DoD Adds Performance-Based Payments Contract Clauses

On Monday, the Department of Defense is set to issue a final rule (DFARS Case 2011-D045) that amends the Defense Federal Acquisition Supplement to address performance-based payments. The rule provides detailed guidance and instructions on the use of the performance-based payments analysis tool, which is on the Defense Procurement and Acquisition Policy website in the Cost, Pricing & Finance section, Performance Based Payments – Guide Book & Analysis Tool tab. The PBP analysis tool is a cash-flow model for evaluating alternative financing arrangements, and is required on new fixed-price contracts.

To implement these requirements, the rule adds two new contract clauses: DFARS 252.232-7012, Performance-Based Payments–Whole-Contract Basis, and DFARS 252.232-7013, Performance-Based Payments–Deliverable-Item Basis. Contracting officers must include these clauses with appropriate fill-ins in solicitations and contracts that contemplate performance-based payments. The final rule also contains a discussion of the comments received from the proposed rule, published in the Federal Register on January 30, 2012.

Wolters Kluwer’s DFARS Matrix Tool will incorporate these new clauses on their effective date of March 31, 2014. The DFARS Matrix Tool provides quickly accessible descriptions, flowdown information, and reporting requirements for the more than 375 DFARS clauses and alternates.

About George Gullo

George Gullo is a Senior Writer/Analyst in the Government Contracts group at Wolters Kluwer Law and Business. George serves as the principal editor of Cost Accounting Standards Guide and supports all of the group’s print and electronic publications, as well as legal research tools, including the Government Contracts Reporter, Board of Contract Appeals Decisions, and the FAR and DFARS Matrix Smart Charts. With more than 20 years experience in the legal publishing industry, including over 10 years in the government contracts area, George also has a background in legal and business transactions. He is a graduate of DePaul University College of Law and a licensed Illinois attorney.
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