[Federal Register Volume 86, Number 165 (Monday, August 30, 2021)]
[Proposed Rules]
[Pages 48366-48368]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-18341]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 204

[Docket DARS-2021-0017]
RIN 0750-AL48


Defense Federal Acquisition Regulation Supplement: Contract 
Closeout Authority for DoD Services Contracts (DFARS Case 2021-D012)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Proposed rule.

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[[Page 48367]]

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 2021.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before October 29, 2021, to be considered 
in the formation of the final rule.

ADDRESSES: Submit comments identified by DFARS Case 2021-D012, using 
any of the following methods:
    [cir] Federal eRulemaking Portal: https://www.regulations.gov. 
Search for ``DFARS Case 2021-D012.'' Select ``Comment'' and follow the 
instructions to submit a comment. Please include your name, company 
name (if any), and ``DFARS Case 2021-D012'' on any attached document.
    [cir] Email: [email protected]. Include DFARS Case 2021-D012 in 
the subject line of the message.
    Comments received generally will be posted without change to 
https://www.regulations.gov, including any personal information 
provided. To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission 
to verify posting.

FOR FURTHER INFORMATION CONTACT: Ms. Kimberly R. Ziegler, telephone 
571-372-6095.

SUPPLEMENTARY INFORMATION:

I. Background

    This rule proposes to amend DFARS subpart 204.8 to implement 
section 820 of the National Defense Authorization Act (NDAA) for Fiscal 
Year (FY) 2021 (Pub. L. 116-283). Section 820 amends section 836(b) of 
the NDAA for FY 2017 (Pub. L. 114-328), as modified by section 824 of 
the NDAA for FY 2018 (Pub. L. 115-91). Section 836 authorizes DoD 
contracting officers to close out certain physically complete contracts 
or groups of contracts through modification of such contracts, without 
completing the requirements of Federal Acquisition Regulation (FAR) 
4.804-5(a)(3) through (15) based upon the age of the contract action.
    DoD published a final rule at 84 FR 18153 on April 30, 2019, to 
implement sections 836 of the NDAA for FY 2017 and 824 of the NDAA for 
FY 2018. The final rule provided similar authorities for contracts 
meeting certain criteria that were entered into on a date that was at 
least 17 fiscal years prior to the current fiscal year.

II. Discussion and Analysis

    Section 820 expands the application of the expedited contract 
closeout authority of section 836 of the NDAA for FY 2017, implemented 
at DFARS 204.804(3)(i)(A), to certain contracts or groups of contracts 
that were awarded at least 7 or 10 fiscal years before the current 
fiscal year and have completed performance or delivery at least four 
years prior to the current fiscal year.
    DFARS 204.804(3)(i)(A) currently provides a blanket application of 
the 17 fiscal year standard, when certain requirements at 
204.804(3)(i)(B) and (C) are met. Section 820 provides two new 
standards, one of which provides a similar blanket application, but the 
number of fiscal years is reduced from 17 to 7. The second standard of 
at least 10 fiscal years only applies to contracts or groups of 
contracts for military construction, as defined in 10 U.S.C. 2801, or 
shipbuilding. Both new standards require physical completion (see FAR 
4.804-4) at least four years prior to the current fiscal year.

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 proposed rule does not create any new solicitation provisions 
or contract clauses. It does not impact any existing solicitation 
provisions or contract clauses or their applicability to contracts 
valued at or below the simplified acquisition threshold or for 
commercial items, including COTS items.

IV. Expected Impact of the Rule

    DFARS 204.804(3)(i) currently provides for the expedited closeout 
of contracts or groups of contracts without completion of a 
reconciliation audit or other corrective actions required by FAR 4.804-
5(a)(3) through (15) if certain criteria are met. If a contract was 
entered into at least 17 years prior to the current fiscal year, is 
physically complete, and has been determined not reconcilable, the 
contracting officer may close the contract through a negotiated 
settlement.
    This rule reduces the age requirement from 17 years to 10 years for 
military construction and shipbuilding and 7 years for all other 
contract actions. The rule adds a new requirement that these contracts 
must be physically complete at least four years prior to the current 
fiscal year.
    The expanded authority will apply to more recent contracts, subject 
to the other criteria in DFARS 204.804(3)(i), to reduce the current 
backlog and administration requirements for contracts eligible for 
closeout.

V. 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.

VI. 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. This rule is not 
anticipated to be a major rule under 5 U.S.C. 804.

VII. 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 this rule 
implements requirements primarily for the Government. 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 (DFARS) to implement section 820 of the National 
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 (Pub. L. 
116-283). Section 820 expands the application of the expedited contract 
closeout authority of section 836 of the NDAA for FY 2017, implemented 
at DFARS 204.804(3)(i)(A), to certain contracts or groups of contracts 
that were awarded at least 7 to 10 FYs before the current FY and have 
completed performance or delivery at least four years prior to the 
current FY. The new 10-year standard

[[Page 48368]]

will apply to contracts or groups of contracts for military 
construction, as defined in 10 U.S.C. 2801, or shipbuilding, while the 
7-year standard will apply to all other contracts.
    The objective of the rule is to implement the requirements of 
section 820, which expands the application of the expedited contract 
closeout authority of section 836 of the NDAA for FY 2017 to more 
recent, physically complete contracts. The legal basis of the rule is 
section 820 of the NDAA for FY 2021.
    This rule will likely affect small entities that have been or will 
be awarded DoD contracts, including those under FAR part 12 procedures 
for the acquisition of commercial items, including commercially 
available off-the-shelf items. Data was obtained from the Electronic 
Data Access module of the Procurement Integrated Enterprise Environment 
for contracts that were physically completed at least four years ago 
and are eligible for closeout between the new standard of 7 or 10 years 
and the previous standard of at least 17 fiscal years after award. The 
data were then compared to the Federal Procurement Data System (FPDS) 
to estimate the number of contracts awarded to small entities. 
Contracts subject to the previous standard of 17 years are included in 
this estimate.
    As of April 2021, the FPDS data indicate that approximately 29,200 
contracts, eligible for expedited closeout under the 7-year standard, 
were awarded to an estimated 4,490 unique small entities. An additional 
estimated 1,775 contracts, subject to the 10-year standard, were 
awarded to approximately 576 small entities. As a result, DoD estimates 
that approximately 5,066 small entities will have the opportunity to 
benefit from the expanded expedited contract authorities provided in 
this rule.
    The rule does not impose any new reporting, recordkeeping, or 
compliance requirements.
    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 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 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 2021-D012), in 
correspondence.

VIII. Paperwork Reduction Act

    This rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Part 204

    Government procurement.

Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.

    Therefore, 48 CFR part 204 is proposed to be amended as follows:

PART 204--ADMINISTRATIVE AND INFORMATION MATTERS

0
1. The authority citation for 48 CFR part 204 continues to read as 
follows:

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

0
2. Amend section 204.804 by revising paragraph (3)(i) to read as 
follows:


Sec.  204.804  Closeout of contract files.

* * * * *
    (3)(i) In accordance with section 836 of the National Defense 
Authorization Act for Fiscal Year 2017 (Pub. L. 114-328), section 824 
of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 
115-91), and section 820 of the National Defense Authorization Act for 
Fiscal Year 2021 (Pub. L. 116-283), contracting officers may close out 
contracts or groups of contracts through issuance of one or more 
modifications to such contracts without completing a reconciliation 
audit or other corrective action in accordance with FAR 4.804-5(a)(3) 
through (15), as appropriate, if each contract--
    (A)(1) For military construction (as defined at 10 U.S.C. 2801) or 
shipbuilding, was awarded at least 10 fiscal years before the current 
fiscal year; or
    (2) For all other contracts, was awarded at least 7 fiscal years 
before the current fiscal year;
    (B) The performance or delivery was completed at least 4 years 
prior to the current fiscal year; and
    (C) Has been determined by a contracting official, at least one 
level above the contracting officer, to be not otherwise reconcilable, 
because--
    (1) The contract or related payment records have been destroyed or 
lost; or
    (2) Although contract or related payment records are available, the 
time or effort required to establish the exact amount owed to the U.S. 
Government or amount owed to the contractor is disproportionate to the 
amount at issue.
* * * * *
[FR Doc. 2021-18341 Filed 8-27-21; 8:45 am]
BILLING CODE 5001-06-P