(a) Preference for Performance-Based Payments.—Whenever practicable, payments under section 3801 of this title shall be made using performance-based payments on any of the following bases:(1) Performance measured by objective, quantifiable methods such as delivery of acceptable items, work measurement, or statistical process controls.
(2) Accomplishment of events defined in the program management plan.
(3) Other quantifiable measures of results.
(b) Basis for performance-based payments.—Performance-based payments shall not be conditioned upon costs incurred in contract performance but on the achievement of performance outcomes listed in subsection (a).
(c) Contractor Accounting Systems.—(1) In order to receive performance-based payments, a contractor’s accounting system shall be in compliance with Generally Accepted Accounting Principles, and there shall be no requirement for a contractor to develop Government-unique accounting systems or practices as a prerequisite for agreeing to receive performance-based payments.
(2) Nothing in this chapter shall be construed to grant the Defense Contract Audit Agency the authority to audit compliance with Generally Accepted Accounting Principles.
(d) Payment Amount.—Payments made under section 3801 of this title may not exceed the unpaid contract price.
(e) Eligibility of Nontraditional Defense Contractors.—The Secretary of Defense shall ensure that nontraditional defense contractors and other private sector companies are eligible for performance-based payments, consistent with best commercial practices.
(Added and amended Pub. L. 116–283, div. A, title XVIII, § 1834(a), (c), Jan. 1, 2021, 134 Stat. 4234, 4235.)
Editorial Notes
Codification
The text of subsec. (b) of section 2307 of this title, which was transferred to this section, redesignated as subsecs. (a), (b), (c), and (e), and amended by Pub. L. 116–283, § 1834(c)(1)–(5), (7), was based on Pub. L. 103–355, title II, § 2001(b), Oct. 13, 1994, 108 Stat. 3302; Pub. L. 114–328, div. A, title VIII, § 831(a), Dec. 23, 2016, 130 Stat. 2282.
The text of subsec. (c) of section 2307 of this title, which was transferred to this section, redesignated as subsec. (d), and amended by Pub. L. 116–283, § 1834(c)(1), (6), was based on act Aug. 10, 1956, ch. 1041, 70A Stat. 131; Pub. L. 85–800, § 9, Aug. 28, 1958, 72 Stat. 967; Pub. L. 103–355, title II, § 2001(a)(3), (7), Oct. 13, 1994, 108 Stat. 3301.
Amendments2021—Subsec. (a). Pub. L. 116–283, § 1834(c)(1)–(3), redesignated subsec. (b) of section 2307 of this title as subsec. (a) of this section, struck out par. (1) designation before “Whenever practicable”, substituted “section 3801 of this title” for “subsection (a)” in introductory provisions, and redesignated subpars. (A) to (C) as pars. (1) to (3), respectively. Amendment directing striking out par. (1) designation before “Whenever possible” was executed by striking it out before “Whenever practicable” to reflect the probable intent of Congress. Former pars. (2) to (4) of subsec. (a) redesignated subsecs. (b), (e), and (c), respectively.
Subsec. (b). Pub. L. 116–283, § 1834(c)(2)(B), (4), after redesignation of section 2307(b) of this title as subsec. (a) of this section, redesignated par. (2) of subsec. (a) as subsec. (b), inserted heading, and substituted “subsection (a)” for “paragraph (1)”.
Subsec. (c). Pub. L. 116–283, § 1834(c)(2)(D), (5), after redesignation of section 2307(b) of this title as subsec. (a) of this section, redesignated par. (4) of subsec. (a) as subsec. (c), inserted heading, redesignated subpars. (A) and (B) as pars. (1) and (2), respectively, and realigned margins, and, in par. (2), substituted “this chapter” for “this section”.
Subsec. (d). Pub. L. 116–283, § 1834(c)(1), (6), redesignated subsec. (c) of section 2307 of this title as subsec. (d) of this section and substituted “section 3801 of this title” for “subsection (a)”.
Subsec. (e). Pub. L. 116–283, § 1834(c)(2)(C), (7), after redesignation of section 2307(b) of this title as subsec. (a) of this section, redesignated par. (3) of subsec. (a) as subsec. (e), moved it to the end of the section, and inserted heading.
Statutory Notes and Related Subsidiaries
Effective DateSection and amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed implementation and applicability of existing law, see section 1801(d) of Pub. L. 116–283, set out as an Effective Date of 2021 Amendment note preceding section 3001 of this title.
RegulationsPub. L. 114–328, div. A, title VIII, § 831(b), Dec. 23, 2016, 130 Stat. 2283, provided that: “Not later than 120 days after the date of the enactment of this Act [Dec. 23, 2016], the Secretary of Defense shall revise the Department of Defense Federal Acquisition Regulation Supplement to conform with section 2307(b) of title 10, United States Code [see 10 U.S.C. 3802(a)–(c), (e)], as amended by subsection (a).”