[Federal Register Volume 84, Number 187 (Thursday, September 26, 2019)]
[Proposed Rules]
[Pages 50811-50812]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20555]



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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 206

[Docket DARS-2019-0051]
RIN 0750-AK67


Defense Federal Acquisition Regulation Supplement: Exception to 
Competition for Certain Follow-On Production Contracts (DFARS Case 
2019-D031)

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 for Fiscal Year 2016 that modifies the 
criteria required to exempt from competition certain follow-on 
productions contracts.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before November 25, 2019, to be 
considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2019-D031, using 
any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov. Submit comments 
via the Federal eRulemaking portal by entering ``DFARS Case 2019-D031'' 
under the heading ``Enter keyword or ID'' and selecting ``Search.'' 
Select the link ``Submit a Comment'' that corresponds with ``DFARS Case 
2019-D031.'' Follow the instructions provided at the ``Submit a 
Comment'' screen. Please ``DFARS Case 2019-D031'' on any attached 
documents.
    [cir] Email: [email protected]. Include DFARS Case 2019-D031 in 
the subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Carrie 
Moore, OUSD(A&S)DPC/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

    DoD is amending the DFARS to implement section 815 of the National 
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016 (Pub. L. 
114-92). Section 815 repeals and replaces section 845 of the NDAA for 
FY 1994 (Pub. L. 103-160; 10 U.S.C. 2371 note) with 10 U.S.C. 2371b, 
which modifies the authority of DoD to carry out certain prototype 
project transactions, as well as the criteria required to award an 
associated follow-on production contract to a participant in the 
transaction without the use of competitive procedures.
    Currently, DFARS 206.001(S-70) states that the award of a follow-on 
production contract for products developed under the authority of 10 
U.S.C. 2371 is excepted from the use of competitive procedures, if: (1) 
The prototype project transaction agreement includes a provision for a 
follow-on production contract; (2) specific criteria in 10 U.S.C. 2371 
note are met; and (3) the quantities and prices for the follow-on 
contract do not exceed the quantities and target prices established in 
the transaction agreement. Section 815 no longer limits a follow-on 
production contract to quantities and target prices that were 
established in the transaction agreement. As a result, this rule 
removes the limitation from the requisite criteria to exempt a follow-
on contract from competitive procedures in subpart 206.

II. Discussion and Analysis

    This rule updates the DFARS 206.001(S-70) references to 10 U.S.C. 
2371 to the equivalent parts of 10 U.S.C. 2371b; and, adds to the list 
of criteria necessary to award a follow-on production contract without 
competition, the requirement that--
     A written determination was executed by certain 
acquisition officials for transactions in excess of specified dollar 
values;
     The follow-on contract be awarded to participants in the 
transaction for the prototype project;
     Competitive procedures were used to selected the parties 
in the transaction; and
     The participants in the transaction successfully completed 
the prototype project provided for in the transaction.
    The additions to the criteria do not implement new requirements. 
The statutes and regulations that implement DoD's other transaction 
authority permit DoD to provide, in the agreement, for the award of a 
follow-on production contract to a participant in the prototype 
project. Agreements made under DoD's other transaction authority are 
not subject to the Federal Acquisition Regulation or DFARS; however, 
the award of a follow-on production contract resulting from such a 
transaction agreement is subject to these acquisition regulations. As 
such, this addition serves as notice to contracting officers that: When 
the transaction agreement included a provision for the award of a 
follow-on production contract, and the award of the contract will be 
made without competition, certain criteria must be met for the follow-
on contract award and certain criteria must have been met during the 
other transaction authority process. This addition will help ensure 
contracting officers are aware of and in compliance with DoD's other 
transactional authority when awarding a resultant follow-on production 
contract.

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

    This rule only impacts the internal operating procedures of the 
agency. The rule does not impose any new requirements on contracts at 
or below the simplified acquisition threshold and for commercial items, 
including commercially available off-the-shelf items.

IV. 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.

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

[[Page 50812]]

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 rule 
is not creating any new requirements for contractors or changing any 
existing policies and practices. 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 implement section 815 of the National 
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016 (Pub. L. 
114-92), which repeals and replaces section 845 of the NDAA for FY 1994 
(Pub. L. 103-160; 10 U.S.C. 2371 note) with 10 U.S.C. 2371b.
    The objective of this proposed rule is to clarify for contracting 
officers the criteria that must be met to award, without competition, a 
follow-on production contract associated with a prototype project 
transaction agreement.
    DoD does not collect data on the number of follow-on production 
contracts that are awarded annually and associated with a prototype 
project transaction agreement made under the authority of 10 U.S.C. 
2371b; therefore, DoD is unable to estimate the number of small 
entities that will be impacted by this rule. However, DoD does not 
expect small business entities to be significantly impacted by this 
rule, because the rule does not change any existing processes or impose 
any additional burdens. Instead, the rule simply clarifies instructions 
to contracting officers on the criteria that must be met in order to 
award an associated follow-on production contract without using 
competitive procedures.
    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 alternatives available to meet the objectives of 
the statutes.
    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 2019-D031) 
in correspondence.

VII. 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 206

    Government procurement.

Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.

    Therefore, 48 CFR part 206 is proposed to be amended as follows:

PART 206--COMPETITION REQUIREMENTS

0
1. The authority citation for 48 CFR part 206 continues to read as 
follows:

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

0
2. Amend section 206.001 by revising paragraph (S-70) to read as 
follows:


206.001  Applicability.

* * * * *
    (S-70) Also excepted from the competition requirements of FAR part 
6 are follow-on production contracts for products developed pursuant to 
the ``other transactions'' authority of 10 U.S.C. 2371b for prototype 
projects when--
    (1) The other transaction agreement includes provisions for a 
follow-on production contract;
    (2) The follow-on contract will be awarded to the participants in 
the other transaction for the prototype project;
    (3) Competitive procedures are used for the selection of parties 
for participation in the transaction;
    (4) The participants in the transaction successfully completes the 
prototype or sub-prototype project provided for in the transaction; and
    (5)(i) There is a written determination that--
    (A) The requirements of 10 U.S.C. 2371b(d) are met; and
    (B) The use of the authority of 10 U.S.C. 2371b is essential to 
promoting the success of the prototype project; and
    (ii)(A) For actions in excess of $100 million, but not in excess of 
$500 million including all options, the determination is executed by 
the senior procurement executive; and
    (B) For actions in excess of $500 million including all options, 
the determination is--
    (1) Executed by the Under Secretary of Defense for Research and 
Engineering or the Under Secretary of Defense for Acquisition and 
Sustainment; and
    (2) Provided to the congressional defense committees at least 30 
days prior to contract award.

[FR Doc. 2019-20555 Filed 9-25-19; 8:45 am]
 BILLING CODE 5001-06-P