[Federal Register Volume 66, Number 165 (Friday, August 24, 2001)]
[Proposed Rules]
[Pages 44588-44589]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-21466]


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DEPARTMENT OF DEFENSE

48 CFR Parts 232 and 252

[DFARS Case 2001-D012]


Defense Federal Acquisition Regulation Supplement; Customary 
Progress Payment Rate for Large Business Concerns

AGENCY: Department of Defense (DoD).

ACTION:  Proposed rule with request for comments.

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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to increase the customary uniform 
progress payment rate for large business concerns from 75 percent to 80 
percent. The progress payment rate change will be applicable only to 
contract awards made on or after October 1, 2001, with final 
implementation contingent upon the approval of a DoD budget and outlay 
ceiling for Fiscal Year (FY) 2002 sufficient to accommodate the outlay 
impact of this proposed change. The Budget of the United States 
Government, FY 2002, submitted by the President, accommodates the 
outlay impact. Contracts awarded before October 1, 2001, will not be 
modified to include the 80 percent rate.

DATES: Comments on the proposed rule should be submitted to the address 
shown below on or before September 24, 2001 to be considered in the 
formation of the final rule.

ADDRESSES: Respondents may submit comments directly on the World Wide 
Web at http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm. As an 
alternative, respondents may e-mail comments to: dfars@acq.osd.mil. 
Please cite DFARS Case 2001-D012 in the subject line of e-mailed 
comments.
    Respondents that cannot submit comments using either of the above

[[Page 44589]]

methods may submit comments to: Defense Acquisition Regulations 
Council, Attn: Ms. Sandra Haberlin, OUSD (AT&L) DP (DAR), IMD 3C132, 
3062 Defense Pentagon, Washington, DC 20301-3062; facsimile (703) 602-
0350. Please cite DFARS Case 2001-D012.
    At the end of the comment period, interested parties may view 
public comments on the World Wide Web at http://emissary.acq.osd.mil/dar/dfars.nsf.

FOR FURTHER INFORMATION CONTACT: Ms. Sandra Haberlin, (703) 602-0289.

SUPPLEMENTARY INFORMATION:

A. Background

    Pursuant to Section 8155 of the FY 1994 Defense Appropriations Act 
(Public Law 103-139), DoD reduced the customary progress payment rate 
for large business concerns from 85 percent to 75 percent, effective 
for solicitations issued on or after November 11, 1993. The rates for 
small business and small disadvantaged business concerns (90 percent 
and 95 percent, respectively) were not changed.
    Despite changes to short term borrowing rates in subsequent years 
that have supported an increase in the progress payment rate for large 
business concerns, DoD has been unable to accommodate a rate increase 
within available funding outlays until FY 2002. This proposed DFARS 
change will conform the DoD customary uniform progress payment rate for 
large business concerns with the progress payment rate for large 
business concerns currently being used by other Executive agencies 
under FAR 32.501-1(a). The DoD rate will be applicable only to new 
contract awards made on or after October 1, 2001. Contracts awarded 
before October 1, 2001, will not be modified to include the 80 percent 
rate.
    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 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 the 
progress payment rates for small and small disadvantaged business 
concerns are unchanged. Therefore, DoD has not performed an initial 
regulatory flexibility analysis. DoD invites comments from small 
businesses and other interested parties. DoD also will consider 
comments from small entities concerning the affected DFARS subparts in 
accordance with 5 U.S.C. 610. Such comments should be submitted 
separately and should cite DFARS Case 2001-D012.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the 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 232 and 252

    Government procurement.

Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
    Therefore, DoD proposes to amend 48 CFR Parts 232 and 252 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 232.501-1 is revised to read as follows:


232.501-1  Customary progress payment rates.

    (a) The customary progress payment rates for DoD contracts, 
including contracts that contain foreign military sales (FMS) 
requirements, are 80 percent for large business concerns, 90 percent 
for small business concerns, and 95 percent for small disadvantaged 
business concerns.
    3. Section 232.502-4-70 is amended by revising paragraph (b) to 
read as follows:


232.502-4-70  Additional clauses.

* * * * *
    (b) Use the clause at 252.232-7004, DoD Progress Payment Rates, 
instead of Alternate I of the clause at FAR 52.232-16, if the 
contractor is a small business or small disadvantaged business concern.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    4. Section 252.232-7004 is revised to read as follows:


252.232-7004  DoD Progress Payment Rates.

    As prescribed in 232.502-4-70(b), use the following clause:

DoD Progress Payment Rates (XXX 2001)

    (a) If the contractor is a small business concern, the Progress 
Payments clause of this contract is modified to change each mention 
of the progress payment rate and liquidation rate (excepting 
paragraph (k), Limitations on Undefinitized Contract Actions) to 90 
percent.
    (b) If the contractor is a small disadvantaged business concern, 
the Progress Payments clause of this contract is modified to change 
each mention of the progress payment rate and liquidation rate 
(excepting paragraph (k), Limitations on Undefinitized Contract 
Actions) to 95 percent.

(End of clause)

[FR Doc. 01-21466 Filed 8-23-01; 8:45 am]
BILLING CODE 5000-04-M