diff --git a/compiler/java/com/google/dart/compiler/DartCompiler.java b/compiler/java/com/google/dart/compiler/DartCompiler.java
index 37b52de956a..748d655c377 100644
--- a/compiler/java/com/google/dart/compiler/DartCompiler.java
+++ b/compiler/java/com/google/dart/compiler/DartCompiler.java
@@ -188,9 +188,10 @@ public class DartCompiler {
       try {
         for (LibraryUnit lib : libraries.values()) {
           LibrarySource libSrc = lib.getSource();
+          boolean libIsDartUri = SystemLibraryManager.isDartUri(libSrc.getUri());
           LibraryUnit apiLib = new LibraryUnit(libSrc);
           LibraryNode selfSourcePath = lib.getSelfSourcePath();
-          boolean persist = !incremental || !apiLib.loadApi(context, context);
+          boolean persist = (!incremental && !libIsDartUri) || !apiLib.loadApi(context, context);
 
           // Parse each compilation unit and update the API to reflect its contents.
           for (LibraryNode libNode : lib.getSourcePaths()) {
@@ -204,7 +205,7 @@ public class DartCompiler {
             }
 
             DartUnit apiUnit = apiLib.getUnit(dartSrc.getName());
-            if (apiUnit == null || isSourceOutOfDate(dartSrc, libSrc)) {
+            if (apiUnit == null || (!libIsDartUri && isSourceOutOfDate(dartSrc, libSrc))) {
               DartUnit unit = parse(dartSrc, lib.getPrefixes());
               if (unit != null) {
                 // if we are visiting the tu
@@ -381,6 +382,12 @@ public class DartCompiler {
       TraceEvent logEvent = Tracer.canTrace() ? Tracer.start(DartEventType.ADD_OUTOFDATE) : null;
       try {
         for (LibraryUnit lib : libraries.values()) {
+
+          if (SystemLibraryManager.isDartUri(lib.getSource().getUri())) {
+            // embedded dart libs are always up to date
+            continue;
+          }
+
           // Load the existing DEPS, or create an empty one.
           LibraryDeps deps = lib.getDeps(context);
 
diff --git a/compiler/java/com/google/dart/compiler/DefaultDartArtifactProvider.java b/compiler/java/com/google/dart/compiler/DefaultDartArtifactProvider.java
index 48bf311655a..42efa0aa68c 100644
--- a/compiler/java/com/google/dart/compiler/DefaultDartArtifactProvider.java
+++ b/compiler/java/com/google/dart/compiler/DefaultDartArtifactProvider.java
@@ -75,7 +75,7 @@ public class DefaultDartArtifactProvider extends DartArtifactProvider {
   public boolean isOutOfDate(Source source, Source base, String extension) {
     if (SystemLibraryManager.isDartUri(base.getUri())) {
       Source bundledSource = getBundledArtifact(source, base, "", extension);
-      if (bundledSource != null) {
+      if (bundledSource != null && bundledSource.exists()) {
         // Note: Artifacts bundled with sources are always up to date
         return false;
       }
@@ -84,9 +84,22 @@ public class DefaultDartArtifactProvider extends DartArtifactProvider {
     return artifactFile.lastModified() < source.getLastModified();
   }
 
+  // TODO(jbrosenberg): remove 'source' argument from this method, it's not used
   protected DartSource getBundledArtifact(Source source, Source base, String part, String extension) {
-    LibrarySource library = libraryOf(base);
-    URI relativeUri = library.getUri().resolve(".").normalize().relativize(base.getUri());
+    LibrarySource library;
+    URI relativeUri;
+    if (base instanceof LibrarySource) {
+      library = (LibrarySource) base;
+      relativeUri = library.getUri().resolve(".").normalize().relativize(base.getUri());
+    } else if (base instanceof DartSource){
+      library = ((DartSource) base).getLibrary();
+      String name = base.getName();
+      URI nameUri = URI.create(name).normalize();
+      relativeUri = library.getUri().resolve(".").normalize().relativize(nameUri);
+    } else {
+      throw new AssertionError(base.getClass().getName());
+    }
+
     DartSource bundledSource;
     if (!relativeUri.isAbsolute()) {
       bundledSource = library.getSourceFor(fullname(relativeUri.getPath(), part, extension));
@@ -96,16 +109,6 @@ public class DefaultDartArtifactProvider extends DartArtifactProvider {
     return bundledSource;
   }
 
-  private LibrarySource libraryOf(Source base) throws AssertionError {
-    if (base instanceof DartSource) {
-      return ((DartSource) base).getLibrary();
-    } else if (base instanceof LibrarySource){
-      return (LibrarySource) base;
-    } else {
-      throw new AssertionError(base.getClass().getName());
-    }
-  }
-
   /**
    * Answer the artifact file associated with the specified source. Only one
    * artifact may be associated with the given extension.
diff --git a/compiler/java/com/google/dart/compiler/UrlSource.java b/compiler/java/com/google/dart/compiler/UrlSource.java
index a59866f2837..67987f4f10c 100644
--- a/compiler/java/com/google/dart/compiler/UrlSource.java
+++ b/compiler/java/com/google/dart/compiler/UrlSource.java
@@ -88,9 +88,6 @@ public abstract class UrlSource implements Source {
 
   @Override
   public long getLastModified() {
-    if (!shouldCareAboutLastModified) {
-      return 0;
-    }
     initProperties();
     return lastModified;
   }