[Federal Register Volume 77, Number 99 (Tuesday, May 22, 2012)]
[Rules and Regulations]
[Pages 30367-30368]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-11563]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 204 and 243

RIN 0750-AH56


Defense Federal Acquisition Regulation Supplement: Order of 
Application for Modifications (DFARS Case 2012-D002)

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

ACTION: Final rule.

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SUMMARY: DoD is issuing a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to establish an order for 
application of contract modifications to resolve any potential 
conflicts that may arise from multiple modifications with the same 
effective date.

DATES: Effective Date: May 22, 2012.

FOR FURTHER INFORMATION CONTACT: Dr. Laura Welsh, telephone 571-372-
6091.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD published a proposed rule in the Federal Register at 77 FR 2679 
on January 19, 2012, to establish an order for application of contract 
modifications. DFARS subpart 204.70, Uniform Procurement Instrument 
Identification Numbers, prescribes numbering procedures for contract 
modifications and the Federal Acquisition Regulation (FAR) part 43.1, 
General, prescribes rules for determining the effective date of 
contract modifications. There are no rules to describe in what order to 
apply modifications to determine the actual content of a resulting 
modified contract. In order to determine the sequence of modifications 
to a contract or order, a method for determining the order of 
application for modifications is needed to resolve any conflict arising 
from multiple modifications with the same effective date. Therefore, 
this final rule adds DFARS text at 204.7007, Order of Application for 
Modifications, to resolve any potential conflict in these 
circumstances. One respondent submitted a public comment in response to 
the proposed rule.

II. Discussion and Analysis of the Public Comment

    DoD considered the public comment in the development of the final 
rule, which is discussed as follows.
    Comment: A respondent suggested that a cross-reference to the 
proposed DFARS 204.7007 language be placed within DFARS part 243, 
Contract Modifications, as the rule addresses contract modifications.
    Response: In response to the respondent's comment, a cross-
reference to DFARS 204.7007 is added at DFARS 243.172. No other changes 
were made to the proposed rule.

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 not a significant regulatory action and, therefore, was not 
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 has prepared a final regulatory flexibility analysis (FRFA) 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
The FRFA is summarized as follows:
    This rule finalizes a proposed amendment to the Defense Federal 
Acquisition Regulation Supplement (DFARS) which was published on 
January 19, 2012. DFARS subpart 204.70, Uniform Procurement Instrument 
Identification Numbers, prescribes numbering procedures for contract 
modifications, and Federal Acquisition Regulation (FAR) subpart 43.1, 
General, prescribes guidelines for determining the effective date. 
There are no rules to describe in what order to apply modifications to 
determine the actual content of a resulting modified contract.
    The objective of the rule is to provide a set of rules to the 
contracting officer to resolve any potential conflicts from multiple 
modifications with the same effective date.
    There were no public comments in response to the initial regulatory 
flexibility analysis.
    DoD received no comments by the Chief Counsel for Advocacy of the 
Small Business Administration in response to the proposed rule.
    The changes required to the DFARS by this case only affect the 
internal operating processes of DoD by establishing an order of 
application for contract modifications. These changes are not expected 
to have an economic impact on contractors.
    This rule does not impose any new reporting or recordkeeping 
requirements.
    The alternative to this rule is to continue relying on DFARS 
subpart 204.70, which prescribes numbering procedures for contract 
modifications, and FAR subpart 43.1, which provides guidelines for 
determining the effective date. However, the cited text does not 
provide a clear structured path to ensure no ambiguity arises when 
determining in what order to apply modifications.

[[Page 30368]]

There is no significant economic impact on small entities.

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).

List of Subjects in 48 CFR Parts 204 and 243

    Government procurement.

Mary Overstreet,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 204 and 243 are amended as follows:

PART 204--ADMINISTRATIVE MATTERS

0
1. The authority citation for 48 CFR part 204 continues to read as 
follows:

    Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.

0
2. Section 204.7007 is added to read as follows:


204.7007  Order of application for modifications.

    (a) Circumstances may exist in which the numeric order of the 
modifications to a contract is not the order in which the changes to 
the contract actually take effect.
    (b) In order to determine the sequence of modifications to a 
contract or order, the modifications will be applied in the following 
order:
    (1) Modifications will be applied in order of the effective date on 
the modification;
    (2) In the event of two or more modifications with the same 
effective date, modifications will be applied in signature date order;
    (3) In the event of two or more modifications with the same 
effective date and the same signature date, procuring contracting 
office modifications will be applied in numeric order, followed by 
contract administration office modifications in numeric order.

PART 243--CONTRACT MODIFICATIONS

0
3. The authority citation for 48 CFR part 243 is revised to read as 
follows:

    Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.

0
4. Section 243.172 is added to read as follows:


243.172  Application of modifications.

    Follow the procedures in 204.7007 for determining the sequence for 
application of modifications to a contract or order.

[FR Doc. 2012-11563 Filed 5-21-12; 8:45 am]
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