[Federal Register Volume 81, Number 168 (Tuesday, August 30, 2016)]
[Proposed Rules]
[Pages 59594-59596]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20477]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 215, 219, and 235

[Docket DARS-2016-0030]
RIN 0750-AJ03


Defense Federal Acquisition Regulation Supplement: Pilot Program 
for Streamlining Awards for Innovative Technology Projects (DFARS Case 
2016-D016)

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

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to implement a section of the National 
Defense Authorization Act for Fiscal Year 2016 that provides exceptions 
from the certified cost and pricing data requirements and from the 
records examination requirement for certain awards to small businesses 
or nontraditional defense contractors.

DATES: Comments on the proposed rule should be submitted in writing to 
the

[[Page 59595]]

address shown below on or before October 31, 2016, to be considered in 
the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2016-D016, 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-D016'' 
under the heading ``Enter keyword or ID'' and selecting ``Search.'' 
Select the link ``Submit a Comment'' that corresponds with ``DFARS Case 
2016-D016.'' Follow the instructions provided at the ``Submit a 
Comment'' screen. Please include your name, company name (if any), and 
``DFARS Case 2016-D016'' on your attached document.
    [cir] Email: [email protected]. Include DFARS Case 2016-D016 in 
the subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. 
Jennifer D. Johnson, 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. Jennifer D. Johnson, telephone 
571-372-6100.

SUPPLEMENTARY INFORMATION: 

I. Background

    This rule proposes to revise the DFARS to implement section 873 of 
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016 
(Pub. L. 114-92). Section 873 provides an exception from certified cost 
and pricing data requirements for contracts, subcontracts, or 
modifications of contracts or subcontracts valued at less than $7.5 
million awarded to a small business or nontraditional defense 
contractor pursuant to a technical, merit-based selection procedure 
(e.g., broad agency announcement) or the Small Business Innovation 
Research (SBIR) Program. Section 873 provides authority to determine 
that submission of cost and pricing data should be required based on 
past performance of the specific small business or nontraditional 
defense contractor or analysis of other information specific to the 
award. Section 873 also provides an exception from the records 
examination requirement at 10 U.S.C. 2313 for contracts valued at less 
than $7.5 million awarded to a small business or nontraditional defense 
contractor pursuant to a technical, merit-based selection procedure 
(e.g., broad agency announcement) or the SBIR Program. Section 873 
provides authority to determine that auditing of records should be 
required based on past performance of the specific small business or 
nontraditional defense contractor or analysis of other information 
specific to the award. These exceptions end on October 1, 2020.

II. Discussion and Analysis

    This rule proposes amendments to DFARS subpart 215.4, subpart 
219.2, and part 235 as summarized in the following paragraphs:
    A. Subpart 215.4, Contract Pricing.
     215.401, Definitions. This section is added to provide a 
definition of ``nontraditional defense contractor,'' consistent with 
section 873 of the NDAA for FY 2016.
     215.403-1, Prohibition on Obtaining Certified cost or 
Pricing Data. This section is amended to add text implementing the 
exception in section 873 from certified cost or pricing data 
requirements.
     215.404-2, Data to Support Proposal Analysis. This section 
is amended to add text implementing the exception in section 873 from 
the records examination requirement.
    B. Subpart 219.2, Policies. At section 219.202, Specific Policies, 
introductory text is added to provide a cross reference to refer 
contracting officers to the new text in DFARS 215.403-1 and 215.404-2.
    C. Part 235, Research and Development Contracting. Section 235.016, 
Broad Agency Announcement, is added to refer contracting officers to 
the new text in subpart 215.4.

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. 
However, an initial regulatory flexibility analysis has been performed 
and is summarized as follows:
    This rule proposes to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to implement section 873 of the National 
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016 (Pub. L. 
114-92). Section 873 provides an exception from certified cost and 
pricing data requirements for contracts, subcontracts, or modifications 
of contracts or subcontracts valued at less than $7.5 million awarded 
to a small business or nontraditional defense contractor pursuant to a 
technical, merit-based selection procedure (e.g., broad agency 
announcement) or the Small Business Innovation Research Program. 
Section 873 provides authority to determine that submission of cost and 
pricing data should be required based on past performance of the 
specific small business or nontraditional defense contractor or 
analysis of other information specific to the award. Section 873 also 
provides an exception from the records examination requirement at 10 
U.S.C. 2313 for contracts valued at less than $7.5 million awarded to a 
small business or nontraditional defense contractor pursuant to a 
technical, merit-based selection procedure (e.g., broad agency 
announcement) or the Small Business Innovation Research Program. 
Section 873 provides authority to determine that auditing of records 
should be required based on past performance of the specific small 
business or nontraditional defense contractor or analysis of other 
information specific to the award. These exceptions end on October 1, 
2020.
    The objectives of this rule are to implement statutory exceptions 
from certified cost and pricing data requirements and from the records 
examination requirement, thereby streamlining awards for innovative 
technology projects to small businesses and nontraditional defense 
contractors. The legal basis for the rule is section 873 of the NDAA 
for FY 2016.
    The rule will apply to small entities who receive awards pursuant 
to a broad agency announcement or the Small Business Innovation 
Research Program. DoD has awarded such contracts valued at less than 
$7.5 million to approximately 1,120 unique small

[[Page 59596]]

entities per year during the last three years.
    This proposed rule does not include any new reporting, 
recordkeeping, or other compliance requirements for small businesses. 
The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    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-D016), 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 Parts 215, 219, and 235

    Government procurement.

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

    Therefore, 48 CFR parts 215, 219, and 235 are proposed to be 
amended as follows:

0
1. The authority citation for 48 CFR parts 215, 219, and 235 continues 
to read as follows:

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

PART 215--CONTRACTING BY NEGOTIATION

0
2. Add section 215.401 to read as follows:


215.401  Definitions.

    Nontraditional defense contractor, as used in this subpart, means 
an entity that is not currently performing and has not performed any 
contract or subcontract for DoD that is subject to full coverage under 
the cost accounting standards prescribed pursuant to 41 U.S.C. 1502 and 
the regulations implementing such section, for at least the 1-year 
period preceding the solicitation of sources by DoD for the procurement 
(10 U.S.C. 2302(9)).
0
3. Revise section 215.403-1(b) to read as follows:


215.403-1  Prohibition on obtaining certified cost or pricing data (10 
U.S.C. 2306a and 41 U.S.C. chapter 35).

    (b) Exceptions to certified cost or pricing data requirements. (i) 
Follow the procedures at PGI 215.403-1(b).
    (ii)(A) Until October 1, 2020, except as provided in paragraph 
(b)(ii)(B) of this section, the requirement to submit certified cost or 
pricing data shall not apply to contracts, subcontracts, or 
modifications of contracts or subcontracts valued at less than $7.5 
million awarded to a small business concern or nontraditional defense 
contractor pursuant to--
    (1) A broad agency announcement containing technical, merit-based 
selection criteria (see FAR 35.016(b)(2)); or
    (2) The Small Business Innovation Research Program.
    (B) Notwithstanding the exception in paragraph (b)(ii)(A) of this 
section, the head of the contracting activity may determine that 
submission of certified cost or pricing data should be required based 
on past performance of the specific small business or nontraditional 
defense contractor, or based on analysis of other information specific 
to the award.
* * * * *
0
4. Revise section 215.404-2 to read as follows:


215.404-2  Data to support proposal analysis.

    (a)(i) Until October 1, 2020, except as provided in paragraph 
(a)(ii) of this section, the requirement for records examination under 
10 U.S.C. 2313(b) shall not apply to a contract valued at less than 
$7.5 million awarded to a small business concern or nontraditional 
defense contractor pursuant to--
    (A) A broad agency announcement containing technical, merit-based 
selection criteria (see FAR 35.016(b)(2)); or
    (B) The Small Business Innovation Research Program.
    (ii) Notwithstanding the exception in paragraph (a)(i) of this 
section, the head of the contracting activity may determine that 
auditing of records should be required based on past performance of the 
specific small business or nontraditional defense contractor, or based 
on analysis of other information specific to the award.
    (b) See PGI 215.404-2 for guidance on obtaining field pricing or 
audit assistance.

PART 219--SMALL BUSINESS PROGRAMS

0
5. Revise section 219.202 to read as follows:


219.202  Specific policies.

    See 215.403-1 and 215.404-2 when contemplating award of a contract, 
subcontract, or modification to a small business or nontraditional 
defense contractor, as defined in subpart 215.4.

PART 235--RESEARCH AND DEVELOPMENT CONTRACTING

0
6. Add section 235.016 to read as follows:


235.016  Broad agency announcement.

    See 215.403-1 and 215.404-2 when contemplating award of a contract, 
subcontract, or modification to a small business or nontraditional 
defense contractor, as defined in subpart 215.4.

[FR Doc. 2016-20477 Filed 8-29-16; 8:45 am]
 BILLING CODE 5001-06-P