[Federal Register Volume 61, Number 236 (Friday, December 6, 1996)]
[Rules and Regulations]
[Pages 64635-64636]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31100]
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DEPARTMENT OF DEFENSE
48 CFR Part 231
[DFARS Case 96-D334]
Defense Federal Acquisition Regulation Supplement; Restructuring
Costs
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 8115 of the National Defense Appropriations Act
for Fiscal Year 1997 (Pub. L. 104-208) concerning the reimbursement of
external restructuring costs associated with a business combination.
DATES: Effective date: December 6, 1996.
Comment date: 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: Ms. Sandra G. Haberlin,
PDUSD (A&T) DP (DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC
20301-3062. Telefax number (703) 602-0350. Please cite DFARS Case 96-
D334 in all correspondence related to this issue.
FOR FURTHER INFORMATION CONTACT:
Ms. Sandra G. Haberlin, (703) 602-0131.
SUPPLEMENTARY INFORMATION:
A. Background
This interim rule amends DFARS 231.205-70, External restructuring
costs, to implement Section 8115 of the National Defense Appropriations
Act for Fiscal Year 1997 (Pub. L. 104-208). Section 8115 restricts DoD
from using fiscal year 1997 funds to reimburse external restructuring
costs associated with a business combination undertaken by a defense
contractor unless certain conditions are met. These conditions include
either that (1) the audited savings for DoD resulting from the
restructuring will be at least twice the costs; or (2) the savings for
DoD will exceed the costs allowed and the Secretary of Defense
determines that the business combination will result in the
preservation of a critical capability that might otherwise be lost to
the Department.
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 8115 of the National
Defense Appropriations Act for Fiscal Year 1997 (Pub. L. 104-208),
which was effective upon enactment on September 30, 1996. However,
comments received in response to the publication of this rule will be
considered in formulating the final rule.
C. Regulatory Flexibility Act
The interim rule is not expected to have a significant economic
impact on a substantial number of small entities within the meaning of
the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because most
contracts awarded to small entities use simplified acquisition
procedures or are awarded on a competitive fixed-price basis, and do
not require application of the cost principle contained in this rule.
In addition, this rule only applies to those entities that incur
restructuring costs associated with a business combination under
contracts funded by fiscal year 1997 funds. An Initial Regulatory
Flexibility Analysis has, therefore, not been performed. Comments are
invited from small businesses and other interested parties. Comments
from small entities concerning the affected DFARS subpart also will be
considered in accordance with Section 610 of the Act. Such comments
must be submitted separately and cite DFARS Case 96-D334 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 Part 231
Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
Therefore, 48 CFR Part 231 is amended as follows:
1. The authority citation for 48 CFR Part 231 continues to read as
follows:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
PART 231--CONTRACT COST PRINCIPLES AND PROCEDURES
2. Section 231.205-70 is amended by revising paragraph (a), and by
adding paragraphs (c) (3) and (d) (10) to read as follows:
231.205-70 External restructuring costs.
(a) Scope. This subsection prescribes policies and procedures for
allowing contractor external restructuring costs when net savings would
result for DoD. This subsection also implements Section 818 of the
National Defense Authorization Act for Fiscal Year 1995 (Pub. L. 103-
337) and Section 8115 of the National Defense Appropriations Act for
Fiscal Year 1997 (Pub. L. 104-208).
* * * * *
(c) * * *
(3) Additionally, for business combinations that occur after
September 30, 1996, no fiscal year 1997 appropriated funds may be
obligated or expended to reimburse a contractor for restructuring costs
associated with external restructuring activities unless--
(i) The audited savings for DoD resulting from the restructuring
will
[[Page 64636]]
exceed the costs allowed by a factor of at least two to one; or
(ii) The savings for DoD resulting from the restructuring will
exceed the costs allowed, and the Secretary of defense determines that
the business combination will result in the preservation of a critical
capability that might otherwise be lost to DoD.
(d) * * *
(10) Consult with the Director of Defense Procurement, Office of
the Under Secretary of Defense (Acquisition & Technology), when
231.205-70(c)(3)(ii) applies.
* * * * *
[FR Doc. 96-31100 Filed 12-5-96; 8:45 am]
BILLING CODE 5000-04-M
