31 Typical Fee Structure Up to 60% of fee subject to loss due to cost overrun –Cost incentive applied to all vehicles –Overrun near end of program can offset fees retained by the performance of previous vehicles May include schedule incentive –Amount at risk for contractor must be measured against importance of schedule and total cost to Government Must ensure that cost incentive does not reward contractor for meeting or exceeding performance requirements when results outweigh value –Technical performance demonstrated through pre-delivery test requirements May use award fee for subjective evaluation during design/development –Management, Technical, Financial,, Security, Operations, etc.
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