[Federal Register Volume 83, Number 104 (Wednesday, May 30, 2018)]
[Proposed Rules]
[Pages 24897-24898]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-11342]



Federal Register / Vol. 83 , No. 104 / Wednesday, May 30, 2018 / 
Proposed Rules

[[Page 24897]]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 204

[Docket DARS-2018-0029]
RIN 0750-AJ76


Defense Federal Acquisition Regulation Supplement: Contract 
Closeout Authority (DFARS Case 2018-D012)

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 sections of the National 
Defense Authorization Act for Fiscal Years 2017 and 2018 to permit 
expedited closeout of certain contracts entered into on a date that is 
at least 17 fiscal years before the current fiscal year.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before July 30, 2018, to be considered in 
the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2018-D012, using 
any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov. Submit comments 
via the Federal eRulemaking portal by entering ``DFARS Case 2018-D012'' 
under the heading ``Enter keyword or ID'' and selecting ``Search.'' 
Select the link ``Submit a Comment'' that corresponds with ``DFARS Case 
2018-D012.'' Follow the instructions provided at the ``Submit a 
Comment'' screen. Please include your name, company name (if any), and 
``DFARS Case 2018-D012'' on your attached document.
    [cir] Email: osd.dfars@mail.mil. Include DFARS Case 2018-D012 in 
the subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Carrie 
Moore, 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. Carrie Moore, telephone 571-372-
6093.

SUPPLEMENTARY INFORMATION:

I. Background

    This rule proposes to revise the DFARS to implement section 836 of 
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 
(Pub. L. 114-328), as modified by section 824 of the NDAA for FY 2018, 
which authorizes the Secretary of Defense to close out certain 
contracts or groups of contracts through modification of such contracts 
without completing a reconciliation audit or other corrective action. 
The authority provided by sections 824 and 836 applies to contracts 
entered into on a date that is at least 17 fiscal years before the 
current fiscal year, that have no further supplies or services due, and 
for which a determination has been made that the contract records are 
not otherwise reconcilable, because--
     The contract or related payment records have been 
destroyed or lost; or
     Although contracts records are available, the time or 
effort required to establish the exact amount owed to the U.S. 
Government or amount owed to the contractor is disproportionate to the 
amount at issue.
    To accomplish closeout of such contracts, sections 824 and 836 
further authorize the following:
     A contract or groups of contracts covered by these 
sections to be closed out through a negotiated settlement with the 
contractor.
     The remaining contract balances to be offset with balances 
within the contract or on other contracts regardless of the year or 
type of appropriation obligated to fund each contract or contract line 
item, and regardless of whether the appropriation has closed.
    When using this authority, the closeout procedures require the 
contracting officer to issue a modification of the affected contract, 
which must be signed by both the contractor and the Government. When 
closing out a group of contracts, the contracting officer must issue a 
modification for at least one of the affected contracts that reflects 
the negotiated settlement for the group of contracts and this 
modification must be signed by both the contractor and the Government. 
The remaining contracts in the group may be modified without obtaining 
the contractor's signature.

II. Discussion and Analysis

    This rule proposes to amend DFARS 204.802 to incorporate the 
expedited closeout authority and procedures provided by section 824 and 
836 for contracts entered into on a date that is at least 17 fiscal 
years before the current fiscal year, that have no further supplies or 
services due under the contract, and where the appropriate 
determination has been made by an individual at least one level above 
the contracting officer.

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. Executive Order 13771

    This rule is not an Executive Order (E.O.) 13771, Reducing 
Regulation and Controlling Regulatory Costs, regulatory action, because 
this rule is not significant under E.O. 12866.

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., 
because the scope of rule is limited to contracts awarded at least 17 
years before a current fiscal year that still require final closeout by 
the Government. However, an initial regulatory flexibility analysis has 
been performed and is summarized as follows:
    The Department of Defense is proposing to amend the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement section 836 of 
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 
(Pub. L. 114-328), as modified by section 824 of the NDAA for FY 2018, 
to permit expedited closeout of certain contracts entered into on a 
date that is at least 17 fiscal years before the current fiscal year.
    The objective of this proposed rule is to implement section 836 of 
the NDAA for FY 2017, as modified by section 824 of the NDAA for FY 
2018.

[[Page 24898]]

    Using estimates from Department and Agency subject matter experts, 
approximately 11,300 contracts subject to this rule need to be closed 
out by the Government. Of these contracts, the Government estimates 
that 50 percent, or 5,650, of the awards were made to small businesses.
    This proposed rule does not include any new reporting, 
recordkeeping, or other compliance requirements for small businesses.
    This rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    There are no known significant alternative approaches to the 
proposed rule that would meet the requirements of the applicable 
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 2018-
D012), 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 Part 204

    Government procurement.


Amy G. Williams,
Deputy, Defense Acquisition Regulations System.

    Therefore, 48 CFR part 204 is proposed to be amended as follows:

PART 204--ADMINISTRATIVE MATTERS

0
1. The authority citation for part 204 continues to read as follows:

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

0
2. Amend section 204.804 by--
0
a. In paragraph (1), removing ``Contracting officers'' and adding 
``Except as provided in paragraph (3) of this section, contracting 
officers'' in its place; and
0
b. Adding paragraph (3).
    The addition reads as follows:


204.804   Closeout of contract files.

* * * * *
    (3)(i) In accordance with section 836 of the National Defense 
Authorization Act for Fiscal Year 2017 (Pub. L. 114-328) and section 
824 of the National Defense Authorization Act for Fiscal Year 2018 
(Pub. L. 115-91), contracting officers may close out contracts or 
groups of contracts through issuance of one or more modifications to 
such contracts without completing a reconciliation audit or other 
corrective action in accordance with FAR 4.804-5(a)(3) through (15), as 
appropriate, if each contract--
    (A) Was entered into on a date that is at least 17 fiscal years 
before the current fiscal year;
    (B) Has no further supplies or services due under the terms of the 
contract; and
    (C) Has been determined by an individual, at least one level above 
the contracting officer, to be not otherwise reconcilable, because--
    (1) The contract or related payment records have been destroyed or 
lost; or
    (2) Although contract or related payment records are available, the 
time or effort required to establish the exact amount owed to the U.S. 
Government or amount owed to the contractor is disproportionate to the 
amount at issue.
    (ii) Any contract or group of contracts meeting the requirements of 
paragraph (3)(i) of this section may be closed out through a negotiated 
settlement with the contractor. Except as provided in paragraph 
(3)(ii)(B), the contract closeout process shall include a bilateral 
modification of the affected contract, including those contracts that 
are closed out in accordance with a negotiated settlement.
    (A) For a contract or groups of contracts, the contracting officer 
shall prepare a negotiation settlement memorandum that describes how 
the requirements of paragraph (3)(i) have been met.
    (B) For a group of contracts, a bilateral modification of at least 
one contract shall be made to reflect the negotiated settlement for a 
group of contracts, and unilateral modifications may be made, as 
appropriate, to other contracts in the group to reflect the negotiated 
settlement.
    (iii) For contract closeout actions under paragraph (3) of this 
section, remaining contract balances--
    (A) May be offset with balances in other contract line items within 
the same contract, regardless of the year or type of appropriation 
obligated to fund each contract line item and regardless of whether the 
appropriation obligated to fund such contract line item has closed; and
    (B) May be offset with balances on other contracts, regardless of 
the year or type of appropriations obligated to fund each contract and 
regardless of whether such appropriations have closed.
* * * * *
[FR Doc. 2018-11342 Filed 5-29-18; 8:45 am]
 BILLING CODE 5001-06-P