[Federal Register Volume 62, Number 178 (Monday, September 15, 1997)]
[Proposed Rules]
[Pages 48205-48206]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24386]


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DEPARTMENT OF DEFENSE

48 CFR Part 215

[DFARS Case 97-D025]


Defense Federal Acquisition Regulation Supplement; Weighted 
Guidelines--Federally Funded Research and Development Centers

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 exempt 
Federally Funded Research and Development Centers from the weighted 
guidelines method for establishing profit and fee objectives.

DATES: Comment date: Comments on the proposed rule should be submitted 
in writing to the address shown below on or before November 14, 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. Amy Williams, PDUSD 
(A&T) DP (DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-
3062. Telefax number (703) 602-0350.
    E-mail comments submitted over the Internet should be addressed to: 
[email protected]
    Please cite DFARS Case 97-D025 in all correspondence related to 
this issue. E-mail correspondence should cite DFARS Case 97-D025 in the 
subject line.

FOR FURTHER INFORMATION CONTACT:
Ms. Amy Williams, (703) 602-0131.

SUPPLEMENTARY INFORMATION:

A. Background

    This proposed rule amends DFARS Subpart 215.9 to exempt Federally 
Funded Research and Development Centers (FFRDCs) from the weighted 
guidelines method for establishing profit and fee objectives. The fee 
for an FFRDC is based on assessment of need and, therefore, should not 
be subject to the structured, risk-based approach embodied in the 
weighted guidelines method of profit/fee computation. The proposed rule 
instead requires contracting officers to establish fee objectives for 
FFRDCs in accordance with FFRDC fee policies in the DoD FFRDC 
Management Plan.

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 
applies only to contract actions with Federally Funded Research and 
Development Centers. The rule is not applicable to small businesses. An 
initial regulatory flexibility analysis has therefore not been 
prepared. Comments are invited from small businesses and other 
interested parties. Comments from small entities concerning the 
affected DFARS subpart also will be considered in accordance with 5 
U.S.C. 610. Such comments should be submitted separately and should 
cite DFARS Case 97-D025 in correspondence.

C. Paperwork Reduction Act

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

List of Subjects in 48 CFR Part 215

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

    Therefore, 48 CFR Part 215 is proposed to be amended as follows:
    1. The authority citation for 48 CFR Part 215 continues to read as 
follows:

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

PART 215--CONTRACTING BY NEGOTIATION

    2. Section 215.902 is amended by revising the introductory text to 
read as follows:


215.902  Policy.

    Departments and agencies shall use a structured approach for 
developing a prenegotiation profit or fee objective (profit objective) 
on any negotiated contract action that requires cost analysis, except 
on cost-plus-award-fee contracts (see 215.974) or contracts with 
Federally Funded Research and Development Centers (FFRDCs) (see 
215.975). There are three structured approaches--
* * * * *
    3. Section 215.903 is amended by revising paragraphs (b)(1) and 
(b)(2) to read as follows:


215.903  Contracting officer responsibilities.

* * * * *
    (b) The contracting officer--
    (1) Shall use the weighted guidelines method (see 215.971), 
unless--

[[Page 48206]]

    (A) The modified weighted guidelines method applies;
    (B) An alternate structured approach is justified;
    (C) Developing a fee objective for a cost-plus-award-fee contract; 
or
    (D) Developing a fee objective for a contract with an FFRDC.
    (2) Shall use the modified weighted guidelines method (see 215.972) 
on contract actions with nonprofit organizations, except contract 
actions with FERDCs;
* * * * *
    4. Section 215.972 is amended by revising the section heading and 
paragraphs (b) and (c), and by removing paragraph (d). The revised text 
read as follows:


215.972  Modified weighted guidelines method for nonprofit 
organizations except FFRDCs.

* * * * *
    (b) For nonprofit organizations which are entities that have been 
identified by the Secretary of Defense or a Secretary of a Department 
as receiving sustaining support on a cost-plus-fixed-fee basis from a 
particular DoD department or agency, compute a fee objective for 
covered actions using the weighted guidelines method in 215.971, with 
the following modifications:
    (1) Modifications to performance risk (Blocks 21-24 of the DD Form 
1547.
    (i) If the contracting officer assigns a value from the standard 
designated range (see 215.971-2(c), reduce the fee objective by an 
amount equal to 1 percent of the costs in Block 18 of the DD Form 1547. 
Show the net (reduced) amount on the DD Form 1547.
    (ii) If the contracting officer assigns a value from the alternate 
designated range, reduce the fee objective by an amount equal to 2 
percent of the costs in Block 18 of the DD Form 1547. Shown the net 
(reduced) amount on the DD Form 1547.
    (2) Modifications to contract type risk (Block 25 of the DD Form 
1547). Use a designated range of -1 percent to 0 percent instead of the 
values in 215.971-3. There is no normal value.
    (c) For all other nonprofit organizations except FFRDCs, compute a 
fee objective for covered actions using the weighted guidelines method 
in 215.971, modified as described in paragraph (b)(1) of this section.


215.975  [Redesignated]

    5. Section 215.975 is redesignated as 215.976.
    6. A new section 215.975 is added to read as follows:


215.975  Fee requirements for FFRDCs.

    For nonprofit organizations that are FFRDCs, the contracting 
officer-
    (a) Should consider whether any fee is appropriate. Considerations 
shall include the FFRDC's--
    (1) Proportion of retained earnings (as established under generally 
accepted accounting methods) that relates to DoD contracted effort;
    (2) Facilities capital acquisition plans;
    (3) Working capital funding as assessed on operating cycle cash 
needs;
    (4) Contingency funding; and
    (5) Provision for funding unreimbursed costs deemed ordinary and 
necessary to the FFRDC.
    (b) Shall, when a fee is considered appropriate, establish the fee 
objective in accordance with FFRDC fee policies in the DoD FFRDC 
Management Plan.
    (c) Shall not use the weighted guidelines method or an alternate 
structured approach.

[FR Doc. 97-24386 Filed 9-12-97; 8:45 am]
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