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Pentagon Proposes Analytics Tool for Awarding Performance-Based Contracts

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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.

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