[Federal Register Volume 86, Number 96 (Thursday, May 20, 2021)]
[Rules and Regulations]
[Pages 27275-27277]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-10580]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 204, 212 and 252
[Docket DARS-2019-0047]
RIN 0750-AJ52
Defense Federal Acquisition Regulation Supplement: Expediting
Contract Closeout (DFARS Case 2017-D042)
AGENCY: Defense Acquisition Regulation 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 permit expedited contract
closeout through a waiver by the contractor and the Government of
entitlement to any residual dollar amounts that are due to either party
at the time of contract closeout. The changes are necessary to
establish an expedited contract closeout agreement that will save
administrative costs for both the contractor and the Government.
DATES: Effective May 20, 2021.
FOR FURTHER INFORMATION CONTACT: Ms. Kimberly Ziegler, telephone 571-
372-6095.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published a proposed rule in the Federal Register at 85 FR
19719 on April 8, 2020, to implement an expedited contract closeout
process in the DFARS. The rule adds a new contract clause at DFARS
252.204-7022, Expediting Contract Closeout, and a prescription for the
clause at DFARS 204.804-70. The clause will be used when the
contracting officer intends to expedite the contract closeout process
by having the contractor and the Government waive entitlement to a
residual dollar amount up to $1,000 at the time of contract closeout.
Four respondents submitted public comments in response to the proposed
rule.
II. Discussion and Analysis
DoD reviewed the public comments in the development of the final
rule. One respondent provided a comment on the DoD budget that was
outside the scope of this rule. A discussion of the remaining comments
and the changes made to the rule as a result of those comments is
provided, as follows:
A. Summary of Significant Changes From the Proposed Rule
Minor edits were made to the final rule to account for baseline
updates necessitated by publication of other DFARS interim or final
rules. Edits were made to the proposed rule to clarify the Government's
intent regarding the determination of a residual amount.
B. Analysis of Public Comments
1. General Support for the Rule
Comment: Some respondents express support for the rule.
Response: DoD acknowledges support for the rule.
2. Application of the Rule
Comment: Some respondents support expanding the application of the
expedited closeout process to other procurements, to include those
issued under FAR parts 8, 15, and 16, and DoD-funded assisted
acquisitions regardless of awarding agency.
Response: The rule does not exclude DoD contracts or orders issued
against DoD contracts. DoD does not have the authority to impose the
expedited contract closeout clause on non-DoD contracts or assisted
acquisitions conducted by non-DoD agencies.
3. Clarification of the Process
Comment: Some respondents express concern about the bilateral
agreement to waive the entitlement of up to $1,000 occurring in advance
of contract closeout. A respondent recommends that the determination to
invoke the clause and the expedited contract closeout process be
mutually agreed by the Government and contractor at time of contract
closeout.
Response: Use of the clause is not mandatory. The rule permits
contracting officers to insert the clause in solicitations and
resulting contracts, at their discretion, unless the successful offeror
indicates they do not agree to the inclusion of the clause in the
resulting contract. The agreement to waive the entitlement at the time
of contract award permits the Government and contractor to complete the
applicable closeout procedures at FAR 4.804, without having to execute
a bilateral contract modification to invoke the clause or close the
contract. The Government and contractor should reach a bilateral
agreement during the normal closeout processes in FAR 4.804. The text
of the final rule is revised to clarify that completion of the contract
closeout procedures at FAR 4.804 is required.
[[Page 27276]]
Comment: Some respondents request clarification on how the residual
amount will be determined.
Response: Contracting officers are still required to complete all
of the applicable closeout requirements at FAR 4.804 when executing the
expedited contract closeout procedures under this rule. The closeout
requirements at FAR 4.804 should result in a determination of any
residual dollar amounts owed to either party at the end of the
contract.
4. Integrity and Public Trust
Comment: A respondent expresses concern that the proposed rule
might negatively impact public trust because the waiver process may
provide a mechanism for abuse by either contractors or the Government.
Of specific concern is the potential for a contractor being permitted
to provide less than the contract requires or, conversely, with the
Government paying less than is legitimately owed under the contract
price structure. The respondent expresses concern that public
perception of the potential for abuse could outweigh the benefits of
the intended cost efficiencies.
Response: FAR 4.804-5 directs contracting officers to initiate
contract closeout after receiving evidence of physical completion, as
defined in FAR 4.804-4.
5. Initial Regulatory Flexibility Analysis
Comment: A respondent questions whether the impact on small
business was accurately reflected in the initial regulatory flexibility
analysis and asserts that the numbers were not comprehensive enough to
estimate the impact on small business.
Response: See section VI of this preamble for revised and expanded
analysis of the impact on small business.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT) and for Commercial Items, Including Commercially
Available Off-the-Shelf (COTS) Items
This rule creates a new clause at DFARS 252.204-7022, Expediting
Contract Closeout. The objective of the rule is to establish an
expedited contract closeout agreement and instructions that will save
administrative costs for both the contractor and the Government. DoD
plans to apply this clause to solicitations and contracts for
acquisitions valued at or below the simplified acquisition threshold
and to acquisitions of commercial items, including COTS items. These
categories of acquisitions are those most likely to benefit from
expedited contract closeout.
IV. Executive Order 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,
or reducing costs, or 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.
V. Congressional Review Act
As required by the Congressional Review Act (5 U.S.C. 801-808)
before an interim or final rule takes effect, DoD will submit a copy of
the interim or final rule with the form, Submission of Federal Rules
under the Congressional Review Act, to the U.S. Senate, the U.S. House
of Representatives, and the Comptroller General of the United States. A
major rule under the Congressional Review Act cannot take effect until
60 days after it is published in the Federal Register. The Office of
Information and Regulatory Affairs has determined that this rule is not
a major rule as defined by 5 U.S.C. 804.
VI. Regulatory Flexibility Act
A final regulatory flexibility analysis (FRFA) has been prepared
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.
The FRFA is summarized as follows:
This rule amends the Defense Federal Acquisition Regulation
Supplement (DFARS) to permit expedited contract closeout through the
waiver of entitlement by the contractor and the Government to any
residual contract dollar amount of $1,000 or less at the time of
contract closeout. The new DFARS clause will apply to solicitations and
contracts, to include contracts valued at or below the simplified
acquisition threshold and contracts for commercial items and
commercially available off-the-shelf (COTS) items.
The objective of the rule is to avoid expending contractor and
Government administrative resources in amounts greater than a residual
contract dollar amount of $1,000 or less at the time of contract
closeout.
One public comment questioned whether the impact on small business
was accurately reflected in the initial regulatory flexibility analysis
(IRFA) and asserted that the numbers were not comprehensive enough to
estimate the impact on small business. The IRFA estimated the impact
based only upon those contracts administered by the Defense Contract
Management Agency; however, the data did not identify the number of
contracts awarded to small entities. Since the initial assessment, DoD-
wide data was obtained and a more comprehensive FRFA has been
conducted. There were no changes made to the rule as a result of this
comment and the expanded analysis.
The rule will likely affect a large number of small entities that
have been or will be awarded contracts, including those under FAR part
12 procedures for the acquisition of commercial items, including COTS
items. Data was obtained from the Electronic Data Access module of the
Procurement Integrated Enterprise Environment for physically complete
contracts that are eligible for closeout and have a residual contract
balance that is less than $1,000 but more than $0. These actions were
then compared to the Federal Procurement Data System to estimate the
number of those contracts awarded to small entities; however, the data
did not identify the number of unique small entities.
As of the end of fiscal year 2020, the data indicates that there
were an estimated 20,884 DoD contracts with total residual contract
amounts valued at approximately $1,844,101 that meet the criteria for
application of the rule. Of those 20,884 contracts, it is estimated
that 14,840 contracts with residual contract value of approximately
$1,294,859 were awarded to small entities. The data further reflects
that approximately 9,292 contracts had a remaining balance due to the
contractor of $1,000 or less and 5,548 contracts indicated a credit due
to the Government of $1,000 or less.
There are no known, significant, alternative approaches that would
accomplish the objectives of the rule.
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).
[[Page 27277]]
List of Subjects in 48 CFR Parts 204, 212, and 252
Government procurement.
Jennifer D. Johnson,
Regulatory Control Officer, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 204, 212, and 252 are amended as follows:
0
1. The authority citation for 48 CFR parts 204, 212, and 252 continues
to read as follows:
Authority: 41 US.C. 1303 and 48 CFR chapter 1.
PART 204--ADMINISTRATIVE AND INFORMATION MATTERS
0
2. Amend section 204.804 by adding paragraph (4) to read as follows:
204.804 Closeout of contract files.
* * * * *
(4) When using the clause at 252.204-7022, Expediting Contract
Closeout, to expedite contract closeout, determine the residual dollar
amount upon completion of all applicable closeout requirements of FAR
4.804.
0
3. Add section 204.804-70 to read as follows:
204.804-70 Contract clause.
Use the clause at 252.204-7022, Expediting Contract Closeout, in
solicitations and contracts, including solicitations and contracts
using FAR part 12 procedures for the acquisition of commercial items,
when the contracting officer intends to expedite contract closeout
through the mutual waiver of entitlement to a residual dollar amount of
$1,000 or less determined at the time of contract closeout.
PART 212--ACQUISITION OF COMMERCIAL ITEMS
0
4. Amend section 212.301 by adding paragraph (f)(ii)(M) to read as
follows:
212.301 Solicitation provisions and contract clauses for the
acquisition of commercial items.
* * * * *
(f) * * *
(ii) * * *
(M) Use the clause at 252.204-7022, Expediting Contract Closeout,
as prescribed in 204.804-70.
* * * * *
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
5. Add section 252.204-7022 to read as follows:
252.204-7022 Expediting Contract Closeout
As prescribed in 204.804-70, use the following clause:
Expediting Contract Closeout (MAY 2021)
(a) At the conclusion of all applicable closeout requirements of
Federal Acquisition Regulation 4.804, the Government and Contractor
shall mutually agree on the residual dollar amount remaining on the
contract. Both the Government and Contractor agree to waive payment
of any residual dollar amount of $1,000 or less to which either
party may be entitled at the time of contract closeout.
(b) A residual dollar amount includes all money owed to either
party at the end of the contract and as a result of the contract,
excluding amounts connected in any way with taxation or a violation
of law or regulation.
(c) For purposes of determining residual dollar amounts, offsets
(e.g., across multiple contracts or orders) may be considered only
to the extent permitted by law.
(End of clause)
[FR Doc. 2021-10580 Filed 5-19-21; 8:45 am]
BILLING CODE 5001-06-P