Defense Federal Acquisition Regulation Supplement: Demonstration Project for Contractors Employing Persons With Disabilities (DFARS Case 2018-D058), 12182-12187 [2019-06248]
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12182
Federal Register / Vol. 84, No. 62 / Monday, April 1, 2019 / Proposed Rules
225.7301–1 Requirement to use firm-fixedprice contracts.
(a) Requirement. In accordance with
section 830 of the National Defense
Authorization Act for Fiscal Year 2017
(Pub. L. 14–328), a firm-fixed-price
contract shall be used for FMS, unless
the foreign country that is the
counterparty to FMS—
(1) Has established in writing a
preference for a different contract type;
or
(2) Requests in writing that a different
contract type be used for a specific FMS.
See PGI 217.202(2) on the use of priced
options for FMS requirements.
(b) Waiver. The requirement in
paragraph (a) of this section may be
waived, if the chief of the contracting
office determines, on a case-by-case
basis, that a different contract type is in
the best interest of the United States and
American taxpayers.
■ 8. Add section 225.7301–2 to read as
follows:
225.7301–2 Solicitation approval for sole
source contracts.
The contracting officer shall
coordinate through agency channels
with the Principal Director, Defense
Pricing and Contracting, prior to issuing
a solicitation for a sole source contract
for U.S./FMS combined requirements
for a major system that has an estimated
contract value that exceeds $500
million. See also 201.170 and PGI
216.403–1(1)(ii)(B) and (C).
PART 234—MAJOR SYSTEM
ACQUISITION
9. Amend section 234.004—
a. In paragraphs (2)(i)(A) and (2)(i)(C)
introductory text, by removing
‘‘Milestone Decision Authority’’ and
adding ‘‘milestone decision authority’’
in both places;
■ b. By revising paragraph (2)(ii)(A)
introductory text;
■ c. In paragraph (2)(ii)(A)(2), by
removing the word ‘‘when’’; and
■ d. By adding paragraphs (2)(iii) and
(2)(iv).
The revision and addition read as
follows:
■
■
234.004
Acquisition strategy.
*
*
*
*
*
(2) * * *
(ii) * * *
(A) Not use cost-reimbursement line
items for the acquisition of production
of major defense acquisition programs,
unless the Under Secretary of Defense
for Acquisition and Sustainment
(USD(A&S)), or the milestone decision
authority when the milestone decision
authority is the service acquisition
executive of the military department
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that is managing the program, submits
to the congressional defense
committees—
*
*
*
*
*
(iii) See 216.301–3 for additional
contract type approval requirements for
cost-reimbursement contracts.
(iv) For fixed-price incentive (firm
target) contracts, contracting officers
shall comply with the guidance
provided at PGI 216.403–1(1)(ii)(B) and
(C).
PART 235—RESEARCH AND
DEVELOPMENT CONTRACTING
10. Amend section 235.006—
a. By redesignating paragraphs (b)(i)
and (b)(ii) as paragraphs (b)(ii) and
(b)(iii);
■ b. In newly redesignated paragraph
(b)(ii)(B) introductory text, by removing
‘‘Under Secretary of Defense
(Acquisition, Technology, and Logistics
(USD(AT&L))’’ and adding ‘‘milestone
decision authority’’ in its place;
■ c. In newly redesignated paragraphs
(b)(iii)(A)(3) introductory text and
(b)(iii)(A)(3)(i) and (ii), by removing
‘‘(b)(ii)(A)(1)’’, ‘‘USD(AT&L)’’, and
‘‘(b)(ii)(A)(3)(i)’’ and adding
‘‘(b)(iii)(A)(1), ‘‘USD(A&S)’’, and
‘‘(b)(iii)(A)(3)(i)’’ in their places,
respectively;
■ d. In the newly redesignated
paragraph (b)(iii)(B) introductory text,
by removing ‘‘USD(AT&L)’’ and adding
‘‘USD(A&S) in two places; and
■ e. By adding new paragraph (b)(i).
The addition reads as follows:
■
■
235.006
type.
Contracting methods and contract
(b)(i) Consistent with section 829 of
the National Defense Authorization Act
for Fiscal Year 2017 (Pub. L. 114–328),
the Under Secretary of Defense for
Acquisition and Sustainment
(USD(A&S)) has determined that the use
of cost-reimbursement contracts for
research and development in excess of
$25 million is approved, if the
contracting officer executes a written
determination and findings that—
(A) The level of program risk does not
permit realistic pricing; and
(B) It is not possible to provide an
equitable and sensible allocation of
program risk between the Government
and the contractor.
*
*
*
*
*
[FR Doc. 2019–06246 Filed 3–29–19; 8:45 am]
BILLING CODE 5001–06–P
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Parts 204, 215, 226, and 252
[Docket DARS–2019–0009]
RIN 0750–AK19
Defense Federal Acquisition
Regulation Supplement:
Demonstration Project for Contractors
Employing Persons With Disabilities
(DFARS Case 2018–D058)
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Proposed rule.
AGENCY:
DoD is proposing to amend
the Defense Federal Acquisition
Regulation Supplement (DFARS) to
implement a section of the National
Defense Authorization Act for Fiscal
Year 2019 that requires the DFARS to be
updated to include an instruction on a
demonstration project for contractors
employing persons with disabilities.
DATES: Comments on the proposed rule
should be submitted in writing to the
address shown below on or before May
31, 2019, to be considered in the
formation of a final rule.
ADDRESSES: Submit comments
identified by DFARS Case 2018–D058,
using any of the following methods:
Æ Federal eRulemaking Portal: https://
www.regulations.gov. Search for
‘‘DFARS Case 2018–D058.’’ Select
‘‘Comment Now’’ and follow the
instructions provided to submit a
comment. Please include ‘‘DFARS Case
2018–D058’’ on any attached
documents.
Æ Email: osd.dfars@mail.mil. Include
DFARS Case 2018–D058 in the subject
line of the message.
Æ Fax: 571–372–6094.
Æ Mail: Defense Acquisition
Regulations System, Attn: Jennifer D.
Johnson, OUSD(A&S)DPC/DARS, Room
3B941, 3060 Defense Pentagon,
Washington, DC 20301–3060.
Comments received generally will be
posted without change to https://
www.regulations.gov, including any
personal information provided. To
confirm receipt of your comment(s),
please check www.regulations.gov,
approximately two to three days after
submission to verify posting (except
allow 30 days for posting of comments
submitted by mail).
FOR FURTHER INFORMATION CONTACT:
Jennifer D. Johnson, telephone 571–
372–6100.
SUPPLEMENTARY INFORMATION:
SUMMARY:
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I. Background
This rule proposes to revise the
DFARS to implement section 888 of the
National Defense Authorization Act
(NDAA) for Fiscal Year (FY) 2019 (Pub.
L. 115–232). Section 888 requires that
the DFARS be updated to include an
instruction on the demonstration project
authorized by section 853 of the NDAA
for FY 2004 (Pub. L. 108–136, 10 U.S.C.
2302 note), as amended by division H,
section 110 of the Consolidated
Appropriations Act, 2004 (Pub. L. 108–
199).
Section 853 of the NDAA for FY 2004
authorized a Demonstration Project for
Contractors Employing Persons with
Disabilities in order to provide defense
contracting opportunities for entities
employing individuals who are severely
disabled. To participate in the
Demonstration Project, an entity must
meet the definition of ‘‘eligible
contractor’’ provided in the proposed
rule. Specifically, individuals with
severe disabilities must comprise no
less than 33 percent of the entity’s total
workforce over the 12-month period
prior to issuance of the solicitation; this
percentage must be one of the
evaluation factors used to evaluate
offers for a contract under the
Demonstration Project. In addition, the
entity must pay not less than the
minimum wage to those individuals and
must provide for its employees’ health
insurance and a retirement plan
comparable to those provided by similar
entities. The entity may be operated on
a for-profit or nonprofit basis.
Contracts awarded under the
Demonstration Project will be credited
toward DoD’s small business goals
established pursuant to the Small
Business Act (15 U.S.C. 644(g)(1)).
Subcontracts awarded to eligible
contractors under these contracts will be
credited toward DoD’s small business
subcontracting goals.
II. Discussion and Analysis
This rule proposes to add coverage of
the Demonstration Project in a new
subpart in DFARS part 226, Other
Socioeconomic Programs. The proposed
new subpart 226.7X, Demonstration
Project for Contractors Employing
Persons with Disabilities, includes
definitions and guidance for the
contracting workforce regarding the
Demonstration Project. Definitions are
proposed for the terms ‘‘eligible
contractor’’ and ‘‘severely disabled
individual,’’ based on those provided in
section 853 of the NDAA for FY 2004.
In addition, the new subpart provides
a prescription for a new solicitation
provision, 252.226–7XXX,
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Representation for Demonstration
Project for Contractors Employing
Persons with Disabilities. This provision
defines the terms ‘‘eligible contractor’’
and ‘‘severely disabled individual,’’
explains the purpose of the
Demonstration Project, and requires the
offeror to represent whether it is or is
not an eligible contractor.
Offerors will complete the
representation as part of their annual
representations and certifications in the
System for Award Management (SAM).
Therefore, the new provision 252.226–
7XXX is added to DFARS 204.1202,
Solicitation provision, in the list of
provisions that are not included
separately in a solicitation when the
provision at Federal Acquisition
Regulation (FAR) 52.204–7, System for
Award Management, is included in the
solicitation. The new provision is also
added to the provision at DFARS
252.204–7007, Alternate A, Annual
Representations and Certifications. The
contracting officer must check the
appropriate box when the new
provision 252.226–7XXX applies to a
solicitation.
Contractors under the Demonstration
Project may be required to have
subcontracting plans per FAR 19.702.
Therefore, this rule proposes to amend
the clause at DFARS 252.219–7003,
Small Business Subcontracting Plan
(DoD Contracts), to define the term
‘‘eligible contractor’’ and to specify that
subcontracts awarded to subcontractors
who also meet the definition of eligible
contractor under the Demonstration
Project may be counted toward the
prime contractor’s small disadvantaged
business subcontracting goal.
To increase the visibility of the
Demonstration Project, this rule
proposes to add at DFARS 215.304,
Evaluation factors and significant
subfactors, a reference to new section
226.7X02. This section contains the
requirement for contracting officers,
when using the Demonstration Project,
to use an evaluation factor that is the
percentage of the offeror’s total
workforce consisting of severely
disabled individuals.
III. Expected Impact of the Proposed
Rule
The Demonstration Project gives DoD
a way to provide additional contracting
opportunities to entities that employ
individuals who are severely disabled
and that may not qualify for approval by
the Committee for Purchase From
People Who Are Blind or Severely
Disabled due to their for-profit status or
for other reasons. Procurements under
the Demonstration Project must be for
products and services that are not
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available from a mandatory source in
FAR part 8, that are not on the
AbilityOne Procurement List
maintained by the Committee, or that
are not available from AbilityOne
participating nonprofit agencies in the
time required.
The Demonstration Project is modeled
after the Small Business
Administration’s set-aside program, but
uniquely includes an incentive for
Federal contractors to hire people with
disabilities, for whom the
unemployment rate is more than twice
the rate for people without disabilities.
Such a demonstration project provides
opportunities for severely disabled
individuals to become gainfully
employed taxpayers. Employing people
with disabilities can be a way to offset
the effects of an aging and shrinking
workforce. In addition, people with
disabilities bring different perspectives
on solving problems and adapting to
different circumstances. The
Demonstration Project provides another
incentive for both for-profit and
nonprofit entities to recruit, employ,
and retain people with disabilities.
The authority provided for the
Demonstration Project has been
available for use, at DoD’s discretion,
since the NDAA for FY 2004 was signed
into law. At the time, DoD considered
the Demonstration Project to be similar
to a pilot program, in that it provided
a way to try a different approach
without making broad changes in the
way DoD buys supplies and services in
general. DoD usually does not amend
the DFARS to add guidance regarding
pilot programs. Therefore, the DFARS
was not amended to include guidance
on the Demonstration Project. As noted
in Section I of this preamble, DoD is
proposing to amend the DFARS in order
to comply with section 888 of the
NDAA for FY 2019.
DoD estimates that there may be
approximately 549 procurements that
could be conducted under the
Demonstration Project per year. This
estimate is based on data obtained from
the Federal Procurement Data System
on the number of contracts awarded in
Product Service Codes (PSCs) that may
be suitable for award under the
Demonstration Project. The selection of
PSCs was informed by the Conference
Report for the NDAA for FY 2004,
which authorized the Demonstration
Project. The Conference Report
indicated that Congress expected
opportunities to exist for the
Demonstration Project in aerospace end
items and components, as well as
information technology products and
services. Therefore, DoD obtained data
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for contracts awarded in the following
PSCs:
PSC
Description
1560 ...............
Airframe Structural Components.
All PSCs in
Aerospace Craft CompoGroup 16.
nents and Accessories.
All PSCs in
Information Technology
Group 70.
Equipment (including
firmware), Software, Supplies, and Support Equipment.
All PSCs in
Information Technology and
Category D3.
Telecommunications.
In certain PSCs, there is some overlap
with the Procurement List maintained
by the Committee for Purchase From
People Who Are Blind or Severely
Disabled. The areas of overlap generally
included a few items within a specific
PSC, not the entire PSC. Therefore,
relevant PSCs were included regardless
of possible overlap with the
Procurement List.
DoD also used awards to nonprofits as
an indicator of suitability for the
Demonstration Project because of its
similarities to the AbilityOne Program,
in terms of employment of individuals
with severe disabilities. From FY 2016
through 2018, an average of 0.16% of
those contracts (approximately 90 each
year) were awarded to nonprofits. Since
the Demonstration Project applies to
both for-profit and nonprofit entities,
DoD conservatively estimated that up to
1% of contracts (approximately 549
each year) awarded in those PSCs may
be suitable for the Demonstration
Project.
However, since 2004, DoD is aware of
only one DoD contract issued pursuant
to the Demonstration Project. The
contract was awarded in 2006; Congress
had provided funds specifically for this
use. This limited use makes it difficult
to predict the impact of the
Demonstration Project. Depending on
the extent to which it is used, it could
create additional contract opportunities
for entities employing people with
severe disabilities, including servicedisabled veterans. DoD invites public
comment regarding whether more
contractors and contracting officers will
take advantage of the Demonstration
Project if it is added to the DFARS.
This rule proposes to require offerors
for procurements conducted under the
Demonstration Project to represent
whether they are or are not eligible
contractors as defined in the rule. Public
costs are expected to be de minimis
since offerors will complete the
representation in the System for Award
Management.
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IV. Applicability to Contracts at or
Below the Simplified Acquisition
Threshold and for Commercial Items,
Including Commercially Available Offthe-Shelf Items
DoD intends to apply the
requirements of section 853 of the
NDAA for FY 2004, as amended by
division H, section 110 of the
Consolidated Appropriations Act, 2004
(Pub. L. 108–199), to contracts at or
below the SAT and to contracts for the
acquisition of commercial items,
including COTS items.
A. Applicability to Contracts at or Below
the Simplified Acquisition Threshold
41 U.S.C. 1905 governs the
applicability of laws to contracts or
subcontracts in amounts not greater
than the simplified acquisition
threshold. It is intended to limit the
applicability of laws to such contracts or
subcontracts. 41 U.S.C. 1905 provides
that if a provision of law contains
criminal or civil penalties, or if the FAR
Council makes a written determination
that it is not in the best interest of the
Federal Government to exempt contracts
or subcontracts at or below the SAT, the
law will apply to them. The Principal
Director, Defense Pricing and
Contracting (DPC), is the appropriate
authority to make comparable
determinations for regulations to be
published in the DFARS, which is part
of the FAR system of regulations.
Therefore, given that the requirements
of section 853 of the NDAA for FY 2004
were enacted to provide defense
contracting opportunities for contractors
employing persons with disabilities and
since many contracts that could be
awarded under the Demonstration
Project are likely to be at or below the
SAT, DoD has determined that it is in
the best interest of the Federal
Government to apply the rule to
contracts at or below the SAT. An
exception for contracts at or below the
SAT would exclude contracts intended
to be covered by the law, thereby
undermining the overarching public
policy purpose of the law.
B. Applicability to Contracts for the
Acquisition of Commercial Items,
Including COTS Items
10 U.S.C. 2375 governs the
applicability of laws to DoD contracts
and subcontracts for the acquisition of
commercial items (including
commercially available off-the-shelf
items) and is intended to limit the
applicability of laws to contracts for the
acquisition of commercial items,
including COTS items. 10 U.S.C. 2375
provides that if a provision of law
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contains criminal or civil penalties, or if
the Under Secretary of Defense for
Acquisition and Sustainment
(USD(A&S)) makes a written
determination that it is not in the best
interest of the Federal Government to
exempt commercial item contracts, the
provision of law will apply to contracts
for the acquisition of commercial items.
Due to delegations of authority from
USD(A&S), the Principal Director, DPC,
is the appropriate authority to make this
determination.
Therefore, given that the requirements
of section 853 of the NDAA for FY 2004
were enacted to provide defense
contracting opportunities for contractors
employing persons with disabilities,
and since many of the products and
services offered by these contractors are
commercial items, including COTS
items, DoD has determined that it is in
the best interest of the Federal
Government to apply the rule to
contracts for the acquisition of
commercial items, including COTS
items, as defined at FAR 2.101. An
exception for contracts for the
acquisition of commercial items,
including COTS items, would exclude
contracts intended to be covered by the
law, thereby undermining the
overarching public policy purpose of
the law.
V. 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.
VI. Executive Order 13771
This proposed rule is not expected to
be subject to the requirements of E.O.
13771, because it is expected to result
in no more than de minimis costs.
VII. Regulatory Flexibility Act
DoD does not expect this proposed
rule to 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,
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et seq. However, an initial regulatory
flexibility analysis has been performed
and is summarized as follows:
DoD is proposing to amend the
DFARS to include an instruction on the
Demonstration Project for Contractors
Employing Persons with Disabilities.
The Demonstration Project allows DoD
to provide defense contracting
opportunities to entities that employ
individuals who are severely disabled,
even though those entities may not
qualify for approval by the Committee
for Purchase From People Who Are
Blind or Severely Disabled.
Procurements under the Demonstration
Project must be for products and
services that are not available from a
mandatory source in Federal
Acquisition Regulation part 8, that are
not on the AbilityOne Procurement List
maintained by the Committee, or that
are not available from AbilityOne
participating nonprofit agencies in the
time required.
The objective of the rule is to
implement section 888 of the NDAA for
FY 2019 (Pub. L. 115–232) by including
in the DFARS an instruction on the
Demonstration Project described above.
The Demonstration Project was
authorized by section 853 of the NDAA
for FY 2004 (Pub. L. 108–136, as
amended; 10 U.S.C. 2302 note). The
legal basis is section 888 of the NDAA
for FY 2019 and 10 U.S.C. 2302 note.
The rule will apply to entities,
including small entities, that meet the
definition of ‘‘eligible contractor’’ in the
rule and that are interested in
competing for contracts under the
Demonstration Project. Specifically, an
eligible contractor employs severely
disabled individuals at a rate of no less
than 33 percent of the contractor’s
workforce over the 12-month period
prior to issuance of the solicitation; pays
not less than the minimum wage to
those individuals; and provides for its
employees’ health insurance and a
retirement plan comparable to those
provided by similar entities. The entity
may operate on a for-profit or nonprofit
basis. According to data in the Federal
Procurement Data System (FPDS), DoD
awarded contracts to approximately
4,065 small entities each year from FY
2016 to FY 2018 in Product and Service
Codes (PSCs) that may be suitable for
award under the Demonstration Project,
such as aerospace components and
accessories and information technology
equipment and services. DoD
conservatively estimates that
approximately 21 percent, or 870 small
entities, may meet the definition of
‘‘eligible contractor’’ and be interested
in competing for contracts under the
Demonstration Project.
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This rule proposes to require offerors
to represent whether they are or are not
eligible contractors under the
Demonstration Project. This
representation will be available for
completion in the System for Award
Management (SAM) and will be
completed on an annual basis. This rule
does not impose any new recordkeeping
or other compliance requirements for
small entities.
This rule does not duplicate, overlap,
or conflict with any other Federal rules.
There are no known alternative
approaches to the proposed rule that
would accomplish the stated objectives
of the applicable statute.
DoD invites comments from small
business concerns and other interested
parties on the expected impact of this
rule on small entities.
DoD will also consider comments
from small entities concerning the
existing regulations in subparts affected
by this rule in accordance with 5 U.S.C.
610. Interested parties must submit such
comments separately and should cite 5
U.S.C 610 (DFARS Case 2018–D058), in
correspondence.
VIII. Paperwork Reduction Act
The rule affects the information
collection requirements in the provision
at FAR 52.204–7, System for Award
Management, and in the clause at FAR
52.204–13, System for Award
Management Maintenance, currently
approved under OMB Control Number
9000–0159, entitled System for Award
Management Registration, in accordance
with the Paperwork Reduction Act (44
U.S.C. chapter 35). The impact,
however, is negligible, because the cost
of providing the additional
representation in the System for Award
Management is de minimis and is
within the estimate of public burden
approved for OMB Control Number
9000–0159.
List of Subjects in 48 CFR Parts 204,
215, 226, and 252
Government procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense
Acquisition Regulations System.
Therefore, 48 CFR parts 204, 215, 226,
and 252 are proposed to be amended as
follows:
■ 1. The authority citation for 48 CFR
parts 204, 215, 226, and 252 continues
to read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR
chapter 1.
PART 204—ADMINISTRATIVE
MATTERS
■
2. Amend section 204.1202 by
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12185
a. Redesignating paragraphs (2)(xi),
(xii), and (xiii) as paragraphs (2)(xii),
(xiii), and (xiv), respectively; and
■ b. Adding new paragraph (xi).
The addition reads as follows:
■
204.1202
Solicitation provision.
*
*
*
*
*
(2) * * *
(xi) 252.226–7XXX, Representation
for Demonstration Project for
Contractors Employing Persons with
Disabilities.
*
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*
PART 215—CONTRACTING BY
NEGOTIATION
3. Amend section 215.304 by adding
paragraph (c)(vi) to read as follows:
■
215.304 Evaluation factors and significant
subfactors.
(c) * * *
(vi) See 226.7X02 for an additional
evaluation factor required in
solicitations when using the
Demonstration Project for Contractors
Employing Persons with Disabilities.
PART 226—OTHER SOCIOECONOMIC
PROGRAMS
4. Add subpart 226.7X, consisting of
226.7X00 through 226.7X03, to read as
follows:
■
SUBPART 226.7X—DEMONSTRATION
PROJECT FOR CONTRACTORS
EMPLOYING PERSONS WITH DISABILITIES
Sec.
226.7X00 Scope of subpart.
226.7X01 Definitions.
226.7X02 Policy and procedures.
226.7X03 Solicitation provision.
SUBPART 226.7X—DEMONSTRATION
PROJECT FOR CONTRACTORS
EMPLOYING PERSONS WITH
DISABILITIES
226.7X00
Scope of subpart.
This subpart implements section 853
of the National Defense Authorization
Act for Fiscal Year 2004 (Pub. L. 108–
136, 10 U.S.C. 2302 note), as amended.
226.7X01
Definitions.
As used in this subpart—
Eligible contractor means a business
entity operated on a for-profit or
nonprofit basis that—
(1) Employs severely disabled
individuals at a rate that averages not
less than 33 percent of its total
workforce over the 12-month period
prior to issuance of the solicitation;
(2) Pays not less than the minimum
wage prescribed pursuant to 29 U.S.C.
206 to the employees who are severely
disabled individuals; and
(3) Provides for its employees’ health
insurance and a retirement plan
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comparable to those provided for
employees by business entities of
similar size in its industrial sector or
geographic region.
Severely disabled individual means
an individual with a disability (as
defined in 42 U.S.C. 12102) who has a
severe physical or mental impairment
that seriously limits one or more
functional capacities.
226.7X02
Policy and procedures.
(a) Contracting officers may use this
demonstration project to award one or
more contracts to an eligible contractor
for the purpose of providing defense
contracting opportunities for entities
that employ severely disabled
individuals. To determine if there are
eligible contractors capable of fulfilling
the agency’s requirement, conduct
market research as described in 210.002
and FAR 10.002. For services, see also
PGI 210.070.
(b) When using this demonstration
project, one of the evaluation factors
shall be the percentage of the offeror’s
total workforce that consists of severely
disabled individuals employed by the
offeror. Contracting officers may use a
rating method in which a higher
percentage of the offeror’s total
workforce consisting of severely
disabled individuals would result in a
higher rating for this evaluation factor.
(c) Contracts awarded to eligible
contractors under this demonstration
project may be counted toward DoD’s
small disadvantaged business goal.
226.7X03
Solicitation provision.
Use the provision at 252.226–7XXX,
Representation for Demonstration
Project for Contractors Employing
Persons with Disabilities, in
solicitations when using this
demonstration project.
PART 252—SOLICITATION
PROVISIONS AND CONTRACT
CLAUSES
5. Amend section 252.204–7007 by—
a. Removing clause date ‘‘(DEC 2018)’’
and adding ‘‘(DATE)’’; and
■ b. Adding paragraph (d)(2)(vi).
The addtion reads as follows:
■
■
252.204–7007 Alternate A, Annual
Representations and Certifications.
*
*
*
*
*
(d) * * *
(2) * * *
(vi) 252.226–7XXX, Representation
for Demonstration Project for
Contractors Employing Persons with
Disabilities.
*
*
*
*
*
■ 6. Amend section 252.219–7003 by—
VerDate Sep<11>2014
16:13 Mar 29, 2019
Jkt 247001
a. Removing clause date ‘‘(DEC 2018)’’
and adding ‘‘(DATE)’’ in its place;
■ b. Revising paragraph (a);
■ c. Redesignating paragraph (b) as
paragraph (b)(1);
■ d. In the newly redesignated
paragraph (b)(1), adding ‘‘(section 8025
of Pub. L. 108–87)’’ at the end of the
paragraph, before the period;
■ e. Adding paragraph (b)(2); and
■ f. In the Alternate I clause—
■ i. Removing the clause date of ‘‘(APR
2018)’’ and adding ‘‘(DATE)’’ in its
place;
■ ii. Revising paragraph (a);
■ iii. Redesignating paragraph (b) as
paragraph (b)(1);
■ iv. In the newly redesignated
paragraph (b)(1), adding ‘‘(section 8025
of Pub. L. 108–87)’’ at the end of the
paragraph, before the period; and
■ v. Adding paragraph (b)(2).
The revisions and additions read as
follows:
■
252.219–7003 Small Business
Subcontracting Plan (DoD Contracts).
*
*
*
*
*
(a) Definitions. As used in this
clause—
Eligible contractor means a business
entity operated on a for-profit or
nonprofit basis that—
(1) Employs severely disabled
individuals at a rate that averages not
less than 33 percent of its total
workforce over the 12-month period
prior to issuance of the solicitation;
(2) Pays not less than the minimum
wage prescribed pursuant to 29 U.S.C.
206 to the employees who are severely
disabled individuals; and
(3) Provides for its employees’ health
insurance and a retirement plan
comparable to those provided for
employees by business entities of
similar size in its industrial sector or
geographic region.
Summary Subcontract Report (SSR)
Coordinator means the individual who
is registered in the Electronic
Subcontracting Reporting System (eSRS)
at the Department of Defense level and
is responsible for acknowledging receipt
or rejecting SSRs submitted under an
individual subcontracting plan in eSRS
for the Department of Defense.
(b) * * *
(2) Subcontracts awarded to eligible
contractors under the Demonstration
Project for Contractors Employing
Persons with Disabilities (see DFARS
226.7X) may be counted toward the
Contractor’s small disadvantaged
business subcontracting goal (section
853 of Pub. L. 108–136, as amended by
division H, section 110 of Pub. L. 108–
199).
*
*
*
*
*
PO 00000
Frm 00044
Fmt 4702
Sfmt 4702
Alternate I. * * *
*
*
*
*
(a) Definitions. As used in this
clause—
Eligible contractor means a business
entity operated on a for-profit or
nonprofit basis that—
(1) Employs severely disabled
individuals at a rate that averages not
less than 33 percent of its total
workforce over the 12-month period
prior to issuance of the solicitation;
(2) Pays not less than the minimum
wage prescribed pursuant to 29 U.S.C.
206 to the employees who are severely
disabled individuals; and
(3) Provides for its employees’ health
insurance and a retirement plan
comparable to those provided for
employees by business entities of
similar size in its industrial sector or
geographic region.
Summary Subcontract Report (SSR)
Coordinator means the individual who
is registered in the Electronic
Subcontracting Reporting System (eSRS)
at the Department of Defense level and
is responsible for acknowledging receipt
or rejecting SSRs submitted under an
individual subcontracting plan in eSRS
for the Department of Defense.
(b) * * *
(2) Subcontracts awarded to eligible
contractors under the Demonstration
Project for Contractors Employing
Persons with Disabilities (see DFARS
226.7X) may be counted toward the
Contractor’s small disadvantaged
business subcontracting goal (section
853 of Pub. L. 108–136, as amended by
division H, section 110 of Pub. L. 108–
199).
*
*
*
*
*
■ 7. Add section 252.226–7XXX to read
as follows:
*
252.226–7XXX Representation for
Demonstration Project for Contractors
Employing Persons with Disabilities.
As prescribed in 226.7X03, use the
following provision:
Representation for Demonstration Project for
Contractors Employing Persons with
Disabilities (Date)
(a) Definitions. As used in this provision—
‘‘Eligible contractor’’ means a business
entity operated on a for-profit or nonprofit
basis that—
(1) Employs severely disabled individuals
at a rate that averages not less than 33
percent of its total workforce over the 12month period prior to issuance of the
solicitation;
(2) Pays not less than the minimum wage
prescribed pursuant to 29 U.S.C. 206 to the
employees who are severely disabled
individuals; and
(3) Provides for its employees’ health
insurance and a retirement plan comparable
to those provided for employees by business
E:\FR\FM\01APP1.SGM
01APP1
Federal Register / Vol. 84, No. 62 / Monday, April 1, 2019 / Proposed Rules
entities of similar size in its industrial sector
or geographic region.
‘‘Severely disabled individual’’ means an
individual with a disability (as defined in 42
U.S.C. 12102) who has a severe physical or
mental impairment that seriously limits one
or more functional capacities.
(b) Demonstration Project. This solicitation
is issued pursuant to the Demonstration
Project for Contractors Employing Persons
with Disabilities. The purpose of the
Demonstration Project is to provide defense
contracting opportunities for entities that
employ severely disabled individuals. To be
eligible for award, an offeror must be an
eligible contractor as defined in paragraph (a)
of this provision.
(c) Representation. The offeror represents
that it b is b is not an eligible contractor as
defined in paragraph (a) of this provision.
(End of provision)
[FR Doc. 2019–06248 Filed 3–29–19; 8:45 am]
BILLING CODE 5001–06–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
instructions provided to submit a
comment. Please include ‘‘DFARS Case
2019–D004’’ on any attached
documents.
Æ Email: osd.dfars@mail.mil. Include
DFARS Case 2019–D004 in the subject
line of the message.
Æ Fax: 571–372–6094.
Æ Mail: Defense Acquisition
Regulations System, Attn: Jennifer D.
Johnson, OUSD(A–S)DPC/DARS, Room
3B941, 3060 Defense Pentagon,
Washington, DC 20301–3060.
Comments received generally will be
posted without change to https://
www.regulations.gov, including any
personal information provided. To
confirm receipt of your comment(s),
please check www.regulations.gov,
approximately two to three days after
submission to verify posting (except
allow 30 days for posting of comments
submitted by mail).
FOR FURTHER INFORMATION CONTACT: Ms.
Jennifer D. Johnson, telephone 571–
372–6100.
SUPPLEMENTARY INFORMATION:
48 CFR Parts 219 and 252
I. Background
[Docket DARS–2019–0015]
DoD is proposing to revise the DFARS
to implement regulatory changes made
by the Small Business Administration
(SBA) in its final rule published in the
Federal Register at 81 FR 34243 on May
31, 2016. SBA’s final rule implemented
the requirements of section 1651 of the
National Defense Authorization Act
(NDAA) for Fiscal Year (FY) 2013 (Pub.
L. 112–239, 15 U.S.C. 657s). Section
1651 revised and standardized the
limitations on subcontracting, including
the nonmanufacturer rule, that apply to
small business concerns, including 8(a)
Program participants, under
procurements conducted pursuant to
Federal Acquisition Regulation (FAR)
part 19, Small Business Programs.
Small business concerns must meet
certain requirements when they offer to
the Government an end item they did
not manufacture, process, or produce.
These requirements are known as the
nonmanufacturer rule. For example, a
small business nonmanufacturer must
offer an end item that a small business
manufactured, processed, or produced
in the United States or its outlying areas
(as defined in FAR 2.101). The clause at
DFARS 252.219–7010, Notification of
Competition Limited to Eligible 8(a)
Concerns—Partnership Agreement,
includes an outdated version of these
requirements. This rule proposes to
update DFARS 252.219–7010 to include
the revised nonmanufacturer rule
provided by section 1651 and
implemented in SBA’s final rule.
RIN 0750–AK39
Defense Federal Acquisition
Regulation Supplement:
Nonmanufacturer Rule for 8(a)
Participants (DFARS Case 2019–D004)
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Proposed rule.
AGENCY:
DoD is proposing to amend
the Defense Federal Acquisition
Regulation Supplement (DFARS) to
implement the final rule published by
the Small Business Administration
implementing a section of the National
Defense Authorization Act for Fiscal
Year 2013 that provided revised and
standardized limitations on
subcontracting, including the
nonmanufacturer rule, that apply to
small business concerns, including
participants in the 8(a) Program.
DATES: Comments on the proposed rule
should be submitted in writing to the
address shown below on or before May
31, 2019, to be considered in the
formation of a final rule.
ADDRESSES: Submit comments
identified by DFARS Case 2019–D004,
using any of the following methods:
Æ Federal eRulemaking Portal: https://
www.regulations.gov. Search for
‘‘DFARS Case 2019–D004.’’ Select
‘‘Comment Now’’ and follow the
SUMMARY:
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16:13 Mar 29, 2019
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PO 00000
Frm 00045
Fmt 4702
Sfmt 4702
12187
II. Discussion and Analysis
This rule proposes to amend DFARS
252.219–7010, paragraph (d), to replace
the outdated text regarding the
nonmanufacturer rule with updated text
that implements section 1651 and SBA’s
final rule. The proposed, updated text is
consistent with the proposed FAR rule
published in the Federal Register on
December 4, 2018, at 83 FR 62540 (FAR
Case 2016–011, Revision of Limitations
on Subcontracting). In addition, this
rule proposes to revise the title of the
clause at 252.219–7010 to align with the
title of FAR 52.219–18, Notification of
Competition Limited to Eligible 8(a)
Participants.
III. Expected Impact of the Proposed
Rule
The clause at DFARS 252.219–7010,
Notification of Competition Limited to
Eligible 8(a) Concerns—Partnership
Agreement, currently requires 8(a)
participants that offer end items they
did not manufacture or produce (i.e.,
nonmanufacturers) to offer end items
manufactured or produced by small
business concerns in the United States
or its outlying areas. This requirement is
known as the ‘‘nonmanufacturer rule.’’
DFARS 252.219–7010 provides an
exemption from the nonmanufacturer
rule for contracts valued at or below
$25,000 and awarded under simplified
acquisition procedures. For these
contracts, an 8(a) participant currently
may offer end items manufactured or
produced by any domestic firm.
SBA’s final rule applied the
nonmanufacturer rule to 8(a) contracts
at any dollar value. There was no
exemption for contracts valued at or
below $25,000 and awarded under
simplified acquisition procedures.
Therefore, this rule proposes to remove
that exemption from DFARS 252.219–
7010. This change means the
nonmanufacturer rule will apply to 8(a)
contracts at any dollar value, and 8(a)
participants that are nonmanufacturers
will be required to offer end items
manufactured, processed, or produced
by small business concerns in the
United States or its outlying areas.
To estimate the number of 8(a)
participants that may be impacted by
this change, DoD obtained data from the
Federal Procurement Data System on
DoD contracts, for products, awarded to
8(a) participants under the 8(a) Program.
Contracts for services, including
construction, were excluded because the
nonmanufacturer rule only applies to
products, not services. In FY 2016
through FY 2018, DoD awarded
contracts for products to an average of
285 8(a) participants each year. An
E:\FR\FM\01APP1.SGM
01APP1
]]>Agencies
[Federal Register Volume 84, Number 62 (Monday, April 1, 2019)]
[Proposed Rules]
[Pages 12182-12187]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-06248]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 204, 215, 226, and 252
[Docket DARS-2019-0009]
RIN 0750-AK19
Defense Federal Acquisition Regulation Supplement: Demonstration
Project for Contractors Employing Persons With Disabilities (DFARS Case
2018-D058)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: DoD is proposing to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to implement a section of the National
Defense Authorization Act for Fiscal Year 2019 that requires the DFARS
to be updated to include an instruction on a demonstration project for
contractors employing persons with disabilities.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before May 31, 2019, to be considered in
the formation of a final rule.
ADDRESSES: Submit comments identified by DFARS Case 2018-D058, using
any of the following methods:
[cir] Federal eRulemaking Portal: https://www.regulations.gov.
Search for ``DFARS Case 2018-D058.'' Select ``Comment Now'' and follow
the instructions provided to submit a comment. Please include ``DFARS
Case 2018-D058'' on any attached documents.
[cir] Email: [email protected]. Include DFARS Case 2018-D058 in
the subject line of the message.
[cir] Fax: 571-372-6094.
[cir] Mail: Defense Acquisition Regulations System, Attn: Jennifer
D. Johnson, OUSD(A&S)DPC/DARS, Room 3B941, 3060 Defense Pentagon,
Washington, DC 20301-3060.
Comments received generally will be posted without change to https://www.regulations.gov, including any personal information provided. To
confirm receipt of your comment(s), please check www.regulations.gov,
approximately two to three days after submission to verify posting
(except allow 30 days for posting of comments submitted by mail).
FOR FURTHER INFORMATION CONTACT: Jennifer D. Johnson, telephone 571-
372-6100.
SUPPLEMENTARY INFORMATION:
[[Page 12183]]
I. Background
This rule proposes to revise the DFARS to implement section 888 of
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019
(Pub. L. 115-232). Section 888 requires that the DFARS be updated to
include an instruction on the demonstration project authorized by
section 853 of the NDAA for FY 2004 (Pub. L. 108-136, 10 U.S.C. 2302
note), as amended by division H, section 110 of the Consolidated
Appropriations Act, 2004 (Pub. L. 108-199).
Section 853 of the NDAA for FY 2004 authorized a Demonstration
Project for Contractors Employing Persons with Disabilities in order to
provide defense contracting opportunities for entities employing
individuals who are severely disabled. To participate in the
Demonstration Project, an entity must meet the definition of ``eligible
contractor'' provided in the proposed rule. Specifically, individuals
with severe disabilities must comprise no less than 33 percent of the
entity's total workforce over the 12-month period prior to issuance of
the solicitation; this percentage must be one of the evaluation factors
used to evaluate offers for a contract under the Demonstration Project.
In addition, the entity must pay not less than the minimum wage to
those individuals and must provide for its employees' health insurance
and a retirement plan comparable to those provided by similar entities.
The entity may be operated on a for-profit or nonprofit basis.
Contracts awarded under the Demonstration Project will be credited
toward DoD's small business goals established pursuant to the Small
Business Act (15 U.S.C. 644(g)(1)). Subcontracts awarded to eligible
contractors under these contracts will be credited toward DoD's small
business subcontracting goals.
II. Discussion and Analysis
This rule proposes to add coverage of the Demonstration Project in
a new subpart in DFARS part 226, Other Socioeconomic Programs. The
proposed new subpart 226.7X, Demonstration Project for Contractors
Employing Persons with Disabilities, includes definitions and guidance
for the contracting workforce regarding the Demonstration Project.
Definitions are proposed for the terms ``eligible contractor'' and
``severely disabled individual,'' based on those provided in section
853 of the NDAA for FY 2004.
In addition, the new subpart provides a prescription for a new
solicitation provision, 252.226-7XXX, Representation for Demonstration
Project for Contractors Employing Persons with Disabilities. This
provision defines the terms ``eligible contractor'' and ``severely
disabled individual,'' explains the purpose of the Demonstration
Project, and requires the offeror to represent whether it is or is not
an eligible contractor.
Offerors will complete the representation as part of their annual
representations and certifications in the System for Award Management
(SAM). Therefore, the new provision 252.226-7XXX is added to DFARS
204.1202, Solicitation provision, in the list of provisions that are
not included separately in a solicitation when the provision at Federal
Acquisition Regulation (FAR) 52.204-7, System for Award Management, is
included in the solicitation. The new provision is also added to the
provision at DFARS 252.204-7007, Alternate A, Annual Representations
and Certifications. The contracting officer must check the appropriate
box when the new provision 252.226-7XXX applies to a solicitation.
Contractors under the Demonstration Project may be required to have
subcontracting plans per FAR 19.702. Therefore, this rule proposes to
amend the clause at DFARS 252.219-7003, Small Business Subcontracting
Plan (DoD Contracts), to define the term ``eligible contractor'' and to
specify that subcontracts awarded to subcontractors who also meet the
definition of eligible contractor under the Demonstration Project may
be counted toward the prime contractor's small disadvantaged business
subcontracting goal.
To increase the visibility of the Demonstration Project, this rule
proposes to add at DFARS 215.304, Evaluation factors and significant
subfactors, a reference to new section 226.7X02. This section contains
the requirement for contracting officers, when using the Demonstration
Project, to use an evaluation factor that is the percentage of the
offeror's total workforce consisting of severely disabled individuals.
III. Expected Impact of the Proposed Rule
The Demonstration Project gives DoD a way to provide additional
contracting opportunities to entities that employ individuals who are
severely disabled and that may not qualify for approval by the
Committee for Purchase From People Who Are Blind or Severely Disabled
due to their for-profit status or for other reasons. Procurements under
the Demonstration Project must be for products and services that are
not available from a mandatory source in FAR part 8, that are not on
the AbilityOne Procurement List maintained by the Committee, or that
are not available from AbilityOne participating nonprofit agencies in
the time required.
The Demonstration Project is modeled after the Small Business
Administration's set-aside program, but uniquely includes an incentive
for Federal contractors to hire people with disabilities, for whom the
unemployment rate is more than twice the rate for people without
disabilities. Such a demonstration project provides opportunities for
severely disabled individuals to become gainfully employed taxpayers.
Employing people with disabilities can be a way to offset the effects
of an aging and shrinking workforce. In addition, people with
disabilities bring different perspectives on solving problems and
adapting to different circumstances. The Demonstration Project provides
another incentive for both for-profit and nonprofit entities to
recruit, employ, and retain people with disabilities.
The authority provided for the Demonstration Project has been
available for use, at DoD's discretion, since the NDAA for FY 2004 was
signed into law. At the time, DoD considered the Demonstration Project
to be similar to a pilot program, in that it provided a way to try a
different approach without making broad changes in the way DoD buys
supplies and services in general. DoD usually does not amend the DFARS
to add guidance regarding pilot programs. Therefore, the DFARS was not
amended to include guidance on the Demonstration Project. As noted in
Section I of this preamble, DoD is proposing to amend the DFARS in
order to comply with section 888 of the NDAA for FY 2019.
DoD estimates that there may be approximately 549 procurements that
could be conducted under the Demonstration Project per year. This
estimate is based on data obtained from the Federal Procurement Data
System on the number of contracts awarded in Product Service Codes
(PSCs) that may be suitable for award under the Demonstration Project.
The selection of PSCs was informed by the Conference Report for the
NDAA for FY 2004, which authorized the Demonstration Project. The
Conference Report indicated that Congress expected opportunities to
exist for the Demonstration Project in aerospace end items and
components, as well as information technology products and services.
Therefore, DoD obtained data
[[Page 12184]]
for contracts awarded in the following PSCs:
------------------------------------------------------------------------
PSC Description
------------------------------------------------------------------------
1560................................... Airframe Structural Components.
All PSCs in Group 16................... Aerospace Craft Components and
Accessories.
All PSCs in Group 70................... Information Technology
Equipment (including
firmware), Software, Supplies,
and Support Equipment.
All PSCs in Category D3................ Information Technology and
Telecommunications.
------------------------------------------------------------------------
In certain PSCs, there is some overlap with the Procurement List
maintained by the Committee for Purchase From People Who Are Blind or
Severely Disabled. The areas of overlap generally included a few items
within a specific PSC, not the entire PSC. Therefore, relevant PSCs
were included regardless of possible overlap with the Procurement List.
DoD also used awards to nonprofits as an indicator of suitability
for the Demonstration Project because of its similarities to the
AbilityOne Program, in terms of employment of individuals with severe
disabilities. From FY 2016 through 2018, an average of 0.16% of those
contracts (approximately 90 each year) were awarded to nonprofits.
Since the Demonstration Project applies to both for-profit and
nonprofit entities, DoD conservatively estimated that up to 1% of
contracts (approximately 549 each year) awarded in those PSCs may be
suitable for the Demonstration Project.
However, since 2004, DoD is aware of only one DoD contract issued
pursuant to the Demonstration Project. The contract was awarded in
2006; Congress had provided funds specifically for this use. This
limited use makes it difficult to predict the impact of the
Demonstration Project. Depending on the extent to which it is used, it
could create additional contract opportunities for entities employing
people with severe disabilities, including service-disabled veterans.
DoD invites public comment regarding whether more contractors and
contracting officers will take advantage of the Demonstration Project
if it is added to the DFARS.
This rule proposes to require offerors for procurements conducted
under the Demonstration Project to represent whether they are or are
not eligible contractors as defined in the rule. Public costs are
expected to be de minimis since offerors will complete the
representation in the System for Award Management.
IV. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-the-Shelf Items
DoD intends to apply the requirements of section 853 of the NDAA
for FY 2004, as amended by division H, section 110 of the Consolidated
Appropriations Act, 2004 (Pub. L. 108-199), to contracts at or below
the SAT and to contracts for the acquisition of commercial items,
including COTS items.
A. Applicability to Contracts at or Below the Simplified Acquisition
Threshold
41 U.S.C. 1905 governs the applicability of laws to contracts or
subcontracts in amounts not greater than the simplified acquisition
threshold. It is intended to limit the applicability of laws to such
contracts or subcontracts. 41 U.S.C. 1905 provides that if a provision
of law contains criminal or civil penalties, or if the FAR Council
makes a written determination that it is not in the best interest of
the Federal Government to exempt contracts or subcontracts at or below
the SAT, the law will apply to them. The Principal Director, Defense
Pricing and Contracting (DPC), is the appropriate authority to make
comparable determinations for regulations to be published in the DFARS,
which is part of the FAR system of regulations.
Therefore, given that the requirements of section 853 of the NDAA
for FY 2004 were enacted to provide defense contracting opportunities
for contractors employing persons with disabilities and since many
contracts that could be awarded under the Demonstration Project are
likely to be at or below the SAT, DoD has determined that it is in the
best interest of the Federal Government to apply the rule to contracts
at or below the SAT. An exception for contracts at or below the SAT
would exclude contracts intended to be covered by the law, thereby
undermining the overarching public policy purpose of the law.
B. Applicability to Contracts for the Acquisition of Commercial Items,
Including COTS Items
10 U.S.C. 2375 governs the applicability of laws to DoD contracts
and subcontracts for the acquisition of commercial items (including
commercially available off-the-shelf items) and is intended to limit
the applicability of laws to contracts for the acquisition of
commercial items, including COTS items. 10 U.S.C. 2375 provides that if
a provision of law contains criminal or civil penalties, or if the
Under Secretary of Defense for Acquisition and Sustainment (USD(A&S))
makes a written determination that it is not in the best interest of
the Federal Government to exempt commercial item contracts, the
provision of law will apply to contracts for the acquisition of
commercial items. Due to delegations of authority from USD(A&S), the
Principal Director, DPC, is the appropriate authority to make this
determination.
Therefore, given that the requirements of section 853 of the NDAA
for FY 2004 were enacted to provide defense contracting opportunities
for contractors employing persons with disabilities, and since many of
the products and services offered by these contractors are commercial
items, including COTS items, DoD has determined that it is in the best
interest of the Federal Government to apply the rule to contracts for
the acquisition of commercial items, including COTS items, as defined
at FAR 2.101. An exception for contracts for the acquisition of
commercial items, including COTS items, would exclude contracts
intended to be covered by the law, thereby undermining the overarching
public policy purpose of the law.
V. 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.
VI. Executive Order 13771
This proposed rule is not expected to be subject to the
requirements of E.O. 13771, because it is expected to result in no more
than de minimis costs.
VII. Regulatory Flexibility Act
DoD does not expect this proposed rule to 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,
[[Page 12185]]
et seq. However, an initial regulatory flexibility analysis has been
performed and is summarized as follows:
DoD is proposing to amend the DFARS to include an instruction on
the Demonstration Project for Contractors Employing Persons with
Disabilities. The Demonstration Project allows DoD to provide defense
contracting opportunities to entities that employ individuals who are
severely disabled, even though those entities may not qualify for
approval by the Committee for Purchase From People Who Are Blind or
Severely Disabled. Procurements under the Demonstration Project must be
for products and services that are not available from a mandatory
source in Federal Acquisition Regulation part 8, that are not on the
AbilityOne Procurement List maintained by the Committee, or that are
not available from AbilityOne participating nonprofit agencies in the
time required.
The objective of the rule is to implement section 888 of the NDAA
for FY 2019 (Pub. L. 115-232) by including in the DFARS an instruction
on the Demonstration Project described above. The Demonstration Project
was authorized by section 853 of the NDAA for FY 2004 (Pub. L. 108-136,
as amended; 10 U.S.C. 2302 note). The legal basis is section 888 of the
NDAA for FY 2019 and 10 U.S.C. 2302 note.
The rule will apply to entities, including small entities, that
meet the definition of ``eligible contractor'' in the rule and that are
interested in competing for contracts under the Demonstration Project.
Specifically, an eligible contractor employs severely disabled
individuals at a rate of no less than 33 percent of the contractor's
workforce over the 12-month period prior to issuance of the
solicitation; pays not less than the minimum wage to those individuals;
and provides for its employees' health insurance and a retirement plan
comparable to those provided by similar entities. The entity may
operate on a for-profit or nonprofit basis. According to data in the
Federal Procurement Data System (FPDS), DoD awarded contracts to
approximately 4,065 small entities each year from FY 2016 to FY 2018 in
Product and Service Codes (PSCs) that may be suitable for award under
the Demonstration Project, such as aerospace components and accessories
and information technology equipment and services. DoD conservatively
estimates that approximately 21 percent, or 870 small entities, may
meet the definition of ``eligible contractor'' and be interested in
competing for contracts under the Demonstration Project.
This rule proposes to require offerors to represent whether they
are or are not eligible contractors under the Demonstration Project.
This representation will be available for completion in the System for
Award Management (SAM) and will be completed on an annual basis. This
rule does not impose any new recordkeeping or other compliance
requirements for small entities.
This rule does not duplicate, overlap, or conflict with any other
Federal rules.
There are no known alternative approaches to the proposed rule that
would accomplish the stated objectives of the applicable statute.
DoD invites comments from small business concerns and other
interested parties on the expected impact of this rule on small
entities.
DoD will also consider comments from small entities concerning the
existing regulations in subparts affected by this rule in accordance
with 5 U.S.C. 610. Interested parties must submit such comments
separately and should cite 5 U.S.C 610 (DFARS Case 2018-D058), in
correspondence.
VIII. Paperwork Reduction Act
The rule affects the information collection requirements in the
provision at FAR 52.204-7, System for Award Management, and in the
clause at FAR 52.204-13, System for Award Management Maintenance,
currently approved under OMB Control Number 9000-0159, entitled System
for Award Management Registration, in accordance with the Paperwork
Reduction Act (44 U.S.C. chapter 35). The impact, however, is
negligible, because the cost of providing the additional representation
in the System for Award Management is de minimis and is within the
estimate of public burden approved for OMB Control Number 9000-0159.
List of Subjects in 48 CFR Parts 204, 215, 226, and 252
Government procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 204, 215, 226, and 252 are proposed to be
amended as follows:
0
1. The authority citation for 48 CFR parts 204, 215, 226, and 252
continues to read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 204--ADMINISTRATIVE MATTERS
0
2. Amend section 204.1202 by
0
a. Redesignating paragraphs (2)(xi), (xii), and (xiii) as paragraphs
(2)(xii), (xiii), and (xiv), respectively; and
0
b. Adding new paragraph (xi).
The addition reads as follows:
204.1202 Solicitation provision.
* * * * *
(2) * * *
(xi) 252.226-7XXX, Representation for Demonstration Project for
Contractors Employing Persons with Disabilities.
* * * * *
PART 215--CONTRACTING BY NEGOTIATION
0
3. Amend section 215.304 by adding paragraph (c)(vi) to read as
follows:
215.304 Evaluation factors and significant subfactors.
(c) * * *
(vi) See 226.7X02 for an additional evaluation factor required in
solicitations when using the Demonstration Project for Contractors
Employing Persons with Disabilities.
PART 226--OTHER SOCIOECONOMIC PROGRAMS
0
4. Add subpart 226.7X, consisting of 226.7X00 through 226.7X03, to read
as follows:
SUBPART 226.7X--DEMONSTRATION PROJECT FOR CONTRACTORS EMPLOYING PERSONS
WITH DISABILITIES
Sec.
226.7X00 Scope of subpart.
226.7X01 Definitions.
226.7X02 Policy and procedures.
226.7X03 Solicitation provision.
SUBPART 226.7X--DEMONSTRATION PROJECT FOR CONTRACTORS EMPLOYING
PERSONS WITH DISABILITIES
226.7X00 Scope of subpart.
This subpart implements section 853 of the National Defense
Authorization Act for Fiscal Year 2004 (Pub. L. 108-136, 10 U.S.C. 2302
note), as amended.
226.7X01 Definitions.
As used in this subpart--
Eligible contractor means a business entity operated on a for-
profit or nonprofit basis that--
(1) Employs severely disabled individuals at a rate that averages
not less than 33 percent of its total workforce over the 12-month
period prior to issuance of the solicitation;
(2) Pays not less than the minimum wage prescribed pursuant to 29
U.S.C. 206 to the employees who are severely disabled individuals; and
(3) Provides for its employees' health insurance and a retirement
plan
[[Page 12186]]
comparable to those provided for employees by business entities of
similar size in its industrial sector or geographic region.
Severely disabled individual means an individual with a disability
(as defined in 42 U.S.C. 12102) who has a severe physical or mental
impairment that seriously limits one or more functional capacities.
226.7X02 Policy and procedures.
(a) Contracting officers may use this demonstration project to
award one or more contracts to an eligible contractor for the purpose
of providing defense contracting opportunities for entities that employ
severely disabled individuals. To determine if there are eligible
contractors capable of fulfilling the agency's requirement, conduct
market research as described in 210.002 and FAR 10.002. For services,
see also PGI 210.070.
(b) When using this demonstration project, one of the evaluation
factors shall be the percentage of the offeror's total workforce that
consists of severely disabled individuals employed by the offeror.
Contracting officers may use a rating method in which a higher
percentage of the offeror's total workforce consisting of severely
disabled individuals would result in a higher rating for this
evaluation factor.
(c) Contracts awarded to eligible contractors under this
demonstration project may be counted toward DoD's small disadvantaged
business goal.
226.7X03 Solicitation provision.
Use the provision at 252.226-7XXX, Representation for Demonstration
Project for Contractors Employing Persons with Disabilities, in
solicitations when using this demonstration project.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
5. Amend section 252.204-7007 by--
0
a. Removing clause date ``(DEC 2018)'' and adding ``(DATE)''; and
0
b. Adding paragraph (d)(2)(vi).
The addtion reads as follows:
252.204-7007 Alternate A, Annual Representations and Certifications.
* * * * *
(d) * * *
(2) * * *
(vi) 252.226-7XXX, Representation for Demonstration Project for
Contractors Employing Persons with Disabilities.
* * * * *
0
6. Amend section 252.219-7003 by--
0
a. Removing clause date ``(DEC 2018)'' and adding ``(DATE)'' in its
place;
0
b. Revising paragraph (a);
0
c. Redesignating paragraph (b) as paragraph (b)(1);
0
d. In the newly redesignated paragraph (b)(1), adding ``(section 8025
of Pub. L. 108-87)'' at the end of the paragraph, before the period;
0
e. Adding paragraph (b)(2); and
0
f. In the Alternate I clause--
0
i. Removing the clause date of ``(APR 2018)'' and adding ``(DATE)'' in
its place;
0
ii. Revising paragraph (a);
0
iii. Redesignating paragraph (b) as paragraph (b)(1);
0
iv. In the newly redesignated paragraph (b)(1), adding ``(section 8025
of Pub. L. 108-87)'' at the end of the paragraph, before the period;
and
0
v. Adding paragraph (b)(2).
The revisions and additions read as follows:
252.219-7003 Small Business Subcontracting Plan (DoD Contracts).
* * * * *
(a) Definitions. As used in this clause--
Eligible contractor means a business entity operated on a for-
profit or nonprofit basis that--
(1) Employs severely disabled individuals at a rate that averages
not less than 33 percent of its total workforce over the 12-month
period prior to issuance of the solicitation;
(2) Pays not less than the minimum wage prescribed pursuant to 29
U.S.C. 206 to the employees who are severely disabled individuals; and
(3) Provides for its employees' health insurance and a retirement
plan comparable to those provided for employees by business entities of
similar size in its industrial sector or geographic region.
Summary Subcontract Report (SSR) Coordinator means the individual
who is registered in the Electronic Subcontracting Reporting System
(eSRS) at the Department of Defense level and is responsible for
acknowledging receipt or rejecting SSRs submitted under an individual
subcontracting plan in eSRS for the Department of Defense.
(b) * * *
(2) Subcontracts awarded to eligible contractors under the
Demonstration Project for Contractors Employing Persons with
Disabilities (see DFARS 226.7X) may be counted toward the Contractor's
small disadvantaged business subcontracting goal (section 853 of Pub.
L. 108-136, as amended by division H, section 110 of Pub. L. 108-199).
* * * * *
Alternate I. * * *
* * * * *
(a) Definitions. As used in this clause--
Eligible contractor means a business entity operated on a for-
profit or nonprofit basis that--
(1) Employs severely disabled individuals at a rate that averages
not less than 33 percent of its total workforce over the 12-month
period prior to issuance of the solicitation;
(2) Pays not less than the minimum wage prescribed pursuant to 29
U.S.C. 206 to the employees who are severely disabled individuals; and
(3) Provides for its employees' health insurance and a retirement
plan comparable to those provided for employees by business entities of
similar size in its industrial sector or geographic region.
Summary Subcontract Report (SSR) Coordinator means the individual
who is registered in the Electronic Subcontracting Reporting System
(eSRS) at the Department of Defense level and is responsible for
acknowledging receipt or rejecting SSRs submitted under an individual
subcontracting plan in eSRS for the Department of Defense.
(b) * * *
(2) Subcontracts awarded to eligible contractors under the
Demonstration Project for Contractors Employing Persons with
Disabilities (see DFARS 226.7X) may be counted toward the Contractor's
small disadvantaged business subcontracting goal (section 853 of Pub.
L. 108-136, as amended by division H, section 110 of Pub. L. 108-199).
* * * * *
0
7. Add section 252.226-7XXX to read as follows:
252.226-7XXX Representation for Demonstration Project for Contractors
Employing Persons with Disabilities.
As prescribed in 226.7X03, use the following provision:
Representation for Demonstration Project for Contractors Employing
Persons with Disabilities (Date)
(a) Definitions. As used in this provision--
``Eligible contractor'' means a business entity operated on a
for-profit or nonprofit basis that--
(1) Employs severely disabled individuals at a rate that
averages not less than 33 percent of its total workforce over the
12-month period prior to issuance of the solicitation;
(2) Pays not less than the minimum wage prescribed pursuant to
29 U.S.C. 206 to the employees who are severely disabled
individuals; and
(3) Provides for its employees' health insurance and a
retirement plan comparable to those provided for employees by
business
[[Page 12187]]
entities of similar size in its industrial sector or geographic
region.
``Severely disabled individual'' means an individual with a
disability (as defined in 42 U.S.C. 12102) who has a severe physical
or mental impairment that seriously limits one or more functional
capacities.
(b) Demonstration Project. This solicitation is issued pursuant
to the Demonstration Project for Contractors Employing Persons with
Disabilities. The purpose of the Demonstration Project is to provide
defense contracting opportunities for entities that employ severely
disabled individuals. To be eligible for award, an offeror must be
an eligible contractor as defined in paragraph (a) of this
provision.
(c) Representation. The offeror represents that it [square] is
[square] is not an eligible contractor as defined in paragraph (a)
of this provision.
(End of provision)
[FR Doc. 2019-06248 Filed 3-29-19; 8:45 am]
BILLING CODE 5001-06-P
