[Federal Register Volume 60, Number 218 (Monday, November 13, 1995)]
[Proposed Rules]
[Pages 56972-56975]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27724]



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DEPARTMENT OF DEFENSE

48 CFR Parts 216, 217, 233, 237, 247, 250, and 252

[DFARS Case 95-D703]


Defense Federal Acquisition Regulation Supplement; Multiyear 
Contracting and Other Miscellaneous Provisions

agency: Department of Defense (DoD).

action: Proposed rule with request for comment.

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summary: The Director of Defense Procurement is proposing to amend the 
Defense Federal Acquisition Regulation Supplement (DFARS) to clarify 
guidance on multiyear contracting; implement sections of the Federal 
Acquisition Streamlining Act of 1994 pertaining to payment of claims 
and Civil Reserve Air Fleet Contractors; and conform the DFARS to 
recent revisions to the FAR pertaining to determinations and findings 
and personal services contracts.

dates: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before January 12, 1996 to be considered 
in the formulation of the final rule.

addresses: Interested parties should submit written comments to: 
Defense Acquisition Regulations Council, PDUSD(A&T)DP(DAR), IMD 3D139, 
3062 Defense Pentagon, Washington, DC 20301-3062. Telefax number (703) 
602-0350. Please cite DFARS Case 95-D703 in all correspondence related 
to this issue.

for further information contact: Ms. Melissa Rider, at (703) 602-0131. 
Please cite DFARS Case 95-D703.

SUPPLEMENTARY INFORMATION:

A. Background

    The Federal Acquisition Streamlining Act of 1994, Pub. L. 103-355 
(the Act), provides authorities that streamline the acquisition process 
and minimize burdensome government-unique requirements. This proposed 
rule implements the following sections of the Act:
    Section 2301, Certification of Contract Claims--This section of the 
Act repeals 10 U.S.C. 2410e and revises 10 U.S.C. 2410. The new 
statutory language aligns DoD claims certification requirements with 
those for civilian agencies (as implemented in the FAR at 33.207), 
thereby eliminating the need for DFARS Subpart 233.70 and the 
associated clause at DFARS 252.233-7000, both of which are deleted by 
this proposed rule. The rule also amends DFARS 233.205 and 250.102 to 
add references to 10 U.S.C. 2410(b), which places restrictions on 
legislative payment of claims.
    Section 3031, Definitions; Section 3032, Consolidation of 
Provisions Relating to Contractual Commitment of Aircraft; and Section 
3033, Use of Military Installations by Contractors--These sections of 
the Act expand upon existing coverage in United States Code governing 
the use of Civil Reserve Air Fleet (CRAF) Contractors, principally upon 
the relationship between the DoD and CRAF contractors. The proposed 
rule adds a new DFARS subpart at 247.70 to address the Act's definition 
of a CRAF contractor, the obligations of a CRAF contractor to the 
Government, and how the CRAF program impacts the Government's choice of 
air transportation sources.
    This proposed rule also reorganizes and clarifies DFARS guidance 
pertaining to multiyear contracting in Subpart 217.1. The revised 
coverage 

[[Page 56973]]
contains DoD-unique statutory multiyear contracting requirements 
applicable to services, supplies, weapon systems, and economic order 
quantity procurements.
    In addition, the proposed rule amends the DFARS as follows to 
conform to recent revisions to the FAR: (1) The rule deletes DFARS 
coverage at 216.301-3 which addresses a determination and findings 
requirement for the use of the cost-reimbursement contracts that was 
eliminated from the FAR by Item IV of Federal Acquisition Circular 90-
30 (60 FR 37772, July 21, 1995); (2) The rule amends DFARS coverage on 
personal services contracts at 237.104 to remove the reference to ``GS-
18,'' Although ``GS-18'' pay rates now correlate to ``SES 6'' under 
current Federal grade structures, recent changes to 5 CFR 304.105(a) do 
not allow increased payments to certain professional categories. The 
proposed change to DFARS 237.104 is related to the FAR revisions 
pertaining to expert services published as Item II of Federal 
Acquisition Circular 90-31 (60 FR 42648, August 16, 1995), as DFARS 
237.104 establishes a ``cap'' on the rates that can be paid such 
experts.

B. Regulatory Flexibility Act

    The proposed 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., because the rule 
primarily reorganizes existing DFARS coverage on multiyear contracting 
for clarity; adds a new subpart which only applies to the acquisition 
of air transportation; and makes minor revisions to conform the DFARS 
to statutory or regulatory requirements. An initial regulatory 
flexibility analysis, therefore, has not been performed. Comments from 
small entities concerning the affected DFARS subparts will be 
considered in accordance with Section 610 of the Act. Such comments 
must be submitted separately and cite DFARS Case 95-D703 in 
correspondence.

C. The Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
rule does not impose recordkeeping or information collection 
requirements which 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 216, 217, 233, 237, 247, 250, and 
252

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

    Therefore, it is proposed that 48 CFR Parts 216, 217, 233, 237, 
247, 250, and 252 be amended as follows:

PART 216--TYPES OF CONTRACTS

    1. The authority citation for 48 CFR Parts 216, 217, 233, 237, 247, 
250, and 252 continues to read as follows:

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


216.301 and 216.301-3   [Removed]

    2. Sections 216.301 and 216.301-3 are removed.

PART 217--SPECIAL CONTRACTING METHODS

    3. Subpart 217.1 is revised to read as follows:

Subpart 217.1--Multiyear Contracting

Sec.
217.101  Definitions.
217.170-1  All multiyear contracts.
217.170-2  Multiyear contracts used to purchase services.
217.170-3  Multiyear contracts used to purchase supplies.
217.170-4  Multiyear contracts for weapon systems.
217.170-5  Multiyear contracts that employ economic order quantity 
procurement.


217.101  Definitions.

    Advance procurement, as used in this subpart, means an exception to 
the full funding policy which allows acquisition of long leadtime items 
(advance long lead acquisition) or economic order quantities (EOQ) of 
items (advance EOQ acquisition) in a fiscal year in advance of that in 
which the related end item is to be acquired. Advance procurements may 
include materials, parts, and components as well as costs associated 
with the further processing of those materials, parts, and components.


217.170-1  All multiyear contracts.

    (a) The Secretary of Defense may instruct the head of the agency 
proposing a multiyear contract to include in that contract negotiated 
priced options for varying the quantities of end items procured (10 
U.S.C. 2306b(j)).
    (b) Before a multiyear contract is awarded, the cost of that 
contract shall be compared against the cost of an annual procurement 
approach, using a present value analysis. The multiyear contract shall 
not be awarded unless the analysis shows it results in the lower cost 
(Section 9021, Public Law 101-165, and similar sections in subsequent 
Defense appropriations acts).
    (c) The head of the agency shall provide written notice to the 
Committees on Appropriations and National Security in the House of 
Representatives and in the Senate at least 10 days before termination 
of any multiyear contract authorized by Congress (Section 9021, Public 
Law 101-165, and similar sections in subsequent Defense appropriations 
acts.)


217.170-2  Multiyear contracts used to purchase services.

    (a) Limitations.
    (i) 10 U.S.C. 2306(g).
    (A) DoD may enter into multiyear acquisitions for the following 
services (and items of supply relating to such services), even though 
funds are limited by statute to obligation only during the fiscal year 
for which they were appropriated:
    (1) Operation, maintenance, and support of facilities and 
installations;
    (2) Maintenance or modification of aircraft, ships, vehicles, and 
other highly complex military equipment;
    (3) Specialized training requiring high quality instructor skills 
(e.g., training for pilots and other aircrew members or foreign 
language training); and
    (4) Base services (e.g., ground maintenance, in-plane refueling, 
bus transportation, and refuse collection and disposal).
    (B) This authority may be used as long as the contract--
    (1) Does not extend beyond five years;
    (2) Complies with FAR 17.101 through 17.105; and
    (3) Performance years do not extend beyond the end of any fiscal 
year.
    (ii) 10 U.S.C. 2829.
    (A) DoD may enter into multiyear contracts for supplies and 
services required for management, maintenance, and operation of 
military family housing and may pay the costs of such contracts for 
each year out of annual appropriations for that year.
    (B) This authority may be used as long as the contract--
    (1) Does not extend beyond four years;
    (2) Complies with FAR 17.101 through 17.105; and
    (3) Performance years do not extend beyond the end of any fiscal 
year.
    (iii) Award of a multiyear contract for services requires a written 
determination by the head of the agency (10 U.S.C. 2306(g)(1)) that--
    (A) There will be a continuing need for the services and incidental 
supplies;
    (B) Furnishing the services and incidental supplies will require--

[[Page 56974]]

    (1) A substantial initial investment in plant or equipment; or
    (2) The incurrence of substantial contingent liabilities for the 
assembly, training or transportation of a specialized work force; and
    (C) Using a multiyear contract will be in the best interest of the 
United States by encouraging effective competition and promoting 
economical business operations (e.g., economic-lot purchases and more 
efficient production rates).


217.170-3  Multiyear contracts used to purchase supplies.

    (a) Applicability. This subsection applies to all multiyear 
contracts for supplies, including weapon systems. For policies that 
apply only to multiyear contracts for weapon systems, see 217.107-4.
    (b) A multiyear contract for supplies may be used if, in addition 
to the conditions listed in FAR 17.105-1 (b)(1) through (5), the use of 
such contract will promote the national security of the United States.
    (c) The head of the agency shall provide written notice to the 
Committees on Appropriations and National Security in the House of 
Representatives and in the Senate at least 30 days before the 
contracting officer awards--
    (1) A multiyear contract containing a cancellation ceiling in 
excess of $100 million (10 U.S.C. 2306b(g)); or
    (2) A multiyear contract including an unfunded contingent liability 
in excess of $20 million (section 9021, Public Law 101-165, and similar 
sections in subsequent Defense appropriations acts).
    (d) Agencies shall establish reporting procedures to meet the 
requirements of paragraph (c) of this subsection. Submit copies of the 
notifications to the Director of Defense Procurement, Office of the 
Under Secretary of Defense (Acquisition and Technology) (OUSD(A&T)/DP), 
and to the Deputy Assistant Secretary of Defense (Comptroller) 
(Program/Budget) (OASD(C)(P/B)).


217.170-4  Multiyear contracts for weapon systems.

    (a) As authorized by 10 U.S.C. 2306b(a), and subject to the 
conditions in paragraph (b) of this subsection, the head of the agency 
may enter into a multiyear contract for--
    (1) A weapon system, associated items and services, and logistics 
support for that weapon system; and
    (2) Advance procurement of components, parts, and materials 
necessary to manufacture a weapon system, including advance procurement 
to achieve economic lot purchases or more efficient production rates. 
See 217.170-5 regarding economic order quantity procurement.
    (b) The following conditions must be satisfied before a multiyear 
contract may be awarded under the authority described in paragraph (a) 
of this subsection:
    (1) The Secretary of Defense certifies to Congress that the current 
five-year defense program fully funds the support costs associated with 
the multiyear program (10 U.S.C. 2306b(i)(1)(A));
    (2) The proposed multiyear contract provides for production at not 
less than minimum economic rates, given the existing tooling and 
facilities (10 U.S.C. 2306b(i)(1)(B));
    (3) If the value of the multiyear contract exceeds $500,000,000, 
the applicable DoD appropriations act specifically provides that a 
multiyear contract may be used to procure the particular system or 
system component (Section 9021, Public Law 101-165, and similar 
sections in subsequent Defense appropriations acts); and
    (4) All other requirements of law are met and there are no other 
statutory restrictions on the use of a multiyear contract for the 
specific system or component, or statute provides for award of 
multiyear contracts (Section 9021, Public Law 101-165, and similar 
sections in subsequent Defense appropriations acts). One such 
restriction may be achieving specified cost savings. If the agency 
finds, after negotiations with the contractor(s) that the specified 
savings cannot be achieved, the head of the agency shall assess the 
savings that, nevertheless, could be achieved by using a multiyear 
contract. If the savings are substantial, the head of the agency may 
request relief from the law's specific savings requirement. The request 
shall--
    (i) Quantify the savings that can be achieved;
    (ii) Explain any other benefits to the Government of using the 
multiyear contract;
    (iii) Include details about the negotiated contract terms and 
conditions; and
    (iv) Be submitted to OUSD(A&T)/DP for transmission to Congress via 
the Secretary of Defense and the President (10 U.S.C. 2306b(i)(2)).


217.170-5  Multiyear contracts that employ economic order quantity 
procurement.

    The head of the agency shall provide written notice to the 
Committees on Appropriations and National Security in the House of 
Representatives and in the Senate at least 30 days before awarding--
    (a) A multiyear contract providing for economic order quantity 
purchases in excess of $20 million in any year; or
    (b) A contract for advance procurement leading to a multiyear 
contract that employs economic order quantity procurement in excess of 
$20 million in any year (Section 9021, Public Law 101-165 and similar 
sections in subsequent Defense appropriations acts).

PART 233--PROTESTS, DISPUTES, AND APPEALS

    4. Section 233.205 is added to read as follows:


233.205  Relationship of the Act to Public Law 805-804.

    Limitation on payment. For payment of either a claim under the 
Contract Disputes Act of 1978 or equitable adjustment or other 
particular relief under Public Law 85-804, see 10 U.S.C. 2410(b).

Subpart 233.70--[Removed]

    5. Subpart 233.70 is removed.

PART 237--SERVICE CONTRACTING

    6. Section 237.104 is amended by revising paragraph (f)(i) to read 
as follows:


237.104  Personal services contracts.

* * * * *
    (f)(i) Payment to each expert or consultant for personal services 
under 5 U.S.C. 3109 shall not exceed the highest rate fixed by the 
Classification Act Schedules for grade GS-15 (see 5 CFR 304.105(a)).
* * * * *

PART 247--TRANSPORTATION

    7. Subpart 247.70 is added to read as follows:

Subpart 247.70--Air Transportation by Civil Reserve Air Fleet 
Contractors

Sec.
247.7000  Scope of subpart.
247.7001  Definitions.
247.7002  Applicability.
247.7003  Air transportation of DoD passengers and cargo.
247.7004  Civil Reserve Air Fleet.


247.7000  Scope of subpart.

    This subpart implements the National Security Decision Directive 
Number 280, National Airlift Policy, dated June 24, 1987, DoD Policy 
Memorandum on Transportation and Traffic Management, dated June 16, 
1994, and 10 U.S.C. 9513, Use of Military Installations by Civil 
Reserve Air Fleet (CRAF) Contractors. The national defense airlift 
objective is to ensure that military and civil airlift 

[[Page 56975]]
resources will be able to meet defense mobilization and deployment 
requirements in support of U.S. defense and foreign policy commitments. 
In support of this objective, DoD requirements shall be satisfied by 
the procurement of airlift from commercial air carriers participating 
in the CRAF program.


247.7001  Definitions.

    As used in this subpart--
    CRAF contractor means a U.S. civilian air carrier holding a 
certificate under Title 49 United States Code, Section 41102, which 
participates in the CRAF program. This definition complies with the 
requirements of the International Air Transportation Fair Competitive 
Practices Act of 1974 (49 U.S.C. 40118, Fly American Act), as 
implemented in FAR subpart 47.4.
    CRAF participation means acceptance of the aircraft offered by the 
contractor into the CRAF program prescribed by the Commander-in-Chief, 
U.S. Transportation Command, and contractor satisfaction of the other 
requirements of that program.
    CRAF Program means a cooperative plan developed by DoD with the 
U.S. civilian air carrier industry to augment DoD organic airlift 
capability during national emergencies and defense-oriented situations.


247.7002  Applicability.

    This subpart applies to all contracting methods used to acquire air 
transportation for DoD passengers or property. The contract methods 
affected include agreements (freight forwarding agreements), bills of 
lading, transportation requests, tenders, and other transportation 
forms as well as more traditional contract methods such as contracts 
and purchase orders.


247.7003  Air transportation of DoD passengers and cargo.

    (a) CRAF contractors shall be used to transport DoD passengers and 
cargo by air unless the contracting officer determines--
    (1) Available CRAF contractor airlift is not suitable and 
responsive to the requirement;
    (2) Law, regulation, or international agreement precludes the use 
of a CRAF contractor; or
    (3) The cost of transportation by a CRAF contractor is 
unreasonable.
    (b) If the total transportation charge exceeds $500,000, the 
contracting officer shall obtain the concurrence of U.S. Transportation 
Command (USTRANSCOM/TCJA) and furnish a copy of the determination 
described in paragraph (a) of this section to USTRANSCOM/TCJA before 
using a non-CRAF carrier.
    (c) Each contract or agreement shall provide for immediate 
termination in the event a contractor fails to maintain CRAF 
membership.


247.7004  Civil Reserve Air Fleet.

    Contractor's requests for membership in the CRAF program are 
processed by the Assistant for Civil Air, Air Mobility Command (AMC), 
Scott AFB IL 62225-5001. Participation requires the offer and 
commitment of contractor owned or controlled aircraft, suitable and 
responsive to military requirements, to the CRAF program and the 
execution of a CRAF contract. The Assistant for Civil Air, AMC, 
maintains a current list of CRAF contractors and may be contacted 
regarding contractor eligibility and membership.

PART 250--EXTRAORDINARY CONTRACTUAL ACTIONS

    8. Section 250.102 is added to read as follows:


250.102  Policy.

    Limitation on payment. Prior to payment of either an equitable 
adjustment or other particular relief under Public Law 85-804, see 10 
U.S.C. 2410(b).

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


252.233-7000  [Removed]

    9. Section 252.233-7000 is removed.

[FR Doc. 95-27724 Filed 11-9-95; 8:45 am]
BILLING CODE 5000-04-M