ABSTRACT. Performance-Based Contracting (PBC) is widely accepted as a useful tool. It is believed that the use of PBC can assist the efficient utilization of the public resources. The objective of this research is to assess the extent of PBC application and the obstacles to applying it in the public procurement systems of developing countries. Interviews and factual analysis of procurement guidelines and contracts are used to collect data for this research. The analysis results indicate that the majority of public organizations have not yet used PBC even though it is allowed by the law. This is due partly to lack of clarity in the procurement laws and lack of capacity to use PBC.

PBC is becoming an interesting topic and draws the attention of many researchers. This is evident in the fact that the number of research outputs has been increasing for the last decade. However, comprehensive and systematic review of previous research indicates that the research outputs pertinent to the topic are limited to specific 14 sectors and areas. More importantly, the research results do not clearly show whether the findings will work in the context of developing countries. This sector and area-specific empirical research outlook hinders the development of a general theoretical framework for PBC.Thus, it confirms that this research area is still under-theorized and needs more research and investigation, especially as regards its applicability in the context of developing countries.