[Federal Register: April 8, 2010 (Volume 75, Number 67)]
[Rules and Regulations]
[Page 18034-18035]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08ap10-15]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 234 and 235
RIN 0750-AF79
Defense Federal Acquisition Regulation Supplement; Research and
Development Contract Type Determination (DFARS Case 2006-D053)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
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SUMMARY: DoD is adopting as final, without change, an interim rule that
requires the Milestone Decision Authority (MDA) for a major defense
acquisition program (MDAP) to select the contract type for a
development program that is consistent with the level of program risk
in accordance with section 818 of the National Defense Authorization
Act (NDAA) for Fiscal Year 2007.
DATES: Effective Date: April 8, 2010.
FOR FURTHER INFORMATION CONTACT: Mr. Mark Gomersall, 703-602-0302.
Please cite DFARS case 2006-D053.
SUPPLEMENTARY INFORMATION:
A. Background
DoD published an interim rule at 73 FR 4117 on January 24, 2008, to
implement section 818 of the National Defense Authorization Act for
Fiscal Year 2007 (Pub. L. 109-364). Section 818 requires DoD to modify
regulations regarding the determination of contract type for
development programs. Such regulations require the Milestone Decision
Authority (MDA) for a major defense acquisition program (MDAP) to
select the contract type for a development program that is consistent
with the level of program risk. The MDA may select a fixed-price type
contract, including a fixed-price incentive contract; or a cost-type
contract, provided certain written determination requirements are
satisfied.
The interim rule added a new section at DFARS 234.004 to implement
the requirements of section 818 of Public Law 109-364, applicable to
MDAPs, and
[[Page 18035]]
updated the policy at 235.006 to address requirements for other than
MDAPs.
Two sources submitted comments on the interim rule. DoD's single
response to both comments is provided following the comments.
1. Comment: One respondent suggested that the interim rule appears
to be requiring written determinations on MDAPs and non-MDAPs that are
exactly the opposite of one another. For MDAPS, 234.004(iii) requires a
written determination by the MDA at the time of Milestone B approval if
a fixed-price contract is not selected, and for non-MDAPs,
235.006(b)(i)(A)(3) requires a written determination if a fixed-price
contract is selected for a developmental program. The respondent
indicated that it is hard for him to understand the logic that would
discourage the use of fixed-price development contracts for non-major
programs, but would encourage their use for major programs. Moreover,
he suggested that fixed-price development contracts are likely to be a
source of numerous requests for equitable adjustments or claims, and
concluded that instituting such a policy would be challenging and ill-
timed even for a robust, experienced, and disciplined workforce.
2. Comment: The respondent stated that the interim rule appears to
introduce additional burdens on DoD program managers and contracting
personnel to justify the decision to issue a shipbuilding contract on a
cost-type basis. The respondent believes that, when selecting a
contract type for any program, DoD's focus should be on ``whether a
product, system, or item is still developing or has reached maturity.''
Further, although they are MDAPs, the respondent believes that the
first several ships of a new class should be viewed as developmental
products that are procured most efficiently through cost-type contracts
because of the inherently high level of risk and uncertainty associated
with them. Therefore, for the first several ships of a class, the
burden placed upon the MDA should most often be to explain why a fixed-
price contract type is selected rather than why a cost-type contract is
selected. For this reason, the respondent believes that the interim
rule is flawed since the requirements should be in reverse order when
applied to shipbuilding contracts.
DoD Response: For MDAPs, the procedures in DFARS 234.004 are
mandated by section 818 of the FY07 NDAA. For other than MDAPs, DoD
determined that it would be in the best interest of the Government to
retain the policy in DFARS 235.006 for a written determination if a
fixed-price contract is selected for a development program. Therefore,
DoD has made no change to the language set forth in the interim rule,
and is adopting the interim 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 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
relates to internal DoD considerations and documentation requirements
relating to the selection of contract type for development programs. No
comments were received in response to publication of the interim rule
with respect to any impact on small entities.
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.
List of Subjects in 48 CFR Parts 234 and 235
Government procurement.
Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.
Interim Rule Adopted as Final Without Change
0
Accordingly, the interim rule amending 48 CFR parts 234 and 235, which
was published at 73 FR 4117 on January 24, 2008, is adopted as a final
rule without change.
[FR Doc. 2010-7259 Filed 4-7-10; 8:45 am]
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