[Federal Register Volume 63, Number 221 (Tuesday, November 17, 1998)]
[Rules and Regulations]
[Pages 63799-63800]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-30713]


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DEPARTMENT OF DEFENSE

48 CFR Parts 215 and 253

[DFARS Case 97-D025]


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

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

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SUMMARY: The Director of Defense Procurement has issued a final rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to exempt contract actions with Federally Funded Research and 
Development Centers (FFRDCs) from the weighted guidelines method of 
establishing profit and fee objectives. The fee for an FFRDC is based 
on assessment of need and, therefore, should not be subject to the 
risk-based approach used in the weighted guidelines method. The rule 
instead requires contracting officers to establish fee objectives for 
FFRDCs in accordance with the DoD FFRDC Management Plan.

EFFECTIVE DATE: November 17, 1998.

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

SUPPLEMENTARY INFORMATION:

A. Background

    A proposed rule with request for comments was published in the 
Federal Register on September 15, 1997 (62 FR 48205). Two sources 
submitted comments in response to the proposed rule. All comments were 
considered in the development of the final rule.

B. Regulatory Flexibility Act

    DoD certifies that this final rule will not 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.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the final 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 Parts 215 and 253

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

    Therefore, 48 CFR Parts 215 and 253 are amended as follows:
    1. The authority citation for 48 CFR Parts 215 and 253 continues to 
read as follows:

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

PART 215--CONTRACTING BY NEGOTIATION

    2. Section 215.404-4 is amended by revising paragraph (b)(1) 
introductory text, paragraph (c)(2) introductory text, and paragraphs 
(c)(2)(A) and (c)(2)(B) to read as follows:


215.404-4  Profit.

    (b) * * *
    (1) Departments and agencies shall use a structured approach for 
developing a prenegotiation profit or fee objective on any negotiated 
contract action that requires cost analysis, except on cost-plus-award-
free contracts (see 215.404-74) or contracts with Federally Funded 
Research and Development Centers (FFRDCs) (see 215.404-75). There are 
three structured approaches--
* * * * *
    (c) * * *
    (2) When using a structured approach, the contracting officer--
    (A) Shall use the weighted guidelines method (see 215.404-71), 
except as provided in paragraphs (c)(2)(B) and (c)(2)(C) of this 
subsection.
    (B) Shall use the modified weighted guidelines method (see 215.404-
72) on contract actions with nonprofit organizations other than FFRDCs.
* * * * *
    3. Section 215.404-72 is revised to read as follows:


215.404-72  Modified weighted guidelines method for nonprofit 
organizations other than FFRDCs.

    (a) Definition. As used in this subpart, a nonprofit organization 
is a business entity--
    (1) That operates exclusively for charitable, scientific, or 
educational purposes;
    (2) Whose earnings do not benefit any private shareholder or 
individual;
    (3) Whose activities do not involve influencing legislation or 
political campaigning for any candidate for public office; and
    (4) That is exempted from Federal income taxation under section 501 
of the Internal Revenue Code.
    (b) For nonprofit organizations that 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 215.404-71, 
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 215.404-71-2(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. Show 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 215.404-71-3. There is no normal value.

[[Page 63800]]

    (c) For all other nonprofit organizations except FFRDCs, compute a 
fee objective for covered actions using the weighted guidelines method 
in 215.404-71, modified as described in paragraph (b)(1) of this 
subsection.


215.404-75  [Redesignated as 215.404-76]

    4. Section 215.404-75 is redesignated as section 215.404-76.
    5. A new section 215.404-75 is added to read as follows:


215.404-75  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; and
    (4) 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.

PART 253--FORMS


253.215-70  [Amended]

    6. Section 253.215-70 is amended in paragraph (b)(4) by revising 
the parenthetical to read ``(see 215.404-76)''.

[FR Doc. 98-30713 Filed 11-16-98; 8:45 am]
BILLING CODE 5000-04-M