[Federal Register Volume 64, Number 73 (Friday, April 16, 1999)]
[Rules and Regulations]
[Pages 18829-18830]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-9561]
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DEPARTMENT OF DEFENSE
48 CFR Part 235
[DFARS Case 98-D306]
Defense Federal Acquisition Regulation Supplement; Manufacturing
Technology Program
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 213 of the Strom Thurmond National Defense
Authorization Act of Fiscal Year 1999. Section 213 requires that, for
each contract entered into on a cost-sharing basis under the
Manufacturing Technology Program, the ratio of contract recipient cost
to Government cost must be determined by competitive procedures.
DATES: Effective date: April 16, 1999.
Comment date: Comments on the interim rule should be submitted in
writing to the address shown below on or before June 15, 1999, to be
considered in the formulation of the final rule.
ADDRESSES: Interested parties should submit written comments to Defense
Acquisition Regulations Council, Attn: Ms. Melissa Rider, PDUSD (A&T)
DP (DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062.
Telefax (703) 602-0350.
E-mail comments submitted over the Internet should be addressed to:
dfars@acq.osd.mil
Please cite DFARS Case 98-D306 in all correspondence related to
this issue. E-mail comments should cite DFARS Case 98-D306 in the
subject line.
FOR FURTHER INFORMATION CONTACT: Ms. Melissa Rider, (703) 602-0131.
SUPPLEMENTARY INFORMATION:
A. Background
This interim rule amends DFARS guidance concerning the
Manufacturing Technology Program to implement Section 213 of the Strom
Thurmond National Defense Authorization Act for Fiscal Year 1999
(Public Act 105-261). Section 213 amends 10 U.S.C. 2525(d) to require
that, for each contract entered into on a cost-sharing basis under the
Manufacturing Technology Program, the ratio of contract recipient cost
to Government cost must be determined by competitive procedures; and
that the Secretary of Defense may delegate the authority to approve use
of other than a cost-sharing contract under the Program only to the
Under Secretary of Defense (Acquisition and Technology) of a service
acquisition executive. On January 9, 1999, the Secretary of Defense
delegated this authority to the Under Secretary of Defense (Acquisition
and Technology).
The rule also removes guidance from DFARS 235.006 pertaining to the
Manufacturing Technology Program, as the guidance has been relocated to
a new section at 235.006-70; and removes obsolete language from 235.006
pertaining to prior years' appropriations acts.
B. Regulatory Flexibility Act
This 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 the only
new requirement for offerors or contractors is a requirement for the
inclusion of a cost-sharing ratio in proposals for contracts under the
Manufacturing Technology Program. This change is not expected to
significantly alter the procedures for award of contracts under the
Manufacturing Technology Program, as the DFARS already requires the use
of cost-sharing arrangements and competitive procedures for contracts
under the Program. 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 subparts also will be considered in
accordance with 5 U.S.C. 610. Such comments should be submitted
separately and should cite DFARS Case 98-D306 in correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the rule does
not impose any information collection requirements that require the
approval of the Office of Management and Budget under 44 U.S.C. 3501,
et seq.
D. Determination To Issue an Interim Rule
A determination has been made under the authority of the Secretary
of Defense that urgent and compelling reasons exist to publish this
interim rule prior to affording the public an opportunity to comment.
This interim rule implements Section 213 of the Strom Thurmond National
Defense Authorization Act for Fiscal Year 1999 (Public Law 105-261)
pertaining to the Manufacturing Technology Program. Section 213 became
effective on October 17, 1998. Comments received in response to the
publication of this interim rule will be considered in the formation of
the final rule.
List of Subjects in 48 CFR Part 235
Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
Therefore, 48 CFR Part 235 is amended as follows:
1. The authority citation for 48 CFR Part 235 continues to read as
follows:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
PART 235--RESEARCH AND DEVELOPMENT CONTRACTING
2. Section 235.006 is revised to read as follows:
[[Page 18830]]
235.006 Contracting methods and contract type.
(b)(i) Do not award a fixed-price type contract for a development
program effort unless--
(A) The level of program risk permits realistic pricing;
(B) The use of a fixed-price type contract permits an equitable and
sensible allocation of program risk between the Government and the
contractor; and
(C) A written determination that the criteria of paragraphs
(b)(i)(A) and (B) of this section have been met is executed--
(1) By the Under Secretary of Defense (Acquisition and Technology)
(USD (A&T)) for--
(i) Research and development for non-major systems, if the contract
is over $25 million;
(ii) The lead ship of a class; or
(iii) The development of a major system (as defined in FAR 2.101)
or subsystem thereof, if the contract is over $25 million; or
(2) By the contracting officer for any development not covered by
paragraph (b)(i)(C)(1) of this section.
(ii) Obtain USD (A&T) approval of the Government's prenegotiation
position before negotiations begin, and obtain USD (A&T) approval of
the negotiated agreement with the contractor before the agreement is
executed, for any action that is--
(A) An increase of more than $250 million in the price or ceiling
price of fixed-price type development contract, or a fixed-price type
contract for the lead ship of a class;
(B) A reduction in the amount of work under a fixed-price type
development contract or a fixed-price type contract for the lead ship
of a class, when the value of the work deleted is $100 million or more;
or
(C) A repricing of fixed-price type production options to a
development contract, or a contract for the lead ship of a class that
increases the price or ceiling price by more than $250 million for
equivalent quantities.
(iii) Notify the USD (A&T) of an intent not to exercise a fixed-
price production option on a development contract for a major weapon
system reasonably in advance of the expiration of the option exercise
period.
3. Section 235.006-70 is added to read as follows:
235.006-70 Manufacturing Technology Program
(a) This subsection implements 10 U.S.C. 2525(d).
(b) Award all contract under the Manufacturing Technology Program
(see DoDI 4200.15, Manufacturing Technology Program) using competitive
procedures.
(c)(1) Use a cost-sharing arrangement (see FAR 16.303) for
contracts awarded under the Manufacturing Technology Program, unless
the USD (A&T) makes a determination that the contract is for a program
that--
(i) Is not likely to have any immediate and direct commercial
application;
(ii) Is of sufficiently high risk to discourage cost sharing by
non-Federal Government sources; or
(iii) Will be carried out by an institution of higher education.
(2) Document the contract file with the rationale for any
determination made in accordance with paragraph (c)(1) of this
subsection.
(d) For each contract entered into on a cost-sharing basis,
determine the ratio of contractor cost to Government cost by
competitive procedures, i.e., each offeror must propose the ratio as
part of its proposal. If only one offer is received, negotiate the
ratio that provides the best value to the Government.
[FR Doc. 99-9561 Filed 4-15-99; 8:45 am]
BILLING CODE 5000-04-M
