[Federal Register Volume 63, Number 52 (Wednesday, March 18, 1998)]
[Rules and Regulations]
[Pages 13133-13134]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-7033]


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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1816 and 1852


FAR Supplement Coverage of Award Fee Evaluations

AGENCY: National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: This is a final rule amending the NASA FAR Supplement (NFS) 
coverage on award fee evaluations to correct inaccurate references and 
improve clarity.

EFFECTIVE DATE: March 18, 1998.

FOR FURTHER INFORMATION CONTACT: Tom O'Toole, NASA Office of 
Procurement, Contract Management Division (Code HK), (202) 358-0478.

SUPPLEMENTARY INFORMATION:

Background

    NASA has different award fee evaluation procedures for service and 
end item contracts. For service contracts, all award fee evaluations 
during the contract term are final. For end item contracts, evaluations 
during the contract term are ``interim'' evaluations that are 
superseded by a single final evaluation at contract completion. The NFS 
has inaccurate references associating interim evaluations with service 
contracts, and these are deleted by this rule. In addition, NASA allow 
for provisional payment of award fee, i.e., payments made during award 
fee periods in anticipation of the Government evaluation at the end of 
the period. References to provisional payments in the NFS are 
inconsistent, and this rule conforms these references. Finally, to 
improve its clarity, the NFS coverage is restructured and miscellaneous 
editorial changes are made. None of the NFS revisions in this rule 
change NASA policy.

Impact

    NASA certifies that this regulation will not have a significant 
economic impact on a substantial number of small business entities 
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). This final 
rule does not impose any reporting or recordkeeping requirements 
subject to the Paperwork Reduction Act.

List of Subjects in 48 CFR Parts 1816 and 1852

    Government procurement.
Deidre Lee,
Associate Administrator for Procurement.

    Accordingly, 48 CFR Parts 1816 and 1852 are amended as follows:
    1. The authority citation for 48 CFR Parts 1816 and 1852 continues 
to read as follows:

    Authority: 42 U.S.C. 2473(c)(1)

PART 1816-TYPES OF CONTRACTS

    2. In section 1816.405-271, paragraph (a) is revised to read as 
follows:


1816.405-271  Base fee.

    (a) A base fee shall not be used on CPAF contracts for which the 
periodic award fee evaluations are final (1816.405-273(a)). In these 
circumstances, contractor performance during any award fee period is 
independent of and has no effect on subsequent performance periods or 
the final results at contract completion. For other contracts, such as 
those for hardware or software development, the procurement officer may 
authorize the use of a base fee not to exceed 3 percent. Base fee shall 
not be used when an award fee incentive is used in conjunction with 
another contract type (e.g., CPIF/AF).
* * * * *
    3. In paragraph (a) of section 1816.405-272, the first sentence is 
revised to read as follows:


1816.405-272  Award fee evaluation periods.

    (a) Award fee evaluation periods, including those for interim 
evaluations, should be at least 6 months in length. * * *
* * * * *
    4. Section 1816.405-273 is revised to read as follows:


1816.405-273  Award fee evaluations.

    (a) Service contracts. On contracts where the contract deliverable 
is the performance of a service over any given time period, contractor 
performance is often definitively measurable within each evaluation 
period. In these cases, all evaluations are final, and the contractor 
keeps the fee earned in any period regardless of the evaluations of 
subsequent periods. Unearned award fee in any given period in a service 
contract is lost and shall not be carried forward, or ``rolled-over,'' 
into subsequent periods.
    (b) End item contracts. On contracts, such as those for end item 
deliverables, where the true quality of contractor performance cannot 
be measured until the end of the contract, only the last evaluation is 
final. At that point, the total contract award fee pool is available, 
and the contractor's total performance is evaluated against the award 
fee plan to determine total earned award fee. In addition to the final 
evaluation, interim evaluations are done to monitor performance prior 
to contract completion, provide feedback to the contractor on the 
Government's assessment of the quality of its performance, and 
establish the basis for making interim award fee payments (see 
1816.405-276(a)). These interim evaluations and associated interim 
award fee payments are superseded by the fee determination made in the 
final evaluation at contract completion. The Government will then pay 
the contractor, or the contractor will refund to the Government, the 
difference between the final award fee determination and the cumulative 
interim fee payments.
    (c) Control of evaluations. Interim and final evaluations may be 
used to provide past performance information during the source 
selection process in future acquisitions and should be marked and 
controlled as ``Source Selection Information--See FAR 3.104''.

[[Page 13134]]

    5. In section 1816.405-275, paragraph (b)(2) is revised to read as 
follows:


1816.405-275   Award fee evaluation scoring.

* * * * *
    (b) * * *
    (2) Very good (90-81): Very effective performance, fully responsive 
to contract requirements; contract requirements accomplished in a 
timely, efficient, and economical manner for the most part; only minor 
deficiencies.
* * * * *
    6. Section 1816.405-276 is added to read as follows:


1816.405-276   Award fee payments and limitations.

    (a) Interim award fee payments. The amount of an interim award fee 
payment (see 1816.405-273(b)) is limited to the lesser of the interim 
evaluation score or 80 percent of the fee allocated to that interim 
period less any provisional payments (see paragraph (b) of this 
subsection) made during the period.
    (b) Provisional award fee payments. Provisional award fee payments 
are payments made within evaluation periods prior to an interim or 
final evaluation for that period. Provisional payments may be included 
in the contract and should be negotiated on a case-by-case basis. For a 
service contract, the total amount of award fee available in an 
evaluation period that may be provisionally paid is the lesser of a 
percentage stipulated in the contract (but not exceeding 80 percent) or 
the prior period's evaluation score. For an end item contract, the 
total amount of provisional payments in a period is limited to a 
percentage not to exceed 80 percent of the prior interim period's 
evaluation score.
    (c) Fee payment. The Fee Determination Official's rating for both 
interim and final evaluations will be provided to the contractor within 
45 calendar days of the end of the period being evaluated. Any fee, 
interim or final, due the contractor will be paid no later than 60 
calendar days after the end of the period being evaluated.


1816.406-70  [Amended]

    7. In paragraph (a) of section 1816.406-70, the last sentence is 
removed.

PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    8. In section 1852.216-76, the clause date is revised, the 
designated paragraph (f) is redesignated as paragraph (g) and 
republished, a new paragraph (f) is added, and Alternate I to the 
clause is removed, to read as follows:


1852.216-76  Award fee for service contracts.

    As prescribed in 1816.406-70(a), insert the following clause:

Award Fee for Service Contracts

March 1998

* * * * *
    (f)(1)Provisional award fee payments [insert ``will'' or ``will 
not'', as applicable] be made under this contract pending the 
determination of the amount of fee earned for an evaluation period. 
If applicable, provisional award fee payments will be made to the 
Contractor on a [insert the frequency of provisional payments (not 
more often than monthly)] basis. The total amount of award fee 
available in an evaluation period that will be provisionally paid is 
the lesser of [Insert a percent not to exceed 80 percent] or the 
prior period's evaluation score.
    (2) Provisional award fee payments will be superseded by the 
final award fee evaluation for that period. If provisional payments 
exceed the final evaluation score, the Contractor will either credit 
the next payment voucher for the amount of such overpayment or 
refund the difference to the Government, as directed by the 
Contracting Officer.
    (3) If the Contracting Officer determines that the Contractor 
will not achieve a level of performance commensurate with the 
provisional rate, payment of provisional award fee will be 
discontinued or reduced in such amounts as the Contracting Officer 
deems appropriate. The Contracting Officer will notify the 
Contractor in writing if it is determined that such discontinuance 
or reduction is appropriate. This determination is not subject to 
the Disputes clause.
    (4) Provisional award fee payments [insert ``will'' or ``will 
not'', as appropriate] be made prior to the first award fee 
determination by the Government.
    (g) Award fee determinations made by the Government under this 
contract are not subject to the Disputes clause.

    *[A period of time greater or lesser than 6 months may be 
substituted in accordance with 1816.405-272(a).]

(End of clause)

[FR Doc. 98-7033 Filed 3-17-98; 8:45 am]
BILLING CODE 7510-01-P