[Federal Register Volume 68, Number 106 (Tuesday, June 3, 2003)]
[Proposed Rules]
[Pages 33057-33058]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-13536]


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DEPARTMENT OF DEFENSE

48 CFR Part 206

[DFARS Case 2002-D023]


Defense Federal Acquisition Regulation Supplement; Follow-On 
Production Contracts for Products Developed Pursuant to Prototype 
Projects

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 provide an exception from competition 
requirements to apply to contracts awarded under the authority of 
Section 822 of the National Defense Authorization Act for Fiscal Year 
2002. Section 822 provides for award of a follow-on production 
contract, without competition, to participants in an ``other 
transaction'' agreement for a prototype project, if the agreement was 
entered into through use of competitive procedures, provided for at 
least one-third non-Federal cost share, and meets certain other 
conditions of law.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before August 4, 2003, 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: [email protected]. 
Please cite DFARS Case 2002-D023 in the subject line of e-mailed 
comments.
    Respondents that cannot submit comments using either of the above 
methods may submit comments to: Defense Acquisition Regulations 
Council, Attn: Ms. Susan L. Schneider, OUSD(AT&L)DPAP(DAR), IMD 3C132, 
3062 Defense Pentagon, Washington, DC 20301-3062; facsimile (703) 602-
0350. Please cite DFARS Case 2002-D023.
    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. Susan Schneider, (703) 602-0326.

SUPPLEMENTARY INFORMATION:

A. Background

    Section 845 of the National Defense Authorization Act for Fiscal 
Year 1994 (Pub. L. 103-160; 10 U.S.C. 2371 note) provides authority for 
DoD to enter into transactions other than contracts, grants, or 
cooperative agreements, in certain situations, for prototype projects 
that are directly relevant to weapons or weapon systems proposed to be 
acquired or developed by DoD. Such transactions are commonly referred 
to as ``other transaction'' (OT) agreements for prototype projects.
    Section 822 of the National Defense Authorization Act for Fiscal 
Year 2002 (Pub. L. 107-107) permits award of a follow-on production 
contract, without competition, to participants in an OT agreement for a 
prototype project if--
    (1) The OT agreement provided for a follow-on production contract;
    (2) The OT agreement provided for at least one-third non-Federal 
cost share for the prototype project;
    (3) Competitive procedures were used for the selection of parties 
for participation in the OT agreement;
    (4) The participants in the OT agreement successfully completed the 
prototype project;
    (5) The number of units provided for in the follow-on production 
contract does not exceed the number of units specified in the OT 
agreement for such a follow-on production contract; and
    (6) The prices established in the follow-on production contract do 
not exceed the target prices specified in the OT agreement for such a 
follow-on production contract.

[[Page 33058]]

    DoD published proposed amendments to the ``Other Transactions'' 
regulations at 32 CFR part 3 on May 20, 2003 (68 FR 27497), to 
implement Section 822. This proposed DFARS rule provides the 
corresponding exemption from competition requirements for follow-on 
production contracts awarded under the authority of Section 822.
    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

    DoD does not expect this rule 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 production contracts for DoD weapons and weapon 
systems. Such contracts typically are not awarded to small business 
concerns. 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 subpart in accordance with 5 
U.S.C. 610. Such comments should be submitted separately and should 
cite DFARS Case 2002-D023.

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 Part 206

    Government procurement.

Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
    Therefore, DoD proposes to amend 48 CFR part 206 as follows:
    1. The authority citation for 48 CFR part 206 continues to read as 
follows:


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

PART 206--COMPETITION REQUIREMENTS

    2. Section 206.001 is amended by adding, after paragraph (b), a new 
paragraph (S-70) to read as follows:


206.001  Applicability.

* * * * *
    (S-70) Also excepted from this part are follow-on production 
contracts for products developed pursuant to the ``other transactions'' 
authority of 10 U.S.C. 2371 for prototype projects when--
    (1) The other transaction agreement includes provisions for a 
follow-on production contract;
    (2) The contracting officer receives sufficient information from 
the agreements officer and the project manager for the prototype other 
transaction agreement, which documents that the conditions set forth in 
10 U.S.C. 2371 note, subsections (f)(2)(A) and (B) (see 32 CFR 3.9(c)), 
have been met; and
    (3) The contracting officer establishes quantities and prices for 
the follow-on production contract that do not exceed the quantities and 
target prices established in the other transaction agreement.

[FR Doc. 03-13536 Filed 6-2-03; 8:45 am]
BILLING CODE 5001-08-P