Potential Award Fee Reductions

There are a lot of ways for the Government to reduce award fees - many of them subjective. Now comes another. DoD just issued an interim rule, amending the DoD FAR Supplement (DFARS) to require contracting officers to consider reduction or denial of award fee if contractor (or subcontractor) actions jeopardize the health or safety of Government personnel (both military and civilian personnel).

The basic requirement reads as follows:

If, in the performance of this contract, the Contractor's or its subcontractor's actions cause serious bodily injury or death of civilian or military Government personnel, the Government may reduce or deny the award fee for the relevant award fee period in which the covered incident occurred, including the recovery of all or part of any award fees paid for any previous period during which the covered incident occurred.

The question then is, what is a "covered incident". The new DFARS defines that term as well. A covered incident is any incident in which the Contractor, through a criminal, civil, or administrative proceeding has been determined in the performance of this contract to have caused serious bodily injury or death of any civilian or military personnel. The term "death" is obvious but what is a "serious bodily injury"? DFARS defines that term also. Serious bodily injury means a grievous physical harm that results in a permanent disability.

DoD didn't think this one up on its own. It was required as part of the National Defense Authorization Act for Fiscal Year 2010.