2010-23664. Defense Federal Acquisition Regulation Supplement; Motor Carrier Fuel Surcharge (DFARS Case 2008-D040)

AGENCY:

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

ACTION:

Final rule.

SUMMARY:

DoD is adopting as final, with changes, an interim rule that implements section 884 of the National Defense Authorization Act for Fiscal Year 2009. Section 884 requires DoD to ensure that, to the maximum extent practicable, in all carriage contracts in which a fuel-related adjustment is provided for, any fuel-related adjustment is passed through to the person who bears the cost of the fuel to which the adjustment relates.

DATES:

Effective Date: September 27, 2010.

FOR FURTHER INFORMATION CONTACT:

Ms. Mary Overstreet, Defense Acquisition Regulations System, OUSD (AT&L)DPAP(DARS), 3060 Defense Pentagon, Room 3B855, Washington, DC 20301-3060. Telephone [phone]; facsimile 703-602-0350. Please cite DFARS Case 2008-D040.

SUPPLEMENTARY INFORMATION:

A. Background

DoD published an interim rule at 74 FR 37652 on July 29, 2009, to implement section 884 of the National Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-417). Section 884 requires DoD to ensure that, to the maximum extent practicable, in all carriage contracts for which a fuel-related adjustment is provided, any fuel-related adjustment is passed through to the person who bears the cost of the fuel to which the adjustment relates. Section 884 also applies to commercial contracts for carriage.

Two respondents submitted comments on the interim rule. A discussion of the comments received and the changes to the rule as a result of these comments is provided below:

1. Comment. One respondent stated that it is customary in the motor carrier freight industry to assume a fixed cost of diesel fuel with a cost recovery mechanism (fuel surcharge) for a time period exceeding 30 days. In the majority of instances, approximately 99 percent of the time, industry passes fuel surcharges to the party that pays for the fuel. The respondent is concerned that the new law will require documenting 100 percent of all activity and as a result, there will be additional administrative work and cost for no appreciable benefit.

Response. DoD does not agree. The statute requires that, to the maximum extent practicable, any fuel-related adjustment is passed through to the person who bears the cost. Since, for the majority of instances, industry passes the fuel surcharges to the party that pays for the fuel, contractor records would reflect this. The only additional documentation requirement would be for the estimated one percent of actions where the fuel-adjustment is not passed through.

2. Comment. Both respondents stated that there are some instances where it is not practicable to mandate an absolute requirement to pass the fuel-related adjustment to the party that paid for the fuel, and one respondent proposed the following remedy:

“(a) Except in instances where doing so would be impracticable, or pose a disproportionate administrative burden, the contractor shall pass through any motor carrier fuel-related surcharge adjustments to the person, corporation, or entity that directly bears the cost of fuel for shipment(s) transported under this contract.

(i) Examples of impracticable instances may include but not be limited to, spot bids, one-time-only bids, or other services that are provided within 30 days of the time service was ordered.”

Response. DoD agrees with the respondents in part. The examples of impracticable instances provided, however, are for short-term arrangements where there would not generally be a fuel surcharge and where the clause would not apply. DoD recognizes there may be limited instances where pass-through of fuel surcharge may not be feasible. Since the statute provides for application to the maximum practicable extent, the clause will include a statement that “Unless an exception is approved by the Contracting Officer,” the contractor shall pass through any motor carrier fuel-related surcharge adjustments to the person, corporation, or entity that directly bears the cost of fuel for shipment(s) transported under this contract.

This regulatory action was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

DoD does not expect this final 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. However, DoD has prepared a final regulatory flexibility analysis consistent with 5 U.S.C. 604. A copy of the analysis may be obtained from the point of contact specified herein. The analysis is summarized as follows:

This final rule amends the DFARS to implement section 884 of the National Defense Authorization Act for Fiscal Year 2009. Section 884 requires DoD to ensure that, to the maximum extent practicable, in all carriage contracts in which a fuel-related adjustment is provided for, any fuel-related adjustment is passed through to the person who bears the cost of the fuel to which the adjustment relates. The objective of the rule is to establish a DoD contract clause with appropriate flow-down requirements addressing the statutory requirement for fuel-related contract adjustments to be passed to the entity bearing the cost of the fuel. The clause is to be inserted in all contracts with motor carriers, brokers, or freight forwarders providing or arranging truck transportation services that provide for a fuel-related adjustment.

An interim rule was published on July 29, 2009, at 74 FR 37652 to which two responses were received. The responses indicated that current commercial marketplace practices already reflect the requirement to flow down any fuel surcharge to the party that incurs the cost of the fuel. Therefore, any impact of this rule on small entities is expected to be minimal.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because this rule does not impose any new 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 247 and 252

• Government procurement

Ynette R. Shelkin,

Editor, Defense Acquisition Regulations System.

Accordingly, the interim rule amending 48 CFR parts 247 and 252, which was published at 74 FR 37652 on July 29, 2009, is adopted as a final rule with the following changes:

1. The authority citation for 48 CFR parts 247 and 252 continues to read as follows:

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

PART 247—TRANSPORTATION

2. Section 247.207 is revised to read as follows:

247.207

Solicitation provisions, contract clauses, and special requirements.

Use the clause at 252.247-7003, Pass-Through of Motor Carrier Fuel Surcharge Adjustment to the Cost Bearer, in solicitations and contracts for carriage in which a motor carrier, broker, or freight forwarder will provide or arrange truck transportation services that provide for a fuel-related adjustment.

PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

Subpart 252.2—Text of Provisions and Clauses

252.212-7001

[Amended]

3. Section 252.212-7001 is amended by revising the clause date, and the dates of the clauses in paragraphs (b)(22) and (c)(2) to read “(SEP 2010)”.

4. Section 252.247-7003 is revised to read as follows:

252.247-7003

Pass-Through of Motor Carrier Fuel Surcharge Adjustment To The Cost Bearer.

As prescribed in 247.207, use the following clause:

PASS-THROUGH OF MOTOR CARRIER FUEL SURCHARGE ADJUSTMENT TO THE COST BEARER (SEP 2010)

(a) This clause implements section 884 of the National Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-417).

(b) Unless an exception is authorized by the Contracting Officer, the Contractor shall pass through any motor carrier fuel-related surcharge adjustments to the person, corporation, or entity that directly bears the cost of fuel for shipment(s) transported under this contract.

(c) The Contractor shall insert the substance of this clause, including this paragraph (c), in all subcontracts with motor carriers, brokers, or freight forwarders.

(End of clause)