[Federal Register Volume 79, Number 60 (Friday, March 28, 2014)]
[Rules and Regulations]
[Pages 17448-17450]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-06735]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 246 and 252

RIN 0750-AH95


Defense Federal Acquisition Regulation Supplement: Clauses With 
Alternates--Quality Assurance (DFARS Case 2013-D004)

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 create an overarching 
prescription for a quality assurance-related clause with two 
alternates. The rule also includes separate prescriptions for the basic 
and alternate clauses and includes the full text of each alternate.

DATES: Effective March 28, 2014.

FOR FURTHER INFORMATION CONTACT: Ms. Annette Gray, telephone 571-372-
6093.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD published a proposed rule in the Federal Register at 78 FR 
48407 on August 8, 2013, to revise the presentation of the DFARS part 
246 clause with alternates and their prescriptions.

II. Discussion

    This final rule addresses the single DFARS part 246 clause that has 
alternates. The affected clause is 252.246-7001, Warranty of Data, with 
two alternates. The naming convention results in new clause titles: 
Warranty of Data--Basic, Warranty of Data--Alternate I, and Warranty of 
Data--Alternate II.
    No public comments were submitted in response to the proposed rule. 
Minor editorial changes were made in the final rule to standardize 
language used for the clause prescriptions and prefaces to provide 
uniform arrangement in the regulations.

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

    A final regulatory flexibility analysis has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., 
and is summarized as follows.
    This final rule amends the Defense Federal Acquisition Regulation 
Supplement (DFARS) to (1) create an umbrella prescription for the 
elements common to the basic clause and both alternates, (2) create a 
specific prescription for the basic clause and each alternate clause 
that address only the requirements for their use of the alternate so 
that it is clear which is appropriate in a specific procurement, and 
(3) include the full text of the clause alternate. The inclusion of the 
full text of the alternate clause makes the terms clearer to offerors, 
and contractors, as well as to DoD contracting officers. The 
prescriptions are not revised in any way to change when the clause is 
applicable to offerors, contractors, or subcontractors.
    No comments were received from the public in response to the 
initial regulatory flexibility analysis. The Chief Counsel for Advocacy 
of the Small Business Administration did not submit any comments in 
response to the rule.
    Potential offerors, including small businesses, may be affected by 
this rule by seeing an unfamiliar format for clause alternates in 
solicitations and contracts issued by DoD contracting activities. 
According to the Federal Procurement Data System, in Fiscal Year 2012, 
DoD made approximately 270,000 contract awards (not including 
modification and orders) that exceeded the micro-purchase threshold, of 
which approximately 180,000 (67%) were awarded to small businesses. It 
is unknown how many of these contracts were awarded that included an 
alternate to a DFARS provision or clause. Nothing substantive will 
change in solicitations or contracts for potential offerors, and only 
the appearance of how clause alternates are presented in the 
solicitations and contracts will be changed. This rule may result in 
potential offerors, including small businesses, expending more time to 
become familiar with and to understand the new format of the clause 
alternates in full text contained in contracts issued

[[Page 17449]]

by any DoD contracting activity. The rule also anticipates saving 
contractors time by making all paragraph substitutions from the basic 
version of the clause, and not requiring the contractors to read 
inapplicable paragraphs contained in the basic version of the clause 
where alternates are also included in the solicitations and contracts. 
The overall burden caused by this rule is expected to be negligible and 
will not be any greater on small businesses than it is on large 
businesses.
    This rule does not add any new information collection requirements. 
No alternatives were identified that will accomplish the objectives of 
the rule. This rule should not result in any 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 246 and 252

    Government procurement.

Manuel Quinones,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 246 and 252 are amended as follows:

0
1. The authority citation for 48 CFR parts 246 and 252 continues to 
read as follows:

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

PART 246--QUALITY ASSURANCE

0
2. Amend section 246.710 by--
0
a. Removing paragraphs (2) and (3);
0
b. Redesignating paragraphs (4) and (5) as paragraphs (2) and (3), 
respectively; and
0
c. Revising paragraph (1) to read as follows:


246.710  Contract clauses.

    (1) Use a clause substantially the same as the basic or one of the 
alternates of the clause at 252.246-7001, Warranty of Data, in 
solicitations and contracts that include the clause at 252.227-7013, 
Rights in Technical Data and Computer Software, when there is a need 
for greater protection or period of liability than provided by the 
inspection and warranty clauses prescribed in FAR part 46.
    (i) Use the basic clause in solicitations and contracts that are 
not firm-fixed price or fixed-price incentive.
    (ii) Use alternate in fixed-price-incentive solicitations and 
contracts.
    (iii) Use alternate II in firm-fixed-price solicitations and 
contracts.
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
3. Amend section 252.246-7001 by--
0
a. Revising the introductory text, clause title and date; and
0
b. Revising Alternate I and Alternate II.
    Revised text reads as follows:


252.246-7001  Warranty of data.

    As prescribed in 246.710(1), use one of the following clauses:
    Basic. As prescribed at 246.710(1)(i), use the following clause.

WARRANTY OF DATA--BASIC (MAR 2014)

* * * * *
    Alternate I. As prescribed in 246.710(1)(ii), use the following 
clause, which uses a different paragraph (d)(3) than the basic 
clause.

WARRANTY OF DATA--ALTERNATE I (MAR 2014)

    (a) Definition. Technical data has the same meaning as given in 
the clause in this contract entitled ``Rights in Technical Data and 
Computer Software.''
    (b) Warranty. Notwithstanding inspection and acceptance by the 
Government of technical data furnished under this contract, and 
notwithstanding any provision of this contract concerning the 
conclusiveness of acceptance, the Contractor warrants that all 
technical data delivered under this contract will at the time of 
delivery conform with the specifications and all other requirements 
of this contract. The warranty period shall extend for three years 
after completion of the delivery of the line item of data (as 
identified in DD Form 1423, Contract Data Requirements List) of 
which the data forms a part; or any longer period specified in the 
contract.
    (c) Contractor Notification. The Contractor agrees to notify the 
Contracting Officer in writing immediately of any breach of the 
above warranty which the Contractor discovers within the warranty 
period.
    (d) Remedies. The following remedies shall apply to all breaches 
of the warranty, whether the Contractor notifies the Contracting 
Officer in accordance with paragraph (c) of this clause or if the 
Government notifies the Contractor of the breach in writing within 
the warranty period:
    (1) Within a reasonable time after such notification, the 
Contracting Officer may--
    (i) By written notice, direct the Contractor to correct or 
replace at the Contractor's expense the nonconforming technical data 
promptly; or
    (ii) If the Contracting Officer determines that the Government 
no longer has a requirement for correction or replacement of the 
data, or that the data can be more reasonably corrected by the 
Government, inform the Contractor by written notice that the 
Government elects a price or fee adjustment instead of correction or 
replacement.
    (2) If the Contractor refuses or fails to comply with a 
direction under paragraph (d)(1)(i) of this clause, the Contracting 
Officer may, within a reasonable time of the refusal or failure--
    (i) By contract or otherwise, correct or replace the 
nonconforming technical data and charge the cost to the Contractor; 
or
    (ii) Elect a price or fee adjustment instead of correction or 
replacement.]
    (3) In addition to the remedies under paragraphs (d)(1) and (2) 
of this clause, the Contractor shall be liable to the Government for 
all damages to the Government as a result of the breach of warranty.
    (i) The additional liability under paragraph (d)(3) of this 
clause shall not exceed 75 percent of the target profit.
    (ii) If the breach of the warranty is with respect to the data 
supplied by an equipment subcontractor, the limit of the 
Contractor's liability shall be--
    (A) Ten percent of the total subcontract price in a firm-fixed-
price subcontract;
    (B) Seventy-five percent of the total subcontract fee in a cost-
plus-fixed-fee or cost-plus-award-fee subcontract; or
    (C) Seventy-five percent of the total subcontract target profit 
or fee in a fixed-price-incentive or cost-plus-incentive 
subcontract.
    (iii) Damages due the Government under the provisions of this 
warranty are not an allowable cost.
    (iv) The additional liability in paragraph (d)(3) of this clause 
shall not apply--
    (A) With respect to the requirements for product drawings and 
associated lists, special inspection equipment (SIE) drawings and 
associated lists, special tooling drawings and associated lists, SIE 
operating instructions, SIE descriptive documentation, and SIE 
calibration procedures under MIL-T-31000, General Specification for 
Technical Data Packages, Amendment 1, or MIL-T-47500, General 
Specification for Technical Data Packages, Supp 1, or drawings and 
associated lists under level 2 or level 3 of MIL-D-1000A, 
Engineering and Associated Data Drawings, or DoD-D-1000B, 
Engineering and Associated Lists Drawings (Inactive for New Design) 
Amendment 4, Notice 1; or drawings and associated lists under 
category E or I of MIL-D-1000, Engineering and Associated Lists 
Drawings, provided that the data furnished by the Contractor was 
current, accurate at time of submission, and did not involve a 
significant omission of data necessary to comply with the 
requirements; or
    (B) To defects the Contractor discovers and gives written notice 
to the Government before the Government discovers the error.
    (e) The provisions of this clause apply anew to that portion of 
any corrected or replaced technical data furnished to the Government 
under paragraph (d)(1)(i) of this clause.


(End of clause)

[[Page 17450]]

    Alternate II. As prescribed at 246.710(1)(iii), use the following 
clause, which uses a different paragraph (d)(3) than the basic clause.

WARRANTY OF DATA--ALTERNATE II (MAR 2014)

    (a) Definition. Technical data has the same meaning as given in 
the clause in this contract entitled ``Rights in Technical Data and 
Computer Software.''
    (b) Warranty. Notwithstanding inspection and acceptance by the 
Government of technical data furnished under this contract, and 
notwithstanding any provision of this contract concerning the 
conclusiveness of acceptance, the Contractor warrants that all 
technical data delivered under this contract will at the time of 
delivery conform with the specifications and all other requirements 
of this contract. The warranty period shall extend for three years 
after completion of the delivery of the line item of data (as 
identified in DD Form 1423, Contract Data Requirements List) of 
which the data forms a part; or any longer period specified in the 
contract.
    (c) Contractor Notification. The Contractor agrees to notify the 
Contracting Officer in writing immediately of any breach of the 
above warranty which the Contractor discovers within the warranty 
period.
    (d) Remedies. The following remedies shall apply to all breaches 
of the warranty, whether the Contractor notifies the Contracting 
Officer in accordance with paragraph (c) of this clause or if the 
Government notifies the Contractor of the breach in writing within 
the warranty period:
    (1) Within a reasonable time after such notification, the 
Contracting Officer may--
    (i) By written notice, direct the Contractor to correct or 
replace at the Contractor's expense the nonconforming technical data 
promptly; or
    (ii) If the Contracting Officer determines that the Government 
no longer has a requirement for correction or replacement of the 
data, or that the data can be more reasonably corrected by the 
Government, inform the Contractor by written notice that the 
Government elects a price or fee adjustment instead of correction or 
replacement.
    (2) If the Contractor refuses or fails to comply with a 
direction under paragraph (d)(1)(i) of this clause, the Contracting 
Officer may, within a reasonable time of the refusal or failure--
    (i) By contract or otherwise, correct or replace the 
nonconforming technical data and charge the cost to the Contractor; 
or
    (ii) Elect a price or fee adjustment instead of correction or 
replacement.
    (3) In addition to the remedies under paragraphs (d)(1) and (2) 
of this clause, the Contractor shall be liable to the Government for 
all damages to the Government as a result of the breach of the 
warranty.
    (i) The additional liability under paragraph (d)(3) of this 
clause shall not exceed ten percent of the total contract price.
    (ii) If the breach of the warranty is with respect to the data 
supplied by an equipment subcontractor, the limit of the 
Contractor's liability shall be--
    (A) Ten percent of the total subcontract price in a firm[-
]fixed[-]price subcontract;
    (B) Seventy-five percent of the total subcontract fee in a cost-
plus-fixed-fee or cost-plus-award-fee subcontract; or
    (C) Seventy-five percent of the total subcontract target profit 
or fee in a fixed-price-incentive or cost-plus-incentive 
subcontract.
    (iii) The additional liability specified in paragraph (d)(3) of 
this clause shall not apply--
    (A) With respect to the requirements for product drawings and 
associated lists, special inspection equipment (SIE) drawings and 
associated lists, special tooling drawings and associated lists, SIE 
operating instructions, SIE descriptive documentation, and SIE 
calibration procedures under MIL-T-31000, General Specification for 
Technical Data Packages, Amendment 1, or MIL-T-47500, General 
Specification for Technical Data Packages, Supp 1, or drawings and 
associated lists under level 2 or level 3 of MIL-D-1000A, 
Engineering and Associated Data Drawings, or DoD-D-1000B, 
Engineering and Associated Lists Drawings (Inactive for New Design) 
Amendment 4, Notice 1; or drawings and associated lists under 
category E or I of MIL-D-1000, Engineering and Associated Lists 
Drawings, provided that the data furnished by the Contractor was 
current, accurate at time of submission, and did not involve a 
significant omission of data necessary to comply with the 
requirements; or
    (B) To defects the Contractor discovers and gives written notice 
to the Government before the Government discovers the error.
    (e) The provisions of this clause apply anew to that portion of 
any corrected or replaced technical data furnished to the Government 
under paragraph (d)(1)(i) of this clause.


(End of clause)


252.246-7002   [Amended]

0
4. Amend section 252.246-7002 introductory text by removing 
``246.710(4)'' and adding ``246.710(2)'' in its place.


252.246-7005  [Amended]

0
5. Amend section 252.246-7005 introductory text by removing 
``246.710(5)(i)(A)'' and adding ``246.710(3)(i)(A)'' in its place.


252.246-7006  [Amended]

0
6. Amend section 252.246-7006 introductory text by removing 
``246.710(5)(i)(B)'' and adding ``246.710(3)(i)(B)'' in its place.

[FR Doc. 2014-06735 Filed 3-27-14; 8:45 am]
BILLING CODE 5001-06-P