Other defendants said they planted an AK-47 assault rifle and a shovel by Awad's body to make it look like he was an insurgent planting a bomb.
Pennington testified at his court-martial that he did not shoot Awad but said he helped force the man into a roadside hole and held his hand over his mouth.
The marine, from Mukilteo, Washington, pleaded guilty on Tuesday to kidnapping and conspiracy.
The marine's attorney presented evidence that Pennington suffered psychological trauma during the battle of Fallujah, where two of his friends died.
However, prosecutors argued that Awad's killing was in cold blood and that Pennington had made light of the murder.
"It's been an emotional roller coaster," Deanna Pennington, the soldier's mother, said after sentencing.
"Bobby 'died' in Fallujah. I want to bring him back"
Deanna Pennington, mother of Robert Pennington, US marine
"Bobby 'died' in Fallujah. I want to bring him back," she said.
Murder, larceny and housebreaking charges against Pennington will be dismissed if he completes terms of a plea bargain requiring him to testify for the government and remain on good behaviour.
Pennington was the sixth member of the squad to plead guilty in the case, though one of those troops withdrew his plea ahead of his sentencing.
He was sentenced to a total of 14 years, but the military judge suspended six years and gave credited him for more than a year he has already served.