E6-21513. Defense Federal Acquisition Regulation Supplement; Inflation Adjustment of Acquisition-Related Thresholds (DFARS Case 2004-D022)

AGENCY:

Defense Acquisition Regulations System, Department of Defense (DoD).

ACTION:

Final rule.

SUMMARY:

DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to adjust acquisition-related thresholds for inflation. Section 807 of the National Defense Authorization Act for Fiscal Year 2005 requires periodic adjustment of statutory acquisition-related dollar thresholds, except those established by the Davis-Bacon Act, the Service Contract Act, or trade agreements. This rule also amends other acquisition-related thresholds that are BASED on policy rather than statute.

DATES:

Effective Date: December 19, 2006.

FOR FURTHER INFORMATION CONTACT:

Ms. Amy Williams, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone [phone]; facsimile [phone]. Please cite DFARS Case 2004-D022.

SUPPLEMENTARY INFORMATION:

A. Background

This final rule implements Section 807 of the National Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108-375). Section 807 provides for adjustment of statutory acquisition-related dollar thresholds every 5 years, except for those established by the Davis-Bacon Act, the Service Contract Act, or trade agreements. This case presented an opportunity to review all acquisition-related dollar thresholds, including those that are non-statutory. DoD published a proposed rule at 71 FR 3446 on January 23, 2006. DoD received one comment from a public-private partnership in response to the proposed rule. That comment related to the proposed increase in the micro-purchase spending limit for the General Services Administration SmartPay Purchase Card Program. The comment did not specifically relate to this DFARS case and, therefore, has been forwarded to the General Services Administration for consideration.

A matrix showing the thresholds reviewed in preparation of this final rule is available at http://www.acq.osd.mil/​dpap/​dars/​dfars/​changenotice/​index.htm,, within the change notice summary containing the same date as this final rule. The statute requires adjustment of acquisition-related thresholds for inflation using the Consumer Price Index for all-urban consumers. Acquisition-related thresholds in statutes that were in effect on October 1, 2000, are subject to 5 years of inflation. The inflation adjustment factors in the proposed rule were calculated on the basis of December 2004 data. For the final rule, data through October 2005 was used. This resulted in a slight increase in the calculated inflation adjustment factors. For the 5-year period from October 2000 through October 2005, the inflation adjustment factor increased from 13 percent to 14.5 percent. However, due to rounding, most thresholds shown in the proposed rule did not change. The exceptions are—

• DFARS 217.170 and 217.171 (Multiyear Contracting)—Increased from $565.5 million to $572.5 million; and
• DFARS 237.170-2 (Service Contracting)—Increased from $77.5 million to $78.5 million.

The threshold at DFARS 207.170-3 (Consolidation of Contract Requirements) is the only threshold in the final rule that was not addressed in the proposed rule, because the calculated threshold now rounds up to $5.5 million, from $5 million.

The threshold at DFARS 216.203-4, for use of the economic price adjustment clause at FAR 52.216-4, was increased from $50,000 to $55,000 in the proposed rule. This threshold change is no longer applicable as a result of the final rule published at 71 FR 39006 on July 11, 2006, which specified the simplified acquisition threshold as the general threshold for DoD use of the FAR economic price adjustment clauses.

The threshold at DFARS 236.601, for congressional notification of certain architect-engineer or construction design contracts, was increased from $500,000 to $550,000 in the proposed rule. This threshold change is no longer applicable as a result of the interim rule published at 71 FR 58540 on October 4, 2006, which increased the threshold to $1 million to implement a statutory change.

The threshold in the clause at DFARS 252.232-7009, Mandatory Payment by Governmentwide Commercial Purchase Card, was increased from $2,500 to $3,000 in the proposed rule. The final rule revises this threshold to the micro-purchase threshold, for consistency with the corresponding clause prescription at DFARS 232.1110.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

DoD certifies that this final rule 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 the adjustment of acquisition-related dollar thresholds is intended to keep pace with inflation and thus maintain the status quo.

C. Paperwork Reduction Act

This rule does not impose any new information collection requirements that require the approval of the Office of Management and Budget (OMB) under 44 U.S.C. 3501, et seq. The information collection requirements of the provision and clauses at 252.225-7003, 252.225-7004, and 252.225-7006 are approved for use through May 31, 2007, under OMB Control Number 0704-0229.

List of Subjects in 48 CFR Parts 201, 205, 207, 211, 217, 219, 223, 225, 228, 232, 237, and 252

• Government procurement

Michele P. Peterson,

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR Parts 201, 205, 207, 211, 217, 219, 223, 225, 228, 232, 237, and 252 are amended as follows:

1. The authority citation for 48 CFR Parts 201, 205, 207, 211, 217, 219, 223, 225, 228, 232, 237, and 252 continues to read as follows:

Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 201—FEDERAL ACQUISITION REGULATIONS SYSTEM

2. Section 201.109 is added to read as follows:

201.109

Statutory acquisition-related dollar thresholds-adjustment for inflation.

(d) A matrix showing the most recent escalation adjustments of statutory acquisition-related dollar thresholds is available at PGI 201.109.

PART 205—PUBLICIZING CONTRACT ACTIONS

205.303

[Amended]

3. Section 205.303 is amended by removing “$5 million” and adding in its place “$5.5 million” as follows:

a. In paragraph (a)(i) introductory text, in the first and second sentences;

b. In paragraph (a)(i)(A), in the second sentence; and

c. In paragraph (a)(i)(B), in the first and second sentences.

PART 207—ACQUISITION PLANNING

207.170-3

[Amended]

4. Section 207.170-3 is amended in paragraph (a) introductory text by removing “$5,000,000” and adding in its place “$5.5 million”.

PART 211—DESCRIBING AGENCY NEEDS

211.503

[Amended]

5. Section 211.503 is amended in paragraph (b), in the first and second sentences, by removing “$500,000” and adding in its place “$550,000”.

PART 217—SPECIAL CONTRACTING METHODS

6. Section 217.170 is amended by revising paragraph (d)(1)(i) to read as follows:

217.170

General.

* * * * *

(d)(1) * * *

(i) Exceed $500 million for supplies (see 217.172(c) and 217.172(e)(4)) or $572.5 million for services (see 217.171(a)(6));

* * * * *

217.171

[Amended]

7. Section 217.171 is amended in paragraph (a)(6) by removing “$500 million” and adding in its place “$572.5 million”.

PART 219—SMALL BUSINESS PROGRAMS

219.502-2

[Amended]

8. Section 219.502-2 is amended in paragraph (a)(i) by removing “$2 million” and adding in its place “$2.5 million”.

PART 223—ENVIRONMENT, ENERGY AND WATER EFFICIENCY, RENEWABLE ENERGY TECHNOLOGIES, OCCUPATIONAL SAFETY, AND DRUG-FREE WORKPLACE

9. Section 223.803 is revised to read as follows:

223.803

Policy.

No DoD contract may include a specification or standard that requires the use of a class I ozone-depleting substance or that can be met only through the use of such a substance unless the inclusion of the specification or standard is specifically authorized at a level no lower than a general or flag officer or a member of the Senior Executive Service of the requiring activity in accordance with Section 326, Public Law 102-484 (10 U.S.C. 2301 (repealed) note). This restriction is in addition to any imposed by the Clean Air Act and applies after June 1, 1993, to all DoD contracts, regardless of place of performance.

PART 225—FOREIGN ACQUISITION

225.7204

[Amended]

10. Section 225.7204 is amended as follows:

a. In paragraphs (a) and (b) by removing “$10 million” and adding in its place “$11.5 million”; and

b. In paragraph (c) by removing “$500,000” and adding in its place “$550,000”.

PART 228—BONDS AND INSURANCE

228.102-1

[Amended]

11. Section 228.102-1 is amended in the second sentence of the introductory text and in paragraph (1) by removing “$25,000” and adding in its place “$30,000”.

PART 232—CONTRACT FINANCING

232.404

[Amended]

12. Section 232.404 is amended in paragraph (a)(9) by removing “$2,500” and adding in its place “$3,000”.

232.502-1

[Amended]

13. Section 232.502-1 is amended in paragraph (b)(1) by removing “$50,000” and adding in its place “$55,000”.

PART 237—SERVICE CONTRACTING

237.170-2

[Amended]

14. Section 237.170-2 is amended in paragraphs (a)(1) and (2) by removing “$50,000,000” and adding in its place “$78.5 million”.

PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

15. Section 252.209-7004 is amended by revising the clause date and paragraph (a) to read as follows:

252.209-7004

Subcontracting with Firms That are Owned or Controlled by the Government of a Terrorist Country.

* * * * *

Subcontracting With Firms That are Owned or Controlled by the Government of a Terrorist Country (Dec 2006)

(a) Unless the Government determines that there is a compelling reason to do so, the Contractor shall not enter into any subcontract in excess of $30,000 with a firm, or a subsidiary of a firm, that is identified in the Excluded Parties List System as being ineligible for the award of Defense contracts or subcontracts because it is owned or controlled by the government of a terrorist country.

* * * * *

252.225-7003

[Amended]

16. Section 252.225-7003 is amended as follows:

a. By revising the clause date to read “(DEC 2006)”;

b. In paragraph (b)(1) by removing “$10 million” and adding in its place “$11.5 million”; and

c. In paragraph (b)(2)(i) by removing “$500,000” and adding in its place “$550,000”.

252.225-7004

[Amended]

17. Section 252.225-7004 is amended as follows:

a. By revising the clause date to read “(DEC 2006)”; and

b. In paragraph (b)(1) by removing “$500,000” and adding in its place “$550,000”.

252.225-7006

[Amended]

18. Section 252.225-7006 is amended as follows:

a. By revising the clause date to read “(DEC 2006)”; and

b. In paragraph (f)(1) by removing “$500,000” and adding in its place “$550,000”.

252.232-7009

[Amended]

19. Section 252.232-7009 is amended as follows:

a. By revising the clause date to read “(DEC 2006)”; and

b. By removing “$2,500” and adding in its place “the micro-purchase threshold in Part 2 of the Federal Acquisition Regulation,”.

252.249-7002

[Amended]

20. Section 252.249-7002 is amended as follows:

a. By revising the clause date to read “(DEC 2006)”; and

b. In paragraph (d)(1) by removing “$500,000” and adding in its place “$550,000”.