It is not clear, by a review of the regulations only, whether provisional award fee payments are allowed or not allowed on a FPAF contract. But, I agree with your supervisors that you should use DFARS 216.405-2 (2)
as your guidance. I've included the Federal Register Notice, released Feb 14, 2011 at https://acc.dau.mil/CommunityBrowser.aspx?id=652913
that clearly states that DoD is eliminating provisional award fee payments. Unfortunately, I do not think that the resuting language in the DFARS and PGI is clear on FPAF contracts. I have contacted the appropriate specialist on the DFARS Council (DARC) to get clarity. I did not want to hold up my response waiting for the DARC response. I have your name/e-mail/telephone number and will contact you once I hear from the DARC. In the meantime, you should assume that you can not use provisional award fee payments.