DFARS Change Notice 19981117
[Federal Register: November 17, 1998 (Volume 63, Number 221)]
[Rules and Regulations]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DEPARTMENT OF DEFENSE
48 CFR Parts 215 and 253
Defense Federal Acquisition Regulation Supplement; Weighted
Guidelines--Federally Funded Research and Development Centers
AGENCY: Department of Defense (DoD).
ACTION: Final rule.
SUMMARY: The Director of Defense Procurement has issued a final rule
amending the Defense Federal Acquisition Regulation Supplement (DFARS)
to exempt contract actions with Federally Funded Research and
Development Centers (FFRDCs) from the weighted guidelines method of
establishing profit and fee objectives. The fee for an FFRDC is based
on assessment of need and, therefore, should not be subject to the
risk-based approach used in the weighted guidelines method. The rule
instead requires contracting officers to establish fee objectives for
FFRDCs in accordance with the DoD FFRDC Management Plan.
FOR FURTHER INFORMATION CONTACT:
Ms. Amy Williams, (703) 602-0131.
A proposed rule with request for comments was published in the
Federal Register on September 15, 1997 (62 FR 48205). Two sources
submitted comments in response to the proposed rule. All comments were
considered in the development of the final rule.
B. Regulatory Flexibility Act
DoD certifies that this final rule will not have a significant
economic impact on a substantial number of small entities within the
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.,
because the rule applies only to contract actions with Federally Funded
Research and Development Centers. The rule is not applicable to small
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the final rule
does not impose any information collection requirements that require
the approval of the Office of Management and Budget under 44 U.S.C.
3501, et seq.
List of Subjects in 48 CFR Parts 215 and 253
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
Therefore, 48 CFR Parts 215 and 253 are amended as follows:
1. The authority citation for 48 CFR Parts 215 and 253 continues to
read as follows:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
2. Section 215.404-4 is amended by revising paragraph (b)(1)
introductory text, paragraph (c)(2) introductory text, and paragraphs
(c)(2)(A) and (c)(2)(B) to read as follows:
(b) * * *
(1) Departments and agencies shall use a structured approach for
developing a prenegotiation profit or fee objective on any negotiated
contract action that requires cost analysis, except on cost-plus-award-
free contracts (see 215.404-74) or contracts with Federally Funded
Research and Development Centers (FFRDCs) (see 215.404-75). There are
three structured approaches--
* * * * *
(c) * * *
(2) When using a structured approach, the contracting officer--
(A) Shall use the weighted guidelines method (see 215.404-71),
except as provided in paragraphs (c)(2)(B) and (c)(2)(C) of this
(B) Shall use the modified weighted guidelines method (see 215.404-
72) on contract actions with nonprofit organizations other than FFRDCs.
* * * * *
3. Section 215.404-72 is revised to read as follows:
(a) Definition. As used in this subpart, a nonprofit organization
is a business entity--
(1) That operates exclusively for charitable, scientific, or
(2) Whose earnings do not benefit any private shareholder or
(3) Whose activities do not involve influencing legislation or
political campaigning for any candidate for public office; and
(4) That is exempted from Federal income taxation under section 501
of the Internal Revenue Code.
(b) For nonprofit organizations that are entities that have been
identified by the Secretary of Defense or a Secretary of a Department
as receiving sustaining support on a cost-plus-fixed-fee basis from a
particular DoD department or agency, compute a fee objective for
covered actions using the weighted guidelines method in 215.404-71,
with the following modifications:
(1) Modifications to performance risk (Blocks 21-24 of the DD Form
1547). (i) If the contracting officer assigns a value from the standard
designated range (see 215.404-71-2(c)), reduce the fee objective by an
amount equal to 1 percent of the costs in Block 18 of the DD Form 1547.
Show the net (reduced) amount on the DD Form 1547.
(ii) If the contracting officer assigns a value from the alternate
designated range, reduce the fee objective by an amount equal to 2
percent of the costs in Block 18 of the DD Form 1547. Show the net
(reduced) amount on the DD Form 1547.
(2) Modifications to contract type risk (Block 25 of the DD Form
1547). Use a designated range of -1 percent to 0 percent instead of the
values in 215.404-71-3. There is no normal value.
(c) For all other nonprofit organizations except FFRDCs, compute a
fee objective for covered actions using the weighted guidelines method
in 215.404-71, modified as described in paragraph (b)(1) of this
4. Section 215.404-75 is redesignated as section 215.404-76.
5. A new section 215.404-75 is added to read as follows:
For nonprofit organizations that are FFRDCs, the contracting
(a) Should consider whether any fee is appropriate. Considerations
shall include the FFRDC's--
(1) Proportion of retained earnings (as established under generally
accepted accounting methods) that relates to DoD contracted effort;
(2) Facilities capital acquisition plans;
(3) Working capital funding as assessed on operating cycle cash
(4) Provision for funding unreimbursed costs deemed ordinary and
necessary to the FFRDC.
(b) Shall, when a fee is considered appropriate, establish the fee
objective in accordance with FFRDC fee policies in the DoD FFRDC
(c) Shall not use the weighted guidelines method or an alternate
6. Section 253.215-70 is amended in paragraph (b)(4) by revising
the parenthetical to read ``(see 215.404-76)''.