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<p>The purpose of this MBA professional report is to introduce the Truth Revealing Incentive Mechanism (TRIM) as a tool  to help the government obtain more accurate cost estimates and control program costs. The TRIM is an economic mechanism  based on principal-agent relationships that uses incentives to align contractors' interests with those of the Government. The TRIM  combats principal-agent problems by extracting a contractor's true estimated costs. The TRIM is structured so that revealing the  true estimated cost offers the contractor the highest potential fee.  This report describes the principal-agent theory, identifies principal-agent problems in the current DoD contracting  environment, discusses how the TRIM addresses these problems more effectively than traditional cost-reimbursement contracts,  and explains how and where the TRIM can be applied. This report also includes an electronic version of the TRIM in Microsoft  Excel format, as well as a practitioner's guide to help contracting officers use the TRIM.
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<br>Subjects: Information asymmetry.; Principal-agent relationships; information asymmetry; moral hazard; incentives; truth-revealing; incentive mechanism</div>
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<dl><dd>Lewis, Victor Scott</dd>
<dd>Pupich, Daniel William</dd></dl></div>
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