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Award-Term Incentives

In: Business and Management

Submitted By questioncat
Words 1382
Pages 6
We have just exercised the last option on the current Navy contract and must start the process to re-compete the next contract for this on-going requirement. The new contract will be valued at over $150 million. The current contract is a fixed price award fee, but recently we went to a briefing given by the Air Force on a relatively new type of contract incentive called Award Term and are considering this as an option. There has been much discussion on what type of contract we will use for the re-compete for the follow on contact. In this paper I will cover the background of the award term incentive acquisition, compare different types of contracts, discuss the pros and cons of the award term method, and whether it meets the Competition in Contracting Act (CICA) requirements. If you search the Federal Acquisition Regulation (FAR) for award term incentive, you won’t find it there. It was designed by Mr. Thomas Jordan in 1997 at Kelly Air Force Base. He used it on a task order contract for the Air Force’s Aeronautical Systems Centers award to McDonnell Douglas Corporation for services on the F-15C aircraft. The contract had a seven year base period, which the contractor could extend to 15 years by rendering excellent service. This type of incentive was not in the Federal Acquisition Regulation (FAR), but was comparable to the award-fee incentive-type contract found in the FAR Part 16.405-2 [1]. Acquisitions that have included award term incentives have been conducted by the Air Force, but the National Aeronautics and Space Administration (NASA), the Naval Facilities Engineering Command (NFEC), the Naval Sea Systems Command (NSSC), the Army’s Ft. Drum in New York, and the General Services Administration have all conducted or announced plans to conduct acquisitions that include award term incentives. Those acquisitions include or plan to include provisions...

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