[Federal Register: July 15, 2009 (Volume 74, Number 134)]
[Proposed Rules]               
[Page 34292]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[[Page 34292]]



Defense Acquisition Regulations System

48 CFR Part 216

RIN 0750-AF81

Defense Federal Acquisition Regulation Supplement; Letter 
Contract Definitization Schedule (DFARS Case 2007-D011)

AGENCY: Defense Acquisition Regulations System, Department of Defense 

ACTION: Proposed rule with request for comments.


SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to clarify requirements regarding 
definitization of letter contracts. The rule specifies that DoD letter 
contracts will be definitized using the DFARS procedures applicable to 
all other undefinitized contract actions.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before September 14, 2009, to be 
considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2007-D011, 
using any of the following methods:
    Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
instructions for submitting comments.
    E-mail: dfars@osd.mil. Include DFARS Case 2007-D011 in the subject 
line of the message.
    Fax: 703-602-7887.
    Mail: Defense Acquisition Regulations System, Attn: Ms. Cassandra 
Freeman, OUSD (AT&L) DPAP (DARS), IMD 3D139, 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-
    Comments received generally will be posted without change to http:/
/www.regulations.gov, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Ms. Cassandra Freeman, 703-602-8383.


A. Background

    Section 16.603 of the Federal Acquisition Regulation (FAR) permits 
the use of a letter contract as a preliminary, undefinitized 
contractual instrument, when negotiating a definitive contract is not 
possible in sufficient time to meet the Government's requirements. FAR 
16.603-2(c)(3) requires the definitization of a letter contract within 
180 days after the date of the letter contract, or before completion of 
40 percent of the work to be performed, whichever occurs first. In 
extreme cases and according to agency procedures, the contracting 
officer may authorize an additional period.
    DFARS Subpart 217.74 contains requirements applicable to all DoD 
undefinitized contract actions, consistent with 10 U.S.C. 2326. DFARS 
217.7404-3(a) requires definitization of such actions by 180 days after 
issuance of the action (this date may be extended but may not exceed 
180 days after the contractor submits a qualifying proposal), or the 
date on which the amount of funds obligated exceeds 50 percent of the 
not-to-exceed price, whichever is earlier. If the contractor submits a 
qualifying proposal before 50 percent of the not-to-exceed price has 
been obligated by the Government, the limitation on obligations before 
definitization may be increased to no more than 75 percent.
    In view of the differences between the FAR and DFARS definitization 
requirements, confusion has arisen in this area. This proposed rule 
clarifies that the definitization requirements at DFARS 217.7404-3(a) 
apply to DoD letter contracts instead of the requirements at FAR 
16.603-2(c)(3). This approach provides consistency in the manner in 
which DoD manages its undefinitized contract actions, and is in line 
with the specific provisions of 10 U.S.C. 2326 relating to DoD use of 
undefinitized contract actions.
    This 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 is a clarification of existing requirements 
pertaining to undefinitized contract actions. 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 subpart in accordance with 5 U.S.C. 610. Such comments should be 
submitted separately and should cite DFARS Case 2007-D011.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply, because the proposed 
rule does not contain 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 Part 216

    Government procurement.

Michele P. Peterson,
Editor, Defense Acquisition Regulations System.
    Therefore, DoD proposes to amend 48 CFR Part 216 as follows:


    1. The authority citation for 48 CFR Part 216 continues to read as 

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

    2. Section 216.603-2 is added to read as follows:

216.603-2   Application.

    (c)(3) In accordance with 10 U.S.C. 2326, establish definitization 
schedules for letter contracts following the requirements at 217.7404-
3(a) instead of the requirements at FAR 16.603-2(c)(3).

 [FR Doc. E9-16665 Filed 7-14-09; 8:45 am]