Liquidation Rate for Perofrmance-Based Payments

[ji20874]

I looked in several agency FAR supplements, but found no answer -- I hope someone here can help me.

I'm preparing an acquisition using performance-based payments -- the solicitation will include the provision at FAR 52.232-28 Invitation to Propose Performance-Based Payments and the resulting contract will include the clause at FAR 52.232-32 Performance-Based Payments. The acquisition is for an Environmental Impact Statement (EIS), so the work is not severable. We don't want to pay progress payments based on incurred costs because of the administrative trouble of monitoring contractor costs, but we are willing to make fixed milestone payments using performance-based payments.

FAR 32.1004 allows us to make performance-based payments on either a whole contract basis or on a deliverable item basis. We have only one deliverable item (the final EIS), although there are several milestones to getting to the final EIS, so the whole contract basis seems right. FAR 32.1004 ( d ) says "[t]he contracting officer shall specify the liquidation rate . . . in the contract." I looked at several agency FAR supplements to see if agencies have established liquidation rates, but I haven't found any. Does anyone in WIFCON have experience in this matter and can recommend a liquidation rate?

Total contract amount will be about $2 Million, with maybe ten milestones over a two-year period.

[here_2_help]

FAR 32.1004 ( d ) says "[t]he contracting officer shall specify the liquidation rate . . . in the contract." I looked at several agency FAR supplements to see if agencies have established liquidation rates, but I haven't found any. Does anyone in WIFCON have experience in this matter and can recommend a liquidation rate?

Basically I think PBP liquidation works just like liquidation of cost-based progress payments. Here's a link to a previous WIFCON discussion on cost-based progress payment liquidations.

http://www.wifcon.com/discussion/index.php?showtopic=481

Unless your agency specifies a different approach (and you indicated that yours does not), then I would expect that the liquidation rate would be equal to the total percentage of contract price covered by PBPs. For example, if the aggregate value of PBPs equals 88% of the contract price, then your liquidation rate would be 88%.

But to my knowledge, very little about PBP liquidations has been put into writing, just like very little about PBP administration has been put into writing. Between 2002 and 2005 I collected every little thing I could find on PBPs ... I found very little.

Hope this helps.

[ji20874]

Here_2_help,

Thanks!

I'm familiar with progress payments based on cost and the normal liquidation rate of 80%.

Using your thoughts, with PBPs adding up to 90% of total cost, then a 90% liquidation rate is right. Sounds good to me.

[here_2_help]

Using your thoughts, with PBPs adding up to 90% of total cost, then a 90% liquidation rate is right. Sounds good to me.

Sounds good to me, too -- and glad to help. But a little corrrection, just to keep everybody on the straight and narrow.

The limit for PBPs is 90% of total contract (or CLIN) price, not total cost. I don't mean to be overly pedantic, but that extra fee makes a difference.

H2H