[Federal Register Volume 77, Number 37 (Friday, February 24, 2012)]
[Rules and Regulations]
[Pages 11354-11355]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-4040]



[[Page 11353]]

Vol. 77

Friday,

No. 37

February 24, 2012

Part IV





Department of Defense





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Defense Acquisition Regulations System





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48 CFR Parts 209, 215, 216, et al.





Defense Federal Acquisition Regulation Supplements; Final Rules

  Federal Register / Vol. 77 , No. 37 / Friday, February 24, 2012 / 
Rules and Regulations  

[[Page 11354]]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 209, 216, and 252

RIN 0750-AH37


Defense Federal Acquisition Regulation Supplement: Award Fee 
Reduction or Denial for Health or Safety Issues (DFARS Case 2011-D033)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Final rule.

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SUMMARY: DoD is adopting as final, without change, an interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to implement those sections of the National Defense Authorization Acts 
for Fiscal Years 2010 and 2011, providing increased authorities to 
reduce or deny award fees to companies found to jeopardize the health 
or safety of Government personnel. In addition, this rule modifies the 
requirement that information on the final determination of award fee be 
entered into the Federal Awardee Performance and Integrity Information 
System (FAPIIS).

DATES: Effective Date: February 24, 2012.

FOR FURTHER INFORMATION CONTACT: Ms. Meredith Murphy, telephone 703-
602-1302.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD published an interim rule in the Federal Register at 76 FR 
57674 on September 16, 2011, to implement sections 823 and 834 of the 
National Defense Authorization Acts (NDAA) for Fiscal Years (FY) 2010 
and 2011, providing increased statutory authorities to reduce or deny 
award fees to companies found to jeopardize the health or safety of 
Government personnel and adding a mechanism to decrease or eliminate a 
contractor's award fee for a specific performance period. In addition, 
the interim rule implemented the modification by section 834 of section 
872 of the NDAA for FY 2009, which required that information on the 
final determination of award fee be entered into the Federal Awardee 
Performance and Integrity Information System (FAPIIS). One respondent 
submitted a public comment in response to the interim rule.

II. Discussion and Analysis of the Public Comment

    The Defense Acquisition Regulations Council (the Council) reviewed 
the public comment in the development of the final rule. A discussion 
of the comment is provided as follows:

A. Summary of Significant Changes

    The interim rule is adopted, without change, as a final rule.

B. Analysis of Public Comment

    Comment: The respondent noted that DFARS 209.105-2-70 uses the term 
``DoD appointing official,'' while the clause, at DFARS 252.216-
7007(a)(ii)(E), states that the determination is made by the Secretary 
of Defense. The respondent suggested that the same term be used in both 
locations.
    Response: The terminology used was carefully considered by DoD. 
Section 834 of the statute requires the Secretary of Defense to provide 
for an ``expeditious, independent investigation'' and ``make a final 
determination, pursuant to procedures established by the Secretary for 
purposes of this section. Defense Criminal Investigative Organizations 
(DCIOs) currently have procedures in place to conduct criminal 
investigations of contractor misconduct. These procedures are outside 
the acquisition regulatory process, and, further, there are differences 
in the procedural processes followed within different parts of DoD. 
After consideration of the comment, DoD determined that the DFARS text 
at 209.105-2-70 should be as specific as possible for the guidance of 
the contracting officer, i.e., ``the DoD appointing official that 
requested a DoD investigation makes a final determination * * *'' 
However, DoD used the ``Secretary of Defense'' in the DFARS clause 
because it is not necessary to specify to the contractor the delegation 
of authority within DoD.

III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is a significant regulatory action and, therefore, was subject to 
review under section 6(b) of E.O. 12866, Regulatory Planning and 
Review, dated September 30, 1993. This rule is not a major rule under 5 
U.S.C. 804.

IV. 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 section 834 of the NDAA for FY 2011 does not apply to firms 
that are subject to the jurisdiction of U.S. courts. By definition, 
small businesses are U.S. businesses and, therefore, are subject to the 
jurisdiction of the U.S. courts. Accordingly, this rule will not affect 
small businesses. For the definition of ``small business,'' the 
Regulatory Flexibility Act refers to the Small Business Act, which in 
turn allows the U.S. Small Business Administration (SBA) Administrator 
to specify detailed definitions or standards (5 U.S.C. 601(3) and 15 
U.S.C. 632(a)). The SBA regulations at 13 CFR 121.105 discuss who is a 
small business: ``(a)(1) Except for small agricultural cooperatives, a 
business concern eligible for assistance from SBA as a small business 
is a business entity organized for profit, with a place of business 
located in the United States, and which operates primarily within the 
United States or which makes a significant contribution to the U.S. 
economy through payment of taxes or use of American products, materials 
or labor.''
    This rule also implements section 823 of the NDAA for FY 2010. 
Section 823 required contracting officers to consider reduction or 
denial of award fee if the actions of the contractor or a subcontractor 
at any tier jeopardized the health or safety of Government personnel. 
DoD did not prepare an initial regulatory flexibility analysis upon 
publication of the interim rule implementing section 823 (75 FR 69360, 
effective November 12, 2010) because, generally, contracts awarded to 
small businesses are not likely to utilize incentive- and award-fee 
contract structures. No comments were received from small entities on 
the interim rule.

V. Paperwork Reduction Act

    The rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act (44 U.S.C. chapter 35).

[[Page 11355]]

List of Subjects in 48 CFR Parts 209, 216, and 252

    Government procurement.

Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.

Interim Rule Adopted as Final Without Change

0
Accordingly, the interim rule amending 48 CFR parts 209, 216, and 252, 
which was published at 76 FR 57674 on September 16, 2011, is adopted as 
a final rule without change.

[FR Doc. 2012-4040 Filed 2-23-12; 8:45 am]
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