[Federal Register Volume 81, Number 126 (Thursday, June 30, 2016)]
[Rules and Regulations]
[Pages 42557-42559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-15256]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 212 and 252
[Docket DARS-2016-0015]
RIN 0750-AI93
Defense Federal Acquisition Regulation Supplement: Pilot Program
on Acquisition of Military Purpose Nondevelopmental Items (DFARS Case
2016-D014)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Interim rule.
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SUMMARY: DoD is issuing an interim rule amending the Defense Federal
Acquisition Regulation Supplement (DFARS) to implement a section of the
National Defense Authorization Act for Fiscal Year 2016 that changes
the criteria for the pilot program on acquisition of military purpose
nondevelopmental items.
DATES: Effective June 30, 2016.
Comment date: Comments on the interim rule should be submitted in
writing to the address shown below on or before August 29, 2016 to be
considered in the formation of a final rule.
ADDRESSES: Submit comments identified by DFARS Case 2016-D014, using
any of the following methods:
[cir] Regulations.gov: http://www.regulations.gov. Submit comments
via the Federal eRulemaking portal by entering ``DFARS Case 2016-D014''
under the heading ``Enter keyword or ID'' and selecting ``Search.''
Select the link ``Submit a Comment'' that corresponds with ``DFARS Case
2016-D014.'' Follow the instructions provided at the ``Submit a
Comment'' screen. Please include your name, company name (if any), and
``DFARS Case 2016-D014'' on your attached document.
[cir] Email: [email protected]. Include DFARS Case 2016-D014 in
the subject line of the message.
[cir] Fax: 571-372-6094.
[cir] Mail: Defense Acquisition Regulations System, Attn: Mr.
Dustin Pitsch, 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: Mr. Dustin Pitsch, telephone 571-372-
6090.
SUPPLEMENTARY INFORMATION:
I. Background
This interim rule revises the DFARS to implement section 892 of the
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016
(Pub. L. 114-92). Section 892 amends section 866 of the NDAA for FY
2011 (Pub. L. 111-383) to modify the criteria for use of the pilot
program on acquisition of military purpose nondevelopmental items.
Section 892 removes the requirements under the program for the use of
competitive procedures and for awards to be made to nontraditional
defense contractors. Section 892 also increases the threshold for use
of the pilot program to contracts up to $100 million.
Section 866 was implemented in DFARS rule 2011-D034, Pilot Program
on Acquisition of Military Purpose Nondevelopmental Items (77 FR 2653),
which allowed for the creation of the pilot program to test whether the
streamlined procedures, similar to those available for commercial
items, can serve as an effective incentive for nontraditional defense
contractors to channel investment and innovation into areas that are
useful to DoD and provide items developed exclusively at private
expense to meet validated military requirements. The DFARS changes
proposed by this rule will allow for increased opportunities to utilize
the pilot program.
II. Discussion and Analysis
This rule amends DFARS subpart 212.71 by--
Deleting the term ``nontraditional defense contractor''
and the associated definition;
Removing the requirement that pilot program contracts be
awarded using competitive procedures;
Increasing the maximum contract award value threshold for
use of the pilot program from $53.5 million to $100 million; and
Revising the prescription for the provision at 252.212-
7002 for use only when the pilot program will be used.
Conforming changes are made to DFARS provision 252.212-7002, Pilot
Program for Acquisition of Military-Purpose Nondevelopmental Items, to
include removal of the requirement at paragraph (c) for offerors to
represent by submission of an offer that the firm is a nontraditional
contractor.
This rule also makes one editorial change to provide at DFARS
212.7101 the full text of the definitions of ``military-purpose
nondevelopmental items'' and ``nondevelopmental items.''
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-the-Shelf Items
DoD does not intend to apply the requirements of section 892 of the
NDAA for FY 2016 to contracts at or below the simplified acquisition
threshold (SAT) or for the acquisition of commercial items, including
commercially available off-the-shelf (COTS) items.
A. Applicability to Contracts at or Below the SAT
41 U.S.C. 1905 governs the applicability of laws to contracts or
subcontracts in amounts not greater than the simplified acquisition
threshold. It is intended to limit the applicability of laws to such
contracts or subcontracts. 41 U.S.C. 1905 provides that if a provision
of law contains criminal or civil penalties, or if the FAR Council
makes a written determination that it is not in the best interest of
the Federal Government to exempt contracts or subcontracts at or below
the SAT, the law will apply to them. The Director, Defense Procurement
and Acquisition Policy (DPAP), is the appropriate authority to make
comparable determinations for regulations to be published in the DFARS,
which is part of the FAR system of regulations. DoD
[[Page 42558]]
did not make that determination. Therefore, this rule does not apply
below the simplified acquisition threshold.
B. Applicability to Contracts for the Acquisition of Commercial Items,
Including COTS Items
41 U.S.C. 1906 governs the applicability of laws to contracts for
the acquisition of commercial items, and is intended to limit the
applicability of laws to contracts for the acquisition of commercial
items. 41 U.S.C. 1906 provides that if a provision of law contains
criminal or civil penalties, or if the FAR Council makes a written
determination that it is not in the best interest of the Federal
Government to exempt commercial item contracts, the provision of law
will apply to contracts for the acquisition of commercial items.
Likewise, 41 U.S.C. 1907 governs the applicability of laws to COTS
items, with the Administrator for Federal Procurement Policy the
decision authority to determine that it is in the best interest of the
Government to apply a provision of law to acquisitions of COTS items in
the FAR. The Director, DPAP, is the appropriate authority to make
comparable determinations for regulations to be published in the DFARS,
which is part of the FAR system of regulations. DoD did not make that
determination. While FAR part 12 commercial procedures may be used to
acquire military purpose nondevelopmental items under this pilot
program, the rule will not apply to the acquisition of commercial
items.
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
DoD does not expect this 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. However, an initial
regulatory flexibility analysis has been performed and is summarized as
follows:
This rule is necessary to implement section 892 of the National
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016.
The objective of the rule is to modify the criteria for the pilot
program at DFARS subpart 212.71, Pilot Program for the Acquisition of
Military Purpose Nondevelopmental Items, to increase the opportunities
for use of the program. The rule removes the criteria that contracts
must be awarded to ``nontraditional defense contractors'' and awards
must be made using competitive procedures. The rule also increases the
dollar threshold for the program to allow use on procurements up to
$100 million.
The changes to the pilot program will have a positive economic
impact on small businesses that did not meet the definition of
``nontraditional defense contractors'' and have developed products that
could be applied to a military purpose. According to data available in
the Federal Procurement Data System for FY 2015, 6,514 unique small
businesses were awarded a DoD contract in excess of the certified cost
and pricing threshold ($750,000) and therefore did not meet the
definition of ``nontraditional defense contractor.'' Prior to the
changes made by this rule these small businesses were not eligible for
an award under the pilot program. These small businesses will now be
able to participate in the pilot program if they are developing a
military purpose nondevelopmental item.
This rule does not impose any new reporting, recordkeeping or other
compliance requirements. The rule does not duplicate, overlap, or
conflict with any other Federal rules. No significant alternatives were
identified during the development of this rule.
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 2016-D014) in
correspondence.
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).
VII. Determination To Issue an Interim Rule
A determination has been made under the authority of the Secretary
of Defense that urgent and compelling reasons exist to promulgate this
interim rule without prior opportunity for public comment. This interim
rule implements section 892 of the NDAA for FY 2016 (Pub. L. 114-92),
which amended section 866 of the NDAA for FY 2011 (Pub. L. 111-383)
to--
Modify criteria for use of the pilot program in order to
increase opportunities for use;
Remove the requirements under the program to use
competitive procedures;
Remove requirements for awards to be made to
nontraditional defense contractors; and
Increase the threshold for use of the program to contracts
up to $100 million.
The purpose of the pilot program is to test whether the streamlined
procedures, similar to those available for commercial items, can serve
as an effective incentive for nontraditional defense contractors to
channel investment and innovation into areas that are useful to DoD and
provide items developed exclusively at private expense to meet
validated military requirements. This action is necessary because the
pilot program expires on December 31, 2019, and, in order to realize
any of the benefits from the statutory modifications made by this rule
prior to the expiration of the pilot program, the changes made by this
rule must take effect immediately. However, pursuant to 41 U.S.C. 1707
and FAR 1.501-3(b), DoD will consider public comments received in
response to this interim rule in the formation of the final rule.
List of Subjects in 48 CFR Parts 212 and 252
Government procurement.
Jennifer L. Hawes,
Editor, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 212 and 252 are amended as follows:
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1. The authority citation for 48 CFR parts 212 and 252 continues to
read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
[[Page 42559]]
PART 212--ACQUISITION OF COMMERCIAL ITEMS
212.7100 [Amended]
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2. Section 212.7100 is amended by removing ``(Pub. L. 111-383)'' and
adding ``(Pub. L. 111-383), as modified by section 892 of the National
Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92)'' in
its place.
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3. Section 212.7101 is revised to read as follows:
212.7101 Definitions.
As used in this subpart--
Military-purpose nondevelopmental item means a nondevelopmental
item that meets a validated military requirement, as determined in
writing by the responsible program manager, and has been developed
exclusively at private expense. An item shall not be considered to be
developed at private expense if development of the item was paid for in
whole or in part through--
(1) Independent research and development costs or bid and proposal
costs, per the definition in FAR 31.205-18, that have been reimbursed
directly or indirectly by a Federal agency or have been submitted to a
Federal agency for reimbursement; or
(2) Foreign government funding.
Nondevelopmental item is defined in FAR 2.101 and also includes
previously developed items of supply that require modifications other
than those customarily available in the commercial marketplace if such
modifications are consistent with the requirement at 212.7102-1(c)(1).
212.7102-1 [Amended]
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4. Amend section 212.7102-1 by--
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a. In the introductory text, removing ``The contracting officer may
enter into contracts with nontraditional defense contractors for'' and
adding ``The contracting officer may utilize this pilot program to
enter into contracts for'' in its place;
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b. Removing paragraph (a);
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c. Redesignating paragraphs (b) through (e) as paragraphs (a) through
(d), respectively;
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d. In the newly redesignated paragraph (b), removing ``$53.5 million''
and adding ``$100 million'' in its place; and
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e. In the newly redesignated paragraph (c)(2), removing ``(d)(1)'' and
adding ``(c)(1)'' in its place.
212.7103 [Amended]
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5. Amend 212.7103 by removing ``in all solicitations'' and adding ``in
solicitations'' in its place, and removing ``for this pilot program''
and adding ``and plan to use the pilot program'' in its place.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
252.212-7002 [Amended]
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6. Amend section 252.212-7002 by--
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a. Removing the clause date ``(JUN 2012)'' and adding ``(JUN 2016)'' in
its place;
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b. In paragraph (a)--
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i. For the definition of ``nondevelopmental item'', removing ``FAR
2.101 and for the purpose of this subpart also includes'' and adding
``FAR 2.101 and also includes'' in its place, and removing ``of DFARS
212.7102-2(d)(1)'' and adding ``at DFARS 212.7102-1(c)(1)'' in its
place; and
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ii. Removing the definition of ``nontraditional defense contractor'';
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c. In paragraph (b), removing ``Nondevelopmental Items,'' and adding
``Nondevelopmental Items, as modified by section 892 of the National
Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92),'' in
its place; and
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d. Removing paragraph (c).
[FR Doc. 2016-15256 Filed 6-29-16; 8:45 am]
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