DFARS CHANGE NOTICE 20090715

FR Doc E9-16674[Federal Register: July 15, 2009 (Volume 74, Number 134)]

[Rules and Regulations]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 202, 212, and 234

Defense Federal Acquisition Regulation Supplement; Acquisition of Commercial Items (DFARS Case 2008-D011)

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 implement Sections 805 and 815 of the National Defense Authorization Act for Fiscal Year 2008. The rule specifies the conditions under which a time-and-materials or labor-hour contract may be used for the acquisition of commercial items. In addition, the rule addresses the conditions under which major weapon systems and subsystems may be treated as commercial items.

DATES: Effective date: July 15, 2009.

Comment date: Comments on the interim rule should be submitted in writing to the address shown below on or before September 14, 2009, to be considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2008-D011, 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 2008-D011 in the subject line of the message.

Fax: 703-602-7887.

Mail: Defense Acquisition Regulations System, Attn: Ms. Angie Sawyer, OUSD (AT&L) DPAP (DARS), IMD 3D139, 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. Angie Sawyer, 703-602-8384.

SUPPLEMENTARY INFORMATION:

A. Background This interim rule implements Sections 805 and 815 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181). Section 805 specifies the types of commercial item acquisitions for which time-and-materials and labor-hour contracts may be used. Section 815 addresses the situations under which major weapon systems, subsystems of major weapon systems, and components and spare parts for major weapon systems may be acquired using procedures established for the acquisition of commercial items. In addition, Section 815 requires DoD to modify its regulations to clarify that the terms ``general public'' and ``non-governmental entities,'' with regard to sales of commercial items, do not include the Federal Government or a State, local, or foreign government.

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

B. Regulatory Flexibility Act DoD does not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule reinforces existing requirements for the appropriate use of commercial acquisition procedures and for ensuring that contract prices are fair and reasonable. 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 2008-D011.

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

D. Determination to Issue an Interim Rule A determination has been made under the authority of the Secretary of Defense, that urgent and compelling reasons exist to publish an interim rule prior to affording the public an opportunity to comment. This interim rule implements Sections 805 and 815 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181). Section 805 requires DoD to modify its acquisition regulations to ensure that time-and-materials and labor-hour contracts are used for commercial items only under certain specified circumstances. Section 815 limits the conditions under which major weapon systems, subsystems of major weapon systems, and components and spare parts of major weapon systems may be treated as commercial items and acquired under procedures established for the acquisition of commercial items. In addition, Section 815 requires DoD to modify its regulations on the acquisition of commercial items to clarify that the terms ``general public'' and ``non-governmental entities'' do not include the Federal Government or a State, local, or foreign government. 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 202, 212, and 234

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

Therefore, 48 CFR Parts 202, 212, and 234 are amended as follows:

1. The authority citation for 48 CFR Parts 202, 212, and 234 continues to read as follows:

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

PART 202--DEFINITIONS OF WORDS AND TERMS

2. Section 202.101 is amended by adding a definition of General public and non-governmental entities in alphabetical order to read as follows:

202.101 Definitions.

* * * * *

General public and non-governmental entities, as used in the definition of commercial item at FAR 2.101, do not include the Federal Government or a State, local, or foreign government (Pub. L. 110-181, Section 815(b)).

* * * * *

PART 212--ACQUISITION OF COMMERCIAL ITEMS

3. Section 212.207 is added to read as follows:

212.207 Contract type.

(b) In accordance with Section 805 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), use of time-and-materials and labor-hour contracts for the acquisition of commercial items is authorized only for the following:

(i) Services acquired for support of a commercial item.

(ii) Emergency repair services.

(iii) Any other commercial services only to the extent that the head of the agency concerned approves a written determination by the contracting officer that--

(A) The services to be acquired are commercial;

(B) If the services to be acquired are subject to FAR 15.403-1(c)(3)(ii), the offeror of the services has submitted sufficient information in accordance with that subsection;

(C) Such services are commonly sold to the general public through use of time-and-materials or labor-hour contracts; and

(D) The use of a time-and-materials or labor-hour contract type is in the best interest of the Government.

PART 234--MAJOR SYSTEM ACQUISITION

4. Section 234.7002 is revised to read as follows:

234.7002 Policy.

(a) Major weapon systems. (1) A DoD major weapon system may be treated as a commercial item, or acquired under procedures established for the acquisition of commercial items, only if--

(i) The Secretary of Defense determines that--

(A) The major weapon system is a commercial item as defined in FAR 2.101; and

(B) Such treatment is necessary to meet national security objectives;

(ii) The offeror has submitted sufficient information to evaluate, through price analysis, the reasonableness of the price for such a system; and

(iii) The congressional defense committees are notified at least 30 days before such treatment or acquisition occurs. Follow the procedures at PGI 234.7002.

(2) The authority of the Secretary of Defense to make a determination under paragraph (a)(1) of this section may not be delegated below the level of the Deputy Secretary of Defense.

(b) Subsystems. A subsystem of a major weapon system (other than a commercially available off-the-shelf item) may be treated as a commercial item and acquired under procedures established for the acquisition of commercial items only if--

(1) The subsystem is intended for a major weapon system that is being acquired, or has been acquired, under procedures established for the acquisition of commercial items in accordance with paragraph (a) of this section; or

(2) The contracting officer determines in writing that--

(i) The subsystem is a commercial item; and

(ii) The offeror has submitted sufficient information to evaluate, through price analysis, the reasonableness of the price for the subsystem.

(c) Components and spare parts. (1) A component or spare part for a major weapon system (other than a commercially available off-the-shelf item) may be treated as a commercial item only if--

(i) The component or spare part is intended for--

(A) A major weapon system that is being acquired, or has been acquired, under procedures established for the acquisition of commercial items in accordance with paragraph (a) of this section; or

(B) A subsystem of a major weapon system that is being acquired, or has been acquired, under procedures established for the acquisition of commercial items in accordance with paragraph (b) of this section; or

(ii) The contracting officer determines in writing that--

(A) The component or spare part is a commercial item; and

(B) The offeror has submitted sufficient information to evaluate, through price analysis, the reasonableness of the price for the component or spare part.

(2) This paragraph (c) shall apply only to components and spare parts that are acquired by DoD through a prime contract or a modification to a prime contract, or through a subcontract under a prime contract or modification to a prime contract on which the prime contractor adds no, or negligible, value.

(d) Relevant information. To the extent necessary to make a determination under paragraph (a)(1)(ii), (b)(2), or (c)(1)(ii) of this section, the contracting officer may request the offeror to submit--

(1) Prices paid for the same or similar commercial items under comparable terms and conditions by both Government and commercial customers; and

(2) Other relevant information regarding the basis for price or cost, including information on labor costs, material costs, and overhead rates, if the contracting officer determines that the information described in paragraph (d)(1) of this section is not sufficient to determine price reasonableness.

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 209, 237, and 252

Defense Federal Acquisition Regulation Supplement; Lead System Integrators (DFARS Case 2006-D051)

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 implement Section 802 of the National Defense Authorization Act for Fiscal Year 2008. Section 802 places limitations on the award of new contracts for lead system integrator functions in the acquisition of major DoD systems.

DATES: Effective date: July 15, 2009.

Comment date: Comments on the interim rule should be submitted in writing to the address shown below on or before September 14, 2009, to be considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2006-D051, 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 2006-D051 in the subject line of the message.

Fax: 703-602-7887.

Mail: Defense Acquisition Regulations System, Attn: Ms. Cassandra Freeman, OUSD (AT&L) DPAP (DARS), IMD 3D139, 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. Cassandra Freeman, 703-602-8383.

SUPPLEMENTARY INFORMATION:

A. Background DoD published an interim rule at 73 FR 1823 on January 10, 2008, to implement Section 807 of the National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364) with regard to limitations on the performance of lead system integrator functions by DoD contractors. On January 28, 2008, Section 802 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181) placed additional limitations on DoD use of lead system integrators. This second interim rule amends the interim rule published on January 10, 2008, to implement Section 802 of Public Law 110-181.

One source submitted comments on the interim rule published on January 10, 2008. A discussion of the comments is provided below.

1. Comment: Section 802 of the Fiscal Year 2008 National Defense Authorization Act (Pub. L. 110-181), which was enacted after publication of the interim rule, contains a definition of ``lead system integrator'' that renders the interim rule definition obsolete.

DoD Response: The definition of ``lead system integrator'' in this second interim rule has been amended for consistency with the definition in Section 802 of Public Law 110-181.

2. Comment: The limitations on the award of new contracts for lead system integrator functions, in Section 802 of Public Law 110-181, will make any implementing regulations applicable to only a handful of contractors. Given the limited duration of ongoing contracts for programs that have been identified as lead system integrators, the newly created contract clauses in the interim rule are unlikely to be incorporated into a contract, because the fiscal year 2008 statutory prohibition effectively precludes their use. Therefore, DoD should withdraw or suspend the interim rule.

DoD Response: DoD agrees that the rule will apply only to a limited number of contractors and only for a limited duration. However, the law must be implemented for those situations where it is applicable.

3. Comment: It is inappropriate to require contractors to represent whether or not they propose to perform lead system integrator functions under vague definitions, given that the contract may be terminated for default or other remedies may be imposed at the sole discretion of the contracting officer if the contractor misrepresented its ``financial interests'' when that term is not defined. Since a ``lead system integrator with system responsibility'' is essentially ``as determined by the Contracting Officer'' at the time of award, this presents an unacceptable situation where a contractor may be subject to penalty effectively for an errant determination by the Government. Moreover, successful offerors risk termination for default for misrepresenting their status at some later time if their lead system integrator status is found to be wrong, even if that representation was mistakenly, rather than knowingly or falsely, executed.

DoD Response: The definitions in the clause at DFARS 252.209-7007, as amended by this interim rule, sufficiently address the compliance requirements of a contractor certifying as a lead system integrator. It is incumbent upon the contractor to ensure that certifications represent the most current, accurate, and complete information to avoid the misinterpretation of information by the contracting officer. Likewise, it is the responsibility of the contracting officer to ensure due diligence in the evaluation of contractor certifications.

4. Comment: Existing regulations, such as those governing conflicts of interest, that are adequate to protect the public interest in situations where a prime contractor is responsible for integrating subsystems into a weapon system, are also adequate to protect the correlating situation in which a prime contractor is integrating systems into a ``system of systems.'' Additional policy guidance may be warranted to advise contracting officers to take appropriate steps in evaluating proposals to ensure mechanisms are in place to avoid conflicts of interest. In that case, the policy additions to Part 209 of the DFARS are sufficient to implement Section 807 of the Fiscal Year 2007 National Defense Authorization Act without the imposition of requirements for contractor representations and additional clauses in solicitations and contracts.

DoD Response: DoD considers the rule's provision and clause to be the appropriate means of conveying this specific statutory requirement to offerors and contractors.

5. Comment: Section 209.570-1 of the rule merely references the reader to the clause at 252.209-7007 for a definition of lead system integrator. The definition should be included in section 209.570-1 instead of referring the reader to the clause section of the DFARS.

DoD Response: The reference to the definition in the contract clause is consistent with the DFARS convention of minimizing repetition of text.

6. Comment: The rule would benefit in the Definitions section by the addition of a cross-reference to the existing statutory or regulatory definition of a major system, so that it is clear exactly what type of standards (dollar threshold, etc.) apply to the rule.

DoD Response: FAR 2.101 provides a definition of ``major system.'' It is not necessary to include a cross-reference in this DFARS rule, since the definitions in FAR 2.101 apply throughout the FAR system unless otherwise specified.

7. Comment: Clarification is needed on the term ``substantial portion'' used in paragraph (a)(2) of the clause at 252.209-7007.

DoD Response: Contracting officers have the discretion to determine whether an activity constitutes a ``substantial portion'' of the work on the system and the major subsystems. Factors to be considered in making this determination are the relative dollar value of the effort and the criticality of the effort to be performed.

8. Comment: Section 209.570-2(b)(1) states that the statutory prohibition does not apply if the Secretary of Defense certifies to both the House and Senate Armed Services Committees that the lead system integrator contractor was selected through a competitive process, and any potential organizational conflict of interest was neutralized in the selection process. The certification requirement itself would benefit from some clarity, and both the certification level and the body to whom the certification is made would benefit from the flexibility to delegate the exception authority to another approval level, such as the head of the contracting activity.

DoD Response: The certification requirement is consistent with Section 807 of the National Defense Authorization Act for Fiscal Year 2007. In view of the limited number of contracts to which this requirement applies, DoD considers it unnecessary to delegate this exception authority.

9. Comment: Section 209.570-2(b)(2), which cites another exception to the prohibition, is confusing. If the goal of this section is to allow for a lead system integrator to act as a subcontractor in the major system development/construction contract after completing lead system integrator functions, the standard for the exception is unclear. What exactly is a ``process over which the entity exercised no control''? The tiering of subcontractors as an ingredient to the selection process for an exception requires clarification.

DoD Response: Section 209.570-2(b)(2) of the rule is consistent with the language in Section 807 of National Defense Authorization Act for Fiscal Year 2007. The record does not document the legislative intent; however, DoD believes that a ``process over which the entity exercised no control'' means that the entity was selected to perform as a lower-tier subcontractor as a result of an independent selection process in which the entity did not participate as a decision-maker.

10. Comment: Section 235.008 contains language that is unclear. In particular, the statement ``See 209.570 for limitations on the award of contracts to contractors acting as lead system integrators,'' appears to prohibit the award of contracts for research and development efforts to lead system integrators.

DoD Response: The cross-reference in DFARS 235.008 does not prohibit the award of contracts for research and development efforts to lead system integrators; it advises the reader to consider the limitations on contractors acting as lead system integrators when evaluating research and development proposals for contract award.

11. Comment: Both the provision at 252.209-7006 and the clause at 252.209-7007 present problematic interpretation issues. Both include references to two different types of lead system integrators: a lead system integrator with system responsibility and a lead system integrator without system responsibility. The distinction between these two types of lead system integrators is somewhat difficult to comprehend, but the offeror is asked to make written representations as to its lead system integrator status based presumably on the type of work statement contained in the solicitation (which may or may not state that the work is for integration or systems engineering, etc.).

DoD Response: Consistent with the statutory provisions, the definitions recognize two categories of contracts for major systems: development/production contracts and service contracts. The offeror's representation will be based upon the contract work statement and any special provisions in the solicitation in light of the limitations and prohibitions in the provision at 252.209-7006 and the clause at 252.209-7007.

12. Comment: The definition of ``lead system integrator without system responsibility'' in the clause at 252.209-7007 anticipates that the lead system integrator understands and can make judgments about what is meant by inherently governmental functions. The definition references a section of the Federal Acquisition Regulation completely unaddressed elsewhere in the rule. At no time prior to this juncture was the prohibition against lead system integrators receiving development/construction contracts tied to a determination that certain types of lead system integrator work were inherently governmental, a term evolving out of the FAIR Act and Competitive Sourcing/A-76 world of contracting. The clause states that contractors performing lead system integrator functions throughout the acquisition timeframe for a major system will refrain from acquiring a financial interest in any company anywhere that might be eligible to develop or manufacture the major system. Without addressing the impact on commerce by prohibiting business enterprises doing defense-related work for the Government from making strategic acquisitions, the timeframes for the complete acquisition cycle for major systems could last for years, effectively bringing legitimate and otherwise legal forms of economic activity (mergers and acquisitions) to a halt and extending the lead system integrator limitation period well beyond that envisioned by Congress when crafting the law.

DoD Response: The definitions and the requirements in the contract clause are consistent with the statutory provisions.

13. Comment: Paragraph (c) of the clause at 252.209-7007 imposes an unclear standard and undefined timeline for notice from a lead system integrator contractor to the contracting officer if the lead system integrator contractor acquires a financial interest in a relevant major system contractor. Additionally, the clause provides the contracting officer the unilateral right to impose a default termination in the event that a conflict cannot be mitigated or avoided after the contract has been awarded and/or in force for some time. Termination should not be made a specific requirement of this clause; rather, if a lead system integrator contractor is acting in good faith and otherwise complying with the requirements of the contract, but termination is still necessary to comport with the principle of any final lead system integrator limitation clause, termination should be one of convenience that allows the lead system integrator contractor to recoup all costs incurred prior to termination. Both paragraphs (c) and (d) of the clause should be rewritten to establish a reasonable standard for both timely notice and to clarify the extent of the Government's remedies in termination.

DoD Response: A failure to comply with statutory prohibitions speaks to the lack of responsibility of a contractor, and could be reasonable justification to terminate a contract for default. However, the clause does not direct a default termination; it only provides for it and also allows other remedial action as may be appropriate. 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 application of the rule is limited to contractors performing lead system integrator functions for major DoD systems. 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 2006-D051.

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

D. Determination To Issue an Interim Rule A determination has been made under the authority of the Secretary of Defense that urgent and compelling reasons exist to publish an interim rule prior to affording the public an opportunity to comment. This interim rule implements Section 802 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181). Section 802 places additional limitations on the performance of lead system integrator functions by DoD contractors. DoD may award a new contract for lead system integrator functions in the acquisition of a major system only if the major system has not yet proceeded beyond low-rate initial production; or if the Secretary of Defense determines that it would not be practicable to carry out the acquisition without continuing to use a contractor to perform lead system integrator functions, and that doing so is in the best interest of DoD. Comments received in response to this interim rule will be considered in the formation of the final rule.

List of Subjects in 48 CFR Parts 209, 237, and 252

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

Therefore, 48 CFR parts 209, 237, and 252 are amended as follows:

1. The authority citation for 48 CFR parts 209, 237, and 252 continues to read as follows:

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

PART 209--CONTRACTOR QUALIFICATIONS

2. Section 209.570-2 is amended by adding paragraphs (c) and (d) to read as follows:

209.570-2 Policy.

* * * * *

(c) In accordance with Section 802 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), DoD may award a new contract for lead system integrator functions in the acquisition of a major system only if--

(1) The major system has not yet proceeded beyond low-rate initial production; or

(2) The Secretary of Defense determines in writing that it would not be practicable to carry out the acquisition without continuing to use a contractor to perform lead system integrator functions and that doing so is in the best interest of DoD. The authority to make this determination may not be delegated below the level of the Under Secretary of Defense for Acquisition, Technology, and Logistics. (Also see 209.570-3(b).)

(d) Effective October 1, 2010, DoD is prohibited from awarding a new contract for lead system integrator functions in the acquisition of a major system to any entity that was not performing lead system integrator functions in the acquisition of the major system prior to January 28, 2008.

3. Section 209.570-3 is revised to read as follows:

209.570-3 Procedures.

(a) In making a responsibility determination before awarding a contract for the acquisition of a major system, the contracting officer shall--

(1) Determine whether the prospective contractor meets the definition of ``lead system integrator'';

(2) Consider all information regarding the prospective contractor's direct financial interests in view of the prohibition at 209.570-2(a); and

(3) Follow the procedures at PGI 209.570-3.

(b) A determination to use a contractor to perform lead system integrator functions in accordance with 209.570-2(c)(2)--

(1) Shall specify the reasons why it would not be practicable to carry out the acquisition without continuing to use a contractor to perform lead system integrator functions, including a discussion of alternatives, such as use of the DoD workforce or a system engineering and technical assistance contractor;

(2) Shall include a plan for phasing out the use of contracted lead system integrator functions over the shortest period of time consistent with the interest of the national defense; and

(3) Shall be provided to the Committees on Armed Services of the Senate and the House of Representatives at least 45 days before the award of a contract pursuant to the determination.

PART 237--SERVICE CONTRACTING

4. Section 237.102-72 is added to read as follows:

237.102-72 Contracts for management services.

In accordance with Section 802 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), DoD may award a contract for the acquisition of services the primary purpose of which is to perform acquisition support functions with respect to the development or production of a major system, only if--

(a) The contract prohibits the contractor from performing inherently governmental functions;

(b) The DoD organization responsible for the development or production of the major system ensures that Federal employees are responsible for determining--

(1) Courses of action to be taken in the best interest of the Government; and

(2) Best technical performance for the warfighter; and

(c) The contract requires that the prime contractor for the contract may not advise or recommend the award of a contract or subcontract for the development or production of the major system to an entity owned in whole or in part by the prime contractor.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

5. Section 252.209-7007 is amended by revising the clause date and paragraphs (a)(2), (a)(3), and (e) to read as follows:

252.209-7007 Prohibited Financial Interests for Lead System Integrators.

* * * * *

PROHIBITED FINANCIAL INTERESTS FOR LEAD SYSTEM INTEGRATORS (JUL 2009)

(a) * * *

(2) Lead system integrator with system responsibility means a prime contractor for the development or production of a major system, if the prime contractor is not expected at the time of award to perform a substantial portion of the work on the system and the major subsystems.

(3) Lead system integrator without system responsibility means a prime contractor under a contract for the procurement of services, the primary purpose of which is to perform acquisition functions closely associated with inherently governmental functions (see section 7.503(d) of the Federal Acquisition Regulation) with respect to the development or production of a major system.

* * * * *

(e) This clause implements the requirements of 10 U.S.C. 2410p, as added by Section 807 of the National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364), and Section 802 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

Defense Federal Acquisition Regulation Supplement; Lease of Vessels, Aircraft, and Combat Vehicles (DFARS Case 2006-D013)

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 implement statutory provisions relating to the leasing of vessels, aircraft, and combat vehicles. The rule applies to long-term leases and charters and to contracts with a substantial termination liability.

DATES: Effective Date: July 15, 2009.

FOR FURTHER INFORMATION CONTACT: Ms. Cassandra Freeman, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone 703-602-8383; facsimile 703-602-7887. Please cite DFARS Case 2006-D013.

SUPPLEMENTARY INFORMATION:

A. Background 10 U.S.C. 2401, as amended by Section 815 of the National Defense Authorization Act for Fiscal Year 2006 (Pub. L. 109-163), permits a military department to award a long-term lease or charter, or a contract with a substantial termination liability, for a vessel, aircraft, or combat vehicle, only if the Secretary of the military department is specifically authorized by law to award the contract and provides the appropriate notifications to the congressional defense committees.

Prior to the enactment of Public Law 109-163, the provisions of 10 U.S.C. 2401 applied to vessels and aircraft. Section 815 of Public Law 109-163 amended 10 U.S.C. 2401 to also include combat vehicles.

DoD published a proposed rule at 72 FR 28662 on May 22, 2007, to address the provisions of 10 U.S.C. 2401. Five sources submitted comments on the proposed rule. A discussion of the comments is provided below.

1. Comment: The proposed rule unduly applies its requirements to all leases and charters instead of only long-term leases and charters.

DoD Response: The rule has been amended to clarify that its requirements apply only to long-term leases and charters, and to contracts that provide for a substantial termination liability, consistent with the statutory provisions.

2. Comment: One respondent stated that the approval authority specified in the proposed rule (head of the agency) is not consistent with the approval authority specified in the statute (Secretary of the military department). Another respondent recommended delegation of the approval authority to the head of the contracting activity, to be consistent with the implementation of 10 U.S.C. 2401a at DFARS 207.470, for approval of leases and charters with terms of 18 months or more.

DoD Response: The final rule specifies the Secretary of the military department as the approval authority, consistent with 10 U.S.C. 2401. However, in accordance with FAR 1.108(b), the Secretary of the military department may delegate this authority as deemed appropriate.

3. Comment: The term ``similar agreement'' should be deleted from the rule, since this term is not defined in the DFARS or in the statute.

DoD Response: The term has been excluded from the final rule.

4. Comment: The rule should identify under what circumstances DoD can lease vessels, aircraft, and combat vehicles and how the decision to lease should be determined. In addition, the rule should include the definitions of the terms ``long-term lease'' and ``substantial termination liability'' found in 10 U.S.C. 2401(d).

DoD Response: The recommended changes have not been adopted. The rule is intended to inform contracting officers of the requirements of 10 U.S.C. 2401, but is not intended to address all aspects of leasing. Leasing is a highly specialized area that requires close coordination between the contracting officer and legal counsel.

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 primarily relates to DoD planning and budget considerations with regard to the leasing of vessels, aircraft, and combat vehicles.

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

List of Subjects in 48 CFR Part 207

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

Therefore, 48 CFR Part 207 is amended as follows:

PART 207--ACQUISITION PLANNING

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

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

2. Section 207.470 is amended as follows:0

a. By redesignating paragraphs (a) and (b) as paragraphs (b) and (c) respectively;

b. By adding a new paragraph (a); and

c. In newly designated paragraph (c), by removing ``Except as provided in paragraph (a) of this section'' and adding in its place ``Except as provided in paragraphs (a) and (b) of this section''.

The new paragraph (a) reads as follows:

207.470 Statutory requirements.

(a) Requirement for authorization of certain contracts relating to vessels, aircraft, and combat vehicles. The contracting officer shall not enter into any contract for the lease or charter of any vessel, aircraft, or combat vehicle, or any contract for services that would require the use of the contractor's vessel, aircraft, or combat vehicle, unless the Secretary of the military department concerned has satisfied the requirements of 10 U.S.C. 2401, when--

(1) The contract will be a long-term lease or charter as defined in 10 U.S.C. 2401(d)(1); or

(2) The terms of the contract provide for a substantial termination liability as defined in 10 U.S.C. 2401(d)(2). Also see PGI 207.470.* * * * *

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

Defense Federal Acquisition Regulation Supplement; Limitation on Procurements on Behalf of DoD (DFARS Case 2008-D005)

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 implement Section 801 of the National Defense Authorization Act for Fiscal Year 2008. Section 801 addresses internal controls for procurements made by non-DoD agencies on behalf of DoD.

DATES: Effective date: July 15, 2009.

Comment date: Comments on the interim rule should be submitted in writing to the address shown below on or before September 14, 2009, to be considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2008-D005, 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 2008-D005 in the subject line of the message.

Fax: 703-602-7887.

Mail: Defense Acquisition Regulations System, Attn: Ms. Cassandra Freeman, OUSD (AT&L) DPAP (DARS), IMD 3D139, 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. Cassandra Freeman, 703-602-8383.

SUPPLEMENTARY INFORMATION:

A. Background This interim rule implements Section 801 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181). Section 801 places limitations on acquisitions made by non-DoD agencies on behalf of DoD. Such acquisitions exceeding the simplified acquisition threshold may be made only if the head of the non-DoD agency has certified that the non-DoD agency will comply with defense procurement requirements for the fiscal year.

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 requirements of the rule are internal to the Government. Therefore, DoD has not performed an initial regulatory flexibility analysis. DoD invites comments from small businesses and other interested parties. DoD also will consider comments from small entities concerning the affected DFARS subpart in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2008-D005.

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

D. Determination to Issue an Interim Rule A determination has been made under the authority of the Secretary of Defense, that urgent and compelling reasons exist to publish an interim rule prior to affording the public an opportunity to comment. This interim rule implements Section 801 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181). Section 801 places limitations on acquisitions made by non-DoD agencies on behalf of DoD, and requires DoD to issue guidance on the appropriate use of interagency contracting. 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, Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR part 217 is amended as follows:

PART 217--SPECIAL CONTRACTING METHODS

1. The authority citation for 48 CFR part 217 continues to read as follows:

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

2. Section 217.7800 is amended by revising paragraph (a) to read as follows:

217.7800 Scope of subpart.

* * * * *

(a) Implements Section 854 of the National Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108-375) and Section 801 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181); and

* * * * *

3. Sections 217.7801 and 217.7802 are revised to read as follows:

217.7801 Definitions.

As used in this subpart--

Acquisition official means--

(1) A DoD contracting officer; or

(2) Any other DoD official authorized to approve a direct acquisition or an assisted acquisition on behalf of DoD.

Assisted acquisition means the type of interagency contracting through which acquisition officials of a non-DoD agency award a contract or a task or delivery order for the acquisition of supplies or services on behalf of DoD.

Direct acquisition means the type of interagency contracting through which DoD orders a supply or service from a Governmentwide acquisition contract maintained by a non-DoD agency.

Non-DoD agency means any department or agency of the Federal Government other than DoD.

217.7802 Policy.

(a) A DoD acquisition official may place an order, make a purchase, or otherwise acquire supplies or services for DoD in excess of the simplified acquisition threshold through a non-DoD agency in any fiscal year only if the head of the non-DoD agency has certified that the non-DoD agency will comply with defense procurement requirements for the fiscal year.

(1) This limitation shall not apply to the acquisition of supplies and services during any fiscal year for which there is in effect a written determination of the Under Secretary of Defense for Acquisition, Technology, and Logistics, that it is necessary in the interest of DoD to acquire supplies and services through the non-DoD agency during the fiscal year. A written determination with respect to a non-DoD agency shall apply to any category of acquisitions through the non-DoD agency that is specified in the determination.

(2) Non-DoD agency certifications and additional information are available at http://www.acq.osd.mil/dpap/cpic/cp/interagency_acquisition.html.

(b) Departments and agencies shall establish and maintain procedures for reviewing and approving orders placed for supplies and services under non-DoD contracts, whether through direct acquisition or assisted acquisition, when the amount of the order exceeds the simplified acquisition threshold. These procedures shall include--

(1) Evaluating whether using a non-DoD contract for the acquisition is in the best interest of DoD. Factors to be considered include-- (i) Satisfying customer requirements;

(ii) Schedule;

(iii) Cost effectiveness (taking into account discounts and fees); and

(iv) Contract administration (including oversight);

(2) Determining that the tasks to be accomplished or supplies to be provided are within the scope of the contract to be used;

(3) Reviewing funding to ensure that it is used in accordance with appropriation limitations;

(4) Providing unique terms, conditions, and requirements to the assisting agency for incorporation into the order or contract as appropriate to comply with all applicable DoD-unique statutes, regulations, directives, and other requirements; and

(5) Collecting and reporting data on the use of assisted acquisition for analysis. Follow the reporting requirements in Subpart 204.6.

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

Defense Federal Acquisition Regulation Supplement; Use of Commercial Software (DFARS Case 2008-D044)

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 implement Section 803 of the National Defense Authorization Act for Fiscal Year 2009. Section 803 requires DoD to identify and evaluate, at all stages of the acquisition process, opportunities for the use of commercial computer software and other non-developmental software.

DATES: Effective Date: July 15, 2009.

FOR FURTHER INFORMATION CONTACT: Mr. Julian Thrash, Defense Acquisition Regulations System, OUSD(AT&L)DPAP(DARS), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone 703-602-0310; facsimile 703-602-7887. Please cite DFARS Case 2008-D044.

SUPPLEMENTARY INFORMATION:

A. Background Section 803 of the National Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-417) requires DoD to ensure that contracting officials identify and evaluate, at all stages of the acquisition process (including concept refinement, concept decision, and technology development), opportunities for the use of commercial computer software and other non-developmental software. This final rule adds text at DFARS 212.212 to address the requirements of Section 803 of Public Law 110-117. In addition, the rule adds cross-references to existing DFARS policy regarding the acquisition of commercial software, software maintenance, and software documentation.

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

B. Regulatory Flexibility Act This rule will not have a significant cost or administrative impact on contractors or offerors, or a significant effect beyond the internal operating procedures of DoD. Therefore, publication for public comment under 41 U.S.C. 418b is not required. However, DoD will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 2008-D044.

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 212 and 239

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

Therefore, 48 CFR parts 212 and 239 are amended as follows:

1. The authority citation for 48 CFR parts 212 and 239 continues to read as follows:

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

PART 212--ACQUISITION OF COMMERCIAL ITEMS

2. Section 212.212 is revised to read as follows:

212.212 Computer software.

(1) Departments and agencies shall identify and evaluate, at all stages of the acquisition process (including concept refinement, concept decision, and technology development), opportunities for the use of commercial computer software and other non-developmental software in accordance with Section 803 of the National Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-417).

(2) See Subpart 208.74 when acquiring commercial software or software maintenance. See 227.7202 for policy on the acquisition of commercial computer software and commercial computer software documentation.

PART 239--ACQUISITION OF INFORMATION TECHNOLOGY

3. Section 239.101 is amended by adding a second sentence to read as follows:

239.101 Policy.

* * * See 227.7202 for policy on the acquisition of commercial computer software and commercial computer software documentation.

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 204, 219, 225, and 252

Defense Federal Acquisition Regulation Supplement; Technical Amendments

AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD is making technical amendments to the Defense Federal Acquisition Regulation Supplement (DFARS) to update references within the DFARS text.

DATES: Effective Date: July 15, 2009.

FOR FURTHER INFORMATION CONTACT: Ms. Michele Peterson, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone 703-602-0311; facsimile 703-602-7887.

SUPPLEMENTARY INFORMATION: This final rule amends DFARS text as follows:

204.7202-2, 219.708, 219.1204, and 225.1101. Updates cross-references.

225.301-4. Adds a reference to a DoD Web site.

252.225-7040. Updates a reference to a DoD publication.

List of Subjects in 48 CFR Parts 204, 219, 225, and 252

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

Therefore, 48 CFR Parts 204, 219, 225, and 252 are amended as follows:

1. The authority citation for 48 CFR Parts 204, 219, 225, and 252 continues to read as follows:

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

PART 204--ADMINISTRATIVE MATTERS

2. Section 204.7202-2 is revised to read as follows:

204.7202-2 DUNS numbers.

Requirements for use of DUNS numbers are in FAR 4.605(b) and 4.607(a).

PART 219--SMALL BUSINESS PROGRAMS

219.708 [Amended]

3. Section 219.708 is amended in paragraphs (b)(2) and (c)(1) by removing ``219.702(a)'' and adding in its place ``219.702''.

219.1204 [Amended]

4. Section 219.1204 is amended in paragraph (c), in the last sentence, by removing ``219.702(a)'' and adding in its place ``219.702''.

PART 225--FOREIGN ACQUISITION

5. Section 225.301-4 is amended in paragraph (2) by revising the last sentence to read as follows:

225.301-4 Contract clause.

* * * * *

(2) * * * Information on the SPOT system is available at http://www.dod.mil/bta/products/spot.html and http://www.acq.osd.mil/log/PS/spot.html.

225.1101 [Amended]

6. Section 225.1101 is amended in paragraph (11)(i) introductory text by removing ``paragraph (10)'' and adding in its place ``paragraph (11)''.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

252.225-7040 [Amended]

7. Section 252.225-7040 is amended as follows:

a. By revising the clause date to read ``(JUL 2009)''; and

b. In paragraph (n)(2) by removing ``DoD Directive 2310.2, Personnel Recovery'' and adding in its place ``DoD Directive 3002.01E, Personnel Recovery in the Department of Defense''.

END OF DCN 20090715