[Federal Register: November 24, 2010 (Volume 75, Number 226)]

[Rules and Regulations]

[Page 71562-71563]

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

[DOCID:fr24no10-18]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 217, 234, and 235

RIN 0750-AG76

Defense Federal Acquisition Regulation Supplement; Contract

Authority for Advanced Component Development or Prototype Units (DFARS

Case 2009-D034)

AGENCY: Defense Acquisition Regulations System, Department of Defense

(DoD).

ACTION: Confirmation of interim final rule.

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SUMMARY: DoD is adopting as final, with a minor change, an interim rule

amending the DFARS to implement section 819 of the National Defense

Authorization Act for Fiscal Year 2010. Section 819 places limitations

on certain types of line items and contract options that may be

included in contracts initially awarded pursuant to competitive

solicitations.

DATES: Effective Date: November 24, 2010.

FOR FURTHER INFORMATION CONTACT: Ms. Meredith Murphy, 703-602-1302.

SUPPLEMENTARY INFORMATION:

I. Background

DoD published an interim rule in the Federal Register at 75 FR 32638 on June 8, 2010, to implement section 819 of the National Defense Authorization Act for Fiscal Year 2010. The interim rule added coverage at DFARS 217.202 and 234.005-1. The intent of the statute is to prevent a contract for new technology that is initially awarded as a result of competition, from becoming a noncompetitive effort for the development of advance components or the procurement of prototype units. The DFARS implementation places specific limits, in accordance with the statute, on the dollar value, period of performance, and time for exercise of contract line items or contract options for such contracts.

The comment period closed on August 9, 2010. A single comment was received in response to the interim rule. The respondent commented that including the change in DFARS part 234 will result in users following this requirement only when procuring major systems. This issue was raised during the preparation of the interim rule. DoD confirmed that part 234 is the optimal location, but has added to DFARS part 235, Research and Development Contracting, a second cross-reference to the part 234 coverage.

II. Executive Order 12866

This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

III. 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 are to internal Government operating procedures. Specifically, the final rule implements section 819 of the National Defense Authorization Act for Fiscal Year 2010. Section 819 places limitations on certain types of line items and contract options that may be included in contracts initially awarded pursuant to competitive solicitations. When the prohibition applies, it limits the dollar value, period of performance, and time for exercise of such contract line items or contract options. The intent of the final rule is to prevent a contract for new technology that is initially awarded as a result of competition from becoming a noncompetitive effort for the development of advanced components or the procurement of prototype units.

IV. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the final 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 217, 234, and 235

Government procurement.

Clare M. Zebrowski,

Editor, Defense Acquisition Regulations System.

Interim Rule Adopted as Final With Changes

Accordingly, the interim rule amending 48 CFR parts 217 and 234, which was published in the Federal Register at 75 FR 32638 on June 8, 2010, is adopted as final with the following changes:

1. The authority citation for 48 CFR parts 217, 234, and 235 continues to read as follows:

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

PART 235--RESEARCH AND DEVELOPMENT CONTRACTING

2. Section 235.006-71 is added to subpart 235.006 to read as follows:

235.006-71 Competition.

See 234.005-1 for limitations on the use of contract line items or contract options for the provision of advanced component development or prototypes of technology developed under a competitively awarded proposal.

[FR Doc. 2010-29498 Filed 11-23-10; 8:45 am]

BILLING CODE 5001-08-P

[Federal Register: November 24, 2010 (Volume 75, Number 226)]

[Rules and Regulations]

[Page 71564-71565]

From the Federal Register Online via GPO Access [wais.access.gpo.gov][DOCID:fr24no10-20]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 242

RIN 0750-AG77

Defense Federal Acquisition Regulation Supplement; Contractor Insurance/Pension Review (DFARS Case 2009-D025)

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

ACTION: Final rule.

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SUMMARY: The Department of Defense (DoD) is issuing a final rule to remove and relocate the requirements for conducting a Contractor Insurance/Pension Review from Procedures, Guidance, and Information (PGI) to the Defense Federal Acquisition Regulation Supplement (DFARS).

DATES: Effective Date: November 24, 2010.

FOR FURTHER INFORMATION CONTACT: Ms. Mary Overstreet, 703-602-0311.

SUPPLEMENTARY INFORMATION:

I. Background

This final rule relocates requirements for Contractor Insurance/Pension Review to DFARS 242.7302 from PGI 242.7302.

DoD published a proposed rule at 75 FR 33237 on June 11, 2010, and the public comment period closed on August 10, 2010. No public comments were received. Therefore, DoD is making no changes to the final rule.

II. Executive Order 12866

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

III. 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. The rule is consistent with existing policy that a CIPR is only required for those contractors that have $50 million in qualifying sales to the Government. The rule merely relocates the requirements for CIPR from the PGI to the DFARS.

IV. Paperwork Reduction Act

The Paperwork Reduction Act (Pub. L. 96-511) applies because information collection requirements in the proposed rule at DFARS subpart 242.73 are currently approved under Office of Management and Budget Control Number 0704-0250. Relocating the requirement has no impact on the information collection requirement.

List of Subjects in 48 CFR Part 242

Government procurement.

Ynette R. Shelkin,

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR part 242 is amended as follows:

PART 242--CONTRACT ADMINISTRATION AND AUDIT SERVICES

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.

2. Revise section 242.7302 to read as follows:

242.7302 Requirements.

(a)(1) An in-depth CIPR as described at DFARS 242.7301(a)(1) shall be conducted only when--

(i) A contractor has $50 million of qualifying sales to the Government during the contractor's preceding fiscal year; and

(ii) The ACO, with advice from DCMA insurance/pension specialists and DCAA auditors, determines a CIPR is needed based on a risk assessment of the contractor's past experience and current vulnerability.

(2) Qualifying sales are sales for which cost or pricing data were required under 10 U.S.C. 2306a, as implemented in FAR 15.403, or that are contracts priced on other than a firm-fixed-price or fixed-price with economic price adjustment basis. Sales include prime contracts, subcontracts, and modifications to such contracts and subcontracts.

(b) A special CIPR that concentrates on specific areas of a contractor's insurance programs, pension plans, or other deferred compensation plans shall be performed for a contractor (including, but not limited to, a contractor meeting the requirements in paragraph (a) of this section) when any of the following circumstances exists, but only if the circumstance(s) may result in a material impact on Government contract costs:

(1) Information reveals a deficiency in the contractor's insurance/pension program.

(2) The contractor proposes or implements changes in its insurance, pension, or deferred compensation plans.

[FR Doc. 2010-29494 Filed 11-23-10; 8:45 am]

BILLING CODE 5001-08-P

[Federal Register: November 24, 2010 (Volume 75, Number 226)]

[Rules and Regulations]

[Page 71560-71562]

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

[DOCID:fr24no10-17]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 215, 234, 242, and 252

RIN 0750-AG46

Defense Federal Acquisition Regulation Supplement; Cost and Software Data Reporting System (DFARS Case 2008-D027)

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

ACTION: Final rule.

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SUMMARY: DoD is issuing a final rule to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to address DoD Cost and Software Data Reporting system requirements for Major Defense Acquisition Programs and Major Automated Information Systems.

DATES: Effective Date: November 24, 2010.

FOR FURTHER INFORMATION CONTACT: Ms. Mary Overstreet, Telephone 703-602-0311.

SUPPLEMENTARY INFORMATION:

I. Background

The DoD cost and software data reporting (CSDR) system establishes requirements for proposals and contract performance for major defense acquisition programs (as defined in 10 U.S.C. 2430) and major automated information systems (as defined in 10 U.S.C. 2445a).

During the proposal process, offerors are required to--

Describe the process to be used to satisfy the requirements of the CSDR Manual (DoD 5000.04-M-1) and the Government-approved CSDR plan; and

Submit certain cost information with the pricing proposal.

During contract performance, the contractor is required to--

Use a documented CSDR process for reporting;

Use the Government-approved contract CSDR plan as the basis for reporting; and

Require subcontractors to comply with the cost and software data reporting requirements.

DoD published a proposed rule at 75 FR 25165 on May 7, 2010. The public comment period closed July 6, 2010. Two respondents submitted comments that are grouped under four comment categories. Based on public comments, changes were made to the proposed rule. Major changes in the final rule are as follows:

Explaining that the two principal components of the CSDR system are the contractor cost data reporting (CCDR) and the software resources data reporting (SRDR) (DFARS 234.7100(a)).

Clarifying the solicitation and contract clause prescriptions (DFARS 234.7101).

Including the approval authority for applying the CSDR requirements at lower dollar thresholds (DFARS 234.7101(b)(2)).

Removing the requirement to submit DD Form 1921-2, Progress Curve Report, with the offeror's pricing proposal (DFARS 252.234-7003(b)(6)).

Removing the reference to DD Form 1921-3, Contractor Business Data Report (DFARS 242.503-2(b) and 252.234-7004, Cost and Software Data Reporting System).

Restructuring the solicitation provision to clarify proposal submission requirements (DFARS 252.234-7003).

Providing an Alternate I to the solicitation provision and to the clause to accommodate CSDR requirements at lower dollar thresholds (DFARS 252.234-7003 and 252.234-7004).

II. Discussion and Analysis

The following paragraphs address the four categories of comments and DoD responses:

1. DD 1921-2, Progress Curve Report

Comment: A respondent noted that DD Form 1921-2 Progress Curve Report, required to be submitted by offerors, in accordance with paragraph (a)(3) of DFARS 252.234-70XX in the proposed rule, is designed to collect unit/lot cost data and is, therefore, not applicable to contracts that do not procure units or lots. The respondent recommended revising the solicitation requirements.

Response: DoD agrees that the DD 1921-2 is not required to be submitted with the contractor's pricing proposal and has revised DFARS provision 252.234-7003 in the final rule accordingly.

2. The DD 1921-3, Contractor Business Data Report

a. Basis for Reporting

Comment: A respondent noted that paragraph (a)(3) of DFARS 252.234-70YY in the proposed rule directs ``the Contractor (to) use DD Form 1921-3, Contractor Business Data Report, as the basis for reporting in accordance with the required CSDR data item descriptions (DIDs).'' DD Form 1921-3, Contractor Business Data Report, is not a basis for reporting, but is a report to be prepared and submitted by the contractor in accordance with DID DI-FNCL-81765A. The respondent suggested removing the reference to DD Form 1921-3.

Response: DoD agrees and deleted the requirement for DD Form 1921-3, Contractor Business Data Report, from clause 252.234-7004 in the final rule.

b. Exempt Below $50 Million

Comment: One respondent asked if a subcontractor is exempt from reporting if it incurs less than $50 million on a program, or if the reporting requirements apply to all levels of subcontractors regardless of level of participation in the program.

Response: DoD revised the solicitation provision and contract clause to clarify applicability to subcontracts.

c. Specific Guidance Is Necessary

Comment: One respondent had numerous questions concerning the completion of DD Form 1921-3.

Response: Questions relating to DD Form 1921-3 preparation guidance are outside the scope of this rule and should be referred directly to the Defense Cost and Resource Center. References to DD Form 1921-3 have been removed from this final rule.

3. Solicitation Provision and Contract Clause Prescriptions

Comment: A respondent noted that ``Paragraphs (a) and (b) of 234.7101, Solicitation provision and contract clause, appear to be intended to distinguish between solicitation instructions and contract requirements, as well as Contractor Cost Data Reporting (CCDR) thresholds (> $50M) versus Software Resources Data Reporting (SRDR) thresholds (> $20M).'' Accordingly, the respondent suggested revising the paragraphs to clarify the distinctions.

Response: DoD agrees and has revised the cited paragraphs accordingly.

4. Contractor Cost and Data Reporting Application

Comment: One respondent asked whether cost allocations are going to be considered valid contract costs and if this supersedes FAR 31.201. The respondent also asked what allowance is provided for contractors with accounting software that does not accommodate the additional data fields necessary to map the offeror's accounting system to the CCDR data item descriptions.

Response: DoD notes that the 5000 series regulations express a strong preference for actual cost data. However, the use of cost allocations is not prohibited; clause 252.234-7003 asks for actual cost data to be used ``to the maximum extent possible'' (emphasis added). On the second point, DoD notes that the required mapping does not necessitate unique software applications. DoD expects its contractors to use standard and readily available electronic software applications such as electronic spreadsheets (e.g., MS-Excel[supreg]) or word processing formats (e.g., MS-Word[supreg]).

III. Executive Order 12866

This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

IV. Regulatory Flexibility Act

DoD has prepared a final regulatory flexibility analysis consistent with 5 U.S.C. 604. A copy of the analysis may be obtained from the individual specified herein. The analysis is summarized as follows:

The objective of the rule is to set forth cost and software data reporting (CSDR) system reporting requirements that are essential for DoD to estimate the cost of current and future weapon systems. The data are also very useful in performing contract price analysis, comparing prices of similar systems, and for capturing contractor-provided cost estimates in standard formats to facilitate comparison across several contractors.

The rule will apply to DoD major defense acquisition program (MDAP) and major automated information system (MAIS) contractors. Due to the magnitude of these major programs, most small businesses are not MDAP or MAIS contractors. DoD solicited comments from small entities and other interested parties (proposed rule at 75 FR 25165). No comments were received from small entities on the impact of this rule and none of the comments was in response to the initial regulatory flexibility analysis. Therefore, there is no change to the rule in this regard.

This final rule sets forth existing DoD CSDR requirements for weapon system programs for proposal submission and contract performance.

During the proposal process, in response to solicitations, offerors are required to--

Describe the standard CSDR process to be used to satisfy the requirements of the CSDR Manual, DoD 5000.04-M-1, and the Government approved CSDR plan, DD Form 2794, and the related Resource Distribution Table (RDT);

Provide comments on the adequacy of the CSDR contract plan, and the related RDT contained in the solicitation; and,

Submit with their pricing proposal: DD Form 1921, Cost Data Summary Report, and DD Form 1921-1, Functional Cost-Hour Report.

During contract performance, the contractor will be required to--

Utilize a documented CSDR process that satisfies the guidelines contained in the DoD 5000.04-M-1, CSDR Manual;

Use management procedures that provide for generation of timely and reliable information for the two principal components of the CSDR system: Contractor cost data reports and software resources data reports;

Use the Government-approved contract CSDR plan, DD Form 2794, with the related RDT; and

Require subcontractors, or subcontracted effort if subcontractors have not been selected, to comply with the CSDR requirements.

This final rule is not expected 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., as most MDAP and MAIS contractors are large businesses. For reporting, contractors are expected to use standard and readily available electronic software applications such as electronic spreadsheets (e.g., MS-Excel[supreg]) or word processing formats (e.g., MS-Word[supreg]) to show the necessary mapping from their accounting systems into the standard CCDR formats.

V. Paperwork Reduction Act

The information collection requirements associated with this rule were approved by the Office of Management and Budget under Clearance Number 0704-0188, Acquisition Management Systems and Data Requirements Control List. The revisions in the final rule will not change the burden hours approved under Clearance Number 0704-0188.

List of Subjects in 48 CFR Parts 215, 234, 242, and 252

Government procurement.

Ynette R. Shelkin,

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR parts 215, 234, 242, and 252 are amended as follows:

1. The authority citation for 48 CFR parts 215, 234, 242, and 252 continues to read as follows:

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

PART 215--CONTRACTING BY NEGOTIATION

215.403-5 [Removed]

2. Remove section 215.403-5.

PART 234--MAJOR SYSTEM ACQUISITION

3. Subpart 234.71 is added to read as follows:

Subpart 234.71--Cost and Software Data Reporting

Sec.

234.7100 Policy.

234.7101 Solicitation provision and contract clause.

Subpart 234.71--Cost and Software Data Reporting

234.7100 Policy.

(a) The cost and software data reporting (CSDR) requirement is mandatory for major defense acquisition programs (as defined in 10 U.S.C. 2430), and major automated information system programs (as defined in 10 U.S.C. 2445a) as specified in DoDI 5000.02, Operation of the Defense Acquisition System and the DoD 5000.04-M-1, CSDR Manual. The CSDR system is applied in accordance with the reporting requirements established in DoDI 5000.02. The two principal components of the CSDR system are contractor cost data reporting and software resources data reporting.

(b) Prior to contract award, contracting officers shall consult with the Defense Cost and Resource Center to determine that the offeror selected for award has proposed a standard CSDR system, as described in the offeror's proposal in response to the provision at 252.234-7003, that is in compliance with DoDI 5000.02, Operation of the Defense Acquisition System, and the DoD 5000.04-M-1, CSDR Manual.

(c) Contact information for the Defense Cost and Resource Center and the Deputy Director, Cost Assessment, is located at PGI 234.7100.

234.7101 Solicitation provision and contract clause.

(a)(1) Use the provision at 252.234-7003, Notice of Cost and Software Data Reporting System, in all solicitations that include the clause at 252.234-7004, Cost and Software Data Reporting.

(2) Use the provision with its Alternate I when the clause at 252.234-7004, Cost and Software Data Reporting, is used with its Alternate I.

(b)(1) Use the clause at 252.234-7004, Cost and Software Data Reporting System, in all solicitations and contracts for major defense acquisition programs and major automated information system programs that exceed $50 million.

(2) Use the clause with its Alternate I in solicitations and contracts for major defense acquisition programs and major automated information system programs with a value equal to or greater than $20 million but less than or equal to $50 million, when so directed by the program manager with the approval of the OSD Deputy Director, Cost Assessment.

PART 242--CONTRACT ADMINISTRATION AND AUDIT SERVICES

4. Designate the current text of section 242.503-2 as paragraph (a) and add new paragraph (b) to read as follows:

242.503-2 Postaward conference procedure.

* * * * *

(b) For contracts that include the clause at 252.234-7004, Cost and Software Data Reporting, postaward conferences shall include a discussion of the contractor's standard cost and software data reporting (CSDR) process that satisfies the guidelines contained in the DoD 5000.04-M-1, CSDR Manual, and the requirements in the Government-approved CSDR plan for the contract, DD Form 2794, and related Resource Distribution Table.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

5. Add section 252.234-7003 to read as follows:

252.234-7003 Notice of Cost and Software Data Reporting System. (NOV 2010)

As prescribed in 234-7101(a)(1), use the following provision:

NOTICE OF COST AND SOFTWARE DATA REPORTING SYSTEM (NOV 2010)

(a) This solicitation includes--

(1) The Government-approved cost and software data reporting (CSDR) plan for the contract, DD Form 2794; and

(2) The related Resource Distribution Table.

(b) As part of its proposal, the offeror shall--

(1) Describe the process to be used to satisfy the requirements of the DoD 5000.04-M-1, CSDR Manual, and the Government-approved CSDR plan for the proposed contract;

(2) Demonstrate how contractor cost and data reporting (CCDR) will be based, to the maximum extent possible, upon actual cost transactions and not cost allocations;

(3) Demonstrate how the data from its accounting system will be mapped into the standard reporting categories required in the CCDR data item descriptions;

(4) Describe how recurring and nonrecurring costs will be segregated;

(5) Provide comments on the adequacy of the CSDR contract plan and related Resource Distribution Table; and

(6) Submit the DD Form 1921, Cost Data Summary Report, and DD Form 1921-1, Functional Cost-Hour Report, with its pricing proposal.

(c) CSDR reporting will be required for subcontractors at any tier with a subcontract that exceeds $50 million. The offeror shall identify, by providing comments on the Resource Distribution Table, the subcontractors, or, if the subcontractors have not been selected, the subcontracted effort in this category.

(End of provision)

Alternate I (NOV 2010). As prescribed in 234.7101(a)(2), substitute the following paragraph (c) for paragraph (c) of the basic provision:

(c) CSDR reporting will be required for subcontractors for selected subcontracts identified in the CSDR contract plan as requiring such reporting. The offeror shall identify, by providing comments on the Resource Distribution Table, the subcontractors, or, if the subcontractors have not been selected, the subcontracted effort.

6. Add section 252.234-7004 to read as follows:

252.234-7004 Cost and Software Data Reporting System. (NOV 2010)

As prescribed in 234.7101(b)(1), use the following clause:

COST AND SOFTWARE DATA REPORTING SYSTEM (NOV 2010)

(a) In the performance of this contract, the Contractor shall use--

(1) A documented standard cost and software data reporting (CSDR) process that satisfies the guidelines contained in the DoD 5000.04-M-1, CSDR Manual;

(2) Management procedures that provide for generation of timely and reliable information for the contractor cost data reports (CCDRs) and software resources data reports (SRDRs) required by the CCDR and SRDR data items of this contract; and

(3) The Government-approved CSDR plan for this contract, DD Form 2794, and the related Resource Distribution Table as the basis for reporting in accordance with the required CSDR data item descriptions.

(b) The Contractor shall require CSDR reporting from subcontractors at any tier with a subcontract that exceeds $50 million. If, for subcontracts that exceed $50 million, the Contractor changes subcontractors or makes new subcontract awards, the Contractor shall notify the Government.

(End of clause)

Alternate I (NOV 2010). As prescribed in 234.7101(b)(2), substitute the following paragraph (b) for paragraph (b) of the basic clause:

(b) The Contractor shall require CSDR reporting from selected subcontractors identified in the CSDR contract plan as requiring such reporting. If the Contractor changes subcontractors or makes new awards for selected subcontract effort, the Contractor shall notify the Government.

[FR Doc. 2010-29496 Filed 11-23-10; 8:45 am]

BILLING CODE 5001-08-P

[Federal Register: November 24, 2010 (Volume 75, Number 226)]

[Rules and Regulations]

[Page 71560-71562]

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

[DOCID:fr24no10-17]

=======================================================================

-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 215, 234, 242, and 252

RIN 0750-AG46

Defense Federal Acquisition Regulation Supplement; Cost and

Software Data Reporting System (DFARS Case 2008-D027)

AGENCY: Defense Acquisition Regulations System, Department of Defense

(DoD).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: DoD is issuing a final rule to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to address DoD Cost and Software Data Reporting system requirements for Major Defense Acquisition Programs and Major Automated Information Systems.

DATES: Effective Date: November 24, 2010.

FOR FURTHER INFORMATION CONTACT: Ms. Mary Overstreet, Telephone 703-602-0311.

SUPPLEMENTARY INFORMATION:

I. Background

The DoD cost and software data reporting (CSDR) system establishes requirements for proposals and contract performance for major defense acquisition programs (as defined in 10 U.S.C. 2430) and major automated information systems (as defined in 10 U.S.C. 2445a).

During the proposal process, offerors are required to--

Describe the process to be used to satisfy the requirements of the CSDR Manual (DoD 5000.04-M-1) and the Government-approved CSDR plan; and

Submit certain cost information with the pricing proposal.

During contract performance, the contractor is required to--

Use a documented CSDR process for reporting;

Use the Government-approved contract CSDR plan as the basis for reporting; and

Require subcontractors to comply with the cost and software data reporting requirements.

DoD published a proposed rule at 75 FR 25165 on May 7, 2010. The public comment period closed July 6, 2010. Two respondents submitted comments that are grouped under four comment categories. Based on public comments, changes were made to the proposed rule. Major changes in the final rule are as follows:

Explaining that the two principal components of the CSDR system are the contractor cost data reporting (CCDR) and the software resources data reporting (SRDR) (DFARS 234.7100(a)).

Clarifying the solicitation and contract clause prescriptions (DFARS 234.7101).

Including the approval authority for applying the CSDR requirements at lower dollar thresholds (DFARS 234.7101(b)(2)).

Removing the requirement to submit DD Form 1921-2, Progress Curve Report, with the offeror's pricing proposal (DFARS 252.234-7003(b)(6)).

Removing the reference to DD Form 1921-3, Contractor Business Data Report (DFARS 242.503-2(b) and 252.234-7004, Cost and Software Data Reporting System).

Restructuring the solicitation provision to clarify proposal submission requirements (DFARS 252.234-7003).

Providing an Alternate I to the solicitation provision and to the clause to accommodate CSDR requirements at lower dollar thresholds (DFARS 252.234-7003 and 252.234-7004).

II. Discussion and Analysis

The following paragraphs address the four categories of comments and DoD responses:

1. DD 1921-2, Progress Curve Report

Comment: A respondent noted that DD Form 1921-2 Progress Curve Report, required to be submitted by offerors, in accordance with paragraph (a)(3) of DFARS 252.234-70XX in the proposed rule, is designed to collect unit/lot cost data and is, therefore, not applicable to contracts that do not procure units or lots. The respondent recommended revising the solicitation requirements.

Response: DoD agrees that the DD 1921-2 is not required to be submitted with the contractor's pricing proposal and has revised DFARS provision 252.234-7003 in the final rule accordingly.

2. The DD 1921-3, Contractor Business Data Report

a. Basis for Reporting

Comment: A respondent noted that paragraph (a)(3) of DFARS 252.234-70YY in the proposed rule directs ``the Contractor (to) use DD Form 1921-3, Contractor Business Data Report, as the basis for reporting in accordance with the required CSDR data item descriptions (DIDs).'' DD Form 1921-3, Contractor Business Data Report, is not a basis for reporting, but is a report to be prepared and submitted by the contractor in accordance with DID DI-FNCL-81765A. The respondent suggested removing the reference to DD Form 1921-3.

Response: DoD agrees and deleted the requirement for DD Form 1921-3, Contractor Business Data Report, from clause 252.234-7004 in the final rule.

b. Exempt Below $50 Million

Comment: One respondent asked if a subcontractor is exempt from reporting if it incurs less than $50 million on a program, or if the reporting requirements apply to all levels of subcontractors regardless of level of participation in the program.

Response: DoD revised the solicitation provision and contract clause to clarify applicability to subcontracts.

c. Specific Guidance Is Necessary

Comment: One respondent had numerous questions concerning the completion of DD Form 1921-3.

Response: Questions relating to DD Form 1921-3 preparation guidance are outside the scope of this rule and should be referred directly to the Defense Cost and Resource Center. References to DD Form 1921-3 have been removed from this final rule.

3. Solicitation Provision and Contract Clause Prescriptions

Comment: A respondent noted that ``Paragraphs (a) and (b) of 234.7101, Solicitation provision and contract clause, appear to be intended to distinguish between solicitation instructions and contract requirements, as well as Contractor Cost Data Reporting (CCDR) thresholds (> $50M) versus Software Resources Data Reporting (SRDR) thresholds (> $20M).'' Accordingly, the respondent suggested revising the paragraphs to clarify the distinctions.

Response: DoD agrees and has revised the cited paragraphs accordingly.

4. Contractor Cost and Data Reporting Application

Comment: One respondent asked whether cost allocations are going to be considered valid contract costs and if this supersedes FAR 31.201. The respondent also asked what allowance is provided for contractors with accounting software that does not accommodate the additional data fields necessary to map the offeror's accounting system to the CCDR data item descriptions.

Response: DoD notes that the 5000 series regulations express a strong preference for actual cost data. However, the use of cost allocations is not prohibited; clause 252.234-7003 asks for actual cost data to be used ``to the maximum extent possible'' (emphasis added). On the second point, DoD notes that the required mapping does not necessitate unique software applications. DoD expects its contractors to use standard and readily available electronic software applications such as electronic spreadsheets (e.g., MS-Excel[supreg]) or word processing formats (e.g., MS-Word[supreg]).

III. Executive Order 12866

This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

IV. Regulatory Flexibility Act

DoD has prepared a final regulatory flexibility analysis consistent with 5 U.S.C. 604. A copy of the analysis may be obtained from the individual specified herein. The analysis is summarized as follows:

The objective of the rule is to set forth cost and software data reporting (CSDR) system reporting requirements that are essential for DoD to estimate the cost of current and future weapon systems. The data are also very useful in performing contract price analysis, comparing prices of similar systems, and for capturing contractor-provided cost estimates in standard formats to facilitate comparison across several contractors.

The rule will apply to DoD major defense acquisition program (MDAP) and major automated information system (MAIS) contractors. Due to the magnitude of these major programs, most small businesses are not MDAP or MAIS contractors. DoD solicited comments from small entities and other interested parties (proposed rule at 75 FR 25165). No comments were received from small entities on the impact of this rule and none of the comments was in response to the initial regulatory flexibility analysis. Therefore, there is no change to the rule in this regard.

This final rule sets forth existing DoD CSDR requirements for weapon system programs for proposal submission and contract performance.

During the proposal process, in response to solicitations, offerors are required to--

Describe the standard CSDR process to be used to satisfy the requirements of the CSDR Manual, DoD 5000.04-M-1, and the Government approved CSDR plan, DD Form 2794, and the related Resource Distribution Table (RDT);

Provide comments on the adequacy of the CSDR contract plan, and the related RDT contained in the solicitation; and,

Submit with their pricing proposal: DD Form 1921, Cost Data Summary Report, and DD Form 1921-1, Functional Cost-Hour Report.

During contract performance, the contractor will be required to--

Utilize a documented CSDR process that satisfies the guidelines contained in the DoD 5000.04-M-1, CSDR Manual;

Use management procedures that provide for generation of timely and reliable information for the two principal components of the CSDR system: Contractor cost data reports and software resources data reports;

Use the Government-approved contract CSDR plan, DD Form 2794, with the related RDT; and

Require subcontractors, or subcontracted effort if subcontractors have not been selected, to comply with the CSDR requirements.

This final rule is not expected 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., as most MDAP and MAIS contractors are large businesses. For reporting, contractors are expected to use standard and readily available electronic software applications such as electronic spreadsheets (e.g., MS-Excel[supreg]) or word processing formats (e.g., MS-Word[supreg]) to show the necessary mapping from their accounting systems into the standard CCDR formats.

V. Paperwork Reduction Act

The information collection requirements associated with this rule were approved by the Office of Management and Budget under Clearance Number 0704-0188, Acquisition Management Systems and Data Requirements Control List. The revisions in the final rule will not change the burden hours approved under Clearance Number 0704-0188.

List of Subjects in 48 CFR Parts 215, 234, 242, and 252

Government procurement.

Ynette R. Shelkin,

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR parts 215, 234, 242, and 252 are amended as follows:

1. The authority citation for 48 CFR parts 215, 234, 242, and 252 continues to read as follows:

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

PART 215--CONTRACTING BY NEGOTIATION

215.403-5 [Removed]

2. Remove section 215.403-5.

PART 234--MAJOR SYSTEM ACQUISITION

3. Subpart 234.71 is added to read as follows:

Subpart 234.71--Cost and Software Data Reporting

Sec.234.7100 Policy.

234.7101 Solicitation provision and contract clause.

Subpart 234.71--Cost and Software Data Reporting

234.7100 Policy.

(a) The cost and software data reporting (CSDR) requirement is mandatory for major defense acquisition programs (as defined in 10 U.S.C. 2430), and major automated information system programs (as defined in 10 U.S.C. 2445a) as specified in DoDI 5000.02, Operation of the Defense Acquisition System and the DoD 5000.04-M-1, CSDR Manual. The CSDR system is applied in accordance with the reporting requirements established in DoDI 5000.02. The two principal components of the CSDR system are contractor cost data reporting and software resources data reporting.

(b) Prior to contract award, contracting officers shall consult with the Defense Cost and Resource Center to determine that the offeror selected for award has proposed a standard CSDR system, as described in the offeror's proposal in response to the provision at 252.234-7003, that is in compliance with DoDI 5000.02, Operation of the Defense Acquisition System, and the DoD 5000.04-M-1, CSDR Manual.

(c) Contact information for the Defense Cost and Resource Center and the Deputy Director, Cost Assessment, is located at PGI 234.7100.

234.7101 Solicitation provision and contract clause.

(a)(1) Use the provision at 252.234-7003, Notice of Cost and Software Data Reporting System, in all solicitations that include the clause at 252.234-7004, Cost and Software Data Reporting.

(2) Use the provision with its Alternate I when the clause at 252.234-7004, Cost and Software Data Reporting, is used with its Alternate I.

(b)(1) Use the clause at 252.234-7004, Cost and Software Data Reporting System, in all solicitations and contracts for major defense acquisition programs and major automated information system programs that exceed $50 million.

(2) Use the clause with its Alternate I in solicitations and contracts for major defense acquisition programs and major automated information system programs with a value equal to or greater than $20 million but less than or equal to $50 million, when so directed by the program manager with the approval of the OSD Deputy Director, Cost Assessment.

PART 242--CONTRACT ADMINISTRATION AND AUDIT SERVICES

4. Designate the current text of section 242.503-2 as paragraph (a) and add new paragraph (b) to read as follows:

242.503-2 Postaward conference procedure.

* * * * *

(b) For contracts that include the clause at 252.234-7004, Cost and Software Data Reporting, postaward conferences shall include a discussion of the contractor's standard cost and software data reporting (CSDR) process that satisfies the guidelines contained in the DoD 5000.04-M-1, CSDR Manual, and the requirements in the Government-approved CSDR plan for the contract, DD Form 2794, and related Resource Distribution Table.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

5. Add section 252.234-7003 to read as follows:

252.234-7003 Notice of Cost and Software Data Reporting System. (NOV 2010)

As prescribed in 234-7101(a)(1), use the following provision:

NOTICE OF COST AND SOFTWARE DATA REPORTING SYSTEM (NOV 2010)

(a) This solicitation includes--

(1) The Government-approved cost and software data reporting (CSDR) plan for the contract, DD Form 2794; and

(2) The related Resource Distribution Table.

(b) As part of its proposal, the offeror shall--

(1) Describe the process to be used to satisfy the requirements of the DoD 5000.04-M-1, CSDR Manual, and the Government-approved CSDR plan for the proposed contract;

(2) Demonstrate how contractor cost and data reporting (CCDR) will be based, to the maximum extent possible, upon actual cost transactions and not cost allocations;

(3) Demonstrate how the data from its accounting system will be mapped into the standard reporting categories required in the CCDR data item descriptions;

(4) Describe how recurring and nonrecurring costs will be segregated;

(5) Provide comments on the adequacy of the CSDR contract plan

and related Resource Distribution Table; and

(6) Submit the DD Form 1921, Cost Data Summary Report, and DD Form 1921-1, Functional Cost-Hour Report, with its pricing proposal.

(c) CSDR reporting will be required for subcontractors at any tier with a subcontract that exceeds $50 million. The offeror shall identify, by providing comments on the Resource Distribution Table, the subcontractors, or, if the subcontractors have not been selected, the subcontracted effort in this category.

(End of provision)

Alternate I (NOV 2010). As prescribed in 234.7101(a)(2), substitute the following paragraph (c) for paragraph (c) of the basic provision:

(c) CSDR reporting will be required for subcontractors for selected subcontracts identified in the CSDR contract plan as requiring such reporting. The offeror shall identify, by providing comments on the Resource Distribution Table, the subcontractors, or, if the subcontractors have not been selected, the subcontracted effort.

6. Add section 252.234-7004 to read as follows:

252.234-7004 Cost and Software Data Reporting System. (NOV 2010)

As prescribed in 234.7101(b)(1), use the following clause:

COST AND SOFTWARE DATA REPORTING SYSTEM (NOV 2010)

(a) In the performance of this contract, the Contractor shall use--

(1) A documented standard cost and software data reporting (CSDR) process that satisfies the guidelines contained in the DoD 5000.04-M-1, CSDR Manual;

(2) Management procedures that provide for generation of timely and reliable information for the contractor cost data reports (CCDRs) and software resources data reports (SRDRs) required by the CCDR and SRDR data items of this contract; and

(3) The Government-approved CSDR plan for this contract, DD Form 2794, and the related Resource Distribution Table as the basis for reporting in accordance with the required CSDR data item descriptions.

(b) The Contractor shall require CSDR reporting from subcontractors at any tier with a subcontract that exceeds $50 million. If, for subcontracts that exceed $50 million, the Contractor changes subcontractors or makes new subcontract awards, the Contractor shall notify the Government.

(End of clause)

Alternate I (NOV 2010). As prescribed in 234.7101(b)(2), substitute the following paragraph (b) for paragraph (b) of the basic clause:

(b) The Contractor shall require CSDR reporting from selected subcontractors identified in the CSDR contract plan as requiring such reporting. If the Contractor changes subcontractors or makes new awards for selected subcontract effort, the Contractor shall notify the Government.

[FR Doc. 2010-29496 Filed 11-23-10; 8:45 am]

BILLING CODE 5001-08-P

[Federal Register: November 24, 2010 (Volume 75, Number 226)]

[Proposed Rules]

[Page 71646-71647]

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

[DOCID:fr24no10-49]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 204 and 252

RIN 0750-AG39

Defense Federal Acquisition Regulation Supplement; Annual

Representations and Certifications (DFARS Case 2009-D011)

AGENCY: Defense Acquisition Regulations System, Department of Defense

(DoD).

ACTION: Proposed rule with request for comments.

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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to conform it to changes in the Federal Acquisition Regulation (FAR) relating to annual representations and certifications.

DATES: Comment date: Comments on this proposed rule should be submitted in writing to the address shown below on or before January 24, 2011, to be considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2009-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 2009-D011 in the subject line of the message.

Fax: 703-602-0350.

Mail: Defense Acquisition Regulations System, Attn: Mr. Julian E. Thrash, OUSD(AT&L)DPAP(DARS), Room 3B855, 3060 Defense Pentagon, Washington, DC 20301-3060.

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

To confirm receipt of your comment(s), please check http://www.regulations.gov approximately two to three days after submission to verify posting (except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: Mr. Julian E. Thrash, 703-602-0310.

SUPPLEMENTARY INFORMATION:

I. Background

DFARS 252.204-7007, Alternate A, Annual Representations and Certifications, was structured to supplement paragraph (d) of FAR 52.204-8, Annual Representations and Certifications (formerly paragraph (c)). FAR 52.204-8 was changed to add a new paragraph (c), which indicates the applicable representations and certifications in ORCA. The representations and certifications in ORCA are those provisions and clauses listed in the prescribing language contained in FAR 4.1202. The change also requires the DFARS representations and certifications in ORCA to be listed in DFARS 252.204-7007. The DFARS representations and certifications are those provisions and clauses contained in the prescribing language listed in DFARS 204.1202.

Further, DFARS 252.212-7000, Offeror Representations and Certifications-Commercial Items, should be removed from DFARS 204.1202(2)(ii). The prescribing language requires inclusion of this provision in all solicitations for commercial items exceeding the simplified acquisition threshold. Further, the inclusion of 252.204-7007, Alternate A, Annual Representations and Certifications, is applicable when the provision at FAR 52.204-8, Annual Representations and Certifications, is included in solicitations, except for commercial item solicitations.

In addition, the proposed changes include the following:

Delete the reference to 252.216-7003, and 252.239-7011 from DFARS 204.1202, because these are clauses, not provisions.

Revise DFARS 252.204-7007 to incorporate the listing of representations or certifications in ORCA that are applicable to the solicitation.

Address in paragraph (d) of DFARS 252.204-7007 the applicability of representations and certifications in ORCA, as set forth in provisions and clauses at DFARS 252.209-7005, 252.225-7000, 252.225-7020, 252.225-7022, 252.225-7031, 252.225-7035, 252.225-7042, 252.229-7003, 252.229-7005, and 252.247-7022.

II. Executive Order 12866

This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30,1993.

III. Regulatory Flexibility Act

DoD does not expect this proposed 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 change is to internal Government operating procedures. Therefore, an initial regulatory flexibility analysis has not been performed. DoD invites comments from small entities and other interested parties.

DoD will also consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C 601, et seq., (DFARS case 2009-D011), in correspondence.

IV. 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 204 and 252

Government procurement.

Clare M. Zebrowski,

Editor, Defense Acquisition Regulations System.

Therefore, DoD proposes to amend 48 CFR parts 204 and 252 as follows:

1. The authority citation for 48 CFR parts 204 and 252 continues to read as follows:

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

PART 204--ADMINISTRATIVE MATTERS

2. Amend section 204.1202 by removing paragraphs (2)(ii), (2)(iii), and (2)(xi); redesignating paragraphs (2)(iv) and (2)(v) as paragraphs (2)(ii) and (2)(iii), respectively; redesignating paragraphs (2)(vi) through (2)(x) as paragraphs (2)(v) through (2)(ix), respectively; redesignating paragraph (2)(xii) as paragraph (2)(x) and adding paragraph (2)(iv), to read as follows:

204.1202 Solicitation provision and contract clause.

* * * * *

(2) * * *

(iv) 252.225-7022, Trade Agreements Certificate-Inclusion of Iraqi End Products.

* * * * *

3. Revise section 252.204-7007 to read as follows:

252.204-7007 Alternate A, Annual Representations and Certifications.

ALTERNATE A, ANNUAL REPRESENTATIONS AND CERTIFICATIONS

(DATE)

As prescribed in 204.1202, substitute the following paragraphs (d) and (e) for paragraph (d) of the provision at FAR 52.204-8:

(d) The following representations or certifications in ORCA are applicable to this solicitation as indicated:

(i) 252.209-7005, Reserve Officer Training Corps and Military Recruiting on Campus. This clause applies to all solicitations and contracts with institutions of higher education.

(ii) 252.225-7000, Buy American Act--Balance of Payments Program Certificate. This provision applies to solicitations containing the clause at 252.225-7001, Buy American Act and Balance of Payments Program.

(iii) 252.225-7020, Trade Agreements Certificate. This provision applies to solicitations containing the clause at 252.225-7021, Trade Agreements.

(iv) 252.225-7022, Trade Agreements Certificate--Inclusion of Iraqi End Products. This provision applies to solicitations containing the clause at 252.225-7021, Trade Agreements, used with its Alternate I.

(v) 252.225-7031, Secondary Arab Boycott of Israel. This provision applies to all solicitations unless an exception applies or a waiver has been granted in accordance with 225.7604.

(vi) 252.225-7035, Buy American Act--Free Trade Agreements--

Balance of Payments Program Certificate. This provision applies to solicitations that include the clause at 252.225-7036, Buy American Act--Free Trade Agreements--Balance of Payments Program. Alternate I applies when the clause at 252.225-7036 is used with its Alternate I.

(vii) 252.225-7042, Authorization to Perform. This provision applies to solicitations when contract performance will be wholly or in part in a foreign country.

(viii) 252.229-7003, Tax Exemptions (Italy). This clause applies to solicitations and contracts when contract performance will be in Italy.

(ix) 252.229-7005, Tax Exemptions (Spain). This clause applies to solicitations and contracts when contract performance will be in Spain.

(x) 252.247-7022, Representation of Extent of Transportation by Sea. This provision applies to all solicitations except--

(A) Those for direct purchase of ocean transportation services; or

(B) Those with an anticipated value at or below the simplified acquisition threshold.

(e) The offeror has completed the annual representations and certifications electronically via the Online Representations and Certifications Application (ORCA) Web site at https://orca.bpn.gov/. After reviewing the ORCA database information, the offeror verifies by submission of the offer that the representations and certifications currently posted electronically that apply to this solicitation as indicated in paragraphs (d) and (e) of this provision have been entered or updated within the last 12 months, are current, accurate, complete, and applicable to this solicitation (including the business size standard applicable to the NAICS code referenced for this solicitation), as of the date of this offer, and are incorporated in this offer by reference (see FAR 4.1201); except for the changes identified below [offeror to insert changes, identifying change by clause number, title, date]. These amended representation(s) and/or certification(s) are also incorporated in this offer and are current, accurate, and complete as of the date of this offer.

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FAR/DFARS Clause Title Date Change

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------------------------------------------------------------------------

Any changes provided by the offeror are applicable to this solicitation only, and do not result in an update to the representations and certifications posted on ORCA.

[FR Doc. 2010-29495 Filed 11-23-10; 8:45 am]

BILLING CODE 5001-08-P

[Federal Register: November 24, 2010 (Volume 75, Number 226)]

[Proposed Rules]

[Page 71647-71648]

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

[DOCID:fr24no10-50]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 215

Defense Federal Acquisition Regulation Supplement; Discussions

Prior to Contract Award (DFARS Case 2010-D013)

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

ACTION: Proposed rule with request for comments.

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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to strongly encourage discussions prior to award for source selections of procurements estimated at $100 million or more. The proposed change was recommended by the DoD Source Selection Joint Analysis Team.

DATES: Comments on the proposed rule should be submitted in writing to the address shown below on or before January 24, 2011, to be considered in the formation of the final rule.

ADDRESSES: Submit comments identified by DFARS Case 2010-D013, using any of the following methods:

[cir] Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

[cir] E-mail: dfars@osd.mil. Include DFARS Case 2010-D013 in the subject line of the message.

[cir] Fax: 703-602-0350.

[cir] Mail: Defense Acquisition Regulations System, Attn: Meredith Murphy, OUSD (AT&L) DPAP (DARS), Room 3B855, 3060 Defense Pentagon, Washington, DC 20301-3060.

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

To confirm receipt of your comment(s), please check http://www.regulations.gov approximately two to three days after submission to verify posting (except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: Ms. Meredith Murphy, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), 3060 Defense Pentagon, Room 3B855, Washington, DC 20301-3060. Telephone 703-602-1302; facsimile 703-602-0350. Please cite DFARS Case 2010-D013.

SUPPLEMENTARY INFORMATION:

I. Background

This DFARS case was initiated at the request of the DoD Source Selection Joint Analysis Team (JAT), chartered by the Deputy Under Secretary of Defense (Acquisition, Technology, and Logistics) to revise the DoD source selection procedures (which are being published separately).

In their examination of current source selection processes utilized within the DoD, members of the JAT determined that there is a significant positive correlation between high-dollar value source selections conducted without discussions and protests sustained. Therefore, to improve the quality of high-dollar value, more complex source selections and reduce turbulence and inefficiency resulting from sustained protests, the JAT recommended that discussions prior to award be strongly encouraged for source selections with a dollar value of $100 million or more.

DoD research has indicated that holding meaningful discussions with industry prior to contract award on high-dollar value, complex requirements improves both industry's understanding of solicitation requirements and the Government's understanding of industry issues. By identifying and discussing these issues prior to submission of final proposals, the Government is often able to issue clarifying language. The modified requirements documentation allows industry to tailor proposals and better describe the offeror's intended approach, increases the probability that the offeror's proposal satisfies Government requirements, and often results in better contract performance. Asking contracting officers to conduct discussions with industry provides a reasonable approach to recognizing and addressing valid industry concerns and a constructive alternative to protests resulting from industry frustration over misunderstood requirements.

DoD notes the potential disadvantages of this proposed change in increased time to complete the source-selection process and additional workload for acquisition staff. However, failure to hold discussions in high-dollar value, more complex source selections has led to misunderstandings of Government requirements by industry and flaws in the Government's evaluation of offerors' proposals, leading to protests that have been sustained, and ultimately extending source-selection timelines. DoD proposes to decrease the possibility of this outcome by making such discussions the default procedure for source selections for procurements at or above $100 million. However, use of the term ``should,'' as defined in FAR part 2, provides that the expected course of action need not be followed if inappropriate for a particular circumstance.

II. Executive Order 12866

This is not a significant regulatory action and, therefore, is not subject to review under Section 6 of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

III. 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 does not add to or delete existing regulations on discussions for the vast majority of DoD procurements, i.e., those under $100 million. For the largest procurements of at least $100 million, any increase in discussions is anticipated to benefit all offerors, including small businesses, by providing them an opportunity to explain details of the offer and market their particular capabilities.

An initial regulatory flexibility analysis has been prepared and is summarized as follows: The opportunity to participate in discussions increases the probability of selection for award, as described above. In fiscal year 2009, the most recent fiscal year for which data is available, DoD awarded 620 new contracts and 252 new task orders/delivery orders of $100 million or more to small businesses. While there is no way to determine how many more small businesses may have been selected for high-dollar value DoD awards had discussions been held, it is reasonable to assume that the number would have been higher, thus providing small businesses with a net positive benefit.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities. DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2010-D013) in correspondence.

IV. Paperwork Reduction Act

The Paperwork Reduction Act does not apply, because there are no 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 215

Government procurement.

Clare M. Zebrowski,

Editor, Defense Acquisition Regulations System.

Therefore, DoD proposes to amend 48 CFR part 215 as follows:

1. The authority citation for 48 CFR part 215 continues to read as follows:

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

PART 215--CONTRACTING BY NEGOTIATION

2. Add sections 215.203-71 and 215.209 to read as follows:

215.203-71 Requests for proposals--procurements of $100 million or more.

For source selections when the procurement is $100 million or more, contracting officers should conduct discussions with offerors in the competitive range.

215.209 Solicitation provisions and contract clauses.

(a) For source selections when the procurement is $100 million or more, contracting officers should use the provision at 52.215-1, Instructions to Offerors--Competitive Acquisition, with its Alternate I.

[FR Doc. 2010-29510 Filed 11-23-10; 8:45 am]

BILLING CODE 5001-08-P