32.1007 Administration and payment of performance-based payments
Source: FAR 32.1007 on acquisition.gov
Performance-based payments can only be approved and paid after the contracting officer verifies successful completion of specified contract events or criteria, ensuring government interests are protected.
Overview
FAR 32.1007 outlines the procedures and responsibilities for administering and paying performance-based payments (PBPs) in government contracts. It assigns the contracting officer primary responsibility for reviewing, approving, and transmitting PBP requests, ensuring that payments are only made upon successful completion of specified contract events or criteria. The section also addresses the need for appropriate reviews to protect government interests and provides guidance for handling government-caused delays.
Key Rules
- Contracting Officer Responsibility
- The contracting officer must review and approve all PBPs for the contract and is responsible for transmitting approved requests to the payment office.
- Approval Requirements
- Each approval must specify the payment amount, relevant contract information, and the appropriation account(s) to be charged.
- Review and Oversight
- The contracting officer determines the level of review needed based on contractor risk factors and may require pre- or post-payment reviews as appropriate.
- Incomplete Performance
- PBPs cannot be approved until the specified event or criterion is fully met; for cumulative events, all prior criteria must be accomplished.
- Government-Caused Delay
- If delays are caused by the government, the payment schedule may be renegotiated to allow billing for completed portions of delayed events.
Responsibilities
- Contracting Officers: Review, approve, and transmit PBP requests; determine review requirements; ensure payments are only made for completed events; renegotiate schedules if government delays occur.
- Contractors: Submit PBP requests only after completing specified events or criteria; provide necessary documentation.
- Agencies: Ensure oversight and compliance with PBP administration procedures.
Practical Implications
- Ensures PBPs are only made for actual performance, protecting government funds.
- Requires careful documentation and review of contractor performance.
- Contractors must be diligent in meeting contract milestones and providing evidence of completion to receive payment.
(a) Responsibility. The contracting officer responsible for administering performance-based payments (see 42.302(a)(13)) for the contract shall review and approve all performance-based payments for that contract.
(b) Approval of financing requests. Unless otherwise provided in agency regulations, or by agreement with the appropriate payment official-
(1) The contracting officer shall be responsible for receiving, approving, and transmitting all performance-based payment requests to the appropriate payment office; and
(2) Each approval shall specify the amount to be paid, necessary contractual information, and the appropriation account(s) (see 32.1004(c)) to be charged for the payment.
(c) Reviews. The contracting officer is responsible for determining what reviews are required for protection of the Government’s interests. The contracting officer should consider the contractor’s experience, performance record, reliability, financial strength, and the adequacy of controls established by the contractor for the administration of performance-based payments. Based upon the risk to the Government, post-payment reviews and verifications should normally be arranged as considered appropriate by the contracting officer. If considered necessary by the contracting officer, pre-payment reviews may be required.
(d) Incomplete performance. The contracting officer shall not approve a performance-based payment until the specified event or performance criterion has been successfully accomplished in accordance with the contract. If an event is cumulative, the contracting officer shall not approve the performance-based payment unless all identified preceding events or criteria are accomplished.
(e) Government-caused delay. Entitlement to a performance-based payment is solely on the basis of successful performance of the specified events or performance criteria. However, if there is a Government-caused delay, the contracting officer may renegotiate the performance-based payment schedule to facilitate contractor billings for any successfully accomplished portions of the delayed event or criterion.