[Federal Register Volume 80, Number 250 (Wednesday, December 30, 2015)]
[Proposed Rules]
[Pages 81499-81500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32873]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 217

[Docket DARS-2015-0067]
RIN 0750-AI80


Defense Federal Acquisition Regulation Supplement: Multiyear 
Contract Requirements (DFARS Case 2015-D009)

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

ACTION: Proposed rule.

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SUMMARY: DoD is proposing to amend the DFARS to implement a section of 
the National Defense Authorization Act for Fiscal Year (FY) 2015 and a 
section of the Department of Defense Appropriations Act for FY 2015, 
which address various requirements for multiyear contracts.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before February 29, 2016 to be considered 
in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2015-D009, using 
any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov. Submit comments 
via the Federal eRulemaking portal by entering ``DFARS Case 2014-D009'' 
under the heading ``Enter keyword or ID'' and selecting ``Search.'' 
Select the link ``Submit a Comment'' that corresponds with ``DFARS Case 
2014-D009.'' Follow the instructions provided at the ``Submit a 
Comment'' screen. Please include your name, company name (if any), and 
``DFARS Case 2015-D009'' on your attached document.
    [cir] Email: [email protected]. Include DFARS Case 2015-D009 in 
the subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. Tresa 
Sullivan, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 Defense Pentagon, 
Washington, DC 20301-3060.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To 
confirm receipt of your comment(s), please check www.regulations.gov, 
approximately two to three days after submission to verify posting 
(except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: Ms. Tresa Sullivan, telephone 571-372-
6176.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD is proposing to amend the DFARS to implement section 816 of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015 
(Pub. L. 113-291) and section 8010 of the Department of Defense 
Appropriations Act for FY 2015 (Division C, Title VII of Pub. L. 113-
235), which address various requirements for multiyear contracts.
    Section 816 of the NDAA amends subsection (i) of 10 U.S.C. 2306b to 
clarify that a multiyear contract may not be entered into for a defense 
acquisition program that has been specifically authorized by law to be 
carried out using multiyear authority unless the Secretary of Defense 
certifies in writing that certain conditions have been met not later 
than 30 days before award of the contract (10 U.S.C. 2306b(i)(3)).
    Section 8010 makes the following additional changes:
     A multiyear contract may not be terminated without 30-day 
prior notification to the congressional defense committees.
     A multiyear contract may not be entered into unless the 
head of the agency ensures that--
    [cir] Cancellation provisions in the contract do not include 
consideration of recurring manufacturing costs of the contractor 
associated with the production of unfunded units to be delivered under 
the contract;
    [cir] The contract provides that payments to the contractor under 
the contract shall not be made in advance of incurred costs on funded 
units; and
    [cir] The contract does not provide for a price adjustment based on 
a failure to award a follow-on contract.

II. Discussion and Analysis

    DoD is proposing to make the following changes to the DFARS:
     Amend 217.170(b) to change ``10 days before termination'' 
to ``30 days before termination'' and remove the references to 10 
U.S.C. 2306.
     Add the new section 8010 requirements for multiyear 
contracts to the list of requirements at 217.172(e).
     Clarify at 217.172(h) that the requirements are applicable 
to defense acquisition programs specifically authorized by law to be 
carried out using multiyear contract authority.
     Change 217.172(h)(2) to require the Secretary of Defense 
to certify to Congress by no later than ``30 days before entry'' into a 
contract, instead of no later than ``March 1 of the year in which the 
Secretary requests legislative authority to enter'' in such contract.
     Delete paragraph (7) at DFARS 217.172(h), which requires a 
notification to congressional defense committees 30 days prior to 
award, and redesignate paragraph (h)(8) as paragraph (7). Add to the 
newly redesignated paragraph (7), a reference to 10 U.S.C. 2306b(i)(4).
     Update cross references to 10 U.S.C. 2306b(i) throughout 
section 217.172.

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 does not expect this proposed rule to 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 this rule implements requirements for the head of agency, which 
are procedures internal to the Government. However, an initial 
regulatory flexibility analysis has been performed and is summarized as 
follows:
    The purpose of this proposed rule is to amend the Defense Federal 
Acquisition Regulation Supplement (DFARS) to require the head of agency 
to--
     Provide written notice to the congressional defense 
committees at least 30 days before termination of any multiyear 
contract;
     For defense acquisition programs specifically authorized 
by law to be carried out using multiyear authority, ensure the 
Secretary of Defense certifies to Congress certain conditions for the 
multiyear contract have been met no

[[Page 81500]]

later than 30 days before entry into the contract; and
     Ensure prior to award of a multiyear contract that--
    [cir] Cancellation provisions in the contract do not include 
consideration of recurring manufacturing costs associated with the 
production of unfunded units;
    [cir] The contract provides that payments to the contractor shall 
not be made in advance of incurred costs on funded units; and
    [cir] The contract does not provide for a price adjustment based on 
failure to award a follow-on contract.
    The objective of this rule is to implement section 816 of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015 and 
section 8010 of the Department of Defense Appropriations Act for FY 
2015, which address various requirements for multiyear contracts.
    The rule is not expected to impact small entities, because the rule 
applies to multiyear contract authorities for specific major defense 
acquisition programs for which small entities would not have the 
capacity or infrastructure to fulfill or sustain. Small entities may 
perform under multiyear contracts as subcontractors; however, the rule 
invokes requirements that apply at the prime contract level.
    This rule does not create any new reporting or recordkeeping 
requirements. The rule does not duplicate, overlap, or conflict with 
any other Federal rules. There are no known significant alternatives to 
the rule that will meet the requirements of the statute.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this rule in accordance 
with 5 U.S.C. 610. Interested parties must submit such comments 
separately and should cite 5 U.S.C. 610 (DFARS Case 2015-D009), in 
correspondence.

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 Part 217

    Government procurement.

Jennifer L. Hawes,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR part 217 is proposed to be amended as follows:

0
1. The authority citation for 48 CFR part 217 continues to read as 
follows:

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

PART 217--SPECIAL CONTRACTING METHODS


217.170  [Amended]

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2. Amend section 217.170 in paragraph (b) by--
0
a. Removing ``10 days'' and adding ``30 days'' in its place; and
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b. Removing ``10 U.S.C. 2306b(l)(6), 10 U.S.C. 2306c(d)(3),'';
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3. Amend section 217.172--
0
a. In paragraph (c), by removing ``10 U.S.C. 2306b(i)(3)'' and adding 
``10 U.S.C. 2306b(i)(1)'' in its place;
0
b. In paragraph (e)(1), by removing the word ``and'';
0
c. In paragraph (e)(2), by removing the period and adding a semicolon 
in its place; and
0
d. By adding paragraphs (e)(3), (4), and (5);
0
e. In paragraph (h) introductory text, by removing ``under the 
authority described in paragraph (b) of this section:'' and adding 
``for a defense acquisition program that has been specifically 
authorized by law to be carried out using multiyear contract 
authority:'' in its place;
0
f. In paragraph (h)(2) introductory text, by removing ``March 1 of the 
year in which the Secretary requests legislative authority to enter'' 
and adding ``30 days before entry'' in its place and by removing ``10 
U.S.C. 2306b(i)(1)(A) through (G)'' and adding ``10 U.S.C. 
2306b(i)(3)'' in its place;
0
g. In paragraph (h)(2)(i)--
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i. By adding ``-1'' after ``FAR 17.105'';
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ii. By adding a comma after ``(5)''; and
0
iii. By removing ``10 U.S.C. 2306b(i)(1)(A)'' and adding ``10 U.S.C. 
2306b(i)(3)(A)'' in its place;
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h. In paragraph (h)(2)(ii), by removing ``10 U.S.C. 2306b(i)(1)(B)'' 
and adding ``10 U.S.C. 2306b(i)(3)(B)'' in its place;
0
i. In paragraph (h)(2)(iii), by removing ``10 U.S.C. 2306b(i)(1)(C)'' 
and adding ``10 U.S.C. 2306b(i)(3)(C)'' in its place;
0
j. In paragraph (h)(2)(iv), by removing ``10 U.S.C. 2306b(i)(1)(D)'' 
and adding ``10 U.S.C. 2306b(i)(3)(D)'' in its place;
0
k. In paragraph (h)(2)(v), by removing ``10 U.S.C. 2306b(i)(1)(E)'' and 
adding ``10 U.S.C. 2306b(i)(3)(E)'' in its place;
0
l. In paragraph (h)(2)(vi), by removing ``10 U.S.C. 2306b(i)(1)(F)'' 
and adding ``10 U.S.C. 2306b(i)(3)(F)'' in its place;
0
m. In paragraph (h)(2)(vii), by removing ``10 U.S.C. 2306b(i)(1)(G)'' 
and adding ``10 U.S.C. 2306b(i)(3)(G)'' in its place;
0
n. In paragraph (h)(3), by removing ``10 U.S.C. 2306b(i)(4)(A)'' and 
adding ``10 U.S.C. 2306b(i)(5)(A)'' in its place;
0
o. In paragraph (h)(4), by removing ``10 U.S.C. 2306b(i)(4)(B)'' and 
adding ``10 U.S.C. 2306b(i)(5)(B)'' in its place;
0
p. In paragraph (h)(5), by removing ``10 U.S.C. 2306b(i)(5)'' and 
adding ``10 U.S.C. 2306b(i)(6)'' in its place;
0
q. In paragraph (h)(6), by removing ``10 U.S.C. 2306b(i)(6)'' and 
adding ``10 U.S.C. 2306b(i)(7)'' in its place;
0
r. Removing paragraph (h)(7);
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s. Redesignating paragraph (h)(8) as (h)(7); and
0
t. In newly redesignated paragraph (h)(7) introductory text, adding 
``(10 U.S.C. 2306b(i)(4))'' after ``law's specific savings 
requirement'' before the period.
    The additions read as follows:


217.172  Multiyear contracts for supplies.

* * * * *
    (e) * * *
    (3) Cancellation provisions in the contract do not include 
consideration of recurring manufacturing costs of the contractor 
associated with the production of unfunded units to be delivered under 
the contract;
    (4) The contract provides that payments to the contractor under the 
contract shall not be made in advance of incurred costs on funded 
units; and
    (5) The contract does not provide for a price adjustment based on a 
failure to award a follow-on contract (section 8008(a) of Pub. L. 105-
56 and similar sections in subsequent DoD appropriations acts).
* * * * *
[FR Doc. 2015-32873 Filed 12-29-15; 8:45 am]
 BILLING CODE 5001-06-P