Award Fee

An award fee is a pool of additional fee available to a contractor under a cost-plus-award-fee (CPAF) contract based on a periodic evaluation of contractor performance against stated criteria. The Award Fee Determination Official evaluates contractor performance at predetermined intervals and determines the portion of the available award fee pool to be paid. Award fee criteria typically include quality, schedule, cost control, and management effectiveness. Unlike incentive fees tied to specific objective metrics, award fees involve subjective evaluation judgment. The award fee structure includes a base fee (if any) that is fixed and an award fee pool available based on performance ratings. Award fees provide motivation for excellent performance beyond minimum requirements.