PGI 216.402-2 (R-DFARS)

Deviated Text

This text comes from the Word attachment to class deviation 2026-O0045, not from acquisition.gov. The deviation memo directs contracting officers to use it in place of the codified PGI. The source attachment linked below is authoritative.

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(1) It is DoD policy to utilize objective criteria, whenever possible, to measure

contract performance. In cases where an award-fee contract must be used due to lack of objective criteria, the contracting officer must consult with the program manager and the fee determining official when developing the award-fee plan. Award-fee criteria must be linked directly to contract cost, schedule, and performance outcomes objectives.

(2) Award fees must be tied to identifiable interim outcomes, discrete events or

milestones, as much as possible. Examples of such interim milestones include timely completion of preliminary design review, critical design review, and successful system demonstration. In situations where there may be no identifiable milestone for a year or more, consideration should be given to apportioning some of the award fee pool for a predetermined interim period of time based on assessing progress toward milestones. In any case, award fee provisions must clearly explain how a contractor’s performance will be evaluated.

(3) The head of the contracting activity for each defense agency must retain the D&F for all acquisition category (ACAT) I or II programs, and all non-ACAT I or II contracts

with an estimated value of $50 million or more. The head of the contracting activity must forward the D&Fs for ACAT I programs to Defense Pricing, Contracting, and Acquisition Policy/Contract Policy directorate (DPCAP/CP) within 1 month of the end of the quarter. Copies of D&Fs on all contracts must also be included in the contract file.

Sources: Deviation attachment (.docx) · Codified PGI 216.402-2

PGI 216.402-2: Limitations.

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