[Federal Register Volume 69, Number 217 (Wednesday, November 10, 2004)]
[Rules and Regulations]
[Pages 65090-65091]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-24865]



48 CFR Part 228

[DFARS Case 2003-D037]

Defense Federal Acquisition Regulation Supplement; Insurance

AGENCY: Department of Defense (DoD).

ACTION: Final rule.


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

EFFECTIVE DATE: November 10, 2004.

FOR FURTHER INFORMATION CONTACT: Mr. Thaddeus Godlewski, Defense 
Acquisition Regulations Council, OUSD (AT&L) DPAP (DAR), IMD 3C132, 
3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-
2022; facsimile (703) 602-0350. Please cite DFARS Case 2003-D037.


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 final rule is a result of the DFARS Transformation initiative. 
The rule deletes DFARS text in the areas addressed below. This text has 
been relocated to the new DFARS companion resource, Procedures, 
Guidance, and Information (PGI), available at http://www.acq.osd.mil/dpap/dars/pgi.
     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 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 
has removed this text from the DFARS and relocated it to the new DFARS 
companion resource, PGI.
     DFARS 228.305, Overseas workers' compensation and war-
hazard insurance. The Defense Base Act (42

[[Page 65091]]

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 
has removed this procedural text from the DFARS and relocated it to the 
new DFARS companion resource, PGI.
    DoD published a proposed rule at 69 FR 8153 on February 23, 2004. 
DoD received no comments on the proposed rule. Therefore, DoD has 
adopted the proposed rule as a final rule without change.
    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 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 deletes DFARS text addressing procedural matters, but 
makes no significant change to contracting policy.

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, 48 CFR part 228 is amended 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. 04-24865 Filed 11-9-04; 8:45 am]