figure was selected rather than, say 3.5?

Will there be any corresponding penalties or punitive measures for providers scoring lower than a minimum service level?

Comments on this post are now closed. Please let us know if you would like to discuss this post.

Last updated: 28 July 2016