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Performance-based payments (PBP) are

a method of contract financing for contractors performing under fixed-price contracts. They differ from the more traditional progress payments in that they are based upon achievement of specific events or accomplishments that are contractually defined and valued in advance.[1]

U.S. government contracting[]

"Performance-based payments are the preferred Government financing method when the contracting officer finds them practical and the contractor agrees to their use. PBPs are not tied to, or based upon, the incurred costs of performance. They cannot be used with fixed price contracts that are awarded using sealed bidding procedures.[2] PBPs are not partial payments, but rather are a means of determining the amount and timing of financing payments. As such, any PBPs that are not liquidated by contract deliveries must be repaid in the event of contract termination."[3]


  1. Defense Acquisition University, ACQuipedia, Performance-Based Payments (full-text).
  2. FAR Part 14.
  3. Defense Acquisition University, ACQuipedia, Performance-Based Payments (full-text).

External links[]

U.S. government contracting: