incentive type contract

incentive type contract

A contract that may be of either a fixed price or cost reimbursement nature, with a special provision for adjustment of the fixed price or fee. It provides for a tentative target price and a maximum price or maximum fee, with price or fee adjustment after completion of the contract for the purpose of establishing a final price or fee based on the contractor's actual costs plus a sliding scale of profit or fee that varies inversely with the cost but which in no event shall permit the final price or fee to exceed the maximum price or fee stated in the contract. See also cost contract; fixed price type contract.
Dictionary of Military and Associated Terms. US Department of Defense 2005.
References in periodicals archive ?
Not every company is motivated to control costs with a cost or incentive type contract. I worked in a business unit at a commercial company that made great profit margins on most of our work.
It also provides guidance on determining whether to use an award or incentive type contract.
This approach allows us to accurately track subcontracting accomplishments, which has been useful in our incentive type contracts and also in assessing contract performance in the CPARS (Contractor Performance Assessment Reporting System).