award fee

A contract fee provision used to motivate a contractor to respond to issues that are assigned and measured periodically.

The contract specifies award fee periods, usually six to nine months long.

The award fee criteria are negotiated prior to the start of the award fee period, providing the buyer flexibility to change the incentive emphasis as the project evolves.

The determination is made unilaterally by the buyer and is not subject to the legal disputes clause provisions.

SOURCE: microsoft project