01-21466. Defense Federal Acquisition Regulation Supplement; Customary Progress Payment Rate for Large Business Concerns

AGENCY:

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 increase the customary uniform progress payment rate for large business concerns from 75 percent to 80 percent. The progress payment rate change will be applicable only to contract awards made on or after October 1, 2001, with final implementation contingent upon the approval of a DoD budget and outlay ceiling for Fiscal Year (FY) 2002 sufficient to accommodate the outlay impact of this proposed change. The Budget of the United States Government, FY 2002, submitted by the President, accommodates the outlay impact. Contracts awarded before October 1, 2001, will not be modified to include the 80 percent rate.

DATES:

Comments on the proposed rule should be submitted to the address shown below on or before September 24, 2001 to be considered in the formation of the final rule.

ADDRESSES:

Respondents may submit comments directly on the World Wide Web at http://emissary.acq.osd.mil/​dar/​dfars.nsf/​pubcomm. As an alternative, respondents may e-mail comments to: [e-mail]. Please cite DFARS Case 2001-D012 in the subject line of e-mailed comments.

Respondents that cannot submit comments using either of the above methods may submit comments to: Defense Acquisition Regulations Council, Attn: Ms. Sandra Haberlin, OUSD (AT&L) DP (DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062; facsimile [phone]. Please cite DFARS Case 2001-D012.

At the end of the comment period, interested parties may view public comments on the World Wide Web at http://emissary.acq.osd.mil/​dar/​dfars.nsf.

FOR FURTHER INFORMATION CONTACT:

Ms. Sandra Haberlin, [phone].

SUPPLEMENTARY INFORMATION:

A. Background

Pursuant to Section 8155 of the FY 1994 Defense Appropriations Act (Public Law 103-139), DoD reduced the customary progress payment rate for large business concerns from 85 percent to 75 percent, effective for solicitations issued on or after November 11, 1993. The rates for small business and small disadvantaged business concerns (90 percent and 95 percent, respectively) were not changed.

Despite changes to short term borrowing rates in subsequent years that have supported an increase in the progress payment rate for large business concerns, DoD has been unable to accommodate a rate increase within available funding outlays until FY 2002. This proposed DFARS change will conform the DoD customary uniform progress payment rate for large business concerns with the progress payment rate for large business concerns currently being used by other Executive agencies under FAR 32.501-1(a). The DoD rate will be applicable only to new contract awards made on or after October 1, 2001. Contracts awarded before October 1, 2001, will not be modified to include the 80 percent rate.

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

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 progress payment rates for small and small disadvantaged business concerns are unchanged. 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 2001-D012.

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.

List of Subjects in 48 CFR Parts 232 and 252

• Government procurement

Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.

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

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

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

PART 232—CONTRACT FINANCING

2. Section 232.501-1 is revised to read as follows:

232.501-1

Customary progress payment rates.

(a) The customary progress payment rates for DoD contracts, including contracts that contain foreign military sales (FMS) requirements, are 80 percent for large business concerns, 90 percent for small business concerns, and 95 percent for small disadvantaged business concerns.

3. Section 232.502-4-70 is amended by revising paragraph (b) to read as follows:

232.502-4-70

Additional clauses.

* * * * *

(b) Use the clause at 252.232-7004, DoD Progress Payment Rates, instead of Alternate I of the clause at FAR 52.232-16, if the contractor is a small business or small disadvantaged business concern.

PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

4. Section 252.232-7004 is revised to read as follows:

252.232-7004

DoD Progress Payment Rates.

As prescribed in 232.502-4-70(b), use the following clause:

DoD Progress Payment Rates (XXX 2001)

(a) If the contractor is a small business concern, the Progress Payments clause of this contract is modified to change each mention of the progress payment rate and liquidation rate (excepting paragraph (k), Limitations on Undefinitized Contract Actions) to 90 percent.

(b) If the contractor is a small disadvantaged business concern, the Progress Payments clause of this contract is modified to change each mention of the progress payment rate and liquidation rate (excepting paragraph (k), Limitations on Undefinitized Contract Actions) to 95 percent.

(End of clause)