Defense Federal Acquisition Regulation Supplement: Use of Fixed-Price Contracts for Certain Major Defense Acquisition Programs (DFARS Case 2023-D009), 67611-67612 [2023-20801]
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Federal Register / Vol. 88, No. 188 / Friday, September 29, 2023 / Proposed Rules
production lots associated with a major
defense acquisition program to be
procured to no more than one when the
milestone decision authority authorizes
the use of a fixed-price type contract at
Milestone B and the scope of the work
includes both development and low-rate
initial production. This limitation may
be waived.
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Parts 207 and 234
[Docket DARS–2023–0030]
RIN 0750–AL82
Defense Federal Acquisition
Regulation Supplement: Use of FixedPrice Contracts for Certain Major
Defense Acquisition Programs (DFARS
Case 2023–D009)
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Proposed rule.
AGENCY:
DoD is proposing to amend
the Defense Federal Acquisition
Regulation Supplement (DFARS) to
implement a section of the National
Defense Authorization Act for Fiscal
Year 2023that limits the number of lowrate initial production lots associated
with a major defense acquisition
program under certain circumstances.
DATES: Comments on the proposed rule
should be submitted in writing to the
address shown below on or before
November 28, 2023, to be considered in
the formation of a final rule.
ADDRESSES: Submit comments
identified by DFARS Case 2023–D009
using any of the following methods:
Æ Federal eRulemaking Portal:
https://www.regulations.gov. Search for
‘‘DFARS Case 2023–D009.’’ Select
‘‘Comment’’ and follow the instructions
to submit a comment. Please include
‘‘DFARS Case 2023–D009’’ on any
attached documents.
Æ Email: osd.dfars@mail.mil. Include
DFARS Case 2023–D009 in the subject
line of the message.
Comments received generally will be
posted without change to https://
www.regulations.gov, including any
personal information provided. To
confirm receipt of your comment(s),
please check https://
www.regulations.gov, approximately
two to three days after submission to
verify posting.
FOR FURTHER INFORMATION CONTACT: Ms.
Jeanette Snyder, 703–508–7524.
SUPPLEMENTARY INFORMATION:
lotter on DSK11XQN23PROD with PROPOSALS3
SUMMARY:
I. Background
DoD is proposing to revise the DFARS
to implement section 808 of the
National Defense Authorization Act
(NDAA) for Fiscal Year (FY) 2023 (Pub.
L. 117–263). Section 808 amends
section 818 of Public Law 109–364 to
limit the number of low-rate initial
VerDate Sep<11>2014
22:26 Sep 28, 2023
Jkt 259001
II. Discussion and Analysis
This proposed rule adds new
guidance to contracting officers at
DFARS 234.004, paragraph (2)(v), to
specify that the contracting officer shall
not procure more than one low-rate
initial production lot associated with a
major defense acquisition program if—
• The milestone decision authority
authorizes the use of a fixed-price type
contract at the time of Milestone B
approval; and
• The scope of work of the fixed-price
type contract includes both
development and low-rate initial
production of items for such major
defense acquisition program.
This limitation may be waived by the
service acquisition executive for the
department concerned, delegable to no
lower than one level above the
contracting officer, if—
• A written notification of the waiver,
including rationale, is provided to the
congressional defense committees no
later than 30 days after issuance of the
waiver; and
• A copy of the waiver and such
congressional notification are included
in the contract file.
This rule also proposes to modify
DFARS 207.106 to reference DFARS
234.004 when selecting the contract
type for a major defense acquisition
program and to remove the reference to
section 811 of the NDAA for FY 2013
(Pub. L. 112–239), since more than one
NDAA applies requirements or
restrictions to contract types for
procurements associated with major
defense acquisition programs.
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 create any new
solicitation provisions or contract
clauses. It does not impact any existing
solicitation provisions or contract
clauses or their applicability to
contracts valued at or below the
simplified acquisition threshold, for
commercial products including COTS
items, or for commercial services.
PO 00000
Frm 00001
Fmt 4701
Sfmt 4702
67611
IV. Expected Impact of the Rule
As a result of this proposed rule,
unless waived, the Government may not
procure more than one low-rate initial
production lot associated with a major
defense acquisition program if, at the
time of Milestone B approval, the
milestone decision authority authorizes
the use of a fixed-price type contract
and the scope of work of the fixed-price
contract includes both development and
low-rate initial production of items
associated with such major defense
acquisition program. This rule does not
impact contractor operations; however,
it may limit contractor risk assumed
under such contracts. Development and
initial production of an item likely
involve the discovery and resolution of
problems that are unknown beforehand.
Risk to a contractor is higher when the
contractor must propose prices for
multiple production lots of an item
before the development and initial
production of that item are complete. By
limiting the number of low-rate initial
production lots on a fixed-price contract
that also includes development, this risk
to the contractor may be reduced.
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, as amended.
VI. Regulatory Flexibility Act
DoD does not expect this proposed
rule, when finalized, to have a
significant economic impact on a
substantial number of small entities
within the meaning of the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq.,
because this rule only applies to certain
fixed-price type contracts for major
defense acquisition programs. However,
an initial regulatory flexibility analysis
has been performed and is summarized
as follows:
This proposed rule is necessary to
implement section 808 of the National
Defense Authorization Act (NDAA) for
Fiscal Year (FY) 2023 (Pub. L. 117–263).
Section 808 modifies section 818 of
E:\FR\FM\29SEP3.SGM
29SEP3
67612
Federal Register / Vol. 88, No. 188 / Friday, September 29, 2023 / Proposed Rules
lotter on DSK11XQN23PROD with PROPOSALS3
Public Law 109–364 to limit the number
of low-rate initial production lots
associated with a major defense
acquisition program to be procured to
no more than one when the milestone
decision authority authorizes the use of
a fixed-price type contract at the time of
Milestone B approval and the scope of
the fixed-price contract includes both
development and low-rate initial
production.
The objective of this proposed rule is
to limit the number of low-rate initial
production lots associated with a major
defense acquisition program to no more
than one when the milestone decision
authority authorizes the use of a fixedprice type contract at the time of
Milestone B approval and the scope of
the fixed-price contract includes both
development and low-rate initial
production. The legal basis for the rule
is section 808 of the NDAA for FY 2023.
Data is not available on the number of
fixed-price type contracts for major
defense acquisition programs that
contain both development and low-rate
initial production; therefore, data was
pulled on contracts that include DFARS
clause 252.234–7004, Cost and Software
Data Reporting System, or its alternate
I clause. This DFARS clause is required
to be included in solicitations and
contracts for major defense acquisition
programs that exceed $50 million and
its alternate I clause is required to be
included in solicitations and contracts
for major defense acquisition programs
that are greater than $20 million, but
less than or equal to $50 million under
certain circumstances. According to the
Procurement Business Intelligence
Service, DoD awarded contracts for
major defense acquisition programs to
162 unique small entities in FY 2020,
133 in FY 2021, and 116 in FY 2022.
The average over the three-year period
is 137 per fiscal year. Therefore, the
number of small entities to which this
rule may apply is 137.
VerDate Sep<11>2014
22:26 Sep 28, 2023
Jkt 259001
This proposed rule does not impose
any new reporting, recordkeeping or
other compliance requirements for small
entities.
This proposed rule does not
duplicate, overlap, or conflict with any
other Federal rules.
There are no known alternatives that
would accomplish the stated objectives
of the applicable statute.
DoD invites comments from small
business concerns and other interested
parties on the expected impact of this
proposed rule on small entities.
DoD will also consider comments
from small entities concerning the
existing regulations in subparts affected
by this rule in accordance with 5 U.S.C.
610. Interested parties must submit such
comments separately and should cite 5
U.S.C. 610 (DFARS Case 2023–D009), in
correspondence.
VIII. Paperwork Reduction Act
This proposed rule does not contain
any new information collection
requirements that require the approval
of the Office of Management and Budget
under the Paperwork Reduction Act (44
U.S.C. chapter 35).
List of Subjects in 48 CFR Parts 207 and
234
Government procurement.
Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition
Regulations System.
Therefore, 48 CFR parts 207 and 234
are proposed to be amended as follows:
■ 1. The authority citation for parts 207
and 234 continues to read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR
chapter 1.
PART 207—ACQUISITION PLANNING
2. In section 207.106, revise paragraph
(S–74) to read as follows:
■
PO 00000
Frm 00002
Fmt 4701
Sfmt 9990
207.106 Additional requirements for major
systems.
*
*
*
*
*
(S–74) When selecting contract type
for a major defense acquisition program,
see 234.004.
PART 234—MAJOR SYSTEM
ACQUISITION
3. Amend section 234.004 by adding
new paragraph (2)(v) to read as follows:
■
234.004
Acquisition strategy.
*
*
*
*
*
(2) * * *
(v) In accordance with section 808 of
the National Defense Authorization Act
for Fiscal Year 2023 (Pub. L. 117–263)—
(A) The contracting officer shall not
procure more than one lot for low-rate
initial production, as defined at 10
U.S.C. 4231, associated with a major
defense acquisition program if—
(1) The milestone decision authority
authorizes the use of a fixed-price type
contract at the time of Milestone B
approval; and
(2) The scope of work of the fixedprice type contract includes both the
development and low-rate initial
production of items for such major
defense acquisition program.
(B) This limitation may be waived by
the service acquisition executive for the
department concerned, delegable to no
lower than one level above the
contracting officer, if—
(1) A written notification of the
waiver, including associated rationale,
is provided to the congressional defense
committees no later than 30 days after
issuance of the waiver in accordance
with agency procedures; and
(2) A copy of the waiver and such
congressional notification are included
in the contract file.
*
*
*
*
*
[FR Doc. 2023–20801 Filed 9–28–23; 8:45 am]
BILLING CODE 5001–06–P
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]]>Agencies
[Federal Register Volume 88, Number 188 (Friday, September 29, 2023)]
[Proposed Rules]
[Pages 67611-67612]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-20801]
Federal Register / Vol. 88, No. 188 / Friday, September 29, 2023 /
Proposed Rules
[[Page 67611]]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 207 and 234
[Docket DARS-2023-0030]
RIN 0750-AL82
Defense Federal Acquisition Regulation Supplement: Use of Fixed-
Price Contracts for Certain Major Defense Acquisition Programs (DFARS
Case 2023-D009)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: DoD is proposing to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to implement a section of the National
Defense Authorization Act for Fiscal Year 2023that limits the number of
low-rate initial production lots associated with a major defense
acquisition program under certain circumstances.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before November 28, 2023, to be
considered in the formation of a final rule.
ADDRESSES: Submit comments identified by DFARS Case 2023-D009 using any
of the following methods:
[cir] Federal eRulemaking Portal: https://www.regulations.gov.
Search for ``DFARS Case 2023-D009.'' Select ``Comment'' and follow the
instructions to submit a comment. Please include ``DFARS Case 2023-
D009'' on any attached documents.
[cir] Email: [email protected]. Include DFARS Case 2023-D009 in
the subject line of the message.
Comments received generally will be posted without change to
https://www.regulations.gov, including any personal information
provided. To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission
to verify posting.
FOR FURTHER INFORMATION CONTACT: Ms. Jeanette Snyder, 703-508-7524.
SUPPLEMENTARY INFORMATION:
I. Background
DoD is proposing to revise the DFARS to implement section 808 of
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2023
(Pub. L. 117-263). Section 808 amends section 818 of Public Law 109-364
to limit the number of low-rate initial production lots associated with
a major defense acquisition program to be procured to no more than one
when the milestone decision authority authorizes the use of a fixed-
price type contract at Milestone B and the scope of the work includes
both development and low-rate initial production. This limitation may
be waived.
II. Discussion and Analysis
This proposed rule adds new guidance to contracting officers at
DFARS 234.004, paragraph (2)(v), to specify that the contracting
officer shall not procure more than one low-rate initial production lot
associated with a major defense acquisition program if--
The milestone decision authority authorizes the use of a
fixed-price type contract at the time of Milestone B approval; and
The scope of work of the fixed-price type contract
includes both development and low-rate initial production of items for
such major defense acquisition program.
This limitation may be waived by the service acquisition executive
for the department concerned, delegable to no lower than one level
above the contracting officer, if--
A written notification of the waiver, including rationale,
is provided to the congressional defense committees no later than 30
days after issuance of the waiver; and
A copy of the waiver and such congressional notification
are included in the contract file.
This rule also proposes to modify DFARS 207.106 to reference DFARS
234.004 when selecting the contract type for a major defense
acquisition program and to remove the reference to section 811 of the
NDAA for FY 2013 (Pub. L. 112-239), since more than one NDAA applies
requirements or restrictions to contract types for procurements
associated with major defense acquisition programs.
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 create any new solicitation provisions or
contract clauses. It does not impact any existing solicitation
provisions or contract clauses or their applicability to contracts
valued at or below the simplified acquisition threshold, for commercial
products including COTS items, or for commercial services.
IV. Expected Impact of the Rule
As a result of this proposed rule, unless waived, the Government
may not procure more than one low-rate initial production lot
associated with a major defense acquisition program if, at the time of
Milestone B approval, the milestone decision authority authorizes the
use of a fixed-price type contract and the scope of work of the fixed-
price contract includes both development and low-rate initial
production of items associated with such major defense acquisition
program. This rule does not impact contractor operations; however, it
may limit contractor risk assumed under such contracts. Development and
initial production of an item likely involve the discovery and
resolution of problems that are unknown beforehand. Risk to a
contractor is higher when the contractor must propose prices for
multiple production lots of an item before the development and initial
production of that item are complete. By limiting the number of low-
rate initial production lots on a fixed-price contract that also
includes development, this risk to the contractor may be reduced.
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, as amended.
VI. Regulatory Flexibility Act
DoD does not expect this proposed rule, when finalized, to have a
significant economic impact on a substantial number of small entities
within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et
seq., because this rule only applies to certain fixed-price type
contracts for major defense acquisition programs. However, an initial
regulatory flexibility analysis has been performed and is summarized as
follows:
This proposed rule is necessary to implement section 808 of the
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2023
(Pub. L. 117-263). Section 808 modifies section 818 of
[[Page 67612]]
Public Law 109-364 to limit the number of low-rate initial production
lots associated with a major defense acquisition program to be procured
to no more than one when the milestone decision authority authorizes
the use of a fixed-price type contract at the time of Milestone B
approval and the scope of the fixed-price contract includes both
development and low-rate initial production.
The objective of this proposed rule is to limit the number of low-
rate initial production lots associated with a major defense
acquisition program to no more than one when the milestone decision
authority authorizes the use of a fixed-price type contract at the time
of Milestone B approval and the scope of the fixed-price contract
includes both development and low-rate initial production. The legal
basis for the rule is section 808 of the NDAA for FY 2023.
Data is not available on the number of fixed-price type contracts
for major defense acquisition programs that contain both development
and low-rate initial production; therefore, data was pulled on
contracts that include DFARS clause 252.234-7004, Cost and Software
Data Reporting System, or its alternate I clause. This DFARS clause is
required to be included in solicitations and contracts for major
defense acquisition programs that exceed $50 million and its alternate
I clause is required to be included in solicitations and contracts for
major defense acquisition programs that are greater than $20 million,
but less than or equal to $50 million under certain circumstances.
According to the Procurement Business Intelligence Service, DoD awarded
contracts for major defense acquisition programs to 162 unique small
entities in FY 2020, 133 in FY 2021, and 116 in FY 2022. The average
over the three-year period is 137 per fiscal year. Therefore, the
number of small entities to which this rule may apply is 137.
This proposed rule does not impose any new reporting, recordkeeping
or other compliance requirements for small entities.
This proposed rule does not duplicate, overlap, or conflict with
any other Federal rules.
There are no known alternatives that would accomplish the stated
objectives of the applicable statute.
DoD invites comments from small business concerns and other
interested parties on the expected impact of this proposed rule on
small entities.
DoD will also consider comments from small entities concerning the
existing regulations in subparts affected by this rule in accordance
with 5 U.S.C. 610. Interested parties must submit such comments
separately and should cite 5 U.S.C. 610 (DFARS Case 2023-D009), in
correspondence.
VIII. Paperwork Reduction Act
This proposed rule does not contain any new information collection
requirements that require the approval of the Office of Management and
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).
List of Subjects in 48 CFR Parts 207 and 234
Government procurement.
Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 207 and 234 are proposed to be amended as
follows:
0
1. The authority citation for parts 207 and 234 continues to read as
follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 207--ACQUISITION PLANNING
0
2. In section 207.106, revise paragraph (S-74) to read as follows:
207.106 Additional requirements for major systems.
* * * * *
(S-74) When selecting contract type for a major defense acquisition
program, see 234.004.
PART 234--MAJOR SYSTEM ACQUISITION
0
3. Amend section 234.004 by adding new paragraph (2)(v) to read as
follows:
234.004 Acquisition strategy.
* * * * *
(2) * * *
(v) In accordance with section 808 of the National Defense
Authorization Act for Fiscal Year 2023 (Pub. L. 117-263)--
(A) The contracting officer shall not procure more than one lot for
low-rate initial production, as defined at 10 U.S.C. 4231, associated
with a major defense acquisition program if--
(1) The milestone decision authority authorizes the use of a fixed-
price type contract at the time of Milestone B approval; and
(2) The scope of work of the fixed-price type contract includes
both the development and low-rate initial production of items for such
major defense acquisition program.
(B) This limitation may be waived by the service acquisition
executive for the department concerned, delegable to no lower than one
level above the contracting officer, if--
(1) A written notification of the waiver, including associated
rationale, is provided to the congressional defense committees no later
than 30 days after issuance of the waiver in accordance with agency
procedures; and
(2) A copy of the waiver and such congressional notification are
included in the contract file.
* * * * *
[FR Doc. 2023-20801 Filed 9-28-23; 8:45 am]
BILLING CODE 5001-06-P
