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/ Wednesday, December 10, 2003
[Federal Register: December 10, 2003 (Volume 68, Number 237)]
[Rules and Regulations]
[Page 68771-68784]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10de03-11]
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DEPARTMENT OF ENERGY
48 CFR Parts 904, 923, 952, and 970
RIN 1991-AB54
Acquisition Regulations; Conditional Payment of Fee, Profit, and
Other Incentives
AGENCY: Department of Energy.
ACTION: Interim final rule.
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SUMMARY: The Department of Energy publishes interim final amendments to
its Acquisition Regulation setting forth policies for reductions of fee
or other amounts payable to DOE prime contractors because of contractor
performance failures related to safeguarding of classified information
and to adequate protection of environment, health and safety, including
the health and safety of workers, at contractor operated sites.
DATES: This rule is effective January 9, 2004. Written comments on
specified portions of this interim final rule
[[Page 68772]]
implementing section 234C of the Atomic Energy Act must be received by
January 26, 2004.
ADDRESSES: Comments (3 copies) on the specified portions of this
interim final rule should be addressed to: Michael L. Righi, U.S.
Department of Energy, Office of Procurement and Assistance Policy, ME-
61, 1000 Independence Avenue, SW., Washington, DC 20585.
FOR FURTHER INFORMATION CONTACT: Michael L. Righi, Office of
Procurement and Assistance Policy (ME-61), 202-586-8175 or michael.righi@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
I. Introduction
II. Background
III. Scope of Further Opportunity for Public Comment
IV. Discussion of Public Comments
V. Procedural Requirements
A. Review of Executive Order 12866
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under the Treasury and Government Appropriations Act,
2001
J. Review Under Executive Order 13211
K. Review Under the Small Business Regulatory Enforcement
Fairness Act
I. Introduction
Pursuant to the Atomic Energy Act of 1954 (Atomic Energy Act) and
other laws, the Department of Energy (DOE or Department) carries out a
variety of national defense and energy research, development, and
demonstration activities at facilities around the nation that are owned
by the United States, under the custody and control of DOE, and
operated by prime contractors under the supervision of DOE. On February
1, 2001, DOE published a Notice of Proposed Rulemaking (NOPR) (66 FR
8560) to amend portions of the DOE Acquisition Regulation (DEAR) (48
CFR chapter 9) that apply to these prime contractors. The NOPR
contained proposed regulatory amendments dealing with reductions in fee
and other payments to these contractors as a result of performance
failures in carrying out contract obligations related to: (1)
Safeguarding classified information; and (2) protection of environment,
health and safety, including the health and safety of workers at
contract sites. Although this rulemaking is generally authorized by the
Atomic Energy Act (42 U.S.C. 2201), the portion of the proposed rule
dealing with safeguarding classified information responded to specific
statutory directions in section 234B of the Atomic Energy Act (42
U.S.C. 2282b). Subsequent to publication of the proposed rule, the
President signed into law a new section 234C, which contains reduction
in fee provisions similar to those in section 234B and provides
specific directions with regard to protection of worker health and
safety.
Today, DOE publishes a notice of interim final rulemaking that
responds to the comments on the proposed rule and contains interim
final regulatory amendments to the DEAR pursuant to general Atomic
Energy Act authorities, as well as pursuant to the specific terms of
sections 234B and 234C of the Atomic Energy Act. Since the provisions
of section 234C are substantially similar to those of section 234B, DOE
does not believe that there are policy issues with regard to section
234C that differ from those concerning section 234B. However, in
addition to its review of comments submitted during the comment period
on the NOPR, DOE is inviting public comment limited to the portions of
the interim final amendments to the DEAR that implement section 234C to
ensure that DOE has not overlooked any subtle, relevant issues that are
unique to section 234C. Those portions of the interim final rule are
specifically identified in part III of this SUPPLEMENTARY INFORMATION.
II. Background
Section 3147 of the National Defense Authorization Act for Fiscal
Year 2000 added section 234B to the Atomic Energy Act (42 U.S.C.
2282b). Section 234B requires, in part, that DOE contracts provide for
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. Section 234B also prescribes that the
implementing regulations must specify various degrees of violations and
the amount of the reduction attributable to each degree of violation.
Section 234B applies to prime contractors, including management and
operating (M&O) contractors and certain non-M&O contractors.
Recent legislation, section 3173 of the National Defense
Authorization Act for Fiscal Year 2003, which adds section 234C to the
Atomic Energy Act (42 U.S.C. 2282c), requires the Department to include
in each contract with a contractor of the Department who has entered
into an agreement of Price Anderson indemnification (48 CFR 952.250-70)
clauses that 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 regulation promulgated
to protect worker safety and health (WS&H). Section 234C also requires
that contract provisions specify various degrees of violations and the
amount of reduction attributable to each degree of violation. The
Department is planning a rulemaking action to establish a new
regulation at 10 CFR part 851 to set forth WS&H requirements and to
address the civil penalty and enforcement aspects of section 234C.
Section 234C specifies that in the event of a violation under the
regulations, the Department may pursue either civil or contract
penalties, but not both. In the case of non-profit entities described
at 42 U.S.C. 2282a(d), the total amount of civil and contract penalties
in a fiscal year may not exceed the total amount of fees paid by the
Department to that entity in that fiscal year.
As opposed to the NOPR, which would have added two clauses, this
interim final rule adds four clauses, three for other than management
and operating contracts and one for management and operating contracts.
The additional clauses reflect the requirements of section 234C.
Consistent with section 234B of the Atomic Energy Act, for other
than management and operating contracts, this interim final rule adds a
clause entitled, ``Conditional Payment of Fee or Profit--Safeguarding
Restricted Data and Other Classified Information'' to DEAR part 952.
Except for DOE management and operating contracts and other contracts
designated by the Procurement Executive, or designee, this clause is
prescribed for use in all DOE contracts that involve or are likely to
involve classified information but that do not include the clause at 48
CFR 952.250-70, Nuclear hazards indemnification agreement. The clause
would provide for reductions of earned fee or profit that is otherwise
payable under applicable contracts for contractor violations of laws,
regulations, or directives relating to the safeguarding of restricted
data and other classified information. Among other things, this clause
would provide for fee reductions for violations related to the
safeguarding of high risk nuclear weapons-related data. At present,
this category consists of data covered by SIGMA 14 or SIGMA 15, but it
may include other categories of high risk
[[Page 68773]]
nuclear weapons-related data should the Department designate additional
categories in the future. The clause sets forth the conditions that may
precipitate a reduction of fee or profit and percentage reduction
ranges that correlate to three degrees of violations.
Consistent with section 234B and C of the Atomic Energy Act, for
other than management and operating contracts, this interim final rule
adds a clause entitled, ``Conditional Payment of Fee or Profit--
Safeguarding Restricted Data and Other Classified Information and
Protection of Worker Safety and Health'' to DEAR part 952. Except for
DOE management and operating contracts and other contracts designated
by the Procurement Executive, or designee, this clause is prescribed
for use in all DOE contracts that involve or are likely to involve
classified information and that also include the clause at 48 CFR
952.250-70, Nuclear hazards indemnification agreement. The clause would
provide for reductions of earned fee or profit that is otherwise
payable under applicable contracts for contractor violations of laws,
regulations, or directives relating to the safeguarding of restricted
data and other classified information or relating to worker safety and
health. The clause sets forth the conditions that may precipitate a
reduction of fee or profit and percentage reduction ranges that
correlate to three degrees of violations.
Consistent with section 234C of the Atomic Energy Act, for other
than management and operating contracts, this interim final rule adds a
clause entitled, ``Conditional Payment of Fee or Profit-Protection of
Worker Safety and Health'' to DEAR part 952. Except for DOE management
and operating contracts and other contracts designated by the
Procurement Executive, or designee, this clause is prescribed for use
in all DOE contracts that do not involve and are not likely to involve
classified information and that do include the clause at 48 CFR
952.250-70, Nuclear hazards indemnification agreement. The clause would
provide for reductions of earned fee or profit that is otherwise
payable under applicable contracts for contractor violations of laws,
regulations, or directives relating to worker safety and health. The
clause sets forth both the conditions that may precipitate a reduction
of fee or profit and the percentage reduction ranges that correlate to
three degrees of violations.
Consistent with section 234B and C of the Atomic Energy Act, for
DOE management and operating contracts and other contracts designated
by the Procurement Executive, the clause at 48 CFR 970.5215-3,
``Conditional Payment of Fee, Profit, or Other Incentives--Facility
Management Contracts,'' provides for reductions of earned fee, fixed
fee, profit, or share of cost savings that may otherwise be payable
under the contract if: Performance failures relating to environment,
safety and health (ES&H) or the safeguarding of restricted data and
other classified information occur (the basic clause); or performance
failures relating to ES&H occur (Alternate I of the clause). The clause
sets forth the conditions that may precipitate a reduction of earned or
fixed fee, profit, or share of cost savings under the contract. The
clause also sets forth the percentage fee, profit, or share of cost
savings reduction ranges that correlate to the three degrees of
performance failures relating to ES&H and to the three degrees of
performance failures relating to safeguarding of restricted data and
other classified information.
A large number of comments DOE received related to the mitigating
factors to be considered before a fee reduction by the contracting
officer. The provisions in the NOPR permitted consideration of
mitigating factors, but did not make consideration of mitigating
factors mandatory. In today's interim final rule, the Department has
changed the proposed language so that it is now mandatory for a
contracting officer to consider mitigating factors when contemplating a
fee reduction. DOE also added a non-exhaustive list of mitigating
factors that must be considered by the contracting officer.
Another significant number of comments DOE received related to the
percentage fee reductions possible for second and third degree
performance failures and the descriptions of what might constitute
performance failures, especially ES&H failures. In this interim final
rule, the Department has changed the proposed rule language to lower
the percentage fee reduction for second and third degree performance
failures (from maximums of 50 percent and 25 percent to maximums of 25
percent and 10 percent, respectively) and shortened and simplified the
description of performance failures for ES&H issues. Additionally, the
interim final rule includes language making it clear that performance
failures only occur if the contractor does not comply with the related
terms and conditions of the contract. The mere occurrence of an event
does not necessarily create the potential for a fee reduction.
The numbering system in this interim final rule differs from the
one in the NOPR because it conforms to the new DEAR numbering system
established by the final rule published in the Federal Register on
December 22, 2000 (65 FR 80993), titled ``Rewrite of Regulations
Governing Management and Operating Contracts.''
Contracting officers must apply these DEAR changes to solicitations
issued on or after the effective date of this rule.
Contracting officers may, at their discretion, include these DEAR
changes in solicitations issued before the effective date of this rule,
provided award of the resulting contract(s) occurs on or after the
effective date.
Contracting officers must apply these DEAR changes: to contracts
extended in accordance with the Department's extend/compete policies
and procedures (48 CFR 917.6, 48 CFR 970.1702-1(a), and internal
guidance) if the extend/compete decision is made on or after the
effective date of this rule, and to options exercised under
competitively awarded management and operating contracts (48 CFR
970.1702-1(b)).
In preparing this notice of interim final rulemaking the Department
has made a variety of technical changes, which do not warrant extended
discussion.
III. Scope of Further Opportunities for Public Comment
The NOPR of February 1, 2001, contained proposed amendments to the
DEAR that are consistent with the subsequently enacted requirements of
section 234C. A few minor amendments have been necessary to the
originally proposed language to specifically address the new section
234C. The amendments are the interim rule portion of this interim final
rule. The amendments are: (1) Revised language at DEAR 970.1504-1-
2(i)(1) and at 970.5215-3(a)(1)(i) making it clear that the term
``environment, safety and health (ES&H)'' also includes ``worker safety
and health (WS&H)''; (2) a new paragraph (c) is added to DEAR 970.2303-
1; (3) a new paragraph (b) is added to DEAR 923.7001; (4) new
paragraphs (f) and (g) are added to DEAR 923.7002; and (5) new clauses
are added at DEAR 952.223-76 and at DEAR 952.223-77. DOE today provides
an opportunity for public comment limited to these five regulatory
amendments and relevant issues unique to implementing section 234C.
IV. Discussion of Public Comments
This section of the Supplementary Information addresses the major
issues that emerged from the public comments. Many of the comments
received in response to the NOPR raised issues related to the civil
penalty requirements of section 234B, which were outside the
[[Page 68774]]
scope of this fee reduction rule, since this rulemaking only addresses
the contractual provisions and fee reduction aspects of the statute.
The Department always intended to conduct two separate rulemakings, one
establishing civil penalty procedural rules similar to the procedural
rules to achieve compliance with DOE nuclear safety requirements found
at 10 CFR part 820 and the other establishing procurement clauses like
those in this rulemaking action. To establish procedural rules, on
April 1, 2002, the Department published a second NOPR (67 FR 15339) to
implement subsections a, c and d of section 234B. In the second NOPR,
the Department proposed to establish a new part 824 to chapter III of
title 10 of the Code of Federal Regulations (CFR) to implement all
subsections of section 234B of the Atomic Energy Act, except subsection
b. A number of the comments received in response to the first NOPR,
intended to implement section b of section 234B, were addressed by the
publication of the second NOPR, intended to implement subsections a, c
and d of section 234B, and need not be addressed at length in this
notice.
Other major issues emerging from the public comments on the
proposed rule are discussed below. Sixteen respondents submitted
comments to the Department.
Mitigating Factors
Comment: Respondents stated that the proposal lacked a sense of
proportion between the seriousness of the violation and the
contractor's culpability and that fee reductions should decrease as
contractor culpability decreases. Others advocated the use of fault
based standards for determining amount of fee reductions and that the
Department should exclude matters beyond the contractor's control.
Response: These comments regarding the issue of taking into account
mitigating circumstances are addressed in the interim final rule
through the addition in each of the contract provisions of a statement
that the contractor's overall performance on an issue be considered and
a mandatory requirement that a list of mitigating factors be
considered.
Comment: Respondents were concerned about the risk of violations
and resultant fee reductions that could result from changing contract
requirements under the directives system.
Response: The DEAR Laws, regulations, and DOE directives clause
allows for contract changes when contract requirements change due to a
new or modified directive. The contract changes include changes to any
contract term or condition, including cost or schedule, that are
appropriate. Therefore, any change to the risk of fee reduction that
could result from changing contract requirements under the directives
system, whether it be increased risk or decreased risk of fee
reduction, can be fairly handled under the clause. In those instances
where DOE lays new safety or security requirements on the contractor,
the contractor must be given adequate time to comply with the new
requirements.
Comment: Respondents stated that contractors should not be
penalized with a fee reduction for self reporting a problem.
Response: The Department agrees and self reporting has been
included in the list of mitigation factors.
E,S&H
Comment: Respondents recommended DOE eliminate the proposed rule's
ES&H coverage because it goes beyond the focus in section 234B of the
Atomic Energy Act on security issues and is covered adequately by the
current clause.
Response: The NOPR covered issues not addressed in the current DEAR
clause because the Department determined it was appropriate to address
ES&H-related fee reductions in the same manner as security-related fee
reductions. The Department's decision to include degrees of violation
for ES&H-related fee reductions was fortuitous since, as discussed in
an earlier section of this notice, the Department must now address a
statutory requirement for fee reductions for violations related to
worker safety and health concerns. The new provisions are required to
specify various degrees of violations and amount of reduction
attributable to each degree of violation. The new requirement is
similar to that contained in section 234B of the Atomic Energy Act,
which was focused on security concerns.
The Department's proposed rule also included other potential
improvements. The current DEAR clause addressing conditional payment of
fee, for example, does not require DOE to consider mitigating
circumstances for ES&H performance failures that are not catastrophic
in determining fee reductions. Nor does it require, for a catastrophic
event, both a failure to comply with the ES&H terms and conditions and
a negative result before a fee reduction can be imposed. Rather it
merely requires that an event occur. Further, the current clause does
not limit performance failures for ES&H or catastrophic events to 25
percent (second degree) or 10 percent (third degree) for lesser
failures, since it does not address degrees of failure.
Comment: Respondents stated that the proposed language regarding
performance failures for ES&H issues was too subjective or vague.
Response: To satisfy respondents' comments, in this interim final
rule, a number of changes have been made to the ES&H-related
provisions. The language describing the degrees of performance failure
has been streamlined, the criteria for failure determinations have been
more clearly oriented to the terms of an individual contract, and the
consideration of mitigating factors has become more focused on systemic
rather than individual failures.
Appeal Process
Comment: Respondents stated that the fee reduction provisions
should be subject to the disputes clause and not left to the unilateral
discretion of the contracting officer.
Response: Fee reductions are subject to the disputes clause. The
contractor will continue to have appeal rights under the Contract
Disputes Act notwithstanding the fact that the contract gives the
contracting officer unilateral discretion to make determinations for
fee reductions. However, the inclusion of this contract term raises the
standard of review to arbitrary or capricious conduct by the fee
determination official. See Burnside-Ott Aviation Training Center v.
Dalton, 107 F.3rd 854 (Fed. Cir. 1997).
Security Issues
Comment: Respondents stated that the Department should not make fee
reductions for security violations in instances where the violations
related to problems inherited by the current contractor, such as
documents already misclassified sometime in the past.
Response: While the mitigating factors now listed in the clauses do
not specifically use the term pre-existing condition, this is the type
of situation contemplated by the mitigating factors. The first
mitigating factor, for example, is ``Degree of control the contractor
had over the event or incident.''
Comment: Respondents stated that the proposed language was too
subjective or vague for the associated penalties. Phrases such as
``reasonably expected to result in'' and ``threaten the successful
completion of'' were considered too vague for descriptions that could
result in fee reductions. Some suggestions were to:
[[Page 68775]]
--Define ``exceptionally grave damage, serious damage, etc.'';
--Define ``safeguards and security management system'' breakdown;
--Define or eliminate ``that can reasonably be expected to result in''
damage to national security;
--Eliminate conduct ``creating a risk'' of harm (basing fee reductions
on incidents that merely create risk is too subjective);
--Eliminate ``or performance failures of similar import'';
Respondents also stated that since risk is always present, fee
reductions should not be imposed for risk. They stated that the rule
would undo current standards of acceptable risk in safeguarding
classified information, which set appropriate levels of protection
against risk based on vulnerability/risk analyses.
Response: The terms used in the proposed rule and this interim
final rule are found in DOE Directives, Executive Orders, and the
National Industrial Security Program. As for risk, the Department
understands risk is present. The interim final rule makes it clear that
fee reductions related to a security violation are only possible if
there is a performance failure related to a security violation and that
failure is the cause of an undesirable outcome, such as events that
cause or could reasonably be expected to cause damage to the national
security.
Comment: A number of respondents stated that the fee reductions
should be tied to a site specific plan that is part of the security
agreement between DOE and contractor. That plan would cite controlling
directives, the contractor's security plan, and define degrees of
performance failure.
Response: The interim final rule specifically allows for site
specific performance criteria/requirements that provide additional
definition, guidance for the amount of the reduction, or guidance for
the applicability of mitigating factors.
Other Issues
Comment: Respondents stated that there should be a distinction in
the rule between contracts that have evaluation periods of different
lengths.
Response: DOE disagrees because the parties are free to negotiate
appropriate evaluation period lengths, taking into account all the
elements of the contract to include, among other things, desired
outcomes, equitable allocation of risks, suitable rewards, and
potential fee reductions for ES&H or security performance failures.
V. Procedural Requirements
A. Review Under Executive Order 12866
Today's regulatory action has been determined not to be ``a
significant regulatory action'' under Executive Order 12866,
``Regulatory Planning and Review'' (58 FR 51735, October 4, 1993).
Accordingly, this action is not subject to review under that Executive
Order by the Office of Information and Regulatory Affairs of the Office
of Management and Budget (OMB).
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis for any rule
that by law must be proposed for public comment, unless the agency
certifies that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities. As required
by Executive Order 13272, ``Proper Consideration of Small Entities in
Agency Rulemaking'' (67 FR 53461, August 16, 2002), DOE published
procedures and policies to ensure that the potential impacts of its
draft rules on small entities are properly considered during the
rulemaking process (68 FR 7990, February 19, 2003), and has made them
available on the Office of General Counsel's Web site: http://www.gc.doe.gov.
DOE has reviewed today's rule under the provisions of
the Regulatory Flexibility Act and the procedures and policies
published on February 19, 2003. Because DOE is contractually obligated
to reimburse contractors for the cost of complying with regulatory
requirements, the rule will not have a significant economic impact on
small entities. Since it is clear that the rule will not have an
adverse economic impact, there is no need to determine the exact number
of small contractors that might be affected by the new requirements. On
the basis of the foregoing, DOE certifies that the rule, if
promulgated, will not have a significant economic impact on a
substantial number of small entities. Accordingly, DOE did not prepare
a regulatory flexibility analysis for this rule.
C. Review Under the Paperwork Reduction Act
No new information collection requirements subject to the Paperwork
Reduction Act, 44 U.S.C. 3501 et seq., are imposed by today's
regulatory action.
D. Review Under the National Environmental Policy Act
DOE has concluded that promulgation of this rule falls into a class
of actions that would not individually or cumulatively have a
significant impact on the human environment, as determined by DOE's
regulations implementing the National Environmental Policy Act of 1969
(42 U.S.C. 4321 et seq.). Specifically, this rule deals only with
agency procedures, and, therefore, is covered under the Categorical
Exclusion in paragraph A6 to subpart D, 10 CFR part 1021. Accordingly,
neither an environmental assessment nor an environmental impact
statement is required.
E. Review Under Executive Order 13132
Executive Order 13132, ``Federalism'' (64 FR 43255, August 4, 1999)
imposes certain requirements on agencies formulating and implementing
policies or regulations that preempt State law or that have federalism
implications. Agencies are required to examine the constitutional and
statutory authority supporting any action that would limit the
policymaking discretion of the States and carefully assess the
necessity for such actions. The Executive Order also requires agencies
to have an accountable process to ensure meaningful and timely input by
State and local officials in the development of regulatory policies
that have federalism implications. On March 14, 2000, DOE published a
statement of policy describing the intergovernmental consultation
process it will follow in the development of such regulations (65 FR
13735). DOE has examined today's rule and has determined that it does
not preempt State law and does not have a substantial direct effect on
the States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. No further action is required by
Executive Order 13132.
F. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform'' (61 FR 4729, February 7, 1996), imposes on
Federal agencies the general duty to adhere to the following
requirements: (1) Eliminate drafting errors and ambiguity; (2) write
regulations to minimize litigation; and (3) provide a clear legal
standard for affected conduct rather than a general standard and
promote simplification and burden reduction. Section 3(b) of
[[Page 68776]]
Executive Order 12988 specifically requires that Executive agencies
make every reasonable effort to ensure that the regulation: (1) Clearly
specifies the preemptive effect, if any; (2) clearly specifies any
effect on existing Federal law or regulation; (3) provides a clear
legal standard for affected conduct while promoting simplification and
burden reduction; (4) specifies the retroactive effect, if any; (5)
adequately defines key terms; and (6) addresses other important issues
affecting clarity and general draftsmanship under any guidelines issued
by the Attorney General. Section 3(c) of Executive Order 12988 requires
Executive agencies to review regulations in light of applicable
standards in section 3(a) and section 3(b) to determine whether they
are met or it is unreasonable to meet one or more of them. DOE has
completed the required review and determined that, to the extent
permitted by law, this rule meets the relevant standards of Executive
Order 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995.
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) requires each Federal agency to assess the effects of a Federal
regulatory action on State, local, and tribal governments, and the
private sector. The Department has determined that today's regulatory
action does not impose a Federal mandate on State, local or tribal
governments or on the private sector.
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
This rule would not have any impact on the autonomy or integrity of the
family as an institution. Accordingly, DOE has concluded that it is not
necessary to prepare a Family Policymaking Assessment.
I. Review Under the Treasury and General Government Appropriations Act,
2001
The Treasury and General Government Appropriations Act, 2001 (44
U.S.C. 3516, note) provides for agencies to review most disseminations
of information to the public under guidelines established by each
agency pursuant to general guidelines issued by OMB. OMB's guidelines
were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines
were published at 67 FR 62446 (October 7, 2002). DOE has reviewed
today's notice under the OMB and DOE guidelines and has concluded that
it is consistent with applicable policies in those guidelines.
J. Review Under Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR
28355, May 22, 2001) requires Federal agencies to prepare and submit to
the Office of Information and Regulatory Affairs (OIRA), Office of
Management and Budget, a Statement of Energy Effects for any proposed
significant energy action. A ``significant energy action'' is defined
as any action by an agency that promulgated or is expected to lead to
promulgation of a final rule, and that: (1) Is a significant regulatory
action under Executive Order 12866, or any successor order; and (2) is
likely to have a significant adverse effect on the supply,
distribution, or use of energy; or (3) is designated by the
Administrator of OIRA as a significant energy action. For any proposed
significant energy action, the agency must give a detailed statement of
any adverse effects on energy supply, distribution, or use should the
proposal be implemented, and of reasonable alternatives to the action
and their expected benefits on energy supply, distribution, and use.
Today's regulatory action is not a significant energy action.
Accordingly, DOE has not prepared a Statement of Energy Effects.
K. Review Under the Small Business Regulatory Enforcement Fairness Act.
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of today's interim final rule prior to its effective date.
The report will state that it has been determined that the rule is not
a ``major rule'' as defined by 5 U.S.C. 801(2).
Issuance of this interim final rule has been approved by the Office
of the Secretary of Energy.
List of Subjects in 48 CFR Parts 904, 923, 952, and 970
Government procurement.
Issued in Washington, DC on December 2, 2003.
Richard H. Hopf,
Director, Office of Procurement and Assistance Management, Office of
Management, Budget and Evaluation, Department of Energy.
Robert C. Braden, Jr.,
Director, Office of Procurement and Assistance Management, National
Nuclear Security Administration.
0
For the reasons set out in the preamble, DOE amends chapter 9 of title
48 of the Code of Federal Regulations as set forth below.
0
1. The authority citation for parts 904 and 952 is revised to read as
follows:
Authority: 42 U.S.C. 2201, 2282a, 2282b, 2282c, 7101 et seq.; 41
U.S.C. 418b; 50 U.S.C. 2401 et seq.
PART 904--ADMINISTRATIVE MATTERS
0
2. Section 904.402 is amended by adding a new paragraph (c) to read as
follows:
904.402 General.
* * * * *
(c)(1) Section 234B of the Atomic Energy Act (42 U.S.C. 2282b)
requires that DOE contracts include a clause that provides for 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 any
contractor employee of any rule, regulation, or order relating to the
safeguarding or security of Restricted Data or other classified
information. The clause is required for all DOE prime contracts that
involve any possibility of contractor access to Restricted Data or
other classified information. The clause is required to specify various
degrees of violations and the amount of the reduction attributable to
each degree of violation. The clause prescribed at 48 CFR 904.404(d)(6)
(Conditional Payment of Fee or Profit--Safeguarding Restricted Data and
Other Classified Information) or the clause prescribed at 48 CFR
923.7002(f) (Conditional Payment of Fee or Profit--Safeguarding
Restricted Data and Other Classified Information and Protection of
Worker Safety and Health) shall be used for this purpose unless the
clause prescribed at 48 CFR 970.1504-5(c) (Conditional Payment of Fee,
Profit, and Other Incentives--Facility Management Contracts) is used.
(2) The clause entitled ``Conditional Payment of Fee or Profit--
Safeguarding Restricted Data and Other Classified Information'' and the
clause entitled ``Conditional Payment of Fee or Profit--Safeguarding
Restricted Data and Other
[[Page 68777]]
Classified Information and Protection of Worker Safety and Health''
provide for reductions of fee or profit that is earned by the
contractor depending upon the severity of the contractor's failure to
comply with contract terms or conditions relating to the safeguarding
of Restricted Data or other classified information. When reviewing
performance failures that would otherwise warrant a reduction of earned
fee, the contracting officer must consider mitigating factors that may
warrant a reduction below the applicable range specified in the clause.
Some of the mitigating factors that must be considered are specified in
the clause.
(3) The contracting officer must obtain the concurrence of the Head
of the Contracting Activity:
(i) Prior to effecting any reduction of fee or amounts otherwise
payable to the contractor in accordance with the terms and conditions
of the clause entitled ``Conditional Payment of Fee or Profit--
Safeguarding Restricted Data and Other Classified Information'' or of
the clause entitled ``Conditional Payment of Fee or Profit--
Safeguarding Restricted Data and Other Classified Information and
Protection of Worker Safety and Health;'' and
(ii) For determinations that no reduction of fee is warranted for a
particular performance failure(s) that would otherwise warrant a
reduction.
0
3. Section 904.404 is amended by adding a new paragraph (d)(6) to read
as follows:
904.404 Solicitation provision and contract clause. [DOE Coverage--
Paragraph (d)]
(d) * * *
(6) Except as prescribed in 48 CFR 970.1504-5(c), the contracting
officer shall insert the clause at 48 CFR 952.204-76, Conditional
Payment of Fee or Profit--Safeguarding Restricted Data and Other
Classified Information, in all contracts that contain the clause at 48
CFR 952.204-2, Security, but that do not contain the clause at 48 CFR
952.250-70, Nuclear hazards indemnity agreement.
PART 923--ENVIRONMENT, CONSERVATION, OCCUPATIONAL SAFETY, AND DRUG-
FREE WORKPLACE
0
4. Section 923.7002 is redesignated as Sec. 923.7003 and a new Sec.
923.7002 is added to read as follows:
923.7002 Worker Safety and Health.
(a)(1) Except when the clause prescribed at 48 CFR 970.1504-5(c) is
used, the clauses entitled ``Conditional Payment of Fee or Profit--
Safeguarding Restricted Data and Other Classified Information and
Protection of Worker Safety and Health'' and ``Conditional Payment of
Fee or Profit--Protection of Worker Safety and Health'' implement the
requirements of section 234C of the Atomic Energy Act for the use of a
contract clause that provides for an appropriate reduction in the fee
or amount paid to the contractor under the contract in the event of a
violation by the contractor or any contractor employee of any
Departmental regulation relating to the enforcement of worker safety
and health concerns. The clauses, in part, provide for reductions in
the amount of fee, profit, or share of cost savings that is otherwise
earned by the contractor for performance failures relating to worker
safety and health violations under the Department's regulations.
(2) The clauses provide for reductions of fee or profit that is
earned by the contractor depending upon the severity of the
contractor's failure to comply with contract terms or conditions
relating to worker safety and health concerns. When reviewing
performance failures that would otherwise warrant a reduction of earned
fee, the contracting officer must consider mitigating factors that may
warrant a reduction below the applicable range specified in the
clauses. Some of the mitigating factors that must be considered are
specified in the clauses.
(3) The contracting officer must obtain the concurrence of the Head
of the Contracting Activity--
(i) Prior to effecting any reduction of fee or amounts otherwise
payable to the contractor in accordance with the terms and conditions
of the clause entitled ``Conditional Payment of Fee or Profit--
Safeguarding Restricted Data and Other Classified Information and
Protection of Worker Safety and Health'' or of the clause entitled
``Conditional Payment of Fee or Profit--Protection of Worker Safety and
Health''; and
(ii) For determinations that no reduction of fee is warranted for a
particular performance failure(s) that would otherwise warrant a
reduction.
(4) Section 234C of the Atomic Energy Act provides that DOE shall
either pursue civil penalties (implemented at 10 CFR part 851) for a
violation under section 234C of the Atomic Energy Act (42 U.S.C. 2282c)
or a contract fee reduction, but not both.
(5) The contracting officer must coordinate with the Office of
Price Anderson Enforcement within the Office of the Assistant Secretary
for Environment, Safety and Health (or with any designated successor
office) before pursuing a contract fee reduction in the event of a
violation by the contractor or any contractor employee of any
Departmental regulation relating to the enforcement of worker health
and safety concerns.
0
5. Redesignated Sec. 923.7003 is further amended by adding a new
paragraphs (f) and (g) to read as follows:
923.7003 Contract clauses.
* * * * *
(f) Except as prescribed in 48 CFR 970.1504-5(c), the contracting
officer shall insert the clause at 48 CFR 952.223-76, Conditional
Payment of Fee or Profit--Safeguarding Restricted Data and Other
Classified Information and Protection of Worker Safety and Health, in
all contracts that contain both the clause at 48 CFR 952.204-2,
Security, and the clause at 48 CFR 952.250-70, Nuclear hazards
indemnity agreement.
(g) Except as prescribed in 48 CFR 970.1504-5(c), the contracting
officer shall insert the clause at 48 CFR 952.223-77, Conditional
Payment of Fee or Profit--Protection of Worker Safety and Health, in
all contracts that do not contain the clause at 48 CFR 952.204-2,
Security, but that do contain the clause at 48 CFR 952.250-70, Nuclear
hazards indemnity agreement.
PART 952--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
6. Section 952.204-76 is added in Subchapter H to read as follows:
952.204-76 Conditional Payment of Fee or Profit--Safeguarding
Restricted Data and Other Classified Information.
As prescribed at 48 CFR (DEAR) 904.404(d)(6), insert the following
clause.
Conditional Payment of Fee or Profit--Safeguarding Restricted Data and
Other Classified Information (JAN 2004)
(a) General. (1) The payment of fee or profit (i.e., award fee,
fixed fee, and incentive fee or profit) under this contract is
dependent upon the contractor's compliance with the terms and
conditions of this contract relating to the safeguarding of
Restricted Data and other classified information (i.e., Formerly
Restricted Data and National Security Information) including
compliance with applicable law, regulation, and DOE directives. The
term ``contractor'' as used in this clause to address failure to
comply shall mean ``contractor or contractor employee.''
(2) In addition to other remedies available to the Government,
if the contractor fails to comply with the terms and conditions of
this contract relating to the safeguarding of Restricted Data and
other classified information, the contracting officer may
unilaterally reduce the amount of fee or
[[Page 68778]]
profit that is otherwise payable to the contractor in accordance
with the terms and conditions of this clause.
(3) Any reduction in the amount of fee or profit earned by the
contractor will be determined by the severity of the contractor's
failure to comply with contract terms and conditions relating to the
safeguarding of Restricted data or other classified information
pursuant to the degrees specified in paragraph (c) of this clause.
(b) Reduction Amount. (1) If in any period (see 48 CFR 952.204-
76 (b)(2)) it is found that the contractor has failed to comply with
contract terms and conditions relating to the safeguarding of
Restricted Data or other classified information, the contractor's
fee or profit of the period may be reduced. Such reduction shall not
be less than 26 percent nor greater than 100 percent of the total
fee or profit earned for a first degree performance failure, not
less than 11 percent nor greater than 25 percent for a second degree
performance failure, and up to 10 percent for a third degree
performance failure. The contracting officer must consider
mitigating factors that may warrant a reduction below the specified
range (see 48 CFR 904.402(c)). The mitigating factors include, but
are not limited to, the following:
(i) Degree of control the contractor had over the event or
incident.
(ii) Efforts the contractor had made to anticipate and mitigate
the possibility of the event in advance.
(iii) Contractor self-identification and response to the event
to mitigate impacts and recurrence.
(iv) General status (trend and absolute performance) of
safeguarding Restricted Data and other classified information and
compliance in related security areas.
(2)(i) Except in the case of performance-based firm-fixed-price
contracts (see paragraph (b)(3) of this clause), the contracting
officer, for purposes of this clause, will at the time of contract
award, or as soon as practicable thereafter, allocate the total
amount of fee or profit that is available under this contract to
equal periods of [insert 6 or 12] months to run sequentially for the
entire term of the contract (i.e., from the effective date of the
contract to the expiration date of the contract, including all
options). The amount of fee or profit to be allocated to each period
shall be equal to the average monthly fee or profit that is
available or otherwise payable during the entire term of the
contract, multiplied by the number of months established above for
each period.
(ii) Under this clause, the total amount of fee or profit that
is subject to reduction in a period in which a performance failure
occurs, in combination with any reduction made under any other
clause in the contract that provides for a reduction to the fee or
profit, shall not exceed the amount of fee or profit that is earned
by the contractor in the period established pursuant to paragraph
(b)(2)(i) of this clause.
(3) For performance-based firm-fixed-price contracts, the
contracting officer will at the time of contract award include
negative monetary incentives in the contract for contractor
violations relating to the safeguarding of Restricted Data and other
classified information.
(c) Safeguarding Restricted Data and Other Classified
Information. Performance failures occur if the contractor does not
comply with the terms and conditions of this contract relating to
the safeguarding of Restricted Data and other classified
information. The degrees of performance failures relating to the
contractor's obligations under this contract for safeguarding of
Restricted Data and other classified information are as follows:
(1) First Degree: Performance failures that have been
determined, in accordance with applicable law, regulation, or DOE
directive, to have resulted in, or that can reasonably be expected
to result in, exceptionally grave damage to the national security.
The following are examples of performance failures or performance
failures of similar import that will be considered first degree:
(i) Non-compliance with applicable laws, regulations, and DOE
directives actually resulting in, or creating a risk of, loss,
compromise, or unauthorized disclosure of Top Secret Restricted Data
or other information classified as Top Secret, any classification
level of information in a Special Access Program (SAP), information
identified as sensitive compartmented information (SCI), or high
risk nuclear weapons-related data.
(ii) Contractor actions that result in a breakdown of the
safeguards and security management system that can reasonably be
expected to result in the loss, compromise, or unauthorized
disclosure of Top Secret Restricted Data, or other information
classified as Top Secret, any classification level of information in
a SAP, information identified as SCI, or high risk nuclear weapons-
related data.
(iii) Failure to promptly report the loss, compromise, or
unauthorized disclosure of Top Secret Restricted Data or other
information classified as Top Secret, any classification level of
information in a SAP, information identified as SCI, or high risk
nuclear weapons-related data.
(iv) Failure to timely implement corrective actions stemming
from the loss, compromise, or unauthorized disclosure of Top Secret
Restricted Data or other information classified as Top Secret, any
classification level of information in a SAP, information identified
as SCI, or high risk nuclear weapons-related data.
(2) Second Degree: Performance failures that have been
determined, in accordance with applicable law, regulation, or DOE
directive, to have actually resulted in, or that can reasonably be
expected to result in, serious damage to the national security. The
following are examples of performance failures or performance
failures of similar import that will be considered second degree:
(i) Non-compliance with applicable laws, regulations, and DOE
directives actually resulting in, or creating risk of, loss,
compromise, or unauthorized disclosure of Secret Restricted Data or
other information classified as Secret.
(ii) Contractor actions that result in a breakdown of the
safeguards and security management system that can reasonably be
expected to result in the loss, compromise, or unauthorized
disclosure of Sceret Restricted Data, or other information
classified as Secret.
(iii) Failure to promptly report the loss, compromise, or
unauthorized disclosure of Restricted Data or other information
regardless of classification (except for information covered by
paragraph (c)(1)(iii) of this clause).
(iv) Failure to timely implement corrective actions stemming
from the loss, compromise, or unauthorized disclosure of Secret
Restricted Data or other information classified as Secret.
(3) Third Degree: Performance failures that have been
determined, in accordance with applicable law, regulation, or DOE
directive, to have actually resulted in, or that can reasonably be
expected to result in, undue risk to the common defense and
security. In addition, this category includes performance failures
that result from a lack of contractor management and/or employee
attention to the proper safeguarding of Restricted Data and other
classified information. These performance failures may be indicators
of future, more severe performance failures and/or conditions, and
if identified and corrected early would prevent serious incidents.
The following are examples of performance failures or performance
failures of similar import that will be considered third degree:
(i) Non-compliance with applicable laws, regulations, and DOE
directives actually resulting in, or creating risk of, loss,
compromise, or unauthorized disclosure of Restricted Data or other
information classified as Confidential.
(ii) Failure to promptly report alleged or suspected violations
of laws, regulations, or directives pertaining to the safeguarding
of Restricted Data or other classified information.
(iii) Failure to identify or timely execute corrective actions
to mitigate or eliminate identified vulnerabilities and reduce
residual risk relating to the protection of Restricted Data or other
classified information in accordance with the contractor's
Safeguards and Security Plan or other security plan, as applicable.
(iv) Contractor actions that result in performance failures
which unto themselves pose minor risk, but when viewed in the
aggregate indicate degradation in the integrity of the contractor's
safeguards and security management system relating to the protection
of Restricted Data and other classified information.
(End of Clause)
0
7. Section 952.223-76 is added to read as follows:
952.223-76 Conditional Payment of Fee or Profit--Safeguarding
Restricted Data and Other Classified Information and Protection of
Worker Safety and Health.
As prescribed at 48 CFR (DEAR) 923.7002(f), insert the following
clause.
Conditional Payment of Fee or Profit--Safeguarding Restricted Data and
Other Classified Information and Protection of Worker Safety and Health
(JAN 2004)
(a) General. (1) The payment of fee or profit (i.e., award fee,
fixed fee, and incentive fee or profit) under this contract is
dependent upon the contractor's compliance with the
[[Page 68779]]
terms and conditions of this contract relating to the safeguarding
of Restricted Data and other classified information (i.e., Formerly
Restricted Data and National Security Information) and relating to
the protection of worker safety and health, including compliance
with applicable law, regulation, and DOE directives. The term
``contractor'' as used in this clause to address failure to comply
shall mean ``contractor or contractor employee.''
(2) In addition to other remedies available to the Federal
Government, if the contractor fails to comply with the terms and
conditions of this contract relating to the safeguarding of
Restricted Data and other classified information or relating to the
protection of worker safety and health, the contracting officer may
unilaterally reduce the amount of fee or profit that is otherwise
payable to the contractor in accordance with the terms and
conditions of this clause.
(3) Any reduction in the amount of fee or profit earned by the
contractor will be determined by the severity of the contractor's
failure to comply with contract terms and conditions relating to the
safeguarding of Restricted data or other classified information or
relating to worker safety and health pursuant to the degrees
specified in paragraphs (c) and (d) of this clause.
(b) Reduction Amount. (1) If in any period (see 48 CFR 952.223-
76 (b)(2)) it is found that the contractor has failed to comply with
contract terms and conditions relating to the safeguarding of
Restricted Data or other classified information or relating to the
protection of worker safety and health, the contractor's fee or
profit of the period may be reduced. Such reduction shall not be
less than 26 percent nor greater than 100 percent of the total fee
or profit earned for a first degree performance failure, not less
than 11 percent nor greater than 25 percent for a second degree
performance failure, and up to 10 percent for a third degree
performance failure. The contracting officer must consider
mitigating factors that may warrant a reduction below the specified
range (see 48 CFR 904.402(c) and 48 CFR 923.7001(b)). The mitigating
factors include, but are not limited to, the following ((v), (vi),
(vii), and (viii) apply to WS&H only):
(i) Degree of control the contractor had over the event or
incident.
(ii) Efforts the contractor had made to anticipate and mitigate
the possibility of the event in advance.
(iii) Contractor self-identification and response to the event
to mitigate impacts and recurrence.
(iv) General status (trend and absolute performance) of:
Safeguarding Restricted Data and other classified information and
compliance in related security areas; or of protecting WS&H and
compliance in related areas.
(v) Contractor demonstration to the Contracting Officer's
satisfaction that the principles of industrial WS&H standards are
routinely practiced (e.g., Voluntary Protection Program Star
Status).
(vi) Event caused by ``Good Samaritan'' act by the contractor
(e.g., offsite emergency response).
(vii) Contractor demonstration that a performance measurement
system is routinely used to improve and maintain WS&H performance
(including effective resource allocation) and to support DOE
corporate decision-making (e.g., policy, WS&H programs).
(viii) Contractor demonstration that an Operating Experience and
Feedback Program is functioning that demonstrably affects continuous
improvement in WS&H by use of lessons-learned and best practices
inter- and intra-DOE sites.
(2)(i) Except in the case of performance-based, firm-fixed-price
contracts (see paragraph (b)(3) of this clause), the contracting
officer, for purposes of this clause, will at the time of contract
award, or as soon as practicable thereafter, allocate the total
amount of fee or profit that is available under this contract to
equal periods of [insert 6 or 12] months to run sequentially for the
entire term of the contract (i.e., from the effective date of the
contract to the expiration date of the contract, including all
options). The amount of fee or profit to be allocated to each period
shall be equal to the average monthly fee or profit that is
available or otherwise payable during the entire term of the
contract, multiplied by the number of months established above for
each period.
(ii) Under this clause, the total amount of fee or profit that
is subject to reduction in a period in which a performance failure
occurs, in combination with any reduction made under any other
clause in the contract that provides for a reduction to the fee or
profit, shall not exceed the amount of fee or profit that is earned
by the contractor in the period established pursuant to paragraph
(b)(2)(i) of this clause.
(3) For performance-based firm-fixed-price contracts, the
contracting officer will at the time of contract award include
negative monetary incentives in the contract for contractor
violations relating to the safeguarding of Restricted Data and other
classified information and relating to protection of worker safety
and health.
(c) Safeguarding Restricted Data and Other Classified
Information. Performance failures occur if the contractor does not
comply with the terms and conditions of this contract relating to
the safeguarding of Restricted Data and other classified
information. The degrees of performance failures relating to the
contractor's obligations under this contract for safeguarding of
Restricted Data and other classified information are as follows:
(1) First Degree: Performance failures that have been
determined, in accordance with applicable law, regulation, or DOE
directive, to have resulted in, or that can reasonably be expected
to result in, exceptionally grave damage to the national security.
The following are examples of performance failures or performance
failures of similar import that will be considered first degree:
(i) Non-compliance with applicable laws, regulations, and DOE
directives actually resulting in, or creating a risk of, loss,
compromise, or unauthorized disclosure of Top Secret Restricted Data
or other information classified as Top Secret, any classification
level of information in a Special Access Program (SAP), information
identified as sensitive compartmented information (SCI), or high
risk nuclear weapons-related data.
(ii) Contractor actions that result in a breakdown of the
safeguards and security management system that can reasonably be
expected to result in the loss, compromise, or unauthorized
disclosure of Top Secret Restricted Data, or other information
classified as Top Secret, any classification level of information in
a SAP, information identified as SCI, or high risk nuclear weapons-
related data.
(iii) Failure to promptly report the loss, compromise, or
unauthorized disclosure of Top Secret Restricted Data or other
information classified as Top Secret, any classification level of
information in a SAP, information identified as SCI, or high risk
nuclear weapons-related data.
(iv) Failure to timely implement corrective actions stemming
from the loss, compromise, or unauthorized disclosure of Top Secret
Restricted Data or other classified information classified as Top
Secret, any classification level of information in a SAP,
information identified as SCI, or high risk nuclear weapons-related
data.
(2) Second Degree: Performance failures that have been
determined, in accordance with applicable law, regulation, or DOE
directive, to have actually resulted in, or that can reasonably be
expected to result in, serious damage to the national security. The
following are examples of performance failures or performance
failures of similar import that will be considered second degree:
(i) Non-compliance with applicable laws, regulations, and DOE
directives actually resulting in, or creating risk of, loss,
compromise, or unauthorized disclosure of Secret Restricted Data or
other information classified as Secret.
(ii) Contractor actions that result in a breakdown of the
safeguards and security management system that can reasonably be
expected to result in the loss, compromise, or unauthorized
disclosure of Secret Restricted Data, or other information
classified as Secret.
(iii) Failure to promptly report the loss, compromise, or
unauthorized disclosure of Restricted Data or other classified
information regardless of classification (except for information
covered by paragraph (c)(1)(iii) of this clause).
(iv) Failure to timely implement corrective actions stemming
from the loss, compromise, or unauthorized disclosure of Secret
Restricted Data or other information classified as Secret.
(3) Third Degree: Performance failures that have been
determined, in accordance with applicable law, regulation, or DOE
directive, to have actually resulted in, or that can reasonably be
expected to result in, undue risk to the common defense and
security. In addition, this category includes performance failures
that result from a lack of contractor management and/or employee
attention to the proper safeguarding of Restricted Data and other
classified information. These performance failures may be indicators
of future, more severe performance failures and/or conditions, and
if identified and corrected early would prevent serious incidents.
The following are examples of performance failures or performance
failures of similar import will be considered third degree:
[[Page 68780]]
(i) Non-compliance with applicable laws, regulations, and DOE
directives actually resulting in, or creating risk of, loss,
compromise, or unauthorized disclosure of Restricted Data or other
information classified as Confidential.
(ii) Failure to promptly report alleged or suspected violations
of laws, regulations, or directives pertaining to the safeguarding
of Restricted Data or other classified information.
(iii) Failure to identify or timely execute corrective actions
to mitigate or eliminate identified vulnerabilities and reduce
residual risk relating to the protection of Restricted Data or other
classified information in accordance with the contractor's
Safeguards and Security Plan or other security plan, as applicable.
(iv) Contractor actions that result in performance failures
which unto themselves pose minor risk, but when viewed in the
aggregate indicate degradation in the integrity of the contractor's
safeguards and security management system relating to the protection
of Restricted Data and other classified information.
(d) Protection of Worker Safety and Health. Performance failures
occur if the contractor does not comply with the contract's WS&H
terms and conditions, which may be included in the DOE approved
contractor Integrated Safety Management System (ISMS). The degrees
of performance failure under which reductions of fee or profit will
be determined are:
(1) First Degree: Performance failures that are most adverse to
WS&H or could threaten the successful completion of a program or
project. For contracts including ISMS requirements, failure to
develop and obtain required DOE approval of WS&H aspects of an ISMS
is considered first degree. The Government will perform necessary
review of the ISMS in a timely manner and will not unreasonably
withhold approval of the WS&H aspects of the contractor's ISMS. The
following performance failures or performance failures of similar
import will be deemed first degree:
(i) Type A accident (defined in DOE Order 225.1A).
(ii) Two Second Degree performance failures during an evaluation
period.
(2) Second Degree: Performance failures that are significantly
adverse to WS&H. They include failures to comply with approved WS&H
aspects of an ISMS that result in an actual injury, exposure, or
exceedence that occurred or nearly occurred but had minor practical
long-term health consequences. The following performance failures or
performance failures of similar import will be considered second
degree:
(i) Type B accident (defined in DOE Order 225.1A).
(ii) Non-compliance with approved WS&H aspects of an ISMS that
results in a near miss of a Type A or B accident. A near miss is a
situation in which an inappropriate action occurs, or a necessary
action is omitted, but does not result in an adverse effect.
(iii) Failure to mitigate or notify DOE of an imminent danger
situation after discovery, where such notification is a requirement
of the contract.
(3) Third Degree: Performance failures that reflect a lack of
focus on improving WS&H. They include failures to comply with
approved WS&H aspects of an ISMS that result in potential breakdown
of the contractor's WS&H system. The following performance failures
or performance failures of similar import will be considered third
degree:
(i) Failure to implement effective corrective actions to address
deficiencies/non-compliance documented through external (e.g.,
Federal) oversight and/or reported per DOE Order 232.1A
requirements, or internal oversight of DOE O 440.1A requirements.
(ii) Multiple similar non-compliances identified by external
(e.g., Federal) oversight that in aggregate indicate a significant
WS&H system breakdown.
(iii) Non-compliances that either have, or may have, significant
negative impacts to workers that indicate a significant WS&H system
breakdown.
(iv) Failure to notify DOE upon discovery of events or
conditions where notification is required by the terms and
conditions of the contract.
(End of Clause)
0
8. Section 952.223-77 is added to read as follows:
952.223-77 Conditional Payment of Fee or Profit--Protection of Worker
Safety and Health.
As prescribed at 48 CFR (DEAR) 923.7002(g), insert the following
clause.
Conditional Payment of Fee or Profit--Protection of Worker Safety and
Health (JAN 2004)
(a) General. (1) The payment of fee or profit (i.e., award fee,
fixed fee, and incentive fee or profit) under this contract is
dependent upon the contractor's compliance with the terms and
conditions of this contract relating to the protection of worker
safety and health (WS&H), including compliance with applicable law,
regulation, and DOE directives. The term ``contractor'' as used in
this clause to address failure to comply shall mean ``contractor or
contractor employee.''
(2) In addition to other remedies available to the Federal
Government, if the contractor fails to comply with the terms and
conditions of this contract relating to the protection of worker
safety and health, the contracting officer may unilaterally reduce
the amount of fee or profit that is otherwise payable to the
contractor in accordance with the terms and conditions of this
clause.
(3) Any reduction in the amount of fee or profit earned by the
contractor will be determined by the severity of the contractor's
failure to comply with contract terms and conditions relating to
worker safety and health pursuant to the degrees specified in
paragraph (c) of this clause.
(b) Reduction Amount. (1) If in any period (see 48 CFR 952.223-
77 (b)(2)) it is found that the contractor has failed to comply with
contract terms and conditions relating to the protection of worker
safety and health, the contractor's fee or profit of the period may
be reduced. Such reduction shall not be less than 26% nor greater
than 100% of the total fee or profit earned for a first degree
performance failure, not less than 11% nor greater than 25% for a
second degree performance failure, and up to 10% for a third degree
performance failure. The contracting officer must consider
mitigating factors that may warrant a reduction below the specified
range (see 48 CFR 923.7001(b)). The mitigating factors include, but
are not limited to, the following:
(i) Degree of control the contractor had over the event or
incident.
(ii) Efforts the contractor had made to anticipate and mitigate
the possibility of the event in advance.
(iii) Contractor self-identification and response to the event
to mitigate impacts and recurrence.
(iv) General status (trend and absolute performance) of
protecting WS&H and compliance in related areas.
(v) Contractor demonstration to the Contracting Officer's
satisfaction that the principles of industrial WS&H standards are
routinely practiced (e.g., Voluntary Protection Program Star
Status).
(vi) Event caused by ``Good Samaritan'' act by the contractor
(e.g., offsite emergency response).
(vii) Contractor demonstration that a performance measurement
system is routinely used to improve and maintain WS&H performance
(including effective resource allocation) and to support DOE
corporate decision-making (e.g., policy, WS&H programs).
(viii) Contractor demonstration that an Operating Experience and
Feedback Program is functioning that demonstrably affects continuous
improvement in WS&H by use of lessons-learned and best practices
inter- and intra-DOE sites.
(2)(i) Except in the case of performance based firm-fixed-price
contracts (see paragraph (b)(3) below), the contracting officer, for
purposes of this clause, will at the time of contract award, or as
soon as practicable thereafter, allocate the total amount of fee or
profit that is available under this contract to equal periods of
[insert 6 or 12] months to run sequentially for the entire term of
the contract (i.e., from the effective date of the contract to the
expiration date of the contract, including all options). The amount
of fee or profit to be allocated to each period shall be equal to
the average monthly fee or profit that is available or otherwise
payable during the entire term of the contract, multiplied by the
number of months established above for each period.
(ii) Under this clause, the total amount of fee or profit that
is subject to reduction in a period in which a performance failure
occurs, in combination with any reduction made under any other
clause in the contract that provides for a reduction to the fee or
profit, shall not exceed the amount of fee or profit that is earned
by the contractor in the period established pursuant to paragraph
(b)(2)(i) of this clause.
(3) For performance-based firm-fixed-price contracts, the
contracting officer will at the time of contract award include
negative monetary incentives in the contract for contractor
violations relating to the protection of worker safety and health.
[[Page 68781]]
(c) Protection of Worker Safety and Health. Performance failures
occur if the contractor does not comply with the contract's WS&H
terms and conditions, which may be included in the DOE approved
contractor Integrated Safety Management System (ISMS). The degrees
of performance failure under which reductions of fee or profit will
be determined are:
(1) First Degree: Performance failures that are most adverse to
WS&H or could threaten the successful completion of a program or
project. For contracts including ISMS requirements, failure to
develop and obtain required DOE approval of WS&H aspects of an ISMS
is considered first degree. The Government will perform necessary
review of the ISMS in a timely manner and will not unreasonably
withhold approval of the WS&H aspects of the contractor's ISMS. The
following performance failures or performance failures of similar
import will be deemed first degree:
(i) Type A accident (defined in DOE Order 225.1A).
(ii) Two Second Degree performance failures during an evaluation
period.
(2) Second Degree: Performance failures that are significantly
adverse to WS&H. They include failures to comply with approved WS&H
aspects of an ISMS that result in an actual injury, exposure, or
exceedence that occurred or nearly occurred but had minor practical
long-term health consequences. The following performance failures or
performance failures of similar import will be considered second
degree:
(i) Type B accident (defined in DOE Order 225.1A).
(ii) Non-compliance with approved WS&H aspects of an ISMS that
results in a near miss of a Type A or B accident. A near miss is a
situation in which an inappropriate action occurs, or a necessary
action is omitted, but does not result in an adverse effect.
(iii) Failure to mitigate or notify DOE of an imminent danger
situation after discovery, where such notification is a requirement
of the contract.
(3) Third Degree: Performance failures that reflect a lack of
focus on improving WS&H. They include failures to comply with
approved WS&H aspects of an ISMS that result in potential breakdown
of the contractor's WS&H system. The following performance failures
or performance failures of similar import will be considered third
degree:
(i) Failure to implement effective corrective actions to address
deficiencies/non-compliance documented through external (e.g.,
Federal) oversight and/or reported per DOE Order 232.1A
requirements, or internal oversight of DOE O 440.1A requirements.
(ii) Multiple similar non-compliances identified by external
(e.g., Federal) oversight that in aggregate indicate a significant
WS&H system breakdown.
(iii) Non-compliances that either have, or may have, significant
negative impacts to workers that indicate a significant WS&H system
breakdown.
(iv) Failure to notify DOE upon discovery of events or
conditions where notification is required by the terms and
conditions of the contract.
(End of Clause)
PART 970--DOE MANAGEMENT AND OPERATING CONTRACTS
0
9. The authority citation for Part 970 is revised to read as follows:
Authority: 42 U.S.C. 2201, 2282a, 2282b, 2282c; 42 U.S.C. 7101
et seq.; 41 U.S.C. 418b; 50 U.S.C. 2401 et seq.
0
10. Section 970.0404-2 is amended by adding paragraph (c) to read as
follows:
970.0404-2 General.
* * * * *
(c) For DOE management and operating contracts and other contracts
designated by the Procurement Executive, or designee, the clause
entitled, ``Conditional Payment of Fee, Profit, and Other Incentives--
Facility Management Contracts,'' implements the requirements of section
234B of the Atomic Energy Act (see 48 CFR 904.402(c)(1)) for the use of
a contract clause that provides for an appropriate reduction in the fee
or amount paid to the contractor under the contract in the event of a
violation by the contractor or any contractor employee of any rule,
regulation, or order relating to the safeguarding or security of
Restricted Data or other classified information. The clause, in part,
provides for reductions in the amount of fee, profit, or share of cost
savings that is otherwise earned by the contractor for performance
failures relating to the safeguarding of Restricted Data and other
classified information.
0
11. Section 970.1504-1-2 is amended by adding new paragraph (i) to read
as follows:
970.1504-1-2 Fee policy.
* * * * *
(i)(1) In addition to other performance requirements specified in
the contract, DOE management and operating contractors and other
contractors designated by the Procurement Executive, or designee, are
subject to performance requirements relating to: environment, safety,
and health (ES&H), including worker safety and health (WS&H); and
safeguarding of Restricted Data and other classified information.
Performance requirements relating to ES&H will be set forth in the
contract's ES&H terms and conditions, including a DOE approved
Integrated Safety Management System (ISMS), or similar document. As
applicable, performance requirements relating to the safeguarding of
Restricted Data and other classified information will be set forth in
the clauses of the contract entitled ``Security'' and ``Laws,
Regulations, and DOE Directives,'' as well as in other terms and
conditions that prescribe requirements for the safeguarding of
Restricted Data and other classified information.
(2) If the contractor does not meet the performance requirements of
the contract relating to ES&H or to the safeguarding of Restricted Data
and other classified information, otherwise earned fee, fixed fee,
profit, or share of cost savings may be unilaterally reduced by the
contracting officer in accordance with the clause entitled
``Conditional Payment of Fee, Profit, and Other Incentives--Facility
Management Contracts.''
(3) The clause entitled ``Conditional Payment of Fee, Profit, and
Other Incentives--Facility Management Contracts,'' provides for
reductions of earned fee, fixed fee, profit, or share of cost savings
under the contract depending upon the severity of the contractor's
performance failure relating to ES&H requirements and, if applicable,
relating to the safeguarding of Restricted Data and other classified
information. When reviewing performance failures that would otherwise
warrant a potential reduction of earned fee, fixed fee, profit, or
share of cost savings, the contracting officer must consider mitigating
factors that may warrant a reduction below the applicable range
specified in the clause. Some of the mitigating factors that must be
considered are included in the clause.
(4) The contracting officer must obtain the concurrence of the
cognizant Program Secretarial Officer
(i) Prior to effecting any reduction of fee or profit in accordance
with the terms and conditions of the clause entitled, ``Conditional
Payment of Fee, Profit, and Other Incentives--Facility Management
Contracts;'' and
(ii) For determinations that no reduction of fee or profit is
warranted for a particular performance failure(s) that would otherwise
be subject to a reduction.
970.1504-1-3 [Amended]
0
12. Section 970.1504-1-3 is amended in paragraph (c)(1) in the last
sentence by removing ``Conditional Payment of Fee, Profit, or
Incentives'' and adding in its place ``Conditional Payment of Fee,
Profit, and Other Incentives--Facility Management Contracts.''
0
13. Section 970.1504-5 is amended by revising the heading and revising
paragraph (c) to read as follows:
970.1504-5 Solicitation provision and contract clauses.
* * * * *
(c)(1) The contracting officer shall insert the clause at 48 CFR
970.5215-3,
[[Page 68782]]
Conditional Payment of Fee, Profit, and Other Incentives--Facility
Management Contracts, in all DOE management and operating contracts and
other contracts determined by the Procurement Executive, or designee.
(2) The contracting officer shall include the clause with its
Alternate I in contracts that do not contain the clause at 48 CFR
952.204-2, Security.
(3) The contracting officer shall include the clause with its
Alternate II in contracts that are awarded on a cost-plus-award-fee
basis. The contracting officer should consider including the clause
with its Alternate II in contracts that are awarded on a multiple fee
basis if the cost-plus-award-fee portion of the contract is
significant.
* * * * *
0
14. Section 970.2303-1 is amended by adding paragraph (c) to read as
follows:
970.2303-1 General.
* * * * *
(c)(1) For DOE management and operating contracts and other
contracts designated by the Procurement Executive, or designee, the
clause entitled ``Conditional Payment of Fee, Profit, and Other
Incentives--Facility Management Contracts'' implements the requirements
of section 234C of the Atomic Energy Act for the use of a contract
clause that provides for an appropriate reduction in the fee or amount
paid to the contractor under the contract in the event of a violation
by the contractor or any contractor employee of any Departmental
regulation relating to the enforcement of worker safety and health
concerns. The clause, in part, provides for reductions in the amount of
fee, profit, or share of cost savings that is otherwise earned by the
contractor for performance failures relating to worker safety and
health violations under the Department's regulations.
(2)(i) Section 234C of the Atomic Energy Act states that DOE shall
either pursue civil penalties (implemented at 10 CFR part 851) for a
violation under section 234C of the Atomic Energy Act (42 U.S.C. 2282c)
or a contract fee reduction, but not both.
(ii) The contracting officer must coordinate with the Office of
Price Anderson Enforcement within the Office of the Assistant Secretary
for Environment, Safety and Health (or with any designated successor
office) before pursuing contract fee reduction in the event of a
violation by the contractor or any contractor employee of any
Departmental regulation relating to the enforcement of worker safety
and health concerns.
970.5215-1 [Amended]
0
15. Section 970.5215-1 is amended in paragraph (c)(3) in the last
sentence by removing ``Conditional Payment of Fee, Profit, or
Incentives'' and adding in its place ``Conditional Payment of Fee,
Profit, and Other Incentives--Facility Management Contracts.''
0
16. Section 970.5215-3 is revised to read as follows:
As prescribed in 48 CFR 970.1504-5(c)(1), insert the following
clause:
970.5215-3 Conditional Payment of Fee, Profit, and Other Incentives--
Facility Management Contracts (JAN 2004)
(a) General. (1) The payment of earned fee, fixed fee, profit,
or share of cost savings under this contract is dependent upon:
(i) The contractor's or contractor employees' compliance with
the terms and conditions of this contract relating to environment,
safety and health (ES&H), which includes worker safety and health
(WS&H), including performance under an approved Integrated Safety
Management System (ISMS); and
(ii) The contractor's or contractor employees' compliance with
the terms and conditions of this contract relating to the
safeguarding of Restricted Data and other classified information.
(2) The ES&H performance requirements of this contract are set
forth in its ES&H terms and conditions, including the DOE approved
contractor ISMS or similar document. Financial incentives for timely
mission accomplishment or cost effectiveness shall never compromise
or impede full and effective implementation of the ISMS and full
ES&H compliance.
(3) The performance requirements of this contract relating to
the safeguarding of Restricted Data and other classified information
are set forth in the clauses of this contract entitled, ``Security''
and ``Laws, Regulations, and DOE Directives,'' as well as in other
terms and conditions.
(4) If the contractor does not meet the performance requirements
of this contract relating to ES&H or to the safeguarding of
Restricted Data and other classified information during any
performance evaluation period established under the contract
pursuant to the clause of this contract entitled, ``Total Available
Fee: Base Fee Amount and Performance Fee Amount,'' otherwise earned
fee, fixed fee, profit or share of cost savings may be unilaterally
reduced by the contracting officer.
(b) Reduction Amount. (1) The amount of earned fee, fixed fee,
profit, or share of cost savings that may be unilaterally reduced
will be determined by the severity of the performance failure
pursuant to the degrees specified in paragraphs (c) and (d) of this
clause.
(2) If a reduction of earned fee, fixed fee, profit, or share of
cost savings is warranted, unless mitigating factors apply, such
reduction shall not be less than 26 percent nor greater than 100
percent of the amount of earned fee, fixed fee, profit, or the
contractor's share of cost savings for a first degree performance
failure, not less than 11 percent nor greater than 25 percent for a
second degree performance failure, and up to 10 percent for a third
degree performance failure.
(3) In determining the amount of the reduction and the
applicability of mitigating factors, the contracting officer must
consider the contractor's overall performance in meeting the ES&H or
security requirements of the contract. Such consideration must
include performance against any site specific performance criteria/
requirements that provide additional definition, guidance for the
amount of reduction, or guidance for the applicability of mitigating
factors. In all cases, the contracting officer must consider
mitigating factors that may warrant a reduction below the applicable
range (see 48 CFR 970.1504-1-2). The mitigating factors include, but
are not limited to, the following ((v), (vi), (vii) and (viii) apply
to ES&H only).
(i) Degree of control the contractor had over the event or
incident.
(ii) Efforts the contractor had made to anticipate and mitigate
the possibility of the event in advance.
(iii) Contractor self-identification and response to the event
to mitigate impacts and recurrence.
(iv) General status (trend and absolute performance) of: ES&H
and compliance in related areas; or of safeguarding Restricted Data
and other classified information and compliance in related areas.
(v) Contractor demonstration to the contracting officer's
satisfaction that the principles of industrial ES&H standards are
routinely practiced (e.g., Voluntary Protection Program, ISO 14000).
(vi) Event caused by ``Good Samaritan'' act by the contractor
(e.g., offsite emergency response).
(vii) Contractor demonstration that a performance measurement
system is routinely used to improve and maintain ES&H performance
(including effective resource allocation) and to support DOE
corporate decision-making (e.g., policy, ES&H programs). * * *
(viii) Contractor demonstration that an Operating Experience and
Feedback Program is functioning that demonstrably affects continuous
improvement in ES&H by use of lessons-learned and best practices
inter- and intra-DOE sites.
(4)(i) The amount of fee, fixed fee, profit, or share of cost
savings that is otherwise earned by a contractor during an
evaluation period may be reduced in accordance with this clause if
it is determined that a performance failure warranting a reduction
under this clause occurs within the evaluation period.
(ii) The amount of reduction under this clause, 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.
(iii) For the purposes of this clause, earned fee, fixed fee,
profit, or share of cost savings for the evaluation period shall
mean the amount determined by the contracting officer or fee
determination official as otherwise
[[Page 68783]]
payable based on the contractor's performance during the evaluation
period. Where the contract provides for financial incentives that
extend beyond a single evaluation period, this amount shall also
include: any provisional amounts determined otherwise payable in the
evaluation period; and, if provisional payments are not provided
for, the allocable amount of any incentive determined otherwise
payable at the conclusion of a subsequent evaluation period. The
allocable amount shall be the total amount of the earned incentive
divided by the number of evaluation periods over which it was
earned.
(iv) The Government will effect the reduction as soon as
practicable after the end of the evaluation period in which the
performance failure occurs. If the Government is not aware of the
failure, it will effect the reduction as soon as practical after
becoming aware. For any portion of the reduction requiring an
allocation the Government will effect the reduction at the end of
the evaluation period in which it determines the total amount earned
under the incentive. If at any time a reduction causes the sum of
the payments the contractor has received for fee, fixed fee, profit,
or share of cost savings to exceed the sum of fee, fixed fee,
profit, or share of cost savings the contractor has earned
(provisionally or otherwise), the contractor shall immediately
return the excess to the Government. (What the contractor ``has
earned'' reflects any reduction made under this or any other clause
of the contract.)
(v) At the end of the contract:
(A) The Government will pay the contractor the amount by which
the sum of fee, fixed fee, profit, or share of cost savings the
contractor has earned exceeds the sum of the payments the contractor
has received; or
(B) The contractor shall return to the Government the amount by
which the sum of the payments the contractor has received exceeds
the sum of fee, fixed fee, profit, or share of cost savings the
contractor has earned. (What the contractor ``has earned'' reflects
any reduction made under this or any other clause of the contract.)
(c) Environment, Safety and Health (ES&H). Performance failures
occur if the contractor does not comply with the contract's ES&H
terms and conditions, including the DOE approved contractor ISMS.
The degrees of performance failure under which reductions of earned
or fixed fee, profit, or share of cost savings will be determined
are:
(1) First Degree: Performance failures that are most adverse to
ES&H. Failure to develop and obtain required DOE approval of an ISMS
is considered first degree. The Government will perform necessary
review of the ISMS in a timely manner and will not unreasonably
withhold approval of the contractor's ISMS. The following
performance failures or performance failures of similar import will
be considered first degree.
(i) Type A accident (defined in DOE Order 225.1A).
(ii) Two Second Degree performance failures during an evaluation
period.
(2) Second Degree: Performance failures that are significantly
adverse to ES&H. They include failures to comply with an approved
ISMS that result in an actual injury, exposure, or exceedence that
occurred or nearly occurred but had minor practical long-term health
consequences. They also include breakdowns of the Safety Management
System. The following performance failures or performance failures
of similar import will be considered second degree:
(i) Type B accident (defined in DOE Order 225.1A).
(ii) Non-compliance with an approved ISMS that results in a near
miss of a Type A or B accident. A near miss is a situation in which
an inappropriate action occurs, or a necessary action is omitted,
but does not result in an adverse effect.
(iii) Failure to mitigate or notify DOE of an imminent danger
situation after discovery, where such notification is a requirement
of the contract.
(3) Third Degree: Performance failures that reflect a lack of
focus on improving ES&H. They include failures to comply with an
approved ISMS that result in potential breakdown of the System. The
following performance failures or performance failures of similar
import will be considered third degree:
(i) Failure to implement effective corrective actions to address
deficiencies/non-compliances documented through: external (e.g.,
Federal) oversight and/or reported per DOE Order 232.1A
requirements; or internal oversight of DOE Order 440.1A
requirements.
(ii) Multiple similar non-compliances identified by external
(e.g., Federal) oversight that in aggregate indicate a significant
programmatic breakdown.
(iii) Non-compliances that either have, or may have, significant
negative impacts to the worker, the public, or the environment or
that indicate a significant programmatic breakdown.
(iv) Failure to notify DOE upon discovery of events or
conditions where notification is required by the terms and
conditions of the contract.
(d) Safeguarding Restricted Data and Other Classified
Information. Performance failures occur if the contractor does not
comply with the terms and conditions of this contract relating to
the safeguarding of Restricted Data and other classified
information. The degrees of performance failure under which
reductions of fee, profit, or share of cost savings will be
determined are as follows:
(1) First Degree: Performance failures that have been
determined, in accordance with applicable law, DOE regulation, or
directive, to have resulted in, or that can reasonably be expected
to result in, exceptionally grave damage to the national security.
The following are examples of performance failures or performance
failures of similar import that will be considered first degree:
(i) Non-compliance with applicable laws, regulations, and DOE
directives actually resulting in, or creating a risk of, loss,
compromise, or unauthorized disclosure of Top Secret Restricted Data
or other information classified as Top Secret, any classification
level of information in a Special Access Program (SAP), information
identified as sensitive compartmented information (SCI), or high
risk nuclear weapons-related data.
(ii) Contractor actions that result in a breakdown of the
safeguards and security management system that can reasonably be
expected to result in the loss, compromise, or unauthorized
disclosure of Top Secret Restricted Data, or other information
classified as Top Secret, any classification level of information in
a SAP, information identified as SCI, or high risk nuclear weapons-
related data.
(iii) Failure to promptly report the loss, compromise, or
unauthorized disclosure of Top Secret Restricted Data, or other
information classified as Top Secret, any classification level of
information in a SAP, information identified as SCI, or high risk
nuclear weapons-related data.
(iv) Failure to timely implement corrective actions stemming
from the loss, compromise, or unauthorized disclosure of Top Secret
Restricted Data or other information classified as Top Secret, any
classification level of information in a SAP, information identified
as SCI, or high risk nuclear weapons-related data.
(2) Second Degree: Performance failures that have been
determined, in accordance with applicable law, DOE regulation, or
directive, to have actually resulted in, or that can reasonably be
expected to result in, serious damage to the national security. The
following are examples of performance failures or performance
failures of similar import that will be considered second degree:
(i) Non-compliance with applicable laws, regulations, and DOE
directives actually resulting in, or creating risk of, loss,
compromise, or unauthorized disclosure of Secret Restricted Data or
other information classified as Secret.
(ii) Contractor actions that result in a breakdown of the
safeguards and security management system that can reasonably be
expected to result in the loss, compromise, or unauthorized
disclosure of Secret Restricted Data, or other information
classified as Secret.
(iii) Failure to promptly report the loss, compromise, or
unauthorized disclosure of Restricted Data or other classified
information regardless of classification (except for information
covered by paragraph (d)(1)(iii) of this clause).
(iv) Failure to timely implement corrective actions stemming
from the loss, compromise, or unauthorized disclosure of Secret
Restricted Data or other classified information classified as
Secret.
(3) Third Degree: Performance failures that have been
determined, in accordance with applicable law, regulation, or DOE
directive, to have actually resulted in, or that can reasonably be
expected to result in, undue risk to the common defense and
security. In addition, this category includes performance failures
that result from a lack of contractor management and/or employee
attention to the proper safeguarding of Restricted Data and other
classified information. These performance failures may be indicators
of future, more severe performance failures and/or conditions, and
if identified and corrected early would prevent serious incidents.
The following are examples of performance failures or performance
failures of similar import that will be considered third degree:
[[Page 68784]]
(i) Non-compliance with applicable laws, regulations, and DOE
directives actually resulting in, or creating risk of, loss,
compromise, or unauthorized disclosure of Restricted Data or other
information classified as Confidential.
(ii) Failure to promptly report alleged or suspected violations
of laws, regulations, or directives pertaining to the safeguarding
of Restricted Data or other classified information.
(iii) Failure to identify or timely execute corrective actions
to mitigate or eliminate identified vulnerabilities and reduce
residual risk relating to the protection of Restricted Data or other
classified information in accordance with the contractor's
Safeguards and Security Plan or other security plan, as applicable.
(iv) Contractor actions that result in performance failures
which unto themselves pose minor risk, but when viewed in the
aggregate indicate degradation in the integrity of the contractor's
safeguards and security management system relating to the protection
of Restricted Data and other classified information.
(End of Clause)
Alternate I (JAN 2004). As prescribed in 48 CFR 970.1504-
5(c)(2), replace paragraphs (a), (b)(1), (b)(2), and (b)(3) of the
basic clause with the following paragraphs (a), (b)(1), (b)(2), and
(b)(3) and delete paragraph (d).
(a) General. (1) The payment of earned fee, fixed fee, profit,
or share of cost savings under this contract is dependent upon the
contractor's or contractor employees' compliance with the terms and
conditions of this contract relating to environment, safety and
health (ES&H), which includes worker safety and health (WS&H),
including performance under an approved Integrated Safety Management
System (ISMS).
(2) The ES&H performance requirements of this contract are set
forth in its ES&H terms and conditions, including the DOE approved
contractor ISMS or similar document. Financial incentives for timely
mission accomplishment or cost effectiveness shall never compromise
or impede full and effective implementation of the ISMS and full
ES&H compliance.
(3) If the contractor does not meet the performance requirements
of this contract relating to ES&H during any performance evaluation
period established under the contract pursuant to the clause of this
contract entitled, ``Total Available Fee: Base Fee Amount and
Performance Fee Amount,'' otherwise earned fee, fixed fee, profit or
share of cost savings may be unilaterally reduced by the contracting
officer.
(b) Reduction Amount. (1) The amount of earned fee, fixed fee,
profit, or share of cost savings that may be unilaterally reduced
will be determined by the severity of the performance failure
pursuant to the degrees specified in paragraph (c) of this clause.
(2) If a reduction of earned fee, fixed fee, profit, or share of
cost savings is warranted, unless mitigating factors apply, such
reduction shall not be less than 26 percent nor greater than 100
percent of the amount of earned fee, fixed fee, profit, or the
contractor's share of cost savings for a first degree performance
failure, not less than 11 percent nor greater than 25 percent for a
second degree performance failure, and up to 10 percent for a third
degree performance failure.
(3) In determining the amount of the reduction and the
applicability of mitigating factors, the contracting officer must
consider the contractor's overall performance in meeting the ES&H
requirements of the contract. Such consideration must include
performance against any site specific performance criteria/
requirements that provide additional definition, guidance for the
amount of reduction, or guidance for the applicability of mitigating
factors. In all cases, the contracting officer must consider
mitigating factors that may warrant a reduction below the applicable
range (see 48 CFR 970.1504-1-2). The mitigating factors include the
following.
(i) Degree of control the contractor had over the event or
incident.
(ii) Efforts the contractor had made to anticipate and mitigate
the possibility of the event in advance.
(iii) Contractor self-identification and response to the event
to mitigate impacts and recurrence.
(iv) General status (trend and absolute performance) of ES&H and
compliance in related areas.
(v) Contractor demonstration to the Contracting Officer's
satisfaction that the principles of industrial ES&H standards are
routinely practiced (e.g., Voluntary Protection Program Star Status,
or ISO 14000 Certification).
(vi) Event caused by ``Good Samaritan'' act by the contractor
(e.g., offsite emergency response).
(vii) Contractor demonstration that a performance measurement
system is routinely used to improve and maintain ES&H performance
(including effective resource allocation) and to support DOE
corporate decision-making (e.g., policy, ES&H programs).
(viii) Contractor demonstration that an Operating Experience and
Feedback Program is functioning that demonstrably affects continuous
improvement in ES&H by use of lessons-learned and best practices
inter- and intra-DOE sites.
Alternate II (JAN 2004). As prescribed in 48 CFR 970.1504-
5(c)(3), insert the following as paragraphs (e) and (f) in contracts
awarded on a cost-plus-award fee, incentive fee or multiple fee
basis (if Alternate I is also used, redesignate the following as
paragraphs (d) and (e)).
(e) Minimum requirements for specified level of performance. (1)
At a minimum the contractor must perform the following:
(i) The requirements with specific incentives which do not
require the achievement of cost efficiencies in order to be
performed at the level of performance set forth in the Statement of
Work, Work Authorization Directive, or similar document unless an
otherwise minimum level of performance has been established in the
specific incentive;
(ii) All of the performance requirements directly related to
requirements specifically incentivized which do not require the
achievement of cost efficiencies in order to be performed at a level
of performance such that the overall performance of these related
requirements is at an acceptable level; and
(iii) All other requirements at a level of performance such that
the total performance of the contract is not jeopardized.
(2) The evaluation of the Contractor's achievement of the level
of performance shall be unilaterally determined by the Government.
To the extent that the Contractor fails to achieve the minimum
performance levels specified in the Statement of Work, Work
Authorization Directive, or similar document, during the performance
evaluation period, the DOE Operations/Field Office Manager, or
designee, may reduce any otherwise earned fee, fixed fee, profit, or
shared net savings for the performance evaluation period. Such
reduction shall not result in the total of earned fee, fixed fee,
profit, or shared net savings being less than 25 percent of the
total available fee amount. Such 25 percent shall include base fee,
if any.
(f) Minimum requirements for cost performance. (1) Requirements
incentivized by other than cost incentives must be performed within
their specified cost constraint and must not adversely impact the
costs of performing unrelated activities.
(2) The performance of requirements with a specific cost
incentive must not adversely impact the costs of performing
unrelated requirements.
(3) The contractor's performance within the stipulated cost
performance levels for the performance evaluation period shall be
determined by the Government. To the extent the contractor fails to
achieve the stipulated cost performance levels, the DOE Operations/
Field Office Manager, or designee, may reduce in whole or in part
any otherwise earned fee, fixed fee, profit, or shared net savings
for the performance evaluation period. Such reduction shall not
result in the total of earned fee, fixed fee, profit or shared net
savings being less than 25 percent of the total available fee
amount. Such 25 percent shall include base fee, if any.
[FR Doc. 03-30364 Filed 12-9-03; 8:45 am]
BILLING CODE 6450-01-P
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