Case Study : Kim Smith Inc. Essay

Kim Smith Inc. (KSI) functions under HUB Zone program and has won the Navy contract for flooring services and is ready to bid on a contract, within the bidding process a type of payment must be selected. KSI would benefit most from a performance based contract since the company is new to government contracting, and there is a lot of work to be completed. According to the FAR performance-based payments (PBPs) are a customary method of contract financing that may be available under fixed-price contracts, except for contracts awarded using Sealed Bidding procedures. PBPs differ from the more traditional progress payments based on costs because these contract financing payments are made on the basis of the contractor’s achievement of objective, quantifiably measurable events, results or accomplishments that are defined and valued in the contract prior to performance. Performance-based contracts are paid based on the success of specific, measurable events or accomplishments that are defined within the terms and conditions of the contract and agreed upon by all parties to the contract. Benefits that performance-based contacts offer include the following enhanced technical and schedule focus, reduced cost of oversight, broadened contractor participation and potentially improved cash flow for the contractor. KSI is meant to do multiple floors according to the RFQ, by receiving payments for each successful job the company can prepare for the next job.

When bidding on this contract…