2018-18238: Performance-Based Payments and Progress Payments (DFARS Case 2017-D019)

Summary

DoD is proposing to implement a section of the National Defense Authorization Act for Fiscal Year 2017, which addresses the preference for performance-based payments, and to streamline the performance-based payment process. DoD is also proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to revise progress payments and performance-based payments policies for DoD contracts in order to increase its business effectiveness and efficiency as well as to provide an opportunity for both small and other than small entities to qualify for increased customary progress payment rates and maximum performance-based payment rates based on whether the offeror/contractor has met certain performance criteria. DOD believes the proposed rule will eliminate the unintended consequences of not updating its contract financing policies (which, in turn will save hundreds of millions of dollars for the taxpayers), will improve contractor performance, and will distinguish and meaningfully recognize high performing companies and divisions of companies, as the case may be. This rule proposes to relieve the administrative burden on contractors by deleting the current regulations relating to performance-based payments at DFARS subpart 232.10 and the associated clauses at DFARS 252.232-7012, Performance-Based Payments--Whole Contract Basis, and 252.232-7013, Performance-Based Payments-- Deliverable Item Basis. This rule also removes the requirement to negotiate consideration due the Government for providing the contractor with the improved cash flow when utilizing performance-based payments. In addition to the request for written comments on this proposed rule, DoD will hold a public meeting to hear the views of interested parties.

The agency’s own summary, as published.

What this changes

Amends 3 parts of the Code of Federal Regulations — the standing rules this notice rewrites.

• 48 CFR 232 Contract Financing
• 48 CFR 242 Contract Administration and Audit Services
• 48 CFR 252 Solicitation Provisions and Contract Clauses