[Federal Register Volume 75, Number 226 (Wednesday, November 24, 2010)]
[Rules and Regulations]
[Pages 71560-71562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-29496]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 215, 234, 242, and 252

RIN 0750-AG46


Defense Federal Acquisition Regulation Supplement; Cost and 
Software Data Reporting System (DFARS Case 2008-D027)

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

ACTION: Final rule.

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SUMMARY: DoD is issuing a final rule to amend the Defense Federal 
Acquisition Regulation Supplement (DFARS) to address DoD Cost and 
Software Data Reporting system requirements for Major Defense 
Acquisition Programs and Major Automated Information Systems.

DATES: Effective Date: November 24, 2010.

FOR FURTHER INFORMATION CONTACT: Ms. Mary Overstreet, Telephone 703-
602-0311.

SUPPLEMENTARY INFORMATION:

I. Background

    The DoD cost and software data reporting (CSDR) system establishes 
requirements for proposals and contract performance for major defense 
acquisition programs (as defined in 10 U.S.C. 2430) and major automated 
information systems (as defined in 10 U.S.C. 2445a).
    During the proposal process, offerors are required to--
    <bullet> Describe the process to be used to satisfy the 
requirements of the CSDR Manual (DoD 5000.04-M-1) and the Government-
approved CSDR plan; and
    <bullet> Submit certain cost information with the pricing proposal.
    During contract performance, the contractor is required to--
    <bullet> Use a documented CSDR process for reporting;
    <bullet> Use the Government-approved contract CSDR plan as the 
basis for reporting; and
    <bullet> Require subcontractors to comply with the cost and 
software data reporting requirements.
    DoD published a proposed rule at 75 FR 25165 on May 7, 2010. The 
public comment period closed July 6, 2010. Two respondents submitted 
comments that are grouped under four comment categories. Based on 
public comments, changes were made to the proposed rule. Major changes 
in the final rule are as follows:
    <bullet> Explaining that the two principal components of the CSDR 
system are the contractor cost data reporting (CCDR) and the software 
resources data reporting (SRDR) (DFARS 234.7100(a)).
    <bullet> Clarifying the solicitation and contract clause 
prescriptions (DFARS 234.7101).
    <bullet> Including the approval authority for applying the CSDR 
requirements at lower dollar thresholds (DFARS 234.7101(b)(2)).
    <bullet> Removing the requirement to submit DD Form 1921-2, 
Progress Curve Report, with the offeror's pricing proposal (DFARS 
252.234-7003(b)(6)).
    <bullet> Removing the reference to DD Form 1921-3, Contractor 
Business Data Report (DFARS 242.503-2(b) and 252.234-7004, Cost and 
Software Data Reporting System).
    <bullet> Restructuring the solicitation provision to clarify 
proposal submission requirements (DFARS 252.234-7003).
    <bullet> Providing an Alternate I to the solicitation provision and 
to the clause to accommodate CSDR requirements at lower dollar 
thresholds (DFARS 252.234-7003 and 252.234-7004).

II. Discussion and Analysis

    The following paragraphs address the four categories of comments 
and DoD responses:

1. DD 1921-2, Progress Curve Report

    Comment: A respondent noted that DD Form 1921-2 Progress Curve 
Report, required to be submitted by offerors, in accordance with 
paragraph (a)(3) of DFARS 252.234-70XX in the proposed rule, is 
designed to collect unit/lot cost data and is, therefore, not 
applicable to contracts that do not procure units or lots. The 
respondent recommended revising the solicitation requirements.
    Response: DoD agrees that the DD 1921-2 is not required to be 
submitted with the contractor's pricing proposal and has revised DFARS 
provision 252.234-7003 in the final rule accordingly.

2. The DD 1921-3, Contractor Business Data Report

a. Basis for Reporting
    Comment: A respondent noted that paragraph (a)(3) of DFARS 252.234-
70YY in the proposed rule directs ``the Contractor (to) use DD Form 
1921-3, Contractor Business Data Report, as the basis for reporting in 
accordance with the required CSDR data item descriptions (DIDs).'' DD 
Form 1921-3, Contractor Business Data Report, is not a basis for 
reporting, but is a report to be prepared and submitted by the 
contractor in accordance with DID DI-FNCL-81765A. The respondent 
suggested removing the reference to DD Form 1921-3.
    Response: DoD agrees and deleted the requirement for DD Form 1921-
3, Contractor Business Data Report, from clause 252.234-7004 in the 
final rule.
b. Exempt Below $50 Million
    Comment: One respondent asked if a subcontractor is exempt from 
reporting if it incurs less than $50 million on a program, or if the 
reporting requirements apply to all levels of subcontractors regardless 
of level of participation in the program.
    Response: DoD revised the solicitation provision and contract 
clause to clarify applicability to subcontracts.
c. Specific Guidance Is Necessary
    Comment: One respondent had numerous questions concerning the 
completion of DD Form 1921-3.
    Response: Questions relating to DD Form 1921-3 preparation guidance 
are outside the scope of this rule and should be referred directly to 
the

[[Page 71561]]

Defense Cost and Resource Center. References to DD Form 1921-3 have 
been removed from this final rule.

3. Solicitation Provision and Contract Clause Prescriptions

    Comment: A respondent noted that ``Paragraphs (a) and (b) of 
234.7101, Solicitation provision and contract clause, appear to be 
intended to distinguish between solicitation instructions and contract 
requirements, as well as Contractor Cost Data Reporting (CCDR) 
thresholds (> $50M) versus Software Resources Data Reporting (SRDR) 
thresholds (> $20M).'' Accordingly, the respondent suggested revising 
the paragraphs to clarify the distinctions.
    Response: DoD agrees and has revised the cited paragraphs 
accordingly.

4. Contractor Cost and Data Reporting Application

    Comment: One respondent asked whether cost allocations are going to 
be considered valid contract costs and if this supersedes FAR 31.201. 
The respondent also asked what allowance is provided for contractors 
with accounting software that does not accommodate the additional data 
fields necessary to map the offeror's accounting system to the CCDR 
data item descriptions.
    Response: DoD notes that the 5000 series regulations express a 
strong preference for actual cost data. However, the use of cost 
allocations is not prohibited; clause 252.234-7003 asks for actual cost 
data to be used ``to the maximum extent possible'' (emphasis added). On 
the second point, DoD notes that the required mapping does not 
necessitate unique software applications. DoD expects its contractors 
to use standard and readily available electronic software applications 
such as electronic spreadsheets (e.g., MS-Excel[supreg]) or word 
processing formats (e.g., MS-Word[supreg]).

III. Executive Order 12866

    This is not a significant regulatory action and, therefore, was not 
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.

IV. Regulatory Flexibility Act

    DoD has prepared a final regulatory flexibility analysis consistent 
with 5 U.S.C. 604. A copy of the analysis may be obtained from the 
individual specified herein. The analysis is summarized as follows:
    The objective of the rule is to set forth cost and software data 
reporting (CSDR) system reporting requirements that are essential for 
DoD to estimate the cost of current and future weapon systems. The data 
are also very useful in performing contract price analysis, comparing 
prices of similar systems, and for capturing contractor-provided cost 
estimates in standard formats to facilitate comparison across several 
contractors.
    The rule will apply to DoD major defense acquisition program (MDAP) 
and major automated information system (MAIS) contractors. Due to the 
magnitude of these major programs, most small businesses are not MDAP 
or MAIS contractors. DoD solicited comments from small entities and 
other interested parties (proposed rule at 75 FR 25165). No comments 
were received from small entities on the impact of this rule and none 
of the comments was in response to the initial regulatory flexibility 
analysis. Therefore, there is no change to the rule in this regard.
    This final rule sets forth existing DoD CSDR requirements for 
weapon system programs for proposal submission and contract 
performance.
    During the proposal process, in response to solicitations, offerors 
are required to--
    <bullet> Describe the standard CSDR process to be used to satisfy 
the requirements of the CSDR Manual, DoD 5000.04-M-1, and the 
Government approved CSDR plan, DD Form 2794, and the related Resource 
Distribution Table (RDT);
    <bullet> Provide comments on the adequacy of the CSDR contract 
plan, and the related RDT contained in the solicitation; and,
    <bullet> Submit with their pricing proposal: DD Form 1921, Cost 
Data Summary Report, and DD Form 1921-1, Functional Cost-Hour Report.
    During contract performance, the contractor will be required to--
    <bullet> Utilize a documented CSDR process that satisfies the 
guidelines contained in the DoD 5000.04-M-1, CSDR Manual;
    <bullet> Use management procedures that provide for generation of 
timely and reliable information for the two principal components of the 
CSDR system: Contractor cost data reports and software resources data 
reports;
    <bullet> Use the Government-approved contract CSDR plan, DD Form 
2794, with the related RDT; and
    <bullet> Require subcontractors, or subcontracted effort if 
subcontractors have not been selected, to comply with the CSDR 
requirements.
    This final rule is not expected 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., as most MDAP and 
MAIS contractors are large businesses. For reporting, contractors are 
expected to use standard and readily available electronic software 
applications such as electronic spreadsheets (e.g., MS-Excel[supreg]) 
or word processing formats (e.g., MS-Word[supreg]) to show the 
necessary mapping from their accounting systems into the standard CCDR 
formats.

V. Paperwork Reduction Act

    The information collection requirements associated with this rule 
were approved by the Office of Management and Budget under Clearance 
Number 0704-0188, Acquisition Management Systems and Data Requirements 
Control List. The revisions in the final rule will not change the 
burden hours approved under Clearance Number 0704-0188.

List of Subjects in 48 CFR Parts 215, 234, 242, and 252

    Government procurement.

Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.

0
Therefore, 48 CFR parts 215, 234, 242, and 252 are amended as follows:
0
1. The authority citation for 48 CFR parts 215, 234, 242, and 252 
continues to read as follows:

     Authority:  41 U.S.C. 421 and 48 CFR chapter 1.

PART 215--CONTRACTING BY NEGOTIATION


215.403-5  [Removed]

0
2. Remove section 215.403-5.

PART 234--MAJOR SYSTEM ACQUISITION

0
3. Subpart 234.71 is added to read as follows:
Subpart 234.71--Cost and Software Data Reporting
Sec.
234.7100 Policy.
234.7101 Solicitation provision and contract clause.

Subpart 234.71--Cost and Software Data Reporting


234.7100  Policy.

    (a) The cost and software data reporting (CSDR) requirement is 
mandatory for major defense acquisition programs (as defined in 10 
U.S.C. 2430), and major automated information system programs (as 
defined in 10 U.S.C. 2445a) as specified in DoDI

[[Page 71562]]

5000.02, Operation of the Defense Acquisition System and the DoD 
5000.04-M-1, CSDR Manual. The CSDR system is applied in accordance with 
the reporting requirements established in DoDI 5000.02. The two 
principal components of the CSDR system are contractor cost data 
reporting and software resources data reporting.
    (b) Prior to contract award, contracting officers shall consult 
with the Defense Cost and Resource Center to determine that the offeror 
selected for award has proposed a standard CSDR system, as described in 
the offeror's proposal in response to the provision at 252.234-7003, 
that is in compliance with DoDI 5000.02, Operation of the Defense 
Acquisition System, and the DoD 5000.04-M-1, CSDR Manual.
    (c) Contact information for the Defense Cost and Resource Center 
and the Deputy Director, Cost Assessment, is located at PGI 234.7100.


234.7101  Solicitation provision and contract clause.

    (a)(1) Use the provision at 252.234-7003, Notice of Cost and 
Software Data Reporting System, in all solicitations that include the 
clause at 252.234-7004, Cost and Software Data Reporting.
    (2) Use the provision with its Alternate I when the clause at 
252.234-7004, Cost and Software Data Reporting, is used with its 
Alternate I.
    (b)(1) Use the clause at 252.234-7004, Cost and Software Data 
Reporting System, in all solicitations and contracts for major defense 
acquisition programs and major automated information system programs 
that exceed $50 million.
    (2) Use the clause with its Alternate I in solicitations and 
contracts for major defense acquisition programs and major automated 
information system programs with a value equal to or greater than $20 
million but less than or equal to $50 million, when so directed by the 
program manager with the approval of the OSD Deputy Director, Cost 
Assessment.

PART 242--CONTRACT ADMINISTRATION AND AUDIT SERVICES

0
4. Designate the current text of section 242.503-2 as paragraph (a) and 
add new paragraph (b) to read as follows:


242.503-2  Postaward conference procedure.

* * * * *
    (b) For contracts that include the clause at 252.234-7004, Cost and 
Software Data Reporting, postaward conferences shall include a 
discussion of the contractor's standard cost and software data 
reporting (CSDR) process that satisfies the guidelines contained in the 
DoD 5000.04-M-1, CSDR Manual, and the requirements in the Government-
approved CSDR plan for the contract, DD Form 2794, and related Resource 
Distribution Table.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
5. Add section 252.234-7003 to read as follows:


252.234-7003  Notice of Cost and Software Data Reporting System. (NOV 
2010)

    As prescribed in 234-7101(a)(1), use the following provision:

NOTICE OF COST AND SOFTWARE DATA REPORTING SYSTEM (NOV 2010)

    (a) This solicitation includes--
    (1) The Government-approved cost and software data reporting 
(CSDR) plan for the contract, DD Form 2794; and
    (2) The related Resource Distribution Table.
    (b) As part of its proposal, the offeror shall--
    (1) Describe the process to be used to satisfy the requirements 
of the DoD 5000.04-M-1, CSDR Manual, and the Government-approved 
CSDR plan for the proposed contract;
    (2) Demonstrate how contractor cost and data reporting (CCDR) 
will be based, to the maximum extent possible, upon actual cost 
transactions and not cost allocations;
    (3) Demonstrate how the data from its accounting system will be 
mapped into the standard reporting categories required in the CCDR 
data item descriptions;
    (4) Describe how recurring and nonrecurring costs will be 
segregated;
    (5) Provide comments on the adequacy of the CSDR contract plan 
and related Resource Distribution Table; and
    (6) Submit the DD Form 1921, Cost Data Summary Report, and DD 
Form 1921-1, Functional Cost-Hour Report, with its pricing proposal.
    (c) CSDR reporting will be required for subcontractors at any 
tier with a subcontract that exceeds $50 million. The offeror shall 
identify, by providing comments on the Resource Distribution Table, 
the subcontractors, or, if the subcontractors have not been 
selected, the subcontracted effort in this category.

(End of provision)
    Alternate I (NOV 2010). As prescribed in 234.7101(a)(2), substitute 
the following paragraph (c) for paragraph (c) of the basic provision:
    (c) CSDR reporting will be required for subcontractors for 
selected subcontracts identified in the CSDR contract plan as 
requiring such reporting. The offeror shall identify, by providing 
comments on the Resource Distribution Table, the subcontractors, or, 
if the subcontractors have not been selected, the subcontracted 
effort.

0
6. Add section 252.234-7004 to read as follows:


252.234-7004  Cost and Software Data Reporting System. (NOV 2010)

    As prescribed in 234.7101(b)(1), use the following clause:

COST AND SOFTWARE DATA REPORTING SYSTEM (NOV 2010)

    (a) In the performance of this contract, the Contractor shall 
use--
    (1) A documented standard cost and software data reporting 
(CSDR) process that satisfies the guidelines contained in the DoD 
5000.04-M-1, CSDR Manual;
    (2) Management procedures that provide for generation of timely 
and reliable information for the contractor cost data reports 
(CCDRs) and software resources data reports (SRDRs) required by the 
CCDR and SRDR data items of this contract; and
    (3) The Government-approved CSDR plan for this contract, DD Form 
2794, and the related Resource Distribution Table as the basis for 
reporting in accordance with the required CSDR data item 
descriptions.
    (b) The Contractor shall require CSDR reporting from 
subcontractors at any tier with a subcontract that exceeds $50 
million. If, for subcontracts that exceed $50 million, the 
Contractor changes subcontractors or makes new subcontract awards, 
the Contractor shall notify the Government.


(End of clause)

    Alternate I (NOV 2010). As prescribed in 234.7101(b)(2), substitute 
the following paragraph (b) for paragraph (b) of the basic clause:

    (b) The Contractor shall require CSDR reporting from selected 
subcontractors identified in the CSDR contract plan as requiring 
such reporting. If the Contractor changes subcontractors or makes 
new awards for selected subcontract effort, the Contractor shall 
notify the Government.

[FR Doc. 2010-29496 Filed 11-23-10; 8:45 am]
BILLING CODE 5001-08-P