[Federal Register Volume 81, Number 246 (Thursday, December 22, 2016)]
[Proposed Rules]
[Pages 93875-93878]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-30597]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 212, 213, 219, 237, and 252

[Docket DARS-2016-0034]
RIN 0750-AJ06


Defense Federal Acquisition Regulation Supplement: Competition 
for Religious-Related Services Contracts (DFARS Case 2016-D015)

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 implement a section of the National 
Defense Authorization Act that provides the competition requirements 
for religious-related services contracts on a U.S. military 
installation.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before February 21, 2017, to be 
considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2016-D015, using 
any of the following methods:
    [cir] Federal eRulemaking Portal: http://www.regulations.gov. 
Search for ``DFARS Case 2015-D015.'' Select ``Comment Now'' and follow 
the instructions provided to submit a comment. Please include ``DFARS 
Case 2015-D015'' on any attached documents.
    [cir] Email: [email protected]. Include DFARS Case 2016-D015 in 
the subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. Lee 
Renna, 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. Lee Renna, telephone 571-372-6095.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD is proposing to revise the DFARS to implement section 898 of 
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016 
(Pub. L. 114-92). Section 898 requires that DoD not preclude a 
nonprofit organization from competing for a contract for religious-
related services on a U.S. military installation. Religious-related 
services typically performed on U.S. military installations range from 
choir and pastoral services, to counseling of service members and their 
families to help them deal with the unique pressures and stresses 
associated with military service. The latter includes, but is not 
limited to, suicide prevention; coping with post-traumatic stress, 
depression, and sexual assault; providing marriage and family 
counseling; and providing religious and moral guidance. The Senate 
Committee Report 114-49 associated with the NDAA for FY 2016 made the 
following statement regarding the recommendation for a provision to 
ensure non-profit organizations can compete on contracts for such 
religious-related services:

    ``It has come to the committee's attention that the Department 
of Defense has at times restricted competition for religious 
services contracts on U.S. military installations to for-profit 
firms. The committee believes certain non-profit entities such as 
religious organizations can provide valuable competition and are 
well-qualified to participate in this particular category of 
services and should not be precluded from competing for these types 
of contracts.''

II. Discussion and Analysis

    The following changes to the DFARS are proposed to implement 
section 898

[[Page 93876]]

in a manner that minimizes the impact on small businesses:
     A new DFARS subpart 237.7X, Competition for Religious-
Related Services, is proposed to implement the requirements of section 
898 for the covered services. Specifically, this subpart establishes 
that a nonprofit organization may not be precluded from competing for 
contracts for religious-related services on a U.S. military 
installation. A cross-reference to DFARS 219.270 is also provided to 
direct contracting officers to guidance on the treatment of set-asides 
for small business concerns.
     A new DFARS section 219.270, Religious-Related Services--
Inclusion of Nonprofit Organizations, is proposed to clarify that when 
acquiring religious-related services on a U.S. military installation, 
nonprofit organizations may not be precluded from competing, even when 
a small business set-aside is used, and that none of the exceptions for 
other than full and open competition at FAR 6.302-5(b)(4) through (7) 
may be used for such procurements. These changes are necessary to 
ensure that contracting officers issue solicitations for the covered 
services on a competitive basis and are aware that set-asides may still 
be used, though offers from nonprofit organizations may be considered 
for award. In addition, this section clarifies that if an apparently 
successful offeror has not represented in its offer that it is a small 
business concern of a type that meets set-aside requirements of the 
solicitation, then the contracting officer shall verify that the 
offeror is registered in the System for Award Management (SAM) database 
as a nonprofit organization.
     A new provision is proposed at DFARS 252.219-70XX, 
Competition for Religious-Related Services, which is prescribed at 
DFARS 219.270 for use in solicitations for the acquisition of 
religious-related services on a U.S. military installation that will be 
set-aside for one of the small business programs identified at FAR 
19.000(a)(3). The solicitation not only provides notice to potential 
offerors that a nonprofit will not be precluded from competing for 
award, but also advises nonprofit organizations that the contracting 
officer will verify that it is registered as a nonprofit organization 
in SAM before considering it for award. Conforming changes are made to 
DFARS 212.301(f)(vii) to ensure the provision is also used in 
commercial acquisitions.
     Similar to the changes proposed at DFARS 219.270, a new 
paragraph (b) is proposed to be added to DFARS 213.7001 to direct 
contracting officers not to use the sole source authority at FAR 6.302-
5(b)(4) and not to exclude a nonprofit organizations from participating 
in competitive procurements under the 8(a) program.
     A definition of ``nonprofit organization'' is also 
provided where the term is used in the rule. The definition proposed in 
the rule is the same as the definition provided in FAR subpart 26.4 and 
the clause at 52.226-6, Promoting Excess Food Donations to Nonprofit 
Organizations. The definition also aligns with the description of a 
nonprofit organization provided in the SAM database.

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

    This rule implements section 898 of the National Defense 
Authorization Act (NDAA) for Fiscal Year (FY) 2016 (Pub. L. 114-92). 
Section 898 requires that DoD may not preclude a nonprofit organization 
from competing for a contract for religious-related services on a U.S. 
military installation. The rule creates one new provision, DFARS 
252.219-70XX, Competition for Religious-Related Services.

A. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT)

    41 U.S.C. 1905 governs the applicability of laws to contracts or 
subcontracts in amounts not greater than the SAT. 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 Federal Acquisition Regulation (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.

B. Applicability to Contracts for the Acquisition of Commercial Items, 
Including Commercially Available Off-the-Shelf (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.

C. Determination

    DoD is proposing to apply the requirements of section 898 to 
contracts at or below the SAT and contracts for the acquisition of 
commercial items, not including COTS items. Section 898 addresses 
competitive acquisitions for religious-related services to be performed 
on a U.S. military installation. It is in the best interest of the 
Federal Government to apply the rule to acquisitions not greater than 
the SAT and those for the acquisition of commercial items (excluding 
COTS items), because a portion of DoD's acquisitions for these types of 
services will result in the award of contracts at or below the SAT or 
for commercial items. An exception for contracts not greater than the 
SAT or for the acquisition of commercial items, would exclude contracts 
intended to be covered by the law, thereby undermining the overarching 
public policy purpose of the law. Since section 898 of the NDAA for FY 
2016 specifically focuses on the competitive acquisition of a service 
requirement, the changes contemplated by this rule are not applicable 
to contracts for COTS items. DoD will make the final determination with 
regard to application to acquisitions below the SAT and to those for 
commercial items after receipt and analysis of public comments.

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

[[Page 93877]]

and benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This is a significant regulatory action and, therefore, 
was 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 expects that this rule may 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. Therefore, an initial 
regulatory flexibility analysis has been prepared and is summarized as 
follows:
    The purpose of this proposed rule is to revise the Defense Federal 
Acquisition Regulation Supplement to implement policies and procedures 
to ensure that DoD does not preclude a nonprofit organization from 
competing for a contract for religious-related services on a U.S. 
military installation.
    This rule is necessary to implement section 898 of the National 
Defense Authorization Act for Fiscal Year (FY) 2016, which is the legal 
basis for the rule.
    This rule may have a significant economic impact on a substantial 
number of small businesses that typically compete for contracts for the 
covered services, since most of the contracts awarded for religious-
related services fall within the dollar range reserved exclusively for 
small business participation (over $3,500, but no more than $150,000). 
The rule may also have a significant economic impact on nonprofit 
organizations, since these entities are normally precluded from 
competing for such acquisitions that are reserved for small business 
concerns.
    According to data obtained from the Federal Procurement Data System 
(FPDS) for FY 2015, DoD awarded 290 contracts to 232 unique businesses 
for religious-related services under the Product Services Code (PSC) 
for Chaplain Services (G002), the majority of which (95 percent) are 
valued below the simplified acquisition threshold (SAT) of $150,000. Of 
those 290 contracts, approximately 160 contracts were awarded to 130 
unique small business concerns (56 percent). The FPDS data further 
indicates that of the 160 contracts awarded to small business, 137 of 
the contracts were awarded on the basis of a total small business set-
aside, including one total set-aside to women-owned small business 
concerns. In addition, in order to carry out the Congressional mandate 
of section 898, this rule restricts the use of the sole source 
authorities at FAR 6.302-5(b)(4) through (7) when contracting for 
religious-related services on U.S. military installations; as a result, 
such solicitations would have to be competed in a manner that allows 
nonprofit organizations to participate. Analysis of FPDS data for FY 
2015 reveals that four contracts were awarded to a HUBZone small 
business concern on a sole source basis.
    Additional FPDS data was obtained for FY 2016, which showed DoD 
awarded 256 contracts to 212 unique businesses for religious-related 
services under PSC G002, of which the majority (91 percent) were valued 
below the SAT. Of those 256 contracts, 158 contracts (62 percent) were 
awarded to 130 unique small business concerns (63 percent). 116 
contracts were solicited using a total small business set-aside. Again, 
as a result of this rule, such solicitations could not preclude a 
nonprofit organization from submitting an offer and being considered 
for award. Six contracts were awarded on a sole source basis under the 
Small Business Act 8(a) Business Development Program (8(a) Program); 
however, this rule restricts DoD contracting officers from using the 
sole source authority at FAR 6.302-5(b)(4) for the 8(a) Program to 
procure religious-related services to be performed on a U.S. military 
installation. In order to comply with section 898, any requirements 
currently in the 8(a) program would be required, upon renewal, to be 
solicited in a manner that does not preclude a nonprofit organization 
from the competition.
    There are no reporting, recordkeeping, or other compliance 
requirements associated with this rule. The rule does not duplicate, 
overlap, or conflict with any other Federal rule.
    There are no significant alternative approaches to the proposed 
rule that would minimize the impact on small entities and meet the 
stated objectives of the statute.
    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-
D015), 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 212, 213, 219, 237, and 252

    Government procurement.

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

    Therefore, 48 CFR parts 212, 213, 219, 237, and 252 are proposed to 
be amended as follows:

0
1. The authority citation for 48 CFR parts 212, 213, 219, 237, and 252 
continues to read as follows:

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

PART 212--ACQUISITION OF COMMERCIAL ITEMS

0
2. Amend section 212.301 by adding new paragraph (f)(vii)(D) to read as 
follows:


212.301   Solicitation provisions and contract clauses for the 
acquisition of commercial items.

* * * * *
    (f) * * *
    (vii) * * *
    (D) Use the provision at 252.219-70XX, Competition for Religious-
Related Services, as prescribed in 219.270-3.
* * * * *

PART 213--SIMPLIFIED ACQUISITION PROCEDURES

0
3. Amend section 213.7001 by--
0
a. Redesignating paragraphs (a)(1) and (2) as paragraphs (a)(1)(i) and 
(ii), respectively;
0
b. Redesignating the introductory text as paragraph (a)(1);
0
c. Redesignating paragraph (b) as paragraph (a)(2); and
0
d. Adding a new paragraph (b).
    The addition reads as follows:


213.7001   Procedures.

* * * * *
    (b) To comply with section 898 of the National Defense 
Authorization Act for Fiscal Year 2016 (Pub. L. 114-92), contracting 
officers shall not use the sole source authority at FAR 6.302-5(b)(4) 
to purchase religious-related services to be performed on a U.S. 
military installation. For competitive purchases under the 8(a) 
program, contracting officers shall not exclude a nonprofit 
organization from the competition. See 219.270 for additional 
procedures.

[[Page 93878]]

PART 219--SMALL BUSINESS PROGRAMS

0
4. Add sections 219.270, 219.270-1, 219.270-2, and 219.270-3 to subpart 
219.2 to read as follows:


219.270   Religious-related services--inclusion of nonprofit 
organizations.


219.270-1   Definition.

    Nonprofit organization, as used in this section, means any 
organization that is--
    (1) Described in section 501(c) of the Internal Revenue Code of 
1986; and
    (2) Exempt from tax under section 501(a) of that Code.


219.270-2   Procedures.

    (a) To comply with section 898 of the National Defense 
Authorization Act for Fiscal Year 2016 (Pub. L. 114-92), when acquiring 
religious-related services to be performed on a U.S. military 
installation--
    (1) Do not preclude a nonprofit organization from competing, even 
when the acquisition is set aside for small businesses as identified in 
FAR 19.000(a)(3); and
    (2) Do not use any of the sole source exceptions at FAR 6.302-
5(b)(4) through (7) for such acquisitions.
    (b) If the apparently successful offeror has not represented in its 
quotation or offer that it is one of the small business concerns 
identified in FAR 19.000(a)(3), the contracting officer shall verify 
that the offeror is registered in the System for Award Management 
database as a nonprofit organization.


219.270-3   Solicitation provision.

    Use the provision 252.219-70XX, Competition for Religious-Related 
Services, in solicitations, including solicitations using FAR part 12 
procedures for the acquisition of commercial items, for the acquisition 
of religious-related services to be performed on U.S. military 
installations, when the acquisition is set aside for any of the small 
business concerns identified in FAR 19.000(a)(3).

PART 237--Service Contracting

0
5. Add new subpart 237.7X to read as follows:

SUBPART 237.7X--COMPETITION FOR RELIGIOUS-RELATED SERVICES

Sec.
237.7X00 Scope of subpart.
237.7X01 Definition.
237.7X02 Policy.

SUBPART 237.7X--COMPETITION FOR RELIGIOUS-RELATED SERVICES


237.7X00   Scope of subpart.

    This subpart provides policy and guidance for the acquisition of 
religious-related services to be performed on a U.S. military 
installation in accordance with section 898 of the National Defense 
Authorization Act for Fiscal Year 2016 (Pub. L. 114-92).


237.7X01   Definition.

    As used in this subpart--
    Nonprofit organization means any organization that is--
    (1) Described in section 501(c) of the Internal Revenue Code of 
1986; and
    (2) Exempt from tax under section 501(a) of that Code.


237.7X02   Policy.

    (a) A nonprofit organization shall not be precluded from competing 
for a contract for religious-related services to be performed on a U.S. 
military installation.
    (b) See 219.270 when an acquisition for religious-related services 
to be performed on a U.S. military installation is set aside for any of 
the small business concerns identified in FAR 19.000(a)(3).

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
6. Add section 252.219-70XX to read as follows:


252.219-70XX   Competition for Religious-Related Services.

    As prescribed in 219.270-3, use the following provision: 
COMPETITION FOR RELIGIOUS-RELATED SERVICES (DATE)
    (a) Definition. As used in this provision--
    Nonprofit organization means any organization that is--
    (1) Described in section 501(c) of the Internal Revenue Code of 
1986; and
    (2) Exempt from tax under section 501(a) of that Code.
    (b) A nonprofit organization is not precluded from competing for a 
contract for religious-related services to be performed on a U.S. 
military installation notwithstanding that a nonprofit organization is 
not a small business concern as identified in FAR 19.000(a)(3).
    (c) If the apparently successful offeror has not represented in its 
offer or quotation that it is a small business concern identified in 
FAR 19.000(a)(3), as appropriate to the solicitation, the Contracting 
Officer will verify that the offeror is registered in the System for 
Award Management (SAM) database as a nonprofit organization.
    (End of provision)

[FR Doc. 2016-30597 Filed 12-21-16; 8:45 am]
 BILLING CODE 5001-06-P