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Award Fee Administrative Changes

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National Aeronautics and Space Administration.


Final rule.


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.


This rule is effective June 29, 2007.

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Tom O'Toole, NASA, Office of Procurement, Contract Management Division (Suite 5J86); (202) 358-0478; e-mail:

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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 correspondence.

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.

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List of Subjects in 48 CFR Part 1816

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Sheryl Goddard,

Acting Assistant Administrator for Procurement.

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1. The authority citation for

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

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

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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 Start Printed Page 35667contracts 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 critical.

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

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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.

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[FR Doc. E7-12656 Filed 6-28-07; 8:45 am]