[Federal Register Volume 85, Number 68 (Wednesday, April 8, 2020)]
[Proposed Rules]
[Pages 19716-19719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06733]
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DEPARTMENT OF DEFENSE
48 CFR Parts 203, 205, 211, 212, 217, 219, 225, 228, 236, 237, 246,
250, and 252
[Docket DARS-2020-0002]
RIN 0750-AK76
Defense Federal Acquisition Regulation Supplement: Inflation
Adjustment of Acquisition-Related Thresholds (DFARS Case 2019-D036)
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 further implement 41 U.S.C. 1908,
Inflation adjustment of acquisition-related dollar thresholds. This
statute requires an adjustment every five years of acquisition-related
thresholds for inflation using the Consumer Price Index for all urban
consumers, except for the Construction Wage Rate Requirements statute
(Davis-Bacon Act), Service Contract Labor Standards statute, and trade
agreements thresholds. DoD is also proposing to use the same
methodology to adjust some nonstatutory DFARS acquisition-related
thresholds in 2020.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before June 8, 2020, to be considered in
the formation of the final rule.
ADDRESSES: Submit comments identified by DFARS Case 2019-D036, using
any of the following methods:
[cir] Federal eRulemaking Portal: http://www.regulations.gov.
Search for ``DFARS Case 2019-D036.'' Select ``Comment Now'' and follow
the instructions to submit a comment. Please include your name, company
name (if any), and ``DFARS Case 2019-D036'' on any attached document.
[cir] Email: [email protected]. Include DFARS Case 2019-D036 in
the subject line of the message.
[cir] Fax: 571-372-6094.
[cir] Mail: Defense Acquisition Regulations System, Attn: Ms.
Kimberly R. Ziegler, OUSD(A&S)DPC/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: Ms. Kimberly R. Ziegler, telephone
571-372-6095.
SUPPLEMENTARY INFORMATION:
I. Background
This rule proposes to amend multiple DFARS parts to further
implement 41 U.S.C. 1908. Section 1908 requires an adjustment every
five years (on October 1 of each year evenly divisible by five) of
statutory acquisition-related thresholds for inflation, using the
Consumer Price Index (CPI) for all urban consumers, except for the
Construction Wage Rate Requirements statute (Davis-Bacon Act), Service
Contract Labor Standards statute, and trade agreements thresholds (see
Federal Acquisition Regulation (FAR) 1.109). As a matter of policy, DoD
is also proposing to use the same methodology to adjust some
nonstatutory DFARS acquisition-related thresholds on October 1, 2020.
FAR case 2019-013 proposes comparable changes to acquisition-related
thresholds in the FAR.
This is the fourth review of DFARS acquisition-related thresholds
since the statute was enacted on October 28, 2004 (section 807 of the
National Defense Authorization Act for FY 2004). The last review was
conducted under DFARS case 2014-D025. The final rule was published
under that case in the Federal
[[Page 19717]]
Register on June 26, 2015 (80 FR 36903), effective October 1, 2015. DoD
subsequently published a correction to DFARS case 2014-D025 on August
3, 2015 at 80 FR 45899.
II. Discussion and Analysis
A. What is an acquisition-related threshold?
This case builds on the review of DFARS thresholds in 2005, 2010,
and 2015, using the same interpretation of an acquisition-related
threshold. 41 U.S.C. 1908 is applicable to ``a dollar threshold that is
specified in law as a factor in defining the scope of the applicability
of a policy, procedure, requirement, or restriction provided in that
law to the procurement of property or services by an executive agency,
as the [FAR] Council determines.'' There are other thresholds in the
DFARS that, while not specified in law, nevertheless meet all the other
criteria. These thresholds may have their origin in Executive order or
regulation. Therefore, the FAR Council has determined, that in this
case, ``acquisition-related threshold'' has a broader meaning, i.e., a
threshold that is specified in law, Executive order, or regulation as a
factor in defining the scope of the applicability of a policy,
procedure, requirement, or restriction provided in that law, Executive
order, or regulation to the procurement of property or services by an
Executive agency. Acquisition-related thresholds are generally tied to
the value of a contract, subcontract, or modification.
Examples of thresholds that are not ``acquisition-related,'' as
defined in this case, are thresholds relating to claims, penalties,
withholding, payments, required levels of insurance, small business
size standards, liquidated damages, protests, etc. This report does not
address thresholds that are not acquisition-related.
B. What acquisition-related thresholds are not subject to escalation
adjustment under this case?
41 U.S.C. 1908 does not permit escalation of acquisition-related
thresholds established by the Construction Wage Rate Requirements
statute (Davis-Bacon Act), the Service Contract Labor Standards
statute, or the United States Trade Representative pursuant to the
authority of the Trade Agreements Act of 1979.
Also, the statute does not authorize DoD to escalate thresholds
originating in Executive order or the implementing agency (such as the
Department of Labor or the Small Business Administration), unless the
Executive order or agency regulations are first amended.
C. How does DoD analyze escalation of a statutory acquisition-related
threshold?
If an acquisition-related threshold is based on statute, the matrix
at https://www.acq.osd.mil/dpap/dars/pgi/pgi_htm/current/PGI201_1.htm
identifies the statute, and the statutory threshold, including the
original threshold and any subsequent revisions to it.
With the exception of thresholds set by the Construction Wage Rate
Requirements statute (Davis-Bacon Act), the Service Contract Labor
Standards statute, and trade agreements, 41 U.S.C. 1908 requires
adjustment of the acquisition-related thresholds for inflation using
the Consumer Price Index (CPI) for all-urban consumers. Acquisition-
related thresholds in statutes that were in effect on October 1, 2000,
are only subject to escalation from that date forward. Acquisition-
related thresholds in statutes that took effect after October 1, 2000,
are escalated from the date that they took effect. For purposes of this
proposed rule, the matrix includes calculation of escalation based on
the estimated CPI value for March 2020 (currently estimated at 258.6)
divided by the CPI for the date of enactment of the statute or
regulation (October 2000, for statutes enacted prior to October 1,
2000). DoD will subsequently adjust as necessary before issuance of the
final rule.
Once the escalation factor is applied to the acquisition-related
threshold, then statutory thresholds must be rounded as follows:
<$10,000 to nearest $500
$10,000-<$100,000 to nearest $5,000
$100,000-<$1 million to nearest $50,000
$1 million-<$10 million to nearest $500,000
$10 million-<$100 million to nearest $5 million
$100 million-<$1 billion to nearest $50 million
Note that since the last adjustment in 2015, the calculation
formula for over $1 million was revised in 41 U.S.C. 1908.
The calculations in this proposed rule are all based on the base
year amount, because escalated amounts in the 2015 rule were subject to
rounding and using those amounts as the base would distort future
calculations.
In 2015, some thresholds, although subject to inflation
calculation, did not actually change, because the inflation in 2015 was
insufficient to overcome the rounding requirements--i.e., the
escalation factor, when applied, did not cause the escalated values to
be high enough to round to the next higher value. However, for the FY
2020 calculations, some thresholds that did not escalate in 2015 have
increased through other statutory actions or will now escalate because
of five additional years of inflation. Likewise, some thresholds that
were escalated in 2015 will not escalate in 2020.
This proposed rule is based on a projected CPI of 258.6 for March
2020. If the actual CPI for March 2020 is higher than 258.6, then
additional statutory thresholds may be subject to escalation in the
final rule, even though not included in the proposed rule.
D. How does DoD analyze a nonstatutory acquisition-related threshold?
No statutory authorization is required to escalate thresholds that
are policy-based within the DFARS. For consistency, escalation of the
DoD policy acquisition-related thresholds is generally recommended
using the same formula applied to the statutory thresholds, unless a
reason has been provided for not doing so.
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,
nor does it change the applicability of any existing provisions or
clauses included in solicitations and contracts valued at or below the
simplified acquisition threshold, or for commercial items, including
COTS items.
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 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.
[[Page 19718]]
V. Executive Order 13771
The 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 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
maintains the status quo by adjusting thresholds for actual
inflationary increases in the CPI. However, an initial regulatory
flexibility analysis has been performed and is summarized as follows:
This rule proposes to amend the Defense Federal Acquisition
Regulation Supplement to implement 41 U.S.C. 1908 and to amend other
acquisition-related dollar thresholds that are based on policy rather
than statute in order to adjust for the changing value of the dollar.
41 U.S.C. 1908 requires adjustment every five years of statutory
acquisition-related dollar thresholds, except for Construction Wage
Rate Requirements statute (Davis-Bacon Act), Service Contract Labor
Standards statute, and trade agreements thresholds. While reviewing all
statutory acquisition-related thresholds, this case presented an
opportunity to also review all nonstatutory acquisition-related
thresholds in the DFARS that are based on policy.
The objective of the case is to maintain the status quo, by
adjusting acquisition-related thresholds for inflation. The legal basis
is 41 U.S.C. 1908. The statute does not authorize escalation of
thresholds originating in Executive orders or the implementing agency
(such as the Department of Labor or the Small Business Administration),
unless the Executive order or agency regulations are first amended.
This rule will likely affect to some extent all small business
concerns that submit offers or are awarded contracts by DoD. However,
most of the threshold changes proposed in this rule are not expected to
have any significant economic impact on small business concerns because
they are intended to maintain the status quo by adjusting for changes
in the value of the dollar. Data generated from the Federal Procurement
Data System (FPDS) for fiscal years 2017 through 2019, indicates that
DoD has awarded an average of 1,494,202 contracts to 56,851 unique
small entities during the three-year period. It is assumed that all
56,851 unique small entities may be affected by this rule, however, the
impact will most likely be beneficial, by preventing burdensome
requirements from applying to more and more acquisitions, as the dollar
loses value.
The rule does not impose any new reporting, recordkeeping, or
compliance requirements. Changes in thresholds for approved information
collection requirements are intended to maintain the status quo and
prevent those requirements from increasing over time.
The rule does not duplicate, overlap, or conflict with any other
Federal rules.
There are no practical alternatives that will accomplish the
objectives of the statute.
DoD will also consider comments from small entities concerning the
existing regulations in subparts affected by the 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-D036), in
correspondence.
VII. Paperwork Reduction Act
The Paperwork Reduction Act does apply. The proposed changes to the
DFARS do not impose new information collection requirements that
require the approval of the Office of Management and Budget (OMB) under
44 U.S.C. 3501, et seq. By adjusting the thresholds for inflation, the
status quo for the current information collection requirements are
maintained under OMB clearance numbers 0704-0229, DFARS Part 225,
Foreign Acquisition and related clauses and 0704-0286, DFARS Part 205,
Publicizing Contract Actions and Provision of Information to
Cooperative Agreement Holders.
List of Subjects in 48 CFR Parts 203, 205, 211, 212, 217, 219, 225,
228, 236, 237, 246, 250, and 252
Government Procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 203, 205, 211, 212, 217, 219, 225, 228,
236, 237, 246, 250, and 252 are proposed to be amended as follows:
0
1. The authority citation for 48 CFR parts 203, 205, 211, 212, 217,
219, 225, 228, 236, 237, 246, 250, and 252 continues to read as
follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 203--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF
INTEREST
203.1004 [Amended]
0
2. Amend section 203.1004 in paragraph (b)(2)(ii) by removing ``$5.5
million'' and adding ``$6 million'' in its place.
PART 205--PUBLICIZING CONTRACT ACTIONS
205.303 [Amended]
0
3. Amend section 205.303 by removing ``$7 million'' everywhere it
appears and adding ``$7.5 million'' in its place.
205.470 [Amended]
0
4. Amend section 205.470 by removing ``$1,000,000'' and adding ``$1.5
million'' in its place.
PART 211--DESCRIBING AGENCY NEEDS
211.503 [Amended]
0
5. Amend section 211.503 in paragraph (b) by removing ``$700,000'' and
adding ``$750,000'' in its place in two places.
PART 212--ACQUISITION OF COMMERCIAL ITEMS
212.271 [Amended]
0
6. Amend section 212.271 by removing ``$40,000'' and adding ``$45,000''
in its place.
PART 217--SPECIAL CONTRACTING METHODS
217.170 [Amended]
0
7. Amend section 217.170 in paragraphs (d)(1)(iv) and (d)(5)
introductory text by removing ``$135.5 million'' and adding ``$150
million'' in both places.
217.171 [Amended]
0
8. Amend section 217.171 in paragraph (d) by removing ``$678.5
million'' and adding ``$750 million'' in its place.
217.172 [Amended]
0
9. Amend section 217.172 in paragraphs (c), (d), and (f)(1) and (2) by
removing ``$678.5 million'' and adding ``$750 million'' in each place.
PART 219--SMALL BUSINESS PROGRAMS
219.502-2 [Amended]
0
10. Amend section 219.502-2 in paragraph (a)(i) by removing ``$2.5
million'' and adding ``$3 million'' in its place.
PART 225--FOREIGN ACQUISITION
225.7204 [Amended]
0
11. Amend section 225.7204 in paragraphs (a) and (b) by removing
``$13.5 million'' and adding ``$15 million'' in each place.
[[Page 19719]]
225.7703-2 [Amended]
0
12. Amend section 225.7703-2 by--
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a. In paragraph (b)(2)(i) by removing ``$93 million'' and adding ``$100
million'' in its place; and
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b. In paragraph (b)(2)(ii) introductory text by removing ``Director,
Defense Procurement and Acquisition Policy'' and adding ``Principal
Director, Defense Pricing and Contracting'' in its place and by
removing ``$93 million'' and adding ``$100 million'' in its place.
PART 228--BONDS AND INSURANCE
228.102-1 [Amended]
0
13. Amend section 228.102-1, in the introductory text and paragraph
(1), by removing ``$35,000'' and adding ``$40,000'' in its place in
both places.
PART 236--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS
236.303-1 [Amended]
0
14. Amend section 236.303-1 in paragraph (a)(4)(i) introductory text
and (a)(4)(ii) by removing ``$4 million'' and adding ``$4.5 million''
in its place in both places.
PART 237--SERVICE CONTRACTING
237.170-2 [Amended]
0
15. Amend section 237.170-2 in paragraphs (a)(1) and (2) by removing
``$93 million'' and adding ``$100 million'' in its place in both
places.
PART 246--QUALITY ASSURANCE
0
16. Amend section 246.402 introductory text by removing ``$300,000''
and adding ``$350,000'' in its place.
PART 250--EXTRAORDINARY CONTRACTUAL ACTIONS AND THE SAFETY ACT
250.102-1 [Amended]
0
17. Amend section 250.102-1 in paragraph (b) by removing ``$70,000''
and adding ``$75,000'' in its place.
250.102-1-70 [Amended]
0
18. Amend section 250.102-1-70 in paragraph (b)(1) by removing
``$70,000'' and adding ``$75,000'' in its place.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
252.225-7003 [Amended]
0
19. Amend section 252.225-7003 by--
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a. Removing the clause date ``(OCT 2015)'' and adding ``(DATE)'' in its
place; and
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b. In paragraph (b)(1), removing ``$13.5 million'' and adding ``$15
million'' in its place; and
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c. In paragraph (b)(2)(i) removing ``$700,000'' and adding ``$750,000''
in its place.
[FR Doc. 2020-06733 Filed 4-7-20; 8:45 am]
BILLING CODE 5001-06-P