Defense Federal Acquisition Regulation Supplement; Multiyear Contracting (DFARS Case 2009-D026), 58152-58155 [2011-23963]
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58152
Federal Register / Vol. 76, No. 182 / Tuesday, September 20, 2011 / Rules and Regulations
only the clause with its Alternate I will
accomplish the purpose of this case.
No comments were received from
small entities on this rule.
V. Paperwork Reduction Act.
The final rule does not contain any
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).
Mary Overstreet,
Editor, Defense Acquisition Regulations
System.
Therefore, 48 CFR part 215 is
amended as follows:
PART 215—CONTRACTING BY
NEGOTIATION
1. The authority citation for 48 CFR
part 215 continues to read as follows:
■
Authority: 41 U.S.C. 1303 and 48 CFR
chapter 1.
2. Section 215.209 is added as follows:
215.209 Solicitation provisions and
contract clauses.
(a) For source selections when the
procurement is $100 million or more,
contracting officers should use the
provision at FAR 52.215–1, Instructions
to Offerors—Competitive Acquisition,
with its Alternate I.
■ 3. Section 215.306 is added as follows:
215.306 Exchanges with offerors after
receipt of proposals.
(c) Competitive range.
(1) For acquisitions with an estimated
value of $100 million or more,
contracting officers should conduct
discussions. Follow the procedures at
FAR 15.306(c) and (d).
[FR Doc. 2011–23949 Filed 9–19–11; 8:45 am]
BILLING CODE 5001–08–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Parts 217 and 241
sroberts on DSK5SPTVN1PROD with RULES
RIN 0750–AG89
Defense Federal Acquisition
Regulation Supplement; Multiyear
Contracting (DFARS Case 2009–D026)
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Final rule.
AGENCY:
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DoD is issuing a final rule
amending the Defense Federal
Acquisition Regulation Supplement
(DFARS) to update and clarify the
requirements for multiyear contracting.
DATES: Effective date: September 20,
2011.
the existing requirements of subpart
217.1. Furthermore, these requirements
are primarily internal procedures for
DoD. No comments were received from
small entities concerning the existing
regulations in subparts affected by this
rule in accordance with 5 U.S.C. 610.
Mr.
Manuel Quinones, telephone (703) 602–
8383.
SUPPLEMENTARY INFORMATION:
IV. Paperwork Reduction Act
FOR FURTHER INFORMATION CONTACT:
I. Background
List of Subjects in 48 CFR Part 215
Government procurement.
■
SUMMARY:
This DFARS case was initiated by
DoD to perform a comprehensive review
of DFARS subpart 217.1, Multiyear
Contracting. On March 2, 2011, the DoD
published a proposed rule to update and
clarify the requirements relating to
multiyear contracting. This final rule
reorganizes and updates existing
coverage for multiyear acquisitions.
A minor editorial change was made to
the final rule at DFARS 217.170 to
remove the redundant introductory
sentence that had been proposed at
217.170(a) and to revert to the original
paragraph numbering of this section. At
DFARS 217.172(f)(1), the references to
217.172(g)(4) and (5) were corrected to
refer to 217.172(g)(3) and (4). Coverage
at 217.175 was renumbered to 217.174
to follow in sequence, and this required
a reference citation change at 241.103.
No changes to existing DoD policy,
including implementation of any
statutorily mandated acquisition-related
thresholds, are being made in this rule.
II. 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, is not
subject to review under section 6(b) of
E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This
rule is not a major rule under 5 U.S.C.
804.
III. Regulatory Flexibility Act
DoD certifies that this rule will not
have a significant economic impact
upon a substantial number of small
entities within the meaning of the
Regulatory Flexibility Act, 5 U.S.C. 601,
et seq., because the rule does not change
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This rule does not impose any
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 217 and
241:
Government procurement.
Mary Overstreet
Editor, Defense Acquisition Regulations
System.
Therefore, 48 CFR parts 217 and 241
are amended as follows:
■ 1. The authority citation for 48 CFR
parts 217 and 241 continues to read as
follows:
Authority: 41 U.S.C. 1303 and 48 CFR
chapter 1.
PART 217—SPECIAL CONTRACTING
METHODS
2. Section 217.170 is amended by—
a. Amending paragraph (a), by
removing ‘‘Section’’ and adding in its
place ‘‘section’’ and removing ‘‘Public
Law 105–56’’ and adding in its place
‘‘Pub. L. 105–56,’’;
■ b. Amending paragraph (b), by
removing ‘‘217.172(f)(2)’’ and adding in
its place ‘‘217.172(g)(2)’’;
■ c. Amending paragraph (c) by
removing ‘‘Section’’ and adding in its
place ‘‘section’’ and removing ‘‘Public
Law 105–56’’ and adding in its place
‘‘Pub. L. 105–56,’’;
■ d. Amending paragraph (c) by
removing in the listing of references ‘‘;’’
in two places and adding in its place
‘‘,’’; and
■ e. Revising paragraph (e) to read as
follows:
■
■
217.170
General.
*
*
*
*
*
(e)(1) DoD must provide notification
to the congressional defense committees
at least 30 days before entering into a
multiyear contract for certain
procurements, including those expected
to—
(i) Employ an unfunded contingent
liability in excess of $20 million (see 10
U.S.C. 2306b(l)(1)(B)(i)(II), 10 U.S.C.
2306c(d)(1), and section 8008(a) of
Pub. L. 105–56 and similar sections in
subsequent DoD appropriations acts);
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(ii) Employ economic order quantity
procurement in excess of $20 million in
any one year of the contract (10 U.S.C.
2306b(l)(1)(B)(i)(I));
(iii) Involve a contract for advance
procurement leading to a multiyear
contract that employs economic order
quantity procurement in excess of
$20 million in any one year (see 10
U.S.C. 306b(l)(1)(B)(ii) and section
8008(a) of Pub. L. 105–56 and similar
sections in subsequent DoD
appropriations acts); or
(iv) Include a cancellation ceiling in
excess of $100 million (see 10 U.S.C.
2306c(d)(4), 10 U.S.C. 2306b(g), and
section 8008(a) of Pub. L. 105–56 and
similar sections in subsequent DoD
appropriations acts).
(2) A DoD component must submit a
request for authority to enter into a
multiyear contract described in
paragraphs (e)(1)(i) through (iv) of this
section as part of the component’s
budget submission for the fiscal year in
which the multiyear contract will be
initiated. DoD will include the request,
for each candidate it supports, as part of
the President’s budget for that year and
in the Appendix to that budget as part
of proposed legislative language for the
appropriations bill for that year (section
8008(b) of Pub. L. 105–56).
(3) If the advisability of using a
multiyear contract becomes apparent
too late to satisfy the requirements in
paragraph (e)(2) of this section, the
request for authority to enter into a
multiyear contract must be—
(i) Formally submitted by the
President as a budget amendment; or
(ii) Made by the Secretary of Defense,
in writing, to the congressional defense
committees (see section 8008(b) of
Pub. L. 105–56).
(4) Agencies must establish reporting
procedures to meet the congressional
notification requirements of paragraph
(e)(1) of this section. The head of the
agency must submit a copy of each
notice to the Director of Defense
Procurement and Acquisition Policy,
Office of the Under Secretary of Defense
(Acquisition, Technology, and Logistics)
(OUSD(AT&L)DPAP), and to the Deputy
Under Secretary of Defense
(Comptroller) (Program/Budget)
(OUSD(C)(P/B)).
(5) If the budget for a contract that
contains a cancellation ceiling in excess
of $100 million does not include
proposed funding for the costs of
contract cancellation up to the
cancellation ceiling established in the
contract—
(i) The notification required by
paragraph (e)(1) of this section shall
include—
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(A) The cancellation ceiling amounts
planned for each program year in the
proposed multiyear contract, together
with the reasons for the amounts
planned;
(B) The extent to which costs of
contract cancellation are not included in
the budget for the contract; and
(C) A financial risk assessment of not
including budgeting for costs of contract
cancellation (10 U.S.C. 2306b(g) and 10
U.S.C. 2306c(d)); and
(ii) The head of the agency shall
provide copies of the notification to the
Office of Management and Budget at
least 14 days before contract award.
■ 3. Amend section 217.171 by—
■ (a) Removing paragraphs (a)(4)
through (a)(6) and paragraph (b);
■ (c) Redesignating paragraphs (a)(2),
(a)(2)(i), (a)(2)(ii), and (a)(2)(iii) as
paragraphs (b), (b)(1), (b)(2), and (b)(3),
respectively;
■ (d) Redesignating paragraphs (a)(3),
(a)(3)(i), (a)(3)(ii), (a)(3)(ii)(A),
(a)(3)(ii)(B) and (a)(3)(iii) as paragraphs
(c), (c)(1), (c)(2), (C)(2)(i), (c)(2)(ii) and
(c)(3), respectively; and
■ (f) Revising paragraph (a) as set forth
below. The revision reads as follows:
217.171
Multiyear contracts for services.
(a) The head of the agency may enter
into a multiyear contract for a period of
not more than 5 years for the following
types of services (and items of supply
relating to such services), even though
funds are limited by statute to obligation
only during the fiscal year for which
they were appropriated (10 U.S.C.
2306c). Covered services are—
(1) Operation, maintenance, and
support of facilities and installations;
(2) Maintenance or modification of
aircraft, ships, vehicles, and other
highly complex military equipment;
(3) Specialized training requiring
high-quality instructor skills (e.g.,
training for pilots and aircrew members
or foreign language training);
(4) Base services (e.g., ground
maintenance, in-plane refueling, bus
transportation, and refuse collection and
disposal); and
(5) Environmental remediation
services for—
(i) An active military installation;
(ii) A military installation being
closed or realigned under a base closure
law as defined in 10 U.S.C. 2667(h)(2);
or
(iii) A site formerly used by DoD.
*
*
*
*
*
■ 4. Section 217.172 is revised to read
as follows:
217.172
Multiyear contracts for supplies.
(a) This section applies to all
multiyear contracts for supplies,
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58153
including weapon systems and other
multiyear acquisitions specifically
authorized by law (10 U.S.C. 2306b).
(b) The head of the agency may enter
into a multiyear contract for supplies if,
in addition to the conditions listed in
FAR 17.105–1(b), the use of such a
contract will promote the national
security of the United States (10 U.S.C.
2306b(a)(6)).
(c) Multiyear contracts in amounts
exceeding $500 million must be
specifically authorized by law (10
U.S.C. 2306b and 10 U.S.C. 2306c). A
multiyear supply contract may be
authorized by an appropriations act or
a law other than an appropriations act
(10 U.S.C. 2306b(i)(3) and (l)(3)).
(d) The head of the agency shall not
enter into a multiyear contract unless—
(1) The Secretary of Defense has
submitted to Congress a budget request
for full funding of units to be procured
through the contract; and
(2) In the case of a contract for
procurement of aircraft, the budget
request includes full funding of
procurement funds for production
beyond advance procurement activities
of aircraft units to be produced in the
fiscal year covered by the budget.
(e)(1) The head of the agency must not
enter into or extend a multiyear contract
that exceeds $500 million (when
entered into or extended until the
Secretary of Defense identifies the
contract and any extension in a report
submitted to the congressional defense
committees (10 U.S.C. 2306b(1)(5)).
(2) In addition, for contracts equal to
or greater than $500 million, the head of
the contracting activity must determine
that the conditions required by
paragraph (g)(2)(i) through (vii) of this
section will be met by such contract, in
accordance with the Secretary’s
certification and determination required
by paragraph (g)(2) of this section (10
U.S.C. 2306b(a)(1)(7)).
(f) The head of the agency may enter
into a multiyear contract for—
(1) A weapon system and associated
items, services, and logistics support for
a weapon system; and
(2) Advance procurement of
components, parts, and materials
necessary to manufacture a weapon
system, including advance procurement
to achieve economic lot purchases or
more efficient production rates (see
217.172(g)(3) and (4) regarding
economic order quantity procurements).
Before initiating an advance
procurement, the contracting officer
must verify that it is consistent with
DoD policy (e.g., the full funding policy
in Volume 2A, chapter 1, of DoD
7000.14–R, Financial Management
Regulation).
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(g) The head of the agency shall
ensure that the following conditions are
satisfied before awarding a multiyear
contract under the authority described
in paragraph (b) of this section:
(1) The multiyear exhibits required by
DoD 7000.14–R, Financial Management
Regulation, are included in the agency’s
budget estimate submission and the
President’s budget request.
(2) The Secretary of Defense certifies
to Congress in writing, by no later than
March 1 of the year in which the
Secretary requests legislative authority
to enter into such contracts, that each of
the conditions in paragraphs (g)(2)(i)
through (vii) of this section is are
satisfied (10 U.S.C. 2306b(i)(1)(A)
through (G)).
(i) The Secretary has determined that
each of the requirements in FAR 17.105,
paragraphs (b)(1) through (5) will be met
by such contract and has provided the
basis for such determination to the
congressional defense committees (10
U.S.C. 2306b(i)(1)(A)).
(ii) The Secretary’s determination
under paragraph (g)(2)(i) of this section
was made after the completion of a cost
analysis performed by the Defense Cost
and Resource Center of the Department
of Defense and such analysis supports
the findings (10 U.S.C. 2306b(i)(1)(B)).
(iii) The system being acquired
pursuant to such contract has not been
determined to have experienced cost
growth in excess of the critical cost
growth threshold pursuant to 10 USC
2433(d) within 5 years prior to the date
the Secretary anticipates such contract
(or a contract for advance procurement
entered into consistent with the
authorization for such contract) will be
awarded (10 U.S.C. 2306b(i)(1)(C)).
(iv) A sufficient number of end items
of the system being acquired under such
contract have been delivered at or
within the most current estimates of the
program acquisition unit cost or
procurement unit cost for such system
to determine that current estimates of
such unit costs are realistic (10 U.S.C.
2306b(i)(1)(D)).
(v) Sufficient funds will be available
in the fiscal year in which the contract
is to be awarded to perform the contract,
and the future-years defense program for
such fiscal year will include the funding
required to execute the program without
cancellation (10 U.S.C. 2306b(i)(1)(E)).
(vi) The contract is a fixed price type
contract (10 U.S.C. 2306b(i)(1)(F)).
(vii) The proposed multiyear contract
provides for production at not less than
minimum economic rates, given the
existing tooling and facilities. The head
of the agency shall submit to USD(C)(P/
B) information supporting the agency’s
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determination that this requirement has
been met (10 U.S.C. 2306b(i)(1)(G)).
(viii) The head of the agency shall
submit information supporting this
certification to USD(C)(P/B) for
transmission to Congress through the
Secretary of Defense.
(A) The head of the agency shall, as
part of this certification, give written
notification to the congressional defense
committees of—
(1) The cancellation ceiling amounts
planned for each program year in the
proposed multiyear contract, together
with the reasons for the amounts
planned;
(2) The extent to which costs of
contract cancellation are not included in
the budget for the contract; and
(3) A financial risk assessment of not
including the budgeting for costs of
contract cancellation (10 U.S.C.
2306b(g)); and
(B) The head of the agency shall
provide copies of the notification to the
Office of Management and Budget at
least 14 days before contract award.
(3) The contract is for the
procurement of a complete and usable
end item (10 U.S.C. 2306b(i)(4)(A)).
(4) Funds appropriated for any fiscal
year for advance procurement are
obligated only for the procurement of
those long-lead items that are necessary
in order to meet a planned delivery
schedule for complete major end items
that are programmed under the contract
to be acquired with funds appropriated
for a subsequent fiscal year (including
an economic order quantity of such
long-lead items when authorized by law
(10 U.S.C. 2306b(i)(4)(B)).
(5) The Secretary may make the
certification under paragraph (g)(2) of
this section notwithstanding the fact
that one or more of the conditions of
such certification are not met if the
Secretary determines that, due to
exceptional circumstances, proceeding
with a multiyear contract under this
section is in the best interest of the
Department of Defense and the
Secretary provides the basis for such
determination with the certification (10
U.S.C. 2306b(i)(5)).
(6) The Secretary of Defense may not
delegate this authority to make the
certification under paragraph (g)(2) of
this section or the determination under
paragraph (g)(5) of this section to an
official below the level of the Under
Secretary of Defense for Acquisition,
Technology, and Logistics (10 U.S.C.
2306b(i)(6)).
(7) The Secretary of Defense shall
send a notification containing the
findings of the agency head under FAR
17.105–1(b), and the basis for such
findings, 30 days prior to the award of
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a multiyear contract or a defense
acquisition program that has been
specifically authorized by law to the
congressional defense committees (10
U.S.C. 2306b(i)(7)).
(8) All other requirements of law are
met and there are no other statutory
restrictions on using a multiyear
contract for the specific system or
component (10 U.S.C. 2306b(i)(2)). One
such restriction may be the achievement
of specified cost savings. If the agency
finds, after negotiations with the
contractor(s), that the specified savings
cannot be achieved, the head of the
agency shall assess the savings that,
nevertheless, could be achieved by
using a multiyear contract. If the savings
are substantial, the head of the agency
may request relief from the law’s
specific savings requirement. The
request shall—
(i) Quantify the savings that can be
achieved;
(ii) Explain any other benefits to the
Government of using the multiyear
contract;
(iii) Include details regarding the
negotiated contract terms and
conditions; and
(iv) Be submitted to
OUSD(AT&L)DPAP for transmission to
Congress via the Secretary of Defense
and the President.
(h) The Secretary of Defense may
instruct the head of the agency
proposing a multiyear contract to
include in that contract negotiated
priced options for varying the quantities
of end items to be procured over the life
of the contract (10 U.S.C. 2306b(j)).
■ 5. Section 217.173 is revised to read
as follows:
217.173 Multiyear contracts for military
family housing.
The head of the agency may enter into
multiyear contracts for periods up to 4
years for supplies and services required
for management, maintenance, and
operation of military family housing and
may pay the costs of such contracts for
each year from annual appropriations
for that year (10 U.S.C. 2829).
217.174
[Removed]
6. Section 217.174 is removed.
7. Section 217.175 is redesignated as
217.174 and the newly redesignated
section 217.174 paragraph (b) is revised
as set forth below.
■
■
217.174 Multiyear contracts for electricity
from renewable energy sources.
*
*
*
*
*
(b) Limitations. The head of the
contracting activity may exercise the
authority in paragraph (a) of this section
to enter into a contract for a period in
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excess of 5 years only if the head of the
contracting activity determines, on the
basis of a business case analysis (see PGI
217.174 for a business case analysis
template and guidance) prepared by the
requiring activity, that—
(1) The proposed purchase of
electricity under such contract is cost
effective; and
(2) It would not be possible to
purchase electricity from the source in
an economical manner without the use
of a contract for a period in excess of 5
years.
*
*
*
*
*
PART 241—ACQUISITION OF UTILITY
SERVICES
8. Section 241.103 paragraph (2) is
revised to read as follows:
■
241.103
Statutory and delegated authority.
*
*
*
*
*
(2) See 217.174 for authority to enter
into multiyear contracts for electricity
from renewable energy sources.
*
*
*
*
*
[FR Doc. 2011–23963 Filed 9–19–11; 8:45 am]
BILLING CODE 5001–08–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Part 236
RIN 0750–AG91
Defense Federal Acquisition
Regulation Supplement; Construction
and Architect-Engineer Services
Performance Evaluation (DFARS Case
2010–D024)
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Final rule.
AGENCY:
DoD is issuing a final rule
amending the Defense Federal
Acquisition Regulation Supplement
(DFARS) to remove the requirement to
use DoD-unique forms to prepare
contractor performance evaluations for
construction and architect-engineer
services.
DATES: Effective Date: September 20,
2011.
FOR FURTHER INFORMATION CONTACT: Mr.
Manuel Quinones, telephone, (703)
602–8383.
SUPPLEMENTARY INFORMATION:
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SUMMARY:
I. Background
This rule removes the requirement to
use DoD-unique forms to document
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contractor past performance for
construction and Architect-Engineer
services. On April 19, 2011, DoD
published a proposed rule in the
Federal Register at 75 FR 21851 to
delete outdated procedures and
references to obsolete DD forms. No
public comments were received in
response to the proposed rule.
One editorial change is being made to
the final rule. The references to ‘‘A–E’’
are revised to read ‘‘architect-engineer’’
in sections 236.102, 236.602–70,
236.606–70, and in 236.609–70.
II. 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, is not
subject to review under section 6(b) of
E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This
rule is not a major rule under 5 U.S.C.
804.
III. 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.
DoD is amending the DFARS to reflect
the current automated process being
used by and delete outdated procedures
and references to obsolete DD forms.
The objective of this rule is to remove
the requirement to use DD Form 2626,
Performance Evaluation (Construction),
and DD Form 2631, Performance
Evaluation (Architect-Engineer), to
evaluate contractor performance.
The Contractor Performance
Assessment Report System (CPARS) is
now the Governmentwide system for
electronically collecting past
performance data; there is no need to
specify separate DoD forms to collect
the data. Accordingly, this rule removes
the requirement to use DD forms 2626
and 2631 from the DFARS.
On April 19, 2011, DoD published a
proposed rule at 75 FR 21851. The
period for public comments closed on
June 20, 2011. DoD made no changes to
the proposed rule because public
comments were not received in
response to the initial regulatory
flexibility analysis.
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58155
There are no reporting, recordkeeping,
or other compliance requirements
associated with this rule. Thus, there are
no professional skills necessary on the
part of small businesses. In a like
manner, there are no direct costs to
small entities to comply with this rule
other than the cost of internet access
should small entities choose to
comment on their past performance
evaluation entered into CPARS by
Government personnel.
There are no known relevant Federal
rules that may duplicate, overlap or
conflict with this rule. Instead, the rule
aligns the DFARS to the Federal
Acquisition Regulation (FAR) ensuring
that agencies submit past performance
reports electronically per FAR 42.15
eliminating the need for paper reports.
No mitigation steps were taken, since
the rule does not have a significant
adverse economic impact on small
entities.
IV. Paperwork Reduction Act
This rule does not impose any
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 Part 236
Government procurement.
Mary Overstreet,
Editor, Defense Acquisition Regulations
System.
Therefore, 48 CFR part 236 is
amended as follows:
PART 236—CONSTRUCTION AND
ARCHITECT–ENGINEER CONTRACTS
1. The authority citation for 48 CFR
part 236 continues to read as follows:
■
Authority: 41 U.S.C. 1303 and 48 CFR
chapter 1.
236.102
[Amended]
2. Amend section 236.102 by—
(a) Removing paragraph designations
(1) through (4);
■ (b) Redesignating paragraphs (i) and
(ii) in the definitions of ‘‘Construction
activity’’ as paragraphs (1) and (2); and
■ (c) Removing the definition of ‘‘A–E’’.
■
■
236.201
■
[Removed]
3. Section 236.201 is removed.
236.602–70
[Amended]
4. Amend section 236.602–70 by
removing ‘‘A–E’’ and adding in its place
‘‘architect-engineer’’.
■ 5. Revise section 236.604 to read as
follows:
■
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20SER1
]]>Agencies
[Federal Register Volume 76, Number 182 (Tuesday, September 20, 2011)]
[Unknown Section]
[Pages 58152-58155]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-23963]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 217 and 241
RIN 0750-AG89
Defense Federal Acquisition Regulation Supplement; Multiyear
Contracting (DFARS Case 2009-D026)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: DoD is issuing a final rule amending the Defense Federal
Acquisition Regulation Supplement (DFARS) to update and clarify the
requirements for multiyear contracting.
DATES: Effective date: September 20, 2011.
FOR FURTHER INFORMATION CONTACT: Mr. Manuel Quinones, telephone (703)
602-8383.
SUPPLEMENTARY INFORMATION:
I. Background
This DFARS case was initiated by DoD to perform a comprehensive
review of DFARS subpart 217.1, Multiyear Contracting. On March 2, 2011,
the DoD published a proposed rule to update and clarify the
requirements relating to multiyear contracting. This final rule
reorganizes and updates existing coverage for multiyear acquisitions.
A minor editorial change was made to the final rule at DFARS
217.170 to remove the redundant introductory sentence that had been
proposed at 217.170(a) and to revert to the original paragraph
numbering of this section. At DFARS 217.172(f)(1), the references to
217.172(g)(4) and (5) were corrected to refer to 217.172(g)(3) and (4).
Coverage at 217.175 was renumbered to 217.174 to follow in sequence,
and this required a reference citation change at 241.103. No changes to
existing DoD policy, including implementation of any statutorily
mandated acquisition-related thresholds, are being made in this rule.
II. 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, is not
subject to review under section 6(b) of E.O. 12866, Regulatory Planning
and Review, dated September 30, 1993. This rule is not a major rule
under 5 U.S.C. 804.
III. Regulatory Flexibility Act
DoD certifies that this rule will not have a significant economic
impact upon a substantial number of small entities within the meaning
of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the
rule does not change the existing requirements of subpart 217.1.
Furthermore, these requirements are primarily internal procedures for
DoD. No comments were received from small entities concerning the
existing regulations in subparts affected by this rule in accordance
with 5 U.S.C. 610.
IV. Paperwork Reduction Act
This rule does not impose any 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 217 and 241:
Government procurement.
Mary Overstreet
Editor, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 217 and 241 are amended as follows:
0
1. The authority citation for 48 CFR parts 217 and 241 continues to
read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 217--SPECIAL CONTRACTING METHODS
0
2. Section 217.170 is amended by--
0
a. Amending paragraph (a), by removing ``Section'' and adding in its
place ``section'' and removing ``Public Law 105-56'' and adding in its
place ``Pub. L. 105-56,'';
0
b. Amending paragraph (b), by removing ``217.172(f)(2)'' and adding in
its place ``217.172(g)(2)'';
0
c. Amending paragraph (c) by removing ``Section'' and adding in its
place ``section'' and removing ``Public Law 105-56'' and adding in its
place ``Pub. L. 105-56,'';
0
d. Amending paragraph (c) by removing in the listing of references
``;'' in two places and adding in its place ``,''; and
0
e. Revising paragraph (e) to read as follows:
217.170 General.
* * * * *
(e)(1) DoD must provide notification to the congressional defense
committees at least 30 days before entering into a multiyear contract
for certain procurements, including those expected to--
(i) Employ an unfunded contingent liability in excess of $20
million (see 10 U.S.C. 2306b(l)(1)(B)(i)(II), 10 U.S.C. 2306c(d)(1),
and section 8008(a) of Pub. L. 105-56 and similar sections in
subsequent DoD appropriations acts);
[[Page 58153]]
(ii) Employ economic order quantity procurement in excess of $20
million in any one year of the contract (10 U.S.C.
2306b(l)(1)(B)(i)(I));
(iii) Involve a contract for advance procurement leading to a
multiyear contract that employs economic order quantity procurement in
excess of $20 million in any one year (see 10 U.S.C. 306b(l)(1)(B)(ii)
and section 8008(a) of Pub. L. 105-56 and similar sections in
subsequent DoD appropriations acts); or
(iv) Include a cancellation ceiling in excess of $100 million (see
10 U.S.C. 2306c(d)(4), 10 U.S.C. 2306b(g), and section 8008(a) of Pub.
L. 105-56 and similar sections in subsequent DoD appropriations acts).
(2) A DoD component must submit a request for authority to enter
into a multiyear contract described in paragraphs (e)(1)(i) through
(iv) of this section as part of the component's budget submission for
the fiscal year in which the multiyear contract will be initiated. DoD
will include the request, for each candidate it supports, as part of
the President's budget for that year and in the Appendix to that budget
as part of proposed legislative language for the appropriations bill
for that year (section 8008(b) of Pub. L. 105-56).
(3) If the advisability of using a multiyear contract becomes
apparent too late to satisfy the requirements in paragraph (e)(2) of
this section, the request for authority to enter into a multiyear
contract must be--
(i) Formally submitted by the President as a budget amendment; or
(ii) Made by the Secretary of Defense, in writing, to the
congressional defense committees (see section 8008(b) of Pub. L. 105-
56).
(4) Agencies must establish reporting procedures to meet the
congressional notification requirements of paragraph (e)(1) of this
section. The head of the agency must submit a copy of each notice to
the Director of Defense Procurement and Acquisition Policy, Office of
the Under Secretary of Defense (Acquisition, Technology, and Logistics)
(OUSD(AT&L)DPAP), and to the Deputy Under Secretary of Defense
(Comptroller) (Program/Budget) (OUSD(C)(P/B)).
(5) If the budget for a contract that contains a cancellation
ceiling in excess of $100 million does not include proposed funding for
the costs of contract cancellation up to the cancellation ceiling
established in the contract--
(i) The notification required by paragraph (e)(1) of this section
shall include--
(A) The cancellation ceiling amounts planned for each program year
in the proposed multiyear contract, together with the reasons for the
amounts planned;
(B) The extent to which costs of contract cancellation are not
included in the budget for the contract; and
(C) A financial risk assessment of not including budgeting for
costs of contract cancellation (10 U.S.C. 2306b(g) and 10 U.S.C.
2306c(d)); and
(ii) The head of the agency shall provide copies of the
notification to the Office of Management and Budget at least 14 days
before contract award.
0
3. Amend section 217.171 by--
0
(a) Removing paragraphs (a)(4) through (a)(6) and paragraph (b);
0
(c) Redesignating paragraphs (a)(2), (a)(2)(i), (a)(2)(ii), and
(a)(2)(iii) as paragraphs (b), (b)(1), (b)(2), and (b)(3),
respectively;
0
(d) Redesignating paragraphs (a)(3), (a)(3)(i), (a)(3)(ii),
(a)(3)(ii)(A), (a)(3)(ii)(B) and (a)(3)(iii) as paragraphs (c), (c)(1),
(c)(2), (C)(2)(i), (c)(2)(ii) and (c)(3), respectively; and
0
(f) Revising paragraph (a) as set forth below. The revision reads as
follows:
217.171 Multiyear contracts for services.
(a) The head of the agency may enter into a multiyear contract for
a period of not more than 5 years for the following types of services
(and items of supply relating to such services), even though funds are
limited by statute to obligation only during the fiscal year for which
they were appropriated (10 U.S.C. 2306c). Covered services are--
(1) Operation, maintenance, and support of facilities and
installations;
(2) Maintenance or modification of aircraft, ships, vehicles, and
other highly complex military equipment;
(3) Specialized training requiring high-quality instructor skills
(e.g., training for pilots and aircrew members or foreign language
training);
(4) Base services (e.g., ground maintenance, in-plane refueling,
bus transportation, and refuse collection and disposal); and
(5) Environmental remediation services for--
(i) An active military installation;
(ii) A military installation being closed or realigned under a base
closure law as defined in 10 U.S.C. 2667(h)(2); or
(iii) A site formerly used by DoD.
* * * * *
0
4. Section 217.172 is revised to read as follows:
217.172 Multiyear contracts for supplies.
(a) This section applies to all multiyear contracts for supplies,
including weapon systems and other multiyear acquisitions specifically
authorized by law (10 U.S.C. 2306b).
(b) The head of the agency may enter into a multiyear contract for
supplies if, in addition to the conditions listed in FAR 17.105-1(b),
the use of such a contract will promote the national security of the
United States (10 U.S.C. 2306b(a)(6)).
(c) Multiyear contracts in amounts exceeding $500 million must be
specifically authorized by law (10 U.S.C. 2306b and 10 U.S.C. 2306c). A
multiyear supply contract may be authorized by an appropriations act or
a law other than an appropriations act (10 U.S.C. 2306b(i)(3) and
(l)(3)).
(d) The head of the agency shall not enter into a multiyear
contract unless--
(1) The Secretary of Defense has submitted to Congress a budget
request for full funding of units to be procured through the contract;
and
(2) In the case of a contract for procurement of aircraft, the
budget request includes full funding of procurement funds for
production beyond advance procurement activities of aircraft units to
be produced in the fiscal year covered by the budget.
(e)(1) The head of the agency must not enter into or extend a
multiyear contract that exceeds $500 million (when entered into or
extended until the Secretary of Defense identifies the contract and any
extension in a report submitted to the congressional defense committees
(10 U.S.C. 2306b(1)(5)).
(2) In addition, for contracts equal to or greater than $500
million, the head of the contracting activity must determine that the
conditions required by paragraph (g)(2)(i) through (vii) of this
section will be met by such contract, in accordance with the
Secretary's certification and determination required by paragraph
(g)(2) of this section (10 U.S.C. 2306b(a)(1)(7)).
(f) The head of the agency may enter into a multiyear contract
for--
(1) A weapon system and associated items, services, and logistics
support for a weapon system; and
(2) Advance procurement of components, parts, and materials
necessary to manufacture a weapon system, including advance procurement
to achieve economic lot purchases or more efficient production rates
(see 217.172(g)(3) and (4) regarding economic order quantity
procurements). Before initiating an advance procurement, the
contracting officer must verify that it is consistent with DoD policy
(e.g., the full funding policy in Volume 2A, chapter 1, of DoD 7000.14-
R, Financial Management Regulation).
[[Page 58154]]
(g) The head of the agency shall ensure that the following
conditions are satisfied before awarding a multiyear contract under the
authority described in paragraph (b) of this section:
(1) The multiyear exhibits required by DoD 7000.14-R, Financial
Management Regulation, are included in the agency's budget estimate
submission and the President's budget request.
(2) The Secretary of Defense certifies to Congress in writing, by
no later than March 1 of the year in which the Secretary requests
legislative authority to enter into such contracts, that each of the
conditions in paragraphs (g)(2)(i) through (vii) of this section is are
satisfied (10 U.S.C. 2306b(i)(1)(A) through (G)).
(i) The Secretary has determined that each of the requirements in
FAR 17.105, paragraphs (b)(1) through (5) will be met by such contract
and has provided the basis for such determination to the congressional
defense committees (10 U.S.C. 2306b(i)(1)(A)).
(ii) The Secretary's determination under paragraph (g)(2)(i) of
this section was made after the completion of a cost analysis performed
by the Defense Cost and Resource Center of the Department of Defense
and such analysis supports the findings (10 U.S.C. 2306b(i)(1)(B)).
(iii) The system being acquired pursuant to such contract has not
been determined to have experienced cost growth in excess of the
critical cost growth threshold pursuant to 10 USC 2433(d) within 5
years prior to the date the Secretary anticipates such contract (or a
contract for advance procurement entered into consistent with the
authorization for such contract) will be awarded (10 U.S.C.
2306b(i)(1)(C)).
(iv) A sufficient number of end items of the system being acquired
under such contract have been delivered at or within the most current
estimates of the program acquisition unit cost or procurement unit cost
for such system to determine that current estimates of such unit costs
are realistic (10 U.S.C. 2306b(i)(1)(D)).
(v) Sufficient funds will be available in the fiscal year in which
the contract is to be awarded to perform the contract, and the future-
years defense program for such fiscal year will include the funding
required to execute the program without cancellation (10 U.S.C.
2306b(i)(1)(E)).
(vi) The contract is a fixed price type contract (10 U.S.C.
2306b(i)(1)(F)).
(vii) The proposed multiyear contract provides for production at
not less than minimum economic rates, given the existing tooling and
facilities. The head of the agency shall submit to USD(C)(P/B)
information supporting the agency's determination that this requirement
has been met (10 U.S.C. 2306b(i)(1)(G)).
(viii) The head of the agency shall submit information supporting
this certification to USD(C)(P/B) for transmission to Congress through
the Secretary of Defense.
(A) The head of the agency shall, as part of this certification,
give written notification to the congressional defense committees of--
(1) The cancellation ceiling amounts planned for each program year
in the proposed multiyear contract, together with the reasons for the
amounts planned;
(2) The extent to which costs of contract cancellation are not
included in the budget for the contract; and
(3) A financial risk assessment of not including the budgeting for
costs of contract cancellation (10 U.S.C. 2306b(g)); and
(B) The head of the agency shall provide copies of the notification
to the Office of Management and Budget at least 14 days before contract
award.
(3) The contract is for the procurement of a complete and usable
end item (10 U.S.C. 2306b(i)(4)(A)).
(4) Funds appropriated for any fiscal year for advance procurement
are obligated only for the procurement of those long-lead items that
are necessary in order to meet a planned delivery schedule for complete
major end items that are programmed under the contract to be acquired
with funds appropriated for a subsequent fiscal year (including an
economic order quantity of such long-lead items when authorized by law
(10 U.S.C. 2306b(i)(4)(B)).
(5) The Secretary may make the certification under paragraph (g)(2)
of this section notwithstanding the fact that one or more of the
conditions of such certification are not met if the Secretary
determines that, due to exceptional circumstances, proceeding with a
multiyear contract under this section is in the best interest of the
Department of Defense and the Secretary provides the basis for such
determination with the certification (10 U.S.C. 2306b(i)(5)).
(6) The Secretary of Defense may not delegate this authority to
make the certification under paragraph (g)(2) of this section or the
determination under paragraph (g)(5) of this section to an official
below the level of the Under Secretary of Defense for Acquisition,
Technology, and Logistics (10 U.S.C. 2306b(i)(6)).
(7) The Secretary of Defense shall send a notification containing
the findings of the agency head under FAR 17.105-1(b), and the basis
for such findings, 30 days prior to the award of a multiyear contract
or a defense acquisition program that has been specifically authorized
by law to the congressional defense committees (10 U.S.C. 2306b(i)(7)).
(8) All other requirements of law are met and there are no other
statutory restrictions on using a multiyear contract for the specific
system or component (10 U.S.C. 2306b(i)(2)). One such restriction may
be the achievement of specified cost savings. If the agency finds,
after negotiations with the contractor(s), that the specified savings
cannot be achieved, the head of the agency shall assess the savings
that, nevertheless, could be achieved by using a multiyear contract. If
the savings are substantial, the head of the agency may request relief
from the law's specific savings requirement. The request shall--
(i) Quantify the savings that can be achieved;
(ii) Explain any other benefits to the Government of using the
multiyear contract;
(iii) Include details regarding the negotiated contract terms and
conditions; and
(iv) Be submitted to OUSD(AT&L)DPAP for transmission to Congress
via the Secretary of Defense and the President.
(h) The Secretary of Defense may instruct the head of the agency
proposing a multiyear contract to include in that contract negotiated
priced options for varying the quantities of end items to be procured
over the life of the contract (10 U.S.C. 2306b(j)).
0
5. Section 217.173 is revised to read as follows:
217.173 Multiyear contracts for military family housing.
The head of the agency may enter into multiyear contracts for
periods up to 4 years for supplies and services required for
management, maintenance, and operation of military family housing and
may pay the costs of such contracts for each year from annual
appropriations for that year (10 U.S.C. 2829).
217.174 [Removed]
0
6. Section 217.174 is removed.
0
7. Section 217.175 is redesignated as 217.174 and the newly
redesignated section 217.174 paragraph (b) is revised as set forth
below.
217.174 Multiyear contracts for electricity from renewable energy
sources.
* * * * *
(b) Limitations. The head of the contracting activity may exercise
the authority in paragraph (a) of this section to enter into a contract
for a period in
[[Page 58155]]
excess of 5 years only if the head of the contracting activity
determines, on the basis of a business case analysis (see PGI 217.174
for a business case analysis template and guidance) prepared by the
requiring activity, that--
(1) The proposed purchase of electricity under such contract is
cost effective; and
(2) It would not be possible to purchase electricity from the
source in an economical manner without the use of a contract for a
period in excess of 5 years.
* * * * *
PART 241--ACQUISITION OF UTILITY SERVICES
0
8. Section 241.103 paragraph (2) is revised to read as follows:
241.103 Statutory and delegated authority.
* * * * *
(2) See 217.174 for authority to enter into multiyear contracts for
electricity from renewable energy sources.
* * * * *
[FR Doc. 2011-23963 Filed 9-19-11; 8:45 am]
BILLING CODE 5001-08-P
