Hello, my question is for general knowledge but I would like to know how the award fee schedule is usually developed. Is there a calculation to determine the what the fee should be if the target cost are meet?
Because acquisitions vary, you have latitude and flexibility in determining your award fee schedule (quarterly, semi-annually, or annually, etc.) as well how you establish the standards that must be met and/or exceeded to earn award fee.
Key references for CPAF contracts include:
FAR: FAR 16.001 (for definitions associated with award fees), FAR 16.401(e), and FAR 16.405-2.
DFARS: See DFARS 216.401(c) which will bring you to DFARS PGI 216.401(c) which will take you to the DAU Award and Incentive Fee Community of Practice (CoP). However, that link and the name of the COP are out of date; so use this to navigate to the Contract, Cost, Price and Finance COP. This COP should have everything you need including references, articles, examples, and a link to the Cost and Pricing Reference Guide (Launch the Tool and go to Volume 4).
Also follow the guidance at DFARS 216.405-2 and the associated DFARS PGI 216.405-2.
Finally, a great place to search for examples of Award Fee Plans and their associated structures and schedules is SAM.gov, Contract Opportunities, select Solicitation Notice and use “award fee” or “award-fee” in the Keywords box.