[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR16.404]

[Page 305]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 16_TYPES OF CONTRACTS--Table of Contents
 
                    Subpart 16.4_Incentive Contracts
 
Sec.  16.404  Fixed-price contracts with award fees.

    (a) Award-fee provisions may be used in fixed-price contracts when 
the Government wishes to motivate a contractor and other incentives 
cannot be used because contractor performance cannot be measured 
objectively. Such contracts shall--
    (1) Establish a fixed price (including normal profit) for the 
effort. This price will be paid for satisfactory contract performance. 
Award fee earned (if any) will be paid in addition to that fixed price; 
and
    (2) Provide for periodic evaluation of the contractor's performance 
against an award-fee plan.
    (b) A solicitation contemplating award of a fixed-price contract 
with award fee shall not be issued unless the following conditions 
exist:
    (1) The administrative costs of conducting award-fee evaluations are 
not expected to exceed the expected benefits;
    (2) Procedures have been established for conducting the award-fee 
evaluation;
    (3) The award-fee board has been established; and
    (4) An individual above the level of the contracting officer 
approved the fixed-price-award-fee incentive.

[62 FR 12696, Mar. 17, 1997]