Jump to content

CPFF versus CPAF


CentContracts

Recommended Posts

While I understand the basis for utilizing a CPAF type contract over a CPFF type contract (reducing risk, adding incentives for the contractor to do a good job), I am confused as to why there is a trend to move away from awarding CPAF contracts and instead use CPFF contracts (I am assuming it is due to administration costs). Specifically, I would like to understand the background/rationale for changing already existing CPAF awards to CPFF awards. Is there any FAR or US Code for this trend? Also, how does one go about determining the allowable fee percentage for the CPFF or is it relatively arbitrary? I've been tasked with making a modification but I want to understand the concept behind the request rather than just make the change "because the customer said so." :)

Link to comment
Share on other sites

CPAF contracts received a lot of criticism lately after their use was examinationed. GAO, IG's, and other oversight groups found in many cases the AF mechanism wasn't used effectively to motivate contractor performance. The studies showed contractors received a large portion of the award fee amount for just doing "satisfactory" work.

The trend is to just negotiate a reasonable fixed fee and forget about justifying and devising standards for execptional performance. In addition, most agencies will take a very critical look at any AF plan and wants to see a comprehensive and critical means of awarding fee.

Lots of guidance exists on determing fee. Do a Google serach of "profit weighted guidelines" and you'll find information from DOD, Energy, Transporation, etc.

Link to comment
Share on other sites

I am confused as to why there is a trend to move away from awarding CPAF contracts and instead use CPFF contracts (I am assuming it is due to administration costs).

Section 814 of the FY2007 National Defense Authorization Act (NDAA), Pub. L. 109-364, required that, in DoD, award fees be linked "to acquisition outcomes (which shall be defined in terms of program cost, schedule, and performance." It also required a number of additional standards and controls on the use and administration of award fee contracts.

Section 867 of the FY2009 NDAA, Pub. L. 110-417, effectively extended most of the Section 814 requirements to civilian agencies.

It's possible that if you've noticed a trend away from CPAF to CPFF, it may be because folks haven't fully figured out how to comply with these "new" requirements yet. Alternatively, it could be viewed that CPFF is just "easier," particularly in light of the fact that AF contracts have been coming under greater scrutiny, thus demanding more time and attention to get things right.

Personally, I doubt it's due to "administration costs," but I have no data or specific information to either prove or disprove that.

Link to comment
Share on other sites

In December 2005, the Government Accountability Office (GAO) issued a report, entitled "DEFENSE ACQUISITIONS: DoD Has Paid Billions in Award and Incentive Fees Regardless of Acquisition Outcomes"( http://www.gao.gov/new.items/d0666.pdf ), which made a number of recommendations on how to improve the use of award fees. Since the publication of this report, the push when using Cost Type contracts had been to stay away from CPAF and CPFF contracts in favor of CPIF. The goal being to link fee to performance outcomes.

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
×
×
  • Create New...