Defense Federal Acquisition Regulation Supplement: Validation of Proprietary and Technical Data (DFARS Case 2018-D069), 48513-48515 [2019-19569]

Download as PDF Federal Register / Vol. 84, No. 178 / Friday, September 13, 2019 / Proposed Rules IV. Executive Orders 12866 and 13563 E.O.s 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 20, 1993. This rule is not a major rule as defined at 5 U.S.C. 804. V. Executive Order 13771 This rule is not expected to be subject to E.O. 13771, because this rule is not a significant regulatory action under E.O. 12866. khammond on DSKBBV9HB2PROD with PROPOSALS3 VI. 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, et seq., because the rule is not creating any new requirements or changing any existing requirements and the rule only impacts foreign contractors. However, an initial regulatory flexibility analysis has been performed and is summarized as follows: This rule proposes to modify DFARS clause 252.229–7001, Tax Relief, to incorporate the information included in DFARS clause 252.229–7000, Invoices Exclusive of Taxes or Duties. Combining these clauses will result in DFARS clause 252.229–7000 being removed from the DFARS, pursuant to action taken by the Regulatory Reform Task Force. The objective of this proposed rule is to streamline DoD contract terms and conditions and contractor responsibilities pertaining to foreign taxes and duties. The modification of these DFARS clauses supports a recommendation from the DoD Regulatory Reform Task Force under Executive Order 13771, ‘‘Enforcing the Regulatory Reform Agenda.’’ This rule is combining two existing clauses that address the same topic into a single comprehensive clause. These clauses apply to solicitations and contracts awarded to a foreign concern for contract performance in a foreign country. This rule is not expected to impact small business entities, because VerDate Sep<11>2014 18:39 Sep 12, 2019 Jkt 247001 this rule only applies to foreign entities. The Small Business Administration (SBA) identifies a ‘‘small business’’ as ‘‘a business entity organized for profit, with a place of business located in the United States, and which operated primarily within the United States or which makes a significant contribution to the U.S. economy through the payment of taxes or use of American products, materials, or labor’’ (13 CFR 121.102(a)). This rule only applies to foreign contractors, which do not meet the SBA definition of ‘‘small business’’ entities. This proposed 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 proposed rule that would meet the proposed objectives. 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–D049) in correspondence. VII. 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 229 and 252 Jennifer Lee Hawes, Regulatory Control Officer, Defense Acquisition Regulations System. Therefore, 48 CFR parts 229 and 252 are proposed to be amended as follows: 1. The authority citation for 48 CFR parts 229 and 252 continues to read as follows: ■ Authority: 41 U.S.C. 1303 and 48 CFR chapter 1. [Removed] 2. Remove section 229.402–1. PO 00000 Frm 00002 Fmt 4701 252.229–7000 Sfmt 4702 [Removed and Reserved] 3. Remove and reserve section 252.229–7000. ■ 4. Amend section 252.229–7001 by— ■ a. Removing the clause date ‘‘(SEP 2014)’’ and adding ‘‘(DATE)’’ in its place; ■ b. Revising paragraph (b); ■ c. In Alternate I— ■ i. Removing the clause date of ‘‘(SEP 2014)’’ and adding ‘‘(DATE)’’ in its place; and ■ ii. Revising paragraph (b). The revisions read as follows: ■ 252.229–7001 Tax Relief * * * * * (b) Invoices submitted in accordance with the terms and conditions of this contract shall be exclusive of all taxes or duties for which relief is available. The Contractor’s invoice shall list separately the gross price, amount of tax deducted, and net price charged. * * * * * Alternate I. * * * * * * * * (b) Invoices submitted in accordance with the terms and conditions of this contract shall be exclusive of all taxes or duties for which relief is available. The Contractor’s invoice shall list separately the gross price, amount of tax deducted, and net price charged. * * * * * [FR Doc. 2019–19568 Filed 9–12–19; 8:45 am] BILLING CODE 5001–06–P DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Parts 227 and 252 RIN 0750–AK71 Defense Federal Acquisition Regulation Supplement: Validation of Proprietary and Technical Data (DFARS Case 2018–D069) Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Advance notice of proposed rulemaking. AGENCY: DoD is seeking information that will assist in the development of a revision to the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the SUMMARY: PART 229—TAXES ■ PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES [Docket DARS–2019–0048] Government procurement. 229.402–1 48513 E:\FR\FM\13SEP3.SGM 13SEP3 48514 Federal Register / Vol. 84, No. 178 / Friday, September 13, 2019 / Proposed Rules khammond on DSKBBV9HB2PROD with PROPOSALS3 National Defense Authorization Act for Fiscal Year 2019, which amended the statutory presumption of development exclusively at private expense for commercial items in the procedures governing the validation of asserted restrictions on technical data. DATES: Interested parties should submit written comments to the address shown below on or before November 12, 2019, to be considered in the formation of any proposed rule. DoD is also hosting public meetings to obtain the views of interested parties in accordance with the notice published in the Federal Register on August 16, 2019, at 84 FR 41953. ADDRESSES: Submit written comments identified by DFARS Case 2018–D069, using any of the following methods: Æ Federal eRulemaking Portal: http:// www.regulations.gov. Search for ‘‘DFARS Case 2018–D069.’’ Select ‘‘Comment Now’’ and follow the instructions provided to submit a comment. Please include ‘‘DFARS Case 2018–D069’’ on any attached documents. Æ Email: osd.dfars@mail.mil. Include DFARS Case 2018–D069 in the subject line of the message. Æ Fax: 571–372–6094. Æ Mail: Defense Acquisition Regulations System, Attn: Ms. 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 http:// 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: I. Background DoD is seeking information from experts and interested parties in Government and the private sector that will assist in the development of a revision to the DFARS to implement section 865 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019 (Pub. L. 115–232). Section 865 repeals several years of congressional adjustments to the statutory presumption of development at private expense for commercial items in the validation procedures at paragraph (f) of 10 U.S.C. 2321. The presumption of development funding for commercial items was VerDate Sep<11>2014 18:39 Sep 12, 2019 Jkt 247001 established in 1994 by section 8106 of the Federal Acquisition Streamlining Act (FASA) (Pub. L. 103–355). This statutory presumption has been amended numerous times, including by section 802(b) of the NDAA for FY 2007 (Pub. L. 109–364), section 815(a)(2) of the NDAA for FY 2008 (Pub. L. 110– 181), section 1071(a)(5) of the NDAA for FY 2015 (Pub. L. 113–291), section 813(a) of the NDAA for FY 2016 (Pub. L. 114–92), and most recently by section 865. The DFARS implementation of this mandatory presumption has evolved accordingly to track the statutory changes, with the primary coverage found at paragraph (c) of DFARS section 227.7103–13, and paragraph (b) of the clause at DFARS 252.227–7037. There is no DFARS coverage applying such a presumption of development funding to commercial computer software because, as a matter of policy also dating back to the FASA time frame, the underlying procedures for challenging and validating asserted restrictions have not been applied to commercial computer software—only to noncommercial computer software (e.g., DFARS section 227.7203–13 and the clause at DFARS 252.227–7019). II. Discussion and Analysis Section 865 repeals the amendments to 10 U.S.C. 2321(f) made by the NDAAs for FYs 2007 through 2016, which required that contractors take certain steps to demonstrate that they paid for the development of commercial items if their restrictions on technical data are challenged. Section 865 returns the presumption of development funding for commercial items to its original form, as established in 1994 by FASA. More specifically, FASA provided that when challenging asserted restrictions on technical data pertaining to a commercial item, DoD is required to presume that the contractor or subcontractor has justified the asserted restriction on the basis that the item was developed exclusively at private expense, regardless of whether the contractor or subcontractor submits a justification in response to the challenge notice. The challenge may be sustained only if DoD provides information demonstrating that the item was not developed exclusively at private expense. Section 865 restores this paradigm. Therefore, DoD is considering changes that would return the DFARS coverage at 227.7103–13 and 252.227–7037 substantially back to its original FASAimplementing language with regard to the presumption. The changes would incorporate minor wording differences PO 00000 Frm 00003 Fmt 4701 Sfmt 4702 due to slight changes in style and nomenclature over the years, such as referring to ‘‘the Contracting Officer’’ in lieu of ‘‘the Department.’’ In addition to seeking public comment on the substance of the draft DFARS revisions, DoD is also seeking information regarding any corresponding change in the burden, including associated costs or savings, resulting from contractors and subcontractors complying with the draft revised DFARS implementation. More specifically, DoD is seeking information regarding any anticipated increase or decrease in such burden and costs relative to the burden and costs associated with complying with the current DFARS implementing language. List of Subjects in 48 CFR Parts 227 and 252 Government procurement. Jennifer Lee Hawes, Regulatory Control Officer, Defense Acquisition Regulations System. Therefore, 48 CFR parts 227 and 252 are proposed to be amended as follows: ■ 1. The authority citation for 48 CFR parts 227 and 252 continues to read as follows: Authority: 41 U.S.C. 1303 and 48 CFR chapter 1. PART 227—PATENTS, DATA, AND COPYRIGHTS 2. Amend section 227.7103–13 by revising paragraph (c)(2) to read as follows: ■ 227.7103–13 Government right to review, verify, challenge, and validate asserted restrictions. * * * * * (c) * * * (2) Commercial items—presumption regarding development exclusively at private expense. 10 U.S.C. 2320(b)(1) and 2321(f) establish a presumption and procedures regarding validation of asserted restrictions for technical data related to commercial items-on the basis of development exclusively at private expense. Contracting officers shall presume that a commercial item was developed exclusively at private expense whether or not a contractor or subcontractor submits a justification in response to a challenge notice. When a challenge is warranted for a commercial item, a contractor’s or subcontractor’s failure to respond to the challenge notice cannot be the sole basis for issuing a final decision denying the validity of an asserted restriction. * * * * * E:\FR\FM\13SEP3.SGM 13SEP3 Federal Register / Vol. 84, No. 178 / Friday, September 13, 2019 / Proposed Rules The revision reads as follows: PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 252.227–7037 Validation of Restrictive Markings on Technical Data. 3. Amend section 252.227–7037 by— a. In the clause heading, removing ‘‘(SEP 2016)’’ and adding ‘‘(DATE)’’ in its place; ■ b. Revising paragraph (b); and ■ c. In paragraph (c), removing ‘‘paragraph (b)(1)’’ and adding ‘‘paragraph (b)’’ in its place. khammond on DSKBBV9HB2PROD with PROPOSALS3 ■ ■ VerDate Sep<11>2014 18:39 Sep 12, 2019 Jkt 247001 * * * * * (b) Commercial items—presumption regarding development exclusively at private expense. The Contracting Officer will presume that the Contractor’s or a subcontractor’s asserted use or release restrictions with respect to a PO 00000 Frm 00004 Fmt 4701 Sfmt 9990 48515 commercial item is justified on the basis that the item was developed exclusively at private expense. The Contracting Officer will not challenge such assertions unless the Contracting Officer has information that demonstrates that the commercial item was not developed exclusively at private expense. * * * * * [FR Doc. 2019–19569 Filed 9–12–19; 8:45 am] BILLING CODE 5001–06–P E:\FR\FM\13SEP3.SGM 13SEP3

Agencies

[Federal Register Volume 84, Number 178 (Friday, September 13, 2019)]
[Proposed Rules]
[Pages 48513-48515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19569]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 227 and 252

[Docket DARS-2019-0048]
RIN 0750-AK71


Defense Federal Acquisition Regulation Supplement: Validation of 
Proprietary and Technical Data (DFARS Case 2018-D069)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Advance notice of proposed rulemaking.

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

SUMMARY: DoD is seeking information that will assist in the development 
of a revision to the Defense Federal Acquisition Regulation Supplement 
(DFARS) to implement a section of the

[[Page 48514]]

National Defense Authorization Act for Fiscal Year 2019, which amended 
the statutory presumption of development exclusively at private expense 
for commercial items in the procedures governing the validation of 
asserted restrictions on technical data.

DATES: Interested parties should submit written comments to the address 
shown below on or before November 12, 2019, to be considered in the 
formation of any proposed rule.
    DoD is also hosting public meetings to obtain the views of 
interested parties in accordance with the notice published in the 
Federal Register on August 16, 2019, at 84 FR 41953.

ADDRESSES: Submit written comments identified by DFARS Case 2018-D069, 
using any of the following methods:
    [cir] Federal eRulemaking Portal: http://www.regulations.gov. 
Search for ``DFARS Case 2018-D069.'' Select ``Comment Now'' and follow 
the instructions provided to submit a comment. Please include ``DFARS 
Case 2018-D069'' on any attached documents.
    [cir] Email: [email protected]. Include DFARS Case 2018-D069 in 
the subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. 
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 http://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:

I. Background

    DoD is seeking information from experts and interested parties in 
Government and the private sector that will assist in the development 
of a revision to the DFARS to implement section 865 of the National 
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019 (Pub. L. 
115-232). Section 865 repeals several years of congressional 
adjustments to the statutory presumption of development at private 
expense for commercial items in the validation procedures at paragraph 
(f) of 10 U.S.C. 2321.
    The presumption of development funding for commercial items was 
established in 1994 by section 8106 of the Federal Acquisition 
Streamlining Act (FASA) (Pub. L. 103-355). This statutory presumption 
has been amended numerous times, including by section 802(b) of the 
NDAA for FY 2007 (Pub. L. 109-364), section 815(a)(2) of the NDAA for 
FY 2008 (Pub. L. 110-181), section 1071(a)(5) of the NDAA for FY 2015 
(Pub. L. 113-291), section 813(a) of the NDAA for FY 2016 (Pub. L. 114-
92), and most recently by section 865.
    The DFARS implementation of this mandatory presumption has evolved 
accordingly to track the statutory changes, with the primary coverage 
found at paragraph (c) of DFARS section 227.7103-13, and paragraph (b) 
of the clause at DFARS 252.227-7037. There is no DFARS coverage 
applying such a presumption of development funding to commercial 
computer software because, as a matter of policy also dating back to 
the FASA time frame, the underlying procedures for challenging and 
validating asserted restrictions have not been applied to commercial 
computer software--only to noncommercial computer software (e.g., DFARS 
section 227.7203-13 and the clause at DFARS 252.227-7019).

II. Discussion and Analysis

    Section 865 repeals the amendments to 10 U.S.C. 2321(f) made by the 
NDAAs for FYs 2007 through 2016, which required that contractors take 
certain steps to demonstrate that they paid for the development of 
commercial items if their restrictions on technical data are 
challenged. Section 865 returns the presumption of development funding 
for commercial items to its original form, as established in 1994 by 
FASA. More specifically, FASA provided that when challenging asserted 
restrictions on technical data pertaining to a commercial item, DoD is 
required to presume that the contractor or subcontractor has justified 
the asserted restriction on the basis that the item was developed 
exclusively at private expense, regardless of whether the contractor or 
subcontractor submits a justification in response to the challenge 
notice. The challenge may be sustained only if DoD provides information 
demonstrating that the item was not developed exclusively at private 
expense. Section 865 restores this paradigm.
    Therefore, DoD is considering changes that would return the DFARS 
coverage at 227.7103-13 and 252.227-7037 substantially back to its 
original FASA-implementing language with regard to the presumption. The 
changes would incorporate minor wording differences due to slight 
changes in style and nomenclature over the years, such as referring to 
``the Contracting Officer'' in lieu of ``the Department.''
    In addition to seeking public comment on the substance of the draft 
DFARS revisions, DoD is also seeking information regarding any 
corresponding change in the burden, including associated costs or 
savings, resulting from contractors and subcontractors complying with 
the draft revised DFARS implementation. More specifically, DoD is 
seeking information regarding any anticipated increase or decrease in 
such burden and costs relative to the burden and costs associated with 
complying with the current DFARS implementing language.

List of Subjects in 48 CFR Parts 227 and 252

    Government procurement.

Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 227 and 252 are proposed to be amended as 
follows:

0
1. The authority citation for 48 CFR parts 227 and 252 continues to 
read as follows:

    Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.

PART 227--PATENTS, DATA, AND COPYRIGHTS

0
2. Amend section 227.7103-13 by revising paragraph (c)(2) to read as 
follows:


227.7103-13   Government right to review, verify, challenge, and 
validate asserted restrictions.

* * * * *
    (c) * * *
    (2) Commercial items--presumption regarding development exclusively 
at private expense. 10 U.S.C. 2320(b)(1) and 2321(f) establish a 
presumption and procedures regarding validation of asserted 
restrictions for technical data related to commercial items-on the 
basis of development exclusively at private expense. Contracting 
officers shall presume that a commercial item was developed exclusively 
at private expense whether or not a contractor or subcontractor submits 
a justification in response to a challenge notice. When a challenge is 
warranted for a commercial item, a contractor's or subcontractor's 
failure to respond to the challenge notice cannot be the sole basis for 
issuing a final decision denying the validity of an asserted 
restriction.
* * * * *

[[Page 48515]]

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
3. Amend section 252.227-7037 by--
0
a. In the clause heading, removing ``(SEP 2016)'' and adding ``(DATE)'' 
in its place;
0
b. Revising paragraph (b); and
0
c. In paragraph (c), removing ``paragraph (b)(1)'' and adding 
``paragraph (b)'' in its place.
    The revision reads as follows:


252.227-7037   Validation of Restrictive Markings on Technical Data.

* * * * *
    (b) Commercial items--presumption regarding development exclusively 
at private expense. The Contracting Officer will presume that the 
Contractor's or a subcontractor's asserted use or release restrictions 
with respect to a commercial item is justified on the basis that the 
item was developed exclusively at private expense. The Contracting 
Officer will not challenge such assertions unless the Contracting 
Officer has information that demonstrates that the commercial item was 
not developed exclusively at private expense.
* * * * *
[FR Doc. 2019-19569 Filed 9-12-19; 8:45 am]
 BILLING CODE 5001-06-P