[Federal Register Volume 88, Number 205 (Wednesday, October 25, 2023)]
[Proposed Rules]
[Pages 73306-73308]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-23436]



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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Chapter 2

[Docket DARS-2023-0037]
RIN 0750-AL84


Defense Federal Acquisition Regulation Supplement: DoD Mentor-
Prot[eacute]g[eacute] Program (DFARS Case 2023-D011)

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 2023 that permanently 
authorizes and modifies the DoD Mentor-Prot[eacute]g[eacute] Program.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before December 26, 2023 to be considered 
in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2023-D011, using 
any of the following methods:
    [cir] Federal eRulemaking Portal: https://www.regulations.gov. 
Search for DFARS Case 2023-D011. Select ``Comment'' and follow the 
instructions to submit a comment. Please include ``DFARS Case 2023-
D011'' on any attached documents.
    [cir] Email: [email protected]. Include DFARS Case 2023-D011 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 856 of 
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2023 
(Pub. L. 117-263). Section 856 transferred section 831 of the NDAA for 
FY 1991 (Pub. L. 101-510; 10 U.S.C. 4901 note) to 10 U.S.C. 4902 and 
authorized the DoD Mentor-Prot[eacute]g[eacute] Program on a permanent 
basis. Section 856 also extends the term for program participation and 
removes the term limitation for mentors to incur costs under mentor-
prot[eacute]g[eacute] agreements entered into after December 23, 2022. 
Section 856 does not apply to mentor-prot[eacute]g[eacute] agreements 
entered into prior to December 23, 2022.

II. Discussion and Analysis

    DoD proposes to modify DFARS subpart 219.71 and DFARS appendix I to 
implement section 856 of the NDAA for FY 2023, which authorizes on a 
permanent basis and modifies the DoD Mentor-Prot[eacute]g[eacute] 
Program (the Program). This proposed rule removes all references to 
``pilot'' to acknowledge that the Program is no longer a temporary, 
pilot program. Removal of the deadline for entering into a mentor-
prot[eacute]g[eacute] agreement is also proposed, as this deadline is 
no longer applicable since the program is no longer authorized on a 
temporary basis. This proposed rule removes the specific dates for 
mentor reimbursements and credit toward subcontracting goals in its 
small business subcontracting plan under mentor-prot[eacute]g[eacute] 
agreements entered into after December 23, 2022.
    In addition, DoD proposes to implement other changes made by 
section 856. The dollar threshold for mentor eligibility is proposed to 
be changed from $100 million to $25 million. The program participation 
term is proposed to be extended from two years to three years. The 
proposed rule includes the addition of ``manufacturing, test and 
evaluation'' to the list of assistance that a mentor may provide to a 
prot[eacute]g[eacute] under a mentor-prot[eacute]g[eacute] agreement 
and the addition of ``manufacturing innovation institutes'' to the list 
of assistance that a mentor firm may obtain for the 
prot[eacute]g[eacute] firm under a mentor-prot[eacute]g[eacute] 
agreement.

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

    This proposed rule amends the clause at DFARS 252.232-7005, 
Reimbursement of Subcontractor Advance Payments--DoD Pilot Mentor-
Prot[eacute]g[eacute] Program, to remove the word ``Pilot'' from the 
clause title. However, this rule does not impose any new requirements 
on contracts at or below the SAT, for commercial products including 
COTS items, or for commercial services. The clause will continue to not 
apply to acquisitions at or below the SAT, to acquisitions of 
commercial products including COTS items, and to acquisitions of 
commercial services.

IV. Expected Impact of the Rule

    This proposed rule implements the permanent authorization of and 
statutory amendments to the DoD Mentor-Prot[eacute]g[eacute] Program. 
The purpose of the program is to provide incentives to DoD contractors 
to furnish eligible small business concerns with assistance designed 
to--
    (1) Enhance the capabilities of small business concerns to perform 
as subcontractors and suppliers under DoD contracts and other contracts 
and subcontracts; and
    (2) Increase the participation of small business concerns as 
subcontractors and suppliers under DoD contracts, other Federal 
Government contracts, and commercial contracts.
    Therefore, this proposed rule, when finalized, will benefit small 
business concerns that participate in the program by extending the 
opportunity to enter into DoD Mentor-Prot[eacute]g[eacute] agreements 
and extending the term of the agreements. This proposed rule is also 
expected to benefit large entities and the Government by expanding the 
defense industrial base.

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, as amended.

VI. Regulatory Flexibility Act

    DoD does not expect this proposed rule, when finalized, 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 proposed rule is only expected to impact a limited 
number of small entities that become prot[eacute]g[eacute]s under a DoD 
mentor-prot[eacute]g[eacute] agreement. However, an initial regulatory 
flexibility analysis has been performed and is summarized as follows:

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    This proposed rule is necessary to implement section 856 of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2023 
(Pub. L. 117-263). Section 856 transferred section 831 of the NDAA for 
FY 1991 (Pub. L. 101-510; 10 U.S.C. 4901 note) to 10 U.S.C. 4902 and 
authorized the DoD Mentor-Prot[eacute]g[eacute] Program on a permanent 
basis. Section 856 also extends the term for program participation and 
removes the term limitation for mentors to incur costs under agreements 
entered into after December 23, 2022.
    The objective of this proposed rule is to implement the permanent 
authorization of the DoD Mentor-Prot[eacute]g[eacute] Program and to 
make other Program changes. The legal basis for the rule is section 856 
of the NDAA for FY 2023.
    The number of new DoD mentor-prot[eacute]g[eacute] agreements 
entered into in FY 2021 was 50, with a total of 104 active agreements; 
in FY 2022, 29 new agreements were entered into, with a total of 62 
active agreements; and in FY 2023, 25 new agreements were entered into, 
with a total of 75 active agreements. The average number of new 
agreements entered into during the last three fiscal years was 
approximately 35 per year, with an average of 80 total active 
agreements per fiscal year. DoD estimates 44 new agreements will be 
entered into in FY 2024, with a total of 81 active agreements in place. 
As of June 5, 2023, there are 62 unique small entities with active 
agreements. Since the number of small entities that will enter into new 
agreements is unknown, DoD cannot provide a more precise estimate of 
the number of small entities to which this rule will apply.
    This proposed rule does not impose any new reporting, 
recordkeeping, or other compliance requirements for small entities.
    This proposed rule does not duplicate, overlap, or conflict with 
any other Federal rules.
    DoD did not identify any significant alternatives to the rule that 
would accomplish the stated objectives of the statute and that would 
minimize the significant economic impact of the rule on small entities. 
DoD does not expect this proposed rule, when finalized, to have a 
significant economic impact on a substantial number of small entities. 
Any impact is expected to be beneficial.
    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 2023-D011), in 
correspondence.

VII. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) applies to this 
proposed rule. However, these changes to the DFARS do not impose 
additional information collection requirements to the paperwork burden 
previously approved by the Office of Management and Budget (OMB) under 
OMB Control Number 0704-0332.

List of Subjects in 48 CFR Chapter 2

    Government procurement.

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

    Therefore, 48 CFR parts 219, 232, 252, and Appendix I to Chapter 2 
are proposed to be amended as follows:

0
1. The authority citation for 48 CFR parts 219, 232, 252, and Appendix 
I to Chapter 2 continues to read as follows:

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

PART 219--SMALL BUSINESS PROGRAMS

0
2. Revise section 219.7100 to read as follows:


219.7100  Scope.

    This subpart implements the DoD Mentor-Prot[eacute]g[eacute] 
Program (referred to as the Program) authorized under 10 U.S.C. 4902. 
The purpose of the Program is to provide incentives for DoD contractors 
to assist prot[eacute]g[eacute] firms in enhancing their capabilities 
and to increase participation of such firms in Government and 
commercial contracts.


219.7101  [Amended]

0
3. Amend section 219.7101 by removing the word ``Pilot''.


219.7103-1  [Amended]

0
4. Amend section 219.7103-1 by removing the word ``Pilot''.


219.7103-2  [Amended]

0
5. Amend section 219.7103-2 in paragraph (b) by removing the word 
``Pilot''.
0
6. Amend section 219.7104 by revising paragraphs (b) and (d) to read as 
follows:


219.7104  Developmental assistance costs eligible for reimbursement or 
credit.

* * * * *
    (b) Before incurring any costs under the Program, mentor firms must 
establish the accounting treatment of developmental assistance costs 
eligible for reimbursement or credit. For mentor-prot[eacute]g[eacute] 
agreements entered into prior to December 23, 2022, to be eligible for 
reimbursement under the Program, the mentor firm must incur the costs 
not later than September 30, 2026.
* * * * *
    (d) For mentor-prot[eacute]g[eacute] agreements entered into prior 
to December 23, 2022, developmental assistance costs incurred by a 
mentor firm not later than September 30, 2026, that are eligible for 
crediting under the Program, may be credited toward subcontracting plan 
goals as set forth in appendix I. For mentor-prot[eacute]g[eacute] 
agreements entered into on or after December 23, 2022, developmental 
assistance costs that are eligible for crediting under the Program may 
be credited toward subcontracting plan goals as set forth in appendix 
I.

PART 232--CONTRACT FINANCING


232.412-70  [Amended]

0
7. Amend section 232.412-70 in paragraph (b) by removing the word 
``Pilot''.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
8. Revise the clause heading, title, and date to read as follows:


252.232-7005  Reimbursement of Subcontractor Advance Payments--DoD 
Mentor-Prot[eacute]g[eacute] Program.

* * * * *

Reimbursement of Subcontractor Advance Payments--DoD Mentor-
Prot[eacute]g[eacute] Program (Date)

* * * * *
0
9. Amend appendix I to chapter 2--
0
a. By revising the appendix title;
0
b. In section I-100 by revising paragraph (a) introductory text.
0
c. In section I-102--
0
i. In paragraph (a)(3)(i) by removing ``$100'' and adding ``$25'' in 
its place;
0
ii. In paragraph (a)(3)(ii) by removing ``or''; and
0
iii. By adding paragraph (a)(3)(iv).
0
d. By revising section I-103.
0
e. In section I-106--
0
i. In paragraph (d)(1)(ii) by removing ``control'' and adding 
``control, manufacturing, test and evaluation,'' in its place; and
0
ii. By adding paragraph (d)(6)(vi).
0
f. In section I-107 by revising paragraph (k).
0
g. In section I-108 paragraph (a)(5) by removing ``2 years'' and adding 
``3 years'' in its place.
0
h. In section I-109 paragraph (b) by removing the word ``Pilot''.
0
i. In section I-111 by removing ``Director, OSBP'' and adding 
``Director,

[[Page 73308]]

OSBP, OUSD(A&S) or the Director, OSBP'' in its place.
0
j. In section I-112.2 by removing paragraph (a)(3) and redesignating 
paragraph (a)(4) as (a)(3).
    The revisions and additions read as follows:

Appendix I to Chapter 2--Policy and Procedures for the DoD Mentor-
Prot[eacute]g[eacute] Program

I-100 Purpose

    (a) This appendix implements the DoD Mentor-
Prot[eacute]g[eacute] Program (referred to as the Program) 
authorized under 10 U.S.C. 4902. The purpose of the Program is to 
provide incentives to DoD contractors to furnish eligible small 
business concerns with assistance designed to--
* * * * *

I-102 Participant Eligibility

    (a) * * *
    (3) * * *
    (iv) Is otherwise capable to assist in the development of 
prot[eacute]g[eacute] firms and is approved by the Director OSBP, 
OUSD(A&S).
* * * * *

I-103 Incentives for Mentors

    Mentors incurring costs through September 30, 2026, pursuant to 
a-mentor-prot[eacute]g[eacute] agreement approved prior to December 
23, 2022, and mentors incurring costs pursuant to a mentor-
prot[eacute]g[eacute] agreement approved on or after December 23, 
2023, may be eligible for--
    (a) Credit toward the attainment of its applicable 
subcontracting goals for unreimbursed costs incurred in providing 
developmental assistance to its prot[eacute]g[eacute] firm(s);
    (b) Reimbursement pursuant to the execution of a separately 
priced contract line item added to a DoD contract; or
    (c) Reimbursement pursuant to entering into a separate DoD 
contract upon determination by the Director, OSBP, of the cognizant 
military department or defense agency that unusual circumstances 
justify using a separate contract.
* * * * *

I-106 Development of Mentor-Prot[eacute]g[eacute] Agreements

* * * * *
    (d) * * *
    (6) * * *
    (vi) Manufacturing innovation institutes.
* * * * *

I-107 Elements of a Mentor-Prot[eacute]g[eacute] Agreement

* * * * *
    (k) A program participation term for the agreement that does not 
exceed 3 years. The agreement may be extended for a period not to 
exceed 2 years if approved by the Director, OSBP, OUSD(A&S). The 
Director, OSBP, of the cognizant military department or defense 
agency will submit requests for an extension of the agreement to the 
Director, OSBP, OUSD(A&S) for approval. The request will include a 
justification describing the unusual circumstances that warrant a 
term in excess of 3 years;
* * * * *
[FR Doc. 2023-23436 Filed 10-24-23; 8:45 am]
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