A. PBP Steps
B. Contractor Personnel
C. Government Personnel
1. Defense Contract Management Agency (DCMA)
2. Defense Contract Audit Agency (DCAA)
3. Defense Finance and Accounting Service (DFAS)
PBPs cannot be placed on contract by simply selecting a prescribed FAR clause. PBPs require significant time and effort upfront on both sides to successfully implement.
A PBP arrangement, like all elements that affect price, will not be finalized until completion of negotiations but the parties should never wait for the start of negotiations, to begin the PBP process. Doing so can significantly delay the completion of negotiations and render PBPs impractical to implement at that time.
If the contractor intends to request the use of PBPs, it should inform the Government as soon as possible before submitting a proposal so that preliminary discussions can begin and the Government can explain what information it will require from the contractor. It is most common for the contractor to propose a complete PBP arrangement with proposed events and timing, event completion criteria and event values as the starting point for discussions.
It is recommended that the RFP direct the contactor to provide the proposed PBP arrangement as part of the cost proposal submission.
Even when the contractor has proposed a PBP arrangement, it is important for both parties to understanding the steps that need to be taken and the personnel and organizations that will be involved in the PBP process.
1. Identify PBP events
2. Establish Completion Criteria for Each PBP Event
3. Obtain and Evaluate the Contractor’s Expenditure Profile
4. Establish PBP Event Values
5. Incorporate the PBP Arrangement Into the Contract via Special Provision
Each of these steps will be addressed in detail in the following chapters.
To assist the Government in the evaluation of PBPs, a PBP Evaluation Checklist is included in the Appendix.
The contractor will need involvement of its contracts, program management, technical and financial personnel.
Like the contractor, the Government will also need involvement of its contracts, program management, technical and contract pricing personnel. However, in addition to these “in-house” resources, the Government will likely need support from the following organizations:
1. Defense Contract Management Agency (DCMA)
If DCMA will administer the contract, involvement of its personnel should be considered mandatory. In-plant DCMA personnel should have first-hand knowledge of the contractor’s processes which can be extremely valuable in the identification of valid PBP event candidates and the associated completion criteria. It is critical that PBP completion criteria be clearly understood by those administering the PBPs, including the Administrative Contracting Officer (ACO).
2. Defense Contract Audit Agency (DCAA)
DCAA involvement may be necessary in evaluating the reasonableness of the contractor’s proposed expenditure profile.
3. Defense Finance and Accounting Service (DFAS)
Since DFAS is responsible for the actual payment of funds to the contractor it is important to consider particular DFAS requirements or special instructions when planning a PBP arrangement. Anytime multiple fund citations will be involved, special instructions are probably required. Any DFAS payment issues should be addressed upfront to avoid unnecessary delay in paying the contractor for completed PBP events.
