Federal incentives for industrial modernization: Historical review and future opportunities

Concerns over the aging of the U.S. aerospace industrial base led DOD to introduce first its Technology Modernization (Tech Mod) Program, and more recently the Industrial Modernization Incentive Program (IMIP). These incentives include productivity shared savings rewards, contractor investment protection to allow for amortization of plant and equipment, and subcontractor/vendor participation. The purpose here is to review DOD IMIP and to evaluate whether a similar program is feasible for NASA and other non-DOD agencies. The IMIP methodology is of interest to industrial engineers because it provides a structured, disciplined approach to identifying productivity improvement opportunities and documenting their expected benefit. However, it is shown that more research on predicting and validating cost avoidance is needed.