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                            1816.402   Application of predetermined, formula-type incentives. (NASA paragraphs 1, 2 and 3).
        
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NFSPart Number: 1816
        
                  

                                
                  
        NASA Federal Acquisition Regulation Supplement
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1816.402 Application of predetermined, formula-type incentives. (NASA paragraphs 1, 2 and 3).1816.402 Application of predetermined, formula-type incentives. (NASA paragraphs 1, 2 and 3).       When considering the use of a quality, performance, or schedule incentive, the following guidance applies:                    (1)  			A positive incentive is generally not appropriate unless—                    (i)  			Performance above the target (or minimum, if there are no negative incentives) level is of significant value to the Government;          (ii) The value of the higher level of performance is worth the additional cost/fee;          (iii) The attainment of the higher level of performance is clearly within the control of the contractor; and          (iv) An upper limit is identified, beyond which no further incentive is earned.          (2) A negative incentive is generally not appropriate unless—                    (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;          (ii) The value of the negative incentive is commensurate with the lower level of performance and any additional administrative costs; and          (iii) Factors likely to prevent attainment of the target level of performance are clearly within the control of the contractor.          (3) When a negative incentive is used, the contract must indicate a level below which performance is not acceptable.    **Parent topic:**  Subpart 1816.4—Incentive Contracts
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