File:An investigation of innovative construction contracting methods used by the general services administration (IA aninvestigationo1094510911).pdf

In the last decade, award fee contracts have gained popularity on operations service contracts within the federal government contracting arena. Recently, award fees have been added to fixed-price construction contracts. The objective of award fees in construction contracts is to positively motivate and reward the contractor to perform beyond the standard which is expected and to emphasize areas of management concern. A study of Fixed-Price Award Fee (FPAF) contracts completed by the General Services Administration (GSA) in the Northwest/Arctic Region from 1996 through 2000 was conducted to analyze construction award fee performance and compare them to other fixed-price contracts. The contracts in this study ranged in price from $ 1.3 million to $13.7 million. Our research found that FPAF cost growth was significantly less than other GSA fixed-price construction and repair contracts during the same period. There were no claims filed on the FPAF contracts over the five-year study period. An analysis was also completed on change order rates, change order types, award fee evaluation procedures and benefits. The results of this study demonstrate that the FPAF contracts have performed well and have enticed Contractors to improve their focus on the owner's core concerns. It also indicates that the use of the evaluated bid form and the performance award fee evaluation provide several advantages to the GSA owner.