[Federal Register Volume 62, Number 108 (Thursday, June 5, 1997)]
[Proposed Rules]
[Pages 30829-30831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14623]


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DEPARTMENT OF DEFENSE

48 CFR Parts 214 and 215

[DFARS Case 97-D011]


Defense Federal Acquisition Regulation Supplement; Distribution 
of Contract Financing Payments

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

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SUMMARY: The Director of Defense Procurement is proposing to amend the 
Defense Federal Acquisition Regulation Supplement (DFARS) to specify 
that, when a contract contains multiple accounting classification 
citations and a provision for contract financing payments, the contract 
also shall include instructions adequate to permit the paying office to 
distribute the contract financing payments in proportions that 
reasonably reflect the performance of work under the contract.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before August 4, 1997 to be considered in 
the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments to: 
Defense Acquisition Regulations Council, Attn: Ms. Melissa Rider, PDUSD 
(A&T) DP (DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-
3062. Telefax number (703) 602-0350. Please cite DFARS Case 97-D011 in 
all correspondence related to this issue.

FOR FURTHER INFORMATION CONTACT:

[[Page 30830]]

Ms. Melissa Rider, (703) 602-0131.

SUPPLEMENTARY INFORMATION: 

A. Background

    This rule proposes amendments to DFARS Subpart 214.2, Solicitations 
of Bids, and Subpart 215.4, Solicitation and Receipt of Proposals and 
Quotations, to indicate that, when a contract contains multiple 
accounting classification citations and includes a provision for 
contract financing payments, the contracting officer shall provide 
instructions adequate to permit the payment office to distribute the 
contract financing payments in proportions that reasonably reflect the 
performance of work on the contract. The contracting officer is 
required to use one of four alternative approaches for developing the 
payment instructions.

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 pertains to internal Government accounting procedures. 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 DFARS subparts also will be considered in accordance with 5 
U.S.C. 610. Such comments should be submitted separately and should 
cite DFARS Case 97-D011 in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply, because this proposed 
rule does not impose any information collection requirements that 
require Office of Management and Budget approval under 44 U.S.C. 3501, 
et seq.

List of Subjects in 48 CFR Parts 214 and 215

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

    Therefore, it is proposed that 48 CFR parts 214 and 215 be amended 
as follows:
    1. The authority citation for 48 CFR parts 214 and 215 continues to 
read as follows:

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

PART 214--SEALED BIDDING

    2. Section 214.201-2 is added to read as follows:


214.201-2  Part I--The Schedule.

    (g) Section G, Contract administration data. When a contract 
contains multiple accounting classification citations and includes a 
provision for contract financing payments (see FAR 32.902), the 
contracting officer shall provide instructions based on one of the 
following alternatives, adequate to permit the paying office to 
distribute the contract financing payment in proportions that 
reasonably reflect the performance of the work on the contract. Payment 
instructions shall not be selected solely on the basis of 
administrative convenience. The payment instructions may be updated as 
necessary.
    (i) Contract financing payments based on information supplied in 
accordance with contract requirements. Payments will be made in a 
manner consistent with information provided by the contractor as a 
result of a contract requirement. For example, payment could be based 
on:
    (A) A payment distribution profile developed by the contracting 
officer from a contract funds status report, or other form of cost 
reporting, that identifies actual funds usage by contract line item (or 
subline item) (CLIN/SLIN); or
    (B) Information contractually required to be included on the 
contractor's payment request, identifying the amount of payment to be 
made for each CLIN/SLIN against which payment is requested.
    (ii) Contract financing payments based on a unique payment 
distribution profile. Payments will be based on a payment distribution 
profile established by the contracting officer at contract award or as 
revised during contract performance. The profile must indicate, for 
each anticipated payment, a percentage apportionment by CLIN/SLIN, 
based on anticipated contract performance. Payment distribution 
profiles may be derived from information supplied by the contractor, 
contract administration office, program office, or elsewhere. Payment 
profiles may reflect a combination of the other alternatives described 
herein; however, each CLIN/SLIN may use only one method (see 204.7103-1 
and 204.7104-1).
    (iii) Contract financing payments distributed on a proportionate 
percentage basis. Payments will be distributed on a proportionate 
percentage basis against all CLINs/SLINs when a best estimate of 
contractor work performance supports an assumption that work will be 
performed supports an assumption that work will be performed for all 
CLINs/SLINs in a relatively proportionate manner.
    (iv) Contracting financing payments using oldest funds first. This 
payment method should be used only when other payment instruction 
options are not practicable. When used, payments will be made from the 
appropriate accounting classification citations in a sequence that 
enables exhaustion of the oldest fiscal year financing appropriation, 
before payments are made from more recent fiscal year appropriations. 
This form of payment instruction most typically applies to requirements 
that are funded by research, development, test and evaluation 
appropriations for successive fiscal years.
    3. Section 214.201-9 is added to read as follows:


214.201-9  Simplified contract format.

    (b) Contract schedule.
    (8) See 214.201-2(g) for contracts that contain multiple accounting 
classification citations and include a provision for contract financing 
payments.

PART 215--CONTRACTING BY NEGOTIATION

    4. Section 215.406-2 is revised to read as follows:


215.406-2  Part I--Schedule.

    (g) Section G, Contract administration data.
    (i) When a contract contains both fixed-price and cost-
reimbursement line items or subline items, the contracting officer 
shall provide, in Section B, Supplies or Services and Prices/Costs, an 
identification of contract type specified for each contract line item 
or subline item to facilitate appropriate payment.
    (ii) When a contract contains multiple accounting classification 
citations and includes a provision for contract financing payments (see 
FAR 32.902), the contracting officer shall provide instructions based 
on one of the following alternatives, adequate to permit the paying 
office to distribute the contract financing payment in proportions that 
reasonably reflect the performance of the work on the contract. Payment 
instructions shall not be selected solely on the basis of 
administrative convenience. The payment instructions may be updated as 
necessary.
    (A) Contract financing payments based on information supplied in 
accordance with contract requirements. Payments will be made in a 
manner consistent with information provided by the contractor as a 
result of a contract

[[Page 30831]]

requirement. For example, payment could be based on:
    (1) A payment distribution profile developed by the contracting 
officer from a contract funds status report, or other form of cost 
reporting, that identifies actual funds usage by contract line item (or 
subline item) (CLIN/SLIN); or
    (2) Information contractually required to be included on the 
contractor's payment request, identifying the amount of payment to be 
made for each CLIN/SLIN against which payment is requested.
    (B) Contract financing payments based on a unique payment 
distribution profile. Payments will be based on a payment distribution 
profile established by the contracting officer at contract award or as 
revised during contract performance. The profile must indicate, for 
each anticipated payment, a percentage apportionment by CLIN/SLIN, 
based on anticipated contract performance. Payment distribution 
profiles may be derived from information supplied by the contractor, 
contract administration office, program office, or elsewhere. Payment 
profiles may reflect a combination of the other alternative described 
herein; however, each CLIN/SLIN may use only one method (see 204.7103-1 
and 204.7104-1).
    (c) Contract financing payments distributed on a proportionate 
percentage basis. Payments will be distributed on a proportionate 
percentage basis against all CLIN/SLINs when a best estimate of 
contractor work performance supports an assumption that work will be 
performed for all CLIN/SLINs in a relatively proportionate manner.
    (D) Contract financing payments using oldest funds first. This 
payment method should be used only when other payment instruction 
options are not practicable. When used, payments will be made from the 
appropriate accounting classification citations in a sequence that 
enables exhaustion of the oldest fiscal year financing appropriation, 
before payments are made from more recent fiscal year appropriations. 
This form of payment instruction most typically applies to requirements 
that are funded by research, development, test and evaluation 
appropriations for successive fiscal years.
[FR Doc. 97-14623 Filed 6-4-97; 8:45 am]
BILLING CODE 5000-04-M