for excellent past performance and penalize it for poor performance. Therefore, performance which is rated as merely satisfactory should generally be assigned a weight of zero. However, a Contractor who has consistently met contractual requirements may be awarded a plus. (v) The following factors are to be considered in evaluating a Contractor's performance record: (A) Cost efficiency. Low cost performance reflecting economic use of facilities and manpower, sound purchasing methods and subcontracting procedures, and effective inventory control are criteria for consideration. Improvement in efficiency through investment in plant modernization, past efficiencies, or lack thereof, effectiveness of the Contractor's make-or-buy program, purchasing and subcontracting system and inventory control should be evaluated. (B) Management. Stability and competence of managment personnel, their willingness and ability to adjust company resources to meet peculiarly difficult and changing control requirements are criteria for consideration. The degree of cooperation by the Contractor with the objectives of the Government should be considered. (C) Extent of the contractor's investment. The extent of a Contractor's total investment (i.e., both equity and borrowed capital) in the performance of the contract will be taken into consideration in determining the amount of the fee or profits. (D) Reliability of cost estimates. Accuracy and reliability of previous cost estimates should be considered. Where substantial overruns have occurred, the Contracting Officer should attempt to determine the reasons. (E) Inventive and developmental contributions. Extent and nature of Contractor-initiated and financed research, development, design work, product engineering, quality control, and manufacturing processes and techniques in the areas of concern to the EPA should be analyzed. (F) Timely performance. The Contractor's performance record, considering excusable delays and the Contractor's efforts to overcome delays, should be analyzed. (G) Small business participation. The Contractor's policies and procedures which energetically support Government small business programs pursuant to FAR subpart 19.7 should be given favorable consideration. Any unusual effort which the Contractor displays in subscontracting with small concerns, particularly for development type work likely to result in later production opportunities, and overall effectiveness of the Contractor in subcontracting with and furnishing assistance to small concerns should be considered. Conversely, failure or unwillingness on the part of the Contractor to support Government small business policies should be viewed as evidence of poor performance for the purpose of establishing a profit objective. (H) Labor surplus area participation. A similar review and evaluation (as required in paragraph (b)(4)(v)(G) of this section) should be given to the Contractor's policies and procedures supporting the Government's labor surplus area program pursuant to FAR part 20. Particular favorable consideration should be given to a Contractor who: (1) Makes a significant effort to help find jobs and provide training for the hardcore unemployed, or (2) promotes maximum subcontractor utilization of certified-eligible concerns, as defined in FAR 20.101. (I) Extent of Government assistance. The Government encourages its Contractors to perform their contracts with the minimum of financial, facilities, or other assistance from the Government. Where extraordinary financial, facilities, or other assistance must be furnished to a Contractor by the Government, such extraordinary assistance should have a modifying effect in determining what constitutes a fair and reasonable profit or fee. (J) Effect of competition. When competition is effective and proposals are on a firm-fixed-price basis, the Contracting Officer normally need not consider in detail the amount of estimated profit included in a price. When effective competition is lacking, and in all cases where cost analysis is performed in accordance with FAR subpart 15.8, the estimate for profit, target profit or fee, or the proposed fixed fee should be analyzed in the same manner as all other elements of price. [49 FR 8843, Mar. 8, 1984; 49 FR 24734, June 15, 1984] 1515.970-3 Documentation. Determination of the profit or fee objective, in accordance with this subpart shall be fully documented. Since the profit objective is the Contracting Officer's pre-negotiation evaluation of a total profit allowance for the proposed contract, the amounts developed for each category of cost will probably change in the course of negotiation. Furthermore, the negotiated profit will probably vary from the profit objective and from the prenegotiation detailed application of the weights to each element of the Contractor's input to total performance. Since the profit objective is viewed as a whole rather than as its component parts, insignificant variations from the prenegotiation profit objective, as a result of changes to the Contractor's input to total performance, need not be documented in detail. Conversely, significant deviations from the profit objective necessary to reach a final agreement on profit or fee shall be explained in the record of negotiation prepared in accordance with FAR 15.808. 1516.404-277 Preparation of the award fee plan. 1516.404-278 Operation of the evaluation system. 1516.404-279 Simplified procedures. Subpart 1516.5-Indefinite-Delivery Contracts 1516.505 Contract clauses. Subpart 1516.6-Time-and-Materials, 1516.603 Letter Contracts. AUTHORITY: Sec. 205(c), 63 Stat. 390, as amended, 40 U.S.C. 486(c). SOURCE: 49 FR 8852, Mar. 8, 1984, unless otherwise noted. 1516.000 Scope of part. This part implements and supplements FAR part 16. It provides policy and procedures for cost-plus-award-fee type contracts and prescribes additional contract clauses for use with cost-reimbursement and indefinite-delivery type contracts. Subpart 1516.3-Cost- 1516.301-70 Payment of fee. The policy of EPA for cost-reimbursement, term form contracts is to make provisional payment of fee (i.e. the fixed fee on cost-plus-fixed-fee type contracts or the base fee on cost-plusaward-fee type contracts) on a percentage of work completed basis, when such a method will not prove detrimental to proper contract performance. Percentage of work completed is the ratio of the direct labor hours performed in relation to the direct labor hours set forth in the contract in clause 1552.21270, "Level of Effort-Cost Reimbursement Term Contract." Provisional payment of fee will remain subject to withholding provisions, such as 48 CFR 52.216-8, Fixed Fee. [56 FR 43711, Sept. 4, 1991] 1516.307 Contract clauses. (a) The Contracting Officer shall insert the clause in 1552.216-71, Date of Incurrence of Cost, in cost-reimburse ment contracts when an anticipatory cost letter has been issued on the project. (b) The Contracting Officer shall insert the clause at 1552.216-74, Payment of Fee, in solicitations and contracts where a cost-reimbursement term form contract is contemplated, unless the Contracting Officer determines that such a provision would be detrimental to ensuring proper contract perform ance. [49 FR 8852, Mar. 8, 1984, as amended at 56 FR 43711, Sept. 4, 1991] Subpart 1516.4-Incentive Contracts 1516.404-2 Cost-plus-award-fee contracts. 1516.404-270 Scope. This subsection establishes the EPA policy for cost-plus- award-fee (CPAF) type contracts. [60 FR 43404, Aug. 21, 1995] EFFECTIVE DATE NOTE: At 60 FR 43404, Aug. 21, 1995, section 1516.404-270 was revised, effective October 20, 1995. For the convenience of the reader the superseded text appears as follows: 1516.404-270 Scope. This subsection establishes the EPA policy and procedures for cost-plus-award-fee (CPAF) type contracts. 1516.404-271 Applicability. Contracting Officers shall consider all contract actions conforming to the limitations of FAR 16.404-2(c) as candidates for award as a CPAF contract. [60 FR 43404, Aug. 21, 1995] EFFECTIVE DATE NOTE: At 60 FR 43404, Aug. 21, 1995, section 1516.404-271 was revised, effective October 20, 1995. For the convenience of the reader the superseded text appears as follows: 1516.404-271 Applicability. (a) The provisions of this subsection apply to all CPAF type contracts. Contracting Officers shall consider all contract actions conforming to the limitations of FAR 16.404-2(c) and 1516.404-273, which have a potential value of $5,000,000 or more as candidates for award as a CPAF contract. Contracting Officers may utilize CPAF contracts for requirements whose estimated value is less than $5,000,000 when considered appropriate. (b) The formal procedures established in this subpart apply to contract acquisitions with a potential value exceeding $2,000,000. The simplified procedures prescribed in 1516.404-279 are authorized for CPAF contracts with a potential value of $2,000,000 or less. 1516.404-272 Definitions. (a) Performance Evaluation Board (PEB). Group of Government officials responsible for assessing the quality of contract performance and recommending the appropriate fee. (b) Fee Determination Official. Individual responsible for reviewing the recommendations of the PEB and making the final determination of the amount of award fee to be awarded to the contractor. [60 FR 43404, Aug. 21, 1995] EFFECTIVE DATE NOTE: At 60 FR 43404, Aug. 21, 1995, section 1516.404-272 was revised, effective October 20, 1995. For the convenience of the reader the superseded text appears as follows: 1516.404-272 Objectives. The award fee contract, when determined suitable for use, is a combination of at least three EPA contracting objectives: (a) It provides for the reimbursement of allowable, allocable, and reasonable costs; (b) it fixes a dollar amount beyond the initial estimate of costs that represents the compensation for risk (base fee); and (c) it motivates performance throughout the life of a contract where success breeds additional income (award fee). The CPAF contract is used when the work to be performed is such that specific quantitative objective measurement is not feasible and the required performance extends over a sufficient period of time for the award fee features to be used effectively. 1516.404-273 Limitations. (a) No award fee may be earned if the Fee Determination Official determines that contractor performance has been satisfactory or less than satisfactory. A contractor may earn award fee only for performance rated above satisfactory or excellent. All award fee plans shall disclose to offerors the numerical rating necessary to be deemed "above satisfactory" or "excellent" for award fee purposes. (b) The base fee shall not exceed three percent of the estimated cost of the contract, exclusive of the fee. 1516.404-274 Waiver. The Chief of the Contracting Office may waive the limitations in paragraphs (a), (b), and (d) of 1516.404-273 on a case-by-case basis when unusual or compelling circumstances exist. The waiver shall be supported by a justification and coordinated with the Procurement Policy Branch in the Office of Acquisition Management. [60 FR 43404, Aug. 21, 1995] EFFECTIVE DATE NOTE: At 60 FR 43404, Aug. 21, 1995, section 1516.404-274 was revised, effective October 20, 1995. For the convenience of the reader the superseded text appears as follows: 1516.404-274 Fee limitations. The base fee should normally be not more than three percent of the estimated cost of the contract. (See FAR 15.903(d), for maximum fee limitations.) At the time of award, the Contracting Officer shall obligate the total amount of base and award fee. However, in incrementally funded contracts, the Contracting Officer shall separate the fee into the base and award fee portions and obligate only the initial increment of cost, base fee, and award fee. The Contracting Officer shall award the total award fee earned for the period being evaluated. The Contracting Officer shall not carry forward into a subsequent evaluation period any award fee not awarded in a previous evaluation period. 1516.404-275 Definitions and responsibilities. Award Fee Plan means a plan, developed by the PEB, which identifies various categories of performance and clearly describes the criteria used by the PEB to evaluate Contractor performance. The plan also allocates the award fee pool among performance categories. Award Fee Pool means that portion of the contract fee set forth in the contract as the amount of fee available to be awarded for Contractor performance in accordance with the criteria contained in the Award Fee Plan. Evaluation Coordinator means a Government official appointed to receive, code, validate, and assess Performance Monitor reports; and to present such Contractor performance information and data to the PEB. Fee Determination Official (FDO) means the Chief of the Contracting Office who reviews the recommendation of the Performance Evaluation Board and makes the final determination of the award fee. PEB Executive Secretary means a Government official who prepares the official PEB report. Performance Evaluation Board (PEB) means a board of Government officials, which performs the in-depth review of all aspects of Contractor performance and recommends an appropriate fee to the FDO. Performance Event means a discrete happening or series of related happenings occurring during the course of performance which indicate or represent Contractor performance. Performance events shall be reported by the performance monitors on EPA Form No. 1900-41B. The Contractor may report performance events directly to the PEB through the Evaluation Coordinator either as they occur or as a summary report of the evaluation period. Performance Monitor(s) means those Government employees designated to observe, assess, and report the performance of the Contractor on a close, continuous day-to-day basis. Performance monitors are of two categories: Technical and business. The technical performance monitors report on the Contractors performing the technical requirements of the contract. The business performance monitors report on the business aspects of the Contractor's performance; these individuals will be the Contracting Officer/Contract Specialist and Cost Analyst most familiar with the specific contractual and financial aspects of the contract. Period of Evaluation means a segment of the contract's period of performance specified in the award fee plan which will be evaluated by the PEB for purposes of establishing the award fee for that period. EFFECTIVE DATE NOTE: At 60 FR 43404, Aug. 21, 1995, section 1516.404-275 was removed, effective October 20, 1995. 1516.404-276 Appointment of personnel. (a) The CCO will determine, in concert with the responsible program office, the participants in the award fee process. The Contracting Officer shall prepare the formal appointment memorandum and forward it to the RAD prior to issuance of the solicitation. Individuals shall be designated as follows: (1) "Chairperson, Performance Evaluation Board and Board Members." The Chairperson of the Performance Evaluation Board shall be the laboratory or division director of the program initiating the procurement. A representative of the responsible contracts operation office shall be a voting member of all PEBS. The Chairperson of the PEB and the Contracting Officer shall recommend other board members. (2) "Evaluation Coordinator." As recommended by the Chairperson of the PEB. (3) "Executive Secretary." As recommended by the Chairperson of the PEB. (4) "Performance Monitors." The PEB Chairperson shall assure that adequate performance monitoring capability is available. These individuals need not be designated in the appointment memorandum. (b) If any changes in the composition of the PEB are necessary, the following approvals shall be obtained: (1) Chairperson, PEB-by the FDO. (2) PEB members-by the Chairperson, PEB. [49 FR 8852, Mar. 8, 1984, as amended at 55 FR 24579, June 18, 1990; 56 FR 6288, Feb. 15, 1991; 59 FR 18976, Apr. 21, 1994] EFFECTIVE DATE NOTE: At 60 FR 43404, Aug. 21, 1995, section 1516.404-276 was removed, effective October 20, 1995. 1516.404-277 Preparation of the award fee plan. The purpose of the award fee plan is to describe in one document the plan for monitoring, assessing, and evaluating Contractor performance to determine any award fee earned. The PEB shall develop and follow an award fee plan which clearly describes the criteria to be used to determine fee. The PEB shall forward the plan through the Contracting Officer to the CCO for approval prior to issuance of the solicitation. The Contracting Officer shall include the award fee plan in the solicitation. A complete award fee plan should include the following elements: (a) The base fee amount. (b) The total award fee pool. (c) Performance areas to be evaluated. (d) Criteria to be used in evaluations. (e) Relative weights to be assigned to performance areas and to the evaluation criteria. (f) Frequency and timing of award fee determination. (g) Proportion of the total award fee pool to be available for each evaluation period. (h) Procedure to be followed (the timing involved) in evaluating performance and determining the award fee. [49 FR 8852, Mar. 8, 1984, as amended at 55 FR 24579, June 18, 1990; 59 FR 18976, Apr. 21, 1994] EFFECTIVE DATE NOTE: At 60 FR 43404, Aug. 21, 1995, section 1516.404-277 was removed, effective October 20, 1995. 1516.404-278 Operation of the evaluation system. (a) Performance Reporting. Performance Monitors shall report information in the form of one or more individual |