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48 CFR · Federal Acquisition Regulation and Defense supplement

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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.

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55 sections with “incentive payment”: the first 40

  • FAR 16.403 Fixed-price incentive contracts.
    (a) Description. A fixed-price incentive contract is a fixed-price contract that provides for adjusting profit and establishing the final contract price by application of a formula based on the relationship of total final negotiated cost to…
  • FAR 52.216-10 Incentive Fee.
    …in 16.307(d), insert the following clause in solicitations and contracts when a cost-plus-incentive-fee contract (other than a facilities contract) is contemplated: Incentive Fee (JUN 2011) (a) General. The Government shall pay the Contra…
  • FAR 52.226-1 Utilization of Indian Organizations and Indian-Owned Economic Enterprises.
    …0240-4000. The BIA will determine the eligibility and notify the Contracting Officer. No incentive payment will be made within 50 working days of subcontract award or while a challenge is pending. If a subcontractor is determined to be an …
  • FAR 52.248-1 Value Engineering.
    …hare in any net acquisition savings realized from accepted VECP's, in accordance with the incentive sharing rates in paragraph (f) below. (b) Definitions. Acquisition savings, as used in this clause, means savings resulting from the applic…
  • DFARS 252.226-7001 Utilization of Indian Organizations, Indian-Owned Economic Enterprises, and Native Hawaiian Small Business Concerns.
    …ome Lands will determine the eligibility and will notify the Contracting Officer. (e) No incentive payment will be made— (1) While a challenge is pending; or (2) If a subcontractor is determined to be an ineligible participant. (f)(1) T…
  • DFARS 216.402-2 Performance incentives.
    (1) See PGI 216.402-2 for guidance on establishing performance incentives. (2) Contracting officers shall ensure requirements about the payment of incentive fees or the imposition of penalties are included in the solicitation for a contrac…
  • FAR 16.406 Contract clauses.
    (a) Insert the clause at 52.216-16, Incentive Price Revision—Firm Target, in solicitations and contracts when a fixed-price incentive (firm target) contract is contemplated. If the contract calls for supplies or services to be ordered under…
  • FAR 19.708 Contract clauses.
    …n solicitations and contracts a clause substantially the same as the clause at 52.219-10, Incentive Subcontracting Program, when a subcontracting plan is required (see 19.702), and inclusion of a monetary incentive is, in the judgment of th…
  • FAR 31.205-6 Compensation for personal services.
    …wable reimbursed relocation costs are allowable under 31.205-35(a)(10).) (f) Bonuses and incentive compensation. (1) Bonuses and incentive compensation are allowable provided the— (i) Awards are paid or accrued under an agreement entered …
  • FAR 48.104-2 Sharing acquisition savings.
    …m payment or as each future contract is awarded. (i) When the instant contract is not an incentive contract, the contractor's share of net acquisition savings is calculated and paid each time such savings are realized. This may occur once,…
  • FAR 52.230-6 Administration of Cost Accounting Standards.
    …al costs of labor or material, described at 16.203-1(a)(2)), and 16.207; (2) Fixed-price incentive contracts and subcontracts where the price is not adjusted based on actual costs incurred (FAR Subpart 16.4); (3) Orders issued under indef…
  • DFARS 215.404-71-3 Contract type risk and working capital adjustment.
    … treat a fixed-price contract with redetermination provisions as if it were a fixed-price incentive contract with below normal conditions. (4) Cost-plus contracts shall not receive the working capital adjustment. (5) These types of contra…
  • FAR 19.705-1 General.
    …of increased subcontracting opportunities in negotiated acquisition by providing monetary incentives such as payments based on actual subcontracting achievement or award-fee contracting (see the clause at 52.219-10, Incentive Subcontracting…
  • FAR 26.102 Policy.
    …forming contracts awarded by Federal agencies. In fulfilling this requirement, the Indian Incentive Program allows an incentive payment equal to 5 percent of the amount paid to a subcontractor in performing the contract, if the contract so …
  • FAR 32.503-6 Suspension or reduction of payments.
    … price used in progress payment computations (the current ceiling price under fixed-price incentive contracts) to include the not-to-exceed amount for any pending change orders and unpriced orders. (ii) Divide the revised contract price by…
  • FAR 32.604 Demand for payment.
    …lty. (4)(i) For debts resulting from specific contract terms (e.g., debts resulting from incentive clause provisions, Quarterly Limitation on Payments Statement, Cost Accounting Standards, price reduction for defective pricing), a notifica…
  • FAR 48.102 Policies.
    …ring procedures and processes. Agencies shall provide contractors a substantial financial incentive to develop and submit VECP's. Contracting activities will include value engineering provisions in appropriate supply, service, architect-eng…
  • FAR 52.216-16 Incentive Price Revision—Firm Target.
    As prescribed in 16.406(a), insert the following clause: Incentive Price Revision—Firm Target (JAN 2022) (a) General. The supplies or services identified in the Schedule as Items ___ [Contracting Officer insert Schedule line item numbers]…
  • FAR 52.216-17 Incentive Price Revision—Successive Targets.
    As prescribed in 16.406(b), insert the following clause: Incentive Price Revision—Successive Targets (JAN 2022) (a) General. The supplies or services identified in the Schedule as Items ___ [Contracting Officer insert line item numbers] a…
  • FAR 52.244-2 Subcontracts.
    …ractor's price objective and the price negotiated; and (G) A complete explanation of the incentive fee or profit plan when incentives are used. The explanation shall identify each critical performance element, management decisions used to …
  • FAR 52.248-3 Value Engineering—Construction.
    …P accepted by the Government under this contract, but shall exclude any value engineering incentive payments to a subcontractor. The Contractor may choose any arrangement for subcontractor value engineering incentive payments; provided, tha…
  • FAR 26.103 Procedures.
    …ns of the contract and the availability of funds, contracting officers shall authorize an incentive payment of 5 percent of the amount paid to the subcontractor. Contracting officers shall seek funding in accordance with agency procedures.
  • FAR 30.604 Processing changes to disclosed or established cost accounting practices.
    …by Executive agency, including any impact the change may have on contract and subcontract incentives, fees, and profits, for each of the following groups: (A) Fixed-price contracts and subcontracts. (B) Flexibly-priced contracts and subco…
  • FAR 30.605 Processing noncompliances.
    …utive agency, including any impact the noncompliance may have on contract and subcontract incentives, fees, and profits, for each of the following groups: (A) Fixed-price contracts and subcontracts. (B) Flexibly-priced contracts and subco…
  • FAR 42.1503 Procedures.
    …itions in the tables 42-1 or 42-2 of this section. (c)(1) When the contract provides for incentive fees, the incentive-fee contract performance evaluation shall be entered into CPARS. (2) When the contract provides for award fee, the awar…
  • DFARS 231.205-6 Compensation for personal services.
    … appropriations. This limitation does not apply to severance payments or early retirement incentive payments. (See 231.205-70(b) for the definitions of “business combination” and “restructuring costs.”) (m)(1) Fringe benefit costs that are…
  • DFARS 231.205-70 External restructuring costs.
    …be allowed include, but are not limited to, severance pay for employees, early retirement incentive payments for employees, employee retraining costs, relocation expense for retained employees, and relocation and rearrangement of plant and …
  • DFARS 234.201 Policy.
    …) DoD applies the earned value management system requirement as follows: (i) For cost or incentive contracts and subcontracts valued at $20,000,000 or more, the earned value management system shall comply with the guidelines in the America…
  • FAR 16.306 Cost-plus-fixed-fee contracts.
    …se present too great a risk to contractors, but it provides the contractor only a minimum incentive to control costs. (b) Application. (1) A cost-plus-fixed-fee contract is suitable for use when the conditions of 16.301-2 are present and, …
  • FAR 16.307 Contract clauses.
    …tract is contemplated. (d) The contracting officer shall insert the clause at 52.216-10, Incentive Fee, in solicitations and contracts when a cost-plus-incentive-fee contract is contemplated. (e)(1) The contracting officer shall insert th…
  • FAR 30.001 Definitions.
    …al costs of labor or material, described at 16.203-1(a)(2)), and 16.207; (2) Fixed-price incentive contracts and subcontracts where the price is not adjusted based on actual costs incurred (Subpart 16.4); (3) Orders issued under indefinit…
  • FAR 30.606 Resolving cost impacts.
    …ecovery of monies by the Government (e.g., due to cost overruns); or (ii) Distortions of incentive provisions and relationships between target costs, ceiling costs, and actual costs for incentive type contracts. (3) When using an alternat…
  • FAR 32.601 General.
    …ulting from contract terms for price redetermination or for determination of prices under incentive type contracts. (2) Price or cost reductions for defective certified cost or pricing data. (3) Financing payments determined to be in exce…
  • FAR 52.215-2 Audit and Records—Negotiation.
    …r data, or in any other form. (b) Examination of costs. If this is a cost-reimbursement, incentive, time-and-materials, labor-hour, or price redeterminable contract, or any combination of these, the Contractor shall maintain and the Contra…
  • FAR 15.203 Requests for proposals.
    …urce actions; (8) Proposal due date and time; and (9) Other relevant information; e.g., incentives, variations in delivery schedule, cost proposal support, and data requirements. (f) Oral RFPs are authorized when processing a written sol…
  • FAR 15.404-1 Proposal analysis techniques.
    … realism analysis. (3) Cost realism analyses may also be used on competitive fixed-price incentive contracts or, in exceptional cases, on other competitive fixed-price-type contracts when new requirements may not be fully understood by com…
  • FAR 16.601 Time-and-materials contracts.
    …. (1) Government surveillance. A time-and-materials contract provides no positive profit incentive to the contractor for cost control or labor efficiency. Therefore, appropriate Government surveillance of contractor performance is required…
  • FAR 17.106-3 Special procedures applicable to DoD, NASA, and the Coast Guard.
    …ure shall be firm-fixed-price, fixed-price with economic price adjustment, or fixed-price incentive. (e) Recurring costs in cancellation ceiling. The inclusion of recurring costs in cancellation ceilings is an exception to normal contract …
  • FAR 22.103-5 Contract clauses.
    … cost-reimbursement contract for operation of vessels is contemplated, or (b) a cost-plus-incentive-fee contract that will provide a swing from the target fee of at least plus or minus 3 percent and a contractor's share of at least 10 perce…
  • FAR 31.204 Application of principles and procedures.
    …contractor that are consistent with this part: (i) Cost-reimbursement. (ii) Fixed-price incentive. (iii) Price redeterminable (i.e., fixed-price contracts with prospective price redetermination and fixed-ceiling-price contracts with retr…

FAR (chapter 1)

DFARS (chapter 2, Defense)

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Rule changes in progress: FAR, DFARS. Terms: glossary.