Government Contracts DoD Rule Requires Preference for Fixed-Price Contracts
Tuesday, December 24, 2019

DoD Rule Requires Preference for Fixed-Price Contracts

By Government Contracts Editorial Staff

The Department of Defense has finalized a proposed rule (¶70,020.427) amending the Defense Federal Acquisition Regulation Supplement. The rule requires a preference for the use of fixed-price contracts in the determination of contract type, review, and approval for certain cost-reimbursement contract types at specified thresholds and established time periods, and the use of firm fixed-price contracts for foreign military sales unless an exception or waiver applies. Accordingly, the rule amends DFARS 202.101 to add the definition of “Milestone decision authority”; adds a reference at DFARS 216.102(1) to inform contracting officers of the new requirements when selecting contract types; adds a reference at DFARS 216.104-70 for the new research and development contract type approval requirements; incorporates the exception on the use of cost-reimbursement contracts for R&D at DFARS 216.301-3(2); incorporates a reference at DFARS 217.202 on the use of options for FMS requirements and for sole source major systems for United States and U.S./FMS combined procurements; adds new DFARS 225.7301-1 to implement section 830 of the National Defense Authorization Act for Fiscal Year 2017 (PL 114-328); provides guidance at DFARS 225.7301-2 on the review requirements; revises DFARS 234.004(2)(ii)(A) to reflect the new organization Under Secretary of Defense for Acquisition and Sustainment; and incorporates the approval on the authority to use cost-reimbursement contracts for R&D in excess of $25 million. The final rule made one change to the proposed rule. To properly align with the FAR requirements for approval of the determination and findings for use of incentive- and award-fee contracts, the final rule relocates the content at PGI 216.40(e)(iii) to DFARS 216.401(d)(i). The rule also implements section 829 of the FY 2017 NDAA. For the text of the final rule, which went into effect on November 27, 2019, see ¶70,017.20.

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