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    Far 16.202-1 says that you can have a FFP contract with a delivery incentive per FAR 16.402-3 and that it will remain a FFP contract. I can't find any contract clauses to put in our contract for the delivery incentive. All the incentive clauses seem to be prescribed for incentive, rather than FFP, contracts. Do you know of one that I missed? Thank you!


    Answer

    This is a good question.

    Award Fee

    Let’s tackle the FPAF contract type first. In this case you missed the clause prescribed at DFARS 216.406(e).

    216.406 Contract clauses.

    (e)  Use the clause at 252.216-7004, Award Fee Reduction or Denial for Jeopardizing the Health or Safety of Government Personnel, in all solicitations and contracts containing award-fee provisions.

    The bold italics is added for emphasis.

    Your solicitation and resulting contract will also have an Award Fee Plan, follow the guidance at FAR 16.401(e) and more specifically at FAR 16.401(e)(3) for establishing your Award Fee Plan. The DFARS also has implemental language you must follow at DFARS 216.401(e) and supplemental language you must follow at DFARS 216.401-70. Both of these will take you to DFARS PGI 216.401; specifically, DFARS PGI 216.401(c), DFARS PGI 216.401(e), and DFARS PGI 216.470.

    In addition to the Award Fee Plan, your solicitation and resulting contract will normally have a dedicated Award Fee CLIN(s). That is how you obligate any award fee earned IAW the Award Fee Plan on the contract.

    Incentive without an Award Fee.

    Correct, FAR 16.201-1 states “… The contracting officer may use a firm-fixed-price contract in conjunction with an award-fee incentive (see 16.404) and performance or delivery incentives (see 16.402-2 and 16.402-3) when the award fee or incentive is based solely on factors other than cost. The contract type remains firm-fixed-price when used with these incentives.” Again, bold italics added for emphasis.

    In this situation, there is not a FAR or DFARS clause required. Because you are not using an award fee, you have wide latitude on how you build this incentive into your solicitation. This is normally done via language in your PWS, SOW, A local clause, etc. If it is a service contract, the incentive (or disincentive if that is the case) will be in the PWS and the PRS (and good idea to build it into the QASP how the incentive is determined). Again, you could have a stand alone CLIN for the incentive or you could modify the primary CLIN the work is covered on that has the incentive associated with it.

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