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[Federal Register Volume 75, Number 218 (Friday, November 12, 2010)]
[Rules and Regulations]
[Pages 69360-69361]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-28494]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 216 and 252

Defense Federal Acquisition Regulation Supplement; Award-Fee 
Reductions for Health and Safety Issues (DFARS Case 2009-D039)

AGENCY: Defense Acquisition Regulations System; Department of Defense 
(DoD).

ACTION: Interim rule with request for comments.

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SUMMARY: DoD is issuing an interim rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement section 823 of 
the National Defense Authorization Act for Fiscal Year 2010. Section 
823 requires contracting officers to consider reduction or denial of 
award fee if contractor or subcontractor actions jeopardize the health 
or safety of Government personnel.

DATES: Effective Date: November 12, 2010.
    Comment Date: Comments on the interim rule should be submitted to 
the address shown below on or before January 11, 2011, to be considered 
in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2009-D039, 
using any of the following methods:
    [cir] Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    [cir] E-mail: dfars@osd.mil. Include DFARS Case 2009-D039 in the 
subject line of the message.
    [cir] Fax: 703-602-0350.
    [cir] Mail: Defense Acquisition Regulations Council, Attn: Ms. Amy 
G. Williams, 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, 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 G. Williams, 703-602-0328.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 823 of the National Defense Authorization Act for Fiscal 
Year 2010 (Pub. L. 111-84), requires DoD to revise guidance issued 
pursuant to section 814 of the National Defense Authorization Act for 
Fiscal Year 2007 (Pub. L. 109-364). Section 823 is entitled ``Authority 
for Secretary of Defense to Reduce or Deny Award Fees to Companies 
Found to Jeopardize Health or Safety of Government Personnel.'' For 
covered contracts that include award fees, if a contractor or its 
subcontractor acts with gross negligence or reckless disregard for 
health or safety, causing serious bodily injury or death of Government 
personnel, then the contracting officer must consider reduction or 
denial of award fee for the period in which that action occurred. This 
interim rule provides a clause to detail those dispositions where a 
reduction or denial of award fee is applicable. The clause also allows 
for the recovery of all or part of any award fees paid for any previous 
award fee evaluation period during which contractor actions caused 
serious bodily injury or death of Government personnel.

II. Executive Order 12866

    This is not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993.

III. Regulatory Flexibility Act:

    DoD does not expect this interim 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 most contracts awarded to small entities use simplified 
acquisition procedures or, based on the circumstances, may be awarded 
on a competitive fixed-price basis or a cost-plus-fixed-fee basis. 
Contracts awarded to small businesses do not generally utilize award-
fee type incentive fee structure. 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-D039) in 
correspondence.

IV. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the rule does 
not impose any information collection requirements that require the 
approval

[[Page 69361]]

of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

V. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comments. This action 
is necessary because section 823 of the National Defense Authorization 
Act for Fiscal Year 2010 requires implementation no later than 180 days 
after October 28, 2009. If this requirement is not implemented in the 
DFARS, contracting officers may not be aware of the requirement to 
consider reduction or denial of the award fee paid in a period in which 
actions of gross negligence or reckless disregard of health or safety 
by the contractor or its subcontractors caused serious bodily injury or 
death of Government personnel. However, pursuant to 41 U.S.C. 418b, DoD 
will consider public comments received in response to this interim rule 
in the formation of the final rule.

List of Subjects in 48 CFR Parts 216 and 252

    Government procurement.

Clare M. Zebrowski,
Editor, Defense Acquisition Regulations System.

0
Therefore, 48 CFR parts 216 and 252 are amended as follows:
0
1. The authority citation for 48 CFR parts 216 and 252 continues to 
read as follows:

    Authority:  41 U.S.C. 421 and 48 CFR chapter 1.

PART 216--TYPES OF CONTRACTS

0
2. Sections 216.405-270 and 216.406 are added to subpart 216.4 to read 
as follows:

216.405-270  Award fee reduction or denial for jeopardizing the health 
or safety of Government personnel.

    (a) Definitions.
    Covered incident and serious bodily injury, as used in this 
section, are defined in the clause at 252.216-7004, Award Fee Reduction 
or Denial for Jeopardizing the Health or Safety of Government 
Personnel.
    (b) In accordance with section 823 of the National Defense 
Authorization Act for Fiscal Year 2010 (Pub. L. 111-84), the 
contracting officer shall include in the evaluation of any award fee 
plan, a review of contractor actions that jeopardized the health and 
safety of Government personnel.
    (c) If, in performing under a contract, contractor or subcontractor 
actions cause serious bodily injury or death of civilian or military 
Government personnel, the contracting officer shall consider reducing 
or denying the award fee for any of the relevant award fee periods in 
which the covered incident occurred, including the recovery of all or 
part of any award fees previously paid for such period.

216.406  Contract clauses.

    Use the clause at 252.216.7004, Award Fee Reduction or Denial for 
Jeopardizing the Health or Safety of Government Personnel, in all 
solicitations and contracts containing award fee provisions.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
3. Section 252.216-7004 is added 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 (NOV 2010)

    (a) Definitions. As used in this clause--
    Covered incident--
    (1) Means any incident in which the Contractor, through a 
criminal, civil, or administrative proceeding that results in a 
disposition listed in paragraph (2) of this definition--
    (i) 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
    (ii) 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.
    (2) Includes those incidents that have resulted in any of the 
following dispositions:
    (i) In a criminal proceeding, a conviction.
    (ii) 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.
    (iii) In an administrative proceeding, a finding of fault and 
liability that results in--
    (A) The payment of a monetary fine or penalty of $5,000 or more; 
or
    (B) The payment of a reimbursement, restitution, or damages in 
excess of $100,000.
    (iv) 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 paragraphs (2)(i), 
(2)(ii), or (2)(iii) of this definition.
    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 relevant award fee 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. 2010-28494 Filed 11-10-10; 8:45 am]
BILLING CODE 5001-08-P
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