Motivate contractors with additional periods of performance.
Agencies use additional periods of performance, known as award term incentives, to motivate vendors to deliver better performance, usually in service contracts with objective performance measures. Award Terms may be awarded using standardized scoring methodologies in performance evaluations and are most impactful when care is taken to guard against grade-inflation, relaxed rating standards and over reliance on subjective performance measures. When used, award terms should be administered separate and distinct from traditional option periods and award fees.
- This practice encourages superior, contractor performance in excess of minimum requirements -- beyond what may typically be incentivized through the exercise of an option. Provides additional means of incentivizing performance on challenging programs or programs involving a heavy investment of capital. Reduces the administrative burden on high-performing contractors in securing additional work while allowing them to build a stronger track record for future competitions.
- Agencies and vendors alike suggest award term incentives may be more motivating than traditional fees
- Motivates higher levels of performance
- Fosters contractor capital investment
- Increases the desirability of the award, thus potentially increasing competition
- Can both reward superior performance and save the agency time and money by spreading out the cycle for re-competition
Award term incentives enable a contractor to become eligible for additional periods of performance under a current contract by achieving prescribed performance measures under that contract. Some have suggested that award terms may be even more impactful than fees in motivating contractors to superior performance. Others have noted that by taking past performance into account in real time, it can both reward superior performance and save the agency time and money by potentially spreading out the cycle for re-competition.
