[Federal Register Volume 72, Number 125 (Friday, June 29, 2007)]
[Rules and Regulations]
[Pages 35666-35667]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-12656]



48 CFR Part 1816

RIN 2700-AD33

Award Fee Administrative Changes

AGENCY: National Aeronautics and Space Administration.

ACTION: Final rule.


SUMMARY: This final rule makes administrative changes to the NASA FAR 
Supplement (NFS) to clarify the requirements for award fee evaluation 
factors and to add a requirement for a documented cost/benefit analysis 
when an award fee contract is used.

EFFECTIVE DATE: This rule is effective June 29, 2007.

Procurement, Contract Management Division (Suite 5J86); (202) 358-0478; 
e-mail: [email protected].


A. Background

    The Government Accountability Office (GAO) report entitled ``NASA 
Procurement: Use of Award Fees for Achieving Program Outcomes Should Be 
Improved'' (GAO-07-58), dated January 2007, included recommendations 
for improving NASA award fee policy. The GAO recommended that NASA 
require cost/benefit analysis documentation when using an award fee 
contract and also recommended that NASA reemphasize the importance of 
tying award fee criteria to desired outcomes and limiting the number of 
evaluation subfactors. NASA agreed with both GAO recommendations, and 
is revising the NFS accordingly.
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This interim 
rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act does not apply to this final rule. 
This final rule does not constitute a significant revision within the 
meaning of FAR 1.501 and Public Law 98-577, and publication for public 
comment is not required. However, NASA will consider comments from 
small entities concerning the affected NFS coverage in accordance with 
5 U.S.C. 610. Interested parties should cite 5 U.S.C. 601, et seq., in 

C. Paperwork Reduction Act

    The Paperwork Reduction Act (Pub. L. 104-13) is not applicable 
because the NFS changes do not impose information collection 
requirements that require the approval of the Office of Management and 
Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 1816

    Government procurement.

Sheryl Goddard,
Acting Assistant Administrator for Procurement.

Accordingly, 48 CFR part 1816 is amended as follows:


1. The authority citation for 48 CFR part 1816 continues to read as 

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

2. Revise paragraph (a) of section 1816.405-270 to read as follows:

1816.405-270  CPAF contracts.

    (a) Use of an award fee incentive shall be approved in writing by 
the procurement officer. The procurement officer's approval shall 
include a discussion of the other types of

[[Page 35667]]

contracts considered and shall indicate why an award fee incentive is 
the appropriate choice, including evidence that any additional 
administrative effort and cost required to monitor and evaluate 
performance are justified by the expected benefits (see FAR 16.405-
2(b)(1)(iii)). Award fee incentives should not be used on contracts 
with a total estimated cost and fee less than $2 million per year. The 
procurement officer may authorize use of award fee for lower-valued 
acquisitions, but should do so only in exceptional situations, such as 
contract requirements having direct health or safety impacts, where the 
judgmental assessment of the quality of contractor performance is 
* * * * *

3. Revise paragraph (a) of section 1816.405-274 to read as follows:

816.405-274  Award fee evaluation factors.

    (a) Explicit evaluation factors shall be established for each award 
fee period. Factors should be tied to desired outcomes. If used, 
subfactors should be limited to the minimum necessary to ensure a 
thorough evaluation and an effective incentive.
* * * * *
 [FR Doc. E7-12656 Filed 6-28-07; 8:45 am]