[Federal Register Volume 69, Number 35 (Monday, February 23, 2004)]
[Proposed Rules]
[Pages 8153-8154]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-3692]



48 CFR Part 228

[DFARS Case 2003-D037]

Defense Federal Acquisition Regulation Supplement; Insurance

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.


SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to update text pertaining to insurance 
requirements. This proposed rule is a result of a transformation 
initiative undertaken by DoD to dramatically change the purpose and 
content of the DFARS.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before April 23, 2004, to be considered 
in the formation of the final rule.

ADDRESSES: Respondents may submit comments via the Internet 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 2003-D037 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: Mr. Thaddeus Godlewski, OUSD (AT&L) DPAP (DAR), IMD 
3C132, 3062 Defense Pentagon, Washington, DC 20301-3062; facsimile 
(703) 602-0350. Please cite DFARS Case 2003-D037.
    At the end of the comment period, interested parties may view 
public comments on the Internet at http://emissary.acq.osd.mil/dar/dfars.nsf.

FOR FURTHER INFORMATION CONTACT: Mr. Thaddeus Godlewski, (703) 602-


A. Background

    DFARS Transformation is a major DoD initiative to dramatically 
change the purpose and content of the DFARS. The objective is to 
improve the efficiency and effectiveness of the acquisition process, 
while allowing the acquisition workforce the flexibility to innovate. 
The transformed DFARS will contain only requirements of law, DoD-wide 
policies, delegations of FAR authorities, deviations from FAR 
requirements, and policies/procedures that have a significant effect 
beyond the internal operating procedures of DoD or a significant cost 
or administrative impact on contractors or offerors. Additional 
information on the DFARS Transformation initiative is available at 
    This proposed rule is a result of the DFARS Transformation 
initiative. The proposed changes delete DFARS text in the areas 
addressed below. This text will be relocated to the new DFARS companion 
resource, Procedures, Guidance, and Information (PGI). A proposed rule 
describing the purpose and structure of PGI is published elsewhere in 
this issue of the Federal Register under DFARS Case 2003-D090, 
Procedures, Guidance, and Information.
     DFARS 228.304, Risk-pooling arrangements. In the 
early 1950's, DoD teamed with the insurance industry to develop a 
program that would minimize the cost of workers' compensation and 
contractor liability charged to Government contracts. The objective was 
to provide an optional insurance plan to be used if it provided a 
better deal than what could be purchased on

[[Page 8154]]

the open market. The team's solution was the National Defense Projects 
Rating Plan (NDPRP). The NDPRP defined premiums via a formula based 
upon average workers' compensation rates throughout the country and 
adjusted for experience pooled from Defense contractors. This produced 
premiums without loadings, e.g., commissions, and eliminated the burden 
of negotiating premiums every year with insurance carriers. Today, 
there is little cost difference between the NDPRP and the states' 
workers' compensation program, because the states have adopted the same 
premium algorithm as the NDPRP and many contractors have adopted self-
insurance. The text at DFARS 228.304 may be beneficial in the event of 
a prolonged surge in Defense contract activity, and should be retained 
as guidance. Accordingly, DoD proposes to remove this text from the 
DFARS and relocate it to the new DFARS companion resource, PGI.
     DFARS 228.305, Overseas workers' compensation 
and war-hazard insurance. The Defense Base Act (42 U.S.C. 1651 et seq.) 
extends the Longshoremen's and Harbor Workers' Compensation Act (33 
U.S.C. 901) to various classes of employees working outside the United 
States. When the agency head recommends a waiver to the Secretary of 
Labor, the Secretary may waive the applicability of the Defense Base 
Act to any contract, subcontract, work location, or classification of 
employees. DFARS 228.305 provides the procedures within DoD for 
submitting such requests for waiver. DoD proposes to remove this 
procedural text from the DFARS and relocate it to the new DFARS 
companion resource, PGI.
    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 
deletes DFARS text addressing procedures that are no longer in use or 
that are internal to DoD. 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 2003-D037.

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 228

    Government procurement.

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

    Therefore, DoD proposes to amend 48 CFR Part 228 as follows:
    1. The authority citation for 48 CFR Part 228 continues to read as 

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


    2. Sections 228.304 and 228.305 are revised to read as follows:

228.304  Risk-pooling arrangements.

    DoD has established the National Defense Projects Rating Plan, also 
known as the Special Casualty Insurance Rating Plan, as a risk-pooling 
arrangement to minimize the cost to the Government of purchasing the 
liability insurance listed in FAR 28.307-2. Use the plan in accordance 
with the procedures at PGI 228.304 when it provides the necessary 
coverage more advantageously than commercially available coverage.

228.305  Overseas workers' compensation and war-hazard insurance.

    (d) When submitting requests for waiver, follow the procedures at 
PGI 228.305(d).

[FR Doc. 04-3692 Filed 2-20-04; 8:45 am]