[Federal Register Volume 88, Number 20 (Tuesday, January 31, 2023)]
[Proposed Rules]
[Pages 6605-6608]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-01296]



  Federal Register / Vol. 88 , No. 20 / Tuesday, January 31, 2023 / 
Proposed Rules  

[[Page 6605]]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 203, 204, 206, 212, 215, and 235

[Docket DARS-2023-0002]
RIN 0750-AL57


Defense Federal Acquisition Regulation Supplement: Defense 
Commercial Solutions Opening (DFARS Case 2022-D006)

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 2022 that authorizes DoD to 
acquire innovative commercial products and commercial services using 
general solicitation competitive procedures, as well as a section of 
the National Defense Authorization Act for Fiscal Year 2023 that makes 
an amendment to that authority.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before April 3, 2023, to be considered in 
the formation of the final rule.

ADDRESSES: Submit comments identified by DFARS Case 2022-D006, using 
either of the following methods:
    [cir] Federal eRulemaking Portal: https://www.regulations.gov. 
Search for ``DFARS Case 2022-D006.'' Select ``Comment'' and follow the 
instructions to submit a comment. Please include ``DFARS Case 2022-
D006'' on any attached documents.
    [cir] Email: [email protected]. Include DFARS Case 2022-D006 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. Jeanette Snyder, 703-508-7524.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD is proposing to revise the DFARS to implement section 803 of 
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2022 
(Pub. L. 117-81) and section 814 of the NDAA for FY 2023 (Pub. L. 117-
263). Section 803 modifies 10 U.S.C. 2380c (redesignated as 10 U.S.C. 
3458) to give DoD the authority to acquire innovative commercial 
products and commercial services through a competitive selection of 
proposals resulting from a general solicitation and the peer review of 
such proposals. Section 803 of the NDAA for FY 2022 also repealed 
section 879 of the NDAA for FY 2017, which authorized a pilot program 
providing the same authority for a limited period of time. Section 814 
amends 10 U.S.C. 3458 to replace ``fixed-price incentive fee 
contracts'' with ``fixed-price incentive contracts''.

II. Discussion and Analysis

    This rule proposes to modify DFARS part 212 to add a new subpart 
212.7X, Defense Commercial Solutions Opening, to implement section 803 
of the NDAA for FY 2022, which permanently authorizes DoD to acquire 
innovative commercial products and commercial services through the use 
of general solicitation competitive procedures and the peer review of 
such proposals in conjunction with a FAR part 12 contract. The proposed 
new subpart 212.7X provides the scope, definitions, policy and 
procedures, and limitations associated with the commercial solutions 
opening. This proposed rule, at DFARS 212.7X02, Policy, authorizes 
contracting officers to use a general solicitation (known as a 
commercial solutions opening (CSO))--
     To obtain innovative solutions or potential capabilities 
that fulfill requirements;
     To close capability gaps, or provide potential innovative 
technological advancements; and
     When meaningful proposals with varying technical or 
scientific approaches can be reasonably anticipated.
    DFARS 212.7X02 instructs contracting officers to--
     Award any resulting CSO contracts on a fixed-price basis, 
including fixed-price incentive contracts;
     Treat products and services acquired as commercial 
products or commercial services; and
     Use the subpart 212.7X procedures in conjunction with FAR 
part 35 and DFARS part 235 when acquiring research and development.
    A CSO seeks innovative solutions, and DFARS 212.7X01 adds a 
definition of ``innovative'' as follows: (1) any technology, process, 
or method, including research and development, that is new as of the 
date of submission of a proposal; or (2) any application that is new as 
of the date of submission of a proposal of a technology, process, or 
method existing as of such date.
    This proposed rule also modifies DFARS 203, 204, 206, 215, 217, and 
235 to add cross-references to CSOs.

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

    This 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, for commercial 
products including commercially available off-the-shelf items, or for 
commercial services.

IV. Expected Impact of the Rule

    This proposed rule implements the permanent statutory authorization 
for DoD to acquire innovative commercial products and commercial 
services through a competitive selection of proposals resulting from a 
general solicitation known as a CSO and the peer review of such 
proposals in conjunction with a FAR part 12 contract. This rule is 
expected to impact the Government and large and small entities by 
simplifying solicitation, evaluation, and award procedures, which 
should decrease acquisition cost and, thus, be less burdensome for all 
parties. The use of a CSO in conjunction with a FAR part 12 contract is 
also expected to benefit contractors and offerors as it will allow for 
the use of existing commercial contracting procedures and operating 
systems, which decreases burden on both large and small entities. As a 
result, large and small entities may be more willing to enter into 
contracts with DoD. Therefore, DoD expects to benefit by having greater 
access to technologies not previously accessible.

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

[[Page 6606]]

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 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 only 11 contracts were awarded annually to small entities as a 
result of a commercial solutions opening during the five-year period of 
the pilot program from fiscal years 2018 to 2022. However, an initial 
regulatory flexibility analysis has been performed and is summarized as 
follows:
    This proposed rule is necessary to implement section 803 of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2022 
(Pub. L. 117-81) and section 814 of the NDAA for FY 2023 (Pub. L. 117-
263). Section 803 modifies 10 U.S.C. 2380c (redesignated as 10 U.S.C. 
3458) to permanently authorize DoD to acquire innovative commercial 
products and commercial services through a competitive selection of 
proposals resulting from a general solicitation, known as a commercial 
solutions opening (CSO), and the peer review of such proposals in 
conjunction with a FAR part 12 contract. Section 814 amends 10 U.S.C. 
3458 to replace ``fixed-price incentive fee contracts'' with ``fixed-
price incentive contracts''.
    The objective of this proposed rule is to implement section 803 to 
permanently authorize DoD to acquire innovative commercial products and 
commercial services through a competitive selection of proposals 
resulting from a CSO and the peer review of such proposals. This 
proposed rule authorizes DoD to obtain innovative solutions or 
potential capabilities to fulfill requirements, close capability gaps, 
or provide potential technological advancements that are new as of the 
date of submission of a proposal or that is a new application as of the 
date of submission of a proposal of a technology, process, or method 
existing as of such date. The use of a CSO with a FAR part 12 
commercial contract is intended to bring new entrants into the DoD 
marketplace. The legal basis for the rule is section 803 of the NDAA 
for FY 2022.
    Section 879 of the NDAA for FY 2017 (Pub. L. 114-328) authorized a 
pilot program for the Defense CSO (the pilot), which was repealed by 
section 803 of the NDAA for FY 2022. During the pilot, from FY 2018 to 
FY 2022, DoD awarded a total of 89 contracts as a result of CSOs, with 
56, or 63 percent, being awarded to small entities over the five-year 
period. Approximately 11 contracts were awarded to small entities each 
year. Data from the System for Award Management revealed there were 
420,000 small entities registered as of January 2022. However, since 
the use of a CSO with a FAR part 12 contract is intended to attract new 
entrants into the market, this number may not fully capture the number 
of small entities to which this rule may apply. Therefore, DoD cannot 
provide a more precise estimate of the number of small entities to 
which this rule may apply.
    This proposed rule does not impose any new reporting, 
recordkeeping, or other compliance requirements for small entities.
    The proposed rule does not duplicate, overlap, or conflict with any 
other Federal rules.
    There are no known alternatives that would accomplish the stated 
objectives of the applicable 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 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 2022-D006), in 
correspondence.

VIII. Paperwork Reduction Act

    This proposed rule does not contain any new 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 Parts 203, 204, 206, 212, 215, and 235.

    Government procurement.

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

    Therefore, 48 CFR parts 203, 204, 206, 212, 215, and 235 are 
proposed to be amended as follows:

0
1. The authority citation for 48 CFR parts 203, 204, 206, 212, 215, and 
235 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

0
2. Add section 203.104-1 to subpart 203.1 to read as follows:


203.104-1   Definitions.

    The definition of Federal agency procurement at FAR 3.104-1 also 
includes commercial solutions openings.

PART 204--ADMINISTRATIVE AND INFORMATION MATTERS

0
3. Amend section 204.1603 by revising paragraph (a)(3)(A)(2) and adding 
a sentence at the end of paragraph (a)(4) to read as follows:


204.1603   Procedures.

    (a) * * *
    (3) * * *
    (A) * * *
    (2) Use S to identify broad agency announcements and commercial 
solutions openings.
* * * * *
    (4) * * * Use C in position 10 to identify the solicitation as a 
commercial solutions opening.
* * * * *

PART 206--COMPETITION REQUIREMENTS

0
4. Amend section 206.102 by adding paragraph (d)(4) to read as follows:


206.102   Use of competitive procedures.

    (d) * * *
    (4) Competitive selection of proposals based on a review by 
scientific, technological, or other subject-matter expert peers 
resulting from a commercial solutions opening as described in subpart 
212.7X (10 U.S.C. 3458) is a competitive procedure.

[[Page 6607]]

PART 212--ACQUISITION OF COMMERCIAL PRODUCTS AND COMMERCIAL 
SERVICES

0
5. Amend section 212.102 by adding paragraph (a)(i)(B)(3) to read as 
follows:


212.102   Applicability.

    (a) * * *
    (i) * * *
    (B) * * *
    (3) 10 U.S.C. 3458--Supplies or services resulting from a 
commercial solutions opening pursuant to subpart 212.7X.
* * * * *
0
6. Amend section 212.203 by adding paragraph (3) to read as follows:


212.203   Procedures for solicitation, evaluation, and award.

* * * * *
    (3) See subpart 212.7X for acquisitions resulting from a commercial 
solutions opening.
0
7. Add subpart 212.7X, consisting of sections 212.7X00 through 
212.7X05, to read as follows:
SUBPART 212.7X--DEFENSE COMMERCIAL SOLUTIONS OPENING
Sec.
212.7X00 Scope of subpart.
212.7X01 Definition.
212.7X02 Policy.
212.7X03 Limitations.
212.7X04 Procedures.
212.7X05 Congressional notification.

SUBPART 212.7X--DEFENSE COMMERCIAL SOLUTIONS OPENING


212.7X00   Scope of subpart.

    This subpart implements section 803 of the National Defense 
Authorization Act for Fiscal Year 2022 (Pub. L. 117-81) (10 U.S.C. 
3458) for the acquisition of innovative commercial products or 
commercial services through the use of a general solicitation known as 
a commercial solutions opening (CSO).


212.7X01   Definition.

    As used in this subpart--
    Innovative means--
    (1) Any technology, process, or method, including research and 
development, that is new as of the date of submission of a proposal; or
    (2) Any application that is new as of the date of submission of a 
proposal of a technology, process, or method existing as of such date.


212.7X02   Policy.

    (a) Contracting officers may only use a CSO--
    (1) To obtain innovative solutions or potential capabilities that 
fulfill requirements;
    (2) To close capability gaps, or provide potential innovative 
technological advancements; and
    (3) When meaningful proposals with varying technical or scientific 
approaches can be reasonably anticipated.
    (b) Notwithstanding the limitations at FAR 12.207(a) and (e), 
contracts awarded pursuant to a CSO shall be fixed-price, including 
fixed-price incentive contracts. When using a fixed-price incentive 
type contract, see FAR 12.214 and 16.204 for additional requirements.
    (c) Contracting officers shall treat products and services acquired 
using a CSO as commercial products or commercial services.
    (d) When using a CSO to acquire research and development, 
contracting officers shall use the procedures of this subpart in 
conjunction with FAR part 35 and part 235. A CSO is not subject to the 
limitations at 235.016 and may be used to fulfill requirements for 
research and development, ranging from advanced component development 
through operational systems development.


212.7X03   Limitations.

    Contracting officers shall follow the procedures at PGI 212.7X03 to 
obtain senior procurement executive approval to award a contract in 
excess of $100 million resulting from a CSO.


212.7X04   Procedures.

    This section prescribes procedures for the use of a CSO.
    (a) The CSO shall--
    (1) Describe the agency's interest for an individual program 
requirement or for broadly defined areas of interest covering the full 
range of the agency's requirements;
    (2) Specify the technical data required that may be necessary to 
meet DoD's minimum requirements (see 227.7102 and 227.7202);
    (3) Describe the evaluation factors for selecting proposals to 
include--
    (i) Technical and importance to agency programs as the primary 
evaluation factors;
    (ii) Price to the extent appropriate, but at a minimum to determine 
that the price is fair and reasonable; and
    (iii) Relative importance of the factors, and the method of 
evaluation;
    (4) Specify the period of time during which proposals submitted in 
response to the CSO will be accepted; and
    (5) Contain instructions for the preparation and submission of 
proposals.
    (b) The contracting officer shall publicize the CSO through the 
Governmentwide point of entry and, if authorized pursuant to FAR 
subpart 5.5, may also publish a notice regarding the CSO in noted 
scientific, technical, or engineering periodicals. The contracting 
officer shall publish the notice at least annually.
    (c) Proposals received in response to the CSO shall be evaluated in 
accordance with evaluation factors specified therein through a 
scientific, technological, or other subject-matter expert peer review 
process. Written evaluation reports on individual proposals are 
required, but proposals need not be evaluated against each other since 
they are not submitted in response to a common performance work 
statement or statement of work.
    (d) Synopsis of proposed contract actions under FAR subpart 5.2 of 
individual contract actions based upon proposals received in response 
to the CSO is not required. The notice published pursuant to paragraph 
(b) of this section fulfills the synopsis requirement.
    (e) When a small business concern would otherwise be selected for 
award but is considered not responsible, follow the SBA Certificate of 
Competency procedure (see FAR subpart 19.6).
    (f) The contracting officer shall document the decision that the 
requirements of this subpart have been met and include the 
documentation in the contract file.


212.7X05   Congressional notification.

    See PGI 212.7X05 for congressional notification requirements for 
contracts valued at more than $100 million that are awarded pursuant to 
a CSO.

PART 215--CONTRACTING BY NEGOTIATION

0
8. Amend section 215.371-4 by adding paragraph (a)(6) to read as 
follows:


215.371-4   Exceptions.

    (a) * * *
    (6) Acquisitions under a commercial solutions opening pursuant to 
subpart 212.7X.
* * * * *
0
9. Add subpart 215.6, consisting of sections 215.602 and 215.604, to 
read as follows:

SUBPART 215.6--UNSOLICITED PROPOSALS


215.602   Policy.

    The policy at FAR 15.602 applies to commercial solutions openings.

[[Page 6608]]

215.604   Agency points of contact.

    (a)(3) The guidance at FAR 15.604(a)(3) applies to commercial 
solutions openings.

PART 235--RESEARCH AND DEVELOPMENT CONTRACTING

0
10. Amend section 235.006-71 by revising paragraph (a) to read as 
follows:


235.006-71   Competition.

    (a)(1) Use of a broad agency announcement with peer or scientific 
review for the award of science and technology proposals in accordance 
with 235.016(a) fulfills the requirement for full and open competition 
(see 206.102(d)(2)).
    (2) Use of a commercial solutions opening with scientific, 
technological, or other subject-matter expert peer review for the award 
of innovative solutions or potential capabilities in accordance with 
subpart 212.7X fulfills the requirement for full and open competition 
(see 206.102(d)(4)).
* * * * *
[FR Doc. 2023-01296 Filed 1-30-23; 8:45 am]
BILLING CODE 5001-06-P