[Federal Register Volume 89, Number 59 (Tuesday, March 26, 2024)]
[Rules and Regulations]
[Pages 20874-20877]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06005]


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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: Final rule.

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SUMMARY: DoD is issuing a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement a section of the 
James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 
that permanently authorizes and modifies the DoD Mentor-
Prot[eacute]g[eacute] Program.

DATES: Effective March 26, 2024.

FOR FURTHER INFORMATION CONTACT: Ms. Jeanette Snyder, 703-508-7524.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD published a proposed rule in the Federal Register at 88 FR 
73306 on October 25, 2023, to implement section 856 of the James M. 
Inhofe 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) 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

[[Page 20875]]

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. One respondent submitted a public comment in response to the 
proposed rule.

II. Discussion and Analysis

    DoD reviewed the public comment in the development of the final 
rule. A discussion of the comment is provided, as follows:

A. Summary of Significant Changes From the Proposed Rule

    There are no significant changes from the proposed rule.

B. Analysis of Public Comment

    Comment: One respondent recommended the rule be amended to allow a 
prot[eacute]g[eacute] to have more than one mentor at a time, as long 
as the mentors are not competitors and do not have any conflicts of 
interest. The respondent indicated that this would align with the Small 
Business Administration (SBA) Mentor-Prot[eacute]g[eacute] Program 
(MPP), which allows a prot[eacute]g[eacute] to have two mentors at the 
same time.
    Response: This rule implements section 856 of the NDAA for FY 2023, 
which is codified at 10 U.S.C. 4902. Paragraph (c)(2) of 10 U.S.C. 4902 
indicates that a prot[eacute]g[eacute] firm may not be party to more 
than one mentor-prot[eacute]g[eacute] agreement concurrently. This 
means that a prot[eacute]g[eacute] may have only one mentor during the 
term of an agreement. Therefore, the proposed change is inconsistent 
with the statute. However, because the statute allows a 
prot[eacute]g[eacute] firm to participate in the DoD MPP for a 5-year 
period beginning on the date the prot[eacute]g[eacute] firm enters into 
its first mentor-prot[eacute]g[eacute] agreement, a 
prot[eacute]g[eacute] may have more than one mentor during the 5-year 
period as long as the prot[eacute]g[eacute] is not a party to more than 
one mentor-prot[eacute]g[eacute] agreement at a time. For example, if a 
prot[eacute]g[eacute] firm enters into a 2-year mentor-
prot[eacute]g[eacute] agreement with a mentor, then the 
prot[eacute]g[eacute] firm could enter into another mentor-
prot[eacute]g[eacute] agreement with a different mentor after the 
conclusion of the first agreement, as long as it did so within the 5-
year period and the second agreement does not extend beyond the 5-year 
period from date the prot[eacute]g[eacute] firm entered into its first 
mentor-prot[eacute]g[eacute] agreement. As such, a 
prot[eacute]g[eacute] firm under the DoD MPP may still benefit from 
having more than one mentor during its participation in the program.

C. Other Changes

    Minor editorial changes are made in appendix I, section I-106.

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

    This final 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 final 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 final 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 Federal 
Government contracts and subcontracts; and
    (2) Increase the participation of small business concerns as 
subcontractors and suppliers under DoD contracts, other Federal 
Government contracts, and contracts with commercial entities.
    Therefore, this final rule 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 final rule is also expected to benefit large 
entities and DoD 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. 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.

VII. Regulatory Flexibility Act

    A final regulatory flexibility analysis has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
and is summarized as follows:
    This final rule is necessary to implement section 856 of the James 
M. Inhofe 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) 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 rule is to 
implement the permanent authorization of the DoD Mentor-
Prot[eacute]g[eacute] Program and to make other Program changes.
    No significant issues were raised by the public comment in response 
to the initial regulatory flexibility analysis.
    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, 19 new agreements were entered into, 
with a total of 69 active agreements. The average number of new 
agreements entered into during the last three fiscal years was 
approximately 33, with an average of 78 total active agreements per 
fiscal year. DoD estimates 44 new agreements will be entered into in FY 
2024, with a total of 76 active agreements in place. As of January 5, 
2024, there are 62 unique small entities with active agreements. Since 
the number of small entities that

[[Page 20876]]

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 final rule does not impose any new reporting, recordkeeping, 
or other compliance requirements for small entities.
    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 rule to have a significant economic impact on 
small entities. Any impact is expected to be beneficial.

VIII. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) applies to this 
final 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, DoD Pilot Mentor-Prot[eacute]g[eacute] 
Program.

List of Subjects in 48 CFR Parts 219, 232, and 252 and Appendix I 
to Chapter 2

    Government procurement.

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

    Therefore, 48 CFR parts 219, 232, and 252 and appendix I to chapter 
2 are amended as follows:

0
1. The authority citation for 48 CFR parts 219, 232, and 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 the heading for subpart 219.71 to read as follows:

Subpart 219.71--DoD Mentor Prot[eacute]g[eacute] Program

0
3. Revise and republish 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
4. Amend section 219.7101 by removing ``Pilot''.


219.7103-1  [Amended]

0
5. Amend section 219.7103-1 by removing ``Pilot''.


219.7103-2  [Amended]

0
6. Amend 219.7103-2 in paragraph (b) by removing ``Pilot''.

0
7. 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
8. Amend section 232.412-70 by removing ``Pilot''.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
9. Amend section 252.232-7005 by revising the section heading and 
clause heading 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 (Mar 2024)

* * * * *

0
10. Amend appendix I to chapter 2 by--
0
a. Revising the appendix heading.
0
b. In section I-100, revising paragraph (a) introductory text.
0
c. In section I-102--
0
i. In paragraph (a)(3)(i), removing ``$100 million'' and adding ``$25 
million'' in its place;
0
ii. In paragraph (a)(3)(ii), removing ``or'';
0
iii. In paragraph (a)(3)(iii), removing the period and adding ``; or'' 
in its place; and
0
iv. Adding paragraph (a)(3)(iv).
0
d. Revising and republishing section I-103.
0
e. In section I-106--
0
i. Revising paragraph (d)(1)(ii); and
0
ii. Adding paragraph (d)(6)(vi).
0
f. In section I-107, revising paragraph (k).
0
g. In section I-108, in paragraph (a)(5), removing ``2 years'' and 
adding ``3 years'' in its place.
0
h. In section I-109, in paragraph (b), removing ``Pilot''.
0
i. In section I-111, in paragraph (a), removing ``Director, OSBP'' and 
adding ``Director, OSBP, OUSD(A&S) or the Director, OSBP'' in its 
place.
0
j. In section I-112.2--
0
i. Revising the section heading;
0
ii. Removing paragraph (a)(3); and
0
iii. Redesignating paragraph (a)(4) as paragraph (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);

[[Page 20877]]

    (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) * * *
    (1) * * *
    (ii) Engineering and technical matters such as production, 
inventory control, manufacturing, test and evaluation, quality 
assurance; acquisition or transfer of hardware, tooling, or 
software; and technology transfer and transition; and
* * * * *
    (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;
* * * * *

I-112.2 Program Specific Reporting Requirements

* * * * *
[FR Doc. 2024-06005 Filed 3-25-24; 8:45 am]
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