[Federal Register Volume 83, Number 189 (Friday, September 28, 2018)]
[Rules and Regulations]
[Pages 49180-49181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-20973]



Defense Acquisition Regulations System

48 CFR Parts 216 and 252

[Docket DARS-2018-0044]
RIN 0750-AJ99

Defense Federal Acquisition Regulation Supplement: Repeal of 
DFARS Clause ``Award Fee'' (DFARS Case 2018-D037)

AGENCY: Defense Acquisition Regulations System, Department of Defense 

ACTION: Final rule.


SUMMARY: DoD is issuing a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to remove a clause that is no 
longer necessary.

DATES: Effective September 28, 2018.

FOR FURTHER INFORMATION CONTACT: Ms. Carrie Moore, telephone 571-372-


I. Background

    DoD is amending the DFARS to remove the DFARS clause 252.216-7005, 
Award Fee, and the associated clause prescription at DFARS 
216.406(e)(2). The DFARS clause advises contractors that: They may earn 
an award fee from zero dollars to the maximum amount stated in the 
award fee plan; an award fee will not be paid for any evaluation period 
in which the Government rates the contractor's overall cost, schedule, 
and technical performance below satisfactory; and, the contracting 
officer may unilaterally revise the award fee plan prior to the 
beginning of a rating period in order to redirect the contractor's 
emphasis on performance.
    Federal Acquisition Regulation (FAR) 16.401 prescribes the award 
fee pool percentages that are available to the contractor and required 
for use by the Government in an award fee plan. Like the DFARS clause, 
these percentages permit the contractor to earn between 0% and 100% of 
the award fee pool. Also like the DFARS clause, the FAR requires all 
award fee plans to prohibit contractors from earning any award fee when 
the contractor's overall cost, schedule, and technical performance is 
below satisfactory. While the FAR does not address the unilateral 
ability to of the contracting officer to make revisions to the award 
fee plan, as discussed in the DFARS clause, the FAR does require award 
fee plans to contain reasonable and attainable targets that motivate 
contractors and discourage inefficiency or waste. Finally, DFARS 
216.401 requires the award fee plan to be incorporated into the 
contract. This action provides contractors with an award fee plan that 
conveys all of the FAR information and requirements for award fee 
plans. As such, this DFARS clause is unnecessary and can be removed.
    The removal of this DFARS clause supports a recommendation from the 
DoD Regulatory Reform Task Force. On February 24, 2017, the President 
signed Executive Order (E.O.) 13777, ``Enforcing the Regulatory Reform 
Agenda,'' which established a Federal policy ``to alleviate unnecessary 
regulatory burdens'' on the American people. In accordance with E.O. 
13777, DoD established a Regulatory Reform Task Force to review and 
validate DoD regulations, including the DFARS. A public notice of the 
establishment of the DFARS Subgroup to the DoD Regulatory Reform Task 
Force, for the purpose of reviewing DFARS provisions and clauses, was 
published in the Federal Register at 82 FR 35741 on August 1, 2017, and 
requested public input. No public comments were received on this 
clause. Subsequently, the DoD Task Force reviewed the requirements of 
DFARS clause 252.216-7005, Award Fee, and determined that the DFARS 
clause was unnecessary and recommended removal.

II. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold and for Commercial Items, Including Commercially Available 
Off-the-Shelf Items

    This rule only removes DFARS clause 252.216-7005, Award Fee, which 
is obsolete. Therefore, the rule does not impose any new requirements 
on contracts at or below the simplified acquisition threshold and for 
commercial items, including commercially available off-the-shelf items.

III. Executive Orders 12866 and 13563

    E.O. 12866, Regulatory Planning and Review; and E.O. 13563, 
Improving Regulation and Regulatory Review, 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. 
The Office of Management and Budget (OMB), Office of Information and 
Regulatory Affairs (OIRA), has determined that this is not a 
significant regulatory action as defined under section 3(f) of E.O. 
12866 and, therefore, was not subject to review under section 6(b). 
This rule is not a major rule as defined at 5 U.S.C. 804(2).

IV. Executive Order 13771

    This rule is not an E.O. 13771, Reducing and Controlling Regulatory 
Costs, regulatory action, because this rule is not significant under 
E.O. 12866.

V. Publication of This Final Rule for Public Comment Is Not Required by 

    The statute that applies to the publication of the FAR is Office of 
Federal Procurement Policy statute (codified at title 41 of the United 
States Code). Specifically, 41 U.S.C. 1707(a)(1) requires that a 
procurement policy, regulation, procedure or form (including an 
amendment or modification thereof) must be published for public comment 
if it relates to the expenditure of

[[Page 49181]]

appropriated funds, and has either a significant effect beyond the 
internal operating procedures of the agency issuing the policy, 
regulation, procedure, or form, or has a significant cost or 
administrative impact on contractors or offerors. This final rule is 
not required to be published for public comment, because DoD is not 
issuing a new regulation; rather, this rule merely removes an obsolete 
requirement from the DFARS.

VI. Regulatory Flexibility Act

    Because a notice of proposed rulemaking and an opportunity for 
public comment are not required to be given for this rule under 41 
U.S.C. 1707(a)(1) (see section V. of this preamble), the analytical 
requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) 
are not applicable. Accordingly, no regulatory flexibility analysis is 
required and none has been prepared.

VII. Paperwork Reduction Act

    The rule does not contain any information collection requirements 
that require the approval of OMB under the Paperwork Reduction Act (44 
U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 216 and 252

    Government procurement.

Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 216 and 252 are amended as follows:

1. The authority citation for 48 CFR parts 216 and 252 continues to 
read as follows:

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


216.406   [Amended]

2. Amend section 216.406 by--
a. Removing paragraph (e)(2); and
b. Redesignating paragraph (e)(1) as paragraph (e).


252.216-7004  [Amended]

3. Amend section 252.216-7004, in the introductory text, by removing 
``216.406'' and adding ``216.406(e)'' in its place.

252.216-7005  [Removed and Reserved]

3. Remove and reserve section 252.216-7005.

[FR Doc. 2018-20973 Filed 9-27-18; 8:45 am]