FAR and DFARS › DFARS Part 232: Contract Financing › Subpart 232.10
DFARS 232.1001 Policy.
The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.
In plain English
This DFARS section explains that performance-based payments are meant to help contractors cover costs during contract performance, but under 10 U.S.C. 3802(a)(2) they must be tied to achieving performance outcomes rather than costs incurred. It also states that all companies, including nontraditional defense contractors, are eligible for these payments subject to the criteria in 232.1003-70, and sets standard payment terms for when a contractor becomes entitled to payment.
Applies to: Department of Defense contracting officers and contractors eligible for performance-based payments
What it requires
- Contracting officers must use the standard payment terms: the contractor entitlement date specified in the contract, or 14 days after the designated billing office receives a proper request for payment, whichever is later.
Key terms: performance-based payments · nontraditional defense contractors · contractor entitlement date · designated billing office · proper request for payment
Written by AI from this section's text. A guide, not legal advice: the text below rules.
The text
(a) As with all contract financing, the purpose of performance-based payments is to assist the contractor in the payment of costs incurred during the performance of the contract. See PGI 232.1001(a) for additional information on use of performance-based payments. However, in accordance with 10 U.S.C. 3802(a)(2), performance-based payments shall not be conditioned upon costs incurred in contract performance, but on the achievement of performance outcomes. Subject to the criteria in 232.1003-70, all companies, including nontraditional defense contractors, are eligible for performance-based payments, consistent with best commercial practices.
(d) The contracting officer shall use the following standard payment terms for performance-based payments: The contractor entitlement date, if any, specified in the contract, or 14 days after receipt by the designated billing office of a proper request for payment, whichever is later.
Sections it refers to
- 232.1003-70 Criteria for use.
← 232.908 Contract clauses. · 232.1003-70 Criteria for use. →
Rule changes for DFARS Part 232
- Defense Federal Acquisition Regulation Supplement; Technical Amendments ↗ · final rule 2024-07-29 · effective 2024-07-29
Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.