DFARS CHANGE NOTICE 19991109

DEPARTMENT OF DEFENSE

48 CFR Parts 204, 209, 225, 242, and 247

[DFARS Cases 98-D003, 99-D004, and 99-D010]

Defense Federal Acquisition Regulation Supplement; Contract

Administration and Audit Services

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

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SUMMARY: The Director of Defense Procurement has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to update policy pertaining to DoD contract administration and audit services. The rule updates references to DoD publications, and reorganizes DFARS test for consistency with the organization of Federal Acquisition Regulation (FAR) text pertaining to contract administration.

EFFECTIVE DATE: November 9, 1999.

FOR FURTHER INFORMATION CONTACT: Mr. Rick Layser, Defense Acquisition Regulations Council, PDUSD (AT&L)DP(DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0293; telefax (703) 602-0350. Please cite DFARS Case 98-D003.

SUPPLEMENTARY INFORMATION:

A. Background

This final rule amends the DFARS to update policy pertaining to DoD contract administration and audit services. The rule updates references in the DFARS text and reorganizes portions of DFARS Part 242 for consistency with the organization of FAR Part 42. The rule also adds text at DFARS 242.302(a)(13) to clarify that the Defense Contract Management Command is not responsible for making contract payments. This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

This final rule does not constitute a significant revision within the meaning of FAR 1.501 and Public Law 98-577 and publication for public comment is not required. However, DoD will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 98-D003.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the 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 204, 209, 225, 242, and 247

Government procurement.

Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.

Therefore, 48 CFR parts 204, 209, 225, 242, and 247 are amended as

follows:

1. The authority citation for 48 CFR parts 204, 209, 225, 242, and

247 continues to read as follows:

Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

Contract Administration and Audit Services

DFARS Cases 98-D003/99-D004/99-D010

Final Rule

SUBPART 204.2-CONTRACT DISTRIBUTION

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204.202 Agency distribution requirements.

(1) Distribute copies of contracts as follows-

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(iv) One copy to the contract administration office (CAO) automatic data processing point, except when the DoDAAD code is the same as that of either the CAO or [the] payment office [(see the Federal Directory of Contract Administration Services Components)]; and

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SUBPART 204.71-UNIFORM CONTRACT LINE ITEM NUMBERING SYSTEM

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204.7102 Policy.

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(b) The numbering procedures are mandatory for all contracts where separate contract line item numbers are assigned, unless-

(1) There are no postaward contract administration functions that the contracting officer will assign to an office listed in the DoD [Federal] Directory of Contract Administration Services Components;

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(3) The contract is a communications service authorization issued by the Defense Information Systems Agency's Office of Defense Commercial Communications [Defense Information Technology Contracting Organization].

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SUBPART 209.1-RESPONSIBLE PROSPECTIVE CONTRACTORS

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209.106-2 Requests for preaward surveys.

(1) The surveying activity is the cognizant contract administration office as listed in DLAH 4105.4, DoD [the Federal] Directory of Contract Administration Services Components. * * *

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SUBPART 225.8-INTERNATIONAL AGREEMENTS AND COORDINATION

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225.872-6 Audit.

(c) Handle requests for audits in qualifying countries under 215.404-2(c).

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225.872-7 Industrial security for qualifying countries.

The required procedures for safeguarding classified defense information necessary for the performance of contracts awarded to qualifying country sources are in the DoD Industrial Security Regulation DoD 5220.22-R (implemented for the Army by AR 380-49; for the Navy by OP[SEC]NAV Instruction 5540.8L[5510.1H]; for the Air Force by AFR 205-4[AFI 31-601]; for the Defense Information Systems Agency by DCA Instruction 240-110-8; and for the National Imagery and Mapping Agency by NIMA Instruction 5220.22).

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PART 242-CONTRACT ADMINISTRATION [AND AUDIT SERVICES]

SUBPART 242.1-INTERAGENCY CONTRACT ADMINISTRATION AND AUDIT SERVICES

242.101 Policy. [242.002 Interagency agreements.]

(C) Quality assurance and pricing services performed for the Supply and Services Canada.

242.102 Procedures.

[(S-70)(i) Foreign governments and international organizations may request contract administration services on their direct purchases from U.S. producers. Direct purchase is the purchase of defense supplies in the United States through commercial channels for use by the foreign government or international organization.]

(b)(i)[(ii)] Supply and Services Canada (SSC) is permitted to submit its requests for contract administration services directly to the cognizant contract administration office.

(ii)[(iii)] Other foreign governments (including Canadian government organizations other than SSC) and international organizations send their requests for contract administration services to the DoD Central Control Point (CCP) at the Defense Contract Management Command (DCMC), New York, NY. Contract administration offices provide services only upon request from the CCP. The CCP shall-

SUBPART 242.2-ASSIGNMENT OF CONTRACT ADMINISTRATION [SERVICES]

242.200[-70] Scope of subpart.

This subpart does not address the contract administration role of a contracting officer's representative (see 201.602).

242.203[2] Retention [Assignment] of contract administration.

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(G) Operation or maintenance of, or installation of equipment at[,] radar or communication network sites;

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242.204 Supporting contract administration.

[a situation] where the contractor's work site is on a military base and a base organization is asked to provide support. Before formally sending the request, coordinate with the office concerned to ensure that resources are available for, and capable of, providing the support.

242.205 Designation of the paying office.

(1) For contracts assigned to the Defense Contract Management Command (DCMC), designate as the paying office-

(2) For contracts not assigned to DCMC, select a paying office or offices under department/agency procedures.

SUBPART 242.3-CONTRACT ADMINISTRATION OFFICE FUNCTIONS

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242.302 Contract administration functions.

(a)(4) * * *

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(8) Monitor contractor costs under Subpart 242.70.

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[(13)(A) Do not delegate the responsibility to make payments to the Defense Contract Management Command (DCMC).

(B) For contracts assigned to DCMC for contract administration, designate as the payment office-

(C) For contracts not assigned to DCMC, select a payment office or offices under department/agency procedures. DoD personnel may use the DFAS Reference Tool, available via the Internet at http://referencetool.dfas.mil, to identify cognizant DFAS payment offices.]

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SUBPART 242.7-INDIRECT COST RATES

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242.705-1 Contracting officer determination procedure.

242.705-2 Auditor determination procedure.

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SUBPART 242.74-TECHNICAL REPRESENTATION AT CONTRACTOR FACILITIES

242.7400 General.

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SUBPART 247.3-TRANSPORTATION IN SUPPLY CONTRACTS

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247.305-10 Packing, marking, and consignment instructions.

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247.370 Use of Standard Form 30 for consignment instructions.

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48 CFR Parts 208 and 251

[DFARS Case 99-D022]

Defense Federal Acquisition Regulation Supplement; Coordinated Acquisition Procedures Update

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

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SUMMARY: The Director of Defense Procurement has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to update procedures relating to the DoD Coordinated Acquisition Program and contractor use of Government supply sources. The rule updates organization names, addresses, and telephone numbers.

EFFECTIVE DATE: November 9, 1999.

FOR FURTHER INFORMATION CONTACT:

Ms. Melissa Rider, Defense Acquisition Regulations Council, PDUSD(AT&L)DP(DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-4245; telefax (703) 602-0350. Please cite DFARS Case 99-D022.

SUPPLEMENTARY INFORMATION:

A. Background

This final rule amends DFARS 208.7003-1 to update Defense Logistics Agency (DLA) organization names and addresses, and to specify that a DoD activity submitting a request to DLA for a waiver under the Integrated Material Management Program must submit a copy of the request to the Defense Logistics Support Command. The rule also amends DFARS 251.102 to update address and telephone number information relating to requests for Government publications. This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

This final rule does not constitute a significant revision within the meaning of FAR 1.501 and Public Law 98-577 and publication for public comment is not required. However, DoD will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 99-D022.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the 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 208 and 251

Government procurement.

Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.

Therefore, 48 CFR parts 208 and 251 are amended as follows:

1. The authority citation for 48 CFR parts 208 and 251 continues to read as follows:

[[Page 61031]]

Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

DLA Coordinated Acquisition Procedures Update

DFARS Case 99-D022

Final Rule

PART 208-REQUIRED SOURCES OF SUPPLIES AND SERVICES

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SUBPART 208.70-COORDINATED ACQUISITION

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208.7003-1 Assignments under integrated materiel management (IMM).

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(2) * * * Submit requests for waiver to-

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PART 251-USE OF GOVERNMENT SOURCES BY CONTRACTORS

SUBPART 251.1-CONTRACTOR USE OF GOVERNMENT SUPPLY SOURCES

251.102 Authorization to use Government supply sources.

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TABLE 51-1, AUTHORIZATION TO PURCHASE FROM GOVERNMENT SUPPLY SOURCES

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48 CFR Part 215

[DFARS Case 99-D001]

Defense Federal Acquisition Regulation Supplement; Weighted Guidelines and Performance-Based Payments

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

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SUMMARY: The Director of Defense Procurement has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to modify the weighted guidelines method of computing profit objectives. The rule adds contracts with performance-based payments to the types of contracts that affect a contractor's cost risk.

EFFECTIVE DATE: November 9, 1999.

FOR FURTHER INFORMATION CONTACT: Ms. Sandra G. Haberlin, Defense Acquisition Regulations Council, PDUSD (AT&L) DP (DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0289; telefax (703) 602-0350. Please cite DFARS Case 99-D001.

SUPPLEMENTARY INFORMATION:

A. Background

DFARS 215.404-4, Profit, requires contracting officers to use the weighted guidelines method of developing a prenegotiation profit or fee objective on most negotiated contract actions that require cost analysis. This method focuses on three profit factors: performance risk, contract type risk, and facilities capital employed. Calculations using these profit factors result in values that become part of the profit objective.

For contract type risk, the calculations include an assessment of the degree of cost risk that the contractor accepts under varying contract types as adjusted by the costs of contractor-provided financing. Prior to issuance of this final rule, DFARS 215.404-71-3, Contract type risk and working capital adjustment, provided only two financing choices for fixed-price and fixed-price incentive contracts: The contract either would provide progress payments or would offer no financing. This final rule adds contracts with performance-based payments as a third choice.

This rule amends DFARS 215.404-71-3 as follows:

1. Adds firm-fixed-price and fixed-price incentive contracts with performance-based payments to the table of contract types at 215.404-71-3(c).

2. Adds evaluation criteria at 215.404-71-3(d) that contracting officers should consider when determining the value for contract type risk associated with contracts using performance-based payments.

3. Removes the reference to the flexible progress payments type of financing at 215.404-71-3(e)(3). DoD does not permit the use of flexible progress payments for contracts awarded as a result of solicitations issued on or after November 11, 1993. A final rule, published in the Federal Register on February 23, 1999 (64 FR 8731), removed references to flexible progress payments from DFARS Part 232. The change to 215.404-71-3(e)(3) in this final rule does not reflect a policy change but merely removes obsolete language.

4. Makes editorial changes.

DoD published a proposed rule in the Federal Register on May 4, 1999 (64 FR 23814). Three sources submitted comments on the proposed rule. DoD considered all comments in the development of the final rule.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

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 most contracts awarded to small entities have a dollar value less than the simplified acquisition threshold and, therefore, would not use the weighted guidelines method of profit computation. The weighted guidelines method normally is used to compute profit objectives on negotiated contract actions at or above $500,000.

[[Page 61032]]

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the 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 Part 215

Government procurement.

Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.

Therefore, 48 CFR part 215 is amended as follows:

1. The authority citation for 48 CFR part 215 continues to read as follows:

Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

Weighted Guidelines and Performance-Based Payments

DFARS Case 99-D001

Final Rule

SUBPART 215.4-CONTRACT PRICING

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215.404-71-3 Contract type risk and working capital adjustment.

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