[Federal Register Volume 84, Number 211 (Thursday, October 31, 2019)]
[Proposed Rules]
[Pages 58366-58368]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-23807]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 249 and 252

[Docket DARS-2019-0060]
RIN 0750-AK56


Defense Federal Acquisition Regulation Supplement: Modification 
of DFARS Clause ``Notification of Anticipated Contract Termination or 
Reduction'' (DFARS Case 2019-D019)

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 update legal and DFARS citations in an 
existing DFARS clause, conform the clause text to the current DFARS 
convention regarding the use of dollar thresholds in contract clauses, 
and remove clause text that is no longer needed to implement the 
underlying statutory language.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before December 30, 2019, to be 
considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2019-D019, using 
any of the following methods:
    [cir] Federal eRulemaking Portal: http://www.regulations.gov. 
Search for ``DFARS Case 2018-D019.'' Select ``Comment Now'' and follow 
the instructions to submit a comment. Please include ``DFARS Case 2019-
D019'' on any attached documents.
    [cir] Email: [email protected]. Include DFARS Case 2019-D019 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

    Within the DFARS, statutory acquisition-related dollar thresholds 
that are subject to inflation adjustment under 41 U.S.C. 1908 are 
identified in the applicable DFARS policy section. Any clause that 
relies on such a threshold will reference the threshold in the 
applicable DFARS policy section, instead of citing the actual dollar 
value. This drafting convention ensures that inflation adjustments of 
statutory acquisition-related thresholds apply to existing contracts 
and subcontracts in effect on the date of the adjustment.
    To conform to this drafting convention, this rule proposes to 
modify the DFARS subpart 249.70 to add the pertinent dollar thresholds 
of 10 U.S.C. 2501 note, Notice to Contractors and Employees Upon 
Proposed Termination or Substantial Reduction in Major Defense 
Programs, and modify DFARS clause 252.249-7002, Notification of 
Anticipated Contract Termination or Reduction, to add references to the 
statutory thresholds cited at DFARS subpart 249.70.
    In addition, DFARS clause 252.249-7002 advises contractors of the 
benefits that may be available to affected employees through the Job 
Training Partnership Act (29 U.S.C. 1661 and 1662; Pub. L. 97-300). The 
Job Training and Partnership Act was repealed and superseded by the 
Workforce Investment Partnership Act (29 U.S.C. chapter 30; Pub. L. 
105-220), which was later repealed and superseded by the Workforce 
Innovation and Opportunity Act (29 U.S.C. chapter 32; Pub. L. 113-128). 
This rule proposes to modify DFARS clause 252.249-7002 to reflect the 
current statute associated with the 10 U.S.C. 2501 note and make other 
conforming changes.

II. Discussion and Analysis

    DFARS clause 252.249-7002 is included in all contracts under a 
major defense program and implements the requirements of 10 U.S.C. 2501 
note. The 10 U.S.C. 2501 note requires contractors, upon receiving 
notice of contract termination or a substantial reduction in funding 
resulting from an appropriations act, to provide notice of the 
anticipated termination or substantial reduction to first-tier 
subcontractors with a subcontract of $700,000 or more, and flow down 
the notification to lower-tier subcontractors with a subcontract of 
$150,000 or more. To implement the dollar thresholds of the 10 U.S.C. 
2501 note in accordance with the current DFARS drafting convention, the 
rule adds the relevant dollar thresholds in DFARS 249.7003,

[[Page 58367]]

and updates the clause text to refer to the thresholds added to DFARS 
249.7003.
    This rule also proposes to amend the DFARS clause to cite the 
Workforce Innovation and Opportunity Act, which is the current statute 
under which employee employment and training opportunities apply, and 
to conform the clause with the current requirements of 10 U.S.C. 2501 
note. Public Law 103-160 amended 10 U.S.C. 2501 note to specify which 
services under title 29 of the U.S.C. an employee could be eligible 
for, depending on whether the termination or reduction will or will not 
result in plant closure or mass layoffs. This specification of 
available services based on results of the notification was removed 
from 10 U.S.C. 2501 note by Public Law 105-277; therefore, this rule 
removes this delineation from the DFARS clause. In addition, the 
thresholds for the subcontractor notification requirements is revised 
to state ``exceeds'' in lieu of ``equals or exceeds'' to align with the 
statute.
    The revision of this DFARS clause 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. Subsequently, the DoD Task Force reviewed 
the requirements of DFARS clause 252.249-7002 and determined that the 
clause should be modified. A summary of the comment received and the 
response to the respondent is provided as follows:
    Comment: The respondent advised that the clause imposes 
administrative burden on contractors and is difficult to manage at the 
multi-tier level.
    Response: The clause is necessary to implement the requirements of 
10 U.S.C. 2501 note, which identifies notification responsibilities for 
DoD, as well as certain DoD contractors and their subcontractors, when 
funding levels in an appropriation act may result in the termination or 
substantial reduction of funding for contracts under a major defense 
program. The clause ensures contractors and subcontractors comply with 
the law and are aware of the benefits potentially available to their 
employees that are adversely affected by the termination or reduction 
in funds.

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 simply updates legal and DFARS citations in the clause and 
removes unnecessary information. This rule does not change the 
applicability of the affected clause, which does not apply to contracts 
valued at or below the SAT, or for commercial or COTS 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 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., 
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 modify the text of DFARS clause 
252.249-7002, Notification of Anticipated Contract Termination or 
Reduction, to: (1) Update legal and DFARS citations in the clause; (2) 
remove text that is no longer necessary to implement 10 U.S.C. 2501 
note; and (3) conform the clause text to the current DFARS convention 
for referencing dollar thresholds in a clause. The update of legal and 
DFARS citations is pursuant to action taken by the DoD Regulatory 
Reform Task Force under Executive Order 13777, Enforcing the Regulatory 
Reform Agenda.
    The objective of this proposed rule is to provide current 
information to contractors and maintain consistency within the DFARS 
clause text.
    DoD does not collect data on the number of small businesses that 
have been awarded contracts under a major defense programs and have 
also received notice of contract termination or a substantial reduction 
in funding resulting from an appropriations act. Due to the complexity 
and magnitude of major defense program contracts, the prime contracts 
are generally awarded to major contractors, and not to small entities. 
Senior DoD program acquisition officials estimate that such 
notification of the termination or substantial reduction in a major 
defense program does not occur, on the average, more than once or twice 
per year. However, this rule is not expected to have a significant 
impact on small business entities, as it does not impose any new 
requirements or change any existing requirements for small business 
entities.
    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 to the rule that will 
meet the stated objectives of the statutes or minimize the impact on of 
the rule on small entities.
    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-D019) 
in correspondence.

VI. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) does apply; 
however, the changes to DFARS 252.249-7002 do not impose additional 
information collection requirements to the paperwork burden previously 
approved under OMB Control Number 0704-0533, titled: DFARS Subpart 
249--Termination of Contracts.

[[Page 58368]]

List of Subjects in 48 CFR Parts 249 and 252

    Government procurement.

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

    Therefore, 48 CFR parts 249 and 252 are proposed to be amended as 
follows:

0
1. The authority citation for 48 CFR parts 249 and 252 continues to 
read as follows:

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

PART 249--TERMINATION OF CONTRACTS

0
2. Amend section 249.7003 by--
0
a. In paragraph (a), removing ``Section 824'' and ``Job Training 
Partnership Act (29 U.S.C. 1661 and 1662)'' and adding ``section 824'' 
and ``Workforce Innovation and Opportunity Act (29 U.S.C. Chapter 32) 
(Pub. L. 113-128)'' respectively, in their places;
0
b. In paragraph (b) introductory text, removing ``to:'' and adding 
``to--'' in its place;
0
c. In paragraph (b)(1), removing ``act.'' And adding ``act; and'' in 
its place;
0
d. Revising paragraph (c).
    The revision reads as follows:


249.7003   Notification of anticipated contract terminations or 
reductions.

* * * * *
    (c) When subcontracts have been issued, the prime contractor is 
responsible for--
    (1) Providing notice of the termination or substantial reduction in 
funding to all first-tier subcontractors with a subcontract valued 
equal to or greater than $700,000; and
    (2) Requiring that each subcontractor--
    (i) Provide such notice to each of its subcontractors for 
subcontracts valued greater than $150,000; and
    (ii) Impose a similar notice and flowdown requirement in 
subcontracts valued greater than $150,000 at all tiers.
0
3. Add section 249.7004 to read as follows:


249.7004  Contract clause.

    Use the clause at 252.249-7002, Notification of Anticipated 
Contract Termination or Reduction, in all contracts under a major 
defense program.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
3. Amend section 252.249-7002 by--
0
a. In the introductory text, removing ``249.7003(c)'' and adding 
``249.7004'' in its place;
0
b. Removing the clause date ``(MAY 2019)'' and adding ``(DATE)'' in its 
place;
0
c. Revising paragraph (b);
0
d. Redesignating the paragraph (c) introductory text and paragraphs 
(c)(1) through (c)(4) as paragraph (c)(1) and paragraphs (c)(1)(i) 
through (c)(1)(iv), respectively.
0
e. Revising newly redesignated paragraph (c)(1)(iii);
0
f. Adding paragraph (c)(2);
0
g. In paragraph (d)(1), removing ``225.870-4(c)(2)(i)(A)(1) and adding 
``249.7003(c)(1)'' in its place;
0
h. Revising paragraphs (d)(2)(i) and (d)(2)(ii); and
0
i. Removing paragraph (e).
    The revisions and additions read as follows:


252.249-7002   Notification of Anticipated Contract Termination or 
Reduction.

* * * * *
    (b) Scope. This clause implements section 1372 of the National 
Defense Authorization Act for Fiscal Year 1994 (Pub. L. 103-160) and 
section 824 of the National Defense Authorization Act for Fiscal Year 
1997 (Pub. L. 104-201), which are intended to help establish benefit 
eligibility under the Workforce Innovation and Opportunity Act (29 
U.S.C. chapter 32) (Pub. L. 113-128) for employees of DoD contractors 
and subcontractors adversely affected by contract terminations or 
substantial reductions under major defense programs.
    (c) * * *
    (1) * * *
    (iii) The State or entity designated by the State to carry out 
rapid response activities described in section 134(a)(2)(A)(i) of the 
Workforce Innovation and Opportunity Act (29 U.S.C. 3174(a)(2)(A)(i)); 
and
* * * * *
    (2) The notice provided an employee under paragraph (c) of this 
clause shall have the same effect as a notice of termination to the 
employee for the purposes of determining whether such employee is 
eligible for training, adjustment assistance, and employment services 
under section Workforce Innovation and Opportunity Act (29 U.S.C. 
chapter 3101) (Pub. L. 113-128).
    (d) * * *
    (2) * * *
    (i) Provide notice to each of its subcontractors with a subcontract 
that exceeds the threshold specified in DFARS 249.7003(c)(2)(i) at the 
time of the notice; and
    (ii) Impose a similar notice and flowdown requirement to 
subcontractors with subcontracts that exceed the threshold specified in 
DFARS 249.7003(c)(2)(ii) at the time of the notice.
* * * * *
[FR Doc. 2019-23807 Filed 10-30-19; 8:45 am]
 BILLING CODE 5001-06-P