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While there are many benefits of using PBC, there are also limitations and instances not appropriate for PBC. Basically, PBC is not:

  • a solution for a poorly defined requirement and/or basis of payment;
  • a solution for a poor relationship between the buyer and seller; and
  • the approach for fixing poor contract.

PBC is not appropriate to be used

  • for short duration contracts where there is limited opportunity to measure contractor’s performance;
  • where there is a limited desire to use this approach because PBC requires an ongoing daily management, hence, commitment of both parties is critical; and
  • newly acquired or fielded systems that have not yet achieved a level of maturity/design stability to support predictable parts forecast and/or estimates of maintenance activities. Early transfer of the performance risk to a commercial provider may result in a higher cost to the Government.
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