[Federal Register Volume 63, Number 173 (Tuesday, September 8, 1998)]
[Proposed Rules]
[Pages 47460-47461]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-23976]


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DEPARTMENT OF DEFENSE

48 CFR Parts 232 and 252

[DFARS Case 98-D400]


Defense Federal Acquisition Regulation Supplement; Flexible 
Progress 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 remove 
references to the flexible progress payments method of contract 
financing. The current DFARS coverage does not permit its use for 
contracts awarded as a result of solicitations issued on or after 
November 11, 1993.

DATES: Comments on the proposed rule should be submitted in writing to 
the address specified below on or before November 9, 1998, to be 
considered in the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments on the 
proposed rule to: Defense Acquisition Regulations Council, Attn: Ms. 
Sandra G. Haberlin, 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 98-D400 in all correspondence 
related to this issue. E-mail correspondence should cite DFARS Case 98-
D400 in the subject line.

FOR FURTHER INFORMATION CONTACT:
Ms. Sandra G. Haberlin, (703) 602-0131.

SUPPLEMENTARY INFORMATION: 

A. Background

    The Director of Defense Procurement established a special 
interagency team to review existing policies and procedures related to 
progress payments, to make them easier to understand and to minimize 
the burdens imposed on contractors and contracting officers. Regulatory 
requirements pertaining to progress payments that were not required by 
statute, required to ensure adequately standardized government business 
practices, or required to protect the public interest were considered 
for revision or elimination.
    An advance notice of proposed rulemaking (ANPR) was published in 
the Federal Register on May 1, 1997 (62 FR 23740). The ANPR solicited 
comments from industry and government personnel on how the Federal 
Acquisition Regulation (FAR) could be revised to result in a simplified 
and streamlined process of applying for and administering progress 
payments.
    After reviewing progress payment policies and public comments 
received in response to the ANPR, the team identified potential changes 
to the FAR and the DFARS. One of the changes for consideration was to 
eliminate DFARS coverage for flexible progress payments. A second ANPR 
was published in the Federal Register on March 5, 1998 (63 FR 11074), 
that solicited comments on the potential changes identified in the 
notice. The ANPR also announced a public meeting, that was subsequently 
held on April 23, 1998.
    After considering written comments received in response to the two 
notices, and verbal comments provided during the public meeting, the 
working group

[[Page 47461]]

submitted a report to the Defense Acquisition Regulations Council.
    This proposed rule reflects the conclusion of the working group 
that references to flexible progress payments as a method of contract 
financing should be removed from the DFARS. This financing method is 
administratively complex and burdensome, and may be replaced with the 
less cumbersome financing method of performance-based payments in some 
situations. In addition, as indicated in Table 32-1 at DFARS 232.502-1-
71, flexible progress payments currently are not permitted for use for 
contracts awarded as a result of solicitations issued on or after 
November 11, 1993.

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 most 
contracts awarded to small entities have a dollar value less than the 
simplified acquisition threshold, and, therefore, do not use the 
flexible progress payments method of financing. In addition, flexible 
progress payments currently are not permitted for use for contracts 
awarded as a result of solicitations issued on or after November 11, 
1993. 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 5 U.S.C. 601, et seq. (DFARS Case 98-D400), 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 Office of Management and Budget approval under 44 U.S.C. 3501, 
et seq.

List of Subjects in 48 CFR Parts 232 and 252

    Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
    Therefore, 48 CFR Parts 232 and 252 are proposed to be amended as 
follows:
    1. The authority citation for 48 CFR Parts 232 and 252 continues to 
read as follows:

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

PART 232--CONTRACT FINANCING

    2. Section 232.501 is revised to read as follows:


Sec. 232.501  General.


Sec. 232.501-1  [Amended]

    3. Section 232.501-1 is amended by removing paragraph (a)(iii).


Sec. 232.501-2  [Amended]

    4. Section 232.501-2 is amended in the second sentence by revising 
the parenthetical ``(232.171)'' to read ``(see 232.071)''.


Sec. 232.502-1-71  [Removed]

    5. Section 232.502-1-71 is removed.


Sec. 232.502-4-70  [Amended]

    6. Section 232.502-4-70 is amended by removing paragraph (b) and 
redesignating paragraph (c) as paragraph (b).

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


Sec. 252.232-7003  [Removed and Reserved]

    7. Section 252.232-7003 is removed and reserved.
    8. Section 252.232-7004 is amended by revising the introductory 
text to read as follows:


Sec. 252.232-70004  DoD progress payment rates.

    As prescribed in 232.502-4-70(b), use the following clause:
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[FR Doc. 98-23976 Filed 9-4-98; 8:45 am]
BILLING CODE 5000-04-M