PGI 216.405-2: Cost-plus-award-fee contracts.

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-(1) Although weighted guidelines do not apply per DFARS 216.405-2(3)(ii) when definitizing a contract action, the contracting officer shall, nevertheless, separately assess and document the reduced cost risk on the contract for--
-(i) The period up to the date of definitization; as well as
-(ii) The remaining period of performance (see DFARS 217.7404-6).
-(2) Normally, award fee is not earned when the fee-determining official has determined that contractor performance has been submarginal or unsatisfactory.
-(3) The basis for all award fee determinations shall be documented in the contract file.
-(4) The cost-plus-award-fee contract is also suitable for level of effort contracts where mission feasibility is established but measurement of achievement must be by subjective evaluation rather than objective measurement. See Table 16-1, Performance Evaluation Criteria, for sample performance evaluation criteria and Table 16-2, Contractor Performance Evaluation Report, for a sample evaluation report.
-(5) The contracting activity may--
-(i) Establish a board to-- (A) Evaluate the contractor's performance; and (B) Determine the amount of the award or recommend an amount to the contracting officer; and
-(ii) Afford the contractor an opportunity to present information on its own behalf.+(1) Award-fee pool. The award-fee pool is the total available award fee for each evaluation period for the life of the contract. The contracting officer shall perform an analysis of appropriate fee distribution to ensure at least 40 per cent of the award fee is available for the final evaluation so that the award fee is appropriately distributed over all evaluation periods to incentivize the contractor throughout performance of the contract. The percentage of award fee available for the final evaluation may be set below 40 per cent if the contracting officer determines that a lower percentage is appropriate, and this determination is approved by the head of the contracting activity (HCA). The HCA may not delegate this approval authority.
+(2) Award-fee evaluation and payments. Award-fee payments other than payments resulting from the evaluation at the end of an award-fee period are prohibited. (This prohibition does not apply to base-fee payments.) The fee-determining official's rating for award-fee evaluations will be provided to the contractor within 45 calendar days of the end of the period being evaluated. The final award-fee payment will be consistent with the fee-determining official's final evaluation of the contractor's overall performance against the cost, schedule, and performance outcomes specified in the award-fee plan.
+(3) Limitations.
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+(i) The cost-plus-award-fee contract shall not be used-- (A) To avoid--
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+(1) Establishing cost-plus-fixed-fee contracts when the criteria for cost-plus-fixed-fee contracts apply; or
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+(2) Developing objective targets so a cost-plus-incentive-fee contract can be used; or (B) For either engineering development or operational system development acquisitions that have specifications suitable for simultaneous research and development and production, except a cost-plus-award-fee contract may be used for individual engineering development or operational system development acquisitions ancillary to the development of a major weapon system or equipment, where--
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+(1) It is more advantageous; and
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+(2) The purpose of the acquisition is clearly to determine or solve specific problems associated with the major weapon system or equipment.
+(ii) Do not apply the weighted guidelines method to cost-plus-award-fee contracts for either the base (fixed) fee or the award fee.
+(iii) The base fee shall not exceed three percent of the estimated cost of the contract exclusive of the fee.
+(4) See PGI 216.405-2 for guidance on the use of cost-plus-award-fee contracts.