United States Code
USC most recently checked for updates: Feb 27, 2020
Linking of award and incentive fees to acquisition outcomes
In this section, the term “executive agency” has the same meaning given in section 133 of this title.
The Federal Acquisition Regulation shall provide executive agencies other than the Department of Defense with instructions, including definitions, on the appropriate use of award and incentive fees in Federal acquisition programs.
The regulations under subsection (b) shall—
ensure that all new contracts using award fees link the fees to acquisition outcomes (which shall be defined in terms of program cost, schedule, and performance);
establish standards for identifying the appropriate level of officials authorized to approve the use of award and incentive fees in new contracts;
provide guidance on the circumstances in which contractor performance may be judged to be “excellent” or “superior” and the percentage of the available award fee which contractors should be paid for the performance;
establish standards for determining the percentage of the available award fee, if any, which contractors should be paid for performance that is judged to be “acceptable”, “average”, “expected”, “good”, or “satisfactory”;
ensure that no award fee may be paid for contractor performance that is judged to be below satisfactory performance or performance that does not meet the basic requirements of the contract;
provide specific direction on the circumstances, if any, in which it may be appropriate to roll over award fees that are not earned in one award fee period to a subsequent award fee period or periods;
ensure consistent use of guidelines and definitions relating to award and incentive fees across the Federal Government;
ensure that each executive agency—
collects relevant data on award and incentive fees paid to contractors; and
has mechanisms in place to evaluate the data on a regular basis;
include performance measures to evaluate the effectiveness of award and incentive fees as a tool for improving contractor performance and achieving desired program outcomes; and
provide mechanisms for sharing proven incentive strategies for the acquisition of different types of products and services among contracting and program management officials.
cite as: 41 USC 4711