Overview
This section defines the application of Subpart 32.10, establishing that it contains the policies and procedures for using performance-based payments (PBPs) as a method of contract financing.
Key Rules
- Applicability: The subpart applies specifically to noncommercial purchases.
- Regulatory Framework: These provisions are governed by the overarching guidance for contract financing found in FAR Subpart 32.1.
- Scope of Guidance: It outlines both the underlying policy for and the specific procedures to implement performance-based payment structures.
Practical Implications
- Contracting officers must use this subpart when structuring fixed-price contracts that utilize financing based on measurable achievement rather than incurred costs.
- Because it is limited to noncommercial purchases, commercial item acquisitions must follow the financing rules under FAR Part 12 instead.