[Federal Register Volume 81, Number 214 (Friday, November 4, 2016)]
[Proposed Rules]
[Pages 78014-78015]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26369]
Federal Register / Vol. 81, No. 214 / Friday, November 4, 2016 /
Proposed Rules
[[Page 78014]]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 215 and 252
[Docket DARS-2016-0004]
RIN 0750-AI84
Defense Federal Acquisition Regulation Supplement: Independent
Research and Development Expenses (DFARS Case 2016-D017)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Proposed rule.
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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to ensure that substantial future
independent research and development expenses, as a means to reduce
evaluated bid prices in competitive source selections, are evaluated in
a uniform way during competitive source selections.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before January 3, 2017, to be considered
in the formation of a final rule.
ADDRESSES: Submit comments identified by DFARS Case 2016-D017, using
any of the following methods:
[cir] Federal eRulemaking Portal: http://www.regulations.gov.
Search for ``DFARS Case 2016-D017.'' Select ``Comment Now'' and follow
the instructions provided to submit a comment. Please include ``DFARS
Case 2016-D017'' on any attached documents.
[cir] Email: [email protected]. Include DFARS Case 2016-D017 in
the subject line of the message.
[cir] Fax: 571-372-6094.
[cir] Mail: Defense Acquisition Regulations System, Attn: Mr. Mark
Gomersall, 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. Mark Gomersall, telephone 571-372-
6099.
SUPPLEMENTARY INFORMATION:
I. Background
As expressed in the ``Implementation Directive for Better Buying
Power 3.0--Achieving Dominant Capabilities through Technical Excellence
and Innovation,'' dated April 9, 2015, the Under Secretary of Defense
for Acquisition, Technology, and Logistics noted a concern when
``promised future IRAD [independent research and development]
expenditures are used to substantially reduce the bid price on
competitive procurements. In these cases, development price proposals
are reduced by using a separate source of government funding (allowable
IRAD overhead expenses spread across the total business) to gain a
price advantage in a specific competitive bid. This is not the intended
purpose of making IRAD an allowable cost.''
DoD published an advanced notice of proposed rulemaking (ANPR) in
the Federal Register at 81 FR 6488 on February 8, 2016, to seek
information to assist in the development of a revision to the DFARS to
ensure that substantial future independent research and development
(IR&D) expenses, used as a means to reduce evaluated bid prices, are
evaluated in a uniform way during competitive source selections. A
public meeting was held on March 3, 2016, to hear the views of
interested parties.
II. Discussion and Analysis
DoD is proposing to amend the DFARS to require contracting officers
to adjust the total evaluated price of major defense acquisition
programs and major automated information systems proposals, for
evaluation purposes only, to include the amount by which the offerors
propose that future independent research and development investments
reduce the price of the proposals.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-the-Shelf Items
This rule proposes to create a new clause: DFARS 252.215-70XX,
Notification of Inclusion of Evaluation Criteria for Reliance Upon
Future Government-Reimbursed Independent Research and Development
Investments. DoD plans not to apply this clause to contracts at or
below the simplified acquisition threshold or to commercial items,
including commercially available off-the-shelf 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 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 prepared
and is summarized as follows:
DoD is proposing to amend the DFARS to require contracting officers
to adjust the total evaluated price of major defense acquisition
programs and major automated information systems proposals, for
evaluation purposes only, to include the amount by which the offerors
propose that future independent research and development investments
reduce the price of the proposals.
The objective of this rule is to ensure that substantial future
independent research and development expenses, as a means to reduce
evaluated bid prices in competitive source selections, are evaluated in
a uniform way during competitive source selections.
The rule has limited application and will apply only to major
defense acquisition programs (as defined in 10 U.S.C. 2430) and major
automated information systems acquisitions (as defined in 10 U.S.C.
2445a). This rule should not impact small entities, since major defense
acquisition programs and major automated information systems
acquisition policies normally apply to large contractors, because the
cost, magnitude, and production requirements of such programs are
generally beyond the capability or capacity of small entities as prime
contractors.
There is no change to reporting and recordkeeping as a result of
this rule. The rule does not duplicate, overlap, or conflict with any
other Federal rules. There are no known significant alternative
approaches to the rule that would meet the requirements.
DoD invites comments from small business concerns and other
interested
[[Page 78015]]
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-D017), 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).
List of Subjects in 48 CFR Parts 215 and 252
Government procurement.
Jennifer L. Hawes,
Editor, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 215 and 252 are proposed to be amended as
follows:
0
1. The authority citation for 48 CFR parts 215 and 252 continues to
read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 215--CONTRACTING BY NEGOTIATION
0
2. In section 215.305, add paragraph (a)(1) to read as follows:
215.305 Proposal evaluation.
(a)(1) Cost or price evaluation. For major defense acquisition
programs and major automated information systems in a development
phase, when an offeror proposes a cost or price that is reduced due to
reliance upon future Government-reimbursed independent research and
development projects, the contracting officer shall, for evaluation
purposes only, adjust the total evaluated cost or price of the proposal
to include the amount by which such investments reduce the price of the
proposal.
* * * * *
0
3. Amend section 215.408 by--
0
a. Redesignating paragraphs (2) through (5) as paragraphs (3) through
(6), respectively; and
0
b. Adding a new paragraph (2) to read as follows:
215.408 Solicitation provisions and contract clauses.
* * * * *
(2) Use the provision at 252.215-70XX, Notification of Inclusion of
Evaluation Criteria for Reliance Upon Future Government-Reimbursed
Independent Research and Development Investments, in all competitive
solicitations for major defense acquisition programs (as defined in 10
U.S.C. 2430) and major automated information systems acquisitions (as
defined in 10 U.S.C. 2445a) in a development phase.
* * * * *
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
4. Add section 252.215-70XX to read as follows:
252.215-70XX Notification of Inclusion of Evaluation Criteria for
Reliance Upon Future Government-Reimbursed Independent Research and
Development Investments.
As prescribed in 215.408(2), use the following provision:
Notification of Inclusion of Evaluation Criteria for Reliance Upon
Future Government-Reimbursed Independent Research and Development
Investments (Date)
(a) This solicitation includes price evaluation criteria that
consider the Offeror's intended use of future Government-reimbursed
independent research and development (IR&D) projects if the Offeror
proposes a cost or price that is reduced due to reliance upon
expected future Government-reimbursed IR&D projects.
(b) If the Offeror, in the performance of any contract resulting
from this solicitation, intends to use IR&D to meet the contract
requirements, the Offeror's proposal shall include documentation in
its price proposal to support this proposed approach.
(c) For evaluation purposes only, the Contracting Officer will
adjust the Offeror's total evaluated cost or price to include the
amount that such future IR&D investments reduce the price of the
proposal.
(End of provision)
[FR Doc. 2016-26369 Filed 11-3-16; 8:45 am]
BILLING CODE 5001-06-P