Document ID: EPA-HQ-OARM-2003-0001-0002
Agency: epa
Document Type: Proposed Rule
Title: Acquisition Regulation: Guidance on Use of Award Term Incentives; Administrative Amendments
Posted Date: 2007-10-04T04:00Z

[Federal Register: October 4, 2007 (Volume 72, Number 192)]
[Proposed Rules]               
[Page 56708-56713]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04oc07-20]                         

=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

48 CFR Parts 1516, 1533, and 1552

[Docket ID No. EPA-HQ-OARM-2003-0001; FRL-8477-9]
RIN 2030-AA89

 
Acquisition Regulation: Guidance on Use of Award Term Incentives; 
Administrative Amendments

AGENCY: Environmental Protection Agency.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Environmental Protection Agency (EPA) is proposing to 
amend the EPA Acquisition Regulation (EPAAR) to add policy, procedures, 
and contract clauses for the use of award term incentives. This rule 
makes two

[[Page 56709]]

administrative changes to the EPAAR. One change is to reflect the 
General Services Board of Contract Appeals as EPA's new forum for 
appeals under the Contract Disputes Act of 1978. The other change 
corrects a numbering error in Subpart 1516.4.

DATES: Comments must be received on or before December 3, 2007.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OARM-2003-0001 by one of the following methods:
     http://www.regulations.gov. Follow the on-line 

instructions for submitting comments.
     E-mail: docket.oei@epa.gov.
     Fax: (202) 566-0224.
     Mail: OEI Docket, Environmental Protection Agency, 
Mailcode: 2822T, 1200 Pennsylvania Ave., NW., Washington, DC 20460. 
Please include a total of three (3) copies.
     Hand Delivery: EPA Docket Center-Attention OEI Docket, EPA 
West, Room B102, 1301 Constitution Ave, NW., Washington, DC 20004. Such 
deliveries are only accepted during the Docket's normal hours of 
operation, and special arrangements should be made for deliveries of 
boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OARM-
2003-0001. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
http://www.regulations.gov, including any personal information provided, 

unless the comment includes information claimed to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. Do not submit information that you consider to 
be CBI or otherwise protected through http://www.regulations.gov or e-mail. 

The http://www.regulations.gov Web site is an ``anonymous access'' system, 

which means EPA will not know your identity or contact information 
unless you provide it in the body of your comment. If you send an e-
mail comment directly to EPA without going through http://www.regulations.gov 

your e-mail address will be automatically captured and included as part 
of the comment that is placed in the public docket and made available 
on the Internet. If you submit an electronic comment, EPA recommends 
that you include your name and other contact information in the body of 
your comment and with any disk or CD-ROM you submit. If EPA cannot read 
your comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment. Electronic 
files should avoid the use of special characters, any form of 
encryption, and be free of any defects or viruses. For additional 
information about EPA's public docket visit the EPA Docket Center 
homepage at http://www.epa.gov/epahome/dockets.htm.

    Docket: All documents in the docket are listed in the 
http://www.regulations.gov index. Although listed in the index, some 

information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, will be publicly available only in hard copy. 
Publicly available docket materials are available either electronically 
in http://www.regulations.gov or in hard copy at the OEI Docket, EPA/DC, EPA 

West, Room B102, 1301 Constitution Ave., NW., Washington, DC. The 
Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through 
Friday, excluding legal holidays. The telephone number for the Public 
Reading Room is (202) 566-1744, and the telephone number for the OEI 
Docket is (202) 566-1752.

FOR FURTHER INFORMATION CONTACT: Marilyn E. Chambers, U.S. EPA, Office 
of Acquisition Management, Mail Code (3802R), Environmental Protection 
Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone 
number: (202) 564-4398; fax number: (202) 565-2474; e-mail address: 
chambers.marilyn@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. General Information

    1. Submitting CBI. Do not submit this information to EPA through 
regulations.gov or e-mail. Clearly mark the part or all of the 
information that you claim to be CBI. (For CBI information in a disk or 
CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as 
CBI and then identify electronically within the disk or CD-ROM the 
specific information that is claimed as CBI). In addition to one 
complete version of the comment that includes information claimed as 
CBI, a copy of the comment that does not contain the information 
claimed as CBI must be submitted for inclusion in the public docket. 
Information so marked will not be disclosed except in accordance with 
procedures set forth in 40 CFR part 2.
    2. Tips for Preparing Your Comments. When submitting comments, 
remember to:
     Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
     Follow directions--The agency may ask you to respond to 
specific questions or organize comments by referencing a Code of 
Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree; suggest alternatives 
and substitute language for your requested changes.
     Describe any assumptions and provide any technical 
information and/or data that you used.
     If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
     Provide specific examples to illustrate your concerns, and 
suggest alternatives.
     Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
     Make sure to submit your comments by the comment period 
deadline identified.

II. Background

    Award terms are a form of incentive, offering additional periods of 
performance rather than additional profit or fee as a reward for 
achieving prescribed performance measures. Award term incentives were 
introduced by the Department of the Air Force in 1997. While they have 
become increasingly popular, the Federal Acquisition Regulation (FAR) 
has yet to provide any coverage on their use. Accordingly, in order to 
assist EPA contracting officers seeking to use award term incentives, 
it is necessary to amend the EPAAR to incorporate guidance on their 
use.
    The administrative amendments are necessary because of two matters. 
First, the numbering of the sections under Subpart 1516.4 of the EPAAR 
does not align with the corresponding sections in the FAR. Second, EPA 
has changed its forum for appeals under the Contract Disputes Act of 
1978 from the Department of Interior Board of Contract Appeals to the 
General Services Board of Contract Appeals. However, the EPAAR still 
references the Department of Interior Board of Contract Appeals as this 
forum.

III. Proposed Rule

    This proposed rule would amend the EPAAR to add coverage on the use 
of award term incentives, and to make the administrative changes 
discussed above. The award term incentives coverage consists of a 
clause prescription and three clauses, one of which includes an 
alternate.
    The first clause, entitled ``Award Term Incentive,'' sets forth the 
overall framework of the incentive including

[[Page 56710]]

the incentive period(s) of performance for which a contractor may 
become eligible by achieving prescribed performance measures, e.g., 
acceptable quality levels. The second clause, entitled ``Award Term 
Incentive Plan,'' sets forth the performance criteria and evaluation 
periods which will serve as the basis for the Government's decision on 
whether the contractor is eligible for an award term incentive. An 
alternate to this clause is provided for contracting officers to use 
ratings entered into the National Institutes of Health Contractor 
Performance System for the contract at hand as the basis for a 
contractor's eligibility for an award term incentive. The last clause, 
entitled ``Award Term Availability of Funds,'' informs contractors that 
funds are not presently available for any award term, and that the 
Government's obligation under any award term is contingent upon the 
availability of appropriated funds from which payment can be made. The 
``Award Term Incentive'' clause, and the ``Award Term Incentive Plan'' 
clause including its alternate, are prescribed for use on substantially 
the same basis.
    In preparing this guidance, EPA was concerned that some contractors 
may believe that their achievement of prescribed performance measures 
conferred an absolute entitlement to award term(s), notwithstanding the 
absence of need or funds for such term(s). Accordingly, the guidance 
provides that any award terms are contingent upon a need for the 
services and the availability of funds.
    The administrative amendments involve the renumbering of sections 
under Subpart 1516.4 of the EPAAR to be consistent with the numbering 
of their corresponding sections in the FAR, and a change to EPAAR 
1533.2 to reflect the substitution of the General Services Board of 
Contract Appeals for the Department of the Interior Board of Contracts 
Appeals as EPA's forum for appeals under the Contract Disputes Act of 
1978.

 IV. Statutory and Executive Order Reviews

Executive Order 12866: Regulatory Planning and Review

    This proposed rule is not a significant regulatory action for the 
purposes of Executive Order 12866; therefore, no review is required by 
the Office of Information and Regulatory Affairs within the Office of 
Management and Budget (OMB).

Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because this rule does 
not contain information requirements that require the approval of OMB 
under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.).

Regulatory Flexibility Act (RFA), as Amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et 
seq.

    The RFA generally requires an agency to prepare a regulatory 
flexibility analysis of any rule subject to notice and comment 
rulemaking requirements under the Administrative Procedure Act or any 
other statute 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 organizations, and small 
governmental jurisdictions.
    For purposes of assessing the impact of today's proposed rule on 
small entities, ``small entity'' is defined as: (1) A small business 
that meets the definition of a small business found in the Small 
Business Act and codified at 13 CFR 121.201; (2) a small governmental 
jurisdiction that is a government of a city, county, town, school 
district or special district with a population of less than 50,000; and 
(3) a small organization that is any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.
    After considering the economic impacts of today's proposed rule on 
small entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. In 
determining whether a rule has a significant economic impact on a 
substantial number of small entities, the impact of concern is any 
significant adverse economic impact on small entities, because the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any significant 
economic impact of the proposed rule on small entities.'' 5 U.S.C. 603 
and 604. Thus, an agency may certify that a rule will not have a 
significant economic impact on a substantial number of small entities 
if the rule relieves regulatory burden, or otherwise has a positive 
economic effect on all of the small entities subject to the rule. Since 
award term incentives will be available equally to large and small 
entities, this rule will not have a significant economic impact on 
small entities.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess 
their regulatory actions on State, local, and Tribal governments, and 
the private sector. This proposed rule does not contain a Federal 
mandate that may result in expenditures of $100 million or more for 
State, local, and Tribal governments, in the aggregate, or the private 
sector in one year. Any private sector costs for this action relate to 
paperwork requirements and associated expenditures that are far below 
the level established for UMRA applicability. Thus, this proposed rule 
is not subject to the requirements of sections 202 and 205 of the UMRA.

Executive Order 13045: Protection of Children From Environmental Health 
and Safety Risks

    Executive Order 13045, entitled ``Protection of Children from 
Environmental Health Risks and Safety Risks'' (62 FR 19885, April 23, 
1997), applies to any rule that: (1) Is determined to be economically 
significant as defined under Executive Order 12866, and (2) concerns an 
environmental health or safety risk that EPA has reason to believe may 
have a disproportionate effect on children. If the regulatory action 
meets both criteria, the Agency must evaluate the environmental health 
or safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the Agency.
    This proposed rule is not subject to Executive Order 13045 because 
it is not an economically significant rule as defined by Executive 
Order 12866, and because it does not involve decisions on environmental 
health or safety risks.

Executive Order 13132: Federalism

    Executive Order 13132, entitled, ``Federalism'' (64 FR 43255, 
August 10, 1999), 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'' are 
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 section 6 of 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

[[Page 56711]]

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 proposed rule does not have federalism implications. It 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. This proposed rule would amend 
the EPAAR to provide guidance on the use of award term incentives and 
make other administrative changes. Thus, the requirements of section 6 
of the Executive Order do not apply to this proposed rule.

Executive Order 13175: Consultation and Coordination with Indian Tribal 
Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 6, 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.'' ``Policies that have tribal 
implications'' are defined in the Executive Order to include 
regulations that have ``substantial direct effects on one or more 
Indian tribes, on the relationship between the Federal Government and 
the Indian tribes, or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes.''
    This proposed rule does not have tribal implications. 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, as specified in Executive Order 13175. 
Thus, Executive Order 13175 does not apply to this proposed rule.
    In the spirit of Executive Order 13175, and consistent with EPA 
policy to promote communication between EPA and tribal governments, EPA 
specifically solicits additional comment on this proposed rule from 
tribal officials.

National Technology Transfer and Advancement Act of 1995

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 
note), directs EPA to use voluntary consensus standards in its 
regulatory activities, unless to do so would be inconsistent with 
applicable law, or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures and business practices) that are developed or 
adopted by voluntary consensus standards bodies. The NTTAA directs EPA 
to provide Congress, through OMB, explanations when the Agency decides 
not to use available and applicable voluntary consensus standards.
    This proposed rule does not involve technical standards. Therefore, 
EPA is not considering use of any voluntary consensus standards.

Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution or Use

    This proposed rule is not subject to Executive Order 13211, 
``Actions Concerning Regulations That Significantly Affect Energy 
Supply, Distribution or Use'' (66 FR 28335 (May 22, 2001)), because it 
is not a significant regulatory action under Executive Order 12866.

List of Subjects in 48 CFR Parts 1516, 1533 and 1552

    Government procurement.

    Dated: September 27, 2007.
Denise Benjamin Sirmons,
Director, Office of Acquisition Management.

    Therefore, 48 CFR Chapter 15 is proposed to be amended as set forth 
below:

PART 1516--TYPES OF CONTRACTS

    1. The authority citation for part 1516 continues to read as 
follows:

    Authority: The provisions of this regulation are issued under 5 
U.S.C. 301; Sec. 205(c), 63 Stat. 390, as amended, 40 U.S.C. 486(c); 
and 41 U.S.C. 418b.

    2. Add section 1516.401-1 to read as follows:

1516.401-1  General.

    3. Add section 1516.401-170 to read as follows:

1516.401-70  Award Term Incentives.

    (a) Award term incentives enable a contractor to become eligible 
for additional periods of performance under a current contract by 
achieving prescribed performance measures under that contract.
    (b) Award term incentives are designed to motivate contractors to 
superior performance. Accordingly, the prescribed performance measures, 
i.e., acceptable quality levels (AQL) which must be achieved by a 
contractor to become eligible for an award term typically will be in 
excess of the AQLs necessary for Government acceptance of contract 
deliverables.
    (c) The Award Term Incentive Plan sets forth the evaluation 
process, including the evaluation criteria and performance measures, 
and serves as the basis for award term decisions. The Award Term 
Incentive Plan may be unilaterally revised by the Government.
    (d) Award term incentives may be used in conjunction with options. 
The Federal Acquisition Regulation does not prescribe a level of 
performance for the exercise of options, as contrasted with award term 
incentives, which should require superior performance as discussed in 
paragraph (b) of this subsection. Award term incentive periods will 
follow any option periods.
    (e) (1) The Government has the unilateral right not to grant or to 
cancel award term incentive periods and the associated award term 
incentive plans if--
    (i) The Contracting Officer has failed to initiate an award term 
incentive period, regardless of whether the contractor's performance 
permitted the Contracting Officer to consider initiating the award term 
incentive period; or
    (ii) The contractor has failed to achieve the performance measures 
for the corresponding evaluation period, or
    (iii) The Government notifies the contractor in writing it does not 
have funds available for the award term; or
    (iv) The Government no longer has a need for the award term 
incentive period at or before the time an award term incentive period 
is to commence.
    (2) When an award term incentive period is not granted or 
cancelled, any--
    (i) Prior award term incentive periods for which the contractor 
remains otherwise eligible are unaffected.
    (ii) Subsequent award term incentive periods are thereby also 
cancelled.
    (f) Award term incentives may be appropriate for any type of 
service contract.
    4. Add section 1516.401-270 to read as follows:

1516.401-270  Definition.

    Acceptable quality level (AQL) as used in this subpart means the 
minimum percent of deliverables which are compliant with a given 
performance

[[Page 56712]]

standard that would permit a contractor to become eligible for an award 
term incentive. Because the performance necessary for eligibility for 
the award term incentive may be in excess of that necessary for the 
Government acceptance of contract deliverables, the AQLs associated 
with the award term incentive may exceed the AQLs associated with the 
acceptance of contract deliverables. For example, under contract X, 
acceptable performance is 75 percent of reports submitted to the 
Government within five days. However, to be eligible for an award term 
incentive, 85 percent of reports must be submitted to the Government 
within five days.

1516.405  [Redesignated as 1516.406]

    5. Redesignate section 1516.405 as section 1516.406.

1516.404-2  [Redesignated as 1516.405-2]

    6. Redesignate section 1516.404-2 as section 1516.405-2.

1516.404-272  [Redesignated as 1516.405-270]

    7. Redesignate section 1516.404-272 as section 1516.405-270.

1516.404-273  [Redesignated as 1516.405-271]

    8. Redesignate section 1516.404-273 as section 1516.405-271.

1516.404-274  [Redesignated as 1516.405-272]

    9. Redesignate section 1516.404-274 as section 1516.405-272.
    10. Amend newly designated section 1516.406 to add new paragraphs 
(c) and (d) to read as follows:

1516.406  Contract clauses.

* * * * *
    (c) The Contracting Officer shall insert the clauses at 1552.216-
77, Award Term Incentive, 1552.216-78, Award Term Incentive Plan, and 
1552.216-79 Award Term Availability of Funds in solicitations and 
contracts when award term incentives are contemplated. The clauses at 
1552.216-77 and 1552.216-78 may be used on a substantially the same 
basis.
    (d) If the Contracting Officer wishes to use the ratings set forth 
in the National Institutes of Health (NIH) Contractor Performance 
System (CPS) on the contract at hand as the basis for contractor 
eligibility for an award term incentive, the Contracting Officer shall 
insert the clause at 1552.216-78 with its Alternate I.

PART 1533--PROTESTS, DISPUTES AND APPEALS

    11. The authority citation for part 1533 continues to read as 
follows:

    Authority: 5 U.S.C. 301; Sec. 205(c), 63 Stat. 390, as amended, 
40 U.S.C. 486(c); and 41 U.S.C. 418b.

    12. Revise section 1533.203 to read as follows:

1533.203  Applicability.

    Pursuant to an interagency agreement between the EPA and the 
General Services Board of Contract Appeals (GSBCA), the GSBCA will hear 
appeals from final decisions of EPA Contracting Officers issued 
pursuant to the Contracts Disputes Act. The rules and regulations of 
the GSBCA appear in 48 CFR Chapter 61.

PART 1552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    13. The authority citation for part 1552 continues to read as 
follows:

    Authority: 5 U.S.C. 301; Sec. 205(c), 63 Stat. 390, as amended, 
40 U.S.C. 486(c); and 41 U.S.C. 418b.

    14. Add section 1552.216-77 to read as follows:

1552.216-77  Award term incentive.

    As prescribed in 1515.406(c), insert a clause substantially the 
same as follows:

AWARD TERM INCENTIVE (XXX 2007)

    (a) General. This contract may be extended as set forth in 
paragraph (b) based on overall contractor performance as evaluated 
in accordance with the Clause entitled ``Award Term Incentive 
Plan,'' provided the Agency has a need for the effort at or before 
the time an award term is to commence, and if the contractor 
receives notice of the availability of funding for an award term 
period pursuant to the ``Award Term Availability of Funds'' clause. 
The Contracting Officer is responsible for the overall award term 
evaluation and award term decision. The Contracting Officer will 
unilaterally decide whether or not the contractor is eligible for an 
award term extension, and in conjunction with the Contracting 
Officer's Representative, will determine the need for continued 
performance and funding availability.
    (b) Period of performance. Provided the contractor has achieved 
the performance measures , e.g., acceptable quality levels, set 
forth in the clause ``Award Term Incentive Plan,'' the Contracting 
Officer may extend the contract by exercising --------[insert the 
total award term incentive periods] additional award term incentive 
period(s) of--------[insert the award term incentive period] months 
each. The total maximum period of performance under this contract, 
if the Government exercises any option periods and all award term 
incentive periods is-------- [ insert the total of the base period, 
option periods (if any), and award term incentive periods] years.
    (c) Right not to grant or cancel the award term incentive. (1) 
The Government has the unilateral right not to grant or to cancel 
award term incentive periods and the associated award term incentive 
plans if--
    (i) The Contracting Officer has failed to initiate an award term 
incentive period, regardless of whether the contractor's performance 
permitted the Contracting Officer to consider initiating the award 
term incentive period; or
    (ii) The contractor has failed to achieve the performance 
measures for the corresponding evaluation period, or
    (iii) The Government notifies the contractor in writing it does 
not have funds available for the award term incentive periods; or
    (iv) The Government no longer has a need for the award term 
incentive period at or before the time an award term incentive 
period is to commence.
    (2) When an award term incentive period is not granted or 
cancelled, any--
    (i) Prior award term incentive periods for which the contractor 
remains otherwise eligible are unaffected.
    (ii) Subsequent award term incentive periods are thereby also 
cancelled.
    (d) Cancellation of an award term incentive period that has not 
yet commenced for any of the reasons set forth in paragraph (c) of 
this clause shall not be considered either a termination for 
convenience or termination for default, and shall not entitle the 
contractor to any termination settlement or any other compensation. 
If the award term incentive is cancelled, a unilateral modification 
will cite this clause as the authority.
    (e) Award term incentive administration. The award term 
incentive evaluation(s) will be completed in accordance with the 
schedule in the Award Term Incentive Plan. The contractor will be 
notified of the results and their eligibility to be considered for 
the respective award term incentive no later than 120 days after an 
evaluation period.
    (f) Review process. The contractor may request a review of an 
award term incentive evaluation which has resulted in the contractor 
being ineligible for the award term incentive. The request shall be 
submitted in writing to the Contracting Officer within 15 days after 
notification of the results of the evaluation.

    (end of clause)
    15. Add section 1552.216-78 to read as follows:

1552.216-78  Award Term Incentive Plan.

    As prescribed in 1515.406(c), insert a clause substantially the 
same as follows:

AWARD TERM INCENTIVE PLAN (XXX 2007)

    (a) The Award Term Incentive Plan provides for the evaluation of 
performance, and, together with Agency need and availability of 
funding, serves as the basis for award term decisions. The Award 
Term Incentive Plan may be unilaterally revised by the Government. 
Any changes to the Award

[[Page 56713]]

Term Incentive Plan will be made in writing and incorporated into 
the contract through a unilateral modification citing this clause. 
The Government will consult with the contractor prior to the 
issuance of a revised Award Term Incentive Plan, but is not required 
to obtain the contractor's consent to the revisions.
    (b) [describe the evaluation periods and associated award term 
incentive periods, e.g., months 1-18 for award term incentive period 
I, and months 19-36 for award term incentive period II]
    (c) [describe the evaluation schedule, e.g., 90 days after the 
end of the evaluation period]
    (d) In order to be eligible for an award term incentive period 
the contractor must achieve all of the acceptable quality levels 
(AQL) for the evaluated tasks, both individual and aggregate, for 
that evaluation period. Failure to achieve any AQL renders the 
contractor ineligible for the associated award term incentive 
period. [identify the most significant tasks. Describe the AQL for 
each task as well as an overall AQL for the associated evaluation 
periods, e.g., an AQL of 90% each for tasks 1 and 3, and an AQL of 
85% for task 7, and an overall AQL of 90% for the months 1-18 
evaluation period]
    (e) [If the contract will contain a quality assurance 
surveillance plan (QASP), reference the QASP, e.g., attachment 2. 
Typically, the performance standards and AQLs will be defined in the 
QASP]

    (end of clause)
    Alternate 1 (XXX 2007). As prescribed in 1516.406(d), substitute 
paragraphs substantially the same as following paragraphs (b) through 
(e) for paragraphs (b) through (e) in the basic clause:
    (b) At the conclusion of each contract year, an average contract 
rating shall be determined by using the numerical ratings entered into 
the National Institutes of Health (NIH) Contractor Performance System 
(CPS) for this contract. The NIHCPS is an interactive database located 
on the Internet which EPA uses to record contractor performance 
evaluations.
    (c) The contract year average rating shall be obtained by dividing 
the combined ratings by the number of ratings, for example:

------------------------------------------------------------------------
                Criteria                              Rating
------------------------------------------------------------------------
Quality of Product or Service..........  5.
Cost Control...........................  4.
Timeliness of Performance..............  4.
Business Relations.....................  5.
                                         18 (combined rating).
                                         / 4 (number of ratings).
                                         = 4.5 contract year average
                                          rating.
------------------------------------------------------------------------

    (d) The contractor shall be evaluated for performance from the 
start of the contract through Year --------[identify the evaluation 
period, e.g., year three]. The average rating for each contract year 
(as derived in paragraph (c) above) will be combined and divided by 
[insert the number of evaluation periods] to obtain an overall average 
rating, for example:

------------------------------------------------------------------------
           Evaluation period                      Average rating
------------------------------------------------------------------------
Year One...............................  4.5.
Year Two...............................  4.75.
Year Three.............................  4.75.
                                         14 (combined average rating).
                                         / 3 (number of evaluation
                                          periods).
                                         = 4.66 overall average rating.
------------------------------------------------------------------------

    (e) Based on the overall average rating as determined under 
paragraph (d), provided that no individual rating, i.e., Quality of 
Product or Service, Cost Control, Timeliness of Performance, or 
Business Relations is below a 3, the contractor shall be eligible for 
the following award term periods:
    (1) Overall average rating of 4.6 to 5.0--Two award term incentive 
periods of --------[insert the number of months] months.
    (2) Overall average rating of 4.0 to 4.6--One award term incentive 
period of --------[insert the number of months] months.
    16. Add section 1552.216-79 to read as follows:

1552.216-79  Award Term Availability of Funds.

    As prescribed in 1515.406(c), insert the following clause:

AWARD TERM AVAILABILITY OF FUNDS (XXX 2007)

    Funds are not presently available for any award term. The 
Government's obligation under any award term is contingent upon the 
availability of appropriated funds from which payment can be made. 
No legal liability on the part of the Government for any award term 
payment may arise until funds are made available to the Contracting 
Officer for an award term and until the Contractor receives notice 
of such availability, to be confirmed in writing by the Contracting 
Officer.

    (end of clause)

[FR Doc. E7-19632 Filed 10-3-07; 8:45 am]

BILLING CODE 6560-50-P