[Code of Federal Regulations]
[Title 48, Volume 5]
[Revised as of October 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR952.223-76]

[Page 392-395]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                     CHAPTER 9--DEPARTMENT OF ENERGY
 
Sec. 952.223-76  Conditional payment of fee or profit--safeguarding 

restricted data and other classified information and 

protection of worker safety and health.

    As prescribed at 48 CFR (DEAR) 923.7002(f), insert the following 
clause.

 Conditional Payment of Fee or Profit--Safeguarding Restricted Data and 
Other Classified Information and Protection of Worker Safety and Health 
                               (JAN 2004)

    (a) General. (1) The payment of fee or profit (i.e., award fee, 
fixed fee, and incentive fee or profit) under this contract is dependent 
upon the contractor's compliance with the terms and conditions of this 
contract relating to the safeguarding of Restricted Data and other 
classified information (i.e., Formerly Restricted Data and National 
Security Information) and relating to the protection of worker safety 
and health, including compliance with applicable law, regulation, and 
DOE directives. The term ``contractor'' as used in this clause to 
address failure to comply shall mean ``contractor or contractor 
employee.''
    (2) In addition to other remedies available to the Federal 
Government, if the contractor fails to comply with the terms and 
conditions of this contract relating to the safeguarding of Restricted 
Data and other classified information or relating to the protection of 
worker safety and health, the contracting officer may unilaterally 
reduce the

[[Page 393]]

amount of fee or profit that is otherwise payable to the contractor in 
accordance with the terms and conditions of this clause.
    (3) Any reduction in the amount of fee or profit earned by the 
contractor will be determined by the severity of the contractor's 
failure to comply with contract terms and conditions relating to the 
safeguarding of Restricted data or other classified information or 
relating to worker safety and health pursuant to the degrees specified 
in paragraphs (c) and (d) of this clause.
    (b) Reduction Amount. (1) If in any period (see 48 CFR 952.223-76 
(b)(2)) it is found that the contractor has failed to comply with 
contract terms and conditions relating to the safeguarding of Restricted 
Data or other classified information or relating to the protection of 
worker safety and health, the contractor's fee or profit of the period 
may be reduced. Such reduction shall not be less than 26 percent nor 
greater than 100 percent of the total fee or profit earned for a first 
degree performance failure, not less than 11 percent nor greater than 25 
percent for a second degree performance failure, and up to 10 percent 
for a third degree performance failure. The contracting officer must 
consider mitigating factors that may warrant a reduction below the 
specified range (see 48 CFR 904.402(c) and 48 CFR 923.7001(b)). The 
mitigating factors include, but are not limited to, the following ((v), 
(vi), (vii), and (viii) apply to WS&H only):
    (i) Degree of control the contractor had over the event or incident.
    (ii) Efforts the contractor had made to anticipate and mitigate the 
possibility of the event in advance.
    (iii) Contractor self-identification and response to the event to 
mitigate impacts and recurrence.
    (iv) General status (trend and absolute performance) of: 
Safeguarding Restricted Data and other classified information and 
compliance in related security areas; or of protecting WS&H and 
compliance in related areas.
    (v) Contractor demonstration to the Contracting Officer's 
satisfaction that the principles of industrial WS&H standards are 
routinely practiced (e.g., Voluntary Protection Program Star Status).
    (vi) Event caused by ``Good Samaritan'' act by the contractor (e.g., 
offsite emergency response).
    (vii) Contractor demonstration that a performance measurement system 
is routinely used to improve and maintain WS&H performance (including 
effective resource allocation) and to support DOE corporate decision-
making (e.g., policy, WS&H programs).
    (viii) Contractor demonstration that an Operating Experience and 
Feedback Program is functioning that demonstrably affects continuous 
improvement in WS&H by use of lessons-learned and best practices inter- 
and intra-DOE sites.
    (2)(i) Except in the case of performance-based, firm-fixed-price 
contracts (see paragraph (b)(3) of this clause), the contracting 
officer, for purposes of this clause, will at the time of contract 
award, or as soon as practicable thereafter, allocate the total amount 
of fee or profit that is available under this contract to equal periods 
of [insert 6 or 12] months to run sequentially for the entire term of 
the contract (i.e., from the effective date of the contract to the 
expiration date of the contract, including all options). The amount of 
fee or profit to be allocated to each period shall be equal to the 
average monthly fee or profit that is available or otherwise payable 
during the entire term of the contract, multiplied by the number of 
months established above for each period.
    (ii) Under this clause, the total amount of fee or profit that is 
subject to reduction in a period in which a performance failure occurs, 
in combination with any reduction made under any other clause in the 
contract that provides for a reduction to the fee or profit, shall not 
exceed the amount of fee or profit that is earned by the contractor in 
the period established pursuant to paragraph (b)(2)(i) of this clause.
    (3) For performance-based firm-fixed-price contracts, the 
contracting officer will at the time of contract award include negative 
monetary incentives in the contract for contractor violations relating 
to the safeguarding of Restricted Data and other classified information 
and relating to protection of worker safety and health.
    (c) Safeguarding Restricted Data and Other Classified Information. 
Performance failures occur if the contractor does not comply with the 
terms and conditions of this contract relating to the safeguarding of 
Restricted Data and other classified information. The degrees of 
performance failures relating to the contractor's obligations under this 
contract for safeguarding of Restricted Data and other classified 
information are as follows:
    (1) First Degree: Performance failures that have been determined, in 
accordance with applicable law, regulation, or DOE directive, to have 
resulted in, or that can reasonably be expected to result in, 
exceptionally grave damage to the national security. The following are 
examples of performance failures or performance failures of similar 
import that will be considered first degree:
    (i) Non-compliance with applicable laws, regulations, and DOE 
directives actually resulting in, or creating a risk of, loss, 
compromise, or unauthorized disclosure of Top Secret Restricted Data or 
other information classified as Top Secret, any classification level of 
information in a Special Access Program (SAP), information identified as 
sensitive compartmented information (SCI), or high risk nuclear weapons-
related data.

[[Page 394]]

    (ii) Contractor actions that result in a breakdown of the safeguards 
and security management system that can reasonably be expected to result 
in the loss, compromise, or unauthorized disclosure of Top Secret 
Restricted Data, or other information classified as Top Secret, any 
classification level of information in a SAP, information identified as 
SCI, or high risk nuclear weapons-related data.
    (iii) Failure to promptly report the loss, compromise, or 
unauthorized disclosure of Top Secret Restricted Data or other 
information classified as Top Secret, any classification level of 
information in a SAP, information identified as SCI, or high risk 
nuclear weapons-related data.
    (iv) Failure to timely implement corrective actions stemming from 
the loss, compromise, or unauthorized disclosure of Top Secret 
Restricted Data or other classified information classified as Top 
Secret, any classification level of information in a SAP, information 
identified as SCI, or high risk nuclear weapons-related data.
    (2) Second Degree: Performance failures that have been determined, 
in accordance with applicable law, regulation, or DOE directive, to have 
actually resulted in, or that can reasonably be expected to result in, 
serious damage to the national security. The following are examples of 
performance failures or performance failures of similar import that will 
be considered second degree:
    (i) Non-compliance with applicable laws, regulations, and DOE 
directives actually resulting in, or creating risk of, loss, compromise, 
or unauthorized disclosure of Secret Restricted Data or other 
information classified as Secret.
    (ii) Contractor actions that result in a breakdown of the safeguards 
and security management system that can reasonably be expected to result 
in the loss, compromise, or unauthorized disclosure of Secret Restricted 
Data, or other information classified as Secret.
    (iii) Failure to promptly report the loss, compromise, or 
unauthorized disclosure of Restricted Data or other classified 
information regardless of classification (except for information covered 
by paragraph (c)(1)(iii) of this clause).
    (iv) Failure to timely implement corrective actions stemming from 
the loss, compromise, or unauthorized disclosure of Secret Restricted 
Data or other information classified as Secret.
    (3) Third Degree: Performance failures that have been determined, in 
accordance with applicable law, regulation, or DOE directive, to have 
actually resulted in, or that can reasonably be expected to result in, 
undue risk to the common defense and security. In addition, this 
category includes performance failures that result from a lack of 
contractor management and/or employee attention to the proper 
safeguarding of Restricted Data and other classified information. These 
performance failures may be indicators of future, more severe 
performance failures and/or conditions, and if identified and corrected 
early would prevent serious incidents. The following are examples of 
performance failures or performance failures of similar import will be 
considered third degree:
    (i) Non-compliance with applicable laws, regulations, and DOE 
directives actually resulting in, or creating risk of, loss, compromise, 
or unauthorized disclosure of Restricted Data or other information 
classified as Confidential.
    (ii) Failure to promptly report alleged or suspected violations of 
laws, regulations, or directives pertaining to the safeguarding of 
Restricted Data or other classified information.
    (iii) Failure to identify or timely execute corrective actions to 
mitigate or eliminate identified vulnerabilities and reduce residual 
risk relating to the protection of Restricted Data or other classified 
information in accordance with the contractor's Safeguards and Security 
Plan or other security plan, as applicable.
    (iv) Contractor actions that result in performance failures which 
unto themselves pose minor risk, but when viewed in the aggregate 
indicate degradation in the integrity of the contractor's safeguards and 
security management system relating to the protection of Restricted Data 
and other classified information.
    (d) Protection of Worker Safety and Health. Performance failures 
occur if the contractor does not comply with the contract's WS&H terms 
and conditions, which may be included in the DOE approved contractor 
Integrated Safety Management System (ISMS). The degrees of performance 
failure under which reductions of fee or profit will be determined are:
    (1) First Degree: Performance failures that are most adverse to WS&H 
or could threaten the successful completion of a program or project. For 
contracts including ISMS requirements, failure to develop and obtain 
required DOE approval of WS&H aspects of an ISMS is considered first 
degree. The Government will perform necessary review of the ISMS in a 
timely manner and will not unreasonably withhold approval of the WS&H 
aspects of the contractor's ISMS. The following performance failures or 
performance failures of similar import will be deemed first degree:
    (i) Type A accident (defined in DOE Order 225.1A).
    (ii) Two Second Degree performance failures during an evaluation 
period.
    (2) Second Degree: Performance failures that are significantly 
adverse to WS&H. They include failures to comply with approved WS&H 
aspects of an ISMS that result

[[Page 395]]

in an actual injury, exposure, or exceedence that occurred or nearly 
occurred but had minor practical long-term health consequences. The 
following performance failures or performance failures of similar import 
will be considered second degree:
    (i) Type B accident (defined in DOE Order 225.1A).
    (ii) Non-compliance with approved WS&H aspects of an ISMS that 
results in a near miss of a Type A or B accident. A near miss is a 
situation in which an inappropriate action occurs, or a necessary action 
is omitted, but does not result in an adverse effect.
    (iii) Failure to mitigate or notify DOE of an imminent danger 
situation after discovery, where such notification is a requirement of 
the contract.
    (3) Third Degree: Performance failures that reflect a lack of focus 
on improving WS&H. They include failures to comply with approved WS&H 
aspects of an ISMS that result in potential breakdown of the 
contractor's WS&H system. The following performance failures or 
performance failures of similar import will be considered third degree:
    (i) Failure to implement effective corrective actions to address 
deficiencies/non-compliance documented through external (e.g., Federal) 
oversight and/or reported per DOE Order 232.1A requirements, or internal 
oversight of DOE O 440.1A requirements.
    (ii) Multiple similar non-compliances identified by external (e.g., 
Federal) oversight that in aggregate indicate a significant WS&H system 
breakdown.
    (iii) Non-compliances that either have, or may have, significant 
negative impacts to workers that indicate a significant WS&H system 
breakdown.
    (iv) Failure to notify DOE upon discovery of events or conditions 
where notification is required by the terms and conditions of the 
contract.

                             (End of clause)

[68 FR 68778, Dec. 10, 2003]