Brief: Share-in-savings is tough

Share-in-savings contracting can be effective in motivating contractors to generate savings and revenue for their clients, but it's hard to do in the federal government, according to a recent GAO report.

With share-in-savings contracting, the contractor invests in the project upfront and is compensated from the client's savings or increased revenue. Four elements are necessary for success: a clear outcome, such as savings; incentives for both the contractor and the client; baseline and performance metrics; and client commitment.

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