The students should be presented with models of good science projects, so they know what you are looking for. Some schools bring scientists or science educators in to judge the student entries, but this is completely optional. You can give participation certificates just as well. However, your site is limited in the number of projects you can send to the District Science Fair, so you need to figure out a way to decide who goes on. Read here Norm Brooks' suggestion for an approach to judging, and a student generated Science Project Rubric.
Many teachers use a traditional scientific method approach.
It should be made clear to students that working scientists do not always follow such a rigid sequence of steps. On the other hand, for a project of this type, the students should clearly state their question, hypothesis, materials and procedure, present their results and a conclusion summarizing their findings. See the Web Resources below for a variety of models you might wish to use. For me, this is the big question. I want my students to develop their curiousity, and their skill at developing and answering their own questions.