(b)(i) For major defense acquisition programs as defined in 10 U.S.C. 2430-
(A) Follow the procedures at 234.004; and
(B) Notify the Under Secretary of Defense (Acquisition, Technology, and Logistics) (USD(AT&L)) 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(AT&L) 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(AT&L) approval of the Government’s prenegotiation position before negotiations begin, and obtain USD(AT&L) 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.
