FedGovContracts.com

Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: February 1, 2001

SUBJECT: Department of Energy Acquisition Regulation (DEAR); Conditional Payment of Fee, Profit, and Other Incentives

SOURCE: Federal Register, February 1, 2001, Vol. 66, No. 22, page 8560

AGENCIES: Department of Energy (DOE)

ACTION: Notice of Proposed Rulemaking

SYNOPSIS: DOE is proposing to amend the DEAR to implement the requirements of Section 3147 of the National Defense Authorization Act for Fiscal Year 2000 (Public Law 106-65) relating to the safeguarding of classified information, and to establish more objective standards and procedures for considering and applying reductions of fee or other amounts payable for Management & Operating (M&O) contractor performance failures relating to environment, safety, and health (ES&H).

EDITOR'S NOTE: The DEAR is available on the Internet at http://www.pr.doe.gov/DEAR/dear.html.

DATES: Comments must be received on or before March 5, 2001.

ADDRESSES: Submit three copies of comments to Michael L. Righi, U.S. Department of Energy, Office of Procurement and Assistance Management, MA-51, 1000 Independence Avenue, SW, Washington, DC 20585.

FOR FURTHER INFORMATION CONTACT: Michael L. Righi at 202-586-8175 or e-mail: michael.l.righi@hq.doe.gov.

SUPPLEMENTAL INFORMATION: Section 3147 of the National Defense Authorization Act for Fiscal Year 2000 (Public Law 106-65), Department of Energy Regulations Relating to the Safeguarding and Security of Restricted Data, requires that DOE contracts include a clause "which provide an appropriate reduction in the fees or amounts paid to the contractor under the contract in the event of a violation by the contractor or contractor employee of any rule, regulation, or order relating to the safeguarding or security of Restricted Data or other classified or sensitive information. The provisions shall specify various degrees of violations and the amount of the reduction attributable to each degree of violation." (EDITOR'S NOTE: DOE states in the introductory material to the proposed rule that "since there is currently no rule, regulation or order which defines the term 'sensitive information,' as used in the Act, this category of information is not addressed in this proposed regulation.")

In addition, in May 2000 the Secretary of Energy announced an initiative to improve M&O contractor performance management by requiring greater responsibility and accountability from both DOE's senior managers and its contractors (see the May 23, 2000, FEDERAL CONTRACTS DISPATCH "Department of Energy; Initiative to Improve Contractor Accountability and Performance."). Because of the serious consequences which can result from performance failures relating to the DOE's ES&H and safeguards and security programs, a major provision of the Secretary's initiative is to better define objective standards and procedures for considering and applying fee reductions for contractor performance failures relating to ES&H and the safeguarding of Restricted Data and classified information.

To implement Section 3147 of Public Law 106-65 and the Secretary's initiative, DOE proposes to amend the DEAR to add one clause and revise another: DEAR 952.204-XX, Conditional Payment of Fee or Profit -- Safeguarding Restricted Data and Other Classified Information, would be added, and it would be included in all contracts that contain DEAR 952.204-2, Security, except Management & Operating (M&O) contracts and other contracts designated by the Procurement Executive; and DEAR 970.5215-3, Conditional Payment of Fee, Profit, or Incentives, which would be retitled "Conditional Payment of Fee, Profit, or Other Incentives -- Facility Management Contracts" and would be included in M&O contracts and other contracts designated by the Procurement Executive. (EDITOR'S NOTE: The proposed rule refers to this clause as being both DEAR 970.5215-3 and DEAR 970.5204-86. DEAR 970.5204-86 was the clause's number until the DEAR Part 970 rewrite changed the number to 970.5215-3 -- see the December 22, 2000, FEDERAL CONTRACTS DISPATCH "Department of Energy Acquisition Regulation (DEAR); Rewrite of Part 970, DOE Management and Operating Contracts.")

Both clauses would reduce the contractor's fee or profit for security violations as follows:

However, the contracting officer would be allowed to consider mitigating factors that may warrant a lesser reduction, and even decide that no reduction should be made.

The revised DEAR 970.5215-3 would also reduce the M&O contractor's fee or profit for failure to obtain approval of its Integrated Safety Management System (ISMS), or for otherwise failing to achieve the minimum performance requirements of the contract relating to ES&H, as follows:

However, the DOE Operations Office/Field Manager would be allowed to consider mitigating factors that may warrant a lesser reduction, and even decide that no reduction should be made.

Nevertheless, the amount of reduction under these clauses, "in combination with any reduction made under any other clause in the contract, shall not exceed the amount of fee, fixed fee, profit, or the contractor's share of cost savings that is otherwise earned during the evaluation period." In other words, the fee or profit cannot be reduced below zero.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2001 by Panoptic Enterprises. All Rights Reserved.

Return to the Dispatches Library.

Return to the Main Page.