E7-14921. Defense Federal Acquisition Regulation Supplement; Payments on Cost-Reimbursement Contracts for Services (DFARS Case 2006-D066)

AGENCY:

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

ACTION:

Proposed rule with request for comments.

SUMMARY:

DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to provide for interim payments under cost-reimbursement contracts for services within 30 days, instead of the current DoD policy of making payments within 14 days. The change will not apply to small business concerns.

DATES:

Comments on the proposed rule should be submitted in writing to the address shown below on or before October 1, 2007, to be considered in the formation of the final rule.

ADDRESSES:

You may submit comments, identified by DFARS Case 2006-D066, using any of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
• E-mail: [e-mail]. Include DFARS Case 2006-D066 in the subject line of the message.
• Fax: [phone].
• Mail: Defense Acquisition Regulations System, Attn: Mr. John McPherson, OUSD(AT&L)DPAP(CPF), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062.
• Hand Delivery/Courier: Defense Acquisition Regulations System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402.

Comments received generally will be posted without change to http://www.regulations.gov,, including any personal information provided.

FOR FURTHER INFORMATION CONTACT:

Mr. John McPherson, [phone].

SUPPLEMENTARY INFORMATION:

A. Background

DFARS 232.906 presently provides for interim payments on cost-reimbursement contracts for services within 14 days after receipt of a proper payment request. The proposed rule would revise this policy to provide for payment to other than small business concerns within 30 days. The proposed change will allow DoD to better cash manage payments without having a significant impact on small business concerns. The proposed change is consistent with the policies of other Government agencies, which do not pay in 14 days. These payments are subject to the Prompt Payment Act.

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

B. Regulatory Flexibility Act

DoD does not expect this proposed rule 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 proposed rule makes no change to payment procedures for small business concerns. Therefore, DoD has not performed an initial regulatory flexibility analysis. DoD invites comments from small businesses and other interested parties. DoD also will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2006-D066.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply, because the proposed 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.

List of Subjects in 48 CFR Parts 216, 232, and 252

• Government procurement

Michele P. Peterson,

Editor, Defense Acquisition Regulations System.

Therefore, DoD proposes to amend 48 CFR Parts 216, 232, and 252 as follows:

1. The authority citation for 48 CFR Parts 216, 232, and 252 continues to read as follows:

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

PART 216—TYPES OF CONTRACTS

2. Section 216.307 is added to read as follows:

216.307

Contract clauses.

(a)(i) The following apply to interim payments on cost-reimbursement contracts for services:

(A) For contracts with other than small business concerns, insert the standard due date of the “30th” day in paragraph (a)(3) of the clause at FAR 52.216-7.

(B) For contracts with small business concerns, insert the “14th” day in paragraph (a)(3) of the clause at FAR 52.216-7.

(ii) For interim payments on cost-reimbursement contracts for other than services, insert the “14th” day in paragraph (a)(3) of the clause at FAR 52.216-7.

PART 232—CONTRACT FINANCING

3. Section 232.906 is revised to read as follows:

232.906

Making payments.

(a)(i) The restrictions of FAR 32.906 prohibiting early payment do not apply to interim payments made to small business concerns. However, contractors shall not be entitled to interest penalties if the Government fails to make early payment.

(ii) It is DoD policy to make payments within 14 days for cost-reimbursement contracts for services with small business concerns.

4. Section 232.908 is added to read as follows:

232.908

Contract clauses.

(c)(3) For cost-reimbursement contracts for services with small business concerns, use the clause at 252.232-7XXX, Payments on Cost-Reimbursement Contracts for Services with Small Business Concerns, instead of Alternate I of the clause at FAR 52.232-25.

PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

5. Section 252.232-7XXX is added to read as follows:

252.232-7XXX

Payments on Cost-Reimbursement Contracts for Services with Small Business Concerns.

As prescribed in 232.908(c)(3), use the following clause:

PAYMENTS ON COST-REIMBURSEMENT CONTRACTS FOR SERVICES WITH SMALL BUSINESS CONCERNS (XXX 2007)

(a) Paragraphs (a)(2), (a)(3), (a)(4)(ii), (a)(4)(iii), and (a)(5)(i) of the Allowable Cost and Payment clause (FAR 52.216-7) do not apply to this contract.

(b) Although accelerated payments may be made in 14 days in accordance with section 232.906(a)(ii) of the Defense Federal Acquisition Regulation Supplement, for purposes of computing late payment interest penalties that may apply, the due date for payment is the 30th day after the designated billing office receives a proper payment request.

(c) The Contractor shall submit requests for interim payments in accordance with paragraph (a) of FAR 52.216-7, Allowable Cost and Payment. If the payment request does not comply with contract requirements, it will be returned within 7 days after the date the designated billing office received the request.

(End of clause)