XL EagleIncremental Funding
Incremental Funding. Incremental funding means the government obligates money to a contract in stages rather than funding the whole price up front. Each new increment is added by modification.
Contracts funded this way include a clause that limits the government's payment to the amount funded so far. Contractors usually must give notice when they near the funded amount.
Why it matters to a small contractor
On incrementally funded work, watch the funded total like a hawk. If you keep working past it, you may not get paid for that work.
Example
A $500,000 contract is funded $150,000 at award. The contractor sends notice when costs reach 75 percent of the funded amount, and a $200,000 increment arrives a month later.
Incremental Funding: common questions
Is incremental funding common on fixed-price work?
Less common, but it happens, especially in defense contracts with specific clauses for it.
What if more funds do not come?
The contract may be stopped or terminated, and you are generally paid only up to the funded amount.
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