The Defense Department is proposing a new rule requiring contracting officers to use an analytics tool when awarding performance-based contracts, according to Monday‘s edition of the Federal Register.
The tool is a cash-flow model for evaluating alternative financing arrangements. Contracting officers would use the tool when considering performance-based payments on new fixed-price contract awards.
The requirement would apply to solicitations made on or after July 1, 2011. Prior to using performance-based payments, the contracting officer would be required to:
- Agree with the offer on price using customary progress payments before negotiation begins
- Use the new analytics tool to analyze the performance-based payments schedule
Under the proposed rule, if performance-based payments are desired, the contractor would submit a proposed performance-based payments schedule that includes:
- Payment events
- Completion criteria
- Event values
- An expected expenditure profile
The Pentagon is accepting comments on the proposed rule through March 30.
