Defense Federal Acquisition Regulation Supplement; Component Breakout, 14101-14102 [06-2642]
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Federal Register / Vol. 71, No. 54 / Tuesday, March 21, 2006 / Rules and Regulations
inherently governmental functions, and
recommended that DoD require
contracting officers to provide written
justifications of decisions made under
this DFARS rule and that those
justifications be made publicly available
on the World Wide Web.
DoD Response: In accordance with
FAR Subpart 4.8, the Government
contract file should document the basis
for an acquisition and the relevant
decisions made by the contracting
officer. DoD does not believe it is
necessary to post the determinations
made in accordance with this rule on
the World Wide Web.
This rule was not subject to Office of
Management and Budget review under
Executive Order 12866, dated
September 30, 1993.
B. Regulatory Flexibility Act
DoD has prepared a final regulatory
flexibility analysis consistent with 5
U.S.C. 604. A copy of the analysis may
be obtained from the point of contact
specified herein. The analysis is
summarized as follows:
The objective of the rule is to ensure
proper management and oversight of
contracts for functions that generally are
not considered to be inherently
governmental, but may approach being
in that category because of the nature of
the function, the manner in which the
contractor performs the contract, or the
manner in which the Government
administers contractor performance.
The impact of the rule on small entities
is unknown at this time. DoD agencies
will implement the requirements of the
rule in making decisions whether to
enter into, and in the administration of,
contracts for performance of the
acquisition functions closely associated
with inherently governmental functions
that are listed in section 7.503(d) of the
Federal Acquisition Regulation. DoD
received no comments on the initial
regulatory flexibility analysis. As a
result of comments received on the
interim rule, the final rule contains a
minor change to clarify that Government
personnel ‘‘oversee’’ but do not
‘‘supervise’’ contractor personnel.
cprice-sewell on PROD1PC66 with RULES
C. Paperwork Reduction Act
The Paperwork Reduction Act does
not apply, because the rule does not
impose any information collection
requirements that require the approval
of the Office of Management and Budget
under 44 U.S.C. 3501, et seq.
VerDate Aug<31>2005
15:05 Mar 20, 2006
Jkt 208001
List of Subjects in 48 CFR Part 207
Government procurement.
Accordingly, the interim rule
amending 48 CFR part 207, which was
published at 70 FR 14572 on March 23,
2005, is adopted as a final rule with the
following change:
I
PART 207—ACQUISITION PLANNING
1. The authority citation for 48 CFR
part 207 continues to read as follows:
I
Authority: 41 U.S.C. 421 and 48 CFR
Chapter 1.
[Amended]
2. Section 207.503 is amended in
paragraph (S–70)(1)(i)(B) by removing
‘‘supervise’’ and adding in its place
‘‘oversee’’.
I
[FR Doc. 06–2643 Filed 3–20–06; 8:45 am]
BILLING CODE 5001–08–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Part 207 and Appendix D to
Chapter 2
[DFARS Case 2003–D071]
Defense Federal Acquisition
Regulation Supplement; Component
Breakout
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Final rule.
AGENCY:
SUMMARY: DoD has issued a final rule
amending the Defense Federal
Acquisition Regulation Supplement
(DFARS) to remove procedures for
breaking out components of end items
for future acquisitions. These
procedures have been relocated to the
new DFARS companion resource,
Procedures, Guidance, and Information.
This final rule is a result of a
transformation initiative undertaken by
DoD to dramatically change the purpose
and content of the DFARS.
DATES: Effective Date: March 21, 2006.
FOR FURTHER INFORMATION CONTACT: Mr.
Euclides Barrera, Defense Acquisition
Regulations System, OUSD (AT&L)
DPAP (DARS), IMD 3C132, 3062
Defense Pentagon, Washington, DC
20301–3062. Telephone (703) 602–0296;
facsimile (703) 602–0350. Please cite
DFARS Case 2003–D071.
PO 00000
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Fmt 4700
Sfmt 4700
SUPPLEMENTARY INFORMATION:
A. Background
Michele P. Peterson,
Editor, Defense Acquisition Regulations
System.
207.503
14101
DFARS Transformation is a major
DoD initiative to dramatically change
the purpose and content of the DFARS.
The objective is to improve the
efficiency and effectiveness of the
acquisition process, while allowing the
acquisition workforce the flexibility to
innovate. The transformed DFARS will
contain only requirements of law, DoDwide policies, delegations of FAR
authorities, deviations from FAR
requirements, and policies/procedures
that have a significant effect beyond the
internal operating procedures of DoD or
a significant cost or administrative
impact on contractors or offerors.
Additional information on the DFARS
Transformation initiative is available at
https://www.acq.osd.mil/dpap/dars/
dfars/transformation/index.htm.
This final rule is a result of the
DFARS Transformation initiative. The
rule removes DFARS Appendix D,
which contains DoD policy and
procedures for breakout of components
of end items for future acquisitions. The
portions of Appendix D containing DoD
policy on component breakout have
been relocated to a new section at
DFARS 207.171. The portions of
Appendix D containing internal DoD
procedures for component breakout
have been relocated to the new DFARS
companion resource, Procedures,
Guidance, and Information (PGI),
available at https://www.acq.osd.mil/
dpap/dars/pgi.
DoD published a proposed rule at 70
FR 14623 on March 23, 2005. One
industry association submitted
comments on the proposed rule. A
discussion of the comments is provided
below.
1. Comment: Relocation of component
breakout requirements to a guidance
document is not appropriate, because it
would provide DoD with the option to
unilaterally eliminate the breakout
requirement in its entirety, without
affording the public an opportunity to
object.
DoD Response: Although PGI is more
than a guidance document, DoD agrees
that portions of Appendix D are more
appropriate for retention in the DFARS.
Therefore, the portions of Appendix D
containing DoD policy for component
breakout have been relocated to a new
section at DFARS 207.171. The portions
of Appendix D that have been relocated
to PGI are limited to internal DoD
procedures for conducting breakout
reviews, documenting breakout
decisions, and maintaining breakout
records. These procedures are still
E:\FR\FM\21MRR1.SGM
21MRR1
14102
Federal Register / Vol. 71, No. 54 / Tuesday, March 21, 2006 / Rules and Regulations
mandatory for use, in accordance with
207.171(d) of this final rule.
2. Comment: Transfer of the
component breakout requirements to a
guidance document, as opposed to
maintaining a regulatory requirement,
would de-emphasize the importance of
tracking this type of information.
Without such information, DoD would
not be able to ensure its compliance
with existing domestic source laws and
regulations. In addition, de-emphasizing
the importance of this information
would be inconsistent with the on-going
U.S. initiative on limiting the adverse
effects of offsets in defense
procurement. Since the issue of offsets
is integrally entwined with foreign and
domestic sources of major weapons
systems and components, the ability to
establish a baseline for components
would be impaired by de-emphasizing
the requirement to track the breakout of
components.
DoD Response: DoD believes that the
final rule actually emphasizes the
importance of component breakout
since, prior to this rule, there was no
reference to component breakout or
Appendix D in any of the numbered
sections of the DFARS. In addition,
DoD’s ability to ensure compliance with
existing domestic source laws and
regulations, or to track the effect of
offsets, is not related to component
breakout procedures. Appendix D does
not require any breaking out of data, nor
does it require tracking of data on
components. While unrelated to
component breakout, DFARS 225.7307
specifies that DoD does not encourage,
enter into, or commit U.S. firms to
foreign military sales offset
arrangements. The only discernable
connection between component
breakout policy and offsets is that U.S.
industry would not be able to offer
components for manufacture in a
foreign country under offset
arrangements if DoD breaks out the
component for direct procurement by
DoD. This connection in no way affects
DoD’s component breakout policy or the
decision regarding placement of
breakout procedures in PGI.
This rule was not subject to Office of
Management and Budget review under
Executive Order 12866, dated
September 30, 1993.
cprice-sewell on PROD1PC66 with RULES
B. Regulatory Flexibility Act
DoD certifies that this final rule will
not 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 rule makes no significant
change to DoD policy for breakout of
VerDate Aug<31>2005
15:05 Mar 20, 2006
Jkt 208001
components of end items for future
acquisitions.
C. Paperwork Reduction Act
The Paperwork Reduction Act does
not apply, because the rule does not
impose any information collection
requirements that require the approval
of the Office of Management and Budget
under 44 U.S.C. 3501, et seq.
List of Subjects in 48 CFR Part 207
Government procurement.
Michele P. Peterson,
Editor, Defense Acquisition Regulations
System.
Therefore, 48 CFR part 207 and
Appendix D to Chapter 2 are amended
as follows:
I 1. The authority citation for 48 CFR
part 207 and Appendix D to subchapter
I continues to read as follows:
I
Authority: 41 U.S.C. 421 and 48 CFR
Chapter 1.
PART 207—ACQUISITION PLANNING
2. Sections 207.171 through 207.171–
4 are added to read as follows:
I
207.171
Component breakout.
207.171–1
(1) Substantial net cost savings
probably will be achieved; and
(2) Breakout action will not jeopardize
the quality, reliability, performance, or
timely delivery of the end item.
(b) Even when either or both the
prime contract and the component will
be acquired with adequate price
competition, the agency shall consider
breakout of the component if substantial
net cost savings will result from—
(1) Greater quantity acquisitions; or
(2) Such factors as improved logistics
support (through reduction in varieties
of spare parts) and economies in
operations and training (through
standardization of design).
(c) Breakout normally is not justified
for a component that is not expected to
exceed $1 million for the current year’s
requirement.
207.171–4
Procedures.
Agencies shall follow the procedures
at PGI 207.171–4 for component
breakout.
Appendix D to Chapter 2
and Reserved]
[Removed
3. Appendix D to Chapter 2 is
removed and reserved.
I
[FR Doc. 06–2642 Filed 3–20–06; 8:45 am]
Scope.
(a) This section provides policy for
breaking out components of end items
for future acquisitions so that the
Government can purchase the
components directly from the
manufacturer or supplier and furnish
them to the end item manufacturer as
Government-furnished material.
(b) This section does not apply to—
(1) The initial decisions on
Government-furnished equipment or
contractor-furnished equipment that are
made at the inception of an acquisition
program; or
(2) Breakout of parts for
replenishment (see Appendix E).
BILLING CODE 5001–08–P
207.171–2
AGENCY:
Definition.
Component, as used in this section,
includes subsystems, assemblies,
subassemblies, and other major
elements of an end item; it does not
include elements of relatively small
annual acquisition value.
207.171–3
Policy.
DoD policy is to break out
components of weapons systems or
other major end items under certain
circumstances.
(a) When it is anticipated that a prime
contract will be awarded without
adequate price competition, and the
prime contractor is expected to acquire
any component without adequate price
competition, the agency shall break out
that component if—
PO 00000
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Parts 207, 208, 216, 217, and
237
[DFARS Case 2002–D024]
Defense Federal Acquisition
Regulation Supplement; Approval of
Service Contracts and Task and
Delivery Orders
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Final rule.
SUMMARY: DoD has adopted as final,
with changes, an interim rule amending
the Defense Federal Acquisition
Regulation Supplement (DFARS) to
implement Section 801(b) of the
National Defense Authorization Act for
Fiscal Year 2002 and Section 854 of the
National Defense Authorization Act for
Fiscal Year 2005. Section 801(b)
requires DoD to establish and
implement a management structure for
the procurement of services. Section 854
requires DoD agencies to comply with
certain review and approval
requirements before using a non-DoD
E:\FR\FM\21MRR1.SGM
21MRR1
]]>Agencies
[Federal Register Volume 71, Number 54 (Tuesday, March 21, 2006)]
[Rules and Regulations]
[Pages 14101-14102]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-2642]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Part 207 and Appendix D to Chapter 2
[DFARS Case 2003-D071]
Defense Federal Acquisition Regulation Supplement; Component
Breakout
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: DoD has issued a final rule amending the Defense Federal
Acquisition Regulation Supplement (DFARS) to remove procedures for
breaking out components of end items for future acquisitions. These
procedures have been relocated to the new DFARS companion resource,
Procedures, Guidance, and Information. This final rule is a result of a
transformation initiative undertaken by DoD to dramatically change the
purpose and content of the DFARS.
DATES: Effective Date: March 21, 2006.
FOR FURTHER INFORMATION CONTACT: Mr. Euclides Barrera, Defense
Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3C132,
3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-
0296; facsimile (703) 602-0350. Please cite DFARS Case 2003-D071.
SUPPLEMENTARY INFORMATION:
A. Background
DFARS Transformation is a major DoD initiative to dramatically
change the purpose and content of the DFARS. The objective is to
improve the efficiency and effectiveness of the acquisition process,
while allowing the acquisition workforce the flexibility to innovate.
The transformed DFARS will contain only requirements of law, DoD-wide
policies, delegations of FAR authorities, deviations from FAR
requirements, and policies/procedures that have a significant effect
beyond the internal operating procedures of DoD or a significant cost
or administrative impact on contractors or offerors. Additional
information on the DFARS Transformation initiative is available at
https://www.acq.osd.mil/dpap/dars/dfars/transformation/index.htm.
This final rule is a result of the DFARS Transformation initiative.
The rule removes DFARS Appendix D, which contains DoD policy and
procedures for breakout of components of end items for future
acquisitions. The portions of Appendix D containing DoD policy on
component breakout have been relocated to a new section at DFARS
207.171. The portions of Appendix D containing internal DoD procedures
for component breakout have been relocated to the new DFARS companion
resource, Procedures, Guidance, and Information (PGI), available at
https://www.acq.osd.mil/ dpap/dars/pgi.
DoD published a proposed rule at 70 FR 14623 on March 23, 2005. One
industry association submitted comments on the proposed rule. A
discussion of the comments is provided below.
1. Comment: Relocation of component breakout requirements to a
guidance document is not appropriate, because it would provide DoD with
the option to unilaterally eliminate the breakout requirement in its
entirety, without affording the public an opportunity to object.
DoD Response: Although PGI is more than a guidance document, DoD
agrees that portions of Appendix D are more appropriate for retention
in the DFARS. Therefore, the portions of Appendix D containing DoD
policy for component breakout have been relocated to a new section at
DFARS 207.171. The portions of Appendix D that have been relocated to
PGI are limited to internal DoD procedures for conducting breakout
reviews, documenting breakout decisions, and maintaining breakout
records. These procedures are still
[[Page 14102]]
mandatory for use, in accordance with 207.171(d) of this final rule.
2. Comment: Transfer of the component breakout requirements to a
guidance document, as opposed to maintaining a regulatory requirement,
would de-emphasize the importance of tracking this type of information.
Without such information, DoD would not be able to ensure its
compliance with existing domestic source laws and regulations. In
addition, de-emphasizing the importance of this information would be
inconsistent with the on-going U.S. initiative on limiting the adverse
effects of offsets in defense procurement. Since the issue of offsets
is integrally entwined with foreign and domestic sources of major
weapons systems and components, the ability to establish a baseline for
components would be impaired by de-emphasizing the requirement to track
the breakout of components.
DoD Response: DoD believes that the final rule actually emphasizes
the importance of component breakout since, prior to this rule, there
was no reference to component breakout or Appendix D in any of the
numbered sections of the DFARS. In addition, DoD's ability to ensure
compliance with existing domestic source laws and regulations, or to
track the effect of offsets, is not related to component breakout
procedures. Appendix D does not require any breaking out of data, nor
does it require tracking of data on components. While unrelated to
component breakout, DFARS 225.7307 specifies that DoD does not
encourage, enter into, or commit U.S. firms to foreign military sales
offset arrangements. The only discernable connection between component
breakout policy and offsets is that U.S. industry would not be able to
offer components for manufacture in a foreign country under offset
arrangements if DoD breaks out the component for direct procurement by
DoD. This connection in no way affects DoD's component breakout policy
or the decision regarding placement of breakout procedures in PGI.
This rule was not subject to Office of Management and Budget review
under Executive Order 12866, dated September 30, 1993.
B. Regulatory Flexibility Act
DoD certifies that this final rule will not 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 rule makes no significant change to DoD policy for breakout of
components of end items for future acquisitions.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply, because the rule does
not impose any information collection requirements that require the
approval of the Office of Management and Budget under 44 U.S.C. 3501,
et seq.
List of Subjects in 48 CFR Part 207
Government procurement.
Michele P. Peterson,
Editor, Defense Acquisition Regulations System.
0
Therefore, 48 CFR part 207 and Appendix D to Chapter 2 are amended as
follows:
0
1. The authority citation for 48 CFR part 207 and Appendix D to
subchapter I continues to read as follows:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
PART 207--ACQUISITION PLANNING
0
2. Sections 207.171 through 207.171-4 are added to read as follows:
207.171 Component breakout.
207.171-1 Scope.
(a) This section provides policy for breaking out components of end
items for future acquisitions so that the Government can purchase the
components directly from the manufacturer or supplier and furnish them
to the end item manufacturer as Government-furnished material.
(b) This section does not apply to--
(1) The initial decisions on Government-furnished equipment or
contractor-furnished equipment that are made at the inception of an
acquisition program; or
(2) Breakout of parts for replenishment (see Appendix E).
207.171-2 Definition.
Component, as used in this section, includes subsystems,
assemblies, subassemblies, and other major elements of an end item; it
does not include elements of relatively small annual acquisition value.
207.171-3 Policy.
DoD policy is to break out components of weapons systems or other
major end items under certain circumstances.
(a) When it is anticipated that a prime contract will be awarded
without adequate price competition, and the prime contractor is
expected to acquire any component without adequate price competition,
the agency shall break out that component if--
(1) Substantial net cost savings probably will be achieved; and
(2) Breakout action will not jeopardize the quality, reliability,
performance, or timely delivery of the end item.
(b) Even when either or both the prime contract and the component
will be acquired with adequate price competition, the agency shall
consider breakout of the component if substantial net cost savings will
result from--
(1) Greater quantity acquisitions; or
(2) Such factors as improved logistics support (through reduction
in varieties of spare parts) and economies in operations and training
(through standardization of design).
(c) Breakout normally is not justified for a component that is not
expected to exceed $1 million for the current year's requirement.
207.171-4 Procedures.
Agencies shall follow the procedures at PGI 207.171-4 for component
breakout.
Appendix D to Chapter 2 [Removed and Reserved]
0
3. Appendix D to Chapter 2 is removed and reserved.
[FR Doc. 06-2642 Filed 3-20-06; 8:45 am]
BILLING CODE 5001-08-P
