[Federal Register: May 12, 2006 (Volume 71, Number 92)]
[Rules and Regulations]               
[Page 27644-27645]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]



Defense Acquisition Regulations System

48 CFR Parts 225 and 249

[DFARS Case 2003-D046]

Defense Federal Acquisition Regulation Supplement; Contract 

AGENCY: Defense Acquisition Regulations System, Department of Defense 

ACTION: Final rule.


SUMMARY: DoD has issued a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to update text pertaining to 
termination of contracts. This rule is a result of a transformation 
initiative undertaken by DoD to dramatically change the purpose and 
content of the DFARS.

EFFECTIVE DATE: May 12, 2006.

Acquisition Regulations System, OUSD(AT&L)DPAP(DARS), IMD 3C132, 3062 
Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0289; 
facsimile (703) 602-0350. Please cite DFARS Case 2003-D046.


A. Background

    DFARS Transformation is a major DoD initiative to dramatically 
change the purpose and content of the DFARS. The objective is to 
improve the efficiency and effectiveness of the acquisition process, 
while allowing the acquisition workforce the flexibility to innovate. 
The transformed DFARS will contain only requirements of law, DoD-wide 
policies, delegations of FAR authorities, deviations from FAR 
requirements, and policies/procedures that have a significant effect 
beyond the internal operating procedures of DoD or a significant cost 
or administrative impact on contractors or offerors. Additional 
information on the DFARS Transformation initiative is available at 

    This final rule is a result of the DFARS Transformation initiative. 
The DFARS changes--
     Relocate text on termination of Canadian Commercial 
Corporation contracts, from part 225, Foreign Acquisition, to a more 
appropriate location in part 249, Termination of Contracts;
     Delete unnecessary cross-references; and
     Delete text on preparation of contract termination status 
reports, completion of forms to document termination settlements, 
preparation of settlement negotiation memoranda, and congressional 
notification of significant contract terminations. Text on these 
subjects has been relocated to the new DFARS companion resource, 
Procedures, Guidance, and Information (PGI), available at http://www.acq.osd.mil/dpap/dars/pgi

    DoD published a proposed rule at 70 FR 39980 on July 12, 2005. DoD 
received no comments on the proposed rule. Therefore, DoD has adopted 
the proposed rule as a final rule without change.
    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 certifies that this final rule will not 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 updates and streamlines DFARS text, but makes no 
significant change to DoD policy regarding termination of contracts.

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.

[[Page 27645]]

List of Subjects in 48 CFR Parts 225 and 249

    Government procurement.

Michele P. Peterson,
Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR parts 225 and 249 are amended as follows:
1. The authority citation for 48 CFR parts 225 and 249 continues to 
read as follows:

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


2. Section 225.870-6 is revised to read as follows:

225.870-6  Termination procedures.

    When contract termination is necessary, follow the procedures at 


3. Sections 249.105-1 and 249.105-2 are revised to read as follows:

249.105-1  Termination status reports.

    Follow the procedures at PGI 249.105-1 for reporting status of 
termination actions.

249.105-2  Release of excess funds.

    See PGI 249.105-2 for guidance on recommending the release of 
excess funds.

249.106 through 249.108-4  [Removed]

4. Sections 249.106 through 249.108-4 are removed.

5. Sections 249.109-7 and 249.110 are revised to read as follows:

249.109-7  Settlement by determination.

    Follow the procedures at PGI 249.109-7 for settlement of a 
convenience termination by determination.

249.110  Settlement negotiation memorandum.

    Follow the procedures at PGI 249.110 for preparation of a 
settlement negotiation memorandum.

6. Section 249.7000 is amended by revising paragraph (a)(3) and adding 
paragraphs (e) through (g) to read as follows:

249.7000  Terminated contracts with Canadian Commercial Corporation.

    (a) * * *
    (3) The Canadian Supply Manual, Chapter 11, Section 11.146, 
available at http://www.pwgsc.gc.ca/acquisitions/text/sm/sm-e.html.

* * * * *
    (e) The Canadian Commercial Corporation will continue administering 
contracts that the U.S. contracting officer terminates.
    (f) The Canadian Commercial Corporation will settle all Canadian 
subcontracts in accordance with the policies, practices, and procedures 
of the Canadian Government.
    (g) The U.S. agency administering the contract with the Canadian 
Commercial Corporation shall provide any services required by the 
Canadian Commercial Corporation, including disposal of inventory, for 
settlement of any subcontracts placed in the United States. Settlement 
of such U.S. subcontracts will be in accordance with this regulation.

7. Section 249.7001 is revised to read as follows:

249.7001  Congressional notification on significant contract 

    Congressional notification is required for any termination 
involving a reduction in employment of 100 or more contractor 
employees. Proposed terminations must be cleared through department/
agency liaison offices before release of the termination notice, or any 
information on the proposed termination, to the contractor. Follow the 
procedures at PGI 249.7001 for congressional notification and release 
of information.

[FR Doc. 06-4467 Filed 5-11-06; 8:45 am]