[Federal Register Volume 61, Number 188 (Thursday, September 26, 1996)]
[Rules and Regulations]
[Pages 50446-50458]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-24064]
[[Page 50446]]
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DEPARTMENT OF DEFENSE
48 CFR Parts 201, 202, 204, 206, 207, 209, 212, 214, 215, 219, 223,
225, 227, 228, 231, 232, 235, 239, 242, 244, 249, 250, 252, 253,
and Appendices B, C, G, and I
[Defense Acquisition Circular (DAC) 91-11]
Defense Federal Acquisition Regulation Supplement; Miscellaneous
Amendments
AGENCY: Department of Defense (DoD).
ACTION: Final rules.
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SUMMARY: Defense Acquisition Circular (DAC) 91-11 amends the Defense
Federal Acquisition Regulation Supplement (DFARS) to revise, finalize,
or add language on competition requirements, acquisition planning,
contractor qualifications, contracting by negotiation, ozone-depleting
substances, drug-free work force, foreign acquisition, bonds and
insurance, contract cost principles and procedures, contract financing,
research and development contracting, acquisition of information
resources, contract administration, and subcontracting policies and
procedures.
DATES: Effective date: September 26, 1996.
FOR FURTHER INFORMATION CONTACT:
Ms. Susan Buckmaster, PDUSD(A&T)DP(DAR),IMD 3D139, 3062 Defense
Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0131.
SUPPLEMENTARY INFORMATION:
A. Background
This Defense Acquisition Circular (DAC) 91-11 includes 30 rules and
miscellaneous editorial amendments. Ten of the rules (Items, III, VI,
VII, VIII, XI, XII, XX, XXII, XXIII, and XXVI) were published
previously in the Federal Register and thus are not included as part of
this notice of amendments to the Code of Federal Regulations. These ten
rules are being published in the DAC incorporate the previously
published amendments into the loose-leaf edition of the DFARS.
B. Regulatory Flexibility Act
DAC 91-11, Items I, II, X, XIV, XVIII, XIX, XXIV, XXV, and XXVII
These final rules do not constitute significant revisions within
the meaning of Federal Acquisition Regulation 1.501 and Public Law 98-
577, and publication of public comment is not required. However,
comments from small entities concerning the affected DFARS subparts
will be considered in accordance with Section 610 of the Regulatory
Flexibility Act (5 U.S.C. 610). Please cite the applicable DFARS case
number in correspondence.
DAC 91-11, Items V, XV, XVII, XXI, XXVIII, XXIX, and XXX
DoD certifies that these rules will not 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:
Item V, Leasing of Commercial Vehicles and Equipment--Leasing of
commercial vehicles and equipment is already permitted by the Federal
Acquisition Regulation (FAR). This rule merely amends the Defense FAR
Supplement (DFARS) to reflect DoD statutory authority and internal
Government considerations pertaining to such leasing.
Item XV, Naval Vessel Components--The foreign source restrictions
contained in this rule do not differ significantly from existing
foreign source restrictions.
Item XVII, Pricing for Sales of Defense Articles--The DFARS already
requires pricing of foreign military sales contracts using the same
general principles that are used in pricing other defense contracts.
The only significant change in this rule relates to the allowability of
independent research and development and bid and proposal costs in
accordance with the cost principle at FAR 31.205-18, under contracts
for foreign military sales wholly paid for from nonrepayable funds.
Most contracts awarded to small entities are awarded using simplified
acquisition procedures, or on a competitive fixed-price basis, and do
not require application of the FAR or DFARS cost principles.
Item XXI, Allowability of Costs--The cost principle in this rule
applies only to costs for bonuses or other payments in excess of the
normal salary paid by a contractor to an employee, when such payments
are part of restructuring costs associated with a business combination.
Most contracts awarded to small entities are awarded using simplified
acquisition procedures, or on a competitive fixed-price basis, and do
not require application of the FAR or DFARS cost principles.
Item XXVIII, Material Management and Accounting System Changes--
Material management and accounting system (MMAS) requirements only
apply to contracts exceeding the simplified acquisition threshold that
are not for the acquisition of commercial items and are not awarded
under the set-aside or Section 8(a) procedures of FAR Part 19.
Additionally, MMAS disclosure, demonstration, and maintenance
requirements only apply to large business concerns.
Item XXIX, Contractor Purchasing System Reviews--Contractor
purchasing system reviews generally are conducted only for contractors
that are expected to have annual sales to the Government exceeding $25
million.
Item XXX, Ground and Flight Risk--The amendments in this rule only
apply to contracts for aircraft development, production, modification,
maintenance, repair, or overhaul, or otherwise involving the furnishing
of aircraft to the contractor by the Government. Historically, most
contractors engaged in this type of contract have been large business
concerns.
DAC 91-11, Items IV, IX, XIII, and XVI
A final regulatory flexibility analysis has been performed for each
of these rules. A copy of the analysis is available by writing the
Defense Acquisition Regulations Council, PDUSD(A&T)DP(DAR), 3062
Defense Pentagon, Washington, DC 20301-3062. Please cite the applicable
DFARS case number in correspondence. The analyses are summarized as
follows:
Item IV, Precontractual Contract Administration (DFARS Case 95-
D015)--This final rule amends the DFARS to provide the contract
administration component access to acquisition planning information,
set forth the fact that costs or savings related to contract
administration may be considered when evaluating an offeror's past
performance, and establish as a contract administration function the
providing of support to program offices and buying activities in
precontractual efforts leading to a solicitation or award. No public
comments were received in response to the initial regulatory
flexibility analysis prepared for the proposed rule published in the
Federal Register at 60 FR 53573 on October 16, 1995. The rule applies
to all entities, large and small, that compete for DoD contracts
awarded using past performance as an evaluation factor. The rule
imposes no new reporting, recordkeeping, or other compliance
requirements. The alternative of not making the revisions to DFARS
Parts 207 and 242 was considered, since the Federal Acquisition
Regulation (FAR) already permits involvement of contract administration
components in precontractual efforts. However, it was determined that
these revisions are needed to ensure that the contract administration
component has access to early acquisition planning information and is
involved in precontractual planning in order to allow for efficient
[[Page 50447]]
and effective contract administration support throughout the
acquisition. The alternative of not making the revisions to DFARS Parts
209 and 215 was also considered, since the FAR already permits the use
of contract and audit data in evaluating performance risk or past
performance. It was determined that specifically citing costs and
savings related to contract administration and audit as a factor in
evaluating performance risk or past performance will encourage use of
this factor and will be beneficial in refining the process for
determining the best value to the Government.
Item IX, Drug Free Work Force (DFARS Case 88-083)--This rule is
necessary to implement DoD policy to ensure that its contractors
maintain programs for achieving a drug-free work force. No public
comments were received in response to the initial regulatory
flexibility analysis prepared for the interim rule published in the
Federal Register at 57 FR32736 on July 23, 1992. The rule applies to
large and small entities with DoD contracts that involve access to
classified information, or that include the prescribed clause for
reasons of national security or for the purpose of protecting the
health or safety of those using or affected by the product of, or
performance of, the contract. The rule requires that certain DoD
contractors maintain a drug-free work force program, including
recordkeeping necessary to ensure that any instances of illegal drug
use be dealt with in accordance with the contractor's program. The
recordkeeping required by DFARS clause 252.223-7004 has been approved
by the Office of Management and Budget under OMB Control Number 0704-
0336. Consideration was given to elimination of the rule in light of
Federal Acquisition Regulation (FAR) Subpart 23.5, which implements the
Drug-Free Work Force Act of 1988. However, the FAR addresses illegal
drugs only in the workplace. The DoD policy is that any drug use by a
contractor employee working in a sensitive position under a DoD
contract may adversely affect national security, health, or safety of
those using or affected by the product of, or performance of, the
contract.
Item XIII, Ball and Roller Bearings (DFARS Case 95-D308)--This
final rule implements Section 8099 of the Fiscal Year 1996 Defense
Appropriations Act (Pub. L. 104-61) and 10 U.S.C. 2534 as amended by
Sections 806(b) and (d) of the Fiscal Year 1996 Defense Authorization
Act (Pub. L. 104-106), which extend the statutory restriction on the
acquisition of nondomestic ball and roller bearings through the year
2000, but reduce the exceptions to the restriction and limit waiver
authority when Fiscal Year 1996 funds are used. There were no issues
raised by public comments in response to the initial regulatory
flexibility analysis prepared for the interim rule published in the
Federal Register at 61 FR 10899 on March 18, 1996. The final rule
incorporates the restriction on miniature and instrument ball bearings
that is presently included in DFARS Subpart 225.71, and specifically
identifies the commercial item exception to the requirements of Section
8099 of the Fiscal Year 1996 Defense Appropriations Act. The rule
applies to all small and large entities that are interested in
furnishing to the Government ball or roller bearings or items
incorporating ball or roller bearings. The rule lessens foreign
competition for domestic sources, particularly in acquisitions that do
not exceed the simplified acquisition threshold, and is expected to
have a positive impact on both small and large entities. The rule
imposes no new recordkeeping or reporting requirements. The existing
recordkeeping and reporting required by DFARS clause 252.225-7025 has
been approved by the Office of Management and Budget under OMB Control
Number 0704-0229.
Item XVI, Foreign Product Restrictions (DFARS Case 95-D033)--This
final rule eliminates all foreign product restrictions in DFARS Subpart
225.71, with the exception of ship propulsion shafts (excluding service
and landing craft shafts), periscope tubes, and ring forgings for bull
gears (greater than 120 inches in diameter). The restriction on
miniature and instrument ball bearings is being incorporated in DFARS
225.7019 with the other statutory restrictions on ball and roller
bearings, because 10 U.S.C. 2534(a)(5) provides for restrictions on
ball and roller bearings in accordance with DFARS Subpart 225.71, as in
effect on October 23, 1992. The elimination of the other restrictions
in DFARS Subpart 225.71 is based on an assessment by DoD that these
restrictions are no longer needed. The objective of this rule is to
maximize full and open competition to the extent consistent with
maintenance of a viable domestic industrial base. No comments were
received in response to the initial regulatory flexibility analysis
prepared for the proposed rule published in the Federal Register at 60
FR 67115 on December 28, 1995. However, a number of respondents
expressed concern that the rule's elimination of foreign product
restrictions would weaken the domestic forging industry and the
national security. Therefore, retention of the foreign product
restrictions on forgings was considered, but rejected for the following
reasons: The restrictions were originally imposed to preserve a
domestic mobilization base for specific classes of items, including
various ferrous forgings, needed to meet Cold War era operational
scenarios. DoD no longer has such a requirement for the classes of
forgings under consideration. Therefore, the mobilization base for
these forgings is no longer required. Additionally, both productivity
and exports have increased for the domestic forging industry.
The rule will affect the preference for domestic manufacturers of
the items no longer restricted. It is estimated that approximately 90
contractors, some of which are small businesses, supply such items to
DoD either as prime contractors or subcontractors under defense
contracts. The information collection required by DFARS clause 252.225-
7025 has been approved by the Office of Management and Budget under OMB
Control Number 0704-0229. The rule will reduce this information
collection requirement, as recordkeeping and reporting will no longer
be required for those items which are no longer restricted to domestic
sources. There are no practical alternatives which would affect the
impact on small entities and still accomplish the objectives of the
rule.
C. Paperwork Reduction Act
DAC 91-11, Items I, II, IV, V, X, XIV, XV, XVII, XVIII, XIX, XXI, XXIV,
XXV, XXVII, XXIX, and XXX
The Paperwork Reduction Act does not apply because these rules do
not contain information collection requirements which require the
approval of the Office of Management and Budget (OMB) under 44 U.S.C.
3501 et seq.
DAC 91-11, Items IX, XIII, XVI, and XXVIII
The Paperwork Reduction Act applies. OMB has approved the
information collection requirements as follows:
------------------------------------------------------------------------
OMB control
Item number
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IX......................................................... 0704-0336
XIII....................................................... 0704-0229
XVI........................................................ 0704-0229
XXVIII..................................................... 0704-0250
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[[Page 50448]]
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
Defense Acquisition Circular (DAC) 91-11 amends the Defense Federal
Acquisition Regulation Supplement (DFARS) 1991 edition. The amendments
are summarized as follows:
Item I--Revisions to FAR/DFARS (DFARS Case 96-D009)
This final rule amends DFARS 201.201-1 to specify that requests for
changes to the FAR or DFARS must identify any potential impact of the
change on automated systems (e.g., automated financial and procurement
systems).
Item II--Overseas Contracts With NATO/Allied Governments or the United
Nations (DFARS Case 96-D004)
This final rule amends DFARS 201.402 and adds a new section at
225.970 to authorize contracting officers outside the United States to
deviate from prescribed non-statutory FAR and DFARS clauses when
contracting for support services, supplies, or construction, with the
governments of North Atlantic Treaty Organization (NATO) countries or
other allies (as described in 10 U.S.C. 2341(2)), or with United
Nations or NATO organizations. This authority may be exercised only if
such governments or organizations will not agree to the standard FAR/
DFARS clauses.
Item III--Justification and Approval Thresholds (DFARS Case 96-
D307)
This final rule was issued by Departmental Letter 96-003, effective
April 12, 1996 (61 FR 10285, March 13, 1996). The rule amends DFARS
206.304 to implement Section 4102 of the Fiscal Year 1996 Defense
Authorization Act (Pub. L. 104-106). Section 4102 amends 10 U.S.C.
2304(f)(1)(B) and 41 U.S.C. 253(F)(1)(B) to increase the dollar
thresholds at which approval for use of other than full and open
competition must be obtained from the competition advocate, the head of
the procuring activity, or the senior procurement executive.
Item IV--Precontractual Contract Administration (DFARS Case 95-
D015)
This final rule amends DFARS Subparts 207.1, 209.1, 215.6, and
242.3 to (1) provide for involvement of the contract administration
office early in the acquisition process, and (2) specify that costs or
savings related to contract administration and audit may be considered
in proposal evaluation when an offeror's past performance or
performance risk is likely to result in significant costs or savings.
Item V--Leasing of Commercial Vehicles and Equipment (DFARS Case 96-
D302)
The interim rule issued by Departmental Letter 96-007, on April 18,
1996, is revised and finalized. The rule amends DFARS 207.470 to
implement Section 807 of the Fiscal Year 1996 Defense Authorization Act
(Pub. L. 104-106). Section 807 amends 10 U.S.C. 2401a to permit the use
of leasing in the acquisition of commercial vehicles and equipment. The
final rule differs from the interim rule in that it clarifies that the
requirements of 207.470(b) apply to the leasing of commercial vehicles
and the equipment that is associated with those vehicles.
Item VI--Institutions of Higher Education (DFARS Case 96-D305)
This interim rule was issued by Departmental Letter 96-012,
effective May 21, 1996 (61 FR 25408, May 21, 1996). The rule amends
DFARS 209.470 and 243.105 to implement Section 541 of the Fiscal Year
1996 Defense Authorization Act (Pub. L. 104-106). Section 541 provides
that no funds available to DoD may be provided by grant or contract to
any institution of higher education that has an anti-ROTC policy.
Item VII--Small Disadvantaged Business Concerns (DFARS Case 95-D039)
This final rule was issued by Departmental Letter 96-009, effective
April 29, 1996 (61 FR 18686, April 29, 1996). The rule amends DFARS
Parts 215, 219, 236, 242, 252, and 253 to (1) expand use of the
evaluation preference for small disadvantaged businesses (SDBs) to
include competitive awards based on other than price or price-related
factors; (2) consider small, small disadvantaged, and women-owned small
business subcontracting as a factor in the evaluation of past
performance; (3) clarify that the contracting officer will weigh
enforceable commitments to use small businesses, SDBs, women-owned
small businesses, historically black colleges and universities, and
minority institutions more heavily than non-enforceable ones, if the
commitment to use such firms is included in the solicitation as a
source selection criterion; (4) require prime contractors to notify the
contracting officer of any substitutions of firms that are not small,
small disadvantaged, or women-owned small businesses for the firms
listed in the subcontracting plan; and (5) establish a test program of
an SDB evaluation preference that would remove the bond cost
differentials between SDBs and other businesses as a factor in most
source selections for construction acquisitions.
Item VII--Test Program for Negotiation of Comprehensive Subcontracting
Plans (DFARS Case 96-D304)
This interim rule was issued by Departmental Letter 96-016,
effective July 31, 1996 (61 FR 39900, July 31, 1996). The rule amends
DFARS Subpart 219.7 and the clause at 252.219-7004 to reflect changes
to the Test Program for Negotiation of Comprehensive Small Business
Subcontracting Plans, as required by Section 811 of the Fiscal Year
1996 Defense Authorization Act (Pub. L. 104-106). The rule also makes
editorial changes to DFARS Part 219 to reflect revisions to FAR Part 19
published in Federal Acquisition Circular 90-32.
Item IX--DRUG-Free Work Force (DFARS Case 88-083)
The interim rule published as Item VII of DAC 91-3, and amended by
Item XXXV of DAC 91-9, is converted to a final rule without change. The
rule implements DoD policy regarding contractor maintenance of a drug-
free work force. The applicable DFARS guidance is at Subpart 223.5 and
252.223-7004.
Item X--Ozone-Depleting Substances (DFARS Case 95-D037)
This final rule adds DFARS Section 223.803 to provide a cross-
reference to the restrictions in DFARS 211.271 regarding award or
modification of contracts requiring the use of class I ozone-depleting
substances.
Item XI--Petroleum Products from Caribbean Basin Countries (DFARS
Case 96-D312)
This interim rule was issued by Departmental Letter 96-015,
effective July 22, 1996 (61 FR 37841, July 22, 1996). The rule amends
DFARS 225.403 to fully implement Section 8094 of the Fiscal Year 1994
Defense Appropriations Act (Pub. L. 103-139). Section 8094 requires DoD
to consider all qualified bids from eligible countries under the
Caribbean Basin Economic Recovery Act as if they were offers from
designated countries under the Trade Agreements Act. The rule also
amends DFARS 225.403-70 and 252.225-7007 to clarify that the definition
of Caribbean Basin country end products includes petroleum and any end
product derived from petroleum.
[[Page 50449]]
Item XII--Designation of Singapore (DFARS Case 96-D308)
This final rule was issued by Departmental Letter 96-008, effective
April 18, 1996 (61 FR 16880, April 18, 1996). The rule amends DFARS
225.408 and 252.225-7007 to add Singapore as a designated country under
the Trade Agreements Act of 1979, as directed by the United States
Trade Representative on March 19, 1996.
Item XIII--Ball and Roller Bearings (DFARS Case 95-D308)
The interim rule issued by Departmental Letter 96-004 on March 18,
1996, is revised and finalized. The rule implements Section 8099 of the
Fiscal Year 1996 Defense Appropriations Act (Pub. L. 104-61) and
Sections 806(b) and (d) of the Fiscal Year 1996 Defense Authorization
Act (Pub. L. 104-106), which extend the statutory restrictions on the
acquisition of nondomestic ball and roller bearings through the year
2000, but reduce the exceptions to the restrictions and limit waiver
authority when fiscal year 1996 funds are used to acquire other than
commercial items. The final rule differs from the interim rule in that
it amends DFARS 225.7001, 225.7019, and 252.225-7016 to include
restrictions pertaining to the acquisition of miniature and instrument
ball bearings which previously were included in Subpart 225.71 and
252.225-7025.
Item XIV--Domestic Wool Preference (DFARS Case 96-D311)
This final rule amends DFARS 225.7002 and deletes the provision at
252.225-7013 to eliminate special procedures for evaluation of offers
for wool. In December 1995, the U.S. Department of Agriculture
discontinued the practice of establishing incentive prices for domestic
wool, which was the practice upon which the special evaluation
procedures were based. Corresponding amendments are made at 212.301.
Item XV--Naval Vessel Components (DFARS Case 96-D300)
The interim rule issued by Departmental Letter 96-005, on March 26,
1996, is converted to a final rule without change. The rule amends
DFARS 225.7012 and 225.7022 to implement Section 806(a) of the Fiscal
Year 1996 Defense Authorization Act (Pub. L. 104-106). Section 806(a)
imposes additional statutory restrictions on the acquisition of anchor
and mooring chain and totally enclosed lifeboats, when used as
components of naval vessels. The rule further amends 225.7012, and
deletes the clauses at 252.225-7020 and 252.225-7021, to remove
obsolete language pertaining to fiscal year 1988-90 restrictions on the
acquisition of anchor and mooring chain.
Item XVI--Foreign Product Restrictions (DFARS Case 95-D033)
This final rule amends DFARS Subpart 225.71 and the clause at
252.225-7025 to eliminate non-statutory foreign product restrictions
except those for certain forging items (ship propulsion shafts,
periscope tubes, and ring forgings for bull gears). Restrictions
pertaining to miniature and instrument ball bearings have been moved to
Subpart 225.70 and 252.225-7016.
Item XVII--Pricing for Sales of Defense Articles (DFARS Case 96-
D309)
The interim rule issued by Departmental Letter 96-010, on April 30,
1996, is converted to a final rule without change. The rule amends
DFARS 225.7303 to implement Section 531A of the Fiscal Year 1996
Foreign Operations, Export Financing, and Related Programs
Appropriations Act (Pub. L. 104-107). Section 531A provides that
foreign military sales of defense articles and services wholly paid for
from funds made available on a nonrepayable basis shall be priced on
the same costing basis as is applicable to like items purchased by DoD
for its own use.
Item XVIII--Alternatives to Miller Act Bonds (DFARS Case 95-D305)
This final rule removes DFARS 228.171 and 252.228-7007. These
sections were published as Item XXIII of DAC 91-9, and amended by Item
X of DAC 91-10, to provide alternative payment protections for
construction contracts between $25,000 and $100,000, pending
implementation of Section 4104(b)(2) of the Federal Acquisition
Streamlining Act of 1994 (Pub. L. 103-355) in the FAR. The implementing
FAR guidance was published as Item XVII of FAC 90-39; therefore, the
DFARS guidance is removed.
Item XIX--Insurance--Liability to Third Parties (DFARS Case 92-
D015)
This final rule amends DFARS 228.311 to remove guidance pertaining
to use of the clause at FAR 52.228-6, Insurance--Immunity from Tort
Liability, as this clause was removed from the FAR by item XII of FAC
90-37.
Item XX--Individual Compensation (DFARS Case 96-D314)
This interim rule was issued by Departmental Letter 96-014,
effective July 10, 1996 (61 FR 36305, July 10, 1996). The rule amends
DFARS Part 231 to implement Section 8086 of the Fiscal Year 1996
Defense Appropriations Act (Pub. L. 104-61). Section 8086 limits
allowable costs for individual compensation to $200,000 per year. This
limitation applies to payments using funds appropriated in fiscal year
1996 under contracts awarded after July 1, 1996.
Item XXI--Allowability of Costs (DFARS Case 95-D309)
The interim rule published as Item XVII of DAC 91-10 is converted
to a final rule with minor clarifying revisions at DFARS 231.205-6. The
rule implements Section 8122 of the Fiscal Year 1996 Defense
Appropriations Act (Pub. L. 104-61). Section 8122 prohibits DoD from
using fiscal year 1996 funds to reimburse a contractor for costs paid
to an employee for a bonus or other payment in excess of the normal
salary paid to the employee, when such payment is part of restructuring
costs associated with a business combination.
Item XXII--Restructuring Costs Under Defense Contracts (DFARS Case
94-D316)
This final rule was issued by Departmental Letter 96-006, effective
April 18, 1996 (61 FR 16881, April 18, 1996). The rule amends DFARS
231.205-70 and 242.1204 to finalize the interim rule which was
published as Item XXIII of DAC 91-7 and which implements Section 818 of
the Fiscal Year 1995 Defense Authorization Act (Pub. L. 103-337).
Section 818 restricts DoD from reimbursing external restructuring costs
associated with a business combination undertaken by a defense
contractor unless certain conditions are met.
Item XXIII--Cost Reimbursement Rules for Indirect Costs (DFARS Case
96-D303)
This interim rule was issued by Departmental Letter 96-011,
effective May 13, 1996 (61 FR 21973, May 13, 1996). The rule adds a new
section at DFARS 231.205-71 to implement Section 808 of the Fiscal Year
1996 Defense Authorization Act (Pub. L. 104-106). Section 808 permits
DoD to enter into a defense capability preservation agreement with a
defense contractor where it would facilitate the achievement of the
policy objectives relating to defense reinvestment, diversification,
and conversion set forth
[[Page 50450]]
in 10 U.S.C. 2501(b), Such an agreement would permit the contractor to
claim certain indirect costs, attributable to its private sector work,
on its defense contracts.
Item XXIV--Determination of Need (DFARS Case 96-D012)
This final rule revises DFARS 232.803(d) to reflect (1) the
amendments made to FAR Subpart 32.8 in Item III of FAC 90-38; and (2)
the May 10, 1996, determination by the Director of Defense Procurement
that a need exists for DoD to agree not to reduce or set off any money
due or to become due under a contract when the proceeds under the
contract have been assigned in accordance with the Assignment of Claims
provision of the contract.
Item XXV--Manufacturing Technology Program (DFARS Case 96-D313)
This final rule amends DFARS 235.006 to implement a portion of
Section 276 of the Fiscal Year 1996 Defense Authorization Act (Pub. L.
104-106). Section 276 changes the name of the Manufacturing Science and
Technology Program to the ``Manufacturing Technology Program,'' and
permits contracts under the program to be on other than a cost-sharing
basis if the contract is for a program to be carried out by an
institution of higher education.
Item XXVI--Direct Submission of Vouchers to Disbursing Office (DFARS
Case 96-D007)
This final rule was issued by Departmental Letter 96-013, effective
May 21, 1996 (61 FR 25409, May 21, 1996). The rule amends DFARS 242.803
to permit contract auditors to authorize direct submission of interim
vouchers for provisional payment to the disbursing office, for
contractors with approved billing systems.
Item XXVII--Requirements for Cost/Schedule Status Report (DFARS Case
95-D042)
This final rule amends DFARS Subpart 242.11 to update references
and guidance pertaining to contractor reporting requirements. DoDI
7000.10, Contract Cost Performance, Funds Status and Cost/Schedule
Status Reports, has been canceled and replaced by DoD 5000.2-R,
Mandatory Procedures for Major Defense Acquisition Programs (MDAPs) and
Major Automated Information System (MAIS) Acquisition Programs, dated
March 15, 1996.
Item XXVIII--Material Management and Accounting System Changes (DFARS
Case 95-D029)
This final rule amends DFARS Subpart 242.72 and 252.242-7004 to (1)
increase the dollar thresholds at which large business contractors are
subject to material management and accounting system (MMAS) disclosure,
demonstration, and maintenance requirements; (2) clarify the
circumstances under which MMAS disclosure and demonstration are
required; and (3) clarify requirements for contractor use of a ``loan/
pay-back'' technique for accomplishing material transactions.
Item XXIX--Contractor Purchasing System Reviews (DFARS Case 95-
D026)
This final rule removes the procedures for contractor purchasing
system reviews at DFARS 244.303 and Appendix C, to provide agencies
maximum flexibility in conducting such reviews.
Item XXX--Ground and Flight Risk (DFARS Case 95-D028)
This final rule amends DFARS 252.228-7001 and 252.228-7002 to (1)
specify that the Government's assumption of risk of aircraft does not
extend to damage, loss, or destruction sustained during flight, if the
flight crew members have not been approved by an authorized Government
flight representative; (2) increase; from $1,000 to $25,000, the
contractor's liability for aircraft loss or damage not sustained during
flight; and (3) clarify language pertaining to aircraft which is
damaged, lost, or destroy prior to delivery and acceptance by the
Government.
Editorial Revisions
(1) DFARS 201.201-1(d)(i) is amended to update the DAR Council
datafax number.
(2) DFARS 202.101 is amended under the heading ``Army'' to revise
the name ``Strategic Defense Command'' to read ``Space and Strategic
Defense Command.''
(3) DFARS 202.101 is amended under the heading ``Navy'' to revise
the title ``Deputy, Acquisition Policy, Integrity and Accountability''
to read ``Deputy, Acquisition and Business Management.''
(4) DFARS is amended to reflect the change in name of the
``Advanced Research Projects Agency'' to the ``Defense Advanced
Research Projects Agency'' and the change in name of the ``Defense
Nuclear Agency'' to the ``Defense Special Weapons Agency.''
(5) DFARS 207.105 is amended to update references and to conform to
the current numbering of FAR 7.105.
(6) DFARS 215.605 is amended to conform to the current numbering of
FAR 15.605.
(7) DFARS 227.7009-1 is amended to update FAR references.
(8) DFARS 231.205-71 is amended to remove the title ``Assistant
Secretary of Defense for Economic Security'' and insert in its place
the title ``Deputy Under Secretary of Defense for Industrial Affairs
and Installations.''
(9) DFARS 239.7501-2 is amended to update statutory references.
(10) DFARS 253.204-70(c)(4)(ix)(B)(9) is amended to revise the FAR
reference.
(11) DFARS Part 253 is amended to update DD Forms 882 and 2139.
(This amendment is being made only in the loose-leaf edition of the
DFARS.)
(12) DFARS Appendix G is amended to update activity names and
addresses.
(13) DFARS Appendix I is amended in I-102(a) and (b) and I-103(a)
by revising the date ``September 30, 1995'' to read ``September 30,
1996.''
Interim Rules Adopted as Final Without Change
PARTS 223 AND 252--[AMENDED]
The interim rule that was published at 57 FR 32736 on July 23,
1992, and amended at 60 FR 61597 on November 30, 1995, is adopted as
final without change.
PART 225--[AMENDED]
The interim rule that was published at 61 FR 18987 on April 30,
1996, is adopted as final without change.
PARTS 225 AND 252--[AMENDED]
The interim rule that was published at 61 FR 13106 on March 26,
1996, is adopted as final without change.
Interim Rules Adopted as Final With Changes
PART 207--[AMENDED]
The interim rule that was published at 61 FR 16879 on April 18,
1996, is adopted as final with an amendment at section 207.470.
PARTS 225 AND 252--[AMENDED]
The interim rule that was published at 61 FR 10899 on March 18,
1996, is adopted as final with revisions at sections 225.7001,
225.7019-2, 225.7019-3, and 252.225-7016.
PART 231--[AMENDED]
The interim rule that was published at 61 FR 7077 on February 26,
1996, is
[[Page 50451]]
adopted as final with amendments at section 231.205-6.
List of Subjects in 48 CFR Parts 201, 202, 204, 206, 207, 209, 212,
214, 215, 219, 223, 225, 227, 228, 231, 232, 235, 239, 242, 244, 249,
250, 252, 253
Government procurement.
Amendments to 48 CFR Chapter 2 (Defense Federal Acquisition Regulation
Supplement)
48 CFR Chapter 2 (the Defense Federal Acquisition Regulation
Supplement) is amended as set forth below.
1. The authority citation for 48 CFR Parts 201, 202, 204, 206, 207,
209, 212, 214, 215, 219, 223, 225, 227, 228, 231, 232, 235, 239, 242,
244, 249, 250, 252, 253, and Appendices B, C, B, and I to subchapter I
continues to read as follows:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
PART 201--FEDERAL ACQUISITION REGULATIONS SYSTEM
2. Section 201.201-1 is amended by revising the introductory text
of paragraph (d)(i), and paragraph (d)(i)(III) to read as follows:
201.201-1 The two councils.
* * * * *
(d)(i) Departments and agencies process proposed revisions of FAR
or DFARS through channels to the Director of the DAR Council. Process
the proposed revision as a memorandum in the following format,
addressed to the Director, DAR Council, OUSD(A&T), 3062 Defense
Pentagon, Washington, DC 20301-3062; datafax (703) 602-0350:
* * * * *
III. Discussion: Include a complete, convincing explanation of
why the change is necessary and how the recommended revision will
solve the problem. Address advantages and disadvantages of the
proposed revision, as well as any cost or administrative impact on
Government activities and contractors. Identify any potential impact
of the change on automated systems, e.g., automated financial and
procurement systems. Provide any other background information that
would be helpful in explaining the issue.
* * * * *
3. Section 201.402 is amended by revising paragraph (2) to read as
follows:
201.402 Policy.
* * * * *
(2) Individual deviations.
(i) Except as provided in paragraph (2)(ii) of this section,
individual deviations, other than those in paragraph (1)(i) of this
section, must be approved in accordance with the department/agency plan
prescribed by 201.304(4).
(ii) Contracting officers outside the United States are authorized
to deviate from prescribed non-statutory FAR and DFARS clauses when
contracting for support services, supplies, or construction, with the
governments of North Atlantic Treaty Organization (NATO) countries or
other allies (as described in 10 U.S.C. 2341(2)), or with United
Nations or NATO organizations. This authority shall be exercised only
if such governments or organizations will not agree to the standard
clauses.
* * * * *
PART 202--DEFINITIONS OF WORDS AND TERMS
202.101 [Amended]
4. Section 202.101 is amended by revising under the heading
``ARMY'' the phrase ``Strategic Defense Command'' to read ``Space and
Strategic Defense Command''; by revising under the heading ``NAVY'' the
phrase ``Deputy, Acquisition Policy, Integrity and Accountability,'' to
read ``Deputy, Acquisition and Business Management,''; by revising the
heading ``ADVANCED RESEARCH PROJECTS AGENCY'' to read ``DEFENSE
ADVANCED RESEARCH PROJECTS AGENCY''; by revising the heading ``DEFENSE
NUCLEAR AGENCY'' to read ``DEFENSE SPECIAL WEAPONS AGENCY''; by
revising under the newly revised heading ``DEFENSE SPECIAL WEAPONS
AGENCY'' the phrase ``Headquarters, Defense Nuclear Agency'' to read
``Headquarters, Defense Special Weapons Agency''; and by revising in
the definition of Departments and agencies the phrases ``Advanced
Research Projects Agency'' and ``Defense Nuclear Agency'' to read
``Defense Advanced Research Projects Agency'' and ``Defense Special
Weapons Agency'', respectively.
PART 204--ADMINISTRATIVE MATTERS
204.7003 [Amended]
5. Section 204.7003 is amended in paragraph (a)(1)(i)(F) by
revising the phrase ``Defense Nuclear Agency--DNA'' to read ``Defense
Special Weapons Agency--DSWA''.
PART 206--COMPETITION REQUIREMENTS
6. Section 206.304 is amended by revising paragraph (a)(4)(B)(2) to
read as follows:
206.304 Approval of the justification.
(a)(4) * * *
(B) * * *
(2) If a civilian, is serving in a position with a grade under the
General Schedule (or any other schedule for civilian officers or
employees) that is comparable to or higher than the grade of major
general or rear admiral.
PART 207--ACQUISITION PLANNING
207.103 [Amended]
7. Section 207.103 is amended in paragraph (h)(i)(B) by revising
the phrase ``to the extent prescribed DoDD 5000.1'' to read ``to the
extent prescribed by DoDD 5000.1''.
8. Section 207.104 is added to read as follows:
207.104 General procedures.
(b) The planner should forward the requirements information to the
contract administration organization when assistance in identification
of potential sources of supply is necessary, when an existing contract
is being modified or resolicited, or when contract administration
resource requirements will be affected.
9. Section 207.105 is amended by revising the introductory text; in
paragraph (a)(8) by removing the reference ``DoDI 5000.2, Defense
Acquisition Management Policies and Procedures'' and inserting in its
place ``DoD 5000.2-R, Mandatory Procedures for Major Defense
Acquisition Programs (MDAPs) and Major Automated Information System
(MAIS) Acquisition Programs''; by redesignating paragraphs (b) (12),
(15), and (17) as paragraphs (b) (13), (16), and (18), respectively; in
newly designated paragraph (b)(13)(iv) by removing the reference ``DoDI
5000.2, Defense Acquisition Management Policies and Procedures'' and
inserting in its place ``DoD 5000.2-R, Mandatory Procedures for Major
Defense Acquisition Programs (MDAPs) and Major Automated Information
System (MAIS) Acquisition Programs''; in newly designated paragraph
(b)(16) by revising the title to read ``Environmental and energy
conservation objectives.''; in newly designated paragraph
(b)(18)(A)(1)(ii) by removing the reference ``(b)(17)(A)(1)(i)'' and
inserting ``(b)(18)(A)(1)(i)'' in its place; and by adding paragraph
(b)(18)(D). The revised and added text reads as follows:
207.105 Contents of written acquisition plans.
For acquisitions covered by 207.103(c)(i) (A) and (B), correlate
the plan to the DoD Future Years Defense Program, applicable budget
submissions, and the decision coordinating paper/program
[[Page 50452]]
memorandum, as appropriate. It is incumbent upon the planner to
coordinate the plan with all those who have a responsibility for the
development, management, or administration of the acquisition. The
acquisition plan should be provided to the contract administration
organization to facilitate resource allocation and planning for the
evaluation, identification, and management of contractor performance
risk.
* * * * *
(b) * * *
(18) * * *
(D) Contract administration. Discuss the level of Government
administration anticipated or currently performed and any change
proposed by the contract administration office.
10. Section 207.470 is amended by revising paragraph (b) to read as
follows:
207.470 Statutory requirements.
* * * * *
(b) Leasing of commercial vehicles and associated equipment. Except
as provided in paragraph (a) of this section, the contracting officer
may use leasing in the acquisition of commercial vehicles and
associated equipment whenever the contracting officer determines that
leasing of such vehicles is practicable and efficient (10 US.C. 2401a).
PART 209--CONTRACTOR QUALIFICATIONS
11. Section 209.103 is amended by adding paragraph (c) to read as
follows:
209.103 Policy.
* * * * *
(c) The additional cost of contract administration and audit due to
a contractor's performance risk may be considered in evaluating the
contractor's price.
209.103-70 [Amended]
11a. Section 209.103-70 is amended by removing the phrase ``in FAR
part 13''.
209.403 [Amended]
12. Section 209.403 is amended in paragraph (1) by revising the
phrase ``Advanced Research Projects Agency--The Director'' to read
``Defense Advanced Research Projects Agency--The Director''; and by
revising the phrase ``Defense Nuclear Agency--The Director'' to read
``Defense Special Weapons Agency--The Director''.
PART 212--ACQUISITION OF COMMERCIAL ITEMS
212.301 [Amended]
13. Section 212.301 amended by removing paragraph (f)(i) and
redesignating paragraphs (f)(ii) through (f)(iv) as paragraphs (f)(i)
through (f)(iii), respectively. Newly designated paragraph (f)(ii) is
amended in the first sentence by removing the phrase ``in FAR part
13''.
PART 214--SEALED BIDDING
214.406-3 [Amended]
14. Section 214.406-3 is amended in paragraph (e)(i) by revising
the phrase ``Advanced Research Projects Agency:'' to read ``Defense
Advanced Research Projects Agency:'', and by revising the abbreviation
``ARPA'' to read ``DARPA''; and in paragraph (e)(vi) by revising the
phrase ``Defense Nuclear Agency:'' to read ``Defense Special Weapons
Agency:'' and by revising the abbreviation ``DNA'' to read ``DSWA''.
PART 215--CONTRACTING BY NEGOTIATION
15. Section 215.605 is amended by revising paragraph (b) to read as
follows:
215.605 Evaluation factors and subfactors.
(b)(2)(A) In acquisitions which require use of the clause at FAR
52.219-9, Small, Small Disadvantaged and Women-Owned Small Business
Subcontracting Plan, the extent of participation of small and small
disadvantaged business in performance of the contact shall be addressed
in source selection.
(1) For acquisitions other than those based only on cost or price
competition, the contracting officer shall evaluate the extent to which
offerors identify and commit to small business and to small
disadvantaged business, historically black college and university, or
minority institution performance of the contract, whether as a joint
venture, teaming arrangement, or subcontractor.
(2) Criteria for evaluation may include--
(i) The extent which such firms are specifically identified in
proposals;
(ii) The extent of commitment to use such firms (for example,
enforceable commitments are to be weighted more heavily than non-
enforceable ones);
(iii) The complexity and variety of the work small firms are to
perform;
(iv) The realism of the proposal;
(v) When not otherwise required by 215.608(a)(2), past performance
of the offerors in complying with requirements of the clauses at FAR
52.219-8, Utilization of Small, Small Disadvantaged and Women-Owned
Small Business Concerns, and 52.219-9, Small, Small Disadvantaged and
Women-Owned Small Business Subcontracting Plan; and
(vi) The extent of participation of such firms in terms of the
value of the total acquisition.
(3) Proposals addressing the extent of small and small
disadvantaged business performance may be separate from subcontracting
plans submitted pursuant to the clause at FAR 52.219-9 and should be
structured to allow for consideration of offers from small businesses.
(4) When an evaluation includes the criterion in paragraph
(b)(2)(A)(2)(i) of this section, the small, small disadvantaged, or
women-owned small businesses considered in the evaluation shall be
listed in any subcontracting plan submitted pursuant to FAR 52.219-9 to
facilitate compliance with 252.219-7003(g).
(B) The costs or savings related to contract administration and
audit may be considered when the offeror's past performance or
performance risk is likely to result in significant costs or savings.
* * * * *
PART 219--SMALL BUSINESS PROGRAMS
16. Subpart 219.7 is amended by revising the title to read as
follows:
Subpart 219.7--Subcontracting with Small Business, Small
Disadvantaged Business and Women-Owned Small Business Concerns
17. Section 219.7201 is amended by revising the second sentence to
read as follows:
219.7201 Administration of the test program.
* * * The focal point for the test program is the Director, Small
and Disadvantaged Business Utilization (SADBU), Office of the Deputy
Under Secretary of Defense (International and Commercial Programs). * *
*
PART 223--ENVIRONMENT, CONSERVATION, OCCUPATIONAL SAFETY, AND DRUG-
FREE WORKPLACE
18. Subpart 223.8 is added to read as follows:
Subpart 223.8--Ozone-Depleting Substances
223.803 Policy.
Section 211.271, Elimination of use of class I ozone-depleting
substances,
[[Page 50453]]
places restrictions on award or modification of DoD contracts requiring
the use of class I ozone-depleting substances. These restrictions are
in addition to any imposed by the Clean Air Act and apply after June 1,
1993, to all DoD contracts, regardless of place of performance.
PART 225--FOREIGN ACQUISITION
225.403 [Amended]
19. Section 225.403 is amended in paragraph (d)(1)(B) (3) by
inserting the work ``Subpart'' immediately before the reference
``225.71''.
20. Subpart 225.9 is added to read as follows:
Subpart 225.9--Additional Foreign Acquisition Clauses
225.970 Clause deviations in overseas contracts.
See 201.402(2) for approval authority for clause deviations in
overseas contracts with governments of North Atlantic Treaty
Organization (NATO) countries or other allies or with United Nations or
NATO organizations.
21. Section 225.7001 is amended by revising paragraph (a) to read
as follows:
225.7001 Definitions.
* * * * *
(a) Bearing components and miniature and instrument ball bearings
are defined in the clause at 252.225-7016, Restriction on Acquisition
of Ball and Roller Bearings.
* * * * *
22. Section 225.7002-2 is amended by revising paragraphs (e) and
(f) to read as follows:
225.7002-2 Exceptions.
* * * * *
(e) Acquisitions using simplified acquisition procedures.
(f) Acquisitions of end items incidentally incorporating cotton or
wool, for which the estimated value of the cotton or wool is not more
than 10 percent of the total price of the end item; provided the
estimated value of the cotton or wool does not exceed the simplified
acquisition threshold.
* * * * *
23. Section 225.7002-3 is revised to read as follows:
225.7002-3 Contract clauses.
Unless an exception is known to apply--
(a) Use the clause at 252.225-7012, Preference for Certain Domestic
Commodities, in all solicitations and contracts which meet or exceed
the simplified acquisition threshold.
(b) Use the clause at 252.225-7014, Preference for Domestic
Specialty Metals, in all solicitations and contracts over the
simplified acquisition threshold that require delivery of an article
containing specialty metals. Use the clause with its Alternate I in all
solicitations and contracts over the simplified acquisition threshold
requiring delivery, for one of the following major programs, of an
article containing specialty metals--
(1) Aircraft;
(2) Missile and space systems;
(3) Ships;
(4) Tank-automotive;
(5) Weapons; or
(6) Ammunition.
(c) Use the clause at 252.225-7015, Preference for Domestic Hand or
Measuring Tools, in all solicitations and contracts over the simplified
acquisition threshold calling for delivery of hand or measuring tools.
225.7002-4 [Removed]
24. Section 225.7002-4 is removed.
225.7011-4 [Amended]
25. Section 225.7011-4 is amended in the introductory text of
paragraph (b) by removing the phrase ``The Pentagon'' and inserting in
its place the phrase ``7100 Defense Pentagon''
225.7012-3 [Amended]
26. Section 225.7012-3 is amended by revising the section title to
read ``Contract clause.'' and by redesignating paragraphs (1) and (2)
as paragraphs (a) and (b), respectively.
27. Section 225.7019-2 is revised to read as follows:
225.7019-2 Exceptions.
(a) The restriction in 225.7019-1(a) does not apply to--
(1) Acquisitions using simplified acquisition procedures, unless
ball or roller bearings or bearing components are the end items being
purchased;
(2) Purchases of commercial items incorporating ball or roller
bearings;
(3) Miniature and instrument ball bearings when necessary to meet
urgent military requirements;
(4) Items acquired overseas for use overseas; or
(5) Ball and roller bearings or bearing components or items
containing bearings for use in a cooperative or co-production project
under an international agreement. This exception does not apply to
miniature and instrument ball bearings.
(b) The restriction in 225.7019-1(b) does not apply to contracts
for acquisition of commercial items or subcontracts for acquisition of
commercial items or subcontracts for acquisition of commercial items or
commercial components (see 212.503(a)(xi) and 212.504(a)(xxxvi)).
28. Section 225.7019-3 is amended by revising the introductory text
of paragraph (a)(2) and adding paragraph (a)(3) to read as follows:
225.7019-3 Waiver.
(a) * * *
(2) For multiyear contracts or contracts exceeding 12 months,
except those for miniature and instrument ball bearings, only if--
* * * * *
(3) For miniature and instrument ball bearings, only if the
contractor agrees to acquire a like quantity and type of domestic
manufacture for nongovernmental use.
* * * * *
29. Sections 225.7102, 225.7103, and 225.7104 are revised to read
as follows:
225.7102 Policy.
DoD requirements for the following forging items, whether as end
items or components, shall be acquired from domestic sources (as
described in the clause at 252.225-7025) to the maximum extent
practicable--
------------------------------------------------------------------------
Items Categories
------------------------------------------------------------------------
Ship propulsion shafts.................... Excludes service and landing
craft shafts.
Periscope tubes........................... All.
Ring forgings for bull gears.............. All greater than 120 inches
in diameter.
------------------------------------------------------------------------
225.7103 Exceptions.
The policy in 225.7102 does not apply to acquisitions--
(a) Using simplified acquisition procedures, unless the restricted
item is the end item being purchased;
(b) Overseas for overseas use; or
(c) When the quantity acquired exceeds the amount needed to
maintain the U.S. defense mobilization base (provided such quantity is
an economical purchase quantity). The restriction to domestic sources
does not apply to the quantity above that required to maintain the
base, in which case, qualifying country sources may compete.
225.7104 Waiver.
Upon request from a prime contractor, the contracting officer may
waive the requirement for domestic manufacture of the items covered by
the policy in 225.7102.
225.7303 [Amended]
30. Section 225.7303 is amended in the title by removing the
abbreviation
[[Page 50454]]
``(FMS)''; in the first sentence by revising the phrase ``foreign
military sale'' to read ``FMS''; and in the second sentence by revising
the phrase ``a foreign military sale'' to read ``an FMS''.
PART 227--PANTENTS, DATA, AND COPYRIGHTS
227.7004 [Amended]
31. Section 227.7004 is amended in paragraph (c)(6) by revising the
phrase ``Defense Nuclear Agency'' to read ``Defense Special Weapons
Agency''.
227.7009-1 [Amended]
32. Section 227.7009-1 is amended by removing paragraph (a); by
redesignating paragraphs (b) through (f) as paragraphs (a) through (e),
respectively; and in newly designated paragraph (d) by revising the
reference ``FAR 33.014'' to read ``FAR subpart 33.2''.
PART 228--BONDS AND INSURANCE
228.171, 228.171-1, 228.171-2, and 228.171-3 [Removed]
33. Sections 228.171, 228.171-1, 228.171-2, and 228.171-3 are
removed.
228.311-1 [Removed]
34. Section 228.311-1 is removed.
228.311-2 [Redesignated]
35. Section 228.311-2 is redesignated as 228.311-1.
36. Section 228.370 is amended by revising the title to read as
follows:
228.370 Additional clauses.
PART 231--CONTRACT COST PRINCIPLES AND PROCEDURES
37. Section 231.205-6 is amended in paragraph (a)(2) by revising
the parenthetical phrase to read ``(Section 8117 of Pub. L. 103-335)''
and in paragraph (f)(1) by revising the first sentence to read as
follows:
231.205-6 Compensation for personal services.
* * * * *
(f)(1) Costs for bonuses or other payments in excess of the normal
salary paid by the contractor to an employee, that are part of
restructuring costs associated with a business combination, are
unallowable under DoD contracts funded by fiscal year 1996
appropriations (Section 8122 of Pub. L. 104-61). * * *
231.205-70 [Amended]
38. Section 231.205-70 is amended in paragraph (d)(2) by removing
the phrase ``paragraph (c)(1)(iv) of this subsection'' and inserting
``231.205-70(c)(1)(iv)'' in its place.
231.205-71 [Amended]
39. Section 231.205-71 is amended in paragraph (b) by removing the
phrase ``Assistant Secretary of Defense for Economic Security'' and
inserting in its place the phrase ``Deputy Under Secretary of Defense
for Industrial Affairs and Installations''.
PART 232--CONTRACT FINANCING
40. Section 232.803 is amended by revising paragraph (d) to read as
follows:
232.803 Policies.
* * * * *
(d) Pursuant to Section 3737(e) of the Revised Statutes (41 U.S.C.
15), and in accordance with Presidential delegation dated October 3,
1995, Secretary of Defense delegation dated February 5, 1996, and Under
Secretary of Defense for Acquisition and Technology delegation dated
February 23, 1996, the Director of Defense Procurement determined on
May 10, 1996, that a need exists for DoD to agree not to reduce or set
off any money due or to become due under the contract when the proceeds
under the contract have been assigned in accordance with the Assignment
of Claims provision of the contract. This determination was published
in the Federal Register on June 11, 1996, as required by law.
Nevertheless, if departments/agencies decide it is in the Government's
interests, or if the contracting officer makes a determination in
accordance with FAR 32.803(d) concerning a significantly indebted
offeror, they may exclude the no-setoff commitment.
PART 235--RESEARCH AND DEVELOPMENT CONTRACTING
41. Section 235.006 is amended by revising paragraphs (a) and
(b)(iv) to read as follows:
235.006 Contracting methods and contract type.
(a) All contracts under the Manufacturing Technology Program (see
DoDI 4200.15, Manufacturing Technology Program) shall be awarded using
competitive procedures (10 U.S.C. 2525).
(b) * * *
(iv) A cost-sharing arrangement (see FAR 16.303) must be used for
contracts awarded in support of the Manufacturing Technology Program,
unless an alternative is approved by the Secretary of Defense (10
U.S.C. 2525). Approval by the Secretary of Defense to use other than a
cost-sharing arrangement for the Manufacturing Technology Program must
be based on a determination that the contract is for a program that--
(A) Is not likely to have any immediate and direct commercial
application;
(B) Is of sufficiently high risk to discourage cost sharing by non-
Federal Government sources; or
(C) Will be carried out by an institution of higher education.
235.7002 [Amended]
42. Section 235.7002 is amended in paragraph (a)(4) by revising the
phrase ``Defense Nuclear Agency'' to read ``Defense Special Weapons
Agency''.
235.7003 [Amended]
43. Section 235.7003 is amended in paragraph (b)(4)(ii) by revising
the phrase ``Defense Nuclear Agency:'' to read ``Defense Special
Weapons Agency:''; and by revising the phrase ``Acquisition Management
Office'' to read `'Acquisition Management Directorate''.
PART 239--ACQUISITION OF INFORMATION RESOURCES
44. Section 239.7501-2 is revised to read as follows:
239.7501-2 Restriction.
Section 8028 of the FY 1992 Defense Appropriations Act (Pub. L.
102-172) and similar sections of the FY 1993, FY 1994, and FY 1995
Defense appropriations acts prohibit use of DoD appropriations for
acquisition of major automated information systems, unless the systems
have successfully completed oversight reviews required by DoD
regulations.
PART 242--CONTRACT ADMINISTRATION
45. Section 242.302 is amended in paragraph (a)(19) by revising the
reference `'252.225-7008'' to read ``252.225-7009'' and by adding
paragraph (a)(67) to read as follows:
242.302 Contract administration functions.
(a) * * *
(67) Also support program offices and buying activities in
precontractual efforts leading to a solicitation or award.
* * * * *
242.803 [Amended]
46. Section 242.803 is amended at the end of paragraph (b)(i)(C) by
changing the period to a semicolon.
47. Section 242.1106 is amended by revising paragraph (a)(i) to
read as follows:
242.1106 Reporting requirements.
(a) * * *
[[Page 50455]]
(i) DoD 5000.2-R, Mandatory Procedures for Major Defense
Acquisition Programs (MDAPs) and Major Automated Information System
(MAIS) Acquisition Programs; and
* * * * *
48. Section 242.1107-70 is revised to read as follows:
242.1107-70 Additional clauses.
When cost/schedule status reporting (C/SSR) is required on
acquisitions for other than major systems (i.e., the Contract Data
Requirements List includes DI-MGMT-81467), use in solicitations and
resulting contracts the clause at 252.242-7005, Cost/Schedule Status
Report.
49. Section 242.7202 is amended by revising paragraph (d) to read
as follows:
242.7202 Policy.
* * * * *
(d) Conforms to the standards at 252.242-7004(f) when the
contractor has cost-reimbursement or fixed-price contracts exceeding
the simplified acquisition threshold, with progress or other contract
financing provisions, except when all of the contracts and subcontracts
are awarded under the set-aside or Section 8(a) procedures of FAR part
19.
50. Section 242.7203 is revised to read as follows:
242.7203 MMAS disclosure, demonstration, and maintenance requirements.
(a) A large business contractor is subject to MMAS disclosure,
demonstration, and maintenance if in its preceding fiscal year the
contractor received DoD prime contracts or subcontracts (including
modifications) totaling--
(1) $70 million or more; or
(2) $30 million or more (but less than $70 million), and the
contracting officer determines it to be in the best interests of the
Government (e.g., contractor disclosure, demonstration, or other
activities indicate significant MMAS problems exist).
(b) After the administrative contracting officer determines the
contractor's MMAS is adequate (see 242.7204(b)), written disclosure
will not be required for the next MMAS review unless the contractor's
policies, procedures, or practices have changed in the interim
period(s). Similarly, once the contractor demonstrates that its MMAS
contains no significant deficiencies, demonstration requirements for
subsequent reviews may be satisfied if internal audits are reasonably
current and contain sufficient transaction tests to demonstrate MMAS
compliance with each standard.
242.7204 [Amended]
51. Section 242.7204 is amended in paragraph (a)(1) by revising the
reference ``242.7203'' to read ``242.7203(a)''; and in paragraph (a)(2)
by revising the reference ``242.7203(b)'' to read ``242.7203(a)(2)''.
242.7206 [Amended]
52. Section 242.7206 is amended in the introductory text by
removing the phrase ``in FAR part 13''.
PART 244--SUBCONTRACTING POLICIES AND PROCEDURES
244.303 [Removed]
53. Section 244.303 is removed.
244.304 [Amended]
54. Section 244.304 is amended in the introductory text of
paragraph (b) by removing the abbreviation ``PSA'' and inserting in its
place the phrase ``purchasing system analyst (PSA)''.
PART 249--TERMINATION OF CONTRACTS
249.7001 [Amended]
55. Section 249.7001 is amended in paragraph (b)(4) by revising the
phrase ``Advanced Research Projects Agency--CMO'' to read ``Defense
Advanced Research Projects Agency--CMO''; and in paragraph (b)(9) by
revising the phrase ``Defense Nuclear Agency--Chief, Office of
Procurement, OATR'' to read ``Defense Special Weapons Agency--
Acquisition Management Directorate (AM)''.
PART 250--EXTRAORDINARY CONTRACTUAL ACTIONS
250.303 [Amended]
56. Section 250.303 is amended in paragraph (5) by revising the
phrase ``Advanced Research Projects Agency--'' to read ``Defense
Advanced Research Projects Agency--''; and in paragraph (10) by
revising the phrase ``Defense Nuclear Agency--'' to read ``Defense
Special Weapons Agency--'', by revising the abbreviation ``DNA'' to
read ``DSWA'', and by revising the abbreviation ``OAPR'' to read
``AM''.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
252.212-7000 [Amended]
57. Section 252.212-7000 is amended in the introductory text by
revising the reference ``212.301(f)(iii)'' to read ``212.301(f)(ii)''.
252.212-7001 [Amended]
58. Section 252.212-7001 is amended in the introductory text by
revising the reference ``212.301(f)(iv)'' to read ``212.301(f)(iii)''.
252.225-7012 [Amended]
59. Section 252.225-7012 is amended in the introductory text by
revising the reference ``225.7002-4(a)'' to read ``225.7002-3(a)''.
252.225-7013 [Removed and Reserved]
60. Section 252.225-7013 is removed and reserved.
252.225-7014 [Amended]
61. Section 252.225-7014 is amended in the introductory text by
revising the reference ``225.7002-4(c)'' to read ``225.7002-3(b)''; and
in the introductory text of ALTERNATE I by revising the reference
``225.7002-4(c)'' to read ``225.7002-3(b)''.
252.225-7015 [Amended]
62. Section 252.225-7015 is amended in the introductory text by
revising the reference ``225.7002-4(d)'' to read ``225.7002-3(c)''.
63. Section 252.225-7016 is revised to read as follows:
252.225-7016 Restriction on Acquisition of Ball and Roller Bearings.
As prescribed in 225.7019-4, use the following clause:
Restriction on Acquisition of Ball and Roller Bearings (Sep 1996)
(a) Definitions.
As used in this clause--
(1) ``Bearing components'' means the bearing element, retainer,
inner race, or outer race.
(2) ``Miniature and instrument ball bearings'' means all rolling
contact ball bearings with a basic outside diameter (exclusive of
flange diameters) of 30 millimeters or less, regardless of material,
tolerance, performance, or quality characteristics.
(b) The Contractor agrees that all ball and roller bearings and
ball and roller bearing components (including miniature and
instrument ball bearings) delivered under this contract, either as
end items or components of end items, shall be wholly manufactured
in the United States or Canada. Unless otherwise specified, raw
materials, such as preformed bar, tube, or rod stock and lubricants,
need not be mined or produced in the United States or Canada.
(c) The restriction in paragraph (b) of this clause does not
apply to the extent that the end items or components containing ball
or roller bearings are commercial items. The commercial item
exception does not include items designed or developed under a
Government contract or contracts where the end item is bearings and
bearing components.
(d) The restriction in paragraph (b) of this clause may be
waived upon request from the
[[Page 50456]]
Contractor in accordance with subsection 225.7019-3 of the Defense
Federal Acquisition Regulation Supplement. If the restriction is
waived for miniature and instrument ball bearings, the Contractor
agrees to acquire a like quantity and type of domestic manufacture
for nongovernmental use.
(e) The Contractor agrees to retain records showing compliance
with this restriction until 3 years after final payment and to make
records available upon request of the Contracting Office.
(f) The Contractor agrees to insert this clause, including this
paragraph (f), in every subcontract and purchase order issued in
performance of this contract, unless items acquired are--
(1) Commercial items other than ball or roller bearings; or
(2) Items that do not contain ball or roller bearings.
(End of clause)
64. Section 252.225-7025 is revised to read as follows:
252.225-7025 Foreign Source Restrictions.
As prescribed in 225.7105, use the following clause:
Foreign Source Restrictions (Sep 1996)
(a) Definitions.
As used in this clause--
(1) Domestic manufacture means manufactured in the United States
or Canada if the Canadian firm--
(i) Normally produces similar items or is currently producing
the item in support of DoD contracts (as prime or subcontractor);
and
(ii) Agrees to become (upon receiving a contract/order) a
planned producer under DoD's Industrial Preparedness Program (IPP),
if it is not already a planned producer for the item.
(2) Forging items means--
------------------------------------------------------------------------
Items Categories
------------------------------------------------------------------------
Ship propulsion shafts.................... Excludes service and landing
craft shafts.
Periscope tubes........................... All.
Ring forgings for bull gears.............. All greater than 120 inches
in diameter.
------------------------------------------------------------------------
(b) The Contractor agrees that end items and their components
delivered under this contract shall contain forging items that are
of domestic manufacture only.
(c) The restriction in paragraph (b) of this clause may be
waived upon request from the Contractor in accordance with section
225.7104 of the Defense Federal Acquisition Regulation Supplement.
(d) The Contractor agrees to retain records showing compliance
with this restriction until 3 years after final payment and to make
records available upon request of the Contracting Officer.
(e) The Contractor agrees to insert this clause, including this
paragraph (e), in subcontracts and purchase orders issued in
performance of this contract, when products purchased contain
restricted forging items.
(End of clause)
65. Section 252.228-7001 is amended by revising the clause date to
read ``(SEP 1996)''; by revising paragraph (d)(2); in paragraph (e) by
removing ``$1,000'' both places it appears and inserting ``$25,000'' in
its places; in the introductory text of paragraph (h) by removing the
phrase ``In the event the'' and inserting in its place the phrase ``In
the event of''; and by revising paragraph (i)(1), the introductory text
of paragraph (i)(2), and paragraph (k). The revised text reads as
follows:
252.228-7001 Ground and flight risk.
* * * * *
(d) * * *
(2) Is sustained during flight if the flight crew members have
not been approved in writing by the Government Flight
Representative, who has been authorized in accordance with the
combined regulation entitled ``Contractor's Flight and Ground
Operations'' (Air Force Regulation 55-22, Army Regulation 95-20,
NAVAIR Instruction 3710.1C, and Defense Logistics Agency Manual
8210.1);
* * * * *
(i) * * *
(1) Require that the aircraft be replaced or restored by the
Contractor to the condition immediately prior to the damage, in
which event the Contracting Officer will make an equitable
adjustment in the contract price and the time for contract
performance; or
(2) Terminate this contract with respect to the aircraft, in
which event the Contractor shall be paid the contract price for the
aircraft (or, if applicable, any work to be performed on the
aircraft) less any amount the Contracting Officer determines--
* * * * *
(k) The Contractor agrees to be bound by the operating
procedures contained in the combined regulation entitled
``Contractor's Flight and Ground Operations'' in effect on the date
of contract award.
(End of clause)
66. Section 252.228-7002 is amended by revising the clause date to
read ``(SEP 1996)''; and by revising section title, the introductory
text of paragraph (c), and paragraph (e) to read as follows:
252.228-7002 Aircraft flight risk.
* * * * *
(c) Unless the flight crew members previously have been approved
in writing by the Government Flight Representative, who has been
authorized in accordance with the combined regulation entitled
``Contractor's Flight and Ground Operations'' (Air Force Regulation
55-22, Army Regulation 95-20, NAVAIR Instruction 3710.1C, and
Defense Logistics Agency Manual 8210.1), the Contractor shall not
be--
* * * * *
(e) The Contractor agrees to be bound by the operating
procedures contained in the combined regulation entitled
``Contractor's Flight and Found Operations'' in effect on the date
of contract award.
(End of clause)
252.228-7006 and 252.228-7007 [Removed]
67. Sections 252.228-7006 and 252.228-7007 are removed.
68. Section 252.242-7004 is amended by revising the clause date to
read ``(SEP 1996)''; by adding paragraph (a)(3); and by revising
paragraphs (c)(2)(i), (c)(2)(ii), (f)(7)(i), and (f)(7)(ii), and
paragraph (f)(7)(iii) introductory text to read as follows:
252.242-7004 Material management and accounting system.
* * * * *
(a) * * *
(3) ``Contractor'' means a business unit as defined in section
31.001 of the Federal Acquisition Regulation (FAR).
* * * * *
(c) * * *
(2) * * *
(i) $70 million or more; or
(ii) $30 million or more (but less than $70 million), and is
notified in writing by the Contracting Officer that paragraphs (d)
and (e) apply.
(f) * * *
(7) * * *
(i) The Contractor shall maintain and disclose written policies
describing the transfer methodology and the loan/pay-back technique.
(ii) The costing methodology may be standard or actual cost, or
any of the inventory costing methods in 48 CFR 9904.411-50(b).
Consistency shall be maintained across all contract and customer
types, and from accounting period to accounting period for initial
charging and transfer charging.
(iii) The system should transfer parts and associated costs
within the same billing period. In the few instances where this may
not be appropriate, the Contractor may accomplish the material
transaction using a loan/pay-back technique. The ``loan/pay-back
technique'' means that the physical part is moved temporarily from
the contract, but the cost of the part remains on the contract. The
procedures for the loan/pay-back technique must be approved by the
Administrative Contracting Officer. When the technique is used, the
Contractor shall have controls to ensure--
* * * * *
PART 253--FORMS
253.204-70 [Amended]
69. Section 253.204-70 is amended in paragraph (c)(4)(ix)(B)(9) by
revising the reference ``FAR 6.302-3(a)(2)(i)'' to read ``FAR 6.302-
3(a)(2)''.
Appendix B to Chapter 2--[Amended]
70. Appendix B to Chapter 2 is amended in Part 5 by revising in the
title the phrase ``DEFENSE NUCLEAR
[[Page 50457]]
AGENCY'' to read ``DEFENSE SPECIAL WEAPONS AGENCY''; and by revising
the abbreviation ``DNA'' to read ``DSWA'' both places it appears.
Appendix C to Chapter 2--[Removed and Reserved]
71. Appendix C to Chapter 2 is removed and reserved.
Appendix G to Chapter 2--[Amended]
72. Appendix G to Chapter 2 is amended in Part 1, Section G-101,
paragraph (c), by removing the address ``**Defense Nuclear Agency,
Chief, Contract Division, Defense Nuclear Agency, Washington, DC 20305-
1000'' and inserting in its place the address ``**Defense Special
Weapons Agency, Director, Acquisition Management Directorate, Defense
Special Weapons Agency, 6801 Telegraph Road, Alexandria, VA 22310-
3398''.
73. Appendix G to Chapter 2 is amended in Part 2 by revising entry
DASG60-CB to read as follows:
PART 2--ARMY ACTIVITY ADDRESS NUMBERS
* * * * *
DASG60-CB
USA Space and Strategic Defense Command, Deputy Commander, ATTN:
CSSD-CM, P.O. Box 1500, Huntsville, AL 35807-3801
* * * * *
74. Appendix G to Chapter 2 is amended in Part 3 by removing entry
N66032--LK and the address that follows; by revising the entries for
activity address numbers N00022, N31149, N52855, N61463, N62472,
N66022, N66972, N67596, and N68409; and by adding entries for activity
address numbers N00038, N0610A, N39088, N43636, N48984, N53863, N55105,
N55271, N57092, N66101, N68317, N68326, N68389, N68482, N68573, and
N68939. The revised and added text reads as follows:
PART 3--NAVY ACTIVITY ADDRESS NUMBERS
* * * * *
N00022--ML*, MQ*, NV*, MLZ
Chief of Naval Personnel, Washington, DC 20370-2000
* * * * *
N00038 (MAJ00011)--LB-5
U.S. Commander-in-Chief, Pacific, HQ Support Division, Box 64017,
Code J145, Camp H.N. Smith, HI 96861-4017
* * * * *
N0610A (MAJ00062)--L98
Commanding Officer, Naval Diving and Salvage Training Center, 350
South Crag Road, Panama City, FL 32407-7016
* * * * *
N31149 (MAJ00024)--EHA-B
Naval Sea Logistics Center Detachment, Philadelphia Naval Base,
Philadelphia, PA 19112-5061
* * * * *
N39088 (MAJ00022)--NVF
Navy Recruiting Orientation Unit, 206 South Avenue, Suite C,
Pensacola, FL 32508-5102
* * * * *
N43646 (MAJ00023)--4JB
Defense Printing Service, Detachment Branch Office, 5403 Southside
Drive, Louisville, KY 40214
* * * * *
N48984 (MAJ00023)--L5E
Defense Printing Service, Detachment Office, 901 South Drive, Scott
Air Force Base, IL 62225-5106
* * * * *
N52855--LZ
Special Boat Unit 11, FPO AP 96601-4517
* * * * *
N53863 (MAJ00060)--LHH
Commander, Surface Warfare Development Group, 2200 Amphibious
Drive, Norfolk, VA 23521-2850
* * * * *
N55105 (MAJ00060)--NMC
Amphibious Construction Batallion Two, 1815 Seabee Drive, Norfolk,
VA 23701
* * * * *
N55271 (MAJ00070)--LP8
Commander, Combat Logistics Group One (N716), Building 221-2W, NSC,
Oakland, CA 94625-5309
* * * * *
N57092 (MAJ00070)--V5U
Naval Inshore Undersea Warfare Group One, Building 184, Box
357140NOLF, Imperial Beach, CA 92135-7140
* * * * *
N61463 (MAJ00060)--LHB-D, LH2-4
Supply Officer, COMNAVBASE Supply, 1530 Gilbert Street, Suite 8,
Norfolk, VA 23511-2793
* * * * *
N62472--JP
Naval Facilities Engineering Command, Northern Division, 10
Industrial Highway, Mail Stop # 82k Lester, PA 19113
* * * * *
N66022 (MAJ00018)--MDW
Naval Dental Center, San Diego, CA 92136-5147
* * * * *
N66101 (MAJ00018)--J5B-D
U.S. Naval Hospital ROTA, PSC 819, Box 18, FPO AE 09645-2500
* * * * *
N66972 (MAJ00022)--MQ2
Commanding Officer, Navy Recruiting District, 8525 N.W. 53red
Terrace, Suite 201, Miami, FL 33166
N67596 (MAJ00022)--NVD
Commanding Officer, Navy Recruiting District, 10500 N. U.S. Highway
281, Suite 108, San Antonio, TX 78216-3630
* * * * *
N68317 (MAJ00062)--R03
Naval Administrative Unit, 1 Amsterdam Road, Scotia NY 12302-9460
* * * * *
N68326 (MAJ00018)--MDA
Naval Dental Center, 2707 Sheridan Road, Bldg 73, Great Lakes, IL
60088-5258
* * * * *
N68389 (MAJ00011)--LB4
Commander, Joint Intelligence Center, Pacific/DSL, P.O. Box 500,
Bldg 352, Makalapa Drive, Pearl Harbor, HI 96860-7450
* * * * *
N68409 (MAJ00018)--QAU
Naval Dental Center, San Francisco, CA 94130-5030
* * * * *
N68482 (MAJ00022)
Department of the Navy, BUPERS Det DAPMAL, Bldg 11, Naval Training
Center, 32110 Perry Road, Suite 110, San Diego, CA 92133-1521
* * * * *
N68573 (MAJ00023)--4JM
Navy Exchange Service Center, NAVABASE, Norfolk, Bldg CD-1, 9222
Hamption Blvd, Norfolk, VA 23511-6390
* * * * *
N68939 (MAJ00012)--V8R
Naval Information Systems Management Center, Washington Navy Yard,
Bldg 176-4, Washington, DC 20374-5070
* * * * *
75. Appendix G to Chapter 2 is amended by revising Part 9 to read
as follows:
PART 9--DEFENSE SPECIAL WEAPONS AGENCY ACTIVITY ADDRESS NUMBERS
DSWA01--8Z
Defense Special Weapons Agency, Headquarters, ATTN; Acquisition
Management Directorate (AM), 6801 Telegraph Road, Alexandria, VA 22310-
3398 (ZD30)
DSWA02--0N
Defense Special Weapons Agency, Field Command, ATTN: Acquisition
Management Office (FCA), 1680 Texas Street, S.E., Kirtland AFB, NM
87115-5669
[[Page 50458]]
(ZD31)
76. Appendix G to Chapter 2 is amended in Part 10 by revising under
entry ``MDA972--WS'' the abbreviation ``ARPA'' to ``DARPA''.
Appendix I to Chapter 2 [Amended]
77. Appendix I to Chapter 2 is amended in section I-102, paragraphs
(a) and (b), and in section I-103, paragraph (a), by revising the date
``September 30, 1995'' to read ``September 30, 1996''.
[FR Doc. 96-24064 Filed 9-25-96; 8:45 am]
BILLING CODE 5000-04-M
