CPAF

CPAF contracts are authorized under FAR 16.305 and give the government significant flexibility to reward excellent performance in areas that are difficult to measure objectively — such as management effectiveness, responsiveness, innovation, and quality of deliverables.

How the award fee works:

• Base fee — a small guaranteed fee (often 0–3%) paid regardless of award fee determination
• Award fee pool — the maximum additional fee available, typically 5–10% of estimated cost
• Award Fee Board — a government panel that evaluates contractor performance against criteria defined in the Award Fee Plan
• Evaluation periods — typically semi-annual or annual reviews where the contractor submits a self-assessment and the Board renders a determination

Award fee criteria typically include: technical performance, schedule adherence, management effectiveness, cost control, responsiveness to government direction, and small business utilization.

Rollover: Unearned award fee from one period may or may not roll over to the next, depending on contract terms. Some contracts allow rollover; others do not.

CPAF is common in large defense service contracts — logistics, base operations, systems engineering support — where the government wants ongoing leverage over contractor performance quality. The key for contractors: understand the Award Fee Plan thoroughly and maintain continuous communication with the government's Fee Determining Official.