How to Write a Statement of Work

Peter S. Cole CPCM, Michael G. Martin PMP

• Publisher: Berrett-Koehler Publishers
• Year: 2012
• Print ISBN: 9781567263640
• eBook ISBN: 9781567263657
• Edition: 6
• Topic: Business
• Subtopic: Bookkeeping & Budgets
• Index: Business

The standard on government statements of work just got better!
How to Write a Statement of Work has been a standard reference for government employees and contractors for many years. Now, with this sixth edition, it is even more relevant and useful. Based on the excellent foundation laid by the late Peter Cole, Michael Martin has updated and added material to guarantee this handbook's place in the list of "must haves" for working with government contracts. As in the earlier editions, the emphasis is on providing practical, detailed guidance on writing and preparing a description of government requirements, whether a statement of work (SOW), a performance work statement (PWS), or a statement of objectives (SOO).
Among the many additions to this sixth edition are updates to reflect the current definition of an SOO as well as references and guidance regarding the development and application of the SOO. There is a new chapter on why change management is so important on projects, legal precedents supporting change management, and how to identify when a change occurs using the SOW. This new chapter also includes information on the federal government's Standard Form 30 (SF30) to provide perspective on how change orders are used and applied in the federal government. If you are working in government contracting in any capacity, you should have this book on hand!

1

Overview

A statement of work (SOW) is the written description of an agency requirement, used in the acquisition of supplies or services. The Federal Acquisition Regulation (FAR)¹ mandates that government requirements be described in a manner that promotes full and open competition to the maximum extent practicable and that restrictive provisions or conditions be used only to the extent necessary to satisfy the needs of the agency or as authorized by law. The FAR² goes on to say that requirements should be stated in terms of the functions to be performed, the performance required, or the essential physical characteristics of the requirements.

WHAT IS A STATEMENT OF WORK?

Although commonly used throughout the government, the term “statement of work” is not defined in the FAR. The FAR uses the term “work statement” when discussing research and development (R&D) contracting and uses the term “statements of work” in the coverage of performance-based contracting, but no specific definition is provided. For our purposes, the term “statement of work” is used in this book to refer to the document that completely describes the contractual work requirement. Unless otherwise noted, the term also encompasses the term “performance work statement” (PWS) used in performance-based service contracting (PBSC).

To put the term “statement of work” in the context of the FAR language, the following are some of the terms that the FAR uses when discussing the description of a work requirement:

• Specification. A specification is a description of the technical requirements for a material, product, or service that includes the criteria for determining whether these requirements are met. Specifications state the government’s minimum needs and are designed to promote full and open competition, with due regard to the nature of the supplies or services to be acquired.
  The two sources of formal government-approved specifications are: (1) the General Services Administration Index of Federal Specifications, Standards, and Commercial Item Descriptions, which lists federal specifications and standards that have been implemented for use by all federal agencies, and (2) the Department of Defense Index of Specifications and Standards (DODISS), which contains unclassified federal and military specifications and standards, related standardization documents, and voluntary standards approved for use by DoD.
• Standards. Standards are documents that establish engineering and technical limitations and applications of items, materials, processes, methods, designs, and engineering practices. Standards include any related criteria deemed essential to achieve the highest practical degree of uniformity in materials or products, or interchangeability of parts used in these products. Formal government-approved standards are found in the documents listed above.
  The FAR³ states that agencies shall select existing requirements documents or develop new requirements documents that meet the needs of the agency in accordance with the guidance contained in the Federal Standardization Manual, FSPM-0001; for DoD components, Defense Standardization Program Policies and Procedures, DoD 4120.24-M; and for IT standards and guidance the Federal Information Processing Standards Publications (FIPS PUBS).
• voluntary Consensus Standards. Voluntary consensus standards are standards established by a private sector body (other than a private standard of an individual firm) that are available for public use. The FAR⁴ states that in accordance with OMB Circular A-119, Federal Participation in the Development and Use of Voluntary Consensus Standards and in Conformity Assessment Activities, and Section 12(d) of the National Technology Transfer and Advancement Act of 1995, Pub L. 104-113 (15 U.S.C 272 note), agencies must use voluntary consensus standards, when they exist, in lieu of government-unique standards, except where inconsistent with law or otherwise impractical.
• Purchase Description. A purchase description is a description of the essential physical characteristics and functions required to meet the government’s minimum needs. A purchase description is used when there is no applicable specification that adequately describes the requirement. This term is usually associated with acquisitions using simplified acquisition procedures.
• Product Description. The term “product description” is a generic term for documents such as specifications, standards, and purchase descriptions.

Each of these terms addresses only part of a complete description of a contractual requirement, generally just the technical requirement. A complete description would include what you want to buy; why you want to buy it; where the work is to be performed; when the work is to be performed; what the work is to accomplish; what, how much, and when it is to be delivered; and how the government will determine that the work has been performed satisfactorily. The SOW encompasses all of these elements and may, as appropriate, include other documents such as specifications, standards, voluntary consensus standards, and purchase descriptions.

IMPORTANCE OF THE SOW

In the past, the government stressed the use of formal government-approved specifications and standards when describing requirements; however, that is no longer the case. Current policy encourages the acquisition of commercial items (i.e., any item, other than real property, that is of a type customarily used by the general public or by non-government entities for purposes other than governmental purposes) or non-development items (i.e., previously developed items or previously developed items that require only minor modifications of a type customarily available in the commercial marketplace). In other words, government agencies now must first consider acquiring supplies or services available in the commercial marketplace rather than using government specifications and standards.

Agencies are now permitted to choose whichever requirements documents they deem to be most suitable. They may use existing requirements documents (federal or DoD specifications and standards), modify or combine existing documents, or create new requirements documents. When creating new requirements documents, the FAR⁵ cites the following order of precedence:

1. Documents mandated for use by law
2. Performance-oriented documents (e.g., PWS, SOO)
3. Detailed, design-oriented documents
4. Standards, specifications, and related publications issued by the government outside the Defense or federal series for non-repetitive acquisition of items.

This book is written primarily for those who develop SOWs for negotiated procurements. While the principles of developing an SOW are the same regardless of the method of procurement, certain caveats apply with respect to sealed bidding. These are addressed at the end of Chapter 5.

NEED FOR A CLEAR AND CONCISE SOW

An SOW is usually developed by the person responsible for ensuring that an activity’s technical requirements are met (i.e., the requisitioner), with the support of contracting personnel. Because the SOW describes the contractual work requirements, it is the heart of the procurement action and must include a clear and concise description of the work requirement. Developing the SOW is, without a doubt, the most important step in the procurement process. A poor description of the work requirement is likely to be misunderstood, leading to—if not causing—problems throughout the procurement process and subsequent contract performance. Although a clear and concise description of the work does not guarantee the contract will be successful, it does significantly reduce the likelihood that problems will arise.

The author of the SOW is usually part of the organization for whom the work will be performed and therefore has a vested interest in the quality of the SOW. If the SOW does not work, the project may fail. Because it usually takes longer to solve a problem than it does to avoid one, it makes sense to take the time to do it right initially.

A clear and concise SOW is essential both before and after contract award and serves three main purposes:

• Establishing performance standards and a contractual baseline
• Providing the contractor with a basis of estimate
• Communicating effectively.

Before Award

Contractors must understand the SOW requirements to be able to develop their technical, management, and staffing plans and to price the proposal properly. The SOW in the request for proposals (RFP) is the only official description of the work requirement. Accordingly, it must provide prospective contractors enough information to develop and price the proposal—without the need for further explanation. A clear and concise SOW helps ensure the receipt of a well-written proposal. It also establishes a uniform basis for evaluating proposals (matching the proposed effort to the stated technical requirement) and for comparing prices.

If questions about the SOW arise during the solicitation process, you must answer them, but use care when providing explanations. Oral explanations, unless put into writing as an amendment to the SOW, are usually not binding. Refer the questions, along with the appropriate answers, to the contracting officer for an official response.

If deficiencies in the SOW are identified before award, the RFP must be amended to correct the deficiencies immediately and prospective contractors must be given additional time to consider the corrections and make appropriate revisions to their proposals. Do not wait and make the corrections after award. Keep the pricing of the corrections in the competitive pre-award environment; modifications after award are likely to cost more. Delaying changes until after award can also make your agency vulnerable to protests from unsuccessful offerors who perceive the delayed changes as favoritism to the successful offeror.

After Award

After award the contractor must understand the SOW requirements to be able to perform the work properly. The SOW in the contract is the only description of the requirement that the contractor is legally bound to follow. Accordingly, it must clearly and concisely describe what you want to buy and any special considerations or constraints that apply.

The SOW, as published in the contract, defines the contractual scope of work—the contractor is required to do only what is written into the contract. A poorly defined SOW therefore often results in a need for changes in the technical requirements, opening the contract to pricing and delivery changes. The number of changes and difficulties in negotiating their scope and price are usually directly related to the quality of the SOW. If the SOW is ambiguous or unclear and a dispute arises over contract interpretation, the courts will follow the contractor’s interpretation, as long as it is reasonable. The courts generally hold the originator of the SOW responsible for its clarity.

To Establish Performance Standards and a Contractual Baseline

The SOW, through its description of the work requirements, establishes the standard for measuring performance effectiveness and achievement both during contract performance and upon contract completion. The work description establishes goals that become the standards against which contract performance is measured. The SOW is not complete unless it describes both the work requirements and the criteria for determining whether the work requirements are met.

The SOW also establishes the baseline from which the degree, extent, and ramifications of proposed contract changes are determined. Proposed changes are checked against the SOW to determine if they are within the scope of the contract. If the proposed change is within the scope of the contract, the change is handled by a contract modification. If it is not within the scope of the contract, a new contract is required. The clarity and conciseness of the SOW are, therefore, important throughout the life of the contract.

To Provide Prospective Contractors with a Basis of Estimate

Prospective contractors need sufficient information on which to base the estimated cost of contract performance. This information or “basis of estimate” is provided in the SOW through the description of the task requirements, a statement of the estimated level of effort required (when appropriate), or both.

Contractors develop cost estimates based on the work description in the SOW. First, they break the work description down into its smallest components, and then, starting from the bottom up, they develop estimates of the resources necessary to complete each component of each task. Cost figures are developed for the estimated resources required. Overhead and general and administrative (G&A) expenses are added to make up the total estimated cost. Profit or fee is then added to the total estimated cost to come up with the total estimated price.

Therefore, the work requirement must be described in a manner that will enable prospective contractors to develop an accurate cost estimate. This is important. If the successful offeror’s estimate is too high, you will pay more than you should for the contract effort. If the estimate is too low, the contract requirement will be underfunded. If your contract is cost-reimbursement, und...

Table of contents

• Cover
• Title Page
• Copyright
• About the Authors
• Dedication
• Table of Contents
• Preface
• CHAPTER 1. OVERVIEW
• CHAPTER 2. PLANNING AND PREPARATION
• CHAPTER 3. WRITING A PERFORMANCE WORK STATEMENT FOR PERFORMANCE-BASED SERVICE CONTRACTING
• CHAPTER 4. USING A STATEMENT OF OBJECTIVES (SOO) AND RELATED ISSUES
• CHAPTER 5. THE SOW FORMAT
• CHAPTER 6. COMMON PROBLEMS IN WRITING SOWS
• CHAPTER 7. MANAGING CHANGES TO THE SOW
• APPENDIX A. SOW REVIEW
• INDEX