Review or Negotiate Performance-Based Payments (PBPs) Contract Financing Terms:
1.1. PBPs are the preferred financing method
when the contracting officer finds them practical, and the contractor agrees
to their use (FAR
32.1001). However, PBPs are only authorized when (FAR 32.1003):
The contract, individual order, or line item is fixed price.
1.1.2. For indefinite
delivery contracts, the individual order does not provide for progress
1.1.3. For other than
delivery contracts, the contract does not provide for progress payments.
delegated to DCMA, the PCO is responsible for negotiating of PBP contract
financing terms. If the PCO delegates the function to DCMA,
the ACO shall establish appropriate performance bases and performance-based
finance payment amounts (FAR 32.1004).
(ND) The ACO shall obtain approval of the performance bases and
performance-based finance payment amounts from the Contracts Director and
the required Contract
Management Boards of Review (BoR) approvals before
entering into negotiations.
The CMO Contracts Director may delegate this action to a level no
lower than the contract team supervisor/leader.
1.2.1. Establishing Events (FAR 32.104(a)(1)).
Each event or performance criterion that will trigger a financing payment is
an integral and necessary part of contract performance and shall be
identified in the contract, along with a description of what constitutes
successful performance of the event or attainment of the performance
criterion. The ACO shall not use the signing of the contract or modifications, the
exercise of options, the passage of time, attendance at meeting,
expenditures of funds, or DD 250 deliverables as events or criterion for
PBPs. 1.2.2. Establishing
Performance-Based Finance Payment Amounts (FAR 32.1004(b)).
The ACO shall establish a complete, fully defined schedule of events or
performance criteria and payment amounts when negotiating the contract
terms. The ACO shall ensure PBPs:
18.104.22.168. Reflect prudent
contract financing provided only to the extent needed for contract
performance, and 22.214.171.124. Not exceed 90
percent of the contract or delivery item price as applicable.
Amounts are commensurate with the value of the performance event or
criterion and are not expected to result in an unreasonably low or negative
level of contractor investment in the contract. To confirm sufficient
investment, the ACO should request expenditure profiles.
1.3. Instructions for Multiple Appropriations (FAR 32.1004(c) and
1.3.1. If there
is more than one appropriation account or subaccount funding payments on the
contract, the ACO shall provide DFAS instructions for the distribution of
financing payments to the respective funds account. 1.3.2.
If the contract contains foreign military sales requirements, the
ACO shall provide instructions for distribution of the contract financing
payments to each country's account. 1.3.3. The ACO shall ensure that distribution instructions are consistent with the
contract's liquidation provisions.
1.4. Liquidating PBPs.
The ACO shall specify the liquidation rate or dollar amount in the contract.
The method of liquidation shall ensure complete liquidation no later than
final payment (FAR 32.1004(d)).
Unless payment administration is retained by the PCO, the ACO shall ensure
that PBP requests are processed promptly within the CMO.
Prompt payment terms for PBPs are the later of the contractor entitlement
date, if specified in the contract, or 14 days after the CMO receives of a
proper request for payment (DFARS 232.1001). The receipt date will be automatically entered on
PBP requests submitted via
proper request for payment includes (FAR 52.232-32):
The name and address of the contractor,
2.1.2. The date of
the request for PBP;
The contract number and/or other identifier of the contract or order.
information and documentation required by the
contract for payment, and
A certification by a contractor official authorized
to bind the contractor that complies with FAR 52.232-32(l).
2.2. If the contractor qualifies or modifies the
certification required in 2.1.5. above, the ACO should request legal review
to ensure the Government is adequately protected, e.g., the contractor
identifies encumbrances against the property acquired or produced for, and
allocated or properly chargeable to, the contract which may affect or impair
the Government's title.
2.3. The contractor may submit
PBP payment requests not more frequently than monthly in a form and manner acceptable to the
3.1. The ACO
shall determine whether the event or performance criteria for which the
payment is requested has been successfully accomplished in accordance with
the contract. The ACO shall not approve a PBP unless the specified
event or performance criterion has been successfully accomplished in
accordance with the contract (FAR
32.1007(d)). If the ACO cannot verify completion of an event, the ACO should request the assistance of the
appropriate technical specialists to substantiate the successful performance
criteria or event requested for payment. 3.2. The ACO should consider
the contractor's experience, performance record, reliability, financial
strength, and the adequacy of controls established by the contractor for the
administration of PBP and conduct pre-award or post-award
reviews considered necessary to protect the Government (FAR 32.1007(c)).
3.3. The ACO should not approve
a credit PBP request.
DFAS cannot process a contract financing request where the net value is a
negative number. MOCAS does not recognize a credit contract financing
request and subsequently stops all future contract financing requests
because its logic indicates that a previous financing request was not paid.
(ND) If the contractor owes the government money, the ACO shall follow the
procedures in the Contract Debt Instruction. 3.4. If the contractor does not include the
appropriate shipment number on the request for payment, the ACO should add a
shipment number to identify the payment in the MOCAS disbursement
history. The shipment number should be a seven character alphanumeric
starting with PBPA (for U.S. disbursements) or PBPB (for FMS disbursements).
The last three positions are numeric and should be serially numbered (e.g.
3.5. If the ACO approves the PBP,
the ACO shall specify the amount to be paid, necessary contractual
information, and the appropriation account(s) to be charged for the payment
consistent with the distribution instructions in the contract (FAR
32.1007(b)(2)). The ACO should also review MOCAS to ensure that
sufficient funds are available under the ACRNs to be charged for the PBP
The ACO shall electronically sign and date the approved
PBP request using Wide Area Workflow (WAWF) unless an exception applies (FAR
32.1007(b)(2)) and submit the approved payment
electronically via WAWF to DFAS (DFARS 252.232-7003). 3.7. The ACOs should ensure that the amount paid by
the contract payment office agrees with the amount approved by the ACO.
In the event that the paid amount differs from the approved amount, the ACO
should contact the payment office to resolve the discrepancy.
4.1. The ACO shall apply the provisions
Suspension or Reduction of Performance-Based Payments, regarding reduction or suspension of PBPs by deduction from
any payment under the contract when the contractor fails to comply with a
material requirement of the contract, fails to make progress on the
contract, is in unsatisfactory financial condition, or is delinquent in
payment of any subcontractor under this contract. The ACO shall notify the
PCO in the event that the contractor fails to complete a performance event
as scheduled, fails to make sufficient progress on a performance event, the
financial condition of the contractor has deteriorated jeopardizing contract
completion, or the contractor has entered into any financial arrangement
that encumbers title to property identified in
FAR 52.232-32(f) Performance-Based Payments. 4.2 (ND) If the ACO plans to suspend PBPs
for small businesses (e.g. small, small-disadvantaged, women-owned, HUBzone,
service-disabled veteran-owned) or when the suspension may have a negative
impact on any contractor's ability to perform the contract through physical
completion, the ACO shall obtain the Contracts
Director and the Contract Management Boards of Review approvals
before suspending payments.
in accordance with position held.
ACO shall be a
warranted contracting officer
Payments Training Matrix
Based Training (CBT)
(Commercial, College/ Vocational)
Administrative Task (The task is wholly enabled by the
contents of the instruction and requires no training intervention)