Document ID: EPA-HQ-OARM-2018-0610-0001
Agency: epa
Document Type: Proposed Rule
Title: Environmental Protection Agency Acquisition Regulation (EPAAR): Award Term Incentive
Posted Date: 2019-03-29T04:00Z

[Federal Register Volume 84, Number 61 (Friday, March 29, 2019)]
[Proposed Rules]
[Pages 11920-11923]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-06131]

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ENVIRONMENTAL PROTECTION AGENCY

48 CFR Parts 1516 and 1552

[EPA-HQ-OARM-2018-0610; FRL-9991-08-OARM]

Environmental Protection Agency Acquisition Regulation (EPAAR); 
Award Term Incentive

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is issuing a 
proposed rule to amend EPA Acquisition Regulation (EPAAR) award term 
incentive policy, procedures, and clauses to remove ambiguity and 
provide clarity with respect to what is required for a contractor to 
successfully earn award terms.

DATES: Comments must be received on or before May 28, 2019.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OARM-2018-0610, at https://www.regulations.gov. Follow the online 
instructions for submitting comments. Once submitted, comments cannot 
be

[[Page 11921]]

edited or removed from Regulations.gov. The EPA may publish any comment 
received to its public docket. Do not submit any information 
electronically that you consider to be Confidential Business 
Information (CBI) or other information whose disclosure is restricted 
by statute. Multimedia submissions (audio, video, etc.) must be 
accompanied by a written comment. The written comment is considered the 
official comment and should include discussion of all points you wish 
to make. The EPA will generally not consider comments or comment 
contents located outside of the primary submission (i.e. on the web, 
cloud, or other file sharing system). For additional submission 
methods, the full EPA public comment policy, information about CBI or 
multimedia submissions, and general guidance on making effective 
comments, please visit: http://www2.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Shakethia Allen, Policy, Training, and 
Oversight Division, Acquisition Policy and Training Service Center 
(3802R), Environmental Protection Agency, 1200 Pennsylvania Ave. NW, 
Washington, DC 20460; telephone number: 202-564-5157; email address: 
[email protected].

SUPPLEMENTARY INFORMATION: 

I. General Information

    1. Submitting Classified Business Information. Only submit CBI to 
the EPA by mail. Do not submit CBI to the EPA website, https://www.regulations.gov, or email. 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 contract, offering additional 
periods of performance without a new competition, rather than 
additional profit or fee as a reward for achieving prescribed 
performance measures. Award term incentives were developed in 1997 by 
the Department of the Air Force and are not described in the Federal 
Acquisition Regulation (FAR). In order to assist EPA contracting 
officers seeking to use award term incentives, it is necessary to amend 
the EPAAR to provide clear language of the requirements needed to 
successfully award and earn award terms.

III. Proposed Rule

    The proposed rule amends EPAAR part 1516--Types of Contracts, 
Subpart 1516.4--Incentive Contracts, 1516.406 Contract Clauses, 
1516.401-70 Award Term Incentives, and 1516.401-270 Definition. The 
proposed rule also amends EPAAR part 1552--Solicitation Provisions and 
Contract Clauses, 1552.216-78 --Award Term Incentive Plan.
    1. EPAAR Sec.  1516.406 establishes the prescription for use of 
related EPAAR clauses, including 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.
    2. EPAAR Sec.  1516.401-270 defines Acceptable Quality Level (AQL) 
as the minimum percent of deliverables which are compliant with a given 
performance standard that would permit a contractor to become eligible 
for an award term incentive.
    3. EPAAR Sec.  1516.401-70 sets forth the overall framework 
governing award term incentives including the prescribed performance 
measures; i.e., the acceptable quality levels (AQL) which must be 
achieved by a contractor to become eligible for an award term.
    4. EPAAR Sec.  1552.216-78 sets forth the performance criteria and 
evaluation periods which will serve as the basis for the EPA's decision 
on whether the contractor is eligible for an award term incentive.

IV. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review

    This action is not a ``significant regulatory action'' under the 
terms of Executive Order (E.O.) 12866 (58 FR 51735, October 4, 1993) 
and is therefore not subject to review under the E.O.

B. Paperwork Reduction Act

    This action does not impose an information collection burden, as 
defined at 5 CFR 1320.3(b), under the provisions of the Paperwork 
Reduction Act, 44 U.S.C. 3501 et seq.

C. 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 Regulatory Flexibility Act 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 this final 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; or (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 
this rule on small entities, I certify that this action will not have a 
significant economic impact on a substantial number of small entities. 
An agency may certify that a rule will not have a significant

[[Page 11922]]

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. Award term incentives 
will be available equally to large and small entities, so this rule 
will not have a significant economic impact on small entities. Also, 
this rule seeks to only clarify existing regulations. We continue to be 
interested in the potential impacts of the rule on small entities and 
welcome comments on issues related to such impacts.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 
104-4), establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, Local, and Tribal 
governments and the private sector. This rule contains no Federal 
mandates (under the regulatory provisions of the Title II of the UMRA) 
for State, Local, and Tribal governments or the private sector. The 
rule imposes no enforceable duty on any State, Local or Tribal 
governments or the private sector. Thus, the rule is not subject to the 
requirements of sections 202 and 205 of the UMRA.

E. 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'' 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.'' This 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.

F. 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 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 rule does not have 
tribal implications as specified in Executive Order 13175.

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

    Executive Order 13045, entitled ``Protection of Children from 
Environmental Health and Safety Risks'' (62 FR 19885, April 23, 1997), 
applies to any rule that: (1) Is determined to be economically 
significant as defined under E.O. 12886, and (2) concerns an 
environmental health or safety risk that may have a proportionate 
effect on children. This rule is not subject to E.O. 13045 because it 
is not an economically significant rule as defined by Executive Order 
12866, and because it does not involve decisions on environment health 
or safety risks.

H. Executive Order 13211: Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This action 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.

I. National Technology Transfer and Advancement Act of 1995 (NTTAA)

    Section 12(d) (15 U.S.C. 272 note) of the National Technology 
Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, 
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 action 
does not involve technical standards. Therefore, EPA is not considering 
the use of any voluntary consensus standards.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898 (59 FR 7629 (February 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 has determined that this proposed 
rule will not have disproportionately high and adverse human health or 
environmental effects on minority or low-income populations because it 
does not affect the level of protection provided to human health or the 
environment in the general public.

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 major 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. Section 804(2) defines a ``major rule'' 
as any rule that the Administrator of the Office of Information and 
Regulatory Affairs of the Office of Management and Budget finds has 
resulted in or is likely to result in (1) an annual effect on the 
economy of $100,000,000 or more; (2) a major increase in costs or 
prices for consumers, individual industries, Federal, State, or local 
government agencies, or geographic regions; or (3) significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or on the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic and export markets. 
EPA is not required to submit a rule report regarding this action under 
section 801 as this is not a major rule by definition.

List of Subjects in 48 CFR Parts 1516 and 1552

    Government procurement, Reporting and recordkeeping requirements.

    Dated: February 26, 2019.
Kimberly Patrick,
Director, Office of Acquisition Management.

    For the reasons stated in the preamble, 48 CFR parts 1516 and 1552 
are proposed to be amended as set forth below:

[[Page 11923]]

PART 1516--TYPES OF CONTRACTS

0
1. The authority citation for part 1516 continues to read as follows:

    Authority:  5 U.S.C. 301and 41 U.S.C. 418b.

0
2. Amend section 1516.401-70 by revising paragraph (b) to read as 
follows:

1516.401-70   Award term incentives.

* * * * *
    (b) Award term incentives are designed to motivate contractors to 
provide superior performance. Superior performance must be defined in 
the Award Term Incentive Plan. 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 will be in excess 
of the AQLs necessary for Government acceptance of contract 
deliverables, unless rationale is documented that such service is 
beyond the contractor's capability or control.
* * * * *
0
3. Revise 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 standard that would permit a contractor to become eligible 
for an award term incentive. The performance necessary for eligibility 
for the award term incentive must be in excess of that necessary for 
the Government acceptance of contract deliverables. The AQLs associated 
with the award term incentive shall 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.
0
4. Amend section 1516.406 by revising 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 substantially the same-as 
basis.
    (d) If the Contracting Officer wishes to use the ratings set forth 
in the Department of Defense Contractor Performance Assessment 
Reporting System 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.

PART 1552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
5. The authority citation for part 1552 continues to read as follows:

    Authority:  5 U.S.C. 301 and 41 U.S.C. 418b.

0
6. Amend section 1552.216-78 by revising paragraph (e) to read as 
follows:

1552.216-78  Award term incentive plan.

* * * * *
    (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)
* * * * *
[FR Doc. 2019-06131 Filed 3-28-19; 8:45 am]
 BILLING CODE 6560-50-P