63330 Federal Register / Vol. 69, No. 210 / Monday, November 1, 2004 / Rules and Regulations 

contracts. Section 847 became effective 

upon enactment on November 24, 2003, 

and expires on September 30, 2008. 

Comments received in response to this 

interim rule will be considered in the 

formation of the final rule.

List of Subjects in 48 CFR Part 212 

Government procurement.

Michele P. Peterson, 

Executive Editor, Defense Acquisition 

Regulations Council.

■ Therefore, 48 CFR part 212 is amended 

as follows:

■ 1. The authority citation for 48 CFR 

part 212 continues to read as follows:

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

Chapter 1.

PART 212—ACQUISITION OF 

COMMERCIAL ITEMS

■ 2. Section 212.212 is added to read as 

follows:

212.212 Computer software. 

The DoD policy for acquiring 

commercial computer software is at 

227.7202.

■ 3. Subpart 212.70 is added to read as 

follows:

Subpart 212.70—Pilot Program for 

Transition to Follow-On Contracting 

After Use of Other Transaction 

Authority

Sec. 

212.7000 Scope. 

212.7001 Definitions. 

212.7002 Pilot program. 

212.7002–1 Contracts under the program. 

212.7002–2 Subcontracts under the 

program. 

212.7003 Rights in technical data and 

computer software.

212.7000 Scope. 

This subpart establishes the pilot 

program authorized by Section 847 of 

the National Defense Authorization Act 

for Fiscal Year 2004 (Pub. L. 108–136).

212.7001 Definitions. 

As used in this subpart—

Nontraditional defense contractor

means a business unit that—

(1) Has entered into an other 

transaction agreement with DoD; and 

(2) Has not, for a period of at least 1 

year prior to the date of the other 

transaction agreement, entered into or 

performed on—

(i) Any contract that is subject to full 

coverage under the cost accounting 

standards described in FAR Part 30; or 

(ii) Any other contract exceeding 

$500,000 to carry out prototype projects 

or to perform basic, applied, or 

advanced research projects for a Federal 

agency that is subject to the FAR. 

Other transaction means a transaction 

that—

(1) Is other than a contract, grant, or 

cooperative agreement; 

(2) Is not subject to the FAR or its 

supplements; and 

(3) Is entered into in accordance with 

32 CFR part 3.

212.7002 Pilot program.

212.7002–1 Contracts under the program. 

(a) The contracting officer may use 

FAR part 12 procedures to award a 

contract for an item or process that does 

not meet the definition of ‘‘commercial 

item,’’ if the contract—

(1) Is awarded to a nontraditional 

defense contractor; 

(2) Is a follow-on contract for the 

production of an item or process begun 

as a prototype project under an other 

transaction agreement; 

(3) Does not exceed $50,000,000; 

(4) Is awarded on or before September 

30, 2008; and 

(5) Is either—

(i) A firm-fixed-price contract; or 

(ii) A fixed-price contract with 

economic price adjustment. 

(b) See 212.7003 for special 

procedures pertaining to rights in 

technical data and computer software.

212.7002–2 Subcontracts under the 

program. 

Except as provided in 212.7003, a 

subcontract for an item or process that 

does not meet the definition of 

‘‘commercial item’’ may be treated as a 

subcontract for a commercial item, if the 

subcontract—

(a) Is under a contract awarded in 

accordance with 212.7002–1; 

(b) Is awarded to a nontraditional 

defense contractor; and 

(c) Is either—

(1) A firm-fixed-price subcontract; or 

(2) A fixed-price subcontract with 

economic price adjustment.

212.7003 Rights in technical data and 

computer software. 

For purposes of determining rights in 

technical data under 227.7102 and 

rights in computer software under 

227.7202, items or processes acquired 

under a contract or subcontract awarded 

in accordance with 212.7002 may be 

treated as developed in part with 

Federal funds and in part at private 

expense (i.e., mixed funding). When this 

occurs—

(a) For technical data, use the clauses 

at 252.227–7013, Rights in Technical 

Data—Noncommercial Items, and 

252.227–7037, Validation of Restrictive 

Markings on Technical Data; 

(b) For computer software, use the 

clauses at 252.227–7014, Rights in 

Noncommercial Computer Software and 

Noncommercial Computer Software 

Documentation, and 252.227–7019, 

Validation of Asserted Restrictions—

Computer Software; 

(c) Require the contractor to include 

the clauses prescribed by paragraphs (a) 

and (b) of this section in subcontracts 

awarded in accordance with 212.7002–

2; and 

(d) Negotiate for the appropriate 

technical data and computer software 

deliverables and special license rights in 

those deliverables, in view of the 

parties’ relative contributions to the 

development of the items or processes.

[FR Doc. 04–24284 Filed 10–29–04; 8:45 am] 

BILLING CODE 5001–08–P

DEPARTMENT OF DEFENSE

48 CFR Part 212 

[DFARS Case 2003–D018] 

Defense Federal Acquisition 

Regulation Supplement; Laws 

Inapplicable to Commercial 

Subcontracts

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to remove the Trade 

Agreements Act and the Buy American 

Act from the list of laws inapplicable to 

subcontracts for commercial items. This 

rule is a result of a transformation 

initiative undertaken by DoD to 

dramatically change the purpose and 

content of the DFARS.

DATES: Effective November 1, 2004.

FOR FURTHER INFORMATION CONTACT: Ms. 

Amy Williams, Defense Acquisition 

Regulations Council, OUSD (AT&L) 

DPAP (DAR), IMD 3C132, 3062 Defense 

Pentagon, Washington, DC 20301–3062. 

Telephone (703) 602–0328; facsimile 

(703) 602–0350. Please cite DFARS Case 

2003–D018.

SUPPLEMENTARY INFORMATION: 

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, DoDwide policies, delegations of FAR 

authorities, deviations from FAR 

requirements, and policies/procedures 

Federal Register / Vol. 69, No. 210 / Monday, November 1, 2004 / Rules and Regulations 63331

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 

http://www.acq.osd.mil/dpap/dfars/

transf.htm.

This final rule is a result of the 

DFARS Transformation initiative. The 

rule amends DFARS 212.504 to remove 

the Trade Agreements Act (19 U.S.C. 

2512) and the Buy American Act (41 

U.S.C. 10) from the list of laws 

inapplicable to subcontracts for the 

acquisition of commercial items. 

Inclusion of these laws on the list is 

unnecessary, because the Government 

does not apply the restrictions of the 

Buy American Act or the Trade 

Agreements Act at the subcontract level. 

The prime contractor is responsible for 

providing an end product that meets the 

requirements of the Acts. 

DoD published a proposed rule at 69 

FR 8151 on February 23, 2004. DoD 

received one comment in response to 

the proposed rule, and that comment 

supported the rule. Therefore, DoD has 

adopted the proposed rule as a final 

rule, with the addition of a correction to 

a cross-reference in 212.504(a). 

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 is a clarification of the 

Government’s existing policy of not 

applying the Buy American Act or the 

Trade Agreements Act at the 

subcontract level. 

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 Part 212 

Government procurement.

Michele P. Peterson, 

Executive Editor, Defense Acquisition 

Regulations Council.

■ Therefore, 48 CFR part 212 is amended 

as follows:

■ 1. The authority citation for 48 CFR 

part 212 continues to read as follows:

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

Chapter 1.

PART 212—ACQUISITION OF 

COMMERCIAL ITEMS

212.504 [Amended]

■ 2. Section 212.504 is amended as 

follows:

■ a. By removing paragraphs (a)(xxiii) 

and (a)(xxiv);

■ b. By redesignating paragraph (a)(xxv) 

as paragraph (a)(xxiii); and

■ c. In newly designated paragraph 

(a)(xxiii), in the second sentence, by 

removing ‘‘225.7019–2(b)’’ and adding in 

its place ‘‘225.7009–2(b)’’.

[FR Doc. 04–24282 Filed 10–29–04; 8:45 am] 

BILLING CODE 5001–08–P

DEPARTMENT OF DEFENSE

48 CFR Part 231 

[DFARS Case 2003–D036] 

Defense Federal Acquisition 

Regulation Supplement; Cost 

Principles and Procedures

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to update text pertaining to 

contract cost principles. This rule is a 

result of a transformation initiative 

undertaken by DoD to dramatically 

change the purpose and content of the 

DFARS.

DATES: Effective November 1, 2004.

FOR FURTHER INFORMATION CONTACT: Mr. 

Thaddeus Godlewski, Defense 

Acquisition Regulations Council, 

OUSD(AT&L)DPAP(DAR), IMD 3C132, 

3062 Defense Pentagon, Washington, DC 

20301–3062. Telephone (703) 602–2022; 

facsimile (703) 602–0350. Please cite 

DFARS Case 2003–D036.

SUPPLEMENTARY INFORMATION: 

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, DoDwide 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 

http://www.acq.osd.mil/dpap/dfars/

transf.htm. 

This final rule is a result of the 

DFARS Transformation initiative. The 

DFARS changes—

• Delete the text at DFARS 231.205–

10, Cost of money, because it is 

redundant of the text in DFARS Subpart 

230.70, Facilities Capital Employed for 

Facilities in Use. 

• Clarify the text at DFARS 231.205–

22, Legislative lobbying costs, to specify 

that these costs are statutorily 

unallowable. 

• Revise the text at DFARS 231.205–

70, External restructuring costs, to—

1. Eliminate unnecessary references to 

fiscal years 1995, 1997, and 1998 

legislation. 

2. Delete text at 231.205–

70(c)(1)(iv)(A) and (B) regarding 

business combinations that occurred on 

or before November 18, 1997. This text 

is unnecessary, because external 

restructurings normally must be 

initiated within 3 years of a business 

combination. 

3. Delete text at 231.205–70(d), 

Procedures and ACO responsibilities. 

This text has been relocated to the new 

DFARS companion resource, 

Procedures, Guidance, and Information 

(PGI). A final rule addressing the 

purpose and structure of PGI is 

published elsewhere in this issue of the 

Federal Register under DFARS Case 

2003–D090, Procedures, Guidance, and 

Information. PGI is available at http://

www.acq.osd.mil/dpap/dars/index.htm. 

DoD published a proposed rule at 69 

FR 8154 on February 23, 2004. 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 clarifies existing 

DFARS text, and deletes DFARS text 

that is redundant, outdated, or 

procedural, but makes no significant 

change to contracting policy. 

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