[Federal Register Volume 60, Number 151 (Monday, August 7, 1995)]
[Proposed Rules]
[Pages 40146-40149]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19318]
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DEPARTMENT OF DEFENSE
48 CFR Parts 209, 216, 217, 246, and 252
[DFARS Case 95-D702]
Defense Federal Acquisition Regulation Supplement; Contract Award
(Proposed)
AGENCY: Department of Defense (DoD).
ACTION: Proposed rule with request for comment.
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SUMMARY: This proposed rule is issued pursuant to the Federal
Acquisition Streamlining Act of 1994 (``the Act''). The Director of
Defense Procurement is proposing to amend the Defense Federal
Acquisition Regulation Supplement concerning contractor qualifications,
special contracting methods, and quality assurance as a result of
changes made to Title 10 U.S.C. by Sections 1505, 2401, and 2402 of the
Act.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before October 6, 1995, to be considered
in the formulation of a final rule.
[[Page 40147]]
ADDRESSES: Interested parties should submit written comments to:
Defense Acquisition Regulations Council, PDUSD(A&T)DP(DAR), IMD 3D139,
3062 Defense Pentagon, Washington, DC 20301-3062. Telefax number (703)
602-0350. Please cite DFARS Case 95-D702 in all correspondence related
to this issue.
FOR FURTHER INFORMATION CONTACT:
Ms. Melissa D.Rider, DFARS FASTA Implementation Secretariat, at (703)
614-1634. Please cite DFARS case 95-D702.
SUPPLEMENTARY INFORMATION:
A. Background
The Federal Acquisition Streamlining Act of 1994, Pub. L. 103-355
(``the Act''), dated October 13, 1994, provides authorities that
streamline the acquisition process and minimize burdensome government-
unique requirements. Major changes that can be expected in the
acquisition process as a result of the Act's implementation include
changes in the areas of Commercial Item Acquisition, Simplified
Acquisition Procedures, the Truth in Negotiations Act, and introduction
of the Federal Acquisition Computer Network (FACNET).
DFARS Case 95-D702 addresses five defense-unique sections of the
Act: Section 1505, Restrictions on Undefinitized Contractual Actions;
Section 2401, Clarification of Provision Relating to Quality Control of
Certain Spare Parts; Section 2402, Contractor Guarantees Regarding
Weapons Systems; Section 3061, Regulations on Procurement, Production,
Warehousing, and Supply Distribution Functions; and Section 10004, Data
Collection Through the Federal Procurement Data System. A discussion of
the changes associated with each section follows:
Section 1505, Restrictions on Undefinitized Contractual Actions--
Subsection 1505(a) of the Act requires that the limitation on
expenditures be changed to reflect limitations on obligations, for
underfinitized contractual actions (UCAs). This was done because the
Government cannot control when funds are expended by the contractor but
can control when funds are obligated on a contract. Subsection 1505(b)
of the Act allows the head of agency to waive the UCA restrictions, if
necessary to support a contingency operation. DFARS changes resulting
from Subsections 1505 (a) and (b) were published as Item IX of Defense
Acquisition Circular 91-7 (60 FR 29491) on June 5, 1995. Therefore,
this proposed rule contains no DFARS changes to implement Subsections
1505 (a) and (b), Subsection 1505(c) of the Act exempts contracts
within the simplified acquisition threshold from UCA restrictions. This
proposed rule implements Subsection 1505(c) at DFARS 217.7402(b). The
proposed rule also changes other portions of DFARS Parts 216 and 217 to
consolidate requirements involving UCAs. A new DFARS clause, modeled on
the clause at FAR 52.216-25, Contract Definitization, is proposed to
provide a standard clause for DoD use in all UCAs.
Section 2401, Clarification of Provision Relating to Qualify
Control of Certain Spare Parts--This Section of the Act requires that
the DoD qualification requirements that were used to qualify an
original production part be used on all subsequent acquisitions of that
part unless the Secretary determines in writing that other sufficiently
similar requirements exist that should be used instead, or that the
original requirements were unnecessary. The proposed rule amends DFARS
Subpart 209.2, Qualification Requirements, to add this requirement, but
allows the requiring activity to make the determination. This is
consistent with the approval levels cited in other on-going FAR cases
on specifications and standards and qualification requirements (QPL/
QSL) and supports, in general, the empowerment of lower echelons of the
acquisition workforce, when and where appropriate (in this case the
requiring activity).
Section 2402, Contractor Guarantees Regarding Weapons Systems--This
Section of the Act requires that acquisition regulations be modified to
include guidelines for negotiating reasonable, cost effective
contractor guarantees,procedures for administering such guarantees, and
guidelines for determining when waivers of requirements for warranties
are appropriate. The proposed rule adds language at DFARS 246.770-2(b)
that discusses the logical process of constructing a rational warranty
for a weapon system. The coverage provides the reader with a good
source of detailed information--the DSMC Warranty Guidebook. The
proposed rule balances the need for specific guidance with the need to
minimize DFARS coverage. This Section of the Act also eliminated
Congressional reporting requirements for other than major weapon
systems. Therefore, minor changes have been made at DFARS 246.770-8 to
delete language pertaining to reporting requirements. The title of the
Under Secretary of Defense (Acquisition and Technology) has been
corrected at DFARS 246.770-8(a).
Section 3061, Regulations on Procurement, Production, Warehousing,
and Supply Distribution Functions--This section of the Act amends 10
U.S.C. 2202 to vest the Secretary of Defense with the authority to
prescribe regulations governing the performance within DoD of
procurement, production, warehousing, and supply distribution, and
related functions. Given that existing FAR coverage of Subpart 1.3
already vests the Secretary of Defense with this authority, especially
when one considers that 5 U.S.C. allows agency heads, such as the
Secretary of Defense, to structure the internal administrative
procedures of his/her agency to support, among other things, the
procurement process, no DFARS change has been made to implement this
Section of the Act.
Section 10004, Data Collection Through the Federal Procurement Data
System. No changes are proposed to implement this Section of the Act in
the DFARS. FAR changes associated with this Section were included in
FAR Case 94-701, which was published as a proposed rule on January 9,
1995 (60 FR 2472).
B. Regulatory Flexibility Act
The proposed 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 new
section at DFARS 209.206-70 pertains to internal Government procedures
for determining qualification requirements; the revisions to DFARS
Parts 216 and 217 and the new contract clause merely consolidate and
standardize existing requirements pertaining to underfinitized contract
actions; and the revisions to DFARS 246.770 pertain to internal
Government considerations regarding to use of warranties. An initial
regulatory flexibility analysis has therefore not been performed.
Comments from small entities concerning the affected DFARS subparts
will be considered in accordance with Section 610 of the Act. Such
comments must be submitted separately and cite DFARS Case 95-D702 in
correspondence.
C. The Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the proposed
rule will not impose any additional reporting or record keeping
requirements that require Office of Management and Budget approval
under 44 U.S.C. 3501, et seq.
[[Page 40148]]
List of Subjects in 48 CFR Parts 209, 216, 217, 246, and 252
Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
Therefore, 48 CFR 209, 216, 217, 246, and 252 are proposed to be
amended as follows:
PART 209--CONTRACTOR QUALIFICATIONS
1. The authority citation for 48 CFR Parts 209, 216, 217, 246, and
252 is revised to read as follows:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
2. Section 209.206-70 is added to read as follows:
209.206-70 Quality control of critical aircraft and ship spare parts.
In accordance with 10 U.S.C. 2383, a contractor supplying any spare
or repair part, that is critical to the operation of an aircraft or
ship, is required to provide a part that meets all appropriate
qualification and quality requirements as may be specified in the
solicitation and made available to prospective offerors. The
qualification requirements shall be identical to the DoD qualification
requirements that were used to qualify the original production part,
unless it is determined by the head of the requiring activity, in
writing, that--
(a) There are other requirements sufficiently similar to those
requirements that should be used instead; or
(b) Any or all such requirements are unnecessary.
PART 216--TYPES OF CONTRACTS
3. Section 216.603-4 is revised to read as follows:
216.603-4 Contract clauses.
(b)(2) See 217.7405(a) for additional guidance regarding use of the
clause at FAR 52.216-24, Limitation of Government Liability.
(3) Use the clause at 252.217-XXXX, Contract Definitization, in
accordance with its prescription at 217.7405(b), instead of the clause
at FAR 52.216-25, Contract Definitization.
4. Section 216.703 is amended by revising paragraph (c) to read as
follows:
216.703 Basic ordering agreements.
(c) Limitations. The period during which orders may be placed
against a basic ordering agreement may not exceed three years. The
contracting officer, with the approval of the chief of the contracting
office, may grant extensions for up to two years. No single extension
shall exceed one year. See subpart 217.74 for additional limitations on
the use of undefinitized orders under basic ordering agreements.
* * * * *
PART 217--SPECIAL CONTRACTING METHODS
5. Section 217.202 is amended by adding paragraph (3) to read as
follows:
217.202 Use of options.
* * * * *
(3) See subpart 217.74 for limitations on the use of undefinitized
options.
6. Section 217.7402 is amended by revising paragraph (b) to read as
follows:
217.7402 Exceptions.
* * * * *
(b) Purchases at or below the simplified acquisition threshold;
* * * * *
217.7404-3 [Amended]
7. Section 217.7404-3 is amended in the introductory text of
paragraph (a) by revising the word ``earliest'' to read ``earlier.''
8. Section 217.7405 is revised to read as follows:
Sec. 217.7405 Contract clauses.
(a) Use the clause at FAR 52.216-24, Limitation of Government
Liability, in all UCAs, solicitations associated with UCAs, basic
ordering agreements, indefinite delivery contracts, and any other type
of contract providing for the use of UCAs.
(b) Use the clause at DFARS 252.217-XXXX, Contract Definitization,
in all UCAs, solicitations associated with UCAs, basic ordering
agreements, indefinite delivery contracts, and any other type of
contract providing for the use of UCAs. Insert the applicable
information in paragraphs (a), (b), and (d) of the clause. If, at the
time of entering into the UCA, the contracting officer knows that the
definitive contract action will be based on adequate price competition
or otherwise will meet the criteria of FAR 15.804-3 for not requiring
submission of cost or pricing data, the words ``and cost or pricing
data'' may be deleted from paragraph (a) of the clause.
PART 246--QUALITY ASSURANCE
9. Section 246.770-2 is amended by redesignating paragraphs (b) and
(c) as (c) and (d), respectively, by adding a new paragraph (b), and by
revising newly designated paragraph (c) to read as follows:
246.770-2 Policy.
* * * * *
(b) Contracting officers and program managers shall consider the
following when developing and negotiating weapon system warranty
provisions:
(1) Warranties may not be appropriate in all situations, and a
waiver should be sought if a warranty would not be cost-effective or
would otherwise be inconsistent with the national defense. In drafting
warranty provisions, the drafters must ensure they understand the
planned operational, maintenance, and supply concepts of the weapon
system to be fielded, and must structure a warranty that matches those
concepts. A warranty plan should be prepared in consonance with
development of the warranty provisions early in the weapon system's
life cycle. The plan should contain program warranty strategy, terms of
the warranty, administration and enforcement requirements, and should
be coordinated with the user and support activities.
(2) A cost/benefit analysis must be accomplished in support of each
warranty (see 246.770-7). The cost/benefit analysis compares all costs
associated with the warranty to the expected benefits. An estimate
shall be made of the likelihood of defects and the estimated cost of
correcting such defects. Also, if substantive changes are required to
the planned operational, maintenance, or supply concepts, any increased
costs should be weighed against the expected benefits in deciding
whether a warranty is cost-effective.
(3) The Warranty Guidebook prepared by the Defense Systems
Management College, Fort Belvoir, VA 22060-5426, is a valuable
reference that can assist in the development, negotiation, and
administration of an effective weapon system warranty.
(c) Contracting officers may require warranties that provide
greater coverage and remedies than specified in paragraph (a) of this
subsection.
10. Section 246.770-8 is amended by removing paragraph (b)(2),
redesignating paragraph (b)(3) as (b)(2), and revising the introductory
texts of paragraphs (a), (c), and (c)(2) to read as follows:
246.770-8 Waiver and notification procedures.
(a) The Secretary of Defense has delegated waiver authority within
the limits specified in 10 U.S.C. 2403. The waiving authority for the
defense agencies is the Under Secretary of Defense (Acquisition and
Technology). Submit defense agency waiver requests to the Director,
Defense Procurement, for processing. The waiving authority
[[Page 40149]]
for the military department is the Secretary of the department with
authority to redelegate no lower than an Assistant Secretary. The
waiving authority may waive one or more of the weapons system
warranties required by 246.770-2 if--
* * * * *
(c) Departments and agencies shall issue procedures for processing
waivers and notifications to Congress.
* * * * *
(2) Notifications shall include--
* * * * *
PART 252--CONTRACT CLAUSES
252.217-7027 [Removed]
11. Section 252.217-7027 is removed.
12. Section 252.217-XXXX is added to read as follows:
252.217-XXXX Contract Definitization.
As prescribed in 217.7405(b), use the following clause:
Contract Definitization (XXX XXXX)
(a) A (insert specific type of contract action) is contemplated.
The Contractor agrees to begin promptly negotiating with the
Contracting Officer the terms of a definitive contract that will
include (1) all clauses required by the Federal Acquisition
Regulation (FAR) on the date of execution of the undefinitized
contract action, (2) all clauses required by law on the date of
execution of the definitive contract action, and (3) any other
mutually agreeable clauses, terms, and conditions. The Contractor
agrees to submit a (insert type of proposal; e.g., fixed-priced or
cost-and-fee) proposal and cost or pricing data supporting its
proposal.
(b) The schedule for definitizing this contract action is as
follows (insert target date for definitization of the contract
action and dates for submission of proposal, beginning of
negotiations, and, if appropriate, submission of the make-or-buy and
subcontracting plans and cost or pricing data):
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(c) If agreement on a definitive contract action to supersede
this undefinitized contract action is not reached by the target date
in paragraph (b) of this clause, or within any extension of it
granted by the Contracting Officer, the Contracting Officer may,
with the approval of the head of the contracting activity, determine
a reasonable price or fee in accordance with subpart 15.8 and part
31 of the FAR, subject to Contractor appeal as provided in the
Disputes clause. In any event, the Contractor shall proceed with
completion of the contract, subject only to the Limitation of
Government Liability clause.
(1) After the Contracting Officer's determination of price or
fee, the contract shall be governed by--
(i) All clauses required by the FAR on the date of execution of
this undefinitized contract action for either fixed-price or cost-
reimbursement contracts, as determined by the Contracting Officer
under this paragraph (c);
(ii) All clauses required by law as of the date of the
Contracting Officer's determination; and
(iii) Any other clauses, terms, and conditions mutually agreed
upon.
(2) To the extent consistent with subparagraph (c)(1) of this
clause, all clauses, terms, and conditions including included in
this undefinitized contract action shall continue in effect, except
those that by their nature apply only to an undefinitized contract
action.
(d) The definitive contract resulting from this undefinitized
contract action will include a negotiated (insert ``cost/price
ceiling '' or ``firm-fixed price'') in no event to exceed (insert
the not-to-exceed amount).
(End of Clause)
[FR Doc. 95-19318 Filed 8-4-95; 8:45 am]
BILLING CODE 5000-04-M
