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###### Department of Defense

###### Defense Acquisition Regulations System

          - 48 CFR Part 231

# AGENCY:

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

# ACTION:

Proposed rule.

# SUMMARY:

DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to require contractors to report independent research and development (IR&D) projects generating annual costs in excess of $50,000.

# DATES:

Comments on the proposed rule should be submitted in writing to the address shown below on or before May 2, 2011, to be considered in the formation of the final rule.

# ADDRESSES:

You may submit comments, identified by DFARS Case 2010-D011, using any of the following methods:

*Regulations.gov: http://www.regulations.gov.*

Submit comments via the Federal eRulemaking portal by inputting “DFARS Case 2010-D011” under the heading “Enter keyword or ID” and selecting “Search.” Select the link “Submit a Comment” that corresponds with “DFARS Case 2010-D011.” Follow the instructions provided at the “Submit a Comment” screen. Please include your name, company name (if any), and “DFARS Case 2010-D011” on your attached document. Follow the instructions for submitting comments.

*E-mail: dfars@osd.mil.*                         Include DFARS Case 2010-D011 in the subject line of the message.                    

*Fax:*                         703-602-0350.                    

*Mail:*                         Defense Acquisition Regulations System, Attn: Mr. Mark Gomersall, 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. To confirm receipt of your comment(s), please check                         *http://www.regulations.gov*                         approximately two to three days after submission to verify posting (except allow 30 days for posting of comments submitted by mail).                    

# FOR FURTHER INFORMATION CONTACT:

Mr. Mark Gomersall, 703-602-0302.

# SUPPLEMENTARY INFORMATION:

## I. Background

This proposed rule revises requirements for reporting IR&D projects that generate annual costs in excess of $50,000 to the Defense Technical Information Center (DTIC). Beginning in the 1990s, DoD reduced its technical exchanges with industry, in part to ensure independence of IR&D. The result has been a loss of linkage between funding and technological purpose. The reporting requirements, as mandated by 10 U.S.C. 2372, will provide in-process information from DoD-sponsored IR&D projects to increase effectiveness by providing visibility into the technical content of industry IR&D activities to meet DoD needs and promote the technical prowess of the industry. Without the collection of this information, DoD will be unable to maximize the value of the IR&D funds the Department disburses without infringing on the independence of contractors to choose which technologies to pursue in IR&D programs.

## II. Executive Order 12866, Regulatory Planning and Review

This rule has been determined to be a significant regulatory action and therefore is 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.

## III. Regulatory Flexibility Act

DoD has prepared an initial regulatory flexibility analysis consistent with 5 U.S.C. 603. A copy of the analysis may be obtained from the point of contact specified herein. The analysis is summarized as follows:

                    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 reporting the IR&D projects utilizing the DTIC on-line input form does not require contractors to expend significant effort or cost. Furthermore, the threshold for reporting annual IR&D costs in excess of $50,000, as set forth in the rule, ensures that the IR&D project reporting requirements will not apply to a significant number of small entities.                

At this time, DoD is unable to estimate the number of small entities to which this rule will apply. Therefore, 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 2010-D011) in correspondence.

## IV. Paperwork Reduction Act

The proposed rule contains new information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35). DoD invites public comments on the following aspects of the proposed rule: (a) Whether the proposed 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 proposed 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. The following is a summary of the information collection requirement.

*Title:*                     Defense Federal Acquisition Regulation Supplement (DFARS) Part 231, Contract Cost Principles and Procedures.                

*Type of Request:*                     New collection.                

*Number of Respondents:*                     700.                

*Responses per Respondent:*                     38.5.                

*Annual Responses:*                     26,950.                          ( print page 11415)    

*Average Burden per Response:*                     0.5 hours.                

*Annual Burden Hours:*                     13,475.                

*Needs and Uses:*                     This information collection requires contractors to report IR&D projects generating annual costs in excess of $50,000. The information will provide in-process information from DoD-sponsored IR&D projects to increase the effectiveness by providing visibility into the technical content of industry IR&D activities to meet DoD needs. Without the collection of this information, DoD will be unable to maximize the value of the IR&D funds that it disburses without infringing on the independence of a contractor to choose which technologies to pursue in its independent research and development program.                

*Affected Public:*                     Businesses or other for-profit and not-for-profit institutions.                

*Frequency:*                     On occasion.                

                    Written comments and recommendations on the proposed information collection should be sent to Ms. Jasmeet Seehra at the Office of Management and Budget, Desk Officer for DoD, Room 10236, New Executive Office Building, Washington, DC 20503, or e-mail                     *Jasmeet_K._Seehra@omb.eop.gov,*                     with a copy to the Defense Acquisition Regulations System,                     *Attn:*                     Mr. Mark Goemrsall, OUSD (AT&L) DPAP (DARS), Room 3B855, 3060 Defense Pentagon, Washington, DC 20301-3060. Comments can be received from 30 to 60 days after the date of this notice, but comments to OMB will be most useful if received by OMB within 30 days after the date of this notice.                

                    To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to the Defense Acquisition Regulations System,                     *Attn:*                     Mr. Mark Gomersall, OUSD (AT&L) DPAP (DARS), Room 3B855, 3060 Defense Pentagon, Washington, DC 20301-3060, or e-mail                     *dfars@osd.mil*. Include DFARS Case 2010-D011 in the subject line of the message.                

# List of Subjects in 48 CFR Part 231

      - Government procurement

Ynette R. Shelkin,

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR part 231 is proposed to be amended as follows:

# PART 231—CONTRACT COST PRINCIPLES AND PROCEDURES

1. The authority citation for 48 CFR part 231 continues to read as follows:

Authority:41 U.S.C. 1303 and 48 CFR chapter 1.

2. Amend section 231.205-18 by adding paragraph (c)(iii)(C) and revising the introductory text of paragraph (c)(iv) to read as follows:

231.205-18 

* * * * *

(c) * * *

(iii) * * *

(C) For a contractor's annual IR&D costs in excess of $50,000 to be allowable, the IR&D projects generating the costs must be reported to the Defense Technical Information Center (DTIC) using the DTIC's on-line input form and instructions. The inputs must be updated at least annually and when the project is completed. Copies of the input and updates must be made available for review by the cognizant administrative contracting officer (ACO) and the cognizant Defense Contract Audit Agency auditor to support the allowability of the costs.

(iv) For major contractors, the cognizant ACO or corporate ACO shall—

* * * * *

[FR Doc. 2011-4528 Filed 3-1-11; 8:45 am]

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