PART 1816

**TYPES OF CONTRACTS**

**TABLE OF CONTENTS**

**SUBPART [1816.1](#OLE_LINK1) SELECTING CONTRACT TYPES**

1816.104 Factors in selecting contract types.

1816.104-70 Contract type for performance-based acquisition (PBA).

**SUBPART [1816.2](#OLE_LINK2) FIXED-PRICE CONTRACTS**

1816.202 Firm-fixed-price contracts.

1816.202-70 NASA contract clause.

1816.203 Fixed-price contracts with economic price adjustment.

1816.203-4 Contract clauses.

**SUBPART [1816.3](#OLE_LINK3) COST-REIMBURSEMENT CONTRACTS**

1816.303-70 Cost-sharing contracts.

1816.306 Cost-plus-fixed-fee contracts.

1816.307 Contract clauses.

1816.307-70 NASA contract clauses.

**SUBPART [1816.4](#OLE_LINK4) INCENTIVE CONTRACTS**

1816.402 Application of pre-determined, formula-type incentives.

1816.402-2 Performance incentives.

1816.402-270 NASA technical performance incentives.

1816.404 Fixed-price contracts with award fees.

1816.405 Cost-reimbursement incentive contracts.

1816.405-2 Cost-plus-award-fee (CPAF) contracts.

1816.405-270 CPAF contracts.

1816.405-271 Base fee.

1816.405-272 Award fee evaluation periods.

1816.405-273 Award fee evaluations.

1816.405-274 Award fee evaluation factors.

1816.405-275 Award fee evaluation scoring.

1816.405-276 Award fee payments and limitations.

1816.406 Contract clauses.

1816.406-70 NASA contract clauses.

**SUBPART [1816.5](#OLE_LINK5) INDEFINITE-DELIVERY CONTRACTS**

1816.504 Indefinite quantity contracts.

1816.505 Ordering.

1816.505-70 Task Ordering.

1816.505-71 Task and delivery order contract ordering period.

1816.505-72 Task and delivery order contract performance periods.

1816.506-70 NASA contract clause.

**SUBPART [1816.6](#OLE_LINK6) TIME-AND-MATERIALS,** **LABOR-HOUR, AND
LETTER CONTRACTS**

1816.603 Letter contracts.

> 1816.603-2 Application.

1816.603-370 Approvals.

**PART 1816**

## TYPES OF CONTRACTS

**Subpart** []{#OLE_LINK1 .anchor}**1816.1\--Selecting Contract Types**

**1816.104 Factors in selecting contract types.**

**1816.104-70 Contract type for performance-based acquisition (PBA).**

\(a\) PBA is defined in [**FAR
2.101**](http://www.arnet.gov/far/current/html/Subpart_2_1.html#1046493)
and discussed in [**FAR
37.6**](http://www.arnet.gov/far/current/html/Subpart_37_6.html#1046740).
Although [**FAR Part
37**](http://www.arnet.gov/far/current/html/Subpart_37_1.html#1046525)
addresses services contracts, PBA is not limited to these contracts. PBA
is the preferred way of contracting for all supplies and services at
NASA. Generally, when contract performance risk under a PBA
specification can be fairly shifted to the contractor to allow for the
operation of objective incentives, a contract type with objectively
measurable incentives (e.g., FFP, FPIF, or CPIF) is appropriate.
However, when contractor performance (e.g., cost control, schedule, or
quality/technical) is best evaluated subjectively using quantitative
measures, a CPAF contract may be used.

\(b\) A PBA is a completion form of contract (something is
accomplished). Term/level-of-effort, time-and-materials and labor hour
contracts should include, when feasible, features that are
performance-oriented. However, those contracts may not be characterized
as PBA.

**Subpart** []{#OLE_LINK2 .anchor}**1816.2\--Fixed-Price Contracts**

**1816.202 Firm-fixed-price contracts.**

**1816.202-70 NASA contract clause.**

The contracting officer shall insert the clause at
[**1852.216-78**](http://www.hq.nasa.gov/office/procurement/regs/5215-16.html#1852.216-78%2352.216-78.html),
Firm-Fixed-Price, in firm-fixed-price solicitations and contracts.
Insert the appropriate amount in the resulting contract.

**1816.203 Fixed-price contracts with** **economic price adjustment.**

**1816.203-4 Contract clauses.**

\(a\) In addition to the approval requirements in the prescriptions at
[FAR 52.216-2](http://www.arnet.gov/far/current/html/52_215.html)
through 52.216-4, the contracting officer shall coordinate with the
installation\'s Deputy Chief Financial Officer (Finance) before
exceeding the ten-percent limit in paragraph (c)(1) of the clauses at
FAR 52.216-2 and 52.216-3 and paragraph (c)(4) of the clause at
52.216-4.

(d)(2) Contracting officers shall contact the Office of Procurement,
Code HK, for specific guidance on preparing clauses using cost indexes.
Such clauses require advance approval by the Assistant Administrator for
Procurement. Requests for approval shall be submitted to the
Headquarters Office of Procurement (Code HS).

**Subpart** []{#OLE_LINK3 .anchor}**1816.3\--Cost-Reimbursement
Contracts**

**1816.303-70 Cost-sharing contracts.**

\(a\) **Cost-sharing with for-profit organizations.**

\(1\) Cost sharing by for-profit organizations is mandatory in any
contract for basic or applied research resulting from an unsolicited
proposal, and may be accepted in any other contract when offered by the
proposing organization. The requirement for cost-sharing may be waived
when the contracting officer determines in writing that the contractor
has no commercial, production, education, or service activities that
would benefit from the results of the research, and the contractor has
no means of recovering its shared costs on such projects.

\(2\) The contractor\'s cost-sharing may be any percentage of the
project cost. In determining the amount of cost-sharing, the contracting
officer shall consider the relative benefits to the contractor and the
Government. Factors that should be considered include \--

\(i\) the potential for the contractor to recover its contribution from
non-Federal sources;

\(ii\) the extent to which the particular area of research requires
special stimulus in the national interest; and

\(iii\) the extent to which the research effort or result is likely to
enhance the contractor\'s capability, expertise, or competitive
advantage.

\(b\) **Cost-sharing with not-for-profit organizations.**

\(1\) Costs to perform research stemming from an unsolicited proposal by
universities and other educational or not-for-profit institutions are
usually fully reimbursed. When the contracting officer determines that
there is a potential for significant benefit to the institution
cost-sharing will be considered.

\(2\) The contracting officer will normally limit the institution\'s
share to no more than 10 percent of the project\'s cost.

\(c\) **Implementation.**

Cost-sharing shall be stated as a minimum percentage of the total
allowable costs of the project. The contractor\'s contributed costs may
not be charged to the Government under any other contract or grant,
including allocation to other contracts and grants as part of an
independent research and development program.

**1816.306 Cost-plus-fixed-fee contracts.**

\(d\) *Completion and term forms.*

\(4\) Term form contracts should include, when feasible, features that
are performance-oriented. However, those contracts may not be
characterized as PBA.

**1816.307 Contract clauses.**

(a)(1) In paragraph (h)(2)(ii)(B) of the Allowable Cost and Payment
clause at [**FAR
52.216-7**](http://www.arnet.gov/far/current/html/52_216.html#1046600),
the period of years may be increased to correspond with any statutory
period of limitation applicable to claims of third parties against the
contractor; provided, that a corresponding increase is made in the
period for retention of records required in paragraph (f) of the clause
at [**FAR
52.215-2**](http://www.arnet.gov/far/current/html/52_215.html#1046537),
Audit and Records - Negotiation.

\(b\) In solicitations and contracts containing the clause at [**FAR
52.216-8**](http://www.arnet.gov/far/current/html/52_216.html#1046645),
Fixed Fee, the Schedule shall include appropriate terms, if any, for
provisional billing against fee.

\(d\) In solicitations and contracts containing the clause at [**FAR
52.216-10**](http://www.arnet.gov/far/current/html/52_216.html#1046658),
Incentive Fee, the Schedule shall include appropriate terms, if any, for
provisional billing against fee.

(g)(1) In paragraph (g)(2)(ii) of the Allowable Cost and
Payment\--Facilities clause at [**FAR
52.216-13**](http://www.arnet.gov/far/current/html/52_216.html#1046697),
the period of years may be increased to correspond with any statutory
period of limitation applicable to claims of third parties against the
contractor; provided, that a corresponding increase is made in the
period for retention of records required in paragraph (f) of the clause
at FAR 52.215-2, Audit and Records - Negotiation.

**1816.307-70 NASA contract clauses.**

\(a\) The contracting officer shall insert the clause at
[**1852.216-73**](http://www.hq.nasa.gov/office/procurement/regs/5215-16.htm#1852.216-73),
Estimated Cost and Cost Sharing, in each contract in which costs are
shared by the contractor pursuant to 1816.303-70.

\(b\) The contracting officer shall insert the clause substantially as
stated at
[**1852.216-74**](http://www.hq.nasa.gov/office/procurement/regs/5215-16.htm#1852.216-74),
Estimated Cost and Fixed Fee, in cost-plus-fixed-fee contracts.

\(c\) The contracting officer may insert the clause at
[**1852.216-75**](http://www.hq.nasa.gov/office/procurement/regs/5215-16.htm#1852.216-75),
Payment of Fixed Fee, in cost-plus-fixed-fee contracts. Modifications to
the clause are authorized.

\(d\) The contracting officer shall insert the clause at
[**1852.216-81**](http://www.hq.nasa.gov/office/procurement/regs/5215-16.htm#1852.216-81),
Estimated Cost, in cost-no-fee contracts that are not cost sharing or
facilities contracts.

\(e\) The contracting officer may insert a clause substantially as
stated at
[**1852.216-87**](http://www.hq.nasa.gov/office/procurement/regs/5215-16.htm#1852.216-87),
Submission of Vouchers for Payment, in cost-reimbursement solicitations
and contracts.

\(f\) When either FAR clause 52.216-7, Allowable Cost and Payment, or
FAR clause
[**52.216-13**](http://www.arnet.gov/far/current/html/52_216.html#1046697),
Allowable Cost and Payment\-\--Facilities, is included in the contract,
as prescribed at [**FAR
16.307(a)**](http://www.arnet.gov/far/current/html/Subpart_16_7.html#1046503)
and (g), the contracting officer should include the clause at
[**1852.216-89**](http://www.hq.nasa.gov/office/procurement/regs/5215-16.htm#1852.216-89),
Assignment and Release Forms.

**Subpart** []{#OLE_LINK4 .anchor}**1816.4\--Incentive Contracts**

**1816.402 Application of predetermined, formula-type incentives.**

When considering the use of a quality, performance, or schedule
incentive, the following guidance applies:

**(1)** A positive incentive is generally not appropriate unless ---

**(i)** Performance above the target (or minimum, if there are no
negative incentives) level is of significant value to the Government;

**(ii)** The value of the higher level of performance is worth the
additional cost/fee;

**(iii)** The attainment of the higher level of performance is clearly
within the control of the contractor; and

**(iv)** An upper limit is identified, beyond which no further incentive
is earned.

**(2)** A negative incentive is generally not appropriate unless ---

**(i)** A target level of performance can be established, which the
contractor can reasonably be expected to reach with a diligent effort,
but a lower level of performance is also minimally acceptable;

**(ii)** The value of the negative incentive is commensurate with the
lower level of performance and any additional administrative costs; and

**(iii)** Factors likely to prevent attainment of the target level of
performance are clearly within the control of the contractor.

**(3)** When a negative incentive is used, the contract must indicate a
level below which performance is not acceptable.

**1816.402-2 Performance incentives.**

**1816.402-270 NASA technical performance incentives.**

\(a\) Pursuant to the guidelines in 1816.402, NASA has determined that a
performance incentive shall be included in all contracts based on
performance-oriented documents (see [**FAR
11.101(a)**](http://www.arnet.gov/far/current/html/Subpart_11_1.html#1046552)),
except those awarded under the commercial item procedures of [**FAR Part
12**](http://www.arnet.gov/far/current/html/Subpart_12_1.html#1046814),
where the primary deliverable(s) is (are) hardware with a total value
(including options) greater than \$25 million. Any exception to this
requirement shall be approved in writing by the head of contracting
activity. Performance incentives may be included in hardware contracts
valued under \$25 million acquired under procedures other than Part 12
at the discretion of the procurement officer upon consideration of the
guidelines in 1816.402. Performance incentives, which are objective and
measure hardware performance after delivery and acceptance, are separate
from other incentives, such as cost or delivery incentives.

\(b\) When a performance incentive is used, it shall be structured to be
both positive and negative based on hardware performance after delivery
and acceptance, unless the contract type requires complete contractor
liability for product performance (e.g., fixed price). In this latter
case, a negative incentive is not required. In structuring the
incentives, the contract shall establish a standard level of performance
based on the salient hardware performance requirement. This standard
performance level is normally the contract\'s minimum performance
requirement. No incentive amount is earned at this standard performance
level. Discrete units of measurement based on the same performance
parameter shall be identified for performance above and, when a negative
incentive is used, below the standard. Specific incentive amounts shall
be associated with each performance level from maximum beneficial
performance (maximum positive incentive) to, when a negative incentive
is included, minimal beneficial performance or total failure (maximum
negative incentive). The relationship between any given incentive,
either positive and negative, and its associated unit of measurement
should reflect the value to the Government of that level of hardware
performance. The contractor should not be rewarded for above-standard
performance levels that are of no benefit to the Government.

\(c\) The final calculation of the performance incentive shall be done
when hardware performance, as defined in the contract, ceases or when
the maximum positive incentive is reached. When hardware performance
ceases below the standard established in the contract and a negative
incentive is included, the Government shall calculate the amount due and
the contractor shall pay the Government that amount. Once hardware
performance exceeds the standard, the contractor may request payment of
the incentive amount associated with a given level of performance,
provided that such payments shall not be more frequent than monthly.
When hardware performance ceases above the standard level of
performance, or when the maximum positive incentive is reached, the
Government shall calculate the final performance incentive earned and
unpaid and promptly remit it to the contractor.

\(d\) When the deliverable hardware lends itself to multiple, meaningful
measures of performance, multiple performance incentives may be
established. When the contract requires the sequential delivery of
several hardware items (e.g., multiple spacecraft), separate performance
incentive structures may be established to parallel the sequential
delivery and use of the deliverables.

\(e\) In determining the value of the maximum performance incentives
available, the contracting officer shall follow the following rules:

\(1\) For a CPFF contract, the sum of the maximum positive performance
incentive and fixed fee shall not exceed the limitations in [**FAR
15.404-4(c)(4)(i).**](http://www.arnet.gov/far/current/html/Subpart_15_4.html#1087987)

\(2\) For an award fee contract.

\(i\) The individual values of the maximum positive performance
incentive and the total potential award fee (including any base fee)
shall each be at least one-third of the total potential contract fee.
The remaining one-third of the total potential contract fee may be
divided between award fee and the maximum performance incentive at the
discretion of the contracting officer.

\(ii\) The maximum negative performance incentive for research and
development hardware (e.g., the first and second units) shall be equal
in amount to the total [earned]{.underline} award fee (including any
base fee). The maximum negative performance incentives for production
hardware (e.g., the third and all subsequent units of any hardware
items) shall be equal in amount to the total [potential]{.underline}
award fee (including any base fee). Where one contract contains both
cases described above, any base fee shall be allocated reasonably among
the items.

\(3\) For cost reimbursement contracts other than award fee contracts,
the maximum negative performance incentives shall not exceed the total
earned fee under the contract.

**1816.404 Fixed-price contracts with award fees.**

Section 1816.405-2 applies to the use of FPAF contracts as if they were
CPAF contracts. However, neither base fee (see 1816.405-271) nor
evaluation of cost control (see 1816.405-274) apply to FPAF contracts.

**1816.405 Cost-reimbursement incentive** **contracts.**

**1816.405-2 Cost-plus-award-fee (CPAF) contracts.**

**1816.405-270 CPAF contracts.**

\(a\) Use of an award fee incentive shall be approved in writing by the
procurement officer. The procurement officer\'s approval shall include a
discussion of the other types of contracts considered and shall indicate
why an award fee incentive is the appropriate choice**,** including
evidence that any additional administrative effort and cost required to
monitor and evaluate performance are justified by the expected benefits
(see FAR 16.405-2(b)(1)(iii)). Award fee incentives should not be used
on contracts with a total estimated cost and fee less than \$2 million
per year. The procurement officer may authorize use of award fee for
lower-valued acquisitions, but should do so only in exceptional
situations, such as contract requirements having direct health or safety
impacts, where the judgmental assessment of the quality of contractor
performance is critical.

\(b\) Except as provided in paragraph (c) of this section, an award fee
incentive may be used in conjunction with other contract types for
aspects of performance that cannot be objectively assessed. In such
cases, the cost incentive is based on objective formulas inherent in the
other contract types (e.g., FPI, CPIF), and the award fee provision
should not separately incentivize cost performance.

\(c\) Award fee incentives shall not be used with a cost-plus-fixed-fee
(CPFF) contract.

**1816.405-271 Base fee.**

\(a\) A base fee shall not be used on CPAF contracts for which the
periodic award fee evaluations are final (1816.405-273(a)). In these
circumstances, contractor performance during any award fee period is
independent of and has no effect on subsequent performance periods or
the final results at contract completion. For other contracts, such as
those for hardware or software

development, the procurement officer may authorize the use of a base fee
not to exceed 3 percent. Base fee shall not be used when an award fee
incentive is used in conjunction with another contract type (e.g.,
CPIF/AF).

\(b\) When a base fee is authorized for use in a CPAF contract, it shall
be paid only if the final award fee evaluation is \"satisfactory\" or
better. (See 1816.405-273 and 1816.405-275) Pending final evaluation,
base fee may be paid during the life of the contract at defined
intervals on a provisional basis. If the final award fee evaluation is
\"poor/unsatisfactory\", all provisional base fee payments shall be
refunded to the Government.

**1816.405-272 Award fee evaluation periods.**

\(a\) Award fee evaluation periods, including those for interim
evaluations, should be at least 6 months in length. When appropriate,
the procurement officer may authorize shorter evaluation periods after
ensuring that the additional administrative costs associated with the
shorter periods are offset by benefits accruing to the Government. Where
practicable, such as developmental contracts with defined performance
milestones (e.g., Preliminary Design Review, Critical Design Review,
initial system test), establishing evaluation periods at conclusion of
the milestones rather than calendar dates, or in combination with
calendar dates should be considered. In no case shall an evaluation
period be longer than 12 months.

\(b\) A portion of the total available award fee contract shall be
allocated to each of the evaluation periods. This allocation may result
in an equal or unequal distribution of fee among the periods. The
contracting officer should consider the nature of each contract and the
incentive effects of fee distribution in determining the appropriate
allocation structure.

**1816.405-273 Award fee evaluations.**

\(a\) *Service Contracts*. On contracts where the contract deliverable
is the performance of a service over any given time period, contractor
performance is often definitively measurable within each evaluation
period. In these cases, all evaluations are final, and the contractor
keeps the fee earned in any period regardless of the evaluations of
subsequent periods. Unearned award fee in any given period in a service
contract is lost and shall not be carried forward, or \"rolled-over,\"
into subsequent periods.

\(b\) *End Item Contracts*. On contracts, such as those for end item
deliverables, where the true quality of contractor performance cannot be
measured until the end of the contract, only the last evaluation is
final. At that point, the total contract award fee pool is available,
and the contractor\'s total performance is evaluated against the award
fee plan to determine total earned award fee. In addition to the final
evaluation, interim evaluations are done to monitor performance prior to
contract completion, provide feedback to the contractor on the
Government\'s assessment of the quality of its performance, and
establish the basis for making interim award fee payments (see
1816.405-276(a)). These interim evaluations and associated interim award
fee payments are superseded by the fee determination made in the final
evaluation at contract completion. The Government will then pay the
contractor, or the contractor will refund to the Government, the
difference between the final award fee determination and the cumulative
interim fee payments.

\(c\) *Control of evaluations*. Interim and final evaluations may be
used to provide past performance information during the source selection
process in future acquisitions and should be marked and controlled as
"Source Selection Information - See [**FAR
3.104**](http://www.arnet.gov/far/current/html/Subpart_3_1.html#1039140)".

**1816.405-274 Award fee evaluation factors.**

\(a\) Explicit evaluation factors shall be established for each award
fee period. Factors should be tied to desired outcomes. If used,
subfactors should be limited to the minimum necessary to ensure a
thorough evaluation and an effective incentive.

\(b\) Evaluation factors will be developed by the contracting officer
based upon the characteristics of an individual procurement. Normally,
technical and schedule considerations will be included in all CPAF
contracts as evaluation factors. Cost control shall be included as an
evaluation factor in all CPAF contracts. When explicit evaluation factor
weightings are used, cost control shall be no less than 25 percent of
the total weighted evaluation factors. The predominant consideration of
the cost control evaluation should be a measurement of the contractor\'s
performance against the negotiated estimated cost of the contract. This
estimated cost may include the value of undefinitized change orders when
appropriate.

(c)(1) The technical factor, if used, must include consideration of risk
management (including mission success, safety, security, health, export
control, and damage to the environment, as appropriate) unless waived at
a level above the contracting officer, with the concurrence of the
project manager. The rationale for any waiver shall be documented in the
contract file. When safety, export control, or security are considered
under the technical factor, the award fee plan shall allow the following
fee determinations, regardless of contractor performance in other
evaluation factors, when there is a major breach of safety or security.

\(i\) For evaluation of service contracts under 1816.405-273(a), an
overall fee determination of zero for any evaluation period in which
there is a major breach of safety or security.

\(ii\) For evaluation of end item contracts under 1816.405-273(b), an
overall fee determination of zero for any interim evaluation period in
which there is a major breach of safety or security. To ensure that the
final award fee evaluation at contract completion reflects any major
breach of safety or security, in an interim period, the overall award
fee pool shall be reduced by the amount of the fee available for the
period in which the major breach occurred if a zero fee determination
was made because of a major breach of safety or security.

\(2\) A major breach of safety must be related directly to the work on
the contract. A major breach of safety is an act or omission of the
Contractor that consists of an accident, incident, or exposure resulting
in a fatality or mission failure; or in damage to equipment or property
equal to or greater than \$1 million; or in any "willful" or "repeat"
violation cited by the Occupational Safety and Health Administration
(OSHA) or by a state agency operating under an OSHA approved plan.

\(3\) A major breach of security may occur on or off Government
installations, but must be directly related to the work on the contract.
A major breach of security is an act or omission by the contractor that
results in compromise of classified information, illegal technology
transfer, workplace violence resulting in criminal conviction, sabotage,
compromise or denial of information technology services, equipment or
property damage from vandalism greater than \$250,000, or theft greater
than \$250,000.

\(4\) The Assistant Administrator for Procurement (Code HS) shall be
notified prior to the determination of a zero award fee because of a
major breach of safety or security.

\(d\) In rare circumstances, contract costs may increase for reasons
outside the contractor\'s control and for which the contractor is not
entitled to an equitable adjustment. One example is a weather-related
launch delay on a launch support contract. The Government shall take
such situations into consideration when evaluating contractor cost
control.

\(e\) Emphasis on cost control should be balanced against other
performance requirement objectives. The contractor should not be
incentivized to pursue cost control to the point that overall
performance is significantly degraded. For example, incentivizing an
underrun that results in direct negative impacts on technical
performance, safety, or other critical contract objectives is both
undesirable and counterproductive. Therefore, evaluation of cost control
shall conform to the following guidelines:

\(1\) Normally, the contractor should be given a score of 0 for cost
control when there is a significant overrun within its control. However,
the contractor may receive higher scores for cost control if the overrun
is insignificant. Scores should decrease sharply as the size of the
overrun increases. In any evaluation of contractor overrun performance,
the Government shall consider the reasons for the overrun and assess the
extent and effectiveness of the contractor\'s efforts to control or
mitigate the overrun.

\(2\) The contractor should normally be rewarded for an underrun within
its control, up to the maximum score allocated for cost control,
provided the average numerical rating for all other award fee evaluation
factors is 81 or greater (see 1816.405-275). An underrun shall be
rewarded as if the contractor has met the estimated cost of the contract
(see 1816.405-274(d)(3)) when the average numerical rating for all other
factors is less than 81 but greater than 60.

\(3\) The contractor should be rewarded for meeting the estimated cost
of the contract, but not to the maximum score allocated for cost
control, to the degree that the contractor has prudently managed costs
while meeting contract requirements. No award shall be given in this
circumstance unless the average numerical rating for all other award fee
evaluation factors is 61 or greater.

\(f\) When an AF arrangement is used in conjunction with another
contract type, the award fee's cost control factor will only apply to a
subjective assessment of the contractor's efforts to control costs and
not the actual cost outcome incentivized under the basic contract type
(e.g. CPIF, FPIF).

(g)(1) The contractor\'s performance against the subcontracting plan
incorporated in the contract shall be evaluated. Emphasis may be placed
on the contractor\'s accomplishment of its goals for subcontracting with
small business, HUBZone small business, women-owned small business**,**
veteran-owned small business, and service-disabled veteran-owned small
business concerns.

\(2\) The contractor\'s performance against the contract target for
participation as subcontractors by small disadvantaged business concerns
in the NAICS Major Groups designated by the Department of Commerce (see
[**FAR
19.201(c)**](http://www.arnet.gov/far/current/html/Subpart_19_2.html#1046479))
shall also be evaluated if the clause at [**FAR
52.219-26**](http://www.arnet.gov/far/current/html/52_219.html#1046951),
Small Disadvantaged Business Participation - Incentive Subcontracting,
is not included in the contract (see **[FAR
19.1204(c](http://www.arnet.gov/far/current/html/Subpart_19_12.html#1046506))**).

\(3\) The contractor\'s achievements in subcontracting high technology
efforts as well as the contractor\'s performance under the
Mentor-Protégé Program, if applicable, may also be evaluated.

\(4\) The evaluation weight given to the contractor\'s performance
against the considerations in paragraphs (g)(1) through (g)(3) of this
section should be significant (up to 15 percent of available award fee).
The weight should motivate the contractor to focus management attention
to subcontracting with small, HUBZone, women-owned, veteran-owned, and
service-disabled veteran-owned small business concerns, and with small
disadvantaged business concerns in designated NAICS Major Groups to the
maximum extent practicable, consistent with efficient contract
performance.

\(h\) When contract changes are anticipated, the contractor's
responsiveness to requests for change proposals should be evaluated.
This evaluation should include the contractor's submission of timely,
complete proposals and cooperation in negotiating the change.

\(i\) Only the award fee performance evaluation factors set forth in the
performance evaluation plan shall be used to determine award fee scores.

\(j\) The Government may unilaterally modify the applicable award fee
performance evaluation factors and performance evaluation areas prior to
the start of an evaluation period. The contracting officer shall notify
the contractor in writing of any such changes 30 days prior to the start
of the relevant evaluation period.

**1816.405-275 Award fee evaluation scoring.**

\(a\) A scoring system of 0-100 shall be used for all award fee ratings.
Award fee earned is determined by applying the numerical score to the
award fee pool. For example, a score of 85 yields an award fee of 85
percent of the award fee pool. No award fee shall be paid unless the
total score is 61 or greater.

\(b\) The following standard adjectival ratings and the associated
numerical scores shall be used on all award fee contracts.

\(1\) **[Excellent]{.underline}** (100-91): Of exceptional merit;
exemplary performance in a timely, efficient, and economical manner;
very minor (if any) deficiencies with no adverse effect on overall
performance.

\(2\) **[Very good]{.underline}** (90-81): Very effective performance,
fully responsive to contract requirements; contract requirements
accomplished in a timely, efficient, and economical manner for the most
part; only minor deficiencies.

\(3\) **[Good]{.underline}** (80-71): Effective performance; fully
responsive to contract requirements; reportable deficiencies, but with
little identifiable effect on overall performance.

\(4\) **[Satisfactory]{.underline}** (70-61): Meets or slightly exceeds
minimum acceptable standards; adequate results; reportable deficiencies
with identifiable, but not substantial, effects on overall performance.

\(5\) **[Poor/Unsatisfactory]{.underline}** (less than 61): Does not
meet minimum acceptable standards in one or more areas; remedial action
required in one or more areas; deficiencies in one or more areas which
adversely affect overall performance.

\(c\) As a benchmark for evaluation, in order to be rated \"Excellent,\"
the contractor must be under cost, on or ahead of schedule, and have
provided excellent technical performance.

\(d\) A scoring system appropriate for the circumstances of the
individual contract requirement should be developed. Weighted scoring is
recommended. In this system, each evaluation factor (e.g., technical,
schedule, cost control) is assigned a specific percentage weighting with
the cumulative weightings of all factors totaling 100. During the award
fee evaluation, each factor is scored from 0-100 according to the
ratings defined in 1816.405-275(b). The numerical score for each factor
is then multiplied by the weighting for that factor to determine the
weighted score. For example, if the technical factor has a weighting of
60 percent and the numerical score for that factor is 80, the weighted
technical score is 48 (80 x 60 percent). The weighted scores for each
evaluation factor are then added to determine the total award fee score.

**1816.405-276 Award fee payments and limitations.**

\(a\) *Interim Award Fee Payments*. The amount of an interim award fee
payment (see 1816.405-273(b)) is limited to the lesser of the interim
evaluation score or 80 percent of the fee allocated to that interim
period less any provisional payments (see paragraph (b) of this
subsection) made during the period.

\(b\) *Provisional Award Fee Payments*. Provisional award fee payments
are payments made within evaluation periods prior to an interim or final
evaluation for that period. Provisional payments may be included in the
contract and should be negotiated on a case-by-case basis. For a service
contract, the total amount of award fee available in an evaluation
period that may be provisionally paid is the lesser of a percentage
stipulated in the contract (but not exceeding 80 percent) or the prior
period\'s evaluation score. For an end item contract, the total amount
of provisional payments in a period is limited to a percentage not to
exceed 80 percent of the prior interim period's evaluation score.

\(c\) *Fee Payment*. The Fee Determination Official\'s rating for both
interim and final evaluations will be provided to the contractor within
45 calendar days of the end of the period being evaluated. Any fee,
interim or final, due the contractor will be paid no later than 60
calendar days after the end of the period being evaluated.

**1816.406 Contract clauses.**

**1816.406-70 NASA contract clauses.**

\(a\) As authorized by [**FAR
16.406(e)**](http://www.arnet.gov/far/current/html/Subpart_16_4.html#1046573),
the contracting officer shall insert the clause at
[**1852.216-76**](http://www.hq.nasa.gov/office/procurement/regs/5215-16.htm#1852.216-76),
Award Fee for Service Contracts, in solicitations and contracts when an
award-fee contract is contemplated and the contract deliverable is the
performance of a service.

\(b\) As authorized by FAR 16.406(e), the contracting officer shall
insert the clause at 1852.216-77, Award Fee for End Item Contracts, in
solicitations and contracts when an award fee contract is contemplated
and the contract deliverables are hardware or other end items for which
total contractor performance cannot be measured until the end of the
contract. When the clause is used in a fixed-price award-fee contract,
it shall be modified by deleting references to base fee in paragraphs
(a), and by deleting paragraph (c)(1), the last sentence of (c)(4), and
the first sentence of (c)(5).

\(c\) The contracting officer may insert a clause substantially as
stated at 1852.216-83, Fixed Price Incentive, in fixed-price-incentive
solicitations and contracts utilizing firm or successive targets. For
items subject to incentive price revision, identify the target cost,
target profit, target price, and ceiling price for each item.

\(d\) The contracting officer shall insert the clause at 1852.216-84,
Estimated Cost and Incentive Fee, in cost-plus-incentive-fee
solicitations and contracts.

\(e\) The contracting officer may insert the clause at 1852.216-85,
Estimated Cost and Award Fee, in award-fee solicitations and contracts.
When the contract includes performance incentives, use Alternate I. When
the clause is used in a fixed-price award fee contract, it shall be
modified to delete references to base fee and to reflect the contract
type.

\(f\) As provided at 1816.402-270, the contracting officer shall insert
a clause substantially as stated at 1852.216-88, Performance Incentive,
when the primary deliverable(s) is (are) hardware and total estimated
cost and fee is greater than \$25 million. A clause substantially as
stated at 1852.216-88 may be included in lower dollar value hardware
contracts with the approval of the procurement officer.

**Subpart** []{#OLE_LINK5 .anchor}**1816.5\--Indefinite-Delivery
Contracts**

**1816.504 Indefinite quantity contracts.**

(a)(4)(ii) ID/IQ service contract values and task order values shall be
expressed only in dollars.

(a)(4)(v) See
[**1815.7003**](http://www.hq.nasa.gov/office/procurement/regs/1815.htm#P819_83502).

**1816.505 Ordering.**

\(a\) (2) Task and delivery orders shall be issued by the contracting
officer.

(b)(5) The Agency and installation ombudsmen designated in accordance
with 1815.7001 shall review complaints from contractors on task order
contracts and delivery order contracts.

**1816.505-70 Task ordering.**

\(a\) The contracting officer shall, to the maximum extent possible,
state task order requirements in terms of functions and the related
performance and quality standards such that the standards may be
objectively measured.

\(b\) To the maximum extent possible, contracting officers shall solicit
contractor task plans to use as the basis for finalizing task order
requirements and enable evaluation and pricing of the contractor\'s
proposed work on a performance based approach as described in
1816.104-70(a).

\(c\) Task order contract type shall be individually determined, based
on the nature of each task order\'s requirements.

\(1\) Task orders may be grouped by contract type for administrative
convenience (e.g., all CPIF orders, all FFP orders, etc.) for contractor
progress and cost reporting.

\(2\) Under multiple awards, solicitations for individual task plans
shall request the same pricing structure from all offerors.

\(d\) Any undefinitized task order issued under paragraph (f) of the
clause at 1852.216-80, Task Ordering Procedure, shall be treated and
reported as an undefinitized contract action in accordance with
[**1843.70**](http://www.hq.nasa.gov/office/procurement/regs/1843.htm#P46_2001).

**1816.505-71 Task and delivery order contract ordering period.**

\(a\) 10 U.S.C. 2304a establishes limitations on the ordering period of
a task or delivery order contract awarded by NASA. The statute specifies
that the ordering period may be for any period up to five years. This
period may be subsequently extended for one or more successive periods
pursuant to an option or contract modification. In no case may the
ordering period exceed a total of ten years unless approved by the
Deputy Chief Acquisition Officer.

\(b\) The deviation requirement at 1817.204(e)(iii) applies to a task or
delivery contract with an ordering period of more than five years.

\(c\) Orders under GSA Federal Supply Schedule contracts must comply
with the limitations in paragraph (a) of this subsection if the orders
provide for the issuance of subsequent task or delivery orders.

\(d\) The limitations in paragraph (a) of this subsection do not apply
to \--

\(1\) Advisory and assistance service task order contracts (authorized
by 10 U.S.C. 2304b). These contracts are limited by statute to 5 years,
with the authority to extend an additional 6 months (see FAR 16.505(c));

\(2\) Definite quantity contracts; and

\(3\) Multi-agency contracts awarded by agencies other than NASA, DoD,
or the Coast Guard.

**1816.505-72 Task and delivery order contract performance periods.**

\(a\) Performance of orders placed within the contract ordering period
may extend for up to one year past the end of the ordering period if the
contracting officer determines that performance of the order cannot
reasonably be deferred to any planned follow-on contract.

  (b) Orders that require performance of more than one year past the end
of the ordering period must be approved by the Deputy Chief Acquisition
Officer prior to issuance. Centers shall submit approval requests, with
full rationale for the necessity of placing the order, to Code HS at
least two weeks before the planned issuance of the order.

**1816.506-70 NASA contract clause.**

Insert the clause at 1852.216-80, Task Ordering Procedure, in
solicitations and contracts when an indefinite-delivery, task order
contract is contemplated. The clause is applicable to both fixed-price
and cost-reimbursement type contracts. If the contract does not require
533M reporting (see [**NPR
9501.2,**](http://nodis.hq.nasa.gov/Library/Directives/NASA-WIDE/Procedures/Financial_Management/N_PG_9501_2C.html)
NASA Contractor Financial Management Reporting), use the clause with its
Alternate I.

**Subpart** []{#OLE_LINK6 .anchor}**1816.6\--Time-and-Materials,
Labor-Hour, and Letter Contracts**

**1816.603 Letter contracts.**

**1816.603-2 Application.**

\(a\) Centers must ensure that NASA liabilities and commitments are
minimized under letter contracts. When a letter contract is justified
and program requirements can be severed into smaller, discreet efforts,
the work authorized by the letter contract must be limited to the
minimum severable effort required to satisfy the urgent program
requirements. The remaining requirements may not be initially included
in the letter contract and must be acquired through a separate fully
priced and definitized contract action.

**1816.603-370 Approvals.**

(a)(1) The approval authority to issue a letter contract is \--

\(i\) The Assistant Administrator for Procurement when the estimated
value of the definitized contract is equal to or greater than the Master
Buy Plan (MBP) submission threshold of
[**1807.7101**](http://www.hq.nasa.gov/office/procurement/regs/1807.htm#P129_9388);

\(ii\) The procurement officer when the estimated value of the
definitized contract is below the MBP submission threshold; and

\(iii\) The Assistant Administrator for Procurement for any modification
of an undefinitized letter contract approved by the procurement officer
that increases the estimated value of the definitized contract to an
amount equal to or above the MBP submission threshold. This approval
must be obtained prior to issuing the modification.

\(2\) The procurement officer must sign all requests for approval by the
Assistant Administrator for Procurement and submit them to Code HS.

\(b\) All requests for authority to issue a letter contract must include
the following:

\(1\) Contractor name and address.

\(2\) Place of performance.

\(3\) Contract number, including modification number, if applicable.

\(4\) Brief description of the work or services to be performed.

\(5\) Performance period or delivery schedule for both the letter
contract and definitized contract.

\(6\) Estimated value of the work authorized by the letter contract.

\(7\) Estimated value of the definitized contract.

\(8\) Contract type of the definitized contract.

\(9\) A statement that the definitized contract will contain all
required clauses or identification of approved specific clause
deviations.

\(10\) Complete justification of the necessity for the letter contract,
including the advantages to the Government and a description of the
efforts to avoid its issuance or to minimize its scope.

\(11\) The definitization schedule described in [**FAR
16.603-2(c)**](http://www.arnet.gov/far/current/html/Subpart_16_6.html#1046499)
expected to be negotiated with the contractor.