Defense Federal Acquisition Regulation Supplement: Modification of DFARS Clause “Cancellation or Termination of Orders” (DFARS Case 2018-D035), 48496-48498 [2019-19557]
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Federal Register / Vol. 84, No. 178 / Friday, September 13, 2019 / Rules and Regulations
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Parts 239 and 252
[Docket DARS–2019–0018]
RIN 0750–AJ97
Defense Federal Acquisition
Regulation Supplement: Modification
of DFARS Clause ‘‘Cancellation or
Termination of Orders’’ (DFARS Case
2018–D035)
Defense Acquisition
Regulations System, Department of
Defense (DoD).
AGENCY:
ACTION:
Final rule.
DoD is issuing a final rule
amending the Defense Federal
Acquisition Regulation Supplement
(DFARS) to modify the text of an
existing DFARS clause to clarify DoD’s
liability in the event DoD cancels or
terminates a telecommunications
service order and include the text of
another DFARS clause to streamline
terms and conditions for contractors
subject to both clauses, pursuant to
action taken by the DoD Regulatory
Reform Task Force.
SUMMARY:
DATES:
Effective September 13, 2019.
Ms.
Carrie Moore, telephone 571–372–6093.
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
khammond on DSKBBV9HB2PROD with RULES2
I. Background
DoD published a proposed rule in the
Federal Register at 84 FR 18225 on
April 30, 2019, to modify the DFARS
clause 252.239–7007, Cancellation or
Termination of Orders, in order to: (1)
Clarify the limitations of the
Government’s obligation to reimburse a
contractor for nonrecoverable costs
when the Government cancels an order
for telecommunications services; and (2)
incorporate the information included in
DFARS 252.239–7008, Reuse
Arrangements. Combining these clauses
results in 252.239–7008 being removed
from the DFARS. The rule implements
a recommendation of the DoD
Regulatory Reform Task Force
established under Executive Order
(E.O.) 13777, ‘‘Enforcing the Regulatory
Reform Agenda.’’
No public comments were received in
response to the proposed rule. No
changes from the proposed rule are
made in the final rule.
VerDate Sep<11>2014
18:37 Sep 12, 2019
Jkt 247001
II. Applicability to Contracts at or
Below the Simplified Acquisition
Threshold and for Commercial Items,
Including Commercially Available OffThe-Shelf Items
This rule does not create any new
provisions or clauses. The rule
combines two clauses into a single
clause and makes minor modifications
to clarify current practices. This rule
does not change the applicability of the
affected clauses.
III. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and
E.O. 13563 direct agencies to assess all
costs and benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). E.O. 13563 emphasizes the
importance of quantifying both costs
and benefits, of reducing costs, of
harmonizing rules, and of promoting
flexibility. This is not a significant
regulatory action and, therefore, was not
subject to review under section 6(b) of
E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This
rule is not a major rule under 5 U.S.C.
804.
IV. Executive Order 13771
This rule is not subject to E.O. 13771,
because this rule is not a significant
regulatory action under E.O. 12866.
V. Regulatory Flexibility Act
A final regulatory flexibility analysis
(FRFA) has been prepared consistent
with the Regulatory Flexibility Act, 5
U.S.C. 601, et seq. The FRFA is
summarized as follows:
DoD is amending DFARS clause
252.239–7007, Cancellation or
Termination of Orders, to: Clarify DoD’s
liability in the event DoD cancels or
terminates a telecommunications
services order; and incorporate the text
of DFARS clause 252.239–7008, Reuse
Arrangements. Combining these two
clauses permits DFARS 252.239–7008 to
be removed from the DFARS.
The objectives of this rule are to:
Streamline contract terms and
conditions pertaining to
telecommunications services; prevent
costs from being incurred in
anticipation of, but prior to, the
establishment of a formal agreement or
contract and award of an order for
telecommunications services; and to
create an upfront mutual understanding
of the maximum amount of
reimbursement due to the contractor in
the event of cancellation or termination.
PO 00000
Frm 00002
Fmt 4701
Sfmt 4700
The modification of these DFARS
clauses implements a recommendation
from the DoD Regulatory Reform Task
Force under E.O. 13771.
No public comments were received in
response to the initial regulatory
flexibility analysis.
This rule is not expected 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, et seq.,
because it is simply combining two
existing clauses that address the same
topic into a single comprehensive
clause, and clarifies the current
practices regarding DoD liability to
reimburse telecommunication services
contractors in certain circumstances.
Based on fiscal year (FY) 2018 data
from the Federal Procurement Data
System, the Government awarded
approximately 8,670 contracts and
orders for services under the Product
and Supply Code (PSC) D3—
Information Technology and
Telecommunications. Of the 8,670
contracts and orders awarded,
approximately 28% of the awards were
made to 1,050 unique small businesses
entities. The PSC D3 does not
breakdown further into information
technology services and
telecommunications services; therefore,
the number of contracts and orders
awarded in FY 2018 exclusively for
telecommunications services is
estimated to be fewer than the number
awarded in FY 2018 under PSC D3 in
its entirety.
This rule does not include any new
reporting, recordkeeping, or other
compliance requirements for small
businesses.
This rule does not duplicate, overlap,
or conflict with any other Federal rules.
There are no known significant
alternative approaches to the rule that
would meet the stated objectives.
VI. Paperwork Reduction Act
The rule does not contain any
information collection requirements that
require the approval of the Office of
Management and Budget under the
Paperwork Reduction Act (44 U.S.C.
chapter 35).
List of Subjects in 48 CFR Parts 239 and
252
Government procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense
Acquisition Regulations System.
Therefore, 48 CFR parts 239 and 252
are amended as follows:
E:\FR\FM\13SER2.SGM
13SER2
Federal Register / Vol. 84, No. 178 / Friday, September 13, 2019 / Rules and Regulations
1. The authority citation for 48 CFR
parts 239 and 252 continues to read as
follows:
■
Authority: 41 U.S.C. 1303 and 48 CFR
chapter 1.
PART 239—ACQUISITION OF
INFORMATION TECHNOLOGY
239.7411
[AMENDED]
2. Amend section 239.7411 by—
a. In paragraph (a) introductory text,
removing the em dash and adding a
period in its place;
■ b. In paragraphs (a)(1) through (5),
removing the semicolons and adding
periods in their places; and
■ c. Removing paragraph (a)(6).
■
■
PART 252—SOLICITATION
PROVISIONS AND CONTRACT
CLAUSES
3. Revise section 252.239–7007 to
read as follows:
■
252.239–7007
of Orders.
Cancellation or Termination
As prescribed in 239.7411(a), use the
following clause:
khammond on DSKBBV9HB2PROD with RULES2
Cancellation or Termination of Orders
(SEP 2019)
(a) Definitions. As used in this clause—
Actual nonrecoverable costs means the
installed costs of the facilities and
equipment, less cost of reusable materials,
and less net salvage value.
Basic cancellation liability means the
actual nonrecoverable cost, which the
Government shall reimburse the Contractor at
the time services are cancelled.
Basic termination liability means the
nonrecoverable cost amortized in equal
monthly increments throughout the liability
period.
Installed costs means the actual cost of
equipment and materials specifically
provided or used, plus the actual cost of
installing (including engineering, labor,
supervision, transportation, rights-of-way,
and any other items which are chargeable to
the capital accounts of the Contractor), less
any costs the government may have directly
reimbursed the Contractor under the Special
Construction and Equipment Charges clause
of this agreement/contract.
Net salvage value means the salvage value
less the cost of removal.
(b) If the Government cancels any of the
services ordered under this agreement/
contract, before the services are made
available to the Government, or terminates
any of these services after they are made
available to the Government, the Government
will reimburse the Contractor for the actual
nonrecoverable costs the Contractor has
reasonably incurred in providing facilities
and equipment for which the Contractor has
no foreseeable reuse. The Government will
not reimburse the Contractor for any actual
nonrecoverable costs incurred after notice of
award, but prior to execution of the order.
VerDate Sep<11>2014
18:37 Sep 12, 2019
Jkt 247001
(c) When feasible, the Contractor shall
reuse cancelled or terminated facilities or
equipment to minimize the charges to the
Government.
(d) If at any time the Government requires
that telecommunications facilities or
equipment be relocated within the
Contractor’s service area, the Government
will have the option of paying the costs of
relocating the facilities or equipment in lieu
of paying any termination or cancellation
charge under this clause. The basic
cancellation liability or basic termination
liability applicable to the facilities or
equipment in their former location shall
continue to apply to the facilities and
equipment in their new location. Monthly
recurring charges shall continue to be paid
during the period.
(e) When there is another requirement or
foreseeable reuse in place of cancelled or
terminated facilities or equipment, no charge
shall apply and the basic cancellation
liability or basic termination liability shall be
appropriately reduced. When feasible, the
Contractor shall promptly reuse discontinued
channels or facilities, including equipment
for which the Government is obligated to pay
a minimum service charge.
(f) The amount of the Government’s
liability upon cancellation or termination of
any of the services ordered under this
agreement/contract will be determined under
applicable tariffs governing cancellation and
termination charges which—
(1) Are filed by the Contractor with a
governmental regulatory body, as defined in
the Orders For Facilities and Services clause
of this agreement/contract;
(2) Are in effect on the date of termination;
and
(3) Provide specific cancellation or
termination charges for the facilities and
equipment involved or show how to
determine the charges.
(g) The amount of the Government’s
liability upon cancellation or termination of
any of the services ordered under this
agreement/contract, which are not subject to
a governmental regulatory body, will be
determined under a mutually agreed
schedule in the communication services
authorization (CSA) or other contractual
document.
(h) If no applicable tariffs are in effect on
the date of cancellation or termination or set
forth in the applicable CSA or other
contractual document, the Government’s
liability will be determined under the
following settlement procedures—
(1) The Contractor agrees to provide the
Contracting Officer, in such reasonable detail
as the Contracting Officer may require,
inventory schedules covering all items of
property or facilities in the Contractor’s
possession, the cost of which is included in
the Basic Cancellation or Termination
Liability for which the Contractor has no
foreseeable reuse.
(2) The Contractor shall use its best efforts
to sell property or facilities when the
Contractor has no foreseeable reuse or when
the Government has not exercised its option
to take title under the Title to
Telecommunications Facilities and
Equipment clause of this agreement/contract.
PO 00000
Frm 00003
Fmt 4701
Sfmt 4700
48497
The Contractor shall apply any proceeds of
the sale to reduce any payments by the
Government to the Contractor under a
cancellation or termination settlement.
(3) The Contractor shall record actual
nonrecoverable costs under established
accounting procedures prescribed by the
cognizant governmental regulatory authority
or, if no such procedures have been
prescribed, under generally accepted
accounting procedures applicable to the
provision of telecommunication services for
public use.
(4) The net salvage value shall be deducted
from the Contractor’s installed cost. In
determining net salvage value, the Contractor
shall consider the foreseeable reuse of the
facilities and equipment by the Contractor.
The Contractor shall make allowance for the
cost of dismantling, removal, reconditioning,
and disposal of the facilities and equipment
when necessary either for the sale of facilities
or their reuse by the Contractor in another
location.
(5) Upon termination of services, the
Government will reimburse the Contractor
for the nonrecoverable cost less such costs
amortized to the date services are terminated
and establish the liability period as mutually
agreed to but not to exceed ten years. In the
case of either a cancellation or a termination,
the Government’s presumed maximum
liability will be capped by the unpaid nonrecurring charges and the monthly recurring
charges set out in the contract/agreement.
The presumed maximum liability for
monthly recurring charges shall be capped at
monthly recurring charges for the minimum
service period and any required notice
period.
(6) When the basic cancellation liability or
basic termination liability established by the
CSA or other contractual document is based
on estimated costs, the Contractor agrees to
settle on the basis of actual cost at the time
of cancellation or termination.
(7) The Contractor agrees that, if after
settlement but within the termination
liability period of the services, should the
Contractor make reuse of equipment or
facilities which were treated as nonreusable
or nonsalvable in the settlement, the
Contractor shall reimburse the Government
for the value of the equipment or facilities.
(8) The Contractor agrees to exclude—
(i) Any costs which are not included in
determining cancellation and termination
charges under the Contractor’s standard
practices or procedures; and
(ii) Charges not ordinarily made by the
Contractor for similar facilities or equipment,
furnished under similar circumstances.
(i) The Government may, under such terms
and conditions as it may prescribe, make
partial payments and payments on account
against costs incurred by the Contractor in
connection with the cancelled or terminated
portion of this agreement/contract. The
Government may make these payments if the
Contracting Officer determines that the total
of the payments is within the amount the
Contractor is entitled. If the total of the
payments is in excess of the amount finally
agreed or determined to be due under this
clause, the Contractor shall pay the excess to
the Government upon demand.
E:\FR\FM\13SER2.SGM
13SER2
48498
Federal Register / Vol. 84, No. 178 / Friday, September 13, 2019 / Rules and Regulations
(j) Failure to agree shall be a dispute
concerning a question of fact within the
meaning of the Disputes clause.
(End of clause)
252.239–7008
II. Applicability to Contracts at or
Below the Simplified Acquisition
Threshold and for Commercial Items,
Including Commercially Available Offthe-Shelf Items
This rule does not create any new
provisions or clauses. The rule
combines two clauses into a single
clause and makes minor modifications
to simplify clause text. This rule does
not change the applicability of the
affected clauses.
[Removed and Reserved]
4. Remove and reserve section
252.239–7008.
■
[FR Doc. 2019–19557 Filed 9–12–19; 8:45 am]
BILLING CODE 5001–06–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Parts 239 and 252
[Docket DARS–2019–0017]
RIN 0750–AK10
Defense Federal Acquisition
Regulation Supplement: Modification
of DFARS Clause ‘‘Orders for Facilities
and Services’’ (DFARS Case 2018–
D045)
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Final rule.
AGENCY:
DoD is issuing a final rule
amending the Defense Federal
Acquisition Regulation Supplement
(DFARS) to modify the text of an
existing DFARS clause to include the
text of another DFARS clause on the
same subject in an effort to streamline
contract terms and conditions for
contractors, pursuant to action taken by
the Regulatory Reform Task Force.
DATES: Effective September 13, 2019.
FOR FURTHER INFORMATION CONTACT: Ms.
Carrie Moore, telephone 571–372–6093.
SUPPLEMENTARY INFORMATION:
SUMMARY:
khammond on DSKBBV9HB2PROD with RULES2
I. Background
DoD published a proposed rule in the
Federal Register at 84 FR 18228 on
April 30, 2019, to modify the DFARS
clause 252.239–7004, Orders for
Facilities and Services, to incorporate
the information in DFARS clause
252.239–7005, Rates, Charges, and
Services, and make minor changes to
simplify the clause text. Combining
these clauses results in 252.239–7005
being removed from the DFARS. The
rule implements a recommendation of
the DoD Regulatory Reform Task Force
established under Executive Order
(E.O.) 13777, ‘‘Enforcing the Regulatory
Reform Agenda.’’
No public comments were received in
response to the proposed rule. No
changes from the proposed rule are
made in the final rule.
VerDate Sep<11>2014
18:37 Sep 12, 2019
Jkt 247001
III. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and
E.O. 13563 direct agencies to assess all
costs and benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). E.O. 13563 emphasizes the
importance of quantifying both costs
and benefits, of reducing costs, of
harmonizing rules, and of promoting
flexibility. This is not a significant
regulatory action and, therefore, was not
subject to review under section 6(b) of
E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This
rule is not a major rule under 5 U.S.C.
804.
IV. Executive Order 13771
This rule is not subject to E.O. 13771,
because this rule is not a significant
regulatory action under E.O. 12866.
V. Regulatory Flexibility Act
A final regulatory flexibility analysis
(FRFA) has been prepared consistent
with the Regulatory Flexibility Act, 5
U.S.C. 601, et seq. The FRFA is
summarized as follows:
DoD is amending DFARS clause
252.239–7004, Orders for Facilities and
Services, to include the text of DFARS
clause 252.239–7005, Rates, Charges,
and Services. Combining these two
clauses permits DFARS 252.239–7005 to
be removed from the DFARS.
The objective of this rule is to
streamline contract terms and
conditions pertaining to
telecommunications services. The
modification of these DFARS clauses
supports a recommendation from the
DoD Regulatory Reform Task Force. The
modification of these DFARS clauses
implements a recommendation from the
DoD Regulatory Reform Task Force
under E.O. 13771.
No public comments were received in
response to the initial regulatory
flexibility analysis.
This rule is not expected to have a
significant economic impact on a
PO 00000
Frm 00004
Fmt 4701
Sfmt 4700
substantial number of small entities
within the meaning of the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq.,
because it is simply combining two
existing clauses that address the same
topic into a single comprehensive
clause.
Based on fiscal year (FY) 2018 data
from the Federal Procurement Data
System, the Government awarded
approximately 8,670 contracts and
orders for services under the Product
and Supply Code (PSC) D3—
Information Technology and
Telecommunications. Of the 8,670
contracts and orders awarded,
approximately 28% of the awards were
made to 1,050 unique small businesses
entities. The PSC D3 does not
breakdown further into information
technology services and
telecommunications services; therefore,
the number of contracts and orders
awarded in FY 2018 exclusively for
telecommunications services is
estimated to be fewer than the number
awarded in FY 2018 under PSC D3 in
its entirety.
This rule does not include any new
reporting, recordkeeping, or other
compliance requirements for small
businesses. This rule does not duplicate,
overlap, or conflict with any other
Federal rules. There are no known
significant alternative approaches to the
rule that would meet the stated
objectives. This rule is not expected to
have a significant economic impact on
small entities.
VI. Paperwork Reduction Act
The rule does not contain any
information collection requirements that
require the approval of the Office of
Management and Budget under the
Paperwork Reduction Act (44 U.S.C.
chapter 35).
List of Subjects in 48 CFR Parts 239 and
252
Government procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense
Acquisition Regulations System.
Therefore, 48 CFR parts 239 and 252
are amended as follows:
■ 1. The authority citation for parts 239
and 252 continues to read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR
chapter 1.
PART 239–ACQUISITION OF
INFORMATION TECHNOLOGY
239.7411
■
■
[Amended]
2. Amend section 239.7411 by—
a. Removing paragraph (a)(3); and
E:\FR\FM\13SER2.SGM
13SER2
]]>Agencies
[Federal Register Volume 84, Number 178 (Friday, September 13, 2019)]
[Rules and Regulations]
[Pages 48496-48498]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19557]
[[Page 48495]]
Vol. 84
Friday,
No. 178
September 13, 2019
Part IV
Department of Defense
-----------------------------------------------------------------------
Defense Acquisition Regulations System
-----------------------------------------------------------------------
48 CFR Parts 204, 209, 212, 213, et al.
Defense Federal Acquisition Regulation Supplement: Modification of
DFARS Clause ``Cancellation or Termination of Orders'' (DFARS Case
2018-D035); Case 2018-D045); Case 2019-D012); Modification of DFARS
Clause ``Trade Agreements'' (DFARS Case 2019-D016); Modification of
DFARS Clause ``Readjustment of Payments'' (DFARS Case 2019-D017);
Modification of DFARS Clause ``Reporting and Payment of Royalties''
(DFARS Case 2019-D018); Repeal of DFARS Provision ``Award to Single
Offeror'' (DFARS Case 2019-D017; Repeal of DFARS Clause ``Returnable
Containers Other Than Cylinders'' (DFARS Case 2019-D025); Update to
Performance Information System References (DFARS Case 2019-D033);
Update to Performance Information System References (DFARS Case 2019-
D033); Appendix A, Armed Services Board of Contract Appeals, Part 1--
Charter; Technical Amendments; Final Rules;
Defense Federal Acquisition Regulation Supplement: Modification of
DFARS Clause ``Tax Relief'' (DFARS Case 2018-D049); Validation of
Proprietary and Technical Data (DFARS Case 2018-D069); Proposed Rules
Federal Register / Vol. 84, No. 178 / Friday, September 13, 2019 /
Rules and Regulations
[[Page 48496]]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 239 and 252
[Docket DARS-2019-0018]
RIN 0750-AJ97
Defense Federal Acquisition Regulation Supplement: Modification
of DFARS Clause ``Cancellation or Termination of Orders'' (DFARS Case
2018-D035)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: DoD is issuing a final rule amending the Defense Federal
Acquisition Regulation Supplement (DFARS) to modify the text of an
existing DFARS clause to clarify DoD's liability in the event DoD
cancels or terminates a telecommunications service order and include
the text of another DFARS clause to streamline terms and conditions for
contractors subject to both clauses, pursuant to action taken by the
DoD Regulatory Reform Task Force.
DATES: Effective September 13, 2019.
FOR FURTHER INFORMATION CONTACT: Ms. Carrie Moore, telephone 571-372-
6093.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published a proposed rule in the Federal Register at 84 FR
18225 on April 30, 2019, to modify the DFARS clause 252.239-7007,
Cancellation or Termination of Orders, in order to: (1) Clarify the
limitations of the Government's obligation to reimburse a contractor
for nonrecoverable costs when the Government cancels an order for
telecommunications services; and (2) incorporate the information
included in DFARS 252.239-7008, Reuse Arrangements. Combining these
clauses results in 252.239-7008 being removed from the DFARS. The rule
implements a recommendation of the DoD Regulatory Reform Task Force
established under Executive Order (E.O.) 13777, ``Enforcing the
Regulatory Reform Agenda.''
No public comments were received in response to the proposed rule.
No changes from the proposed rule are made in the final rule.
II. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-The-Shelf Items
This rule does not create any new provisions or clauses. The rule
combines two clauses into a single clause and makes minor modifications
to clarify current practices. This rule does not change the
applicability of the affected clauses.
III. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and E.O. 13563 direct agencies to
assess all costs and benefits of available regulatory alternatives and,
if regulation is necessary, to select regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety effects, distributive impacts, and equity).
E.O. 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This is not a significant regulatory action and,
therefore, was not subject to review under section 6(b) of E.O. 12866,
Regulatory Planning and Review, dated September 30, 1993. This rule is
not a major rule under 5 U.S.C. 804.
IV. Executive Order 13771
This rule is not subject to E.O. 13771, because this rule is not a
significant regulatory action under E.O. 12866.
V. Regulatory Flexibility Act
A final regulatory flexibility analysis (FRFA) has been prepared
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.
The FRFA is summarized as follows:
DoD is amending DFARS clause 252.239-7007, Cancellation or
Termination of Orders, to: Clarify DoD's liability in the event DoD
cancels or terminates a telecommunications services order; and
incorporate the text of DFARS clause 252.239-7008, Reuse Arrangements.
Combining these two clauses permits DFARS 252.239-7008 to be removed
from the DFARS.
The objectives of this rule are to: Streamline contract terms and
conditions pertaining to telecommunications services; prevent costs
from being incurred in anticipation of, but prior to, the establishment
of a formal agreement or contract and award of an order for
telecommunications services; and to create an upfront mutual
understanding of the maximum amount of reimbursement due to the
contractor in the event of cancellation or termination. The
modification of these DFARS clauses implements a recommendation from
the DoD Regulatory Reform Task Force under E.O. 13771.
No public comments were received in response to the initial
regulatory flexibility analysis.
This rule is not expected 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, et seq., because it is simply
combining two existing clauses that address the same topic into a
single comprehensive clause, and clarifies the current practices
regarding DoD liability to reimburse telecommunication services
contractors in certain circumstances.
Based on fiscal year (FY) 2018 data from the Federal Procurement
Data System, the Government awarded approximately 8,670 contracts and
orders for services under the Product and Supply Code (PSC) D3--
Information Technology and Telecommunications. Of the 8,670 contracts
and orders awarded, approximately 28% of the awards were made to 1,050
unique small businesses entities. The PSC D3 does not breakdown further
into information technology services and telecommunications services;
therefore, the number of contracts and orders awarded in FY 2018
exclusively for telecommunications services is estimated to be fewer
than the number awarded in FY 2018 under PSC D3 in its entirety.
This rule does not include any new reporting, recordkeeping, or
other compliance requirements for small businesses.
This rule does not duplicate, overlap, or conflict with any other
Federal rules.
There are no known significant alternative approaches to the rule
that would meet the stated objectives.
VI. Paperwork Reduction Act
The rule does not contain any information collection requirements
that require the approval of the Office of Management and Budget under
the Paperwork Reduction Act (44 U.S.C. chapter 35).
List of Subjects in 48 CFR Parts 239 and 252
Government procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 239 and 252 are amended as follows:
[[Page 48497]]
0
1. The authority citation for 48 CFR parts 239 and 252 continues to
read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 239--ACQUISITION OF INFORMATION TECHNOLOGY
239.7411 [AMENDED]
0
2. Amend section 239.7411 by--
0
a. In paragraph (a) introductory text, removing the em dash and adding
a period in its place;
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b. In paragraphs (a)(1) through (5), removing the semicolons and adding
periods in their places; and
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c. Removing paragraph (a)(6).
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
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3. Revise section 252.239-7007 to read as follows:
252.239-7007 Cancellation or Termination of Orders.
As prescribed in 239.7411(a), use the following clause:
Cancellation or Termination of Orders (SEP 2019)
(a) Definitions. As used in this clause--
Actual nonrecoverable costs means the installed costs of the
facilities and equipment, less cost of reusable materials, and less
net salvage value.
Basic cancellation liability means the actual nonrecoverable
cost, which the Government shall reimburse the Contractor at the
time services are cancelled.
Basic termination liability means the nonrecoverable cost
amortized in equal monthly increments throughout the liability
period.
Installed costs means the actual cost of equipment and materials
specifically provided or used, plus the actual cost of installing
(including engineering, labor, supervision, transportation, rights-
of-way, and any other items which are chargeable to the capital
accounts of the Contractor), less any costs the government may have
directly reimbursed the Contractor under the Special Construction
and Equipment Charges clause of this agreement/contract.
Net salvage value means the salvage value less the cost of
removal.
(b) If the Government cancels any of the services ordered under
this agreement/contract, before the services are made available to
the Government, or terminates any of these services after they are
made available to the Government, the Government will reimburse the
Contractor for the actual nonrecoverable costs the Contractor has
reasonably incurred in providing facilities and equipment for which
the Contractor has no foreseeable reuse. The Government will not
reimburse the Contractor for any actual nonrecoverable costs
incurred after notice of award, but prior to execution of the order.
(c) When feasible, the Contractor shall reuse cancelled or
terminated facilities or equipment to minimize the charges to the
Government.
(d) If at any time the Government requires that
telecommunications facilities or equipment be relocated within the
Contractor's service area, the Government will have the option of
paying the costs of relocating the facilities or equipment in lieu
of paying any termination or cancellation charge under this clause.
The basic cancellation liability or basic termination liability
applicable to the facilities or equipment in their former location
shall continue to apply to the facilities and equipment in their new
location. Monthly recurring charges shall continue to be paid during
the period.
(e) When there is another requirement or foreseeable reuse in
place of cancelled or terminated facilities or equipment, no charge
shall apply and the basic cancellation liability or basic
termination liability shall be appropriately reduced. When feasible,
the Contractor shall promptly reuse discontinued channels or
facilities, including equipment for which the Government is
obligated to pay a minimum service charge.
(f) The amount of the Government's liability upon cancellation
or termination of any of the services ordered under this agreement/
contract will be determined under applicable tariffs governing
cancellation and termination charges which--
(1) Are filed by the Contractor with a governmental regulatory
body, as defined in the Orders For Facilities and Services clause of
this agreement/contract;
(2) Are in effect on the date of termination; and
(3) Provide specific cancellation or termination charges for the
facilities and equipment involved or show how to determine the
charges.
(g) The amount of the Government's liability upon cancellation
or termination of any of the services ordered under this agreement/
contract, which are not subject to a governmental regulatory body,
will be determined under a mutually agreed schedule in the
communication services authorization (CSA) or other contractual
document.
(h) If no applicable tariffs are in effect on the date of
cancellation or termination or set forth in the applicable CSA or
other contractual document, the Government's liability will be
determined under the following settlement procedures--
(1) The Contractor agrees to provide the Contracting Officer, in
such reasonable detail as the Contracting Officer may require,
inventory schedules covering all items of property or facilities in
the Contractor's possession, the cost of which is included in the
Basic Cancellation or Termination Liability for which the Contractor
has no foreseeable reuse.
(2) The Contractor shall use its best efforts to sell property
or facilities when the Contractor has no foreseeable reuse or when
the Government has not exercised its option to take title under the
Title to Telecommunications Facilities and Equipment clause of this
agreement/contract. The Contractor shall apply any proceeds of the
sale to reduce any payments by the Government to the Contractor
under a cancellation or termination settlement.
(3) The Contractor shall record actual nonrecoverable costs
under established accounting procedures prescribed by the cognizant
governmental regulatory authority or, if no such procedures have
been prescribed, under generally accepted accounting procedures
applicable to the provision of telecommunication services for public
use.
(4) The net salvage value shall be deducted from the
Contractor's installed cost. In determining net salvage value, the
Contractor shall consider the foreseeable reuse of the facilities
and equipment by the Contractor. The Contractor shall make allowance
for the cost of dismantling, removal, reconditioning, and disposal
of the facilities and equipment when necessary either for the sale
of facilities or their reuse by the Contractor in another location.
(5) Upon termination of services, the Government will reimburse
the Contractor for the nonrecoverable cost less such costs amortized
to the date services are terminated and establish the liability
period as mutually agreed to but not to exceed ten years. In the
case of either a cancellation or a termination, the Government's
presumed maximum liability will be capped by the unpaid non-
recurring charges and the monthly recurring charges set out in the
contract/agreement. The presumed maximum liability for monthly
recurring charges shall be capped at monthly recurring charges for
the minimum service period and any required notice period.
(6) When the basic cancellation liability or basic termination
liability established by the CSA or other contractual document is
based on estimated costs, the Contractor agrees to settle on the
basis of actual cost at the time of cancellation or termination.
(7) The Contractor agrees that, if after settlement but within
the termination liability period of the services, should the
Contractor make reuse of equipment or facilities which were treated
as nonreusable or nonsalvable in the settlement, the Contractor
shall reimburse the Government for the value of the equipment or
facilities.
(8) The Contractor agrees to exclude--
(i) Any costs which are not included in determining cancellation
and termination charges under the Contractor's standard practices or
procedures; and
(ii) Charges not ordinarily made by the Contractor for similar
facilities or equipment, furnished under similar circumstances.
(i) The Government may, under such terms and conditions as it
may prescribe, make partial payments and payments on account against
costs incurred by the Contractor in connection with the cancelled or
terminated portion of this agreement/contract. The Government may
make these payments if the Contracting Officer determines that the
total of the payments is within the amount the Contractor is
entitled. If the total of the payments is in excess of the amount
finally agreed or determined to be due under this clause, the
Contractor shall pay the excess to the Government upon demand.
[[Page 48498]]
(j) Failure to agree shall be a dispute concerning a question of
fact within the meaning of the Disputes clause.
(End of clause)
252.239-7008 [Removed and Reserved]
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4. Remove and reserve section 252.239-7008.
[FR Doc. 2019-19557 Filed 9-12-19; 8:45 am]
BILLING CODE 5001-06-P
