Defense Federal Acquisition Regulation Supplement: Modification of Authority of the Department of Defense To Carry Out Certain Prototype Projects (DFARS Case 2023-D006), 33834-33835 [2023-11140]

Download as PDF 33834 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: lotter on DSK11XQN23PROD with RULES1 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), VerDate Sep<11>2014 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. PO 00000 Frm 00036 Fmt 4700 Sfmt 4700 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 E:\FR\FM\25MYR1.SGM 25MYR1 Federal Register / Vol. 88, No. 101 / Thursday, May 25, 2023 / Rules and Regulations 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. DEPARTMENT OF DEFENSE VI. Regulatory Flexibility Act [Docket DARS–2022–0026] The Regulatory Flexibility Act does not apply to this rule because this final rule does not constitute a significant DFARS revision within the meaning of FAR 1.501–1, and 41 U.S.C. 1707 does not require publication for public comment. RIN 0750–AL22 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. 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) as recommended by the DoD Inspector General to refine the management of undefinitized contract actions. SUMMARY: Effective May 25, 2023. David Johnson, telephone 202–913– 5764. SUPPLEMENTARY INFORMATION: I. Background PART 206—COMPETITION REQUIREMENTS 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. 2. Revise section 206.001–70 to read as follows: ■ 206.001–70 Exception for prototype projects for follow-on production contracts. lotter on DSK11XQN23PROD with RULES1 Defense Federal Acquisition Regulation Supplement: Undefinitized Contract Actions (DFARS Case 2021– D003) FOR FURTHER INFORMATION CONTACT: Therefore, 48 CFR part 206 is amended as follows: (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. 4022 for prototype projects, when the contracting officer receives sufficient documentation from the agreements officer issuing the other transaction agreement for the prototype project that— (1) The other transaction agreement included provisions for a follow-on production contract (10 U.S.C. 4022(f)(1)); and (2) Where applicable, 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. (b) See PGI 206.001–70 for additional guidance. [FR Doc. 2023–11140 Filed 5–24–23; 8:45 am] BILLING CODE 5001–06–P 15:53 May 24, 2023 48 CFR Parts 215, 217, and 252 DATES: Jennifer D. Johnson, Editor/Publisher, Defense Acquisition Regulations System. VerDate Sep<11>2014 Defense Acquisition Regulations System Jkt 259001 DoD published a proposed rule in the Federal Register at 87 FR 65507 on October 28, 2022, to amend the DFARS to refine the management of undefinitized contract actions (UCAs). This final rule implements recommendations regarding management of undefinitized contract actions (UCAs) as addressed in the DoD Inspector General Audit of Military Department Management of Undefinitized Contract Actions (Report No. DODIG–2020–084). 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. No changes are made to the final rule in response to the public comments. A discussion of the comments is provided, as follows: A. Analysis of Public Comments 1. Possible Subjectiveness Associated With the Term ‘‘Qualified Proposal’’ Comment: Several respondents remarked that aspects of the definition of ‘‘qualified proposal’’ in the context of UCAs appear open to interpretation, and the resulting subjectivity could result in unwarranted detrimental treatment of PO 00000 Frm 00037 Fmt 4700 Sfmt 4700 33835 contractors. Some respondents suggested DoD should change the DFARS to provide additional details regarding what comprises a qualifying proposal or otherwise require contracting officers to undertake a dialogue to assist contractors developing and submitting qualifying proposals. Response: The term ‘‘qualified proposal,’’ defined at DFARS 217.7401, was not proposed for revision in this rule, and the definition is based on statute now found at 10 U.S.C. 3377(b)(2). This rule does not conceptually change the term or its usage, and the comment is therefore outside the scope of this rule. 2. Contract Risk Factors Comment: Several respondents commented on the language regarding contract risk factors at 215.404–71– 3(d)(2)(i). Several respondents stated that this rule would limit the contracting officer’s discretion and flexibility to review and assign risk factors that consider the circumstances of a particular UCA. One respondent noted that current language at DFARS 215.404–71–3(d)(2)(i) already instructs the contracting officer to consider the extent to which costs have been incurred prior to definitization rendering unnecessary the language this rule adds at DFARS 215.404–71– 3(d)(2)(i), including any resulting updates to DD Form 1547, Record of Weighted Guidelines. One respondent suggested modifying DFARS 217.7404– 6, Allowable Profit, to specify cost-risk factors, including ‘‘inflation and baseline fluidity, and reduced negotiating strength with suppliers and vendors in a UCA environment.’’ Some respondents disagreed with the assumption reflected in the DFARS that a contractor’s cost risk declines during the period of a UCA, therefore warranting a fee reduction based on lower risk. Response: This rule is intended to incentivize both parties to definitize UCAs timely. The additional language in this rule at DFARS 215.404–71– 3(d)(2)(i) provides contracting officers with flexibility and clarity to properly consider and assign fees to the relevant portions based upon their differing risk profiles, and DoD declines to remove the additional language from the final rule. Regarding the comment centering on stating factors that affect cost risk, at least some of the factors or considerations the respondent listed are effectively reflected at DFARS 215.404– 71–3(d)(1), and the contracting officer would already consider them when ascribing contract risk. The comment regarding contract risk declining over E:\FR\FM\25MYR1.SGM 25MYR1

Agencies

[Federal Register Volume 88, Number 101 (Thursday, May 25, 2023)]
[Rules and Regulations]
[Pages 33834-33835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-11140]


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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)

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 2023.

DATES: Effective May 25, 2023.

FOR FURTHER INFORMATION CONTACT: Ms. Kimberly R. Ziegler, telephone 
703-901-3176.

SUPPLEMENTARY INFORMATION: 

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), 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.

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 Off-the-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

[[Page 33835]]

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

    The Regulatory Flexibility Act does not apply to this rule because 
this final rule does not constitute a significant DFARS revision within 
the meaning of FAR 1.501-1, and 41 U.S.C. 1707 does not require 
publication for public comment.

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.


0
2. Revise 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. 4022 for prototype projects, when the contracting officer 
receives sufficient documentation from the agreements officer issuing 
the other transaction agreement for the prototype project that--
    (1) The other transaction agreement included provisions for a 
follow-on production contract (10 U.S.C. 4022(f)(1)); and
    (2) Where applicable, 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.
    (b) See PGI 206.001-70 for additional guidance.

[FR Doc. 2023-11140 Filed 5-24-23; 8:45 am]
BILLING CODE 5001-06-P
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