[Federal Register Volume 81, Number 185 (Friday, September 23, 2016)]
[Rules and Regulations]
[Pages 65563-65565]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22569]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 216 and 236
[Docket DARS-2016-0006]
RIN 0750-AI87
Defense Federal Acquisition Regulation Supplement: Prohibition on
Use of Any Cost-Plus System of Contracting for Military Construction
and Military Family Housing Projects (DFARS Case 2015-D040)
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 implement a section of the
National Defense Authorization Act for Fiscal Year 2012 that amended
title 10 of the United States Code by prohibiting any form of cost-plus
contracting for military construction projects or military family
housing projects.
DATES: Effective September 23, 2016.
FOR FURTHER INFORMATION CONTACT: Mr. Tom Ruckdaschel, telephone 571-
372-6088.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published a proposed rule in the Federal Register at 81 FR
17050 on March 25, 2016. This final rule implements section 2801 of the
National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112-
81). Section 2801 amends 10 U.S.C. 2306 by prohibiting any form of
cost-plus contracting for military construction projects or military
family housing projects. Three respondents submitted public comments in
response to the proposed rule.
II. Discussion and Analysis
DoD reviewed the public comments in the development of the final
rule. A discussion of the comments and the changes made to the rule as
a result of those comments is provided, as follows:
A. Summary of Significant Changes from the Proposed Rule
There are minor changes to the DFARS text from the proposed rule
[[Page 65564]]
based on the public comments. A list of the specific cost-reimbursement
contract types prohibited has been included at DFARS 216.301-3,
Limitations. At DFARS 236.215 the terminology was expanded to state
``contracts in connection with a military construction project or
military family housing project'' in lieu of ``contracts for
construction.'' Additionally, at DFARS 236.271, the reference to
236.271 to the prohibition on use of ``cost-plus'' contracts was
revised to refer to ``cost-reimbursement'' contracts.
B. Analysis of Public Comments
1. Support for the Rule
Comment: One respondent expressed support for the proposed rule,
indicating that a blanket prohibition on cost-plus contracting in
military construction and family housing projects is in the best
interest of all parties, including small businesses and taxpayers.
Response: Noted.
2. Opposition to the Rule
Comment: One respondent opposed a blanket prohibition of cost-plus
contracts stating that the rule excludes advances and innovations in
the marketplace by prohibiting the selection of this form of
contracting for construction projects.
Response: DoD does not have discretion in this rule as the
prohibition is statutory and required by 10 U.S.C. 2306(c).
3. Term ``Cost-plus Contract''
Comment: One respondent expressed concern that the term ``cost-plus
contract,'' as used in the proposed rule is nonstandard within title 48
of the Code of Federal Regulation, and as such should be further
defined.
Response: In the context of the proposed DFARS revisions, ``cost-
plus'' was interpreted as meaning those ``cost-reimbursement'' contract
types defined in Federal Acquisition Regulation 16.304, 16.305, and
16.306. Further delineation, however, is added to DFARS 216.301-3 to
list the specific contract types prohibited: Cost-plus-fixed-fee, cost-
plus-award-fee, and cost-plus-incentive-fee. Additionally, the
reference in DFARS 236.271 to use of any cost-plus contract is revised
to refer to the list of cost-reimbursement contracts at DFARS 216.301-
3.
4. Cross Reference to Statute
Comment: One respondent proposed that DoD remove the cross
reference to 10 U.S.C. 2306(c) as the prohibition should remain
notwithstanding any future changes that might be made to 10 U.S.C.
2306(c).
Response: It is a DFARS drafting convention to indicate in the
regulations if they are based on a statute. This is helpful when
considering future amendments to, or deviations from, the regulations.
If the statute changes, appropriate changes to the regulations may be
required.
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.
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:
The purpose of this rule is to amend the Defense Federal
Acquisition Regulation Supplement (DFARS) to implement section 2801 of
the National Defense Authorization Act for Fiscal Year 2012, which
amends 10 U.S.C. 2306, to prohibit any form of cost-plus contracting
for military construction projects or military family housing projects.
No comments were received from the public regarding the initial
regulatory flexibility analysis.
There is minimal impact anticipated on small entities as a result
of the proposed rule. Based on data available in the Federal
Procurement Data System, there were only 19 cost-reimbursement type
construction contracts awarded in fiscal year 2015, two of which were
awarded to small businesses. There is already a general prohibition at
DFARS 216.306 on certain cost-plus-fixed-fee contracts funded by a
military construction appropriations act. The proposed rule expands
this prohibition to all cost-plus contract types in connection with a
military construction project or a military family housing project.
There are no new projected reporting, recordkeeping, and other
compliance requirements of the rule.
There are no known significant alternatives to the rule that would
meet the requirements of the statute.
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 Parts 216 and 236
Government procurement.
Jennifer L. Hawes,
Editor, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 216 and 236 are amended as follows:
0
1. The authority citation for 48 CFR parts 216 and 236 continues to
read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 216--TYPES OF CONTRACTS
0
2. Add section 216.301-3 to read as follows:
216.301-3 Limitations.
For contracts in connection with a military construction project or
a military family housing project, contracting officers shall not use
cost-plus-fixed-fee, cost-plus-award-fee, or cost-plus-incentive-fee
contract types (10 U.S.C. 2306(c)). This applies notwithstanding a
declaration of war or the declaration by the President of a national
emergency under section 201 of the National Emergencies Act (50 U.S.C.
1621) that includes the use of the Armed Forces.
0
3. Amend section 216.306 by adding introductory text to paragraph (c)
to read as follows:
216.306 Cost-plus-fixed-fee contracts.
(c) Limitations. For contracts in connection with a military
construction project or military family housing project, see the
prohibition at 216.301-3.
* * * * *
PART 236--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS
0
4. Add section 236.215 to read as follows:
[[Page 65565]]
236.215 Special procedures for cost-reimbursement contracts for
construction.
For contracts in connection with a military construction project or
military family housing project, see the prohibition at 216.301-3.
0
5. Revise section 236.271 to read as follows:
236.271 Cost-plus-fixed-fee contracts.
Annual military construction appropriations acts restrict the use
of cost-plus-fixed-fee contracts (see 216.306(c)). See also 216.301-3
regarding the prohibition on the use of certain cost-reimbursement
contracts in connection with a military construction project or
military family housing project.
[FR Doc. 2016-22569 Filed 9-22-16; 8:45 am]
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