DFARS CHANGE NOTICE 20060223

[Federal Register: February 23, 2006 (Volume 71, Number 36)]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 204

[DFARS Case 2003-D084]

Defense Federal Acquisition Regulation Supplement; Administrative Matters

AGENCY: Defense Acquisition Regulations System, 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 addressing administrative matters related to contract placement. This rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

DATES: Effective Date: February 23, 2006.

FOR FURTHER INFORMATION CONTACT: Ms. Robin Schulze, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0326; facsimile (703) 602-0350. Please cite DFARS Case 2003-D084.

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/dars/dfars/transformation/index.htm.

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

Deletes administrative procedures for DoD signature of contract documents at DFARS 204.101. 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.

Deletes unnecessary cross-references at DFARS 204.402(1) and 204.902(b).

Deletes text on security requirements and IRS reporting requirements at DFARS 204.402(2) and 204.904, respectively, as these requirements are adequately addressed in the FAR or elsewhere in the DFARS.

DoD published a proposed rule at 70 FR 19037 on April 12, 2005. DoD received comments from one respondent. The respondent agreed with the proposed change to DFARS 204.101, Contracting officer's signature, and the deletion of DFARS 204.904, Reporting payment information to the IRS. However, the respondent disagreed with deletion of the text at DFARS 204.402 addressing the contractor's obligations regarding the protection of a DoD employee's work product. The respondent stated that deletion of this text could lead contractor personnel to believe that a contractor's procedures trump the security requirements of a DoD employee. DoD does not believe that deletion of the text at DFARS 204.402 will present such a problem, because the clause at DFARS 252.204-7003, Control of Government Personnel Work Product, contains similar text, and that clause is included in all solicitations and contracts in accordance with DFARS 204.404-70(b). Therefore, DoD has adopted the proposed rule as a final rule without change.

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

B. Regulatory Flexibility Act DoD certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule updates and streamlines DFARS text, but makes no significant change to DoD contracting policy.

C. Paperwork Reduction Act The Paperwork Reduction Act does not apply, because the rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 204

Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System. Therefore, 48 CFR part 204 is amended as follows:

1. The authority citation for 48 CFR part 204 continues to read as follows:

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

PART 204--ADMINISTRATIVE MATTERS

2. Section 204.101 is revised to read as follows:

204.101 Contracting officer's signature.

Follow the procedures at PGI 204.101 for signature of contract documents.

3. Section 204.402 is revised to read as follows:

204.402 General.

DoD employees or members of the Armed Forces who are assigned to or visiting a contractor facility and are engaged in oversight of an acquisition program will retain control of their work products, both classified and unclassified.

204.902 [Amended]

4. Section 204.902 is amended in paragraph (b) by removing the parenthetical ``(see 204.670)''.

204.904 [Removed]

5. Section 204.904 is removed.

[Federal Register: February 23, 2006 (Volume 71, Number 36)]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 231

[DFARS Case 2004-D026]

Defense Federal Acquisition Regulation Supplement; Business Restructuring Costs--Delegation of Authority To Make Determinations Relating to Payment

AGENCY: Defense Acquisition Regulations System, 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 819 of the National Defense Authorization Act for Fiscal Year 2005. Section 819 contains changes concerning delegation of authority to make determinations relating to payment of defense contractors for business restructuring costs.

DATES: Effective Date: February 23, 2006.

FOR FURTHER INFORMATION CONTACT: Mr. Bill Sain, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0293; facsimile (703) 602-0350. Please cite DFARS Case 2004-D026.

SUPPLEMENTARY INFORMATION:

A. Background DoD published an interim rule at 70 FR 43074 on July 26, 2005, to implement section 819 of the National Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108-375). Section 819 amended 10 U.S.C. 2325(a)(2) to permit the Director of the Defense Contract Management Agency to make determinations of savings related to contractor restructuring costs that are expected to be less than $25 million over a 5-year period. In addition, the DFARS rule removed unnecessary references to requirements for certifications for business combinations that occurred before November 1997; and clarified requirements for projected restructuring costs and savings to be computed on a present value basis.

DoD received no comments on the interim rule. Therefore, DoD has adopted the interim rule as a final rule without change.

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

B. Regulatory Flexibility Act DoD certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the cost principle addressed in this rule applies only to DoD contractors that incur restructuring costs for external restructuring activities.

C. Paperwork Reduction Act The Paperwork Reduction Act does not apply, because the rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 231

Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System.Interim Rule Adopted as Final Without Change

Accordingly, the interim rule amending 48 CFR part 231, which was published at 70 FR 43074 on July 26, 2005, is adopted as a final rule without change.

[Federal Register: February 23, 2006 (Volume 71, Number 36)]

[DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 236

[DFARS Case 2003-D034]

Defense Federal Acquisition Regulation Supplement; Construction Contracting

AGENCY: Defense Acquisition Regulations System, 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 contracting for construction. This rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

DATES: Effective Date: February 23, 2006.

FOR FURTHER INFORMATION CONTACT: Mr. Euclides Barrera, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0296; facsimile (703) 602-0350. Please cite DFARS Case 2003-D034.

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/dars/dfars/transformation/index.htm.

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

Deletes DFARS text defining and addressing the use of network analysis systems, as this subject is addressed in the United Facilities Guide Specifications used by the military departments in specifying construction requirements; and

Deletes DFARS text on distribution and use of contractor performance reports, handling of Government estimates of construction costs, use of bid schedules with additive or deductive items, and technical working agreements with foreign governments. Text on these subjects 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 70 FR 35605 on June 21, 2005. DoD received no comments on the proposed rule. Therefore, DoD has adopted the proposed rule as a final rule without change.

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

B. Regulatory Flexibility Act DoD certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule updates and streamlines DFARS text, but makes no significant change to DoD contracting policy.

C. Paperwork Reduction Act The Paperwork Reduction Act does not apply, because the rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 236

Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR part 236 is amended as follows:

1. The authority citation for 48 CFR part 236 continues to read as follows:

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

PART 236--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

236.102 [Amended]

2. Section 236.102 is amended by removing paragraph (4) and redesignating paragraph (5) as paragraph (4).

3. Section 236.201 is amended by revising paragraph (c) to read as follows:

236.201 Evaluation of contractor performance.

* * * * *

(c) Follow the procedures at PGI 236.201(c) for distribution and use of performance reports.

4. Section 236.203 is revised to read as follows:

236.203 Government estimate of construction costs.

Follow the procedures at PGI 236.203 for handling the Government estimate of construction costs.

5. Section 236.213 is revised to read as follows:

236.213 Special procedures for sealed bidding in construction contracting.

If it appears that sufficient funds may not be available for all the desired construction features, consider using a bid schedule with additive or deductive items in accordance with PGI 236.213.

236.213-70 and 236.273 [Removed]

6. Sections 236.213-70 and 236.273 are removed.

236.274 [Redesignated]

7. Section 236.274 is redesignated as section 236.273.

8. Newly designated section 236.273 is amended by revising paragraph (b) to read as follows:

236.273 Construction in foreign countries.

* * * * *

(b) See PGI 236.273(b) for guidance on technical working agreements with foreign governments.

[Federal Register: February 23, 2006 (Volume 71, Number 36)]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 242

[DFARS Case 2003-D050]

Defense Federal Acquisition Regulation Supplement; Contractor Insurance/Pension Reviews

AGENCY: Defense Acquisition Regulations System, 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 Government review of contractor insurance programs, pension plans, and other deferred compensation plans. This rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

DATES: Effective Date: February 23, 2006.

FOR FURTHER INFORMATION CONTACT: Ms. Debra Overstreet, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0310; facsimile (703) 602-0350. Please cite DFARS Case 2003-D050.

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/dars/dfars/transformation/index.htm.

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

Update and clarify requirements and responsibilities for Government review of a contractor's insurance programs, pension plans, and other deferred compensation plans; and

Delete text addressing procedural matters relating to these reviews. 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 70 FR 35606 on June 21, 2005. 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 contractor insurance/pension review requirements apply primarily to large business concerns.

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 242

Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR part 242 is amended as follows:

1. The authority citation for 48 CFR part 242 continues to read as follows:

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

PART 242--CONTRACT ADMINISTRATION AND AUDIT SERVICES

242.7300 [Removed]0

2. Section 242.7300 is removed.

3. Sections 242.7301 through 242.7303 are revised to read as follows:

242.7301 General.

(a) The administrative contracting officer (ACO) is responsible for determining the allowability of insurance/pension costs in Government contracts and for determining the need for a Contractor/Insurance Pension Review (CIPR). Defense Contract Management Agency (DCMA) insurance/pension specialists and Defense Contract Audit Agency (DCAA) auditors assist ACOs in making these determinations, conduct CIPRs when needed, and perform other routine audits as authorized under FAR 42.705 and 52.215-2. A CIPR is a DCMA/DCAA joint review that--

(1) Provides an in-depth evaluation of a contractor's--

(i) Insurance programs;

(ii) Pension plans;

(iii) Other deferred compensation plans; and

(iv) Related policies, procedures, practices, and costs; or

(2) Concentrates on specific areas of the contractor's insurance programs, pension plans, or other deferred compensation plans.

(b) DCMA is the DoD Executive Agency for the performance of all CIPRs.

(c) DCAA is the DoD agency designated for the performance of contract audit responsibilities related to Cost Accounting Standards administration as described in FAR Subparts 30.2 and 30.6 as they relate to a contractor's insurance programs, pension plans, and other deferred compensation plans.

242.7302 Requirements.

Follow the procedures at PGI 242.7302 to determine if a CIPR is needed.

242.7303 Responsibilities.

Follow the procedures at PGI 242.7303 when conducting a CIPR.

[Federal Register: February 23, 2006 (Volume 71, Number 36)]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 225 and 252

Defense Federal Acquisition Regulation Supplement; Trade Agreements Thresholds and Morocco Free Trade Agreement

(DFARS Case 2005-D017)

AGENCY: Defense Acquisition Regulations System, 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 incorporate increased thresholds for application of the World Trade Organization Government Procurement Agreement and the Free Trade Agreements, as determined by the United States Trade Representative. The rule also implements a new Free Trade Agreement with Morocco and amends the list of end products that are subject to trade agreements.

DATES: Effective Date: February 23, 2006.

Comment date: Comments on the interim rule should be submitted in writing to the address shown below on or before April 24, 2006, to be considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2005-D017, using any of the following methods:

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

Follow the instructions for submitting comments.

E-mail: dfars@osd.mil. Include DFARS Case 2005-D017 in the subject line of the message.

Fax: (703) 602-0350.

Mail: Defense Acquisition Regulations System, Attn: Ms. Amy Williams, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062.

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

Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, (703) 602-0328.

SUPPLEMENTARY INFORMATION:

A. Background This interim rule amends the clause prescriptions at DFARS 225.1101 and 225.7503 to reflect increased thresholds for application of the trade agreements. Every 2 years, the trade agreements thresholds are escalated according to a pre-determined formula set forth in the agreements. The United States Trade Representative has specified the following thresholds (70 FR 73510, December 12, 2005):

Trade agreement

Supply contract (equal to or exceeding)

Service contract (equal to or exceeding)

Construction contract (equal to or exceeding)

World Trade Organization Government Procurement Agreement

$193,000

$193,000

$7,407,000

Free Trade Agreements (FTA):

     

Australia FTA

64,786

64,786

$7,407,000

Chile FTA

64,786

64,786

$7,407,000

Morocco FTA

193,000

193,000

$7,407,000

Singapore FTA

64,786

64,786

$7,407,000

NAFTA:

     

--Canada

25,000

64,786

8,422,165

--Mexico

64,786

64,786

8,422,165

In addition, this interim rule implements a new Free Trade Agreement with Morocco as approved by Congress (Pub. L. 108-302). The Morocco Free Trade Agreement waives the applicability of the Buy American Act for some foreign supplies and construction materials from Morocco, and specifies procurement procedures designed to ensure fairness.

The World Trade Organization Government Procurement Agreement and the other free trade agreements each list the items to which the trade agreements do not apply when acquired by DoD. DFARS 225.401-70 lists the end products that are subject to trade agreements if the value of the acquisition is at or above the applicable dollar threshold. The following items are not excluded for DoD from coverage by the trade agreements and, therefore, have been added to the list at DFARS 225.401-70: Pins, needles, sewing kits, flag staffs, flagpoles, flagstaff trucks, and tobacco products.

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

B. Regulatory Flexibility Act DoD does not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the dollar threshold changes are designed to keep pace with inflation and thus maintain the status quo. Although the rule opens up DoD procurement to the products of Morocco, DoD does not believe there will be a significant economic impact on U.S. small businesses. DoD applies the trade agreements to only those non-defense items listed at DFARS 225.401-70, and procurements that are set aside for small businesses are exempt from application of the trade agreements. Therefore, DoD has not performed an initial regulatory flexibility analysis. DoD invites comments from small businesses and other interested parties. DoD also will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2005-D017.

C. Paperwork Reduction Act This interim rule affects the certification and information collection requirements in the provisions at DFARS 252.225-7020 and 252.225-7035, currently approved under Office of Management and Budget Control Number 0704-0229. However, there is no impact on the estimated burden hours. The dollar threshold changes are in line with inflation and maintain the status quo. Reporting of products from Morocco as Free Trade Agreement end products rather than other foreign end products has no impact on paperwork burden.

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 incorporates increased dollar thresholds for application of the World Trade Organization Government Procurement Agreement and the Free Trade Agreements, as determined by the United States Trade Representative. In addition, the rule implements a new Free Trade Agreement with Morocco, as approved by Congress (Pub. L. 108-302). The Morocco Free Trade Agreement waives the applicability of the Buy American Act for some foreign supplies and construction materials from Morocco and specifies procurement procedures designed to ensure fairness. The increased dollar thresholds and the Morocco Free Trade Agreement became effective on January 1, 2006. Comments received in response to this interim rule will be considered in the formation of the final rule.

List of Subjects in 48 CFR Parts 225 and 252

Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR parts 225 and 252 are amended as follows:

1. The authority citation for 48 CFR parts 225 and 252 continues to read as follows:

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

PART 225--FOREIGN ACQUISITION

2. Section 225.401-70 is amended in the table by adding, in numerical order, two new entries to read as follows:

Sec. 225.401-70 End products subject to trade agreements.

* * * * *

83 Pins, needles, and sewing kits (only part of 8315) and flag staffs, flagpoles, and flagstaff trucks (only part of 8345)* * * * *

89 Tobacco products (only 8975)

* * * * *

3. Section 225.1101 is amended by revising paragraph (10)(i) to read as follows:

Sec. 225.1101 Acquisition of supplies.

* * * * *

(10)(i) Use the clause at 252.225-7036, Buy American Act--Free Trade Agreements--Balance of Payments Program, instead of the clause at FAR 52.225-3, Buy American Act--Free Trade Agreements--Israeli Trade Act, in solicitations and contracts for the items listed at 225.401-70, when the estimated value equals or exceeds $25,000, but is less than $193,000, and a Free Trade Agreement applies to the acquisition.

(A) Use the basic clause when the estimated value equals or exceeds $64,786.

(B) Use the clause with its Alternate I when the estimated value equals or exceeds $25,000 but is less than $64,786.

* * * * *

4. Section 225.7503 is revised to read as follows:

Sec. 225.7503 Contract clauses.

Unless the entire acquisition is exempt from the Balance of Payments Program--

(a) Use the clause at 252.225-7044, Balance of Payments Program--Construction Material, in solicitations and contracts for construction to be performed outside the United States with a value greater than the simplified acquisition threshold but less than $7,407,000.

(b) Use the clause at 252.225-7045, Balance of Payments Program--Construction Material Under Trade Agreements, in solicitations and contracts for construction to be performed outside the United States with a value of $7,407,000 or more. For acquisitions with a value of $7,407,000 or more, but less than $8,422,165, use the clause with its Alternate I.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

252.212-7001 [Amended]

5. Section 252.212-7001 is amended as follows:

a. By revising the clause date to read ``(FEB 2006)''; and0

b. In paragraph (b), in entry ``252.225-7021'', by removing ``(DEC 2005)'' and adding in its place ``(FEB 2006)''.

6. Section 252.225-7021 is amended by revising the clause date and paragraph (a)(3)(ii) to read as follows:

Sec. 252.225-7021 Trade agreements.

* * * * *

Trade Agreements (FEB 2006)

(a) * * *

(3) * * *

(ii) A Free Trade Agreement country (Australia, Canada, Chile, Mexico, Morocco, or Singapore);

* * * * *

7. Section 252.225-7045 is amended as follows:

a. By revising the clause date;

b. In paragraph (a), by revising paragraph (2) of the definition of ``Designated country''; and

c. By revising Alternate I to read as follows:

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

* * * * *

Balance of Payments Program--Construction Material Under Trade Agreements (Feb 2006)

(a) * * *

Designated country means--

* * * * *

(2) A Free Trade Agreement country (Australia, Canada, Chile, Mexico, Morocco, or Singapore);

* * * * *

Alternate I (Feb 2006). As prescribed in 225.7503(b), delete the definitions of ``designated country'' and ``designated country construction material'' from the definitions in paragraph (a) of the basic clause, add the following definition of ``Australian, Chilean, or Moroccan construction material'' to paragraph (a) of the basic clause, and substitute the following paragraphs (b) and (c) for paragraphs (b) and (c) of the basic clause:

Australian, Chilean, or Moroccan construction material means a construction material that--

(1) Is wholly the growth, product, or manufacture of Australia, Chile, or Morocco; or

(2) In the case of a construction material that consists in whole or in part of materials from another country, has been substantially transformed in Australia, Chile, or Morocco into a new and different construction material distinct from the materials from which it was transformed.

(b) This clause implements the Balance of Payments Program by providing a preference for domestic construction material. In addition, the Contracting Officer has determined that the WTO GPA and all Free Trade Agreements except NAFTA apply to this acquisition. Therefore, the Balance of Payments Program restrictions are waived for WTO GPA country, Australian, Chilean, or Moroccan, least developed country, or Caribbean Basin country construction material.

(c) The Contractor shall use only domestic, WTO GPA country, Australian, Chilean, or Moroccan, least developed country, or Caribbean Basin country construction material in performing this contract, except for--

(1) Construction material valued at or below the simplified acquisition threshold in Part 2 of the Federal Acquisition Regulation; or

(2) The construction material or components listed by the Government as follows:

[Contracting Officer to list applicable excepted materials or indicate ``none'']

[Federal Register: February 23, 2006 (Volume 71, Number 36)]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 204

[DFARS Case 2003-D082]

Defense Federal Acquisition Regulation Supplement; Uniform Contract Line Item Numbering

AGENCY: Defense Acquisition Regulation System, 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 addressing uniform line item numbering in DoD contracts. This rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.

DATES: Effective Date: February 23, 2006.

FOR FURTHER INFORMATION CONTACT: Ms. Deborah Tronic, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0289; facsimile (703) 602-0350. Please cite DFARS Case 2003-D082.

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/dars/dfars/transformation/index.htm.

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

Eliminates certain exceptions to requirements for uniform contract line item numbering at DFARS 204.7102, to promote standardization in contract writing; and

Deletes procedures for use and numbering of contract exhibits and attachments at DFARS 204.7105. This text has been relocated to the new DFARS companion resource, Procedures, Guidance, and Information, available at http://www.acq.osd.mil/dpap/dars/pgi.

DoD published a proposed rule at 70 FR 19036 on April 12, 2005. Two respondents submitted comments on the proposed rule. A discussion of the comments follows:

1. Comment: DoD should not eliminate the option of using exhibits and attachments, as these are useful tools for the contracting officer.

DoD Response: The rule does not eliminate the use of exhibits and attachments. They are still permitted and are addressed in Subpart 204.71 of the DFARS companion resource, Procedures, Guidance, and Information.

2. Comment: DoD should add guidance on the structuring of contract line items and subline items under performance-based contracts.

DoD Response: The recommendation is considered to be outside the scope of this DFARS case. Therefore, DoD has made no change to the rule as a result of this comment.

DoD has adopted the proposed rule as a final rule without change.

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

B. Regulatory Flexibility Act DoD certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule pertains only to DoD administrative procedures for numbering of contract line items, exhibits, and attachments.

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 204

Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR Part 204 is amended as follows:

1. The authority citation for 48 CFR Part 204 continues to read as follows:

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

PART 204--ADMINISTRATIVE MATTERS

2. Section 204.7102 is revised to read as follows:

204.7102 Policy.

(a) The numbering procedures of this subpart shall apply to all--

(1) Solicitations;

(2) Solicitation line and subline item numbers;

(3) Contracts as defined in FAR Subpart 2.1;

(4) Contract line and subline item numbers;

(5) Exhibits;

(6) Exhibit line and subline items; and

(7) Any other document expected to become part of the contract.

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

(1) The contract is an indefinite-delivery type for petroleum products against which posts, camps, and stations issue delivery orders for products to be consumed by them; or

(2) The contract is a communications service authorization issued by the Defense Information Systems Agency's Defense Information Technology Contracting Organization.

3. Section 204.7105 is revised to read as follows:

204.7105 Contract exhibits and attachments.

Follow the procedures at PGI 204.7105 for use and numbering of contract exhibits and attachments.

END OF DCN 20060223