DFARS CHANGE NOTICE 20030620

[Federal Register: June 20, 2003 (Volume 68, Number 119)]

DEPARTMENT OF DEFENSE

48 CFR Part 228

[DFARS Case 2002-D030]

Defense Federal Acquisition Regulation Supplement; Payment Bonds on Cost-Reimbursement Contracts

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to permit the use of alternative payment protections for fixed-price construction subcontracts between $25,000 and $100,000 issued under cost-reimbursement contracts. This change is consistent with the

corresponding Federal Acquisition Regulation (FAR) policy applicable to fixed-price construction contracts.

EFFECTIVE DATE: June 20, 2003.

FOR FURTHER INFORMATION CONTACT: Mr. Euclides Barrera, Defense Acquisition Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0296; facsimile (703) 602-0350. Please cite DFARS Case 2002-D030.

SUPPLEMENTARY INFORMATION:

A. Background This final rule updates DFARS policy on performance and payment bonds for construction contracts. In accordance with the Miller Act (40 U.S.C. 270a-270f), FAR 28.102-1(a) requires performance and payment bonds for construction contracts exceeding $100,000. In accordance with Section 4104(b)(2) of the Federal Acquisition Streamlining Act of 1994 (Public Law 103-355), FAR 28.102-1(b) permits alternative payment protections for construction contracts between $25,000 and $100,000. DFARS 228.102-1 waives the requirement for performance and payment bonds for cost-reimbursement contracts, but requires the prime

contractor to obtain bonds for its fixed-price subcontracts exceeding $25,000. This DFARS rule authorizes the use of alternative payment protections for subcontracts between $25,000 and $100,000, for consistency with the corresponding FAR policy applicable to prime contracts.

In addition, this rule updates text implementing 10 U.S.C. 2701(h) and (i), pertaining to bonds under Defense Environmental Restoration Program contracts. 10 U.S.C. 2701(h) and (i) were to expire on December

31, 1999; however, Section 314 of the National Defense Authorization Act for Fiscal Year 2002 (Public Law 107-107) removed this expiration date. Therefore, the corresponding DFARS text has been amended to

remove the expiration date. Additionally, the text has been relocated from 228.102-1 to a new section at 228.102-70, to identify the subject matter as DoD-unique.

DoD published a proposed rule at 68 FR 7490 on February 14, 2003. DoD received no comments on the proposed rule. Therefore, DoD has adopted the proposed rule as a final rule without change.

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 the rule still requires payment protections for fixed-price construction subcontracts exceeding $25,000, while providing flexibility for subcontractors to chose the type of protection to be provided for subcontracts between $25,000 and $100,000.

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 228

Government procurement. Michele P. Peterson, Executive Editor, Defense Acquisition Regulations Council.

Therefore, 48 CFR part 228 is amended as follows:

1. The authority citation for 48 CFR part 228 continues to read as follows:

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

PART 228--BONDS AND INSURANCE

2. Section 228.102-1 is revised to read as follows:

228.102-1 General.

The requirement for performance and payment bonds is waived for cost-reimbursement contracts. However, for cost-type contracts with fixed-price construction subcontracts over $25,000, require the prime contractor to obtain from each of its construction subcontractors performance and payment protections in favor of the prime contractor as follows:

(1) For fixed-price construction subcontracts over $25,000, but not exceeding $100,000, payment protection sufficient to pay labor and material costs, using any of the alternatives listed at FAR 28.102-1(b)(1).

(2) For fixed-price construction subcontracts over $100,000--

(i) A payment bond sufficient to pay labor and material costs; and

(ii) A performance bond in an equal amount if available at no additional cost.

3. Section 228.102-70 is added to read as follows:

228.102-70 Defense Environmental Restoration Program construction contracts.

For Defense Environmental Restoration Program construction contracts entered into pursuant to 10 U.S.C. 2701-

(a) Any rights of action under the performance bond shall only accrue to, and be for the exclusive use of, the obligee named in the bond;

(b) In the event of default, the surety's liability on the performance bond is limited to the cost of completion of the contract work, less the balance of unexpended funds. Under no circumstances shall the liability exceed the penal sum of the bond;

(c) The surety shall not be liable for indemnification or compensation of the obligee for loss or liability arising from personal injury or property damage, even if the injury or damage was caused by a breach of the bonded contract; and

(d) Once it has taken action to meet its obligations under the bond, the surety is entitled to any indemnification and identical standard of liability to which the contractor was entitled under the contract or applicable laws and regulations.

[Federal Register: June 20, 2003 (Volume 68, Number 119)]

DEPARTMENT OF DEFENSE

48 CFR Part 253

[DFARS Case 2003-D002]

Defense Federal Acquisition Regulation Supplement; Reporting Requirements Update

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to update contract action reporting requirements for Fiscal Year 2004. The rule makes changes to

instructions for completion of the Individual Contracting Action Report.

EFFECTIVE DATE: October 1, 2003.

FOR FURTHER INFORMATION CONTACT: Mr. Euclides Barrera, Defense Acquisition Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0296; facsimile (703) 602-0350. Please cite DFARS Case 2003-D002.

SUPPLEMENTARY INFORMATION:

A. Background This final rule contains instructions for contracting officers to use in completing DD Form 350, Individual Contracting Action Report, during Fiscal Year 2004. DoD uses this form to collect statistical data on its

contracting actions. The rule includes changes related to reporting of contract modification actions and program or system information.

DD Form 350, and other forms prescribed by the DFARS, are not included in the Code of Federal Regulations. The forms are available electronically via the Internet at http://web1.whs.osd.mil/icdhome/ddeforms.htm

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 rule will not have a significant cost or administrative impact on contractors or offerors, or a significant effect beyond the internal operating procedures of DoD. Therefore, publication for public comment is not required. However, DoD will consider comments from small entities concerning the affected DFARS subpart in accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 2003-D002.

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 253

Government procurement. Michele P. Peterson, Executive Editor, Defense Acquisition Regulations Council.

Therefore, 48 CFR part 253 is amended as follows:

1. The authority citation for 48 CFR part 253 continues to read as follows:

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

PART 253--FORMS

2. Section 253.204-70 is amended by revising paragraphs (b)(2) and (b)(12)(iii) to read as follows:

253.204-70 DD Form 350, Individual Contracting Action Report.

* * * * *

(b) * * *

(2) LINE B2, MODIFICATION, ORDER, OR OTHER ID NUMBER.

(i) LINE B2A, ORDER OR OTHER ID NUMBER. Enter the supplementary procurement instrument identification number if one was assigned in accordance with 204.7004 or as permitted by 204.7000. It can be up to 13 characters. Orders under DoD contracts have a four-position number (see 204.7004(d)); orders under non-DoD contracts have a 13-position number with an F in the ninth position.

(ii) LINE B2B, MODIFICATION NUMBER. Modifications to contracts and agreements have a six-position modification number (see 204.7004(c)); modifications to orders under DoD contracts have a two-position

modification number (see 204.7004(e)); and modifications to orders under non-DoD contracts have a six-position modification number.

* * * * *

(12) * * *

(iii) LINE B12C, MDAP, MAIS, OR OTHER PROGRAM CODE.

(A) Enter the Major Defense Acquisition Program (MDAP) or Major Automated Information System (MAIS) code that applies to the contract. If more than one code applies, enter the one that best identifies the

program or system representing the largest dollar value.

(B) If the action is funded by the Missile Defense Agency, enter code CAA.

(C) If the action supports environmental cleanup programs, enter one of the following codes:

(1) ZDE--Defense Environmental and Restoration Program.

(2) ZBC--Base Realignment and Closure Environmental Activities.

(3) ZSE--Environmental Protection Agency Superfund.

(4) ZOP--Other environmental programs.

(D) If A, B, or C does not apply to the action, enter three zeros.

(E) Defense Logistics Agency and Defense Contract Management Agency activities must use the code assigned by the sponsoring military department.

* * * * *

[Federal Register: June 20, 2003 (Volume 68, Number 119)]

DEPARTMENT OF DEFENSE

48 CFR Part 208

[DFARS Case 2003-D006]

Defense Federal Acquisition Regulation Supplement; Deletion of Federal Prison Industries Clearance Exception

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to delete obsolete text pertaining to an exception from requirements for purchase of products

from Federal Prison Industries, Inc. (FPI). The DFARS text has become obsolete due to a broader exception to FPI clearance requirements published in Item V of Federal Acquisition Circular 2001-14 on May 22, 2003.

EFFECTIVE DATE: June 20, 2003.

FOR FURTHER INFORMATION CONTACT: Ms. Susan Schneider, Defense Acquisition Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0326; facsimile (703) 602-0350. Please cite DFARS Case 2003-D006.

SUPPLEMENTARY INFORMATION:

A. Background The FPI Board of Directors recently adopted a resolution increasing, to $2,500, the blanket waiver threshold relating to small dollar-value purchases from FPI. An interim rule amending the Federal

Acquisition Regulation (FAR) to implement this waiver was published as Item V of Federal Acquisition Circular (FAC) 2001-14 on May 22, 2003 (68 FR 28094). The preamble provides information for parties interested

in providing public comment on that rule.

The text at DFARS 208.606(1) implements a previous blanket waiver granted by FPI for DoD purchases totaling $250 or less that require delivery within 10 days. Since the broader waiver implemented at FAR

8.606 by FAC 2001-14 applies to all Federal agencies, the text at DFARS 208.606(1) is no longer necessary and is being deleted.

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 rule will not have a significant cost or administrative impact on contractors or offerors, or a significant effect beyond the internal operating procedures of DoD. Therefore, publication for public comment is not required. However, DoD will consider comments from small entities concerning the affected DFARS subpart in accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 2003-D006.

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 208

Government procurement. Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.

Therefore, 48 CFR part 208 is amended as follows:

1. The authority citation for 48 CFR part 208 continues to read as follows:

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

PART 208--REQUIRED SOURCES OF SUPPLIES AND SERVICES

2. Section 208.606 is revised to read as follows:

208.606 Exceptions.

For DoD, FPI clearances also are not required if market research shows that the FPI product is not comparable to products available from the private sector that best meet the Government's needs in terms of price, quality, and time of delivery.

END OF DFARS CHANGE NOTICE 20030620