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ARTICLE · 02 NOVEMBER 2022

US DOD Repeals Preference For Fixed-Price Contracts

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On October 28, 2022, the Department of Defense ("DoD") issued a final rule, DFARS Case 2022-D007, to repeal its prior (2019) requirement that contracting officers must first consider...

United StatesGovernment, Public Sector
Marcia Madsen
Marcia Madsen
Cameron R. Edlefsen
Cameron R. Edlefsen
Evan C. Williams
Evan C. Williams
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On October 28, 2022, the Department of Defense ("DoD") issued a final rule, DFARS Case 2022-D007, to repeal its prior (2019) requirement that contracting officers must first consider fixed-price contracts and obtain approval from the head of the contracting activity for use of certain cost-reimbursement contracts. The final rule implements section 817 of the National Defense Authorization Act ("NDAA") for Fiscal Year (FY) 2022 and is effective immediately.

Background

In 2019, the DoD implemented the fixed-price contract preference in the determination of contract type as required by section 829 of the FY 2017 NDAA (Pub. L. 114-328)(DFARS 216.102(1)). Section 829 also mandated that the head of the contracting activity approve awarding cost-reimbursement contracts in excess of $25 million (DFARS 216.301-3(2)). The final rule revises these DFARS sections and removes the fixed-price contract preference and approval requirements.

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