Available dates

Dec 18—20, 2019
3 days
Washington, District of Columbia, United States
USD 889
USD 296 per day
Feb 24—26, 2020
3 days
Tysons, Virginia, United States
USD 889
USD 296 per day
May 27—29, 2020
3 days
Washington, District of Columbia, United States
USD 889
USD 296 per day
+2 more options


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About the course

Incentive contracts should be used to motivate contractors to earn more by achieving better performance and controlling costs. When you build a foundation in incentive contracts, you will be able to better drive performance and cost efficiency. You will study the basic principles of profit incentives, considerations in contract type selection, elements of incentive contracts, and the relationship between incentive contracts and government pricing policies.

Learning Objectives

  • Determine if the use of an incentive contract is appropriate
  • Select the best suited incentive contracting arrangement
  • Solicit, evaluate, negotiate, and award incentive contracts
  • Administer an incentive contract

Course Topics

Introduction to Incentive Contracting

  • Basic Principles of Incentive Contracting
  • Selection of Contract Types
  • Elements of Basic Incentive Contract Types
  • Relationships of Incentive Contracting and Pricing Policies

Incentive Contract Negotiation

  • Advance Planning
  • Request For Proposals
  • Estimates and Objectives
  • Proposal Analysis
  • Selection of Contract Types in Research and Development
  • Prenegotiation Objectives
  • Preaward Profit Objectives
  • Special Clauses
  • Trade-Offs in Negotiation
  • Documentation

Cost Incentives

  • Fixed-Price-Incentive—Cost Only
  • Cost-Plus-Incentive-Fee—Cost Only
  • Range of Incentive Effectiveness
  • Graphics—Fixed-Price-Incentive—Cost Only
  • Graphics — Cost-Plus-Incentive-Fee — Cost-Only
  • Broken Share Lines
  • Broken Share Lines—Multiple Incentives
  • Exercises
  • Exercise: Point of Total Assumption
  • Exercise: Share Ratio
  • Exercise: Final Price and Profit
  • Exercise: Range of Incentive Effectiveness
  • Exercise: High and Low Cost Estimates
  • Exercise: Contractor's Fee
  • Exercise: Fixed-Price-Incentive-Fee
  • Exercise: Cost-Plus-Incentive-Fee
  • Exercise: Target Cost v. Most Probable Cost to Perform

Multiple Incentive Contracts

  • Overview
  • Target Cost
  • Multiple Incentive Structuring
  • Performance Structuring (Steps I through IV)
  • Cost-Plus-Incentive-Fee — Multiple Incentives
  • Cost-Performance Structure (Steps V-VII)
  • Conclusion (Seven Steps — Multiple Incentive Structuring)
  • Fixed Price Multiple Incentives
  • Incentive Measurements and Payment
  • Effect of Fixed Overhead on Incentive Sharing Arrangements
  • Exercise: Whirly-Bird Manufacturing

Schedule Incentives

  • Cost-Plus-Incentive-Fee
  • Fixed-Price-Incentive
  • Exercise: Fee Dollar Value

Contract Changes

  • Cost Incentive Changes
  • Multiple Incentive Changes
  • Exercise: Fixed-Priced Incentive Work

Award-Fee and Award-Term Contracts

  • Award-Fee Contracts
  • Award-Term Contracting
  • Exercise: Withholding Base Fee
  • Exercise: Reducing Award Fee
  • Exercise: Termination for Convenience and Award Fee
  • Exercise: Contract Modifications and Award Fee

Who should attend

This course is designed for personnel involved in structuring incentive contracts.

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