Safeguard data-processing system: A cost-plus-award-fee contract for a large software development program

This paper describes the Cost-Plus-Award-Fee (CPAF) contract that has been used to control a major software development effort, amounting to approximately $30 million annually. The amount of the award fee is determined periodically, based on a unilateral judgment of supplier performance. The lessons learned in handling a contract of this type and magnitude are summarized. The cpaf contract has proven to be a good means of ensuring the continued attention of supplier management that is necessary for obtaining high performance on time.