National Contract Management Association. Contract Incentives for 21 st Century Warfighting. Alan J. Boykin 7 February 2007. Session Overview. Definition of the Incentive Contract (IC) IC and DoD Leadership Focus Advising the warfighter Key objectives of IC in acquisition planning
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Contract Incentives for
Alan J. Boykin
7 February 2007
IC arrangements are described as appropriate when a firm-fixed-price contract is not appropriate and the required supplies or services can 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.
Over last three years… key messages to reshape
Concept evolution . . .
R I S K
Shared cost risk
Final profit determined share ratio
Costs compared to targets
Profit adjusted for under/overrun
Ceiling price = Max Govt liabilityExamples of IC Application
Fee earned on performance