Arkansas Code
Subchapter 2 - Arkansas Procurement Law
§ 19-11-267. Development and use of performance-based contracts — Findings

(a) The General Assembly finds that:
(1) Performance-based contracts provide an effective and efficient method of monitoring and evaluating the overall quality of services provided; and
(2) The practice of including benchmark objectives that the provider must attain at specific intervals during the term of the contract is an essential requirement for measuring performance.

(b)
(1) A state agency, board, commission, or institution of higher education that enters into a contract under this chapter to procure services that has a contract amount of at least one million dollars ($1,000,000) in a single contract year or a total projected contract amount, including any amendments to or possible extensions of the contract, of at least seven million dollars ($7,000,000) shall use performance-based standards in the contract that are specifically tailored to the services being provided under the contract.
(2) The performance-based standards used under this subsection shall include performance measures based on objective factors.
(3) A state agency, board, commission, or institution of higher education is encouraged to use performance-based standards that are based on objective factors in any other contract in which it would serve the best interest of the state.

(c) A state agency, board, commission, or institution of higher education that enters into a contract with performance-based standards:
(1)
(A) Shall monitor the vendor's performance and adherence to the performance-based standards in the contract.
(B) For state contracts, the Office of State Procurement shall be the state agency that monitors each vendor's performance under this subdivision (c)(1); and

(2) May impose financial consequences, as identified in the contract, on a vendor that is party to a contract with performance-based standards for failure to satisfy the performance-based standards, including without limitation withholding payment or pursuing liquidated damages to the extent allowed by law.

(d)
(1) The State Procurement Director shall promulgate rules necessary to implement and administer this section.
(2) Rules promulgated under this subsection are subject to approval by the Legislative Council or, if the General Assembly is in session, the Joint Budget Committee.

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