[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]



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 

ACTION: Final rule.


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-


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-
    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:


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]

2. Amend section 252.227-7002 by--
a. Removing the clause date of ``(OCT 1966)'' and adding ``(SEP 2019)'' 
in its place; and
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]