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.