[Federal Register Volume 71, Number 62 (Friday, March 31, 2006)]
[Rules and Regulations]
[Pages 16241-16243]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-3085]


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DEPARTMENT OF ENERGY

48 CFR Parts 901 and 970

RIN 1991-AB64


Acquisition Regulation: Make-or-Buy Plans

AGENCY: Department of Energy.

ACTION: Final rule.

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SUMMARY: The Department of Energy (DOE) is amending the Department of 
Energy Acquisition Regulation (DEAR) to revise its requirements for 
contractor make-or-buy plans. The Department published a Notice of 
Proposed Rulemaking on December 15, 2004, proposing to eliminate its 
program requiring make or buy analyses and plans from its management 
and operating (M&O) contractors.

DATES: Effective Date: May 1, 2006.

FOR FURTHER INFORMATION CONTACT: Richard Langston, U.S. Department of 
Energy, MA-61, 1000 Independence Avenue, SW., Washington, DC 20585, 
Telephone (202) 287-1339 or submit electronically to 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background
II. Discussion of Public Comments
III. Section-by-Section Analysis
IV. Procedural Requirements
    A. Review Under Executive Order 12866
    B. Review Under Executive Order 12988
    C. Review Under the Regulatory Flexibility Act
    D. Review Under the Paperwork Reduction Act
    E. Review Under the National Environmental Policy Act
    F. Review Under Executive Order 13132
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 13211
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under the Small Business Regulatory Fairness Act of 
1996
    L. Approval by the Office of the Secretary of Energy

I. Background

    DOE now has more than eight years of experience with the make-or-
buy policy it established in 1997. All M&O contractors have approved 
make-or-buy plans in place. The Department has evaluated the operation 
of the make-or-buy policy and the effect that policy has had in 
achieving the Department's objectives. The make-or-buy program is not 
delivering value to the Department commensurate with the costs of its 
implementation.
    The Department conducted a number of assessments since establishing 
the current make-or-buy plan requirements and implemented a number of 
actions intended to improve the manner in which DOE and its contractors 
implemented the make-or-buy requirements. The conclusion drawn from the 
most recent assessment is that there is little evidence that these 
plans are producing the efficiencies and cost savings anticipated by 
the Department. The Department has determined that the lack of 
measurable progress and costs of complying and monitoring compliance 
with the make-or-buy policy outweigh any potential benefits to the 
Department.
    There are multiple approaches to achieving cost efficiencies and 
operational effectiveness under a contract, and the Department has made 
great strides with its other contract reform initiatives. The make-or-
buy plan requirements have not increased efficiency and the Department 
is amending the DEAR to eliminate the requirement that M&O contractors 
prepare and maintain formal make-or-buy plans.

II. Discussion of Public Comments

    Only one comment was received in response to our December 15, 2004 
Notice of Proposed Rulemaking. The reviewer suggested that, rather than 
eliminate the make-or-buy review analysis, the Department introduce a 
5-part alternative make-or-buy system which would include consolidation 
of identified products or services into a DOE-wide plan.
    The Department has evaluated the suggested revisions to the make-
or-buy process. The make-or-buy process was ideally meant to be a 
system for categorizing all M&O contract internal work activities as 
``make'' or ``buy'' activities. ``Make'' activities are core 
competencies critical to the mission success that are not available for 
outsourcing. ``Buy'' activities are non-core work activities that 
provide strategic support to core competencies that are available for 
outsourcing. Contractors use their make-or-buy plans to evaluate 
subcontracting opportunities and improve in-house performance. The 
objective of the make-or-buy policy is to require M&O contractors to 
operate the Department's laboratories, weapons production plants, and 
other facilities in the most cost effective and efficient manner. The 
suggested alternative does not appear to offer advantages in fulfilling 
those needs. Accordingly, the Department is not pursuing the suggested 
alternative.

III. Section-by-Section Analysis

    The Department is amending the DEAR as follows.
    1. Sections 901.105 is amended to delete the reference to the 
Office of Management and Budget, OMB control number for make-or-buy 
plans.
    2. Sections 970.1504-4-1 through 970.1504-4-3 are eliminated.
    3. Section 970.1504-5(b) is eliminated.
    4. Section 970.5203-1 is amended to include outsourcing of 
functions as a consideration of efficient and effective operations.
    5. Section 970.5203-2 is amended to provide a requirement for 
contractors to consider outsourcing as a mechanism to increase 
improvement in the management of the contract.
    6. Section 970.5215-2 is eliminated.
    7. Section 970.5244-1 is amended to remove and reserve paragraph 
(n).

IV. Procedural Requirements

A. Review Under Executive Order 12866

    This regulatory action has been determined not to be a significant 
regulatory action under Executive Order 12866, Regulatory Planning and 
Review, (58 FR 51735, October 4, 1993). Accordingly, this rule is not 
subject to review under the Executive Order by the Office of 
Information and Regulatory Affairs (OIRA) within the OMB.

B. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
Civil Justice Reform, 61 FR 4729 (February 7, 1996), imposes on 
Executive agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction. With regard to the review 
required by section 3(a), section 3(b) of Executive Order 12988 
specifically requires that Executive agencies make every reasonable 
effort to ensure that the regulation: (1) Clearly specifies the 
preemptive effect, if any; (2) clearly specifies any effect on existing 
Federal law or regulation; (3) provides a clear legal standard for 
affected conduct while promoting simplification and burden reduction; 
(4) specifies the retroactive effect, if any; (5) adequately defines 
key terms; and (6)

[[Page 16242]]

addresses other important issues affecting clarity and general 
draftsmanship under any guidelines issued by the Attorney General. 
Section 3(c) of Executive Order 12988 requires Executive agencies to 
review regulations in light of applicable standards in section 3(a) and 
section 3(b) to determine whether they are met or it is unreasonable to 
meet one or more of them. DOE has completed the required review and 
determined that, to the extent permitted by law, these regulations meet 
the relevant standards of Executive Order 12988.

C. Review Under the Regulatory Flexibility Act

    This rule has been reviewed under the Regulatory Flexibility Act, 5 
U.S.C. 601 et seq., which requires preparation of an initial regulatory 
flexibility analysis for any rule that must be proposed for public 
comment and that is likely to have a significant economic impact on a 
substantial number of small entities. The rule would not have a 
significant economic impact on small entities because no small entities 
are DOE M&O contractors and because the rule would eliminate the 
existing burden of preparing make-or-buy analyses.
    Accordingly, DOE certifies that this rule would not have a 
significant economic impact on a substantial number of small entities, 
and, therefore, no regulatory flexibility analysis has been prepared.

D. Review Under Paperwork Reduction Act

    Information collection or recordkeeping requirements contained in 
this rulemaking have been previously cleared under OMB paperwork 
clearance package number 1910-5102. The existing burden will be removed 
by this rulemaking.

E. Review Under the National Environmental Policy Act

    DOE has concluded that promulgation of this rule falls into a class 
of actions which would not individually or cumulatively have 
significant impact on the human environment, as determined by DOE's 
regulations (10 CFR part 1021, subpart D) implementing the National 
Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et seq.). 
Specifically, this rule is categorically excluded from NEPA review 
because the amendments to the DEAR are strictly procedural (categorical 
exclusion A6). Therefore, this rule does not require an environmental 
impact statement or environmental assessment pursuant to NEPA.

F. Review Under Executive Order 13132

    Executive Order 13132 (64 FR 43255, August 4, 1999) imposes certain 
requirements on agencies formulating and implementing policies or 
regulations that preempt State law or that have federalism 
implications. Agencies are required to examine the constitutional and 
statutory authority supporting any action that would limit the 
policymaking discretion of the States and carefully assess the 
necessity for such actions. DOE has examined today's rule and has 
determined that it does not preempt State law and does not have a 
substantial direct effect on the States, on the relationship between 
the National Government and the States, or on the distribution of power 
and responsibilities among the various levels of government. No further 
action is required by Executive Order 13132.

G. Review Under the Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires a 
Federal agency to perform a detailed assessment of costs and benefits 
of any rule imposing a Federal Mandate with costs to State, local or 
tribal governments, or to the private sector, of $100 million or more 
in any single year. This rulemaking does not impose a Federal mandate 
on State, local or tribal governments or on the private sector.

H. Review Under the Treasury and General Government Appropriations Act, 
1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277), requires Federal agencies to issue a 
Family Policymaking Assessment for any rule or policy that may affect 
family well-being. This rule will have no impact on family well being.

I. Review Under Executive Order 13211

    Executive Order 13211, Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use, (66 FR 28355, 
May 22, 2001) requires Federal agencies to prepare and submit to the 
OIRA, Office of Management and Budget, a Statement of Energy Effects 
for any significant energy action. A ``significant energy action'' is 
defined as any action by an agency that promulgates or is expected to 
lead to promulgation of a final rule, and that: (1) Is a significant 
regulatory action under Executive Order 12866, or any successor order; 
and (2) is likely to have a significant adverse effect on the supply, 
distribution, or use of energy, or (3) is designated by the 
Administrator of OIRA as a significant energy action. For any 
significant energy action, the agency must give a detailed statement of 
any adverse effects on energy supply, distribution, or use should the 
proposal be implemented, and of reasonable alternatives to the action 
and their expected benefits on energy supply, distribution, and use.
    Today's rule is not a significant energy action. Accordingly, DOE 
has not prepared a Statement of Energy Effects.

J. Review Under the Treasury and General Government Appropriations Act, 
2001

    The Treasury and General Government Appropriations Act, 2001, 44 
U.S.C. 3516, note, provides for agencies to review most disseminations 
of information to the public under implementing guidelines established 
by each agency pursuant to general guidelines issued by OMB. OMB's 
guidelines were published at 67 FR 8452 (February 22, 2002), and DOE's 
guidelines were published at 67 FR 62446 (October 7, 2002). DOE has 
reviewed today's rule under the OMB and DOE guidelines and has 
concluded that it is consistent with applicable policies in those 
guidelines.

K. Review Under the Small Business Regulatory Enforcement Fairness Act 
of 1996

    As required by 5 U.S.C. 801, DOE will report to Congress 
promulgation of this rule prior to its effective date. The report will 
state that it has been determined that the rule is not a ``major rule'' 
as defined by 5 U.S.C. 804(3).

L. Approval by the Office of the Secretary of Energy

    The Office of the Secretary of Energy has approved issuance of this 
final rule.

List of Subjects in 48 CFR Parts 901 and 970

    Government procurement.

    Issued in Washington, DC, on March 23, 2006.
Edward R. Simpson,
Director, Office of Procurement and Assistance Management, Office of 
Management, Department of Energy.
Robert C. Braden, Jr.,
Director, Office of Acquisition and Supply Management, National Nuclear 
Security Administration.

0
For the reasons set out in the preamble, the Department of Energy is 
amending chapter 9 of title 48 of the Code of Federal Regulations as 
set forth below:

[[Page 16243]]

PART 901--FEDERAL ACQUISITION REGULATIONS SYSTEM

0
1. The authority citation for part 901 is revised to read as follows:

    Authority: 42 U.S.C. 2201; 2282a; 2282b; 2282c; 42 U.S.C. 7101, 
et seq.; 41 U.S.C. 418b; 50 U.S.C. 2401, et seq.


0
2. Section 901.105 is amended by revising the second sentence to read 
as follows:


901.105  OMB control numbers.

    * * * The OMB control number for the collection of information 
under 48 CFR chapter 9 is 1910-4100 except for Reporting and 
Recordkeeping Requirements for Safety Management (see 48 CFR 970.5223-
1) which is 1910-5103.

PART 970--DOE MANAGEMENT AND OPERATING CONTRACTS

0
3. The authority citation for part 970 continues to read as follows:

    Authority: 42 U.S.C. 2201; 2282a; 2282b; 2282c; 42 U.S.C. 7101, 
et seq.; 41 U.S.C. 418b; 50 U.S.C. 2401, et seq.


970.1504-4-1-970.1504-4-3  [Removed and Reserved]

0
4. Sections 970.1504-4-1 through 970.1504-4-3 are removed and reserved.


970.1504-5  [Amended]

0
5. Section 970.1504-5 is amended by removing paragraph (b), and 
redesignating paragraphs (c), (d) and (e) as paragraphs (b), (c) and 
(d) respectively.


970.5203-1  [Amended]

0
6. Section 970.5203-1 is amended by revising the clause date to read 
``May 2006'' and by adding in paragraph (a)(1), second sentence, the 
words ``including consideration of outsourcing of functions'' after the 
word ``promoted''.


970.5203-2  [Amended]

0
7. Section 970.5203-2, is amended by revising the clause date to read 
``May 2006'' and by adding in paragraph (a), last sentence, the words 
``outsourcing decisions,'' after the words ``changes in 
organization,''.


970.5215-2  [Removed and Reserved]

0
8. Section 970.5215-2, Make-or-Buy plan, is removed and reserved.


970.5244-1  [Amended]

0
9. Section 970.5244-1 is amended by revising the clause date to read 
``May 2006'' and by removing and reserving paragraph (n).

[FR Doc. 06-3085 Filed 3-30-06; 8:45 am]
BILLING CODE 6450-01-P