Federal Contracting: Application of OMB Guidance Can Improve Use of Award Fee Contracts

Abstract

In December 2007, the OMB Office of Federal Procurement Policy issued guidance to chief acquisition officers and senior procurement executives to review and update their acquisition policies on the appropriate use of incentive fee contracts, which include award fee contracts. The guidance highlighted preferred practices including: (1) linking award fees to acquisition outcomes, such as cost, schedule, and performance results;(2) limiting the use of rollover2 to exceptional circumstances defined by agency policies; (3) designing evaluation factors that motivate excellent contractor performance by making clear distinctions between satisfactory and excellent performance; and (4) prohibiting payments for contractor performance that is judged to be unsatisfactory or does not meet the basic requirements of the contract.3 Further, OMB asked agencies to obtain and share practices in using award fees through an existing Web-based resource. The OMB guidance was developed based on award fee problems that had been identified by GAO and which DOD and NASA had begun to address.

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Document Details

Document Type
Technical Report
Publication Date
Aug 03, 2009
Accession Number
AD1174857

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  • John Hutton

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  • United States Government Accountability Office

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  • Accountability
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