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CLC057 PERFORMANCE BASED PAYMENTS
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CLC057 PERFORMANCE BASED PAYMENTS
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CLC057 PERFORMANCE BASEDPAYMENTS
Contract Financing? - ANS-is covered in FAR Part 32 and is defined as the Government
authorized payment of funds to the contractor prior to acceptance of supplies or
services by the Government. Contract financing does not include invoice payments,
payments for partial acceptance or lease or rental payments.
Purpose and Scope of Contract Financing - ANS-to assist the contractor in paying costs
incurred during the performance of the contract. FAR 32.104(a)(1) states that when
contract financing is provided it should be provided only to the extent actually needed
for prompt and efficient performance.
Performance Based Payments - ANS-to assist the contractor in paying costs incurred
during the performance of the contract. FAR 32.104(a)(1) states that when contract
financing is provided it should be provided only to the extent actually needed for prompt
and efficient performance.
Production Contract - ANS-The ideal candidate for a PBP where fabrication, assembly
and test processes are well established. The Contractor would have already completed
a one or more production lots.
Contract for Services (Developmental Contracts) - ANS-would be practical for PBP
(fixed price contracts)
Undefinitized Contracts - ANS-Should be awarded using progress payments. Would
provide the contractor with adequate financing
Competitive Solicitation - ANS-significant discussion between government and offeror is
required, recommended that solicitation statement states that contract award is based
on progress payments and after the contract if needed the government can modify the
contract for contract financing.
Advantanges of PBPs - ANS-1. Enhanced Technical and Schedule Focus
focus attention on accomplishing meaningful and measurable technical progress and on
meeting contract schedule commitment.
2. Broadened Contractor Participation
, the contractor's accounting system status is no longer a precondition of the financial
relationship between the parties.
3. Potentially Improve Cash Flow
Under current Federal Acquisition Regulation (FAR) Subpart 32.10, PBPs can be made
for up to a specified portion of the contract or line item price (currently 90%), whereas
traditional progress payments are limited to a fixed percentage of incurred costs
(currently 80% for DoD). This can have a substantial positive cash-flow advantage for a
contractor.
4. Reduce Costs of Oversight and Compliance
Because the contractor's accounting and related systems are not integral or required
when making PBPs, the contractor does not have to expend resources or make special
accommodations to comply with many of the government's cost-based oversight and
compliance programs (e.g., Cost Accounting Standards (CAS), Material Management
and Accounting Systems (MMAS), Contractor Insurance and Pension Reviews
(CIPRs)). This can free up administrative resources to provide better overall value and
possibly reduced costs
Steps in Progress Payments - ANS-Step 1 Establish a detail program
Step 2 Identify PBS event
Step 3 Establish the completion criteria for PBP event
Step 4 Evaluate the Monthly Expenditures
Step 5 Establish Event Values
Step 6 Develop Special Contract Provision
Integrated Master Plan - ANS-is an effective program management tool. It is the
contractor's event-based plan for accomplishing the Statement of Objectives (SOO) and
the Statement of Work (SOW). It identifies the key activities, events, milestones and
reviews that make up the program.
Integrated Master Schedule - ANS-is a networked multilayered schedule generated by
the contractor that begins with all identified IMP events, accomplishments and criteria. It
shows the expected start and finish dates of the events. It contains all contractually
required events/milestones such as reviews, tests, completion dates, and deliveries
specified in the program Work Breakdown Structure (WBS).
FAR Part 32 - ANS-Contract Financing
Government Contract Payment - ANS-Authorized government disburement of money to
a contractor prior to acceptance of supplies or services
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