Your browser does not support JavaScript!

Chapter 21 - Performance-Based Contracting and Service Level Agreements

21.9 Selecting the PBC incentive strategy

21.9.3 Options as incentives

An option is the agency’s unilateral right in a contract and within a specified time to purchase, or not to purchase, additional supplies or services or to extend, or not to extend, the term of the contract. To increase supplier incentive and motivation, the solicitation and contract should indicate that the agency’s future decision to exercise contractual options for additional quantities, services, or contract term is contingent on the supplier’s successful performance. The more specific the standards of performance, the more likely the supplier will achieve them because both successful performance evaluation and additional business are at stake.