A cost-plus-award-fee contract is a cost-reimbursement contract that provides for a fee consisting of
(a) a base amount (which may be zero) fixed at inception of the contract and
(b) an award amount, based upon a judgmental evaluation by the Government, sufficient to provide motivation for excellence in contract performance. Cost-plus-award-fee contracts are covered in Subpart 16.4, Incentive Contracts. See 16.401(e) for a more complete description and discussion of application of these contracts. See 16.301-3 and 16.401(e)(5) for limitations.
