235.006 Contracting methods and contract type.

(b)

(i)  For major defense acquisition programs as defined in 10 U.S.C. 2430-

(A)  Follow the procedures at 234.004; and

(B)  Notify the Under Secretary of Defense (Acquisition, Technology, and Logistics) (USD(AT&L)) of an intent not to exercise a fixed-price production option on a development contract for a major weapon system reasonably in advance of the expiration of the option exercise period.

(ii)  For other than major defense acquisition programs-

(A)  Do not award a fixed-price type contract for a development program effort unless-

(1)  The level of program risk permits realistic pricing;

(2)  The use of a fixed-price type contract permits an equitable and sensible allocation of program risk between the Government and the contractor; and

(3)  A written determination that the criteria of paragraphs (b)(ii)(A)(1) and (2) of this section have been met is executed-

(i)  By the USD(AT&L) if the contract is over $25 million and is for: research and development for a non-major system; the development of a major system (as defined in FAR 2.101); or the development of a subsystem of a major system; or

(ii)  By the contracting officer for any development not covered by paragraph (b)(ii)(A)(3)(i) of this section.

(B)  Obtain USD(AT&L) approval of the Government's prenegotiation position before negotiations begin, and obtain USD(AT&L) approval of the negotiated agreement with the contractor before the agreement is executed, for any action that is-

(1)  An increase of more than $250 million in the price or ceiling price of a fixed-price type development contract, or a fixed-price type contract for the lead ship of a class;

(2)  A reduction in the amount of work under a fixed-price type development contract or a fixed-price type contract for the lead ship of a class, when the value of the work deleted is $100 million or more; or

(3)  A repricing of fixed-price type production options to a development contract, or a contract for the lead ship of a class, that increases the price or ceiling price by more than $250 million for equivalent quantities.