[Federal Register Volume 69, Number 35 (Monday, February 23, 2004)]
[Proposed Rules]
[Pages 8155-8157]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-3707]


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DEPARTMENT OF DEFENSE

48 CFR Parts 234, 242, and 252

[DFARS Case 2003-D030]


Defense Federal Acquisition Regulation Supplement; Major Systems 
Acquisition

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 update text pertaining to major 
systems acquisition, earned value management systems, and cost/schedule 
status reporting. 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-D030 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. Teresa Brooks, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 
Defense Pentagon, Washington, DC 20301-3062; facsimile (703) 602-0350. 
Please cite DFARS Case 2003-D030.
    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: Ms. Teresa Brooks, (703) 602-0326.

SUPPLEMENTARY INFORMATION:

[[Page 8156]]

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 
http://www.acq.osd.mil/dp/dars/transf.htm.
    This proposed rule is a result of the DFARS Transformation 
initiative. The proposed changes include--
     Deletion of the definitions of ``systems'' and 
``systems acquisition'' at DFARS 234.001, since these terms are not 
used within DFARS Part 234.
     Relocation of text on earned value management 
systems from DFARS Part 234 to Part 242, since earned value management 
system requirements are not limited to major systems acquisition. The 
earned value management system thresholds specified in DoDI 5000.2, 
Operation of the Defense Acquisition System, do not cleanly equate to 
major or other than major systems. The prescriptions for the Cost/
Schedule Status Report clause and provision at DFARS 252.242-7005 and 
252.242-7006, respectively, also are amended to remove text that limits 
their use to other than major systems.
     Deletion of text at DFARS 234.005-70 regarding a 
requirement for the procuring contracting officer to obtain assistance 
from the administrative contracting officer when determining the 
adequacy of a proposed earned value management system plan. Text on 
this subject 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.
     Updating of references to OMB Circulars and the 
DoD 5000 series documents.
    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 
updates and relocates DFARS text, with no substantive change in policy. 
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 
2003-D030.

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 234, 242, and 252

    Government procurement.

Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
    Therefore, DoD proposes to amend 48 CFR Parts 234, 242, and 252 as 
follows:
    1. The authority citation for 48 CFR Parts 234, 242, and 252 
continues to read as follows:

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

PART 234--MAJOR SYSTEM ACQUISITION


234.001  [Removed]

    2. Section 234.001 is removed.
    3. Section 234.003 is revised to read as follows:


234.003  Responsibilities.

    DoDD 5000.1, The Defense Acquisition System, and DoDI 5000.2, 
Operation of the Defense Acquisition System, contain the DoD 
implementation of OMB Circular A-109 and OMB Circular A-11.
    4. Section 234.005 is revised to read as follows:


234.005  General requirements.

    See 242.1106(a) for information on the use of earned value 
management systems and the use of cost/schedule status reports.


234.005-70 and 234.005-71  [Removed]

    5. Sections 234.005-70 and 234.005-71 are removed.

PART 242--CONTRACT ADMINISTRATION AND AUDIT SERVICES

    6. Section 242.1106 is amended by revising paragraph (a) to read as 
follows:


242.1106  Reporting requirements.

    (a) See DoDI 5000.2, Operation of the Defense Acquisition System, 
for reporting requirements for defense technology projects and 
acquisition programs. Table E3.T2. of DoDI 5000.2 specifies the earned 
value management system (EVMS) thresholds. When an offeror proposes an 
EVMS plan, follow the review procedures at PGI 242.1106(a). The Defense 
Acquisition Guidebook provides additional guidance on earned value 
management and identifies when cost/schedule status reports are 
applicable.
* * * * *
    7. Section 242.1107-70 is revised to read as follows:


242.1107-70  Solicitation provision and contract clause.

    (a) When the Government requires contractor compliance with DoD 
earned value management system criteria--
    (1) Use the provision at 252.242-7XXX, Notice of Earned Value 
Management System, in solicitations; and
    (2) Use the clause at 252.242-7YYY, Earned Value Management System, 
in solicitations and contracts.
    (b) Use the clause at 252.242-7005, Cost/Schedule Status Report, in 
solicitations and contracts that require cost/schedule status reports 
(i.e., when the Contract Data Requirements List includes DI-MGMT-
81467).
    (c) Use the provision at 252.242-7006, Cost/Schedule Status Report 
Plans, in solicitations that require cost/schedule status reports.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


252.234-7000 and 252.234-7001  [Removed]

    8. Sections 252.234-7000 and 252.234-7001 are removed.
    9. Sections 252.242-7XXX and 252.242-7YYY are added to read as 
follows:


252.242-7XXX  Notice of Earned Value Management System.

    As prescribed in 242.1107-70(a)(1), use the following provision:

Notice of Earned Value Management System (XXX 2004)

    (a) The offeror shall provide documentation that the cognizant 
Administrative Contracting Officer (ACO) has

[[Page 8157]]

recognized that the proposed earned value management system (EVMS) 
complies with the EVMS criteria of DoDI 5000.2, Operation of the 
Defense Acquisition System, or that the proposed cost/schedule 
control system has been accepted by the Department of Defense.
    (b) If the offeror proposes to use a system that does not meet 
the requirements of paragraph (a) of this provision, the offeror 
shall submit a comprehensive plan for compliance with the EVMS 
criteria.
    (1) The plan shall--
    (i) Describe the EVMS the offeror intends to use in performance 
of the contract;
    (ii) Distinguish between the offeror's existing management 
system and modifications proposed to meet the criteria;
    (iii) Describe the management system and its application in 
terms of the 32 EVMS criteria;
    (iv) Describe the proposed procedure for administration of the 
criteria as applied to subcontractors; and
    (v) Provide documentation describing the process and results of 
any third-party or self-evaluation of the system's compliance with 
EVMS criteria.
    (2) The offeror shall provide information and assistance as 
required by the Contracting Officer to support review of the plan.
    (3) The Government will review the offeror's plan for EVMS 
before contract award.
    (c) Offerors shall identify the major subcontractors, or major 
subcontracted effort if major subcontractors have not been selected, 
planned for application of the criteria. The prime contractor and 
the Government shall agree to subcontractors selected for 
application of the EVMS criteria.

(End of Provision)


252.242-7YYY  Earned Value Management System.

    As prescribed in 242.1107-70(a)(2), use the following clause:

Earned Value Management System (XXX 2004)

    (a) In the performance of this contract, the Contractor shall 
use an earned value management system (EVMS) that has been 
recognized by the cognizant Administrative Contracting Officer (ACO) 
as complying with the criteria provided in DoDI 5000.2, Operation of 
the Defense Acquisition System.
    (b) If, at the time of award, the Contractor's EVMS has not been 
recognized by the cognizant ACO as complying with EVMS criteria (or 
the Contractor does not have an existing cost/schedule control 
system that has been accepted by the Department of Defense), the 
Contractor shall apply the system to the contract and shall be 
prepared to demonstrate to the ACO that the EVMS complies with the 
EVMS criteria referenced in paragraph (a) of this clause.
    (c) The Government may require integrated baseline reviews. Such 
reviews shall be scheduled as early as practicable and should be 
conducted within 180 calendar days after (1) contract award, (2) the 
exercise of significant contract options, or (3) the incorporation 
of major modifications. The objective of the integrated baseline 
review is for the Government and the Contractor to jointly assess 
areas, such as the Contractor's planning, to ensure complete 
coverage of the statement of work, logical scheduling of the work 
activities, adequate resourcing, and identification of inherent 
risks.
    (d) Unless a waiver is granted by the ACO, Contractor-proposed 
EVMS changes require approval of the ACO prior to implementation. 
The ACO shall advise the Contractor of the acceptability of such 
changes within 30 calendar days after receipt of the notice of 
proposed changes from the Contractor. If the advance approval 
requirements are waived by the ACO, the Contractor shall disclose 
EVMS changes to the ACO at least 14 calendar days prior to the 
effective date of implementation.
    (e) The Contractor agrees to provide access to all pertinent 
records and data requested by the ACO or duly authorized 
representative. Access is to permit Government surveillance to 
ensure that the EVMS complies, and continues to comply, with the 
criteria referenced in paragraph (a) of this clause.
    (f) The Contractor shall require the following subcontractors to 
comply with the requirements of this clause:
    (Contracting Officer to insert names of subcontractors selected 
for application of EVMS criteria in accordance with 252.242-
7XXX(c).)

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(End of Clause)

    10. Section 252.242-7005 is amended by revising the introductory 
text, clause date, and paragraph (c) to read as follows:


252.242-7005  Cost/Schedule Status Report.

    As prescribed in 242.1107-70(b), use the following clause:

Cost/Schedule Status Report (XXX 2004)

* * * * *
    (c) The Contractor may use a cost/schedule control system that 
has been recognized by the cognizant Administrative Contracting 
Officer (ACO) as complying with the earned value management system 
criteria provided in DoDI 5000.2, Operation of the Defense 
Acquisition System.

* * * * *
    11. Section 252.242-7006 is amended by revising the introductory 
text, clause date, and paragraph (b) to read as follows:


252.242-7006   Cost/Schedule Status Report Plans.

    As prescribed in 242.1107-70(c), use the following provision:

Cost/Schedule Status Report Plans (XXX 2004)

* * * * *
    (b) If the offeror proposes to use a cost/schedule control 
system that has been recognized by the cognizant Administrative 
Contracting Officer as complying with the earned value management 
system criteria of DoDI 5000.2, Operation of the Defense Acquisition 
System, the offeror may submit a copy of the documentation of such 
recognition instead of the written summary required by paragraph (a) 
of this provision.

(End of Provision)

[FR Doc. 04-3707 Filed 2-20-04; 8:45 am]
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