We are currently doing a stand-alone contract which could possibly result in a modification to an existing system. For the stand-alone contract, R&D, the contractor has proposed using performance based payments for financing rather than using progress payments. One of the PBP Events proposed is the CDR. There are established entry and exit criteria and a decision point. Can the CDR be used as a PBP event or does a CDR more align with guidance on meetings? Also, can you provide guidance as to how to evaluate the proposed CDR Event dollar value?
This response is based on the information provided. We suggest you discuss with your contracting team, program manager and/or legal department as appropriate.
A Critical Design Review (CDR) can be used as a milestone in a performance based payments (PBP) environment. This is more than a status meeting, it is a review of progress, work accomplished. The significant challenge is that design reviews are set at some level of completion e.g., PDR conducted @ 65%, CDR conducted @ 95%. The specific percentages are determined by the government program team. The key points to be concerned with are the entry and exit criteria for the CDR. Assuming the contractor had met the entry criteria and conducts the CDR, the government team will identify a number of action items to be completed before the CDR can be deemed to have been completed. The payment upon successful completion of the milestone event (in this example CDR) would be based on completion of all exit criteria of which the action items are a part.
We cannot comment specifically as to an appropriate dollar value without having insight into the overall program costs. We suggest you request as part of the proposal submission an expenditure profile which will give you and your technical team insight into expected contractor costs from which the program team can determine an equitable value for completion of that action item.