10 U.S.C. § 3802 — Payment

(a) Preference for Performance-Based Payments .— Whenever practicable, payments under section 3801 of this title must be made using performance-based payments on any of the following bases: (1) Performance measured by objective, quantifiable methods such as delivery of acceptable items, work measurement, or statistical process controls. (2) Accomplishment of events defined in the program management plan. (3) Other quantifiable measures of results. (b) Basis for performance-based payments .— Performance-based payments must not be conditioned upon costs incurred in contract performance but on the achievement of performance outcomes listed in subsection (a). (c) Contractor Accounting Systems.— (1) In order to receive performance-based payments, a contractor’s accounting system must be in compliance with Generally Accepted Accounting Principles, and there must be no requirement for a contractor to develop Government-unique accounting systems or practices as a prerequisite for agreeing to receive performance-based payments. (2) Nothing in this chapter must be construed to grant the Defense Contract Audit Agency the authority to audit compliance with Generally Accepted Accounting Principles. (d) Payment Amount .— Payments made under section 3801 of this title may not exceed the unpaid contract price. (e) Eligibility of Nontraditional Defense Contractors .— The Secretary of Defense must ensure that nontraditional defense contractors and other private sector companies are eligible for performance-based payments, consistent with best commercial practices.