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I am preparing to issue an RFP for a service contract to dismantle, evaluate, pack/crate/transport to another location, reassemble and test some sensitive equipment. I would like to incorporate progress payments based on milestone completion AND would like to incorporate some sort of consequence (% reduction to that line) should contractor fail to meet each milestone. Every step is dependent on the other and several missions are dependent on this move being done properly and timely.

I am finding guidance for construction progress payments and performance-based payments, neither of which seem to be applicable to this requirement. I do not believe that I am prohibited from this approach, but I am seeking guidance and lessons concerning incorporating consequences (% reduction). I do not plan on providing positive incentives besides the fair profit awardee should earn.

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I am preparing to issue an RFP for a service contract to dismantle, evaluate, pack/crate/transport to another location, reassemble and test some sensitive equipment. I would like to incorporate progress payments based on milestone completion AND would like to incorporate some sort of consequence (% reduction to that line) should contractor fail to meet each milestone. Every step is dependent on the other and several missions are dependent on this move being done properly and timely.

I am finding guidance for construction progress payments and performance-based payments, neither of which seem to be applicable to this requirement. I do not believe that I am prohibited from this approach, but I am seeking guidance and lessons concerning incorporating consequences (% reduction). I do not plan on providing positive incentives besides the fair profit awardee should earn.

PBP Performance Based Payment = If all milestone(s) are not completed for a task, no payment is approved. What more incentive would you need.

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I am preparing to issue an RFP for a service contract to dismantle, evaluate, pack/crate/transport to another location, reassemble and test some sensitive equipment. I would like to incorporate progress payments based on milestone completion AND would like to incorporate some sort of consequence (% reduction to that line) should contractor fail to meet each milestone. Every step is dependent on the other and several missions are dependent on this move being done properly and timely.

I am finding guidance for construction progress payments and performance-based payments, neither of which seem to be applicable to this requirement. I do not believe that I am prohibited from this approach, but I am seeking guidance and lessons concerning incorporating consequences (% reduction). I do not plan on providing positive incentives besides the fair profit awardee should earn.

How is your concept different from performance-based payments?

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Guest Vern Edwards

Do you want to make the "progress payment" for each phase provisional upon timely completion of the whole?

When you say want "some sort of consequence," do you mean something like liquidated damages?

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Thank you for your responses. I was under the impression that Performance Based Payments were a type of financing and did not want to use that term incorrectly. Semantics? Progress payments based on accomplishment is what I want--- but this is not a construction K, so I did not want to use "progress payment" terminology incorrectly, either.

We were considering LD's in addiiton to a % reduction to the FFP line item for each day late (not excusable). We don't want the money returned, but we want to emphasize at the RFP stage how critical this whole situation was,-- and that maybe the "not-so-serious" players would drop out of the race and the serious players would prepare their tech proposal accordingly.

However, since this appears to be overkill to some, we will go the usual route of not making final payment until 100% successful completion.

V/r--EB

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Suggest turning this around and using the carrot instead of the stick, by putting a small incentive on each milestone. A milestone should be a complete and usable segment of work, inspected for compliance, quality, and timeliness, each of which carries brownie points.

Thanks for the suggestion. We really don't have the funding for incentives; we barely can get our mission accomplished with current funds.

And, it is my opinion that a fair profit is incentive enough these days for this work.

V/r--EB

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Sounds to me like you are just looking for regular progress payments, the clause 52.232-16 is allowed for construction, commodities, and services. There is not really much difference between the three when it comes down to applying the progress payment.

As a certain percentage of the service is complete to the satisfaction of the contract and government, then allow for payment of that percentage. If the service has not been provided satisfactorily then do not pay for it until it is.

In your case it appears you have the following requirement. Dismantle, evaluate, pack/crate/transport to another location, reassemble and test. So once the item(s) are dismantled then pay for it, evaluated pay for it, etc?..

Obviously you will want to have a mutually agreeable percentage for each activity and some agreement to frequency of billing, i.e. once a month.

With the example given I don?t see a need for LD?s. Remember LD?s are intended to help the government recoupe damages for late delivery. If you are intending to use LD?s in a punitive fashion, that is incorrect.

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Thank you for your responses. I was under the impression that Performance Based Payments were a type of financing and did not want to use that term incorrectly. Semantics? Progress payments based on accomplishment is what I want--- but this is not a construction K, so I did not want to use "progress payment" terminology incorrectly, either.

We were considering LD's in addiiton to a % reduction to the FFP line item for each day late (not excusable). We don't want the money returned, but we want to emphasize at the RFP stage how critical this whole situation was,-- and that maybe the "not-so-serious" players would drop out of the race and the serious players would prepare their tech proposal accordingly.

However, since this appears to be overkill to some, we will go the usual route of not making final payment until 100% successful completion.

V/r--EB

Have you considered using the clause at 52.232-32?

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