This paper examines the use of profit and contract finance policies as tools to motivate defense contractors to deliver systems that perform as required on time and within budget. It explores three areas where contract outcomes appear to be linked to these policies: the weighted guidelines; incentive contract features; and major sole-source procurement programs. With the weighted guidelines-provisions in the Defense Federal Acquisition Regulation Supplement (DFARS) for determining the base fee specified in a typical DoD acquisition contract-the facilities capital mark-up and its effect on capital investment is examined. Also the effect of contract incentives on cost growth is studied. Finally the economic prize model inherent in major defense acquisitions is re-examined in the context of its incentive effect on system cost. The study conclusions suggest that the incentive tools examined cannot be expected to greatly improve the average performance schedule and cost outcomes for the Defense Department. ; The original document contains color images.