Fry the bacon until crisp but not burnt.

Remove bacon and crumble.

Chop onion and saute briefly in bacon drippings (just enough to remove the raw flavor and consistency, approx 2 minutes)

Return crumbled bacon to pan.

Add the vinegar, water, salt, sugar, pepper, and mustard to the pan.

Bring to a boil until combined and slightly reduced.

(Optional: add up to 1 Tbsp of flour at this point to thicken)

Pour over potatoes and refrigerate.