82_FR_34557 82 FR 34416 - NASA Federal Acquisition Regulation Supplement: Award Term (NFS Case 2016-N027)

82 FR 34416 - NASA Federal Acquisition Regulation Supplement: Award Term (NFS Case 2016-N027)

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

Federal Register Volume 82, Issue 141 (July 25, 2017)

Page Range34416-34419
FR Document2017-15520

NASA is issuing a final rule amending 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.

Federal Register, Volume 82 Issue 141 (Tuesday, July 25, 2017)
[Federal Register Volume 82, Number 141 (Tuesday, July 25, 2017)]
[Rules and Regulations]
[Pages 34416-34419]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-15520]


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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1816 and 1852

RIN 2700-AE32


NASA Federal Acquisition Regulation Supplement: Award Term (NFS 
Case 2016-N027)

AGENCY: National Aeronautics and Space Administration.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: NASA is issuing a final rule amending 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: Effective: August 24, 2017.

FOR FURTHER INFORMATION CONTACT: Marilyn E. Chambers, telephone 202-
358-5154.

SUPPLEMENTARY INFORMATION:

I. Background

    NASA published a proposed rule in the Federal Register at 81 FR 
89038 on December 9, 2016, 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 performance is superior, the 
Government has an on-going need for the requirement, and funds are 
available for the additional period of performance. The policy provides 
a non-monetary incentive for contractors whose 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

[[Page 34417]]

performance is acceptable, while earning an award term requires 
sustained excellent performance. Two respondents submitted comments on 
the proposed rule.

II. Discussion and Analysis

    NASA reviewed the public comments in the development of the final 
rule. An editorial change was made to the rule for clarification. No 
other changes to the proposed rule were made. A discussion of the 
comments and the change made to the rule as a result of those comments 
are provided as follows:
    A. Changes. No changes are being made to the final rule as a result 
of the public comments received with the exception of a minor editorial 
change.
    B. Analysis of Public Comments.
    Comment: One respondent stated exceeding the five-year limit on 
contracts using award terms, could limit competition, limit the range 
of solutions available to NASA, and raise prices for the government and 
would lead to sole source contracting, reduced competition, and higher 
costs to the government.
    Response: FAR 17.204(e) states, unless otherwise approved in 
accordance with agency procedures, the total of the basic and option 
periods shall not exceed 5 years in the case of services. NFS 
1817.204(e) provides for exceptions to the 5-year period of performance 
limitation under Agency contracts. Concerning the impact of the use of 
award terms on competition, range of solutions available to NASA, and 
prices, the rule at 1816.405-277(c)states the factors to consider when 
determining whether to use award terms include, market stability, the 
potential changes and advancements in technology, and flexibility to 
change direction with mission changes.
    Comment: One respondent stated that contractors would be more 
interested in proposing on a contract if the contract has the potential 
for additional years of business. The respondent opined a better course 
of action is for NASA to issue a request for proposals allowing for the 
incumbent contractor on an award term contract to compete for a follow-
on contract alongside any other interested parties and that this 
competition would provide NASA with a range of potential solutions and 
lower costs.
    Response: As stated in the policy, the benefits of a longer-term 
relationship versus more frequent competitions must be considered when 
determining if an award term incentive is appropriate. The factors 
considered in this decision would be documented in the Determination 
and Findings, required in under current NFS policy for incentive 
contracts, and provided to the Associate Administrator for Procurement 
for review and approval.
    Comment: One respondent inquired about NASA's current award term 
policy, Procurement Information Circular (PIC) 06-02, Use of Award Term 
Incentive, dated January 25, 2006, and NASA's current use of award term 
incentives. Additionally, the respondent referenced an award term 
contracting pilot program in the late 1990's with the intent of 
assessing the use of award term contracts at NASA. The respondent 
questioned how the pilot and (PIC) informed this rule.
    Response: The PIC and pilot program the respondent references are 
more than a decade old. The pilot was conducted to provide information 
from the NASA procurement organizations on their use of award term 
incentives. At the time of that pilot, NASA had 12 award term 
contracts. As discussed in the Initial Regulatory Flexibility Analysis 
contained in the proposed rule, NASA has ten award term contracts. The 
PIC was used as a starting point for drafting this rule. Additional 
research on the use of award term contracts and comments from the NASA 
procurement organizations also contributed to the formulation of this 
rule.
    Comment: Another respondent stated the proposed clause is 
ambiguous, specifically, paragraph (a) states that the CO ``may'' award 
a term, but paragraph (f) gives reasons for not awarding a term. The 
respondent questioned, if none of those reasons apply, must the CO 
award a term and, if so what does the ``may'' mean and, if not, why 
have paragraph (f).
    Response: Paragraph (a) of the clause is a general statement that 
the contracting officer will rely on the Award Term Plan to determine 
if the contractor is eligible for an award term. ``May'' is used in 
paragraph (a) because the decision to extend the contract for the 
number and duration of award terms is discretionary, i.e., a contractor 
may earn an award term based on meeting the requirements of the Award 
Term Plan, but the contracting officer, for a variety of reasons, may 
decide not to grant the award term. NASA agrees there is some overlap 
of paragraphs (a) and (f). To remove this overlap, paragraph (a) is 
revised to remove the phrase ``subject to the Government's continuing 
need for the contract and the availability of funds.'' Paragraph (f) of 
the clause, which addresses the Government's right not to grant or 
cancel the award term, states the award term may not be granted if the 
there is no continuing need or if funds are not available.

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 prepared a Final Regulatory Flexibility Analysis (FRFA) 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
The FRFA is summarized as follows:
    The objective of this rule is to implement policy in the NASA 
Federal Acquisition Regulation Supplement (NFS) to address the use of 
``award terms'' or additional contract periods of performance for which 
a contractor may earn if the contractor's performance is superior, the 
Government has an on-going need for the requirement, and funds are 
available for the additional period of performance. This policy 
provides a non-monetary incentive for contractors whose performance is 
sustained at an excellent level.
    No comments were received in response to the initial regulatory 
flexibility analysis.
    The Federal Procurement Data System (FPDS) does not track award fee 
contracts, but a survey of NASA's procurement organizations shows there 
are currently 10 active award term contracts. Of these, six are with 
small businesses. A range of services are covered, such as logistics, 
facilities or technical management and information technology.
    There are no special reporting, recordkeeping, and other compliance 
requirements associated with this rule.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    NASA was unable to identify any alternatives that would reduce the 
economic impact on small entities. However, NASA does not expect this 
rule to have any significant economic impact on small entities, because 
it does

[[Page 34418]]

not impose any new requirements on contractors.

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 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 may be eligible for contract 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) 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;

[[Page 34419]]

    (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) of this section 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 1852.216-72 to read as follows:


1852.216-72   Award term.

    As prescribed in 1816.406-70(g), insert the following clause:

AWARD TERM

(AUG 2017)
    (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.
    (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 
submitted in writing to the Contracting Officer within 15 days after 
notification of the results of the evaluation.
    (f)(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 clause; 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) 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.
    (h) Cancellation of an award term period that has not yet 
commenced for any of the reasons set forth in paragraphs (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. 2017-15520 Filed 7-24-17; 8:45 am]
BILLING CODE 7510-13-P



                                                    34416               Federal Register / Vol. 82, No. 141 / Tuesday, July 25, 2017 / Rules and Regulations

                                                       (ii) An individual assessment must be                 reported to the approving official, and to            NATIONAL AERONAUTICS AND
                                                    performed to determine suitability for                   other officials as required under all                 SPACE ADMINISTRATION
                                                    employment for any conviction defined                    other applicable law.
                                                    in paragraph (j)(8)(iv), regardless of the                                                                     48 CFR Parts 1816 and 1852
                                                                                                                (iv) The community residential care
                                                    age of the conviction.                                   provider must remove all duties                       RIN 2700–AE32
                                                       (6)(i) The community residential care
                                                    provider must ensure that all alleged                    requiring direct resident contact with
                                                                                                             veteran residents from any employee                   NASA Federal Acquisition Regulation
                                                    violations involving mistreatment,                                                                             Supplement: Award Term (NFS Case
                                                    neglect, or abuse, including injuries of                 alleged to have violated this paragraph
                                                                                                             (j) during the investigation of such                  2016–N027)
                                                    unknown source, and misappropriation
                                                    of resident property are reported to the                 employee.                                             AGENCY:  National Aeronautics and
                                                    approving official immediately, which                       (7) For purposes of this paragraph (j),            Space Administration.
                                                    means no more than 24 hours after the                    the term ‘‘employee’’ includes a:                     ACTION: Final rule.
                                                    provider becomes aware of the alleged                       (i) Non-VA health care provider at the
                                                    violation; and to other officials in                                                                           SUMMARY:   NASA is issuing a final rule
                                                                                                             community residential care facility;                  amending the NASA Federal
                                                    accordance with State law. The report,
                                                    at a minimum, must include—                                 (ii) Staff member of the community                 Acquisition Regulation (FAR)
                                                       (A) The facility name, address,                       residential care facility who is not a                Supplement (NFS) to add policy on the
                                                    telephone number, and owner;                             health care provider, including a                     use of additional contract periods of
                                                       (B) The date and time of the alleged                  contractor; and                                       performance or ‘‘award terms’’ as a
                                                    violation;                                                  (iii) Person with direct resident                  contract incentive.
                                                       (C) A summary of the alleged                                                                                DATES: Effective: August 24, 2017.
                                                                                                             access. The term ‘‘person with direct
                                                    violation;                                                                                                     FOR FURTHER INFORMATION CONTACT:
                                                       (D) The name of any public or private                 resident access’’ means an individual
                                                                                                             living in the facility who is not                     Marilyn E. Chambers, telephone 202–
                                                    officials or VHA program offices that
                                                                                                             receiving services from the facility, who             358–5154.
                                                    have been notified of the alleged
                                                    violations, if any;                                      may have access to a resident or a                    SUPPLEMENTARY INFORMATION:
                                                       (E) Whether additional investigation                  resident’s property, or may have one-on-              I. Background
                                                    is necessary to provide VHA with more                    one contact with a resident.
                                                    information about the alleged violation;                                                                         NASA published a proposed rule in
                                                                                                                (8) For purposes of this paragraph (j),
                                                       (F) The name of the alleged victim;                                                                         the Federal Register at 81 FR 89038 on
                                                                                                             an employee is considered ‘‘convicted’’               December 9, 2016, to implement policy
                                                       (G) Contact information for the                       of a criminal offense—
                                                    resident’s next of kin or other                                                                                addressing the use of ‘‘award terms’’ or
                                                    designated family member, agent,                            (i) When a judgment of conviction has              additional contract periods of
                                                    personal representative, or fiduciary;                   been entered against the individual by                performance for which a contractor may
                                                    and                                                      a Federal, State, or local court,                     earn if the contractor’s performance is
                                                       (H) Contact information for a person                  regardless of whether there is an appeal              superior, the Government has an on-
                                                    who can provide additional details at                    pending;                                              going need for the requirement, and
                                                    the community residential care                              (ii) When there has been a finding of              funds are available for the additional
                                                    provider, including a name, position,                    guilt against the individual by a Federal,            period of performance. The policy
                                                    location, and phone number.                                                                                    provides a non-monetary incentive for
                                                                                                             State, or local court;
                                                       (ii) The community residential care                                                                         contractors whose performance is
                                                    provider must notify the resident’s next                    (iii) When a plea of guilty or nolo                excellent. An award term incentive
                                                    of kin, caregiver, other designated                      contendere by the individual has been                 would be used where a longer term
                                                    family member, agent, personal                           accepted by a Federal, State, or local                relationship (generally more than five
                                                    representative, or fiduciary of the                      court; or                                             years) between the Government and a
                                                    alleged incident concurrently with                          (iv) When the individual has entered               contractor would provide benefits to
                                                    submission of the incident report to the                 into participation in a first offender,               both parties. Benefits of award term
                                                    approving official.                                      deferred adjudication, or other                       incentives include a more stable
                                                       (iii) The community residential care                  arrangement or program where                          business relationship both for the
                                                    provider must have evidence that all                     judgment of conviction has been                       contractor and its employees (thus
                                                    alleged violations involving                                                                                   retaining a skilled, experienced
                                                                                                             withheld.
                                                    mistreatment, neglect, or abuse,                                                                               workforce), motivating excellent
                                                    including injuries of unknown source,                       (9) For purposes of this paragraph (j),            performance (including cost savings),
                                                    and misappropriation of resident                         the terms ‘‘abuse’’ and ‘‘neglect’’ have              fostering contractor capital investment,
                                                    property are documented and                              the same meaning set forth in 38 CFR                  increasing the desirability of the award
                                                    thoroughly investigated, and must                        51.90(b).                                             (potentially increasing competition),
                                                    prevent further abuse while the                          *       *     *   *     *                             and reduced administrative costs and
                                                    investigation is in progress. The results                                                                      disruptions in preparing for and
                                                                                                             (The information collection requirements in
                                                    of all investigations must be reported to                                                                      negotiating replacement contracts.
                                                                                                             this section have been approved by the Office
                                                    the approving official within 5 working                                                                          Award terms are an incentive and not
asabaliauskas on DSKBBY8HB2PROD with NOTICES




                                                                                                             of Management and Budget under control
                                                    days of the incident and to other                                                                              the same as exercising an option as set
                                                                                                             number 2900–0844.)
                                                    officials in accordance with all other                                                                         forth in FAR 17.207. While there are
                                                    applicable law, and appropriate                          [FR Doc. 2017–15519 Filed 7–24–17; 8:45 am]           similarities between an award term and
                                                    corrective action must be taken if the                   BILLING CODE 8320–01–P                                an option, such as funds must be
                                                    alleged violation is verified. Any                                                                             available and the requirement must
                                                    corrective action taken by the                                                                                 fulfill an existing Government need, the
                                                    community residential care provider as                                                                         key difference is that an option may be
                                                    a result of such investigation must be                                                                         exercised when the contractor’s


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                                                                        Federal Register / Vol. 82, No. 141 / Tuesday, July 25, 2017 / Rules and Regulations                                        34417

                                                    performance is acceptable, while                         under current NFS policy for incentive                no continuing need or if funds are not
                                                    earning an award term requires                           contracts, and provided to the Associate              available.
                                                    sustained excellent performance. Two                     Administrator for Procurement for
                                                                                                                                                                   III. Executive Orders 12866 and 13563
                                                    respondents submitted comments on the                    review and approval.
                                                    proposed rule.                                              Comment: One respondent inquired                      Executive Orders (E.O.s) 12866 and
                                                                                                             about NASA’s current award term                       13563 direct agencies to assess all costs
                                                    II. Discussion and Analysis                                                                                    and benefits of available regulatory
                                                                                                             policy, Procurement Information
                                                       NASA reviewed the public comments                     Circular (PIC) 06–02, Use of Award                    alternatives and, if regulation is
                                                    in the development of the final rule. An                 Term Incentive, dated January 25, 2006,               necessary, to select regulatory
                                                    editorial change was made to the rule                    and NASA’s current use of award term                  approaches that maximize net benefits
                                                    for clarification. No other changes to the               incentives. Additionally, the respondent              (including potential economic,
                                                    proposed rule were made. A discussion                    referenced an award term contracting                  environmental, public health and safety
                                                    of the comments and the change made                      pilot program in the late 1990’s with the             effects, distributive impacts, and
                                                    to the rule as a result of those comments                intent of assessing the use of award term             equity). E.O. 13563 emphasizes the
                                                    are provided as follows:                                 contracts at NASA. The respondent                     importance of quantifying both costs
                                                       A. Changes. No changes are being                      questioned how the pilot and (PIC)                    and benefits, of reducing costs, of
                                                    made to the final rule as a result of the                informed this rule.                                   harmonizing rules, and of promoting
                                                    public comments received with the                                                                              flexibility. This is not a significant
                                                                                                                Response: The PIC and pilot program
                                                    exception of a minor editorial change.                                                                         regulatory action and, therefore, was not
                                                       B. Analysis of Public Comments.                       the respondent references are more than
                                                                                                             a decade old. The pilot was conducted                 subject to review under section 6(b) of
                                                       Comment: One respondent stated                                                                              E.O. 12866, Regulatory Planning and
                                                    exceeding the five-year limit on                         to provide information from the NASA
                                                                                                             procurement organizations on their use                Review, dated September 30, 1993. This
                                                    contracts using award terms, could limit                                                                       rule is not a major rule under 5 U.S.C.
                                                    competition, limit the range of solutions                of award term incentives. At the time of
                                                                                                             that pilot, NASA had 12 award term                    804.
                                                    available to NASA, and raise prices for
                                                    the government and would lead to sole                    contracts. As discussed in the Initial                IV. Regulatory Flexibility Act
                                                    source contracting, reduced                              Regulatory Flexibility Analysis
                                                                                                                                                                      NASA prepared a Final Regulatory
                                                    competition, and higher costs to the                     contained in the proposed rule, NASA
                                                                                                                                                                   Flexibility Analysis (FRFA) consistent
                                                    government.                                              has ten award term contracts. The PIC
                                                                                                                                                                   with the Regulatory Flexibility Act, 5
                                                       Response: FAR 17.204(e) states,                       was used as a starting point for drafting
                                                                                                                                                                   U.S.C. 601, et seq. The FRFA is
                                                    unless otherwise approved in                             this rule. Additional research on the use
                                                                                                                                                                   summarized as follows:
                                                    accordance with agency procedures, the                   of award term contracts and comments
                                                                                                                                                                      The objective of this rule is to
                                                    total of the basic and option periods                    from the NASA procurement
                                                                                                                                                                   implement policy in the NASA Federal
                                                    shall not exceed 5 years in the case of                  organizations also contributed to the
                                                                                                                                                                   Acquisition Regulation Supplement
                                                    services. NFS 1817.204(e) provides for                   formulation of this rule.
                                                                                                                                                                   (NFS) to address the use of ‘‘award
                                                    exceptions to the 5-year period of                          Comment: Another respondent stated                 terms’’ or additional contract periods of
                                                    performance limitation under Agency                      the proposed clause is ambiguous,                     performance for which a contractor may
                                                    contracts. Concerning the impact of the                  specifically, paragraph (a) states that the           earn if the contractor’s performance is
                                                    use of award terms on competition,                       CO ‘‘may’’ award a term, but paragraph                superior, the Government has an on-
                                                    range of solutions available to NASA,                    (f) gives reasons for not awarding a term.            going need for the requirement, and
                                                    and prices, the rule at 1816.405–                        The respondent questioned, if none of                 funds are available for the additional
                                                    277(c)states the factors to consider when                those reasons apply, must the CO award                period of performance. This policy
                                                    determining whether to use award terms                   a term and, if so what does the ‘‘may’’               provides a non-monetary incentive for
                                                    include, market stability, the potential                 mean and, if not, why have paragraph                  contractors whose performance is
                                                    changes and advancements in                              (f).                                                  sustained at an excellent level.
                                                    technology, and flexibility to change                       Response: Paragraph (a) of the clause                 No comments were received in
                                                    direction with mission changes.                          is a general statement that the                       response to the initial regulatory
                                                       Comment: One respondent stated that                   contracting officer will rely on the                  flexibility analysis.
                                                    contractors would be more interested in                  Award Term Plan to determine if the                      The Federal Procurement Data System
                                                    proposing on a contract if the contract                  contractor is eligible for an award term.             (FPDS) does not track award fee
                                                    has the potential for additional years of                ‘‘May’’ is used in paragraph (a) because              contracts, but a survey of NASA’s
                                                    business. The respondent opined a                        the decision to extend the contract for               procurement organizations shows there
                                                    better course of action is for NASA to                   the number and duration of award terms                are currently 10 active award term
                                                    issue a request for proposals allowing                   is discretionary, i.e., a contractor may              contracts. Of these, six are with small
                                                    for the incumbent contractor on an                       earn an award term based on meeting                   businesses. A range of services are
                                                    award term contract to compete for a                     the requirements of the Award Term                    covered, such as logistics, facilities or
                                                    follow-on contract alongside any other                   Plan, but the contracting officer, for a              technical management and information
                                                    interested parties and that this                         variety of reasons, may decide not to                 technology.
                                                    competition would provide NASA with                      grant the award term. NASA agrees                        There are no special reporting,
                                                    a range of potential solutions and lower                 there is some overlap of paragraphs (a)               recordkeeping, and other compliance
                                                                                                             and (f). To remove this overlap,
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                                                    costs.                                                                                                         requirements associated with this rule.
                                                       Response: As stated in the policy, the                paragraph (a) is revised to remove the                   The rule does not duplicate, overlap,
                                                    benefits of a longer-term relationship                   phrase ‘‘subject to the Government’s                  or conflict with any other Federal rules.
                                                    versus more frequent competitions must                   continuing need for the contract and the                 NASA was unable to identify any
                                                    be considered when determining if an                     availability of funds.’’ Paragraph (f) of             alternatives that would reduce the
                                                    award term incentive is appropriate.                     the clause, which addresses the                       economic impact on small entities.
                                                    The factors considered in this decision                  Government’s right not to grant or                    However, NASA does not expect this
                                                    would be documented in the                               cancel the award term, states the award               rule to have any significant economic
                                                    Determination and Findings, required in                  term may not be granted if the there is               impact on small entities, because it does


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                                                    34418               Federal Register / Vol. 82, No. 141 / Tuesday, July 25, 2017 / Rules and Regulations

                                                    not impose any new requirements on                       to both the Government and potential                  must be priced, evaluated, and
                                                    contractors.                                             offerors should be considered when                    considered in the initial contract
                                                                                                             determining whether to use award                      selection process in order to be valid.
                                                    V. Paperwork Reduction Act                                                                                        (i) All contracts including award
                                                                                                             terms, this decision must be weighed
                                                      The rule does not contain any                          against market stability, the potential               terms shall be supported by an Award
                                                    information collection requirements that                 changes and advancements in                           Term Plan that establishes criteria for
                                                    require the approval of the Office of                    technology, and flexibility to change                 earning an award term and the
                                                    Management and Budget under the                          direction with mission changes and                    methodology and schedule for
                                                    Paperwork Reduction Act (44 U.S.C.                       associated frequent procurements.                     evaluating contractor performance. A
                                                    chapter 35).                                               (d) Award terms may be used in                      copy of the Award Term Plan shall be
                                                                                                             conjunction with contract options under               included in the contract. The
                                                    List of Subjects in 48 CFR Parts 1816
                                                                                                             FAR 17.2. Award terms are similar to                  contracting officer may unilaterally
                                                    and 1852
                                                                                                             contract options in that they are                     revise the Award Term Plan. Award
                                                      Government procurement.                                conditioned on the Government’s                       Term Plans shall—
                                                    Manuel Quinones,                                         continuing need for the contract and the                 (1) Identify the officials to include
                                                                                                             availability of funds. However, FAR                   Term-Determining Official involved in
                                                    NASA FAR Supplement Manager.
                                                                                                             17.207(c)(7) states the contracting officer           the award term evaluation and their
                                                      Accordingly, 48 CFR parts 1816 and                     must determine that the contractor’s                  function;
                                                    1852 are amended as follows:                             performance has been acceptable, e.g.,                   (2) Identify and describe each
                                                    ■ 1. The authority citation for parts                    received satisfactory ratings. In contrast,           evaluation factor, any subfactors, related
                                                    1816 and 1852 continues to read as                       to become eligible for an award term,                 performance standards, adjectival
                                                    follows:                                                 the contractor must maintain a level of               ratings, and numerical ranges or weights
                                                      Authority: 51 U.S.C. 20113(a) and 48 CFR               performance above acceptable as                       to be used. The contracting officer
                                                    chapter 1.                                               specified in the Award Term Plan (see                 should follow the guidance at 1816.405–
                                                                                                             1816.405–277(i)). In contracts with both              274 in establishing award term
                                                    PART 1816—TYPES OF CONTRACTS                             option periods and award terms, the                   evaluation factors and 1816.405–275 in
                                                                                                             award term period of performance or                   establishing adjectival rating categories,
                                                    ■  2. Amend section 1816.001 by adding                   ordering period shall begin after                     associated descriptions, numerical
                                                    in alphabetical order the definition                     completion of any option period of                    scoring system, and weighted scoring
                                                    ‘‘Term-determining official’’ to read as                 performance or ordering period.                       system;
                                                    follows:                                                   (e) Contracts with award terms shall                   (3) Specify the annual overall rating
                                                                                                             include a base period of performance or               required for the contractor to be eligible
                                                    1816.001    Definitions.
                                                                                                             ordering period and may include a                     for an award term that reflects a level of
                                                    *     *     *     *     *                                designated number of option periods                   performance above acceptable and the
                                                      Term-determining official means the                    during which the Government will                      number of award terms the contractor
                                                    designated Agency official who reviews                   observe and evaluate the contractor’s                 may qualify for based on the rating
                                                    the recommendations of the Award-                        performance allowing the contractor to                score;
                                                    Term Board in determining whether the                    earn an award term. Additionally, as                     (4) Identify the evaluation period(s)
                                                    contractor is eligible for an award term.                specified in the Award Term Plan, the                 and the evaluation schedule to be
                                                    *     *     *     *     *                                contractor may also be evaluated for                  conducted at stated intervals during the
                                                    ■ 3. Add section 1816.405–277 to read                    additional award terms during                         contract period of performance or
                                                    as follows:                                              performance of an earned award term. If               ordering period so that the contractor
                                                                                                             the contractor meets or exceeds the                   will periodically be informed of the
                                                    1816.405–277      Award term.                            performance requirements, there is an                 quality of its performance and the areas
                                                      (a) An award term enables a                            on-going need for and desire to continue              in which improvement is expected (e.g.,
                                                    contractor to become eligible for                        the contract, funds are available, and the            six months, nine months, twelve
                                                    additional periods of performance or                     contractor is not listed in the System for            months, or at other specific milestones),
                                                    ordering periods under a service                         Award Management Exclusions, then                     and when the decision points are for the
                                                    contract (as defined in FAR 37.101) by                   the contractor may be eligible for                    determination that the contractor is
                                                    achieving and sustaining the prescribed                  contract extension for the period of the              eligible for an award term; and
                                                    performance levels under the contract. It                award term.                                              (5) Identify the contract’s base period
                                                    incentivizes the contractor for                            (f) Contracts with award terms shall                of performance or ordering period, any
                                                    maintaining superior performance by                      comply with FAR and NFS restrictions                  option period(s), and total award-term
                                                    providing an opportunity for extensions                  on the overall contract length, such as               periods(s). Award term periods shall not
                                                    of the contract term.                                    the 5-year period of performance                      exceed one year.
                                                      (b) Award terms are best suited for                    limitation found at NFS 1817.204.                        (j)(1) The Government has the
                                                    acquisitions where a longer term                           (g) Award terms may only be used in                 unilateral right not to grant or to cancel
                                                    relationship (generally more than five                   acquisitions for services exceeding $20               award term periods and the associated
                                                    years) between the Government and a                      million dollars. Use of award terms for               Award Term Plans if—
                                                    contractor would provide significant                     lower-valued acquisitions may be                         (i) The contractor has failed to achieve
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                                                    benefits to both. Motivating excellent                   authorized in exceptional situations                  the required performance measures for
                                                    performance, fostering contractor capital                such as contract requirements having                  the corresponding evaluation period;
                                                    investment, and increasing the                           direct health or safety impacts, where                   (ii) After earning an award term, the
                                                    desirability of the award, thus                          the judgmental assessment of the quality              contractor fails to earn an award term in
                                                    potentially increasing competition, are                  of contractor performance is critical.                any succeeding year of contract
                                                    benefits that may justify the use of                       (h) Consistent with the Competition                 performance, the contracting officer may
                                                    award terms.                                             in Contracting Act and general                        cancel any award terms that the
                                                      (c) While the administrative burden                    procurement principles, the potential                 contractor has earned, but that have not
                                                    and cost of more frequent procurements                   award term periods in a procurement                   begun;


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                                                                        Federal Register / Vol. 82, No. 141 / Tuesday, July 25, 2017 / Rules and Regulations                                               34419

                                                       (iii) The contracting officer notifies                   (c) The Government will evaluate offerors          not be considered either a termination for
                                                    the contractor that the Government no                    for award purposes by adding the total price          convenience or termination for default, and
                                                    longer has a need for the award term                     for all options and award terms to the price          shall not entitle the Contractor to any
                                                                                                             for the basic requirement. This evaluation            termination settlement or any other
                                                    period before the time an award term
                                                                                                             will not obligate the Government to exercise          compensation.
                                                    period is to begin;                                      any options or award term periods.                      (h) Cancellation of an award term period
                                                       (iv) The contractor represented that it                  (d) The Award Term Plan is attached in             that has not yet commenced for any of the
                                                    was a small business concern prior to                    Section J. The Award Term Plan provides the           reasons set forth in paragraphs (f) and (g) of
                                                    award of the contract, the contract was                  methodology and schedule for evaluating               this clause shall not be considered either a
                                                    set-aside for small businesses, and the                  Contractor performance, determining                   termination for convenience or termination
                                                    contractor rerepresents in accordance                    eligibility for an award term, and, together          for default, and shall not entitle the
                                                    with FAR clause 52.219–28 Post-Award                     with Agency need for the contract and                 Contractor to any termination settlement or
                                                    Small Business Program                                   availability of funding, serves as the basis for      any other compensation. If the award term is
                                                                                                             award term decisions. The Contracting                 cancelled, a unilateral modification will cite
                                                    Rerepresentation, that it is no longer a                 Officer may unilaterally revise the Award             this clause as the authority.
                                                    small business; or                                       Term Plan. Any changes to the Award Term                (i) Funds are not presently available for
                                                       (v) The contracting officer notifies the              Plan will be in writing and incorporated into         any award term. The Government’s
                                                    contractor that funds are not available                  the contract through a unilateral modification        obligation under any award term is
                                                    for the award term.                                      citing this clause prior to the commencement          contingent upon the availability of
                                                       (2) When an award term period is not                  of any evaluation period. The Contracting             appropriated funds from which payment can
                                                    granted or cancelled, any—                               Officer will consult with the Contractor prior        be made. No legal liability on the part of the
                                                       (i) Prior award term periods for which                to the issuance of a revised Award Term               Government for any award term payment
                                                    the contractor remains otherwise                         Plan; however, the Contractor’s consent is            may arise until funds are made available to
                                                    eligible are unaffected.                                 not required.                                         the Contracting Officer for an award term and
                                                                                                                (e) The award term evaluation(s) will be           until the Contractor receives notice of such
                                                       (ii) Subsequent award term periods
                                                                                                             completed in accordance with the schedule             availability, to be confirmed in writing by the
                                                    are also cancelled.                                      in the Award Term Plan. The Contractor will
                                                       (k) Cancellation of an award term                                                                           Contracting Officer.
                                                                                                             be notified of the results and its eligibility to
                                                    period that has not yet commenced for                    be considered for the respective award term           (End of clause)
                                                    any of the reasons set forth in paragraph                no later than 120 days after the evaluation           [FR Doc. 2017–15520 Filed 7–24–17; 8:45 am]
                                                    (j) of this section shall not be considered              period set forth in the Award Term Plan. The          BILLING CODE 7510–13–P
                                                    either a termination for convenience or                  Contractor may request a review of an award
                                                    termination for default, and shall not                   term evaluation which has resulted in the
                                                    entitle the contractor to any termination                Contractor not earning the award term. The
                                                                                                             request shall be submitted in writing to the          DEPARTMENT OF THE INTERIOR
                                                    settlement or any other compensation. If
                                                                                                             Contracting Officer within 15 days after
                                                    the award term is cancelled, a unilateral                                                                      Fish and Wildlife Service
                                                                                                             notification of the results of the evaluation.
                                                    modification will cite the clause as the                    (f)(1) The Government has the unilateral
                                                    authority.                                               right not to grant or to cancel award term            50 CFR Part 21
                                                    ■ 4. Amend section 1816.406–70 by                        periods and the associated Award Term Plan
                                                                                                                                                                   [Docket No. FWS–HQ–MB–2013–0070;
                                                    adding paragraph (g) to read as follows:                 if—
                                                                                                                                                                   FF09M21200–134–FXMB1231099BPP0]
                                                                                                                (i) The Contractor has failed to achieve the
                                                    1816.406–70      NASA contract clauses.                  required performance measures for the                 RIN 1018–AZ69
                                                    *     *     *     *     *                                corresponding evaluation period;
                                                      (g) Insert the clause at 1852.216–72,                     (ii) After earning an award term, the              Migratory Bird Permits; Control Order
                                                    Award Term in solicitations and                          Contractor fails to earn an award term in any         for Introduced Migratory Bird Species
                                                                                                             succeeding year of contract performance, the          in Hawaii
                                                    contracts for services exceeding $20
                                                                                                             Contracting Officer may cancel any award
                                                    million when award terms are                             terms that the Contractor has earned, but that        AGENCY:   Fish and Wildlife Service,
                                                    contemplated.                                            have not begun;                                       Interior.
                                                                                                                (iii) The Contracting Officer has notified
                                                    PART 1852—SOLICITATION                                                                                         ACTION: Final rule.
                                                                                                             the Contractor that the Government no longer
                                                    PROVISIONS AND CONTRACT                                  has a need for the award term period before           SUMMARY:   Introduced, nonnative, alien,
                                                    CLAUSES                                                  the time an award term period is to begin;
                                                                                                                                                                   and invasive species in Hawaii displace,
                                                                                                                (iv) The Contractor represented that it was
                                                    ■ 5. Add section 1852.216–72 to read as                  a small business concern prior to award of            compete with, and consume native
                                                    follows:                                                 this contract, the contract was set-aside for         species, some of which are endangered,
                                                                                                             small businesses, and the Contractor                  threatened, or otherwise in need of
                                                    1852.216–72      Award term.                             rerepresents in accordance with FAR clause            additional protection in order to
                                                      As prescribed in 1816.406–70(g),                       52.219–28, Post-Award Small Business                  increase or maintain viable populations.
                                                    insert the following clause:                             Program Rerepresentation, that it is no longer        To protect native species, we establish
                                                                                                             a small business; or                                  a control order for cattle egrets
                                                    AWARD TERM                                                  (v) The Contracting Officer has notified the       (Bubulcus ibis) and barn owls (Tyto
                                                    (AUG 2017)                                               Contractor that funds are not available for the
                                                                                                                                                                   alba), two invasive migratory bird
                                                      (a) Based on overall Contractor                        award term.
                                                    performance as evaluated in accordance with                 (2) When an award term period is not               species in Hawaii, under the direction
                                                    the Award Term Plan, the Contracting Officer             granted or cancelled, any—                            of Executive Order 13112. We also make
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                                                    may extend the contract for the number and                  (i) Prior award term periods for which the         available the supporting final
                                                    duration of award terms as set forth in the              contractor remains otherwise eligible are             environmental assessment, the finding
                                                    Award Term Plan.                                         unaffected, except as provided in paragraph           of no significant impact, and public
                                                      (b) The Contracting Officer will execute               (g) of this clause; or                                comments for this control order.
                                                    any earned award term period(s) through a                   (ii) Subsequent award term periods are also
                                                                                                                                                                   DATES: This rule is effective August 24,
                                                    unilateral contract modification. All contract           cancelled.
                                                    provisions continue to apply throughout the                 (g) Cancellation of an award term period           2017.
                                                    contract period of performance or ordering               that has not yet started for any of the reasons       FOR FURTHER INFORMATION CONTACT: Jerry
                                                    period, including any award term period(s).              set forth in paragraph (f) of this clause shall       Thompson, at 703–358–2016.


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Document Created: 2018-10-24 11:22:03
Document Modified: 2018-10-24 11:22:03
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rule.
DatesEffective: August 24, 2017.
ContactMarilyn E. Chambers, telephone 202- 358-5154.
FR Citation82 FR 34416 
RIN Number2700-AE32
CFR Citation48 CFR 1816
48 CFR 1852

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