Defense Federal Acquisition Regulation Supplement: Award Fee Reduction or Denial for Health or Safety Issues (DFARS Case 2011-D033), 11354-11355 [2012-4040]
Download as PDF
<![CDATA[
11354
Federal Register / Vol. 77, No. 37 / Friday, February 24, 2012 / Rules and Regulations
II. Discussion and Analysis of the
Public Comment
The Defense Acquisition Regulations
Council (the Council) reviewed the
public comment in the development of
the final rule. A discussion of the
comment is provided as follows:
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Parts 209, 216, and 252
RIN 0750–AH37
A. Summary of Significant Changes
The interim rule is adopted, without
change, as a final rule.
Defense Federal Acquisition
Regulation Supplement: Award Fee
Reduction or Denial for Health or
Safety Issues (DFARS Case 2011–
D033)
Defense Acquisition
Regulations System, Department of
Defense (DoD).
AGENCY:
ACTION:
Final rule.
DoD is adopting as final,
without change, an interim rule
amending the Defense Federal
Acquisition Regulation Supplement
(DFARS) to implement those sections of
the National Defense Authorization Acts
for Fiscal Years 2010 and 2011,
providing increased authorities to
reduce or deny award fees to companies
found to jeopardize the health or safety
of Government personnel. In addition,
this rule modifies the requirement that
information on the final determination
of award fee be entered into the Federal
Awardee Performance and Integrity
Information System (FAPIIS).
SUMMARY:
DATES:
Effective Date: February 24,
2012.
Ms.
Meredith Murphy, telephone 703–602–
1302.
SUPPLEMENTARY INFORMATION:
FOR FURTHER INFORMATION CONTACT:
srobinson on DSK4SPTVN1PROD with RULES3
I. Background
DoD published an interim rule in the
Federal Register at 76 FR 57674 on
September 16, 2011, to implement
sections 823 and 834 of the National
Defense Authorization Acts (NDAA) for
Fiscal Years (FY) 2010 and 2011,
providing increased statutory
authorities to reduce or deny award fees
to companies found to jeopardize the
health or safety of Government
personnel and adding a mechanism to
decrease or eliminate a contractor’s
award fee for a specific performance
period. In addition, the interim rule
implemented the modification by
section 834 of section 872 of the NDAA
for FY 2009, which required that
information on the final determination
of award fee be entered into the Federal
Awardee Performance and Integrity
Information System (FAPIIS). One
respondent submitted a public comment
in response to the interim rule.
VerDate Mar<15>2010
20:17 Feb 23, 2012
Jkt 226001
B. Analysis of Public Comment
Comment: The respondent noted that
DFARS 209.105–2–70 uses the term
‘‘DoD appointing official,’’ while the
clause, at DFARS 252.216–7007(a)(ii)(E),
states that the determination is made by
the Secretary of Defense. The
respondent suggested that the same term
be used in both locations.
Response: The terminology used was
carefully considered by DoD. Section
834 of the statute requires the Secretary
of Defense to provide for an
‘‘expeditious, independent
investigation’’ and ‘‘make a final
determination, pursuant to procedures
established by the Secretary for
purposes of this section. Defense
Criminal Investigative Organizations
(DCIOs) currently have procedures in
place to conduct criminal investigations
of contractor misconduct. These
procedures are outside the acquisition
regulatory process, and, further, there
are differences in the procedural
processes followed within different
parts of DoD. After consideration of the
comment, DoD determined that the
DFARS text at 209.105–2–70 should be
as specific as possible for the guidance
of the contracting officer, i.e., ‘‘the DoD
appointing official that requested a DoD
investigation makes a final
determination * * *’’ However, DoD
used the ‘‘Secretary of Defense’’ in the
DFARS clause because it is not
necessary to specify to the contractor
the delegation of authority within DoD.
III. 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 a significant
regulatory action and, therefore, was
subject to review under section 6(b) of
E.O. 12866, Regulatory Planning and
PO 00000
Frm 00002
Fmt 4701
Sfmt 4700
Review, dated September 30, 1993. This
rule is not a major rule under 5 U.S.C.
804.
IV. 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 section 834 of the NDAA for FY
2011 does not apply to firms that are
subject to the jurisdiction of U.S. courts.
By definition, small businesses are U.S.
businesses and, therefore, are subject to
the jurisdiction of the U.S. courts.
Accordingly, this rule will not affect
small businesses. For the definition of
‘‘small business,’’ the Regulatory
Flexibility Act refers to the Small
Business Act, which in turn allows the
U.S. Small Business Administration
(SBA) Administrator to specify detailed
definitions or standards (5 U.S.C. 601(3)
and 15 U.S.C. 632(a)). The SBA
regulations at 13 CFR 121.105 discuss
who is a small business: ‘‘(a)(1) Except
for small agricultural cooperatives, a
business concern eligible for assistance
from SBA as a small business is a
business entity organized for profit,
with a place of business located in the
United States, and which operates
primarily within the United States or
which makes a significant contribution
to the U.S. economy through payment of
taxes or use of American products,
materials or labor.’’
This rule also implements section 823
of the NDAA for FY 2010. Section 823
required contracting officers to consider
reduction or denial of award fee if the
actions of the contractor or a
subcontractor at any tier jeopardized the
health or safety of Government
personnel. DoD did not prepare an
initial regulatory flexibility analysis
upon publication of the interim rule
implementing section 823 (75 FR 69360,
effective November 12, 2010) because,
generally, contracts awarded to small
businesses are not likely to utilize
incentive- and award-fee contract
structures. No comments were received
from small entities on the interim rule.
V. Paperwork Reduction Act
The 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).
E:\FR\FM\24FER3.SGM
24FER3
Federal Register / Vol. 77, No. 37 / Friday, February 24, 2012 / Rules and Regulations
DoD is adopting as final, with
changes, an interim rule amending the
Defense Federal Acquisition Regulation
Supplement (DFARS) to improve the
effectiveness of DoD oversight of
contractor business systems.
DATES: Effective date: February 24, 2012.
FOR FURTHER INFORMATION CONTACT: Mr.
Mark Gomersall, 703–602–0302.
SUPPLEMENTARY INFORMATION:
that such systems provide timely,
reliable information for the management
of DoD programs. Based on the
comments received in response to the
second proposed rule and the
requirements of the NDAA for FY 2011,
DoD published an interim rule with
request for comments on May 18, 2011
(76 FR 28856). The public comment
period ended on July 18, 2011.
Comments were received from 14
respondents in response to the interim
rule.
Contractor business systems and
internal controls are the first line of
defense against waste, fraud, and abuse.
Weak control systems increase the risk
of unallowable and unreasonable costs
on Government contracts. To improve
the effectiveness of Defense Contract
Management Agency (DCMA) and
Defense Contract Audit Agency (DCAA)
oversight of contractor business
systems, DoD has clarified the definition
and administration of contractor
business systems as follows:
A. Contractor business systems have
been defined as accounting systems,
estimating systems, purchasing systems,
earned value management systems
(EVMS), material management and
accounting systems (MMAS), and
property management systems.
B. Compliance enforcement
mechanisms have been implemented in
the form of a business systems clause
which includes payment withholding
that allows contracting officers to
withhold a percentage of payments,
under certain conditions, when a
contractor’s business system contains
significant deficiencies. Payments could
be withheld on—
• Interim payments under—
Æ Cost-reimbursement contracts;
Æ Incentive type contracts;
Æ Time-and-materials contracts;
Æ Labor-hour contracts;
• Progress payments; and
• Performance-based payments.
I. Background
II. Discussion and Analysis
DoD published an initial proposed
rule for Business Systems—Definition
and Administration (DFARS Case 2009–
D038) in the Federal Register on
January 15, 2010 (75 FR 2457). Based on
the comments received, DoD published
a second proposed rule on December 3,
2010 (75 FR 75550). The public
comment period closed January 10,
2011. On January 7, 2011, the National
Defense Authorization Act (NDAA) for
Fiscal Year (FY) 2011 was signed into
law (Pub. L. 111–383). Section 893 of
the NDAA for FY 2011, Contractor
Business Systems, set forth statutory
requirements for the improvement of
contractor business systems to ensure
A. Analysis of Public Comments
List of Subjects in 48 CFR Parts 209,
216, and 252
Government procurement.
Ynette R. Shelkin,
Editor, Defense Acquisition Regulations
System.
Interim Rule Adopted as Final Without
Change
Accordingly, the interim rule
amending 48 CFR parts 209, 216, and
252, which was published at 76 FR
57674 on September 16, 2011, is
adopted as a final rule without change.
■
[FR Doc. 2012–4040 Filed 2–23–12; 8:45 am]
BILLING CODE 5001–06–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Parts 215, 232, 234, 242, 244,
245, and 252
RIN 0750–AG58
Defense Federal Acquisition
Regulation Supplement; Business
Systems—Definition and
Administration (DFARS Case 2009–
D038)
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Final rule.
AGENCY:
srobinson on DSK4SPTVN1PROD with RULES3
SUMMARY:
VerDate Mar<15>2010
20:17 Feb 23, 2012
Jkt 226001
1. Accounting System Monitoring
Comment: A respondent stated that
DFARS 252.242–7006(c)(8) is vague.
Periodic monitoring of the system can
take many forms and be performed by
numerous personnel. The respondent
suggested that wording more in line
with DFARS 252.244–7001(c)(18),
DFARS 252.215–7002(d)(4)(xii), or
DFARS 252.215–7002(d)(4)(xiii) would
better state who is expected to perform
the monitoring, why the monitoring is
being performed, and would give a
clearer expectation of level of
monitoring to be performed.
PO 00000
Frm 00003
Fmt 4701
Sfmt 4700
11355
Response: The size and complexity of
companies and their processes,
operations, and accounting systems
capabilities vary. Therefore, it is not
feasible to establish specific
requirements regarding the extent or
frequency of monitoring by the
contractor. However, the term
‘‘periodic’’ has been removed and
additional language has been added,
similar to the language at 252.244–7001
and 252.215–7002, to clarify that the
contractor’s accounting system shall
provide for management reviews or
internal audits of the contractor’s
system to ensure compliance with the
contractor’s policies, procedures, and
established accounting practices.
2. Business Systems Clause Prescription
Comment: A ‘‘covered contract’’ is
defined at DFARS 242.7000(a) as one
that is subject to Cost Accounting
Standards (CAS). A respondent stated
that the problem with this prescription
is that a contracting officer will not
typically know if the resulting contract
will be subject to CAS when drafting the
solicitation. A determination as to
whether CAS applies to a particular
contract is made after the offeror
submits an offer containing the
information required by the provision at
FAR 52.230–1, Cost Accounting Notices
and Certification. The contracting
officer then inserts the appropriate CAS
clauses in the contract, if necessary. The
respondent suggested that one way to
correct this is to add a paragraph to the
clause making it self-deleting if CAS
does not apply to the contract.
Response: The clause has been
amended to make it self-deleting if CAS
does not apply.
3. Definition of Covered Contract
Comment: A respondent suggested
that the definition of ‘‘covered contract’’
be modified to match the definition in
section 893 of the NDAA for FY 2011.
Response: Section 816 of the NDAA
for 2012 redefined ‘‘covered contract’’ as
‘‘a contract that is subject to the cost
accounting standards promulgated
pursuant to section 1502 of title 41,
United States Code, that could be
affected if the data produced by a
contractor business system has a
significant deficiency.’’ The section 816
definition matches the definition used
in this rule, therefore, no revisions are
necessary.
4. Cost vs. Cost-Reimbursement
Comment: A respondent stated that
the word ‘‘cost’’ is used throughout the
rule when ‘‘cost-reimbursement’’ is
what is meant. Unless this rule only
applies to cost contracts, a specific type
E:\FR\FM\24FER3.SGM
24FER3
]]>Agencies
[Federal Register Volume 77, Number 37 (Friday, February 24, 2012)]
[Rules and Regulations]
[Pages 11354-11355]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-4040]
[[Page 11353]]
Vol. 77
Friday,
No. 37
February 24, 2012
Part IV
Department of Defense
-----------------------------------------------------------------------
Defense Acquisition Regulations System
-----------------------------------------------------------------------
48 CFR Parts 209, 215, 216, et al.
Defense Federal Acquisition Regulation Supplements; Final Rules
Federal Register / Vol. 77 , No. 37 / Friday, February 24, 2012 /
Rules and Regulations
[[Page 11354]]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 209, 216, and 252
RIN 0750-AH37
Defense Federal Acquisition Regulation Supplement: Award Fee
Reduction or Denial for Health or Safety Issues (DFARS Case 2011-D033)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: DoD is adopting as final, without change, an interim rule
amending the Defense Federal Acquisition Regulation Supplement (DFARS)
to implement those sections of the National Defense Authorization Acts
for Fiscal Years 2010 and 2011, providing increased authorities to
reduce or deny award fees to companies found to jeopardize the health
or safety of Government personnel. In addition, this rule modifies the
requirement that information on the final determination of award fee be
entered into the Federal Awardee Performance and Integrity Information
System (FAPIIS).
DATES: Effective Date: February 24, 2012.
FOR FURTHER INFORMATION CONTACT: Ms. Meredith Murphy, telephone 703-
602-1302.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published an interim rule in the Federal Register at 76 FR
57674 on September 16, 2011, to implement sections 823 and 834 of the
National Defense Authorization Acts (NDAA) for Fiscal Years (FY) 2010
and 2011, providing increased statutory authorities to reduce or deny
award fees to companies found to jeopardize the health or safety of
Government personnel and adding a mechanism to decrease or eliminate a
contractor's award fee for a specific performance period. In addition,
the interim rule implemented the modification by section 834 of section
872 of the NDAA for FY 2009, which required that information on the
final determination of award fee be entered into the Federal Awardee
Performance and Integrity Information System (FAPIIS). One respondent
submitted a public comment in response to the interim rule.
II. Discussion and Analysis of the Public Comment
The Defense Acquisition Regulations Council (the Council) reviewed
the public comment in the development of the final rule. A discussion
of the comment is provided as follows:
A. Summary of Significant Changes
The interim rule is adopted, without change, as a final rule.
B. Analysis of Public Comment
Comment: The respondent noted that DFARS 209.105-2-70 uses the term
``DoD appointing official,'' while the clause, at DFARS 252.216-
7007(a)(ii)(E), states that the determination is made by the Secretary
of Defense. The respondent suggested that the same term be used in both
locations.
Response: The terminology used was carefully considered by DoD.
Section 834 of the statute requires the Secretary of Defense to provide
for an ``expeditious, independent investigation'' and ``make a final
determination, pursuant to procedures established by the Secretary for
purposes of this section. Defense Criminal Investigative Organizations
(DCIOs) currently have procedures in place to conduct criminal
investigations of contractor misconduct. These procedures are outside
the acquisition regulatory process, and, further, there are differences
in the procedural processes followed within different parts of DoD.
After consideration of the comment, DoD determined that the DFARS text
at 209.105-2-70 should be as specific as possible for the guidance of
the contracting officer, i.e., ``the DoD appointing official that
requested a DoD investigation makes a final determination * * *''
However, DoD used the ``Secretary of Defense'' in the DFARS clause
because it is not necessary to specify to the contractor the delegation
of authority within DoD.
III. 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 a significant regulatory action and, therefore, was 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.
IV. 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 section 834 of the NDAA for FY 2011 does not apply to firms
that are subject to the jurisdiction of U.S. courts. By definition,
small businesses are U.S. businesses and, therefore, are subject to the
jurisdiction of the U.S. courts. Accordingly, this rule will not affect
small businesses. For the definition of ``small business,'' the
Regulatory Flexibility Act refers to the Small Business Act, which in
turn allows the U.S. Small Business Administration (SBA) Administrator
to specify detailed definitions or standards (5 U.S.C. 601(3) and 15
U.S.C. 632(a)). The SBA regulations at 13 CFR 121.105 discuss who is a
small business: ``(a)(1) Except for small agricultural cooperatives, a
business concern eligible for assistance from SBA as a small business
is a business entity organized for profit, with a place of business
located in the United States, and which operates primarily within the
United States or which makes a significant contribution to the U.S.
economy through payment of taxes or use of American products, materials
or labor.''
This rule also implements section 823 of the NDAA for FY 2010.
Section 823 required contracting officers to consider reduction or
denial of award fee if the actions of the contractor or a subcontractor
at any tier jeopardized the health or safety of Government personnel.
DoD did not prepare an initial regulatory flexibility analysis upon
publication of the interim rule implementing section 823 (75 FR 69360,
effective November 12, 2010) because, generally, contracts awarded to
small businesses are not likely to utilize incentive- and award-fee
contract structures. No comments were received from small entities on
the interim rule.
V. Paperwork Reduction Act
The 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).
[[Page 11355]]
List of Subjects in 48 CFR Parts 209, 216, and 252
Government procurement.
Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.
Interim Rule Adopted as Final Without Change
0
Accordingly, the interim rule amending 48 CFR parts 209, 216, and 252,
which was published at 76 FR 57674 on September 16, 2011, is adopted as
a final rule without change.
[FR Doc. 2012-4040 Filed 2-23-12; 8:45 am]
BILLING CODE 5001-06-P
