Guidance on Using Incentive and Other Contract Types

Abstract

I am pleased to issue the enclosed, "Guidance on Using Incentive and Other Contract Types." Contract type is just one element of the overall contractor compensation arrangement, which includes contract financing, profit or fee, and incentives, as well as other contract terms and conditions. Selection of the appropriate contract type depends on a multitude of factors and is very situationally dependent. This guidance addresses, in a comprehensive way, the considerations our contracting and acquisition professionals should take into account when selecting and negotiating the most appropriate contract type for a given requirement.