48 CFR § 216.402-2 - 216.402-2 Performance incentives.

---
identifier: "/us/cfr/t48/s216.402-2"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "48 CFR § 216.402-2 - 216.402-2   Performance incentives."
title_number: 48
title_name: "Federal Acquisition Regulations System"
section_number: "216.402-2"
section_name: "216.402-2   Performance incentives."
chapter_number: 2
chapter_name: "DEFENSE ACQUISITION REGULATIONS SYSTEM, DEPARTMENT OF DEFENSE"
subchapter_number: "C"
subchapter_name: "CONTRACTING METHODS AND CONTRACT TYPES"
part_number: "216"
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. 1303 and 48 CFR chapter 1."
regulatory_source: "56 FR 36340, July 31, 1991, unless otherwise noted."
cfr_part: "216"
---


# 216.402-2 216.402-2   Performance incentives.

(1) See PGI 216.402-2 for guidance on establishing performance incentives.

(2) Contracting officers shall ensure requirements about the payment of incentive fees or the imposition of penalties are included in the solicitation for a contract for the engineering and manufacturing development or production of a weapon system, including embedded software, if the program manager or comparable requiring activity official exercising program manager responsibilities includes—

(i) Provisions for the payment of incentive fees to the contractor, based on achievement of design specification requirements for reliability and maintainability of weapons systems under the contract; or

(ii) The imposition of penalties to be paid by the contractor to the Government for failure to achieve such design specification requirements (10 U.S.C. 4328).

[71 FR 39007, July 11, 2006, as amended at 84 FR 58333, Oct. 31, 2019; 87 FR 15818, Mar. 18, 2022; 87 FR 76992, Dec. 16, 2022]