DFARS CHANGE NOTICE 20040917

[Federal Register: September 17, 2004 (Volume 69, Number 180)]

[Rules and Regulations]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr17se04-16]

DEPARTMENT OF DEFENSE

48 CFR Parts 207 and 219

[DFARS Case 2003-D109]

Defense Federal Acquisition Regulation Supplement; Consolidation

of Contract Requirements

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for comments.

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SUMMARY: DoD has issued an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Section 801 of the National Defense Authorization Act for Fiscal Year 2004. Section 801 places restrictions on the consolidation of two or more requirements of a DoD department, agency, or activity into a single solicitation and contract.

DATES: Effective date: September 17, 2004.

Comment date: Comments on the interim rule should be submitted to the address shown below on or before November 16, 2004, to be considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2003-D109, using any of the following methods: Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.

Defense Acquisition Regulations Web site: http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm.

Follow the instructions for submitting comments.

E-mail: dfars@osd.mil. Include DFARS Case 2003-D109 in the subject line of the message.

Fax: Primary: (703) 602-7887; Alternate: (703) 602-0350.

Mail: Defense Acquisition Regulations Council, Attn: Ms. Donna Hairston-Benford, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062.

Hand Delivery/Courier: Defense Acquisition Regulations Council, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402.

All comments received will be posted to http://emissary.acq.osd.mil/dar/dfars.nsf

FOR FURTHER INFORMATION CONTACT: Ms. Donna Hairston-Benford, (703) 602-0289.

SUPPLEMENTARY INFORMATION:

A. Background

This interim rule amends DFARS Parts 207 and 219 to implement Section 801 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136). Section 801 adds 10 U.S.C. 2382, which places restrictions on the use of an acquisition strategy that includes a consolidation of contract requirements with a total value exceeding $5,000,000.

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 is expected to have a beneficial impact on small business concerns. An initial regulatory flexibility analysis has been prepared consistent with 5 U.S.C. 603. The analysis is summarized as follows:

This interim rule amends the DFARS to implement Section 801 of the National Defense Authorization Act for Fiscal Year 2004. Section 801 adds 10 U.S.C. 2382, which places restrictions on the consolidation of two or more requirements of a DoD department, agency, or activity into a single solicitation and contract, when the total value of the requirements exceeds $5,000,000. The objective of the rule is to ensure that decisions regarding consolidation of contract requirements are made with a view toward providing small business concerns with appropriate opportunities to participate in DoD procurements as prime contractors and subcontractors. The rule does not duplicate, overlap, or conflict with any other Federal rules. DoD considers the restrictions on consolidation of contract requirements to be separate and distinct from the restrictions on contract bundling specified in the Federal Acquisition Regulation. There are no significant alternatives that would accomplish the objectives of 10 U.S.C. 2382.

The impact on small entities is expected to be positive.

A copy of the analysis may be obtained from the point of contact specified herein. DoD invites comments from small businesses and other interested parties. DoD also will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2003-D109.

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.

D. Determination To Issue an Interim Rule

A determination has been made under the authority of the Secretary of Defense that urgent and compelling reasons exist to publish an interim rule prior to affording the public an opportunity to comment. This interim rule implements Section 801 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136). Section 801 provides that a DoD department, agency, or activity may not execute an acquisition strategy that includes a consolidation of contract requirements with a total value exceeding $5,000,000, unless the senior procurement executive concerned conducts market research, identifies any alternative contracting approaches that would involve a lesser degree of consolidation, and determines that the consolidation is necessary and justified. Comments received in response to this interim rule will be considered in the formation of the final rule.

List of Subjects in 48 CFR Parts 207 and 219

Government procurement.

Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.

Therefore, 48 CFR parts 207 and 219 are amended as follows:

1. The authority citation for 48 CFR parts 207 and 219 continues to

read as follows:

Consolidation of Contract Requirements

DFARS Case 2003-D109

Interim Rule

PART 207—ACQUISITION PLANNING

SUBPART 207.1—ACQUISITION PLANS

* * * * *

207.170 Consolidation of contract requirements.

207.170-1 Scope.

This section implements 10 U.S.C. 2382.

207.170-2 Definitions.

As used in this section—

“Consolidation of contract requirements” means the use of a solicitation to obtain offers for a single contract or a multiple award contract to satisfy two or more requirements of a department, agency, or activity for supplies or services that previously have been provided to, or performed for, that department, agency, or activity under two or more separate contracts lower in cost than the total cost of the contract for which the offers are solicited.

“Multiple award contract” means—

(1) A multiple award schedule issued by the General Services Administration as described in FAR Subpart 8.4;

(2) A multiple award task order or delivery order contract issued in accordance with FAR Subpart 16.5; or

(3) Any other indefinite-delivery, indefinite-quantity contract that an agency enters into with two or more sources for the same line item under the same solicitation.]

207.170-3 Policy and procedures.

(a) Agencies shall not consolidate contract requirements with a total value exceeding $5,000,000 unless the acquisition strategy includes--

(1) The results of market research;

(2) Identification of any alternative contracting approaches that would involve a lesser degree of consolidation; and

(3) A determination by the senior procurement executive that the consolidation is necessary and justified.

(i) Market research may indicate that consolidation of contract requirements is necessary and justified if the benefits of the acquisition strategy substantially exceed the benefits of each of the possible alternative contracting approaches. Benefits include costs and, regardless of whether quantifiable in dollar amounts—

(A) Quality;

(B) Acquisition cycle;

(C) Terms and conditions; and

(D) Any other benefit.

(ii) Savings in administrative or personnel costs alone do not constitute a sufficient justification for a consolidation of contract requirements unless the total amount of the cost savings is expected to be substantial in relation to the total cost of the procurement.

(b) Include the determination made in accordance with paragraph (a)(3) of this section in the contract file.]

* * * * *

PART 219—SMALL BUSINESS PROGRAMS

* * * *

219.201 General policy.

* * * * *

(d) * * *

[(11) Also conduct annual reviews to assess—

(A) The extent of consolidation of contract requirements that has occurred (see 207.170); and

(B) The impact of those consolidations on the availability of small business concerns to participate in procurements as both contractors and subcontractors.]

* * * * *

DEPARTMENT OF DEFENSE

48 CFR Part 237

[DFARS Case 2003-D103]

Defense Federal Acquisition Regulation Supplement; Personal

Services Contracts

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for comments.

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SUMMARY: DoD has issued an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Sections 721 and 841 of the National Defense Authorization Act for Fiscal Year 2004. Section 721 provides permanent authority for DoD to enter into personal services contracts for health care at locations outside of DoD medical treatment facilities. Section 841 adds authority for DoD to enter into contracts for personal services that are to be performed outside the United States or that directly support the mission of a DoD intelligence or counter-intelligence organization or the special operations command.

DATES: Effective date: September 17, 2004.

Comment date: Comments on the interim rule should be submitted to the address shown below on or before November 16, 2004, to be considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2003-D103, using any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.

Defense Acquisition Regulations Web site: http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm.

Follow the instructions for submitting comments.

E-mail: dfars@osd.mil. Include DFARS Case 2003-D103 in the subject line of the message.

Fax: Primary: (703) 602-7887; Alternate: (703) 602-0350.

Mail: Defense Acquisition Regulations Council, Attn: Ms. Teresa Brooks, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062.

Hand Delivery/Courier: Defense Acquisition Regulations Council, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402.

All comments received will be posted to http://emissary.acq.osd.mil/dar/dfars.nsf

.

FOR FURTHER INFORMATION CONTACT: Ms. Teresa Brooks, (703) 602-0326.

SUPPLEMENTARY INFORMATION:

A. Background

This interim rule amends DFARS Subpart 237.1 to implement Sections 721 and 841 of the National Defense Authorization Act for Fiscal Year 2004 (Pub. L. 108-136).

Section 721 amends 10 U.S.C. 1091(a)(2) to provide permanent authority for DoD to enter into personal services contracts for health care at locations outside of DoD medical treatment facilities (such as military entrance processing stations). The law previously provided for this authority to expire on December 31, 2003.

Section 841 amends 10 U.S.C. 129b to add authority for DoD to enter into contracts for personal services that (1) are to be provided by individuals outside the United States to support DoD activities and programs outside the United States; (2) directly support the mission of a DoD intelligence or counter-intelligence organization; or (3) directly support the mission of the DoD special operations command. This authority applies if the services to be procured are urgent or unique and would not be practical to obtain by other means. 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 does not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory

[[Page 55992]]

Flexibility Act, 5 U.S.C. 601, et seq., because application of the rule is limited to personal services contracts for (1) health care at locations outside of DoD medical treatment facilities, or (2) urgent or unique services that are to be performed outside the United States, or are in direct support of intelligence missions, when it would not be practical for DoD to obtain these services by other means. Therefore, DoD has not performed an initial regulatory flexibility analysis. DoD invites comments from small businesses and other interested parties. DoD also will consider comments from small entities concerning the affected DFARS subpart in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2003-D103.

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.

D. Determination To Issue an Interim Rule

A determination has been made under the authority of the Secretary of Defense that urgent and compelling reasons exist to publish an interim rule prior to affording the public an opportunity to comment. This interim rule implements Sections 721 and 841 of the National Defense Authorization Act for Fiscal Year 2004 (Pub. L. 108-136). Section 721 provides permanent authority for DoD to enter into personal services contracts for health care at locations outside of DoD medical treatment facilities. Section 841 adds authority for DoD to enter into contracts for urgent or unique personal services that (1) are to be provided by individuals outside the United States to support DoD activities and programs outside the United States; (2) directly support the mission of a DoD intelligence or counter-intelligence organization; or (3) directly support the mission of the DoD special operations command. Sections 721 and 841 became effective upon enactment on November 24, 2003. Comments received in response to this interim rule will be considered in the formation of the final rule.

List of Subjects in 48 CFR Part 237

Government procurement.

Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.

Therefore, 48 CFR part 237 is amended as follows:

1. The authority citation for 48 CFR part 237 continues to read as follows:

Personal Services Contracts

DFARS Case 2003-D103

Interim Rule

PART 237—SERVICE CONTRACTING

SUBPART 237.1—SERVICE CONTRACTS – GENERAL

237.104 Personal services contracts.

(b)(i) Authorization to acquire the personal services of experts and consultants is included in Pub. L. 101-165, Section 9002 [10 U.S.C. 129b]. Personal service contracts for expert and consultant services must also be authorized by a determination and findings (D&F) in accordance with department/agency regulations.

(A) Generally, the D&F should authorize one contract at a time; however, an authorizing official may issue a blanket D&F for classes of contracts.

(B) Prepare each D&F in accordance with FAR 1.7 and include a determination that—

(1) The duties are of a temporary or intermittent nature;

(2) Acquisition of the services is advantageous to the national defense;

(3) DoD personnel with necessary skills are not available;

(4) Excepted appointment cannot be obtained;

(5) A nonpersonal services contract is not practicable;

(6) Statutory authority, 5 U.S.C. 3109 and other legislation, apply; and

(7) Any other determination required by statues has been made.

(ii) Personal services contracts for health care are authorized by 10 U.S.C. 1091.

(A) This authority may be used to acquire—

(1) Direct health care services provided in medical treatment facilities; and

[(2) Health care services at locations outside of medical treatment facilities (such as the provision of medical screening examinations at military entrance processing stations); and]

(2[3]) Services of clinical counselors, family advocacy program staff, and victim’s services representatives to members of the Armed Forces and covered beneficiaries who require such services, provided in medical treatment facilities or elsewhere. Persons with whom a personal services contract may be entered into under this authority include clinical social workers, psychologists, psychiatrists, and other comparable professionals who have advanced degrees in counseling or related academic disciplines and who meet all requirements for State licensure and board certification requirements, if any, within their fields of specialization.

(B) Sources for personal services contracts with individuals under the authority of 10 U.S.C. 1091 shall be selected through the procedures in this section. These procedures do not apply to contracts awarded to business entities other than individuals. Selections made using the procedures in this section are exempt by statute from FAR Part 6 competition requirements (see 206.001(b)).

(C) Approval requirements for—

(1) Direct health care personal service[s] contracts (see 237.104 [paragraphs] (b)(ii)(A)(1) [and (2) of this section]) and a pay cap are in DoDI 6025.5, Personal Services Contracts for Health Care Providers.

[(i)] Requests [A request] to enter into a personal service[s] contract for direct health care services must be approved by the commander of the medical/dental treatment facility where the services will be performed.

[(ii) A request to enter into a personal services contract for a location outside of a medical treatment facility must be approved by the chief of the medical facility who is responsible for the area in which the services will be performed.]

(2) Services of clinical counselors, family advocacy program staff, and victim’s services representatives (see 237.104 [paragraph] (b)(ii)(A)(2[3])[of this section]), shall be in accordance with agency procedures.

(D) The contracting officer must ensure that the requiring activity provides a copy of the approval with the purchase request.

(E) The contracting officer must provide adequate advance notice of contracting opportunities to individuals residing in the area of the facility. The notice must include the qualification criteria against which individuals responding will be evaluated. The contracting officer shall solicit applicants through at least one local publication which serves the area of the facility. Acquisitions under this section for personal service contracts are exempt from the posting and synopsis requirements of FAR Part 5.

(F) The contracting officer shall provide the qualifications of individuals responding to the notice to the commander of the facility for evaluation and ranking in accordance with agency procedures. Individuals must be considered solely on the basis of the professional qualifications established for the particular personal services being acquired and the Government’s estimate of reasonable rates, fees, or other costs. The commander of the facility shall provide the contracting officer with rationale for the ranking of individuals, consistent with the required qualifications.

(G) Upon receipt from the facility of the ranked listing of applicants, the contracting officer shall either—

(1) Enter into negotiations with the highest ranked applicant. If a mutually satisfactory contract cannot be negotiated, the contracting officer shall terminate negotiations with the highest ranked applicant and enter into negotiations with the next highest.

(2) Enter into negotiations with all qualified applicants and select on the basis of qualifications and rates, fees, or other costs.

(H) In the event only one individual responds to an advertised requirement, the contracting officer is authorized to negotiate the contract award. In this case, the individual must still meet the minimum qualifications of the requirement and the contracting officer must be able to make a determination that the price is fair and reasonable.

(I) If a fair and reasonable price cannot be obtained from a qualified individual, the requirement should be canceled and acquired using procedures other than those set forth in this section.

[(iii)(A) In accordance with 10 U.S.C. 129b(d), an agency may enter into a personal services contract if—

(1) The personal services—

(i) Are to be provided by individuals outside the United States, regardless of their nationality;

(ii) Directly support the mission of a defense intelligence component or counter-intelligence organization of DoD; or

(iii) Directly support the mission of the special operations command of DoD; and

(2) The head of the contracting activity provides written approval for the proposed contract. The approval shall include a determination that addresses the following:

(i) The services to be procured are urgent or unique;

(ii) It would not be practical to obtain such services by other means; and

(iii) For acquisition of services in accordance with paragraph (b)(iii)(A)(1)(i) of this section, the services to be acquired are necessary and appropriate for supporting DoD activities and programs outside the United States.

(B) The contracting officer shall ensure that the applicable requirements of paragraph (b)(iii)(A)(2) of this section have been satisfied and shall include the approval documentation in the contract file.

(iv) The requirements of 5 U.S.C. 3109, Employment of Experts and Consultants; Temporary or Intermittent, do not apply to contracts entered into in accordance with paragraph (b)(iii) of this section.]

(f)(i) Payment to each expert or consultant for personal services under 5 U.S.C. 3109 shall not exceed the highest rate fixed by the Classification Act Schedules for grade GS-15 (see 5 CFR 304.105(a)).

(ii) The contract may provide for the same per diem and travel expenses authorized for a Government employee, including actual transportation and per diem in lieu of subsistence for travel between home or place of business and official duty station.

(iii) Coordinate with the civilian personnel office on benefits, taxes, personnel ceilings, and maintenance of records.

* * * * *

DEPARTMENT OF DEFENSE

48 CFR Parts 209, 217, and 246

[DFARS Case 2003-D101]

Defense Federal Acquisition Regulation Supplement; Quality Control of Aviation Critical Safety Items and Related Services

AGENCY: Department of Defense (DoD).

[[Page 55988]]

ACTION: Interim rule with request for comments.

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SUMMARY: DoD has issued an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Section 802 of the National Defense Authorization Act for Fiscal Year 2004. Section 802 requires DoD to establish a quality control policy for the procurement of aviation critical safety items and the modification, repair, and overhaul of those items.

DATES: Effective date: September 17, 2004.

Comment date: Comments on the interim rule should be submitted to the address shown below on or before November 16, 2004, to be considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2003-D101, using any of the following methods:

[cir] Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.

[cir] Defense Acquisition Regulations Web Site: http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm.

Follow the instructions for submitting comments.

[cir] E-mail: dfars@osd.mil. Include DFARS Case 2003-D101 in the subject line of the message.

[cir] Fax: Primary: (703) 602-7887; Alternate: (703) 602-0350.

[cir] Mail: Defense Acquisition Regulations Council, Attn: Ms. Teresa Brooks, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062.

[cir] Hand Delivery/Courier: Defense Acquisition Regulations Council, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402.

All comments received will be posted to http://emissary.acq.osd.mil/dar/dfars.nsf

FOR FURTHER INFORMATION CONTACT: Ms. Teresa Brooks, (703) 602-0326.

SUPPLEMENTARY INFORMATION:

A. Background

This interim rule amends DFARS Parts 209, 217, and 246 to implement Section 802 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136). Section 802 requires DoD to prescribe in regulations a quality control policy for the procurement of aviation critical safety items and the modification, repair, and overhaul of those items. This interim rule--

[cir] Identifies the responsibilities of the head of the design control activity for quality control of aviation critical safety items and related services; and

[cir] Specifies that DoD may enter into a contract for the procurement, modification, repair, or overhaul of an aviation critical safety item only with a source approved by the head of the design control activity.

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 does not expect this rule to 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 primarily relates to internal DoD responsibilities for ensuring quality control in the procurement of aviation critical safety items and related services. Therefore, DoD has not performed an initial regulatory flexibility analysis. DoD invites comments from small businesses and other interested parties. DoD also will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2003-D101.

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.

D. Determination To Issue an Interim Rule

A determination has been made under the authority of the Secretary of Defense that urgent and compelling reasons exist to publish an interim rule prior to affording the public an opportunity to comment. This interim rule implements Section 802 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136). Section 802 requires DoD to prescribe in regulations a quality control policy for the procurement of aviation critical safety items and the modification, repair, and overhaul of those items. Section 802 became effective upon enactment on November 24, 2003. Comments received in response to this interim rule will be considered in the formation of the final rule.

List of Subjects in 48 CFR Parts 209, 217, and 246

Government procurement.

Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.

Therefore, 48 CFR parts 209, 217, and 246 are amended as follows:

1. The authority citation for 48 CFR parts 209, 217, and 246 continues to read as follows:

Quality Control of Aviation Critical

Safety Items and Related Services

DFARS Case 2003-D101

Interim Rule

PART 209—CONTRACTOR QUALIFICATIONS

* * * * *

SUBPART 209.2--QUALIFICATIONS REQUIREMENTS

* * * * *

[209.270 Aviation critical safety items.

209.270-1 Scope.

This section—

(a) Implements Section 802 of the National Defense Authorization Act for Fiscal Year 2004 (Pub. L. 108-136); and

(b) Prescribes policy and procedures for qualification requirements in the procurement of aviation critical safety items and the modification, repair, and overhaul of those items.

209.270-2 Definitions.

As used in this section-

“Aviation critical safety item” means a part, an assembly, installation equipment, launch equipment, recovery equipment, or support equipment for an aircraft or aviation weapon system if the part, assembly, or equipment contains a characteristic any failure, malfunction, or absence of which could cause—

(1) A catastrophic or critical failure resulting in the loss of or serious damage to the aircraft or weapon system;

(2) An unacceptable risk of personal injury or loss of life; or

(3) An uncommanded engine shutdown that jeopardizes safety.

“Design control activity” means the systems command of a military department that is specifically responsible for ensuring the air worthiness of an aviation system or equipment in which an aviation critical safety item is to be used.

209.270-3 Policy.

(a) The head of the contracting activity for an aviation critical safety item may enter into a contract for the procurement, modification, repair, or overhaul of such an item only with a source approved by the head of the design control activity.

(b) The approval authorities specified in this section apply instead of those otherwise specified in FAR 9.202(a)(1), 9.202(c), or 9.206-1(c), for the procurement, modification, repair, and overhaul of aviation critical safety items.

209.270-4 Procedures.

For items identified as aviation critical safety items—

(a) The head of the design control activity shall—

(1) Approve qualification requirements in accordance with procedures established by the design control activity; and

(2) Qualify and identify aviation critical safety item suppliers and products.

(b) The contracting officer shall—

(1) Ensure that the head of the design control activity has determined that a prospective contractor or its product meets or can meet the established qualification standards before the date specified for award of the contract;

(2) Refer any offers received from an unapproved source to the head of the design control activity for approval. The head of the design control activity will determine whether the offeror or its product meets or can meet the established qualification standards before the date specified for award of the contract; and

(3) Refer any requests for qualification to the design control activity.

(c) See 246.407(S-70) and 246.504 for quality assurance requirements.]

* * * * *

PART 217—SPECIAL CONTRACTING METHODS

* * * * *

SUBPART 217.75--ACQUISITION OF REPLENISHMENT PARTS

* * * * *

217.7501 General.

* * * * *

(b) * * *

(2) Replenishment parts must be acquired so as to ensure the safe, dependable, and effective operation of the equipment. Where this assurance is not possible with new sources, competition may be limited to the original manufacturer of the equipment or other sources that have previously manufactured or furnished the parts as long as the action is justified. [See 209.270 for requirements applicable to replenishment parts for aviation critical safety items.]

* * * * *

PART 246—QUALITY ASSURANCE

* * * * *

SUBPART 246.4—GOVERNMENT CONTRACT QUALITY ASSURANCE

* * * * *

246.407 Nonconforming supplies or services.

* * * * *

[(S-70) The head of the design control activity is the approval authority for acceptance of any nonconforming aviation critical safety items or nonconforming modification, repair, or overhaul of such items (see 209.270). ]

* * * * *

[SUBPART 246.5--ACCEPTANCE

246.504 Certificate of conformance. 

Before authorizing a certificate of conformance for aviation critical safety items, obtain the concurrence of the head of the design control activity (see 209.270).]

* * * * *

DEPARTMENT OF DEFENSE

48 CFR Part 207

[DFARS Case 2004-D004]

Defense Federal Acquisition Regulation Supplement; Acquisition Plans--Corrosion Prevention and Mitigation

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

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SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Section 1067 of the National Defense Authorization Act for Fiscal Year 2003. Section 1067 requires DoD to prevent and mitigate corrosion during the design, acquisition, and maintenance of military equipment.

EFFECTIVE DATE: September 17, 2004.

FOR FURTHER INFORMATION CONTACT: Ms. Teresa Brooks, 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 2004-D004.

SUPPLEMENTARY INFORMATION:

A. Background

This final rule amends DFARS 207.105 to add corrosion prevention and mitigation to the areas that agencies must address in acquisition plans. The rule implements Section 1067 of the National Defense Authorization Act for Fiscal Year 2003 (Public Law 107-314), which requires DoD to prevent and mitigate corrosion during the design, acquisition, and maintenance of military equipment.

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 2004-D004.

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 207

Government procurement.

Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.

Therefore, 48 CFR part 207 is amended as follows:

1. The authority citation for 48 CFR part 207 continues to read as follows:

Acquisition Plans – Corrosion Protection and Mitigation

DFARS Case 2004-D004

Final Rule

PART 207—ACQUISITION PLANNING

SUBPART 207.1—ACQUISITION PLANS

* * * * *

207.105 Contents of written acquisition plans.

* * * * *

(b) Plan of action.

* * * * *

(13) Logistics considerations.

* * * * *

(ii) Discuss the mission profile, reliability, and maintainability (R&M) program plan, R&M predictions, redundancy, qualified parts lists, parts and material qualification, R&M requirements imposed on vendors, failure analysis, corrective action and feedback, and R&M design reviews and trade-off studies. [Also discuss corrosion prevention and mitigation plans.]

* * * * *

DEPARTMENT OF DEFENSE

48 CFR Part 252

[DFARS Case 2003-D098]

Defense Federal Acquisition Regulation Supplement; Definition of

Terrorist Country

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

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SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to remove Iraq from the list of terrorist countries subject to a prohibition on DoD contract awards. This change is a result of the President's May 7, 2003, determination to suspend sanctions against Iraq.

[[Page 55993]]

EFFECTIVE DATE: September 17, 2004.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0328; facsimile (703) 602-0350. Please cite DFARS Case 2003-D098.

SUPPLEMENTARY INFORMATION:

A. Background

The provision at DFARS 252.209-7001, Disclosure of Ownership or Control by the Government of a Terrorist Country, implements 10 U.S.C. 2327, which prohibits DoD from entering into a contract with a firm that is owned or controlled by the government of a country that has repeatedly provided support for acts of international terrorism. This final rule amends the provision at DFARS 252.209-7001 to remove Iraq from the list of countries subject to the prohibition. This change is a result of the President's May 7, 2003, determination to suspend all sanctions against Iraq that apply to countries that have supported terrorism (Presidential Determination 2003-23, 68 FR 26459, May 16, 2003).

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-D098.

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 252

Government procurement.

Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.

0

Therefore, 48 CFR part 252 is amended as follows:

0

1. The authority citation for 48 CFR part 252 continues to read as follows:

Definition of Terrorist Country

DFARS Case 2003-D098

Final Rule

PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

* * * * *

252.209-7001 Disclosure of Ownership or Control by the Government of a Terrorist Country.

As prescribed in 209.104-70(a), use the following provision:

DISCLOSURE OF OWNERSHIP OR CONTROL BY THE GOVERNMENT OF A TERRORIST COUNTRY (MAR 1998 [SEP 2004])

(a) Definitions. As used in this provision—

* * * * *

(2) “Terrorist country” means a country determined by the Secretary of State, under section 6(j)(1)(A) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)(i)(A)), to be a country the government of which has repeatedly provided support for acts of international terrorism. As of the date of this provision, terrorist countries [subject to this provision] include: Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria.

* * * * *

DEPARTMENT OF DEFENSE

48 CFR Parts 226 and 252

[DFARS Case 2002-D033]

Defense Federal Acquisition Regulation Supplement; Indian Incentive Program

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

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SUMMARY: DoD has adopted as final, with changes, an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement DoD Appropriations Act provisions pertaining to the Indian Incentive Program. The Program permits incentive payments to contractors, and subcontractors at any tier, that use Indian organizations, Indian-owned economic enterprises, and Native Hawaiian small business concerns as subcontractors.

EFFECTIVE DATE: September 17, 2004.

FOR FURTHER INFORMATION CONTACT: Ms. Donna Hairston-Benford, Defense Acquisition Regulations Council, OUSD (AT&L)DPAP(DAR),IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0289; facsimile (703) 602-0350. Please cite DFARS Case 2002-D033.

SUPPLEMENTARY INFORMATION:

A. Background

DoD published an interim rule at 68 FR 56561 on October 1, 2003, to implement Section 8021 of the DoD Appropriations Act for Fiscal Year 2003 (Public Law 107-248). Section 8021 revised the criteria for application of the Indian Incentive Program by establishing a >$500,000 threshold for contracts and subcontracts under which incentives may be paid; by authorizing incentive payments for subcontracts awarded to Native Hawaiian small business concerns; and by adding contracts and subcontracts for commercial items to the Program. Section 8021 of the DoD Appropriations Act for Fiscal Year 2004 (Public Law 108-87) and Section 8021 of the DoD Appropriations Act for Fiscal Year 2005 (Public Law 108-287) contain similar provisions.

Fourteen sources submitted comments on the interim rule. A discussion of the comments is provided below. Differences between the interim and final rules are addressed in the response to Comments 1 and 6.

1. Comment: Revise requirements for use of the Indian incentive clause at DFARS 252.226-7001, to require inclusion of the clause in all contracts and subcontracts exceeding $500,000, instead of the present requirement for inclusion of the clause in contracts and subcontracts exceeding $500,000 when ``subcontracting opportunities may exist.'' This change would eliminate the possibility that a subcontracting opportunity might be overlooked.

DoD Response: Concur. The recommended change has been made in the final rule at 226.104 and 252.226-7001(g).

2. Comment: The rule should include the statutory requirement for inclusion of the incentive clause in subcontracts exceeding $500,000 at any tier.

DoD Response: The rule requires inclusion of the clause, including the flowdown requirement, in all subcontracts exceeding $500,000. This covers all subcontracts exceeding $500,000 at all tiers.

3. Comment: The $500,000 threshold for inclusion of the incentive clause in contracts and subcontracts is restrictive and should be lowered to $100,000 or less.

DoD Response: Do not concur. The $500,000 threshold is consistent with the Appropriations Act provisions.

4. Comment: With regard to the requirement for subcontracted commercial items to be produced or manufactured in whole or in part by a Native firm, the phrase ``produced or manufactured in whole or in part'' should be clarified. Solutions offered were: Use of the manufacturing standards established by the North American Industry Classification System (NAICS) codes; use of a percentage such as that contained in the nonmanufacturer rule at FAR 19.102(f)(2); or a reference to the Small Business Administration regulations at 13 CFR 121.406.

DoD Response: Do not concur. Placing such a restriction on the eligibility of a subcontract awarded to a Native firm would be without statutory basis.

5. Comment: Can an Indian business provide a non-commercial item as a reseller for the actual manufacturer?

DoD Response: Neither the Appropriations Act provisions nor the DFARS rule place any manufacturing conditions on non-commercial items subcontracted under the Program.

6. Comment: The rule should clarify that Alaska Native Corporations are eligible for participation in Program.

DoD Response: The rule already provides for participation of Alaska Native Corporations, through the definitions of ``Indian'' and ``Indian-owned economic enterprise'' in the clause at 252.226-7001. Minor changes have been made to the definition of ``Indian'' to clarify this point.

7. Comment: Are businesses owned by individual Federally recognized American Indians eligible for participation in the Program, as well as those businesses owned by Federally recognized tribes and organizations?

DoD Response: Yes. The definitions at 252.226-7001 provide for participation by Indian-owned businesses that are individually owned or tribally owned.

8. Comment: The Indian Incentive Program should also be applied to DoD Family Housing Privatization contracts. Presently, the incentive clause cannot be included in these contracts, because the privatization contracts are not considered DoD contracts.

DoD Response: This comment is outside the scope of the DFARS rule. Therefore, no change has been made to the rule as a result of this comment.

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 may 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. DoD has prepared a final regulatory flexibility analysis. A copy of the analysis may be obtained from the point of contact specified herein. The analysis is summarized as follows:

This rule amends the DFARS to implement Section 8021 of the DoD Appropriations Act for Fiscal Year 2003 (Public Law 107-248), Section 8021 of the DoD Appropriations Act for Fiscal Year 2004 (Public Law 108-87), and Section 8021 of the DoD Appropriations Act for Fiscal Year 2005 (Public Law 108-287) pertaining to the Indian Incentive Program. The Program permits incentive payments to contractors, and subcontractors at any tier, that use Indian organizations, Indian-owned economic enterprises, and Native Hawaiian small business concerns as subcontractors. DoD received no comments on the initial regulatory flexibility analysis. However, as a result of comments received on the interim rule, the final rule includes a change that prescribes use of the Indian incentive clause at DFARS 252.226-7001 in all contracts and subcontracts exceeding $500,000, rather than in only those exceeding $500,000 for which subcontracting opportunities are deemed to exist at the time of award of the contract or subcontract. The rule requires that maximum practicable opportunity be provided for Indian organizations, Indian-owned economic enterprises, and Native Hawaiian small business concerns to receive subcontract awards; and provides that a contractor or subcontractor that awards a subcontract to such an entity may receive an incentive payment of 5 percent of the amount of the subcontract. There are no practical alternatives that would accomplish the objectives of the applicable statutes.

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 226 and 252

Government procurement.

Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.

Accordingly, the interim rule amending 48 CFR parts 226 and 252, which was published at 68 FR 56561 on October 1, 2003, is adopted as a final rule with the following changes:

1. The authority citation for 48 CFR parts 226 and 252 continues to read as follows:

Indian Incentive Program

DFARS Case 2002-D033

Final Rule

PART 226—OTHER SOCIOECONOMIC PROGRAMS

SUBPART 226.1 INDIAN INCENTIVE PROGRAM

226.103 Procedures.

(f) The contracting officer shall--

(i) Submit a request for funding of the Indian incentive to the Office of Small and Disadvantaged Business Utilization, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics) (OUSD(AT&L)SADBU), 1777 North Kent Street, Suite 9100, Arlington, VA 22209; and

(ii) Upon receipt of funding from OUSD(AT&L)SADBU, issue a contract modification to add the Indian incentive funding for payment of the contractor’s request for adjustment as described in the clause at 252.226-7001, Utilization of Indian Organizations, Indian-Owned Economic Enterprises, and Native Hawaiian Small Business Concerns.

226.104 Contract clause.

Use the clause at 252.226-7001, Utilization of Indian Organizations, Indian-Owned Economic Enterprises, and Native Hawaiian Small Business Concerns, in solicitations and contracts for supplies or services exceeding $500,000 in value for which subcontracting opportunities may exist.

* * * * *

PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

* * * * *

252.212-7001 Contract Terms and Conditions Required to Implement Statutes or Executive Orders Applicable to Defense Acquisitions of Commercial Items.

As prescribed in 212.301(f)(iii), use the following clause:

CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR EXECUTIVE ORDERS APPLICABLE TO DEFENSE ACQUISITIONS OF COMMERCIAL ITEMS (JUN 2004 [SEP 2004])

* * * * *

(b) The Contractor agrees to comply with any clause that is checked on the following list of Defense FAR Supplement clauses which, if checked, is included in this contract by reference to implement provisions of law or Executive orders applicable to acquisitions of commercial items or components.

* * * * *

____ 252.226-7001 Utilization of Indian Organizations,

Indian-Owned Economic Enterprises, and

Native Hawaiian Small Business Concerns (OCT 2003 [SEP 2004]) (Section 8021 of Pub.

L. 107-248 [and similar sections in

subsequent DoD appropriations acts]).

* * * * *

252.226-7001 Utilization of Indian Organizations, Indian-Owned Economic Enterprises, and Native Hawaiian Small Business Concerns.

As prescribed in 226.104, use the following clause:

UTILIZATION OF INDIAN ORGANIZATIONS, INDIAN-OWNED ECONOMIC ENTERPRISES, AND NATIVE HAWAIIAN SMALL BUSINESS CONCERNS

(OCT 2003 [SEP 2004])

(a) Definitions. As used in this clause--

“Indian” means[--

(1)] a[A]ny person who is a member of any Indian tribe, band, group, pueblo, or community that is recognized by the Federal Government as eligible for services from the Bureau of Indian Affairs (BIA) in accordance with 25 U.S.C. 1452(c)[;] and

[(2)] a[A]ny “Native” as defined in the Alaska Native Claims Settlement Act (43 U.S.C. 1601 [et seq.]).

“Indian organization” means the governing body of any Indian tribe or entity established or recognized by the governing body of an Indian tribe for the purposes of 25 U.S.C. Chapter 17.

“Indian-owned economic enterprise” means any Indian-owned (as determined by the Secretary of the Interior) commercial, industrial, or business activity established or organized for the purpose of profit, provided that Indian ownership constitutes not less than 51 percent of the enterprise.

“Indian tribe” means any Indian tribe, band, group, pueblo, or community, including native villages and native groups (including corporations organized by Kenai, Juneau, Sitka, and Kodiak) as defined in the Alaska Native Claims Settlement Act, that is recognized by the Federal Government as eligible for services from BIA in accordance with 25 U.S.C. 1452(c).

“Interested party” means a contractor or an actual or prospective offeror whose direct economic interest would be affected by the award of a subcontract or by the failure to award a subcontract.

“Native Hawaiian small business concern” means an entity that is—

(1) A small business concern as defined in Section 3 of the Small Business Act (15 U.S.C. 632) and relevant implementing regulations; and

(2) Owned and controlled by a Native Hawaiian as defined in 25 U.S.C. 4221(9).

(b) The Contractor shall use its best efforts to give Indian organizations, Indian-owned economic enterprises, and Native Hawaiian small business concerns the maximum practicable opportunity to participate in the subcontracts it awards, to the fullest extent consistent with efficient performance of the contract.

(c) The Contracting Officer and the Contractor, acting in good faith, may rely on the representation of an Indian organization, Indian-owned economic enterprise, or Native Hawaiian small business concern as to its eligibility, unless an interested party challenges its status or the Contracting Officer has independent reason to question that status.

(d) In the event of a challenge to the representation of a subcontractor, the Contracting Officer will refer the matter to—

(1) For matters relating to Indian organizations or Indian-owned economic enterprises:

U.S. Department of the Interior

Bureau of Indian Affairs

Attn: Chief, Division of Contracting and

Grants Administration

1849 C Street NW, MS-2626-MIB

Washington, DC 20240-4000.

The BIA will determine the eligibility and will notify the Contracting Officer.

(2) For matters relating to Native Hawaiian small business concerns:

Department of Hawaiian Home Lands

PO Box 1879

Honolulu, HI 96805.

The Department of Hawaiian Home Lands will determine the eligibility and will notify the Contracting Officer.

(e) No incentive payment will be made—

(1) While a challenge is pending; or

(2) If a subcontractor is determined to be an ineligible participant.

(f)(1) The Contractor, on its own behalf or on behalf of a subcontractor at any tier, may request an incentive payment in accordance with this clause.

(2) The incentive amount that may be requested is 5 percent of the estimated cost, target cost, or fixed price included in the subcontract at the time of award to the Indian organization, Indian-owned economic enterprise, or Native Hawaiian small business concern.

(3) In the case of a subcontract for commercial items, the Contractor may receive an incentive payment only if the subcontracted items are produced or manufactured in whole or in part by an Indian organization, Indian-owned economic enterprise, or Native Hawaiian small business concern.

(4) The Contractor has the burden of proving the amount claimed and shall assert its request for an incentive payment prior to completion of contract performance.

(5) The Contracting Officer, subject to the terms and conditions of the contract and the availability of funds, will authorize an incentive payment of 5 percent of the estimated cost, target cost, or fixed price included in the subcontract awarded to the Indian organization, Indian-owned economic enterprise, or Native Hawaiian small business concern.

(6) If the Contractor requests and receives an incentive payment on behalf of a subcontractor, the Contractor is obligated to pay the subcontractor the incentive amount.

(g) The Contractor shall insert the substance of this clause, including this paragraph (g), in all subcontracts exceeding $500,000 for which further subcontracting opportunities may exist.

(End of clause)

DEPARTMENT OF DEFENSE

48 CFR Parts 225 and 252

[DFARS Case 2003-D099]

Defense Federal Acquisition Regulation Supplement; Berry Amendment Changes

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

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SUMMARY: DoD has adopted as final, without change, an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Sections 826 and 827 of the National Defense Authorization Act for Fiscal Year 2004. Sections 826 and 827 provide exceptions to the domestic source requirements of the Berry Amendment. Section 826 applies to the acquisition of food, specialty metals, and hand or measuring tools needed to support contingency operations or to fulfill other urgent requirements. Section 827 applies to the acquisition of waste and byproducts of cotton or wool fiber for use in the production of propellants and explosives.

EFFECTIVE DATE: September 17, 2004.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0328; facsimile (703) 602-0350. Please cite DFARS Case 2003-D099.

SUPPLEMENTARY INFORMATION:

A. Background

DoD published an interim rule at 69 FR 26508 on May 13, 2004, to implement Sections 826 and 827 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136). The rule amended DFARS 225.7002-2 and 252.225-7012 to provide new exceptions to the domestic source requirements of the Berry Amendment (10 U.S.C. 2533a), as authorized by Sections 826 and 827 of Public Law 108-136. DoD received no comments on the interim rule. Therefore, DoD has adopted the interim 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 exceptions to domestic source requirements authorized by the rule are limited to acquisitions of (1) Food, specialty metals, and hand or measuring tools needed to support contingency operations or to fulfill other urgent requirements; and (2) waste and byproducts of cotton or wool fiber for use in the production of propellants and explosives.

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 225 and 252

Government procurement.

Interim Rule Adopted as Final Without Change

0

Accordingly, the interim rule amending 48 CFR parts 225 and 252, which was published at 69 FR 26508 on May 13, 2004, is adopted as a final rule without change.

Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.