{"data":{"id":"us/48-cfr-1816.402","jurisdiction":"us","citation":"48 CFR 1816.402","heading":"1816.402 Application of predetermined, formula-type incentives. (NASA paragraphs 1, 2 and 3).","body":"When considering the use of a quality, performance, or schedule incentive, the following guidance applies:\n(1) A positive incentive is generally not appropriate unless—\n(i) Performance above the target (or minimum, if there are no negative incentives) level is of significant value to the Government;\n(ii) The value of the higher level of performance is worth the additional cost/fee;\n(iii) The attainment of the higher level of performance is clearly within the control of the contractor; and\n(iv) An upper limit is identified, beyond which no further incentive is earned.\n(2) A negative incentive is generally not appropriate unless—\n(i) A target level of performance can be established, which the contractor can reasonably be expected to reach with a diligent effort, but a lower level of performance is also minimally acceptable;\n(ii) The value of the negative incentive is commensurate with the lower level of performance and any additional administrative costs; and\n(iii) Factors likely to prevent attainment of the target level of performance are clearly within the control of the contractor.\n(3) When a negative incentive is used, the contract must indicate a level below which performance is not acceptable.","path":["Title 48—Federal Acquisition Regulations System","CHAPTER 18—NATIONAL AERONAUTICS AND SPACE ADMINISTRATION","SUBCHAPTER C—CONTRACTING METHODS AND CONTRACT TYPES","PART 1816—TYPES OF CONTRACTS","Subpart 1816.4—Incentive Contracts"],"source_url":"https://www.ecfr.gov/api/versioner/v1/full/2026-08-25/title-48.xml","current_through":"2026-08-25","vintage":"","retrieved_at":"2026-08-27T02:26:29Z","sha256":"3c40b89a94dedde6b6df242c3b3b5ff31b4ec308947cdb20fecdcbec9557e2aa","source_id":"us-cfr","stale":true,"prev":"us/48-cfr-1816.307-70","next":"us/48-cfr-1816.402-2"},"notice":"GroundRules: Original legal text. Not legal advice."}