48 CFR § 16.402-4 - 16.402-4 Structuring multiple-incentive contracts.
---
identifier: "/us/cfr/t48/s16.402-4"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "48 CFR § 16.402-4 - 16.402-4 Structuring multiple-incentive contracts."
title_number: 48
title_name: "Federal Acquisition Regulations System"
section_number: "16.402-4"
section_name: "16.402-4 Structuring multiple-incentive contracts."
chapter_number: 1
chapter_name: "FEDERAL ACQUISITION REGULATION"
subchapter_number: "C"
subchapter_name: "CONTRACTING METHODS AND CONTRACT TYPES"
part_number: "16"
part_name: "TYPES OF CONTRACTS"
positive_law: false
currency: "2026-04-05"
last_updated: "2026-04-05"
format_version: "1.1.0"
generator: "[email protected]"
authority: "41 U.S.C. 1121(b); 40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C. chapter 137 legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C. 20113."
regulatory_source: "48 FR 42219, Sept. 19, 1983, unless otherwise noted."
cfr_part: "16"
---
# 16.402-4 16.402-4 Structuring multiple-incentive contracts.
A properly structured multiple-incentive arrangement should—
(a) Motivate the contractor to strive for outstanding results in all incentive areas; and
(b) Compel trade-off decisions among the incentive areas, consistent with the Government's overall objectives for the acquisition. Because of the interdependency of the Government's cost, the technical performance, and the delivery goals, a contract that emphasizes only one of the goals may jeopardize control over the others. Because outstanding results may not be attainable for each of the incentive areas, all multiple-incentive contracts must include a cost incentive (or constraint) that operates to preclude rewarding a contractor for superior technical performance or delivery results when the cost of those results outweighs their value to the Government.