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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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23 sections with “performance 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…
  • 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 37.602 Performance work statement.
    (a) A Performance work statement (PWS) may be prepared by the Government or result from a Statement of objectives (SOO) prepared by the Government where the offeror proposes the PWS. (b) Agencies shall, to the maximum extent practicable— …
  • FAR 11.501 Policy.
    …ges clause. Use liquidated damages clauses only when— (1) The time of delivery or timely performance is so important that the Government may reasonably expect to suffer damage if the delivery or performance is delinquent; and (2) The exte…
  • FAR 37.601 General.
    (a) Solicitations may use either a performance work statement or a statement of objectives (see 37.602). (b) Performance-based contracts for services shall include— (1) A performance work statement (PWS); (2) Measurable performance stand…
  • DFARS 215.404-71-3 Contract type risk and working capital adjustment.
    … (1) “No financing” means either that the contract does not provide progress payments or performance-based payments, or that the contract provides them only on a limited basis, such as financing of first articles. Do not compute a working …
  • FAR 16.405-1 Cost-plus-incentive-fee contracts.
    …ost, a target fee, minimum and maximum fees, and a fee adjustment formula. After contract performance, the fee payable to the contractor is determined in accordance with the formula. The formula provides, within limits, for increases in fee…
  • FAR 16.101 General.
    …1) the degree and timing of the responsibility assumed by the contractor for the costs of performance and (2) the amount and nature of the profit incentive offered to the contractor for achieving or exceeding specified standards or goals. …
  • FAR 16.104 Factors in selecting contract types.
    …tiating contract pricing arrangements. It is essential that the uncertainties involved in performance and their possible impact upon costs be identified and evaluated, so that a contract type that places a reasonable degree of cost responsi…
  • FAR 16.401 General.
    …be acquired at lower costs and, in certain instances, with improved delivery or technical performance, by relating the amount of profit or fee payable under the contract to the contractor's performance. Incentive contracts are designed to o…
  • FAR 35.006 Contracting methods and contract type.
    …estimates are sufficient to permit such a preference. The precision with which the goals, performance objectives, and specifications for the work can be defined will largely determine the type of contract employed. The contract type must be…
  • FAR 48.105 Relationship to other incentives.
    …its of an accepted VECP should not be rewarded 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 ince…
  • FAR 52.248-1 Value Engineering.
    …stablished. Instant unit cost reduction means the amount of the decrease in unit cost of performance (without deducting any Contractor's development or implementation costs) resulting from using the VECP on this, the instant contract. If t…
  • FAR 16.403 Fixed-price incentive contracts.
    …st responsibility will provide a positive profit incentive 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 reason…
  • FAR 15.203 Requests for proposals.
    …e alternative line items on other terms and conditions or the requirement (e.g., place of performance or payment and funding requirements) (see 15.206); (3) Information required to be in the offeror's proposal; and (4) Factors and signifi…
  • FAR 16.203-1 Description.
    …ified costs of labor or material that the contractor actually experiences during contract performance. (3) Adjustments based on cost indexes of labor or material. These price adjustments are based on increases or decreases in labor or mate…
  • FAR 16.404 Fixed-price contracts with award fees.
    …nt 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 normal profit) for the effort. This price will be …
  • FAR 52.244-2 Subcontracts.
    …d in FAR Subpart 2.1, entered into by a subcontractor to furnish supplies or services for performance of the prime contract or a subcontract. It includes, but is not limited to, purchase orders, and changes and modifications to purchase ord…
  • DFARS 216.401-71 Objective criteria.
    … officers shall use objective criteria to the maximum extent possible to measure contract performance. Objective criteria are associated with cost-plus-incentive-fee and fixed-price-incentive contracts. (2) When objective criteria exist bu…
  • FAR 12.207 Contract type.
    …ontract types authorized 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…
  • FAR 16.202-1 Description.
    …e a firm-fixed-price contract 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 contrac…
  • FAR 17.105-2 Objectives.
    …e placement and administration of contracts. (d) Substantial continuity of production or performance, thus avoiding annual startup costs, preproduction testing costs, make-ready expenses, and phaseout costs. (e) Stabilization of contracto…
  • FAR 19.708 Contract clauses.
    …omen-owned small business concerns, and is commensurate with the efficient and economical performance of the contract; unless the conditions in paragraph (c)(3) of this section are applicable. The contracting officer may vary the terms of t…

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.