Federal Register / Vol. 76, No. 180 / Friday, September 16, 2011 / Rules and Regulations 57677 

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. 

* * * * * 

(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 

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 

■ 5. Revise section 252.216–7004 to 

read as follows: 

252.216–7004 Award Fee Reduction or 

Denial for Jeopardizing the Health or Safety 

of Government Personnel. 

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 

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] 

BILLING CODE 5001–08–P 

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 


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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. 

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. 

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 

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: 


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Federal Register / Vol. 76, No. 180 / Friday, September 16, 2011 / Rules and Regulations 57679 

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) 

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 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Temporary rule; modification of 

a closure. 

SUMMARY: 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. 

ADDRESSES: 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). 

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 


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