[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]