[Federal Register: June 8, 2010 (Volume 75, Number 109)]
[Rules and Regulations]               
[Page 32638-32639]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08jn10-22]                         

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 217 and 234

 
Defense Federal Acquisition Regulation Supplement; Contract 
Authority for Advanced Component Development or Prototype Units (DFARS 
Case 2009-D034)

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

ACTION: Interim rule with request for comments.

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SUMMARY: DoD is issuing an interim rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement section 819 of 
the National Defense Authorization Act for Fiscal Year 2010. Section 
819 places limitations on certain types of line items and contract 
options that may be included in contracts initially awarded pursuant to 
competitive solicitations. When the prohibition applies, it limits the 
dollar value, period of performance, and time for exercise of such 
contract line items or contract options.

DATES: Effective Date: June 8, 2010.
    Comment Date: Comments on the interim rule should be submitted in 
writing to the address shown below on or before August 9, 2010, to be 
considered in the formation of the final rule.

ADDRESSES: Submit comments identified by DFARS Case 2009-D034, using 
any of the following methods:
    [cir] Federal eRulemaking Portal: http: //www.regulations.gov. 
Follow the instructions for submitting comments.
    [cir] E-mail: dfars@osd.mil. Include DFARS Case 2009-D034 in the 
subject line of the message.
    [cir] Fax: 703-602-0350.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. 
Meredith Murphy, OUSD(AT&L)DPAP(DARS), Room 3B855, 3060 Defense 
Pentagon, Washington, DC 20301-3060.
    Comments received generally will be posted without change to http:/
/www.regulations.gov, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Ms. Meredith Murphy, 703-602-1302.

SUPPLEMENTARY INFORMATION:

A. Background

    This DFARS case implements section 819 of the National Defense 
Authorization Act for Fiscal Year 2010 (Pub. L. 111-84, enacted October 
28, 2009). Section 819 is entitled ``Contract Authority for Advanced 
Component Development or Prototype Units.''
    Section 819 is intended to prevent a contract for new technology 
that is initially awarded as a result of competition from becoming a 
noncompetitive effort for the development of advanced components or the 
procurement of prototype units. To do so, section 819 places 
limitations on the (a) Dollar value, (b) period of performance, and (c) 
time for exercise of contract line items or contract options for 
advanced component development or procurement of prototype items. 
Specifically, the contract line item or contract option must be limited 
to the minimal amount of initial or additional prototype items that 
will allow for timely competitive solicitation and award of a follow-on 
development or production contract for those items. The term of the 
contract line item or contract option cannot be for a period longer 
than 12 months, and the dollar value of the work to be performed 
pursuant to the contract line item or contract option may not exceed 
the lesser of the amount that is three times the dollar value of the 
work previously performed under the contract or $20 million.
    Because the coverage is most likely to apply to major systems 
acquisitions, it has been added as a new DFARS subsection 234.005-1, 
entitled ``Competition.'' However, because the language applies to the 
exercise and content of certain contract options, a reference to 
234.005-1 has been added to DFARS 217.202, entitled ``Use of Options.''
    This is not a significant regulatory action and, therefore, is 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 that this interim rule will 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 rule does not impose any additional requirements on small 
businesses. Therefore, an Initial Regulatory Flexibility Analysis has 
not been performed. DoD invites comments from small business concerns 
and other interested parties on the expected impact of this rule on 
small entities.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this rule in accordance 
with 5 U.S.C. 610. Interested parties must submit such comments 
separately and should cite 5 U.S.C. 610 (DFARS Case 2009-D034) in 
correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the interim rule 
does not contain any information collection requirements that require 
the approval of the Office of Management and Budget under 44 U.S.C., et 
seq.

D. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DoD) that urgent and compelling circumstances exist to 
promulgate this interim rule without prior opportunity for public 
comments. This action is necessary because section 819 of the National 
Defense Authorization Act for Fiscal Year 2010 became effective upon 
enactment on October 28, 2009. Section 819 places limitations on 
certain types of line items and contract options that may be included 
in contracts initially awarded pursuant to competitive solicitations. 
In order to prevent a contract for new technology that is initially 
awarded as a result of competition from becoming a noncompetitive 
effort for the development of advanced components or procurement of 
prototype units, it is necessary to publish this rule as an interim 
rule prior to affording the public an opportunity to comment. However, 
pursuant to 41 U.S.C. 418b and FAR 1.501-3, DoD will consider public 
comments received in response to this interim rule in the formation of 
the final rule.

[[Page 32639]]

List of Subjects in 48 CFR Parts 217 and 234

    Government procurement.

Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.

0
Therefore, 48 CFR parts 217 and 234 are amended as follows:
0
1. The authority citation for 48 CFR parts 217 and 234 continues to 
read as follows:

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

PART 217--SPECIAL CONTRACTING METHODS

0
2. Section 217.202 is revised as follows:


217.202  Use of options.

    (1) See PGI 217.202 for guidance on the use of options.
    (2) See 234.005-1 for limitations on the use of contract options 
for the provision of advanced component development or prototype of 
technology developed under the contract or the delivery of initial or 
additional prototype items.

PART 234--MAJOR SYSTEM ACQUISITION

0
3. Section 234.005-1 is added to read as follows:


234.005-1  Competition.

    (1) A contract that is initially awarded from the competitive 
selection of a proposal resulting from a general solicitation may 
contain a contract line item or contract option for the provision of 
advanced component development or prototype of technology developed 
under the contract or the delivery of initial or additional prototype 
items if the item or a prototype thereof is created as the result of 
work performed under the contract only when it adheres to the following 
limitations:
    (i) The contract line item or contract option shall be limited to 
the minimal amount of initial or additional prototype items that will 
allow for timely competitive solicitation and award of a follow-on 
development or production contract for those items.
    (ii) The term of the contract line item or contract option shall be 
for not more than 12 months.
    (iii) The dollar value of the work to be performed pursuant to the 
contract line item or contract option shall not exceed the lesser of--
    (A) The amount that is three times the dollar value of the work 
previously performed under the contract; or
    (B) $20 million.
    (2) A contract line item or contract option may not be exercised 
under this authority after September 30, 2014.

[FR Doc. 2010-13524 Filed 6-7-10; 8:45 am]
BILLING CODE 5001-08-P