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[Federal Register Volume 80, Number 100 (Tuesday, May 26, 2015)]
[Rules and Regulations]
[Pages 29980-29981]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12341]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 216

RIN 0750-AI56

Defense Federal Acquisition Regulation Supplement: Approval 
Threshold for Time-and-Materials and Labor-Hour Contracts (DFARS Case 
2014-D020)

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

ACTION: Final rule.

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SUMMARY: DoD is issuing a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to establish the level of 
approval required for a determination and findings for time-and-
materials and labor-hour contracts, or portions of contracts, exceeding 
$1 million.

DATES: Effective May 26, 2015.

FOR FURTHER INFORMATION CONTACT: Ms. Jennifer Johnson, telephone 571-
372-6176.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD is issuing a final rule amending the DFARS to establish the 
level of approval required for a determination and findings (D&F) for 
time-and-materials and labor-hour contracts, or portions of contracts, 
exceeding $1 million. The D&F must address why cost-plus-fixed-fee and 
other contract types are not appropriate. The approval requirements in 
this rule do not apply to contracts that support contingency or 
peacekeeping operations, or that provide humanitarian assistance, 
disaster relief, or recovery from conventional, nuclear, biological, 
chemical, or radiological attack.

II. Publication of This Final Rule for Public Comment Is Not Required 
by Statute

    ``Publication of proposed regulations'', 41 U.S.C. 1707, is the 
statute which applies to the publication of the Federal Acquisition 
Regulation. Paragraph (a)(1) of the statute requires that a procurement 
policy, regulation, procedure or form (including an amendment or 
modification thereof) must be published for public comment if it 
relates to the expenditure of appropriated funds, and has either a 
significant effect beyond the internal operating procedures of the 
agency issuing the policy, regulation, procedure or form, or has a 
significant cost or administrative impact on contractors or offerors. 
This final rule is not required to be published for public comment 
because it pertains to requirements for internal documentation within 
DoD, specifically, determination and findings for use of the time-and-
materials and labor-hour contract types. These requirements affect only 
the internal operating procedures of the Government. This final rule is 
not required to be published for public comment, because it has no 
effect beyond the internal operating procedures of DoD, and has no cost 
or administrative impact on contractors or offerors.

III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 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

    The Regulatory Flexibility Act does not apply to this rule because 
this final rule does not constitute a significant DFARS revision within 
the meaning of FAR 1.501-1, and 41 U.S.C. 1707 does not require 
publication for public comment.

V. Paperwork Reduction Act

    The rule does not contain any 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).

List of Subjects in 48 CFR Part 216

    Government procurement.

Amy G. Williams,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR part 216 is amended as follows:

PART 216--TYPES OF CONTRACTS

0
1. The authority citation for 48 CFR part 216 continues to read as 
follows:

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

0
2. Section 216.601 is amended by revising paragraph (d) to read as 
follows:

216.601  Time-and-materials contracts.

    (d) Limitations.
    (i)(A) Approval of determination and findings for time-and-
materials or labor-hour contracts.
    (1) Base period plus any option periods is three years or less.
    (i) For contracts (including indefinite-delivery contracts) and 
orders in which

[[Page 29981]]

the portion of the requirement performed on a time-and-materials or 
labor-hour basis exceeds $1 million, the approval authority for the 
determination and findings shall be the senior contracting official 
within the contracting activity. This authority may not be delegated.
    (ii) For contracts (including indefinite-delivery contracts) and 
orders in which the portion of the requirement performed on a time-and-
materials or labor-hour basis is less than or equal to $1 million, the 
determination and findings shall be approved one level above the 
contracting officer.
    (2) Base period plus any option periods exceeds three years. The 
authority of the head of the contracting activity to approve the 
determination and findings may not be delegated.
    (3) Exception. The approval requirements in paragraphs (d)(i)(A)(1) 
and (2) of this section do not apply to contracts that--
    (i) Support contingency or peacekeeping operations; or
    (ii) Provide humanitarian assistance, disaster relief, or recovery 
from conventional, nuclear, biological, chemical, or radiological 
attack.
    (B) Content of determination and findings. The determination and 
findings shall contain sufficient facts and rationale to justify that 
no other contract type is suitable. At a minimum, the determination and 
findings shall--
    (1) Include a description of the market research conducted;
    (2) Establish that it is not possible at the time of placing the 
contract or order to accurately estimate the extent or duration of the 
work or to anticipate costs with any reasonable degree of certainty;
    (3) Address why a cost-plus-fixed-fee term or other cost-
reimbursement, incentive, or fixed-price contract or order is not 
appropriate; for contracts (including indefinite-delivery contracts) 
and orders for noncommercial items awarded to contractors with adequate 
accounting systems, a cost-plus-fixed-fee term contract type shall be 
preferred over a time-and-materials or labor-hour contract type;
    (4) Establish that the requirement has been structured to minimize 
the use of time-and-materials and labor-hour requirements (e.g., 
limiting the value or length of the time-and-materials or labor-hour 
portion of the contract or order; establishing fixed prices for 
portions of the requirement); and
    (5) Describe the actions planned to minimize the use of time-and-
materials and labor-hour contracts on future acquisitions for the same 
requirements.
    (C) Indefinite-delivery contracts. For indefinite-delivery 
contracts, the contracting officer shall structure contracts that 
authorize time-and-materials orders or labor-hour orders to also 
authorize orders on a cost-reimbursement, incentive, or fixed-price 
basis, to the maximum extent practicable.
* * * * *

[FR Doc. 2015-12341 Filed 5-22-15; 8:45 am]
 BILLING CODE 5001-06-P
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