Defense Federal Acquisition Regulation Supplement: Contractor Purchasing System Review Threshold (DFARS Case 2017-D038), 72247-72249 [2019-27823]
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Federal Register / Vol. 84, No. 250 / Tuesday, December 31, 2019 / Rules and Regulations
e. In paragraph (10)(i)(C), removing
‘‘$180,000’’ and adding ‘‘$182,000’’ in
its place; and
■ f. In paragraphs (10)(i)(D) through (F),
removing ‘‘$80,317’’ wherever it appears
and adding ‘‘$83,099’’ in its place.
DEPARTMENT OF DEFENSE
225.7017–3
[Docket DARS–2019–0024]
■
[Amended]
3. Amend section 225.7017–3, in
paragraph (b), by removing ‘‘$180,000’’
and adding ‘‘$182,000’’ in its place.
48 CFR Part 244
■
RIN 0750–AJ48
225.7503
Defense Federal Acquisition
Regulation Supplement: Contractor
Purchasing System Review Threshold
(DFARS Case 2017–D038)
[Amended]
4. Amend section 225.7503 by—
a. In paragraphs (a) and (b)
introductory text, removing
‘‘$6,932,000’’ and adding ‘‘$7,008,000’’
in both places;
■ b. In paragraph (b)(1), removing
‘‘$10,441,216’’ and adding
‘‘$10,802,884’’ in its place;
■ c. In paragraph (b)(2), removing
‘‘$6,932,000’’ and adding ‘‘$7,008,000’’
in its place, and removing
‘‘$10,441,216’’ and adding
‘‘$10,802,884’’ in its place;
■ d. In paragraph (b)(3), removing
‘‘$10,441,216’’ and adding
‘‘$10,802,884’’ in its place; and
■ e. In paragraph (b)(4), removing
‘‘$6,932,000’’ and adding ‘‘$7,008,000’’
in its place, and removing
‘‘$10,441,216’’ and adding
‘‘$10,802,884’’ in its place.
■
■
PART 252—SOLICITATION
PROVISIONS AND CONTRACT
CLAUSES
252.225–7017
[Amended]
5. Amend section 252.225–7017 by—
a. Removing clause date ‘‘(AUG
2019)’’ and adding ‘‘(JAN 2020)’’ in its
place;
■ b. In paragraphs (c)(2) and (3),
removing ‘‘$80,317’’ and adding
‘‘$83,099’’ in its place; and
■ c. In paragraphs (c)(4) and (5),
removing ‘‘$180,000’’ and adding
‘‘$182,000’’ in its place.
■
■
252.225–7018
[Amended]
6. Amend section 252.225–7018 by—
a. Removing clause date ‘‘(DEC 2018)’’
and adding ‘‘(JAN 2020)’’ in its place;
■ b. In paragraph (b)(1) introductory
text, removing ‘‘$180,000’’ and adding
‘‘$182,000’’ in its place;
■ c. In paragraph (b)(2), removing
‘‘$180,000’’ and adding ‘‘$182,000’’ in
its place;
■ d. In paragraphs (d)(3) and (4)
introductory text, removing ‘‘$80,317’’
and adding ‘‘$83,099’’ in both places;
and
■ e. In paragraphs (d)(5) and (6)
introductory text, removing ‘‘$180,000’’
and adding ‘‘$182,000’’ in both places.
■
■
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Defense Acquisition Regulations
System
[FR Doc. 2019–27828 Filed 12–30–19; 8:45 am]
BILLING CODE P
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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 establish a DoD contractor
purchasing system review dollar
threshold that provides a regulatory
basis for allowing DoD personnel to
support other essential priorities and
missions of greater contractual risk,
while reducing regulatory impact on
contractors.
DATES: Effective December 31, 2019.
FOR FURTHER INFORMATION CONTACT:
Kimberly Ziegler, telephone 571–372–
6095.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Background
DoD published a proposed rule in the
Federal Register at 84 FR 25228 on May
31, 2019, proposing to amend the
DFARS to implement a recommendation
from the Defense Contract Management
Agency (DCMA) to raise the contractor
purchasing system review (CPSR)
threshold at Federal Acquisition
Regulation (FAR) 44.302(a) from $25
million to $50 million. Currently, FAR
44.302(a) requires the administrative
contracting officer (ACO) to determine
whether a contractor’s sales to the
Government are expected to exceed $25
million during the next 12 months and,
if so, perform a review to determine if
a CPSR is needed. The ACO uses this
dollar threshold in conjunction with the
surveillance criteria cited at FAR
44.302(a), i.e., contractor past
performance, and the volume,
complexity, and dollar value of
subcontracts, to make this
determination. DCMA performs the
preponderance of DoD CPSRs.
Competitively awarded firm-fixed-price
and competitively awarded fixed-price
with economic price adjustment
contracts and sales of commercial items
pursuant to part 12 of the FAR are
excluded from this requirement.
PO 00000
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Fmt 4700
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72247
FAR 44.302(a) specifically authorizes
the head of the agency responsible for
contract administration to raise or lower
the $25 million CPSR threshold if it is
considered to be in the Government’s
best interest. The dollar threshold of $25
million cited at FAR 44.302(a) has been
unchanged since 1996. In 2016, the
DCMA CPSR Group conducted an
analysis to determine if raising the
CPSR threshold would be beneficial.
Based on the Group’s findings, it was
determined that adjusting the threshold
upward to $50 million would
appropriately account for inflation,
reduce burden on small contractors, and
allow a more efficient and effective use
of CPSR resources to review larger
contractors where more taxpayer dollars
are at risk. Three respondents submitted
public comments in response to the
proposed rule.
II. Discussion and Analysis
DoD reviewed the public comments in
the development of the final rule.
A. Summary of Significant Changes
From the Proposed Rule
There are no changes made to the
final rule as a result of the public
comments.
B. Analysis of Public Comments
1. Support for the Rule
Comment: Two respondents conveyed
overall support for the rule, but one
respondent stated the support for the
rule was contingent on DoD ensuring
procurements valued at $50 million or
below will not require the contractor to
have or maintain an approved
purchasing system per the clause at
DFARS 252.242–7005, Contractor
Business Systems.
Response: FAR clause 52.244–2,
Subcontracts, allows the contracting
officer to assess whether a system
review is needed (e.g., when meeting
the $50 million threshold is
anticipated). DFARS 252.244–7001,
Contractor Purchasing System
Administration, establishes the review
criteria. Contractors whose sales have
not reached the $50 million threshold
may opt to allow their approval to
expire rather than incur the costs to
maintain a system that meets the criteria
for an approved system. If an approved
purchasing system is necessary to
support a particular program, the
contractor can work with the
contracting officer to obtain a
purchasing system review based on risk
or pressing need. Otherwise, the
contractor can request consent to
subcontract in accordance with FAR
52.244–2.
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Federal Register / Vol. 84, No. 250 / Tuesday, December 31, 2019 / Rules and Regulations
2. Assessment of Risk
Comment: One respondent conveyed
concerns that smaller contractors with
fewer and lower dollar value contracts
can create greater risks than contractors
with larger dollar value contracts due to
the availability of financial resources.
Response: There is no evidence that
contractors with lower sales are
inherently more risky than those with
higher sales. The $25 million threshold
established by FAR 44.302(a) has not
changed since 1996. Analysis shows
that the threshold could be raised to $50
million with consideration given to
inflation and acceptable risk. Consistent
with Better Buying Power (BBP) 3.0,
raising the CPSR threshold is intended
reduce the administrative burden on
smaller contractors. Smaller contractors
are often exempt from many of the CPSR
review elements as a result of the recent
increase to the threshold for obtaining
certified cost or pricing data.
Comment: One respondent
recommended reevaluating the riskbased assessment approach that DCMA
employs to assess which contractors to
review in a given year because
contractors currently exceeding the
threshold should not have latent
undiscovered weaknesses in their
purchasing systems. Based upon this
assumption, the increased threshold
would have no significant impact upon
those purchasing systems.
Response: Risk assessments on
approved systems are used by DCMA to
prioritize one approved system over
another and are used to schedule
reviews. New entries (initial reviews)
are worked into the existing schedule.
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3. FAR 52.244–2, Subcontracts, and
DFARS 252.244–7001, Contractor
Purchasing System Administration
Comment: One respondent
recommended revising the requirement
for inclusion of the clause at FAR
52.244–2, Subcontracts, and the clause
at DFARS 252.244–7001, Contractor
Purchasing System Administration, and
permit contracting officers to omit both
clauses from applicable contracts if a
CPSR will not be performed.
Response: The contracting officer
inserts the FAR clause 52.244–2,
Subcontracts, when flexibly priced
contracts are anticipated, thus setting
the stage for a contractor to submit
requests for consent to subcontract. If a
contractor’s sales to the Government
(excluding competitively awarded firmfixed-price and competitively awarded
fixed-price with economic price
adjustment contracts and sales of
commercial items pursuant to part 12)
are expected to exceed $50 million
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15:44 Dec 30, 2019
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during the next 12 months, the
contracting officer will perform a review
to determine if a CPSR is needed. In
evaluating the acceptability of the
contractor’s purchasing system, the
contracting officer, in consultation with
the purchasing system analyst or
auditor, determines whether the
contractor’s purchasing system complies
with the system criteria for an
acceptable purchasing system as
prescribed in the clause at 252.244–
7001, Contractor Purchasing System
Administration. CPSR approval can be
viewed to lighten the consent to
subcontract burden on both the
contractor and contracting officer. If the
contracting officer determines that an
approved system is not in the best
interests of the Government, then they
can choose not to initiate a review and
continue with consent packages and
annual contracting officer surveillance.
The criteria found at DFARS 252.244–
7001 can be used by contracting officers,
in addition to those found in FAR
52.244–2, when conducting annual
surveillance of a contractor without an
approved system when the clause is
present in prime contracts.
4. Initial Regulatory Flexibility Analysis
(IRFA)
Comment: One respondent inquired if
the data in the IRFA for DCMA CPSRs
included all of the military departments
and defense agencies.
Response: See section VI of this
preamble.
5. Small Business Impacts
Comment: One respondent conveyed
concerns that many solicitations require
as a responsive element of bidding that
the contractor demonstrate that it has a
current approved purchasing system.
The respondent further stated that
contractors meeting the threshold for
CPSRs will meet that test, however,
those that are no longer required to
maintain and receive CPSRs will not. As
a result, the respondent recommends
that DoD consider the potential
implications for small businesses and
on competition for cost-reimbursement
or certain indefinite delivery indefinite
quantity contracts from the CPSR
threshold change when developing
contract requirements in the future.
Response: If an approved purchasing
system is necessary to support a
particular program, the contractor can
work with the contracting officer to
obtain a purchasing system review
based on risk or pressing need.
Otherwise, the contractor can request
consent to subcontract in accordance
with the clause at FAR 52.244–2.
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6. Out of Scope
Comment: One respondent questioned
the mechanism to be used to provide
oversight of cybersecurity compliance if
an entity no longer meets the threshold
for a CPSR.
Response: This comment is out of
scope of this rule.
III. Applicability to Contracts at or
Below the Simplified Acquisition
Threshold and for Commercial Items,
Including Commercially Available Offthe-Shelf Items
This rule does not add any new
provisions or clauses or impact any
existing provisions or clauses. The rule
merely increases the DoD dollar
threshold for conducting CPSRs from
$25 million to $50 million.
IV. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and
13563 direct agencies to assess all costs
and benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). E.O. 13563 emphasizes the
importance of quantifying both costs
and benefits, of reducing costs, of
harmonizing rules, and of promoting
flexibility. This is 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.
V. Executive Order 13771
This final rule is not subject to E.O.
13771, because this rule is not a
significant regulatory action under E.O.
12866.
VI. Regulatory Flexibility Act
A final regulatory flexibility analysis
(FRFA) has been prepared consistent
with the Regulatory Flexibility Act, 5
U.S.C. 604, et seq. The FRFA is
summarized as follows:
DoD is amending the Defense Federal
Acquisition Regulation Supplement
(DFARS) to establish a DoD contractor
purchasing system review (CPSR) dollar
threshold. This rule creates a new
DFARS section at 244.302 to establish a
CPSR dollar threshold of $50 million.
The threshold will be used in
conjunction with other surveillance
criteria cited at Federal Acquisition
Regulation (FAR) 44.302(a), to include
contractor past performance and the
volume, complexity, and dollar value of
subcontracts. The rule establishes a DoD
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dollar threshold of $50 million for a
formal CPSR; in effect, raising the
current surveillance threshold of $25
million cited at FAR 44.302(a) for DoD
contractors.
One respondent submitted a public
comment in response to the initial
regulatory flexibility analysis (IRFA)
which is summarized as follows:
Comment: The respondent inquired if
the data in the IRFA for DCMA CPSRs
included all of the military departments
and defense agencies.
Reponse: The data included all CPSRs
across all of the Department of Defense.
The Government sales include all
Government contracts/subcontracts (to
include military departments and
defense agencies) minus those
competitively awarded firm-fixed-price,
competitively awarded fixed-price with
economic price adjustment contracts, or
sales of commercial items pursuant to
FAR part 12.
In 2014, there were 667 unique
entities for which administrative
contracting officers (ACO) had recorded
approved CPSR decisions in the
Contract Business Analysis Repository.
A 20% reduction in the number of
CPSRs is expected to result from
increasing the CPSR threshold from $25
million to $50 million for a total
reduction of approximately 133 firms no
longer meeting the criteria for a CPSR
review. Contractor purchasing systems
are eligible for a comprehensive followon review every three years. Based on
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this three-year review cycle,
approximately 45 fewer contractors
would be reviewed each year (133
firms/3-year cycle = 44.3, rounded to 45
fewer reviews conducted each year). Of
the 45 entities, it is estimated that 35 of
these contractors are large businesses
and 10 are small entities.
The $50 million dollar threshold
should reduce the compliance burden
for approximately 133 contractors, and
permit a more prudent and efficient use
of resources, prioritizing surveillance to
the larger firms.
For the approximately 133 contractors
affected by this rule, there could be
additional requirements for those firms
to request consent to contract from the
ACO, pursuant to the clause at FAR
52.244–2, Subcontracts. It is estimated
that the annual number of consent to
contract requests are approximately 12
per contractor.
There are no known significant
alternative approaches to the rule that
would accomplish the stated objectives.
VII. Paperwork Reduction Act
The Paperwork Reduction Act (44
U.S.C. Chapter 35) applies. The rule
contains information collection
requirements. The Office of
Management and Budget (OMB) has
previously cleared the information
collection requirements affected by this
rule under OMB Control Number 9000–
0132, Contractors’ Purchasing System
Review, and 9000–0149, Subcontract
PO 00000
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72249
Consent. These two clearances have
been consolidated; the updated
clearance reflecting the new DoD CPSR
threshold has been cleared by OMB
under 9000–0149, entitled ‘‘Subcontract
Consent and Contractor’s Purchasing
System Review’’ through February 28,
2022.
List of Subjects in 48 CFR Part 244
Government procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense
Acquisition Regulations System.
Therefore, 48 CFR part 244 is
amended as follows:
PART 244—SUBCONTRACTING
POLICIES AND PROCEDURES
1. The authority citation for 48 CFR
part 244 continues to read as follows:
■
Authority: 41 U.S.C. and 48 CFR chapter
1.
2. Section 244.302 is added to read as
follows:
■
244.302
Requirements.
(a) In lieu of the threshold at FAR
44.302(a), the ACO shall determine the
need for a CPSR if a contractor’s sales
to the Government are expected to
exceed $50 million during the next 12
months.
[FR Doc. 2019–27823 Filed 12–30–19; 8:45 am]
BILLING CODE 5001–06–P
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]]>Agencies
[Federal Register Volume 84, Number 250 (Tuesday, December 31, 2019)]
[Rules and Regulations]
[Pages 72247-72249]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-27823]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Part 244
[Docket DARS-2019-0024]
RIN 0750-AJ48
Defense Federal Acquisition Regulation Supplement: Contractor
Purchasing System Review Threshold (DFARS Case 2017-D038)
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 establish a DoD contractor
purchasing system review dollar threshold that provides a regulatory
basis for allowing DoD personnel to support other essential priorities
and missions of greater contractual risk, while reducing regulatory
impact on contractors.
DATES: Effective December 31, 2019.
FOR FURTHER INFORMATION CONTACT: Kimberly Ziegler, telephone 571-372-
6095.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published a proposed rule in the Federal Register at 84 FR
25228 on May 31, 2019, proposing to amend the DFARS to implement a
recommendation from the Defense Contract Management Agency (DCMA) to
raise the contractor purchasing system review (CPSR) threshold at
Federal Acquisition Regulation (FAR) 44.302(a) from $25 million to $50
million. Currently, FAR 44.302(a) requires the administrative
contracting officer (ACO) to determine whether a contractor's sales to
the Government are expected to exceed $25 million during the next 12
months and, if so, perform a review to determine if a CPSR is needed.
The ACO uses this dollar threshold in conjunction with the surveillance
criteria cited at FAR 44.302(a), i.e., contractor past performance, and
the volume, complexity, and dollar value of subcontracts, to make this
determination. DCMA performs the preponderance of DoD CPSRs.
Competitively awarded firm-fixed-price and competitively awarded fixed-
price with economic price adjustment contracts and sales of commercial
items pursuant to part 12 of the FAR are excluded from this
requirement.
FAR 44.302(a) specifically authorizes the head of the agency
responsible for contract administration to raise or lower the $25
million CPSR threshold if it is considered to be in the Government's
best interest. The dollar threshold of $25 million cited at FAR
44.302(a) has been unchanged since 1996. In 2016, the DCMA CPSR Group
conducted an analysis to determine if raising the CPSR threshold would
be beneficial. Based on the Group's findings, it was determined that
adjusting the threshold upward to $50 million would appropriately
account for inflation, reduce burden on small contractors, and allow a
more efficient and effective use of CPSR resources to review larger
contractors where more taxpayer dollars are at risk. Three respondents
submitted public comments in response to the proposed rule.
II. Discussion and Analysis
DoD reviewed the public comments in the development of the final
rule.
A. Summary of Significant Changes From the Proposed Rule
There are no changes made to the final rule as a result of the
public comments.
B. Analysis of Public Comments
1. Support for the Rule
Comment: Two respondents conveyed overall support for the rule, but
one respondent stated the support for the rule was contingent on DoD
ensuring procurements valued at $50 million or below will not require
the contractor to have or maintain an approved purchasing system per
the clause at DFARS 252.242-7005, Contractor Business Systems.
Response: FAR clause 52.244-2, Subcontracts, allows the contracting
officer to assess whether a system review is needed (e.g., when meeting
the $50 million threshold is anticipated). DFARS 252.244-7001,
Contractor Purchasing System Administration, establishes the review
criteria. Contractors whose sales have not reached the $50 million
threshold may opt to allow their approval to expire rather than incur
the costs to maintain a system that meets the criteria for an approved
system. If an approved purchasing system is necessary to support a
particular program, the contractor can work with the contracting
officer to obtain a purchasing system review based on risk or pressing
need. Otherwise, the contractor can request consent to subcontract in
accordance with FAR 52.244-2.
[[Page 72248]]
2. Assessment of Risk
Comment: One respondent conveyed concerns that smaller contractors
with fewer and lower dollar value contracts can create greater risks
than contractors with larger dollar value contracts due to the
availability of financial resources.
Response: There is no evidence that contractors with lower sales
are inherently more risky than those with higher sales. The $25 million
threshold established by FAR 44.302(a) has not changed since 1996.
Analysis shows that the threshold could be raised to $50 million with
consideration given to inflation and acceptable risk. Consistent with
Better Buying Power (BBP) 3.0, raising the CPSR threshold is intended
reduce the administrative burden on smaller contractors. Smaller
contractors are often exempt from many of the CPSR review elements as a
result of the recent increase to the threshold for obtaining certified
cost or pricing data.
Comment: One respondent recommended reevaluating the risk-based
assessment approach that DCMA employs to assess which contractors to
review in a given year because contractors currently exceeding the
threshold should not have latent undiscovered weaknesses in their
purchasing systems. Based upon this assumption, the increased threshold
would have no significant impact upon those purchasing systems.
Response: Risk assessments on approved systems are used by DCMA to
prioritize one approved system over another and are used to schedule
reviews. New entries (initial reviews) are worked into the existing
schedule.
3. FAR 52.244-2, Subcontracts, and DFARS 252.244-7001, Contractor
Purchasing System Administration
Comment: One respondent recommended revising the requirement for
inclusion of the clause at FAR 52.244-2, Subcontracts, and the clause
at DFARS 252.244-7001, Contractor Purchasing System Administration, and
permit contracting officers to omit both clauses from applicable
contracts if a CPSR will not be performed.
Response: The contracting officer inserts the FAR clause 52.244-2,
Subcontracts, when flexibly priced contracts are anticipated, thus
setting the stage for a contractor to submit requests for consent to
subcontract. If a contractor's sales to the Government (excluding
competitively awarded firm-fixed-price and competitively awarded fixed-
price with economic price adjustment contracts and sales of commercial
items pursuant to part 12) are expected to exceed $50 million during
the next 12 months, the contracting officer will perform a review to
determine if a CPSR is needed. In evaluating the acceptability of the
contractor's purchasing system, the contracting officer, in
consultation with the purchasing system analyst or auditor, determines
whether the contractor's purchasing system complies with the system
criteria for an acceptable purchasing system as prescribed in the
clause at 252.244-7001, Contractor Purchasing System Administration.
CPSR approval can be viewed to lighten the consent to subcontract
burden on both the contractor and contracting officer. If the
contracting officer determines that an approved system is not in the
best interests of the Government, then they can choose not to initiate
a review and continue with consent packages and annual contracting
officer surveillance. The criteria found at DFARS 252.244-7001 can be
used by contracting officers, in addition to those found in FAR 52.244-
2, when conducting annual surveillance of a contractor without an
approved system when the clause is present in prime contracts.
4. Initial Regulatory Flexibility Analysis (IRFA)
Comment: One respondent inquired if the data in the IRFA for DCMA
CPSRs included all of the military departments and defense agencies.
Response: See section VI of this preamble.
5. Small Business Impacts
Comment: One respondent conveyed concerns that many solicitations
require as a responsive element of bidding that the contractor
demonstrate that it has a current approved purchasing system. The
respondent further stated that contractors meeting the threshold for
CPSRs will meet that test, however, those that are no longer required
to maintain and receive CPSRs will not. As a result, the respondent
recommends that DoD consider the potential implications for small
businesses and on competition for cost-reimbursement or certain
indefinite delivery indefinite quantity contracts from the CPSR
threshold change when developing contract requirements in the future.
Response: If an approved purchasing system is necessary to support
a particular program, the contractor can work with the contracting
officer to obtain a purchasing system review based on risk or pressing
need. Otherwise, the contractor can request consent to subcontract in
accordance with the clause at FAR 52.244-2.
6. Out of Scope
Comment: One respondent questioned the mechanism to be used to
provide oversight of cybersecurity compliance if an entity no longer
meets the threshold for a CPSR.
Response: This comment is out of scope of this rule.
III. 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 add any new provisions or clauses or impact any
existing provisions or clauses. The rule merely increases the DoD
dollar threshold for conducting CPSRs from $25 million to $50 million.
IV. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is 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.
V. Executive Order 13771
This final rule is not subject to E.O. 13771, because this rule is
not a significant regulatory action under E.O. 12866.
VI. Regulatory Flexibility Act
A final regulatory flexibility analysis (FRFA) has been prepared
consistent with the Regulatory Flexibility Act, 5 U.S.C. 604, et seq.
The FRFA is summarized as follows:
DoD is amending the Defense Federal Acquisition Regulation
Supplement (DFARS) to establish a DoD contractor purchasing system
review (CPSR) dollar threshold. This rule creates a new DFARS section
at 244.302 to establish a CPSR dollar threshold of $50 million. The
threshold will be used in conjunction with other surveillance criteria
cited at Federal Acquisition Regulation (FAR) 44.302(a), to include
contractor past performance and the volume, complexity, and dollar
value of subcontracts. The rule establishes a DoD
[[Page 72249]]
dollar threshold of $50 million for a formal CPSR; in effect, raising
the current surveillance threshold of $25 million cited at FAR
44.302(a) for DoD contractors.
One respondent submitted a public comment in response to the
initial regulatory flexibility analysis (IRFA) which is summarized as
follows:
Comment: The respondent inquired if the data in the IRFA for DCMA
CPSRs included all of the military departments and defense agencies.
Reponse: The data included all CPSRs across all of the Department
of Defense. The Government sales include all Government contracts/
subcontracts (to include military departments and defense agencies)
minus those competitively awarded firm-fixed-price, competitively
awarded fixed-price with economic price adjustment contracts, or sales
of commercial items pursuant to FAR part 12.
In 2014, there were 667 unique entities for which administrative
contracting officers (ACO) had recorded approved CPSR decisions in the
Contract Business Analysis Repository. A 20% reduction in the number of
CPSRs is expected to result from increasing the CPSR threshold from $25
million to $50 million for a total reduction of approximately 133 firms
no longer meeting the criteria for a CPSR review. Contractor purchasing
systems are eligible for a comprehensive follow-on review every three
years. Based on this three-year review cycle, approximately 45 fewer
contractors would be reviewed each year (133 firms/3-year cycle = 44.3,
rounded to 45 fewer reviews conducted each year). Of the 45 entities,
it is estimated that 35 of these contractors are large businesses and
10 are small entities.
The $50 million dollar threshold should reduce the compliance
burden for approximately 133 contractors, and permit a more prudent and
efficient use of resources, prioritizing surveillance to the larger
firms.
For the approximately 133 contractors affected by this rule, there
could be additional requirements for those firms to request consent to
contract from the ACO, pursuant to the clause at FAR 52.244-2,
Subcontracts. It is estimated that the annual number of consent to
contract requests are approximately 12 per contractor.
There are no known significant alternative approaches to the rule
that would accomplish the stated objectives.
VII. Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. Chapter 35) applies. The
rule contains information collection requirements. The Office of
Management and Budget (OMB) has previously cleared the information
collection requirements affected by this rule under OMB Control Number
9000-0132, Contractors' Purchasing System Review, and 9000-0149,
Subcontract Consent. These two clearances have been consolidated; the
updated clearance reflecting the new DoD CPSR threshold has been
cleared by OMB under 9000-0149, entitled ``Subcontract Consent and
Contractor's Purchasing System Review'' through February 28, 2022.
List of Subjects in 48 CFR Part 244
Government procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.
Therefore, 48 CFR part 244 is amended as follows:
PART 244--SUBCONTRACTING POLICIES AND PROCEDURES
0
1. The authority citation for 48 CFR part 244 continues to read as
follows:
Authority: 41 U.S.C. and 48 CFR chapter 1.
0
2. Section 244.302 is added to read as follows:
244.302 Requirements.
(a) In lieu of the threshold at FAR 44.302(a), the ACO shall
determine the need for a CPSR if a contractor's sales to the Government
are expected to exceed $50 million during the next 12 months.
[FR Doc. 2019-27823 Filed 12-30-19; 8:45 am]
BILLING CODE 5001-06-P
