31798 Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / Proposed Rules

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.

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]

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