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 technique allows procurement teams to build flexibility into the solicitation to allow for future conversion from one contract type to another, such as from time-and-materials to firm-fixed-price, after award.

Consider this text in your next solicitation: "As appropriate, after award, Labor Hour/Time & Material (T&M) contract line item numbers (CLINs) may be converted to Firm-Fixed Price (FFP) CLINs through mutual agreement of both parties, based on the rates (and labor categories) negotiated at the time of award."