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Page 3 of 9 Print 4/10/2014
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Lesson: Monetary Incentives Page 4 of 8 Exceeding Goals in Subcontracting Plan You may encourage contractors to increase subcontracting opportunities for small businesses by providing monetary incentives such as payments based on actual subcontracting achievement. When using this type of incentive, you must ensure that the goals are realistic and any rewards for exceeding the goals are commensurate with the efforts the contractor would not have otherwise expended. You should normally negotiate the incentive provisions after reaching final agreement with the contractor on the subcontracting plan. Providing a monetary incentive is a judgment call after all the information is gathered. You must bear in mind that the funding used for such an incentive will come from program funds since there are not any "pie in the sky" funds available. Bottom line: Do not offer an incentive unless you have the money to pay for it. Reference: FAR 19.705-1, 19.708(c), and 52.219-10 Page 4 of 9 Print 4/10/2014
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Lesson: Monetary Incentives Page 5 of 8 Actions When Incentives Are Included If you determine monetary incentives are appropriate, keep the following in mind as you negotiate with your contractor: Explain that if subcontract goals are exceeded, a percentage (0 to 10) of the dollars in excess of each goal will be received. Make sure this percentage is included in the clause. Negotiate percentage based on the type and extent of effort that would be required for contractor to exceed goal. Ensure that monetary incentives are properly used to encourage the contractor to provide a unique out reach program to utilize targeted groups in non-traditional areas and to provide major technical assistance to the firms. For cost contracts, make sure that the incentive does not exceed the limitations on fee at FAR 15.404 -4(c)(4) . Popup(s): Explain that if subcontract goals are exceeded, a percentage (0 to 10) of the dollars in excess of each goal will be received. SB target is $1.0 million; the contractor achieves $1.5 million. The excess is $500,000; 10 percent of $500,000 is $50,000. $500,000 x .10 = $50,000 Negotiate percentage based on the type and extent of effort that would be required for contractor to exceed goal. Ensure that this amount is commensurate with additional investments, (i.e., funds that the firm would not otherwise have spent for this purpose) necessary to expand the contractor's base of targeted small businesses. Although this percentage is negotiable, you cannot negotiate more than you have funds to cover. Keep in mind, the money comes from program funds and must be available when you include an incentive. Page 5 of 9 Print 4/10/2014
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Lesson: Monetary Incentives Page 6 of 8 Award Fee Incentives You may include SB, VOSB, SDVOSB, HUBZone SB, and WOSB subcontracting as one of the factors to be
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  • Fall '18
  • ClementO.Abrams
  • Government, Cost-plus contract

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