You are on page 1of 4

20758 Federal Register / Vol. 72, No.

80 / Thursday, April 26, 2007 / Rules and Regulations

Acquisition System, and the disciplines A. Background List of Subjects in 48 CFR Parts 206 and
in the Defense Acquisition Guidebook. 225
(d) Source selection processes shall This final rule amends DFARS text as
follows: Government procurement.
be—
(1) Reviewed and approved by Æ 206.303–1—Removes text Michele P. Peterson,
cognizant organizations responsible for designating the Director of Defense Editor, Defense Acquisition Regulations
oversight; Procurement and Acquisition Policy as System.
(2) Documented by the head of the the agency point of contact for ■ Therefore, 48 CFR parts 206 and 225
contracting activity or at the agency submission of certain justification and are amended as follows:
level; and approval documents to the U.S. Trade ■ 1. The authority citation for 48 CFR
(3) Periodically reviewed by outside Representative. This text is no longer parts 206 and 225 continues to read as
officials independent of that office or applicable, as the underlying Federal follows:
agency. Acquisition Regulation (FAR) Authority: 41 U.S.C. 421 and 48 CFR
(e) Legal review of documentation of requirement for submission of these Chapter 1.
major acquisition system source
documents to the U.S. Trade
selection shall be conducted prior to PART 206—COMPETITION
Representative was removed by the
contract award, including the REQUIREMENTS
supporting documentation of the source interim rule that was published at 69 FR
selection evaluation board, source 77870 on December 28, 2004, and 206.303 and 206.303–1 [Removed]
selection advisory council, and source finalized at 71 FR 219 on January 3, ■ 2. Sections 206.303 and 206.303–1 are
selection authority. 2006. removed.
(f) Procurement management reviews Æ 225.870–2 and 225.872–3—
shall determine whether clearance Removes text addressing requirements PART 225—FOREIGN ACQUISITION
threshold authorities are clear and that for inclusion of Canadian firms and 225.870–2 [Amended]
independent review is provided for qualifying country sources on
acquisitions exceeding the simplified ■ 3. Section 225.870–2 is amended as
solicitation mailing lists, and for
acquisition threshold. follows:
sending solicitations to the Canadian ■ a. By removing paragraphs (a) through
[FR Doc. E7–7911 Filed 4–25–07; 8:45 am] Commercial Corporation as well as (c); and
BILLING CODE 5001–08–P Canadian firms appearing on the lists. ■ b. By redesignating paragraphs (d) and
This text is no longer applicable, as (e) as paragraphs (a) and (b)
solicitation mailing lists have been respectively.
DEPARTMENT OF DEFENSE replaced by electronic tools such as the
Central Contractor Registration database 225.872–3 [Amended]
Defense Acquisition Regulations and the Federal Business Opportunities ■ 4. Section 225.872–3 is amended as
System Web site. The FAR was amended to follows:
remove references to solicitation ■ a. By removing paragraph (a); and
48 CFR Parts 206 and 225 ■ b. By redesignating paragraphs (b)
mailing lists in the final rule published
at 68 FR 43855 on July 24, 2003. through (g) as paragraphs (a) through (f)
RIN 0750–AF62 respectively.
This rule was not subject to Office of
Defense Federal Acquisition Management and Budget review under [FR Doc. E7–7907 Filed 4–25–07; 8:45 am]
Regulation Supplement; Deletion of Executive Order 12866, dated BILLING CODE 5001–08–P
Obsolete Acquisition Procedures September 30, 1993.
(DFARS Case 2006–D046)
B. Regulatory Flexibility Act DEPARTMENT OF DEFENSE
AGENCY: Defense Acquisition
Regulations System, Department of This rule will not have a significant Defense Acquisition Regulations
Defense (DoD). cost or administrative impact on System
ACTION: Final rule.
contractors or offerors, or a significant
effect beyond the internal operating 48 CFR Parts 215, 231, and 252
SUMMARY: DoD has issued a final rule procedures of DoD. Therefore,
RIN 0750–AF67
amending the Defense Federal publication for public comment under
Acquisition Regulation Supplement 41 U.S.C. 418b is not required. Defense Federal Acquisition
(DFARS) to remove text relating to However, DoD will consider comments Regulation Supplement; Excessive
obsolete requirements for maintenance from small entities concerning the Pass-Through Charges (DFARS Case
of paper-based solicitation mailing lists affected DFARS subparts in accordance 2006–D057)
and for furnishing of documents to with 5 U.S.C. 610. Such comments
certain entities. AGENCY: Defense Acquisition
should cite DFARS Case 2006–D046.
EFFECTIVE DATE: April 26, 2007.
Regulations System, Department of
C. Paperwork Reduction Act Defense (DoD).
FOR FURTHER INFORMATION CONTACT: Ms.
ACTION: Interim rule with request for
Amy Williams, Defense Acquisition The Paperwork Reduction Act does comments.
Regulations System, OUSD (AT&L) not apply, because the rule does not
DPAP (DARS), IMD 3C132, 3062 impose any information collection SUMMARY: DoD has issued an interim
Defense Pentagon, Washington, DC
pwalker on PROD1PC71 with RULES

requirements that require the approval rule amending the Defense Federal
20301–3062. Telephone (703) 602–0328; of the Office of Management and Budget Acquisition Regulation Supplement
facsimile (703) 602–0350. Please cite under 44 U.S.C. 3501, et seq. (DFARS) to implement Section 852 of
DFARS Case 2006–D046. the National Defense Authorization Act
SUPPLEMENTARY INFORMATION: for Fiscal Year 2007. Section 852

VerDate Aug<31>2005 17:20 Apr 25, 2007 Jkt 211001 PO 00000 Frm 00058 Fmt 4700 Sfmt 4700 E:\FR\FM\26APR1.SGM 26APR1
Federal Register / Vol. 72, No. 80 / Thursday, April 26, 2007 / Rules and Regulations 20759

requires DoD to prescribe regulations to Executive Order 12866, dated subcontracts are not excessive, in
ensure that pass-through charges on September 30, 1993. accordance with Section 852 of Public
contracts or subcontracts that are Law 109–364. DoD contracting officers
B. Regulatory Flexibility Act
entered into for or on behalf of DoD are will use the information to assess the
not excessive in relation to the cost of DoD does not expect this rule to have value added by a contractor or
work performed by the relevant a significant economic impact on a subcontractor in relation to proposed,
contractor or subcontractor. substantial number of small entities billed, or claimed indirect costs or profit
DATES: Effective date: April 26, 2007.
within the meaning of the Regulatory on work performed by a subcontractor.
Flexibility Act, 5 U.S.C. 601, et seq.,
Comment date: Comments on the Affected Public: Businesses or other
because DoD does not expect a
interim rule should be submitted in for-profit institutions.
significant number of entities to propose
writing to the address shown below on
excessive pass-through charges under Respondent’s Obligation: Required to
or before June 25, 2007, to be considered
DoD contracts or subcontracts, and the obtain or retain benefits.
in the formation of the final rule.
information required from offerors and
ADDRESSES: You may submit comments, contractors regarding pass-through Frequency: On occasion.
identified by DFARS Case 2006–D057, charges is minimal. Therefore, DoD has Written comments and
using any of the following methods: not performed an initial regulatory recommendations on the proposed
• Federal eRulemaking Portal: http:// flexibility analysis. DoD invites information collection should be sent to
www.regulations.gov. Follow the comments from small businesses and Ms. Hillary Jaffe at the Office of
instructions for submitting comments. other interested parties. DoD also will Management and Budget, Desk Officer
• E-mail: dfars@osd.mil. Include consider comments from small entities for DoD, Room 10236, New Executive
DFARS Case 2006–D057 in the subject concerning the affected DFARS subparts Office Building, Washington, DC 20503,
line of the message. in accordance with 5 U.S.C. 610. Such with a copy to the Defense Acquisition
• Fax: (703) 602–0350. comments should be submitted
Regulations System, Attn: Mr. John
• Mail: Defense Acquisition separately and should cite DFARS Case
McPherson, OUSD(AT&L)DPAP(CPF),
Regulations System, Attn: Mr. John 2006–D057.
IMD 3C132, 3062 Defense Pentagon,
McPherson, OUSD(AT&L)DPAP(CPF), C. Paperwork Reduction Act Washington, DC 20301–3062.
IMD 3C132, 3062 Defense Pentagon,
This interim rule contains a new Comments can be received from 30 to 60
Washington, DC 20301–3062.
information collection requirement. The days after the date of this notice, but
• Hand Delivery/Courier: Defense
Acquisition Regulations System, Crystal Office of Management and Budget comments to OMB will be most useful
Square 4, Suite 200A, 241 18th Street, (OMB) has approved the information if received by OMB within 30 days after
Arlington, VA 22202–3402. collection requirement for use through the date of this notice.
Comments received generally will be October 31, 2007, under OMB Control To request more information on this
posted without change to http:// Number 0704–0443, in accordance with proposed information collection or to
www.regulations.gov, including any the emergency processing procedures of obtain a copy of the proposal and
personal information provided. 5 CFR 1320.13. DoD invites comments associated collection instruments,
on the following aspects of the interim
FOR FURTHER INFORMATION CONTACT: Mr. please write to the Defense Acquisition
rule: (a) Whether the collection of
John McPherson, (703) 602–0296. Regulations System, Attn: Mr. John
information is necessary for the proper
SUPPLEMENTARY INFORMATION: McPherson, OUSD(AT&L)DPAP(CPF),
performance of the functions of DoD,
including whether the information will IMD 3C132, 3062 Defense Pentagon,
A. Background Washington, DC 20301–3062.
have practical utility; (b) the accuracy of
This interim rule implements Section the estimate of the burden of the D. Determination To Issue an Interim
852 of the National Defense information collection; (c) ways to Rule
Authorization Act for Fiscal Year 2007 enhance the quality, utility, and clarity
(Public Law 109–364). Section 852 of the information to be collected; and A determination has been made under
requires DoD to prescribe regulations to (d) ways to minimize the burden of the the authority of the Secretary of Defense
ensure that pass-through charges on information collection on respondents, that urgent and compelling reasons exist
contracts or subcontracts (or task or including the use of automated to publish an interim rule prior to
delivery orders) that are entered into for collection techniques or other forms of affording the public an opportunity to
or on behalf of DoD are not excessive in information technology. The following comment. This interim rule implements
relation to the cost of work performed is a summary of the information Section 852 of the National Defense
by the relevant contractor or collection requirement. Authorization Act for Fiscal Year 2007
subcontractor. To enable DoD to ensure Title: Defense Federal Acquisition (Public Law 109–364). Section 852
that pass-through charges are not Regulation Supplement (DFARS); requires DoD to prescribe regulations,
excessive, this interim rule contains a Excessive Pass-Through Charges.
solicitation provision and a contract not later than May 1, 2007, to ensure
Type of Request: New collection.
clause requiring offerors and contractors that pass-through charges on contracts
Number of Respondents: 12,650.
to identify the percentage of work that or subcontracts (or task or delivery
Responses per Respondent:
will be subcontracted and, when Approximately 1. orders) that are entered into for or on
subcontract costs will exceed 70 percent Annual Responses: 12,800. behalf of DoD are not excessive in
of the total cost of work to be performed, Average Burden per Response: .51 relation to the cost of work performed
by the relevant contractor or
pwalker on PROD1PC71 with RULES

to provide information on indirect costs hour.


and profit and value added with regard Annual Burden Hours: 6,550. subcontractor. Comments received in
to the subcontract work. Needs and Uses: DoD needs this response to this interim rule will be
This rule was not subject to Office of information to ensure that pass-through considered in the formation of the final
Management and Budget review under charges under DoD contracts and rule.

VerDate Aug<31>2005 17:20 Apr 25, 2007 Jkt 211001 PO 00000 Frm 00059 Fmt 4700 Sfmt 4700 E:\FR\FM\26APR1.SGM 26APR1
20760 Federal Register / Vol. 72, No. 80 / Thursday, April 26, 2007 / Rules and Regulations

List of Subjects in 48 CFR Parts 215, 252.215–7003 Excessive pass-through Contracting Officer shall determine if
231, and 252 charges—identification of subcontract excessive pass-through charges exist.
effort. (c) Performance of work by the Contractor
Government procurement. As prescribed in 215.408(3), use the or a subcontractor. (1) If the Contractor
following provision: changes the amount of subcontract effort
Michele P. Peterson,
identified in its proposal such that it exceeds
Editor, Defense Acquisition Regulations EXCESSIVE PASS-THROUGH CHARGES— 70 percent of the total cost of work to be
System. IDENTIFICATION OF SUBCONTRACT performed under the contract, task order, or
EFFORT (APR 2007) delivery order, the Contractor shall provide
■ Therefore, 48 CFR parts 215, 231, and
252 are amended as follows: (a) Definition. Excessive pass-through the Contracting Officer with a description of
charge, as used in this provision, is defined the value added by the Contractor as related
■ 1. The authority citation for 48 CFR to the subcontract effort.
in the clause of this solicitation entitled
parts 215, 231, and 252 continues to ‘‘Excessive Pass-Through Charges’’ (DFARS (2) If any subcontractor identified in the
read as follows: 252.215–7004). proposal changes the amount of lower-tier
Authority: 41 U.S.C. 421 and 48 CFR (b) General. The offeror’s proposal shall subcontractor effort such that it exceeds 70
Chapter 1. exclude excessive pass-through charges. percent of the total cost of the work to be
(c) Performance of work by the Contractor performed under its subcontract, the
PART 215—CONTRACTING BY or a subcontractor. (1) The offeror shall Contractor shall provide the Contracting
NEGOTIATION identify in its proposal the percent of effort Officer with a description of the value added
it intends to perform, and the percent by the subcontractor as related to the work
expected to be performed by each to be performed by the lower-tier
■ 2. Section 215.408 is amended by
subcontractor, under the contract, task order, subcontractor(s).
adding paragraph (3) to read as follows: or delivery order. (3) If any subcontractor not identified in
215.408 Solicitation provisions and (2) If the offeror intends to subcontract the proposal subcontracts to a lower-tier
contract clauses. more than 70 percent of the total cost of work subcontractor more than 70 percent of the
to be performed under the contract, task total cost of work to be performed under its
* * * * * order, or delivery order, the offeror shall subcontract, the Contractor shall provide the
(3) Use the provision at 252.215–7003, identify in its proposal— Contracting Officer with a description of the
Excessive Pass-Through Charges— (i) The amount of the offeror’s indirect value added by the subcontractor as related
Identification of Subcontract Effort, and costs and profit applicable to the work to be to the work to be performed by the lower-tier
the clause at 252.215–7004, Excessive performed by the subcontractor(s); and subcontractor(s).
Pass-Through Charges, in all (ii) A description of the value added by the (d) Recovery of excessive pass-through
offeror as related to the work to be performed charges. If the Contracting Officer determines
solicitations and contracts (including
by the subcontractor(s). that excessive pass-through charges exist—
task or delivery orders) except for— (3) If any subcontractor proposed under the (1) For fixed-price contracts, the
(i) Firm-fixed-price contracts awarded contract, task order, or delivery order intends Government shall be entitled to a price
on the basis of adequate price to subcontract to a lower-tier subcontractor reduction for the amount of excessive pass-
competition; more than 70 percent of the total cost of work through charges included in the contract
(ii) Fixed-price contracts with to be performed under its subcontract, the price; and
economic price adjustment, awarded on offeror shall identify in its proposal— (2) For other than fixed-price contracts, the
(i) The amount of the subcontractor’s excessive pass-through charges are
the basis of adequate price competition; indirect costs and profit applicable to the unallowable in accordance with the
(iii) Firm-fixed-price contracts for the work to be performed by the lower-tier provisions in Subpart 31.2 of the Federal
acquisition of a commercial item; or subcontractor(s); and Acquisition Regulation (FAR) and Subpart
(iv) Fixed-price contracts with (ii) A description of the value added by the 231.2 of the Defense FAR Supplement.
economic price adjustment, for the subcontractor as related to the work to be (e) Access to records. (1) The Contracting
acquisition of a commercial item. performed by the lower-tier subcontractor(s). Officer, or authorized representative, shall
(End of provision) have the right to examine and audit all the
PART 231—CONTRACT COST Contractor’s records (as defined at FAR
PRINCIPLES AND PROCEDURES 252.215–7004 Excessive pass-through 52.215–2(a)) necessary to determine whether
charges. the Contractor proposed, billed, or claimed
■ 3. Sections 231.201–2 and 231.203 are As prescribed in 215.408(3), use the excessive pass-through charges.
added to read as follows: following clause: (2) For those subcontracts to which
paragraph (f) of this clause applies, the
231.201–2 Determining allowability. EXCESSIVE PASS-THROUGH CHARGES Contracting Officer, or authorized
(APR 2007) representative, shall have the right to
(a) In addition to the requirements at examine and audit all the subcontractor’s
(a) Definitions. As used in this clause—
FAR 31.201–2(a), a cost is allowable Excessive pass-through charge, with records (as defined at FAR 52.215–2(a))
only when it complies with the clause respect to a Contractor or subcontractor that necessary to determine whether the
at 252.215–7004, Excessive Pass- adds no or negligible value to a contract or subcontractor proposed, billed, or claimed
Through Charges. subcontract, means a charge to the excessive pass-through charges.
Government by the Contractor or (f) Flowdown. The Contractor shall insert
231.203 Indirect costs. subcontractor that is for indirect costs or the substance of this clause, including this
(d) Excessive pass-through charges, as profit on work performed by a subcontractor paragraph (f), in all subcontracts under this
defined in the clause at 252.215–7004, (other than charges for the costs of managing contract, except for—
subcontracts and applicable indirect costs (1) Firm-fixed-price subcontracts awarded
are unallowable.
and profit based on such costs). on the basis of adequate price competition;
PART 252—SOLICITATION No or negligible value means the (2) Fixed-price subcontracts with economic
Contractor or subcontractor cannot price adjustment, awarded on the basis of
PROVISIONS AND CONTRACT demonstrate to the Contracting Officer that adequate price competition;
pwalker on PROD1PC71 with RULES

CLAUSES its effort added substantive value to the (3) Firm-fixed-price subcontracts for the
contract or subcontract in accomplishing the acquisition of a commercial item; or
■ 4. Sections 252.215–7003 and work performed under the contract. (4) Fixed-price subcontracts with economic
252.215–7004 are added to read as (b) General. The Government will not pay price adjustment, for the acquisition of a
follows: excessive pass-through charges. The commercial item.

VerDate Aug<31>2005 17:20 Apr 25, 2007 Jkt 211001 PO 00000 Frm 00060 Fmt 4700 Sfmt 4700 E:\FR\FM\26APR1.SGM 26APR1
Federal Register / Vol. 72, No. 80 / Thursday, April 26, 2007 / Rules and Regulations 20761

(End of clause) proposed rule. A discussion of the DFARS case. DoD recognizes the
[FR Doc. E7–7905 Filed 4–25–07; 8:45 am]
comments is provided below. importance of the issues raised by the
1. Comment: One respondent stated respondent and is currently working
BILLING CODE 5001–08–P
that the proposed changes to independently of this case to resolve
subcontracting plan requirements at those issues. Any proposed changes to
DFARS 219.704(2) and 252.219–7003(g) the DFARS that might result would be
DEPARTMENT OF DEFENSE
would create an ambiguity. These published under a separate case for
Defense Acquisition Regulations changes proposed to amend text public comment.
System requiring contractors to notify the 3. Comment: One respondent stated
administrative contracting officer (ACO) that deleting DFARS text and putting it
48 CFR Parts 219 and 252 of any substitutions of ‘‘firms that are in PGI requires contracting officers to
not small, small disadvantaged, or research multiple locations to ensure
RIN 0750–AE93 women-owned small businesses for the they are complying with all the
firms listed in the subcontracting plan,’’ necessary requirements. The respondent
Defense Federal Acquisition to instead indicate that the contractor
Regulation Supplement; Small stated that deleting requirements would
must notify the ACO of any be streamlining, not moving them to
Business Programs (DFARS Case substitutions of small businesses
2003–D047) another area which may cause
specifically identified in the uncertainty and ambiguity.
AGENCY: Defense Acquisition subcontracting plan. The respondent DoD Response: DoD has moved non-
Regulations System, Department of stated that ACOs and contractors could regulatory requirements and guidance
Defense (DoD). interpret this change to mean that that do not significantly impact the
ACTION: Final rule.
contractors would be required to public, from DFARS to PGI to facilitate
provide notification when substituting rapid dissemination of any future
SUMMARY: DoD has issued a final rule any firm, even one that is a small changes, thus streamlining the process.
amending Defense Federal Acquisition business concern, for one that is listed Where there is related text in PGI, a link
Regulation Supplement (DFARS) text in the subcontracting plan. The to this text is imbedded in DFARS.
pertaining to small business programs. respondent recommended that the rule Through these links, the user is able to
The rule updates and clarifies policy for instead require contractors to notify the view the related PGI text side-by-side
contracting with small business and ACO of any substitutions of ‘‘firms that with the DFARS text. PGI also contains
small disadvantaged business concerns are not small business concerns’’ for the information on training, deviations,
and relocates text to the DFARS firms listed in the subcontracting plan. policy memoranda, and other
companion resource, Procedures, DoD Response: DoD agrees that the information (e.g., guidebooks) that is not
Guidance, and Information. language in the proposed rule could be available in the DFARS.
ambiguous. Therefore, the final rule has This rule was not subject to Office of
EFFECTIVE DATE: April 26, 2007.
been written to clarify the existing Management and Budget review under
FOR FURTHER INFORMATION CONTACT: Ms. policy, i.e., that the contractor must
Deborah Tronic, Defense Acquisition Executive Order 12866, dated
notify the ACO of any substitutions of September 30, 1993.
Regulations System, firms that are not small business firms,
OUSD(AT&L)DPAP(DARS), IMD 3C132, for the small business firms specifically B. Regulatory Flexibility Act
3062 Defense Pentagon, Washington, DC identified in the subcontracting plan. DoD certifies that this final rule will
20301–3062. Telephone (703) 602–0289; 2. Comment: One respondent not have a significant economic impact
facsimile (703) 602–0350. Please cite recommended deleting the proposed on a substantial number of small entities
DFARS Case 2003–D047. text at 219.704(3), which contains a within the meaning of the Regulatory
SUPPLEMENTARY INFORMATION: reference to the procedures in DFARS Flexibility Act, 5 U.S.C. 601, et seq.,
215.304 regarding evaluation of offers because the rule makes no significant
A. Background
that require a subcontracting plan. The change to DoD policy for contracting
This final rule amends DFARS Part respondent recommended that the with small business and small
219 and corresponding contract clauses. proposed 219.704(3) be replaced with disadvantaged business concerns.
The DFARS changes— text stating that offerors with approved
• Update and clarify requirements for commercial or comprehensive C. Paperwork Reduction Act
contracting with small business and subcontracting plans are not required to The Paperwork Reduction Act does
small disadvantaged business concerns; submit contract-specific goals, and that not apply, because the rule does not
and those offerors will be evaluated based impose any information collection
• Delete text containing procedures on Standard Form 295 information and requirements that require the approval
for referring matters to the Small Defense Contract Management Agency of the Office of Management and Budget
Business Administration; procedures for evaluations of company-wide under 44 U.S.C. 3501, et seq.
processing contract awards under the performance under their small business
8(a) Program; and information on the programs. In addition, the respondent List of Subjects in 48 CFR Parts 219 and
DoD test program for negotiation of recommended that 219.704 state that 252
comprehensive small business contracting officers may accept Government procurement.
subcontracting plans. Text on these commercial subcontracting plans for
subjects has been relocated to the both commercial item and Michele P. Peterson,
DFARS companion resource, noncommercial item contracts, provided Editor, Defense Acquisition Regulations
Procedures, Guidance, and Information the plan covers the entire production of System.
pwalker on PROD1PC71 with RULES

(PGI), available at http:// both commercial and noncommercial ■ Therefore, 48 CFR parts 219 and 252
www.acq.osd.mil/dpap/dars/pgi. items as set forth at FAR 52.219–9(g). are amended as follows:
DoD published a proposed rule at 71 DoD Response: The issues addressed ■ 1. The authority citation for 48 CFR
FR 9303 on February 23, 2006. Three in this comment go beyond the scope of parts 219 and 252 continues to read as
respondents submitted comments on the the changes being made under this follows:

VerDate Aug<31>2005 17:20 Apr 25, 2007 Jkt 211001 PO 00000 Frm 00061 Fmt 4700 Sfmt 4700 E:\FR\FM\26APR1.SGM 26APR1

You might also like