[Federal Register Volume 62, Number 69 (Thursday, April 10, 1997)]
[Rules and Regulations]
[Pages 17549-17550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9202]



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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 2


Pilot Program Policy

AGENCY: Department of Defense, Office of the Deputy Under Secretary of 
Defense (Acquisition Reform).

ACTION: Final rule.

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SUMMARY: This rule establishes the criteria for nominating an 
acquisition program as a participant in the Defense Acquisition Pilot 
Program, the procedures for designation under the pilot program, and 
the policies related to requests for statutory and regulatory relief to 
be granted under the pilot program. This part implements the provisions 
of Section 809 of the National Defense Authorization Act for Fiscal 
Year 1991, as amended by the National Defense Authorization Act of FY 
1994.

EFFECTIVE DATE: April 10, 1997.

ADDRESSES: Office of the Deputy Under Secretary of Defense (Acquisition 
Reform), Room 2A330, 3620 Defense Pentagon, Washington, DC 20301-3620.

FOR FURTHER INFORMATION CONTACT:
Mr. Richard K. Sylvester, telephone (703) 697-6399.

SUPPLEMENTARY INFORMATION: On December 2, 1993, the Department of 
Defense published a proposed rule (58 FR 63542). Public comments were 
received on the proposed rule and reviewed and addressed. The comments 
fell into two basic categories, the majority which dealt with 
administrative corrections and have been incorporated, and the second 
group, which are no longer germane as a result of the designation of 
programs as authorized by the Federal Acquisition Streamlining Act of 
1994 or from inapplicability due to more recent changes in statute. No 
substantive changes have been made to the rule.
    Publication in the Federal Register is required by Section 809 of 
the National Defense Authorization Act for Fiscal Year 1991 (10 U.S.C. 
2430 note), as amended by the National Defense Authorization Act of FY 
1994. This rule does not constitute ``significant regulatory action as 
defined by E.O. 12866. The rule does not: (1) Have an annual effect on 
the economy of $100 million or more, or adversely affect in a material 
way, the economy, a sector of the economy, productivity, competition, 
jobs; the environment, public health or safety, or State, local, or 
tribal governments or communities; (2) create a serious inconsistency 
or otherwise interfere with an action taken or planned by another 
agency; (3) materially alter the budgetary impact of entitlements, 
grants user fees, loan programs, or the rights and obligations of 
recipients thereof; or (4) raise novel legal or policy issues arising 
out of legal mandates, the President's priorities, or the principles 
set forth in E.O. 12866. This rule is not subject to the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.). Therefore, no Regulatory 
Flexibility Analysis was prepared. This rule does not impose any 
reporting or record keeping requirements under the Paperwork Reduction 
Act (44 U.S.C. 3501 et seq.).

List of Subjects in 32 CFR Part 2

    Government procurement.

    Accordingly, title 32, chapter I, is amended by adding part 2, to 
read as follows:

PART 2--PILOT PROGRAM POLICY

Sec.
2.1  Purpose.
2.2  Statutory relief for participating programs.
2.3  Regulatory relief for participating programs.
2.4  Designation of participating programs.
2.5  Criteria for designation of participating programs.

    Authority: 10 U.S.C. 2340 note.


Sec. 2.1  Purpose.

    Section 809 of Public Law 101-510, ``National Defense Authorization 
Act for Fiscal Year 1991,'' as amended by section 811 of Public Law 
102-484, ``National Defense Authorization Act for Fiscal Year 1993'' 
and Public Law 103-160, ``National Defense Authorization Act for Fiscal 
Year 1994,'' authorizes the Secretary of Defense to conduct the Defense 
Acquisition Pilot Program. In accordance with section 809 of Public Law 
101-510, the Secretary may designate defense acquisition programs for 
participation in the Defense Acquisition Pilot Program.
    (a) The purpose of the pilot programs is to determine the potential 
for increasing the efficiency and effectiveness of the acquisition 
process. Pilot programs shall be conducted in accordance with the 
standard commercial, industrial practices. As used in this policy, the 
term ``standard commercial, industrial practice'' refers to any 
acquisition management practice, process, or procedure that is used by 
commercial companies to produce and sell goods and services in the 
commercial marketplace. This definition purposely implies a broad range 
of potential activities to adopt commercial practices, including 
regulatory and statutory streamlining, to eliminate unique Government 
requirements and practices such as government-unique contracting 
policies and practices, government-unique specifications and standards, 
and reliance on cost determination rather than price analysis.
    (b) Standard commercial, industrial practices include, but are not 
limited to:
    (1) Innovative contracting policies and practices;
    (2) Performance and commercial specifications and standards;
    (3) Innovative budget policies;
    (4) Establishing fair and reasonable prices without cost data;
    (5) Maintenance of long-term relationships with quality suppliers;
    (6) Acquisition of commercial and non-developmental items 
(including components); and
    (7) Other best commercial practices.


Sec. 2.2  Statutory relief for participating programs.

    (a) Within the limitations prescribed, the applicability of any 
provision of law or any regulation prescribed to implement a statutory 
requirement may be waived for all programs participating in the Defense 
Acquisition Pilot Program, or separately for each participating 
program, if that waiver or limit is specifically authorized to be 
waived or limited in a law authorizing appropriations for a program 
designated by statute as a participant in the Defense Acquisition Pilot 
Program.
    (b) Only those laws that prescribe procedures for the procurement 
of supplies or services; a preference or requirement for acquisition 
from any source or class of sources; any requirement related to 
contractor performance; any cost allowability, cost accounting, or 
auditing requirements; or any requirement for the management of, 
testing to be performed under, evaluation of, or reporting on a defense 
acquisition program may be waived.
    (c) The requirements in section 809 of Public Law 101-510, as 
amended by section 811 of Public Law 102-484, the requirements in any 
law enacted on or after the enactment of Public Law 101-510 (except to 
the extent that a waiver or limitation is specifically authorized for 
such a defense acquisition program by statute), and any provision of 
law that ensures the financial integrity of the conduct of a Federal 
Government program or that relates to the authority of the Inspector 
General of the Department of Defense may not be considered for waiver.

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Sec. 2.3  Regulatory relief for participating programs.

    (a) A program participating in the Defense Acquisition Pilot 
Program will not be subject to any regulation, policy, directive, or 
administrative rule or guideline relating to the acquisition activities 
of the Department of Defense other than the Federal Acquisition 
Regulation (FAR) \1\, the Defense FAR Supplement (DFARS) \2\, or those 
regulatory requirements added by the Under Secretary of Defense for 
Acquisition and Technology, the Head of the Component, or the DoD 
Component Acquisition Executive.
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    \1\ Copies of this Department of Defense publication may be 
obtained from the Government Printing Office, Superintendent of 
Documents, Washington, DC 20402.
    \2\ See footnote 1 to Sec. 2.3(a).
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    (b) Provisions of the FAR and/or DFARS that do not implement 
statutory requirements may be waived by the Under Secretary of Defense 
for Acquisition and Technology using appropriate administrative 
procedures. Provisions of the FAR and DFARS that implement statutory 
requirements may be waived or limited in accordance with the procedures 
for statutory relief previously mentioned.
    (c) Regulatory relief includes relief from use of government-unique 
specifications and standards. Since a major objective of the Defense 
Acquisition Pilot Program is to promote standard, commercial industrial 
practices, functional performance and commercial specifications and 
standards will be used to the maximum extent practical. Federal or 
military specifications and standards may be used only when no 
practical alternative exists that meet the user's needs. Defense 
acquisition officials (other than the Program Manager or Commodity 
Manager) may only require the use of military specifications and 
standards with advance approval from the Under Secretary of Defense for 
Acquisition and Technology, the Head of the DoD Component, or the DoD 
Component Acquisition Executive.


Sec. 2.4  Designation of participating programs.

    (a) Pilot programs may be nominated by a DoD Component Head or 
Component Acquisition Executive for participation in the Defense 
Acquisition Pilot Program. The Under Secretary of Defense for 
Acquisition and Technology shall determine which specific programs will 
participate in the pilot program and will transmit to the Congressional 
defense committees a written notification of each defense acquisition 
program proposed for participation in the pilot program. Programs 
proposed for participation must be specifically designated as 
participants in the Defense Acquisition Pilot Program in a law 
authorizing appropriations for such programs and provisions of law to 
be waived must be specifically authorized for waiver.
    (b) Once included in the Defense Acquisition Pilot Program, 
decision and approval authority for the participating program shall be 
delegated to the lowest level allowed in the acquisition regulations 
consistent with the total cost of the program (e.g., under DoD 
Directive 5000.1, \3\ an acquisition program that is a major defense 
acquisition program would be delegated to the appropriate Component 
Acquisition Executive as an acquisition category IC program)
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    \3\ Copies may be obtained, at cost, from the National Technical 
Information Service, 5285 Port Royal Road, Springfield, VA 22161.
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    (c) At the time of nomination approval, the Under Secretary of 
Defense for Acquisition and Technology will establish measures to judge 
the success of a specific program, and will also establish a means of 
reporting progress towards the measures.


Sec. 2.5  Criteria for designation of participating programs.

    (a) Candidate programs must have an approved requirement, full 
program funding assured prior to designation, and low risk. Nomination 
of a candidate program to participate in the Defense Acquisition Pilot 
Program should occur as early in the program's life-cycle as possible. 
Developmental programs will only be considered on an exception basis.
    (b) Programs in which commercial or non-developmental items can 
satisfy the military requirement are preferred as candidate programs. A 
nominated program will address which standard commercial, industrial 
practices will be used in the pilot program and how those practices 
will be applied.
    (c) Nomination of candidate programs must be accompanied by a list 
of waivers being requested to Statutes, FAR, DFARS, DoD Directives \4\ 
and Instructions,\5\ and where applicable, DoD Component regulations. 
Waivers being requested must be accompanied by rationale and 
justification for the waiver. The justification must include:
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    \4\ See footnote 3 to Sec. 2.4(b).
    \5\ See footnote 3 to Sec. 2.4(b).
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    (1) The provision of law proposed to be waived or limited.
    (2) The effects of the provision of law on the acquisition, 
including specific examples.
    (3) The actions taken to ensure that the waiver or limitation will 
not reduce the efficiency, integrity, and effectiveness of the 
acquisition process used for the defense acquisition program; and
    (4) A discussion of the efficiencies or savings, if any, that will 
result from the waiver or limitation.
    (d) No nominated program shall be accepted until the Under 
Secretary of Defense has determined that the candidate program is 
properly planned.

    Dated: April 4, 1997.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 97-9202 Filed 4-9-97; 8:45 am]
BILLING CODE 5000-04-M