Chapter 21 - Performance-Based Contracting and Service Level Agreements

21.9.0 Selecting the PBC incentive strategy

Agencies should carefully select procurement and contract administration strategies, methods, and techniques that best provide the proper contract motivations to encourage high-quality supplier performance. One way to accomplish this business goal is to craft procurement strategies that make effective use of incentives. The appropriate selection and use of incentives can “make-or-break” procurement success—especially when acquiring IT services. There are seven broad types of incentives that agencies should consider in developing a performance-based procurement strategy:

• Use of incentive contracts
• Modular strategies
• Options as incentives
• Multiple awards
• Payment strategies
• Value engineering
• Past performance evaluation and recognition