Defense Federal Acquisition Regulation Supplement: Payment Instructions (DFARS Case 2017-D036), 33831-33834 [2023-11138]
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Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Rules and Regulations
South Coast, Ventura County, and West
Mojave Desert NAAs.
lotter on DSK11XQN23PROD with RULES1
IV. Statutory and Executive Order
Reviews
Under the Clean Air Act, the
Administrator is required to approve a
SIP submission that complies with the
provisions of the Act and applicable
Federal regulations. 42 U.S.C. 7410(k);
40 CFR 52.02(a). Thus, in reviewing SIP
submissions, the EPA’s role is to
approve state choices, provided that
they meet the criteria of the Clean Air
Act. Accordingly, this action merely
approves state law as meeting Federal
requirements and does not impose
additional requirements beyond those
imposed by state law. For that reason,
this action:
• Is not a significant regulatory action
subject to review by the Office of
Management and Budget under
Executive Orders 12866 (58 FR 51735,
October 4, 1993) and 13563 (76 FR 3821,
January 21, 2011);
• Does not impose an information
collection burden under the provisions
of the Paperwork Reduction Act (44
U.S.C. 3501 et seq.);
• Is certified as not having a
significant economic impact on a
substantial number of small entities
under the Regulatory Flexibility Act (5
U.S.C. 601 et seq.);
• Does not contain any unfunded
mandate or significantly or uniquely
affect small governments, as described
in the Unfunded Mandates Reform Act
of 1995 (Pub. L. 104–4);
• Does not have federalism
implications as specified in Executive
Order 13132 (64 FR 43255, August 10,
1999);
• Is not an economically significant
regulatory action based on health or
safety risks subject to Executive Order
13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action
subject to Executive Order 13211 (66 FR
28355, May 22, 2001); and
• Is not subject to requirements of
section 12(d) of the National
Technology Transfer and Advancement
Act of 1995 (15 U.S.C. 272 note) because
application of those requirements would
be inconsistent with the Clean Air Act.
In addition, the SIP is not approved
to apply on any Indian reservation land
or in any other area where the EPA or
an Indian tribe has demonstrated that a
tribe has jurisdiction. In those areas of
Indian country, the rule does not have
tribal implications and will not impose
substantial direct costs on tribal
governments or preempt tribal law as
specified by Executive Order 13175 (65
FR 67249, November 9, 2000).
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Executive Order 12898 (Federal
Actions To Address Environmental
Justice in Minority Populations and
Low-Income Populations, 59 FR 7629,
Feb. 16, 1994) directs Federal agencies
to identify and address
‘‘disproportionately high and adverse
human health or environmental effects’’
of their actions on minority populations
and low-income populations to the
greatest extent practicable and
permitted by law. The EPA defines
environmental justice (EJ) as ‘‘the fair
treatment and meaningful involvement
of all people regardless of race, color,
national origin, or income with respect
to the development, implementation,
and enforcement of environmental laws,
regulations, and policies.’’ The EPA
further defines the term fair treatment to
mean that ‘‘no group of people should
bear a disproportionate burden of
environmental harms and risks,
including those resulting from the
negative environmental consequences of
industrial, governmental, and
commercial operations or programs and
policies.’’
The State did not evaluate
environmental justice considerations as
part of its SIP submittal; the CAA and
applicable implementing regulations
neither prohibit nor require such an
evaluation. The EPA did not perform an
EJ analysis and did not consider EJ in
this action. Due to the nature of the
action being taken here, this action is
expected to have a neutral to positive
impact on the air quality of the affected
area. Consideration of EJ is not required
as part of this action, and there is no
information in the record inconsistent
with the stated goal of E.O. 12898 of
achieving environmental justice for
people of color, low-income
populations, and Indigenous peoples.
This action is subject to the
Congressional Review Act, and EPA will
submit a rule report to each House of
the Congress and to the Comptroller
General of the United States. This action
is not a ‘‘major rule’’ as defined by 5
U.S.C. 804(2).
Under section 307(b)(1) of the Clean
Air Act, petitions for judicial review of
this action must be filed in the United
States Court of Appeals for the
appropriate circuit by July 24, 2023.
Filing a petition for reconsideration by
the Administrator of this final rule does
not affect the finality of this action for
the purposes of judicial review nor does
it extend the time within which a
petition for judicial review may be filed
and shall not postpone the effectiveness
of such rule or action. This action may
not be challenged later in proceedings to
enforce its requirements. (See section
307(b)(2).)
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33831
List of Subjects in 40 CFR Part 52
Environmental protection, Air
pollution control, Incorporation by
reference, Nitrogen dioxide, Particulate
matter, Reporting and recordkeeping
requirements, Sulfur dioxide, Volatile
organic compounds.
Authority: 42 U.S.C. 7401 et seq.
Dated: May 18, 2023.
Martha Guzman Aceves,
Regional Administrator, Region IX.
For the reasons stated in the
preamble, the Environmental Protection
Agency amends part 52, chapter I, title
40 of the Code of Federal Regulations as
follows:
PART 52—APPROVAL AND
PROMULGATION OF
IMPLEMENTATION PLANS
1. The authority citation for part 52
continues to read as follows:
■
Authority: 42 U.S.C. 7401 et seq.
Subpart F—California
2. Section 52.220 is amended by
adding paragraph (c)(597) to read as
follows:
■
§ 52.220
Identification of plan—in part.
*
*
*
*
*
(c) * * *
(597) The following multi-district
certification was submitted on February
3, 2022, by the Governor’s designee, as
an attachment to a letter dated February
3, 2022.
(i) [Reserved]
(ii) Additional materials. (A)
California Air Resources Board.
(1) ‘‘California Clean Fuels for Fleets
Certification for the 70 ppb Ozone
Standard,’’ adopted on January 27, 2022.
(2) [Reserved]
(B) [Reserved]
[FR Doc. 2023–11006 Filed 5–24–23; 8:45 am]
BILLING CODE 6560–50–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Parts 204, 232, and 252
[Docket DARS–2022–0029]
RIN 0750–AJ46
Defense Federal Acquisition
Regulation Supplement: Payment
Instructions (DFARS Case 2017–D036)
Defense Acquisition
Regulations System, Department of
Defense (DoD).
AGENCY:
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33832
ACTION:
Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Rules and Regulations
Final rule.
DoD is issuing a final rule
amending the Defense Federal
Acquisition Regulation Supplement
(DFARS) to provide payment
instructions for certain contracts based
on the type of item acquired and the
type of payment.
DATES: Effective May 25, 2023.
FOR FURTHER INFORMATION CONTACT: Mr.
David E. Johnson, telephone 202–913–
5764.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Background
DoD published a proposed rule in the
Federal Register at 87 FR 77053 on
December 16, 2022, to amend the
DFARS to provide payment instructions
for certain contracts based on the type
of item acquired and the type of
payment. Two respondents submitted
comments in response to the proposed
rule.
II. Discussion and Analysis
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:
A. Summary of Significant Changes
From the Proposed Rule
Language in the clause at DFARS
252.232–7002, Progress Payments for
Foreign Military Sales Acquisitions, is
changed for clarity. The term
‘‘subcontractor progress payments’’ is
changed to ‘‘subcontract financing’’ in
the clauses at DFARS 252.232–7002,
paragraph (d), and 252.232–7018,
Progress Payments—Multiple Lots,
paragraph (b)(4).
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B. Analysis of Public Comments
1. Data Underlying the Proposed Rule
Comment: One respondent inquired
about the set of data that underlies the
proposed rule and whether such data
adequately supports the proposed rule.
Response: Such data has not been
published for public comment, but it
was gathered in the normal course of
compiling operational statistics relating
to the manual entry of payment
instructions in DoD payment systems.
This rule standardizes payment
instructions and therefore eliminates the
need for such manual entry. This in turn
eliminates the possibility of both dataentry errors and application of incorrect
payment instructions.
2. Possible Ambiguity in Instructions for
Progress Payment Requests
Comment: One respondent inquired
whether paragraph (a) of the clause at
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DFARS 252.232–7002, Progress
Payments for Foreign Military Sales
Acquisitions, requires separate
submission of foreign military sales
(FMS) progress payment requests
combined with U.S. sales progress
payment requests, or rather that the
clause requires submission of FMS
progress payment requests separate from
U.S. ones.
Response: The intent is for FMS
progress payment requests to be
submitted separately from U.S. sales
progress payment requests. The
language in the clause at DFARS
252.232–7002 has been clarified in the
final rule.
3. Prescription for the Clause at DFARS
252.232–70XX
Comment: One respondent inquired
whether the prescription for the clause
at DFARS 252.232–70XX, Progress
Payments—Multiple Lots, should
explicitly limit application of the clause
to fixed price contracts.
Response: In accordance with Federal
Acquisition Regulation 32.500(a), only
fixed-price contracts may provide for
progress payments. The prescription
limits application of the clause at
DFARS 252.232–7018 to contracts that
provide for progress payments. DoD
therefore declines the suggested change
as unnecessary.
4. References to ‘‘Subcontractor Progress
Payments’’
Comment: One respondent
recommends changing the term
‘‘subcontractor progress payments’’ to
‘‘subcontract financing’’ in the clauses
at DFARS 252.232–7002(d) and
252.232–70XX(b)(4) to better align with
relevant language in the Federal
Acquisition Regulation.
Response: In the final rule, the term
‘‘subcontractor progress payments’’ is
changed to ‘‘subcontract financing’’ in
the clauses at DFARS 252.232–7002,
paragraph (d), and 252.232–7018,
paragraph (b)(4).
III. Applicability to Contracts at or
Below the Simplified Acquisition
Threshold (SAT) and for Commercial
Services, and for Commercial Products,
Including Commercially Available Offthe-Shelf (COTS) Items
This rule clarifies payment
instructions for certain contracts based
on the type of item acquired and the
type of payment by amending DFARS
252.204–7006, Billing Instructions—
Cost Vouchers, and 252.232–7002,
Progress Payments for Foreign Military
Sales Acquisitions. Application of these
clauses to contracts at or below the SAT
and to commercial services, commercial
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products, and COTS items is
unchanged. This final rule adds a new
clause at 252.232–7018, Progress
Payments—Multiple Lots. DoD will
apply this clause to solicitations and
contracts at or below the SAT and will
not apply the clause to commercial
services or commercial products,
including COTS items.
IV. Expected Impact of the Rule
Currently, payment instructions are
being entered manually into DoD’s
payment systems due to a lack of clarity
in the DFARS regarding payment
instructions. This rule clarifies the
payment instruction language in the
DFARS. The clarifications in this rule
will reduce data errors and inoperability
problems throughout DoD’s business
processes created by manual entry of
payment instructions in the payment
systems, as well as reducing the cost of
data entry.
V. 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.
VI. 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.
VII. 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:
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Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Rules and Regulations
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The purpose of this rule is to provide
clarifications on payment instructions
for certain contracts based on the type
of item acquired and the type of
payment. DoD has found that the
payment instructions often are not
inserted when required and that
payment instructions, if inserted, are
often not appropriate for the contracts in
question. An analysis of the issue
showed that the appropriate accounting
treatment for payments can be derived
from the type of item acquired and the
type of payment. In addition, the
analysis highlighted the need to
establish procedures for structuring
progress payment requests for contracts
with multiple production lots. The
clarifications in this rule will promote
consistency with generally accepted
accounting principles and reduce data
errors created by manual entry of
payment instructions in the payment
systems.
No public comments were received in
response to the initial regulatory
flexibility analysis.
The rule will apply to all small
entities that will be awarded costreimbursement, time-and-material, or
labor-hour contracts. However, the rule
requires negligible additional effort by
contractors, including small entities,
because it simply clarifies the
identification and use of payment
information elements in payment
requests. According to data from the
Federal Procurement Data System for
fiscal years 2020 through 2022,
approximately 6,800 costreimbursement, time-and-material, and
labor-hour contracts (0.01% percent of
all awards) are awarded to
approximately 1,100 small businesses (3
percent of all awardees) each year. This
rule also applies to contracts that use
multiple accounting classifications or
that involve progress payments for
multiple production lots. DoD cannot
accurately quantify the number of
contracts subject to the multiple-lot
progress payments clause, but such
contracts are likely few in number.
The rule does not contain any new
reporting, recordkeeping, or other
compliance requirements for small
entities.
There are no known, significant,
alternative approaches to the rule that
would meet the objectives of the rule.
VIII. Paperwork Reduction Act
The Paperwork Reduction Act (44
U.S.C. chapter 35) applies to this rule
regarding new DFARS clause 252.232–
7018, Progress Payments—Multiple
Lots. However, these changes to the
DFARS do not impose additional
information collection requirements to
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15:53 May 24, 2023
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the paperwork burden previously
approved under Office of Management
and Budget (OMB) Control Number
9000–0010, titled Progress Payments, SF
1443. The rule affects information
collection requirements in DFARS
252.232–7002, Progress Payments for
Foreign Military Sales Acquisitions,
currently approved under OMB Control
Number 0704–0321, titled ‘‘DFARS Part
232, Contract Financing, and the Clause
at 252.232–7002, Progress Payments for
Foreign Military Sales Acquisition.’’
The impact, however, is negligible
because the changed reporting
requirement is not anticipated to
increase the estimate of total burden
hours; rather the requirement to submit
separate payment requests by rate is
merely replaced by a requirement to
submit separate payment requests for
FMS and U.S. line items in the contract.
List of Subjects in 48 CFR Parts 204,
232, and 252
Government procurement.
Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition
Regulations System.
Therefore, 48 CFR parts 204, 232, and
252 are amended as follows:
■ 1. The authority citation for 48 CFR
parts 204, 232, and 252 continues to
read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR
chapter 1.
PART 204—ADMINISTRATIVE AND
INFORMATION MATTERS
2. Amend section 204.7109 by
revising paragraph (b) to read as follows:
■
204.7109
Contract clauses.
*
*
*
*
*
(b) Use the clause at 252.204–7006,
Billing Instructions—Cost Vouchers, in
solicitations and contracts when a costreimbursement contract, a time-andmaterials contract, or a labor-hour
contract is contemplated.
PART 232—CONTRACT FINANCING
3. Amend section 232.502–4–70 by
adding paragraph (c) to read as follows:
■
232.502–4–70
Additional clauses.
*
*
*
*
*
(c) Use the clause at 252.232–7018,
Progress Payments—Multiple Lots, to
authorize separate progress payment
requests for multiple lots.
PART 252—SOLICITATION
PROVISIONS AND CONTRACT
CLAUSES
■
4. Amend section 252.204–7006—
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33833
a. By revising the section heading,
clause heading, and clause date; and
■ b. In the clause introductory text,
removing ‘‘payment’’ and adding
‘‘payment using a cost voucher’’ in its
place.
The revisions read as follows:
■
252.204–7006
Vouchers.
*
*
Billing Instructions—Cost
*
*
*
Billing Instructions—Cost Vouchers
(May 2023)
*
*
*
*
*
5. Revise section 252.232–7002 to
read as follows:
■
252.232–7002 Progress Payments for
Foreign Military Sales Acquisitions.
As prescribed in 232.502–4–70(a), use
the following clause:
Progress Payments for Foreign Military Sales
Acquisitions (May 2023)
If this contract includes foreign military
sales (FMS) requirements, the Contractor
shall—
(a) Submit separate progress payment
requests for the FMS and U.S. line items in
the contract;
(b) Submit a supporting schedule showing
the amount of each request distributed to
each country’s requirements;
(c) Identify in each progress payment
request the contract requirements to which it
applies (i.e., FMS or U.S.);
(d) Calculate each request on the basis of
the prices, costs (including costs to
complete), subcontract financing, and
progress payment liquidations of the contract
requirements to which it applies; and
(e) Distribute costs among the countries in
a manner acceptable to the Administrative
Contracting Officer.
(End of clause)
6. Add section 252.232–7018 to read
as follows:
■
252.232–7018 Progress Payments—
Multiple Lots.
As prescribed in 232.502–4–70(c), use
the following clause:
Progress Payments—Multiple Lots (May
2023)
(a) Definitions. As used in this clause—
Lot means one or more fixed-price
deliverable line items or deliverable subline
items representing a single, severable group
where the sum of the costs for each group is
segregated and a single progress payment rate
is used.
Multiple lots means more than one lot on
a single contract where progress payment
proration is performed on a lot-wide, versus
contract-wide, basis.
(b) When submitting progress payment
requests under the billing instructions in
Federal Acquisition Regulation (FAR) clause
52.232–16, Progress Payments, or Defense
Federal Acquisition Regulation Supplement
(DFARS) clause 252.232–7002, Progress
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Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Rules and Regulations
Payments for Foreign Military Sales
Acquisitions, of this contract, the Contractor
shall—
(1) Submit separate progress payment
requests for each lot identified in the
contract;
(2) Identify the contract price for the lot as
the sum of all fixed-priced line items
identified to the lot, in accordance with FAR
32.501–3;
(3) Identify the lot on each progress
payment request to which the request
applies;
(4) Calculate each request on the basis of
the price, costs (including the cost to
complete), subcontractor financing, and
progress payment liquidations of the lot to
which it applies; and
(5) Distribute costs among lots in a manner
acceptable to the Administrative Contracting
Officer.
(c) Submit a separate progress payment
request for U.S. and FMS requirements in
accordance with the DFARS clause 252.232–
7002, Progress Payments for Foreign Military
Sales Acquisitions, of this contract.
(End of clause)
[FR Doc. 2023–11138 Filed 5–24–23; 8:45 am]
BILLING CODE 5001–06–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Part 206
[Docket DARS–2023–0021]
RIN 0750–AL79
Defense Federal Acquisition
Regulation Supplement: Modification
of Authority of the Department of
Defense To Carry Out Certain
Prototype Projects (DFARS Case 2023–
D006)
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 2023.
DATES: Effective May 25, 2023.
FOR FURTHER INFORMATION CONTACT: Ms.
Kimberly R. Ziegler, telephone 703–
901–3176.
SUPPLEMENTARY INFORMATION:
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SUMMARY:
I. Background
DoD is amending the DFARS to
implement section 842 of the National
Defense Authorization Act (NDAA) for
Fiscal Year (FY) 2023 (Pub. L. 117–263),
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15:53 May 24, 2023
Jkt 259001
which amends 10 U.S.C. 4022(f)(2) to
permit the award of a follow-on
production contract without the use of
competitive procedures, even if explicit
notification was not listed within the
request for proposal for the prototype
project transaction. This revision
modifies the criteria required to award
a follow-on production contract without
the use of competitive procedures at
DFARS 206.001–70(a), which requires
other transaction solicitations and
agreements to include provisions for a
follow-on contract in order to qualify for
an exception to competition
requirements.
The statutory revision to the criteria
does not implement new requirements;
instead it removes one of the
requirements. The statutes and
regulations that implement DoD’s other
transactions authority permit DoD to
provide, in the agreement, for the award
of a follow-on production contract to a
participant in the prototype project.
Agreements made under DoD’s other
transactions authority are not subject to
the Federal Acquisition Regulation
(FAR) or DFARS; however, the award of
a follow-on production contract
resulting from such an other transaction
agreement is subject to these acquisition
regulations.
DoD issued a final rule for DFARS
case 2019–D031 (87 FR 10989) on
February 28, 2022, to implement section
815 of the NDAA for FY 2016 (Pub. L.
114–92), which modified the criteria
required to exempt from competition
certain follow-on production contracts
at DFARS 206.001–70(a)(1) and (2).
This final rule removes from DFARS
206.001–70(a)(1) the other transaction
solicitation requirement and clarifies
that an other transaction agreement is
still statutorily required (10 U.S.C.
4022(f)(1)) to provide for the award of a
follow-on production contract in order
for a contracting officer to award the
follow-on production contract without
obtaining competition. DFARS 206.001–
70(a)(2) is revised to require
documentation from the agreements
officer for the other transaction
agreement that, where applicable for the
prototype project, the threshold at 10
U.S.C. 4022(a)(2)(C) and the
requirements at 10 U.S.C. 4022(f)(2)(A)
and (B) have been met. These and
additional revisions in 206.001–70(a)
are intended to ensure an accurate
interpretation of the statutory
requirements of 10 U.S.C. 4022 that are
subject to the DFARS.
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II. Publication of This Final Rule for
Public Comment Is Not Required by
Statute
The statute that applies to the
publication of the FAR is 41 U.S.C.
1707, Publication of Proposed
Regulations. Subsection (a)(1) of the
statute requires that a procurement
policy, regulation, procedure, or form
(including an amendment or
modification thereof) must be published
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 DoD is removing a
requirement that is no longer mandated
by statute and that affects only the
internal operating procedures of DoD.
III. Applicability to Contracts at or
Below the Simplified Acquisition
Threshold (SAT), for Commercial
Services and for Commercial Products,
Including Commercially Available Offthe-Shelf (COTS) Items
This rule does not impose any new
requirements on contracts at or below
the simplified acquisition threshold, for
commercial services, or for commercial
products, including commercially
available off-the-shelf items.
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.
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 to the
Comptroller General of the United
States. A major rule under the
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]]>Agencies
[Federal Register Volume 88, Number 101 (Thursday, May 25, 2023)]
[Rules and Regulations]
[Pages 33831-33834]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-11138]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 204, 232, and 252
[Docket DARS-2022-0029]
RIN 0750-AJ46
Defense Federal Acquisition Regulation Supplement: Payment
Instructions (DFARS Case 2017-D036)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
[[Page 33832]]
ACTION: Final rule.
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SUMMARY: DoD is issuing a final rule amending the Defense Federal
Acquisition Regulation Supplement (DFARS) to provide payment
instructions for certain contracts based on the type of item acquired
and the type of payment.
DATES: Effective May 25, 2023.
FOR FURTHER INFORMATION CONTACT: Mr. David E. Johnson, telephone 202-
913-5764.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published a proposed rule in the Federal Register at 87 FR
77053 on December 16, 2022, to amend the DFARS to provide payment
instructions for certain contracts based on the type of item acquired
and the type of payment. Two respondents submitted comments in response
to the proposed rule.
II. Discussion and Analysis
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:
A. Summary of Significant Changes From the Proposed Rule
Language in the clause at DFARS 252.232-7002, Progress Payments for
Foreign Military Sales Acquisitions, is changed for clarity. The term
``subcontractor progress payments'' is changed to ``subcontract
financing'' in the clauses at DFARS 252.232-7002, paragraph (d), and
252.232-7018, Progress Payments--Multiple Lots, paragraph (b)(4).
B. Analysis of Public Comments
1. Data Underlying the Proposed Rule
Comment: One respondent inquired about the set of data that
underlies the proposed rule and whether such data adequately supports
the proposed rule.
Response: Such data has not been published for public comment, but
it was gathered in the normal course of compiling operational
statistics relating to the manual entry of payment instructions in DoD
payment systems. This rule standardizes payment instructions and
therefore eliminates the need for such manual entry. This in turn
eliminates the possibility of both data-entry errors and application of
incorrect payment instructions.
2. Possible Ambiguity in Instructions for Progress Payment Requests
Comment: One respondent inquired whether paragraph (a) of the
clause at DFARS 252.232-7002, Progress Payments for Foreign Military
Sales Acquisitions, requires separate submission of foreign military
sales (FMS) progress payment requests combined with U.S. sales progress
payment requests, or rather that the clause requires submission of FMS
progress payment requests separate from U.S. ones.
Response: The intent is for FMS progress payment requests to be
submitted separately from U.S. sales progress payment requests. The
language in the clause at DFARS 252.232-7002 has been clarified in the
final rule.
3. Prescription for the Clause at DFARS 252.232-70XX
Comment: One respondent inquired whether the prescription for the
clause at DFARS 252.232-70XX, Progress Payments--Multiple Lots, should
explicitly limit application of the clause to fixed price contracts.
Response: In accordance with Federal Acquisition Regulation
32.500(a), only fixed-price contracts may provide for progress
payments. The prescription limits application of the clause at DFARS
252.232-7018 to contracts that provide for progress payments. DoD
therefore declines the suggested change as unnecessary.
4. References to ``Subcontractor Progress Payments''
Comment: One respondent recommends changing the term
``subcontractor progress payments'' to ``subcontract financing'' in the
clauses at DFARS 252.232-7002(d) and 252.232-70XX(b)(4) to better align
with relevant language in the Federal Acquisition Regulation.
Response: In the final rule, the term ``subcontractor progress
payments'' is changed to ``subcontract financing'' in the clauses at
DFARS 252.232-7002, paragraph (d), and 252.232-7018, paragraph (b)(4).
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT) and for Commercial Services, and for Commercial
Products, Including Commercially Available Off-the-Shelf (COTS) Items
This rule clarifies payment instructions for certain contracts
based on the type of item acquired and the type of payment by amending
DFARS 252.204-7006, Billing Instructions--Cost Vouchers, and 252.232-
7002, Progress Payments for Foreign Military Sales Acquisitions.
Application of these clauses to contracts at or below the SAT and to
commercial services, commercial products, and COTS items is unchanged.
This final rule adds a new clause at 252.232-7018, Progress Payments--
Multiple Lots. DoD will apply this clause to solicitations and
contracts at or below the SAT and will not apply the clause to
commercial services or commercial products, including COTS items.
IV. Expected Impact of the Rule
Currently, payment instructions are being entered manually into
DoD's payment systems due to a lack of clarity in the DFARS regarding
payment instructions. This rule clarifies the payment instruction
language in the DFARS. The clarifications in this rule will reduce data
errors and inoperability problems throughout DoD's business processes
created by manual entry of payment instructions in the payment systems,
as well as reducing the cost of data entry.
V. 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.
VI. 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.
VII. 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:
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The purpose of this rule is to provide clarifications on payment
instructions for certain contracts based on the type of item acquired
and the type of payment. DoD has found that the payment instructions
often are not inserted when required and that payment instructions, if
inserted, are often not appropriate for the contracts in question. An
analysis of the issue showed that the appropriate accounting treatment
for payments can be derived from the type of item acquired and the type
of payment. In addition, the analysis highlighted the need to establish
procedures for structuring progress payment requests for contracts with
multiple production lots. The clarifications in this rule will promote
consistency with generally accepted accounting principles and reduce
data errors created by manual entry of payment instructions in the
payment systems.
No public comments were received in response to the initial
regulatory flexibility analysis.
The rule will apply to all small entities that will be awarded
cost-reimbursement, time-and-material, or labor-hour contracts.
However, the rule requires negligible additional effort by contractors,
including small entities, because it simply clarifies the
identification and use of payment information elements in payment
requests. According to data from the Federal Procurement Data System
for fiscal years 2020 through 2022, approximately 6,800 cost-
reimbursement, time-and-material, and labor-hour contracts (0.01%
percent of all awards) are awarded to approximately 1,100 small
businesses (3 percent of all awardees) each year. This rule also
applies to contracts that use multiple accounting classifications or
that involve progress payments for multiple production lots. DoD cannot
accurately quantify the number of contracts subject to the multiple-lot
progress payments clause, but such contracts are likely few in number.
The rule does not contain any new reporting, recordkeeping, or
other compliance requirements for small entities.
There are no known, significant, alternative approaches to the rule
that would meet the objectives of the rule.
VIII. Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. chapter 35) applies to this
rule regarding new DFARS clause 252.232-7018, Progress Payments--
Multiple Lots. However, these changes to the DFARS do not impose
additional information collection requirements to the paperwork burden
previously approved under Office of Management and Budget (OMB) Control
Number 9000-0010, titled Progress Payments, SF 1443. The rule affects
information collection requirements in DFARS 252.232-7002, Progress
Payments for Foreign Military Sales Acquisitions, currently approved
under OMB Control Number 0704-0321, titled ``DFARS Part 232, Contract
Financing, and the Clause at 252.232-7002, Progress Payments for
Foreign Military Sales Acquisition.'' The impact, however, is
negligible because the changed reporting requirement is not anticipated
to increase the estimate of total burden hours; rather the requirement
to submit separate payment requests by rate is merely replaced by a
requirement to submit separate payment requests for FMS and U.S. line
items in the contract.
List of Subjects in 48 CFR Parts 204, 232, and 252
Government procurement.
Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 204, 232, and 252 are amended as follows:
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1. The authority citation for 48 CFR parts 204, 232, and 252 continues
to read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 204--ADMINISTRATIVE AND INFORMATION MATTERS
0
2. Amend section 204.7109 by revising paragraph (b) to read as follows:
204.7109 Contract clauses.
* * * * *
(b) Use the clause at 252.204-7006, Billing Instructions--Cost
Vouchers, in solicitations and contracts when a cost-reimbursement
contract, a time-and-materials contract, or a labor-hour contract is
contemplated.
PART 232--CONTRACT FINANCING
0
3. Amend section 232.502-4-70 by adding paragraph (c) to read as
follows:
232.502-4-70 Additional clauses.
* * * * *
(c) Use the clause at 252.232-7018, Progress Payments--Multiple
Lots, to authorize separate progress payment requests for multiple
lots.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
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4. Amend section 252.204-7006--
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a. By revising the section heading, clause heading, and clause date;
and
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b. In the clause introductory text, removing ``payment'' and adding
``payment using a cost voucher'' in its place.
The revisions read as follows:
252.204-7006 Billing Instructions--Cost Vouchers.
* * * * *
Billing Instructions--Cost Vouchers (May 2023)
* * * * *
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5. Revise section 252.232-7002 to read as follows:
252.232-7002 Progress Payments for Foreign Military Sales
Acquisitions.
As prescribed in 232.502-4-70(a), use the following clause:
Progress Payments for Foreign Military Sales Acquisitions (May 2023)
If this contract includes foreign military sales (FMS)
requirements, the Contractor shall--
(a) Submit separate progress payment requests for the FMS and
U.S. line items in the contract;
(b) Submit a supporting schedule showing the amount of each
request distributed to each country's requirements;
(c) Identify in each progress payment request the contract
requirements to which it applies (i.e., FMS or U.S.);
(d) Calculate each request on the basis of the prices, costs
(including costs to complete), subcontract financing, and progress
payment liquidations of the contract requirements to which it
applies; and
(e) Distribute costs among the countries in a manner acceptable
to the Administrative Contracting Officer.
(End of clause)
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6. Add section 252.232-7018 to read as follows:
252.232-7018 Progress Payments--Multiple Lots.
As prescribed in 232.502-4-70(c), use the following clause:
Progress Payments--Multiple Lots (May 2023)
(a) Definitions. As used in this clause--
Lot means one or more fixed-price deliverable line items or
deliverable subline items representing a single, severable group
where the sum of the costs for each group is segregated and a single
progress payment rate is used.
Multiple lots means more than one lot on a single contract where
progress payment proration is performed on a lot-wide, versus
contract-wide, basis.
(b) When submitting progress payment requests under the billing
instructions in Federal Acquisition Regulation (FAR) clause 52.232-
16, Progress Payments, or Defense Federal Acquisition Regulation
Supplement (DFARS) clause 252.232-7002, Progress
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Payments for Foreign Military Sales Acquisitions, of this contract,
the Contractor shall--
(1) Submit separate progress payment requests for each lot
identified in the contract;
(2) Identify the contract price for the lot as the sum of all
fixed-priced line items identified to the lot, in accordance with
FAR 32.501-3;
(3) Identify the lot on each progress payment request to which
the request applies;
(4) Calculate each request on the basis of the price, costs
(including the cost to complete), subcontractor financing, and
progress payment liquidations of the lot to which it applies; and
(5) Distribute costs among lots in a manner acceptable to the
Administrative Contracting Officer.
(c) Submit a separate progress payment request for U.S. and FMS
requirements in accordance with the DFARS clause 252.232-7002,
Progress Payments for Foreign Military Sales Acquisitions, of this
contract.
(End of clause)
[FR Doc. 2023-11138 Filed 5-24-23; 8:45 am]
BILLING CODE 5001-06-P
