Award Fee Study Group Report

Section 814(c) of the National Defense Authorization Act (NDAA) for Fiscal Year 2007 required a federally funded research and development center (FFRDC) to assess mechanisms that could ensure an independent evaluation of contractor performance supporting award fee determinations. Specifically, the FFRDC was to assess the advantages of (1) using separate award fee pools controlled by the independent fee determination board and (2) allowing contractor assessments across programs in contrast to their being made solely on the basis of the contractor's performance against the criteria set in the award fee plan. IDA performed the assessment with a study group composed of veteran senior defense acquisition officials. The study group developed a tailored alternative scenario it believed was feasible and satisfied the requirements in the NDAA. Compared to the present award fee process, the proposed change would offer little net benefit at great risk of diluting program management's influence over the contractor's behavior, which would erode rather than improve the effectiveness of the award fee process. Presented as briefing charts with accompanying textual notes. This paper was erroneously issued as a Draft Final under the number P-4276. The correct report number is P-4296. Task no. AH-7-2774. The original document contains color images.