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Mission Performance Assessment

Lesson Objectives. Given a contracting scenario and performance metrics, justify actions for monitoring a contractor's performance. Given a contracting scenario, prepare a plan for conducting a post-award orientation conference pg 5-6Given a scenario, select a surveillance method for assessing a c

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Mission Performance Assessment

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    1. Mission Performance Assessment

    2. Lesson Objectives Given a contracting scenario and performance metrics, justify actions for monitoring a contractor’s performance. Given a contracting scenario, prepare a plan for conducting a post-award orientation conference pg 5-6 Given a scenario, select a surveillance method for assessing a contractor’s performance that includes all business factors Given a scenario on a contractor’s performance, justify an acceptable Government remedy. Discuss the characteristics of three types of Government contract termination: convenience, cause and default Discuss characteristics and impacts of payments to contractors.

    3. Purpose Types of Orientation When to Use Planning & Conducting a Post Award Conference Outcomes Post Award Orientation Overview Post award orientation is a pre-emptive attempt to make sure the Government and the contractor are "on the same page." Just because we've reached the proverbial "meeting of the minds" doesn't necessarily mean there won't be some problems ahead as the work moves along. Although both sides signed the same document, there could still be some issues that could cause real problems in the future. Post award orientation is a pre-emptive attempt to make sure the Government and the contractor are "on the same page." Just because we've reached the proverbial "meeting of the minds" doesn't necessarily mean there won't be some problems ahead as the work moves along. Although both sides signed the same document, there could still be some issues that could cause real problems in the future.

    4. Post Award Orientation Review the steps in the process. Emphasize the importance of the Government-only pre-conference Don’t allow your conference to get “hijacked” by your teammates. Review the steps in the process. Emphasize the importance of the Government-only pre-conference Don’t allow your conference to get “hijacked” by your teammates.

    5. Post Award Orientation Is it necessary? Considerations Type of orientation Document the outcomes DD 1484 The extent of the post-award orientation depends on several factors including: The type, value, and complexity of the contract; the urgency of the delivery schedule; and the contractor's performance history. Another factor you may want to take into account is the contractor's status as a small or small disadvantaged business. Depending on their experience, small and small disadvantaged businesses may call for special consideration, especially for an award as large as your body armor contract. In some cases, a letter from the contracting officer to the contractor will constitute adequate post-award orientation. The letter identifies contract administration personnel and highlights any significant or unusual requirements. Other contracts will dictate a post-award conference with agency and contractor personnel to introduce key personnel, review contract requirements, and discuss any questions. The contracting officer acts as or designates a chairperson for the conference.The extent of the post-award orientation depends on several factors including: The type, value, and complexity of the contract; the urgency of the delivery schedule; and the contractor's performance history. Another factor you may want to take into account is the contractor's status as a small or small disadvantaged business. Depending on their experience, small and small disadvantaged businesses may call for special consideration, especially for an award as large as your body armor contract. In some cases, a letter from the contracting officer to the contractor will constitute adequate post-award orientation. The letter identifies contract administration personnel and highlights any significant or unusual requirements. Other contracts will dictate a post-award conference with agency and contractor personnel to introduce key personnel, review contract requirements, and discuss any questions. The contracting officer acts as or designates a chairperson for the conference.

    7. Exercise 5.1

    8. Brief-Out Process We will brief out Post-Award results in table sequence Briefly discuss your scenario Type of Conference (Telephone, VTC, In person, Letter and etc) Identify agenda items and what issues you would want to discuss and why Limit brief to 5 minutes

    9. 5.2 Assessment Factors Ask: “What do you think of when you hear the phrase performance assessment?” Explain that performance assessment serves a dual purpose. We use the information gained through those assessments because it’s how we collect past performance data for future source selection use. That is a mandatory requirement. However, performance assessment isn't just collecting after-the-fact past performance data. Rather, performance assessment is actually an overall management system. It is an on-going process that involves prevention and detection used to achieve conformance of the work product or service. Ideally, performance assessment occurs in a continuous cycle, allowing for an improved work process or product as better techniques are discovered and implemented. The cycle culminates for a particular contract with the reporting of that contractor’s performance to a centralized past performance database that is used in future award decisions.Ask: “What do you think of when you hear the phrase performance assessment?” Explain that performance assessment serves a dual purpose. We use the information gained through those assessments because it’s how we collect past performance data for future source selection use. That is a mandatory requirement. However, performance assessment isn't just collecting after-the-fact past performance data. Rather, performance assessment is actually an overall management system. It is an on-going process that involves prevention and detection used to achieve conformance of the work product or service. Ideally, performance assessment occurs in a continuous cycle, allowing for an improved work process or product as better techniques are discovered and implemented. The cycle culminates for a particular contract with the reporting of that contractor’s performance to a centralized past performance database that is used in future award decisions.

    10. Discussion Questions Why Assess? What are some performance factors to assess? Why is on-time delivery important? What are some indicators of Quality performance? Who are the players in performance assessment?

    11. Why Assess? To Determine: How well we are doing? (Contractor & Government) If we are meeting our goals If our customers are satisfied If our processes are working If and where improvements are necessary

    12. Assessment Factors Overview Cost Control Timeliness (Schedule/Delivery) Quality Business Relations Management of Key Personnel Customer satisfaction Compliance (e.g. OSHA, EPA, DOL, Sm. Business subcontracting goals) The first step in performance measurement is choosing WHAT to measure -- not necessarily an easy task! What are the “right” things to measure? The answer is, of course, “It depends!” As you’ve learned, the areas and degrees of Government “oversight” over the contractor’s performance will vary greatly depending on a number of factors. They include: the degree of complexity dollar amount commerciality contract type mission impact the availability of Government resources.The first step in performance measurement is choosing WHAT to measure -- not necessarily an easy task! What are the “right” things to measure? The answer is, of course, “It depends!” As you’ve learned, the areas and degrees of Government “oversight” over the contractor’s performance will vary greatly depending on a number of factors. They include: the degree of complexity dollar amount commerciality contract type mission impact the availability of Government resources.

    13. Schedule/Delivery P. 5-9 Did contractor meet contractual delivery requirements? Is there a reward for early delivery? Is there a penalty for late delivery? Is the contractor on schedule to meet contractual requirements? Here we look at the on-time completion of tasks, whether scheduled with established completion dates/times/milestones and deadlines, or unscheduled tasks, such as corrective maintenance in response to equipment failures. Bottom line: Did the contractor provide deliverables in a timely and effective manner and in accordance with established milestones? Here we look at the on-time completion of tasks, whether scheduled with established completion dates/times/milestones and deadlines, or unscheduled tasks, such as corrective maintenance in response to equipment failures. Bottom line: Did the contractor provide deliverables in a timely and effective manner and in accordance with established milestones?

    14. Product/Service Quality P. 5-10 Does product/service meet requirements? Conforms/Adheres to: Specifications Standards-FAR 37.603 PWS/SOW/SOO-FAR 37.602 Quality Assurance Plan-FAR 37.604 There are a number of ways to define and measure “quality. At the most basic level, though "quality" means conformance to contract requirements. Quality is a mandatory evaluation factor and a mandatory performance review element. To reach the desired end-state of a "quality" product or service, we may use any number of measures to monitor the contractor's performance. The actual performance quality measures you’ll use will, of course, vary according to the nature of the work on your contract. Examples are listed in Student GuideThere are a number of ways to define and measure “quality. At the most basic level, though "quality" means conformance to contract requirements. Quality is a mandatory evaluation factor and a mandatory performance review element. To reach the desired end-state of a "quality" product or service, we may use any number of measures to monitor the contractor's performance. The actual performance quality measures you’ll use will, of course, vary according to the nature of the work on your contract. Examples are listed in Student Guide

    15. Business Relations P. 5-11 Tends to be a “subjective” analysis Encompasses matters such as the contractor’s: Responsiveness Professionalism Cooperativeness This is a highly subjective factor, and there are several different approaches to measuring a contractor’s effectiveness in this area. The key is to make sure the contractor understands what you’re measuring and knows how you’re doing it – i.e. the criteria and standards. Here are some questions that might give you some insight on the contractor's effectiveness in this area: Was the contractor responsive and proactive in resolving problems? How effective is the contractor at managing and controlling subcontractors and suppliers? Were the contractor's channels of communication within its own organization and with Government personnel adequate and efficient? This is a highly subjective factor, and there are several different approaches to measuring a contractor’s effectiveness in this area. The key is to make sure the contractor understands what you’re measuring and knows how you’re doing it – i.e. the criteria and standards. Here are some questions that might give you some insight on the contractor's effectiveness in this area: Was the contractor responsive and proactive in resolving problems? How effective is the contractor at managing and controlling subcontractors and suppliers? Were the contractor's channels of communication within its own organization and with Government personnel adequate and efficient?

    16. Management of Key Personnel P. 5-11 Were technical experts highly qualified and effective in performing the required services? Were an appropriate number of personnel assigned to the project? Did delivered products reflect skill and standardization required by the customer? This is another somewhat subjective assessment factor. There is no precise way to “measure” a contractor's effectiveness against this factor. Even so, it may be of critical importance. Here are some questions to ask that may aid you in determining the contractor’s effectiveness under this factor: This is another somewhat subjective assessment factor. There is no precise way to “measure” a contractor's effectiveness against this factor. Even so, it may be of critical importance. Here are some questions to ask that may aid you in determining the contractor’s effectiveness under this factor:

    17. Customer Satisfaction P. 5-12 Our guiding principle is to satisfy our customer in terms of cost, quality and timeliness of the delivered product or service. Customer satisfaction may be considered a subset under “Quality” or it may be a stand-alone factor. There are several subjective ways to measure this factor. One way is to look at the promptness and degree of concern with which the Contractor responds to the needs, requests, and demands of the COTR and contracting officer. Of course, a better indicator might be to go to the actual end-user and measure their satisfaction. Percent of product that meets customer expectations Time to answer customer complaints Number of customer complaints Customer satisfaction may be considered a subset under “Quality” or it may be a stand-alone factor. There are several subjective ways to measure this factor. One way is to look at the promptness and degree of concern with which the Contractor responds to the needs, requests, and demands of the COTR and contracting officer. Of course, a better indicator might be to go to the actual end-user and measure their satisfaction. Percent of product that meets customer expectations Time to answer customer complaints Number of customer complaints

    18. Compliance P. 5-12 Examples of areas OSHA EPA Labor laws A contract may include compliance requirements that are mandated by law – such safety, labor, and environmental. For example, under “safety” we could look at a contractor’s compliance with safety manuals, regulations, certifications, and commonly accepted safety procedures. Under “labor” – Is the contractor paying overtime properly, paying the required rates, complying with child labor laws, etc. Generally speaking we wouldn’t “reward” compliance to the law, but non-compliance could be grounds for adverse action against the contractor. A contract may include compliance requirements that are mandated by law – such safety, labor, and environmental. For example, under “safety” we could look at a contractor’s compliance with safety manuals, regulations, certifications, and commonly accepted safety procedures. Under “labor” – Is the contractor paying overtime properly, paying the required rates, complying with child labor laws, etc. Generally speaking we wouldn’t “reward” compliance to the law, but non-compliance could be grounds for adverse action against the contractor.

    19. Assessment Roles Contracting Officer Contracting Officer Representative It’s not enough just to have a “plan” in place establishing the assessment factors. We also have to have people in place to monitor the contractor’s performance. Although the contracting officer is the official “face” of the Government to the contractor, most COs are not technical experts. We depend on others to be our “eyes and ears” out in the field. Contracting Officer Representatives keep us informed so that we’re able to make those decisions that only contracting officers can make. We use the term COR here to include COTR, QAR and QAE. CORs review contractor submitted reports for completeness, verify compliance with our requirements documents, and validate completion. They identify performance in writing and provide written reports to the CO, including any performance deficiencies. It is crucial that the CO and COR establish a good working rapport and open communications. Only the CO can direct a contractor to take an action not in the contract that will cause them to incur additional costs. Proper training of your COR is a MUST. It’s not enough just to have a “plan” in place establishing the assessment factors. We also have to have people in place to monitor the contractor’s performance. Although the contracting officer is the official “face” of the Government to the contractor, most COs are not technical experts. We depend on others to be our “eyes and ears” out in the field. Contracting Officer Representatives keep us informed so that we’re able to make those decisions that only contracting officers can make. We use the term COR here to include COTR, QAR and QAE. CORs review contractor submitted reports for completeness, verify compliance with our requirements documents, and validate completion. They identify performance in writing and provide written reports to the CO, including any performance deficiencies. It is crucial that the CO and COR establish a good working rapport and open communications. Only the CO can direct a contractor to take an action not in the contract that will cause them to incur additional costs. Proper training of your COR is a MUST.

    20. Assessing EAS Alloy’s Performance How much Government oversight is needed? Is there a formal “plan?” What assessment factors will you use & why? Who would perform the assessment? How will you know if EAS’ performance is or is not satisfactory?

    21. Assessing Services Contracts Why bother? In FY 2002, 54 percent of DoD spending for goods & services was spent on service contracts From FY 1992 to FY 2002, DoD contracts for goods and services increased from $121.4 billion to $170.8 billion, an increase of 41 percent However, the cost of procurement of services alone increased from $61.7 billion to $92.9 billion, an increase of 51 percent (DoD IG Report 2004-015, October 30,2003)  FY 2005: DoD services totaled $269 billion The fastest growing sector of Government contracting is the acquisition of services. Each year the Federal Government spends over $200 billion buying goods and services. Thus making services the Government’s largest single spending category. As such, we have to know the rules governing how we acquire those services. The fastest growing sector of Government contracting is the acquisition of services. Each year the Federal Government spends over $200 billion buying goods and services. Thus making services the Government’s largest single spending category. As such, we have to know the rules governing how we acquire those services.

    22. Using PBA The current goals for the use of performance-based acquisitions are: FY 2004 35 percent of dollars awarded FYs 2005 to 2007 50 percent of dollars awarded What’s the implication? We must know how to set up these types of contracts and make sure we’re in a position to evaluate the contractor’s performance This is now THE way to acquire Services! The implication is that we in contracting must know how to set up these types of contracts and make sure we’re in a position to evaluate the contractor’s performance. This is now THE way to acquire Services! The implication is that we in contracting must know how to set up these types of contracts and make sure we’re in a position to evaluate the contractor’s performance.

    23. Performance Based Acquisitions (PBA) Definition Policy We are required by policy to use performance-based contracting methods to the maximum extent practicable when acquiring most types of services. PBSA methods are intended to ensure that required performance quality levels are achieved and that the Government’s total payment is in line with the quality of services received. Performance Based Service contracts: Describe the requirements in terms of results required rather than methods of performing the work, Use measurable performance standards Specify procedures for reductions in fee and/or price for deficient services, and Include performance incentives where appropriate. We are required by policy to use performance-based contracting methods to the maximum extent practicable when acquiring most types of services. PBSA methods are intended to ensure that required performance quality levels are achieved and that the Government’s total payment is in line with the quality of services received. Performance Based Service contracts: Describe the requirements in terms of results required rather than methods of performing the work, Use measurable performance standards Specify procedures for reductions in fee and/or price for deficient services, and Include performance incentives where appropriate.

    24. Quality Assurance Surveillance Plan Quality Assurance Surveillance Plan Required “Living document” Methods of assessment FAR 37.602, 11.002, 37.604, 46.4 Establishing “measurable performance standards” is meaningless without some enforcement! That’s why it’s vital to have an effective, on-going system to assess the contractor’s performance. Government contract surveillance is an essential aspect of PBSA and is necessary to ensure that funds are spent prudently. It is an over-arching principle with PBSA that contractors assume increased accountability and responsibility for their processes and their performance. FAR 37.602-2 states that agencies SHALL develop quality assurance surveillance plans when acquiring services. The QASP is a living document that may be changed as contract requirements change. QASPs should specify all work requiring surveillance and the method of surveillance. Your QASP will vary with your contract. Remember the QASP is not a part of the contract. The QASP addresses the methods of assessment and works with the Performance Requirements Summary (PRS). The PRS usually lists tasks, deliverables, standards, and quality levels for acceptable performance. Establishing “measurable performance standards” is meaningless without some enforcement! That’s why it’s vital to have an effective, on-going system to assess the contractor’s performance. Government contract surveillance is an essential aspect of PBSA and is necessary to ensure that funds are spent prudently. It is an over-arching principle with PBSA that contractors assume increased accountability and responsibility for their processes and their performance. FAR 37.602-2 states that agencies SHALL develop quality assurance surveillance plans when acquiring services. The QASP is a living document that may be changed as contract requirements change. QASPs should specify all work requiring surveillance and the method of surveillance. Your QASP will vary with your contract. Remember the QASP is not a part of the contract. The QASP addresses the methods of assessment and works with the Performance Requirements Summary (PRS). The PRS usually lists tasks, deliverables, standards, and quality levels for acceptable performance.

    25. Performance Work Statement There is no standard template or outline for a PWS. The FAR only requires that agencies-- Describe requirements in terms of results rather than process. Use measurable performance standards and quality assurance surveillance plans. Provide for reductions of fees or price. Include performance incentives where appropriate. There is not a standard template or outline for a PWS except for Professional and Technical Services which is included in A GUIDE TO BEST PRACTICES FOR PERFORMANCE-BASED SERVICE CONTRACTING located on the website shown here. The FAR only requires that agencies-- Describe requirements in terms of results rather than process. Use measurable performance standards and quality assurance surveillance plans. Provide for reductions of fees or price. Include performance incentives where appropriate. There is not a standard template or outline for a PWS except for Professional and Technical Services which is included in A GUIDE TO BEST PRACTICES FOR PERFORMANCE-BASED SERVICE CONTRACTING located on the website shown here. The FAR only requires that agencies-- Describe requirements in terms of results rather than process. Use measurable performance standards and quality assurance surveillance plans. Provide for reductions of fees or price. Include performance incentives where appropriate.

    26. Exercise 5.2 Quality Assurance Surveillance Plan Support Services for PEO Combat Support & Combat Support Services Complete the Chart for the QASP on 5-33 by determining the appropriate surveillance method Scan Pages 5-16 thru 5-32 to accomplish. 60 minutes A Quality Assurance Surveillance Plan (QASP) will be used by Government personnel to ensure that the contractor complies with the standards of the contract. The QASP is to be used as a guide by the Contract Officer’s Technical Representative (COTR) and the Program Manager (PM). It provides a systematic method to evaluate the services the contractor is required to furnish. The surveillance/evaluation methods identified in this plan, in concert with the contractor’s quality control procedures, will assure the government of satisfactory contractor Review the QASP in Exercise 6.2 with the students. This will help them prepare for the actual exercise. Go over the format and uses. ANSWERS: We want to capture problems before rather than after the fact C.3.3 (Periodic). We don’t want to wait for customer complaints C.3.5 (Periodic or Contractor metrics) C.3.2 (Contractor metrics, Periodic Inspection or Customer Survey) C.3.6 (Contractor Metrics) C.3.7 (Contractor metrics or Customer Complaints) A Quality Assurance Surveillance Plan (QASP) will be used by Government personnel to ensure that the contractor complies with the standards of the contract. The QASP is to be used as a guide by the Contract Officer’s Technical Representative (COTR) and the Program Manager (PM). It provides a systematic method to evaluate the services the contractor is required to furnish. The surveillance/evaluation methods identified in this plan, in concert with the contractor’s quality control procedures, will assure the government of satisfactory contractor Review the QASP in Exercise 6.2 with the students. This will help them prepare for the actual exercise. Go over the format and uses. ANSWERS: We want to capture problems before rather than after the fact C.3.3 (Periodic). We don’t want to wait for customer complaints C.3.5 (Periodic or Contractor metrics) C.3.2 (Contractor metrics, Periodic Inspection or Customer Survey) C.3.6 (Contractor Metrics) C.3.7 (Contractor metrics or Customer Complaints)

    27. 5.3 Select the Appropriate Remedy First things first: Read the contract! This is especially true if you didn’t actually write the contract. If you’re administering a new contract, it’s critical that you know what is actually in that contract! While a contract represents a "meeting of the minds" between the parties, rarely do both parties interpret everything in that contract in the exact same manner. This is especially true in some of the more complex contracts. This, of course, is one of the main reasons we conduct post-award orientations. It's also the reason why establishing and maintaining good communications throughout contract performance is so important.First things first: Read the contract! This is especially true if you didn’t actually write the contract. If you’re administering a new contract, it’s critical that you know what is actually in that contract! While a contract represents a "meeting of the minds" between the parties, rarely do both parties interpret everything in that contract in the exact same manner. This is especially true in some of the more complex contracts. This, of course, is one of the main reasons we conduct post-award orientations. It's also the reason why establishing and maintaining good communications throughout contract performance is so important.

    28. Remedies Covered in Contract Invoke contract clause (s) (ex. Stop Work, Cure Notice, Show Cause, Liquidated Damages, Termination) Withhold/reduce award/incentive fees Reject work or allow re-work Decline to extend term (award term contracting) Invoke a specific contract clause (ex. Stop work, cure notice, show cause, liquidated damages) Reject work (under inspection and acceptance rights) Allow re-work Reduce/withdraw progress payments Invoke a statute Invoke a warranty Terminate Invoke a specific contract clause (ex. Stop work, cure notice, show cause, liquidated damages) Reject work (under inspection and acceptance rights) Allow re-work Reduce/withdraw progress payments Invoke a statute Invoke a warranty Terminate

    29. Terminations Homework Review STOP, COVER RESPONSES TO THE TERMINATIONS HOMEWORK QUESTIONS ON PAGES 5-43 TO 5-81STOP, COVER RESPONSES TO THE TERMINATIONS HOMEWORK QUESTIONS ON PAGES 5-43 TO 5-81

    30. Inside the FAR What Part of the FAR addresses terminations? FAR Part 49 Pursuant to FAR 49.104 what are the duties of the prime contractor in regard to the subcontracts upon receipt of a termination notice? FAR 49104(b): Terminate all subcontracts related to the terminated portion of the prime contract. Pursuant to FAR 49.607, how much time has to be remaining in the contract delivery schedule to issue a “Cure Notice”? FAR 49.607(a): “If the time remaining in the contract delivery schedule is not sufficient to permit a realistic “cure” period of 10 days or more, the “Cure Notice” should not be issued. AFTER COMPLETION OF REVIEWING THE TERMINAIONS HOMEWORK ASSIGNMENT THE FOLLOWING CHARTS SERVE AS A REVIEW TO WRAP UP THE TERMINATION DISCUSSIONS. CONTINUE INSTRUCTION.AFTER COMPLETION OF REVIEWING THE TERMINAIONS HOMEWORK ASSIGNMENT THE FOLLOWING CHARTS SERVE AS A REVIEW TO WRAP UP THE TERMINATION DISCUSSIONS. CONTINUE INSTRUCTION.

    31. Termination For Convenience (T4C) Student Guide Unilateral government right Notice of termination must be in writing No justification is required May be partial or complete Contractor is compensated for: In-process and completed work Profit for completed and partially completed work Negotiate a settlement agreement

    32. Termination Responsibilities The contracting officer shall terminate contracts, whether for default or convenience, only when it is in the Government’s interest. When the price of the undelivered balance of the contract is less than $5,000, the contract should not normally be terminated for convenience but should be permitted to run to completion.

    33. Termination For Default (T4D) or Cause Student Guide Government may terminate for default if Contractor fails to: Make timely delivery Perform any Other contract provision (material breach) Make progress & thereby endangers performance (anticipatory repudiation) Government pays contract price for completed supplies Government may obtain reprocurement costs per FAR 49.402-6(c) Steps Cure Notice Show Cause

    34. T4D Cure Notice Student Guide Cure Notice Delinquency notice that must be issued by the Government prior to a T4D Provides for a 10 day “cure” period Failure to issue a cure notice can make the termination invalid

    35. T4D Show Cause Notice Student Guide Show Cause Notice Preliminary written notice given to the contractor when a T4D appears to be appropriate Indicates the contractual liabilities of default Asks for contractors response to show cause why the contract should not be T4D Considerations Urgency of need Availability of other sources Contractor excuses for failure Effect on Contractor and industrial base

    36. Remedies Not Covered Informal resolution between parties Modify the contract File claim Seek Alternative Disputes Resolution Decline to exercise option Legal recourse Document in past performance database Other remedies may not necessarily be covered in the contract, meaning there is no specific course of action dictated. Those would include actions such as: File a claim Seek alternative dispute resolution (ADR) Withhold award/incentive fee Decline to exercise option or to extend term Legal recourse Document poor performance in past performance database Explain the terminology by saying that there is nothing, per se, in a contract that tells you when or if you take an action such as these. The RIGHT to take such actions is there but there is no directive telling that you have to do any of these.Other remedies may not necessarily be covered in the contract, meaning there is no specific course of action dictated. Those would include actions such as: File a claim Seek alternative dispute resolution (ADR) Withhold award/incentive fee Decline to exercise option or to extend term Legal recourse Document poor performance in past performance database Explain the terminology by saying that there is nothing, per se, in a contract that tells you when or if you take an action such as these. The RIGHT to take such actions is there but there is no directive telling that you have to do any of these.

    37. Additional Considerations Strict compliance Warranties (FAR 46.7) Commercial & non-commercial Express & Implied (FAR 46.706) Liquidated damages The government is entitled to “strict compliance” with the technical requirements of the contract. It does not matter that the service or item actually furnished is equal to or superior to that described in the contract specifications. Strict compliance means exactly that, and there are serious risks for noncompliance. FAR 12.404 addresses commercial warranties. With liquidated damages the parties have agreed, in advance, to a clause in a contract that provides for an automatic award of damages to be paid in the event of a breach of contract. The government is entitled to “strict compliance” with the technical requirements of the contract. It does not matter that the service or item actually furnished is equal to or superior to that described in the contract specifications. Strict compliance means exactly that, and there are serious risks for noncompliance. FAR 12.404 addresses commercial warranties. With liquidated damages the parties have agreed, in advance, to a clause in a contract that provides for an automatic award of damages to be paid in the event of a breach of contract.

    38. Unauthorized Commitment (UC): An agreement that is not binding solely because the government representative who made it lacked the authority to enter into that agreement on behalf of the government FAR 1.602-3(a)

    39. Ratification The act of approving an unauthorized commitment by an official who has the authority to do so (e.g., CO) FAR 1.602-3(a)

    40. Prevent Ratifications Brief to all personnel (e-mail, Commanders Call, etc.) CO is responsible for contracts with all firms wanting to sell goods and services to installation Designed to protect interests of the Government Make sure vendors know you do not have contractual or purchasing authority (if not a CO) Do not give advance contracting information to any contractor If action is not ratified, the individual responsible for the UC may be held personally accountable for restitution to the vendor

    41. Exercise 5.3 Read the Scenarios Page 5-82 thru 5-84. Working in groups, address the problems and develop an appropriate remedy to the situation. Each Table will complete the scenario corresponding to their table number 30 minutes Each group will be assigned situation #1 plus one additional scenario. Develop potential alternatives the assigned situations. Select the most appropriate action and develop supporting rationale, citing references (statutes/regulation). This is a group exercise to be completed in 60 minutes. Be prepared to debrief the class Scenarios 1,3, -Yes. Function and authority of Govt personnel, correspondence, work progress, financial reports, any subcontracts, modifications, government property, data rights, warranties, delivery schedules, invoicing and billing, SCA, quality assurance, security, surveillance Scenario 2 – Yes. Yes. Function and authority of Govt personnel, correspondence, change authority, rework, specification, invoicing and billing, surveillance (Customer Complaints) Scenario 4- Yes. Function and authority of Govt personnel, correspondence, work progress, change authority, modifications, government property, rework, Technical specification, invoicing and billing, labor, quality assurance, surveillance Scenario 5- Yes because of visibility. Discuss all the concerns of interest to the HCA Scenario 6- At the plant site, NIJ Std, quality surveillance, warranty, delivery. I would send a quality specialist. THE ABOVE IS JUST SOME SUGGESTIONS. Each group will be assigned situation #1 plus one additional scenario. Develop potential alternatives the assigned situations. Select the most appropriate action and develop supporting rationale, citing references (statutes/regulation). This is a group exercise to be completed in 60 minutes. Be prepared to debrief the class Scenarios 1,3, -Yes. Function and authority of Govt personnel, correspondence, work progress, financial reports, any subcontracts, modifications, government property, data rights, warranties, delivery schedules, invoicing and billing, SCA, quality assurance, security, surveillance Scenario 2 – Yes. Yes. Function and authority of Govt personnel, correspondence, change authority, rework, specification, invoicing and billing, surveillance (Customer Complaints) Scenario 4- Yes. Function and authority of Govt personnel, correspondence, work progress, change authority, modifications, government property, rework, Technical specification, invoicing and billing, labor, quality assurance, surveillance Scenario 5- Yes because of visibility. Discuss all the concerns of interest to the HCA Scenario 6- At the plant site, NIJ Std, quality surveillance, warranty, delivery. I would send a quality specialist. THE ABOVE IS JUST SOME SUGGESTIONS.

    42. 5.4 Invoices and Payments The contract payments arena is very complex and subject to numerous laws, ever-changing regulations and numerous standard contract provisions. There are also many “players” who have a role in the payment process –e.g. the contractor, the contracting officer, DCMA, QAEs, QARs, COTRs, and the Defense Finance and Accounting Service (DFAS). The Government recognizes the importance of “cash flow” to our contractors and continually seeks innovative ways to expedite the payment process. This section will address some of the major initiatives to improve this process. I HAVE CREATED A HANDOUT THAT SHOULD BE PROVIDED TO THE STUDENTS WHEN YOU GET TO THE THIRD SLIDE OF THIS SECTION. STUDENTS SEEM TO ENJOY BECAUSE THE EXERCISE IS FAR BASED. WHEN COMPLETE, YOU WILL HAVE SET THE STAGE FOR THE PBP EXERCISE. THE HANDOUT WILL BE INCLUDED ON THE DISC UNDER THE HANDOUT FILE. The contract payments arena is very complex and subject to numerous laws, ever-changing regulations and numerous standard contract provisions. There are also many “players” who have a role in the payment process –e.g. the contractor, the contracting officer, DCMA, QAEs, QARs, COTRs, and the Defense Finance and Accounting Service (DFAS). The Government recognizes the importance of “cash flow” to our contractors and continually seeks innovative ways to expedite the payment process. This section will address some of the major initiatives to improve this process. I HAVE CREATED A HANDOUT THAT SHOULD BE PROVIDED TO THE STUDENTS WHEN YOU GET TO THE THIRD SLIDE OF THIS SECTION. STUDENTS SEEM TO ENJOY BECAUSE THE EXERCISE IS FAR BASED. WHEN COMPLETE, YOU WILL HAVE SET THE STAGE FOR THE PBP EXERCISE. THE HANDOUT WILL BE INCLUDED ON THE DISC UNDER THE HANDOUT FILE.

    43. Acceptance Performance issues resolved Performance satisfactory/delivery complete SF 1449 DD 250 Once all performance issues under the contract have been resolved and performance or delivery is satisfactory, the Government is now ready to accept the service or supply. The acceptance paragraph in 52.212-4 is based upon the assumption that the Government will rely on the contractor's assurances that the commercial item tendered for acceptance conforms to the contract requirements. The Government inspection of commercial items does not prejudice its other rights under the acceptance paragraph. Additionally, although the paragraph does not address the issue of rejection, the Government always has the right to refuse acceptance of nonconforming items. This paragraph is generally appropriate when the Government is acquiring noncomplex commercial items. The reverse of the SF-1449 can be used for receipt, inspection, and acceptance of a commercial item. Government acceptance will be reflected by signing in block 32b of the form. The DD Form 250, Material Inspection and Receiving Report, is another form that can be used. This form is normally used when purchasing noncommercial items and can be used for: Acceptance of equipment/data by the Government (i.e. title transferred to the Government); The Contractor's invoice for payment. A packing list for shipping and receiving; Evidence of Government Quality inspection. DD 250 acceptance authority (signer) is designated in Contract Section E - Inspection and Acceptance. Once all performance issues under the contract have been resolved and performance or delivery is satisfactory, the Government is now ready to accept the service or supply. The acceptance paragraph in 52.212-4 is based upon the assumption that the Government will rely on the contractor's assurances that the commercial item tendered for acceptance conforms to the contract requirements. The Government inspection of commercial items does not prejudice its other rights under the acceptance paragraph. Additionally, although the paragraph does not address the issue of rejection, the Government always has the right to refuse acceptance of nonconforming items. This paragraph is generally appropriate when the Government is acquiring noncomplex commercial items. The reverse of the SF-1449 can be used for receipt, inspection, and acceptance of a commercial item. Government acceptance will be reflected by signing in block 32b of the form. The DD Form 250, Material Inspection and Receiving Report, is another form that can be used. This form is normally used when purchasing noncommercial items and can be used for: Acceptance of equipment/data by the Government (i.e. title transferred to the Government); The Contractor's invoice for payment. A packing list for shipping and receiving; Evidence of Government Quality inspection. DD 250 acceptance authority (signer) is designated in Contract Section E - Inspection and Acceptance.

    44. Invoices & Payment (Handout) Payment Basics Prompt Payment Act Contract Financing Payments Commercial Delivery Payments Commercial Advance Payments Commercial Interim Payments Noncommercial Payment Methods Your contract will specify the government office responsible for payment and will provide invoicing instructions to the contractor. The more accurate an invoice, the more quickly the contractor will be paid. It sounds simple, but poorly prepared, improperly submitted invoices are the source of most payment “issues.” It is important that you and the contractor thoroughly understand the payment process and identify potential breakdowns. It will take the students one hour to research the payment basics listed above. Provide them the handout for completion and discussion. This will set the stage for the remainder of the slides and exercise. Your contract will specify the government office responsible for payment and will provide invoicing instructions to the contractor. The more accurate an invoice, the more quickly the contractor will be paid. It sounds simple, but poorly prepared, improperly submitted invoices are the source of most payment “issues.” It is important that you and the contractor thoroughly understand the payment process and identify potential breakdowns. It will take the students one hour to research the payment basics listed above. Provide them the handout for completion and discussion. This will set the stage for the remainder of the slides and exercise.

    45. Order of Preference – Contract Financing FAR 32.106 Private financing Customary contract financing other than loan guarantees and certain advance payments (32.113) Loan guarantees Unusual contract financing (32.114) – HCA approval Advanced payments (see exceptions in 32.404(b))

    46. Regulatory Requirements SAP Threshold – Unless agency regulations state otherwise, contract financing shall not be provided for purchases under authority of FAR Part 13. Prompt Payment Act – FAR 32.9 Requires “timely” payment Standards Commercial Contract Financing Commercial Delivery Payments – FAR 32.001 Commercial Advanced Payments – made before any performance Commercial Interim Payments – any payment not a commercial advance or delivery payment (not subject to interest)

    47. Noncommercial Payment Methods Advance Payments – FAR 32.102(a) advances of money by the Government to a prime contractor before, in anticipation of, and for the purpose of complete performance under one or more contracts. Can be made to primes for advancement to subcontractors Progress Payments – FAR 32.102(b) Performance Based Payments – FAR 32.10 – preferred There are other payment methods authorized for noncommercial items. These include: Advanced Payments Progress Payments Performance Based Payments Noncommercial payment methods will be discussed in detail during your Level II training. There are other payment methods authorized for noncommercial items. These include: Advanced Payments Progress Payments Performance Based Payments Noncommercial payment methods will be discussed in detail during your Level II training.

    48. Invoice Interim Payments Government pays interest for late payments CO and COR should make voucher/invoice review and approval a priority Prompt Payment Act

    49. Law Certifying Officers “pecuniarily liable” (monetary penalty) for erroneous payments DOD Accountable Officials also pecuniarily liable Payment Policy

    50. Accounting Officials Ensure controls to minimize erroneous payments Comply with regs/policies/procedures Support CO’s via timely/accurate data to ensure proper payments Request advice from CO regarding AO responsibilities Timely response to inquiries regarding erroneous payments

    51. Personal Liability ACCOUNTABLE OFFICIALS SHALL BE PECUNIARILY LIABLE FOR ERRONEOUS PAYMENTS THAT RESULT FROM INFORMATION, DATA, OR SERVICE THEY NEGLIGENTLY PROVIDE TO A CERTIFYING OFFICER… FOR THE FULL AMOUNT OF THE ERRONEOUS PAYMENT UP TO ONE MONTH’S COMPENSATION. PERSONALLY LIABLE (MONETARILY)PERSONALLY LIABLE (MONETARILY)

    52. Policy DOD FMR PROVIDES FOR: Random pre- & post payment reviews by designated review officials (Vol 5, Chap 33, Para 3308)

    53. Policy FAR Part 32.9 Payment due based on receipt of a proper invoice & satisfactory performance Generally due within 30 days of invoice date or government acceptance – otherwise interest is due contractor Government has 7 days from receipt to notify the contractor if invoice is improper Prompt Payment clause is in all contracts

    54. Policy -- GSA “HOWEVER”… GSA currently requires your invoices to be processed within 5 days (including certification by CO)

    55. “Proper” Invoice? Contractor name/address Date Contract/Task Order number Description/Qty/Unit/Extension Shipment no. & date of shipment Name/address to remit payment Name/title/phone of person to contact if defective invoice Any other info required by contract

    56. Typical Invoice Problems Inflated/unrealistic labor hours Unsupported ODCs (poor description, can’t tie to specific task) Unsupported travel costs Unauthorized overtime charges Incorrect/unrealistic labor category “Management” hours disproportionate to “worker bee” hours Duplicate invoice, or wrong invoice Math errors Other “pitfalls” – e.g., competing workload demands, contractor UNDERcharges for something

    57. Additional Typical Problems Wrong contract/task order number Wrong price (proposed vs negotiated) Wrong CLIN, P/N, S/N No POC for defective invoices No date Incorrect/missing shipment info No remittance address Negotiated prompt pay discounts not offered

    58. Wide Area Workflow – Receipt & Acceptance In the traditional DoD business method, three documents are required to make a payment – the contract, the receiving report and the invoice. Each of these may arrive at the payment office separately if they are paper. They are processed individually as they arrive. Information is then manually keyed into the payment system. Using WAWF-RA, electronic documents are shared, eliminating paper and redundant data entry. Accuracy is increased and the risk of losing a document is greatly reduced. Document access and appropriate functions are controlled through the user registration process. Only authorized users will be able to access documents and records. In the traditional DoD business method, three documents are required to make a payment – the contract, the receiving report and the invoice. Each of these may arrive at the payment office separately if they are paper. They are processed individually as they arrive. Information is then manually keyed into the payment system. Using WAWF-RA, electronic documents are shared, eliminating paper and redundant data entry. Accuracy is increased and the risk of losing a document is greatly reduced. Document access and appropriate functions are controlled through the user registration process. Only authorized users will be able to access documents and records.

    59. Collecting Past Performance Information Relevant performance information Fair Narrative accompany rating Before the contract is closed out, it is important that each COR, technical monitor, program manager, and customer understand the importance of providing relevant past performance information. The ratings must be fair and based only on the requirements stated in the contract, task order/delivery order, GSA task order/delivery order, and/or CSA. A narrative must accompany each rating. The narrative should be as detailed as possible to assist those using the information during future source selections. These narratives become part of the PAR that is provided to the contractor for review. Before the contract is closed out, it is important that each COR, technical monitor, program manager, and customer understand the importance of providing relevant past performance information. The ratings must be fair and based only on the requirements stated in the contract, task order/delivery order, GSA task order/delivery order, and/or CSA. A narrative must accompany each rating. The narrative should be as detailed as possible to assist those using the information during future source selections. These narratives become part of the PAR that is provided to the contractor for review.

    60. Award decision Source Selection Using Past Performance Information The Government now relies more than ever on the use of past performance data to assist in making award decisions. To accomplish this, we now have very elaborate systems in place to track contractors' performance. With the increased emphasis on that data, we need to make sure we capture information that will be of real value. The person responsible for preparing the assessment must consider inputs from the program manager, end user, the Contracting Officer, and other parties affected by the item or service in coming up with a final assessment report. The Government agencies use a common rating scale: exceptional, very good, satisfactory, marginal, and unsatisfactory. FAR 42.1500 outlines the policies and procedures used in the Government for collecting and using both past and current performance information. Recording contractor current performance information periodically during contract performance is a winning strategy. This provides a powerful motivator for contractors to maintain high quality performance or to improve inadequate performance before the next reporting cycle. The Government now relies more than ever on the use of past performance data to assist in making award decisions. To accomplish this, we now have very elaborate systems in place to track contractors' performance. With the increased emphasis on that data, we need to make sure we capture information that will be of real value. The person responsible for preparing the assessment must consider inputs from the program manager, end user, the Contracting Officer, and other parties affected by the item or service in coming up with a final assessment report. The Government agencies use a common rating scale: exceptional, very good, satisfactory, marginal, and unsatisfactory. FAR 42.1500 outlines the policies and procedures used in the Government for collecting and using both past and current performance information. Recording contractor current performance information periodically during contract performance is a winning strategy. This provides a powerful motivator for contractors to maintain high quality performance or to improve inadequate performance before the next reporting cycle.

    61. Exercise 5.4 Performance-Based Payments Read pages 5-92 thru 5-97 Address the questions on page 5-97 and be prepared to brief the class 45 Minutes Performance-Based Payment Exercise Exercise 5.4 Performance-Based Payment Questions 1.      Do you think it was appropriate to use PBPs for this effort?  Explain. 2.      How much will the Government pay the contractor for completing Hovercraft Event 2?  How much for Production tooling Event 1? 3.      What type of contract pricing arrangement exists for this contract?  How do you know? 4.      The contract will indicate that all contractor billings be reviewed and approved before payment is made.  Describe/summarize the process. 5.      Why does it matter whether an event is severable or cumulative? 6.      What are some of the financial and performance risks for the Government and the contractor when PBPs are used? 7.      What is meant by the term “liquidation rate” and how does the Government accomplish it? 8.      What is a contractor’s motivation to accept PBPs rather than progress payments?  Explain. 9.      What are the benefits of Performance Based Payments to the Government?  10. What are the potential shortcomings (problems) associated with using PBPs? Performance-Based Payment Questions 1.      Do you think it was appropriate to use PBPs for this effort?  Explain. Yes.  Answers will vary, but should point out some of the following: The focus of PBP is to pay for performance not cost; therefore, PBP should either be specifically defined events with entrance and exit criteria or some other objective measurable criteria.   Meets appropriate criteria for use (as detailed):   Performance-based payments (PBP) are contract-financing payments that are for non-commercial purchases that are not payments for accepted items.    They are also: ·        Fully recoverable in the event of default ·        Not to be used when other forms of contract financing are provided ·        Treated like progress payments for Government accounting purposes ·        Not subject to interest penalty provisions of prompt payment ·        Preferred financing method when the contracting officer finds them practical and the contractor agrees to their use ·        Used on definitized fixed-price type contracts 2.      How much will the Government pay the contractor for completing Hovercraft Event 2?  How much for Production tooling Event 1? Remember PBP payments are capped at 90% of the value of the line item or contract value. Hovercraft Event 2 (Receipt of aft pressure bulkhead details) Payment = 15% (event value) x $10M (unit price) = $1.5 million per hovercraft, or a maximum of $22.5 million for all 15 units Production Tooling Event 1 (Completion of main gear tooling).  Payment = 30% (event value) x 15M = $4.5 million 3.      What type of contract pricing arrangement exists for this contract?  How do you know? This is a fixed price type pricing arrangement.  How do you know?  By regulation, only fixed-price, non-commercial contracts are eligible for Performance Based Payments.  [FAR 32.1000] 4.      The contract will indicate that all contractor billings be reviewed and approved before payment is made.  Describe/summarize the process. Ultimately the Government contracting officer (ACO) will review and approve the payment request.  The review/approval follows verification/confirmation [by the designated Government representative (e.g. COR, COTR, QAR)] that the milestone event criteria have been met.  The ACO then forwards documentation to the payment office, which authorizes the payment to be made. 5.      Why does it matter whether an event is severable or cumulative? The criteria may be severable or cumulative.  A Severable event, or criterion, is independent of the accomplishment of any other event or criterion.  Successful accomplishment of a cumulative event or criterion is dependent upon the previous accomplishment of another event.  It matters because with cumulative events you can only authorize payment after the contractor completes a prior event or events.  Severable means the event can stand-alone when it comes to payment.  Payment for a severable event is not dependent on successful completion of any prior event. 6.      What are some of the financial and performance risks for the Government and the contractor when PBPs are used? For the contractor PBPs present a great financial risk to since no payments are made until designated payment milestone events are achieved.  Progress payments are a greater financial risk to the Government.  Administration is more complex, there’s more oversight involved and the potential for erroneous payments is greater.  Progress payments present an overall greater performance risk to the Government since that type of financing is based on contractor costs incurred, and not necessarily actual progress on the work.  A contractor is more motivated to perform if payments are directly tied to achieving specific performance milestones.  The performance events must be appropriate or the Government may end up paying for events that are not of TRUE value.  Also, you must avoid agreeing to events that are functionally “advance payments.” 7.      What is meant by the term “liquidation rate” and how does the Government accomplish it? Liquidation is how the Government recoups the money paid out in this financing arrangement.  Money is held back when the contractor invoices to account for financing payments already made. 8.      What is a contractor’s motivation to accept PBPs rather than progress payments?  Explain. PBPs may result in improved cash flow to contractor.  The timing of payments (cash flow) is critically important due to the time value of money.  PBPs can be valued up to 90% of price of line item or total contract versus the customary rate of 80% (large businesses) for progress payments.  Also, unlike the case with progress payments, profit may be included. ·        Reduced oversight and compliance costs since specialized accounting systems are not required. ·        Management team focus on technical and schedule; Encourages contractor management team to be involved in program’s progress. 9.      What are the benefits of Performance Based Payments to the Government? ·        10. What are the potential Enhanced technical and schedule focus ·        Reduced oversight and compliance costs ·        Reduced risk of overpayment ·        Reinforced roles of program managers and Integrated Product Teams   shortcomings (problems) associated with using PBPs? ·        Poorly defined event schedules ·        Ill-defined performance criteria ·        Event dependence not shown ·        Contractor must agree to use PBPs ·        Properly assessing “value” to the individual performance events. Performance-Based Payment Exercise Exercise 5.4 Performance-Based Payment Questions 1.      Do you think it was appropriate to use PBPs for this effort?  Explain. 2.      How much will the Government pay the contractor for completing Hovercraft Event 2?  How much for Production tooling Event 1? 3.      What type of contract pricing arrangement exists for this contract?  How do you know? 4.      The contract will indicate that all contractor billings be reviewed and approved before payment is made.  Describe/summarize the process. 5.      Why does it matter whether an event is severable or cumulative? 6.      What are some of the financial and performance risks for the Government and the contractor when PBPs are used? 7.      What is meant by the term “liquidation rate” and how does the Government accomplish it? 8.      What is a contractor’s motivation to accept PBPs rather than progress payments?  Explain. 9.      What are the benefits of Performance Based Payments to the Government?  10. What are the potential shortcomings (problems) associated with using PBPs? Performance-Based Payment Questions 1.      Do you think it was appropriate to use PBPs for this effort?  Explain. Yes.  Answers will vary, but should point out some of the following: The focus of PBP is to pay for performance not cost; therefore, PBP should either be specifically defined events with entrance and exit criteria or some other objective measurable criteria.   Meets appropriate criteria for use (as detailed):   Performance-based payments (PBP) are contract-financing payments that are for non-commercial purchases that are not payments for accepted items.    They are also: ·        Fully recoverable in the event of default ·        Not to be used when other forms of contract financing are provided ·        Treated like progress payments for Government accounting purposes ·        Not subject to interest penalty provisions of prompt payment ·        Preferred financing method when the contracting officer finds them practical and the contractor agrees to their use ·        Used on definitized fixed-price type contracts 2.      How much will the Government pay the contractor for completing Hovercraft Event 2?  How much for Production tooling Event 1? Remember PBP payments are capped at 90% of the value of the line item or contract value. Hovercraft Event 2 (Receipt of aft pressure bulkhead details) Payment = 15% (event value) x $10M (unit price) = $1.5 million per hovercraft, or a maximum of $22.5 million for all 15 units Production Tooling Event 1 (Completion of main gear tooling).  Payment = 30% (event value) x 15M = $4.5 million 3.      What type of contract pricing arrangement exists for this contract?  How do you know? This is a fixed price type pricing arrangement.  How do you know?  By regulation, only fixed-price, non-commercial contracts are eligible for Performance Based Payments.  [FAR 32.1000] 4.      The contract will indicate that all contractor billings be reviewed and approved before payment is made.  Describe/summarize the process. Ultimately the Government contracting officer (ACO) will review and approve the payment request.  The review/approval follows verification/confirmation [by the designated Government representative (e.g. COR, COTR, QAR)] that the milestone event criteria have been met.  The ACO then forwards documentation to the payment office, which authorizes the payment to be made. 5.      Why does it matter whether an event is severable or cumulative? The criteria may be severable or cumulative.  A Severable event, or criterion, is independent of the accomplishment of any other event or criterion.  Successful accomplishment of a cumulative event or criterion is dependent upon the previous accomplishment of another event.  It matters because with cumulative events you can only authorize payment after the contractor completes a prior event or events.  Severable means the event can stand-alone when it comes to payment.  Payment for a severable event is not dependent on successful completion of any prior event. 6.      What are some of the financial and performance risks for the Government and the contractor when PBPs are used? For the contractor PBPs present a great financial risk to since no payments are made until designated payment milestone events are achieved.  Progress payments are a greater financial risk to the Government.  Administration is more complex, there’s more oversight involved and the potential for erroneous payments is greater.  Progress payments present an overall greater performance risk to the Government since that type of financing is based on contractor costs incurred, and not necessarily actual progress on the work.  A contractor is more motivated to perform if payments are directly tied to achieving specific performance milestones.  The performance events must be appropriate or the Government may end up paying for events that are not of TRUE value.  Also, you must avoid agreeing to events that are functionally “advance payments.” 7.      What is meant by the term “liquidation rate” and how does the Government accomplish it? Liquidation is how the Government recoups the money paid out in this financing arrangement.  Money is held back when the contractor invoices to account for financing payments already made. 8.      What is a contractor’s motivation to accept PBPs rather than progress payments?  Explain. PBPs may result in improved cash flow to contractor.  The timing of payments (cash flow) is critically important due to the time value of money.  PBPs can be valued up to 90% of price of line item or total contract versus the customary rate of 80% (large businesses) for progress payments.  Also, unlike the case with progress payments, profit may be included. ·        Reduced oversight and compliance costs since specialized accounting systems are not required. ·        Management team focus on technical and schedule; Encourages contractor management team to be involved in program’s progress. 9.      What are the benefits of Performance Based Payments to the Government? ·        10. What are the potential Enhanced technical and schedule focus ·        Reduced oversight and compliance costs ·        Reduced risk of overpayment ·        Reinforced roles of program managers and Integrated Product Teams   shortcomings (problems) associated with using PBPs? ·        Poorly defined event schedules ·        Ill-defined performance criteria ·        Event dependence not shown ·        Contractor must agree to use PBPs ·        Properly assessing “value” to the individual performance events.

    62. Role of the COR in Contract Performance Assessment Post award orientation Assessing performance/measures/standard Remedies available to Government Acceptance and payment process Post award orientation Assessing performance/measures/standard Remedies available to Government Acceptance and payment process

    63. Read The Contract!

    64. COR/COTR/QAE Duties/Responsibilities Criteria Cancellation of Appointments

    65. COR Authority COR has specific delegated authority Source of COR authority is the contracting officer per contract Appointment Memorandum (scope and limitations of authority delegated)

    66. COR Appointment Separate delegation made for each contract COR must resign in writing COR cannot delegate responsibilities to his or her replacement New COR must be appointed by the contracting officer in writing

    68. COR Acceptance

    69. Special Agent

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