[Federal Register Volume 78, Number 189 (Monday, September 30, 2013)]

[Rules and Regulations]

From the Federal Register Online via the Government Printing Office [www.gpo.gov]

[FR Doc No: 2013-23768]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 203 and 252

RIN 0750-AH97

Defense Federal Acquisition Regulation Supplement: Enhancement of Contractor Employee Whistleblower Protections (DFARS Case 2013-D010)

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

ACTION: Interim rule.

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SUMMARY: DoD is issuing an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement statutory amendments to whistleblower protections for contractor and subcontractor employees.

DATES: Effective date: September 30, 2013. In accordance with FAR 1.108(d)(3), contracting officers are encouraged to include the changes in these rules in major modifications to contracts and orders awarded prior to the effective date of this interim rule.

Comment Date: Comments on the interim rule should be submitted in writing to the address shown below on or before November 29, 2013, to be considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2013-D010, using any of the following methods:

[cir] Regulations.gov: http://www.regulations.gov. Submit comments via the Federal eRulemaking portal by entering ``DFARS Case 2013-D010'' under the heading ``Enter keyword or ID'' and selecting ``Search.'' Select the link ``Submit a Comment'' that corresponds with ``DFARS Case 2013-D010.'' Follow the instructions provided at the ``Submit a Comment'' screen. Please include your name, company name (if any), and ``DFARS Case 2013-D010'' on your attached document.

[cir] Email: dfars@osd.mil. Include DFARS Case 2013-D010 in the subject line of the message.

[cir] Fax: 571-372-6094.

[cir] Mail: Defense Acquisition Regulations System, Attn: Ms. 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 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, Room 3B855, 3060 Defense Pentagon, Washington, DC 20301-3060. Telephone 571-372-6098; facsimile 571-372-6101.''

SUPPLEMENTARY INFORMATION:

I. Background

This interim rule revises the DFARS to implement section 827 (except paragraph (g)) of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2013 (Pub. L. 112-239, enacted January 2, 2013). Section 827 (Enhancement of Whistleblower Protections for Contractor Employees) made extensive changes to 10 U.S.C. 2409, entitled ``Contractor employees: Protection from reprisal or disclosure.'' Paragraph (g) of section 827, which amended paragraph (k) of 10 U.S.C. 2324, entitled ``Allowable costs under defense contracts,'' is partially addressed under a separate DFARS case, 2013-D022, Allowability of Legal Costs for Whistleblower Proceedings.

Section 827 of the NDAA for FY 2013 created a standalone statute for DoD that is not dependent on the Federal Acquisition Regulation (FAR) coverage. The DoD contractor whistleblower rules are based on an independent statute that applies only to Title 10 agencies. Section 828, Pilot Program for Enhancement of Contractor Whistleblower Protections, of the NDAA for FY 2013 will be implemented in the FAR; see FAR Case 2013-015. Section 828 establishes a four-year ``pilot program'' to provide enhanced whistleblower protections for employees of civilian agency contractors and subcontractors and suspend the use of FAR 3.901 through 3.906. The FAR will also incorporate sections 827(g) and 828(d) of the NDAA for FY 2013 (Pub. L. 112-239).

Section 827(g) amends 10 U.S.C. 2324(k). In a like manner, section 828(d) amends 41 U.S.C. 4310 to address legal costs incurred by a contractor in connection with a proceeding commenced by a contractor employee submitting a complaint under the applicable whistleblower section (10 U.S.C. 2409 or 41 U.S.C. 4712, respectively). See FAR Case 2013-017, entitled Allowability of Legal Costs for Whistleblower Proceedings.

II. Discussion and Analysis

The current FAR addresses this subject at subpart 3.9, and the DoD-unique rules are contained in DFARS subpart 203.9, entitled ``Whistleblower Protections for Contractor Employees.'' DFARS subpart 203.9 implements 10 U.S.C. 2409, as amended. The subpart covers the policy, procedures for filing and investigating complaints, remedies, and the prescription for the clause at DFARS 252.203-7002, entitled ``Requirement to Inform Employees of Whistleblower Rights.''

A. Section 827 Changes to 10 U.S.C. 2409

Section 827 revised 10 U.S.C. 2409 as follows:

(a)(1): Amended grounds for disclosure.

(a)(2): Amended persons and bodies to whom disclosure may be made and for which reprisal is prohibited.

(a)(3)(A): Provided a definition of who is deemed to have made a disclosure, see 203.903(3).

(a)(3)(B): Added prohibition against reprisal even if undertaken at the request of a DoD or Administration official.

(b)(1): Provided an additional basis on which the Inspector General may determine not to investigate.

(b)(2)(B): Provided a reporting timeframe for any additional period for investigation.

(b)(3): Provided specific exemptions to the prohibition against disclosure of information from or about any person alleging the reprisal.

(b)(4): Added a three-year time limit for bringing a complaint.

(c)(1)(B): Modified the types of damages that may be ordered.

(c)(2): Created a two-year time limit for bringing an action if remedies have been denied or after remedies are deemed to have been exhausted.

(c)(4): Expanded on the types of relief that may be granted when a person fails to comply with an order for relief.

(c)(5): Clarified that filing an appeal generally may not be grounds for staying enforcement of the order.

(c)(6): Stated the legal burden of proof to be used.

(c)(7): Prohibited any waiver of the rights and remedies in the statute.

(d): Added a new requirement to notify employees of their rights and remedies.

(e): Created an exemption for elements of the intelligence community.

(g)(6): Added a definition of ``abuse of authority.''

B. Changes to DFARS

The statutory changes to 10 U.S.C. 2409 made by section 827 are implemented in DFARS subpart 203.9. The statutory changes to 10 U.S.C. 2324(k) made by section 827 are being implemented separately.

The interim rule amends DFARS 203.900, Scope of subpart, to add a reference to section 827 and implement the exclusion of the intelligence community from applicability of the subpart. The definition of ``abuse of authority'' is added to DFARS 203.901, Definition.

Amendments are made to DFARS 203.903, Policy. The applicability of the subpart is expanded to include violations of rule or regulation and abuse of authority relating to a DoD contract. The entities covered are expanded to include other law enforcement agencies, a court or grand jury, and certain contractor or subcontractor management officials or employees. In addition, the changes to this section include a clarification of what constitutes a ``disclosure.''

DFARS 203.904 is revised to add the specific procedures for filing complaints from FAR 3.904. DFARS 203.905 is amended to address specific reasons for which the DoD Inspector General would be justified in not investigating a complaint of discrimination or reprisal, add timelines, and clarify the narrow circumstances under which the DoD Inspector General could respond to any inquiry or disclose information about alleged reprisal.

The remedies at DFARS 203.906 are amended to prohibit reprisal, add a time limit for bringing an action, and state that the rights and remedies provided in DFARS subpart 203.9 cannot be waived. Paragraph (h) of section 827 provides that nothing in the new law may be construed to provide any rights to disclose classified information not otherwise provided by law. This important caveat is included in a new section 203.907, entitled ``Classified information.''

The clause prescribed at DFARS 203.970 is 252.203-7002, Requirement to Inform Employees of Whistleblower Rights. The interim rule amends the clause to apply to subcontractors the specific requirement to inform employees in writing of their whistleblower rights. In addition, the written notification of employee whistleblower rights and protections is required in the predominant native language of the workforce.

III. Executive Orders 12866 and 13563

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is a significant regulatory action and, therefore, was subject to review under section 6(b) of E.O. 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 does not expect this interim 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 neither changes the substance of contract or solicitation procedures or policies nor creates a whistleblower protection for contractor employees. Such protections currently exist, and this case only clarifies contractors' rights and the remedies available to their employees. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:

DoD is amending the DFARS to implement changes to the existing protections for contractor whistleblower employees as a result of amendments made by section 827 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2013. Section 827 of the NDAA for FY 2013 amended 10 U.S.C. 2409 and 10 U.S.C. 2324(k). Section 827 changes are applicable to DoD, NASA, and the Coast Guard. Each agency will amend its Federal Acquisition Regulation supplement to incorporate these provisions. This Initial Regulatory Flexibility Analysis pertains only to this DFARS interim rule. This rule makes revisions to subpart 203.9, ``Whistleblower Protections for Contractor Employees.'' The subpart covers the policy, procedures for filing and investigating complaints, remedies, and the prescription for the clause at DFARS 252.203-7002, entitled ``Requirement to Inform Employees of Whistleblower Rights.''

The rule applies to all entities, small as well as large, at the prime contract and subcontract level. However, not all entities will have a situation occur that requires an employee to use the whistleblower provisions. Given that a whistleblower employee may work for any size business, the impact on small businesses is directly associated with the number of whistleblowers it employs. There is no way to predict this number in advance. However, a small entity could be impacted by a whistleblower employee either as a Government prime contractor or subcontractor. In addition, the impact on an entity is directly related to the seriousness of the alleged wrongdoing.

There are no reporting requirements associated with reporting of the wrongdoing as stated in the interim rule. A firm accused of retaliating against an employee whistleblower is likely to be required to furnish human resources documentation to disprove the accusation. This documentation, however, would only be required in the course of an investigation of the accusation, not as a result of a contract clause.

The rule does not duplicate, overlap, or conflict with any other Federal rules. Because of the terms used in the statute, DoD is unable to create alternatives, such as exempting small entities or establishing a dollar threshold for coverage. Regardless of the size of the business, a whistleblower employee must be protected from retaliation by his/her employer.

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 2013-D010), in correspondence.

V. Paperwork Reduction Act

The rule does not contain any information collection additional requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

VI. Determination To Issue an Interim Rule

A determination has been made by the Secretary of Defense pursuant to 41 U.S.C. 1701(d) that urgent and compelling reasons exist to justify promulgating this rule on an interim basis without prior opportunity for public comment. This action is necessary for the following reasons: First, by operation of law, the revised statute became effective on July 1, 2013 (i.e., Congress included language in section 827 specifically addressing the effective date of the changes to 10 U.S.C. 2409). Second, the revisions impose new responsibilities on agencies and create certain new rights for contractor employees. Specifically, as of July 1, 2013:

There are changes and additions in the list of entities to whom a whistleblower disclosure makes the whistleblower eligible for additional protections against reprisal;

Agency heads have expanded responsibilities to take specific actions with regard to a DoD Inspector General finding of reprisal against a contractor whistleblower:

The law requires that the written notice to employees of their whistleblower rights must be provided in the ``predominant native language of the workforce;'' and

For the first time, contractors must flow down to subcontractors the requirement to provide written notice to subcontractor employees.

In addition, there is a new exemption for elements of the intelligence community that was not available under previous laws.

The most effective and efficient way to ensure awareness and compliance by agencies and contractors with all of these requirements is through immediate regulatory change. Delaying promulgation may delay the effective date of regulations but will not postpone when the law becomes applicable to contractors and subcontractors. Thus, ordinary notice and comment procedures would unnecessarily increase the risk of confusion and noncompliance, defeating the regulatory objective.

Moreover, there is little likelihood that the publication of this rule without prior comment will increase burden on contractors. This interim regulation qualifies as an interpretative rule, as it provides basic guidance that agencies and contractors need to comply with the statute. Indeed, this regulation prescribes little beyond that which is set forth clearly in the statute.

Nevertheless, pursuant to 41 U.S.C. 1707 and FAR 1.501-3(b), DoD will consider public comments received in response to this interim rule in the formation of the Department's final rule.

List of Subjects in 48 CFR Parts 203 and 252

Government procurement.

Manuel Quinones,

Editor, Defense Acquisition Regulations System.

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

1. The authority citation for 48 CFR parts 203 and 252 continues to read as follows:

Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.

PART 203--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

2. Section 203.900 is revised to read as follows:

203.900 Scope of subpart.

(a) This subpart implements 10 U.S.C. 2409 as amended by section 846 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), section 842 of the National Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-417), and section 827 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239).

(b) This subpart does not apply to any element of the intelligence community, as defined in 50 U.S.C. 3003(4). This subpart does not apply to any disclosure made by an employee of a contractor or subcontractor of an element of the intelligence community if such disclosure--

(1) Relates to an activity or an element of the intelligence community; or

(2) Was discovered during contract or subcontract services provided to an element of the intelligence community.

3. Section 203.901 is added to read as follows:

203.901 Definition.

Abuse of authority, as used in this subpart, means an arbitrary and capricious exercise of authority that is inconsistent with the mission of DoD or the successful performance of a DoD contract.

4. Section 203.903 is revised to read as follows:

203.903 Policy.

(1) Policy. 10 U.S.C. 2409 prohibits contractors or subcontractors from discharging, demoting, or otherwise discriminating against an employee as a reprisal for disclosing, to any of the entities listed at paragraph (2) of this section, information that the employee reasonably believes is evidence of gross mismanagement of a DoD contract, a gross waste of DoD funds, an abuse of authority relating to a DoD contract, a substantial and specific danger to public health or safety, or a violation of law, rule, or regulation related to a DoD contract (including the competition for or negotiation of a contract). Such reprisal is prohibited even if it is undertaken at the request of an executive branch official, unless the request takes the form of a non-discretionary directive and is within the authority of the executive branch official making the request.

(2) Entities to whom disclosure may be made:

(i) A Member of Congress or a representative of a committee of Congress.

(ii) An Inspector General that receives funding from or has oversight over contracts awarded for or on behalf of DoD.

(iii) The Government Accountability Office.

(iv) A DoD employee responsible for contract oversight or management.

(v) An authorized official of the Department of Justice or other

law enforcement agency.

(vi) A court or grand jury.

(vii) A management official or other employee of the contractor or subcontractor who has the responsibility to investigate, discover, or address misconduct.

(3) Disclosure clarified. An employee who initiates or provides evidence of contractor or subcontractor misconduct in any judicial or administrative proceeding relating to waste, fraud, or abuse on a DoD contract shall be deemed to have made a disclosure.

(4) Contracting officer actions. A contracting officer who receives a complaint of reprisal of the type described in paragraph (1) of this section shall forward it to legal counsel or to the appropriate party in accordance with agency procedures.

5. Section 203.904 is revised to read as follows:

203.904 Procedures for filing complaints.

(a) Any employee of a contractor or subcontractor who believes that he or she has been discharged, demoted, or otherwise discriminated against contrary to the policy in 203.903 may file a complaint with the Inspector General of the Department of Defense.

(b) A complaint may not be brought under this section more than three years after the date on which the alleged reprisal took place.

(c) The complaint shall be signed and shall contain--

(1) The name of the contractor;

(2) The contract number, if known; if not, a description reasonably sufficient to identify the contract(s) involved;

(3) The violation of law, rule, or regulation giving rise to the disclosure;

(4) The nature of the disclosure giving rise to the discriminatory act, including the party to whom the information was disclosed; and

(5) The specific nature and date of the reprisal.

6. Section 203.905 is amended by--

a. Removing the introductory text;

b. Revising paragraphs (1) and (3); and

c. Adding paragraphs (4) and (5).

The revision and addition read as follows:

203.905 Procedures for investigating complaints.

(1) Unless the DoD Inspector General makes a determination that the complaint is frivolous, fails to allege a violation of the prohibition in 203.903, or has been previously addressed in another Federal or State judicial or administrative proceeding initiated by the complainant, the DoD Inspector General will investigate the complaint.

* * * * *

(3) Upon completion of the investigation, the DoD Inspector General--

(i) Either will determine that the complaint is frivolous, fails to allege a violation of the prohibition in 203.903, or has been previously addressed in another Federal or State judicial or administrative proceeding initiated by the complainant, or will submit the report addressed in paragraph (2) of this section within 180 days after receiving the complaint; and

(ii) If unable to submit a report within 180 days, will submit the report within the additional time period, up to 180 days, as agreed to by the person submitting the complaint.

(4) The DoD Inspector General may not respond to any inquiry or disclose any information from or about any person alleging the reprisal, except to the extent that such response or disclosure is--

(i) Made with the consent of the person alleging reprisal;

(ii) Made in accordance with 5 U.S.C. 552a (the Freedom of Information Act) or as required by any other applicable Federal law; or

(iii) Necessary to conduct an investigation of the alleged reprisal.

(5) The legal burden of proof specified at paragraph (e) of 5 U.S.C. 1221 (Individual Right of Action in Certain Reprisal Cases) shall be controlling for the purposes of an investigation conducted by the DoD Inspector General, decision by the head of an agency, or judicial or administrative proceeding to determine whether prohibited discrimination has occurred.

7. Section 203.906 is amended by--

a. Revising paragraph (1);

b. Amending paragraph (2)(ii) by adding a sentence at the end of the paragraph; and

c. By adding paragraphs (4), (5), and (6).

The revision and additions read as follows:

203.906 Remedies.

(1) Not later than 30 days after receiving a DoD Inspector General report in accordance with 203.905, the head of the agency shall determine whether sufficient basis exists to conclude that the contractor has subjected the complainant to a reprisal as prohibited by 203.903; and shall either issue an order denying relief or shall take one or more of the following actions:

(i) Order the contractor to take affirmative action to abate the reprisal.

(ii) Order the contractor to reinstate the person to the position that the person held before the reprisal, together with compensatory damages (including back pay), employment benefits, and other terms and conditions of employment that would apply to the person in that position if the reprisal had not been taken.

(iii) Order the contractor to pay the complainant an amount equal to the aggregate amount of all costs and expenses (including attorneys' fees and expert witnesses' fees) that were reasonably incurred by the complainant for, or in connection with, bringing the complaint regarding the reprisal, as determined by the head of the agency.

(2) * * *

(ii) * * * An action under this authority may not be brought more than two years after the date on which remedies are deemed to have been exhausted.

* * * * *

(4) Whenever a contractor fails to comply with an order issued by the head of agency in accordance with 10 U.S.C. 2409, the head of the agency or designee shall request the Department of Justice to file an action for enforcement of such order in the United States district court for a district in which the reprisal was found to have occurred. In any action brought under this paragraph, the court may grant appropriate relief, including injunctive relief, compensatory and exemplary damages, and reasonable attorney fees and costs. The person upon whose behalf an order was issued may also file such an action or join in an action filed by the head of the agency.

(5) Any person adversely affected or aggrieved by an order issued by the head of the agency in accordance with 10 U.S.C. 2409 may obtain judicial review of the order's conformance with the law, and the implementing regulation, in the United States Court of Appeals for a circuit in which the reprisal is alleged in the order to have occurred. No petition seeking such review may be filed more than 60 days after issuance of the order by the head of the agency or designee. Review shall conform to Chapter 7 of Title 5, Unites States Code. Filing such an appeal shall not act to stay the enforcement of the order by the head of an agency, unless a stay is specifically entered by the court.

(6) The rights and remedies provided for in this subpart may not be waived by any agreement, policy, form, or condition of employment.

8. Section 203.907 is added to read as follows.

203.907 Classified information.

As provided in section 827(h) of the National Defense Authorization Act for Fiscal Year 2013, nothing in this coverage provides any rights to disclose classified information not otherwise provided by law.

252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

9. Section 252.203-7002 is amended by--

a. Amending the clause date by removing ``(JAN 2009)'' and adding in its place ``(SEP 2013)'';

b. Designating the clause text as paragraph (a);

c. Revising the newly designated paragraph (a); and

d. Adding a new paragraph (b).

The revision and addition read as follows:

252.203-7002 Requirement to Inform Employees of Whistleblower Rights.

* * * * *

(a) The Contractor shall inform its employees in writing, in the predominant native language of the workforce, of contractor employee whistleblower rights and protections under 10 U.S.C. 2409, as described in subpart 203.9 of the Defense Federal Acquisition Regulation Supplement.

(b) The Contractor shall include the substance of this clause, including this paragraph (b), in all subcontracts.

(End of clause)

[FR Doc. 2013-23768 Filed 9-27-13; 8:45 am]

BILLING CODE 5001-06-P

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[Federal Register Volume 78, Number 189 (Monday, September 30, 2013)]

[Rules and Regulations]

From the Federal Register Online via the Government Printing Office [www.gpo.gov]

[FR Doc No: 2013-23743]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 206, 212, 225, and 252

RIN 0750-AH98

Defense Federal Acquisition Regulation Supplement: Acquisitions in Support of Operations in Afghanistan (DFARS Case 2013-D009)

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

ACTION: Interim rule.

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SUMMARY: DoD is issuing an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement two sections of the National Defense Authorization Act for Fiscal Year 2013 that require compliance with domestic source restrictions in the case of any textile components supplied by DoD to the Afghan National Army or the Afghan National Police for purposes of production of uniforms, and eliminate the application of the enhanced authority to acquire products and services from Iraq.

DATES: Effective Date: September 30, 2013.

Comment Date: Comments on the interim rule should be submitted in writing to the address shown below on or before November 29, 2013, to be considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2013-D009, using any of the following methods:

[cir] Regulations.gov: http://www.regulations.gov. Submit comments via the Federal eRulemaking portal by entering ``DFARS Case 2013-D009'' under the heading ``Enter keyword or ID'' and selecting ``Search.'' Select the link ``Submit a Comment'' that corresponds with ``DFARS Case 2013-D009.'' Follow the instructions provided at the ``Submit a Comment'' screen. Please include your name, company name (if any), and ``DFARS Case 2013-D009'' on your attached document.

[cir] Email: dfars@osd.mil. Include DFARS Case 2013-D009 in the subject line of the message.

[cir] Fax: 703-602-0350.

[cir] Mail: Defense Acquisition Regulations System, Attn: Ms. Amy G. Williams, 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 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. Amy G. Williams, Defense Acquisition Regulations System, OUSD (AT&L) DPAP/DARS, Room 3B855, 3060 Defense Pentagon, Washington, DC 20301-3060. Telephone 571-372-6106; facsimile 571-372-6089.

SUPPLEMENTARY INFORMATION:

I. Background

This interim rule revises the DFARS to implement sections 826 and 842 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2013 (Pub. L. 112-239).

Section 826 requires compliance with 10 U.S.C. 2533a (the Berry Amendment) in the case of any textile components supplied by DoD to the Afghan National Army or the Afghan National Police for purposes of production of uniforms. The law further states that no exception or exemptions under that section shall apply.

Section 842 modifies section 886 of the NDAA for FY 2008 (Pub. L. 110-181), which provided enhanced authority to acquire products and services from Iraq and Afghanistan in support of operations in Iraq or Afghanistan. Section 842 eliminates application of the enhanced authority to acquisition of products and services from Iraq.

II. Discussion and Analysis

A. Revisions to DFARS Subpart 225.77 and Associated Provisions and Clauses

This interim rule amends the scope of subpart 225.77 to reflect implementation of sections 826 and 842 of the National Defense Authorization Act for FY 2013 (Pub. L. 112-239).

1. Section 842

This interim rule amends the title of subpart 225.77 to apply only to operations in Afghanistan, and deletes application of the policies and procedures of that subpart to products and services from Iraq.

At 225.7702 (now redesignated 225.7702-1), DoD has deleted the references to the Army of Iraq, the Iraqi Police Forces, and other Iraqi security organizations. Although there was no change to section 892 of the NDAA for FY 2008, Competition for Procurement of Small Arms Supplied to Iraq and Afghanistan, there is no longer a need for this coverage relating to Iraq in the DFARS. DoD does not buy small arms for any of these Iraqi organizations and the enhanced authority to buy items in support of operations in Iraq no longer exists.

This interim rule deletes the reporting requirements at section 225.7703-4 (and redesignates 225.7703-5 as 225.7703-4). The statutory requirement to report on acquisitions using the methods in this section expired at the end of FY 2009.

With regard to associated provisions and clauses, DoD has deleted Alternate I of DFARS 252.225-7021, Trade Agreements; and DFARS 252.225-7022, Trade Agreements Certificate--Inclusion of Iraqi End Products, because this clause and provision were only necessary to allow the acquisition of Iraqi end products when trade agreements applied to the acquisition.

DFARS 252.225-7023, Preference for Products or Services from Iraq or Afghanistan; DFARS 252.225-7024, Requirement for Products or Services from Iraq or Afghanistan; and DFARS 252.225-7026, Acquisition Restricted to Products or Services from Iraq or Afghanistan, have been modified to delete enhanced authority relating to acquisitions of products or services from of Iraq.

2. Section 826

This interim rule adds a new section at 225.7702-2 to state the requirement that any textile components supplied by DoD to the Afghan National Army or the Afghan National Police for purpose of production of uniforms shall be produced in the United States.

DFARS 225.7703-4(d) prescribes the use of a new clause at DFARS 252.225-7029, Acquisition of Uniform Components for Afghan Military or Afghan National Police, in solicitations and contracts for the acquisition of any textile components that DoD intends to supply to the Afghan National Army or the Afghan National Police for purposes of production of uniforms.

The new clause at DFARS 252.225-7029 defines ``textile component'' to mean any item consisting of fibers, yarns, or fabric, supplied for incorporation into a uniform or a component of a uniform. It does not include items that do not contain fibers, yarns, or fabric, such as the metallic or plastic elements of buttons, zippers, or other clothing fasteners. There is a cross-reference to this definition added at DFARS 225.7701.

The clause also states that there are no exceptions or waivers to the requirement that the contractor shall deliver under this contract only textile components that have been produced in the United States.

B. Other Conforming Changes

In addition to the changes in DFARS subpart 225.77 and the associated provisions and clauses, conforming changes were also required at DFARS 206.303-70, 212.301, 225.401, 225.502, 225.1101, 225.7501, and the clause prefaces of 252.225-7032, 252.225-7033, 252.225-7035, and 252.225-7036.

III. Applicability to Acquisition of Commercial Items and Acquisitions Not Greater Than the Simplified Acquisition Threshold

Section 826 states that 10 U.S.C. 2533a shall apply, and no exceptions or exemptions under that section shall apply. 10 U.S.C. 2533a (the Berry Amendment) specifically states in paragraph (i) that the statute is applicable to contracts and subcontracts for the procurement of commercial items, notwithstanding section 1906 of title 41. It does not specifically mention 41 U.S.C. 1907, which addresses applicability to commercially available off-the-shelf (COTS) items. However, most of the items restricted by the Berry Amendment are COTS items, and the application of the Berry Amendment in the DFARS has not included any exception for COTS items. Although paragraph (h) of the Berry Amendment provides an exception for purchases in amounts not greater than the simplified acquisition threshold, section 826 requires application to acquisitions not greater than the simplified acquisition threshold, because it states that none of the Berry Amendment exceptions apply.

IV. Executive Orders 12866 and 13563

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

V. 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. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:

This initial regulatory flexibility analysis has been prepared consistent with 5 U.S.C. 603. This rule implements sections 826 and 842 of the National Defense Authorization Act for FY 2013 (Pub. L. 112-239).

The objective of the rule is to (1) require compliance with domestic source restrictions in the case of any textile components supplied by DoD to the Afghan National Army or the Afghan National Police for purposes of production of uniforms, and (2) eliminate the application of the enhanced authority to acquire products and services from Iraq. The legal basis is the above-cited statutes.

The number of small entities to be affected by the rule is not known. The rule has the potential to impact entities that manufacture textile components, if purchased by DoD to supply to the Afghan National Army or the Afghan National Police for purposes of production of uniforms. Any impact is expected to be beneficial, because it will require purchase from a domestic source.

There are no projected reporting, recordkeeping, or other compliance requirements. The rule does not duplicate, overlap, or conflict with any other Federal rules.

DoD was unable to identify any significant alternatives consistent with the stated objectives of the statute. DoD does not anticipate any significant economic impact on small entities. Any impact is expected to be beneficial.

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 2013-D009), in correspondence.

V. Paperwork Reduction Act

The rule contains information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35); however, these changes to the DFARS do not impose additional information collection requirements to the paperwork burden previously approved under OMB Control Number 0704-0229, entitled Defense Federal Acquisition Regulation Supplement; Part 225 and Related Clauses (Total approved burden hours--57,135).

VI. 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 promulgate this interim rule without prior opportunity for public comment. This action is necessary because sections 826 and 842 of the NDAA for FY 2013 were effective upon enactment (January 2, 2013). If implementation is delayed--

Contracting officers may be unaware that the existing exceptions to the Berry Amendment no longer apply in the case of DoD purchase of textile components to be supplied to the Afghan National Army or the Afghan National Police for purpose of production of uniforms. This may result in purchases of foreign textile components in violation of the law.

Contracting officers may erroneously provide a preference for the products or services of Iraq, without statutory authority. This will detract from the efforts to appropriately use the enhanced authority to acquire products and services from Afghanistan and the Central Asian states in support of operations in Afghanistan.

The Commander, United States Central Command (USCENTCOM), has advised that procuring products or services from the Central Asian states to meet Operation ENDURING FREEDOM requirements is critical to U.S. efforts to gain access and permissions for supporting current and future operations in, to, and from Afghanistan. USCENTCOM also advises that procurements in the Central Asian states support the USCENTCOM Theater Campaign Plan and International Security Assistance Force Civil Military Campaign Plan, as well as long-term economic development and stability in the region.

However, pursuant to 41 U.S.C. 1707 and FAR 1.501-3(b), DoD will consider public comments received in response to this interim rule in the formation of the final rule.

List of Subjects in 48 CFR Parts 206, 212, 225, and 252

Government procurement.

Manuel Quinones,

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR parts 206, 212, 225, and 252 are amended as follows:

1. The authority citation for 48 CFR parts 206, 212, 225, and 252 continues to read as follows:

Authority: 41 U.S.C. 1303 and 48 CFR Chapter 1.

PART 206--COMPETITION REQUIREMENTS

2. Section 206.303-70 is amended by revising the section heading the section heading to read as follows:

206.303-70 Acquisitions in support of operations in Afghanistan.

* * * * *

PART 212--ACQUISITION OF COMMERCIAL ITEMS

3. Section 212.301 is amended by--

a. Revising paragraph (f)(xxvi);

b. Removing paragraph (f)(xxvii) and redesignating paragraphs (f)(xxviii) through (xxxii) as paragraphs (xxvii) through (xxxi);

0

c. Revising newly redesignated paragraphs (f)(xxvii) through (xxix);

d. Adding a new paragraph (f)(xxxii); and

e. Revising paragraphs (f)(xxxiv) and (xxxv).

The revisions and addition are as follows:

212.301 Solicitation provisions and contract clauses for the acquisition of commercial items.

(f) * * *

(xxvi) Use the clause at 252.225-7021, Trade Agreements to comply with 19 U.S.C. 2501-2518 and 19 U.S.C. 3301 note.

(A) Use the basic clause as prescribed in 225.1101(6)(i).

(B) Use the clause with its Alternate II as prescribed in 225.1101(6)(ii).

(xxvii) Use the provision at 252.225-7023, Preference for Products or Services from Afghanistan, as prescribed in 225.7703-4(a), to comply with section 886 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).

(xxviii) Use the clause at 252.225-7024, Requirement for Products or Services from Afghanistan, as prescribed in 225.7703-4(b), to comply with section 886 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).

(xxix) Use the clause at 252.225-7026, Acquisition Restricted to Products or Services from Afghanistan, as prescribed in 225.7703-4(c), to comply with section 886 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).

* * * * *

(xxxii) Use the clause at 252.225-7029, Acquisition of Uniform Components for Afghan Military or Afghan National Police, as prescribed in 225.7703-4(d).

* * * * *

(xxxiv) Use the provision at 252.225-7035, Buy American--Free Trade Agreements--Balance of Payments Program Certificate, to comply with 41 U.S.C. chapter 83 and 19 U.S.C. 3301 note. Alternates II, III, and V also implement section 886 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).

(A) Use the basic provision as prescribed in 225.1101(9)(i).

(B) Use the provision with its Alternate I as prescribed in 225.1101(9)(ii).

(C) Use the provision with its Alternate II as prescribed in 225.1101(9)(iii).

(D) Use the provision with its Alternate III as prescribed in 225.1101(9)(iv).

(E) Use the provision with its Alternate IV as prescribed in 225.1101(9)(v).

(F) Use the provision with its Alternate V as prescribed in 225.1101(9)(vi).

(xxxv) Use the clause at 252.225-7036, Buy American--Free Trade Agreements--Balance of Payments Program to comply with 41 U.S.C. chapter 83 and 19 U.S.C. 3301 note. Alternates II, III, and V also implement section 886 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).

(A) Use the basic clause as prescribed in 225.1101(10)(i)(A).

(B) Use the clause with its Alternate I as prescribed in 225.1101(10)(i)(B).

(C) Use the clause with its Alternate II as prescribed in 225.1101(10)(i)(A).

(D) Use the clause with its Alternate III as prescribed in 225.1101(10)(i)(B).

(E) Use the clause with its Alternate IV as prescribed in 225.1101(10)(i)(C).

(F) Use the clause with its Alternate V as prescribed in 225.1101(10)(i)(C).

* * * * *

PART 225--FOREIGN ACQUISITION

4. Section 225.401-71 is revised as follows:

225.401-71 Products or services in support of operations in Afghanistan.

When acquiring products or services, other than small arms, in support of operations in Afghanistan, if using a procedure specified in 225.7703-1(a)(2) or (3), the procedures of subpart 25.4 are not applicable.

225.502 [Amended]

5. Section 225.502(c)(iv) is amended by removing the words ``Iraq or''.

225.1101 [Amended]

6. Section 225.1101 is amended by--

a. Removing in paragraph (5)(i) the phrase ``Except as provided in paragraph (7) of this section, use'' and adding in its place ``Use'';

b. Removing paragraph (6)(ii) and redesignating paragraphs (6) (iii) through (v) as paragraphs (6)(ii) through (iv);

c. In redesignated paragraph (6)(ii), removing the phrase ``and Alternate I is not applicable'';

d. In redesignated paragraph (6)(iii)(B), removing the words ``Iraq or'';

e. Removing paragraph (7) and redesignating paragraphs (8) through (11) as paragraphs (7) through (10).

f. In redesignated paragraph (10)(i), removing the phrase ``paragraph (11)(ii)'' and adding in its place ``paragraph (10)(ii)''.

225.7501 [Amended]

6. Section 225.7501(a)(5) is amended by removing the words ``Iraq or''.

Subpart 225.77 Acquisitions in Support of Operations in Afghanistan

7. Subpart 225.77 heading is revised to read as set forth above.

8. Section 225.7700 is revised to read as follows:

225.7700 Scope.

This subpart implements--

(a) Section 892 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181);

(b) Section 886 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), as amended by section 842 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239);

(c) Section 826 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239); and

(d) The determinations by the Deputy Secretary of Defense regarding participation of the countries of the South Caucasus or Central and South Asia in acquisitions in support of operations in Afghanistan.

9. Section 225.7701 is revised to read as follows:

225.7701 Definitions.

As used in this subpart--

Product from Afghanistan means a product that is mined, produced, or manufactured in Afghanistan.

Service from Afghanistan means a service including construction that is performed in Afghanistan predominantly by citizens or permanent resident aliens of Afghanistan.

Small arms means pistols and other weapons less than 0.50 caliber.

Source from Afghanistan means a source that--

(1) Is located in Afghanistan; and

(2) Offers products or services from Afghanistan.

Textile component is defined in the clause at 252.225-7029, Acquisition of Uniform Components for Afghan Military or Afghan National Police.

225.7702 [Redesignated as 225.7702-1]

10a. Redesignate section 225.7702 as 225.7702-1.

10b. Add a new section 225.7702 heading to read as follows:

225.7702 Acquisitions not subject to the enhanced authority to acquire products or services from Afghanistan.

225.7702-1 [Amended]

10c. In redesignated section 225.7702-1(a), remove the phrases ``the Army of Iraq,'', ``the Iraqi Police Forces,'' and ``Iraqi or''.

10d. Add a new section 225.7702-2 to read as follows:

225.7702-2 Acquisition of uniform components for the Afghan military or the Afghan police.

Any textile components supplied by DoD to the Afghan National Army or the Afghan National Police for purpose of production of uniforms shall be produced in the United States.

11. Section 225.7703 heading is revised to read as follows:

225.7703 Enhanced authority to acquire products or services from Afghanistan.

225.7703-1 [Amended]

12. Section 225.7703-1 is amended--

a. In paragraph (a) introductory text by adding the phrase ``except as provided in 225.7702,'' after ``225.7703-2,'', removing the phrases ``, other than small arms,'' and ``Iraq or'', and removing the comma after ``Afghanistan'';

b. In paragraph (a)(1) by removing the words ``Iraq or'';

c. In paragraph (a)(2) by removing the words ``Iraq or''; and

d. In paragraph (a)(3) by removing the words ``Iraq or''.

225.7703-2 [Amended]

13. Section 225.7703-2 is amended--

a. In paragraph (a) introductory text by removing the words ``Iraq or'';

b. In paragraph (a)(1) by removing the words ``Iraq or'';

c. In paragraph (b) introductory text by removing the words ``Iraq or'';

d. In paragraph (b)(1)(i) by removing the words ``Iraq or'';

e. In paragraph (b)(1)(ii)(A) by removing the words ``Iraq or''; and

f. By revising paragraph (b)(2)(ii)(E) to read as follows:

25.7703-2 Determination requirements.

* * * * *

(b) * * *

(2) * * *

(ii) * * *

(E) Commander of the United States Central Command Joint Theater Support Contracting Command (C-JTSCC).

* * * * *

14. Section 225.7703-3 is revised as follows:

225.7703-3 Evaluating offers.

Evaluate offers submitted in response to solicitations that include the provision at 252.225-7023, Preference for Products or Services from Afghanistan, as follows:

(a) If the low offer is an offer of a product or service from Afghanistan, award on that offer.

(b) If there are no offers of a product or service from Afghanistan, award on the low offer.

(c) Otherwise, apply the evaluation factor specified in the solicitation to the low offer.

(1) If the price of the low offer of a product or service from Afghanistan is less than the evaluated price of the low offer, award on the low offer of a product or service from Afghanistan.

(2) If the evaluated price of the low offer remains less than the low offer of a product or service from Afghanistan, award on the low offer.

(d) For acquisitions in support of USCENTCOM, see PGI 225.7703-3.

225.7703-4 [Removed]

15a. Section 225.7703-4 is removed.

15b. Section 225.7703-5 is redesignated as 225.7703-4 and revised as follows:

225.7703-4 Solicitation provisions and contract clauses.

(a) Use the provision at 252.225-7023, Preference for Products or Services from Afghanistan, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, that provide a preference for products or services from Afghanistan in accordance with 225.7703-1(a)(1). The contracting officer may modify the 50 percent evaluation factor in accordance with contracting office procedures.

(b) Use the clause at 252.225-7024, Requirement for Products or Services from Afghanistan, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, that include the provision at 252.225-7023, Preference for Products or Services from Afghanistan, and in the resulting contract.

(c) Use the clause at 252.225-7026, Acquisition Restricted to Products or Services from Afghanistan, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that--

(1) Are restricted to the acquisition of products or services from Afghanistan in accordance with 225.7703-1(a)(2); or

(2) Will be directed to a particular source or sources from Afghanistan in accordance with 225.7703-1(a)(3).

(d) Use the clause at 252.225-7029, Acquisition of Uniform Components for Afghan Military or Afghan National Police, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, for the acquisition of any textile components that DoD intends to supply to the Afghan National Army or the Afghan National Police for purposes of production of uniforms.

(e) When the Trade Agreements Act applies to the acquisition, use the appropriate clause and provision as prescribed at 225.1101 (5) and (6).

(f) Do not use any of the following provisions or clauses in solicitations or contracts that include the provision at 252.225-7023, the clause at 252.225-7024, or the clause at 252.225-7026:

(1) 252.225-7000, Buy American Act--Balance of Payments Program Certificate.

(2) 252.225-7001, Buy American Act and Balance of Payments Program.

(3) 252.225-7002, Qualifying Country Sources as Subcontractors.

(4) 252.225-7035, Buy American Act--Free Trade Agreements--Balance of Payments Program Certificate.

(5) 252.225-7036, Buy American Act--Free Trade Agreements--Balance of Payments Program.

(6) 252.225-7044, Balance of Payments Program--Construction Material.

(7) 252.225-7045, Balance of Payments Program--Construction Material Under Trade Agreements.

(g) Do not use the following clause or provision in solicitations or contracts that include the clause at 252.225-7026:

(1) 252.225-7020, Trade Agreements Certificate.

(2) 252.225-7021, Trade Agreements.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

252.225-7021 [Amended]

16. Section 252.225-7021 is amended--

a. By removing and reserving Alternate I; and

b. In Alternate II, by removing in the introductory text ``225.1101(6)(iii)'' and adding in its place ``225.1101(6)(ii)''.

252.225-7022 [Removed and Reserved]

17. Section 252.225-7022 is removed and reserved.

18. Section 252.225-7023 is revised to read as follows:

252.225-7023 Preference for Products or Services from Afghanistan.

As prescribed in 225.7703-4(a), use the following provision:

Preference for Products or Services From Afghanistan (SEP 2013)

(a) Definitions. ``Product from Afghanistan'' and ``service from Afghanistan,'' as used in this provision, are defined in the clause of this solicitation entitled ``Requirement for Products or Services from Afghanistan'' (DFARS 252.225-7024).

(b) Representation. The offeror represents that all products or services to be delivered under a contract resulting from this solicitation are products from Afghanistan or services from Afghanistan, except those listed in--

(1) Paragraph (c) of this provision; or

(2) Paragraph (c)(2) of the provision entitled ``Trade Agreements Certificate,'' if included in this solicitation.

(c) Other products or services. The following offered products or services are not products from Afghanistan or services from Afghanistan:

(Line Item Number) (Country of Origin)

(d) Evaluation. For the purpose of evaluating competitive offers, the Contracting Officer will increase by 50 percent the prices of offers of products or services that are not products or services from Afghanistan.

(End of provision)

19. Section 252.225-7024 is revised to read as follows:

252.225-7024 Requirement for Products or Services from Afghanistan.

As prescribed in 225.7703-4(b), use the following clause:

Requirement for Products or Services From Afghanistan (SEP 2013)

(a) Definitions. As used in this clause--

(1) ``Product from Afghanistan'' means a product that is mined, produced, or manufactured in Afghanistan.

(2) ``Service from Afghanistan'' means a service including construction that is performed in Afghanistan predominantly by citizens or permanent resident aliens of Afghanistan.

(b) The Contractor shall provide only products from Afghanistan or services from Afghanistan under this contract, unless, in its offer, it specified that it would provide products or services other than products from Afghanistan or services from Afghanistan.

(End of clause)

20. Section 252.225-7026 is revised to read as follows:

252.225-7026 Acquisition Restricted to Products or Services from Afghanistan.

As prescribed in 225.7703-4(c), use the following clause:

Acquisition Restricted to Products or Services From Afghanistan (SEP 2013)

(a) Definitions. As used in this clause--

(1) ``Product from Afghanistan'' means a product that is mined, produced, or manufactured in Afghanistan.

(2) ``Service from Afghanistan'' means a service including construction that is performed in Afghanistan predominantly by citizens or permanent resident aliens of Afghanistan.

(b) The Contractor shall provide only products from Afghanistan or services from Afghanistan under this contract.

(End of clause)

21. Section 252.225-7029 is added to read as follows:

252.225-7029 Acquisition of Uniform Components for Afghan Military or Afghan National Police.

As prescribed in 225.7703-4(d), use the following clause:

Acquisition of Uniform Components for the Afghan Military or the Afghan National Police (SEP 2013)

(a) Definitions. As used in this clause--

``Textile component'' means any item consisting of fibers, yarns, or fabric, supplied for incorporation into a uniform or a component of a uniform. It does not include items that do not contain fibers, yarns, or fabric, such as the metallic or plastic elements of buttons, zippers, or other clothing fasteners.

``United States'' means the 50 States, the District of Columbia, and outlying areas.

(b) As required by section 826 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239), the Contractor shall deliver under this contract only textile components that have been produced in the United States.

(c) There are no exceptions or waivers to this requirement.

(End of clause)

252.225-7032 [Amended]

22. In section 252.225-7032, the introductory text is amended by removing ``225.1101(8)'' and adding in its place ``225.1101(7)''.

252.225-7033 [Amended]

23. In section 252.225-7033, the introductory text is amended by removing ``225.1101(9)'' and adding in its place ``225.1101(8)''.

252.225-7035 [Amended]

24. Section 252.225-7035 is amended by--

a. Removing ``225.1101(10)(i)'' in the introductory text and adding in its place ``225.1101(9)(i)'';

b. In Alternate I, removing ``225.1101(10)(ii)'' in the introductory text and adding in its place ``225.1101(9)(ii)'';

c. In Alternate II, removing ``225.1101(10)(iii)'' in the introductory text and adding in its place ``225.1101(9)(iii)'';

d. In Alternate III, removing ``225.1101(10)(iv)'' in the introductory text and adding in its place ``225.1101(9)(iv)'';

e. In Alternate IV, removing ``225.1101(10)(v)'' in the introductory text and adding in its place ``225.1101(9)(v)''; and

f. In Alternate V, removing ``225.1101(10)(vi)'' in the introductory text and adding in its place ``225.1101(9)(vi)''.

252.225-7036 [Amended]

25. Section 252.225-7036 is amended by--

a. Removing ``225.1101(11)(i)(A)'' in the introductory text and adding in its place ``225.1101(10)(i)(A)'';

b. In Alternate I, removing ``225.1101(11)(i)(B)'' in the introductory text and adding in its place ``225.1101(10)(i)(B)'';

c. In Alternate II, removing ``225.1101(11)(i)(A)'' in the introductory text and adding in its place ``225.1101(10)(i)(A)'';

d. In Alternate III, removing ``225.1101(11)(i)(B)'' in the introductory text and adding in its place ``225.1101(10)(i)(B)'';

e. In Alternate IV, removing ``225.1101(11)(i)(C)'' in the introductory text and adding in its place ``225.1101(10)(i)(C)''; and

f. In Alternate V, removing ``225.1101(11)(i)(C)'' in the introductory text and adding in its place ``225.1101(10)(i)(C)''.

[FR Doc. 2013-23743 Filed 9-27-13; 8:45 am]

BILLING CODE 5001-06-P

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[Federal Register Volume 78, Number 189 (Monday, September 30, 2013)]

[Rules and Regulations]

From the Federal Register Online via the Government Printing Office [www.gpo.gov]

[FR Doc No: 2013-23764]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 216 and 252

RIN 0750-AI04

Defense Federal Acquisition Regulation Supplement: Allowability of Legal Costs for Whistleblower Proceedings (DFARS Case 2013-D022)

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

ACTION: Interim rule.

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SUMMARY: DoD is issuing an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2013 that amends the allowability of legal costs incurred by a contractor related to whistleblower proceedings.

DATES: Effective date: September 30, 2013

Comment date: Comments on the interim rule should be submitted in writing to the address shown below on or before November 29, 2013, to be considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2013-D022, using any of the following methods:

[cir] Regulations.gov: http://www.regulations.gov. Submit comments via the Federal eRulemaking portal by entering ``DFARS Case 2013-D022'' under the heading ``Enter keyword or ID'' and selecting ``Search.'' Select the link ``Submit a Comment'' that corresponds with ``DFARS Case 2013-D022.'' Follow the instructions provided at the ``Submit a Comment'' screen. Please include your name, company name (if any), and ``DFARS Case 2013-D022'' on your attached document.

[cir] Email: dfars@osd.mil. Include DFARS Case 2013-D022 in the subject line of the message.

[cir] Fax: 571-372-6094.

[cir] Mail: Defense Acquisition Regulations System, Attn: Ms. Amy Williams, 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 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. Amy Williams, Defense Acquisition Regulations System, OUSD (AT&L) DPAP/DARS, Room 3B855, 3060 Defense Pentagon, Washington, DC 20301-3060. Telephone 571-372-6106; facsimile 571-372-6094.

SUPPLEMENTARY INFORMATION:

I. Background

This interim rule revises DFARS subparts 216.3 and adds a new clause at 252.216 to implement paragraphs (g) and (i) of section 827 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239).

II. Discussion and Analysis

The National Defense Authorization Act (NDAA) for Fiscal Year 2013 (Pub. L. 112-239, enacted January 2, 2013) established enhanced whistleblower protections for contractor and subcontractor employees in separate, but parallel, sections of the NDAA for titles 10 and 41 agencies, respectively. Title 10 agencies are required by the terms of section 827(i)(2) to revise their respective FAR supplements. These enhanced whistleblower protections and the associated cost principle changes are being implemented by two DFARS cases (for DoD only) and two FAR cases (for title 41 agencies), which are independent, but parallel, rulemakings because of some minor differences in the operations of the underlying statutes and because the title 41 statute is only a four-year pilot program.

Paragraph 827(g) addresses the allowability of legal costs incurred by a contractor related to whistleblower proceedings.

Paragraph 827(i)(1) specifies that the amendments made by section 827 are applicable to--

Contracts awarded on or after the effective date;

Task orders entered into on or after the effective date, pursuant to contracts awarded before, on, or after such date; and

Contracts awarded before the effective date, which are modified to include a contract clause providing for the applicability of such amendments.

Paragraph 827(i)(3) requires that at the time of any major modification to a contract that was awarded before the effective date, the head of the contracting agency shall make best efforts to include in the contract a clause providing for the applicability to the contract of the amendments made by section 827.

DoD has added a new clause at DFARS 252.216-7009, Allowability of Legal Costs Incurred in Connection With a Whistleblower Proceeding, as prescribed at DFARS 216.307(a). This clause is necessary to make the revised whistleblower cost principle applicable to any task orders issued against contracts awarded prior to the effective date of this regulation and any contracts modified to implement section 827. Otherwise, unless the terms of the contract state otherwise, FAR clause 52.216-7, Allowable Cost and Payment, states in paragraph (a) that costs are determined to be allowable in accordance with FAR subpart 31.2 in effect on the date of the contract award.

DFARS Case 2013-D010 will address the paragraphs of section 827 that provide enhancements of whistleblower protections for contractor employees, including revisions to 10 U.S.C. 2409.

III. Executive Orders 12866 and 13563

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is a significant regulatory action and, therefore, was subject to review under section 6(b) of E.O. 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 does not expect this interim 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 most contracts awarded to small entities are awarded on a competitive fixed-price basis, and do not require application of the cost principles contained in this rule. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:

The reason for the action is to implement paragraphs 827(g) and (i) of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239). Section 827(g) expands the cost principle at 10 U.S.C. 2324(k) to apply the cost principle on allowability of costs related to legal and other proceedings to costs incurred by contractors in proceedings commenced by a contractor employee submitting a complaint under 10 U.S.C. 2409 (whistleblowing), and include as specifically unallowable, legal costs of a proceeding that results in an order to take corrective action under 10 U.S.C. 2409. The legal basis for the rule is 10 U.S.C. 2324(k).

Most contracts awarded on a fixed-price competitive basis do not require application of the cost principles. The majority of contracts valued at or below the simplified acquisition threshold are awarded on a fixed price competitive basis. Requiring submission of certified cost or pricing data for acquisitions that do not exceed the simplified acquisition threshold is prohibited (FAR 15.403-4(a)(2). According to the Federal Procurement Data System data for Fiscal Year (FY) 2012, there were 48,115 new DoD contract awards over the simplified acquisition threshold in FY 2012. Of those contracts, only 6,760 awards were to small businesses on other than a competitive fixed-price basis. Estimating 3 awards per small business, that could involve about 2,600 small businesses. However, this rule would only affect a contractor if a contractor employee commenced a proceeding by submitting a complaint under 10 U.S.C. 2409, and if that proceeding resulted in imposition of a monetary penalty or an order to take corrective action under 10 U.S.C. 2409. We do not have data on the percentage of contracts that involve submission of a whistleblower complaint and result in monetary penalty or an order to take corrective action.

There are no projected reporting, recordkeeping, or other compliance requirements of this rule.

The rule does not duplicate, overlap, or conflict with any other Federal rules. DoD was unable to identify any alternatives to the rule that would reduce the impact on small entities and still meet the requirements of the statute.

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 2013-D022), in correspondence.

V. Paperwork Reduction Act

The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

VI. 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 promulgate this interim rule without prior opportunity for public comment. By operation of law, the new statute for the whistleblower protection became effective on July 1, 2013, i.e., Congress included language in section 827(i) specifically addressing the effective date of the revisions to 10 U.S.C. 2409 and 10 U.S.C. 2324. Section 827(g), which is implemented through this rulemaking, addresses the contractor's legal fees arising from an employee's complaint of reprisal and makes these fees expressly unallowable costs when there is contractor culpability. The most effective and efficient way to ensure awareness and compliance by the DoD and its contractors with section 827(g) is through the issuance of an interim rule. This regulation requires nothing beyond that which is set forth clearly in the statute. However, pursuant to 41 U.S.C. 1707 and FAR 1.501-3(b), DoD will consider public comments received in response to this interim rule in the formation of the final rule.

List of Subjects in 48 CFR Parts 216 and 252

Government procurement.

Manuel Quinones,

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR parts 216 and 252 are amended as follows:

1. The authority citation for 48 CFR parts 216 and 252 continues to read as follows:

Authority: 41 U.S.C. 1303 and 48 CFR Chapter 1.

PART 216--TYPES OF CONTRACTS

2. Add section 216.307 to subpart 216.3 to read as follows:

216.307 Contract clauses.

(a) As required by section 827 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239), use the clause at 252.216-7009, Allowability of Costs Incurred in Connection With a Whistleblower Proceeding--

(1) In task orders entered pursuant to contracts awarded before September 30, 2013, that include the clause at FAR 52.216-7, Allowable Cost and Payment; and

(2) In contracts awarded before September 30, 2013, that--

(i) Include the clause at FAR 52.216-7, Allowable Cost and Payment; and

(ii) Are modified to include the clause at DFARS 252.203-7002, Requirement to Inform Employees of Whistleblower Rights, dated September 2013 or later.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

3. Add section 252.216-7009 to read as follows:

52.216-7009 Allowability of legal costs incurred in connection with a whistleblower proceeding.

As prescribed in 216.307(a), use the following clause:

Allowability of Legal Costs Incurred in Connection With a Whistleblower Proceeding (SEP 2013)

Pursuant to section 827 of the National Defense Authorization Act for Fiscal year 2013 (Pub. L. 112-239), notwithstanding FAR clause 52.216-7, Allowable Cost and Payment--

(1) The restrictions of FAR 31.205-47(b) on allowability of costs related to legal and other proceedings also apply to any proceeding brought by a contractor employee submitting a complaint under 10 U.S.C. 2409, entitled ``Contractor employees: protection from reprisal for disclosure of certain information;'' and

(2) Costs incurred in connection with a proceeding that is brought by a contractor employee submitting a complaint under 10 U.S.C. 2409 are also unallowable if the result is an order to take corrective action under 10 U.S.C. 2409.

(End of clause)

[FR Doc. 2013-23764 Filed 9-27-13; 8:45 am]

BILLING CODE 5001-06-P