[Code of Federal Regulations]

[Title 48, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR16.404]



[Page 315-316]

 

            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



[[Page 316]]



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]