Cost Accounting Standards: Revision of the Exemption From Cost Accounting Standards for Contracts and Subcontracts for the Acquisition of Commercial Items, 33146-33148 [2018-15176]

Download as PDF 33146 Federal Register / Vol. 83, No. 137 / Tuesday, July 17, 2018 / Rules and Regulations encouraged to rescan their receivers for new channel assignments. Next Gen TV Broadcaster Written Notices to MVPDs (Third-Party Disclosure Requirement; 47 CFR 73.3801(h), 73.6029(h), and 74.782(i)): Next Gen TV stations relocating their ATSC 1.0 signals (e.g., moving to a temporary host station’s facilities, subsequently moving to a different host, or returning to its original facility) must provide notice to MVPDs that: (i) No longer will be required to carry the station’s ATSC 1.0 signal due to the relocation; or (ii) carry and will continue to be obligated to carry the station’s ATSC 1.0 signal from the new location. Broadcaster notices to multichannel video programming distributors (MVPDs) will be used to notify MVPDs that carry a Next Gen TV broadcast station about channel changes and facility information. Local Simulcasting Agreements (Recordkeeping Requirement; 47 CFR 73.3801(e), 73.6029(e), and 74.782(f)): Broadcasters must maintain a written copy of any local simulcasting agreement and provide it to the Commission upon request. FCC staff will review the local simulcasting agreement (when applicable) to determine compliance with FCC rules and to determine whether the public interest would be served by grant of the application for a Next Gen TV station license. Federal Communications Commission. Marlene Dortch, Secretary. [FR Doc. 2018–15156 Filed 7–16–18; 8:45 am] BILLING CODE 6712–01–P OFFICE OF MANAGEMENT AND BUDGET Office of Federal Procurement Policy 48 CFR Part 9903 Cost Accounting Standards: Revision of the Exemption From Cost Accounting Standards for Contracts and Subcontracts for the Acquisition of Commercial Items Cost Accounting Standards Board, Office of Federal Procurement Policy, Office of Management and Budget. ACTION: Final rule. daltland on DSKBBV9HB2PROD with RULES AGENCY: The Office of Federal Procurement Policy (OFPP), Cost Accounting Standards (CAS) Board, is publishing a final rule revising the exemption for contracts or subcontracts for the acquisition of commercial items. SUMMARY: VerDate Sep<11>2014 16:09 Jul 16, 2018 Jkt 244001 This final rule clarifies the types of contracts that are exempt from the application of Cost Accounting Standards when acquiring commercial items. DATES: Effective August 16, 2018. FOR FURTHER INFORMATION CONTACT: Raymond Wong, Staff Director, Cost Accounting Standards Board (telephone: 202–395–6805; email: rwong@ omb.eop.gov). SUPPLEMENTARY INFORMATION: This final rule revises the exemption 48 CFR 9903.201–1(b)(6) for contracts or subcontracts for the acquisition of commercial items (hereafter referred to as the ‘‘(b)(6) commercial item exemption’’). A. Regulatory Process—Changes to 48 CFR Part 9903 The CAS Board’s regulations and Standards are codified at 48 CFR chapter 99. This final rule amends a CAS Board regulation other than a Standard and, as such, is not subject to the statutorily prescribed rulemaking process for the promulgation of a Standard at 41 U.S.C. 1502(c) [formerly, 41 U.S.C. 422(g)]. B. Background and Summary In November 2012, the CAS Board issued a proposed rule to clarify the exemption from CAS when acquiring commercial items. 77 FR 69422. The exemption enumerates the contract types that are authorized when procuring commercial items. Over the years, the CAS Board has issued several rules addressing the exemption to reflect statutory changes regarding the types of contracts that may be used in commercial item acquisitions. See 61 FR 39360 (providing an exemption for firmfixed-price contracts and subcontracts for the acquisition of commercial items as authorized by section 4305 of the Clinger-Cohen Act of 1996 (FARA), Pub. L. 104–106); 62 FR 31294 (adding fixedprice contracts with economic price adjustments other than those based on actual incurred costs for labor and materials); and 72 FR 36367 (expanding the list of exempt contract types to include time-and-material and laborhour contracts, in response to changes made by section 1432 of the Services Acquisition Reform Act of 2003, Pub. L. 108–136, which authorized these types of contracts for the acquisition of commercial items). Since enactment of the Federal Acquisition Streamlining Act in 1994 (Pub. L. 103–355), the Federal Acquisition Regulation (FAR) has included an enumerated list of contract types authorized for use in acquiring PO 00000 Frm 00028 Fmt 4700 Sfmt 4700 commercial items. See 48 CFR part 12.207. Similar to the CAS Board, the Federal Acquisition Regulatory Council has amended FAR 12.207 several times to reflect statutory changes and clarify the intent of the regulation. An inconsistency has developed between the list of contract types recognized for use in acquiring commercial items set forth in paragraph (b)(6) and that commercial item exemption and contract types reflected in FAR 12.207. For example, FAR 12.207 allows the use of firmed fixed price contracts in conjunction with award fee incentives or performance or delivery incentives, known as fixed-price incentive (FPI) contracts, when the award fee or incentive is based solely on factors other than cost. However, the (b)(6) exemption does not expressly recognize FPI contracts on the enumerated list of exempt contracts. Because of this discrepancy, some commenters on a prior CAS Board rulemaking expressed concern that these types of FPI contracts might be excluded under a literal reading of the (b)(6) exemption. See 72 FR 36367. In its proposed rule, the CAS Board sought to address the inconsistencies between the lists in the (b)(6) exemption and FAR 12.207 by removing reference to specific contract types in the (b)(6) exemption and instead making simple reference to ‘‘contracts and subcontracts for the acquisition of commercial items.’’ The CAS Board explained that this generalized language would ‘‘obviate the continuing need to update and keep current a detailed listing of permissible contract types for the acquisition of commercial items, which continues to evolve with the passage of time.’’ 77 FR 69424. The CAS Board further explained that this language tracks the exemption set forth in its authorizing statute at 41 U.S.C. 1502(b)(1)(C)(i) as well as the language in section 4205 of the Clinger-Cohen Act. The CAS Board received several comments in response to the proposed rule. A discussion of the comments and the Board’s responses are set forth in section C. Of particular note, some commenters raised concern that more general language may perpetuate ambiguities regarding what contract types are covered by the exemption. After review of the public comments and further deliberation, the CAS Board has concluded that the desired goal of clarification can be more effectively achieved by adding language to the exemption that cross references to FAR 12.207 and its enumeration of contract types authorized for the acquisition of commercial items. The CAS Board E:\FR\FM\17JYR1.SGM 17JYR1 Federal Register / Vol. 83, No. 137 / Tuesday, July 17, 2018 / Rules and Regulations believes this approach has multiple benefits. This linkage will eliminate disparities between the FAR and CAS Board rules regarding the description of contract types authorized for commercial item acquisitions. In addition, by maintaining reference to an enumerated list of authorized contract types for commercial item acquisitions, this formulation will avoid the ambiguity that could have been created if the more generalized language in proposed rule were adopted. The CAS Board also hopes that this change will avoid the need for additional CAS Board rulemakings in the event of future statutory actions addressing allowable contract types for commercial item procurements. Accordingly, this final rule amends the language at 9903.201–1(b)(6) to exempt contracts and subcontracts authorized in 48 CFR 12.207 for the acquisition of commercial items. The CAS Board intends to monitor the effectiveness of this rule in achieving the intent of the law regarding CAS exemptions. daltland on DSKBBV9HB2PROD with RULES C. Public Comments The CAS Board published a Notice of Proposed Rulemaking (NPR) on November 19, 2012, proposing to revise the (b)(6) commercial item exemption to read: ‘‘[c]ontracts and subcontracts for the acquisition of commercial items,’’ (77 FR 69422). In response to the NPR, the CAS Board received comments from four entities, one of which supported the proposed rule without change and three of which raised concerns. A summary of concerns and the CAS Board’s response are below. 1. Lack of clarity. Three commenters raised concern that deletion of the more detailed explanation of what contract types are exempt from CAS will increase confusion. One commenter stated that the change ‘‘may be confusing to the inexperienced, including both contractors and Government representatives’’ who may not immediately understand how to interpret the phrase ‘‘contracts and subcontracts for the acquisition of commercial items’’ without further explanation. This commenter suggested that the exemption include a specific cross reference to statute or regulation so that the reader could more easily determine the exempt contract types. Other commenters warned that a blanket exemption could lead to overpayment. One of these commenters admonished the Board on the need to preserve a more tailored exemption that continues to clarify that the exemption does not apply to specific contract types VerDate Sep<11>2014 16:09 Jul 16, 2018 Jkt 244001 that involve reimbursement or pricing based on actual costs. Response: The Board agrees that readers need to be made aware of the specific contracts that are covered by the exemption. This specificity will help ensure easy, clear, and consistent application. As explained above, the Board believes that reference to FAR 12.207, which identifies contract types that may be used to acquire commercial items should accomplish this objective. In this regard, the CAS Board notes that amendments to the CAS Board’s authorizing statute made by section 820 of the National Defense Authorization Act for FY 2017 make clear that the Board bears a responsibility to ‘‘minimize the burden on contractors while protecting the interests of the Federal Government.’’ The Board believes this goal is shared by the FAR Council, especially in light of direction provided in Executive Order (E.O.) 13771, Reducing Regulation and Controlling Regulatory Costs, which directs agencies to ‘‘manage costs associated with the governmental imposition of private expenditures required to comply with Federal regulations.’’ The Board intends to monitor the effectiveness of this final rule in achieving the intent of the law regarding CAS exemptions and retains the right to change the approach in the future should any changes to FAR 12.207 that the Board believes are inconsistent with this objective occur. 2. Disclosure statements. Two commenters recommended the CAS Board develop Cost Accounting Standards and Disclosure Statement requirements for commercial item acquisitions, as Congress had required in the Clinger-Cohen Act. One of those commenters stated that such steps were needed before the permissible contract types are expanded to include certain cost type contracts. Response: Creating CAS and Disclosure Statements for commercial item acquisitions would be outside the scope of this rulemaking effort. The CAS Board is aware of the direction contained in the Conference Report to the Federal Acquisition Streamlining Act to ‘‘establish guidance, consistent with commercial accounting systems and practices, to ensure that contractors appropriately assign costs to contracts (other than firm, fixed-price contracts) that are covered by the exemption for contracts or subcontracts where the price negotiated is based on established catalog or market prices of commercial items sold in substantial quantities to the general public.’’ That assessment was made by the CAS Board when PO 00000 Frm 00029 Fmt 4700 Sfmt 4700 33147 promulgating the 1997 final rule. However, since the law currently prohibits the use of cost type contracts for the acquisition of commercial items, the Board believes there is little to be gained from developing and imposing Cost Accounting Standards and Disclosure Statement requirements at this time. However, the CAS Board continues to reserve the right to issue such cost accounting standards and disclosure statement requirements should the need arise in the future. 3. Hybrid and indefinite-deliveryindefinite-quantity (IDIQ) contracts. One commenter raised the question of how to determine whether CAS is triggered on a ‘‘hybrid’’ contract that contains contract line item numbers (CLINs) for both commercial items and noncommercial items where the total value of the contract exceeds the CAS applicability threshold. The commenter suggested that CAS be clarified to ensure CLINs for commercial items on a hybrid contract are not covered by CAS, irrespective of the value of the contract. The commenter further recommended clarification of the CAS triggers for IDIQ contracts, which are often used to acquire commercial items—in particular whether to value the contract based on the size of orders or the size of the umbrella contract. Response: While issues related to the applicability of CAS to hybrid and IDIQ contracts are outside the scope of this rulemaking effort, the CAS Board takes note of these issues. The Board intends to review these issues more carefully to determine whether clarification of its rules is needed to ensure appropriate application of CAS coverage. D. Paperwork Reduction Act The Paperwork Reduction Act (44 U.S.C. Chapter 35, Subchapter I) does not apply to this rulemaking, because this rule will impose no paperwork burden on offerors, affected contractors and subcontractors, or members of the public which requires the approval of OMB under 44 U.S.C. 3501, et seq. The purpose of this rule is to clarify the application of CAS to contracts for commercial items. In addition, this rule is consistent with the intent of the objectives of the ‘‘Streamlined Applicability of Cost Accounting Standards’’ set forth in Section 802 of the National Defense Authorization Act for Fiscal Year 2000 (Pub. L. 106–65). E. Executive Orders 12866 and 13771, the Congressional Review Act, and the Regulatory Flexibility Act This rule provides technical clarification on the application of exemptions from CAS for commercial E:\FR\FM\17JYR1.SGM 17JYR1 33148 Federal Register / Vol. 83, No. 137 / Tuesday, July 17, 2018 / Rules and Regulations item acquisitions consistent with authorities in the Clinger-Cohen Act. By cross referencing FAR 12.207 and its enumeration of contract types authorized for the acquisition of commercial items, the CAS Board expects to eliminate disparities between the FAR and CAS Board rules that has created confusion for contractors and subcontractors. The economic impact on contractors and subcontractors is, therefore, expected to be minor. As a result, the Board has determined that this rule will not result in the promulgation of an ‘‘economically significant rule’’ under the provisions of Executive Order 12866, and that a regulatory impact analysis will not be required, and the requirements of E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, do not apply. For the same reason, this final rule is not a ‘‘major rule’’ under the Congressional Review Act, 5 U.S.C. Chapter 8. Finally, this rule does not have a significant effect on a substantial number of small entities because small businesses are exempt from the application of the Cost Accounting Standards. Therefore, this rule does not require a regulatory flexibility analysis under the Regulatory Flexibility Act of 1980, 5 U.S.C. Chapter 6. List of Subjects in 48 CFR Part 9903 Cost Accounting Standards, Government procurement. Lesley A. Field, Acting Chair, Cost Accounting Standards Board. For the reasons set forth in this preamble, 48 CFR part 9903 is amended as follows: PART 9903—CONTRACT COVERAGE 1. The authority citation for part 9903 continues to read as follows: ■ Authority: Pub. L. 111–350, 124 Stat. 3677, 41 U.S.C. 1502. 9903.201–1 CAS applicability. daltland on DSKBBV9HB2PROD with RULES * * * * * (b) * * * (6) Contracts and subcontracts authorized in 48 CFR 12.207 for the acquisition of commercial items. * * * * * [FR Doc. 2018–15176 Filed 7–16–18; 8:45 am] BILLING CODE 3110–01–P VerDate Sep<11>2014 16:09 Jul 16, 2018 Jkt 244001 National Oceanic and Atmospheric Administration 50 CFR Part 635 [Docket No. 180205129–8129–01] RIN 0648–BH50 Atlantic Highly Migratory Species National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Final rule; technical amendments. AGENCY: This final rule makes editorial corrections amending the regulations for Atlantic highly migratory species (HMS). This final action will make the rules easier to use by making the crossreferences in the regulations accurate, correcting grammatical and punctuation issues, and reformatting the regulations where needed to be consistent with Federal Register guidelines. The action also in several instances simplifies regulatory text by removing unnecessary language. The rule is administrative in nature and does not make any change with substantive effect to the regulations for HMS fisheries. DATES: This final rule is effective on July 17, 2018. ADDRESSES: Documents related to HMS fisheries management, such as the 2006 Consolidated HMS Fishery Management Plan (FMP) and its amendments, are available from the HMS Management Division website at https:// www.fisheries.noaa.gov/topic/atlantichighly-migratory-species or upon request from the HMS Management Division at 1315 East-West Highway, Silver Spring, MD 20910. FOR FURTHER INFORMATION CONTACT: Lauren Latchford, Larry Redd, or Karyl Brewster-Geisz by phone at 301–427– 8503. SUMMARY: Atlantic HMS are managed under the dual authority of the Magnuson-Stevens Fishery Conservation and Management Act, 16 U.S.C. 1801 et seq., (MagnusonStevens Act) and the Atlantic Tunas Convention Act, 16 U.S.C. 971 et seq., (ATCA). On October 2, 2006, NMFS published in the Federal Register (71 FR 58058) regulations implementing the 2006 Consolidated HMS FMP, which details the management measures for Atlantic HMS fisheries; these management measures have been amended or otherwise modified numerous times. The implementing SUPPLEMENTARY INFORMATION: 2. Section 9903.201–1 is amended by revising paragraph (b)(6) to read as follows: ■ DEPARTMENT OF COMMERCE PO 00000 Frm 00030 Fmt 4700 Sfmt 4700 regulations for Atlantic HMS are at 50 CFR part 635. Background The regulations at 50 CFR part 635 are promulgated under ATCA and the Magnuson-Stevens Act for the conservation and management of Atlantic highly migratory species, including species of tunas, billfish, sharks, and swordfish. In 2006, NMFS consolidated Atlantic HMS management into one fishery management plan, the 2006 Consolidated HMS FMP. Since then, NMFS has amended the FMP ten times through the fishery management plan amendment process and has made numerous other regulatory changes through framework actions. With this volume of regulatory action, some small grammatical and other errors have accumulated over time. As described in the sections below, this technical amendment corrects grammatical, punctuation, consistency, crossreference errors in the HMS regulations at 50 CFR part 635. As explained in the Consistency section below, it also simplifies regulatory text by removing unnecessary language in several limited instances. Typographical Corrections The following grammatical, punctuation, or clerical errors (i.e., typographical errors) in the HMS regulations are corrected by this final rule: The definition of ‘‘CK’’ at § 635.2 does not spell out the words for which it is an acronym. This final action therefore adds ‘‘Cleithrum to Caudal Keel’’ before the acronym ‘‘CK.’’ The definition of ‘‘Hammerhead Sharks’’ at § 635.2 capitalizes the word ‘‘shark(s).’’ This final action changes to lowercase the word ‘‘shark(s).’’ The regulation at § 635.4(l)(2)(viii) does not capitalize the word ‘‘tunas’’ in the permit title, ‘‘Atlantic Tunas Longline category LAP.’’ This final action capitalizes the word ‘‘Tunas.’’ The regulation at § 635.5(b)(1)(i) has commas incorrectly after the words ‘‘all’’ and ‘‘swordfish’’ in the sentence, ‘‘All reports must be species-specific and must include the required information about all, swordfish, and sharks received by the dealer.’’ This final action removes the misplaced commas. The regulation at § 635.5(c)(2) is missing apostrophes and has extra parentheses in three places where the text should read, ‘‘owner’s designee.’’ This final action adds apostrophes and removes the mistaken parentheses to correct this text. The regulations at § 635.6(b)(1)(ii) and (c)(1) do not capitalize the word ‘‘Arabic.’’ This final action corrects this error and E:\FR\FM\17JYR1.SGM 17JYR1

Agencies

[Federal Register Volume 83, Number 137 (Tuesday, July 17, 2018)]
[Rules and Regulations]
[Pages 33146-33148]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-15176]


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OFFICE OF MANAGEMENT AND BUDGET

Office of Federal Procurement Policy

48 CFR Part 9903


Cost Accounting Standards: Revision of the Exemption From Cost 
Accounting Standards for Contracts and Subcontracts for the Acquisition 
of Commercial Items

AGENCY: Cost Accounting Standards Board, Office of Federal Procurement 
Policy, Office of Management and Budget.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Office of Federal Procurement Policy (OFPP), Cost 
Accounting Standards (CAS) Board, is publishing a final rule revising 
the exemption for contracts or subcontracts for the acquisition of 
commercial items. This final rule clarifies the types of contracts that 
are exempt from the application of Cost Accounting Standards when 
acquiring commercial items.

DATES: Effective August 16, 2018.

FOR FURTHER INFORMATION CONTACT: Raymond Wong, Staff Director, Cost 
Accounting Standards Board (telephone: 202-395-6805; email: 
[email protected]).

SUPPLEMENTARY INFORMATION: This final rule revises the exemption 48 CFR 
9903.201-1(b)(6) for contracts or subcontracts for the acquisition of 
commercial items (hereafter referred to as the ``(b)(6) commercial item 
exemption'').

A. Regulatory Process--Changes to 48 CFR Part 9903

    The CAS Board's regulations and Standards are codified at 48 CFR 
chapter 99. This final rule amends a CAS Board regulation other than a 
Standard and, as such, is not subject to the statutorily prescribed 
rulemaking process for the promulgation of a Standard at 41 U.S.C. 
1502(c) [formerly, 41 U.S.C. 422(g)].

B. Background and Summary

    In November 2012, the CAS Board issued a proposed rule to clarify 
the exemption from CAS when acquiring commercial items. 77 FR 69422. 
The exemption enumerates the contract types that are authorized when 
procuring commercial items. Over the years, the CAS Board has issued 
several rules addressing the exemption to reflect statutory changes 
regarding the types of contracts that may be used in commercial item 
acquisitions. See 61 FR 39360 (providing an exemption for firm-fixed-
price contracts and subcontracts for the acquisition of commercial 
items as authorized by section 4305 of the Clinger-Cohen Act of 1996 
(FARA), Pub. L. 104-106); 62 FR 31294 (adding fixed-price contracts 
with economic price adjustments other than those based on actual 
incurred costs for labor and materials); and 72 FR 36367 (expanding the 
list of exempt contract types to include time-and-material and labor- 
hour contracts, in response to changes made by section 1432 of the 
Services Acquisition Reform Act of 2003, Pub. L. 108-136, which 
authorized these types of contracts for the acquisition of commercial 
items).
    Since enactment of the Federal Acquisition Streamlining Act in 1994 
(Pub. L. 103-355), the Federal Acquisition Regulation (FAR) has 
included an enumerated list of contract types authorized for use in 
acquiring commercial items. See 48 CFR part 12.207. Similar to the CAS 
Board, the Federal Acquisition Regulatory Council has amended FAR 
12.207 several times to reflect statutory changes and clarify the 
intent of the regulation. An inconsistency has developed between the 
list of contract types recognized for use in acquiring commercial items 
set forth in paragraph (b)(6) and that commercial item exemption and 
contract types reflected in FAR 12.207. For example, FAR 12.207 allows 
the use of firmed fixed price contracts in conjunction with award fee 
incentives or performance or delivery incentives, known as fixed-price 
incentive (FPI) contracts, when the award fee or incentive is based 
solely on factors other than cost. However, the (b)(6) exemption does 
not expressly recognize FPI contracts on the enumerated list of exempt 
contracts. Because of this discrepancy, some commenters on a prior CAS 
Board rulemaking expressed concern that these types of FPI contracts 
might be excluded under a literal reading of the (b)(6) exemption. See 
72 FR 36367.
    In its proposed rule, the CAS Board sought to address the 
inconsistencies between the lists in the (b)(6) exemption and FAR 
12.207 by removing reference to specific contract types in the (b)(6) 
exemption and instead making simple reference to ``contracts and 
subcontracts for the acquisition of commercial items.'' The CAS Board 
explained that this generalized language would ``obviate the continuing 
need to update and keep current a detailed listing of permissible 
contract types for the acquisition of commercial items, which continues 
to evolve with the passage of time.'' 77 FR 69424. The CAS Board 
further explained that this language tracks the exemption set forth in 
its authorizing statute at 41 U.S.C. 1502(b)(1)(C)(i) as well as the 
language in section 4205 of the Clinger-Cohen Act.
    The CAS Board received several comments in response to the proposed 
rule. A discussion of the comments and the Board's responses are set 
forth in section C. Of particular note, some commenters raised concern 
that more general language may perpetuate ambiguities regarding what 
contract types are covered by the exemption. After review of the public 
comments and further deliberation, the CAS Board has concluded that the 
desired goal of clarification can be more effectively achieved by 
adding language to the exemption that cross references to FAR 12.207 
and its enumeration of contract types authorized for the acquisition of 
commercial items. The CAS Board

[[Page 33147]]

believes this approach has multiple benefits. This linkage will 
eliminate disparities between the FAR and CAS Board rules regarding the 
description of contract types authorized for commercial item 
acquisitions. In addition, by maintaining reference to an enumerated 
list of authorized contract types for commercial item acquisitions, 
this formulation will avoid the ambiguity that could have been created 
if the more generalized language in proposed rule were adopted. The CAS 
Board also hopes that this change will avoid the need for additional 
CAS Board rulemakings in the event of future statutory actions 
addressing allowable contract types for commercial item procurements.
    Accordingly, this final rule amends the language at 9903.201-
1(b)(6) to exempt contracts and subcontracts authorized in 48 CFR 
12.207 for the acquisition of commercial items. The CAS Board intends 
to monitor the effectiveness of this rule in achieving the intent of 
the law regarding CAS exemptions.

C. Public Comments

    The CAS Board published a Notice of Proposed Rulemaking (NPR) on 
November 19, 2012, proposing to revise the (b)(6) commercial item 
exemption to read: ``[c]ontracts and subcontracts for the acquisition 
of commercial items,'' (77 FR 69422). In response to the NPR, the CAS 
Board received comments from four entities, one of which supported the 
proposed rule without change and three of which raised concerns. A 
summary of concerns and the CAS Board's response are below.
    1. Lack of clarity. Three commenters raised concern that deletion 
of the more detailed explanation of what contract types are exempt from 
CAS will increase confusion. One commenter stated that the change ``may 
be confusing to the inexperienced, including both contractors and 
Government representatives'' who may not immediately understand how to 
interpret the phrase ``contracts and subcontracts for the acquisition 
of commercial items'' without further explanation. This commenter 
suggested that the exemption include a specific cross reference to 
statute or regulation so that the reader could more easily determine 
the exempt contract types. Other commenters warned that a blanket 
exemption could lead to overpayment. One of these commenters admonished 
the Board on the need to preserve a more tailored exemption that 
continues to clarify that the exemption does not apply to specific 
contract types that involve reimbursement or pricing based on actual 
costs.
    Response: The Board agrees that readers need to be made aware of 
the specific contracts that are covered by the exemption. This 
specificity will help ensure easy, clear, and consistent application. 
As explained above, the Board believes that reference to FAR 12.207, 
which identifies contract types that may be used to acquire commercial 
items should accomplish this objective. In this regard, the CAS Board 
notes that amendments to the CAS Board's authorizing statute made by 
section 820 of the National Defense Authorization Act for FY 2017 make 
clear that the Board bears a responsibility to ``minimize the burden on 
contractors while protecting the interests of the Federal Government.'' 
The Board believes this goal is shared by the FAR Council, especially 
in light of direction provided in Executive Order (E.O.) 13771, 
Reducing Regulation and Controlling Regulatory Costs, which directs 
agencies to ``manage costs associated with the governmental imposition 
of private expenditures required to comply with Federal regulations.''
    The Board intends to monitor the effectiveness of this final rule 
in achieving the intent of the law regarding CAS exemptions and retains 
the right to change the approach in the future should any changes to 
FAR 12.207 that the Board believes are inconsistent with this objective 
occur.
    2. Disclosure statements. Two commenters recommended the CAS Board 
develop Cost Accounting Standards and Disclosure Statement requirements 
for commercial item acquisitions, as Congress had required in the 
Clinger-Cohen Act. One of those commenters stated that such steps were 
needed before the permissible contract types are expanded to include 
certain cost type contracts.
    Response: Creating CAS and Disclosure Statements for commercial 
item acquisitions would be outside the scope of this rulemaking effort. 
The CAS Board is aware of the direction contained in the Conference 
Report to the Federal Acquisition Streamlining Act to ``establish 
guidance, consistent with commercial accounting systems and practices, 
to ensure that contractors appropriately assign costs to contracts 
(other than firm, fixed-price contracts) that are covered by the 
exemption for contracts or subcontracts where the price negotiated is 
based on established catalog or market prices of commercial items sold 
in substantial quantities to the general public.'' That assessment was 
made by the CAS Board when promulgating the 1997 final rule. However, 
since the law currently prohibits the use of cost type contracts for 
the acquisition of commercial items, the Board believes there is little 
to be gained from developing and imposing Cost Accounting Standards and 
Disclosure Statement requirements at this time. However, the CAS Board 
continues to reserve the right to issue such cost accounting standards 
and disclosure statement requirements should the need arise in the 
future.
    3. Hybrid and indefinite-delivery-indefinite-quantity (IDIQ) 
contracts. One commenter raised the question of how to determine 
whether CAS is triggered on a ``hybrid'' contract that contains 
contract line item numbers (CLINs) for both commercial items and non-
commercial items where the total value of the contract exceeds the CAS 
applicability threshold. The commenter suggested that CAS be clarified 
to ensure CLINs for commercial items on a hybrid contract are not 
covered by CAS, irrespective of the value of the contract. The 
commenter further recommended clarification of the CAS triggers for 
IDIQ contracts, which are often used to acquire commercial items--in 
particular whether to value the contract based on the size of orders or 
the size of the umbrella contract.
    Response: While issues related to the applicability of CAS to 
hybrid and IDIQ contracts are outside the scope of this rulemaking 
effort, the CAS Board takes note of these issues. The Board intends to 
review these issues more carefully to determine whether clarification 
of its rules is needed to ensure appropriate application of CAS 
coverage.

D. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. Chapter 35, Subchapter I) 
does not apply to this rulemaking, because this rule will impose no 
paperwork burden on offerors, affected contractors and subcontractors, 
or members of the public which requires the approval of OMB under 44 
U.S.C. 3501, et seq. The purpose of this rule is to clarify the 
application of CAS to contracts for commercial items. In addition, this 
rule is consistent with the intent of the objectives of the 
``Streamlined Applicability of Cost Accounting Standards'' set forth in 
Section 802 of the National Defense Authorization Act for Fiscal Year 
2000 (Pub. L. 106-65).

E. Executive Orders 12866 and 13771, the Congressional Review Act, and 
the Regulatory Flexibility Act

    This rule provides technical clarification on the application of 
exemptions from CAS for commercial

[[Page 33148]]

item acquisitions consistent with authorities in the Clinger-Cohen Act. 
By cross referencing FAR 12.207 and its enumeration of contract types 
authorized for the acquisition of commercial items, the CAS Board 
expects to eliminate disparities between the FAR and CAS Board rules 
that has created confusion for contractors and subcontractors. The 
economic impact on contractors and subcontractors is, therefore, 
expected to be minor. As a result, the Board has determined that this 
rule will not result in the promulgation of an ``economically 
significant rule'' under the provisions of Executive Order 12866, and 
that a regulatory impact analysis will not be required, and the 
requirements of E.O. 13771, Reducing Regulation and Controlling 
Regulatory Costs, do not apply. For the same reason, this final rule is 
not a ``major rule'' under the Congressional Review Act, 5 U.S.C. 
Chapter 8. Finally, this rule does not have a significant effect on a 
substantial number of small entities because small businesses are 
exempt from the application of the Cost Accounting Standards. 
Therefore, this rule does not require a regulatory flexibility analysis 
under the Regulatory Flexibility Act of 1980, 5 U.S.C. Chapter 6.

List of Subjects in 48 CFR Part 9903

    Cost Accounting Standards, Government procurement.

Lesley A. Field,
Acting Chair, Cost Accounting Standards Board.

    For the reasons set forth in this preamble, 48 CFR part 9903 is 
amended as follows:

PART 9903--CONTRACT COVERAGE

0
1. The authority citation for part 9903 continues to read as follows:

    Authority:  Pub. L. 111-350, 124 Stat. 3677, 41 U.S.C. 1502.


0
2. Section 9903.201-1 is amended by revising paragraph (b)(6) to read 
as follows:


9903.201-1   CAS applicability.

* * * * *
    (b) * * *
    (6) Contracts and subcontracts authorized in 48 CFR 12.207 for the 
acquisition of commercial items.
* * * * *

[FR Doc. 2018-15176 Filed 7-16-18; 8:45 am]
 BILLING CODE 3110-01-P

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