Defense Federal Acquisition Regulation Supplement; Management of Unpriced Change Orders, 48276-48278 [2010-19674]
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48276
Federal Register / Vol. 75, No. 153 / Tuesday, August 10, 2010 / Rules and Regulations
Resubmission of a previously denied
claim includes only those claims that
were previously denied and refiled
under the Act.
(4) Any violation of paragraph (b) of
this section shall result in a fine of not
more than $5,000.
*
*
*
*
*
Dated: August 2, 2010.
Eric H. Holder, Jr.,
Attorney General.
[FR Doc. 2010–19633 Filed 8–9–10; 8:45 am]
BILLING CODE 4410–12–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 117
[Docket No. USCG–2010–0659]
Drawbridge Operation Regulations;
Pequonnock River, Bridgeport, CT,
Maintenance
Coast Guard, DHS.
Notice of temporary deviation
from regulations.
AGENCY:
ACTION:
The Commander, First Coast
Guard District, has issued a temporary
deviation from the regulation governing
the operation of the Metro North (Peck)
Bridge across the Pequonnock River,
mile 0.3, at Bridgeport, Connecticut.
The deviation allows the bridge to
remain in the closed position to
facilitate scheduled maintenance for
three months.
DATES: This deviation is effective from
August 7, 2010 through November 7,
2010.
SUMMARY:
Documents mentioned in
this preamble as being available in the
docket are part of docket USCG–2010–
0659 and are available online at
www.regulations.gov, inserting USCG–
2010–0659 in the ‘‘Keyword’’ and then
clicking ‘‘Search.’’ They are also
available for inspection or copying at
the Docket Management Facility (M–30),
U.S. Department of Transportation,
West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue, SE.,
Washington, DC 20590, between 9 a.m.
and 5 p.m., Monday through Friday,
except Federal holidays.
FOR FURTHER INFORMATION CONTACT: If
you have questions on this rule, call or
e-mail Ms. Judy Leung-Yee, Project
Officer, First Coast Guard District,
telephone (212) 668–7165, e-mail
judy.k.leung-yee@uscg.mil. If you have
questions on viewing the docket, call
Renee V. Wright, Program Manager,
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ADDRESSES:
VerDate Mar<15>2010
15:15 Aug 09, 2010
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Docket Operations, telephone 202–366–
9826.
SUPPLEMENTARY INFORMATION: The Metro
North (Peck) Bridge, across the
Pequonnock River at mile 0.3, at
Bridgeport, Connecticut, has a vertical
clearance in the closed position of 26
feet at mean high water and 32 feet at
mean low water. The drawbridge
operation regulations are listed at 33
CFR 117.219(c).
The owner of the bridge, Metro North
Railroad, requested a temporary
deviation from the regulations to
facilitate scheduled bridge maintenance,
mitre rail rehabilitation, at the bridge.
Under this temporary deviation the
Metro North (Peck) Bridge may remain
in the closed position from August 7,
2010 through November 7, 2010. Vessels
that can pass under the bridge in the
closed position may do so at all times.
The Metro North (Peck) Bridge
received no requests to open in both
2008 and 2009. Waterway users were
advised of the requested bridge closure
and offered no objection.
In accordance with 33 CFR 117.35(e),
the bridge must return to its regular
operating schedule immediately at the
end of the designated time period. This
deviation from the operating regulations
is authorized under 33 CFR 117.35.
Dated: July 30, 2010.
Gary Kassof,
Bridge Program Manager, First Coast Guard
District.
[FR Doc. 2010–19631 Filed 8–9–10; 8:45 am]
BILLING CODE 9110–04–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Parts 215, 217, and 243
[DFARS Case 2008–D034]
RIN 0750–AG27
Defense Federal Acquisition
Regulation Supplement; Management
of Unpriced Change Orders
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Final rule.
AGENCY:
The Department of Defense
(DoD) is adopting as final a proposed
rule amending the DFARS to make
requirements for DoD management and
oversight of unpriced change orders
consistent with those that apply to other
undefinitized contract actions. This
final rule adds new policy to address
SUMMARY:
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section 812 of the National Defense
Authorization Act for Fiscal Year 2010.
DATES: Effective Date: August 10, 2010.
FOR FURTHER INFORMATION CONTACT: Ms.
Meredith Murphy, Defense Acquisition
Regulations System, OUSD (AT&L)
DPAP/DARS, Room 3B855, 3060
Defense Pentagon, Washington, DC
20301–3060, Telephone 703–602–1302;
facsimile 703–602–0350. Please cite
DFARS Case 2008–D034.
SUPPLEMENTARY INFORMATION:
A. Background
The proposed rule addressed DFARS
subpart 217.74, which prescribes
policies and procedures for the
management and oversight of
undefinitized contract actions (UCAs).
In the current DFARS, unpriced change
orders that are issued in accordance
with FAR part 43 and DFARS part 243
are excluded from the scope of subpart
217.74. A rule was proposed because of
the need for full accountability and
enhanced oversight of unpriced
contractual actions, including unpriced
change orders.
The proposed rule was published in
the Federal Register at 74 FR 37669 on
July 29, 2009. Two respondents
submitted comments in response to the
proposed rule. One respondent deemed
this ‘‘a new rule that is very much
needed,’’ while the other respondent
requested that the proposed rule be
withdrawn. To enhance transparency
and accountability, DoD has determined
to proceed with this rule. The comments
submitted by the respondents are
addressed in the following paragraphs.
Comment: Make a separate limitation
on obligations applicable to small
businesses.
One respondent addressed the
percentage limitation on obligations
prior to definitization, which the
proposed rule, at DFARS 243.204–70–
4(a), set at 50 percent. There is an
exception in the proposed rule allowing
an increase from 50 percent to 75
percent when a contractor submits a
qualifying proposal before 50 percent of
the not-to-exceed price has been
obligated by the Government. The
respondent recommended that the latter
percentage be increased from 75 percent
to 95 percent for small, small
disadvantaged, and HUBZone
businesses. In support of its position,
the respondent cited frequent instances
where it believed that a particular
agency had requested multiple audits as
a delaying tactic to avoid definitization.
When definitization is delayed, the
contractor can perform up to half of the
work that has been required unilaterally
by the Government without being
E:\FR\FM\10AUR1.SGM
10AUR1
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Federal Register / Vol. 75, No. 153 / Tuesday, August 10, 2010 / Rules and Regulations
reimbursed. According to the
respondent, this burden would impact
small and small disadvantaged
businesses disproportionately, because
they do not have the internal cash flow
generally available to large businesses.
Response: This is an issue of faulty
execution on the part of the agency
cited, not a problem with the policy.
Enabling an unpriced contract action to
continue in an unpriced state up to 95
percent of the not-to-exceed price,
would only place contractors at greater
risk and give contracting officers even
less incentive to definitize the action in
a timely manner.
Comment: Limiting a contractor’s
profit for reduced risk doesn’t consider
that the contractor’s risk is increased
while a contract obligation is
undefinitized.
The new section 243.204–70–6
(Allowable profit) requires the
Government to consider ‘‘(a) Any
reduced cost risk to the contractor’’
when a substantial portion of the
required performance has been
completed before the contract action is
definitized. Both respondents objected
to the regulation’s assumption that a
contractor’s cost risk declines in this
situation. One respondent stated that it
would be grossly unfair for DoD to
retain the uniquely Government right to
issue unilateral change orders and then
penalize contractors by decrementing
allowable profit on incurred costs. The
other respondent claimed that the
contractor experiences increased, not
decreased, cost risk during the period
that the change order remains
undefinitized.
Response: The respondents have not
acknowledged that the Government also
incurs increased cost risk during the
period prior to definitization of the
contract action. The intent of this
coverage is to (1) increase transparency;
(2) provide management oversight to
prevent abuses in the definitization
process; and (3) provide incentives for
both the Government and contractors to
definitize UCAs as quickly as
reasonably possible. Therefore, this
portion of the proposed rule will not be
changed because doing so would reduce
a big incentive to definitize an action in
the minimum reasonable time. Further,
the 50 percent and 75 percent
limitations are established by statute (10
U.S.C. 2326(b)(3)), and DoD does not
have authority to modify them.
Comment: Foreign military sales,
special access programs, congressionally
mandated long-lead procurement
contracts, and purchases under the
simplified acquisition threshold are
exempted from the definition of
undefinitized contract action (UCA).
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One respondent cites 10 U.S.C. 2326
as exempting the above categories from
the definition of UCA. Therefore,
according to the respondent, DoD is
prohibited from including these types of
change orders in the UCA definition.
Response: The Congress recently took
a different position on this issue. It is a
matter of statutory construction that
later-enacted laws take precedence over
prior-enacted laws. This rule of
statutory construction is particularly
relevant here. In this case, section 812
of the National Defense Authorization
Act for Fiscal Year 2010 (Pub. L. 111–
84), enacted October 28, 2009, requires
DoD to extend the limitations on cost
reimbursement and profit/fee to all
categories of undefinitized contract
actions.
This is not a significant regulatory
action and, therefore, was not subject to
review under section 6(b) of Executive
Order 12866, Regulatory Planning and
Review, dated September 30, 1993. This
rule is not a major rule under 5 U.S.C.
804.
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 the change is to internal
Government operating procedures. The
rule makes requirements for DoD
management and oversight of unpriced
change orders consistent with those that
apply to other undefinitized contract
actions.
C. Paperwork Reduction Act
The Paperwork Reduction Act does
not apply because the final 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 Parts 215,
217, and 243
Government procurement.
Ynette R. Shelkin,
Editor, Defense Acquisition Regulations
System.
Therefore, 48 CFR parts 215, 217, and
243 are amended as follows:
■ 1. The authority citation for 48 CFR
parts 215, 217, and 243 continues to
read as follows:
■
Authority: 41 U.S.C. 421 and 48 CFR
chapter 1.
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48277
PART 215—CONTRACTING BY
NEGOTIATION
215.404–71–3
[Amended]
2. Amend section 215.404–71–3 in the
first sentence of paragraph (d)(2), by
revising the parenthetical to read ‘‘(also
see 217.7404–6(a) and 243.204–70–6)’’.
■
PART 217—SPECIAL CONTRACTING
METHODS
3. Amend section 217.7401 in
paragraph (d) by adding a third sentence
to read as follows:
■
217.7401
Definitions.
*
*
*
*
*
(d) * * * For policy relating to
definitization of change orders, see
243.204–70.
■ 4. Revise section 217.7402 to read as
follows:
217.7402
Exceptions.
(a) The following undefinitized
contract actions (UCAs) are not subject
to this subpart. However, the
contracting officer shall apply the policy
and procedures to them to the
maximum extent practicable (also see
paragraph (b) of this section):
(1) UCAs for foreign military sales;
(2) Purchases at or below the
simplified acquisition threshold;
(3) Special access programs;
(4) Congressionally mandated longlead procurement contracts.
(b) If the contracting officer
determines that it is impracticable to
adhere to the policy and procedures of
this subpart for a particular contract
action that falls within one of the
categories in paragraph (a)(1), (3), or (4)
of this section, the contracting officer
shall provide prior notice, through
agency channels, to the Deputy Director,
Defense Procurement and Acquisition
Policy (Contract Policy and
International Contracting), 3060 Defense
Pentagon, Washington, DC 20301–3060.
■ 5. Amend section 217.7405 by adding
paragraph (c) to read as follows:
217.7405
Plans and reports.
*
*
*
*
*
(c) Consolidated UCA Management
Reports shall include information about
all change orders that are not forward
priced (i.e., unpriced) and have an
estimated value exceeding $5 million.
■ 6. Revise section 217.7406 to read as
follows:
217.7406
Contract clauses.
(a) Use the clause at FAR 52.216–24,
Limitation of Government Liability, in—
(1) All UCAs;
(2) Solicitations associated with
UCAs;
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48278
Federal Register / Vol. 75, No. 153 / Tuesday, August 10, 2010 / Rules and Regulations
(3) Basic ordering agreements;
(4) Indefinite-delivery contracts;
(5) Any other type of contract
providing for the use of UCAs; and
(6) Unpriced change orders with an
estimated value exceeding $5 million.
(b)(1) Use the clause at 252.217–7027,
Contract Definitization, in—
(i) All UCAs;
(ii) Solicitations associated with
UCAs;
(iii) Basic ordering agreements;
(iv) Indefinite-delivery contracts;
(v) Any other type of contract
providing for the use of UCAs; and
(vi) Unpriced change orders with an
estimated value exceeding $5 million.
(2) Insert the applicable information
in paragraphs (a), (b), and (d) of the
clause.
(3) If, at the time of entering into the
UCA or unpriced change order, the
contracting officer knows that the
definitive contract action will meet the
criteria of FAR 15.403–1, 15.403–2, or
15.403–3 for not requiring submission of
cost or pricing data, the words ‘‘and cost
or pricing data’’ may be deleted from
paragraph (a) of the clause.
243.204–70–2
PART 243—CONTRACT
MODIFICATIONS
243.204–70–4
7. Revise section 243.204 to read as
follows:
■
243.204
Administration.
Follow the procedures at PGI 243.204
for administration of change orders.
243.204–70
[Redesignated as 243.204–71]
8. Redesignate section 243.204–70 as
section 243.204–71.
■ 9. Add a new section 243.204–70 to
read as follows:
■
243.204–70
orders.
Definitization of change
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243.204–70–1
(a) This subsection applies to
unpriced change orders with an
estimated value exceeding $5 million.
(b) Unpriced change orders for foreign
military sales and special access
programs are not subject to this
subsection, but the contracting officer
shall apply the policy and procedures to
them to the maximum extent
practicable. If the contracting officer
determines that it is impracticable to
adhere to the policy and procedures of
this subsection for an unpriced change
order for a foreign military sale or a
special access program, the contracting
officer shall provide prior notice,
through agency channels, to the Deputy
Director, Defense Procurement and
Acquisition Policy (Contract Policy and
International Contracting), 3060 Defense
Pentagon, Washington, DC 20301–3060.
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243.204–70–3
15:15 Aug 09, 2010
Jkt 220001
Definitization schedule.
(a) Unpriced change orders shall
contain definitization schedules that
provide for definitization by the earlier
of—
(1) The date that is 180 days after
issuance of the change order (this date
may be extended but may not exceed
the date that is 180 days after the
contractor submits a qualifying
proposal); or
(2) The date on which the amount of
funds obligated under the change order
is equal to more than 50 percent of the
not-to-exceed price.
(b) Submission of a qualifying
proposal in accordance with the
definitization schedule is a material
element of the contract. If the contractor
does not submit a timely qualifying
proposal, the contacting officer may
suspend or reduce progress payments
under FAR 32.503–6, or take other
appropriate action.
Limitations on obligations.
(a) The Government shall not obligate
more than 50 percent of the not-toexceed price before definitization.
However, if a contractor submits a
qualifying proposal before 50 percent of
the not-to-exceed price has been
obligated by the Government, the
limitation on obligations before
definitization may be increased to no
more than 75 percent (see 232.102–70
for coverage on provisional delivery
payments).
(b) Obligations should be consistent
with the contractor’s requirements for
the undefinitized period.
243.204–70–5
Scope.
Price ceiling.
Unpriced change orders shall include
a not-to-exceed price.
Exceptions.
(a) The limitations in 243.204–70–2,
243.204–70–3, and 243.204–70–4 do not
apply to unpriced change orders for the
purchase of initial spares.
(b) The limitations in 243.204–70–4(a)
do not apply to unpriced change orders
for ship construction and ship repair.
(c) The head of the agency may waive
the limitations in 243.204–70–2,
243.204–70–3, and 243.204–70–4 for
unpriced change orders if the head of
the agency determines that the waiver is
necessary to support—
(1) A contingency operation; or
(2) A humanitarian or peacekeeping
operation.
243.204–70–6
Allowable profit.
When the final price of an unpriced
change order is negotiated after a
substantial portion of the required
performance has been completed, the
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head of the contracting activity shall
ensure the profit allowed reflects—
(a) Any reduced cost risk to the
contractor for costs incurred during
contract performance before negotiation
of the final price;
(b) The contractor’s reduced cost risk
for costs incurred during performance of
the remainder of the contract; and
(c) The extent to which costs have
been incurred prior to definitization of
the contract action (see 215.404–71–
3(d)(2)). The risk assessment shall be
documented in the contract file.
243.204–70–7
Plans and reports.
To provide for enhanced management
and oversight of unpriced change
orders, departments and agencies
shall—
(a) Include in the Consolidated
Undefinitized Contract Action (UCA)
Management Plan required by 217.7405,
the actions planned and taken to ensure
that unpriced change orders are
definitized in accordance with this
subsection; and
(b) Include in the Consolidated UCA
Management Report required by
217.7405, each unpriced change order
with an estimated value exceeding $5
million.
■ 10. Add section 243.205–72 to read as
follows:
243.205–72
Unpriced change orders.
See the clause prescriptions at
217.7406 for all unpriced change orders
with an estimated value exceeding $5
million.
[FR Doc. 2010–19674 Filed 8–9–10; 8:45 am]
BILLING CODE 5001–08–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Parts 215, 231, and 252
[DFARS Case 2006–D057]
Defense Federal Acquisition
Regulation Supplement; Excessive
Pass-Through Charges
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Final rule.
AGENCY:
DoD is issuing a final rule to
delete the DFARS language
implementing section 852 of the
National Defense Authorization Act for
Fiscal Year 2007 that ensures that passthrough charges on contracts or
subcontracts that are entered into for or
on behalf of DoD are not excessive in
SUMMARY:
E:\FR\FM\10AUR1.SGM
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]]>Agencies
[Federal Register Volume 75, Number 153 (Tuesday, August 10, 2010)]
[Rules and Regulations]
[Pages 48276-48278]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-19674]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 215, 217, and 243
[DFARS Case 2008-D034]
RIN 0750-AG27
Defense Federal Acquisition Regulation Supplement; Management of
Unpriced Change Orders
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Department of Defense (DoD) is adopting as final a
proposed rule amending the DFARS to make requirements for DoD
management and oversight of unpriced change orders consistent with
those that apply to other undefinitized contract actions. This final
rule adds new policy to address section 812 of the National Defense
Authorization Act for Fiscal Year 2010.
DATES: Effective Date: August 10, 2010.
FOR FURTHER INFORMATION CONTACT: Ms. Meredith Murphy, Defense
Acquisition Regulations System, OUSD (AT&L) DPAP/DARS, Room 3B855, 3060
Defense Pentagon, Washington, DC 20301-3060, Telephone 703-602-1302;
facsimile 703-602-0350. Please cite DFARS Case 2008-D034.
SUPPLEMENTARY INFORMATION:
A. Background
The proposed rule addressed DFARS subpart 217.74, which prescribes
policies and procedures for the management and oversight of
undefinitized contract actions (UCAs). In the current DFARS, unpriced
change orders that are issued in accordance with FAR part 43 and DFARS
part 243 are excluded from the scope of subpart 217.74. A rule was
proposed because of the need for full accountability and enhanced
oversight of unpriced contractual actions, including unpriced change
orders.
The proposed rule was published in the Federal Register at 74 FR
37669 on July 29, 2009. Two respondents submitted comments in response
to the proposed rule. One respondent deemed this ``a new rule that is
very much needed,'' while the other respondent requested that the
proposed rule be withdrawn. To enhance transparency and accountability,
DoD has determined to proceed with this rule. The comments submitted by
the respondents are addressed in the following paragraphs.
Comment: Make a separate limitation on obligations applicable to
small businesses.
One respondent addressed the percentage limitation on obligations
prior to definitization, which the proposed rule, at DFARS 243.204-70-
4(a), set at 50 percent. There is an exception in the proposed rule
allowing an increase from 50 percent to 75 percent when a contractor
submits a qualifying proposal before 50 percent of the not-to-exceed
price has been obligated by the Government. The respondent recommended
that the latter percentage be increased from 75 percent to 95 percent
for small, small disadvantaged, and HUBZone businesses. In support of
its position, the respondent cited frequent instances where it believed
that a particular agency had requested multiple audits as a delaying
tactic to avoid definitization. When definitization is delayed, the
contractor can perform up to half of the work that has been required
unilaterally by the Government without being
[[Page 48277]]
reimbursed. According to the respondent, this burden would impact small
and small disadvantaged businesses disproportionately, because they do
not have the internal cash flow generally available to large
businesses.
Response: This is an issue of faulty execution on the part of the
agency cited, not a problem with the policy. Enabling an unpriced
contract action to continue in an unpriced state up to 95 percent of
the not-to-exceed price, would only place contractors at greater risk
and give contracting officers even less incentive to definitize the
action in a timely manner.
Comment: Limiting a contractor's profit for reduced risk doesn't
consider that the contractor's risk is increased while a contract
obligation is undefinitized.
The new section 243.204-70-6 (Allowable profit) requires the
Government to consider ``(a) Any reduced cost risk to the contractor''
when a substantial portion of the required performance has been
completed before the contract action is definitized. Both respondents
objected to the regulation's assumption that a contractor's cost risk
declines in this situation. One respondent stated that it would be
grossly unfair for DoD to retain the uniquely Government right to issue
unilateral change orders and then penalize contractors by decrementing
allowable profit on incurred costs. The other respondent claimed that
the contractor experiences increased, not decreased, cost risk during
the period that the change order remains undefinitized.
Response: The respondents have not acknowledged that the Government
also incurs increased cost risk during the period prior to
definitization of the contract action. The intent of this coverage is
to (1) increase transparency; (2) provide management oversight to
prevent abuses in the definitization process; and (3) provide
incentives for both the Government and contractors to definitize UCAs
as quickly as reasonably possible. Therefore, this portion of the
proposed rule will not be changed because doing so would reduce a big
incentive to definitize an action in the minimum reasonable time.
Further, the 50 percent and 75 percent limitations are established by
statute (10 U.S.C. 2326(b)(3)), and DoD does not have authority to
modify them.
Comment: Foreign military sales, special access programs,
congressionally mandated long-lead procurement contracts, and purchases
under the simplified acquisition threshold are exempted from the
definition of undefinitized contract action (UCA).
One respondent cites 10 U.S.C. 2326 as exempting the above
categories from the definition of UCA. Therefore, according to the
respondent, DoD is prohibited from including these types of change
orders in the UCA definition.
Response: The Congress recently took a different position on this
issue. It is a matter of statutory construction that later-enacted laws
take precedence over prior-enacted laws. This rule of statutory
construction is particularly relevant here. In this case, section 812
of the National Defense Authorization Act for Fiscal Year 2010 (Pub. L.
111-84), enacted October 28, 2009, requires DoD to extend the
limitations on cost reimbursement and profit/fee to all categories of
undefinitized contract actions.
This is not a significant regulatory action and, therefore, was not
subject to review under section 6(b) of Executive Order 12866,
Regulatory Planning and Review, dated September 30, 1993. This rule is
not a major rule under 5 U.S.C. 804.
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 the change is to internal Government operating procedures. The
rule makes requirements for DoD management and oversight of unpriced
change orders consistent with those that apply to other undefinitized
contract actions.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the final 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 Parts 215, 217, and 243
Government procurement.
Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.
0
Therefore, 48 CFR parts 215, 217, and 243 are amended as follows:
0
1. The authority citation for 48 CFR parts 215, 217, and 243 continues
to read as follows:
Authority: 41 U.S.C. 421 and 48 CFR chapter 1.
PART 215--CONTRACTING BY NEGOTIATION
215.404-71-3 [Amended]
0
2. Amend section 215.404-71-3 in the first sentence of paragraph
(d)(2), by revising the parenthetical to read ``(also see 217.7404-6(a)
and 243.204-70-6)''.
PART 217--SPECIAL CONTRACTING METHODS
0
3. Amend section 217.7401 in paragraph (d) by adding a third sentence
to read as follows:
217.7401 Definitions.
* * * * *
(d) * * * For policy relating to definitization of change orders,
see 243.204-70.
0
4. Revise section 217.7402 to read as follows:
217.7402 Exceptions.
(a) The following undefinitized contract actions (UCAs) are not
subject to this subpart. However, the contracting officer shall apply
the policy and procedures to them to the maximum extent practicable
(also see paragraph (b) of this section):
(1) UCAs for foreign military sales;
(2) Purchases at or below the simplified acquisition threshold;
(3) Special access programs;
(4) Congressionally mandated long-lead procurement contracts.
(b) If the contracting officer determines that it is impracticable
to adhere to the policy and procedures of this subpart for a particular
contract action that falls within one of the categories in paragraph
(a)(1), (3), or (4) of this section, the contracting officer shall
provide prior notice, through agency channels, to the Deputy Director,
Defense Procurement and Acquisition Policy (Contract Policy and
International Contracting), 3060 Defense Pentagon, Washington, DC
20301-3060.
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5. Amend section 217.7405 by adding paragraph (c) to read as follows:
217.7405 Plans and reports.
* * * * *
(c) Consolidated UCA Management Reports shall include information
about all change orders that are not forward priced (i.e., unpriced)
and have an estimated value exceeding $5 million.
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6. Revise section 217.7406 to read as follows:
217.7406 Contract clauses.
(a) Use the clause at FAR 52.216-24, Limitation of Government
Liability, in--
(1) All UCAs;
(2) Solicitations associated with UCAs;
[[Page 48278]]
(3) Basic ordering agreements;
(4) Indefinite-delivery contracts;
(5) Any other type of contract providing for the use of UCAs; and
(6) Unpriced change orders with an estimated value exceeding $5
million.
(b)(1) Use the clause at 252.217-7027, Contract Definitization,
in--
(i) All UCAs;
(ii) Solicitations associated with UCAs;
(iii) Basic ordering agreements;
(iv) Indefinite-delivery contracts;
(v) Any other type of contract providing for the use of UCAs; and
(vi) Unpriced change orders with an estimated value exceeding $5
million.
(2) Insert the applicable information in paragraphs (a), (b), and
(d) of the clause.
(3) If, at the time of entering into the UCA or unpriced change
order, the contracting officer knows that the definitive contract
action will meet the criteria of FAR 15.403-1, 15.403-2, or 15.403-3
for not requiring submission of cost or pricing data, the words ``and
cost or pricing data'' may be deleted from paragraph (a) of the clause.
PART 243--CONTRACT MODIFICATIONS
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7. Revise section 243.204 to read as follows:
243.204 Administration.
Follow the procedures at PGI 243.204 for administration of change
orders.
243.204-70 [Redesignated as 243.204-71]
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8. Redesignate section 243.204-70 as section 243.204-71.
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9. Add a new section 243.204-70 to read as follows:
243.204-70 Definitization of change orders.
243.204-70-1 Scope.
(a) This subsection applies to unpriced change orders with an
estimated value exceeding $5 million.
(b) Unpriced change orders for foreign military sales and special
access programs are not subject to this subsection, but the contracting
officer shall apply the policy and procedures to them to the maximum
extent practicable. If the contracting officer determines that it is
impracticable to adhere to the policy and procedures of this subsection
for an unpriced change order for a foreign military sale or a special
access program, the contracting officer shall provide prior notice,
through agency channels, to the Deputy Director, Defense Procurement
and Acquisition Policy (Contract Policy and International Contracting),
3060 Defense Pentagon, Washington, DC 20301-3060.
243.204-70-2 Price ceiling.
Unpriced change orders shall include a not-to-exceed price.
243.204-70-3 Definitization schedule.
(a) Unpriced change orders shall contain definitization schedules
that provide for definitization by the earlier of--
(1) The date that is 180 days after issuance of the change order
(this date may be extended but may not exceed the date that is 180 days
after the contractor submits a qualifying proposal); or
(2) The date on which the amount of funds obligated under the
change order is equal to more than 50 percent of the not-to-exceed
price.
(b) Submission of a qualifying proposal in accordance with the
definitization schedule is a material element of the contract. If the
contractor does not submit a timely qualifying proposal, the contacting
officer may suspend or reduce progress payments under FAR 32.503-6, or
take other appropriate action.
243.204-70-4 Limitations on obligations.
(a) The Government shall not obligate more than 50 percent of the
not-to-exceed price before definitization. However, if a contractor
submits a qualifying proposal before 50 percent of the not-to-exceed
price has been obligated by the Government, the limitation on
obligations before definitization may be increased to no more than 75
percent (see 232.102-70 for coverage on provisional delivery payments).
(b) Obligations should be consistent with the contractor's
requirements for the undefinitized period.
243.204-70-5 Exceptions.
(a) The limitations in 243.204-70-2, 243.204-70-3, and 243.204-70-4
do not apply to unpriced change orders for the purchase of initial
spares.
(b) The limitations in 243.204-70-4(a) do not apply to unpriced
change orders for ship construction and ship repair.
(c) The head of the agency may waive the limitations in 243.204-70-
2, 243.204-70-3, and 243.204-70-4 for unpriced change orders if the
head of the agency determines that the waiver is necessary to support--
(1) A contingency operation; or
(2) A humanitarian or peacekeeping operation.
243.204-70-6 Allowable profit.
When the final price of an unpriced change order is negotiated
after a substantial portion of the required performance has been
completed, the head of the contracting activity shall ensure the profit
allowed reflects--
(a) Any reduced cost risk to the contractor for costs incurred
during contract performance before negotiation of the final price;
(b) The contractor's reduced cost risk for costs incurred during
performance of the remainder of the contract; and
(c) The extent to which costs have been incurred prior to
definitization of the contract action (see 215.404-71-3(d)(2)). The
risk assessment shall be documented in the contract file.
243.204-70-7 Plans and reports.
To provide for enhanced management and oversight of unpriced change
orders, departments and agencies shall--
(a) Include in the Consolidated Undefinitized Contract Action (UCA)
Management Plan required by 217.7405, the actions planned and taken to
ensure that unpriced change orders are definitized in accordance with
this subsection; and
(b) Include in the Consolidated UCA Management Report required by
217.7405, each unpriced change order with an estimated value exceeding
$5 million.
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10. Add section 243.205-72 to read as follows:
243.205-72 Unpriced change orders.
See the clause prescriptions at 217.7406 for all unpriced change
orders with an estimated value exceeding $5 million.
[FR Doc. 2010-19674 Filed 8-9-10; 8:45 am]
BILLING CODE 5001-08-P
