Performance-based payments : why have they not been adopted as the preferred method of contract financing?
Oettl, K. Eric.
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The objective of this thesis is to provide a comprehensive analysis of the issues surrounding the use of performance-based payments as a form of contract financing and to determine the major reasons why PBP have not been readily adopted in Department of Defense (DoD) contracts. In order to fully research, analyze, and evaluate the issues surrounding PBP and the reasons why they have not been readily adopted, two separate online surveys were developed and distributed. One survey was disseminated to DoD acquisition workforce personnel such as contracting officers and program managers. The second survey was distributed to contracting, program management, and acquisition personnel within the defense industrial base. Additionally, interviews were conducted with DoD personnel and defense contractors involved with PBP. Analysis led to concluding: training in PBP is inadequate, a lack of coordination exists between the Procuring Contracting Officer (PCO) and Administrative Contracting Officer (ACO) in establishing PBP terms, the PBP payment process needs immediate improvement, and a culture change is still needed with DoD. Recommendations to expand the use of PBP are: develop a comprehensive training program on PBP, encourage the use of Integrated Product Teams (IPTs) in the PBP process, improve the payment process for PBP, and continue the strong push for the expansion of PBP usage.
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