§1816.402. Application of predetermined, formula-type incentives. (NASA paragraphs 1, 2 and 3).
48 C.F.R. § 1816.402
When considering the use of a quality, performance, or schedule incentive, the following guidance applies:
A positive incentive is generally not appropriate unless—
Performance above the target (or minimum, if there are no negative incentives) level is of significant value to the Government;
The value of the higher level of performance is worth the additional cost/fee;
The attainment of the higher level of performance is clearly within the control of the contractor; and
An upper limit is identified, beyond which no further incentive is earned.
A negative incentive is generally not appropriate unless—
A target level of performance can be established, which the contractor can reasonably be expected to reach with a diligent effort, but a lower level of performance is also minimally acceptable;
The value of the negative incentive is commensurate with the lower level of performance and any additional administrative costs; and
Factors likely to prevent attainment of the target level of performance are clearly within the control of the contractor.
When a negative incentive is used, the contract must indicate a level below which performance is not acceptable.
Notes, amendments, and revision history
Amendments
[63 FR 12997, Mar. 17, 1998, as amended at 69 FR 21764, Apr. 22, 2004]
Authority
Authority: 51 U.S.C. 20113(a) and 48 CFR chapter 1.
Source
Source: 62 FR 3478, Jan. 23, 1997, unless otherwise noted.
Amendments
[63 FR 12997, Mar. 17, 1998, as amended at 69 FR 21764, Apr. 22, 2004]