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    I've never heard of 'early progress payments' I checked the DoD Acquisition Strategy template to see what it is looking for, and sure enough, the template says Identify financing methods planned and whether these provisions will be flowed down to subcontractors. Indicate if early progress payments will be traded off for lower prices in negotiations. I wonder if you have ever heard of Early progress payments as directed by the Acq Strat template, or if you make the assumption that this is a form of advanced or unusual. I skimmed through FAR 32 and couldnt find any such thing as early progress payments my thought is that perhaps the template means Advance Payments or Unusual Progress Payments. I wonder if you have heard of early progress payments as directed by the acq strat template, or if you also believe that it is meant to read advanced or unusual payments. Thanks for your help


    Answer

    The acquisition strategy template issued under the April 2011 memo from the Principle Under Secretary of Defense, Mr. Kendall,  reflects the Better Buying Power initiatives set forth in Dr Carter's September 2010 memorandum.  One of those 23 initiatives is direction to "Adjust progress payments to incentivize performance".  It states that DOD should use innovative contract financing methods to incentivize vendors with the time value of money in exchange for lower prices/costs. 

    The basis of negotiations for all fixed
    price type contracts shall be customary progress payments, but after agreement on price, there shall be flexibility for the contractor to propose an alternate payment arrangement for the Government's consideration.  It essentially directs the negotiation of consideration for improved cash flow
    gained by innovative financing.  The term" early progress payments" in the template is a much abbreviated link to this initiative. 

    The most widely
    considered alternative to customary progress payments is performance based
    payments which very clearly and specifically recognizes the time value of money through a reduced contract price.  The DOD performance based payments tool and guidance can be found at
    http://www.acq.osd.mil/dpap/cpic/cp/Performance_based_payments.html  The tool allows the government team to quantify the value of the time value of money achieved through performance based payments in  order to negotiate a
    reduced price, and document the consideration achieved.  In addressing this section of the acquisition strategy, the program team should consider all possible innovations and  alternatives to customary progress payments which
    would result in a lower contract price.


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