The Department of Defense has started soliciting public comments on a plan to establish and implement a pilot program to incentivize contractor performance for specific, measurable criteria by increasing the customary progress payment rate.
According to a notice published Monday in the Federal Register, the comment period will run through Jan. 29.
What Is the Progress Payment Incentive Pilot?
The planned implementation of the Progress Payment Incentive Pilot, or PPIP, is authorized under Section 874 of the fiscal year 2024 National Defense Authorization Act, or NDAA.
This section of the NDAA authorizes an increase of up to 10 percentage points higher than the current customary progress payment rate for contractor performance against clear, measurable criteria on a contract-by-contract basis.
Vendors seeking to participate in the pilot must be eligible for customary progress payments and their participation must be voluntary.
To be included in the pilot program, DOD plans to require contract actions to be nominated by the cognizant contracting officer and approved by the director of price, cost and finance within Defense Pricing, Contracting and Acquisition Policy during the acquisition’s preaward phase.
The department expects the nominated contract or order to have a performance period of no more than three years to ensure that all performance, including potential new work and options, will be finalized before the pilot’s sunset date.
DOD expects PPIP to focus on payment time to subcontractors to help improve cash flow throughout the supply base.
