performance-based payment | The Contracting Education Academy

October 8, 2018 By AMK

Facing industry pressure, Pentagon backs off contract payment changes

Following a wave of criticism from the defense industry and members of Congress, the Pentagon on Monday backed off proposed changes to how companies receive cash flow on their contracts.

In a statement released at the unusual time of 7:19 PM, Deputy Secretary of Defense Patrick Shanahan said the decision to withdraw the proposed acquisition changes stemmed from a lack of “coordination” inside the department.

“Recently, proposed amendments to the Defense Federal Acquisition Regulation Supplement (DFARS) were prematurely released, absent full coordination,” Shanahan’s statement read. “As a result, the Department will rescind the proposed amendments. In coordination with industry, the Department will create a revised rule to implement section 831 of the FY2017 NDAA.”

“The department will continue to partner closely with Congress and industry to examine all reform opportunities, ensuring we provide the best value to taxpayers and critical capabilities to military personnel who defend this great Nation,” Shanahan said.

Keep reading this article at: https://www.defensenews.com/pentagon/2018/10/02/facing-industry-pressure-pentagon-backs-off-contract-payment-changes/

August 15, 2017 By AMK

Agencies can deliver better results for less money by using outcome-based contracting model

As the Trump administration continues to set its agenda for the federal government, it is emphasizing accountability, efficiency and tangible results. The message is clear: agencies must deliver better results with fewer resources.

With budget cuts, hiring freezes and greater scrutiny of program funding, we need a fundamental shift in the way agencies acquire services and deliver on their missions to citizens. Outcomes-based contracting, which promotes a tight collaboration between agencies and their contractors, is a natural fit for this environment. With the administration’s business-centric approach to problem-solving, it would make sense for agencies to tie contractors’ compensation to their ability to deliver defined program outcomes.

The Opportunity

In an outcomes-based contracting model, companies are paid for the results they deliver. It’s an approach that has already gained popularity within the technology industry, so much so that Gartner predicts that by 2018, one-third of all IT contracts will be based on program outcomes, replacing traditional cost-plus contracts that pay based on the completion of individual tasks or activities.

Outcomes-based contracting has enormous potential beyond IT procurements. Amid growing skepticism about the effective implementation of both large and small public programs, outcomes-based contracts help to ensure that agencies are good stewards of taxpayer funds by directly aligning contractor compensation with program goals.

Keep reading this article at: http://www.govexec.com/excellence/promising-practices/2017/07/how-agencies-can-deliver-better-results-less-money/139756

December 16, 2013 By AMK

HHS chief seeks investigation into Affordable Health Care website contracts

Health and Human Services Secretary Kathleen Sebelius on Tuesday asked the department’s inspector general to investigate the contracting process behind the government’s botched rollout of the online health insurance exchange in October.

In a letter to Inspector General Daniel Levinson, Sebelius said it’s critical to understand the factors that contributed to the failed launch of HealthCare.gov. “I am requesting that your office undertake a review of the work of our contractors, and the management of and payments to those contractors, in the development of HealthCare.gov,” she wrote.

Specifically, she requested an investigation of the acquisition process; contractor selection and project management; contractor performance and monitoring; and payments to contractors throughout the process.

Keep reading this article at: http://www.nextgov.com/health/2013/12/hhs-chief-seeks-investigation-obamacare-website-contracts/75326

February 3, 2012 By AMK

Pentagon proposes analytics tool for awarding performance-based contracts

The Defense Department is proposing a new rule requiring contracting officers to use an analytics tool when awarding performance-based contracts, according to the Jan. 30, 2012 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, 2012.

— reprinted from Executive Gov, appearing on Jan. 30, 2012 at http://www.executivegov.com/2012/01/pentagon-proposes-analytics-tool-for-awarding-performance-based-contracts/.

Following a wave of criticism from the defense industry and members of Congress, the Pentagon on Monday backed off proposed changes to how companies receive cash flow on their contracts.

As the Trump administration continues to set its agenda for the federal government, it is emphasizing accountability, efficiency and tangible results. The message is clear: agencies must deliver better results with fewer resources.

The Opportunity

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