IMPROVING THE EFFECTIVENESS OF INCENTIVE CONTRACTING
RAND CORP SANTA MONICA CA
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Present defense procurement policy relies heavily on the use of incentive contracts to provide contractors with some inducement to control costs. The intent is to encourage contractors through increased profits toward more efficient performance and improved cost control. This paper identifies the various effects that incentive contracts may have on contract costs, and questions the validity of the cost savings commonly attributed to these contracts. Several possible strategies for improving their effectiveness are also discussed.
- Logistics, Military Facilities and Supplies