Award-Fee Rule Incentivizes Contractors, DOD Says

Law360, New York (February 16, 2011, 4:45 PM EST) -- The U.S. Department of Defense has issued a final rule revising award-fee incentives for contractors after defending the rule against criticism, including concerns that it would hurt cash flow.

The DOD on Monday unveiled the final rule, amending the Defense Federal Acquisition Regulation Supplement to modify the distribution of awards in award-fee contracts, eliminate provisional award-fee payments and create new guidelines for using objective criteria in measuring contract performance.

Issued preliminarily in April, the new rule, which took effect upon publication, requires that contracting officers withhold...
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