[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR32.1001]

[Page 679-680]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 32--CONTRACT FINANCING--Table of Contents
 
                Subpart 32.10--Performance-Based Payments
 
Sec. 32.1001  Policy.

    (a) Performance-based payments are the preferred Government 
financing method when the contracting officer

[[Page 680]]

finds them practical, and the contractor agrees to their use.
    (b) Performance-based payments are contract financing payments that 
are not payment for accepted items.
    (c) Performance-based payments are fully recoverable, in the same 
manner as progress payments, in the event of default. Except as provided 
in 32.1003(c), the contracting officer must not use performance-based 
payments when other forms of contract financing are provided.
    (d) For Government accounting purposes, the Government should treat 
performance-based payments like progress payments based on costs under 
subpart 32.5.
    (e) Performance-based payments are contract financing payments and, 
therefore, are not subject to the interest-penalty provisions of prompt 
payment (see subpart 32.9). However, each agency must make these 
payments in accordance with the agency's policy for prompt payment of 
contract financing payments.

[65 FR 16281, Mar. 27, 2000]