Defense Federal Acquisition Regulation Supplement; Increase the Use of Fixed-Price Incentive (Firm Target) Contracts, 57677-57679 [2011-23779]
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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.
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*
*
*
*
*
(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
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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.
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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
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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.
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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
https://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 https://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
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Fmt 4700
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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]
-----------------------------------------------------------------------
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
