[Federal Register Volume 75, Number 83 (Friday, April 30, 2010)]
[Proposed Rules]
[Pages 22728-22729]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-9881]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 216 and 252
Defense Federal Acquisition Regulation Supplement Award-Fee
Contracts (DFARS Case 2006-D021)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Proposed rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: DoD is proposing to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to address award-fee contracts, including
eliminating the use of provisional award-fee payments.
DATES: Comments on the proposed rule should be submitted to the address
shown below on or before June 29, 2010, to be considered in the
formation of the final rule.
ADDRESSES: You may submit comments, identified by DFARS Case 2006-D021,
using any of the following methods:
[cir] Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
[cir] E-mail: [email protected]. Include DFARS Case 2006-D021 in the
subject line of the message.
[cir] Fax: 703-602-0350.
[cir] Mail: Defense Acquisition Regulations System, Attn: Mr. Mark
Gomersall, OUSD(AT&L)DPAP(DARS), 3060 Defense Pentagon, Room 3B855,
Washington, DC 20301-3060.
Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided.
FOR FURTHER INFORMATION CONTACT: Mr. Mark Gomersall, 703-602-0302.
SUPPLEMENTARY INFORMATION:
A. Background
This DFARS case proposes to revise guidance for award-fee
evaluations and payments and to eliminate the use of provisional award-
fee payments. One new clause is provided as part of this rule to detail
the use of award fees. In addition, this rule incorporates DoD policy
guidance on the use of objective criteria.
This rule was not subject to Office of Management and Budget review
under Executive Order 12866, dated September 30, 1993.
B. Regulatory Flexibility Act
DoD does not expect this rule to have a significant economic impact
on a
[[Page 22729]]
substantial number of small entities within the meaning of the
Regulatory Flexibility Act, 5 U.S.C. 601, et seq. because most
contracts awarded to small entities use simplified acquisition
procedures or are awarded on a competitive fixed-price basis and do not
utilize award-fee type incentives. Therefore, DoD has not performed an
initial regulatory flexibility analysis. DoD invites comments from
small business concerns and other interested parties on the expected
impact of this rule on small entities.
DoD will also consider comments from small entities concerning the
existing regulations in subparts affected by this rule in accordance
with 5 U.S.C. 610. Interested parties must submit such comments
separately and should cite 5 U.S.C. 610 (DFARS Case 2006-D021) in
correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the rule does
not impose any information collection requirements that require the
approval of the Office of Management and Budget under 44 U.S.C. 3501,
et seq.
List of Subjects in 48 CFR Parts 216 and 252
Government procurement.
Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.
Therefore, DoD proposes to amend 48 CFR parts 216 and 252 as
follows:
1. The authority citation for 48 CFR parts 216 and 252 continues to
read as follows:
Authority: 41 U.S.C. 421 and 48 CFR chapter 1.
PART 216--TYPES OF CONTRACTS
2. Add sections 216.401 and 216.401-70 to read as follows:
216.401 General.
(e) Award-fee plans required in FAR 16.401(e) must be incorporated
into all award-fee type contracts.
216.401-70 Objective criteria.
(1) Contracting officers will use objective criteria to the maximum
extent possible to measure contract performance. Objective criteria are
associated with cost-plus-incentive-fee and fixed-price incentive
contracts.
(2) When objective criteria exist but the contracting officer
determines that it is in the best interest of the Government also to
incentivize subjective elements of performance, the most appropriate
contract type is a multiple-incentive contract containing both
objective incentives and subjective award-fee criteria (i.e., cost-
plus-incentive-fee/award-fee or fixed-price-incentive/award-fee).
(3) See PGI 216.401-70 for guidance on the use of award-fee
contracts.
3. Revise section 216.405-2 to read as follows:
216.405-2 Cost-plus-award-fee contracts.
(1) Award-fee pool. The award-fee pool is the total available award
fee for each evaluation period for the life of the contract. The
contracting officer must perform an analysis of appropriate fee
distribution to ensure at least 40% of the award fee is held for the
final evaluation so that the award fee is appropriately distributed
over all evaluation periods to incentivize the contractor throughout
performance of the contract.
(2) Award-fee evaluation and payments. Award-fee payments other
than payments resulting from the evaluation at the end of an award-fee
period are prohibited. (This prohibition does not apply to base-fee
payments.) The fee-determining official's rating for award-fee
evaluations will be provided to the contractor within 45 calendar days
of the end of the period being evaluated. The final award-fee payment
will be consistent with the contracting officer's final evaluation of
the contractor's overall performance against the cost, schedule, and
performance outcomes specified in the award-fee plan.
(3) Limitations.
(i) The CPAF contract shall not be used--
(A) To avoid--
(1) Establishing cost-plus-fixed-fee contracts when the criteria
for cost-plus-fixed-fee contracts apply; or
(2) Developing objective targets so a cost-plus-incentive-fee
contract can be used; or
(B) For either engineering development or operational system
development acquisitions that have specifications suitable for
simultaneous research and development and production, except a CPAF
contract may be used for individual engineering development or
operational system development acquisitions ancillary to the
development of a major weapon system or equipment, where--
(1) It is more advantageous; and
(2) The purpose of the acquisition is clearly to determine or solve
specific problems associated with the major weapon system or equipment.
(ii) Do not apply the weighted guidelines method to CPAF contracts
for either the base (fixed) fee or the award fee.
(iii) The base fee shall not exceed three percent of the estimated
cost of the contract exclusive of the fee.
(4) See PGI 216.405-2 for guidance on the use of cost-plus-award-
fee contracts.
4. Add section 216.406 to read as follows:
216.406 Contract clauses.
(e) Use the clause at 252.216-70XX, Award Fee, in solicitations and
contracts when an award-fee contract is contemplated.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
5. Add section 252.216-70XX to read as follows:
252.216-70XX Award fee.
As prescribed in 216.406(e), insert the following clause:
AWARD FEE (DATE)
The Contractor may earn award fee from a minimum of zero dollars
to the maximum amount stated in the award-fee plan in this contract.
In no event will award fee be paid to the Contractor for any
evaluation period in which the Government rates the Contractor's
overall cost, schedule, and technical performance below
satisfactory. The Government may unilaterally revise the award-fee
plan prior to the beginning of any rating period in order to
redirect Contractor emphasis.
(End of clause)
[FR Doc. 2010-9881 Filed 4-29-10; 8:45 am]
BILLING CODE 5001-08-P