FAR 16.402-3
Delivery incentives.
(a) Delivery incentives should be considered when improvement from a required delivery schedule is a significant Government objective. It is important to determine the Government’s primary objectives in a given contract ( e.g., earliest possible delivery or earliest quantity production). (b) Incentive arrangements on delivery should specify the application of the reward-penalty structure in the event of Government-caused delays or other delays beyond the control, and without the fault or negligence, of the contractor or subcontractor.
Source: acquisition.gov — FAR
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