# AFARS PART 5116

- Subpart 5116.2 -- Fixed-Price Contracts

- 5116.203 -- Fixed-price contracts with economic price adjustment.

- 5116.203-4 -- Contract clauses.

- Subpart 5116.4 -- Incentive Contracts.

- 5116.405 -- Cost-reimbursement incentive contracts.

- 5116.405-2 -- Cost-plus-award-fee contracts.

- Subpart 5116.5 – Indefinite-Delivery Contracts

- 5116.505 Ordering.

- 5116.505-90 -- Multiple Award Task Order Contracts.

- Subpart 5116.6 -- Time-and-Materials, Labor-Hour, and Letter Contracts

- 5116.601-90 -- Payments.

- 5116.603 -- Letter contracts.

- 5116.603-2 -- Application.

AFARS -- Part 5116
Types of Contracts

Subpart 5116.2 -- Fixed-Price Contracts

5116.203 -- Fixed-price contracts with economic price adjustment.

5116.203-4 -- Contract clauses.

(d) (2) See 5101.304(a)(4).

Subpart 5116.4 -- Incentive Contracts.

(S-90) Section 814 of the 2007 National Defense Authorization Act requires the collection of relevant data on award and incentive fees paid to contractors. Data shall be collected for contracts containing award or performance incentive provisions that :

(1) have an estimated contract value (including options) greater than $50M at the end of the reporting period; and

(2) For which an award fee determination or payment of a performance or delivery incentive(s) were made during the semi-annual period for which the data is collected.

(S-91) The semi-annual periods for collecting data are the six month periods ending June 30 and December 31 of each year.

(1) Data shall be provided through the Office of the Deputy Assistant Secretary of the Army for Procurement Attn: SAAL-PP, to the Director, Defense Procurement and Acquisition Policy no later than 90 days after the end of the semi-annual reporting period.

(S-92) For contracts meeting the criteria in S-90(1) and (2) above, the data must be formally reviewed and documented at one level above the fee determining official to ensure that the award and performance incentive fees are commensurate with the contractor’s performance under the contract. In addition to the independent review one level above the Fee Determining Official (FDO), the respective Head of the Contracting Activity will formally review the submissions for their organization. This review will entail a determination that the semi-annual award and incentive fee submissions are commensurate with the contractor’s performance under the contract.

[AFARS Revision #25, Item XII, dated April 1, 2010]

5116.405 -- Cost-reimbursement incentive contracts.

5116.405-2 -- Cost-plus-award-fee contracts.

(b) Application.

(2) (A) Award fee, when properly used, is a valuable tool for motivating contractors to improve performance while, at the same time, providing Government personnel an opportunity for close monitoring of the contractor’s performance (technical, management, schedule, and cost). The intended goal of award fee contracting is to motivate the contractor’s performance in those areas critical to program success that are susceptible to measurement and evaluation. By entering into an award fee arrangement, the contracting officer initiates a process that incentivizes a contractor to improve performance and records the Government’s assessment of the contractor’s performance. Once the decision has been made to use an award fee contract, the evaluation plan and organizational structure must be tailored to meet the needs of the particular acquisition. The award fee plan must clearly identify the specific award fee evaluation criteria for assessing contractor performance. The criteria should take into account program risk, as well as be appropriate for the designated award fee period.

(B) The award fee pool is the total of the available award fee dollars for each evaluation period for the life of the contract. Base fee is not earned and is, therefore, paid on a regular basis without the contractor’s performance being evaluated. Since the available award fee during the evaluation period must be earned, the contractor begins each evaluation period with 0% of the available award fee and works up to the evaluated fee for each evaluation period. Contractors do not begin with 100% of the available award fee and have deductions withdrawn to arrive at the evaluated fee for each evaluation period. In addition, contractors should not receive award fee (above the base fee) for simply meeting contract requirements. Earning of award fee should be in accordance with the award fee plan, and should be directly commensurate with the level of performance under the contract. A contractor should not receive the maximum amount of award fee under a contract without a demonstrated superior level of performance, as provided for in the award fee plan. Maximum contract fee is the sum of all fees (not just the award fee) and incentives payable under the contract, including performance and subcontracting incentives.

(C) When an Award Fee Evaluation Board (AFEB) will be used, the Principal Assistant Responsible for Contracting (PARC) or authorized contracting officer must appoint an Award Fee Determining Official (AFDO) in writing, unless the PARC will serve as the AFDO. The AFDO will appoint in writing the AFEB and its chairperson. Such appointment letters will clearly outline the responsibilities and limitations of the AFEB and its chairperson. AFEB membership should consist of those contracting and acquisition management personnel, including contract administration personnel, most knowledgeable of the requirements and contractor performance in the areas to be evaluated. Selection of board members must be coordinated with the Program Executive Officer or other management official responsible for technical requirements. The AFEB chairperson is responsible for ensuring that all AFEB evaluators are sufficiently trained in their responsibilities. AFEBs and AFDOs will document the rationale for their decision(s). The AFDO may alter the AFEB’s recommended award fee; however, it must be documented in sufficient detail to show that the integrity of the award fee determination process has been maintained.

Subpart 5116.5 – Indefinite-Delivery Contracts

5116.505 Ordering.

(b)(6) Each HCA shall designate a task and delivery order ombudsman for the contracting activity. The ombudsman shall be a senior official, who is independent of the contracting officer and may be the Special Competition Advocate. The ombudsman shall be responsible for reviewing complaints from the contractors under multiple award task or delivery order contracts and ensuring that all the contractors are afforded a fair opportunity to be considered, consistent with the procedures in the contract.

[AFARS Revision #25, Item XIII, dated April 1, 2010]

5116.505-90 -- Multiple Award Task Order Contracts.

(a) Requiring documentation and using procedures beyond those required by FAR Part 16.5 adds little or no value to the selection/placement of task orders under Multiple Award Task Order (MATO) contracts. Contracting Officers are admonished to keep submission requirements to a minimum and use streamlined procedures, including oral presentations. [AFARS Revision #11, dated May 4, 2004]

(b) Ordering decisions must be appropriately documented. Critical decisions, such the exception to the fair opportunity process described at FAR 16.505 (b)(2) or the selection of a higher priced proposal because of its greater technical merit, must be documented in sufficient detail to justify the decision.

(c) With the exception of architect-engineer contracts, price shall be considered in the ordering process. While awards should be made on the basis of best value, award decisions shall take price into consideration.

(d) Past performance information, including quality, timeliness, and cost control on earlier orders placed under the same MATO contract, should be considered in the ordering process. Past performance information should already be readily available in program and technical offices. Requests for contractor submission of past performance information with proposal submission under MATO contracts shall be eliminated.

[AFARS Revision #21, dated May 22, 2007]

Subpart 5116.6 -- Time-and-Materials, Labor-Hour, and Letter Contracts

5116.601-90 -- Payments.

The contracting officer must document the contract file with a justification when the five percent withholding of payments required by FAR 52.232-7(a)(2) is reduced or waived.

5116.603 -- Letter contracts.

5116.603-2 -- Application.

(c)(3) PARCs may authorize an additional period subject to the limitations in DFARS 217.7404-3.