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FAR and DFARS › FAR Part 16: Types of Contracts › Subpart 16.4

FAR 16.402-3 Delivery incentives.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section says delivery incentives should be considered when faster delivery than the required schedule is a significant Government objective, and that the Government's primary objectives should be identified. It also requires delivery incentive arrangements to specify how the reward-penalty structure applies to Government-caused delays or other delays beyond the contractor's control and without fault or negligence.

Applies to: Contracting officers and contractors on contracts using delivery incentives

What it requires

  • Consider delivery incentives when improvement from the required delivery schedule is a significant Government objective
  • Determine the Government's primary objectives in the contract
  • Specify in delivery incentive arrangements the application of the reward-penalty structure for Government-caused delays or other delays beyond the contractor's or subcontractor's control and without fault or negligence

Key terms: delivery incentives · required delivery schedule · reward-penalty structure · Government-caused delays · subcontractor

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

(a) Delivery incentives should be considered when improvement from a required delivery schedule is a significant Government objective. It is important to determine the Government's primary objectives in a given contract (e.g., earliest possible delivery or earliest quantity production).

(b) Incentive arrangements on delivery should specify the application of the reward-penalty structure in the event of Government-caused delays or other delays beyond the control, and without the fault or negligence, of the contractor or subcontractor.

Sections that refer to it

← 16.402-2 Performance incentives. · 16.402-4 Structuring multiple-incentive contracts. →

Rule changes for FAR Part 16

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 16.402-3 Delivery incentives · SpendQuery