Defense Federal Acquisition Regulation Supplement: Management of Should-Cost Review Process (DFARS Case 2018-D015), 65308-65310 [2019-25655]
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65308
Federal Register / Vol. 84, No. 229 / Wednesday, November 27, 2019 / Rules and Regulations
a. In paragraph (2)(i)(A), removing
‘‘Milestone Decision Authority’’ and
adding ‘‘milestone decision authority’’
in its place;
■ b. In paragraph (2)(i)(C) introductory
text, removing ‘‘Milestone Decision
Authority’s’’ and adding ‘‘milestone
decision authority’s’’ in its place;
■ c. Revising paragraphs (2)(ii)
introductory text and (2)(ii)(A)
introductory text;
■ d. In paragraph (2)(ii)(A)(2), removing
the word ‘‘when’’; and
■ e. Adding paragraphs (2)(iii) and
(2)(iv).
The revision and addition read as
follows:
■
234.004
Acquisition strategy.
*
*
*
*
*
(2) * * *
(ii) In accordance with section 811 of
the National Defense Authorization Act
for Fiscal Year 2013 (Pub. L. 112–239),
the contracting officer shall—
(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
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
11. Amend section 235.006 by—
a. Redesignating paragraphs (b)(i) and
(ii) as paragraphs (b)(ii) and (iii);
■ b. In newly redesignated paragraph
(b)(ii)(B) introductory text, removing
‘‘Under Secretary of Defense
(Acquisition, Technology, and Logistics)
(USD(AT&L))’’ and adding ‘‘milestone
decision authority’’ in its place;
■ c. In newly redesignated paragraph
(b)(iii)(A)(3) introductory text, removing
‘‘(b)(ii)(A)(1)’’ and adding
‘‘(b)(iii)(A)(1)’’ in its place;
■ d. In newly redesignated paragraph
(b)(iii)(A)(3)(i), removing ‘‘USD(AT&L)’’
and adding ‘‘USD(A&S)’’ in its place;
■ e. In newly redesignated paragraph
(b)(iii)(A)(3)(ii), removing
‘‘(b)(ii)(A)(3)(i)’’ and adding
‘‘(b)(iii)(A)(3)(i)’’ in its place;
■
■
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17:24 Nov 26, 2019
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f. In the newly redesignated paragraph
(b)(iii)(B) introductory text, removing
‘‘USD(AT&L)’’ and adding ‘‘USD(A&S)’’
in two places; and
■ g. 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. 2019–25658 Filed 11–26–19; 8:45 am]
BILLING CODE 5001–06–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Parts 215 and 252
[Docket DARS–2019–0038]
RIN 0750–AJ78
Defense Federal Acquisition
Regulation Supplement: Management
of Should-Cost Review Process
(DFARS Case 2018–D015)
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Final rule.
AGENCY:
DoD is issuing a final rule to
amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to
implement a section of the National
Defense Authorization Act for Fiscal
Year 2018, which requires an
amendment to the DFARS to provide for
the appropriate use of the should-cost
review process of a major weapon
system.
DATES: Effective November 27, 2019.
FOR FURTHER INFORMATION CONTACT: Ms.
Amy G. Williams, telephone 571–372–
6106.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Background
DoD published a proposed rule in the
Federal Register at 84 FR 39254 on
PO 00000
Frm 00050
Fmt 4700
Sfmt 4700
August 9, 2019, to implement section
837 of the National Defense
Authorization Act (NDAA) for Fiscal
Year (FY) 2018 (Pub. L. 115–91). Section
837 requires an amendment to the
DFARS to provide for the appropriate
use of the should-cost review process of
a major weapon system in a manner that
is transparent, objective, and provides
for the efficiency of the systems
acquisition process in the Department of
Defense. There were no public
comments submitted in response to the
proposed rule. There are no changes
from the proposed rule made in the final
rule.
II. Applicability to Contracts at or
Below the Simplified Acquisition
Threshold and for Commercial Items,
Including Commercially Available Offthe-Shelf Items
This rule create a new clause at
DFARS 252.215–7015, Program ShouldCost Review, but this clause is not
applicable to contracts valued at or
below the simplified acquisition
threshold or for the acquisition of
commercial items, including
commercially available off-the-shelf
items. Contracts for the development
and or production of a major weapon
system do not include contracts valued
at or below the simplified acquisition
threshold and are unlikely to include
contracts for commercial items.
III. Executive Orders 12866 and 13563
Executive Order (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 and, therefore, was not
subject to review under section 6(b) of
E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This
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:
E:\FR\FM\27NOR1.SGM
27NOR1
Federal Register / Vol. 84, No. 229 / Wednesday, November 27, 2019 / Rules and Regulations
This action is necessary to implement
section 837 of the National Defense
Authorization Act (NDAA) for Fiscal
Year (FY) 2018. Section 837 requires an
amendment to the DFARS to provide for
the appropriate use of the should-cost
review process of a major weapon
system in a manner that is transparent,
objective and provides for the efficiency
of the systems acquisition process in the
Department of Defense.
The objective of this rule is to amend
the DFARS to include six elements, at
a minimum, regarding the appropriate
use of the should-cost review of a major
weapon system: (1) A description of the
features of the should-cost review
process, (2) establishment of a process
for communicating with the prime
contractor on the program the elements
of a proposed should-cost review, (3) a
method for ensuring that identified
should-cost savings opportunities are
based on accurate, complete, and
current information and can be
quantified and tracked, (4) a description
of the training, skills, and experience
that Department of Defense and
contractor officials carrying out a
should-cost review should possess, (5) a
method for ensuring appropriate
collaboration with the contractor
throughout the review process, and (6)
establishment of review process
requirements that provide for sufficient
analysis and minimize any impact on
program schedule. The legal basis for
these changes is section 837 of the
NDAA for FY 2018.
No public comments were received in
response to the proposed rule.
This rule only applies to contracts for
the development and or production of a
major systems, as defined in FAR 2.101.
DoD estimates that there are 150 major
systems, which include major weapon
systems. DoD estimates that the prime
contractors for major systems are other
than small business and only one
program should-cost review occurs per
year for major systems, so this rule will
have minimal impact on small
businesses.
This final rule does not include any
new reporting, recordkeeping, or other
compliance requirements for small
businesses.
There are no known significant
alternative approaches to the rule that
would meet the objectives. There is no
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
VerDate Sep<11>2014
17:24 Nov 26, 2019
Jkt 250001
Paperwork Reduction Act (44 U.S.C.
chapter 35).
List of Subjects in 48 CFR Parts 215 and
252
Government procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense
Acquisition Regulations System.
Therefore, 48 CFR parts 215 and 252
are amended as follows:
■ 1. The authority citation for 48 CFR
parts 215 and 252 continues to read as
follows:
Authority: 41 U.S.C. 1303 and 48 CFR
chapter 1.
PART 215—CONTRACTING BY
NEGOTIATION
2. Amend section 215.407–4 by
designating the text as paragraph (a),
adding a heading to newly designated
paragraph (a), and adding paragraph (b)
to read as follows:
■
215.407–4
Should-cost review.
(a) General. * * *
(b) Program should-cost review. Major
weapon system should-cost program
reviews shall be conducted in a manner
that is transparent, objective, and
provides for the efficiency of the DoD
systems acquisition process (section 837
of the National Defense Authorization
Act for Fiscal Year 2018 (Pub. L. 115–
91)).
(i) Major weapon system should-cost
reviews may include the following
features:
(A) A thorough review of each
contributing element of the program
cost and the justification for each cost.
(B) An analysis of non-value added
overhead and unnecessary reporting
requirements.
(C) Benchmarking against similar DoD
programs, similar commercial programs
(where appropriate), and other programs
by the same contractor at the same
facility.
(D) An analysis of supply chain
management to encourage competition
and incentive cost performance at lower
tiers.
(E) A review of how to restructure the
program (Government and contractor)
team in a streamlined manner, if
necessary.
(F) Identification of opportunities to
break out Government-furnished
equipment versus prime contractorfurnished materials.
(G) Identification of items or services
contracted through third parties that
result in unnecessary pass-through
costs.
(H) Evaluation of ability to use
integrated developmental and
PO 00000
Frm 00051
Fmt 4700
Sfmt 4700
65309
operational testing and modeling and
simulation to reduce overall costs.
(I) Identification of alternative
technology and materials to reduce
developmental or lifecycle costs for a
program.
(J) Identification and prioritization of
cost savings opportunities.
(K) Establishment of measurable
targets and ongoing tracking systems.
(ii) The should-cost review shall
provide for sufficient analysis while
minimizing the impact on program
schedule by engaging stakeholders
early, relying on information already
available before requesting additional
data, and establishing a team with the
relevant expertise early.
(iii) The should-cost review team
shall be comprised of members,
including third-party experts if
necessary, with the training, skills, and
experience in analysis of cost elements,
production or sustainment processes,
and technologies relevant to the
program under review. The review team
may include members from the Defense
Contract Management Agency, the
department or agency’s cost analysis
center, and appropriate functional
organizations, as necessary.
(iv) The should-cost review team shall
establish a process for communicating
and collaborating with the contractor
throughout the should-cost review,
including notification to the contractor
regarding which elements of the
contractor’s operations will be reviewed
and what information will be necessary
to perform the review, as soon as
practicable, both prior to and during the
review.
(v) The should-cost review team
report shall ensure, to the maximum
extent practicable, review of current,
accurate, and complete data, and shall
identify cost savings opportunities
associated with specific engineering or
business changes that can be quantified
and tracked.
■ 3. Amend section 215.408 by adding
paragraph (8) to read as follows:
215.408 Solicitation provisions and
contract clauses.
*
*
*
*
*
(8) Use the clause at 252.215–7015,
Program Should-Cost Review, in all
solicitations and contracts for the
development or production of a major
weapon system, as defined in 234.7001.
PART 252—SOLICITATION
PROVISIONS AND CONTRACT
CLAUSES
4. Add section 252.215–7015 to read
as follows:
■
E:\FR\FM\27NOR1.SGM
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65310
Federal Register / Vol. 84, No. 229 / Wednesday, November 27, 2019 / Rules and Regulations
252.215–7015
Review.
Program Should-Cost
I. Background
As prescribed in 215.408(8), use the
following clause:
Program Should-Cost Review (Nov
2019)
(a) The Government has the right to
perform a program should-cost review, as
described in Federal Acquisition Regulation
(FAR) 15.407–4(b). The review may be
conducted in support of a particular contract
proposal or during contract performance to
find opportunities to reduce program costs.
The Government will communicate the
elements of the proposed should-cost review
to the prime contractor (Pub. L. 115–91).
(b) If the Government performs a program
should-cost review, upon the Government’s
request, the Contractor shall provide access
to accurate and complete cost data and
Contractor facilities and personnel necessary
to permit the Government to perform the
program should-cost review.
(c) The Government has the right to use
third-party experts to supplement the
program should-cost review team. The
Contractor shall provide access to the
Contractor’s facilities and information
necessary to support the program should-cost
review to any third-party experts who have
signed non-disclosure agreements in
accordance with the FAR 52.203–16.
(End of clause)
[FR Doc. 2019–25655 Filed 11–26–19; 8:45 am]
BILLING CODE 5001–06–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Parts 225 and 237
[Docket DARS–2019–0066]
RIN 0750–AK86
Defense Federal Acquisition
Regulation Supplement: Repeal of
Temporary Statutory Authorities
(DFARS Case 2019–D040)
II. Discussion and Analysis
This rule removes the obsolete
language at DFARS 225.7003–4 and
237.102–70(c) that implemented
sections 842(b) and 1010, respectively.
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 implement a section of the
National Defense Authorization Act for
Fiscal Year 2019.
DATES: Effective November 27, 2019.
FOR FURTHER INFORMATION CONTACT: Ms.
Kimberly R. Ziegler, telephone 571–
372–6095.
SUPPLEMENTARY INFORMATION:
SUMMARY:
VerDate Sep<11>2014
17:24 Nov 26, 2019
Jkt 250001
DoD is amending the DFARS to
partially implement section 812 of the
National Defense Authorization Act
(NDAA) for Fiscal Year (FY) 2019 (Pub.
L. 115–232). Section 812 repealed more
than 60 obsolete Defense acquisition
laws, most of which have been
completed, have expired, or do not
impact the contracting regulations. DoD
published a final rule to repeal one
statute identified in section 812 at 84 FR
12137 on April 1, 2019. This rule
repeals two additional statutes, section
842(b) of the NDAA for FY 2007 (Pub.
L. 109–364) and section 1010 of the
USA Patriot Act of 2001 (Pub. L. 107–
56).
To implement section 842(b) of the
NDAA for FY 2007, DoD published a
final rule at 74 FR 37626 on July 29,
2009 (DFARS Case 2008–D003). The
rule established a one-time waiver
authority for contracts under which
specialty metals were incorporated into
items produced, manufactured, or
assembled in the United States prior to
October 17, 2006, and where final
acceptance by the Government took
place after that date, but before
September 30, 2010.
To implement section 1010 of the
USA Patriot Act of 2001, DoD published
a final rule at 67 FR 55730 on August
30, 2002 (DFARS Case 2001–D018). The
rule provided an exception to the
prohibition on contracting for security
functions at a military installation or
facility. The exception authorized DoD
to award contracts to proximately
located local and State governments
during the period of time that United
States armed forces were engaged in
Operation Enduring Freedom and 180
days thereafter. Operation Enduring
Freedom officially ended on December
29, 2014; therefore, this authority
expired on June 26, 2015.
III. Publication of This Final Rule for
Public Comment Is Not Required by
Statute
The statute that applies to the
publication of the Federal Acquisition
Regulation is Office of Federal
Procurement Policy statute (codified at
title 41 of the United States Code).
Specifically, 41 U.S.C. 1707(a)(1)
requires that a procurement policy,
regulation, procedure, or form
(including an amendment or
modification thereof) must be published
PO 00000
Frm 00052
Fmt 4700
Sfmt 4700
for public comment if it relates to the
expenditure of appropriated funds, and
has either a significant effect beyond the
internal operating procedures of the
agency issuing the policy, regulation,
procedure or form, or has a significant
cost or administrative impact on
contractors or offerors. This final rule is
not required to be published for public
comment, because the rule merely
removes two expired authorities from
the DFARS.
IV. Applicability to Contracts at or
Below the Simplified Acquisition
Threshold and for Commercial Items,
Including Commercially Available Offthe-Shelf Items
This rule removes expired authorities
for contracted security functions at a
military installation or facility at DFARS
237.102–70(c) and a one-time waiver of
the specialty metals clause under
certain circumstances at DFARS
225.7003–4. This rule does not create or
revise any solicitation provisions or
contract clauses.
V. Executive Orders 12866 and 13563
Executive Orders (E.O.) 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.
VI. 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.
VII. Regulatory Flexibility Act
Because a notice of proposed
rulemaking and an opportunity for
public comment are not required to be
given for this rule under 41 U.S.C.
1707(a)(1) (see section III. of this
preamble), the analytical requirement of
the Regulatory Flexibility Act (5 U.S.C.
601 et seq.) are not applicable.
Accordingly, no regulatory flexibility
analysis is required, and none has been
prepared.
E:\FR\FM\27NOR1.SGM
27NOR1
]]>Agencies
[Federal Register Volume 84, Number 229 (Wednesday, November 27, 2019)]
[Rules and Regulations]
[Pages 65308-65310]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25655]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 215 and 252
[Docket DARS-2019-0038]
RIN 0750-AJ78
Defense Federal Acquisition Regulation Supplement: Management of
Should-Cost Review Process (DFARS Case 2018-D015)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: DoD is issuing a final rule to amend the Defense Federal
Acquisition Regulation Supplement (DFARS) to implement a section of the
National Defense Authorization Act for Fiscal Year 2018, which requires
an amendment to the DFARS to provide for the appropriate use of the
should-cost review process of a major weapon system.
DATES: Effective November 27, 2019.
FOR FURTHER INFORMATION CONTACT: Ms. Amy G. Williams, telephone 571-
372-6106.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published a proposed rule in the Federal Register at 84 FR
39254 on August 9, 2019, to implement section 837 of the National
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018 (Pub. L.
115-91). Section 837 requires an amendment to the DFARS to provide for
the appropriate use of the should-cost review process of a major weapon
system in a manner that is transparent, objective, and provides for the
efficiency of the systems acquisition process in the Department of
Defense. There were no public comments submitted in response to the
proposed rule. There are no changes from the proposed rule 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 create a new clause at DFARS 252.215-7015, Program
Should-Cost Review, but this clause is not applicable to contracts
valued at or below the simplified acquisition threshold or for the
acquisition of commercial items, including commercially available off-
the-shelf items. Contracts for the development and or production of a
major weapon system do not include contracts valued at or below the
simplified acquisition threshold and are unlikely to include contracts
for commercial items.
III. Executive Orders 12866 and 13563
Executive Order (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 and, therefore, was not subject to
review under section 6(b) of E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This 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:
[[Page 65309]]
This action is necessary to implement section 837 of the National
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018. Section 837
requires an amendment to the DFARS to provide for the appropriate use
of the should-cost review process of a major weapon system in a manner
that is transparent, objective and provides for the efficiency of the
systems acquisition process in the Department of Defense.
The objective of this rule is to amend the DFARS to include six
elements, at a minimum, regarding the appropriate use of the should-
cost review of a major weapon system: (1) A description of the features
of the should-cost review process, (2) establishment of a process for
communicating with the prime contractor on the program the elements of
a proposed should-cost review, (3) a method for ensuring that
identified should-cost savings opportunities are based on accurate,
complete, and current information and can be quantified and tracked,
(4) a description of the training, skills, and experience that
Department of Defense and contractor officials carrying out a should-
cost review should possess, (5) a method for ensuring appropriate
collaboration with the contractor throughout the review process, and
(6) establishment of review process requirements that provide for
sufficient analysis and minimize any impact on program schedule. The
legal basis for these changes is section 837 of the NDAA for FY 2018.
No public comments were received in response to the proposed rule.
This rule only applies to contracts for the development and or
production of a major systems, as defined in FAR 2.101. DoD estimates
that there are 150 major systems, which include major weapon systems.
DoD estimates that the prime contractors for major systems are other
than small business and only one program should-cost review occurs per
year for major systems, so this rule will have minimal impact on small
businesses.
This final rule does not include any new reporting, recordkeeping,
or other compliance requirements for small businesses.
There are no known significant alternative approaches to the rule
that would meet the objectives. There is no 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 215 and 252
Government procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 215 and 252 are amended as follows:
0
1. The authority citation for 48 CFR parts 215 and 252 continues to
read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 215--CONTRACTING BY NEGOTIATION
0
2. Amend section 215.407-4 by designating the text as paragraph (a),
adding a heading to newly designated paragraph (a), and adding
paragraph (b) to read as follows:
215.407-4 Should-cost review.
(a) General. * * *
(b) Program should-cost review. Major weapon system should-cost
program reviews shall be conducted in a manner that is transparent,
objective, and provides for the efficiency of the DoD systems
acquisition process (section 837 of the National Defense Authorization
Act for Fiscal Year 2018 (Pub. L. 115-91)).
(i) Major weapon system should-cost reviews may include the
following features:
(A) A thorough review of each contributing element of the program
cost and the justification for each cost.
(B) An analysis of non-value added overhead and unnecessary
reporting requirements.
(C) Benchmarking against similar DoD programs, similar commercial
programs (where appropriate), and other programs by the same contractor
at the same facility.
(D) An analysis of supply chain management to encourage competition
and incentive cost performance at lower tiers.
(E) A review of how to restructure the program (Government and
contractor) team in a streamlined manner, if necessary.
(F) Identification of opportunities to break out Government-
furnished equipment versus prime contractor-furnished materials.
(G) Identification of items or services contracted through third
parties that result in unnecessary pass-through costs.
(H) Evaluation of ability to use integrated developmental and
operational testing and modeling and simulation to reduce overall
costs.
(I) Identification of alternative technology and materials to
reduce developmental or lifecycle costs for a program.
(J) Identification and prioritization of cost savings
opportunities.
(K) Establishment of measurable targets and ongoing tracking
systems.
(ii) The should-cost review shall provide for sufficient analysis
while minimizing the impact on program schedule by engaging
stakeholders early, relying on information already available before
requesting additional data, and establishing a team with the relevant
expertise early.
(iii) The should-cost review team shall be comprised of members,
including third-party experts if necessary, with the training, skills,
and experience in analysis of cost elements, production or sustainment
processes, and technologies relevant to the program under review. The
review team may include members from the Defense Contract Management
Agency, the department or agency's cost analysis center, and
appropriate functional organizations, as necessary.
(iv) The should-cost review team shall establish a process for
communicating and collaborating with the contractor throughout the
should-cost review, including notification to the contractor regarding
which elements of the contractor's operations will be reviewed and what
information will be necessary to perform the review, as soon as
practicable, both prior to and during the review.
(v) The should-cost review team report shall ensure, to the maximum
extent practicable, review of current, accurate, and complete data, and
shall identify cost savings opportunities associated with specific
engineering or business changes that can be quantified and tracked.
0
3. Amend section 215.408 by adding paragraph (8) to read as follows:
215.408 Solicitation provisions and contract clauses.
* * * * *
(8) Use the clause at 252.215-7015, Program Should-Cost Review, in
all solicitations and contracts for the development or production of a
major weapon system, as defined in 234.7001.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
4. Add section 252.215-7015 to read as follows:
[[Page 65310]]
252.215-7015 Program Should-Cost Review.
As prescribed in 215.408(8), use the following clause:
Program Should-Cost Review (Nov 2019)
(a) The Government has the right to perform a program should-
cost review, as described in Federal Acquisition Regulation (FAR)
15.407-4(b). The review may be conducted in support of a particular
contract proposal or during contract performance to find
opportunities to reduce program costs. The Government will
communicate the elements of the proposed should-cost review to the
prime contractor (Pub. L. 115-91).
(b) If the Government performs a program should-cost review,
upon the Government's request, the Contractor shall provide access
to accurate and complete cost data and Contractor facilities and
personnel necessary to permit the Government to perform the program
should-cost review.
(c) The Government has the right to use third-party experts to
supplement the program should-cost review team. The Contractor shall
provide access to the Contractor's facilities and information
necessary to support the program should-cost review to any third-
party experts who have signed non-disclosure agreements in
accordance with the FAR 52.203-16.
(End of clause)
[FR Doc. 2019-25655 Filed 11-26-19; 8:45 am]
BILLING CODE 5001-06-P
