Effects of Incentive Contracts in Research And Development a Preliminary Resear

Cover Effects of Incentive Contracts in Research And Development a Preliminary Resear
Effects of Incentive Contracts in Research And Development a Preliminary Resear
Edward Baer Roberts
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This pro- tection is not achievable by other than the best government technical organizations. In theory, performance incentives are designed to accom- plish such safeguards. In practice, however, the problems of establishing and maintaining performance incentives are reported by the government agency to be great.
Although no direct evidence was obtained to explain why a contractor will take a chance of incurring long run penalties caused by poor per- formance, there are several possible explan
...ations. First, the contractor is not directly reducing performance; he is behaving in a way that will merely increase the probability of reduced performance. Short run cost control pressures under the incentive arrangements may be enough to make -li- the gamble appear to be a reasonable one. It is also possible that the contractor (and particularly a subcontractor) may hope that malfunctions will be difficult to trace to him. After the system leaves his control many factors typically arise that are recognized to be outside of the contractor's control.

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