[Federal Register: April 30, 2010 (Volume 75, Number 83)]

[Rules and Regulations]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 201, 237, and 246

Defense Federal Acquisition Regulation Supplement; Service Contract Surveillance (DFARS Case 2008-D032)

AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to ensure that the requirement for a quality assurance surveillance plan is addressed for each contract with a dollar value above the simplified acquisition threshold, and that contracts for services have appropriate performance management or surveillance plans prepared for the work being performed under the contract.

DATES: Effective Date: April 30, 2010.

FOR FURTHER INFORMATION CONTACT: Ms. Mary Overstreet, Defense Acquisition Regulations System, OUSD(AT&L)DPAP(DARS), 3060 Defense Pentagon, Room 3B855, Washington, DC 20301-3060. Telephone 703-602-0311; facsimile 703-602-0350. Please cite DFARS Case 2008-D032.

SUPPLEMENTARY INFORMATION:

A. Background

The DoD improvement plan for the GAO High Risk Area--Contract Management, includes a commitment from DoD to clarify and/or enhance the DFARS to ensure that appropriate surveillance plans are included in contracts for services. This rule amends the DFARS to ensure that quality assurance surveillance plans are prepared in conjunction with the statement of work or statement of objectives, and included in solicitations and contracts for services to facilitate assessments of contractor performance. Additionally, the requirement for a quality assurance surveillance plan shall be addressed and documented in the contract file for each contract with a dollar value above the simplified acquisition threshold.

DoD is issuing this rule as a final rule because this rule does not have a significant effect beyond the internal operating procedures of DoD and does not have a significant cost or administrative impact on contractors or offerors. Therefore, public comment is not required in accordance with 41 U.S.C. 418b(a).

B. Regulatory Flexibility Act

The Regulatory Flexibility Act does not apply to this rule. This final rule does not constitute a significant DFARS revision within the meaning of FAR 1.501 and public comment is not required in accordance with 41 U.S.C. 418b(a).

C. Paperwork Reduction Act

The Paperwork Reduction Act (Pub. L. 96-511) does not apply because the rule does not impose additional 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 201, 237, and 246

Government procurement.

Ynette R. Shelkin,

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR parts 201, 237, and 246 are amended as follows:

1. The authority citation for 48 CFR parts 201, 237, and 246 continues to read as follows:

Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

PART 201--FEDERAL ACQUISITION REGULATIONS SYSTEM

2. Section 201.602-2 is amended by revising paragraph (1) to read as follows:

201.602-2 Responsibilities.

(1) Follow the procedures at PGI 201.602-2 regarding designation, assignment, and responsibilities of a contracting officer's representative (COR).

* * * * *

PART 237--SERVICE CONTRACTING

3. Section 237.172 is added to read as follows:

237.172 Service Contracts Surveillance.

Ensure that quality assurance surveillance plans are prepared in conjunction with the preparation of the statement of work or statement of objectives for solicitations and contracts for services. These plans should be tailored to address the performance risks inherent in the specific contract type and the work effort addressed by the contract. (See FAR Subpart 46.4.) Retain quality assurance surveillance plans in the official contract file. See https://sam.dau.mil, Step Four--Requirements Definition, for examples of quality assurance surveillance plans.

PART 246--QUALITY ASSURANCE

4. Section 246.401 is added to read as follows:

246.401 General.

The requirement for a quality assurance surveillance plan shall be addressed and documented in the contract file for each contract except for those awarded using simplified acquisition procedures. For contracts for services, the contracting officer should prepare a quality assurance surveillance plan to facilitate assessment of contractor performance, see 237.172. For contracts for supplies, the contracting officer should address the need for a quality assurance surveillance plan.

[FR Doc. 2010-9884 Filed 4-29-10; 8:45 am]

BILLING CODE 5001-08-P

[Federal Register: April 30, 2010 (Volume 75, Number 83)]

[Proposed Rules]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 211 and 252

RIN 0750-AG55

Defense Federal Acquisition Regulation Supplement; Government-Assigned Serial Number Marking (DFARS Case 2008-D047)

AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

SUMMARY: DoD proposes to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to require contractors to apply Government-assigned serial numbers in human-readable format on major end items, when required by law, regulation, or military operational necessity.

DATES: Comments on the proposed rule should be submitted in writing 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 2008-D047, using any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

E-mail: dfars@osd.mil. Include DFARS Case 2008-D047 in the subject line of the message.

Fax: 703-602-0350.

Mail: Defense Acquisition Regulations System, Attn: Ms. Mary Overstreet, OUSD(AT&L)DPAP(DARS), Room 3B855, 3060 Defense Pentagon, 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: Ms. Mary Overstreet, 703-602-0311.

SUPPLEMENTARY INFORMATION:

A. Background

DoD proposes to amend the DFARS 211.274 to require contractors to apply Government-assigned serial numbers, such as tail numbers/hull numbers and equipment registration, in human-readable format on major end items, when required by law, regulation, or military operational necessity. The rule establishes a standard DoD method of specifying Government-assigned serial numbers contractually, and requires the contractor to associate these serial numbers with the Unique Item Identifier (UII) assigned by the contractor and to register them in the DoD Item Unique Identification (IUID) Registry along with the UII. The rule also requires agreement between the Government and contractor prior to use of the serial numbers in constructing the end item UII.

Application of these Government serial numbers is a standard practice because crew members and maintenance technicians have to distinguish visually individual end items during operations. The serial numbers are applied at minimal cost typically by painting them on an exterior surface with a stencil resulting in a human-readable format. The rule eliminates any ambiguity between the UII and the use of the Government-assigned serial number.

The rule also proposes a new clause, Use of Government-Assigned Serial Numbers, in solicitations and contracts that contain the clause at 252.211-7003, Item Identification and Valuation, and that require the contractor to mark major end items under the terms and conditions of the contract. The Government-assigned method of serialization outlined in this proposed rule allows the Government to use its internal serialization as a data key to existing DoD property management, logistics, and maintenance systems.

This regulatory action was subject to review under section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993.

B. Regulatory Flexibility Act

DoD has prepared an initial regulatory flexibility analysis consistent with 5 U.S.C. 603. A copy of the analysis may be obtained from the point of contact specified herein. The analysis is summarized as follows:

This proposed rule is not expected to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because any start-up costs that contractors will incur to comply with the rule are expected to be minimal, and should be offset by the reduced administrative costs that are expected to result from implementation of

this rule. The objective of the rule is to improve the accountability and control of DoD assets. The proposed clause at 252.211-70XX, Use of Government-Assigned Serial Numbers, requires the Contractor to mark the Government-assigned serial numbers on those major end items as specified by line item in the Schedule, in accordance with the technical instructions for the placement and method of application identified in the terms and conditions of the contract, and to register the Government-assigned serial number along with the major end item's UII at the time of delivery in accordance with the provisions of the clause at DFARS 252.211-7003(d). Since DoD requires that the use of Government-assigned serial numbers be limited to satisfy requirements of law or regulation, or to facilitate the identification of major end items consistent with military operational requirements, e.g., aircraft tail numbers or ship hull numbers in military operations, the number of small entities impacted by this rule is not expected to be substantial. At this time, DoD is unable to estimate the number of small entities to which this rule will apply. Therefore, DoD invites comments from small business 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 2008-D047) in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act (Pub. L. 96-511) does not apply because the rule does not impose additional 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 211 and 252

Government procurement.

Ynette R. Shelkin,

Editor, Defense Acquisition Regulations System.

Therefore, DoD proposes to amend 48 CFR parts 211 and 252 as follows:

1. The authority citation for 48 CFR parts 211 and 252 continues to read as follows:

Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

PART 211--DESCRIBING AGENCY NEEDS

211.274-5 [Redesignated as 211.274-6]

2. Redesignate section 211.274-5 as 211.274-6.

3. Add section 211.274-5 to read as follows:

211.274-5 Policy for assignment of Government-assigned serial numbers. It is DoD policy that contractors apply Government-assigned serial numbers, such as tail numbers/hull numbers and equipment registration numbers in human-readable format, on major end items when required by law, regulation, or military operational necessity. The latest version of MIL-STD-130, Marking of U.S. Military Property, shall be used for the marking of human-readable information.

4. In newly redesignated 211.274-6, add paragraph (c) to read as follows:

211.274-6 Contract clauses.

* * * * *

(c) Use the clause at 252.211-70XX, Use of Government-Assigned Serial Numbers, in solicitations and contracts that--

(1) Contain the clause at 252.211-7003, Item Identification and Valuation; and

(2) Require the contractor to mark major end items under the terms and conditions of the contract.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

252.211-7003 [Amended]

5. Amend section 252.211-7003 by removing ``211.274-5'' from the introductory text and adding in its place ``211.274-6''.

252.211-7007 [Amended]

5. Amend section 252.211-7007 by removing ``211.274-5'' from the introductory text and adding in its place ``211.274-6''.

6. Add section 252.211-70XX to read as follows:

252.211-70XX Use of Government-Assigned Serial Numbers.

As prescribed in 211.274-6(c), use the following clause:

USE OF GOVERNMENT-ASSIGNED SERIAL NUMBERS (DATE)

(a) Definitions. As used in this clause--

Government-assigned serial number means a combination of letters or numerals in a fixed human-readable information format (text) conveying information about a major end item, which is provided to a Contractor by the requiring activity with accompanying technical data instructions for marking the Government-assigned serial number on major end items to be delivered to the Government.

Major end item means a final combination of component parts and/or materials which is ready for its intended use and of such importance to operational readiness that review and control of inventory management functions (procurement, distribution, maintenance, disposal, and asset reporting) is required at all levels of life-cycle management. Major end items include aircraft; ships; boats; motorized wheeled, tracked, and towed vehicles for use on highway or rough terrain; weapon and missile end items; ammunition; and sets, assemblies, or end items having a major end item as a component.

Unique item identifier (UII) means a set of data elements permanently marked on an item that is globally unique and unambiguous and never changes in order to provide traceability of the item throughout its total life cycle. The term includes a concatenated UII or a DoD-recognized unique identification equivalent.

(b) The Contractor shall mark the Government-assigned serial numbers on those major end items as specified by line item in the Schedule, in accordance with the technical instructions for the placement and method of application identified in the terms and conditions of the contract.

(c) The Contractor shall register the Government-assigned serial number along with the major end item's UII at the time of delivery in accordance with the provisions of the clause at DFARS 252.211-7003(d).

(d) The Contractor shall establish the UII for major end items for use throughout the life of the major end item. The Contractor may elect, but is not required, to use the Government-assigned serial number to construct the UII.

(End of Clause)

[FR Doc. 2010-9889 Filed 4-29-10; 8:45 am]

BILLING CODE 5001-08-P

[Federal Register: April 30, 2010 (Volume 75, Number 83)]

[Proposed Rules]

[Page 22729-22731]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr30ap10-24]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 245 and 252

RIN 0750-AG64

Defense Federal Acquisition Regulation Supplement; Reporting of Government Property Lost, Stolen, Damaged, or Destroyed (DFARS Case 2008-D049)

AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

SUMMARY: DoD proposes to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to require contractors to report loss, theft, damage, and destruction (LTDD) of Government property to the DCMA ``eTools'' application.

DATES: Comments on the proposed rule should be submitted in writing 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 2008-D049, using any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.

E-mail: dfars@osd.mil. Include DFARS Case 2008-D049 in the subject line of the message.

Fax: 703-602-0350.

Mail: Defense Acquisition Regulations System, Attn: Ms. Mary Overstreet, 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: Ms. Mary Overstreet, 703-602-0311.

SUPPLEMENTARY INFORMATION:

A. Background

DoD is pursuing the migration from paper-based processes to greater use of automation. This proposed rule revises requirements for all DoD contractors to report the loss, theft, damage, and destruction (LTDD) of Government property to the DCMA ``eTools'' application.

B. Regulatory Flexibility Act

DoD has prepared an initial regulatory flexibility analysis consistent with 5 U.S.C. 603. A copy of the analysis may be obtained from the point of contact specified herein. The analysis is summarized as follows:

The objective of this rule is to provide DoD with a single repository of all LTDD data to improve accountability and control of DoD assets and contractor oversight.

The rule generally will apply to DoD contractors provided with Government-furnished property. The proposed clause at 252.245-70XX Reporting Loss, Theft, Damage, or Destruction of Government Property, requires the contractor to use the Defense Contract Management Agency ``e-Tools'' software application for reporting of loss, damage, or destruction of Government property, which can be accessed from the DCMA homepage External Web Access Management application at http://www.dcma.mil. This rule is not expected to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because any start-up costs that contractors will incur to comply with the rule are expected to be minimal, and any such costs should be offset by the reduced administrative costs that are expected to result from implementation of this rule. At this time, DoD is unable to estimate the number of small

entities to which this rule will apply. Therefore, 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 2008-D049) in correspondence.

C. Paperwork Reduction Act

The information collection requirements under this proposed rule were formerly set forth under FAR 52.245-1(f)(vi), and have been approved by the Office of Management and Budget under Clearance Number 9000-0075. The requirements of this proposed rule are not expected to change significantly the burden hours approved under Clearance Number 9000-0075.

List of Subjects in 48 CFR Parts 245 and 252

Government procurement.

Ynette R. Shelkin,

Editor, Defense Acquisition Regulations System.

Therefore, DoD proposes to amend 48 CFR parts 245 and 252 as follows:

1. The authority citation for 48 CFR parts 245 and 252 continues to read as follows:

Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

PART 245--GOVERNMENT PROPERTY

2. Amend section 245.102 by adding paragraph (4) to read as follows:

245.102 Policy.

* * * * *

(4) Reporting of Government Property Lost, Damaged, Destroyed, or Stolen.

(i) The Defense Contract Management Agency (DCMA) ``e-Tools'' software application shall be the DoD data repository for reporting of loss, theft, damage, or destruction of Government property in the possession of contractors. Reporting value shall be at acquisition cost. The ``e-Tools'' system can be accessed from the DCMA home page External Web Access Management application at http://www.dcma.mil.

(ii) Unless otherwise provided for in the contract, the requirements of paragraph (4)(i) of this section do not apply to normal and reasonable inventory adjustments of ``low risk'' consumable material such as common hardware, as agreed to by the contractor and Government Property Administrator. Such losses are typically a product of normal process variation.

(iii) Reporting requirements apply to losses outside such variation. For example, due to theft of; or when losses occur due to a failure to provide adequate storage or security, e.g., failure to repair a leaky roof; or due to ``acts of God,'' e.g., tornado damages warehouse or stockroom.

(iv) The aforementioned reporting requirements in no way change the liability provisions or reporting requirements under the clauses at FAR 52.245-1, Government Property, or FAR 52.245-2, Government Property Installation Operation Services.

4. Amend section 245.107-70 by revising the section heading, redesignating the introductory text as paragraph (1), and adding paragraph (2) to read as follows:

245.107-70 Contract Clauses.

(1) Use the clause at 252.245-7000, Government-Furnished Mapping, Charting, and Geodesy Property, in solicitations and contracts when mapping, charting, and geodesy property is to be furnished.

(2) Use the clause at 252.245-70XX in solicitations and contracts that contain the clause at--

(i) FAR 52.245-1, Government Property; or

(ii) FAR 52.245-2, Government Property Installation Operation Services.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

5. Section 252.245-70XX is added to read as follows:

252.245-70XX Reporting Loss, Theft, Damage, or Destruction of Government Property.

As prescribed in 245.107-70, use the following clause:

REPORTING LOSS, THEFT, DAMAGE, OR DESTRUCTION OF GOVERNMENT PROPERTY (DATE)

(a) Definitions. As used in this clause--

Acquisition cost, for Government-furnished property, means the amount identified in the contract, or in the absence of such identification, the item's fair-market value.

Government property means all property owned or leased by the Government. Government property includes both Government-furnished property and Contractor-acquired property. Government property consists of material, equipment, special tooling, special test equipment, and real property.

(b) Policy for Contractor Reporting of Government Property Lost, Stolen, Damaged, or Destroyed.

(1) The Contractor shall use the Defense Contract Management Agency (DCMA) ``e-Tools'' software application for reporting of loss, theft, damage, or destruction of Government property. Reporting value shall be at acquisition cost. The ``e-Tools'' system can be accessed from the DCMA home page External Web Access Management application at http://www.dcma.mil.

(2) Unless otherwise provided for in this contract, the requirements of paragraph (b) (1) of this clause do not apply to normal and reasonable inventory adjustments, i.e., losses of ``low risk'' consumable material such as common hardware, as agreed to by the Contractor and the Government Property Administrator. Such losses are typically a product of normal process variation. The Contractor shall ensure that its property management system provides adequate management control measures, e.g., statistical process controls, as a means of managing such variation.

(3) Reporting requirements apply to losses outside such variation. For example, due to theft of; or when losses occur due to a failure to provide adequate storage or security, e.g., failure to repair a leaky roof; or due to ``acts of God,'' e.g., tornado damages warehouse or stockroom.

(4) The aforementioned reporting requirements in no way change the liability provisions or reporting requirements under the clauses at FAR 52.245-1, Government Property, or FAR 52.245-2, Government Property Installation Operation Services.

(End of clause)

[FR Doc. 2010-9890 Filed 4-29-10; 8:45 am]

BILLING CODE 5001-08-P

[Federal Register: April 30, 2010 (Volume 75, Number 83)]

[Proposed Rules]

[Page 22728-22729]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr30ap10-23]

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: dfars@osd.mil. 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 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