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  • Question

    Can you provide perspective for my requirement? I would send a "first iteration" PWs and an extremely rough Award Fee Plan if attachments were an option. Currently there is no acquisition plan.


    Answer

    Incentive type contracts are certainly a great way to incentivize performance and there are many ways to approach this.  Provided in the link below is the “Comparison of Major Contract Types” chart that provides an overview of each type of contract and when they should be considered.

    One thing to consider is that if these are determined to be commercial services and FAR Part 12 is used, you can only utilize a firm-fixed-price contract or fixed-price contract with economic price adjustment (FAR 12.207 (a)).  A traditional incentive structure may not be appropriate in this case.  A base period and options would be one way to structure the contract under FAR Part 12.  Options would only be exercised if, in accordance FAR 17.207, the contractor’s performance on the contract has been acceptable, e.g., received satisfactory ratings.

    If you are following the procedures in FAR Part 15, you could consider a fixed-price with award fee (FPAF) but this requires a pool of dollars that can be earned based on the government’s subjective and qualitative evaluation of contractor performance.   A FPAF contract is used to motivate contractors for aspects of performance that cannot be measured objectively.  It requires an award-fee strategy approved at a level above the PCO and the establishment of an Award Fee Board.   Award-fee criteria will be linked directly to schedule and performance outcome objectives.

    An alternate strategy may be to look at award-terms.  An award-term incentive is a derivative of the award-fee incentive but instead of rewarding outstanding performance with additional fee, the award-term incentive allows for additional performance periods if the award term criteria, and any stipulated conditions such as need and availability of funds, are met or exceeded.  The award-term incentive is a tool to enhance the government’s ability to establish long-term business relationships that promote sustained outstanding performance.  It is used to incentivizing acquisition outcomes.  The award-term incentive follows the same procedures the award-fee incentives in that it requires an award-term strategy and an Award Term Board.   You should always follow your organizations policy and procedures as it relates to incentive contracting when moving forward with these types of contracts.

    Both Fixed-Price Incentive Firm (FPIF) and Cost plus Incentive Fee (CPIF) are based on incentivizing price/cost, which does not appear to be the issue in your situation.

    Helpful Links:

    Comparison of Major Contract Types Chart

    https://www.dau.edu/tools/t/Comparison-of-Major-Contract-Types-Chart

    Incentives Contracting - - Incentives, Award Fee, Award Term

    https://www.dau.edu/acquipedia/pages/articledetails.aspx#!107

    Guidebook for Performance-Based Services Acquisition - Appendix I (Award Terms)

    https://www.dau.edu/cop/pbl/_layouts/15/WopiFrame.aspx?sourcedoc=/cop/pbl/DAU%20Sponsored%20Documents/PBSA%20Guide.pdf&action=default&DefaultItemOpen=1

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