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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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38 sections with “incentives”

  • FAR 16.402-2 Performance incentives.
    (a) Performance incentives may be considered in connection with specific product characteristics (e.g., a missile range, an aircraft speed, an engine thrust, or a vehicle maneuverability) or other specific elements of the contractor's perfo…
  • FAR 48.105 Relationship to other incentives.
    …warded both as value engineering shares and under performance, design-to-cost, or similar incentives of the contract. To that end, when performance, design-to-cost, or similar targets are set and incentivized, the targets of such incentives…
  • FAR 16.402-1 Cost incentives.
    (a) Most incentive contracts include only cost incentives, which take the form of a profit or fee adjustment formula and are intended to motivate the contractor to effectively manage costs. No incentive contract may provide for other incent…
  • FAR 16.402-3 Delivery incentives.
    (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 poss…
  • 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 16.402 Application of predetermined, formula-type incentives.
  • DFARS 216.402 Application of predetermined, formula-type incentives.
  • FAR 52.230-6 Administration of Cost Accounting Standards.
    …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 31.205-6 Compensation for personal services.
    …hod are allowable to the extent they are not otherwise unallowable. (6) Early retirement incentives. An early retirement incentive is an incentive given to an employee to retire early. For contract costing purposes, costs of early retireme…
  • 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 52.248-1 Value Engineering.
    …ll be the sole determiner of the amount of collateral savings. (k) Relationship to other incentives. Only those benefits of an accepted VECP not rewardable under performance, design-to-cost (production unit cost, operating and support cost…
  • FAR 16.202-1 Description.
    …tract in conjunction with an award-fee incentive (see 16.404) and performance or delivery incentives (see 16.402-2 and 16.402-3) when the award fee or incentive is based solely on factors other than cost. The contract type remains firm-fixe…
  • FAR 16.203-1 Description.
    …tment in conjunction with an award-fee incentive (see 16.404) and performance or delivery incentives (see 16.402-2 and 16.402-3) when the award fee or incentive is based solely on factors other than cost. The contract type remains fixed-pri…
  • FAR 16.403 Fixed-price incentive contracts.
    …entive for effective cost control and performance; and (3) If the contract also includes incentives on technical performance and/or delivery, the performance requirements provide a reasonable opportunity for the incentives to have a meanin…
  • FAR 16.405-1 Cost-plus-incentive-fee contracts.
    …the contractor to manage effectively. (2) The contract may include technical performance incentives when it is highly probable that the required development of a major system is feasible and the Government has established its performance o…
  • FAR 37.601 General.
    …d of assessing contractor performance against performance standards; and (3) Performance incentives where appropriate. When used, the performance incentives shall correspond to the performance standards set forth in the contract (see 16.40…
  • FAR 52.244-2 Subcontracts.
    …rice 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 quantify each incentive element, r…
  • DFARS 231.205-18 Independent research and development and bid and proposal costs.
    …ding the simplified acquisition threshold, except for a fixed-price contract without cost incentives. The term also includes a subcontract for an amount exceeding the simplified acquisition threshold, except for a fixed-price subcontract wi…
  • FAR 11.501 Policy.
    …ately or prove. (b) Liquidated damages are not punitive and are not negative performance incentives (see 16.402-2). Liquidated damages are used to compensate the Government for probable damages. Therefore, the liquidated damages rate must …
  • FAR 12.207 Contract type.
    … by this subpart may be used in conjunction with an award fee and performance or delivery incentives when the award fee or incentive is based solely on factors other than cost (see 16.202-1 and 16.203-1). (e) Use of any contract type other…
  • 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 16.101 General.
    … in which the contractor's responsibility for the performance costs and the profit or fee incentives offered are tailored to the uncertainties involved in contract performance.
  • FAR 16.104 Factors in selecting contract types.
    … factor, the Government may choose to assume a greater proportion of risk or it may offer incentives tailored to performance outcomes to ensure timely contract performance. (g) Period of performance or length of production run. In times of…
  • FAR 16.401 General.
    … (ii) discourage contractor inefficiency and waste. (b) When predetermined, formula-type incentives on technical performance or delivery are included, increases in profit or fee are provided only for achievement that surpasses the targets,…
  • FAR 16.404 Fixed-price contracts with award fees.
    …ed in fixed-price contracts when the Government wishes to motivate a contractor and other incentives cannot be used because contractor performance cannot be measured objectively. Such contracts shall establish a fixed price (including norma…
  • FAR 17.105-2 Objectives.
    …for lesser quantities, particularly in cases involving high startup costs. (h) Providing incentives to contractors to improve productivity through investment in capital facilities, equipment, and advanced technology.
  • 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 19.708 Contract clauses.
    …ss, small disadvantaged business, and women-owned small business concerns' subcontracting incentives. They can take many forms, from a fully quantified schedule of payments based on actual subcontract achievement to an award-fee approach em…
  • FAR 35.006 Contracting methods and contract type.
    …eimbursement completion arrangement (see 16.306(d)). When the use of cost and performance incentives is desirable and practicable, fixed-price incentive and cost-plus-incentive-fee contracts should be considered in that order of preference.…
  • FAR 37.602 Performance work statement.
    …ormance standards; (3) Rely on the use of measurable performance standards and financial incentives in a competitive environment to encourage competitors to develop and institute innovative and cost-effective methods of performing the work…
  • FAR 42.709-1 Scope.
    …plies to all contracts in excess of $1 million, except fixed-price contracts without cost incentives or any firm-fixed-price contracts for the purchase of commercial products or commercial services.
  • FAR 42.709-7 Contract clause.
    …all solicitations and contracts over $1 million except fixed-price contracts without cost incentives or any firm-fixed-price contract for the purchase of commercial products or commercial services. Generally, covered contracts are those whi…
  • DFARS 212.102 Applicability.
    …ent, enable DoD to acquire items that otherwise might not have been available, and create incentives for nontraditional defense contractors to do business with DoD. It is not intended to recategorize current other than commercial products o…
  • DFARS 215.404-71-3 Contract type risk and working capital adjustment.
    …onsiderable economic uncertainty; (iii) Incentive provisions (e.g., cost and performance incentives) that place a high degree of risk on the contractor; (iv) FMS sales (other than those under DoD cooperative logistics support arrangements…
  • DFARS 216.401-71 Objective criteria.
    …most appropriate contract type is a multiple-incentive contract containing both objective incentives and subjective award-fee criteria (i.e., cost-plus-incentive-fee/award-fee or fixed-price-incentive/award-fee). (3) See PGI 216.401(e) for…
  • DFARS 219.7100 Scope.
    …as the Program) authorized under 10 U.S.C. 4902. The purpose of the Program is to provide incentives for DoD contractors to assist protégé firms in enhancing their capabilities and to increase participation of such firms in Government and c…
  • DFARS 219.7102 General.
    …ovides this preliminary assessment, which is a benefit of program participation; and (d) Incentives that DoD may provide to mentor firms, which include— (1) Reimbursement for developmental assistance costs through— (i) A separately price…

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.