BBP Focus Areas Focus Area: Incentivize Productivity & Innovation in Industry and Government




Reward contractors for successful supply chain and indirect expense management.


Initiative: Align profitability more tightly with Department goals
    • The Department will reassess how it provides incentives to industry so that they are as cost effective as possible at achieving the Department’s goals. The desire is to reward successful contractor performance that has high value to the Department and which might not be achieved without the motivation provided by the incentives. Both basic contract types and special incentive fee structures will be reassessed over the next few months to see if a better alignment can be accomplished.



DocsRelated Documents:




Incentivize Productivity and Innovation in Industry--Capitalize on Progress Payments Structures
(Presentation, 1/12/12)

• Incentivize Productivity and Innovation in Industry--Reward Contractors for Successful Supply Chain and Indirect Expense Management
(Presentation, 1/12/2010)


Initiative: Employ appropriate contract types
    • The original BBP emphasized the use of Fixed Price Incentive (FPI) contracts. In BBP 2.0, we are refining our guidance to emphasize the use of the appropriate contract vehicle for the product or services being acquired. The DFAR and FAR provide for a range of contract types for a reason: one size does not fit all. This initiative will focus on improving the training of management and contracting personnel in the appropriate use of all contract types.


Initiative: Increase use of Fixed Price Incentive contracts in Low Rate Initial Production
    • One phase of acquisition where FPI contracts are particularly appropriate is during the early stages of transition from development to production, low rate initial production (LRIP), particularly the earlier lots of LRIP. We will continue to emphasize the use of FPI during this phase.



DocsRelated Documents:




Incentive Contracting with an Emphasis on Fixed-Price Incentive (Firm Target) (FPI(F)) (Presentation, 11/7/2011)


Initiative: Better define value in “best value” competitions
    • In competitive bidding processes, industry tends to default to threshold performance levels because they are less costly and source selections seldom give predictable credit for performance above threshold. In addition, when the Department buys non-developmental items (NDI) or near-NDI products, it often must select among products with varying levels of performance and with inherent cost differentials. The Department needs to improve its ability to define the value to the Department of performance that is above minimum levels so that it can make appropriate source selections and so that industry can bid intelligently. This will spur innovation by providing a predictable basis by which companies can bid enhanced performance with the knowledge that any increased costs are within an acceptable range.


Initiative: When LPTA is used, define Technically Acceptable to ensure needed quality


Initiative: Institute a superior supplier incentive program
    • This is an item from BBP 1.0 that has not been implemented. The Navy is currently developing a pilot program for DoD, with the intent to recognize and reward contractors who demonstrate superior performance by focusing on cost, schedule, performance, quality, and responsiveness. The program will be initiated in the next few months.


Initiative: Increase use of Performance-based Logistics
  • There is sufficient data on the effectiveness of PBL at reducing cost and improving support performance to conclude that if it is effectively implemented and managed, PBL yields significant benefits. Key activities include increasing the knowledge base of PBL through standard processes, tools, and training



DocsRelated Documents:




Performance Based Logistics (PBL) Guidebook (March 2016)

Endorsement of Next-Generation Performance-Based Logistics Strategies (Memo, 5/14/2012)


Initiative: Reduce backlog of DCAA Audits without compromising effectiveness
  • The Department has a significant backlog in both closeout and pre-award audits. DCAA, with the assistance DCMA and DPAP, is increasing audit resources and developing a risk-based process for reducing the audit backlog. We expect to make major gains in reducing audit-associated delays in both contract closeouts and pre-award audits in 2013.


Initiative: Expand programs to leverage industry's IR&D
      • This is an initiative that began under BBP 1.0 and will continue under BBP 2.0. The overall effort requires continued leadership support to keep the momentum going and preserve the progress made over the past year.