Running head: GOVERNMENT CONTRACTS
BUS 319 Principles of Federal Acquisition Week 10 Assignment 5: Contract Cost and
Documentation for the Navy
Contract Cost and Documentation for the Navy
Forms of Payment
Progress payments are considered as payments that are made in different parts or stages.
The amount of money to be paid is the same as the initial amount. The only difference is that it is
normally paid in bits. Under the Navy contracts, progress payments are not allowed under costreimbursements contracts made to any subcontractor present in any business enterprise
(Sapolsky, 2014). They are also not allowed under contracts for construction, ship conversion or
ship building, alteration or repair. Progress payments are either unusual or customary. The latter
refers to those contracts made when certain factors such as payment rate, the frequency of
payment and cost base have all been established (Rendon, 2015). Most of the customary progress
payment is normally 80% of the total cost of a given project and must be evaluated by a
contracting officer before it is provided.
Performance-based payments are the most preferred method of payment by most of the
government facilities on any project done by individual contractors. The payments are fully
recoverable similar to progress payments (Rendon, 2015). These forms of contracts are never
subject to interest rate penalties. Partial payments involve paying for a specific amount of money
that lasts to the certain duration of time before paying the other amount. It is more similar to
progress payments but with a smaller degree of payment.
Since the contract involves the renovation of some section of the floor and the floor is
currently not being used the use of partial payments would seem to be the most realistic form of
payment. Progress payments involve more costs for the contractor as well as government.
Performance-based payments are burdensome to administer since they involve place emphasis
on technical progress and schedule (Rendon, 2015). They also reinforce roles of different
government officers such as auditors and accountants meaning at given points specific projects
will be checked o...