[Federal Register Volume 81, Number 78 (Friday, April 22, 2016)]
[Proposed Rules]
[Pages 23667-23669]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-09356]



48 CFR Parts 1816 and 1852

RIN 2700-AE31

NASA Federal Acquisition Regulation Supplement: Clarification of 
Award Fee Evaluations and Payments (NFS Case 2016-N008)

AGENCY: National Aeronautics and Space Administration.

ACTION: Proposed rule.


SUMMARY: NASA is proposing to amend the NASA Federal Acquisition 
Regulation Supplement (NFS) to clarify NASA's award fee process by 
incorporating terms used in award fee contracting; guidance relative to 
final award fee evaluations; release of source selection information; 
and the calculation of the provisional award fee payment percentage in 
NASA end-item award fee contracts.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before June 21, 2016, to be considered in 
the formation of a final rule.

ADDRESSES: Submit comments identified by NFS Case 2016-N008, using any 
of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov. Submit comments 
via the Federal eRulemaking portal by entering ``NFS Case 2016-N008'' 
under the heading ``Enter keyword or ID'' and selecting ``Search.'' 
Select the link ``Submit a Comment'' that corresponds with ``NFS Case 
2016-N008.'' Follow the instructions provided at the ``Submit a 
Comment'' screen. Please include your name, company name (if any), and 
``NFS Case 2016-N008'' on your attached document.
    [cir] Email: [email protected]. Include NFS Case 2016-N008 
in the subject line of the message.
    [cir] Fax: (202) 358-3082.
    [cir] Mail: NASA Headquarters (HQ), Office of Procurement, Contract 
and Grant Policy Division, Attn: Mr. William Roets, Suite 5M18, 300 E 
Street SW., Washington, DC 20546-0001.

Procurement, Contract and Grant Policy Division, Suite 5M18, 300 E 
Street SW., Washington, DC 20456-0001. Telephone 202-358-4483; 
facsimile 202-358-3082.


I. Background

    NASA is proposing to revise the NFS to clarify NASA's award fee 
process. As part of the NASA Office of Procurement internal reviews and 
the NASA Office of the Inspector General (OIG) audit entitled ``NASA's 
Use of Award Fee Contracts,'' Report Number IG-14-003, NASA is 
implementing revisions to NFS 1816.4 and 1852.216-77 to clarify NASA's 
award fee evaluation and payment processes.

II. Discussion

    NASA is proposing the following revisions to clarify NASA's award 
fee process:
     Add new definitions section at NFS 1816.001. Definitions 
for Earned Award Fee and Unearned Award Fee are being added to provide 
clarity and consistency in how these terms are utilized in NASA's award 
fee evaluation process.
     Revise NFS 1816.405-273(b) to provide further management 
review for final award fee determinations that meet certain criteria as 
outlined in this rule's revised NFS text.
     Revise NFS 1816.405-273(c) to provide clarification 
regarding the release of source selection information that is included 
in the Contractor Performance Assessment Reporting System (CPARS).
     Revise NFS 1816.405-276(b) and 1852.216-77(c)(3) to 
clarify how provisional award fee payments are calculated in NASA end-
item award fee contracts. The current NFS text describes this 
calculation as ``limited to a percentage not to exceed 80 percent of 
the prior interim period's evaluation score'' and yet does not address 
how the first award fee evaluation period should be handled. To address 
this issue, NFS is being revised to read: ``limited to a percentage not 
to exceed 80 percent of the prior interim period's evaluation score, 
except for the first evaluation period, which is limited to 80 percent 
of the available award fee for that evaluation period.''
     In addition, since the FAR removed clause 52.216-13 in 
Federal Acquisition Circular (FAC) 2005-17, NASA is removing references 
to this clause contained in NFS 1816.307, 1816.307-70, and 1852.216-89.

III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs

[[Page 23668]]

and benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This is not a significant regulatory action and, 
therefore, was not subject to review under section 6(b) of E.O. 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

IV. Regulatory Flexibility Act

    NASA 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 the 
guidance largely clarifies NASA's award fee evaluation and payment 
process, which should result in a more consistent use and 
administration of award fees within NASA. These revisions should 
provide all entities, both large and small, with a positive benefit. 
However, an initial regulatory flexibility analysis (IRFA) has been 
performed and is summarized as follows:
    An analysis of data in the Federal Procurement Data System (FPDS) 
revealed that award fee contracts are primarily awarded to large 
businesses with large dollar contracts. An analysis of FPDS data over 
the past three years (Fiscal Year (FY)2013 through FY2015) showed that 
an average of 157 award fee contracts were awarded at NASA per year, of 
which 33 (approximately 20%) were awarded to small businesses. Thus, 
the application of the award fee revisions contained in this rule do 
not apply to a substantial number of small entities.
    The rule imposes no reporting, recordkeeping, or other information 
collection requirements. The rule does not duplicate, overlap, or 
conflict with any other Federal rules, and there are no known 
significant alternatives to the rule.
    NASA invites comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
    NASA 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 shall submit such comments 
separately and should cite 5 U.S.C. 610 (NFS Case 2016-N008), in 

V. Paperwork Reduction Act

    The rule does not contain any 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 1816 and 1852

    Government procurement.

Manuel Quinones,
NASA FAR Supplement Manager.

    Accordingly, 48 CFR parts 1816 and 1852 are proposed to be amended 
as follows:

1. The authority citation for parts 1816 and 1852 continues to read as 

    Authority:  51 U.S.C. 20113(a) and 48 CFR chapter 1.


2. Add section 1816.001 to read as follows:

1816.001  Definitions.

    As used in this part--
    ``Earned Award Fee'' means the payment of the full amount of an 
award fee evaluation period's score/rating.
    ``Unearned Award Fee'' means the difference between the available 
award fee pool amount for a given award fee evaluation period less the 
contractor's earned award fee amount for that same evaluation period.
* * * * *

1816.307  [Amended]

3. Amend section 1816.307 by removing paragraph (g)(1) in its entirety.
4. Revise section 1816.307-70, in paragraph (f), to read as follows:

1816.307-70  NASA contract clauses.

* * * * *
    (f) When FAR clause 52.216-7, Allowable Cost and Payment, is 
included in the contract, as prescribed at FAR 16.307(a), the 
contracting officer should include the clause at 1852.216-89, 
Assignment and Release Forms.
* * * * *
5. Amend section 1816.405-273 by revising paragraphs (b) and (c) to 
read as follows:

1816.405-273  Award fee evaluations.

* * * * *
    (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. However, if the final award 
fee adjectival rating is higher or lower than the average adjectival 
rating of all the interim award fee periods, or if the final award fee 
score is eight base percentage points higher or lower than the average 
award fee score of all interim award fee periods (e.g. 80% to 88%), 
then the Head of the Contracting Activity (HCA) or the Deputy Chief 
Acquisition Officer (if the HCA is the Fee Determination Official) 
shall review and concur in the final award fee determination. 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''. See FAR 
42.1503(h) regarding the requirements for releasing Source Selection 
Information included in the Contractor Performance Assessment Reporting 
System (CPARS).
* * * * *
6. Amend section 1816.405-276 by revising the last sentence of 
paragraph (b) to read as follows:

1816.405-276  Award fee payments and limitations.

* * * * *
    (b) * * * 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, except for the 
first evaluation period which is limited to 80 percent of the available 
award fee for that evaluation period.
* * * * *


7. Amend section 1852.216-77 by revising the date of the clause and 
paragraph (c)(3). The revised text reads as follows:

1852.216-77  Award Fee for End Item Contracts.

* * * * *

[[Page 23669]]

    Award Fee for End Item Contracts (Date)
* * * * *
    (c)(1) * * *
    (3) Provisional award fee payments will [insert ``not'' if 
applicable] be made under this contract pending each interim 
evaluation. 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 amount of award fee which will 
be provisionally paid in each evaluation period is limited to [Insert a 
percent not to exceed 80 percent] of the prior interim evaluation score 
(see [insert applicable cite]), except for the first evaluation period 
which is limited to [insert a percent not to exceed 80 percent] of the 
available award fee for that evaluation period. Provisional award fee 
payments made each evaluation period will be superseded by the interim 
award fee evaluation for that period. If provisional payments made 
exceed the interim 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. If the Government determines that (i) the total amount of 
provisional fee payments will apparently substantially exceed the 
anticipated final evaluation score, or (ii) the prior interim 
evaluation is ``poor/unsatisfactory,'' the Contracting Officer will 
direct the suspension or reduction of the future payments and/or 
request a prompt refund of excess payments as appropriate. Written 
notification of the determination will be provided to the Contractor 
with a copy to the Deputy Chief Financial Officer (Finance).
* * * * *
8. Amend section 1852.216-89 by revising the date of the clause, and 
the first sentence of the paragraph to read as follows:

1852.216-89  Assignment and Release Forms.

* * * * *
Assignment and Release Forms ([Date])
    The Contractor shall use the following forms to fulfill the 
assignment and release requirements of FAR clause 52.216-7, Allowable 
Cost and Payment:
* * * * *
[FR Doc. 2016-09356 Filed 4-21-16; 8:45 am]