235.006 Contracting methods and contract type.

(b)(i) For major defense acquisition programs as defined in 10 U.S.C. 4201—

(A) Follow the procedures at 234.004; and

(B) Notify the milestone decision authority of an intent not to exercise a fixed-price production option on a development contract for a major weapon system reasonably in advance of the expiration of the option exercise period.

(ii) For other than major defense acquisition programs—

(A) Do not award a fixed-price type contract for a development program effort unless—

( 1 ) The level of program risk permits realistic pricing;

( 2 ) The use of a fixed-price type contract permits an equitable and sensible allocation of program risk between the Government and the contractor; and

( 3 ) A written determination that the criteria of paragraphs (b)(ii)(A)( 1 ) and ( 2 ) of this section have been met is executed—

( i ) By the USD(A&S) if the contract is over $25 million and is for: research and development for a non-major system; the development of a major system (as defined in FAR 2.101); or the development of a subsystem of a major system; or

( ii ) By the contracting officer for any development not covered by paragraph (b)(ii)(A)( 3 )( i ) of this section.

(B) Obtain USD(A&S) approval of the Government's prenegotiation position before negotiations begin, and obtain USD(A&S) approval of the negotiated agreement with the contractor before the agreement is executed, for any action that is—

( 1 ) An increase of more than $250 million in the price or ceiling price of a fixed-price type development contract, or a fixed-price type contract for the lead ship of a class;

( 2 ) A reduction in the amount of work under a fixed-price type development contract or a fixed-price type contract for the lead ship of a class, when the value of the work deleted is $100 million or more; or

( 3 )) A repricing of fixed-price type production options to a development contract, or a contract for the lead ship of a class, that increases the price or ceiling price by more than $250 million for equivalent quantities.