Acquisition regulations: Technical performance incentive guidance,

[Federal Register: May 22, 1998 (Volume 63, Number 99)]

[Rules and Regulations]

[Page 28285-28286]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr22my98-17]

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 1816

Revision to the NASA FAR Supplement on Technical Performance Incentive Guidance.

AGENCY: National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

SUMMARY: This is a final rule amending the NASA FARSupplement (NFS) to correct inconsistencies on technical performance incentive guidance.

EFFECTIVE DATE: May 22, 1998.

FOR FURTHER INFORMATION CONTACT: Tom O'Toole, NASA Office of Procurement, Contract Management Division (Code HK), (202) 358-0478.

SUPPLEMENTARY INFORMATION:

Background

NFS section 1816.402-270, NASA Technical Performance Incentives, requires the use of positive and negative performance incentives in hardware contracts greater than $25M unless waived in writing by the Center Director. New section 1816.402, Application of Predetermined, Formula-Type Incentives, was added as a final rule in the March 17, 1998 Federal Register (63 FR 12997-12998). This section provided guidance on the appropriate selection and use of positive and negative performance incentives, but did not change the mandatory requirement in 1816.402-270 which appears to preempt those guidelines in certain circumstances. This incongruity is rectified by adding language to 1816.402-270 stating that NASA has considered the guidelines in 1816.402 and has determined that performance incentives are appropriate for, and must be used in, hardware contracts greater than $25M. Additional administrative revisions are made to indicate that this policy does not apply to commercial acquisitions under FAR Part 12 and that negative incentives are not required for contracts which already require total contractor liability for product performance.

Impact

NASA certifies that this regulation will not have a significant economic impact on a substantial number of small business entities under the RegulatoryFlexibility Act (5 U.S.C. 601 et seq.). This final rule does not impose any reporting requirements or recordkeeping requirements subject to the Paperwork Reduction Act.

List of Subjects in 48 CFR Part 1816

Government procurement. Deidre A. Lee, Associate Administrator for Procurement.

Accordingly, 48 CFR Part 1816 is amended as follows:

PART 1816--TYPES OF CONTRACTS

1. The authority citation for 48 CFR Part 1816 continues to read as follows:

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

2. In section 1816.402-270, paragraphs (a), (b), and (c) are revised to read as follows:

   1816.402-270 NASA technical performance incentives.

   (a) Pursuant to the guidelines in 1816.402, NASA has determined that a performance incentive shall be included in all contracts based on performance-oriented documents (see FAR 11.101(a)), except those awarded under the commercial item procedures of FAR part 12, where the primary deliverable(s) is (are) hardware with a total value (including options) greater than $25 million. Any exception to this requirement shall be approved in writing by the Center Director. Performance incentives may be included in hardware contracts valued under $25 million acquired under procedures other than FAR Part 12 at the discretion of the procurement officer upon consideration of the guidelines in 1816.402. Performance incentives, which are objective and measure hardware performance after delivery and acceptance, are separate from other incentives, such as cost or delivery incentives.

   (b) When a performance incentive is used, it shall be structured to be both positive and negative based on hardware performance after delivery and acceptance, unless the contract type requires complete contractor liability for product performance (e.g., fixed price). In this latter case, a negative incentive is not required. In structuring the incentives, the contract shall establish a standard level of performance based on the salient hardware performance requirement. This standard performance level is normally the contract's minimum performance requirement. No incentive amount is earned at this standard performance level. Discrete units of measurement based on the same performance parameter shall be identified for performance above and, when a negative incentive is used, below the standard. Specific incentive amounts shall be associated with each performance level from maximum beneficial performance (maximum positive incentive) to, when a negative incentive is included, minimal beneficial performance or total failure (maximum negative incentive). The relationship between any given incentive, either positive and negative, and its associated unit of measurement should reflect the value to the Government of that level of hardware performance. The contractor should not be rewarded for above-standard performance levels that are of no benefit to the Government.

   (c) The final calculation of the performance incentive shall be done when hardware performance, as defined in the contract, ceases or when the maximum positive incentive is reached. When hardware performance ceases below the standard established in the contract and a negative incentive is included, the Government shall calculate the amount due and the contractor shall pay the Government that amount. Once hardware performance exceeds the standard, the contractor may request payment of the incentive amount associated with a given level of performance, provided that such payments shall not be more frequent than monthly. When hardware performance ceases above the standard level of performance, or when the maximum positive incentive is reached, the Government shall calculate the final performance incentive earned and

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   unpaid and promptly remit it to the contractor. * * * * *

   [FR Doc. 98-13778Filed5-21-98; 8:45 am]

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