A. Liquidation
B. Title to Property Acquired or Produced by Contractors
The contracting officer must determine whether the event or performance criteria for which the payment is requested have been successfully accomplished in accordance with the contract. The contracting officer shall not approve a PBP unless the specified event or performance criterion has been successfully accomplished in accordance with the contract (FAR 32.1007(d)).
Because PBP is a method of contract financing, every effort should be made to process payment requests as expeditiously as possible.
Contractor PBP requests may not be submitted more often than monthly. This does not mean, however, that a monthly request cannot cover payment for more than one payment event. Payment requests must clearly identify the event or events covered by the monthly submission and must refer to the applicable contract provision so that the amount to be paid can be unambiguously determined.
Payment requests submitted to the reviewing/approving office will be promptly reviewed and either rejected and returned to the contractor or approved and forwarded to the DFAS paying office.
PBPs are financing payments, as opposed to delivery payments. The Government recoups PBPs through deduction of liquidations from payments that would otherwise be due to the contractor for delivery of completed contract items. In the event of termination for default, any unliquidated PBPs must be returned to the Government. The contracting officer must specify the liquidation rates or amounts that will apply to deliveries made during the contract period and include that information in the contract.
B. Title to Property Acquired or Produced by Contractors
Just as with traditional progress payments, when it makes PBPs, the Government takes title to all property acquired or produced under the contract. The purpose of doing so is to protect the Government’s financial interest in the payments made prior to partial or full delivery of the goods or services called for under the contract. When the contract has been fully performed and all deliveries have been made and accepted, title to any property not delivered to the Government reverts to the contractor.
