74992 Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Rules and Regulations 

DoD received no comments on the 

interim DFARS rule. However, the final 

rule includes the following additional 

changes: 

• Amendment of the trade agreements 

clauses at DFARS 252.225–7021, 

252.225–7036, and 252.225–7045 to 

remove the statement that United States 

law will apply to resolve any claim of 

breach of contract. This statement is no 

longer necessary, because the final rule 

published in FAC 2001–25 contains a 

new FAR clause, 52.233–4, Applicable 

Law for Breach of Contract Claim, that 

is prescribed for inclusion in all 

contracts. 

• A minor amendment at DFARS 

225.502(c)(i)(B) to clarify that, in 

acquisitions subject to a Free Trade 

Agreement, only eligible products of the 

applicable Free Trade Agreement 

country are exempt from application of 

the Buy American Act or Balance of 

Payments Program evaluation factor 

(e.g., for acquisitions between $25,000 

and $58,550, a Mexican end product 

would be a ‘‘NAFTA country end 

product’’ but would not be an ‘‘eligible 

product,’’ in accordance with the 

thresholds at FAR 25.402).

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.

Although the rule opens up Government 

procurement to the products of Chile, 

and lowers the trade agreements 

threshold for the products of Singapore, 

the economic impact on U.S. small 

businesses will not be significant. DoD 

applies the trade agreements to only 

those non-defense items listed at 

DFARS 225.401–70, and acquisitions 

below $100,000 that are set aside for 

small businesses are exempt. 

C. Paperwork Reduction Act 

This rule affects the certification and 

information collection requirements in 

the provisions at DFARS 252.225–7020 

and 252.225–7035, currently approved 

by the Office of Management and 

Budget under Clearance Number 0704–

0229. The impact, however, is 

negligible. In the provision at DFARS 

252.225–7020, Trade Agreements 

Certificate, the offeror no longer has to 

list offers of end products from Chile as 

nondesignated country end products. 

However, offers of Chilean end products 

would have been unlikely, because 

purchase of foreign products other than 

eligible products is prohibited by the 

Trade Agreements Act. In the provision 

at DFARS 252.225–7035, Buy American 

Act—Free Trade Agreements—Balance 

of Payments Program Certificate, the 

offeror must list all end products that 

are not domestic end products. The 

offeror will list products of Chile and 

Singapore on the list of Free Trade 

Agreement country end products, rather 

than the list of ‘‘other foreign end 

products.’’

List of Subjects in 48 CFR Parts 212, 

213, 225, and 252 

Government procurement.

Michele P. Peterson, 

Executive Editor, Defense Acquisition 

Regulations Council.

■ Accordingly, the interim rule 

amending 48 CFR parts 212, 213, 225, 

and 252, which was published at 69 FR 

1926 on January 13, 2004, is adopted as 

a final rule with the following changes:

■ 1. The authority citation for 48 CFR 

parts 212, 213, 225, and 252 continues to 

read as follows:

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

Chapter 1.

PART 225—FOREIGN ACQUISITION

225.502 [Amended]

■ 2. Section 225.502 is amended in 

paragraph (c)(i)(B) by removing ‘‘end’’

and adding in its place ‘‘eligible’’.

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES

252.212–7001 [Amended]

■ 3. Section 252.212–7001 is amended as 

follows:

■ a. By revising the clause date to read 

‘‘(DEC 2004)’’;

■ b. In paragraph (b), in entry ‘‘252.225–

7021’’, by removing ‘‘(JUN 2004)’’ and 

adding in its place ‘‘(DEC 2004)’’; and

■ c. In paragraph (b), in entry ‘‘252.225–

7036’’, by removing ‘‘(JAN 2004)’’ the 

first place it appears and adding in its 

place ‘‘(DEC 2004)’’.

252.225–7021 [Amended]

■ 4. Section 252.225–7021 is amended as 

follows:

■ a. By revising the clause date to read 

‘‘(DEC 2004)’’;

■ b. By removing paragraph (e); and

■ c. By redesignating paragraph (f) as 

paragraph (e).

252.225–7036 [Amended]

■ 5. Section 252.225–7036 is amended as 

follows:

■ a. By revising the clause date to read 

‘‘(DEC 2004)’’; and

■ b. By removing paragraph (e).

252.225–7045 [Amended]

■ 6. Section 252.225–7045 is amended as 

follows:

■ a. By revising the clause date to read 

‘‘(DEC 2004)’’; and

■ b. By removing paragraph (d).

[FR Doc. 04–27345 Filed 12–14–04; 8:45 am] 

BILLING CODE 5001–08–P

DEPARTMENT OF DEFENSE

48 CFR Part 217 

[DFARS Case 2003–D097/2004–D023] 

Defense Federal Acquisition 

Regulation Supplement; Contract 

Period for Task and Delivery Order 

Contracts

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for 

comments. 

SUMMARY: DoD has issued an interim 

rule amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to implement Section 843 of 

the National Defense Authorization Act 

for Fiscal Year 2004 and Section 813 of 

the National Defense Authorization Act 

for Fiscal Year 2005. Section 843 placed 

a 5-year limit on the period of task or 

delivery order contracts awarded under 

10 U.S.C. 2304a. Section 813 further 

amended 10 U.S.C. 2304a to permit a 

total period of up to 10 years, which 

may be exceeded if the head of the 

agency determines in writing that 

exceptional circumstances require a 

longer contract period. The DFARS rule 

clarifies that the 10-year limit applies to 

the ordering period, establishes a limit 

on the length of orders, and includes 

other key information regarding 

applicability.

DATES: Effective date: December 15, 

2004. 

Comment date: Comments on the 

interim rule should be submitted to the 

address shown below on or before 

February 14, 2005, to be considered in 

the formation of the final rule.

ADDRESSES: You may submit comments, 

identified by DFARS Case 2003–D097, 

using any of the following methods: 

• Federal eRulemaking Portal: http://

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Defense Acquisition Regulations 

Web Site: http://emissary.acq.osd.mil/

dar/dfars.nsf/pubcomm. Follow the 

instructions for submitting comments. 

• E-mail: dfars@osd.mil. Include 

DFARS Case 2003–D097 in the subject 

line of the message. 

Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Rules and Regulations 74993

• Fax: (703) 602–0350. 

• Mail: Defense Acquisition 

Regulations Council, Attn: Ms. Robin 

Schulze, OUSD(AT&L)DPAP(DAR), IMD 

3C132, 3062 Defense Pentagon, 

Washington, DC 20301–3062. 

• Hand Delivery/Courier: Defense 

Acquisition Regulations Council, 

Crystal Square 4, Suite 200A, 241 18th 

Street, Arlington, VA 22202–3402. 

All comments received will be posted 

to http://emissary.acq.osd.mil/dar/

dfars.nsf.

FOR FURTHER INFORMATION CONTACT:

Robin Schulze, (703) 602–0326.

SUPPLEMENTARY INFORMATION:

A. Background 

This interim rule implements Section 

843 of the National Defense 

Authorization Act for Fiscal Year 2004 

(Pub. L. 108–136) and Section 813 of the 

National Defense Authorization Act for 

Fiscal Year 2005 (Pub. L. 108–375). 

Section 843 amended the general 

authority for task and delivery order 

contracts at 10 U.S.C. 2304a to specify 

that a task or delivery order contract 

entered into under that section may 

cover a total period of not more than 5 

years. Section 813 further amended 10 

U.S.C. 2304a to permit a total ordering 

period of not more than 10 years, unless 

the head of the agency determines in 

writing that exceptional circumstances 

necessitate a longer ordering period. 

DoD published an interim rule 

implementing Section 843 of Public 

Law 108–136 at 69 FR 13478 on March 

23, 2004. Twenty-three respondents 

submitted comments on the interim 

rule. A discussion of the comments is 

provided below. This second interim 

rule implements Section 813 of Public 

Law 108–375 and incorporates changes 

made as a result of public comments 

received on the interim rule published 

on March 23, 2004. Differences between 

the first and second interim rules are 

addressed in the discussion of 

comments 1, 2, 3, and 7 below. 

1. Comment: Ordering period vice 

period of performance. Twelve 

respondents expressed concern that the 

rule did not specify whether the 5-year 

limit applies to the ordering period or 

the period of performance. Respondents 

pointed out that if performance is 

limited to 5 years, the end result is that 

this type of contract may only be able 

to have a base year and 2 or 3 option 

years to ensure that all work is 

completed by the end of the fifth year.

DoD Response: The second interim 

rule incorporates the 10-year limit 

allowed by Section 813 and clarifies 

that the limit applies to the ordering 

period. In making this clarification, DoD 

determined that it was important to 

establish a reasonable limit on the 

period of performance for task or 

delivery orders issued during the 

ordering period and established such a 

limit in the rule at 217.204(e)(iii). 

2. Comment: Six-month extension for 

services. Two respondents raised 

concerns as to whether the 5-year limit 

imposed by Section 843 was inclusive 

of any 6-month extension permitted by 

the clause at FAR 52.217–8, Option to 

Extend Services. Another respondent 

identified the exception at FAR 

16.505(c)(2)(ii) for contracted advisory 

and assistance services that permits 

such contracts to exceed 5 years by 6 

months in certain circumstances. This 

respondent suggested that the DFARS 

rule supplement FAR 16.505(c)(2) to 

clarify whether contracts for advisory 

and assistance services can be longer 

than 5 years. 

DoD Response: For contracts issued 

pursuant to 10 U.S.C. 2304a, the 

ordering period is restricted to a 

maximum of 10 years unless the head of 

the agency determines in writing that 

exceptional circumstances require a 

longer ordering period. However, the 

performance period of an order may 

extend no more than 1 year beyond the 

10-year limit or extended limit unless 

approved by the senior procurement 

executive. The authority at FAR 

16.505(c)(2)(ii), for advisory and 

assistance services, derives from 10 

U.S.C. 2304b and is unaffected by 

Section 843 or 813, which limit only 

task or delivery order contracts awarded 

pursuant to 10 U.S.C. 2304a. The second 

interim rule clarifies that contracts for 

advisory and assistance services are 

governed by the requirements of 10 

U.S.C. 2304b and FAR 16.505(c). 

3. Comment: Exception for 

Information Technology. One 

respondent suggested that the 5-year 

limit imposed by Section 843 should 

not apply to information technology 

contracts and that the rule should be 

clarified to identify this exception. The 

respondent identified the Clinger-Cohen 

Act (Pub. L. 104–106) as the authority 

for the exception for information 

technology. 

DoD Response: The Clinger-Cohen 

Act does not provide an exception for 

information technology. The limits in 

Sections 843 and 813 apply to all task 

and delivery order contracts awarded 

under 10 U.S.C. 2304a, including those 

for information technology. The second 

interim rule clarifies this point at 

217.204(e)(ii). 

4. Comment: Applicability to 

contracts awarded before the interim 

rule. One respondent requested that the 

rule address the applicability of Section 

843 to contracts awarded after the 

enactment of Section 843, but before the 

issuance of the interim rule. Another 

respondent assumed that the 5-year 

limit precluded agencies from placing 

orders under contracts awarded prior to 

the enactment of Section 843. Another 

respondent expressed concern that some 

of the military departments unilaterally 

implemented the 5-year limit for 

existing indefinite-delivery indefinitequantity contracts or chose to 

implement the limit for new 

solicitations issued prior to the effective 

date of the rule. Two respondents 

recommended that the background 

information for the rule state that the 5-

year limit is applicable only to contracts 

that result from solicitations issued on 

or after March 23, 2004. 

DoD Response: Generally, statutes 

take effect on the date of enactment 

unless they expressly state a different 

effective date (e.g., ‘‘upon 

implementation in regulations, or 180 

days, whichever comes first’’). 

Consistent with FAR 1.108(d), as a 

matter of policy, the DFARS 

implementation of the Section 843 

limitation was effective for solicitations 

issued on or after March 23, 2004, the 

date of publication of the first interim 

rule. The DFARS implementation of the 

Section 813 limitation is effective on the 

date of publication of this second 

interim rule. In accordance with FAR 

1.108(d)(2), contracting officers may 

amend solicitations issued before the 

effective date of this second interim rule 

to incorporate the longer ordering 

period. 

5. Comment: Applicability to existing 

contracts. One respondent raised 

questions about the applicability of the 

5-year limit to new solicitations issued 

for new delivery orders to be awarded 

against existing contracts. Specifically, 

whether the 5-year limit (1) would 

apply to the entire contract, including 

previously awarded delivery orders; (2) 

would apply to merely the single 

delivery order and any additional 

delivery orders solicited after the 

interim rule; or (3) would not apply. 

Another respondent questioned whether 

an existing contract that has a 7-year 

ordering period but has reached a 

quantity or dollar ceiling in 5 years 

could be modified, with a justification 

and approval, to increase the ceiling. 

The same respondent questioned 

whether an existing contract could be 

modified to extend the ordering period 

beyond 5 years.

DoD Response: Neither Section 843 

nor 813 has retroactive effect. Under 

Section 813, a contracting officer may 

exercise existing options and may 

modify existing contracts to add new 

74994 Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Rules and Regulations 

options or otherwise extend the 

ordering period up to 10 years, or longer 

if authorized by the head of the agency. 

Additionally, an existing contract may 

be modified to extend the existing 

ordering period, provided the 

justification for the new work is 

documented in a justification and 

approval in accordance with FAR 6.304. 

6. Comment: Options on Orders and 

Within Scope Changes. One respondent 

requested that the rule address the use 

of option periods attached to task and 

delivery orders. The respondent 

suggested that every order should be 

permitted to contain up to four option 

periods. Another respondent suggested 

that within-scope changes could extend 

the ordering period beyond 5 years and 

requested that the rule clarify whether 

the 5-year limit applies to within-scope 

changes. 

DoD Response: Options and 

modifications may be issued to extend 

the total ordering period for a contract 

or an individual order; however, the 

total ordering period may not exceed 10 

years unless authorized by the head of 

the agency. 

7. Comment: Disappointed with 

Implementation. Two respondents 

expressed disappointment that DoD 

rushed to implement Section 843 and 

that the interim rule provided only the 

barest coverage. The respondents 

recommended that the final rule expand 

the coverage to include key elements 

from the question and answer document 

made available on the Defense 

Procurement and Acquisition Policy 

Web site. 

DoD Response: DoD has a 

responsibility to promptly implement 

laws enacted by Congress. It was also 

necessary to issue an interim rule to 

ensure consistent implementation 

within DoD. The second interim rule 

has been expanded to include key 

elements regarding applicability from 

the question and answer document and 

changes required by the enactment of 

Section 813. 

8. Comment: Program Impacts. Four 

respondents identified programs or 

missions that will be impacted by the 5-

year limit. 

DoD Response: DoD agrees that the 5-

year limit may have had an adverse 

impact on the ability of agencies to 

accomplish their missions. The second 

interim rule minimizes the impact to the 

extent permitted by Section 813. 

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 has prepared an initial regulatory 

flexibility analysis consistent with 5 

U.S.C. 604. The analysis is summarized 

as follows: This interim rule applies to 

all new DoD solicitations for supplies or 

services that will result in a task or 

delivery order contract awarded under 

the authority of 10 U.S.C. 2304a. It may 

affect businesses interested in 

submitting offers for such contracts. The 

impact on small entities is unknown at 

this time. DoD invites comments from 

small businesses and other interested 

parties. DoD also will consider 

comments from small entities 

concerning the affected DFARS subpart 

in accordance with 5 U.S.C. 610. Such 

comments should be submitted 

separately and should cite DFARS Case 

2003–D097. 

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.

D. Determination To Issue an Interim 

Rule 

A determination has been made under 

the authority of the Secretary of Defense 

that urgent and compelling reasons exist 

to publish an interim rule prior to 

affording the public an opportunity to 

comment. This interim rule implements 

Section 813 of the National Defense 

Authorization Act for Fiscal Year 2005 

(Pub. L. 108–375). Section 813 provides 

that the total period of a task or delivery 

order contract awarded under 10 U.S.C. 

2304a may not exceed 10 years, unless 

the head of the agency determines in 

writing that exceptional circumstances 

require a longer contract period. Section 

813 became effective upon enactment 

on October 28, 2004. 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 217 

Government procurement.

Michele P. Peterson, 

Executive Editor, Defense Acquisition 

Regulations Council.

■ Therefore, 48 CFR part 217 is amended 

as follows:

■ 1. The authority citation for 48 CFR 

part 217 continues to read as follows:

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

Chapter 1.

PART 217—SPECIAL CONTRACTING 

METHODS

■ 2. Section 217.204 is revised to read as 

follows:

217.204 Contracts. 

(e)(i) Notwithstanding FAR 17.204(e), 

the ordering period of a task order or 

delivery order contract awarded by DoD 

pursuant to 10 U.S.C. 2304a—

(A) May be for any period up to 5 

years; 

(B) May be subsequently extended for 

one or more successive periods in 

accordance with an option provided in 

the contract or a modification of the 

contract; and 

(C) Shall not exceed 10 years unless 

the head of the agency determines in 

writing that exceptional circumstances 

require a longer ordering period. 

(ii) DoD must submit a report to 

Congress when an ordering period is 

extended beyond 10 years in accordance 

with paragraph (e)(i)(C) of this section. 

Follow the procedures at PGI 217.204(e) 

for reporting requirements. 

(iii) Paragraph (e)(i) of this section—

(A) Also applies to information 

technology task or delivery order 

contracts; 

(B) Does not apply to contracts, 

including task or delivery order 

contracts, awarded under other statutory 

authority; and 

(C) Does not apply to the following: 

(1) Advisory and assistance service 

task order contracts (authorized by 10 

U.S.C. 2304b that are limited by statute 

to 5 years, with the authority to extend 

an additional 6 months (see FAR 

16.505(c)). 

(2) Definite-quantity contracts. 

(3) GSA schedule contracts. 

(4) Multi-agency contracts awarded by 

agencies other than NASA, DoD, or the 

Coast Guard. 

(iv) Obtain approval from the senior 

procurement executive before issuing an 

order against a task or delivery order 

contract subject to paragraph (e)(i) of 

this section, if performance under the 

order is expected to extend more than 

1 year beyond the 10-year limit or 

extended limit described in paragraph 

(e)(i)(C) of this section (see FAR 37.106 

for funding and term of service 

contracts).

[FR Doc. 04–27346 Filed 12–14–04; 8:45 am] 

BILLING CODE 5001–08–P