In federal contracts, what is meant by "performance-based contracting"?

Performance-based contracting is a procurement approach that places a strong emphasis on the results and outcomes of the contract rather than merely on the inputs or processes used to achieve those results. By focusing on the achievement of specific outcomes, this method encourages efficiency and innovation from contractors, as they are incentivized to meet or exceed the established performance standards.

The correct answer highlights that performance-based contracting involves a payment system that is contingent upon the results attained under the contract. This means that contractors are compensated based on their success in delivering the agreed-upon services or products, which aligns their interests with those of the federal government seeking effective and efficient procurement solutions.

Other options do not align with the principles of performance-based contracting. For instance, focusing on the quantity of resources used would not necessarily ensure the quality or effectiveness of the outcomes, which is a fundamental aspect of performance-based contracts. Evaluating bidder qualifications, while important in the selection process, does not reflect the core idea of linking payment to performance results. Lastly, a contract type with no performance metrics would contradict the essential characteristic of performance-based contracting that specifically relies on measuring performance to determine success and payment.