Tuesday, September 20, 2011

Award Fee Reductions or Eliminations

The Department of Defense issued an interim rule that requires contracting officers to include in the evaluation criteria of any award-fee plan, a review of contractor and subcontractor actions that jeopardized the health or safety of Government personnel (either military or civilian) through gross negligence or reckless disregard for the safety of such personnel.

There was a similar interim rule published last November. That one required conviction in a criminal proceeding, or finding of fault and liability in a civil or administrative proceeding. This one adds contractors and subcontractors that are not under the jurisdiction of the U.S. courts, presumably to include foreign companies that provide support for overseas deployments (Germany, Korea, Japan, Iraq, Afghanistan, etc). For those contractors, a final determination of fault resulting from a DoD investigation is required.

Under the interim rule, the contracting officer shall consider reducing or denying award fees for a period if contractor (or subcontractor) actions caused serious bodily injury or death of civilian or military Government personnel during the period under review. Serious bodily injury is defined as a "grievous physical harm that results in a permanent disability."

In addition, this rule requires that information on the final determination of award fee be entered into the Federal Awardee Performance and Integrity Information System (FAPIIS).

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