8300 Federal Register / Vol. 76, No. 30 / Monday, February 14, 2011 / Rules and Regulations 

of the United States. EPA will submit a 

report containing this action and other 

required information to the U.S. Senate, 

the U.S. House of Representatives, and 

the Comptroller General of the United 

States prior to publication of the rule in 

the Federal Register. A major rule 

cannot take effect until 60 days after it 

is published in the Federal Register. 

This action is not a ‘‘major rule’’ as 

defined by 5 U.S.C. 804(2). 

C. Petitions for Judicial Review 

Under section 307(b)(1) of the CAA, 

petitions for judicial review of this 

action must be filed in the United States 

Court of Appeals for the appropriate 

circuit by April 15, 2011. Filing a 

petition for reconsideration by the 

Administrator of this final rule does not 

affect the finality of this action for the 

purposes of judicial review nor does it 

extend the time within which a petition 

for judicial review may be filed, and 

shall not postpone the effectiveness of 

such rule or action. Parties with 

objections to this direct final rule are 

encouraged to file a comment in 

response to the parallel notice of 

proposed rulemaking for this action 

published in the proposed rules section 

of today’s Federal Register, rather than 

file an immediate petition for judicial 

review of this direct final rule, so that 

EPA can withdraw this direct final rule 

and address the comment in the 

proposed rulemaking. This action to 

approve Virginia’s revision to the 

definition of ‘‘Volatile organic 

compound’’ may not be challenged later 

in proceedings to enforce its 

requirements. (See section 307(b)(2).) 

List of Subjects in 40 CFR Part 52 

Environmental protection, Air 

pollution control, Incorporation by 

reference, Ozone, Reporting and 

recordkeeping requirements, Volatile 

organic compounds. 

Dated: February 1, 2011. 

W.C. Early, 

Acting Regional Administrator, Region III. 

40 CFR part 52 is amended as follows: 

PART 52—[AMENDED] 

■ 1. The authority for citation for part 52 

continues to read as follows: 

Authority: 42 U.S.C. 7401 et seq. 

Subpart VV—Virginia 

■ 2. In § 52.2420, the table in paragraph 

(c) is amended by adding a seventh 

entry under 5–10–20 to read as follows: 

§ 52.2420 Identification of plan. 

* * * * * 

(c) * * * 

EPA-APPROVED VIRGINIA REGULATIONS AND STATUTES

State citation Title/subject 

State 

effective 

date 

EPA approval date Explanation [former SIP 

citation] 

9 VAC 5 Chapter 10 ................ General Definitions [Part I] 

* * * * * * * 

5–10–20 .................................... Terms Defined ......................... 2/18/10 2/14/11 [Insert page number 

where the document begins].

Revised definition of ‘‘Volatile 

organic compound.’’ 

* * * * * * * 

* * * * * 

[FR Doc. 2011–3096 Filed 2–11–11; 8:45 am] 

BILLING CODE 6560–50–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R09–OAR–2011–0041; FRL–9264–1] 

Finding of Failure To Submit State 

Implementation Plan Revisions for 

Particulate Matter, PM–10, Maricopa 

County (Phoenix) PM–10 

Nonattainment Area, AZ 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule. 

SUMMARY: EPA is taking final action to 

find that Arizona failed to make a state 

implementation plan (SIP) submittal 

required under the Clean Air Act (CAA 

or Act) for the Maricopa County 

(Phoenix) nonattainment area (Maricopa 

area) for particulate matter of 10 

microns or less (PM–10). The Maricopa 

area is a serious PM–10 nonattainment 

area which, having failed to attain the 

PM–10 National Ambient Air Quality 

Standards (NAAQS) by its required 

statutory attainment deadline, is subject 

to section 189(d) of the CAA. For such 

areas, section 189(d) requires that states 

submit within 12 months after the 

applicable attainment date, plan 

revisions which provide for attainment 

of the PM–10 NAAQS, and from the 

date of such submission until 

attainment, for an annual reduction of 

PM–10 or PM–10 precursor emissions 

within the area of not less than 5 

percent of the amount of such emissions 

as reported in the most recent inventory 

prepared for the area. 

Arizona submitted a section 189(d) 

plan for the Maricopa area on December 

21, 2007, and EPA proposed action on 

this plan on September 9, 2010. On 

January 25, 2011, prior to final action on 

the plan by EPA, Arizona withdrew the 

submitted plan from the Agency’s 

consideration. As a result of the 

withdrawal, EPA is today finding that 

Arizona failed to make the submittal 

required for the Maricopa area under 

section 189(d) of the Act. 

This action triggers the 18-month 

clock for mandatory application of 

sanctions and 2-year clock for a federal 

implementation plan (FIP) under the 

Act. This action is consistent with the 

CAA mechanism for assuring SIP 

submissions. 

DATES: Effective Date: This action was 

effective as of February 14, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Gregory Nudd, U.S. Environmental 

Protection Agency, Region 9, Air 

Division (AIR–2), 75 Hawthorne Street, 

San Francisco, CA 94105–3901, 

Telephone: (415) 947–4107; 

nudd.gregory@epa.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The NAAQS are standards for certain 

ambient air pollutants set by EPA to 

protect public health and welfare. PM– 

10 is among the ambient air pollutants 

for which EPA has established healthbased standards. PM–10 causes adverse 

health effects by penetrating deep in the 

lungs, aggravating the cardiopulmonary 

system. Children, the elderly, and 

people with asthma and heart 

conditions are the most vulnerable. 

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1 In a 1994 rulemaking, EPA established the 

Agency’s selection of the sequence of these two 

sanctions: The offset sanction under section 

179(b)(2) shall apply at 18 months, followed 6 

months later by the highway sanction under section 

179(b)(1) of the Act. EPA does not choose to deviate 

from this presumptive sequence in this instance. 

For more details on the timing and implementation 

of the sanctions, see 59 FR 39832 (August 4, 1994), 

promulgating 40 CFR 52.31, ‘‘Selection of sequence 

of mandatory sanctions for findings made pursuant 

to section 179 of the Clean Air Act.’’ 

On July 1, 1987 EPA revised the 

health-based NAAQS (52 FR 24672), 

replacing the standards for total 

suspended particulates with new 

standards applying only to particulate 

matter up to ten microns in diameter 

(PM–10). At that time, EPA established 

two PM–10 standards, annual standards 

and 24-hour standards. Effective 

December 18, 2006, EPA revoked the 

annual PM–10 standards but retained 

the 24-hour PM–10 standards. 71 FR 

61144 (October 17, 2006). The 24-hour 

PM–10 standards of 150 micrograms per 

cubic meter (μg/m3) are attained when 

the expected number of days per 

calendar year with a 24-hour average 

concentration above 150 μg/m3, as 

determined in accordance with 

appendix K to 40 CFR part 50, is equal 

to or less than one. 40 CFR 50.6 and 40 

CFR part 50, appendix K. 

On the date of enactment of the 1990 

Clean Air Act Amendments (CAA or the 

Act), many areas, including the 

Maricopa area, meeting the 

qualifications of section 107(d)(4)(B) of 

the amended Act were designated 

nonattainment by operation of law. 56 

FR 11101 (March 15, 1991). The 

Maricopa area is located in the eastern 

portion of Maricopa County and 

encompasses the cities of Phoenix, 

Mesa, Scottsdale, Tempe, Chandler, 

Glendale, as well as 17 other 

jurisdictions and unincorporated 

County lands. The nonattainment area 

also includes the town of Apache 

Junction in Pinal County. EPA codified 

the boundaries of the Maricopa area at 

40 CFR 81.303. 

Once an area is designated 

nonattainment for PM–10, section 188 

of the CAA outlines the process for 

classifying the area as moderate or 

serious and establishes the area’s 

attainment deadline. In accordance with 

section 188(a), at the time of 

designation, all PM–10 nonattainment 

areas, including the Maricopa area, were 

initially classified as moderate. 

A moderate PM–10 nonattainment 

area must be reclassified to serious PM– 

10 nonattainment by operation of law if 

EPA determines after the applicable 

attainment date that, based on air 

quality, the area failed to attain by that 

date. CAA sections 179(c) and 188(b)(2). 

On May 10, 1996, EPA reclassified the 

Maricopa area as a serious PM–10 

nonattainment area. 61 FR 21372. 

As a serious PM–10 nonattainment 

area, the Maricopa area acquired a new 

attainment deadline of no later than 

December 31, 2001. CAA section 

188(c)(2). However CAA section 188(e) 

allows states to apply for up to a 5-year 

extension of that deadline if certain 

conditions are met. Arizona requested 

an attainment date extension under 

CAA section 188(e) from December 31, 

2001 to December 31, 2006. On July 25, 

2002, EPA approved the serious area 

PM–10 plan for the Maricopa area and 

granted Arizona’s request to extend the 

attainment date for the area to December 

31, 2006. 67 FR 48718. This final action, 

as well as the two proposals preceding 

it, provide a more detailed discussion of 

the history of PM–10 planning in the 

Maricopa area. See 65 FR 19964 (April 

13, 2000) and 66 FR 50252 (October 2, 

2001). 

On June 6, 2007, EPA found that the 

Maricopa area failed to attain the 24- 

hour PM–10 NAAQS by December 31, 

2006 (72 FR 31183) and required the 

submittal of a new plan meeting the 

requirements of section 189(d) by 

December 31, 2007. 

On December 19, 2007, the Maricopa 

Association of Governments (MAG) 

adopted the ‘‘MAG 2007 Five Percent 

Plan for PM–10 for the Maricopa County 

Nonattainment Area’’ (189(d) plan). On 

December 21, 2007 the Arizona 

Department of Environmental Quality 

(ADEQ) submitted the 189(d) plan. 

MAG adopted and ADEQ submitted this 

SIP revision in order to address the CAA 

requirements in section 189(d). 

CAA section 110(k)(1) requires EPA to 

determine whether a SIP submission is 

complete within 60 days of receipt. This 

section also provides that any plan that 

has not been affirmatively determined to 

be complete or incomplete shall become 

complete within 6 months by operation 

of law. EPA’s completeness criteria are 

found in 40 CFR part 51, appendix V. 

The 189(d) plan submittal became 

complete by operation of law on June 

21, 2008. 

EPA proposed to partially approve 

and partially disapprove the 189(d) plan 

on September 9, 2010 (75 FR 54806). On 

January 25, 2011, prior to any final EPA 

action, Arizona withdrew the 189(d) 

plan from the Agency’s consideration. 

II. Final Action 

A. Finding of Failure To Submit 

Required SIP Revisions 

If Arizona does not submit the 

required plan revisions within 18 

months of the effective date of today’s 

rulemaking, pursuant to CAA section 

179(a) and 40 CFR 52.31, the offset 

sanction identified in CAA section 

179(b) will be applied in the affected 

area. If the State has still not made a 

complete submittal 6 months after the 

offset sanction is imposed, then the 

highway funding sanction will apply in 

the affected area, in accordance with 40 

CFR 52.31.1 The 18-month clock will 

stop and the sanctions will not take 

effect if, within 18 months after the date 

of the finding, EPA finds that the State 

has made a complete submittal 

addressing the 189(d) PM–10 

requirements for the Maricopa area. In 

addition, CAA section 110(c)(1) 

provides that EPA must promulgate a 

federal implementation plan (FIP) no 

later than 2 years after a finding under 

section 179(a) unless EPA takes final 

action to approve the submittal within 

2 years of EPA’s finding. 

B. Effective Date Under the 

Administrative Procedures Act 

This final action is effective on 

February 14, 2011. 

Under the Administrative Procedures 

Act (APA), 5 U.S.C. 553(d)(3), an agency 

rulemaking may take effect before 30 

days after the date of publication in the 

Federal Register if an agency has good 

cause to mandate an earlier effective 

date. Today’s action concerns SIP 

revisions that are already overdue and 

the State has been aware of applicable 

provisions of the CAA relating to 

overdue SIPs. In addition, today’s action 

simply starts a ‘‘clock’’ that will not 

result in sanctions for 18 months, and 

that the State may ‘‘turn off’’ by a 

complete SIP submittal addressing the 

189(d) PM–10 requirements for the 

Maricopa area. These reasons support 

an effective date prior to 30 days after 

the date of publication. 

C. Notice-and-Comment Under the 

Administrative Procedures Act 

This final agency action is not subject 

to the notice-and-comment 

requirements of the APA, 5 U.S.C. 

533(b). EPA believes that because of the 

limited time provided to make findings 

of failure to submit regarding SIP 

submissions, Congress did not intend 

such findings to be subject to noticeand-comment rulemaking. However, to 

the extent such findings are subject to 

notice-and-comment rulemaking, EPA 

invokes the good cause exception 

pursuant to the APA, 5 U.S.C. 553(d)(3). 

Notice and comment are unnecessary 

because no EPA judgment is involved in 

making a nonsubstantive finding of 

failure to submit SIPs required by the 

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8302 Federal Register / Vol. 76, No. 30 / Monday, February 14, 2011 / Rules and Regulations 

CAA. Furthermore, providing notice 

and comment would be impracticable 

because of the limited time provided 

under the statute for making such 

determinations. Finally, notice and 

comment would be contrary to the 

public interest because it would divert 

Agency resources from the critical 

substantive review of submitted SIPs. 

See 58 FR 51270, 51272, note 17 

(October 1, 1993); 59 FR 39832, 39853 

(August 4, 1994). 

III. Statutory and Executive Order 

Reviews 

A. Executive Order 12866, Regulatory 

Planning and Review 

The Office of Management and Budget 

(OMB) has exempted this regulatory 

action from Executive Order 12866, 

entitled ‘‘Regulatory Planning and 

Review.’’ 

B. Paperwork Reduction Act 

This action does not impose an 

information collection burden under the 

provisions of the Paperwork Reduction 

Act, 44 U.S.C. 3501 et seq. Burden is 

defined at 5 CFR 1320.3(b). 

C. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires an agency to conduct 

a regulatory flexibility analysis of any 

rule subject to notice and comment 

rulemaking requirements unless the 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities. 

Small entities include small businesses, 

small not-for-profit enterprises, and 

small governmental jurisdictions. 

This final rule will not have a 

significant impact on a substantial 

number of small entities because 

findings of failure to submit required 

SIP revisions do not by themselves 

create any new requirements. Therefore, 

I certify that this action will not have a 

significant economic impact on a 

substantial number of small entities. 

D. Unfunded Mandates Reform Act 

Under section 202 of the Unfunded 

Mandates Reform Act of 1995 

(‘‘Unfunded Mandates Act’’), signed into 

law on March 22, 1995, EPA must 

prepare a budgetary impact statement to 

accompany any proposed or final rule 

that includes a Federal mandate that 

may result in estimated costs to State, 

local, or tribal governments in the 

aggregate; or to the private sector, of 

$100 million or more. Under section 

205, EPA must select the most costeffective and least burdensome 

alternative that achieves the objectives 

of the rule and is consistent with 

statutory requirements. Section 203 

requires EPA to establish a plan for 

informing and advising any small 

governments that may be significantly 

or uniquely impacted by the rule. 

EPA has determined that today’s 

action does not include a Federal 

mandate that may result in estimated 

costs of $100 million or more to either 

State, local, or tribal governments in the 

aggregate, or to the private sector. The 

CAA provision discussed in this rule 

requires states to submit SIPs. This rule 

merely finds that Arizona has not met 

that requirement. Accordingly, no 

additional costs to State, local, or tribal 

governments, or to the private sector, 

result from this action. 

E. Executive Order 13132, Federalism 

Federalism (64 FR 43255, August 10, 

1999) revokes and replaces Executive 

Orders 12612 (Federalism) and 12875 

(Enhancing the Intergovernmental 

Partnership). Executive Order 13132 

requires EPA to develop an accountable 

process to ensure ‘‘meaningful and 

timely input by State and local officials 

in the development of regulatory 

policies that have federalism 

implications.’’ ‘‘Policies that have 

federalism implications’’ is defined in 

the Executive Order to include 

regulations that have ‘‘substantial direct 

effects on the States, on the relationship 

between the national government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government.’’ Under 

Executive Order 13132, EPA may not 

issue a regulation that has federalism 

implications, that imposes substantial 

direct compliance costs, and that is not 

required by statute, unless the Federal 

government provides the funds 

necessary to pay the direct compliance 

costs incurred by State and local 

governments, or EPA consults with 

State and local officials early in the 

process of developing the proposed 

regulation. EPA also may not issue a 

regulation that has federalism 

implications and that preempts State 

law unless the Agency consults with 

State and local officials early in the 

process of developing the proposed 

regulation. 

This rule will not have substantial 

direct effects on the States, on the 

relationship between the national 

government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government, as specified in 

Executive Order 13132, because it does 

not alter the relationship or the 

distribution of power and 

responsibilities established in the Clean 

Air Act. Thus, the requirements of 

section 6 of the Executive Order do not 

apply to this rule. 

F. Executive Order 13175, Coordination 

With Indian Tribal Governments 

Executive Order 13175, entitled 

‘‘Consultation and Coordination with 

Indian Tribal Governments’’ (65 FR 

67249, November 9, 2000), requires EPA 

to develop an accountable process to 

ensure ‘‘meaningful and timely input by 

tribal officials in the development of 

regulatory policies that have tribal 

implications.’’ This final rule does not 

have tribal implications, as specified in 

Executive Order 13175. It will not have 

substantial direct effects on tribal 

governments, on the relationship 

between the Federal government and 

Indian tribes, or on the distribution of 

power and responsibilities between the 

Federal government and Indian tribes. 

Thus, Executive Order 13175 does not 

apply to this rule. 

G. Executive Order 13045, Protection of 

Children From Environmental Health 

Risks and Safety Risks 

EPA interprets Executive Order 13045 

(62 FR 19885, April 23, 1997) as 

applying only to those regulatory 

actions that concern health or safety 

risks, such that the analysis required 

under section 5–501 of the Executive 

Order has the potential to influence the 

regulation. This rule is not subject to 

Executive Order 13045 because it 

merely finds that Arizona has failed to 

make a submission that is required 

under the Clean Air Act. 

H. Executive Order 13211, Actions That 

Significantly Affect Energy Supply, 

Distribution, or Use 

This rule is not subject to Executive 

Order 13211, ‘‘Actions Concerning 

Regulations That Significantly Affect 

Energy Supply, Distribution, or Use’’ (66 

FR 28355, May 22, 2001) because it is 

not a significant regulatory action under 

Executive Order 12866. 

I. National Technology Transfer and 

Advancement Act 

Section 12 of the National Technology 

Transfer and Advancement Act 

(NTTAA) of 1995 requires Federal 

agencies to evaluate existing technical 

standards when developing a new 

regulation. To comply with NTTAA, 

EPA must consider and use ‘‘voluntary 

consensus standards’’ (VCS) if available 

and applicable when developing 

programs and policies unless doing so 

would be inconsistent with applicable 

law or otherwise impractical. 

The EPA believes that VCS are 

inapplicable to this action. Today’s 

action does not require the public to 

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Federal Register / Vol. 76, No. 30 / Monday, February 14, 2011 / Rules and Regulations 8303 

perform activities conducive to the use 

of VCS. 

J. Executive Order 12898: Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Population 

Executive Order (EO) 12898 (59 FR 

7629 (Feb. 16, 1994)) establishes federal 

executive policy on environmental 

justice. Its main provision directs 

federal agencies, to the greatest extent 

practicable and permitted by law, to 

make environmental justice part of their 

mission by identifying and addressing, 

as appropriate, disproportionately high 

and adverse human health or 

environmental effects of their programs, 

policies, and activities on minority 

populations and low-income 

populations in the United States. 

EPA lacks the discretionary authority 

to address environmental justice in this 

rulemaking. 

K. Congressional Review Act 

The Congressional Review Act, 5 

U.S.C. 801 et seq., as added by the Small 

Business Regulatory Enforcement 

Fairness Act of 1996, generally provides 

that before a rule may take effect, the 

agency promulgating the rule must 

submit a rule report, which includes a 

copy of the rule, to each House of the 

Congress and to the Comptroller General 

of the United States. EPA will submit a 

report containing this rule and other 

required information to the U.S. Senate, 

the U.S. House of Representatives, and 

the Comptroller General of the United 

States prior to publication of the rule in 

the Federal Register. A major rule 

cannot take effect until 60 days after it 

is published in the Federal Register. 

This action is not a ‘‘major rule’’ as 

defined by 5 U.S.C. section 804(2). This 

rule will be effective February 14, 2011. 

L. Petitions for Judicial Review 

Under section 307(b)(1) of the Clean 

Air Act, petitions for judicial review of 

this action must be filed in the United 

States Court of Appeals for the 

appropriate circuit by April 15, 2011. 

Filing a petition for reconsideration by 

the Administrator of this final rule does 

not affect the finality of this rule for the 

purposes of judicial review nor does it 

extend the time within which a petition 

for judicial review may be filed, and 

shall not postpone the effectiveness of 

such rule or action. This action may not 

be challenged later in proceedings to 

enforce its requirements (see section 

307(b)(2)). 

Authority: 42 U.S.C. 7401 et seq. 

Dated: January 3, 2011. 

Jared Blumenfeld, 

Regional Administrator, Region IX. 

[FR Doc. 2011–3027 Filed 2–11–11; 8:45 am] 

BILLING CODE 6560–50–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 216 and 252 

RIN 0750–AF51 

Defense Federal Acquisition 

Regulation Supplement; Award-Fee 

Contracts (DFARS Case 2006–D021) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Final rule. 

SUMMARY: DoD is issuing a final rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to address award-fee contracts, 

including eliminating the use of 

provisional award-fee payments. 

DATES: Effective Date: February 14, 

2011. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Mark Gomersall, Defense Acquisition 

Regulations System, OUSD (AT&L) 

DPAP/DARS, 3060 Defense Pentagon, 

Room 3B855, Washington, DC 20301– 

3060. Telephone 703–602–0302; 

facsimile 703–602–0350. Please cite 

DFARS Case 2006–D021. 

SUPPLEMENTARY INFORMATION: 

I. Background 

DoD published a proposed rule in the 

Federal Register (75 FR 22728) on April 

30, 2010, to revise guidance for awardfee evaluations and payments, eliminate 

the use of provisional award-fee 

payments, and incorporate DoD policy 

guidance on the use of objective criteria. 

A new clause entitled Award Fee sets 

forth the use of award fees in DoD 

contracts. 

II. Discussion and Analysis 

A. Analysis of Public Comments 

In response to the proposed rule, DoD 

received comments from three 

respondents. A discussion of the 

comments is provided below: 

1. Making 40 Percent of the Award-Fee 

Pool Available for the Final Evaluation 

a. Comment: The respondents 

considered the language aligning fee 

distributions with contract performance 

and cost schedules. One respondent 

stated that holding 40 percent of the 

award fee until the final evaluation does 

not consider the completion of 

individual contract line items or 

undefinitized work. 

DoD Response: The purpose of 

making 40 percent of the award-fee pool 

available under the final evaluation 

period is to set aside a sufficient amount 

to protect the taxpayer’s interest in the 

event a contractor fails to meet 

contractual obligations. Assuming the 

contract is properly structured, there is 

nothing in the rule that prohibits 

contractors from being paid for 

completed contract line items or work 

performed under undefinitized 

contracts. 

b. Comment: The respondents 

expressed concern that holding 40 

percent award fee until the final 

evaluation does not reward contract 

performance, particularly if a contract is 

terminated before the final evaluation. 

One respondent was concerned that by 

making a specified percentage of the 

award fee available for the final 

evaluation period, in the event of a 

termination for convenience, the 

contractor may not have the ability to 

earn that final award–fee percentage. 

DoD response: The rule does not 

change the current procedures for 

terminations for convenience. In the 

event of a termination for convenience 

prior to the final evaluation period, 

contractors will be eligible to earn 

award fee available up to the point of 

the termination. 

c. Comment: One respondent was 

concerned that holding of 40 percent of 

the award fee until final evaluation will 

negatively affect cash flow. The 

respondents were also concerned that 

the proposed rule will increase financial 

risk to Government contractors and 

result in an imbalance in the risk/ 

reward relationship. One respondent 

was concerned, therefore, that the rule 

will unfavorably impact DoD’s supplier 

base by adversely impacting suppliers’ 

ability to attract debt and equity 

investment. 

DoD Response: Contractors will 

continue to be paid incurred costs on 

cost-type contracts, completed work 

under fixed-price contracts with 

progress payments, or milestones 

achieved under fixed-price contracts 

with performance-based payments. 

Accordingly, a contractor’s cash flow 

should not be significantly impacted. 

Since contractors who consistently meet 

contractual performance requirements 

will maximize the amount of award fee 

earned, there is no imbalance in the 

risk/reward relationship. There should 

be little, if any, impact on a superior 

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