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.

FAR Rule Standardizes Past Performance Reporting

Federal Acquisition Circular 2005-69, which will be published in tomorrow’s Federal Register, contains a final rule, FAR Case 2012-009, that provides governmentwide standardized past performance evaluation factors and performance rating categories. The rule will require contracting officials to enter past performance information into the Contractor Performance Assessment Reporting System (CPARS). Two tables in revised FAR 42.1503 provide evaluation rating definitions and descriptions.

Generally, federal agencies must prepare evaluations of contractor performance for each contract, order, or modification that exceeds the simplified acquisition threshold. The evaluations must be prepared at least annually and at the time contract performance ends. The final rule is a culmination of a process that included two proposed rules (and two correcting amendments). The rules—published July 28, 2011, and September 6, 2012—generated a significant number of public comments that the FAR Councils considered in formulating the final rule. The rule will go into effect September 3, 2013.