[Federal Register Volume 61, Number 252 (Tuesday, December 31, 1996)]
[Rules and Regulations]
[Pages 69287-69288]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32805]


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DEPARTMENT OF DEFENSE
48 CFR Parts 1 and 31

[FAC 90-44; FAR Case 96-010; Item I]
RIN 9000-AH41


Federal Acquisition Regulation; Automatic Data Processing 
Equipment Leasing Costs

AGENCIES: Department of Defense (DOD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Interim rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council have agreed to an interim rule which 
deletes the definition of automatic data processing equipment (ADPE) 
and the cost principle concerning ADPE leasing costs. This regulatory 
action was not subject to Office of Management and Budget review under 
Executive Order 12866, dated September 30, 1993. This is not a major 
rule under 5 U.S.C. 804.

DATES: Effective Date: December 31, 1996.
    Comment Due Date: To be considered in the formulation of a final 
rule, comments should be submitted to the address given below on or 
before March 3, 1997.

ADDRESSES: Comments should be submitted to: General Services 
Administration, FAR Secretariat, 18th & F Streets NW, Room 4037, 
Washington, DC 20405.
    E-Mail comments submitted over the Internet should be addressed to: 
96-010@www.ARNET.gov.

FOR FURTHER INFORMATION CONTACT:
Mr. Jeremy Olson at (202) 501-3221 in reference to this FAR case. For 
general information, contact the FAR Secretariat, Room 4037, GS 
Building, Washington, DC 20405 (202) 501-4755. Please cite FAC 90-44, 
FAR case 96-010.

SUPPLEMENTARY INFORMATION:

A. Background

    The cost principle at FAR 31.205-2, Automatic Data Processing 
Equipment (ADPE) Leasing Costs, was implemented when ADPE was an 
emerging technology, had limited applications, and was a substantial 
cost element on Government contracts. For these early computer systems, 
the hardware itself constituted the major expense, and that fact, 
coupled with the risks of ownership of this rapidly evolving 
technology, justified the detailed scrutiny required under the cost 
principle. In the current technological environment, however, where 
hardware costs are no longer such a significant expense and computer 
systems have become ubiquitous in the workplace, the continued 
application of FAR 31.205-2 is no longer appropriate and is an 
unnecessary accounting and administrative burden on contractors. The 
cost principle at FAR 31.205-36, Rental Costs, adequately protects the 
Government's interests in this cost area without prescribing overly 
detailed annual requirements.
    This interim rule deletes the cost principle at 31.205-2, the ADPE 
definition at 31.001, and references to the term ``ADPE'' found 
elsewhere in Part 31.

B. Regulatory Flexibility Act

    The interim 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 most 
contracts awarded to small entities use simplified acquisition 
procedures, or are awarded on a competitive, fixed-price basis, and do 
not require application of the FAR cost principles. An Initial 
Regulatory Flexibility Analysis has, therefore, not been performed. 
Comments are invited from small businesses and other interested 
parties. Comments from small entities concerning the affected FAR 
subparts also will be considered in accordance with 5 U.S.C. 601. Such 
comments must be submitted separately and cite 5 U.S.C. 601, et. seq. 
(FAR case 96-010) in correspondence.

C. Paperwork Reduction Act

    The interim rule deletes the information collection requirement at 
FAR 31.205-2, which was previously approved by the Office of Management 
and Budget (OMB) under Control Number 9000-0072.

D. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DOD), the Administrator of General Services (GSA), and the 
Administrator of the National Aeronautics and Space Administration 
(NASA) that, pursuant to 41 U.S.C. 418b, urgent and compelling reasons 
exist to publish an interim rule prior to affording the public an 
opportunity to comment. The rule is necessary because the cost 
principle at FAR 31.205-2 imposes unnecessary administrative and 
accounting requirements on contractors and the Government, since it 
requires contractors to annually demonstrate compliance with a number 
of specific criteria, including obtaining contracting officer approval 
in certain circumstances. In order for contractors, and ultimately, the 
Government, to experience cost savings as quickly as possible, it is 
necessary that an interim rule be published to eliminate this 
burdensome and obsolete requirement. However, pursuant to Public Law 
98-577 and FAR 1.501, public comments received in response to this 
interim rule will be considered in the formation of the final rule.

List of Subjects in 48 CFR Parts 1 and 31

    Government procurement.

    Dated: December 19, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, 48 CFR parts 1 and 31 are amended as set forth below:
    1. The authority citation for 48 CFR parts 1 and 31 continues to 
read as follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 1--FEDERAL ACQUISITION REGULATION SYSTEM


1.106  [Amended]

    2. Section 1.106 is amended in the list following the introductory 
paragraph by removing the FAR segment ``31.205-2'' and the 
corresponding OMB control number ``9000-0072''.

[[Page 69288]]

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES


31.001  [Amended]

    3. Section 31.001 is amended by removing the definition ``Automatic 
data processing equipment (ADPE)''.


31.109  [Amended]

    4. Section 31.109 is amended by removing paragraph (h)(10) and 
redesignating paragraphs (h)(11) through (h)(17) as (h)(10) through 
(h)(16), respectively.


31.205-2  [Removed and reserved]

    5. Section 31.205-2 is removed and reserved.
    6. Section 31.205-36 is amended in paragraph (a) by revising the 
first sentence to read as follows:


31.205-36  Rental costs.

    (a) This subsection is applicable to the cost of renting or leasing 
real or personal property acquired under ``operating leases'' as 
defined in Statement of Financial Accounting Standards No. 13 (FAS-13), 
Accounting for Leases. * * *
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[FR Doc. 96-32805 Filed 12-30-96; 8:45 am]
BILLING CODE 6820-EP-M