DEFENSE FAR SUPPLEMENT Change Notice 20041215

DoD published the following changes to the DFARS on December 15, 2004.

Interim Rule

Contract Period for Task and Delivery Order Contracts (DFARS Case 2003-D097/2004-D023)

Limits the ordering period of a task or delivery order contract awarded under the authority of 10 U.S.C. 2304a to not more than 10 years, unless the head of the agency determines that exceptional circumstances require a longer ordering period. This rule revises the interim rule published on March 23, 2004 (DFARS Change Notice 20040323), which contained a 5-year limit on task or delivery order contracts. The rule implements Section 843 of the National Defense Authorization Act for Fiscal Year 2004 and Section 813 of the National Defense Authorization Act for Fiscal Year 2005.

Affected subparts/sections: 217.2; PGI 217.2

The Federal Register notice for this rule:

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

DEPARTMENT OF DEFENSE

48 CFR Part 217

[DFARS Case 2003-D097/2004-D023]

Defense Federal Acquisition Regulation Supplement; Contract Period for Task and Delivery Order Contracts

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for comments.

SUMMARY: DoD has issued an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Section 843 of the National Defense Authorization Act for Fiscal Year 2004 and Section 813 of the National Defense Authorization Act for Fiscal Year 2005. Section 843 placed a 5-year limit on the period of task or delivery order contracts awarded under 10 U.S.C. 2304a. Section 813 further amended 10 U.S.C. 2304a to permit a total period of up to 10 years, which may be exceeded if the head of the agency determines in writing that exceptional circumstances require a longer contract period. The DFARS rule clarifies that the 10-year limit applies to the ordering period, establishes a limit on the length of orders, and includes other key information regarding applicability.

DATES: Effective date: December 15, 2004.

Comment date: Comments on the interim rule should be submitted to the address shown below on or before February 14, 2005, to be considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2003-D097, 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-D097 in the subject line of the message.

Fax: (703) 602-0350.

Mail: Defense Acquisition Regulations Council, Attn: Ms. Robin Schulze, 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: Robin Schulze, (703) 602-0326.

SUPPLEMENTARY INFORMATION:

A. Background This interim rule implements Section 843 of the National Defense Authorization Act for Fiscal Year 2004 (Pub. L. 108-136) and Section 813 of the National Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108-375). Section 843 amended the general authority for task and delivery order contracts at 10 U.S.C. 2304a to specify that a task or delivery order contract entered into under that section may cover a total period of not more than 5 years. Section 813 further amended 10 U.S.C. 2304a to permit a total ordering period of not more than 10 years, unless the head of the agency determines in writing that exceptional circumstances necessitate a longer ordering period.

DoD published an interim rule implementing Section 843 of Public Law 108-136 at 69 FR 13478 on March 23, 2004. Twenty-three respondents submitted comments on the interim rule. A discussion of the comments is provided below. This second interim rule implements Section 813 of Public Law 108-375 and incorporates changes made as a result of public comments received on the interim rule published on March 23, 2004. Differences between the first and second interim rules are addressed in the discussion of comments 1, 2, 3, and 7 below.

1. Comment: Ordering period vice period of performance. Twelve respondents expressed concern that the rule did not specify whether the 5-year limit applies to the ordering period or the period of performance. Respondents pointed out that if performance is limited to 5 years, the end result is that this type of contract may only be able to have a base year and 2 or 3 option years to ensure that all work is completed by the end of the fifth year.

DoD Response: The second interim rule incorporates the 10-year limit allowed by Section 813 and clarifies that the limit applies to the ordering period. In making this clarification, DoD determined that it was important to establish a reasonable limit on the period of performance for task or delivery orders issued during the ordering period and established such a limit in the rule at 217.204(e)(iii).

2. Comment: Six-month extension for services. Two respondents raised concerns as to whether the 5-year limit imposed by Section 843 was inclusive of any 6-month extension permitted by the clause at FAR 52.217-8, Option to Extend Services. Another respondent identified the exception at FAR 16.505(c)(2)(ii) for contracted advisory and assistance services that permits such contracts to exceed 5 years by 6 months in certain circumstances. This respondent suggested that the DFARS rule supplement FAR 16.505(c)(2) to clarify whether contracts for advisory and assistance services can be longer than 5 years.

DoD Response: For contracts issued pursuant to 10 U.S.C. 2304a, the ordering period is restricted to a maximum of 10 years unless the head of the agency determines in writing that exceptional circumstances require a longer ordering period. However, the performance period of an order may extend no more than 1 year beyond the 10-year limit or extended limit unless approved by the senior procurement executive. The authority at FAR 16.505(c)(2)(ii), for advisory and assistance services, derives from 10 U.S.C. 2304b and is unaffected by Section 843 or 813, which limit only task or delivery order contracts awarded pursuant to 10 U.S.C. 2304a. The second interim rule clarifies that contracts for advisory and assistance services are governed by the requirements of 10 U.S.C. 2304b and FAR 16.505(c).

3. Comment: Exception for Information Technology. One respondent suggested that the 5-year limit imposed by Section 843 should not apply to information technology contracts and that the rule should be clarified to identify this exception. The respondent identified the Clinger-Cohen Act (Pub. L. 104-106) as the authority for the exception for information technology.

DoD Response: The Clinger-Cohen Act does not provide an exception for information technology. The limits in Sections 843 and 813 apply to all task and delivery order contracts awarded under 10 U.S.C. 2304a, including those for information technology. The second interim rule clarifies this point at 217.204(e)(ii).

4. Comment: Applicability to contracts awarded before the interim rule. One respondent requested that the rule address the applicability of Section 843 to contracts awarded after the enactment of Section 843, but before the issuance of the interim rule. Another respondent assumed that the 5-year limit precluded agencies from placing orders under contracts awarded prior to the enactment of Section 843. Another respondent expressed concern that some of the military departments unilaterally implemented the 5-year limit for existing indefinite-delivery indefinite-quantity contracts or chose to implement the limit for new solicitations issued prior to the effective date of the rule. Two respondents recommended that the background information for the rule state that the 5-year limit is applicable only to contracts that result from solicitations issued on or after March 23, 2004.

DoD Response: Generally, statutes take effect on the date of enactment unless they expressly state a different effective date (e.g., ``upon implementation in regulations, or 180 days, whichever comes first''). Consistent with FAR 1.108(d), as a matter of policy, the DFARS implementation of the Section 843 limitation was effective for solicitations issued on or after March 23, 2004, the date of publication of the first interim rule. The DFARS implementation of the Section 813 limitation is effective on the date of publication of this second interim rule. In accordance with FAR 1.108(d)(2), contracting

officers may amend solicitations issued before the effective date of this second interim rule to incorporate the longer ordering period.

5. Comment: Applicability to existing contracts. One respondent raised questions about the applicability of the 5-year limit to new solicitations issued for new delivery orders to be awarded against existing contracts. Specifically, whether the 5-year limit (1) would apply to the entire contract, including previously awarded delivery orders; (2) would apply to merely the single delivery order and any additional delivery orders solicited after the interim rule; or (3) would not apply. Another respondent questioned whether an existing contract that has a 7-year ordering period but has reached a quantity or dollar ceiling in 5 years could be modified, with a justification and approval, to increase the ceiling. The same respondent questioned whether an existing contract could be modified to extend the ordering period beyond 5 years.

DoD Response: Neither Section 843 nor 813 has retroactive effect. Under Section 813, a contracting officer may exercise existing options and may modify existing contracts to add new options or otherwise extend the ordering period up to 10 years, or longer if authorized by the head of the agency. Additionally, an existing contract may be modified to extend the existing ordering period, provided the justification for the new work is documented in a justification and approval in accordance with FAR 6.304.

6. Comment: Options on Orders and Within Scope Changes. One respondent requested that the rule address the use of option periods attached to task and delivery orders. The respondent suggested that every order should be permitted to contain up to four option periods. Another respondent suggested that within-scope changes could extend the ordering period beyond 5 years and requested that the rule clarify whether the 5-year limit applies to within-scope changes.

DoD Response: Options and modifications may be issued to extend the total ordering period for a contract or an individual order; however, the total ordering period may not exceed 10 years unless authorized by the head of the agency.

7. Comment: Disappointed with Implementation. Two respondents expressed disappointment that DoD rushed to implement Section 843 and that the interim rule provided only the barest coverage. The respondents recommended that the final rule expand the coverage to include key elements from the question and answer document made available on the Defense Procurement and Acquisition Policy Web site.

DoD Response: DoD has a responsibility to promptly implement laws enacted by Congress. It was also necessary to issue an interim rule to ensure consistent implementation within DoD. The second interim rule has been expanded to include key elements regarding applicability from the question and answer document and changes required by the enactment of Section 813.

8. Comment: Program Impacts. Four respondents identified programs or missions that will be impacted by the 5-year limit.

DoD Response: DoD agrees that the 5-year limit may have had an adverse impact on the ability of agencies to accomplish their missions. The second interim rule minimizes the impact to the extent permitted by Section 813.

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 has prepared an initial regulatory flexibility analysis consistent with 5 U.S.C. 604. The analysis is summarized as follows: This interim rule applies to all new DoD solicitations for supplies or services that will result in a task or delivery order contract awarded under the authority of 10 U.S.C. 2304a. It may affect businesses interested in submitting offers for such contracts. The impact on small entities is unknown at this time. 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-D097.

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 813 of the National Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108-375). Section 813 provides that the total period of a task or delivery order contract awarded under 10 U.S.C. 2304a may not exceed 10 years, unless the head of the agency determines in writing that exceptional circumstances require a longer contract period. Section 813 became effective upon enactment on October 28, 2004. 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 217

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

Therefore, 48 CFR part 217 is amended as follows:

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

Contract Period for Task and Delivery Order Contracts

DFARS Case 2003-D097/2004-D023

Interim Rule

PART 216—TYPES OF CONTRACTS

* * * * *

SUBPART 216.5—INDEFINITE-DELIVERY CONTRACTS

* * * * *

216.501-2 General.

(a)  See 217.204(e) for limitations on the period for task order or delivery order contracts awarded by DoD pursuant to 10 U.S.C. 2304a.

* * * * *

PART 217—SPECIAL CONTRACTING METHODS

* * * * *

SUBPART 217.2—OPTIONS

* * * * *

217.204 Contracts.

(e)[(i)] Notwithstanding FAR 17.204(e), the [ordering] period of a task order or delivery order contract, including all options or modifications, awarded by DoD pursuant to 10 U.S.C. 2304a shall not exceed 5 years.[--

(A) May be for any period up to 5 years;

(B) May be subsequently extended for one or more successive periods in accordance with an option provided in the contract or a modification of the contract; and

(C) Shall not exceed 10 years unless the head of the agency determines in writing that exceptional circumstances require a longer ordering period.

(ii) DoD must submit a report to Congress when an ordering period is extended beyond 10 years in accordance with paragraph (e)(i)(C) of this section. Follow the procedures at PGI 217.204(e) for reporting requirements.

(iii) Paragraph (e)(i) of this section—

(A) Also applies to information technology task or delivery order contracts;

(B) Does not apply to contracts, including task or delivery order contracts, awarded under other statutory authority; and

(C) Does not apply to the following:

(1) Advisory and assistance service task order contracts (authorized by 10 U.S.C. 2304b that are limited by statute to 5 years, with the authority to extend an additional 6 months (see FAR 16.505(c)).

(2) Definite-quantity contracts.

(3) GSA schedule contracts.

(4) Multi-agency contracts awarded by agencies other than NASA, DoD, or the Coast Guard.

(iv) Obtain approval from the senior procurement executive before issuing an order against a task or delivery order contract subject to paragraph (e)(i) of this section, if performance under the order is expected to extend more than 1 year beyond the 10-year limit or extended limit described in paragraph (e)(i)(C) of this section (see FAR 37.106 for funding and term of service contracts).]

* * * * *

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

Contract Period for Task and Delivery Order Contracts

DFARS Case 2003-D097

Procedures, Guidance, and Information

PGI 217—SPECIAL CONTRACTING METHODS

* * * * *

PGI 217.2—OPTIONS

PGI 217.204 Contracts.

(e) By October 31st of each year, the military departments and defense agencies must submit a report addressing each extension of an ordering period for a task or delivery order contract, granted during the previous fiscal year, that resulted in a total ordering period of more than 10 years.

(1) Include in the report--

(i) A discussion of the exceptional circumstances on which the extension was based; and

(ii) The justification for the head of the agency’s determination of exceptional circumstances.

(2) Submit the report to--

Director, Defense Procurement and

Acquisition Policy

OUSD(AT&L)DPAP

3060 Defense Pentagon

Washington, DC 20301-3060

(3) The Director, Defense Procurement and Acquisition Policy, will submit a consolidated DoD report to Congress.

(4) This reporting requirement—

(i) Complies with subsection 813(b) of the National Defense Authorization Act for Fiscal Year 2005 (Public Law 108-375); and

(ii) Expires after submission of the report for fiscal year 2009.

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. Additional information on the DFARS Transformation initiative is available at http://www.acq.osd.mil/dpap/dfars/transf.htm. Three of the following changes relocate text to the new DFARS companion resource, Procedures, Guidance, and Information (PGI), available at http://www.acq.osd.mil/dpap/dars/pgi.

Improper Business Practices and Contractor Qualifications Relating to Debarment, Suspension, and Business Ethics (DFARS Case 2003-D012)

Consolidates text on reporting of improper business practices to the appropriate authorities; updates a contract clause addressing prohibitions on persons convicted of fraud or other defense-contract-related felonies; and relocates to PGI, procedures for referring matters to the agency debarring and suspending official.

Affected subparts/sections: DFARS Table of Contents; Part 203 Table of Contents; 203.0; 203.1; 203.2; 203.3; 203.4; 203.5; 209.1; 209.4; 252.203; PGI 203.5; PGI 209.1; PGI 209.4

The Federal Register notice for this rule:

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

DEPARTMENT OF DEFENSE

48 CFR Parts 203, 209, and 252

[DFARS Case 2003-D012]

Defense Federal Acquisition Regulation Supplement; Improper Business Practices and Contractor Qualifications Relating to Debarment, Suspension, and Business Ethics

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to streamline and clarify text pertaining to debarment, suspension, and improper business practices. This rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

EFFECTIVE DATE: December 15, 2004.

FOR FURTHER INFORMATION CONTACT: Mr. Euclides Barrera, Defense Acquisition Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0296; facsimile (703) 602-0350. Please cite DFARS Case 2003-D012.

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 include--

Consolidation of requirements for reporting violations and suspected violations of certain requirements into a new section at DFARS 203.070. This results in elimination of DFARS sections 203.103, 203.103-2, and 203.104-10; subparts 203.2, 203.3, and 203.4; and sections 203.502 and 203.570-4.

Streamlining of text at DFARS 203.570-1 and 203.570-2 relating to prohibitions on persons convicted of fraud or other defense-contract-related felonies.

Revision of the clause at 252.203-7001, Prohibition on Persons Convicted of Fraud or Other Defense-Contract-Related Felonies, to remove unnecessary references to first-tier subcontracts in paragraphs (b) and (d). Paragraph (g) of the clause adequately addresses requirements for flow down to first-tier subcontracts.

Deletion of text at DFARS 203.570-3 relating to internal DoD procedures for waiver of the 5-year period for prohibitions on persons convicted of fraud or other defense-contract-related felonies; and deletion of text at DFARS 209.105-2, 209.406-3, and 209.407-3 containing internal DoD procedures for referral of matters to agency debarment and suspension officials. This text has been relocated to the new DFARS companion resource, Procedures, Guidance, and Information (PGI), available at http://www.acq.osd.mil/dpap/dars/pgi.

DoD published a proposed rule at 69 FR 8146 on February 23, 2004. Two sources submitted comments on the proposed rule. A discussion of the comments is provided below:

1. Comment: Section 203.070, which specifies the violations or suspected violations that must be reported, should also include: the Truth in Negotiations Act (19 U.S.C. 2306(f)); the False Claims Act (31 U.S.C. 3729 et seq.); a reference to FAR 9.406-2(a)(3), which lists causes for debarment; and a reference to FAR 9.407-2(a)(3), which lists causes for suspension.

DoD Response: Do not agree. Since section 203.070 falls within the scope of FAR Part 3 and DFARS Part 203, Improper Business Practices and Personal Conflicts of Interest, the violations listed in section 203.070 are limited to those addressed in FAR Part 3 and DFARS Part 203.

2. Comment: In section 203.070, the reference to ``DoDD 7075.5'' should be corrected to read ``DoDD 7050.5.''

DoD Response: Agree. This correction has been included in the final rule.

3. Comment: In section 203.070(c), the reference to the gratuities clause should be corrected to read ``FAR 3.203.''

DoD Response: Agree. This correction has been included in the final rule.

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

B. Regulatory Flexibility Act DoD certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule streamlines and clarifies existing DFARS text, with no substantive change in 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 203, 209, and 252

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

Therefore, 48 CFR Parts 203, 209, and 252 are amended as follows:

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

Improper Business Practices and Contractor Qualifications

Relating to Debarment, Suspension, and Business Ethics

DFARS Case 2003-D012

Final Rule

(Text that is stricken and highlighted will be relocated

to Procedures, Guidance, and Information (PGI))

PART 203—IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

[203.070 Reporting of violations and suspected violations.

Report violations and suspected violations of the following requirements in accordance with 209.406-3 or 209.407-3 and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related to Procurement Activities:

(a) Certificate of Independent Price Determination (FAR 3.103).

(b) Procurement integrity (FAR 3.104).

(c) Gratuities clause (FAR 3.203).

(d) Antitrust laws (FAR 3.303).

(e) Covenant Against Contingent Fees (FAR 3.405).

(f) Anti-kickback Act (FAR 3.502).

(g) Prohibitions on persons convicted of defense-related contract felonies (203.570).]

SUBPART 203.1—SAFEGUARDS

203.103 Independent pricing.

203.103-2 Evaluating the certification.

(b)(3) Report the matter in accordance with 209.406-3 or 209.407-3, and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related to Procurement Activities.

203.104 Procurement integrity.

* * * * *

203.104-10 Violations or possible violations.

(d)(3) When referring a violation to the agency debarring and suspending official, use the procedures at 209.406-3 or 209.407-3, and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related to Procurement Activities.

SUBPART 203.2--CONTRACTOR GRATUITIES TO GOVERNMENT PERSONNEL

203.203 Reporting suspected violations of the Gratuities clause.

Report suspected violations of the Gratuities clause in accordance with 209.406-3 or 209.407-3, and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related to Procurement Activities.

SUBPART 203.3--REPORTS OF SUSPECTED ANTITRUST VIOLATIONS

203.301 General.

(b) Report suspected antitrust violations in accordance with 209.406-3 or 209.407-3, and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related to Procurement Activities.

SUBPART 203.4--CONTINGENT FEES

203.405 Misrepresentations or violations of the Covenant Against Contingent Fees.

(b) Report suspected fraud or other criminal conduct in accordance with 209.406-3 or 209.407-3, and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related to Procurement Activities.

SUBPART 203.5--OTHER IMPROPER BUSINESS PRACTICES

203.502 Subcontractor kickbacks.

Report suspected violations of the Anti-Kickback Act in accordance with 209.406-3 or 209.407-3, and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related to Procurement Activities.

203.502-2 General [Subcontractor kickbacks].

* * * * *

203.570 Prohibition on persons convicted of fraud or other defense-contract-related felonies.

203.570-1 Scope.

This subpart prescribes policies and procedures to implement[s] 10 U.S.C. 2408.

203.570-2 Policy [Prohibition period].

(a) A contractor or subcontractor shall not knowingly allow a person, convicted after September 29, 1988, of fraud or any other felony arising out of a contract with the DoD, to serve—

(1) In a management or supervisory capacity on any DoD contract or first-tier subcontract;

(2) On its board of directors;

(3) As a consultant, agent, or representative; or

(4) In any capacity with the authority to influence, advise, or control the decisions of any DoD contractor or subcontractor with regard to any DoD contract or first-tier subcontract.

(b) DoD has sole responsibility for determining the period of the prohibition described in paragraph (a[b]) of this subsection [the clause at 252.203-7001, Prohibition on Persons Convicted of Fraud or Other Defense-Contract-Related Felonies]. The prohibition period—

(1[a]) Shall not be less than 5 years from the date of conviction unless the agency head or a designee grants a waiver in the interest of national security[. Follow the waiver procedures at PGI 203.570-2(a)]; and

(2[b]) May be more than 5 years from the date of conviction if the agency head or a designee makes a written determination of the need for the longer period. The agency shall provide a copy of the determination to the [address at PGI 203.570-2(b).] Bureau of Justice Assistance, U.S. Department of Justice, 810 Seventh Street, NW, Washington, DC 20531.

203.570-3 Waiver.

(a) The contracting officer shall—

(1) Review any request for waiver; and

(2) Deny the request if the contracting officer decides the waiver is not required in the interests of national security; or

(3) Forward the request to the head of the agency or designee for approval if the contracting officer decides the waiver may be in the interest of national security.

(b) The head of the agency or designee shall report all waivers granted, and the reasons for granting the waiver, to the Under Secretary of Defense (Acquisition, Technology, and Logistics), who will forward the report to Congress as required by 10 U.S.C. 2408(a)(3).

203.570-4 Reporting.

When a defense contractor or first-tier subcontractor is found in violation of the prohibition in 203.570-2, report the matter in accordance with 209.406-3 or 209.407-3, and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related to Procurement Activities.

203.570-5[3] Contract clause.

Use the clause at 252.203-7001, Prohibition on Persons Convicted of Fraud or Other Defense-Contract-Related Felonies, in all solicitations and contracts exceeding the simplified acquisition threshold, except solicitations and contracts for commercial items.

* * * * *

PART 209—CONTRACTOR QUALIFICATIONS

SUBPART 209.1--RESPONSIBLE PROSPECTIVE CONTRACTORS

* * * * *

209.105-2 Determinations and documentation.

(a) [For guidance on submission of determinations to the appropriate debarring and suspending official, see PGI 209.105-2(a).] When the contracting officer considers such action appropriate, the contracting officer must submit a copy of the determination to the appropriate debarring and suspending official (see 209.403).

* * * * *

SUBPART 209.4--DEBARMENT, SUSPENSION, AND INELIGIBILITY

* * * * *

209.406 Debarment.

* * * * *

209.406-3 Procedures.

(a) Investigation and referral.

(i) Refer all matters appropriate for consideration by an agency debarring and suspending official as soon as practicable to the appropriate debarring and suspending official identified in 209.403. Any person may refer a matter to the debarring and suspending official. [Follow the procedures at PGI 209.406-3.]

(ii) Use the following format when referring a matter to the agency debarring and suspending official for consideration. To the extent practicable, provide all specified information.

(A) Name, address, and telephone number of the point of contact for the activity making the report.

(B) Name, contractor and Government entity (CAGE) code, and address of the contractor.

(C) Name and addresses of the members of the board, principal officers, partners, owners, and managers.

(D) Name and addresses of all known affiliates, subsidiaries, or parent firms, and the nature of the business relationship.

(E) For each contract affected by the conduct being reported—

(1) The contract number;

(2) All office identifying numbers or symbols;

(3) Description of supplies or services;

(4) The amount;

(5) The percentage of completion;

(6) The amount paid the contractor;

(7) Whether the contract is assigned under the Assignment of Claims Act and, if so, to whom; and

(8) The amount due the contractor.

(F) For any other contracts outstanding with the contractor or any of its affiliates—

(1) The contract number;

(2) The amount;

(3) The amounts paid the contractor;

(4) Whether the contract is assigned under the Assignment of Claims Act and, if so, to whom; and

(5) The amount due the contractor.

(G) A complete summary of all pertinent evidence and the status of any legal proceedings involving the contractor.

(H) An estimate of any damages sustained by the Government as a result of the contractor's action (explain how the estimate was calculated).

(I) If a contracting office initiates the report, the comments and recommendations of the contracting officer and of each higher-level contracting review authority regarding—

(1) Whether to suspend or debar the contractor;

(2) Whether to apply limitations to the suspension or debarment;

(3) The period of any recommended debarment; and

(4) Whether to continue any current contracts with the contractor (or explain why a recommendation regarding current contracts is not included).

(J) When appropriate, as an enclosure to the report—

(1) A copy or pertinent extracts of each pertinent contract;

(2) Witness statements or affidavits;

(3) Copies of investigative reports when authorized by the investigative agency;

(4) Certified copies of indictments, judgments, and sentencing actions; and

(5) A copy of any available determinations of nonresponsibility in accordance with FAR 9.105-2(a)(1); and

(6) Any other appropriate exhibits or documentation.

(iii) Send three copies of each report, including enclosures, to the appropriate debarring and suspending official.

(iv) If a referral lacks sufficient evidence of a cause for debarment, the debarring and suspending official may initiate a review or investigation, as appropriate, by reporting the referral to the appropriate Government entity, e.g., contracting activity, inspector general, or criminal investigative agency.

(b) Decisionmaking process.

(i) The agency debarring and suspending official may initiate the debarment process by issuing a notice of proposed debarment in accordance with FAR 9.406-3(c) when the debarring and suspending official finds that the administrative record contains sufficient evidence of one or more of the causes for debarment stated in FAR 9.406-2 or 209.406-2.

(A) The absence of a referral in accordance with paragraph (a)(i) of this subsection, or the absence of any information specified in the report format in paragraph (a)(ii) of this subsection, will not preclude the debarring and suspending official from making such a finding.

(B) The signature of the debarring and suspending official on the notice of proposed debarment is sufficient evidence that the debarring and suspending official has made such a finding.

(ii) The agency debarring and suspending official must use the decisionmaking process stated in FAR 9.406-3(b), DFARS Appendix H, and any agency-specific procedures that were provided to the contractor in advance of the decision.

(d) Debarring official's decision. The absence of a referral in accordance with paragraph (a)(i) of this subsection, or the absence of any information specified in the report format in paragraph (a)(ii) of this subsection, will not preclude the debarring and suspending official from making a decision.

209.407 Suspension.

209.407-3 Procedures.

(a) Investigation and referral.

(i) Refer all matters appropriate for consideration by an agency debarring and suspending official as soon as practicable to the appropriate debarring and suspending official identified in 209.403. Any person may refer a matter to the debarring and suspending official. [Follow the procedures at PGI 209.407-3.]

(ii) Use the format at 209.406-3(a)(ii) when referring a matter to the agency debarring and suspending official for consideration. To the extent practicable, provide all information specified in the format.

(iii) If a referral lacks sufficient evidence of a cause for suspension, the debarring and suspending official may initiate a review or investigation, as appropriate, by reporting the referral to the appropriate Government entity, e.g., contracting activity, inspector general, or criminal investigative agency.

(b) Decisionmaking process.

(i) The agency debarring and suspending official may initiate the suspension process by issuing a notice of suspension in accordance with FAR 9.407-3(c) when the debarring and suspending official finds that the administrative record contains sufficient evidence of one or more of the causes for suspension stated in FAR 9.407-2.

(A) The absence of a referral in accordance with paragraph (a)(i) of this subsection, or the absence of any information specified in the report format at 209.406-3(a)(ii), will not preclude the debarring and suspending official from making such a finding.

(B) The signature of the debarring and suspending official on the notice of suspension is sufficient evidence that the debarring and suspending official has made such a finding.

(ii) In deciding whether to terminate a suspension following a submission of matters in opposition, the agency debarring and suspending official must use the decisionmaking process stated in FAR 9.407-3(b), DFARS Appendix H, and any agency-specific procedures that were provided to the contractor in advance of the decision.

(d) Suspending official's decision. The absence of a referral in accordance with paragraph (a)(i) of this subsection, or the absence of any information specified in the report format at 209.406-3(a)(ii), will not preclude the debarring and suspending official from making a decision.

* * * * *

PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

* * * * *

252.203-7001 Prohibition on Persons Convicted of Fraud or Other Defense-Contract-Related Felonies.

As prescribed in 203.570-5[3], use the following clause:

PROHIBITION ON PERSONS CONVICTED OF FRAUD OR OTHER DEFENSE-CONTRACT-RELATED FELONIES (MAR 1999 [DEC 2004])

* * * * *

(b) Any individual who is convicted after September 29, 1988, of fraud or any other felony arising out of a contract with the DoD is prohibited from serving—

(1) In a management or supervisory capacity on any DoD [this] contract or first-tier subcontract;

(2) On the board of directors of any DoD contractor or first-tier subcontractor [the Contractor];

(3) As a consultant, agent, or representative for any DoD contractor or first-tier subcontractor [the Contractor]; or

(4) In any other capacity with the authority to influence, advise, or control the decisions of any DoD contractor or subcontractor [the Contractor] with regard to any DoD contract or first-tier subcontract [this contract].

(c) Unless waived, the prohibition in paragraph (b) of this clause applies for not less than 5 years from the date of conviction.

(d) 10 U.S.C. 2408 provides that a defense contractor or first-tier subcontractor [the Contractor] shall be subject to a criminal penalty of not more than $500,000 if convicted of knowingly—

(1) Employing a person under a prohibition specified in paragraph (b) of this clause; or

(2) Allowing such a person to serve on the board of directors of the contractor or first-tier subcontractor.

* * * * *

(h) Pursuant to 10 U.S.C. 2408(c), defense contractors and subcontractors may obtain information as to whether a particular person has been convicted of fraud or any other felony arising out of a contract with the DoD by contacting The Office of Justice Programs, The Denial of Federal Benefits Office, U.S. Department of Justice, telephone (202) 616-3507 [(301) 809-4904].

(End of clause)

* * * * *

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

Improper Business Practices and Contractor Qualifications

DFARS Case 2003-D012

Procedures, Guidance, and Information

PGI 203—IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

PGI 203.5--OTHER IMPROPER BUSINESS PRACTICES

PGI 203.570 Prohibition on persons convicted of fraud or other defense-contract-related felonies.

PGI 203.570-2 Prohibition period.

(a)(1) The contracting officer shall—

(i) Review any request for waiver; and

(ii) Deny the request if the contracting officer decides the waiver is not required in the interests of national security; or

(iii) Forward the request to the head of the agency or designee for approval if the contracting officer decides the waiver may be in the interest of national security.

(2) The head of the agency or designee shall report all waivers granted, and the reasons for granting the waiver, to the Under Secretary of Defense (Acquisition, Technology, and Logistics), who will forward the report to Congress as required by 10 U.S.C. 2408(a)(3).

(b) Submit a copy of the determination to Bureau of Justice Assistance, U.S. Department of Justice, 810 Seventh Street, NW, Washington, DC 20531.

PGI 209—CONTRACTOR QUALIFICATIONS

PGI 209.1--RESPONSIBLE PROSPECTIVE CONTRACTORS

* * * * *

PGI 209.105-2 Determinations and documentation.

(a) When the contracting officer considers such action appropriate, the contracting officer should submit a copy of the determination to the appropriate debarring and suspending official in DFARS 209.403.

* * * * *

PGI 209.4--DEBARMENT, SUSPENSION, AND INELIGIBILITY

* * * * *

PGI 209.406 Debarment.

* * * * *

PGI 209.406-3 Procedures.

(a) Use the following format when referring a matter to the agency debarring and suspending official for consideration. To the extent practicable, provide all specified information.

(1) Name, address, and telephone number of the point of contact for the activity making the report.

(2) Name, contractor and Government entity (CAGE) code, and address of the contractor.

(3) Name and addresses of the members of the board, principal officers, partners, owners, and managers.

(4) Name and addresses of all known affiliates, subsidiaries, or parent firms, and the nature of the business relationship.

(5) For each contract affected by the conduct being reported—

(i) The contract number;

(ii) All office identifying numbers or symbols;

(iii) Description of supplies or services;

(iv) The amount;

(v) The percentage of completion;

(vi) The amount paid the contractor;

(vii) Whether the contract is assigned under the Assignment of Claims Act and, if so, to whom; and

(viii) The amount due the contractor.

(6) For any other contracts outstanding with the contractor or any of its affiliates—

(i) The contract number;

(ii) The amount;

(iii) The amounts paid the contractor;

(iv) Whether the contract is assigned under the Assignment of Claims Act and, if so, to whom; and

(v) The amount due the contractor.

(7) A complete summary of all pertinent evidence and the status of any legal proceedings involving the contractor.

(8) An estimate of any damages sustained by the Government as a result of the contractor's action (explain how the estimate was calculated).

(9) If a contracting office initiates the report, the comments and recommendations of the contracting officer and of each higher-level contracting review authority regarding—

(i) Whether to suspend or debar the contractor;

(ii) Whether to apply limitations to the suspension or debarment;

(iii) The period of any recommended debarment; and

(iv) Whether to continue any current contracts with the contractor (or explain why a recommendation regarding current contracts is not included).

(10) When appropriate, as an enclosure to the report—

(i) A copy or pertinent extracts of each pertinent contract;

(ii) Witness statements or affidavits;

(iii) Copies of investigative reports when authorized by the investigative agency;

(iv) Certified copies of indictments, judgments, and sentencing actions;

(v) A copy of any available determinations of nonresponsibility in accordance with FAR 9.105-2(a)(1); and

(vi) Any other appropriate exhibits or documentation.

(b) Send three copies of each report, including enclosures, to the appropriate debarring and suspending official.

(c) If a referral lacks sufficient evidence of a cause for debarment, the debarring and suspending official may initiate a review or investigation, as appropriate, by reporting the referral to the appropriate Government entity, e.g., contracting activity, inspector general, or criminal investigative agency.

(d) Decisionmaking process.

(1) The agency debarring and suspending official may initiate the debarment process by issuing a notice of proposed debarment in accordance with FAR 9.406-3(c) when the debarring and suspending official finds that the administrative record contains sufficient evidence of one or more of the causes for debarment stated in FAR 9.406-2 or DFARS 209.406-2.

(i) The absence of a referral in accordance with DFARS 209.406-3, or the absence of any information specified in the report format in PGI 209.406-3(a), will not preclude the debarring and suspending official from making such a finding.

(ii) The signature of the debarring and suspending official on the notice of proposed debarment is sufficient evidence that the debarring and suspending official has made such a finding.

(2) The agency debarring and suspending official must use the decisionmaking process stated in FAR 9.406-3(b), DFARS Appendix H, and any agency-specific procedures that were provided to the contractor in advance of the decision.

PGI 209.407 Suspension.

PGI 209.407-3 Procedures.

(a) Use the format at PGI 209.406-3(a) when referring a matter to the agency debarring and suspending official for consideration. To the extent practicable, provide all information specified in the format.

(b) If a referral lacks sufficient evidence of a cause for suspension, the debarring and suspending official may initiate a review or investigation, as appropriate, by reporting the referral to the appropriate Government entity, e.g., contracting activity, inspector general, or criminal investigative agency.

(c) Decisionmaking process.

(1) The agency debarring and suspending official may initiate the suspension process by issuing a notice of suspension in accordance with FAR 9.407-3(c) when the debarring and suspending official finds that the administrative record contains sufficient evidence of one or more of the causes for suspension stated in FAR 9.407-2.

(i) The absence of a referral in accordance with DFARS 209.407-3, or the absence of any information specified in the report format at PGI 209.406-3(a), will not preclude the debarring and suspending official from making such a finding.

(ii) The signature of the debarring and suspending official on the notice of suspension is sufficient evidence that the debarring and suspending official has made such a finding.

(2) In deciding whether to terminate a suspension following a submission of matters in opposition, the agency debarring and suspending official must use the decisionmaking process stated in FAR 9.407-3(b), DFARS Appendix H, and any agency-specific procedures that were provided to the contractor in advance of the decision.

DoD Pilot Mentor-Protégé Program (DFARS Case 2003-D013)

Changes the DoD Pilot Mentor-Protégé Program to authorize the Director, Small and Disadvantaged Business Utilization (SADBU), of each military department or defense agency to approve contractors as mentor firms and to approve mentor-protégé agreements. The Director, Office of the Secretary of Defense, SADBU, will retain policy and oversight responsibility and will remain the principal budget authority for the Program. This rule also revises the structure of DFARS Appendix I for clarity and to reflect current Program requirements.

Affected subparts/sections: 219.71; Appendix I Table of Contents; Appendix I

The Federal Register notice for this rule:

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

DEPARTMENT OF DEFENSE

48 CFR Part 219 and Appendix I to Chapter 2

[DFARS Case 2003-D013]

Defense Federal Acquisition Regulation Supplement; DoD Pilot Mentor-Protege Program

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 policy pertaining to the DoD Pilot Mentor-Protege Program. The rule authorizes the Director, Small and Disadvantaged Business Utilization, of each military department and defense agency to approve mentor firms and mentor-protege agreements.

EFFECTIVE DATE: December 15, 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-D013.

SUPPLEMENTARY INFORMATION:

A. Background This final rule authorizes the Director, Small and Disadvantaged Business Utilization (SADBU), of each military department and defense agency to approve mentor firms and mentor-protege agreements under the DoD Pilot Mentor-Protege Program. The Director, Office of the Secretary of Defense, SADBU, will retain policy and oversight responsibility for the offices participating in the Program and will remain the principal budget authority for the Program. This rule also updates procedures for implementation of the Mentor-Protege Program.

DoD published a proposed rule at 69 FR 26533 on May 13, 2004. Two respondents submitted comments on the proposed rule. One respondent expressed support for the rule. The other respondent recommended amendment of the rule to allow service-disabled veteran-owned small business concerns to participate as protege firms. Statutory authority permitting participation of service-disabled veteran-owned small business concerns as protege firms was provided in Section 842 of the National Defense Authorization Act for Fiscal Year 2005 (Public Law 108-375) on October 28, 2004. DoD will be implementing the new authority provided by Section 842 separately under DFARS Case 2004-D028. Therefore, DoD has adopted the proposed rule published on May 13, 2004, 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 changes in the rule relate primarily to administrative aspects of the DoD Pilot Mentor-Protege Program. The basic principles of the Program have not changed.

C. Paperwork Reduction Act The information collection requirements of the DoD Pilot Mentor Protege Program have been approved by the Office of Management and Budget under Control Number 0704-0332 for use through May 31, 2007.

List of Subjects in 48 CFR Part 219

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

Therefore, 48 CFR part 219 and appendix I to chapter 2 are amended as follows:

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

DFARS Case 2003-D013

DoD Pilot Mentor-Protege Program

Final Rule

PART 219-SMALL BUSINESS PROGRAMS

* * * * *

SUBPART 219.71--PILOT MENTOR-PROTEGE PROGRAM

219.7100 Scope.

This subpart implements the Pilot Mentor-Protege Program [(hereafter referred to as the “Program”)] established under Section 831 of the National Defense Authorization Act for Fiscal Year 1991 (Pub. L. 101-510; 10 U.S.C. 2302 note). The purpose of the Program is to provide incentives for DoD contractors to assist protege firms in enhancing their capabilities and to increase participation of such firms in Government and commercial contracts.

219.7101 Policy.

DoD policy and procedures for implementation of the Program are contained in Appendix I, Policy and Procedures for the DoD Pilot Mentor-Protege Program.

219.7102 General.

The Program includes-

(a) Mentor firms that are prime contractors with at least one active subcontracting plan negotiated under FAR Subpart 19.7 [or under the DoD Comprehensive Subcontracting Test Program].

(b) Protege firms that are—

(1)(i) Small disadvantaged business concerns as defined at 219.001(1);

(ii) Business entities owned and controlled by an Indian tribe;

(iii) Business entities owned and controlled by a Native Hawaiian Organization;

(iv) Qualified organizations employing the severely disabled; or

(v) Women-owned small business concerns;

(2) Eligible for receipt of Federal contracts; and

(3) Selected by the mentor firm.

(c) Mentor-protege agreements that establish a developmental assistance program for a protege firm.

(d) Incentives that DoD may provide to mentor firms, including:

(1) Reimbursement for developmental assistance costs through-

(i) A separately priced contract line item on a DoD contract; or

(ii) A separate contract, upon written determination by the [cognizant Component] Director, Small and Disadvantaged Business Utilization [(SADBU)], Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics) (SADBU, OUSD(AT&L)), that unusual circumstances justify reimbursement using a separate contract; or

(2) Credit toward applicable subcontracting goals, established under a subcontracting plan negotiated under FAR Subpart 19.7 [or under the DoD Comprehensive Subcontracting Test Program], for developmental assistance costs that are not reimbursed.

219.7103 Procedures.

219.7103-1 General.

The procedures for application, acceptance, and participation in the Program are in Appendix I, Policy and Procedures for the DoD Pilot Mentor-Protege Program. The Director, SADBU, [of each military department or defense agency has the authority to] OUSD(AT&L), approves contractors as mentor firms, approves mentor-protege agreements, and forwards approved mentor-protege agreements to the contracting officer when program funding is available through a DoD program manager.

219.7103-2 Contracting officer responsibilities.

Contracting officers must-

(a) Negotiate an advance agreement on the treatment of developmental assistance costs for either credit or reimbursement if the mentor firm proposes such an agreement, or delegate authority to negotiate to the administrative contracting officer (see FAR 31.109).

(b) Modify (without consideration) applicable contract(s) to incorporate the clause at 252.232-7005, Reimbursement of Subcontractor Advance Payments--DoD Pilot Mentor-Protege Program, when a mentor firm provides advance payments to a protege firm under the Program and the mentor firm requests reimbursement of advance payments.

(c) Modify (without consideration) applicable contract(s) to incorporate other than customary progress payments for protege firms in accordance with FAR 32.504(c) if a mentor firm provides such payments to a protege firm and the mentor firm requests reimbursement.

(d) Modify applicable contract(s) to establish a contract line item for reimbursement of developmental assistance costs if-

(1) A DoD program manager [or the cognizant Component Director, SADBU,] has made funds available for that purpose; and

(2) The contractor has an approved mentor-protege agreement.

(e) Negotiate and award a separate contract for reimbursement of developmental assistance costs only if-

(1) A DoD program manager has made [F]funds [are] available for that purpose;

(2) The contractor has an approved mentor-protege agreement; and

(3) The [cognizant Component] Director, SADBU, OUSD(AT&L), has made a determination in accordance with 219.7102(d)(1)(ii).

(f) Not authorize reimbursement for costs of assistance furnished to a protege firm in excess of $1,000,000 in a fiscal year unless a written determination from the [cognizant Component] Director, SADBU, OUSD(AT&L), is obtained.

(g) Advise contractors of reporting requirements in Appendix I.

(h) Provide a copy of the approved Mentor-Protege agreement to the Defense Contract Management Agency administrative contracting officer responsible for conducting the annual performance review (see Appendix I, Section I-112 [3]).

219.7104 Developmental assistance costs eligible for reimbursement or credit.

(a) Developmental assistance provided under an approved mentor-protege agreement is distinct from, and must not duplicate, any effort that is the normal and expected product of the award and administration of the mentor firm's subcontracts. The mentor firm must accumulate and charge costs associated with the latter in accordance with its approved accounting practices. Mentor firm costs that are eligible for reimbursement are set forth in Appendix I.

(b) Before incurring any costs under the Program, mentor firms must establish the accounting treatment of developmental assistance costs eligible for reimbursement or credit. Advance agreements are encouraged. To be eligible for reimbursement under the Program, the mentor firm must incur the costs before October 1, 2008.

(c) If the mentor firm is suspended or debarred while performing under an approved mentor-protege agreement, the mentor firm may not be reimbursed or credited for developmental assistance costs incurred more than 30 days after the imposition of the suspension or debarment.

(d) Developmental assistance costs, incurred by a mentor firm before October 1, 2008, that are eligible for crediting under the Program, may be credited toward subcontracting plan goals as set forth in Appendix I.

219.7105 Reporting.

Mentor and protege firms must report on the progress made under mentor-protege agreements as indicated in Appendix I, Section I-111[2].

219.7106 Performance reviews.

The Defense Contract Management Agency will conduct annual performance reviews of all mentor-protege agreements as indicated in Appendix I, Section I-112[3]. The determinations made in these reviews should be a major factor in determinations of amounts of reimbursement, if any, that the mentor firm is eligible to receive in the remaining years of the Program participation term under the agreement.

* * * * *

APPENDIX I--POLICY AND PROCEDURES FOR THE DOD PILOT MENTOR-PROTEGE PROGRAM

I-100 Purpose.

(a) This Appendix I to 48 CFR Chapter 2 implements the Pilot Mentor-Protege Program (hereinafter referred to as the "Program") established under Section 831 of Pub. L. 101-510, the National Defense Authorization Act for Fiscal Year 1991 (10 U.S.C. 2302 note). The purpose of the Program is to-

(1) Provide incentives to major DoD contractors, performing under at least one active approved subcontracting plan negotiated with DoD or another Federal agency, to assist protege firms in enhancing their capabilities to satisfy DoD and other contract and subcontract requirements;

(2) Increase the overall participation of protege firms as subcontractors and suppliers under DoD contracts, other Federal agency contracts, and commercial contracts; and

(3) Foster the establishment of long-term business relationships between protege firms and such contractors.

(b) Under the Program, eligible companies approved as mentor firms will enter into mentor-protege agreements with eligible protege firms to provide appropriate developmental assistance to enhance the capabilities of the protege firms to perform as subcontractors and suppliers. According to the law, DoD may provide the mentor firm with either cost reimbursement or credit against applicable subcontracting goals established under contracts with DoD or other Federal agencies.

(c) DoD will measure the overall success of the Program by the extent to which the Program results in-

(1) An increase in the dollar value of contract and subcontract awards to protege firms (under DoD contracts, contracts awarded by other Federal agencies, and commercial contracts) from the date of their entry into the Program until 2 years after the conclusion of the agreement;

(2) An increase in the number and dollar value of subcontracts awarded to a protege firm (or former protege firm) by its mentor firm (or former mentor firm);

(3) An increase in subcontracting with small disadvantaged business (SDB) and women-owned small business (WOSB) concerns in industry categories where SDBs and WOSBs traditionally have not participated within the mentor firm's vendor base;

(4) The involvement of emerging SDB protege firms in the Program; and

(5)[(3)] An increase in the employment level of protege firms from the date of entry into the Program until 2 years after the completion of the agreement.

(d) This policy sets forth the procedures for participation in the Program applicable to companies that are interested in receiving-

(1) Reimbursement through a separate contract line item in a DoD contract or a separate contract with DoD; or

(2) Credit toward applicable subcontracting goals for costs incurred under the Program.

I-101 Definitions.

I-101.1 Emerging SDB protege firm.

A small disadvantaged business whose size is no greater than 50 percent of the Small Business Administration (SBA) numerical size standard applicable to the North American Industry Classification System (NAICS) code for the supplies or services that the protege firm provides or would provide to the mentor firm.

I-101.2[1] Historically Black college or university.

An institution determined by the Secretary of Education to meet the requirements of 34 CFR 608.2. The term also means any nonprofit research institution that was an integral part of such a college or university before November 14, 1986.

I-101.3[2] Minority institution of higher education.

An institution meeting the definition of "Minority Institution" at FAR 26.301. [of higher education with a student body that reflects the composition specified in section 312(b)(3), (4), and (5) of the Higher Education Act of 1965 (20 U.S.C. 1058(b)(3), (4), and (5)).]

[I-101.3 Eligible entity employing the severely disabled.

A business entity operated on a for-profit or nonprofit basis that--

(a) Uses rehabilitative engineering to provide employment opportunities for severely disabled individuals and integrates severely disabled individuals into its workforce;

(b) Employs severely disabled individuals at a rate that averages not less than 20 percent of its total workforce;

(c) Employs each severely disabled individual in its workforce generally on the basis of 40 hours per week; and

(d) Pays not less than the minimum wage prescribed pursuant to section 6 of the Fair Labor Standards Act (29 U.S.C. 206) to those employees who are severely disabled individuals.

I-101.4 Severely disabled individual.

An individual who has a physical or mental disability which constitutes a substantial handicap to employment and which, in accordance with criteria prescribed by the Committee for the Purchase from the Blind and Other Severely Handicapped established by the first section of the Act of June 25, 1938 (41 U.S.C. 46; popularly known as the “Javits-Wagner-O’Day Act”) is of such a nature that the individual is otherwise prevented from engaging in normal competitive employment.

I-101.5 Small disadvantaged business (SDB).

A small business concern that is--

(a) An SDB concern as defined at 219.001, paragraph (1) of the definition of "small disadvantaged business concern";

(b) A business entity owned and controlled by an Indian tribe as defined in Section 8(a)(13) of the Small Business Act (15 U.S.C. 637(a)(13)); or

(c) A business entity owned and controlled by a Native Hawaiian Organization as defined in Section 8(a)(15) of the Small Business Act.

I.101.6 Women-owned small business (WOSB).

A small business concern owned and controlled by women as defined in Section 8(d)(3)(D) of the Small Business Act (15 U.S.C. 637(d)(3)(D)).]

I-102 General procedures [Participant eligibility].

(a) At any time between October 1, 1991, and September 30, 2005, companies interested in becoming mentor firms that want to take credit toward applicable subcontracting goals for costs incurred for providing developmental assistance to one or more protege firms must apply to DoD for participation in the Program pursuant to the application process set forth at I-106(a).

(b) At any time between October 1, 1991, and September 30, 2005, companies interested in becoming mentor firms that are able to identify funding from a DoD program manager(s) to provide developmental assistance to one or more protege firms must apply to DoD for participation in the Program, pursuant to the application process set forth at I-106(d).

(a) To be eligible to participate as a mentor, an entity must be--

(1) An entity other than small business, unless a waiver to the small business exception has been obtained from the Director, Small and Disadvantaged Business Utilization (SADBU), OUSD(AT&L), that is a prime contractor to DoD with an active subcontracting plan; or

(2) A graduated 8(a) firm that provides documentation of its ability to serve as a mentor; and

(3) Approved to participate as a mentor in accordance with I-105.

(b) To be eligible to participate as a protege, an entity must be--

(1) An SDB, a WOSB, or an eligible entity employing the severely disabled;

(2) Eligible for the award of Federal contracts; and

(3) A small business according to the Small Business Administration (SBA) size standard for the North American Industry Classification System (NAICS) code that represents the contemplated supplies or services to be provided by the protege firm to the mentor firm if the firm is representing itself as a qualifying entity under the definition at I-101.5(a) or I-101.6.

(c) Mentor firms may rely in good faith on a written representation that the entity meets the requirements of paragraph (a) of this section, except for a protege's status as a small disadvantaged business concern (see FAR 19.703(b)).

(d) If at any time the SBA (or DoD in the case of entities employing the severely disabled) determines that a protege is ineligible, assistance that the mentor firm furnishes to the protege after the date of the determination may not be considered assistance furnished under the Program.

(e) A company may not be approved for participation in the Program as a mentor firm if, at the time of requesting participation in the Program, it is currently debarred or suspended from contracting with the Federal Government pursuant to FAR Subpart 9.4.

(f) If the mentor firm is suspended or debarred while performing under an approved mentor-protege agreement, the mentor firm-

(1) May continue to provide assistance to its protege firms pursuant to approved mentor-protege agreements entered into prior to the imposition of such suspension or debarment;

(2) May not be reimbursed or take credit for any costs of providing developmental assistance to its protege firm, incurred more than 30 days after the imposition of such suspension or debarment; and

(3) Must promptly give notice of its suspension or debarment to its protege firm and the cognizant Component Director, SADBU.]

I-103 Program duration.

Activities under the Program may occur only during the following periods:

(a) From October 1, 1991, until [New mentor-protégé agreements may be submitted and approved through] September 30, 2005, companies that have been approved for participation in the Program as mentor firms pursuant to I-102, General Procedures, may enter into mentor-protege agreements, pursuant to I-107, Mentor-Protege Agreements.

(b) From October 1, 1991, until September 30, 2008, DoD may reimburse a mentor firm's costs of providing developmental assistance to its protege firm only if a DoD program manager has identified the funding for such costs and- [Mentors incurring costs prior to September 30, 2008, pursuant to an approved mentor-protege agreement may be eligible for--

(1)(i) For mentor-protege agreements entered into prior to October 1, 1999, the mentor firm incurs such costs after DoD and the mentor firm enter into a separate contract, cooperative agreement, or other agreement; or

(ii) For mentor-protege agreements entered into on or after October 1, 1999, the mentor firm incurs such costs after DoD and the mentor firm enter into a separate contract based upon a determination by the Director, Small and Disadvantaged Business Utilization, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics) (SADBU, OUSD(AT&L)), that unusual circumstances justify using a separate contract; or

[(1) Credit toward the attainment of its applicable subcontracting goals for unreimbursed costs incurred in providing developmental assistance to its protege firm(s);]

(2) The mentor firm incurs such costs pursuant to the execution of a separately priced contract line item added to a DoD contract(s).

[(2) Reimbursement pursuant to the execution of a separately priced contract line item added to a DoD contract; or

(3) Reimbursement pursuant to entering into a separate DoD contract upon determination by the cognizant Component Director, SADBU, that unusual circumstances justify using a separate contract.]

(c) From October 1, 1991, until September 30, 2008, a mentor firm may receive credit toward the attainment of its applicable subcontracting goals, for unreimbursed costs incurred in providing developmental assistance to its protege firms, only if such costs are incurred pursuant to an approved mentor-protege agreement.

I-104 Eligibility requirements for a protege firm.

(a) An entity may qualify as a protege firm if it is-

(1)(i) An SDB concern as defined at 219.001, paragraph (1) of the definition of "small disadvantaged business concern";

(ii) A business entity owned and controlled by an Indian tribe as defined in Section 8(a)(13) of the Small Business Act (15 U.S.C. 637(a)(13));

(iii) A business entity owned and controlled by a Native Hawaiian Organization as defined in Section 8(a)(15) of the Small Business Act (15 U.S.C. 637(a)(15));

(iv) A qualified organization employing the severely disabled as defined in Section 8064A of Pub. L. 102-172; or

(v) A small business concern owned and controlled by women, as defined in Section 8(d)(3)(D) of the Small Business Act (15 U.S.C. 637(d)(3)(D));

(2) Eligible for the award of Federal contracts; and

(3) A small business according to the SBA size standard for the NAICS code that represents the contemplated supplies or services to be provided by the protege firm to the mentor firm, if the firm is representing itself as a qualifying entity under paragraph (a)(1)(i) or (v) of this section.

(b) A protege firm may self-certify to a mentor firm that it meets the eligibility requirements in paragraph (a) of this section. Mentor firms may rely in good faith on a written representation that the entity meets the requirements of paragraph (a) of this section, except for a protege's status as a small disadvantaged business concern (see FAR 19.703(b)).

(c) A protege firm may have only one active DoD mentor-protege agreement.

I-105[4] Selection of protege firms.

(a) Mentor firms will be solely responsible for selecting protege firms. Mentor firms are encouraged to identify and select concerns that are defined as emerging SDB protege firms.

(b) The selection of protege firms by mentor firms may not be protested, except as in paragraph (c) of this section.

(c) In the event of a protest regarding the size or disadvantaged status of an entity selected to be a protege firm as defined in I-104(a)[101.5], the mentor firm must refer the protest to the SBA to resolve in accordance with 13 CFR Part 121 (with respect to size) or 13 CFR Part 124 (with respect to disadvantaged status).

(d) For purposes of the Small Business Act, no determination of affiliation or control (either direct or indirect) may be found between a protege firm and its mentor firm on the basis that the mentor firm has agreed to furnish (or has furnished) to its protege firm, pursuant to a mentor-protege agreement, any form of developmental assistance described in I-107(f).

(e) If at any time pursuant to paragraph (c) of this section, the SBA determines that a protege firm is ineligible, assistance that the mentor firm furnishes to such a concern after the date of the determination may not be considered assistance furnished under the Program. [A protege firm may have only one active DoD mentor-protege agreement.]

I-106[5] [Mentor a]Approval process for companies to participate in the Program as mentor firms.

(a) On or after October 1, 1991, a company that is interested in becoming a mentor firm that is seeking credit toward applicable subcontracting goals for costs incurred under the Program must submit a request to the Director, SADBU, OUSD(AT&L), for approval as a mentor firm under the Program. The Director will evaluate the request based on the extent to which the company's proposal addresses the items listed in paragraphs (b) and (c) of this section. To the maximum extent possible, a company should limit its request to not more than 10 pages, single-spaced. A company may identify more than one protege in its request for approval under the Program. The request must include the information required in paragraphs (b) and (c) of this section and may cover one or more proposed mentor-protege relationships. [An entity seeking to participate as a mentor must apply to the cognizant Component Director, SADBU, to establish its initial eligibility as a mentor. This application may accompany its initial mentor-protege agreement.]

(b) A company must indicate whether it is interested in participating in the Program pursuant to I-100(d)(1) or (2) and must submit the following information: [The application must provide the following information:]

(1) A statement that the company is currently performing under at least one active approved subcontracting plan negotiated with DoD or another Federal agency pursuant to FAR 19.702, and that the company is currently eligible for the award of Federal contracts [or a statement that the entity is a graduated 8(a) firm].

(2) The number of proposed mentor-protege relationships covered by the request for approval as a mentor firm.

(3[2]) A summary of the company's historical and recent activities and accomplishments under its small and disadvantaged business utilization program.

(4[3]) The total dollar amount of DoD contracts and subcontracts that the company received during the 2 preceding fiscal years. (Show prime contracts and subcontracts separately per year.)

(5[4]) The total dollar amount of all other Federal agency contracts and subcontracts that the company received during the 2 preceding fiscal years. (Show prime contracts and subcontracts separately per year.)

(6[5]) The total dollar amount of subcontracts that the company awarded under DoD contracts during the 2 preceding fiscal years.

(7[6]) The total dollar amount of subcontracts that the company awarded under all other Federal agency contracts during the 2 preceding fiscal years.

(8[7]) The total dollar amount and percentage of subcontracts that the company awarded to all SDB and WOSB firms under DoD contracts and other Federal agency contracts during the 2 preceding fiscal years. (Show DoD subcontract awards separately.) If the company presently is required to submit a Standard Form (SF) 295, Summary Subcontract Report, the request must include copies of the final reports for the 2 preceding fiscal years.

[(8) Information on the company’s ability to provide developmental assistance to eligible proteges.]

(9) The number and total dollar amount of subcontracts that the company awarded to the identified protege firm(s) during the 2 preceding fiscal years (if any). (Show DoD subcontract awards and other Federal agency subcontract awards separately.)

(c) In addition to the information required in paragraph (b) of this section, companies must submit the following information for each proposed mentor-protege relationship:

(1) Information on the company's ability to provide developmental assistance to the identified protege firm and how that assistance will potentially increase subcontracting opportunities in industry categories where SDBs and WOSBs are not dominant in the company's vendor base.

(2) A letter of intent indicating that both the mentor firm and the protege firm will negotiate a mentor-protege agreement. The letter of intent must be signed by both parties and must contain the following information:

(i) The name, address, and telephone number of both parties.

(ii) The protege firm's business classification, based upon the NAICS code(s) that represents the contemplated supplies or services to be provided by the protege firm to the mentor firm.

(iii) A statement that the protege firm meets the eligibility criteria in I-104(a).

(iv) A preliminary assessment of the developmental needs of the protege firm, and the proposed developmental assistance the mentor firm envisions providing the protege firm to address those needs and enhance the protege firm's ability to perform successfully under contracts or subcontracts with DoD and other Federal agencies and commercial contracts.

(v) An estimate of the dollar amount and type of subcontracts that the mentor firm will award to the protege firm, and the period of time over which the mentor firm will make those awards.

(vi) Information as to whether the protege firm's development will be concentrated on a single major system, a service or supply program, research and development programs, initial production, or mature systems, or in the mentor firm's overall contract base.

(3) An estimate of the cost of the developmental assistance program and the period of time over which the mentor firm will provide assistance.

[A template of the mentor application is available at: www.acq.osd.mil/sadbu/mentor_protege.]

(d) A company that has identified Program funds to be made available through a DoD program manager must provide the information in paragraphs (b) and (c) of this section through the appropriate program manager and the cognizant Director, SADBU, to the Director, SADBU, OUSD(AT&L), with a letter signed by the appropriate program manager indicating the amount of funding that has been identified for the developmental assistance program. The company must submit a justification and endorsement from the cognizant Director, SADBU, when requesting any of the following unusual actions:

(1) Reimbursement of developmental costs in excess of $1,000,000.

(2) Reimbursement through a separate contract.

(3) A Program participation term greater than 3, but not more than 5, years.

[Companies that apply for participation and are not approved will be provided the reasons and an opportunity to submit additional information for reconsideration].

(e) Companies seeking credit toward applicable subcontracting goals for the cost of developmental assistance, or reimbursement with funds made available by a DoD program manager, must submit four copies of the information specified in paragraphs (b) and (c) of this section to the Director, SADBU, OUSD(AT&L), ATTN: Pilot Mentor-Protege Program Manager, 1777 North Kent Street, Suite 9100, Arlington, VA 22209. Upon receipt of this information, the Director, SADBU, OUSD(AT&L), will review and evaluate each request and, to the maximum extent possible, within 30 days advise each applicant of approval or rejection of its request to become a mentor firm.

(f) A company approved as a mentor firm, either for credit or for reimbursement through funds made available by a DoD program manager, may proceed with the negotiation of the mentor-protege agreement with the identified protege firm(s).

(g) Companies that apply for participation in the Program pursuant to paragraph (e) of this section, and are not approved, will be provided the reasons and an opportunity to submit additional information for reconsideration.

(h) A company may not be approved for participation in the Program as a mentor firm if, at the time of requesting participation in the Program, it is currently debarred or suspended from contracting with the Federal Government pursuant to FAR Subpart 9.4.

(i) If the mentor firm is suspended or debarred while performing under an approved mentor-protege agreement, the mentor firm-

(1) May continue to provide assistance to its protege firms pursuant to approved mentor-protege agreements entered into prior to the imposition of such suspension or debarment;

(2) May not be reimbursed or take credit for any costs of providing developmental assistance to its protege firm, incurred more than 30 days after the imposition of such suspension or debarment; and

(3) Must promptly give notice of its suspension or debarment to its protege firm and the Director, SADBU, OUSD(AT&L).

[I-106 Development of mentor-protege agreements.

(a) Prospective mentors and their proteges may choose to execute letters of intent prior to negotiation of mentor-protégé agreements.

(b) The agreements should be structured after completion of a preliminary assessment of the developmental needs of the protege firm and mutual agreement regarding the developmental assistance to be provided to address those needs and enhance the protege’s ability to perform successfully under contracts or subcontracts.

(c) A mentor firm may not require a protege firm to enter into a mentor-protege agreement as a condition for award of a contract by the mentor firm, including a subcontract under a DoD contract awarded to the mentor firm.

(d) The mentor-protege agreement may provide for the mentor firm to furnish any or all of the following types of developmental assistance:

(1) Assistance by mentor firm personnel in-

(i) General business management, including organizational management, financial management, and personnel management, marketing, business development, and overall business planning;

(ii) Engineering and technical matters such as production inventory control and quality assurance; and

(iii) Any other assistance designed to develop the capabilities of the protege firm under the developmental program.

(2) Award of subcontracts under DoD contracts or other contracts on a noncompetitive basis.

(3) Payment of progress payments for the performance of subcontracts by a protege firm in amounts as provided for in the subcontract; but in no event may any such progress payment exceed 100 percent of the costs incurred by the protege firm for the performance of the subcontract. Provision of progress payments by a mentor firm to a protege firm at a rate other than the customary rate for the firm must be implemented in accordance with FAR 32.504(c).

(4) Advance payments under such subcontracts. The mentor firm must administer advance payments in accordance with FAR Subpart 32.4.

(5) Loans.

(6) Investment(s) in the protege firm in exchange for an ownership interest in the protege firm, not to exceed 10 percent of the total ownership interest. Investments may include, but are not limited to, cash, stock, and contributions in kind.

(7) Assistance that the mentor firm obtains for the protege firm from one or more of the following:

(i) Small Business Development Centers established pursuant to Section 21 of the Small Business Act (15 U.S.C. 648).

(ii) Entities providing procurement technical assistance pursuant to 10 U.S.C. Chapter 142 (Procurement Technical Assistance Centers).

(iii) Historically Black colleges and universities.

(iv) Minority institutions of higher education.

(e) Pursuant to FAR 31.109, approved mentor firms seeking either reimbursement or credit are strongly encouraged to enter into an advance agreement with the contracting officer responsible for determining final indirect cost rates under FAR 42.705. The purpose of the advance agreement is to establish the accounting treatment of the costs of the developmental assistance pursuant to the mentor-protege agreement prior to the incurring of any costs by the mentor firm. An advance agreement is an attempt by both the Government and the mentor firm to avoid possible subsequent dispute based on questions related to reasonableness, allocability, or allowability of the costs of developmental assistance under the Program. Absent an advance agreement, mentor firms are advised to establish the accounting treatment of such costs and to address the need for any changes to their cost accounting practices that may result from the implementation of a mentor-protege agreement, prior to incurring any costs, and irrespective of whether costs will be reimbursed or credited.

(f) Developmental assistance provided under an approved mentor-protege agreement is distinct from, and must not duplicate, any effort that is the normal and expected product of the award and administration of the mentor firm's subcontracts. Costs associated with the latter must be accumulated and charged in accordance with the contractor's approved accounting practices; they are not considered developmental assistance costs eligible for either credit or reimbursement under the Program.]

I-107 [Elements of a m]Mentor-protege agreements.

[Each mentor-protege agreement will contain the following elements:]

(a) A signed mentor-protege agreement for each mentor-protege relationship identified under I-106(b)(2) must be submitted to the Director, SADBU, OUSD(AT&L), and approved before developmental assistance costs may be incurred. To the maximum extent possible, such mentor-protege agreements will be approved within 5 business days of receipt. [The name, address, e-mail address, and telephone number of the mentor and protege points of contact;]

(b) Each signed mentor-protege agreement submitted for approval under the Program must include-

(1) The name, address, and telephone number of the mentor firm and the protege firm and a point of contact within the mentor firm who will administer the developmental assistance program;

(2) The NAICS code(s) that represent the contemplated supplies or services to be provided by the protege firm to the mentor firm and a statement that, at the time the agreement is submitted for approval, the protege firm, if an SDB or WOSB concern, does not exceed the size standard for the appropriate NAICS code;

(3) A developmental program for the protege firm specifying the type of assistance identified in paragraph (f) of this section that will be provided. The developmental program also must include-

(i) Factors to assess the protege firm's developmental progress under the Program, including milestones for providing the identified assistance;

(ii) The anticipated number, dollar value, and type of subcontracts to be awarded the protege firm consistent with the extent and nature of the mentor firm's business, and the period of time over which the subcontracts will be awarded; and

(iii) The dollar value of the technical assistance program, broken out per year;

(4) A statement from the protege firm indicating its commitment to comply with the requirements for reporting and for review of the agreement during the duration of the agreement and for 2 years thereafter;

(5) A program participation term for the agreement that does not exceed 3 years. Requests for an extension of the agreement for a period not to exceed an additional 2 years are subject to the approval of the Director, SADBU, OUSD(AT&L), and are contingent upon the endorsement and submission of justification for such an extension from the cognizant Director, SADBU. The justification must detail the unusual circumstances that warrant a term in excess of 3 years;

(6) Procedures for the mentor firm to notify the protege firm in writing at least 30 days in advance of the mentor firm's intent to voluntarily withdraw its participation in the Program. A mentor firm may voluntarily terminate its mentor-protege agreement(s) only if it no longer wants to be a participant in the Program as a mentor firm. Otherwise, a mentor firm must terminate a mentor-protege agreement for cause;

(7) Procedures for a protege firm to notify the mentor firm in writing at least 30 days in advance of the protege firm's intent to voluntarily terminate the mentor-protege agreement;

(8) Procedures for the mentor firm to terminate the mentor-protege agreement for cause which provide that-

(i) The mentor firm must furnish the protege firm a written notice of the proposed termination, stating the specific reasons for such action, at least 30 days in advance of the effective date of such proposed termination;

(ii) The protege firm must have 30 days to respond to such notice of proposed termination, and may rebut any findings believed to be erroneous and offer a remedial program;

(iii) Upon prompt consideration of the protege firm's response, the mentor firm must either withdraw the notice of proposed termination and continue the protege firm's participation, or issue the notice of termination; and

(iv) The decision of the mentor firm regarding termination for cause, conforming with the requirements of this section, will be final and is not reviewable by DoD; and

(9) Additional terms and conditions as may be agreed upon by both parties.

[The NAICS code(s) that represent the contemplated supplies or services to be provided by the protege firm to the mentor firm and a statement that, at the time the agreement is submitted for approval, the protege firm, if an SDB or WOSB concern, does not exceed the size standard for the appropriate NAICS code;]

(c) Mentor firms must send a copy of any termination notices to the Director, SADBU, OUSD(AT&L), the cognizant Director, SADBU, and the Defense Contract Management Agency administrative contracting officer responsible for conducting the annual performance review, and, where funding is made available through a DoD program manager, must provide a copy to the program manager and to the contracting officer. [A statement that the protege firm is eligible to participate in accordance with I-102(b);]

(d) Termination of a mentor-protege agreement will not impair the obligations of the mentor firm to perform pursuant to its contractual obligations under Government contracts and subcontracts. Termination of all or part of the mentor-protege agreement will not impair the obligations of the protege firm to perform pursuant to its contractual obligations under any contract awarded to the protege firm by the mentor firm. [A statement that the mentor is eligible to participate in accordance with I-102;]

(e) Only developmental assistance provided after DoD approval of the mentor-protege agreement may be reimbursed. [A preliminary assessment of the developmental needs of the protege firm;]

(f) The mentor-protege agreement may provide for the mentor firm to furnish any or all of the following types of developmental assistance:

(1) Assistance by mentor firm personnel in-

(i) General business management, including organizational management, financial management, and personnel management, marketing, business development, and overall business planning;

(ii) Engineering and technical matters such as production inventory control and quality assurance; and

(iii) Any other assistance designed to develop the capabilities of the protege firm under the developmental program.

(2) Award of subcontracts under DoD contracts or other contracts on a noncompetitive basis.

(3) Payment of progress payments for the performance of subcontracts by a protege firm in amounts as provided for in the subcontract; but in no event may any such progress payment exceed 100 percent of the costs incurred by the protege firm for the performance of the subcontract. Provision of progress payments by a mentor firm to a protege firm at a rate other than the customary rate for the firm must be implemented in accordance with FAR 32.504(c).

(4) Advance payments under such subcontracts. The mentor firm must administer advance payments in accordance with FAR Subpart 32.4.

(5) Loans.

(6) Investment(s) in the protege firm in exchange for an ownership interest in the protege firm, not to exceed 10 percent of the total ownership interest. Investments may include, but are not limited to, cash, stock, and contributions in kind.

(7) Assistance that the mentor firm obtains for the protege firm from one or more of the following:

(i) Small Business Development Centers established pursuant to Section 21 of the Small Business Act (15 U.S.C. 648).

(ii) Entities providing procurement technical assistance pursuant to 10 U.S.C. Chapter 142 (Procurement Technical Assistance Centers).

(iii) Historically Black colleges and universities.

(iv) Minority institutions of higher education.

[A developmental program for the protege firm specifying the type of assistance the mentor will provide to the protege and how that assistance will-

(1) Increase the protege’s ability to participate in DoD, Federal, and/or commercial contracts and subcontracts; and

(2) Increase small business subcontracting opportunities in industry categories where eligible proteges or other small business firms are not dominant in the company’s vendor base;]

(g) A mentor firm may not require a protege firm to enter into a mentor-protege agreement as a condition for award of a contract by the mentor firm, including a subcontract under a DoD contract awarded to the mentor firm. [Factors to assess the protege firm's developmental progress under the Program, including specific milestones for providing each element of the identified assistance;

(h) An estimate of the dollar value and type of subcontracts that the mentor firm will award to the protege firm, and the period of time over which the subcontracts will be awarded;

(i) A statement from the protege firm indicating its commitment to comply with the requirements for reporting and for review of the agreement during the duration of the agreement and for 2 years thereafter;

(j) A program participation term for the agreement that does not exceed 3 years. Requests for an extension of the agreement for a period not to exceed an additional 2 years are subject to the approval of the cognizant Component Director, SADBU. The justification must detail the unusual circumstances that warrant a term in excess of 3 years;

(k) Procedures for the mentor firm to notify the protege firm in writing at least 30 days in advance of the mentor firm's intent to voluntarily withdraw its participation in the Program. A mentor firm may voluntarily terminate its mentor-protege agreement(s) only if it no longer wants to be a participant in the Program as a mentor firm. Otherwise, a mentor firm must terminate a mentor-protege agreement for cause;

(l) Procedures for the mentor firm to terminate the mentor-protege agreement for cause which provide that-

(1) The mentor firm must furnish the protege firm a written notice of the proposed termination, stating the specific reasons for such action, at least 30 days in advance of the effective date of such proposed termination;

(2) The protege firm must have 30 days to respond to such notice of proposed termination, and may rebut any findings believed to be erroneous and offer a remedial program;

(3) Upon prompt consideration of the protege firm's response, the mentor firm must either withdraw the notice of proposed termination and continue the protege firm's participation, or issue the notice of termination; and

(4) The decision of the mentor firm regarding termination for cause, conforming with the requirements of this section, will be final and is not reviewable by DoD;

(m) Procedures for a protege firm to notify the mentor firm in writing at least 30 days in advance of the protege firm's intent to voluntarily terminate the mentor-protege agreement;

(n) Additional terms and conditions as may be agreed upon by both parties; and

(o) Signatures and dates for both parties to the mentor-protege agreement.]

[I-108 Submission and approval of mentor-protege agreements.

(a) Upon solicitation or as determined by the cognizant DoD component, mentors will submit--

(1) A mentor application pursuant to I-105, if the mentor has not been previously approved to participate;

(2) A signed mentor-protege agreement pursuant to I-107;

(3) A statement as to whether the mentor is seeking credit or reimbursement of costs incurred;

(4) The estimated cost of the technical assistance to be provided, broken out per year;

(5) A justification if program participation term is greater than 3 years (Term of agreements may not exceed 5 years); and

(6) For reimbursable agreements, a specific justification for developmental costs in excess of $1,000,000 per year.

(b) When seeking reimbursement of costs, cognizant DoD components may require additional information.

(c) The mentor-protege agreement must be approved by the cognizant Component Director, SADBU, prior to incurring costs eligible for credit.

(d) The cognizant DoD component will execute a contract modification or a separate contract, if justified pursuant to I-103(b)(3), prior to the mentor’s incurring costs eligible for reimbursement.

(e) Credit agreements that are not associated with an existing DoD program and/or component will be submitted for approval to Director, SADBU, Defense Contract Management Agency (DCMA), via the mentor’s cognizant administrative contracting officer.

(f) A prospective mentor that has identified Program funds to be made available from a DoD program manager must provide the information in paragraph (a) of this section through the program manager to the cognizant Component Director, SADBU, with a letter signed by the program manager indicating the amount of funding that has been identified for the developmental assistance program.]

I-108[9] Reimbursement procedures. [Reimbursable agreements.

The following program provisions apply to all reimbursable mentor-protege agreements:]

(a) DoD will reimburse a mentor firm only for the cost of developmental assistance incurred by the mentor firm and provided to a protege firm under I-107(f)(1) and (7), and pursuant to an approved mentor-protege agreement. For agreements entered into prior to October 1, 1999, DoD will provide reimbursement only through a separate contract, cooperative agreement, or other agreement entered into between DoD and the mentor firm, awarded for the purpose of providing developmental assistance to one or more protege firms; a separately priced contract line item in a DoD contract; or inclusion of program costs in indirect expense pools. For agreements entered into on or after October 1, 1999, DoD will provide reimbursement only through a separately priced contract line item in a DoD contract; or through a separate contract if the Director, SADBU, OUSD(AT&L), determines that unusual circumstances justify reimbursement using a separate contract. No other means for the reimbursement of the costs of developmental assistance provided under I-107(f)(1) and (7) are authorized under the Program.

(b) Costs included in indirect expense pools will be reimbursed only to the extent that the costs are otherwise reasonable, allocable, and allowable.

(c[a]) Assistance provided in the form of progress payments to a protege firm in excess of the customary progress payment rate for the firm will be reimbursed only if implemented in accordance with FAR 32.504(c).

(d[b]) Assistance provided in the form of advance payments will be reimbursed only if the payments have been provided to a protege firm under subcontract terms and conditions similar to those in the clause at FAR 52.232-12, Advance Payments. Reimbursement of any advance payments will be made pursuant to the inclusion of the clause at DFARS 252.232-7005, Reimbursement of Subcontractor Advance Payments--DoD Pilot Mentor-Protege Program, in appropriate contracts. In requesting reimbursement, the mentor firm agrees that the risk of any financial loss due to the failure or inability of a protege firm to repay any unliquidated advance payments will be the sole responsibility of the mentor firm.

(e[c]) No other forms of developmental assistance are authorized for reimbursement under the Program. [The primary forms of developmental assistance authorized for reimbursement under the Program are identified in I-106(d). On a case-by-case basis, Component Directors, SADBU, at their discretion, may approve additional incidental expenses for reimbursement, provided these expenses do not exceed 10 percent of the total estimated cost of the agreement.]

(f[d]) The total amount reimbursed to a mentor firm for costs of assistance furnished to a protege firm in a fiscal year may not exceed $1,000,000 unless the [cognizant Component] Director, SADBU, OUSD(AT&L), determines in writing that unusual circumstances justify reimbursement at a higher amount. Request for authority to reimburse in excess of $1,000,000 must detail the unusual circumstances and must be endorsed and submitted by the program manager and [to] the cognizant [Component] Director, SADBU.

[(e) Developmental assistance costs that are incurred pursuant to an approved reimbursable mentor-protege agreement, and have been charged to, but not reimbursed through, a separate contract, or through a separately priced contract line item added to a DoD contract, will not be otherwise reimbursed, as either a direct or indirect cost, under any other DoD contract, irrespective of whether the costs have been recognized for credit against applicable subcontracting goals.]

I-109[10] Credit for unreimbursed developmental assistance costs [agreements.

I-110.1 Program provisions applicable to credit agreements.]

(a) Developmental assistance costs incurred by a mentor firm for providing assistance to a protege firm pursuant to an approved [credit] mentor-protege agreement, that have not been reimbursed through a separate contract, cooperative agreement, or other agreement entered into between DoD and the mentor firm, or through a separately priced contract line item added to a DoD contract, may be credited as if it were [the costs were incurred under] a subcontract award to that protege[,] for [the purpose of] determining the performance of the mentor firm in attaining an applicable subcontracting goal established under any contract containing a subcontracting plan pursuant to the clause at FAR 52.219-9, Small Business Subcontracting Plan[, or the provisions of the DoD Comprehensive Subcontracting Plan Test Program]. Unreimbursed developmental assistance costs incurred for a protege firm that is a qualified organization [an eligible entity] employing the severely disabled may be credited toward the mentor firm's small disadvantaged business subcontracting goal, even if the protege firm is not a small disadvantaged business concern.

(b) For crediting purposes only, [C]costs that have been reimbursed through inclusion in indirect expense pools may also be credited as subcontract awards for determining the performance of the mentor firm in attaining an applicable subcontracting goal established under any contract containing a subcontracting plan pursuant to the clause at FAR 52.219-9. However, costs that have not been reimbursed because they are not reasonable, allocable, or allowable under I-108(b), will not be recognized for crediting purposes.

(c) Other costs that are not eligible for reimbursement pursuant to I-108(a)[6(d)] may be recognized for credit only if requested, identified, and incorporated in an approved mentor-protege agreement.

(d) The amount of credit a mentor firm may receive for any such unreimbursed developmental assistance costs must be equal to-

(1) Four times the total amount of such costs attributable to assistance provided by small business development centers, historically Black colleges and universities, minority institutions, and procurement technical assistance centers.

(2) Three times the total amount of such costs attributable to assistance furnished by the mentor's employees.

(3) Two times the total amount of other such costs incurred by the mentor in carrying out the developmental assistance program.

(e) A mentor firm may receive credit toward the attainment of an SDB subcontracting goal for each subcontract awarded for a product or a service by the mentor firm to an entity that qualifies as an SDB protege firm pursuant to I-104(a)(1)(i) through (iv). With respect to former SDB protege firm(s), a mentor may take credit for awards to such concern(s) that, except for its size would be a small business concern owned and controlled by socially and economically disadvantaged individuals, but only if-

(1) The size of such business concern is not more than two times the appropriate size standard;

(2) The business concern formerly had a mentor-protege agreement with such mentor firm that was not terminated for cause; and

(3) The credit is taken not later than October 1, 2008.

(f) Amounts credited toward applicable subcontracting goal(s) for unreimbursed costs under the Program must be separately identified from the amounts credited toward the goal resulting from the award of actual subcontracts to protege firms. The combination of the two must equal the mentor firm's overall accomplishment toward the applicable goal(s).

[I-110.2 Credit adjustments]

(g[a]) Adjustments may be made to the amount of credit claimed under paragraphs (a) and (b) of this section if the Director, SADBU, OUSD(AT&L), determines that-

(1) A mentor firm's performance in the attainment of its subcontracting goals through actual subcontract awards declined from the prior fiscal year without justifiable cause; and

(2) Imposition of such a limitation on credit appears to be warranted to prevent abuse of this incentive for the mentor firm's participation in the Program.

(h[b]) The mentor firm must be afforded the opportunity to explain the decline in small business subcontract awards before imposition of any such limitation on credit. In making the final decision to impose a limitation on credit, the Director, SADBU, OUSD(AT&L), must consider-

(1) The mentor firm's overall small business participation rates (in terms of percentages of subcontract awards and dollars awarded) as compared to the participation rates existing during the 2 fiscal years prior to the firm's admission to the Program;

(2) The mentor firm's aggregate prime contract awards during the prior 2 fiscal years and the total amount of subcontract awards under such contracts; and

(3) Such other information the mentor firm may wish to submit.

(i[c]) The decision of the Director, SADBU, OUSD(AT&L), regarding the imposition of a limitation on credit will be final.

(j) Any prospective limitation on credit imposed by the Director, SADBU, OUSD(AT&L), must be expressed as a percentage of otherwise eligible credit, will apply beginning on a specific date in the future, and will continue until a date certain during the current fiscal year.

(k) Any retroactive limitation on credit imposed by the Director, SADBU, OUSD(AT&L), must reflect the actual costs incurred for developmental assistance (not exceeding the maximum amount reimbursed).

(l) For purposes of calculating any incentives to be paid to a mentor firm for exceeding an SDB subcontracting goal pursuant to the clause at FAR 52.219-26, Small Disadvantaged Business Participation Program--Incentive Subcontracting, incentives will be paid only if an SDB subcontracting goal has been exceeded as a result of actual subcontract awards to SDBs (i.e., excluding credit under paragraphs (a), (b), and (c) of this section).

(m) Developmental assistance costs that are incurred pursuant to an approved mentor-protege agreement, and have been charged to, but not reimbursed through, a separate contract, cooperative agreement, or other agreement entered into between DoD and the mentor firm, or through a separately priced contract line item added to a DoD contract, will not be otherwise reimbursed, as either a direct or indirect cost, under any other DoD contract, irrespective of whether the costs have been recognized for credit against applicable subcontracting goals.

(n) Developmental assistance provided under an approved mentor-protege agreement is distinct from, and must not duplicate, any effort that is the normal and expected product of the award and administration of the mentor firm's subcontracts. Costs associated with the latter must be accumulated and charged in accordance with the contractor's approved accounting practices; they are not considered developmental assistance costs eligible for either credit or reimbursement under the Program.

[I-111 Agreement terminations.

(a) Mentors and/or proteges must send a copy of any termination notices to the cognizant Component Director, SADBU, that approved the agreement, and the DCMA administrative contracting officer responsible for conducting the annual review pursuant to I-113.

(b) For reimbursable agreements, mentors must also send copies of any termination to the program manager and to the contracting officer.

(c) Termination of a mentor-protege agreement will not impair the obligations of the mentor firm to perform pursuant to its contractual obligations under Government contracts and subcontracts.

(d) Termination of all or part of the mentor-protege agreement will not impair the obligations of the protege firm to perform pursuant to its contractual obligations under any contract awarded to the protégé firm by the mentor firm.

(e) Mentors and proteges will follow provisions of the mentor-protege agreement developed in compliance with I-107(k) through (m).]

I-110 Advance agreements on the treatment of developmental assistance costs.

Pursuant to FAR 31.109, approved mentor firms seeking either reimbursement or credit are strongly encouraged to enter into an advance agreement with the contracting officer responsible for determining final indirect cost rates under FAR 42.705. The purpose of the advance agreement is to establish the accounting treatment of the costs of the developmental assistance pursuant to the mentor-protege agreement prior to the incurring of any costs by the mentor firm. An advance agreement is an attempt by both the Government and the mentor firm to avoid possible subsequent dispute based on questions related to reasonableness, allocability, or allowability of the costs of developmental assistance under the Program. Absent an advance agreement, mentor firms are advised to establish the accounting treatment of such costs and address the need for any changes to their cost accounting practices that may result from the implementation of a mentor-protege agreement, prior to incurring any costs, and irrespective of whether costs will be reimbursed or credited.

I-111[12] Reporting requirements.

[I-112.1 Reporting requirements applicable to SF294/SF295 reports.

(a) Amounts credited toward applicable subcontracting goal(s) for unreimbursed costs under the Program must be separately identified on the appropriate SF294/SF295 reports from the amounts credited toward the goal(s) resulting from the award of actual subcontracts to protege firms. The combination of the two must equal the mentor firm's overall accomplishment toward the applicable goal(s).

(b) A mentor firm may receive credit toward the attainment of an SDB subcontracting goal for each subcontract awarded by the mentor firm to an entity that qualifies as a protege firm pursuant to I-101.3 or I-101.5.

(c) For purposes of calculating any incentives to be paid to a mentor firm for exceeding an SDB subcontracting goal pursuant to the clause at FAR 52.219-26, Small Disadvantaged Business Participation Program--Incentive Subcontracting, incentives will be paid only if an SDB subcontracting goal has been exceeded as a result of actual subcontract awards to SDBs (i.e., excluding credit).

I-112.2 Program specific reporting requirements.]

(a) Mentor[s] firms must report on the progress made under active mentor-protege agreements semiannually for the periods ending March 31st and September 30th [throughout the Program participation term of the agreement.] The September 30th report must address the entire fiscal year. Reports are due 30 days after the close of each reporting period. The report must include-

(1) Data on performance under the mentor-protege agreement, including dollars obligated, expenditures, credit taken under the Program, applicable subcontract awards under DoD contracts, developmental assistance provided, impact of the agreement, and progress of the agreement (A recommended format and guidance for this submission are available via the Internet at http://www.acq.osd.mil/sadbu/mentor_protege); and

(2) A copy of the SF 294, Subcontracting Report for Individual Contracts, for each contract where developmental assistance was credited, with a statement in Block 15 identifying-

(i) The amount of dollars credited to the applicable subcontracting goal as a result of developmental assistance provided to protege firms under the Program; and

(ii) The number and dollar value of subcontracts awarded to the protege firm(s), broken out per protege.

(3) In addition to the reporting requirements of paragraph (a)(1) of this section, for commercial companies and companies participating in the DoD Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans, indicate in Block 15 of the SF 295-

(i) The total dollars credited to the applicable subcontracting goal as a result of developmental assistance provided to protege firm(s) under the Program; and

(ii) The total dollar amount of subcontracts awarded to the protege firm(s), broken out per protege.

(b) The mentor firm and the protege firm—

(1) Must provide data on the progress made by the protege firm in employment, revenues, and participation in DoD contracts during—

(i) Each fiscal year of the Program participation term; and

(ii) Each of the 2 fiscal years following the expiration of the Program participation term;

(2) Must provide the data by October 31st of each year to address the prior fiscal year; and

(3) During the Program participation term, may provide the data as part of the mentor report required by paragraph (a) of this section for the period ending September 30th.

(c) Progress reports must be submitted as follows:

(1) For agreements that provide credit toward applicable subcontracting goals for costs incurred under the Program, to the Director, SADBU, OUSD(AT&L), and the Defense Contract Management Agency (DCMA) administrative contracting officer.

(2) For agreements that provide for reimbursement of costs incurred under the Program, to the Director, SADBU, OUSD(AT&L), the contracting officer, the DCMA administrative contracting officer, the program manager, and the cognizant Director, SADBU.

[(b) Reports are due 30 days after the close of each reporting period.

(c) Each report must include the following data on performance under the mentor-protege agreement:

(1) Dollars obligated (for reimbursable agreements).

(2) Expenditures.

(3) Dollars credited, if any, toward applicable subcontracting goals as a result of developmental assistance provided to the protege and a copy of the SF294 and/or SF295 for each contract where developmental assistance was credited.

(4) The number and dollar value of subcontracts awarded to the protege firm.

(5) Description of developmental assistance provided, including milestones achieved.

(6) Impact of the agreement in terms of capabilities enhanced, certifications received, and/or technology transferred.

(d) A recommended reporting format and guidance for its submission are available at: www.acq.osd.mil/sadbu/mentor_protege.

(e) The protege must provide data, annually by October 31st, on the progress made during the prior fiscal year by the protege in employment, revenues, and participation in DoD contracts during-

(1) Each fiscal year of the Program participation term; and

(2) Each of the 2 fiscal years following the expiration of the Program participation term.

(f) The protege report required by paragraph (e) of this section may be provided as part of the mentor report for the period ending September 30th required by paragraph (a) of this section.

(g) Progress reports must be submitted--

(1) For credit agreements, to the cognizant Component Director, SADBU, that approved the agreement, and the mentor’s cognizant DCMA administrative contracting officer; and

(2) For reimbursable agreements, to the cognizant Component Director, SADBU, the contracting officer, the DCMA administrative contracting officer, and the program manager.]

I-112[13] Agreement [Performance] reviews.

The Defense Contract Management Agency [(a) DCMA] will conduct annual performance reviews of the progress and accomplishments realized under approved mentor-protege agreements. These reviews must verify data provided on the semiannual reports and must provide information as to-

(a[1]) Whether all costs reimbursed to the mentor firm under the agreement were reasonably incurred to furnish assistance to the protege firm in accordance with the mentor-protege agreement and applicable regulations and procedures; and

(b[2]) Whether the mentor firm and protege firm accurately reported progress made by the protege firm in employment, revenues, and participation in DoD contracts during the Program participation term and for 2 fiscal years following the expiration of the Program participation term.

[(b) A checklist for annual performance reviews is available at www.acq.osd.mil/sadbu/mentor_protege.]

Competition Requirements (DFARS Case 2003-D017)

Deletes text that is obsolete or duplicative of FAR policy; and relocates procedures for documenting reasons for use of other than full and open competition to PGI.

Affected subparts/sections: Part 206 Table of Contents; 206.0; 206.2; 206.3; PGI 206.2; PGI 206.3

The Federal Register notice for this rule:

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

DEPARTMENT OF DEFENSE

48 CFR Part 206

[DFARS Case 2003-D017]

Defense Federal Acquisition Regulation Supplement; Competition Requirements

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 competition requirements. This rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

EFFECTIVE DATE: December 15, 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-D017.

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 include--

[cir] Revision of DFARS 206.001 to clarify the text.

[cir] Deletion of text at DFARS 206.202(b) regarding documentation needed to support a DoD determination to exclude a particular source from a contact action in order to establish or maintain an alternative source of supplies or services; and deletion of text at DFARS 206.302-2 containing examples of circumstances under which use of other than full and open competition may be appropriate due to unusual and compelling urgency. This text has been relocated to the new DFARS companion resource, Procedures, Guidance, and Information (PGI), available at http://www.acq.osd.mil/dpap/dars/pgi.

Deletion of obsolete text at DFARS 206.302-1(b)(4) and deletion of unnecessary text at DFARS 206.303-1(b) and (c) and 206.303-2.

DoD published a proposed rule at 69 FR 8149 on February 23, 2004. DoD received one comment on the proposed rule. The respondent recommended further revision of the text at 206.001 to clarify that the exception from competition authorized by 10 U.S.C. 1091 applies only to contracts awarded to individuals. DoD has included this clarification in the final rule.

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

B. Regulatory Flexibility Act DoD certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the DFARS changes in this rule are limited to clarifying revisions or deletion of text that is unnecessary or internal to DoD.

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 206

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

Therefore, 48 CFR Part 206 is amended as follows:

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

Competition Requirements

DFARS Case 2003-D017

Final Rule

(Text that is stricken and highlighted will be relocated

to Procedures, Guidance, and Information (PGI))

PART 206—COMPETITION REQUIREMENTS

* * * * *

206.001 Applicability.

(b) Contracts awarded using the procedures in 237.104(b)(ii) are expressly authorized by 10 U.S.C. 1091. [As authorized by 10 U.S.C. 1091, contracts awarded to individuals using the procedures at 237.104(b)(ii) are exempt from the competition requirements of FAR Part 6.]

SUBPART 206.2--FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

206.202 Establishing or maintaining alternative sources.

(a) Agencies may use this authority to totally or partially exclude a particular source from a contract action.

(b) The determination and findings (D&F) and the documentation supporting the D&F must [shall] identify the source to be excluded from the contract action. (i) Include the following information [at PGI 206.202(b)], as applicable, and any other information that may be pertinent, in the supporting documentation[.]:

(A) The acquisition history of the supplies or services, including sources, prices, quantities, and dates of award;

(B) The circumstances which make it necessary to exclude the particular source from the contract action, including—

(1) The reasons for the lack of or potential loss of alternative sources; e.g., the technical complexity and criticality of the supplies or services; and

(2) The current annual requirement and projected needs for the supplies or services;

(C) Whether the existing source must be totally excluded from the contract action or whether a partial exclusion is sufficient;

(D) The potential effect of exclusion on the excluded source in terms of loss of capability to furnish the supplies or services in the future;

(E) When FAR 6.202(a)(1) is the authority, the basis for—

(1) The determination of future competition; and

(2) The determination of reduced overall costs. Include, as a minimum, a discussion of start-up costs, facility costs, duplicative administration costs, economic order quantities, and life cycle cost considerations; and

(F) When FAR 6.202(a)(2) is the authority—

(1) The current annual and mobilization requirements for the supplies or services, citing the source of, or the basis for, the data;

(2) A comparison of current production capacity with that necessary to meet mobilization requirements;

(3) An analysis of the risks of relying on the present source; and

(4) A projection of the time required for a new source to acquire the necessary facilities and achieve the production capacity necessary to meet mobilization requirements.

(ii) A sample format for Determination and Findings citing the authority of FAR 6.202(a) is in Table 6-1, Determinations and Findings.

TABLE 6-1, DETERMINATIONS AND FINDINGS

 

Determination and Findings

 

Authority to Exclude a Source

 

In accordance with 10 U.S.C. 2304(b)(1), it is my determination that the following contract action may be awarded using full and open competition after exclusion of ____________________*:

 

(Describe requirement.)

Findings

 

The exclusion of _____________________*

 

Alternate 1: will increase or maintain competition for this requirement and is expected to result in a reduction of $__________ in overall costs for the present and future acquisition of these supplies or services. (Describe how estimate was derived.)

 

Alternate 2: is in the interest of national defense because it will result in having a supplier available for furnishing these supplies or services in case of a national emergency or industrial mobilization. (Explain circumstances requiring exclusion of source.)

 

Alternate 3: is in the interest of national defense because it will result in establishment or maintenance of an essential engineering, research or development capability to be provided by an educational or other nonprofit institution or a federally funded research and development center. (Explain circumstances requiring exclusion of source.)

 

* Identify source being excluded.

* * * * *

SUBPART 206.3--OTHER THAN FULL AND OPEN COMPETITION

206.302 Circumstances permitting other than full and open competition.

206.302-1 Only one responsible source and no other supplies or services will satisfy agency requirements.

* * * * *

(b) Application. * * *

(4) Do not use this authority unless the equipment or parts have been adopted as standard items of supply in accordance with DoDI 5000.2, Defense Acquisition Management Policies and Procedures.

206.302-2 Unusual and compelling urgency.

(b) Application. The circumstances under which use of this authority may be appropriate include, but are not limited to, the following: [For guidance on circumstances under which use of this authority may be appropriate, see PGI 206.302-2(b).]

(i) Supplies, services, or construction needed at once because of fire, flood, explosion, or other disaster;

(ii) Essential equipment or repair needed at once to—

(A) Comply with orders for a ship;

(B) Perform the operational mission of an aircraft; or

(C) Preclude impairment of launch capabilities or mission performance of missiles or missile support equipment.

(iii) Construction needed at once to preserve a structure or its contents from damage;

(iv) Purchase requests citing an issue priority designator under DoD 4140.1-R, DoD Materiel Management Regulation, of 4 or higher, or citing “Electronic Warfare QRC Priority.”

* * * * *

206.303 Justifications.

206.303-1 Requirements.

(b) Technical and requirements personnel must obtain any review and approval required by department or agency procedures before submission of a recommendation for other than full and open competition to the contracting officer.

(c) When conditions warrant, a class justification may provide for award of multiple contracts extending across more than one program phase.

(d) The Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), is the agency point of contact for submission of justifications to the Office of the United States Trade Representative.

206.303-2 Content.

(a) Include sufficient information in the justification to permit its approval as a stand-alone document, even though agency procedures may require supplementary documentation.

* * * * *

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

Competition Requirements

DFARS Case 2003-D017

Procedures, Guidance, and Information

PGI 206—COMPETITION REQUIREMENTS

PGI 206.2—FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

PGI 206.202 Establishing or maintaining alternative sources.

(b) (i) Include the following information, as applicable, and any other information that may be pertinent, in the supporting documentation:

(A) The acquisition history of the supplies or services, including sources, prices, quantities, and dates of award.

(B) The circumstances which make it necessary to exclude the particular source from the contract action, including—

(1) The reasons for the lack of or potential loss of alternative sources; e.g., the technical complexity and criticality of the supplies or services; and

(2) The current annual requirement and projected needs for the supplies or services.

(C) Whether the existing source must be totally excluded from the contract action or whether a partial exclusion is sufficient.

(D) The potential effect of exclusion on the excluded source in terms of loss of capability to furnish the supplies or services in the future.

(E) When FAR 6.202(a)(1) is the authority, the basis for—

(1) The determination of future competition; and

(2) The determination of reduced overall costs. Include, as a minimum, a discussion of start-up costs, facility costs, duplicative administration costs, economic order quantities, and life cycle cost considerations.

(F) When FAR 6.202(a)(2) is the authority—

(1) The current annual and mobilization requirements for the supplies or services, citing the source of, or the basis for, the data;

(2) A comparison of current production capacity with that necessary to meet mobilization requirements;

(3) An analysis of the risks of relying on the present source; and

(4) A projection of the time required for a new source to acquire the necessary facilities and achieve the production capacity necessary to meet mobilization requirements.

(ii) The following is a sample format for Determination and Findings citing the authority of FAR 6.202(a):

 

Determination and Findings

 

Authority to Exclude a Source

 

In accordance with 10 U.S.C. 2304(b)(1), it is my determination that the following contract action may be awarded using full and open competition after exclusion of ____________________*:

 

(Describe requirement.)

Findings

 

The exclusion of _____________________*

 

Alternate 1: will increase or maintain competition for this requirement and is expected to result in a reduction of $__________ in overall costs for the present and future acquisition of these supplies or services. (Describe how estimate was derived.)

 

Alternate 2: is in the interest of national defense because it will result in having a supplier available for furnishing these supplies or services in case of a national emergency or industrial mobilization. (Explain circumstances requiring exclusion of source.)

 

Alternate 3: is in the interest of national defense because it will result in establishment or maintenance of an essential engineering, research or development capability to be provided by an educational or other nonprofit institution or a federally funded research and development center. (Explain circumstances requiring exclusion of source.)

 

* Identify source being excluded.

PGI 206.3--OTHER THAN FULL AND OPEN COMPETITION

PGI 206.302 Circumstances permitting other than full and open competition.

PGI 206.302-2 Unusual and compelling urgency.

(b) Application. The circumstances under which use of this authority may be appropriate include, but are not limited to, the following:

(i) Supplies, services, or construction needed at once because of fire, flood, explosion, or other disaster;

(ii) Essential equipment or repair needed at once to—

(A) Comply with orders for a ship;

(B) Perform the operational mission of an aircraft; or

(C) Preclude impairment of launch capabilities or mission performance of missiles or missile support equipment.

(iii) Construction needed at once to preserve a structure or its contents from damage;

(iv) Purchase requests citing an issue priority designator under DoD 4140.1-R, DoD Materiel Management Regulation, of 4 or higher, or citing “Electronic Warfare QRC Priority.”

Construction and Architect-Engineer Services (DFARS Case 2003-D035)

Relocates to PGI, procedures for establishment of evaluation criteria in the selection of firms for architect-engineer contracts; deletes unnecessary text on preselection boards and selection authorities; and replaces a reference to Standard Form 254, Architect-Engineer and Related Services Questionnaire, with a reference to its replacement, Standard Form 330, Architect-Engineer Qualifications.

Affected subparts/sections: Part 236 Table of Contents; 236.6; PGI 236.6

The Federal Register notice for this rule:

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

DEPARTMENT OF DEFENSE

48 CFR Part 236

[DFARS Case 2003-D035]

Defense Federal Acquisition Regulation Supplement; Construction and Architect-Engineer Services

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 selection of firms for architect-engineer contracts. This rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

EFFECTIVE DATE: December 15, 2004.

FOR FURTHER INFORMATION CONTACT: Mr. Euclides Barrera, Defense Acquisition Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0296; facsimile (703) 602-0350. Please cite DFARS Case 2003-D035.

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 changes in this rule--

Revise DFARS 236.602-1 to remove procedures for establishment of evaluation criteria in the selection of firms for architect-engineer contracts. This text has been relocated to the new DFARS companion resource, Procedures, Guidance, and Information (PGI), available at http://www.acq.osd.mil/dpap/dars/pgi.

Remove unnecessary text on preselection boards and selection authorities at DFARS 236.602-2 and 236.602-4.

Amend DFARS 236.604 to reflect replacement of Standard Form 254, Architect--Engineer and Related Services Questionnaire, with Standard Form 330, Architect-Engineer Qualifications.

DoD published a proposed rule at 69 FR 35568 on June 25, 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 changes in the rule represent no substantive change to policy with regard to selection of firms for architect-engineer contracts.

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 236

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

Therefore, 48 CFR Part 236 is amended as follows:

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

Construction and Architect-Engineer Services

DFARS Case 2003-D035

Final Rule

(Text that is stricken and highlighted will be relocated

to Procedures, Guidance, and Information (PGI))

PART 236—CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

* * * * *

236.602 Selection of firms for architect-engineer contracts.

236.602-1 Selection criteria.

(a)(i) Establish the evaluation criteria before making the public announcement required by FAR 5.205(c) and include the criteria and their relative order of importance in the announcement. [Follow the procedures at PGI 236.602-1(a).] The evaluation criteria should be project specific. Use the information in the DD Form 1391, FY__ Military Construction Project Data, when available, and other pertinent project data in preparing the evaluation criteria.

(4) Use performance evaluation data from the central data base identified in 236.201.

(6) The primary factor in A-E selection is the determination of the most highly qualified firm. Also consider secondary factors such as geographic proximity and equitable distribution of work, but do not attribute greater significance to the secondary factors than to qualifications and past performance. Do not reject the overall most highly qualified firm solely in the interest of equitable distribution of contracts.

(A) Consider the volume of work awarded by DoD during the previous 12 months. In considering equitable distribution of work among A-E firms, include small business concerns; historically black colleges and universities and minority institutions; firms that have not had prior DoD contracts; and small disadvantaged business concerns and joint ventures with small disadvantaged business participants if the North American Industry Classification System (NAICS) Industry Subsector of the acquisition is one in which use of a price evaluation adjustment is currently authorized (see FAR 19.201(b)).

(1) Use data extracted from the Defense Contract Action Data System (DCADS) compiled from DD Form 350, Individual Contracting Action Report. DCADS data may be obtained from the central data base identified in 236.201(c)(1).

(2) Do not consider awards to overseas offices for projects outside the United States, its territories and possessions. Do not consider awards to a subsidiary if the subsidiary is not normally subject to management decisions, bookkeeping, and policies of a holding or parent company or an incorporated subsidiary that operates under a firm name different from the parent company. This allows greater competition.

(B) Consider as appropriate superior performance evaluations on recently completed DoD contracts.

(C) Consider the extent to which potential contractors identify and commit to small business, to small disadvantaged business (SDB) if the NAICS Industry Subsector of the subcontracted effort is one in which use of an evaluation factor or subfactor for participation of SDB concerns is currently authorized (see FAR 19.201(b)), and to historically black college or university and minority institution performance as subcontractors.

236.602-2 Evaluation boards.

(a) Preselection boards may be used to identify to the selection board the qualified firms that have a reasonable chance of being considered as most highly qualified by the selection board.

236.602-4 Selection authority.

(a) The selection authority shall be at a level appropriate for the dollar value and nature of the proposed contract.

(c) A finding that some of the firms on the selection report are unqualified does not preclude approval of the report, provided that a minimum of three most highly qualified firms remains. The reasons for finding a firm or firms unqualified must be recorded.

* * * * *

236.604 Performance evaluation.

* * * * *

(c) Distribution and use of performance reports.

* * * * *

(ii) File and use the DD Form 2631, Performance Evaluation (Architect-Engineer), in a manner similar to the SF 254, Architect-Engineer and Related Services Questionnaire [SF 330, Architect-Engineer Qualifications, Part II].

* * * * *

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

Construction and Architect-Engineer Services

DFARS Case 2003-D035

Procedure, Guidance, and Information

PGI 236—CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

* * * * *

PGI 236.6—ARCHITECT-ENGINEER SERVICES

PGI 236.602 Selection of firms for architect-engineer contracts.

PGI 236.602-1 Selection criteria.

(a) The evaluation criteria should be project specific. Use the information in the DD Form 1391, FY__ Military Construction Project Data, when available, and other pertinent project data in preparing the evaluation criteria.

(4) Use performance evaluation data from the central data base identified in 236.201.

(6) The primary factor in A-E selection is the determination of the most highly qualified firm. Also consider secondary factors such as geographic proximity and equitable distribution of work, but do not attribute greater significance to the secondary factors than to qualifications and past performance. Do not reject the overall most highly qualified firm solely in the interest of equitable distribution of contracts.

(A) Consider the volume of work awarded by DoD during the previous 12 months. In considering equitable distribution of work among A-E firms, include small business concerns; historically black colleges and universities and minority institutions; firms that have not had prior DoD contracts; and small disadvantaged business concerns and joint ventures with small disadvantaged business participants if the North American Industry Classification System (NAICS) Industry Subsector of the acquisition is one in which use of a price evaluation adjustment is currently authorized (see FAR 19.201(b)).

(1) Use data extracted from the Defense Contract Action Data System (DCADS) compiled from DD Form 350, Individual Contracting Action Report. DCADS data may be obtained from the central data base identified in DFARS 236.201(c)(1).

(2) Do not consider awards to overseas offices for projects outside the United States, its territories and possessions. Do not consider awards to a subsidiary if the subsidiary is not normally subject to management decisions, bookkeeping, and policies of a holding or parent company or an incorporated subsidiary that operates under a firm name different from the parent company. This allows greater competition.

(B) Consider as appropriate superior performance evaluations on recently completed DoD contracts.

(C) Consider the extent to which potential contractors identify and commit to small business, to small disadvantaged business (SDB) if the NAICS Industry Subsector of the subcontracted effort is one in which use of an evaluation factor or subfactor for participation of SDB concerns is currently authorized (see FAR 19.201(b)), and to historically black college or university and minority institution performance as subcontractors.

Final Rules – Legislative

Free Trade Agreements – Chile and Singapore (DFARS Case 2003-D088)

Finalizes, with changes, the interim rule published on January 13, 2004 (DFARS Change Notice 20040113), to implement new Free Trade Agreements with Chile and Singapore. The new Free Trade Agreements waive the applicability of the Buy American Act for some foreign supplies and construction materials from Chile and Singapore, and specify procurement procedures designed to ensure fairness. The changes in the final rule delete text on the applicability of U.S. law to resolve any breach of contract, since this issue is now addressed in the clause at FAR 52.233-4, Applicable Law for Breach of Contract Claim. The final rule also contains a minor change to clarify procedures for application of the Free Trade Agreements when evaluating foreign offers for supplies.

Affected subparts/sections: 225.5; 252.212; 252.225

The Federal Register notice for this rule:

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

DEPARTMENT OF DEFENSE

48 CFR Parts 212, 213, 225, and 252

[DFARS Case 2003-D088]

Defense Federal Acquisition Regulation Supplement; Free Trade Agreements--Chile and Singapore

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has adopted as final, with changes, an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement new Free Trade Agreements with Chile and Singapore, as approved by Congress in the United States-Chile Free Trade Agreement Implementation Act and the United States-Singapore Free Trade Agreement Implementation Act. The new Free Trade Agreements waive the applicability of the Buy American Act for some foreign supplies and construction materials from Chile and Singapore, and specify procurement procedures designed to ensure fairness.

EFFECTIVE DATE: December 15, 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-D088.

SUPPLEMENTARY INFORMATION:

A. Background DoD published an interim DFARS rule at 69 FR 1926 on January 13, 2004, to implement new Free Trade Agreements with Chile and Singapore, in accordance with the United States-Chile Free Trade Agreement Implementation Act (Public Law 108-77) and the United States-Singapore Free Trade Agreement Implementation Act (Public Law 108-78). Applicable changes to the Federal Acquisition Regulation (FAR) were published in Federal Acquisition Circular (FAC) 2001-19 on January 7, 2004 (69 FR 1051; Interim rule), and in FAC 2001-25 on October 5, 2004 (69 FR 59700; Final rule).

DoD received no comments on the interim DFARS rule. However, the final rule includes the following additional changes:

Amendment of the trade agreements clauses at DFARS 252.225-7021, 252.225-7036, and 252.225-7045 to remove the statement that United States law will apply to resolve any claim of breach of contract. This statement is no longer necessary, because the final rule published in FAC 2001-25 contains a new FAR clause, 52.233-4, Applicable Law for Breach of Contract Claim, that is prescribed for inclusion in all contracts.

A minor amendment at DFARS 225.502(c)(i)(B) to clarify that, in acquisitions subject to a Free Trade Agreement, only eligible products of the applicable Free Trade Agreement country are exempt from application of the Buy American Act or Balance of Payments Program evaluation factor (e.g., for acquisitions between $25,000 and $58,550, a Mexican end product would be a ``NAFTA country end product'' but would not be an ``eligible product,'' in accordance with the thresholds at FAR 25.402).

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. Although the rule opens up Government procurement to the products of Chile, and lowers the trade agreements threshold for the products of Singapore, the economic impact on U.S. small businesses will not be significant. DoD applies the trade agreements to only those non-defense items listed at DFARS 225.401-70, and acquisitions below $100,000 that are set aside for small businesses are exempt.

C. Paperwork Reduction Act This rule affects the certification and information collection requirements in the provisions at DFARS 252.225-7020 and 252.225-7035, currently approved by the Office of Management and Budget under Clearance Number 0704-0229. The impact, however, is negligible. In the provision at DFARS 252.225-7020, Trade Agreements Certificate, the offeror no longer has to list offers of end products from Chile as nondesignated country end products. However, offers of Chilean end products would have been unlikely, because purchase of foreign products other than eligible products is prohibited by the Trade Agreements Act. In the provision at DFARS 252.225-7035, Buy American Act--Free Trade Agreements--Balance of Payments Program Certificate, the offeror must list all end products that are not domestic end products. The offeror will list products of Chile and Singapore on the list of Free Trade Agreement country end products, rather than the list of ``other foreign end products.''

List of Subjects in 48 CFR Parts 212, 213, 225, and 252

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

Accordingly, the interim rule amending 48 CFR parts 212, 213, 225, and 252, which was published at 69 FR 1926 on January 13, 2004, is adopted as a final rule with the following changes:

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

Free Trade Agreements—Chile and Singapore

DFARS Case 2003-D088

Final Rule

PART 225—FOREIGN ACQUISITION

* * * * *

SUBPART 225.5--EVALUATING FOREIGN OFFERS--SUPPLY CONTRACTS

225.502 Application.

* * * * *

(c) Use the following procedures instead of those in FAR 25.502(c) for acquisitions subject to the Buy American Act or the Balance of Payments Program:

(i)(A) If the acquisition is subject only to the Buy American Act or the Balance of Payments Program, then only qualifying country end products are exempt from application of the Buy American Act or Balance of Payments Program evaluation factor.

(B) If the acquisition is also subject to a Free Trade Agreement, then end [eligible] products of the applicable Free Trade Agreement country are also exempt from application of the Buy American Act or Balance of Payments Program evaluation factor.

* * * * *

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 (SEP 2004 [DEC 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.

* * * * *

_____ 252.225-7021 Trade Agreements (JUN 2004 [DEC 2004])

(19 U.S.C. 2501-2518 and 19 U.S.C.

3301 note).

* * * * *

_____ 252.225-7036 Buy American Act--Free Trade

Agreements--Balance of Payments Program (JAN 2004 [DEC 2004]) (___ Alternate I) (JAN 2004) (41 U.S.C. 10a-10d and 19 U.S.C. 3301 note).

* * * * *

252.225-7021 Trade Agreements.

As prescribed in 225.1101(6), use the following clause:

TRADE AGREEMENTS (JUN 2004 [DEC 2004])

* * * * *

(e) United States law will apply to resolve any claim of breach of this contract.

(f[e]) * * *

(End of clause)

* * * * *

252.225-7036 Buy American Act--Free Trade Agreements--Balance of Payments Program.

As prescribed in 225.1101(10)(i), use the following clause:

BUY AMERICAN ACT--FREE TRADE AGREEMENTS--BALANCE OF PAYMENTS PROGRAM (JAN 2004 [DEC 2004])

* * * * *

(e) United States law will apply to resolve any claim of breach of this contract.

(End of clause)

* * * * *

252.225-7045 Balance of Payments Program--Construction Material Under Trade Agreements.

As prescribed in 225.7503(b), use the following clause:

BALANCE OF PAYMENTS PROGRAM--CONSTRUCTION MATERIAL UNDER TRADE AGREEMENTS (JUN 2004 [DEC 2004])

* * * * *

(d) United States law will apply to resolve any claim of breach of this contract.

(End of clause)

* * * * *

Firefighting Services Contracts (DFARS Case 2003-D107)

Finalizes, without change, the interim rule published on June 25, 2004 (DFARS Change Notice 20040625), to implement Section 331 of the National Defense Authorization Act for Fiscal Year 2004. Section 331 permits the award of contracts for firefighting functions at military installations or facilities for periods of one year or less, if the functions would otherwise have to be performed by members of the armed forces who are not readily available due to a deployment.

Affected subparts/sections: None.

The Federal Register notice for this rule:

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

DEPARTMENT OF DEFENSE

48 CFR Part 237

[DFARS Case 2003-D107]

Defense Federal Acquisition Regulation Supplement; Firefighting Services Contracts

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has adopted as final, without change, an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Section 331 of the National Defense Authorization Act for Fiscal Year 2004. Section 331 provides authority for contractor performance of firefighting functions at military installations or facilities for periods of one year or less, if the functions would otherwise have to be performed by members of the armed forces who are not readily available due to a deployment.

EFFECTIVE DATE: December 15, 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-D107.

SUPPLEMENTARY INFORMATION: A. Background

DoD published an interim DFARS rule at 69 FR 35532 on June 25, 2004, to implement Section 331 of the National Defense Authorization Act for Fiscal Year 2004 (Pub. L. 108-136). Section 331 amended 10 U.S.C. 2465 to permit the award of contracts for firefighting functions at military installations or facilities, for periods of one year or less, if the functions would otherwise have to be performed by members of the armed forces who are not readily available by reason of a deployment. 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 application of the rule is limited to firefighting functions at military installations or facilities for periods of one year or less, when members of the armed forces are not readily available to perform the functions due to a deployment.

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 237

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

Interim Rule Adopted as Final Without Change

Accordingly, the interim rule amending 48 CFR Part 237, which was published at 69 FR 35532 on June 25, 2004, is adopted as a final rule without change.

END OF DCN 20041215