[Federal Register Volume 81, Number 90 (Tuesday, May 10, 2016)]
[Rules and Regulations]
[Pages 28733-28735]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-10824]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 241

[Docket DARS-2015-0050]
RIN 0750-AI74


Defense Federal Acquisition Regulation Supplement: Contract Term 
Limit for Energy Savings Contracts (DFARS Case 2015-D018)

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 clarify the contract term 
for energy savings contracts awarded under 10 U.S.C. 2913.

DATES: Effective May 10, 2016.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, telephone 571-372-
6106.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD published a proposed rule in the Federal Register at 80 FR 
72675 on November 20, 2015, to clarify the contract term for contracts 
awarded under the statutory authority of 10 U.S.C. 2913. Ten 
respondents submitted public comments in response to the proposed rule.

[[Page 28734]]

II. Discussion and Analysis

    DoD reviewed the public comments in the development of the final 
rule. A discussion of the comments received and the changes made to the 
rule as a result of those comments follows:

A. Summary of Significant Changes From the Proposed Rule

    The final rule has been revised at DFARS 241.103(2) to provide that 
the contracting officer may enter into an energy savings contract under 
10 U.S.C. 2913 for a period not to exceed 25 years. This change to 
``energy savings contract'' from ``shared energy savings contract'' 
brings the term limit for all activities authorized by section 2913 
under the final rule.

B. Analysis of Public Comments

1. General Support for the Rule
    Comment: Several respondents expressed support for the changes in 
the proposed rule, indicating that the term limit of 25 years would 
promote the use of shared energy savings contracts, have a positive 
benefit on small businesses, facilitate greater partnerships between 
utilities and DoD customers, and increase competition. One respondent 
indicated that the term limit of 25 years would lead to several 
benefits including deeper retrofits, elimination of cream skimming, 
effectively leveraging private sector funding, and accomplishing the 
President's Performance Contracting Challenge goals.
    Response: Noted.
2. Clarification of the Contract Period
    Comment: One respondent requested clarification of the date that 
the contract period commences. The respondent stated that the rule 
would most effectively accomplish its goal of accommodating project 
financing needs if the contract period were tied to the payment term, 
and suggested that the rule be revised to state the following: ``The 
contracting officer may enter into a shared energy savings contract 
under 10 U.S.C. 2913 for a `payment term' not to exceed 25 years.''
    Response: Payment term is interpreted as the performance period of 
the contract, which is not to exceed 25 years. The contract period will 
include the entire performance period, including construction, if any.
3. Inclusion of Water-Related Projects
    Comment: One respondent expressed concern that the rule's failure 
to address water-related projects authorized by 10 U.S.C. 2866 would 
result in ambiguity and confusion with regard to the term limit for 
such contracts. The respondent suggested that the rule be revised to 
state the following: ``The contracting officer may enter into a 
contract under 10 U.S.C. 2913 or 10 U.S.C. 2866 for a period not to 
exceed 25 years.''
    Response: The recommendation is beyond the scope of the case.
4. Application of 10 U.S.C. 2913 to Agreements With Gas or Electric 
Utilities
    Comment: One respondent stated that 10 U.S.C. 2913 applies not only 
to shared energy savings contracts, but also to agreements with gas or 
electric companies, and recommended removing the reference to shared 
energy savings contracts.
    Response: The final rule has been revised at 241.103(2) to provide 
that the contracting officer may enter into an energy savings contract 
under 10 U.S.C. 2913 for a period not to exceed 25 years.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold and for Commercial Items, Including Commercially Available 
Off-the-Shelf Items

    This rule does not add any new provisions or clauses or impact any 
existing provisions or clauses.

IV. 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.

V. Regulatory Flexibility Act

    A final regulatory flexibility analysis (FRFA) has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
The FRFA is summarized as follows:
    This final rule amends the Defense Federal Acquisition Regulation 
Supplement (DFARS) to clarify the contract term for contracts awarded 
under the statutory authority of 10 U.S.C. 2913. Section 2913 requires 
DoD to develop a simplified method of contracting for shared energy 
savings contract services that will accelerate the use of such 
contracts. DoD is authorized by section 2913 to contract with utility 
service providers to implement energy conservation measures on military 
bases. Section 2913 does not indicate a term limit for contracts or 
activities executed under this authority, and this has created 
ambiguity and inconsistency throughout DoD on the term limit that is 
imposed on contracts awarded under the authority. Additionally, the 
ambiguity has resulted in a hesitation to enter shared energy savings 
contracts, contrary to the intent of section 2913.
    No comments were received from the public regarding the initial 
regulatory flexibility analysis.
    The rule is not anticipated to have a significant economic impact 
on small business entities. The number of contract awards made under 
the authority of 10 U.S.C. 2913 is not currently tracked by DoD's 
business systems. However, it is estimated that approximately 25 shared 
energy savings projects are initiated across DoD each year, with 
approximately 17 being awarded annually. It is believed that most 
awards are made to large utility providers, with generally 25% or more 
of the renovation and operations and maintenance work executed under 
the awards being subcontracted to local small business by the utility 
provider.
    This rule does not create any new reporting or recordkeeping 
requirements.
    There are no known significant alternatives to the rule.

VI. 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 241

    Government procurement.

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

    Therefore, 48 CFR part 241 is amended as follows:

PART 241--ACQUISITION OF UTILITY SERVICES

0
1. The authority citation for part 241 continues to read as follows:

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


0
2. Amend section 241.103 by--
0
a. Redesignating paragraphs (2) and (3) as paragraphs (3) and (4); and
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b. Adding a new paragraph (2).

[[Page 28735]]

    The addition reads as follows:


241.103  Statutory and delegated authority.

* * * * *
    (2) The contracting officer may enter into an energy savings 
contract under 10 U.S.C. 2913 for a period not to exceed 25 years.
* * * * *
[FR Doc. 2016-10824 Filed 5-9-16; 8:45 am]
BILLING CODE 5001-06-P