Not every contract has the same payment terms. Sometimes we pay in full up front. Sometimes we pay upon completion. Sometimes we pay in parts along the way. Those same payment terms can apply to government contracts as well. This episode is not about that.
In government contracting, there’s also another layer in addition to the payment process: the contract funding process can work in the same way. Sometimes the contract is fully funded and sometimes the contract is, you guessed it, “incrementally funded”. That means that the government doles out the funding in bits (sometimes large bits and sometimes small bits) in order for the contractor to keep performing.
In this episode, Kevin and Paul explain what incremental funding is, why it makes sense in some cases (and is not allowed in others), and they provide some keys to effectively manage contracts that use incremental funding. While this concept may not apply to every contract – it seems to be getting more and more common as Congress continues to delay providing a budget each year…which of course can cause a delay in the available funding.