Defense Federal Acquisition Regulation Supplement; Increase the Use of Fixed-Price Incentive (Firm Target) Contracts, 57677-57679 [2011-23779]

Download as PDF Federal Register / Vol. 76, No. 180 / Friday, September 16, 2011 / Rules and Regulations PART 209—CONTRACTOR QUALIFICATIONS 2. Add section 209.105 to subpart 209.1 to read as follows: ■ 209.105 Procedures 3. Add section 209.105–2–70 to read as follows: ■ 209.105–2–70 Inclusion of determination of contractor fault in Federal Awardee Performance and Integrity Information System (FAPIIS). If the contractor or a subcontractor at any tier is not subject to the jurisdiction of the U.S. courts and the DoD appointing official that requested a DoD investigation makes a final determination that a contractor’s or subcontractor’s gross negligence or reckless disregard for the safety of civilian or military personnel of the Government caused serious bodily injury or death of such personnel, the contracting officer shall enter in FAPIIS the appropriate information regarding such determination within three days of receiving notice of the determination, pursuant to section 834 of the National Defense Authorization Act for Fiscal Year 2011 (Pub. L. 111–383). Information posted in FAPIIS regarding such determinations will be publicly available. PART 216—TYPES OF CONTRACTS 4. Amend section 216.405–2–70 by revising paragraphs (b) and (c) to read as follows: ■ 216.405–2–70 Award fee reduction or denial for jeopardizing the health or safety of Government personnel. erowe on DSK2VPTVN1PROD with RULES * * * * * (b) The contracting officer shall include in the evaluation criteria of any award-fee plan, a review of contractor and subcontractor actions that jeopardized the health or safety of Government personnel, through gross negligence or reckless disregard for the safety of such personnel, as determined through— (1) Conviction in a criminal proceeding, or finding of fault and liability in a civil or administrative proceeding (in accordance with section 823 of the National Defense Authorization Act for Fiscal Year 2010 (Pub. L. 111–84)); or (2) If a contractor or a subcontractor at any tier is not subject to the jurisdiction of the U.S. courts, a final determination of contractor or subcontractor fault resulting from a DoD investigation (in accordance with section 834 of the National Defense VerDate Mar<15>2010 13:06 Sep 15, 2011 Jkt 223001 Authorization Act for Fiscal Year 2011 (Pub. L. 111–383)). (c) In evaluating the contractor’s performance under a contract that includes the clause at 252.216–7004, Award Fee Reduction or Denial for Jeopardizing the Health or Safety of Government Personnel, the contracting officer shall consider reducing or denying award fees for a period if contractor or subcontractor actions cause serious bodily injury or death of civilian or military Government personnel during such period. The contracting officer’s evaluation also shall consider recovering all or part of award fees previously paid for such period. PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 57677 outcomes specified in subparagraphs (a)(ii)(A), (a)(ii) (B), or (a)(ii)(C). (E) In a DoD investigation of the Contractor or its subcontractors at any tier not subject to the jurisdiction of the U.S. courts, a final determination by the Secretary of Defense of Contractor or subcontractor fault (see DFARS 216.405–2–70. Serious bodily injury means a grievous physical harm that results in a permanent disability. (b) If, in the performance of this contract, the Contractor’s or its subcontractor’s actions cause serious bodily injury or death of civilian or military Government personnel, the Government may reduce or deny the award fee for the period in which the covered incident occurred, including the recovery of all or part of any award fees paid for any previous period during which the covered incident occurred. (End of clause) [FR Doc. 2011–23630 Filed 9–15–11; 8:45 am] ■ 5. Revise section 252.216–7004 to read as follows: BILLING CODE 5001–08–P 252.216–7004 Award Fee Reduction or Denial for Jeopardizing the Health or Safety of Government Personnel. DEPARTMENT OF DEFENSE As prescribed in 216.406 use the following clause: Award Fee Reduction or Denial for Jeopardizing the Health or Safety of Government Personnel (SEP 2011) (a) Definitions. As used in this clause— Covered incident— (i) Means any incident in which the Contractor, through a criminal, civil, or administrative proceeding that results in a disposition listed in paragraph (a)(ii) of this definition— (A) Has been determined in the performance of this contract to have caused serious bodily injury or death of any civilian or military personnel of the Government through gross negligence or with reckless disregard for the safety of such personnel; or (B) Has been determined to be liable for actions of a subcontractor of the Contractor that caused serious bodily injury or death of any civilian or military personnel of the Government through gross negligence or with reckless disregard for the safety of such personnel. (ii) Includes those incidents that have resulted in any of the following dispositions: (A) In a criminal proceeding, a conviction. (B) In a civil proceeding, a finding of fault or liability that results in the payment of a monetary fine, penalty, reimbursement, restitution, or damage of $5,000 or more. (C) In an administrative proceeding, a finding of fault and liability that results in— (1) The payment of a monetary fine or penalty of $5,000 or more; or (2) The payment of a reimbursement, restitution, or damages in excess of $100,000. (D) In a criminal, civil, or administrative proceeding, a disposition of the matter by consent or compromise with an acknowledgment of fault by the Contractor if the proceeding could have led to any of the PO 00000 Frm 00053 Fmt 4700 Sfmt 4700 Defense Acquisition Regulations System 48 CFR Part 216 [DFARS Case 2011–D010] RIN 0750–AH15 Defense Federal Acquisition Regulation Supplement; Increase the Use of Fixed-Price Incentive (Firm Target) Contracts Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Final rule. AGENCY: DoD is issuing a final rule amending the DFARS to increase the use of fixed-price incentive (firm target) contracts, with particular attention to share lines and ceiling prices. DATES: Effective date: September 16, 2011. SUMMARY: FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, telephone 703–602– 0328. SUPPLEMENTARY INFORMATION: I. Background This DFARS case was initiated to implement an initiative to incentivize productivity and innovation in industry, as set forth in a memorandum from the Under Secretary of Defense for Acquisition, Technology, & Logistics (USD(AT&L)), dated November 3, 2010. The memorandum provided guidance to the secretaries of the military departments and directors of defense E:\FR\FM\16SER1.SGM 16SER1 57678 Federal Register / Vol. 76, No. 180 / Friday, September 16, 2011 / Rules and Regulations agencies on obtaining greater efficiency and productivity in defense spending. In support of this initiative, DoD published a proposed rule in the Federal Register on March 2, 2011 (76 FR 11410). The proposed rule required that contracting officers must— (1) Give particular consideration to the use of fixed-price incentive (firm target) contracts, especially for acquisitions moving from development to production; and (2) Pay particular attention to share line and ceiling prices for fixed-price incentive (firm target) contracts, with 120 percent ceiling and a 50/50 share ratio as the default arrangement. The comment period closed on May 2, 2011. DoD received comments from one respondent. erowe on DSK2VPTVN1PROD with RULES II. Discussion/Analysis The respondent considered that the incorporation of a broad preference to use a 50/50 share line with a ceiling of 120 percent is a mistake for Government acquisitions for the reasons discussed in the following comments. Comment: The respondent provided anecdotal evidence that currently acquisition leadership translates this preference as a mandatory requirement. Response: All of the documentation for this case, and all of the presentations by senior acquisition leaders within DoD, have emphasized that this initiative is to be implemented in a way that makes sense for each individual acquisition. The guidance in the DFARS companion Procedures, Guidance, and Information (PGI) reiterates that each situation must be evaluated in terms of the degree and nature of the risk presented in order to select the proper contract type. The PGI also provides additional guidance on establishing the target cost, share lines, and ceiling price. This regulation is not a ‘‘one-sizefits-all’’ mandate. However, to make the final rule more consistent with the terminology of the USD(AT&L) memo of November 3, 2010, and to clarify that each contract must be considered on a case-by-case basis, DoD has revised the description of the use of a fixed-price incentive (firm target) contract with a 50/50 share ratio and a 120 percent ceiling from ‘‘the default arrangement’’ to ‘‘the point of departure for establishing the incentive arrangement.’’ Comment: According to the respondent, the Institute for Defense Analyses (IDA) study, Can Profit Policy and Contract Incentives Improve Defense Contract Outcomes?, makes a strong case for the ineffectiveness of incentive contracts. VerDate Mar<15>2010 13:06 Sep 15, 2011 Jkt 223001 Response: The majority of incentive contracts covered by the IDA study were award-fee contracts, not fixed-price incentive (firm target) contracts. Furthermore, DoD is actively taking steps to ensure that incentives are linked to acquisition outcomes and the profits are tied to performance in achieving those outcomes. Comment: The respondent stated that in order to correct the use of incentives, DoD should mandate that contracting officers use a true pessimistic/optimistic weighted average and ensure that their cost curves do not mirror cost-plusfixed-fee cost curves. Response: DoD endorses the respondent’s concept that contracting officers should carefully develop a realistic target cost and that an incentive contract should provide adequate incentives. The reason for specifying the 120 percent ceiling and the 50/50 cost sharing arrangement as the point of departure for establishing the incentive arrangement is to promote cost realism and discourage an incentive arrangement that does not provide adequate incentive to the contractor to control costs. An excessively flat share line approaches a cost-plus-fixed-fee arrangement (100/0), thereby providing almost no incentive to the contractor to control costs. A 50/50 share line suggests that the Government and the contractor have a common view of the likely contract execution cost. A 50/50 share line should represent a point where the estimate is deemed equally likely to be too high or too low. However, as already stated, rather than issuing mandates, DoD encourages the evaluation of each situation in terms of the degree and nature of the risk presented in order to select the proper contract type and, if an incentive contract type is selected, the appropriate incentive arrangement. III. Executive Orders 12866 and 13563 Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This PO 00000 Frm 00054 Fmt 4700 Sfmt 4700 rule is not a major rule under 5 U.S.C. 804. IV. Regulatory Flexibility Act DoD has prepared a final regulatory flexibility analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is summarized as follows: This rule amends the Defense Federal Acquisition Regulation Supplement to implement the initiative on incentivizing productivity and innovation in industry, as presented by the Under Secretary of Defense for Acquisition, Technology, & Logistics in a memorandum dated November 3, 2010. The objective of the rule is to incentivize contractors to control costs. The legal basis is 41 U.S.C. 1303 and 48 CFR chapter 1. There were no public comments in response to the initial regulatory flexibility analysis. The final rule will not have much impact on small entities, because the focus of the rule is on development efforts that are moving into early production. Small entities are more likely to receive awards for commercial products, including commercially available off-the-shelf products, for which firm-fixed-price contracts are appropriate. In Fiscal Year 2010, 93 percent of awards to small businesses were firm-fixed-price contracts, and 99.99 percent of awards to small businesses were other than fixed-price incentive contracts. The final rule imposes no reporting, recordkeeping, or other information collection requirements. There are no known alternatives to the rule that would adequately implement the DoD policy. There is no significant economic impact on small entities. There are no other alternatives that will accomplish the objectives of the rule. V. Paperwork Reduction Act The final rule does not contain any information collection requirements that require approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35). List of Subjects in 48 CFR Part 216 Government procurement. Ynette R. Shelkin, Editor, Defense Acquisition Regulations System. Therefore, 48 CFR part 216 is amended as follows: E:\FR\FM\16SER1.SGM 16SER1 Federal Register / Vol. 76, No. 180 / Friday, September 16, 2011 / Rules and Regulations 1. The authority citation for 48 CFR part 216 continues to read as follows: ■ Authority: 41 U.S.C. 1303 and 48 CFR chapter 1. 2. Add section 216.403–1 to read as follows: ■ 216.403–1 Fixed-price incentive (firm target) contracts. (b) Application. (1) The contracting officer shall give particular consideration to the use of fixed-price incentive (firm target) contracts, especially for acquisitions moving from development to production. (2) The contracting officer shall pay particular attention to share lines and ceiling prices for fixed-price incentive (firm target) contracts, with a 120 percent ceiling and a 50/50 share ratio as the point of departure for establishing the incentive arrangement. (3) See PGI 216.403–1 for guidance on the use of fixed-price incentive (firm target) contracts. [FR Doc. 2011–23779 Filed 9–15–11; 8:45 am] BILLING CODE 5001–08–P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 679 [Docket No. 101126522–0640–02] RIN 0648–XA704 Fisheries of the Exclusive Economic Zone Off Alaska; Shallow-Water Species by Vessels Using Trawl Gear in the Gulf of Alaska National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Temporary rule; modification of a closure. AGENCY: NMFS is opening directed fishing for shallow-water species by vessels using trawl gear in the Gulf of Alaska (GOA) for 48 hours. This action is necessary to fully use the fourth seasonal apportionment of the 2011 Pacific halibut bycatch allowance specified for the trawl shallow-water species fishery in the GOA. DATES: Effective 1200 hrs, Alaska local time (A.l.t.), September 14, 2011, through 1200 hrs, A.l.t., September 16, 2011. Comments must be received at the following address no later than 4:30 p.m., A.l.t., September 28, 2011. erowe on DSK2VPTVN1PROD with RULES SUMMARY: VerDate Mar<15>2010 13:06 Sep 15, 2011 Jkt 223001 You may submit comments on this document, identified by FDMS Docket Number NOAA–NMFS–2011– 0224, by any one of the following methods: • Electronic Submissions: Submit all electronic public comments via the Federal eRulemaking Portal Web site at http://www.regulations.gov. To submit comments via the e-Rulemaking Portal, first click the ‘‘submit a comment’’ icon, then enter NOAA–NMFS–2011–0224 in the keyword search. Locate the document you wish to comment on from the resulting list and click on the ‘‘Submit a Comment’’ icon on the right of that line. • Mail: Submit written comments to Glenn Merrill, Assistant Regional Administrator, NMFS, P.O. Box 21668, Juneau, AK 99802. • Fax: (907) 586–7557; Attn: Glenn Merrill. Instructions: Comments must be submitted by one of the above methods to ensure that the comments are received, documented, and considered by NMFS. Comments sent by any other method, to any other address or individual, or received after the end of the comment period, may not be considered. All comments received are a part of the public record and will generally be posted for public viewing on http://www.regulations.gov without change. All personal identifying information (e.g., name, address, etc.) submitted voluntarily by the sender will be publicly accessible. Do not submit confidential business information, or otherwise sensitive or protected information. NMFS will accept anonymous comments (enter ‘‘N/A’’ in the required fields if you wish to remain anonymous). Attachments to electronic comments will be accepted in Microsoft Word or Excel, WordPerfect, or Adobe PDF file formats only. FOR FURTHER INFORMATION CONTACT: Obren Davis, 907–586–7228. SUPPLEMENTARY INFORMATION: NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council under authority of the MagnusonStevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679. NMFS closed directed fishing for shallow-water species by vessels using trawl gear in the GOA under § 679.21(d)(7)(i) on September 3, 2011 (76 FR 55726, September 7, 2011). ADDRESSES: PART 216—TYPES OF CONTRACTS PO 00000 Frm 00055 Fmt 4700 Sfmt 4700 57679 As of September 12, 2011, NMFS has determined that approximately 149 metric tons remain in the fourth seasonal apportionment of the 2011 Pacific halibut bycatch allowance specified for the trawl shallow-water species fishery in the GOA. Therefore, in accordance with § 679.25(a)(1)(i), (a)(2)(i)(C) and (a)(2)(iii)(D), and to fully utilize the fourth seasonal apportionment of the 2011 Pacific halibut bycatch allowance specified for the trawl shallow-water species fishery in the GOA, NMFS is terminating the previous closure and is opening directed fishing for trawl shallow-water species by vessels using trawl gear in the GOA. This will enhance the socioeconomic well-being of harvesters dependent upon shallow-water species in this area. The Administrator, Alaska Region (Regional Administrator) considered the following factors in reaching this decision: (1) The current catch of halibut by trawl vessels participating in the shallow-water species fisheries and, (2) the harvest capacity and stated intent on future harvesting patterns of vessels participating in this fishery. In accordance with § 679.21(d)(7)(i), the Regional Administrator has determined that the fourth seasonal apportionment of the Pacific halibut bycatch allowance specified for the trawl shallow-water species fishery in the GOA will be reached after 48 hours. Consequently, NMFS is prohibiting directed fishing for the shallow-water species fishery by vessels using trawl gear in the GOA. The species and species groups that comprise the shallow-water species fishery are pollock, Pacific cod, shallow-water flatfish, flathead sole, Atka mackerel, skates, and ‘‘other species.’’ This prohibition does not apply to fishing for pollock by vessels using pelagic trawl gear in those portions of the GOA open to directed fishing for pollock. This inseason action does not apply to vessels fishing under a cooperative quota permit in the cooperative fishery in the Rockfish Program for the Central GOA. Classification This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public E:\FR\FM\16SER1.SGM 16SER1

Agencies

[Federal Register Volume 76, Number 180 (Friday, September 16, 2011)]
[Rules and Regulations]
[Pages 57677-57679]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-23779]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 216

[DFARS Case 2011-D010]
RIN 0750-AH15


Defense Federal Acquisition Regulation Supplement; Increase the 
Use of Fixed-Price Incentive (Firm Target) Contracts

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

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: DoD is issuing a final rule amending the DFARS to increase the 
use of fixed-price incentive (firm target) contracts, with particular 
attention to share lines and ceiling prices.

DATES: Effective date: September 16, 2011.

FOR FURTHER INFORMATION CONTACT:  Ms. Amy Williams, telephone 703-602-
0328.

SUPPLEMENTARY INFORMATION:

I. Background

    This DFARS case was initiated to implement an initiative to 
incentivize productivity and innovation in industry, as set forth in a 
memorandum from the Under Secretary of Defense for Acquisition, 
Technology, & Logistics (USD(AT&L)), dated November 3, 2010. The 
memorandum provided guidance to the secretaries of the military 
departments and directors of defense

[[Page 57678]]

agencies on obtaining greater efficiency and productivity in defense 
spending. In support of this initiative, DoD published a proposed rule 
in the Federal Register on March 2, 2011 (76 FR 11410). The proposed 
rule required that contracting officers must--
    (1) Give particular consideration to the use of fixed-price 
incentive (firm target) contracts, especially for acquisitions moving 
from development to production; and
    (2) Pay particular attention to share line and ceiling prices for 
fixed-price incentive (firm target) contracts, with 120 percent ceiling 
and a 50/50 share ratio as the default arrangement.

The comment period closed on May 2, 2011. DoD received comments from 
one respondent.

II. Discussion/Analysis

    The respondent considered that the incorporation of a broad 
preference to use a 50/50 share line with a ceiling of 120 percent is a 
mistake for Government acquisitions for the reasons discussed in the 
following comments.
    Comment: The respondent provided anecdotal evidence that currently 
acquisition leadership translates this preference as a mandatory 
requirement.
    Response: All of the documentation for this case, and all of the 
presentations by senior acquisition leaders within DoD, have emphasized 
that this initiative is to be implemented in a way that makes sense for 
each individual acquisition. The guidance in the DFARS companion 
Procedures, Guidance, and Information (PGI) reiterates that each 
situation must be evaluated in terms of the degree and nature of the 
risk presented in order to select the proper contract type. The PGI 
also provides additional guidance on establishing the target cost, 
share lines, and ceiling price. This regulation is not a ``one-size-
fits-all'' mandate.
    However, to make the final rule more consistent with the 
terminology of the USD(AT&L) memo of November 3, 2010, and to clarify 
that each contract must be considered on a case-by-case basis, DoD has 
revised the description of the use of a fixed-price incentive (firm 
target) contract with a 50/50 share ratio and a 120 percent ceiling 
from ``the default arrangement'' to ``the point of departure for 
establishing the incentive arrangement.''
    Comment: According to the respondent, the Institute for Defense 
Analyses (IDA) study, Can Profit Policy and Contract Incentives Improve 
Defense Contract Outcomes?, makes a strong case for the ineffectiveness 
of incentive contracts.
    Response: The majority of incentive contracts covered by the IDA 
study were award-fee contracts, not fixed-price incentive (firm target) 
contracts. Furthermore, DoD is actively taking steps to ensure that 
incentives are linked to acquisition outcomes and the profits are tied 
to performance in achieving those outcomes.
    Comment: The respondent stated that in order to correct the use of 
incentives, DoD should mandate that contracting officers use a true 
pessimistic/optimistic weighted average and ensure that their cost 
curves do not mirror cost-plus-fixed-fee cost curves.
    Response: DoD endorses the respondent's concept that contracting 
officers should carefully develop a realistic target cost and that an 
incentive contract should provide adequate incentives. The reason for 
specifying the 120 percent ceiling and the 50/50 cost sharing 
arrangement as the point of departure for establishing the incentive 
arrangement is to promote cost realism and discourage an incentive 
arrangement that does not provide adequate incentive to the contractor 
to control costs. An excessively flat share line approaches a cost-
plus-fixed-fee arrangement (100/0), thereby providing almost no 
incentive to the contractor to control costs. A 50/50 share line 
suggests that the Government and the contractor have a common view of 
the likely contract execution cost. A 50/50 share line should represent 
a point where the estimate is deemed equally likely to be too high or 
too low. However, as already stated, rather than issuing mandates, DoD 
encourages the evaluation of each situation in terms of the degree and 
nature of the risk presented in order to select the proper contract 
type and, if an incentive contract type is selected, the appropriate 
incentive arrangement.

III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This rule is not a major rule 
under 5 U.S.C. 804.

IV. Regulatory Flexibility Act

    DoD has prepared a final regulatory flexibility analysis (FRFA) 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
The FRFA is summarized as follows:
    This rule amends the Defense Federal Acquisition Regulation 
Supplement to implement the initiative on incentivizing productivity 
and innovation in industry, as presented by the Under Secretary of 
Defense for Acquisition, Technology, & Logistics in a memorandum dated 
November 3, 2010. The objective of the rule is to incentivize 
contractors to control costs. The legal basis is 41 U.S.C. 1303 and 48 
CFR chapter 1.
    There were no public comments in response to the initial regulatory 
flexibility analysis.
    The final rule will not have much impact on small entities, because 
the focus of the rule is on development efforts that are moving into 
early production. Small entities are more likely to receive awards for 
commercial products, including commercially available off-the-shelf 
products, for which firm-fixed-price contracts are appropriate. In 
Fiscal Year 2010, 93 percent of awards to small businesses were firm-
fixed-price contracts, and 99.99 percent of awards to small businesses 
were other than fixed-price incentive contracts.
    The final rule imposes no reporting, recordkeeping, or other 
information collection requirements.
    There are no known alternatives to the rule that would adequately 
implement the DoD policy. There is no significant economic impact on 
small entities.
    There are no other alternatives that will accomplish the objectives 
of the rule.

V. Paperwork Reduction Act

    The final rule does not contain any information collection 
requirements that require approval of the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Part 216

    Government procurement.

Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.
    Therefore, 48 CFR part 216 is amended as follows:

[[Page 57679]]

PART 216--TYPES OF CONTRACTS

0
1. The authority citation for 48 CFR part 216 continues to read as 
follows:

     Authority:  41 U.S.C. 1303 and 48 CFR chapter 1.


0
2. Add section 216.403-1 to read as follows:


216.403-1  Fixed-price incentive (firm target) contracts.

    (b) Application.
    (1) The contracting officer shall give particular consideration to 
the use of fixed-price incentive (firm target) contracts, especially 
for acquisitions moving from development to production.
    (2) The contracting officer shall pay particular attention to share 
lines and ceiling prices for fixed-price incentive (firm target) 
contracts, with a 120 percent ceiling and a 50/50 share ratio as the 
point of departure for establishing the incentive arrangement.
    (3) See PGI 216.403-1 for guidance on the use of fixed-price 
incentive (firm target) contracts.

[FR Doc. 2011-23779 Filed 9-15-11; 8:45 am]
BILLING CODE 5001-08-P