D.C. Mun. Regs. tit. 27, r. 27-2407
Incentive contracts shall include cost incentives, which take the form of a profit or fee adjustment formula. No incentive contract shall provide for other incentives without also providing for a cost incentive.
Except for cost-plus-award- fee contracts, incentive contracts shall include a target cost, a target profit or fee, and a profit or fee adjustment formula that (within the constraints of a price ceiling or minimum and maximum fee) provides for the following:
Technical performance incentives may be considered in connection with specific product characteristics or other specific elements of the contractor's performance.
Technical performance incentives shall be designed to tailor profit or fee to results achieved by the contractor, compared with specified target goals. The contract shall be specific in establishing performance test criteria (such as testing conditions, instrumentation precision, and data interpretation) in order to determine the degree of attainment of performance targets.
The contracting officer may consider delivery incentives when meeting a required delivery schedule is a significant District objective.
The contracting officer shall specify in incentive arrangements the application of the reward-penalty structure in the event of District-caused delays, or other delays beyond the control and without the fault or negligence of the contractor or a subcontractor.
D.C. Mun. Regs. tit. 27, r. 27-2407