[Federal Register Volume 84, Number 105 (Friday, May 31, 2019)]
[Proposed Rules]
[Pages 25228-25229]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11304]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Part 244
[Docket DARS-2019-0024]
RIN 0750-AJ48
Defense Federal Acquisition Regulation Supplement: Contractor
Purchasing System Review Threshold (DFARS Case 2017-D038)
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 establish a DoD contractor purchasing
system review dollar threshold that provides a regulatory basis for
allowing DoD personnel to support other essential priorities and
missions of greater contractual risk, while reducing regulatory impact
on contractors.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before July 30, 2019, to be considered in
the formation of a final rule.
ADDRESSES: Submit comments identified by DFARS Case 2017-D038, using
any of the following methods:
[cir] Federal eRulemaking Portal: http://www.regulations.gov.
Search for ``DFARS Case 2017-D038.'' Select ``Comment Now'' and follow
the instructions to submit a comment. Please include your name, company
name (if any), and ``DFARS Case 2017-D038'' on any attached document.
[cir] Email: [email protected]. Include DFARS Case 2017-D038 in
the subject line of the message.
[cir] Fax: 571-372-6094.
[cir] Mail: Defense Acquisition Regulations System, Attn: Kimberly
Bass, OUSD(A&S)DPAP/DARS, Room 3B941, 3060 Defense Pentagon,
Washington, DC 20301-3060.
Instructions: 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: Kimberly Bass, telephone 571-372-6174.
SUPPLEMENTARY INFORMATION:
I. Background
This proposed rule implements a recommendation from the Defense
Contract Management Agency (DCMA) to raise the contractor purchasing
system review (CPSR) threshold at Federal Acquisition Regulation
44.302(a) from $25 million to $50 million. Currently, FAR 44.302(a)
requires the administrative contracting officer (ACO) to determine
whether a contractor's sales to the Government are expected to exceed
$25 million during the next 12 months and, if so, perform a review to
determine if a CPSR is needed. The ACO uses this dollar threshold in
conjunction with the surveillance criteria cited at FAR 44.302(a),
i.e., contractor past performance, and the volume, complexity, and
dollar value of subcontracts. DCMA performs the preponderance of DoD
CPSRs. Competitively awarded firm-fixed-price and competitively awarded
fixed-price with economic price adjustment contracts and sales of
commercial items pursuant to Part 12 are excluded from this
requirement.
FAR 44.302(a) specifically authorizes the head of the agency
responsible for contract administration to raise or lower the $25
million CPSR threshold if it is considered to be in the Government's
best interest. The dollar threshold of $25 million cited at FAR
44.302(a) has been unchanged since 1996. In 2016, the DCMA CPSR Group
conducted an analysis to determine if raising the CPSR threshold would
be beneficial. Based on the Group's findings, it was determined that
adjusting the threshold upward to $50 million would appropriately
account for inflation, reduce burden on small contractors, and allow a
more efficient and effective use of CSPR resources to review larger
contractors where more taxpayer dollars are at risk.
II. Discussion and Analysis
This rule proposes to amend DFARS 244.302, Requirements, to
establish within the DFARS a DoD CPSR dollar threshold of $50 million.
With this threshold in place, it is estimated that DCMA ACOs can reduce
the number of contractor reviews by approximately 20 percent, while
reducing by only 2% the value of contract dollars covered by CSPRs.
Thus, the Government will be adequately protected by the $50 million
threshold.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-the-Shelf Items
This rule does not add any new provisions or clauses or impact any
existing provisions or clauses. The rule merely increases the DoD
dollar threshold for conducting CPSRs to $50 million.
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
[[Page 25229]]
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. Executive Order 13771
This rule is not expected to be subject to E.O. 13771, because this
rule is not a significant regulatory action under E.O. 12866.
VI. 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., based
on a review of historical data concerning the purchasing system,
business system program. However, an initial regulatory flexibility
analysis has been performed and is summarized as follows:
DoD is proposing to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to establish a DoD contractor purchasing
system review (CPSR) dollar threshold.
The objective of this rule is to create a new DFARS section at
244.302 to establish a CPSR dollar threshold of $50 million. The
threshold will be used in conjunction with other surveillance criteria
cited at Federal Acquisition Regulation (FAR) 44.302(a), to include
contractor past performance and the volume, complexity, and dollar
value of subcontracts. The proposed rule establishes a DoD dollar
threshold of $50 million for a formal CPSR; in effect, raising the
current surveillance threshold of $25 million cited at FAR 44.302(a)
for DoD contractors.
In 2014, there were there were 667 unique entities for which
administrative contracting officers (ACO) had recorded approved CPSR
decisions in the Contract Business Analysis Repository. A 20% reduction
in the number of CPSRs is expected to result from increasing the CPSR
threshold from $25 million to $50 million for a total reduction of
approximately 133 firms no longer meeting the criteria for a CPSR
review. Contractor purchasing systems are eligible for a comprehensive
follow-on review every three years. Based on this three-year review
cycle, approximately 45 fewer contractors would be reviewed each year
(133 firms/3-year cycle = 44.3, rounded to 45 fewer reviews conducted
each year). Of the 45 entities, it is estimated that 35 of these
contractors are large businesses and 10 are small entities.
The $50 million dollar threshold should reduce the compliance
burden for approximately 133 contractors, and permit a more prudent and
efficient use of resources, prioritizing surveillance to the larger
firms.
For the approximately 133 contractors affected by this rule, there
could be additional requirements for those firms to request consent to
contract from the ACO, pursuant to FAR clause 52.244-2, Subcontracts.
It is estimated that the annual number of consent to contract requests
are approximately 12 per contractor.
The rule does not duplicate, overlap, or conflict with any other
Federal rules. There are no significant alternatives to the proposed
rule that accomplish the stated objectives.
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 2017-D038), in
correspondence.
VII. Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. Chapter 35) applies. The
rule contains information collection requirements cleared by the Office
of Management and Budget under OMB control number 9000-0149, entitled
``Subcontract Consent and Contractor's Purchasing System Review.'' The
current clearance for OMB control number 9000-0149 already accounts for
the reduction in burden associated with raising the DoD threshold for
conducting CPSRs.
List of Subjects in 48 CFR Part 244
Government procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.
Therefore, 48 CFR part 244 is proposed to be amended as follows:
PART 244--SUBCONTRACTING POLICIES AND PROCEDURES
0
1. The authority citation for 48 CFR part 244 continues to read as
follows:
Authority: 41 U.S.C. 1303 ad 48 CFR chapter 1.
PART 244--SUBCONTRACTING POLICIES AND PROCEDURES
0
2. Section 244.302 is added to read as follows:
244.302 Requirements.
(a) In lieu of the threshold at FAR 44.302(a), the ACO shall
determine the need for a CPSR if a contractor's sales to the Government
are expected to exceed $50 million during the next 12 months.
[FR Doc. 2019-11304 Filed 5-30-19; 8:45 am]
BILLING CODE 5001-06-P