[Federal Register Volume 61, Number 120 (Thursday, June 20, 1996)]
[Proposed Rules]
[Page 31798]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-14838]




[[Page 31797]]


_______________________________________________________________________

Part IX

Department of the Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________



48 CFR Parts 16 and 52



Federal Acquisition Regulation; Performance Incentives for Fixed-Price 
Contracts; Proposed Rule

Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / 
Proposed Rules

[[Page 31798]]



DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 16 and 52

[FAR Case 93-603]
RIN 9000-AH07


Federal Acquisition Regulation; Performance Incentives for Fixed-
Price Contracts

AGENCIES: Department of Defense (DOD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council are proposing to amend the Federal 
Acquisition Regulation (FAR) by allowing performance incentives alone 
and not just when performance incentives are coupled with cost 
incentives. Thus award fees will be allowed in fixed-price contracts. 
Also, they have agreed to some editorial changes to the related 
clauses.This regulatory action was not subject to Office of Management 
and Budget review under Executive Order 12866, dated September 30, 
1993. This is not a major rule under 5 U.S.C. 804.

DATES: Comments should be submitted on or before August 19, 1996 to be 
considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to: -
General Services Administration, FAR Secretariat (VRS), 18th & F 
Streets, NW, Room 4037, Washington, DC 20405.
    Please cite FAR case 93-603 in all correspondence related to this 
case.

FOR FURTHER INFORMATION CONTACT: Mr. Ralph DeStefano at (202) 501-1758 
in reference to this FAR case. For general information, contact the FAR 
Secretariat, Room 4037, GS Building, Washington, DC 20405 (202) 501-
4755. Please cite FAR case 93-603.

SUPPLEMENTARY INFORMATION:

A. Background

    The FAR currently only provides for the use of performance 
incentives together with cost incentives. This FAR revision proposes an 
amendment to the FAR allowing performance incentives to be used alone. 
This proposed change will allow agencies to recognize and reward 
contractors that share the Government's commitment to quality and 
perform at a level that exceeds the minimum in terms of quality, 
timeliness, technical ingenuity and effective management.

B. Regulatory Flexibility Act

    This proposed rule is not expected 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 the rule 
authorizes the government to use an additional type of contract under 
the Federal Acquisition Regulation. The rule authorizes award fees in 
fixed price contract performance incentives alone and not just when 
performance incentives are coupled with cost incentives. An Initial 
Regulatory Flexibility Analysis has, therefore, not been performed. 
Comments from small entities concerning the affected FAR subpart will 
be considered in accordance with 5 U.S.C. 610 of the Act. Such comments 
must be submitted separately and should cite 5 U.S.C. 601, et seq. (FAR 
case 93-603), in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act (Pub. L. 104-13) does not apply because 
the proposed changes to the FAR do not impose recordkeeping or 
information collection requirements, or collections of information from 
offerors, contractors, or members of the public which require the 
approval of the Office of Management and Budget under 44 U.S.C. 3501, 
et seq.

List of Subjects in 48 CFR Parts 16 and 52

    Government procurement.

    Dated: June 6, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, it is proposed that 48 CFR Parts 16 and 52 be amended as 
set forth below:
    1. The authority citation for 48 CFR Parts 16 and 52 continues to 
read as follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 16-TYPES OF CONTRACTS

    2. Section 16.204 is amended by removing the citation ``16.405'' 
and inserting ``16.406'' in its place.
    3. Section 16.403-3 is added to read as follows:


16.403-3  Fixed-price contracts with award fees.

    Award fee provisions may be used in fixed-price contracts as 
provided in 16.405.
    4. Section 16.405 is redesignated as 16.406 and a new 16.405 is 
added to read as follows:


16.405  Other applications of award fees.

    The ``award amount'' portion of the fee may be used in other types 
of contracts under the following conditions:
    (a) The Government wishes to motivate and reward a contractor for 
management performance in areas which cannot be measured objectively 
and where normal incentive provisions cannot be used.
    (b) A ``base fee'' (fixed amount portion) is not used.
    (c) A level above the contracting officer approves the use of the 
``award amount.''
    (d) An award review board and procedures are established for 
conduct of the evaluation.
    (e) The administrative costs of evaluation do not exceed the 
expected benefits.
    (f) The contract expressly excludes from the operation of the 
disputes clause any disagreement by the contractor concerning the 
amount of the award fee.

PART 52-SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    5. Section 52.216-16 is amended by revising the introductory 
paragraph, and Alternate I introductory text to read as follows:


52.216-16  Incentive Price Revision--Firm Target.

    As prescribed in 16.406(a), insert the following clause:
* * * * *
    Alternate I (APR 1984). As prescribed in 16.406(a), add the 
following paragraph (o) to the basic clause:
* * * * *
    6. Section 52.216-17 is amended by revising the introductory 
paragraph, and Alternate I introductory text to read as follows:


52.216-17  Incentive Price Revision--Successive Targets.

    As prescribed in 16.406(b), insert the following clause:
* * * * *
    Alternate I (APR 1984). As prescribed in 16.406(b), add the 
following paragraph (q) to the basic clause:
* * * * *
[FR Doc. 96-14838 Filed 6-19-96; 8:45 am]
BILLING CODE 6820-EP-P