10 U.S.C. § 3802

1. (a)Whenever practicable, payments under section 3801 of this title shall be made using performance-based payments on any of the following bases:
   1. (1)Performance measured by objective, quantifiable methods such as delivery of acceptable items, work measurement, or statistical process controls.
   2. (2)Accomplishment of events defined in the program management plan.
   3. (3)Other quantifiable measures of results.
2. (b)Performance-based payments shall not be conditioned upon costs incurred in contract performance but on the achievement of performance outcomes listed in subsection (a).
3. (c)
   1. (1)In order to receive performance-based payments, a contractor’s accounting system shall be in compliance with Generally Accepted Accounting Principles, and there shall 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. (2)Nothing in this chapter shall be construed to grant the Defense Contract Audit Agency the authority to audit compliance with Generally Accepted Accounting Principles.
4. (d)Payments made under section 3801 of this title may not exceed the unpaid contract price.
5. (e)The Secretary of Defense shall ensure that nontraditional defense contractors and other private sector companies are eligible for performance-based payments, consistent with best commercial practices.