Share in savings contracts

Share in savings contracts as pioneered by the US Information Technology Management Reform Act of 1996. The act included provisions for two pilot programmes (including one on share in savings) to test alternative contracting approaches. Share in savings is based on an agreement where the contractor pays the initial cost of implementing a new information technology system and is then paid from the savings generated by the new system. This requires accurate measures of base line costs so that the savings can be determined.