[Federal Register Volume 61, Number 236 (Friday, December 6, 1996)]
[Rules and Regulations]
[Pages 64636-64637]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31099]
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DEPARTMENT OF DEFENSE
48 CFR Parts 249 and 252
[DFARS Case 96-D320]
Defense Federal Acquisition Regulation Supplement; Notice of
Termination
AGENCY: Department of Defense (DoD).
ACTION: Interim rule with request for comments.
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SUMMARY: The Director of Defense Procurement has issued an interim rule
amending the Defense Federal Acquisition Regulation Supplement (DFARS)
to implement Section 824 of the National Defense Authorization Act for
fiscal Year 1997 (Pub. L. 104-201). Section 824 streamlines the
statutory requirements for providing notification to contractors
regarding contract terminations or reductions that are expected to
occur as a result of reduced funding levels under major defense
programs.
EFFECTIVE DATE: December 6, 1996. Comments on the interim rule should
be submitted in writing to the address shown below on or before
February 4, 1997, to be considered in the formulation of the final
rule.
ADDRESSES: Interested parties should submit written comments to:
Defense Acquisition Regulations Council, Attn: Mr. Richard G. Layser,
PDUSD (A&T) DP (DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC
20301-3062. Telefax number (703) 602-0350.
Please cite DFARS Case 96-D320 in all correspondence related to
this issue.
FOR FURTHER INFORMATION CONTACT:
Mr. Rick Layser, (703) 602-0131.
SUPPLEMENTARY INFORMATION:
A. Background
This interim rule implements Section 824 of the National Defense
Authorization Act for Fiscal Year 1997 (Pub. L. 104-201). Section 824
of Public Law 104-201 amends Section 4471 of Public Law 102-484 (10
U.S.C. 2501 note) to streamline requirements for providing notices to
contractors and subcontractors that may be adversely affected by
substantial reductions in funding levels under major defense programs.
The changes include: (1) Elimination of the requirement for notices
pertaining to funding reductions that may occur as a result of the
submission of the President's budget; (2) elimination of the
requirement for publication of notices of anticipated program
termination or reduction in the Federal Register; and (3) an increase
in the time period, from 45 to 60 days, within which contractors must
provide notice of anticipated contract termination or reduction to
affected subcontractors after receiving notice from the Government.
B. Determination To Issue an Interim Rule
A determination has been made under the authority of the Secretary
of Defense to issue this rule as an interim rule. Urgent and compelling
reasons exist to promulgate this rule without prior opportunity for
public comment. This rule implements Section 824 of the National
Defense Authorization Act for Fiscal Year 1997 (Pub. L. 104-201).
Section 824 became effective upon enactment on September 23, 1996. This
interim rule is necessary to ensure that DoD contracting activities
become aware of the amended statutory requirements for providing
notification to contractors regarding anticipated contract termination
or reduction. However, comments received in response to the publication
of this interim rule will be considered in formulating the final rule.
C. Regulatory Flexibility Act
The interim rule may 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 rule
revises requirements for providing notification to contractors and
subcontractors regarding contract terminations or reductions that are
expected to occur under major defense programs. An initial regulatory
flexibility analysis has been prepared and is summarized as follows:
This interim rule amends the Defense Federal Acquisition Regulation
Supplement (DFARS) to implement Section 824 of the National Defense
Authorization Act for Fiscal Year 1997 (Pub. L. 104-201). Section 824
streamlines the statutory requirements for providing notification to
contractors and subcontractors regarding contract terminations or
reductions that are expected to occur as a result of reduced funding
levels under major defense programs. The rule will apply to all large
and small entities that have, under a major defense program, a prime
contract, a first-tier subcontract of $500,000 or more, or a lower-tier
subcontract of $100,000 or more, that is expected to be terminated or
substantially reduced as a result of reduced funding levels in an
appropriations act. It is not feasible to predict the number of small
entities that may be affected. However, according to statistics from
the DD Form 350 data base maintained by Department of Defense (DoD)
Washington Headquarters Services, DoD awarded approximately 35,400
prime contracts exceeding $100,000 to small entities during fiscal year
1995. This rule imposes no additional reporting, recordkeeping, or
compliance requirements on offerors or contractors. This rule does not
duplicate, overlap, or conflict with any other Federal rules.
Consideration was given to delaying the notification requirements until
the time of execution of the contract termination modification.
However, this alternative would not ensure full compliance with the
applicable statute, which requires DoD to notify its contractors of
anticipated contract termination or reduction not later than 60 days
after the enactment of an appropriations act. Comments are invited from
small businesses and other interested parties. Comments from small
entities concerning the affected DFARS subparts also will be considered
in accordance with Section 610 of the Act. Such comments should be
submitted separately and cite DFARS Case 96-D320 in correspondence.
D. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the interim rule
does not impose any new reporting or recordkeeping requirements which
require Office of Management and Budget approval under 44 U.S.C. 3501,
et seq.
List of Subjects in 48 CFR Parts 249 and 252
Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
Therefore, 48 CFR Parts 249 and 252 are amended as follows:
1. The authority citation for 48 CFR Parts 249 and 252 continues to
read as follows:
[[Page 64637]]
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
PART 249--TERMINATION OF CONTRACTS
2. Section 249.7003 is revised to read as follows:
249.7003 Notification of anticipated contract terminations or
reductions.
(a) Section 1372 of the National Defense Authorization Act for
Fiscal Year 1994 (Pub. L. 103-160) and Section 824 of the National
Defense Authorization Act for Fiscal Year 1997 (Pub. L. 104-201) are
intended to help establish benefit eligibility under the Job Training
Partnership Act (29 U.S.C. 1661 and 1662) for employees of DoD
contractors and subcontractors adversely affected by termination or
substantial reductions in major defense programs.
(b) Departments and agencies are responsible for establishing
procedures to:
(1) Identify which contracts (if any) under major defense programs
will be terminated or substantially reduced as a result of the funding
levels provided in an appropriations act.
(2) Within 60 days of the enactment of such an act, provide notice
of the anticipated termination of or substantial reduction in the
funding of affected contracts)
(i) Directly to the Secretary of Labor; and
(ii) Through the contracting officer to each prime contractor.
(c) Use the clause at 25.249-7002, Notification of Anticipated
Contract Termination or Reduction, in all contracts under a major
defense program.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
3. Section 252.249-7002 is revised to read as follows:
252.249-7002 Notification of Anticipated Contract Termination or
Reduction.
As prescribed in 249.7003(c), use the following clause:
NOTIFICATION OF ANTICIPATED CONTRACT TERMINATION OR REDUCTION
(DEC 1996)
(a) Definitions.
Major defense program means a program that is carried out to
produce or acquire a major system (as defined in 10 U.S.C. 2302(5))
(see also DoD 5000.2-R, Mandatory Procedures for Major Defense
Acquisition Programs (MDAPs) and Major Automated Information System
(MAIS) Acquisition Programs).
Substantial reduction means a reduction of 25 percent or more in
the total dollar value of funds obligated by the contract.
(b) Section 1372 of the National Defense Authorization Act for
Fiscal Year 1994 (Pub. L. 103-160) and Section 824 of the National
Defense Authorization Act for Fiscal Year 1997 (Pub. L. 104-201) are
intended to help establish benefit eligibility under the Job
Training Partnership Act (29 U.S.C. 1661 and 1662) for employees of
DoD contractors and subcontractors adversely affected by contract
terminations or substantial reductions under major defense programs.
(c) Notice to employees and state and local officials. Within 2
weeks after the Contracting Officer notifies the Contractor that
contract funding will be terminated or substantially reduced, the
Contractor shall provide notice of such anticipated termination or
reduction to--
(1) Each employee representative of the Contractor's employees
whose work is directly related to the defense contract; or
(2) If there is no such representative, each such employee;
(3) The State dislocated worker unit or office described in
section 311(b)(2) of the Job Training Partnership Act (29 U.S.C.
1661(b)(2)); and
(4) The chief elected official of the unit of general local
government within which the adverse effect may occur.
(d) Notice to subcontractors. Not later than 60 days after the
Contractor receives the Contracting Officer's notice of the
anticipated termination or reduction, the Contractor shall--
(1) Provide notice of the anticipated termination or reduction
to each first-tier subcontractor with a subcontract of $500,000 or
more; and
(2) Require that each such subcontractor--
(i) Provide notice to each of its subcontractors with a
subcontract of $100,000 or more; and
(ii) Impose a similar notice and flowdown requirement to
subcontractors with subcontracts of $100,000 or more.
(e) The notice provided an employee under paragraph (c) of this
clause shall have the same effect as a notice of termination to the
employee for the purposes of determining whether such employee is
eligible for training, adjustment assistance, and employment
services under section 325 or 325A of the Job Training Partnership
Act (29 U.S.C. 1662d, 1662d-1). If the Contractor has specified that
the anticipated contract termination or reduction is not likely to
result in plant closure or mass layoff, as defined in 29 U.S.C.
2101, the employee shall be eligible only for services under section
314(b) and paragraphs (1) through (14), (16), and (18) of section
314(c) of the Job Training Partnership Act (29 U.S.C. 1661c(b) and
paragraphs (1) through (14), (16), and (18) of section 1661c(c)).
(End of clause)
[FR Doc. 96-31099 Filed 12-5-96; 8:45 am]
BILLING CODE 5000-04-M
