Award Fees and Their Relationship to Contract Success

Abstract

Award fee contracts are applicable when objective criteria are neither feasible nor effective. They were heavily used to incentivize contractor performance in the procurement of major defense acquisition programs (MDAPs) until 2005, when the Government Accountability Office (GAO) released Report 06-66. The report caused the Department of Defense to shy away from using award fee contracts, resulting in a usage decrease by 46% in 2007 and 85% in 2008. The purpose of this research is to determine whether a relationship exists between award fee contracts and contract success as measured by earned value management (EVM) or contractor performance ratings. Data was collected from a sample of contracts from a major Navy command. Six contract observations were identified as successful contracts, with one contract being labeled a failure. Further analysis showed a positive correlation between award fee decisions and contractor performance ratings on the successful contracts. Although the findings are encouraging, they were not statistically significant due to the small sample size.

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Document Details

Document Type
Technical Report
Publication Date
Jun 01, 2015
Accession Number
AD1014643

Entities

People

  • Bran Sherman
  • Jonathan Lipscomb

Organizations

  • Naval Postgraduate School

Tags

Communities of Interest

  • Engineered Resilient Systems
  • Human Systems

DTIC Thesaurus Topics

  • Air Force
  • Business Administration
  • Contract Administration
  • Contractors
  • Contracts
  • Department Of Defense
  • Fighter Aircraft
  • Government Procurement
  • Governments
  • Information Retrieval
  • Information Science
  • Management Personnel
  • Military Acquisition
  • Organizational Structure
  • Procurement
  • Public Policy
  • United States Government

Readers

  • Defense Acquisition Program Management
  • Regression Analysis.
  • Technical Research and Report Writing.