Defense Federal Acquisition Regulation Supplement: Exception to Competition for Certain Follow-On Production Contracts (DFARS Case 2019-D031), 10989-10990 [2022-04011]

Agencies

• Defense Acquisition Regulations System
• DEPARTMENT OF DEFENSE

[Federal Register Volume 87, Number 39 (Monday, February 28, 2022)]
[Rules and Regulations]
[Pages 10989-10990]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-04011]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 206

[Docket DARS-2019-0051]
RIN 0750-AK67


Defense Federal Acquisition Regulation Supplement: Exception to 
Competition for Certain Follow-On Production Contracts (DFARS Case 
2019-D031)

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 implement a section of the 
National Defense Authorization Act for Fiscal Year 2016 that modifies 
the criteria required to exempt from competition certain follow-on 
production contracts.

DATES: Effective February 28, 2022.

FOR FURTHER INFORMATION CONTACT: Ms. Kimberly R. Ziegler, telephone 
571-372-6095.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD published a proposed rule in the Federal Register at 84 FR 
50811 on September 26, 2019, to amend DFARS 206.001 to implement 
section 815 of the National Defense Authorization Act (NDAA) for Fiscal 
Year (FY) 2016 (Pub. L. 114-92). Section 815 repeals and replaces 
section 845 of the NDAA for FY 1994 (Pub. L. 103-160; 10 U.S.C. 2371 
note) with 10 U.S.C. 2371b, which modifies the authority of DoD to 
carry out other transaction (OT) agreements for prototype projects, as 
well as the criteria required to award an associated follow-on 
production contract to the participants in the other transaction 
agreement without the use of competitive procedures. One respondent 
submitted comments on the proposed rule.

II. Discussion and Analysis

A. Summary of Significant Changes

    The purpose of this rule is to provide contracting officers with 
updated internal guidance when awarding a follow-on production contract 
that is exempt from the competitive procedures of Federal Acquisition 
Regulation part 6, as set forth in 10 U.S.C. 2371b. The rule is not 
intended to implement policy, regulation, or guidance on DoD's 
authority to enter into OT prototype agreements at 10 U.S.C. 2371b. As 
such, this final rule changes the rule text to specify that the 
agreements officer for the OT agreement for the prototype project is 
responsible for providing to the contracting officer information that 
confirms the requirements to award a noncompetitive follow-on 
production contract, as specified in 10 U.S.C. 2371b and DoD OT 
agreement policy, have been met.

B. Analysis of Public Comments

    DoD reviewed the public comments in the development of the final 
rule. A discussion of the comments and the changes made to the rule as 
a result of those comments is provided, as follows:
    Comment: The respondent advised that DoD should provide clear 
guidance on what constitutes ``successful completion'' of a prototype 
transaction; the rule text should be clarified to explain what it means 
to award a follow-on production contract to ``the participants in the 
transaction,'' as contracts are usually made between the Government and 
a single entity; the rule should clarify what a ``participant'' is, 
given that not all parties to a transaction necessarily participate in 
the project.
    The respondent also advised that the rule should be revised to 
clarify the prerequisites for awarding the OT for the prototype project 
and the prerequisites for awarding a follow-on production contract. 
Specifically, one of the criteria for awarding a follow-on production 
contract is that the OT for the prototype project is based on specific 
determinations made by certain acquisition officials according to 
different threshold values. The proposed rule, however, applies these 
determination requirements only to the follow-on production contract, 
when they should instead apply only to the initial OT agreement.
    Response: This rule is not intended to implement policy, 
regulation, or guidance on DoD's authority to enter into OT prototype 
agreements at 10 U.S.C. 2371b. Instead, the Office of the Under 
Secretary of Defense for Acquisition and Sustainment (OUSD(A&S)) is the 
organization responsible for promulgation of policy for OT agreements, 
which can be viewed at https://aaf.dau.edu/aaf/ot-guide/. As a result, 
this rule is modified to clarify that the contracting officer does not 
make the determination that the prototype project was successfully 
completed and, instead, should receive that information from the 
agreements officer for the OT agreement.
    Comment: The respondent advised that 32 CFR part 3 should be 
updated to reflect the current authority at 10 U.S.C. 2371b.
    Response: This comment is outside the scope of this rule, which 
amends 48 CFR chapter 2.

C. Other Changes

    The proposed numbering of the DFARS text is redesignated as DFARS 
206.001-70 from 206.001(S-70) to align with FAR system drafting 
conventions.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold, for Commercial Products Including Commercially Available 
Off-the-Shelf Items, and for Commercial Services

    This rule only impacts the internal operating procedures of the 
agency. The rule does not impose any new requirements on contracts at 
or below

[[Page 10990]]

the simplified acquisition threshold, for commercial products including 
commercially available off-the-shelf items, or for commercial services.

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 30, 1993.

V. Congressional Review Act

    As required by the Congressional Review Act (5 U.S.C. 801-808) 
before an interim or final rule takes effect, DoD will submit a copy of 
the interim or final rule with the form, Submission of Federal Rules 
under the Congressional Review Act, to the U.S. Senate, the U.S. House 
of Representatives, and the Comptroller General of the United States. A 
major rule under the Congressional Review Act cannot take effect until 
60 days after it is published in the Federal Register. The Office of 
Information and Regulatory Affairs has determined that this rule is not 
a major rule as defined by 5 U.S.C. 804.

VI. 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:
    The Department of Defense is amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement section 815 of 
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016 
(Pub. L. 114-92), which repeals and replaces section 845 of the NDAA 
for FY 1994 (Pub. L. 103-160; 10 U.S.C. 2371 note) with 10 U.S.C. 
2371b.
    The objective of this rule is to provide contracting officers with 
updated internal guidance when awarding a follow-on production contract 
that is exempt from the competitive procedures of Federal Acquisition 
Regulation part 6, as set forth in 10 U.S.C. 2371b.
    No public comments were received in response to the initial 
regulatory flexibility analysis.
    DoD does not collect data on the number of follow-on production 
contracts that are awarded annually and associated with a prototype 
project transaction agreement made under the authority of 10 U.S.C. 
2371b; therefore, DoD is unable to estimate the number of small 
entities that will be impacted by this rule. However, DoD does not 
expect small entities to be significantly impacted by this rule, 
because the rule does not change any existing processes or impose any 
additional burdens. Instead, the rule simply clarifies instructions to 
contracting officers on the criteria that must be met in order to award 
an associated follow-on production contract without using competitive 
procedures.
    This rule does not include any new reporting, recordkeeping, or 
other compliance requirements for small entities. This rule does not 
duplicate, overlap, or conflict with any other Federal rules. There are 
no known alternative approaches to the rule that would meet the stated 
objectives.

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 Part 206

    Government procurement.

Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.

    Therefore, 48 CFR part 206 is amended as follows:

PART 206--COMPETITION REQUIREMENTS

0
1. The authority citation for 48 CFR part 206 continues to read as 
follows:

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


206.001   [Amended]

0
2. Amend section 206.001 by removing paragraph (S-70).

0
3. Add section 206.001-70 to read as follows:


206.001-70   Exception for prototype projects for follow-on production 
contracts.

    (a) Also excepted from this part are follow-on production contracts 
for products developed pursuant to the ``other transactions'' authority 
of 10 U.S.C. 2371b for prototype projects when--
    (1) The other transaction solicitation and agreement included 
provisions for a follow-on production contract; and
    (2) The contracting officer receives sufficient documentation from 
the agreements officer of the other transaction agreement for the 
prototype project that the requirements of 10 U.S.C. 2371b sections 
(f)(2)(A) and (B) and, when applicable, section (a)(2), have been met.
    (b) See PGI 206.001-70(b) for additional guidance.

[FR Doc. 2022-04011 Filed 2-25-22; 8:45 am]
BILLING CODE 5001-06-P