[Federal Register Volume 69, Number 240 (Wednesday, December 15, 2004)]
[Rules and Regulations]
[Pages 74992-74994]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-27346]


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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.

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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:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Defense Acquisition Regulations Web Site: http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm. Follow the instructions for 
submitting comments.
    <bullet> E-mail: <a href="/cdn-cgi/l/email-protection#37535156454477584453195a5e5b"><span class="__cf_email__" data-cfemail="5e3a383f2c2d1e312d3a70333732">[email protected]</span></a>. Include DFARS Case 2003-D097 in the 
subject line of the message.

[[Page 74993]]

    <bullet> Fax: (703) 602-0350.
    <bullet> Mail: Defense Acquisition Regulations Council, Attn: Ms. 
Robin Schulze, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, 
Washington, DC 20301-3062.
    <bullet> 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 indefinite-quantity 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

[[Page 74994]]

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.

0
Therefore, 48 CFR part 217 is amended as follows:
0
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

0
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


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