[Federal Register Volume 76, Number 41 (Wednesday, March 2, 2011)]
[Proposed Rules]
[Pages 11410-11411]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-4527]



[[Page 11410]]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 216

RIN 0750-AH15


Defense Federal Acquisition Regulation Supplement; Increase the 
Use of Fixed-Price Incentive (Firm Target) Contracts (DFARS Case 2011-
D010)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Proposed rule.

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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to increase the use of fixed-price 
incentive (firm target) contracts, with particular attention to share 
lines and ceiling prices.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before May 2, 2011, to be considered in 
the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2011-D010, 
using any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov.
    Submit comments via the Federal eRulemaking portal by inputting 
``DFARS Case 2011-D010'' under the heading ``Enter keyword or ID'' and 
selecting ``Search.'' Select the link ``Submit a Comment'' that 
corresponds with ``DFARS Case 2011-D010.'' Follow the instructions 
provided at the ``Submit a Comment'' screen. Please include your name, 
company name (if any), and ``DFARS Case 2011-D010'' on your attached 
document.
    [cir] E-mail: [email protected]. Include DFARS Case 2011-D010 in the 
subject line of the message.
    [cir] Fax: 703-602-0350.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. Amy 
Williams, OUSD (AT&L) DPAP/DARS, 3060 Defense Pentagon, Room 3B855, 
Washington, DC 20301-3060.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To 
confirm receipt of your comment(s), please check http://www.regulations.gov approximately two to three days after submission to 
verify posting (except allow 30 days for posting of comments submitted 
by mail).

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, OUSD (AT&L) DPAP/
DARS, 3060 Defense Pentagon, Room 3B855, Washington, DC 20301-3060. 
Telephone 703-602-0328; facsimile 703-602-0350. Please cite DFARS Case 
2011-D010.

SUPPLEMENTARY INFORMATION:

I. Background

    This DFARS case was initiated to incentivize productivity and 
innovation in industry, as set forth in a memorandum from the Under 
Secretary of Defense for Acquisition, Technology, and Logistics, dated 
November 3, 2010. The memorandum provided guidance to the secretaries 
of the military departments and directors of defense agencies on 
obtaining greater efficiency and productivity in defense spending. In 
support of this initiative, DoD is proposing to amend DFARS subpart 
216.4 to require that contracting officers must--
    (1) Give particular consideration to the use of fixed-price 
incentive (firm target) contracts, especially for acquisitions moving 
from development to production; and
    (2) Pay particular attention to share lines and ceiling prices for 
fixed-price incentive (firm target) contracts, with a 120 percent 
ceiling and a 50/50 share ratio as the default arrangement.

II. Executive Order 12866

    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993. This rule is not 
a major rule under 5 U.S.C. 804.

III. Regulatory Flexibility Act

    DoD does not expect this rule 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 this rule 
does not impose economic burdens on contractors. The purpose and effect 
of this rule is to establish an approval threshold for contract type 
and to encourage the use of a particular contract type in order to 
incentivize productivity and innovation in industry. However, DoD has 
prepared an initial regulatory flexibility analysis that is summarized 
as follows:
    This rule proposes to amend the Defense Federal Acquisition 
Regulation Supplement to implement the initiative on incentivizing 
productivity and innovation in industry, as presented by the Under 
Secretary of Defense for Acquisition, Technology, & Logistics in a 
memorandum dated November 3, 2010. The objective of the rule is to 
incentivize contractors. The legal basis is 41 U.S.C. 1303 and 48 CFR 
chapter 1.
    The proposed rule will not have much impact on small entities 
because the focus of the rule is for development efforts that are 
moving into early production. Small entities are more likely to receive 
awards for commercial products, including commercially available off-
the-shelf products, for which firm-fixed-price contracts are 
appropriate. In Fiscal Year 2010, 93 percent of awards to small 
businesses were firm-fixed-price contracts, and 99.99 percent of awards 
to small businesses were other than fixed-price incentive contracts.
    The proposed rule imposes no reporting, recordkeeping, or other 
information collection requirements.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    There are no known alternatives to the rule that would adequately 
implement the DoD policy. There is no significant economic impact on 
small entities.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this rule in accordance 
with 5 U.S.C. 610. Interested parties must submit such comments 
separately and should cite 5 U.S.C. 610 (DFARS Case 2011-D010) in 
correspondence.

IV. Paperwork Reduction Act

    The proposed rule contains no information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Part 216

    Government procurement.

Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.
    Therefore, 48 CFR part 216 is proposed to be amended as follows:

PART 216--TYPES OF CONTRACTS

    1. The authority citation for 48 CFR part 216 continues to read as 
follows:

    Authority:  41 U.S.C. 1303 and 48 CFR chapter 1.

    2. Add section 216.403-1 to read as follows:


216.403-1  Fixed-price incentive (firm target) contracts.

    (b) Application.
    (1) The contracting officer shall give particular consideration to 
the use of fixed-price incentive (firm target)

[[Page 11411]]

contracts, especially for acquisitions moving from development to 
production.
    (2) The contracting officer shall pay particular attention to share 
lines and ceiling prices for fixed-price incentive (firm target) 
contracts, with a 120 percent ceiling and a 50/50 share ratio as the 
default arrangement.

[FR Doc. 2011-4527 Filed 3-1-11; 8:45 am]
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