POLICY AND OVERSIGHT DIVISION (POD)

1. POLICY AND OVERSIGHT DIVISION (POD) COST-PLUS-AWARD-FEE AND COST-PLUS-AWARD-TERM TRAINING DECEMBER 17, 2012

2. FAR 16.401(e)(1) – Award-fee contract is suitable when: • The work to be performed is neither feasible nor effective to devise predetermined objective incentive targets applicable to cost, schedule and technical performance • Meeting the objectives is enhanced by motivating the contractor toward exceptional performance

3. FAR 16.401(e)(1) – Award-fee contract is suitable when: • Need exists for the Government to have flexibility to evaluate performance and conditions under which it was achieved • Additional administrative effort and cost to monitor and evaluate performance are justified by expected benefits in risk and cost benefit analysis in the D&F (FAR 16.401(e)(5)(iii)

4. CAM 1316.1 Section 7.2 – Limitations on use of Incentive Contracts • Must be directly tied to acquisition outcomes such as cost, schedule and performance results • Contractor’s accounting system must be adequate to determine cost data applicable to incentive contract • Providing opportunities to obtain unearned / roll-over fees is prohibited

5. CAM 1316.1 Section 7.2 – Limitations on use of Incentive Contracts • Incentive fees shall not be paid if performance is determined to be below satisfactory or not meeting contract requirements • Incentive contracts may not provide for other incentives without providing a cost incentive or constraint

6. CAM 1316.1 Section 7.3 – Documentation to support use of Incentive Contracts • Justification and Approval • Acquisition Plan • Surveillance Plan • Award-Fee Plan

7. CAM 1316.1 Section 7.3 – Documentation to support use of Incentive Contracts Justification and Approval • Based on findings within Risk and Cost Benefit Analysis • Addresses suitability items in FAR 16.401(e)(1) • Approved by SBPO or delegated HCO • Copy provided to SPE

8. CAM 1316.1 Section 7.3 – Documentation to support use of Incentive Contracts Acquisition Plan • Requires approval by appropriate Bureau or Departmental review board • Shall document analysis of market research • Shall state the desired outcomes, performance requirements, milestones, risks and cost benefits of the contract type

9. CAM 1316.1 Section 7.3 – Documentation to support use of Incentive Contracts Surveillance Plan • Outlines how Government will monitor, control, and mitigate adverse contract performance • Provides assurance of efficient methods and effective cost controls are used • Outlines Government personnel roles and responsibilities in performing surveillance

10. CAM 1316.1 Section 7.3 – Documentation to support use of Incentive Contracts Surveillance Plan • Demonstrates skills and capacity of Government personnel to perform reviews before payment • Plan is signed by COR, Program Manager, and Contracting Officer

11. CAM 1316.1 Section 7.3 – Documentation to support use of Incentive Contracts Award-Fee Plan • Identifies evaluation criteria and how they are linked to acquisition objectives • Describes how contractor performance will be measured against evaluation criteria • Documents adjectival rating and award-fee pool percentages earned

12. CAM 1316.1 Section 7.3 – Documentation to support use of Incentive Contracts Award-Fee Plan • Prohibits award-fee earned when overall cost, schedule and technical performance is below satisfactory • Evaluates contractor performance in stated intervals during contract period of performance

13. CAM 1316.1 Section 7.3 – Documentation to support use of Incentive Contracts Award-Fee Plan • Periodically provides contractor feedback on quality and areas in which improvement is expected • Defines total award-fee pool amount and how it is allocated across each evaluation period

14. QUESTIONS