[Federal Register Volume 84, Number 178 (Friday, September 13, 2019)]
[Rules and Regulations]
[Pages 48501-48503]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19561]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Part 252
[Docket DARS-2019-0046]
RIN 0750-AK54
Defense Federal Acquisition Regulation Supplement: Modification
of DFARS Clause ``Readjustment of Payments'' (DFARS Case 2019-D017)
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 update an existing DFARS
clause to clearly identify the Government official to be contacted when
applying the terms of the clause, pursuant to action taken by the
Regulatory Reform Task Force.
[[Page 48502]]
DATES: Effective September 13, 2019.
FOR FURTHER INFORMATION CONTACT: Ms. Carrie Moore, telephone 571-372-
6093.
SUPPLEMENTARY INFORMATION:
I. Background
DoD is amending the DFARS to update the Government point of contact
in DFARS clause 252.227-7002, Readjustment of Payments. DFARS clause
252.227-7002 is included in all contracts that contain patent release
and settlement agreements, license agreements, and/or assignments,
executed by the Government, under which the Government acquires rights,
and provide for payment of a running royalty. The clause addresses
royalty terms, conditions, and payments, and requires the contractor to
notify ``the Secretary'' upon granting more favorable royalty terms to
the Government under another agreement.
Contractors do not notify the Secretary of Defense, Army, Navy, or
Air Force when complying with this clause, and DFARS conventions no
longer use ``the Secretary'' as a way to identify the Department
responsible for issuing the contract or oversight of subsequent
contract performance. Instead, contractors notify the contracting
officer when such a notification is necessary under the clause. The
contracting officer is the appropriate point of contact, as they are
the individual responsible for ensuring performance of all necessary
actions for effective contracting, ensuring compliance with the terms
of the contract, and safeguarding the interests of the United States in
its contractual relationships.
This rule updates the clause to identify the contracting officer,
not the Secretary, as the individual to be notified under the clause.
As a result, this rule intends to clarify and simplify the notification
required of contractors by the clause and avoid any miscommunication or
misunderstanding between the Government and contractor when complying
with the clause.
II. Discussion and Analysis
The modification of this DFARS text implements a recommendation
from the DoD Regulatory Reform Task Force. On February 24, 2017, the
President signed Executive Order (E.O.) 13777, ``Enforcing the
Regulatory Reform Agenda,'' which established a Federal policy ``to
alleviate unnecessary regulatory burdens'' on the American people. In
accordance with E.O. 13777, DoD established a Regulatory Reform Task
Force to review and validate DoD regulations, including the DFARS. A
public notice of the establishment of the DFARS Subgroup to the DoD
Regulatory Reform Task Force, for the purpose of reviewing DFARS
provisions and clauses, was published in the Federal Register at 82 FR
35741 on August 1, 2017, and requested public input. One public comment
was received on this clause.
Comment: The respondent advised that the clause is never used and
should be deleted from the DFARS. The respondent recommended that,
instead of the clause, a policy statement permitting DoD to enter into
settlement agreements where patent and copyright infringement is
alleged by a third party owner of a patent or copyright would suffice.
Response: DFARS clause 252.227-7002 serves as an agreement, through
incorporation in the contract, between DoD and the contractor that, by
execution of the contract, DoD is entitled to apply the more favorable
royalty terms of future license agreements between the contractor and
DoD to the contract that includes the clause. The clause also requires
the contractor to notify DoD if the contractor grants more favorable
terms to the DoD, and identifies how royalty payments will be handled
in the event of a patent claim or appeal. The clause applies to the
requirements and content of the individual contract. As such, the
clause is necessary, when applicable, in the contract to represent the
agreement to such terms by both parties, as they relate to the specific
contract. A general statement of policy does not fulfill the intent of
this clause. Additionally, the clause is available for use, when
applicable and necessary. This clause is beneficial to DoD by
facilitating a standard and uniform incorporation of more common terms
and conditions associated with patent and license agreements and
assignments into applicable contracts, without having to draft the
language of these more common terms and conditions with each contract.
This approach also ensures the same language is incorporated into each
contract, which helps DoD avoid miscommunications or misunderstanding
and maintain consistency in negotiating such terms and conditions DoD-
wide.
The DoD Task Force reviewed the requirements of DFARS clause
252.227-7002 and determined that the DFARS clause should only be
modified to update the point of contact for notifications.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-the-Shelf Items
This proposed rule does not create any new provisions or clauses.
The rule clarifies the point of contact for an existing clause. This
rule does not change the applicability of the affected clause, which
applies to those valued at or below the SAT, if applicable, but not to
commercial or COTS items.
IV. Publication of This Final Rule for Public Comment Is Not Required
by Statute
The statute that applies to the publication of the Federal
Acquisition Regulation is Office of Federal Procurement Policy statute
(codified at title 41 of the United States Code). Specifically, 41
U.S.C. 1707(a)(1) requires that a procurement policy, regulation,
procedure or form (including an amendment or modification thereof) must
be published for public comment if it relates to the expenditure of
appropriated funds, and has either a significant effect beyond the
internal operating procedures of the agency issuing the policy,
regulation, procedure, or form, or has a significant cost or
administrative impact on contractors or offerors. This final rule is
not required to be published for public comment, because DoD is not
issuing a new regulation; rather, this rule merely updates the
Government point of contact.
V. Executive Orders 12866 and 13563
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.
VI. Executive Order 13771
This rule is not subject to E.O. 13771, because this rule is not a
significant regulatory action under E.O. 12866.
[[Page 48503]]
VII. Regulatory Flexibility Act
Because a notice of proposed rulemaking and an opportunity for
public comment are not required to be given for this rule under 41
U.S.C. 1707(a)(1) (see section IV. of this preamble), the analytical
requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.)
are not applicable. Accordingly, no regulatory flexibility analysis is
required, and none has been prepared.
VIII. 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 252
Government procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.
Therefore, 48 CFR part 252 is amended as follows:
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
1. The authority citation for part 252 continues to read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
252.227-7002 [Amended]
0
2. Amend section 252.227-7002 by--
0
a. Removing the clause date of ``(OCT 1966)'' and adding ``(SEP 2019)''
in its place; and
0
b. In paragraph (a), removing ``the Secretary'' and adding ``the
Contracting Officer'' in its place.
[FR Doc. 2019-19561 Filed 9-12-19; 8:45 am]
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