11410 Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Proposed Rules 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Part 216 

RIN 0750–AH15 

Defense Federal Acquisition 

Regulation Supplement; Increase the 

Use of Fixed-Price Incentive (Firm 

Target) Contracts (DFARS Case 2011– 

D010) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Proposed rule. 

SUMMARY: DoD is proposing to amend 

the Defense Federal Acquisition 

Regulation Supplement (DFARS) to 

increase the use of fixed-price incentive 

(firm target) contracts, with particular 

attention to share lines and ceiling 

prices. 

DATES: Comments on the proposed rule 

should be submitted in writing to the 

address shown below on or before May 

2, 2011, to be considered in the 

formation of the final rule. 

ADDRESSES: You may submit comments, 

identified by DFARS Case 2011–D010, 

using any of the following methods: 

Æ Regulations.gov: http:// 

www.regulations.gov. 

Submit comments via the Federal 

eRulemaking portal by inputting 

‘‘DFARS Case 2011–D010’’ under the 

heading ‘‘Enter keyword or ID’’ and 

selecting ‘‘Search.’’ Select the link 

‘‘Submit a Comment’’ that corresponds 

with ‘‘DFARS Case 2011–D010.’’ Follow 

the instructions provided at the ‘‘Submit 

a Comment’’ screen. Please include your 

name, company name (if any), and 

‘‘DFARS Case 2011–D010’’ on your 

attached document. 

Æ E-mail: dfars@osd.mil. Include 

DFARS Case 2011–D010 in the subject 

line of the message. 

Æ Fax: 703–602–0350. 

Æ Mail: Defense Acquisition 

Regulations System, Attn: Ms. Amy 

Williams, OUSD (AT&L) DPAP/DARS, 

3060 Defense Pentagon, Room 3B855, 

Washington, DC 20301–3060. 

Comments received generally will be 

posted without change to http:// 

www.regulations.gov, including any 

personal information provided. To 

confirm receipt of your comment(s), 

please check http://www.regulations.gov 

approximately two to three days after 

submission to verify posting (except 

allow 30 days for posting of comments 

submitted by mail). 

FOR FURTHER INFORMATION CONTACT: Ms. 

Amy Williams, OUSD (AT&L) DPAP/ 

DARS, 3060 Defense Pentagon, Room 

3B855, Washington, DC 20301–3060. 

Telephone 703–602–0328; facsimile 

703–602–0350. Please cite DFARS Case 

2011–D010. 

SUPPLEMENTARY INFORMATION: 

I. Background 

This DFARS case was initiated to 

incentivize productivity and innovation 

in industry, as set forth in a 

memorandum from the Under Secretary 

of Defense for Acquisition, Technology, 

and Logistics, dated November 3, 2010. 

The memorandum provided guidance to 

the secretaries of the military 

departments and directors of defense 

agencies on obtaining greater efficiency 

and productivity in defense spending. 

In support of this initiative, DoD is 

proposing to amend DFARS subpart 

216.4 to require 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 

lines and ceiling prices for fixed-price 

incentive (firm target) contracts, with a 

120 percent ceiling and a 50/50 share 

ratio as the default arrangement. 

II. Executive Order 12866 

This rule was not subject to Office of 

Management and Budget review under 

Executive Order 12866, dated 

September 30, 1993. This rule is not a 

major rule under 5 U.S.C. 804. 

III. Regulatory Flexibility Act 

DoD does not expect this rule to have 

a significant economic impact on a 

substantial number of small entities 

within the meaning of the Regulatory 

Flexibility Act, 5 U.S.C. 601, et seq., 

because this rule does not impose 

economic burdens on contractors. The 

purpose and effect of this rule is to 

establish an approval threshold for 

contract type and to encourage the use 

of a particular contract type in order to 

incentivize productivity and innovation 

in industry. However, DoD has prepared 

an initial regulatory flexibility analysis 

that is summarized as follows: 

This rule proposes to amend 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. The legal basis 

is 41 U.S.C. 1303 and 48 CFR chapter 

1. 

The proposed rule will not have much 

impact on small entities because the 

focus of the rule is for 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 proposed rule imposes no 

reporting, recordkeeping, or other 

information collection requirements. 

The rule does not duplicate, overlap, 

or conflict with any other Federal rules. 

There are no known alternatives to 

the rule that would adequately 

implement the DoD policy. There is no 

significant economic impact on small 

entities. 

DoD invites comments from small 

business concerns and other interested 

parties on the expected impact of this 

rule on small entities. 

DoD will also consider comments 

from small entities concerning the 

existing regulations in subparts affected 

by this rule in accordance with 5 U.S.C. 

610. Interested parties must submit such 

comments separately and should cite 5 

U.S.C. 610 (DFARS Case 2011–D010) in 

correspondence. 

IV. Paperwork Reduction Act 

The proposed rule contains no 

information collection requirements that 

require the 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 

proposed to be amended as follows: 

PART 216—TYPES OF CONTRACTS 

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) 


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Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Proposed Rules 11411 

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 default arrangement. 

[FR Doc. 2011–4527 Filed 3–1–11; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Part 217 

RIN 0750–AG89 

Defense Federal Acquisition 

Regulation Supplement; Multiyear 

Contracting (DFARS Case 2009–D026) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Proposed rule. 

SUMMARY: DoD is proposing to amend 

the Defense Federal Acquisition 

Regulation Supplement (DFARS) to 

update and clarify the requirements for 

multiyear contracting. No statutory 

changes are incorporated in this 

proposed rule. 

DATES: Comments on the proposed rule 

should be submitted in writing to the 

address shown below on or before May 

2, 2011, to be considered in the 

formation of the final rule. 

ADDRESSES: Submit comments 

identified by DFARS Case 2009–D026, 

using any of the following methods: 

Æ Regulations.gov: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

Æ E-mail: dfars@osd.mil. Include 

DFARS Case 2009–D026 in the subject 

line of the message. 

Æ Fax: (703) 602–0350. 

Æ Mail: Defense Acquisition 

Regulations System, Attn: Manual 

Quinones, OUSD (AT&L) DPAP (DARS), 

Room 3B855, 3060 Defense Pentagon, 

Washington, DC 20301–3060. 

Comments received generally will be 

posted without change to http:// 

www.regulations.gov, including any 

personal information provided. To 

confirm receipt of your comment(s), 

please check http://www.regulations.gov 

approximately two to three days after 

submission to verify posting (except 

allow 30 days for posting of comments 

submitted by mail). 

FOR FURTHER INFORMATION CONTACT: 

Manual Quinones, Telephone (703) 

602–1302. 

SUPPLEMENTARY INFORMATION: 

I. Background 

This DFARS case was initiated by 

DoD based on an internal DoD policy 

decision to perform a comprehensive 

review of DFARS subpart 217.1, 

Multiyear Contracting to update and 

clarify the requirements relating to 

multiyear contracting. This effort 

includes reorganizing existing coverage 

for multiyear acquisitions, such as the 

co-location of basic congressional 

notification requirements under 

217.170, General. Additionally, the 

contents of 217.173, Multiyear contracts 

for weapons systems and 217.174, 

Multiyear contracts that employ 

economic order quantity procurement, 

are merged into 217.170, General, and 

217.172, Multiyear contracts for 

supplies. The requirements governing 

multiyear contracts for military family 

housing, currently at 217.171(b), are 

separated out and highlighted as a new 

section 217.173, entitled ‘‘Multiyear 

contracting for military family housing.’’ 

Citations to the United States Code, 

relevant DoD regulations, and the 

Federal Acquisition Regulation have 

been updated. No changes to existing 

DoD policy, including implementation 

of any statutorily mandated acquisitionrelated thresholds, are being made in 

this rule. 

II. Executive Order 12866 

This rule was not subject to Office of 

Management and Budget review under 

Executive Order 12866, dated 

September 30, 1993. This rule is not a 

major rule under 5 U.S.C. 804. 

III. Regulatory Flexibility Act 

DoD does not expect this rule to have 

an economic impact on small entities 

within the meaning of the Regulatory 

Flexibility Act, 5 U.S.C. 601, et seq., 

because the rule does not change the 

existing requirements of subpart 217.1. 

Further, these requirements are 

primarily internal procedures for DoD. 

Therefore, DoD has not performed an 

initial regulatory flexibility analysis. 

DoD invites comments from small 

business concerns and other interested 

parties on the expected impact of this 

rule on small entities. 

DoD will also consider comments 

from small entities concerning the 

existing regulations in subparts affected 

by this rule in accordance with 5 U.S.C. 

610. Interested parties must submit such 

comments separately and should cite 5 

U.S.C. 610 (DFARS Case 2009–D026) in 

correspondence. 

IV. Paperwork Reduction Act 

This rule does not impose any 

information collection requirements that 

require the 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 217 

Government procurement. 

Mary Overstreet, 

Editor, Defense Acquisition Regulations 

System. 

Therefore, 48 CFR part 217 is 

proposed to be amended as follows: 

PART 217—SPECIAL CONTRACTING 

METHODS 

1. The authority citation for 48 CFR 

part 217 continues to read as follows: 

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

chapter 1. 

2. Section 217.170 is amended by— 

a. Redesignating paragraphs (a), (b), 

(c), (d), and (e) as paragraphs (b), (c), (d), 

(e), and (f), respectively; 

b. Adding a new paragraph (a); 

c. Amending redesignated paragraph 

(b) by removing ‘‘Public Law 105–56’’ 

and adding in its place ‘‘Pub. L. 105–56,’’ 

and removing ‘‘Section’’ and adding in 

its place ‘‘section’’; 

d. Amending redesignated paragraph 

(c) by removing ‘‘217.172(f)(2)’’ and 

adding in its place ‘‘217.172(g)(2)’’; 

e. Revising redesignated paragraph 

(d); and 

f. Revising redesignated paragraph (f). 

The additions and revisions read as 

follows: 

217.170 General. 

(a) This section explains the general 

rules that are common to all multiyear 

contracts. 

* * * * * 

(d) The head of the agency must 

provide written notice to the 

congressional defense committees at 

least 10 days before termination of any 

multiyear contract (10 U.S.C. 

2306b(1)(6), 10 U.S.C. 2306c(d)(3), 

section 8008(a) of Pub. L. 105–56, and 

similar sections in subsequent DoD 

appropriations acts). 

* * * * * 

(f)(1) DoD must provide notification to 

the congressional defense committees at 

least 30 days before entering into a 

multiyear contract for certain 

procurements, including those expected 

to— 

(i) Employ an unfunded contingent 

liability in excess of $20 million (see 10 

U.S.C. 2306b(1)(1)(B)(i)(II), 10 U.S.C. 

2306(d)(1), and section 8008(a) of Pub. 


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