Ramon Jackson on Friday, June 30, 2000 - 10:50 am:
The usual sound advice with one qualification. One of the oft
stated reasons to let an award fee contract is to engage
corporate management's attention. If the nature of the contract
is insignificant in dollar amount or some other feature to the
corporations likely to offer there is no sense in going to the
extra effort in the first place. That is something that should
be in the early analysis of contract type well before the
solicitation hits the CBD.
If an agency has a relatively small dollar effort with no
significant impacts on future agency business, technology or
business experience gains, or other "bait" it is (tools again)
using a nail gun to drive a single nail with way too much
preparation and effort for the job at hand.
Seperately, but I think equally important, the agency must
actually use the award fee. If the contract is worth the effort
in setting up an award fee contract the work must be done to
make it realistic post award. A record of "standard" fees across
a wide range of contracts indicates rote use of the method. I'd
almost go so far to say that it would be unlikely to have
exactly the same award profile as there usually is variance in
actual performance. I suspect an agency has picked a method they
are unwilling to invest the effort to effectively use where all
awards fall in a narrow range.
on Thursday, June 29, 2000 - 11:05 am:
I've been thinking about your request for award fee language
that will motivate contractor corporate management to improve
the support it gives to the division working on your contract.
Here is a question and some thoughts:
Question: How big is your contract/program in terms of the total
sales of the corporation in question?
Thoughts: Unless your contract represents a very
significant share of the contractor's present or prospective
sales, and unless the increment of additional profit that the
the corporate management would earn by changing their behavior
to suit you would be very large, then your incentive is
not likely to change their behavior. Moreover, it is usually
difficult for corporate management to make short term structural
changes in order to reduce indirect cost rates on specific
If the contractor folks working on your contract are encouraging
you to do this, I suggest that (a) they are trying to get you
off their back by pointing the finger (perhaps justifiably) at
their headquarters, or (b) they sincerely believe that changing
the award fee plan would change their management's behavior, in
which case I refer you back to the preceding paragraph.
By the way, if you ask the contractor's management if what I say
is true, they will say no. They will figure that if you don't
already understand know that, then they are not going to be the
ones to burst your bubble. They won't want you going around
saying that they said something like that; it might make them
sound unresponsive, God forbid.
In my opinion, if you allocate any part of your precious award
fee pool to objectives which the people working directly on your
program cannot achieve on their own, then you will be casting
your seeds on stony ground.
If your program represents significant potential sales, of if
NAVSEA is otherwise a very large customer of that contractor,
then a letter from a flag-rank program manager or the NAVSEA
Commander to a high-level corporate executive is likely to have
a much bigger impact on management behavior than an increment of
Ramon Jackson on Friday, June 23, 2000 - 12:26 pm:
Please don't cut and paste. Define your issues and then specify
the goals and behavior you want to see. It wouldn't hurt to also
identify some examples of the types of things you will
definitely hit them on, but be clear that those are just
examples and not the limits of "hits."
From your post an example could be something along the lines of
"Evaluation will be made on the degree to which corporate
management at all levels supports the accomplishment of the
project. Specific evaluation will be made of corporate
management's support of project cost control, timely resource
allocation and availability to government program and contract
management for issue resolution. These are not the exclusive
areas that will be examined as total corporate commitment and
support to project support is expected."
Since a theoretical purpose of an award fee is to get top
management attention it seems a bit odd to me that this wasn't
always explicit. One of the purposes is to get those senior
faces into the brief where they can hear they "did good" or paid
a price. It is also the place where you can look them in the eye
and say that, since they have just taken a small hit for being
asleep and not helping with resources, you are making an
adjustment that will make the price of further dozing painful
enough to awaken anyone.
I hope you have also preserved the ability to adjust award fee
criteria to address specific issues. The most senseless
application is the scheme under which pre-contract criteria are
or can never be tempered for a future period based on track
record. It makes the whole exercise about as sane as someone
buying a specified shoe for their kid for life. It won't fit and
will cause all sorts of problems. I've seen some people who want
to make one set of criteria for all contracts for all periods --
gets to my old saw about hammering screws. While management
criteria probably should look quite similar across the board
they sure shouldn't look the same in all cases.
If this is a problem now, move it up in importance for next
period, if that brings refreshing change keep it, but consider
adjustment in importance for the one after.
on Friday, June 23, 2000 - 09:58 am:
I am looking for award fee
criteria language which can be used to evaluate how the
corporate management supports the divisions/segments of a
company. We have had some difficult times on a major weapon
system development contract due to corporate decisions which
have resulted in both cost (rates) and schedule (resources)
problems at the division level. We would like to be able to let
the corporate leaders know that we are evaluating them as well
as our "direct" partner.