- the awards are paid or accrued under an agreement entered into in good faith between the contractor and the employees before the services are rendered or pursuant to an established plan or policy followed by the contractor so consistently as to imply, in effect, an agreement to make such payment and
- the basis for the award is supported.
Monday, April 18, 2011
Bonuses and Incentive Compensation
Bonuses and incentive compensation plans take many forms. Usually they involve cash payments but might also include stock options, stock appreciation rights, etc, or a combination thereof. The allowability of these costs is covered in FAR 31.205-6 (j). Briefly, the cost principle allows the cost of bonuses and incentive compensation provided they meet the following two criteria;