[Federal Register Volume 81, Number 237 (Friday, December 9, 2016)]
[Proposed Rules]
[Pages 89038-89041]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29443]
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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1816 and 1852
[NFS Case 2016-N027]
RIN 2700-AE32
NASA Federal Acquisition Regulation Supplement: Award Term
AGENCY: National Aeronautics and Space Administration.
ACTION: Proposed rule.
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SUMMARY: NASA is proposing to amend the NASA Federal Acquisition
Regulation (FAR) Supplement (NFS) to add policy on the use of
additional contract periods of performance or ``award terms'' as a
contract incentive.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before February 7, 2017, to be considered
in the formation of a final rule.
ADDRESSES: Submit comments identified by NFS Case 2016-N027, 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-N027''
under the heading ``Enter keyword or ID'' and selecting ``Search.''
Select the link ``Submit a Comment'' that corresponds with ``NFS Case
2016-N027.'' Follow the instructions provided at the ``Submit a
Comment'' screen. Please include your name, company name (if any), and
``NFS Case 2016-N027'' on your attached document.
[cir] Email: [email protected]. Include NFS Case 2016-N027
in the subject line of the message.
[cir] Fax: (202) 358-3082.
[cir] Mail: National Aeronautics and Space Administration,
Headquarters, Office of Procurement, Contract and Grant Policy
Division, Attn: Marilyn E. Chambers, LP-011, 300 E Street SW.,
Washington, DC 20546-0001.
FOR FURTHER INFORMATION CONTACT: Marilyn E. Chambers, NASA HQ, Office
of Procurement, Contract and Grant Policy Division, Suite 5H38, 300 E
Street SW., Washington, DC 20456-0001. Telephone 202-358-5154;
facsimile 202-358-3082.
SUPPLEMENTARY INFORMATION:
I. Background
NASA is proposing to amend the NFS to implement policy addressing
the use of ``award terms'' or additional contract periods of
performance for which a contractor may earn if the contractor's
sustained performance is superior, the Government has an on-going need
for the requirement, and funds are available for the additional period
of performance. The purpose of the policy is to provide a non-monetary
incentive for contractors whose sustained performance is excellent. An
award term incentive would be used where a longer term relationship
(generally more than five years) between the Government and a
contractor would provide benefits to both parties. Benefits of award
term incentives include a more stable business relationship both for
the contractor and its employees (thus retaining a skilled, experienced
workforce), motivating excellent performance (including cost savings),
fostering contractor capital investment, increasing the desirability of
the award (potentially increasing competition), and reduced
administrative costs and disruptions in preparing for and negotiating
replacement contracts.
Award terms are an incentive and not the same as exercising an
option as set forth in FAR 17.207. While there are similarities between
an award term and an option, such as funds must be available and the
requirement must fulfill an existing Government need, the key
difference is that an option may be exercised when the contractor's
performance is acceptable, while earning an award term requires
sustained excellent performance.
II. Discussion
The FAR subpart 16.4, Incentive Contracts, addresses a variety of
techniques to incentivize contractor delivery or technical performance
by connecting the amount of profit or fee payable under the contract to
the contractor's performance and payable during the current period of
performance. Under conventional incentives, funds are reserved to cover
the incentive for the instant performance period. Conversely, an award
term could be earned after the base period of performance and any
option(s) are exercised; an award term does not involve additional
funds beyond the amount of the current performance period.
NASA is proposing to add section 1816.405-277 to address the use of
award term incentives and covers the following areas:
Considerations when planning to use award term incentives.
Differences between contract options and award term
incentives.
Identifying plans to use award term incentives in
acquisition planning.
Procurement procedures related to processing award term
incentives.
[[Page 89039]]
Establishes a minimum contract value of twenty million
dollars in order to use award term incentives.
Sets forth the requirement for an award term plan to be
incorporated into the contract and lists the elements of such a plan.
The Government's unilateral right to not grant or to
cancel award terms and the conditions under which this may occur.
Additionally, the clause at 1852.216-XX, Award Term, is added to
inform the contractor of the conditions for earning an award term and
the fact that, even if the contractor meets the standards of
eligibility for an award term, the Government may not grant the award
term or cancel the award term under certain listed conditions.
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 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, based
on current usage, NASA does not expect to award a large number of award
term contracts. In those instances when used, award term contracts will
include small businesses to the same extent that small businesses are
included in other NASA procurements. NASA anticipates that this rule
will 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:
The Federal Procurement Data System (FPDS) does not track award
term contracts, but a survey of NASA's procurement organizations shows
there are currently ten (10) active award term contracts. Of these, six
(6) are with small businesses. A range of services are covered, such as
logistics, facilities or technical management and information
technology.
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 entities.
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 must submit such comments
separately and should cite 5 U.S.C. 610 (NFS Case 2016-N027), in
correspondence.
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 Parts 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:
0
1. The authority citation for parts 1816 and 1852 continues to read as
follows:
Authority: 51 U.S.C. 20113(a) and 48 CFR chapter 1.
PART 1816-- TYPES OF CONTRACTS
0
2. Amend section 1816.001 by adding in alphabetical order the
definition ``Term-determining official'' to read as follows:
1816.001 Definitions.
* * * * *
Term-determining official means the designated Agency official who
reviews the recommendations of the Award-Term Board in determining
whether the contractor is eligible for an award term.
* * * * *
0
3. Add section 1816.405-277 to read as follows:
1816.405-277 Award term.
(a) An award term enables a contractor to become eligible for
additional periods of performance or ordering periods under a service
contract (as defined in FAR 37.101) by achieving and sustaining the
prescribed performance levels under the contract. It incentivizes the
contractor for maintaining superior performance by providing an
opportunity for extensions of the contract term.
(b) Award terms are best suited for acquisitions where a longer
term relationship (generally more than five years) between the
Government and a contractor would provide significant benefits to both.
Motivating excellent performance, fostering contractor capital
investment, and increasing the desirability of the award, thus
potentially increasing competition, are benefits that may justify the
use of award terms.
(c) While the administrative burden and cost of more frequent
procurements to both the Government and potential offerors should be
considered when determining whether to use award terms, this decision
must be weighed against market stability, the potential changes and
advancements in technology, and flexibility to change direction with
mission changes and associated frequent procurements.
(d) Award terms may be used in conjunction with contract options
under FAR 17.2. Award terms are similar to contract options in that
they are conditioned on the Government's continuing need for the
contract and the availability of funds. However, FAR 17.207(c)(7)
states the contracting officer must determine that the contractor's
performance has been acceptable, e.g., received satisfactory ratings.
In contrast, to become eligible for an award term, the contractor must
maintain a level of performance above acceptable as specified in the
Award Term Plan (see 1816.405-277(i)). In contracts with both option
periods and award terms, the award term period of performance or
ordering period shall begin after completion of any option period of
performance or ordering period.
(e) Contracts with award terms shall include a base period of
performance or ordering period and may include a designated number of
option periods during which the Government will observe and evaluate
the contractor's performance allowing the contractor to earn an award
term. Additionally, as specified in the Award Term Plan, the contractor
may also be evaluated for additional award terms during performance of
an earned award term. If the contractor meets or exceeds the
performance requirements, there is an on-going need for and desire to
continue the contract, funds are available, and the contractor is not
listed in the System for Award Management Exclusions, then the
contractor is eligible for contract
[[Page 89040]]
extension for the period of the award term.
(f) Contracts with award terms shall comply with FAR and NFS
restrictions on the overall contract length, such as the 5-year period
of performance limitation found at NFS 1817.204.
(g) Award terms may only be used in acquisitions for services
exceeding $20 million dollars. Use of award terms for lower-valued
acquisitions may be authorized in exceptional situations such as
contract requirements having direct health or safety impacts, where the
judgmental assessment of the quality of contractor performance is
critical.
(h) Consistent with the Competition in Contracting Act and general
procurement principles, the potential award term periods in a
procurement must be priced, evaluated, and considered in the initial
contract selection process in order to be valid.
(i) Award term plan. All contracts including award terms shall be
supported by an Award Term Plan that establishes criteria for earning
an award term and the methodology and schedule for evaluating
contractor performance. A copy of the Award Term Plan shall be included
in the contract. The Contracting Officer may unilaterally revise the
Award Term Plan. Award Term Plans shall--
(1) Identify the officials to include Term-Determining Official
involved in the award term evaluation and their function;
(2) Identify and describe each evaluation factor, any subfactors,
related performance standards, adjectival ratings, and numerical ranges
or weights to be used. The contracting officer should follow the
guidance at 1816.405-274 in establishing award term evaluation factors
and 1816.405-275 in establishing adjectival rating categories,
associated descriptions, numerical scoring system, and weighted scoring
system;
(3) Specify the annual overall rating required for the contractor
to be eligible for an award term that reflects a level of performance
above acceptable and the number of award terms the contractor may
qualify for based on the rating score;
(4) Identify the evaluation period(s) and the evaluation schedule
to be conducted at stated intervals during the contract period of
performance or ordering period so that the contractor will periodically
be informed of the quality of its performance and the areas in which
improvement is expected (e.g., six months, nine months, twelve months,
or at other specific milestones), and when the decision points are for
the determination that the contractor is eligible for an award term;
and
(5) Identify the contract's base period of performance or ordering
period, any option period(s), and total award-term periods(s). Award
term periods shall not exceed one year.
(j)(1) The Government has the unilateral right not to grant or to
cancel award term periods and the associated Award Term Plans if--
(i) The contractor has failed to achieve the required performance
measures for the corresponding evaluation period;
(ii) After earning an award term, the contractor fails to earn an
award term in any succeeding year of contract performance, the
contracting officer may cancel any award terms that the contractor has
earned, but that have not begun.
(iii) The contracting officer notifies the contractor that the
Government no longer has a need for the award term period before the
time an award term period is to begin;
(iv) The contractor represented that it was a small business
concern prior to award of the contract, the contract was set-aside for
small businesses, and the contractor rerepresents in accordance with
FAR clause 52.219-28 Post-Award Small Business Program
Rerepresentation, that it is no longer a small business; or
(v) The contracting officer notifies the contractor that funds are
not available for the award term.
(2) When an award term period is not granted or cancelled, any--
(i) Prior award term periods for which the contractor remains
otherwise eligible are unaffected.
(ii) Subsequent award term periods are also cancelled.
(k) Cancellation of an award term period that has not yet commenced
for any of the reasons set forth in paragraph (j) shall not be
considered either a termination for convenience or termination for
default, and shall not entitle the Contractor to any termination
settlement or any other compensation. If the award term is cancelled, a
unilateral modification will cite the clause as the authority.
0
4. Amend section 1816.406-70 by adding paragraph (g) to read as
follows:
1816.406-70 NASA contract clauses.
* * * * *
(g) Insert the clause at 1852.216-72, Award Term in solicitations
and contracts for services exceeding $20 million when award terms are
contemplated.
PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
5. Add section 1852.216-XX to read as follows:
1852.216-XX Award term.
As prescribed in 1816.406(g), insert the following clause:
AWARD TERM
(MONTH YEAR)
(a) Based on overall Contractor performance as evaluated in
accordance with the Award Term Plan, the Contracting Officer may extend
the contract for the number and duration of award terms as set forth in
the Award Term Plan subject to the Government's continuing need for the
contract and the availability of funds.
(b) The Contracting Officer will execute any earned award term
period(s) through a unilateral contract modification. All contract
provisions continue to apply throughout the contract period of
performance or ordering period, including any award term period(s).
(c) The Government will evaluate offerors for award purposes by
adding the total price for all options and award terms to the price for
the basic requirement. This evaluation will not obligate the Government
to exercise any options or award term periods.
(d) The Award Term Plan is attached in Section J. The Award Term
Plan provides the methodology and schedule for evaluating Contractor
performance, determining eligibility for an award term, and, together
with Agency need for the contract and availability of funding, serves
as the basis for award term decisions. The Contracting Officer may
unilaterally revise the Award Term Plan. Any changes to the Award Term
Plan will be in writing and incorporated into the contract through a
unilateral modification citing this clause prior to the commencement of
any evaluation period. The Contracting Officer will consult with the
Contractor prior to the issuance of a revised Award Term Plan; however,
the Contractor's consent is not required.
(e) The award term evaluation(s) will be completed in accordance
with the schedule in the Award Term Plan. The Contractor will be
notified of the results and its eligibility to be considered for the
respective award term no later than 120 days after the evaluation
period set forth in the Award Term Plan. The Contractor may request a
review of an award term evaluation which has resulted in the Contractor
not earning the award term. The request shall be
[[Page 89041]]
submitted in writing to the Contracting Officer within 15 days after
notification of the results of the evaluation.
(f) Right not to grant or cancel the award term. (1) The Government
has the unilateral right not to grant or to cancel award term periods
and the associated Award Term Plan if--
(i) The Contractor has failed to achieve the required performance
measures for the corresponding evaluation period;
(ii) After earning an award term, the contractor fails to earn an
award term in any succeeding year of contract performance, the
contracting officer may cancel any award terms that the contractor has
earned, but that have not begun.
(iii) The Contracting Officer has notified the Contractor that the
Government no longer has a need for the award term period before the
time an award term period is to begin;
(iv) The Contractor represented that it was a small business
concern prior to award of this contract, the contract was set-aside for
small businesses, and the Contractor rerepresents in accordance with
FAR clause 52.219-28, Post-Award Small Business Program
Rerepresentation, that it is no longer a small business; or
(v) The Contracting Officer has notified the Contractor that funds
are not available for the award term.
(2) When an award term period is not granted or cancelled, any--
(i) Prior award term periods for which the contractor remains
otherwise eligible are unaffected, except as provided in paragraph (g)
of this section; or
(ii) Subsequent award term periods are also cancelled.
(g) Cancellation of an award term period that has not yet started
for any of the reasons set forth in paragraph (f) shall not be
considered either a termination for convenience or termination for
default, and shall not entitle the Contractor to any termination
settlement or any other compensation.
(h) Cancellation of an award term period that has not yet commenced
for any of the reasons set forth in paragraph (f) and (g) of this
clause shall not be considered either a termination for convenience or
termination for default, and shall not entitle the Contractor to any
termination settlement or any other compensation. If the award term is
cancelled, a unilateral modification will cite this clause as the
authority.
(i) Funds are not presently available for any award term. The
Government's obligation under any award term is contingent upon the
availability of appropriated funds from which payment can be made. No
legal liability on the part of the Government for any award term
payment may arise until funds are made available to the Contracting
Officer for an award term and until the Contractor receives notice of
such availability, to be confirmed in writing by the Contracting
Officer.
(End of clause)
[FR Doc. 2016-29443 Filed 12-8-16; 8:45 am]
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