Incentives are employed to induce better performance and may be positive, negative, or a combination of both. They are applied selectively to motivate suppliers and to discourage inefficiency. Incentives apply to the most important aspects of the work, rather than each individual task.
Incentives will vary from contract to contract and are subject to discussion during source selection and negotiations. The incentive structure should reflect both value to the Postal Service for the various performance levels and a meaningful incentive to the supplier. Effective performance incentives reward suppliers for outstanding work, but do not penalize them for fully satisfactory (but less-than-outstanding) work.
