Award Fee Reduction or Denial for Health or Safety Issues (DFARS Case 2011-D033)

Summary:

DCN 20110916 includes an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement those sections of the National Defense Authorization Acts (NDAA) for Fiscal Years (FY) 2011 and 2010 providing increased statutory authorities to reduce or deny award fees to companies found to jeopardize the health or safety of Government personnel and adding a mechanism to decrease or eliminate a contractor's award fee for a specific performance period. In addition, this rule modifies the section of the NDAA for FY 2009 that requires that information on the final determination of award fee be entered into the Federal Awardee Performance and Integrity Information System (FAPIIS).

Supplementary Information:

I.  Background

An interim rule was published in the Federal Register under DFARS Case 2009-D039, Award-Fee Reductions for Health and Safety Issues, on November 12, 2010, at 75 FR 69360 to implement section 823 of the National Defense Authorization Act for Fiscal Year 2010 (Pub. L. 111-84). This interim rule includes the review of public comments received in response to the Federal Register notice for DFARS Case 2009-D039. DFARS Case 2009-D039 was merged into this case, DFARS Case 2011-D033, after the NDAA for FY 2011 (Pub. L. 111-383) was enacted on January 7, 2011, in order to combine related sections of the NDAAs for FY 2010 and FY 2011 affecting identical sections of the DFARS.

A. Section 834 Interim Rule

The NDAA for FY 2011 was enacted on January 7, 2011. Section 834 of the statute added to existing statutory authorities to decrease or eliminate a contractor's award fee for a performance period based on a final determination resulting from a DoD investigation of a serious bodily injury or death of any civilian or military personnel alleged to have been caused by a contractor or subcontractor.

Section 834 applies only to contractors and subcontractors at any tier that are not subject to the jurisdiction of U.S. courts.

A contractor's award fee is affected if, after the investigation, a determination is made that the serious bodily injury or death was caused by the contractor's or subcontractor's gross negligence or with reckless disregard for the safety of civilian or military personnel of the Government.

Senate Report 111-201, "to accompany S. 3454, the National Defense Authorization Act for Fiscal Year 2011," associated with section 834, stated that investigations under the provision would be conducted pursuant to existing DoD procedures for administrative fact-finding investigations, such as those provided by Army Regulation 15-6 and the Manual of the Judge Advocate General of the Navy. Defense Criminal Investigative Organizations (DCIOs) have procedures in place currently for conducting criminal investigations of contractor misconduct. In addition, the Military Services have procedures for conducting administrative investigations involving actions related to civilian and military personnel. Findings of criminal misconduct are made at the conclusion of the DCIO investigations.

The statute also modifies section 872 of the NDAA for FY 2009 (Pub. L. 110-417), and requires that information on the final determination be entered into the Federal Awardee Performance and Integrity Information System (FAPIIS) (see DFARS 209.105-2-70) and will be available to the public.

DoD has added a provision at DFARS 209.105-2-70 to provide for the inclusion of a final determination of contractor fault in the FAPIIS (see FAR 9.104-6 and http://www.ppirs.gov). In addition, the requirements of section 834 have been included at DFARS 216.405-2-70, Award fee reduction or denial for jeopardizing the health or safety of Government personnel, and added as a fifth cause for reducing or denying a contractor's award fee in the clause at DFARS 252.216-7004.

B. Section 823 Interim Rule

The related statutory provision, section 823 of the NDAA for FY 2010, currently is addressed at DFARS 216.405-2-70, Award fee reduction for jeopardizing the health or safety of Government personnel, and the clause at DFARS 252.216-7004 (similarly titled), which require the contracting officer to include in the evaluation criteria of any award-fee plan a review of contractor actions that jeopardized the health and safety of Government personnel. As previously discussed, the section 823 requirement was implemented in the DFARS by DFARS Case 2009-D039, published in the Federal Register as an interim rule on November 12, 2010, at 75 FR 69360, prior to its being merged into this case, 2011-D033, Award Fee Reduction or Denial for Health or Safety Issues.

II. Discussion and Analysis

The public comment period for the interim rule issued under DFARS Case 2009-D039 closed January 24, 2011. Two respondents submitted comments on the interim rule. The individual comments are discussed here.

Dates:

Effective Date:

The Effective Date for this final rule is 16 September 2011.

Applicability Date:

This interim rule is applicable to any contract entered into on or after the effective date. This interim rule is applicable to any task order or delivery order issued on or after the effective date of this interim rule, under a contract entered into before, on, or after the effective date.

Comment Date:

Comments are due on or before 15 November 2011 to be considered in the formation of the final rule.

Click here to read the entire Federal Register notice for this rule.