DFARS Change Notice 20041101

DoD published the following changes to the DFARS on November 1, 2004. In addition, DoD launched its new DFARS companion resource, Procedures, Guidance, and Information (PGI), available at http://www.acq.osd.mil/dpap/dars/pgi.

Interim Rule

Transition of Weapons-Related Prototype Projects to Follow-On Contracts (DFARS Case 2003-D106)

Establishes a pilot program that permits contracting officers to use FAR Part 12 (Acquisition of Commercial Items) procedures to award follow-on contracts for the production of items begun as prototype projects under other transaction agreements. The follow-on contract must be awarded to a nontraditional defense contractor; must not exceed $50,000,000; and must be either firm-fixed-price or fixed-price with economic price adjustment. This change implements Section 847 of the National Defense Authorization Act for Fiscal Year 2004 and is intended to ease the transition of nontraditional defense contractors from prototype transactions to standard contracts.

Affected subparts/sections: DFARS Table of Contents; Part 212 Table of Contents; 212.2; 212.70

The Federal Register notice for this rule:

From the Federal Register Online via GPO Access

DEPARTMENT OF DEFENSE

48 CFR Parts 205, 226, 235, and 252

[DFARS Case 2003-D016]

Defense Federal Acquisition Regulation Supplement; Publicizing Contract Actions

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to update text pertaining to publicizing contract actions. This rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

DATES: Effective November 1, 2004.

FOR FURTHER INFORMATION CONTACT: Ms. Robin Schulze, 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-D016.

SUPPLEMENTARY INFORMATION:

A. Background DFARS Transformation is a major DoD initiative to dramatically change the purpose and content of the DFARS. The objective is to improve the efficiency and effectiveness of the acquisition process, while allowing the acquisition workforce the flexibility to innovate. The transformed DFARS will contain only requirements of law, DoD-wide policies, delegations of FAR authorities, deviations from FAR requirements, and policies/procedures that have a significant effect beyond the internal operating procedures of DoD or a significant cost or administrative impact on contractors or offerors. Additional information on the DFARS Transformation initiative is available at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.acq.osd.mil/dp/dars/transf.htm.

This final rule is a result of the DFARS Transformation initiative. The DFARS changes include--

Deletion of text at DFARS 205.207(d)(ii) containing a notice to be included in acquisitions being considered for historically black college and university and minority institution (HBCU/MI) set-aside. This notice is being relocated to the new DFARS companion resource, Procedures, Guidance, and Information (PGI), with retention of a policy statement in DFARS 205.207 regarding use of the notice, and addition of a policy statement at DFARS 226.7003-2(c) regarding the requirement for an interested HBCU/MI to provide evidence of its

capability and eligibility (which is also addressed in the notice). A final rule addressing the purpose and structure of PGI is published elsewhere in this issue of the Federal Register under DFARS Case 2003-D090, Procedures, Guidance, and Information. PGI is available at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.acq.osd.mil/dpap/dars/index.htm.

Redesignation of DFARS 205.207(d)(iii) as 205.207(d)(ii), and deletion of text that duplicates policy found in 235.016. A reference to 236.016 has been retained in newly designated 205.207(d)(ii).

Deletion of unnecessary text at DFARS 205.207(e), 205.470-1, and 205.502. The clause prescription at 205.470-2 is redesignated as 205.470 and amended to include a statutory reference.

DoD published a proposed rule at 69 FR 8148 on February 23, 2004. 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 updates and relocates DFARS text, but makes no significant change to contracting policy.

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 205, 226, 235 and 252

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

Therefore, 48 CFR parts 205, 226, 235, and 252 are amended as follows:

A Microsoft Word format document showing all additions and deletions made by this rule:

Publicizing Contract Actions

DFARS Case 2003-D016

Final Rule

(Text that is stricken and highlighted has been relocated

to Procedures, Guidance, and Information (PGI))

PART 205—PUBLICIZING CONTRACT ACTIONS

SUBPART 205.2--SYNOPSES OF PROPOSED CONTRACT ACTIONS

* * * * *

205.207 Preparation and transmittal of synopses.

(d)(i) For [acquisitions being considered for] historically black college and university and minority institution set-asides under 226.7003, use CBD Numbered Note 5.[--]

[(A) Cite the appropriate Numbered Note; and

(B) Include the notice at PGI 205.207(d)(i).]

(ii) For acquisitions being considered for historically black college and university and minority institution set-aside, state:

Final Rules – DFARS Transformation

The following changes are a result of DFARS Transformation, which is a major DoD initiative to dramatically change the purpose and content of the DFARS. The transformed DFARS will contain only requirements of law, DoD-wide policies, delegations of FAR authorities, deviations from FAR requirements, and policies/procedures that have a significant effect on the public. The objective is to improve the efficiency and effectiveness of the acquisition process, while allowing the acquisition workforce the flexibility to innovate. Additional information on the DFARS Transformation initiative is available at http://www.acq.osd.mil/dpap/dfars/transf.htm.

Procedures, Guidance, and Information (DFARS Case 2003-D090)

Defines a new DFARS companion resource, Procedures, Guidance, and Information (PGI), which contains mandatory and non-mandatory internal DoD procedures, non-mandatory guidance, and supplemental information. Use of PGI will enable DoD to more rapidly convey internal administrative and procedural information to the acquisition workforce. PGI will not contain policy or procedures that significantly affect the public and, therefore, will not be published in the Federal Register or the Code of Federal Regulations. PGI is available at http://www.acq.osd.mil/dpap/dars/pgi. The HTML version of the DFARS, available at http://www.acq.osd.mil/dpap/dfars, contains links to PGI.

Affected subparts/sections: Part 201 Table of Contents; 201.1; 201.2; 201.3; 202.1

The Federal Register notice for this rule:

From the Federal Register Online via GPO Access

DEPARTMENT OF DEFENSE

48 CFR Parts 201 and 202

[DFARS Case 2003-D090]

Defense Federal Acquisition Regulation Supplement; Procedures, Guidance, and Information

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to define a companion resource to the DFARS that contains mandatory and non-mandatory internal DoD procedures, non-mandatory guidance, and supplemental information. This new resource, entitled Procedures, Guidance, and Information, is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

DATES: Effective November 1, 2004.

FOR FURTHER INFORMATION CONTACT: Ms. Michele Peterson, Defense Acquisition Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0311; facsimile (703) 602-0350. Please cite DFARS Case 2003-D090.SUPPLEMENTARY INFORMATION:

A. Background DFARS Transformation is a major DoD initiative to dramatically change the purpose and content of the DFARS. The objective is to improve the efficiency and effectiveness of the acquisition process, while allowing the acquisition workforce the flexibility to innovate. The transformed DFARS will contain only requirements of law, DoD-wide policies, delegations of FAR authorities, deviations from FAR requirements, and policies/procedures that have a significant effect beyond the internal operating procedures of DoD or a significant cost or administrative impact on contractors or offerors. Additional information on the DFARS Transformation initiative is available at http://www.acq.osd.mil/dpap/dfars/transf.htm.

This final rule is a result of the DFARS Transformation initiative. The rule establishes the framework for a new DFARS companion resource, Procedures, Guidance, and Information (PGI), which contains mandatory and non-mandatory internal DoD procedures, non-mandatory guidance, and supplemental information. PGI will not be published in the Code of Federal Regulations, but will be available electronically at http://

http://www. acq. osd. mil/dpap/dars/index. htm. Use of PGI will enable DoD to more rapidly convey internal administrative and procedural information to the acquisition workforce. The HTML version of the DFARS available

at http: //http://www. acq. osd. mil/dpap/dfars/index. htm will contain computerized links to the corresponding PGI sections.

DoD published a proposed rule at 69 FR 8145 on February 23, 2004. DoD received one comment on the proposed rule. The comment recommended additional policy and procedures relating to interagency acquisitions under the Economy Act (31 U.S.C. 1535). The comment is considered to be outside the scope of this case, but will be considered with other changes being developed for DFARS Part 217, which addresses the Economy Act. 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 new DFARS companion resource will contain only procedures, guidance, and information that have no significant effect beyond the internal operating procedures of DoD and no significant cost or administrative impact on contractors or offerors.

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 201 and 202

Government procurement. Michele P. Peterson, Executive Editor, Defense Acquisition Regulations Council.Therefore, 48 CFR parts 201 and 202 are amended as follows:

A Microsoft Word format document showing all additions and deletions made by this rule:

Procedures, Guidance, and Information

DFARS Case 2003-D090

Final Rule

PART 201—FEDERAL ACQUISITION REGULATIONS SYSTEM

* * * * *

201.105 Issuance.

201.105-3 Copies.

The DFARS is [and the DFARS Procedures, Guidance, and Information (PGI) are] available electronically via the World Wide Web at http://www.acq.osd.mil/dpap/dars/index.htm.

* * * * *

201.201 Maintenance of the FAR.

201.201-1 The two councils.

[201.201-70 Maintenance of Procedures, Guidance, and Information.

The DAR Council is also responsible for maintenance of the DFARS Procedures, Guidance, and Information (PGI).]

* * * * *

SUBPART 201.3--AGENCY ACQUISITION REGULATIONS

201.301 Policy.

(a)[(1)] DoD implementation and supplementation of the FAR is issued in the Defense Federal Acquisition Regulation Supplement (DFARS) under authorization and subject to the authority, direction, and control of the Secretary of Defense. [The DFARS contains—

(i) Requirements of law;

(ii) DoD-wide policies;

(iii) Delegations of FAR authorities;

(iv) Deviations from FAR requirements; and

(v) Policies/procedures that have a significant effect beyond the internal operating procedures of DoD or a significant cost or administrative impact on contractors or offerors.

(2) Relevant procedures, guidance, and information that do not meet the criteria in paragraph (a)(1) of this section are issued in the DFARS Procedures, Guidance, and Information (PGI).]

* * * * *

PART 202—DEFINITIONS OF WORDS AND TERMS

* * * * *

202.101 Definitions.

* * * * *

[“Procedures, Guidance, and Information (PGI)” means a companion resource to the DFARS that—

(1) Contains mandatory internal DoD procedures. The DFARS will direct compliance with mandatory procedures using imperative language such as “Follow the procedures at...” or similar directive language;

(2) Contains non-mandatory internal DoD procedures and guidance and supplemental information to be used at the discretion of the contracting officer. The DFARS will point to non-mandatory procedures, guidance, and information using permissive language such as “The contracting officer may use...” or “Additional information is available at...” or other similar language;

(3) Is numbered similarly to the DFARS, except that each PGI numerical designation is preceded by the letters “PGI”; and

(4) Is available electronically at http://www.acq.osd.mil/dpap/dars/index.htm.]

* * * * *

Publicizing Contract Actions (DFARS Case 2003-D016)

Deletes unnecessary text on cooperative agreement holders, paid advertisements, and synopsis requirements; and relocates a synopsis format to PGI.

Affected subparts/sections: Part 205 Table of Contents; 205.2; 205.4; 205.5; 226.70; 235.0; 252.205; PGI 205.2

The Federal Register notice for this rule:

From the Federal Register Online via GPO Access

DEPARTMENT OF DEFENSE

48 CFR Parts 205, 226, 235, and 252

[DFARS Case 2003-D016]

Defense Federal Acquisition Regulation Supplement; Publicizing Contract Actions

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to update text pertaining to publicizing contract actions. This rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

DATES: Effective November 1, 2004.

FOR FURTHER INFORMATION CONTACT: Ms. Robin Schulze, 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-D016.

SUPPLEMENTARY INFORMATION:

A. Background DFARS Transformation is a major DoD initiative to dramatically change the purpose and content of the DFARS. The objective is to improve the efficiency and effectiveness of the acquisition process, while allowing the acquisition workforce the flexibility to innovate. The transformed DFARS will contain only requirements of law, DoD-wide policies, delegations of FAR authorities, deviations from FAR requirements, and policies/procedures that have a significant effect beyond the internal operating procedures of DoD or a significant cost or administrative impact on contractors or offerors. Additional information on the DFARS Transformation initiative is available at http://www.acq.osd.mil/dp/dars/transf.htm.

This final rule is a result of the DFARS Transformation initiative. The DFARS changes include--

Deletion of text at DFARS 205.207(d)(ii) containing a notice to be included in acquisitions being considered for historically black college and university and minority institution (HBCU/MI) set-aside. This notice is being relocated to the new DFARS companion resource, Procedures, Guidance, and Information (PGI), with retention of a policy statement in DFARS 205.207 regarding use of the notice, and addition of a policy statement at DFARS 226.7003-2(c) regarding the requirement for an interested HBCU/MI to provide evidence of its

capability and eligibility (which is also addressed in the notice). A final rule addressing the purpose and structure of PGI is published elsewhere in this issue of the Federal Register under DFARS Case 2003-D090, Procedures, Guidance, and Information. PGI is available at http://www.acq.osd.mil/dpap/dars/index.htm

Redesignation of DFARS 205.207(d)(iii) as 205.207(d)(ii), and deletion of text that duplicates policy found in 235.016. A reference to 236.016 has been retained in newly designated 205.207(d)(ii).

Deletion of unnecessary text at DFARS 205.207(e), 205.470-1, and 205.502. The clause prescription at 205.470-2 is redesignated as 205.470 and amended to include a statutory reference.

DoD published a proposed rule at 69 FR 8148 on February 23, 2004. 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 updates and relocates DFARS text, but makes no significant change to contracting policy.

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 205, 226, 235 and 252

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

Therefore, 48 CFR parts 205, 226, 235, and 252 are amended as follows:

A Microsoft Word format document showing all additions and deletions made by this rule:

Publicizing Contract Actions

DFARS Case 2003-D016

Final Rule

(Text that is stricken and highlighted has been relocated

to Procedures, Guidance, and Information (PGI))

PART 205—PUBLICIZING CONTRACT ACTIONS

SUBPART 205.2--SYNOPSES OF PROPOSED CONTRACT ACTIONS

* * * * *

205.207 Preparation and transmittal of synopses.

(d)(i) For [acquisitions being considered for] historically black college and university and minority institution set-asides under 226.7003, use CBD Numbered Note 5.[--]

[(A) Cite the appropriate Numbered Note; and

(B) Include the notice at PGI 205.207(d)(i).]

(ii) For acquisitions being considered for historically black college and university and minority institution set-aside, state:

“This proposed contract is being considered as a 100 percent set-aside for historically black colleges and universities (HBCUs) and minority institutions (MIs), as defined by the clause at 252.226-7000 of the Defense Federal Acquisition Regulation Supplement. Interested HBCUs and MIs should provide the contracting office as early as possible, but not later than 15 days after this notice, evidence of their capability to perform the contract, and a positive statement of their eligibility as an HBCU or MI. If adequate response is not received from HBCUs and MIs, the solicitation will instead be issued, without further notice, as: _________________________________ (indicate if unrestricted, or restricted for small business or small disadvantaged business, etc.). Therefore, replies to this notice are also requested from _____________________________________________ (enter the types of firms to be solicited in the event an HBCU or MI set-aside is not made).”

(iii) For broad agency announcement [notices, see 235.016.] (BAA) (see 235.016) notices, indicate which, if any, portion of the BAA will be set-aside for historically black colleges and universities and minority institutions.

(e) For acquisitions restricted to domestic sources under the authority of FAR 6.302-3, use CBD Numbered Note 13.

SUBPART 205.4--RELEASE OF INFORMATION

205.470 Contractor information to be provided cooperative agreement holders.

205.470-1 Statutory requirement.

(a) As required by 10 U.S.C. 2413, the Defense Logistics Agency enters into cooperative agreements—

(1) With—

(i) State and local governments;

(ii) Non-profit organizations;

(iii) Indian tribal organizations; and

(iv) Indian-owned economic enterprises

(2) For the provision of technical assistance to business entities.

(b) Contractors receiving defense contracts valued at more than $500,000 must provide cooperative agreement holders, at their request, the information specified in the clause at 252.205-7000, Provision of Information to Cooperative Agreement Holders.

205.470-2 Contract clause.

Use the clause at 252.205-7000, Provision of Information to Cooperative Agreement Holders, in solicitations and contracts expected to exceed $500,000. [This clause implements 10 U.S.C. 2416.]

SUBPART 205.5--PAID ADVERTISEMENTS

205.502 Authority.

For paid advertisements to recruit civilian personnel, see Section 332-1-9 of the Federal Personnel Manual.

(a) Newspapers.

(i) Heads of contracting activities are delegated authority to approve the publication of paid advertisements in newspapers. They may redelegate this authority in accordance with agency procedures.

(ii) Before advertising in newspapers, the contracting officer must obtain written approval from the agency official designated in accordance with paragraph (a)(i) of this section.

* * * * *

SUBPART 226.70--HISTORICALLY BLACK COLLEGES AND UNIVERSITIES AND MINORITY INSTITUTIONS

226.7003 Set-asides for HBCUs and MIs.

* * * * *

226.7003-2 Set-aside procedures.

* * * * *

(c) Follow the special synopsis instructions in 205.207(d)(iii), (iv), and (v). [Interested HBCU/MIs must provide evidence of their capability to perform the contract, and a positive statement of their eligibility, within 15 days of publication of the synopsis in order for the acquisition to proceed as an HCBU/MI set-aside.]

* * * * *

PART 235—RESEARCH AND DEVELOPMENT CONTRACTING

* * * * *

235.016 Broad agency announcement.

* * * * *

(1) Whenever practicable, reserve discrete or severable areas of research interest contained in broad agency announcements for exclusive competition among historically black colleges and universities and minority institutions;

(2) Indicate such reservation—

(i) In the broad agency announcement; and

(ii) In the announcement synopsis (see 205.207(d)(v)).

* * * * *

PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

* * * * *

252.205-7000 Provision of Information to Cooperative Agreement Holders.

As prescribed in 205.470-2, use the following clause:

* * * * *

A Microsoft Word format document showing the text added to PGI:

Publicizing Contract Actions

DFARS Case 2003-D016

Procedures, Guidance, and Information

PGI 205—PUBLICIZING CONTRACT ACTIONS

PGI 205.2--SYNOPSES OF PROPOSED CONTRACT ACTIONS

PGI 205.207 Preparation and transmittal of synopses.

(d)(i) Include the following notice in acquisitions being considered for historically black college and university and minority institution set-aside:

“This proposed contract is being considered as a 100 percent set-aside for historically black colleges and universities (HBCUs) and minority institutions (MIs), as defined by the clause at 252.226-7000 of the Defense Federal Acquisition Regulation Supplement. Interested HBCUs and MIs should provide the contracting office as early as possible, but not later than 15 days after this notice, evidence of their capability to perform the contract, and a positive statement of their eligibility as an HBCU or MI. If adequate response is not received from HBCUs and MIs, the solicitation will instead be issued, without further notice, as: _________________________________ (indicate if unrestricted, or restricted for small business or small disadvantaged business, etc.). Therefore, replies to this notice are also requested from _____________________________________________ (enter the types of firms to be solicited in the event an HBCU or MI set-aside is not made).”

Cost Principles and Procedures (DFARS Case 2003-D036)

Deletes obsolete and duplicative text on contract cost principles; and relocates procedural text on Government responsibilities relating to contractor restructuring costs to PGI.

Affected subparts/sections: Part 231 Table of Contents; 231.2; PGI 231.2

The Federal Register notice for this rule:

From the Federal Register Online via GPO Access

DEPARTMENT OF DEFENSE

48 CFR Part 231

[DFARS Case 2003-D036]

Defense Federal Acquisition Regulation Supplement; Cost Principles and Procedures

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to update text pertaining to contract cost principles. This rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

DATES: Effective November 1, 2004.

FOR FURTHER INFORMATION CONTACT: Mr. Thaddeus Godlewski, Defense Acquisition Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-2022; facsimile (703) 602-0350. Please cite DFARS Case 2003-D036.

SUPPLEMENTARY INFORMATION:

A. Background DFARS Transformation is a major DoD initiative to dramatically change the purpose and content of the DFARS. The objective is to improve the efficiency and effectiveness of the acquisition process, while allowing the acquisition workforce the flexibility to innovate. The transformed DFARS will contain only requirements of law, DoD-wide policies, delegations of FAR authorities, deviations from FAR requirements, and policies/procedures that have a significant effect beyond the internal operating procedures of DoD or a significant cost or administrative impact on contractors or offerors. Additional information on the DFARS Transformation initiative is available at http://www.acq.osd.mil/dpap/dfars/transf.htm.

This final rule is a result of the DFARS Transformation initiative.

The DFARS changes--

Delete the text at DFARS 231.205-10, Cost of money, because it is redundant of the text in DFARS Subpart 230.70, Facilities Capital Employed for Facilities in Use.

Clarify the text at DFARS 231.205-22, Legislative lobbying costs, to specify that these costs are statutorily unallowable.

Revise the text at DFARS 231.205-70, External restructuring costs, to--

1. Eliminate unnecessary references to fiscal years 1995, 1997, and 1998 legislation.

2. Delete text at 231.205-70(c)(1)(iv)(A) and (B) regarding business combinations that occurred on or before November 18, 1997. This text is unnecessary, because external restructurings normally must be initiated within 3 years of a business combination.

3. Delete text at 231.205-70(d), Procedures and ACO responsibilities. This text has been relocated to the new DFARS companion resource, Procedures, Guidance, and Information (PGI). A final rule addressing the purpose and structure of PGI is published elsewhere in this issue of the Federal Register under DFARS Case 2003-D090, Procedures, Guidance, and Information. PGI is available at http://www.acq.osd.mil/dpap/dars/index.htm

DoD published a proposed rule at 69 FR 8154 on February 23, 2004. 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 clarifies existing DFARS text, and deletes DFARS text that is redundant, outdated, or procedural, but makes no significant change to contracting policy.

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 231

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

Therefore, 48 CFR part 231 is amended as follows:

A Microsoft Word format document showing all additions and deletions made by this rule:

Cost Principles and Procedures

DFARS Case 2003-D036

Final Rule

(Text that is stricken and highlighted has been relocated

to Procedures, Guidance, and Information (PGI))

PART 231—CONTRACT COST PRINCIPLES AND PROCEDURES

* * * * *

SUBPART 231.2—CONTRACTS WITH COMMERCIAL ORGANIZATIONS

231.205-10 Cost of money.

The contractor also must comply with Subpart 230.70 and maintain records to demonstrate compliance.

* * * * *

231.205-22 Legislative lobbying costs.

(a) [Costs associated with] P[p]reparing any material, report, list, or analysis on the actual or projected economic or employment impact in a particular State or congressional district of an acquisition program for which all research, development, testing, and evaluation has not been completed [also are unallowable] (10 U.S.C. 2249).

231.205-70 External restructuring costs.

(a) Scope. This subsection[--

(1)] p[P]rescribes policies and procedures for allowing contractor external restructuring costs when savings would result for DoD.[; and

(2)] This subsection also i[I]mplements 10 U.S.C. 2325[.], Section 818 of the National Defense Authorization Act for Fiscal Year 1995 (Pub. L. 103-337) (10 U.S.C. 2324 note), Section 8115 of the National Defense Appropriations Act for Fiscal Year 1997 (Pub. L. 104-208), and Section 8092 of the National Defense Appropriations Act for Fiscal Year 1998 (Pub. L. 105-56).

* * * * *

(c) Limitations on cost allowability.

(1) Restructuring costs associated with external restructuring activities shall not be allowed unless—

(i) Such costs are allowable in accordance with FAR Part 31 and DFARS Part 231;

(ii) An audit of projected restructuring costs and restructuring savings is performed;

(iii) The cognizant administrative contracting officer (ACO) reviews the audit report and the projected costs and projected savings, and negotiates an advance agreement in accordance with paragraph (d)(8) of this subsection; and

(iv) For business combinations that occur /

(A) Prior to October 1, 1996, the Under Secretary of Defense (Acquisition, Technology, and Logistics) or the Principal Deputy certifies that projections of future restructuring savings resulting for DoD from the business combination are based on audited cost data and should result in overall reduced costs for DoD.

(B) October 1, 1996, through November 18, 1997, the Under Secretary of Defense (Acquisition, Technology, and Logistics) or the Principal Deputy

(1) Certifies that projections of future restructuring savings resulting for DoD from the business combination are based on audited cost data and should result in overall reduced costs for DoD; and

(2) Determines in writing that the audited projected savings for DoD resulting from the restructuring will exceed either

(i) The costs allowed by a factor of at least two to one; or

(ii) The costs allowed, and the business combination will result in the preservation of a critical capability that might otherwise be lost to DoD.

(C) A[a]fter November 18, 1997, the Under Secretary of Defense (Acquisition, Technology, and Logistics) or the Principal Deputy determines in writing that the audited projected savings for DoD resulting from the restructuring will exceed either

(1)[(A)] The costs allowed by a factor of at least two to one; or

(2)[(B)] The cost allowed, and the business combination will result in the preservation of a critical capability that might otherwise be lost to DoD.

(2) The audit, review, certification, and determination required by paragraph (c)(1) of this subsection shall not apply to any business combination for which payments for restructuring costs were made before August 15, 1994, or for which the cognizant ACO executed an advance agreement establishing cost ceilings based on audit/negotiation of detailed cost proposals for individual restructuring projects before August 15, 1994.

(d) Procedures and ACO responsibilities. As soon as it is known that the contractor will incur restructuring costs for external restructuring activities, the cognizant ACO shall [follow the procedures at PGI 231.205-70(d).]

(1) Promptly execute a novation agreement, if one is required, in accordance with FAR Subpart 42.12 and DFARS Subpart 242.12 and include the provision at DFARS 242.1204(e).

(2) Direct the contractor to segregate restructuring costs and to suspend these amounts from any billings, final contract price settlements, and overhead settlements until the certification, or determination, or both, as applicable, in paragraph (c)(1)(iv) of this subsection is obtained.

(3) Require the contractor to submit an overall plan of restructuring activities and an adequately supported proposal for planned restructuring projects. The proposal must include a breakout by year by cost element, showing the present value of projected restructuring costs and projected restructuring savings.

(4) Notify major buying activities of contractor restructuring actions and inform them about any potential monetary impacts on major weapons programs, when known.

(5) Upon receipt of the contractor’s proposal, as soon as practicable, adjust forward pricing rates to reflect the impact of projected restructuring savings. If restructuring costs are included in forward pricing rates prior to execution of an advance agreement in accordance with paragraph (d)(8) of this subsection, the contracting officer shall include a repricing clause in each fixed-price action that is priced based on the rates. The repricing clause must provide for a downward price adjustment to remove restructuring costs if the certification, or determination, or both, as applidable, required by paragraph (c)(1)(iv) of this subsection is not obtained.

(6) Upon receipt of the contractor’s proposal, immediately request an audit review of the contractor’s proposal.

(7) Upon receipt of the audit report, determine if restructuring savings will exceed restructuring costs on a present value basis. However, for business combinations that occur on or after October 1, 1996, the audited projected savings for DoD must exceed the costs allowed by a factor of at least two to one on a present value basis, unless the determination at paragraph (c)(1)(iv)(B)(2)(ii) or (c)(1)(iv)(C)(2) of this subsection applies.

(8) Negotiate an advance agreement with the contractor setting forth, at a minimum, a cumulative cost ceiling for restructuring projects and, when necessary, a cost amortization schedule. The costs may not exceed the amount of projected restructuring savings on a present value basis. The advance agreement shall not be executed until the certification, or determination, or both, as applicable, required by paragraph (c)(1)(iv) of this subsection is obtained.

(9) Submit to the Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), ATTN: OUSD(AT&L)DPAP(P), a recommendation for certification, or determination, or both, as applicable. Include the information described in paragraph (e) of this subsection.

(10) Consult with the Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), when paragraph (c)(1)(iv)(B)(2)(ii) or (c)(1)(iv)(C)(2) of this subsection applies.

* * * * *

A Microsoft Word format document showing the text added to PGI:

Cost Principles and Procedures

DFARS Case 2003-D036

Procedures, Guidance, and Information

PGI 231—CONTRACT COST PRINCIPLES AND PROCEDURES

* * * * *

PGI 231.2—CONTRACTS WITH COMMERCIAL ORGANIZATIONS

PGI 231.205-70 External restructuring costs.

(d) Procedures and ACO responsibilities. The cognizant ACO shall—

(1) Promptly execute a novation agreement, if one is required, in accordance with FAR Subpart 42.12 and DFARS Subpart 242.12 and include the provision at DFARS 242.1204(e).

(2) Direct the contractor to segregate restructuring costs and to suspend these amounts from any billings, final contract price settlements, and overhead settlements until the certification, or determination, or both, as applicable, in DFARS 231.205-70(c)(1)(iv) is obtained.

(3) Require the contractor to submit an overall plan of restructuring activities and an adequately supported proposal for planned restructuring projects. The proposal must include a breakout by year by cost element, showing the present value of projected restructuring costs and projected restructuring savings.

(4) Notify major buying activities of contractor restructuring actions and inform them about any potential monetary impacts on major weapons programs, when known.

(5) Upon receipt of the contractor’s proposal, as soon as practicable, adjust forward pricing rates to reflect the impact of projected restructuring savings. If restructuring costs are included in forward pricing rates prior to execution of an advance agreement in accordance with paragraph (d)(8) of this subsection, the contracting officer shall include a repricing clause in each fixed-price action that is priced based on the rates. The repricing clause must provide for a downward price adjustment to remove restructuring costs if the certification, or determination, or both, as applicable, required by DFARS 231.205-70(c)(1)(iv) is not obtained.

(6) Upon receipt of the contractor’s proposal, immediately request an audit review of the contractor’s proposal.

(7) Upon receipt of the audit report, determine if restructuring savings will exceed restructuring costs on a present value basis. However, for business combinations that occur on or after November 18, 1997, the audited projected savings for DoD must exceed the costs allowed by a factor of at least two to one on a present value basis, unless the determination at DFARS 231.205-70 (c)(1)(iv)(B) applies.

(8) Negotiate an advance agreement with the contractor setting forth, at a minimum, a cumulative cost ceiling for restructuring projects and, when necessary, a cost amortization schedule. The costs may not exceed the amount of projected restructuring savings on a present value basis. The advance agreement shall not be executed until the certification, or determination, or both, as applicable, required by DFARS 231.205-70 (c)(1)(iv) is obtained.

(9) Submit to the Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), ATTN: OUSD(AT&L)DPAP(P), a recommendation for certification, or determination, or both, as applicable. Include the information described in DFARS 231.205-70(e).

(10) Consult with the Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), when DFARS 231.205-70 (c)(1)(iv)(B) applies.

Laws Inapplicable to Commercial Subcontracts (DFARS Case 2003-D018)

Removes the Trade Agreements Act and the Buy American Act from the list of laws inapplicable to subcontracts for the acquisition of commercial items.  Inclusion of these laws on the list is unnecessary, because the Government does not apply the restrictions of the Buy American Act or the Trade Agreements Act at the component level.  In addition, inclusion of these laws on the list could be misleading because—

(1) Inclusion of the Buy American Act on the list has sometimes been misinterpreted to mean that commercial components do not count in the calculation of whether domestic components exceed 50 percent of the value of the components of an end item; and

(2) Inclusion of both Acts on the list has sometimes been misinterpreted to mean that the prime contractor need not comply with the Acts for subcontracted end items.  Waiver of the Buy American Act or the Trade Agreements Act is not applicable if the prime contractor is reselling or distributing commercial items of another contractor without adding value.

The prime contractor is nevertheless responsible for providing an end product that meets the requirements of the Acts.

Affected subparts/sections: 212.5

The Federal Register notice for this rule:

From the Federal Register Online via GPO Access

DEPARTMENT OF DEFENSE

48 CFR Part 212

[DFARS Case 2003-D018]

Defense Federal Acquisition Regulation Supplement; Laws Inapplicable to Commercial Subcontracts

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to remove the Trade Agreements Act and the Buy American Act from the list of laws inapplicable to subcontracts for commercial items. This rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

DATES: Effective November 1, 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-D018.

SUPPLEMENTARY INFORMATION:

A. Background DFARS Transformation is a major DoD initiative to dramatically change the purpose and content of the DFARS. The objective is to improve the efficiency and effectiveness of the acquisition process, while allowing the acquisition workforce the flexibility to innovate. The transformed DFARS will contain only requirements of law, DoD-wide policies, delegations of FAR authorities, deviations from FAR requirements, and policies/procedures that have a significant effect beyond the internal operating procedures of DoD or a significant cost or administrative impact on contractors or offerors. Additional information on the DFARS Transformation initiative is available at http://www.acq.osd.mil/dpap/dfars/transf.htm.

This final rule is a result of the DFARS Transformation initiative. The rule amends DFARS 212.504 to remove the Trade Agreements Act (19 U.S.C. 2512) and the Buy American Act (41 U.S.C. 10) from the list of laws inapplicable to subcontracts for the acquisition of commercial items. Inclusion of these laws on the list is unnecessary, because the Government does not apply the restrictions of the Buy American Act or the Trade Agreements Act at the subcontract level. The prime contractor is responsible for providing an end product that meets the requirements of the Acts.

DoD published a proposed rule at 69 FR 8151 on February 23, 2004. DoD received one comment in response to the proposed rule, and that comment supported the rule. Therefore, DoD has adopted the proposed rule as a final rule, with the addition of a correction to a cross-reference in 212.504(a).

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 is a clarification of the Government's existing policy of not applying the Buy American Act or the Trade Agreements Act at the subcontract level.

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 212

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

Therefore, 48 CFR part 212 is amended as follows:

A Microsoft Word format document showing all additions and deletions made by this rule

Laws Inapplicable to Commercial Subcontracts

DFARS Case 2003-D018

Final Rule

PART 212—ACQUISITION OF COMMERCIAL ITEMS

* * * * *

212.504 Applicability of certain laws to subcontracts for the acquisition of commercial items.

(a) The following laws are not applicable to subcontracts at any tier for the acquisition of commercial items or commercial components:

* * * * *

(xxiii) 19 U.S.C. 2512, Trade Agreements Act.

(xxiv) 41 U.S.C. 10, Buy American Act.

(xxv[xxiii]) Domestic Content Restrictions in the National Defense Appropriations Acts for Fiscal Years 1996 and Subsequent Years, unless the restriction specifically applies to commercial items. For the restriction that specifically applies to commercial ball or roller bearings as end items, see 225.701[0]9-2(b) (Section 8064 of Pub. L. 106-259).

* * * * *

Final Rule - Purchases from Federal Prison Industries (DFARS Case 2004-D005)

Deletes DFARS text on purchase of products from Federal Prison Industries. The DFARS text is no longer necessary as a result of FAR policy on this subject that was published in Federal Acquisition Circular 2001-21 on March 26, 2004.

Affected subparts/sections: DFARS Table of Contents; Part 208 Table of Contents; 208.6; Part 210 Table of Contents; 210.0; Part 219 Table of Contents; 219.5; Part 252 Table of Contents; 252.219

The Federal Register notice for this rule:

From the Federal Register Online via GPO Access

DEPARTMENT OF DEFENSE

48 CFR Parts 208, 210, 219, and 252

[DFARS Case 2004-D005]

Defense Federal Acquisition Regulation Supplement; Federal Prison Industries--Deletion of Duplicative Text

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to delete text on purchase of products from Federal Prison Industries (FPI). The DFARS text is no longer necessary as a result of Governmentwide policy on this subject that was added to the Federal Acquisition Regulation (FAR) on March 26, 2004.

DATES: Effective November 1, 2004.

FOR FURTHER INFORMATION CONTACT: Ms. Michele Peterson, Defense Acquisition Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0311; facsimile (703) 602-0350. Please cite DFARS Case 2004-D005.

SUPPLEMENTARY INFORMATION:

A. Background DoD published DFARS policy at 67 FR 20687 on April 26, 2002, and 68 FR 64559 on November 14, 2003, to implement 10 U.S.C. 2410n, which contains requirements for (1) conducting market research before purchasing an FPI product; (2) use of competitive procedures if an FPI product is found to be noncomparable to products available from the private sector; (3) limiting an inmate worker's access to information; and (4) prohibiting mandatory use of FPI as a subcontractor. Section 637 of Division F of the Consolidated Appropriations Act, 2004 (Pub. L. 108-199), required the issuance of Governmentwide regulations that impose the procedures, standards, and limitations of 10 U.S.C. 2410n. Section 637 was implemented through publication of FAR policy in Federal Acquisition Circular 2001-21, at 69 FR 16148, on March 26, 2004. Since the FAR policy implementing 10 U.S.C. 2410n makes the DFARS policy unnecessary, this final rule removes the DFARS policy that was published at 67 FR 20687 on April 26, 2002, and 68 FR 64559 on November 14, 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 subparts in accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 2004-D005.

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, 210, 219, and 252

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

Therefore, 48 CFR parts 208, 210, 219, and 252 are amended as follows:

A Microsoft Word format document showing all additions and deletions made by this rule:

Purchases from Federal Prison Industries –

Deletion of Duplicative Text

DFARS Case 2004-D005

Final Rule

PART 208—-REQUIRED SOURCES OF SUPPLIES AND SERVICES

* * * * *

SUBPART 208.6-—ACQUISITION FROM FEDERAL PRISON INDUSTRIES, INC.

208.601-70 Definitions.

As used in this subpart—

“Competitive procedures” includes the procedures in FAR 6.102, the set-aside procedures in FAR Subpart 19.5, and competition conducted in accordance with FAR Part 13.

“Market research” means obtaining specific information about the price, quality, and time of delivery of products available in the private sector and may include techniques described in FAR 10.002(b)(2).

208.602 Policy.

(a)(i) Before purchasing a product listed in the FPI Schedule, conduct market research to determine whether the FPI product is comparable to products available from the private sector that best meet the Government’s needs in terms of price, quality, and time of delivery (10 U.S.C. 2410n). This is a unilateral determination made at the discretion of the contracting officer. The procedures of FAR 8.605 do not apply.

(ii) Prepare a written determination that includes supporting rationale explaining the assessment of price, quality, and time of delivery, based on the results of market research comparing FPI products to those available from the private sector.

(iii) If the FPI product is comparable, follow the policy at FAR 8.602(a).

(iv) If the FPI product is not comparable in one or more of the areas of price, quality, and time of delivery—

(A) Acquire the product using—

(1) Competitive procedures; or

(2) The fair opportunity procedures in FAR 16.505, if placing an order under a multiple award task or delivery order contract;

(B) Include FPI in the solicitation process and consider a timely offer from FPI for award in accordance with the requirements and evaluation factors in the solicitation, including solicitations issued using small business set-aside procedures; and

(C) When using a multiple award schedule issued under the procedures of FAR Subpart 8.4—

(1) Establish and communicate to FPI the requirements and evaluation factors that will be used as the basis for selecting a source, so that an offer from FPI can be evaluated on the same basis as the schedule holder; and

(2) Consider a timely offer from FPI.

208.606 Exceptions.

For DoD, FPI clearances also are not required when—

(1) The contracting officer makes a determination 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; and

(2) The procedures at 208.602(a)(iv) are used.

208.670 Performance as a subcontractor.

Do not require a contractor, or subcontractor at any tier, to use FPI as a subcontractor for performance of a contract by any means, including means such as—

(a) A solicitation provision requiring a potential contractor to offer to make use of FPI products or services;

(b) A contract specification requiring the contractor to use specific products or services (or classes of products or services) offered by FPI; or

(c) Any contract modification directing the use of FPI products or services.

208.671 Protection of classified and sensitive information.

Do not enter into any contract with FPI that allows an inmate worker access to any—

(a) Classified data;

(b) Geographic data regarding the location of—

(1) Surface and subsurface infrastructure providing communications or water or electrical power distribution;

(2) Pipelines for the distribution of natural gas, bulk petroleum products, or other commodities; or

(3) Other utilities; or

(c) Personal or financial information about any individual private citizen, including information relating to such person’s real property however described, without the prior consent of the individual.

* * * * *

PART 210—-MARKET RESEARCH

210.001 Policy.

(a) Also conduct market research before purchasing a product listed in the Federal Prison Industries (FPI) Schedule. Use the results to determine whether the FPI product is comparable to products available from the private sector that best meet the Government’s needs in terms of price, quality, and time of delivery. (See Subpart 208.6.)

* * * * *

PART 219—SMALL BUSINESS PROGRAMS

* * * * *

SUBPART 219.5—SET-ASIDES FOR SMALL BUSINESS

* * * * *

219.502-70 Inclusion of Federal Prison Industries, Inc.

When using competitive procedures in accordance with 208.602(a)(iv), include Federal Prison Industries, Inc. (FPI), in the solicitation process and consider a timely offer from FPI.

* * * * *

219.508 Solicitation provisions and contract clauses.

(c) Use the clause at FAR 52.219-6, Notice of Total Small Business Set-Aside, with 252.219-7005, Alternate A, when the procedures of 208.602(a)(iv) apply to the acquisition.

(d) Use the clause at FAR 52.219-7, Notice of Partial Small Business Set-Aside, with 252.219-7006, Alternate A, when the procedures of 208.602(a)(iv) apply to the acquisition.

* * * * *

PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

* * * * *

252.219-7005 Alternate A [Reserved].

ALTERNATE A (DEC 2003)

As prescribed in 219.508(c), substitute the following paragraph (b) for paragraph (b) of the clause at FAR 52.219-6:

(b) General. (1) Offers are solicited only from small business concerns and Federal Prison Industries, Inc. (FPI). Offers received from concerns that are not small business concerns or FPI shall be considered nonresponsive and will be rejected.

(2) Any award resulting from this solicitation will be made to either a small business concern or FPI.

252.219-7006 Alternate A [Reserved].

ALTERNATE A (DEC 2003)

As prescribed in 219.508(d), add the following paragraph (d) to the clause at FAR 52.219-7:

(d) Notwithstanding paragraph (b) of this clause, offers will be solicited and considered from Federal Prison Industries, Inc., for both the set-aside and non-set-aside portion of this requirement.

* * * * *

Final Rule - Purchases from Federal Prison Industries (DFARS Case 2004-D005)

Deletes DFARS text on purchase of products from Federal Prison Industries. The DFARS text is no longer necessary as a result of FAR policy on this subject that was published in Federal Acquisition Circular 2001-21 on March 26, 2004.

Affected subparts/sections: DFARS Table of Contents; Part 208 Table of Contents; 208.6; Part 210 Table of Contents; 210.0; Part 219 Table of Contents; 219.5; Part 252 Table of Contents; 252.219

The Federal Register notice for this rule:

From the Federal Register Online via GPO Access

DEPARTMENT OF DEFENSE

48 CFR Parts 208, 210, 219, and 252

[DFARS Case 2004-D005]

Defense Federal Acquisition Regulation Supplement; Federal Prison Industries--Deletion of Duplicative Text

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to delete text on purchase of products from Federal Prison Industries (FPI). The DFARS text is no longer necessary as a result of Governmentwide policy on this subject that was added to the Federal Acquisition Regulation (FAR) on March 26, 2004.

DATES: Effective November 1, 2004.

FOR FURTHER INFORMATION CONTACT: Ms. Michele Peterson, Defense Acquisition Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0311; facsimile (703) 602-0350. Please cite DFARS Case 2004-D005.

SUPPLEMENTARY INFORMATION:

A. Background DoD published DFARS policy at 67 FR 20687 on April 26, 2002, and 68 FR 64559 on November 14, 2003, to implement 10 U.S.C. 2410n, which contains requirements for (1) conducting market research before purchasing an FPI product; (2) use of competitive procedures if an FPI product is found to be noncomparable to products available from the private sector; (3) limiting an inmate worker's access to information; and (4) prohibiting mandatory use of FPI as a subcontractor.

Section 637 of Division F of the Consolidated Appropriations Act, 2004 (Pub. L. 108-199), required the issuance of Governmentwide regulations that impose the procedures, standards, and limitations of 10 U.S.C. 2410n. Section 637 was implemented through publication of FAR policy in Federal Acquisition Circular 2001-21, at 69 FR 16148, on March 26, 2004. Since the FAR policy implementing 10 U.S.C. 2410n makes the DFARS policy unnecessary, this final rule removes the DFARS policy that was published at 67 FR 20687 on April 26, 2002, and 68 FR 64559 on November 14, 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 subparts in accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 2004-D005.

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, 210, 219, and 252

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

Therefore, 48 CFR parts 208, 210, 219, and 252 are amended as follows:

A Microsoft Word format document showing all additions and deletions made by this rule:

Purchases from Federal Prison Industries –

Deletion of Duplicative Text

DFARS Case 2004-D005

Final Rule

PART 208—-REQUIRED SOURCES OF SUPPLIES AND SERVICES

* * * * *

SUBPART 208.6-—ACQUISITION FROM FEDERAL PRISON INDUSTRIES, INC.

208.601-70 Definitions.

As used in this subpart—

“Competitive procedures” includes the procedures in FAR 6.102, the set-aside procedures in FAR Subpart 19.5, and competition conducted in accordance with FAR Part 13.

“Market research” means obtaining specific information about the price, quality, and time of delivery of products available in the private sector and may include techniques described in FAR 10.002(b)(2).

208.602 Policy.

(a)(i) Before purchasing a product listed in the FPI Schedule, conduct market research to determine whether the FPI product is comparable to products available from the private sector that best meet the Government’s needs in terms of price, quality, and time of delivery (10 U.S.C. 2410n). This is a unilateral determination made at the discretion of the contracting officer. The procedures of FAR 8.605 do not apply.

(ii) Prepare a written determination that includes supporting rationale explaining the assessment of price, quality, and time of delivery, based on the results of market research comparing FPI products to those available from the private sector.

(iii) If the FPI product is comparable, follow the policy at FAR 8.602(a).

(iv) If the FPI product is not comparable in one or more of the areas of price, quality, and time of delivery—

(A) Acquire the product using—

(1) Competitive procedures; or

(2) The fair opportunity procedures in FAR 16.505, if placing an order under a multiple award task or delivery order contract;

(B) Include FPI in the solicitation process and consider a timely offer from FPI for award in accordance with the requirements and evaluation factors in the solicitation, including solicitations issued using small business set-aside procedures; and

(C) When using a multiple award schedule issued under the procedures of FAR Subpart 8.4—

(1) Establish and communicate to FPI the requirements and evaluation factors that will be used as the basis for selecting a source, so that an offer from FPI can be evaluated on the same basis as the schedule holder; and

(2) Consider a timely offer from FPI.

208.606 Exceptions.

For DoD, FPI clearances also are not required when—

(1) The contracting officer makes a determination 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; and

(2) The procedures at 208.602(a)(iv) are used.

208.670 Performance as a subcontractor.

Do not require a contractor, or subcontractor at any tier, to use FPI as a subcontractor for performance of a contract by any means, including means such as—

(a) A solicitation provision requiring a potential contractor to offer to make use of FPI products or services;

(b) A contract specification requiring the contractor to use specific products or services (or classes of products or services) offered by FPI; or

(c) Any contract modification directing the use of FPI products or services.

208.671 Protection of classified and sensitive information.

Do not enter into any contract with FPI that allows an inmate worker access to any—

(a) Classified data;

(b) Geographic data regarding the location of—

(1) Surface and subsurface infrastructure providing communications or water or electrical power distribution;

(2) Pipelines for the distribution of natural gas, bulk petroleum products, or other commodities; or

(3) Other utilities; or

(c) Personal or financial information about any individual private citizen, including information relating to such person’s real property however described, without the prior consent of the individual.

* * * * *

PART 210—-MARKET RESEARCH

210.001 Policy.

(a) Also conduct market research before purchasing a product listed in the Federal Prison Industries (FPI) Schedule. Use the results to determine whether the FPI product is comparable to products available from the private sector that best meet the Government’s needs in terms of price, quality, and time of delivery. (See Subpart 208.6.)

* * * * *

PART 219—SMALL BUSINESS PROGRAMS

* * * * *

SUBPART 219.5—SET-ASIDES FOR SMALL BUSINESS

* * * * *

219.502-70 Inclusion of Federal Prison Industries, Inc.

When using competitive procedures in accordance with 208.602(a)(iv), include Federal Prison Industries, Inc. (FPI), in the solicitation process and consider a timely offer from FPI.

* * * * *

219.508 Solicitation provisions and contract clauses.

(c) Use the clause at FAR 52.219-6, Notice of Total Small Business Set-Aside, with 252.219-7005, Alternate A, when the procedures of 208.602(a)(iv) apply to the acquisition.

(d) Use the clause at FAR 52.219-7, Notice of Partial Small Business Set-Aside, with 252.219-7006, Alternate A, when the procedures of 208.602(a)(iv) apply to the acquisition.

* * * * *

PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

* * * * *

252.219-7005 Alternate A [Reserved].

ALTERNATE A (DEC 2003)

As prescribed in 219.508(c), substitute the following paragraph (b) for paragraph (b) of the clause at FAR 52.219-6:

(b) General. (1) Offers are solicited only from small business concerns and Federal Prison Industries, Inc. (FPI). Offers received from concerns that are not small business concerns or FPI shall be considered nonresponsive and will be rejected.

(2) Any award resulting from this solicitation will be made to either a small business concern or FPI.

252.219-7006 Alternate A [Reserved].

ALTERNATE A (DEC 2003)

As prescribed in 219.508(d), add the following paragraph (d) to the clause at FAR 52.219-7:

(d) Notwithstanding paragraph (b) of this clause, offers will be solicited and considered from Federal Prison Industries, Inc., for both the set-aside and non-set-aside portion of this requirement.

* * * * *

Technical Amendments

Updates Internet addresses for DoD activity address codes and order code assignments; and adds a link to PGI for information on use of Federal Supply Schedules.

Affected subparts/sections: 204.70; 208.4; PGI 208.4

The Federal Register notice for this rule:

Technical Amendments

Final Rule

PART 204—ADMINISTRATIVE MATTERS

* * * * *

SUBPART 204.70—UNIFORM PROCUREMENT INSTRUMENT IDENTIFICATION NUMBERS

* * * * *

204.7003 Basic PII number.

(a) Elements of a number. The number consists of 13 alpha-numeric characters grouped to convey certain information.

(1) Positions 1 through 6. The first six positions identify the department/agency and office issuing the instrument. Use the DoD Activity Address Code (DoDAAC) assigned to the issuing office. DoDAACs can be found at https://www.daas.dla.mil/daashome/ [https://day2k1.daas.dla.mil/daasinq/].

* * * * *

204.7005 Assignment of order codes.

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(d) Order code assignments can be found at http://www.acq.osd.mil/dp/dars/dfars.html [http://www.acq.osd.mil/dpap/dfars/ordercode.htm].

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PART 208—REQUIRED SOURCES OF SUPPLIES AND SERVICES

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SUBPART 208.4—FEDERAL SUPPLY SCHEDULES

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208.404 Using schedules.

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[(S-70) See related information at PGI 208.404.]

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A Microsoft Word format document showing the text added to PGI:

Technical Amendments

Procedures, Guidance, and Information

PGI 208—REQUIRED SOURCES OF SUPPLIES AND SERVICES

PGI 208.4—FEDERAL SUPPLY SCHEDULES

PGI 208.404 Using schedules.

Related Policy Memoranda:

(1) September 13, 2004, memorandum from the Director of Defense Procurement and Acquisition Policy, Subject: Approval Levels for Sole Source Orders Under Federal Supply Schedules (FSSs) and Multiple Award Contracts (MACs) – Establishes approval levels and documentation requirements for sole source orders under FSSs and MACs.

(2) October 1, 2004, memorandum from the GSA Office of the Chief Acquisition Officer, Subject: Purchases on Behalf of Other Agencies – Reinforces the policy at FAR 8.404(b) and (c)(3), requiring a contracting officer placing an order on behalf of another agency to apply the regulatory and statutory requirements applicable to the agency for which the order is placed. This requires early dialogue between the requiring and acquiring agencies, and may also require communication within the requiring agency, between the office initiating the request and the requiring agency’s contracting office.

END OF DCN 20041101