Ellen Lord, undersecretary for acquisition and sustainment at the Defense Department and a 2018 Wash100 recipient, said in a video interview aired Friday that DoD plans to use performance or progress payments as an incentive to defense companies that work to fulfill project requirements.
“I believe the lifeblood of most industry is cash flow, so what we will do is regulate the percentage of payments or the amount of profit that can be achieved through what type of performance they demonstrate by the numbers,” Lord told Defense News' Aaron Mehta during the interview.
She noted the Defense Contract Management Agency has large amounts of industrial base data that the department uses to understand cost structures, rates and disclosure statements.
Lord added the data also helps DoD to measure quality in how contractors manage factories, overhead structures and cost of systems ordered by defense agencies, as well as the timeliness of proposal submissions and achievement of small business contracting targets.
The department will accept public comments on its proposed rule for performance-based and progress payment rates through Oct. 23.