[Federal Register: October 29, 2010 (Volume 75, Number 209)]
[Rules and Regulations]               
[Page 66680-66683]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29oc10-14]                         

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 237 and 252

RIN 0750-AG52

 
Defense Federal Acquisition Regulation Supplement (DFARS); 
Continuation of Essential Contractor Services (DFARS Case 2009-D017)

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

ACTION: Final rule.

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SUMMARY: DoD is adopting as final, with changes, the interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to add policy and a contract clause requiring that contractors 
providing essential contractor services, as determined by the requiring 
activity, shall be prepared to continue such services during periods of 
crisis.

DATES: Effective date: October 29, 2010.
    Applicability date: Contracting officers may, at their discretion, 
include these changes in any existing contract with appropriate 
consideration, in accordance with FAR 1.108(d)(3).

FOR FURTHER INFORMATION CONTACT: Mr. Julian E. Thrash, 703-602-0310.

SUPPLEMENTARY INFORMATION:

[[Page 66681]]

I. Background

    DoD published an interim rule in the Federal Register at 75 FR 
10191, on March 5, 2010, implementing the requirements of DoDI 3020.37, 
Continuation of Essential DoD Contractor Services During Crises. DoD 
Instruction (DoDI) 1100.22, Policy and Procedures for Determining 
Workforce Mix, has since superseded DoDI 3020.37.
    This rule is necessary to ensure that essential contractor services 
are not interrupted. The current changing threat environment, 
particularly under the additional challenges caused by such potential 
crises as destructive weather, earthquakes, or pandemic disease, has 
increased the need for continuity of operations capabilities and plans 
that enable agencies to continue their essential functions during a 
broad range of emergencies and crises.
    DoD established this requirement for contractors to submit their 
plans to ensure continuation of essential contractor services that 
support mission-essential functions during a crisis situation. As a 
general rule, the designation of services as essential contractor 
services will not apply to an entire contract but will apply only to 
those service function(s) that have been specifically identified as 
essential contractor services by the functional commander or civilian 
equivalent.
    The public comment period for the DFARS interim rule closed May 4, 
2010. Two respondents submitted comments to the interim rule. A 
discussion of the comments and the changes made to the rule as a result 
of those comments is provided below.

II. Analysis of Public Comments

A. Definitions

1. Definition of ``Functional Commander or Equivalent''
    Comment. A respondent requested the term ``functional commander or 
equivalent'' be defined. The respondent was concerned with how this 
term would be interpreted in non-military offices that did not have a 
``functional commander or equivalent.''
    Response. The term ``functional commander or equivalent'' has been 
revised. The term appropriate ``functional commander or civilian 
equivalent'' clarifies the meaning of the phrase ``or equivalent.'' 
This revised identifier, ``civilian equivalent,'' was added to the 
definitions of ``essential contractor services,'' and ``mission-
essential functions.'' Additionally, conforming changes to DFARS 
237.7602(a), and 237.7602(b) were made for this revised term.
2. Definition of a `` Crisis''
    Comment. A respondent requested a definition for a ``crisis'' be 
added to the text.
    Response. A crisis situation is dynamic, with the body of knowledge 
growing hour-by-hour from the latest situational reports. As such, it 
does not lend itself to a precise definition. The contractor will be 
notified to activate plans for a crisis by the contracting officer, who 
does so at the directions of the appropriate functional commander or 
civilian equivalent.

B. The Contracting Officer's Role

    Comment. A respondent was concerned that DFARS 237.7602, Policy, 
did not clearly lay out the role of a contracting officer in the 
process of requiring a contractor to submit a plan. The concern was 
that direction to the contractor should come from the contracting 
officer, not the requiring activity.
    Response. DFARS 237.7602, Policy, has been revised at paragraphs 
(a) and (b) to clarify that it is the role of the contracting officer, 
not the requiring activity, to provide direction to the contractor.

C. Written Plan

1. Status of the Plan
    Comment. A respondent expressed concern regarding DFARS 
237.7602(b), whether the contractor should ``have a plan'' or ``submit 
a plan.''
    Response. DFARS 237.7602(b) has been revised to require contractors 
to ``provide a written plan'' for Government-determined essential 
contractor services.
2. Materially Altered Plans
    Comment. A respondent expressed concern that a contracting officer 
needs to have the most current version of the contractor's plan. The 
concern centered on the determination of whether a change would 
``materially alter'' the plan.
    Response. DFARS 252.237-7023(c)(2) has been revised to require the 
contractor to provide all plan updates to the contracting officer for 
approval.
3. Use of a Plan
    Comment. A respondent expressed a number of concerns about the 
evaluation of a contractor's written plan, and whether or not the plan 
should be evaluated prior to contract award.
    Response. In response to this concern, a provision has been created 
at DFARS 252.237-7024, Notice of Continuation of Essential Contractor 
Services, to require the submission of the plan as part of the 
offeror's proposal. The associate provision prescription is added at 
237.7603. The contractor's continuity of essential services plan shall 
be considered and evaluated as part of the technical evaluation of 
offers. The functional managers of the services should be consulted to 
determine the sufficiency of these plans. The contractor's Mission-
Essential Contractor Services Plan, in the resultant contract, will 
remain active in accordance with the clause at DFARS 252.237-7023, 
Continuation of Essential Contractor Services.

D. Equitable Adjustment

    Comment. A respondent stated that, if costs increase due to the 
continuation of services during an event that would create an excusable 
delay, contractors should be entitled to an equitable adjustment to the 
terms of the contract. Furthermore, they were concerned that inclusion 
of the clause in a contract could be construed as waiving the 
contractor's right to an equitable adjustment to contract terms other 
than schedule terms when providing its best efforts to maintain 
continuity of operations during a crisis.
    Response. DFARS 252.237-7023(f), Changes, provides the basis for 
determining an equitable adjustment. In the interim rule, this 
paragraph allowed for an equitable adjustment to contract price. In the 
final rule, this paragraph has been revised to include that, in 
addition to an adjustment in price, an equitable adjustment may be to 
``delivery schedule, or both.''

E. Causes Beyond the Control of the Contractor

    Comment. Two respondents requested the clause at DFARS 252.237-
7023(c) be clarified with regard to causes beyond the control of the 
contractor.
    Response. As a result of the necessity to ensure performance of a 
mission-essential function, a new paragraph has been added at DFARS 
252.237-7023(d)(1). This paragraph clarifies that, in those specific 
instances where a contractor function is considered mission essential, 
it is important for contract performance to continue notwithstanding 
any other clause of the contract; and that the contractor shall be 
responsible to perform those services identified as essential 
contractor services during crisis situations (as directed by the 
contracting officer), in accordance with its Mission-Essential 
Contractor Services Plan. If in the course of contract performance, a 
contractor feels it must apply for an equitable adjustment, it may 
follow the

[[Page 66682]]

process required in DFARS 252.237-7023(f), Changes.

F. Other Changes

     The definitions have been moved from 237.7601 to the 
clause 252.237-7023(a).
     DFARS 252.237-7023 has been renamed ``Continuation of 
Essential Contractor Services'' instead of ``Continuation of Mission-
Essential Functions'' in order to use more precise terminology.
     Redesignated DFARS 252.237-7023(e) adds ``military'' 
personnel to the list of options the Government reserves the right to 
utilize in crisis situations. Additionally, reference to the Office of 
Federal Procurement Policy letter dated May 2007, and FAR and DFARS 
parts 18 and 218 were determined unnecessary and have been deleted from 
that paragraph.

III. Executive Order 12866

    This regulatory action was 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.

IV. Regulatory Flexibility Act

    DoD certifies that this rule will not have a significant economic 
impact upon a substantial number of small entities because it allows 
for an equitable adjustment for additional costs that are incurred 
during a crisis situation.
    The interim rule published at 75 FR 10191, on March 5, 2010, 
invited comments from small businesses and other interested parties. No 
comments were received from small entities on the affected DFARS 
subpart with regard to small businesses.

V. Paperwork Reduction Act

    This final rule contains an information collection requirement. The 
Office of Management and Budget (OMB) has approved the information 
collection requirement for use through December 31, 2010, under OMB 
Control Number 0704-0465, in accordance with the emergency processing 
procedures of 5 CFR 1320.13.
    The following is a summary of the information collection 
requirement.
    Title: Defense Federal Acquisition Regulation Supplement (DFARS) 
2009-D017; Continuation of Essential Contractor Services.
    Type of Request: New collection.
    Number of Respondents: 7,600.
    Responses per Respondents: 1.25.
    Annual Responses: 9,500.
    Average Burden per Response: 2.
    Total Annual Burden Hours: 19,000.
    Needs and Uses: DoD needs this information to ensure essential 
contractor services are performed for continuity of operations.
    Affected Public: Businesses or other for-profit institutions.
    Frequency: On occasion.
    Respondent's Obligation: Required to obtain contract.
    The interim rule, published at 75 FR 10191, on March 5, 2010, 
invited comments on the following aspects of the interim rule: (a) 
Whether the collection of information is necessary for the proper 
performance of the functions of DoD, including whether the information 
will have practical utility; (b) the accuracy of the estimate of the 
burden of the information collection; (c) ways to enhance the quality, 
utility, and clarity of the information to be collected; and (d) ways 
to minimize the burden of the information collection on respondents, 
including the use of automated collection techniques or other forms of 
information technology. No comments were received regarding this 
information collection requirement.
    To request more information on this information collection or to 
obtain a copy of the information collection requirement and associated 
collection instruments, please write to the Defense Acquisition 
Regulations System (DARS), Attn: Mr. Julian Thrash, 
OUSD(AT&L)DPAP(DARS), Room 3B855, 3060 Defense Pentagon, Washington, DC 
20301-3060.

List of Subjects in 48 CFR Parts 237 and 252

    Government procurement.

Clare M. Zebrowski,
Editor, Defense Acquisition Regulations System.

0
Therefore, the Defense Acquisition Regulations System confirms as final 
the interim rule published at 75 FR 10191, March 5, 2010, with the 
following changes:
0
1. The authority citation for 48 CFR parts 237 and 252 continues to 
read as follows:

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

PART 237--SERVICE CONTRACTING

0
2. Subpart 237.76 is revised to read as follows:
Subpart 237.76--Continuation of Essential Contractor Services
Sec.
237.7600 Scope.
237.7601 Definitions.
237.7602 Policy.
237.7603 Solicitation provision and contract clause.

Subpart 237.76--Continuation of Essential Contractor Services


237.7600  Scope.

    This subpart prescribes procedures for the acquisition of essential 
contractor services which support mission-essential functions.


237.7601  Definitions.

    As used in this subpart, essential contractor service and mission-
essential functions are defined in the clause at 252.237-7023, 
Continuation of Essential Contractor Services.


237.7602  Policy.

    (a) Contractors providing services designated as essential 
contractor services shall be prepared to continue providing such 
services, in accordance with the terms and conditions of their 
contracts, during periods of crisis. As a general rule, the designation 
of services as essential contractor services will not apply to an 
entire contract but will apply only to those service functions that 
have been specifically identified as essential contractor services by 
the functional commander or civilian equivalent.
    (b) Contractors who provide Government-determined essential 
contractor services shall provide a written plan to be incorporated in 
the contract, to ensure the continuation of these services in crisis 
situations. Contracting officers shall consult with a functional 
manager to assess the sufficiency of the contractor-provided written 
plan. Contractors will activate such plans only during periods of 
crisis, as authorized by the contracting officer, who does so at the 
direction of the appropriate functional commander or civilian 
equivalent.
    (c) The contracting officer shall follow the procedures at PGI 
207.105U(b)(20)(C) in preparing an acquisition plan.


237.7603  Solicitation provision and contract clause.

    (a) Use the clause at 252.237-7023, Continuation of Essential 
Contractor Services in all solicitations and contracts for services 
that are in support of mission-essential functions.
    (b) Use the provision at 252.237-7024, Notice of Continuation of 
Essential Contractor Services in all solicitations for services that 
include the clause 252.237-7023.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
3. Section 252.237-7023 is revised to read as follows:

[[Page 66683]]

252.237-7023  Continuation of Essential Contractor Services.

    As prescribed in 237.7603(a), use the following clause:

CONTINUATION OF ESSENTIAL CONTRACTOR SERVICES (OCT 2010)

    (a) Definitions. As used in this clause-
    (1) Essential contractor service means a service provided by a 
firm or individual under contract to DoD to support mission-
essential functions, such as support of vital systems, including 
ships owned, leased, or operated in support of military missions or 
roles at sea; associated support activities, including installation, 
garrison, and base support services; and similar services provided 
to foreign military sales customers under the Security Assistance 
Program. Services are essential if the effectiveness of defense 
systems or operations has the potential to be seriously impaired by 
the interruption of these services, as determined by the appropriate 
functional commander or civilian equivalent.
    (2) Mission-essential functions means those organizational 
activities that must be performed under all circumstances to achieve 
DoD component missions or responsibilities, as determined by the 
appropriate functional commander or civilian equivalent. Failure to 
perform or sustain these functions would significantly affect DoD's 
ability to provide vital services or exercise authority, direction, 
and control.
    (b) The Government has identified all or a portion of the 
contractor services performed under this contract as essential 
contractor services in support of mission-essential functions. These 
services are listed in attachment --, Mission-Essential Contractor 
Services, dated --------.
    (c)(1) The Mission-Essential Contractor Services Plan submitted 
by the Contractor, is incorporated in this contract.
    (2) The Contractor shall maintain and update its plan as 
necessary. The Contractor shall provide all plan updates to the 
Contracting Officer for approval.
    (3) As directed by the Contracting Officer, the Contractor shall 
participate in training events, exercises, and drills associated 
with Government efforts to test the effectiveness of continuity of 
operations procedures and practices.
    (d)(1) Notwithstanding any other clause of this contract, the 
Contractor shall be responsible to perform those services identified 
as essential contractor services during crisis situations (as 
directed by the Contracting Officer), in accordance with its 
Mission-Essential Contractor Services Plan.
    (2) In the event the Contractor anticipates not being able to 
perform any of the essential contractor services identified in 
accordance with paragraph (b) of this clause during a crisis 
situation, the Contractor shall notify the Contracting Officer or 
other designated representative as expeditiously as possible and use 
its best efforts to cooperate with the Government in the 
Government's efforts to maintain the continuity of operations.
    (e) The Government reserves the right in such crisis situations 
to use Federal employees, military personnel, or contract support 
from other contractors, or to enter into new contracts for essential 
contractor services.
    (f) Changes. The Contractor shall segregate and separately 
identify all costs incurred in continuing performance of essential 
services in a crisis situation. The Contractor shall notify the 
Contracting Officer of an increase or decrease in costs within 
ninety days after continued performance has been directed by the 
Contracting Officer, or within any additional period that the 
Contracting Officer approves in writing, but not later than the date 
of final payment under the contract. The Contractor's notice shall 
include the Contractor's proposal for an equitable adjustment and 
any data supporting the increase or decrease in the form prescribed 
by the Contracting Officer. The parties shall negotiate an equitable 
price adjustment to the contract price, delivery schedule, or both 
as soon as is practicable after receipt of the Contractor's 
proposal.
    (g) The Contractor shall include the substance of this clause, 
including this paragraph (g), in subcontracts for the essential 
services.


(End of clause)

0
4. Section 252.237-7024 is added to read as follows:


252.237-7024  Notice of Continuation of Essential Contractor Services.

    As prescribed in 237.7603(b), use the following provision:

NOTICE OF CONTINUATION OF ESSENTIAL CONTRACTOR SERVICES [OCT 2010]

    (a) Definitions. Essential contractor service and mission-
essential functions have the meanings given in the clause at 
252.237-7023, Continuation of Essential Contractor Services, in this 
solicitation.
    (b) The offeror shall provide with its offer a written plan 
describing how it will continue to perform the essential contractor 
services listed in attachment --, Mission Essential Contractor 
Services, dated --------, during periods of crisis. The offeror 
shall--
    (1) Identify provisions made for the acquisition of essential 
personnel and resources, if necessary, for continuity of operations 
for up to 30 days or until normal operations can be resumed;
    (2) Address in the plan, at a minimum--
    (i) Challenges associated with maintaining essential contractor 
services during an extended event, such as a pandemic that occurs in 
repeated waves;
    (ii) The time lapse associated with the initiation of the 
acquisition of essential personnel and resources and their actual 
availability on site;
    (iii) The components, processes, and requirements for the 
identification, training, and preparedness of personnel who are 
capable of relocating to alternate facilities or performing work 
from home;
    (iv) Any established alert and notification procedures for 
mobilizing identified ``essential contractor service'' personnel; 
and
    (v) The approach for communicating expectations to contractor 
employees regarding their roles and responsibilities during a 
crisis.


(End of provision)

[FR Doc. 2010-27302 Filed 10-28-10; 8:45 am]
BILLING CODE 5001-08-P