Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Rules and Regulations 77741 

item, with a contractor that has been 

debarred, suspended, or proposed for 

debarment unless there is a compelling 

reason to do so. If a contractor intends 

to subcontract, other than a subcontract 

for a commercially available off-theshelf item, with a party that is debarred, 

suspended, or proposed for debarment 

as evidenced by the parties’ inclusion in 

the EPLS (see 9.404), a corporate officer 

or designee of the contractor is required 

by operation of the clause at 52.209–6, 

Protecting the Government’s Interests 

when Subcontracting with Contractors 

Debarred, Suspended, or Proposed for 

Debarment, to notify the contracting 

officer, in writing, before entering into 

such subcontract. For contracts for the 

acquisition of commercial items, the 

notification requirement applies only 

for first-tier subcontracts. For all other 

contracts, the notification requirement 

applies to subcontracts at any tier. The 

notice must provide the following: 

* * * * * 

PART 52—SOLICITATION PROVISIONS 

AND CONTRACT CLAUSES 

■ 3. Amend section 52.209–6 by— 

■ a. Revising the date of the clause; 

■ b. Redesignating paragraphs (a) 

through (c) as paragraphs (b) through 

(d), respectively; and adding a new 

paragraph (a); 

■ c. Revising the newly designated 

paragraphs (b), (c), and (d) introductory 

text; and 

■ d. Adding paragraph (e). 

The revised and added text reads as 

follows: 

52.209–6 Protecting the Government’s 

Interest When Subcontracting With 

Contractors Debarred, Suspended, or 

Proposed for Debarment. 

* * * * * 

Protecting the Government’s Interest 

When Subcontracting With Contractors 

Debarred, Suspended, or Proposed for 

Debarment (DEC 2010) 

(a) Definition. Commercially available offthe-shelf (COTS) item, as used in this 

clause— 

(1) Means any item of supply (including 

construction material) that is— 

(i) A commercial item (as defined in 

paragraph (1) of the definition in FAR 2.101); 

(ii) Sold in substantial quantities in the 

commercial marketplace; and 

(iii) Offered to the Government, under a 

contract or subcontract at any tier, without 

modification, in the same form in which it 

is sold in the commercial marketplace; and 

(2) Does not include bulk cargo, as defined 

in section 3 of the Shipping Act of 1984 (46 

U.S.C. App. 1702), such as agricultural 

products and petroleum products. 

(b) The Government suspends or debars 

Contractors to protect the Government’s 

interests. Other than a subcontract for a 

commercially available off-the-shelf item, the 

Contractor shall not enter into any 

subcontract, in excess of $30,000 with a 

Contractor that is debarred, suspended, or 

proposed for debarment by any executive 

agency unless there is a compelling reason to 

do so. 

(c) The Contractor shall require each 

proposed subcontractor whose subcontract 

will exceed $30,000, other than a 

subcontractor providing a commercially 

available off-the-shelf item, to disclose to the 

Contractor, in writing, whether as of the time 

of award of the subcontract, the 

subcontractor, or its principals, is or is not 

debarred, suspended, or proposed for 

debarment by the Federal Government. 

(d) A corporate officer or a designee of the 

Contractor shall notify the Contracting 

Officer, in writing, before entering into a 

subcontract with a party (other than a 

subcontractor providing a commercially 

available off-the-shelf item) that is debarred, 

suspended, or proposed for debarment (see 

FAR 9.404 for information on the Excluded 

Parties List System). The notice must include 

the following: 

* * * * * 

(e) Subcontracts. Unless this is a contract 

for the acquisition of commercial items, the 

Contractor shall include the requirements of 

this clause, including this paragraph (e) 

(appropriately modified for the identification 

of the parties), in each subcontract that— 

(1) Exceeds $30,000 in value; and 

(2) Is not a subcontract for commercially 

available off-the-shelf items. 

(End of clause) 

■ 4. Amend section 52.212–5 by— 

■ a. Revising the date of the clause; and 

■ b. Redesignating paragraphs (b)(6) 

through (b)(44) as paragraphs (b)(7) 

through (b)(45), respectively; and 

adding a new paragraph (b)(6). 

The revised and added text reads as 

follows: 

52.212–5 Contract Terms and Conditions 

Required To Implement Statutes or 

Executive Orders—Commercial Items. 

* * * * * 

Contract Terms and Conditions 

Required To Implement Statutes or 

Executive Orders—Commercial Items 

(DEC 2010) 

(b) * * * 

(6) 52.209–6, Protecting the Government’s 

Interest When Subcontracting with 

Contractors Debarred, Suspended, or 

Proposed for Debarment (DEC 2010) (31 

U.S.C. 6101 note). (Applies to contracts over 

$30,000). (Not applicable to subcontracts for 

the acquisition of commercially available offthe-shelf items). 

* * * * * 

■ 5. Amend section 52.213–4 by 

revising the date of the clause and 

paragraph (b)(2)(i) to read as follows: 

52.213–4 Terms and Conditions— 

Simplified Acquisitions (Other Than 

Commercial Items). 

* * * * * 

Terms and Conditions—Simplified 

Acquisitions (Other Than Commercial 

Items) (DEC 2010) 

(b) * * * 

(2) * * * 

(i) 52.209–6, Protecting the Government’s 

Interest When Subcontracting with 

Contractors Debarred, Suspended, or 

Proposed for Debarment (DEC 2010) (Applies 

to contracts over $30,000). (Not applicable to 

subcontracts for the acquisition of 

commercially available off-the-shelf items). 

* * * * * 

[FR Doc. 2010–30565 Filed 12–10–10; 8:45 am] 

BILLING CODE 6820–EP–P 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Parts 15, 31, and 52 

[FAC 2005–47; FAR Case 2008–031; Item 

VI; Docket 2009–0034, Sequence 2] 

RIN 9000–AL27 

Federal Acquisition Regulation; 

Limitation on Pass-Through Charges 

AGENCIES: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Final rule. 

SUMMARY: The Civilian Agency 

Acquisition Council and the Defense 

Acquisition Regulations Council 

(Councils) have adopted as final, with 

changes, the interim rule amending the 

Federal Acquisition Regulation (FAR) to 

implement section 866 of the Duncan 

Hunter National Defense Authorization 

Act (NDAA) for Fiscal Year (FY) 2009, 

which applies to executive agencies 

other than DoD. DoD is subject to 

section 852 of the John Warner NDAA 

for FY 2007, which is also implemented 

in this final rule. Section 866 requires 

the Councils to amend the FAR, and 

section 852 requires the Secretary of 

Defense to prescribe regulations to 

minimize excessive pass-through 

charges by contractors from 

subcontractors, or from tiers of 

subcontractors, that add no or negligible 

value, and to ensure that neither a 

contractor nor a subcontractor receives 

indirect costs or profit/fee (i.e., passthrough charges) on work performed by 

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77742 Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Rules and Regulations 

a lower-tier subcontractor to which the 

higher-tier contractor or subcontractor 

adds no or negligible value. 

DATES: Effective Date: January 12, 2011. 

FOR FURTHER INFORMATION CONTACT: For 

clarification of content, contact Mr. 

Edward Chambers, Procurement 

Analyst, at (202) 501–3221. For 

information pertaining to status or 

publication schedules, contact the 

Regulatory Secretariat at (202) 501– 

4755. Please cite FAC 2005–47, FAR 

Case 2008–031. 

SUPPLEMENTARY INFORMATION: 

A. Background 

DoD, GSA, and NASA published an 

interim rule in the Federal Register at 

74 FR 52853, October 14, 2009, to 

implement section 866 of the Duncan 

Hunter NDAA for FY 2009 (Pub. L. 110– 

417) as well as section 852 of the John 

Warner NDAA for FY 2007 (Pub. L. 

109–364). These acts required the 

Councils to amend the FAR to minimize 

excessive pass-through charges by 

contractors from subcontractors, or from 

tiers of subcontractors, that add no or 

negligible value, and to ensure that 

neither a contractor nor a higher-tier 

subcontractor receives indirect costs or 

profit/fee (i.e., pass-through charges) on 

work performed by a lower-tier 

subcontractor to which the contractor or 

higher-tier subcontractor adds no or 

negligible value. 

To enable agencies to ensure that 

pass-through charges are not excessive, 

the interim rule included a solicitation 

provision and a contract clause 

requiring offerors and contractors to 

identify the percentage of work that will 

be subcontracted, and when subcontract 

costs will exceed 70 percent of the total 

cost of work to be performed, to provide 

information on indirect costs and profit/ 

fee and value added with regard to the 

subcontract work. Seventy percent was 

selected as the threshold for this 

information reporting requirement, 

because it represents a substantial 

amount of subcontracting. 

To ensure that the Government can 

make a determination as to whether or 

not pass-through charges are excessive, 

the interim rule incorporated a reporting 

threshold that affords the contracting 

officer the ability to understand what 

functions the contractor will perform 

(e.g., consistent with the contractor’s 

disclosed practice) and thus will 

provide added value, whether it be 

before award, or if the contractor 

subsequently decides to subcontract 

substantially all of the effort. The rule 

provides a recovery mechanism for the 

excessive pass-through charges for those 

situations in which a contractor 

subcontracts all, or substantially all, of 

the performance of the contract, and 

does not perform the subcontract 

management functions, or other valueadded functions, that were charged to 

the Government through indirect costs 

and related profit/fee. 

The final rule adopts the interim rule 

with a minor change involving the 

addition of two types of fixed-price 

incentive contracts to the list of 

contracts at FAR 15.408(n)(2)(i)(B)(2) for 

DoD that are not subject to the 

limitation on pass-through charges 

clauses. These additions are fixed-price 

incentive contracts awarded on the basis 

of adequate price competition and fixedprice incentive contracts for the 

acquisition of a commercial item. 

Section 852 of the John Warner NDAA 

for FY 2007 (Pub. L. 109–364) is clear 

that DoD contracts awarded on the basis 

of adequate price competition, and DoD 

contracts for the acquisition of a 

commercial item are not subject to the 

limitation on pass-through charges. 

B. Discussion and Analysis 

The FAR Secretariat received five 

responses to the interim rule. These 

responses included a total of 31 

comments on 23 issues. Each issue is 

discussed in the following sections. 

Issue 1: Three respondents expressed 

their support for the interim rule with 

one respondent stating that they were in 

favor of companies being responsible, 

responsive, and capable of providing 

adequate management systems to track 

the level of subcontracting taking place 

under specific contracts. 

Response: The Councils acknowledge 

their support for the interim rule. 

Issue 2: One respondent 

recommended that guidance should be 

provided to assist contracting officers 

with implementing the rule. The 

respondent cited several examples of 

what should be in that guidance. 

Response: The Councils disagree with 

the inclusion of such implementation 

guidance in the FAR. Agencies will 

provide supplemental guidance and 

training to implement this rule, as 

appropriate. 

Issue 3: One respondent 

recommended that the clause language 

incorporate GAO recommendations 

relative to ‘‘requiring contracting 

officials to take risk into account when 

determining the degree of assessment 

needed.’’ 

Response: The Councils do not 

concur. The respondent’s 

recommendation goes to procedures for 

assessing contractor value added. Such 

procedures are beyond the scope of this 

case, and reasonably should be 

implemented through agency guidance. 

Issue 4: One respondent 

recommended that the final rule be 

written such as to ‘‘serve as a tool to 

ensure consistency to the extent 

practicable between contractor’s 

proposals and actual performance rather 

than to serve as a basis to disallow cost 

after incurrence.’’ 

Response: The Councils do not concur 

with the respondent’s recommendation. 

Unless otherwise required under the 

contract, contractors have the right to 

revise and manage workload under the 

contract as they see fit. The clauses 

provide sufficient protection to the 

Government for such cases where the 

contractor revises the workload from 

what had been negotiated to a situation 

where excessive pass-through charges 

exist. 

Issue 5: One respondent 

recommended that the final rule be 

written such as to ‘‘carefully consider 

the potential effects on those small 

businesses performing as prime 

contractors on contract set-asides given 

that small business prime contractors 

could experience significant financial 

impacts as a result of disallowed passthrough costs under this rule.’’ 

Response: The Councils do not concur 

with the respondent’s recommendation. 

Section 866 of the FY 2009 NDAA does 

not set forth an exclusion for small 

businesses under this rule. 

Issue 6: One respondent 

recommended that the final rule should 

reconcile DoD policies to avoid 

confusion. Specifically, they assert that 

the Wynne memorandum dated July 12, 

2004, and the policies enacted in the 

Weapons Systems Acquisition Reform 

Act of 2009 are contrary to this rule, 

which ‘‘exerts pressure on contracting 

officials to keep work in-house to 

address the reporting requirement.’’ 

Response: The Councils do not concur 

with the respondent’s recommendation. 

The Councils do not agree that there are 

conflicts between this rule and DoD 

policy. Competition and teaming 

arrangements are not hindered by this 

regulation, and subcontracting efforts 

are not limited to 70 percent of the total 

effort. The 70 percent threshold triggers 

an information reporting requirement. 

This rule is emphasizing that value is to 

be added by the contractor to the 

subcontracted effort. 

Issue 7: One respondent 

recommended that ‘‘a distinction be 

made with regard to G&A applied to 

contracts versus applied profit. This 

will serve to protect the contractor’s 

recovery of allowable G&A if incurred in 

accordance with CAS and the 

contractor’s disclosed practices, while 

focusing the Government’s attention to 

the negotiated item of profit.’’ 

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Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Rules and Regulations 77743 

Response: The Councils do not concur 

with the respondent’s recommendation. 

The Councils disagree that a distinction 

should be made with regard to G&A 

applied to contracts versus applied 

profit because the statutes prohibit 

application of overhead to excessive 

pass-through charges, as well as profit. 

Issue 8: One respondent 

recommended that the rule should use 

the threshold in FAR 15.403–4 to ensure 

a consistent minimum threshold among 

all executive agencies in lieu of multiple 

thresholds currently in the rule. The 

respondent believed that if the Councils 

utilize the threshold in FAR 15.404–4, 

the rule ‘‘will exclude a significant 

number of subcontracts from this 

burdensome requirement but still cover 

the vast majority of the total value of 

subcontracts.’’ 

Response: The Councils do not concur 

with the respondent’s recommendation. 

By statute, civilian agencies are required 

to establish the threshold at the 

simplified acquisition threshold, while 

DoD established its threshold at the 

threshold for obtaining cost or pricing 

data in FAR 15.403–4. 

Issue 9: One respondent 

recommended that the provision and 

clause be amended to include 

definitions of ‘‘total cost of the work’’ 

and ‘‘total cost of work’’. As such, the 

respondent recommended that ‘‘FAR 

52.215–22 be amended to provide that, 

for purposes of determining whether the 

70 percent subcontracting threshold is 

reached, the ‘total cost of the work’ to 

be performed by the prime contractor or 

a higher-tier subcontractor shall include 

the prime contractor’s or higher-tier 

subcontractor’s direct and indirect costs 

of the work, excluding applicable profit 

or fee, to be performed under the 

contract or higher-tier subcontractor, as 

the case may be, and the ‘total cost of 

the work’ to be performed by each 

subcontractor to the prime contractor or 

to a higher-tier subcontractor shall 

include its direct and indirect costs, 

including applicable profit or fee, of the 

work to be performed under its 

subcontract.’’ Also, the respondent 

recommended that ‘‘FAR 52.215–23 be 

amended to provide that, for purposes 

of determining whether a prime 

contractor, or higher-tier subcontractor, 

changes the amount of subcontractor 

effort after award such that it exceeds 70 

percent of the total cost of work to be 

performed under the contractor or 

higher-tier subcontractor, the ‘total cost 

of the work’ to be performed by the 

prime contractor or higher-tier 

subcontractor under the contract or 

higher-tier subcontractor shall include 

the contractor’s or higher-tier 

subcontractor’s direct and indirect costs 

of the work, excluding applicable profit 

or fee, to be performed under the 

contract or higher-tier subcontractor, as 

the case may be, and the ‘total cost of 

the work’ to be performed by each 

subcontractor to the prime contractor or 

to a higher-tier subcontractor shall 

include its direct and indirect costs, 

including applicable profit or fee, of the 

work to be performed under its 

subcontract.’’ 

Response: The Councils do not concur 

with the respondent’s recommendation. 

The Councils believe that the 

respondent’s recommended definitions 

are not necessary, as they are 

universally understood within the 

acquisition community. 

Issue 10: Two respondents believed 

that the determination of value-added 

work be performed before contract 

award and not during contract 

performance. One respondent 

recommended that ‘‘the rule be placed 

in FAR Part 15 (for example, in 15.404– 

1, Proposal Analysis) rather than in a 

clause to affirm and emphasize the basic 

contract formation policy that contracts 

should not be entered into where the 

contracting officer determines after a 

thorough proposal analysis that an 

offeror adds no or negligible value to the 

proposed acquisition.’’ The respondent 

believed that the pass-through rule, as 

currently written, ‘‘would unfairly 

continue to subject contractors to 

continuing post-award reviews by the 

government of pass-through charges and 

potential disallowances throughout the 

life of the contract which is unjustified, 

inappropriate, onerous, and not 

required by sections 866 or 852 of the 

NDAAs.’’ Similarly, another respondent 

recommended that FAR 52.215–23 be 

changed to add language from Alternate 

I to the standard clause, thus, mandating 

that contracting officers determine prior 

to award that the contractor will add 

value. The respondent also 

recommended that FAR 52.215–23(c) be 

changed ‘‘to require the contracting 

officer to make a determination as to 

whether the contractor will, in fact, 

provide ‘added value’, thereby putting 

the contractor on notice as to whether 

it can apply indirect costs and profit to 

work performed by subcontractors.’’ 

This determination should be required 

to be made in a reasonable time not to 

exceed 30 days and if no determination 

made by 30 days, consider work to be 

value-added. 

Response: The Councils do not concur 

with the respondent’s 

recommendations. The statute’s 

requirements are not limited only to 

pre-award restrictions, but instead set 

forth the requirements to ensure that 

neither a contractor nor a subcontractor 

receives indirect costs or profit on work 

performed by a lower-tier subcontractor 

to which the higher-tier contractor or 

subcontractor adds no or negligible 

value at any time. 

Issue 11: One respondent 

recommended that the final rule include 

an exemption for cost accounting 

standard (CAS)-covered contracts since 

allocability and allowability of passthrough charges are already covered in 

CAS and cost principles. 

Response: The Councils do not concur 

with the respondent’s recommendation. 

The statutes do not set forth an 

exclusion for CAS-covered contracts. 

Furthermore, CAS does not ensure that 

the Government does not pay excessive 

pass-through charges as required by the 

statutes. 

Issue 12: One respondent 

recommended that the final rule include 

an exemption for contracts issued 

subject to the Truth In Negotiations Act 

(TINA) requirements since already 

existing cost or pricing data 

requirements would provide necessary 

data relative to pass-through charges. 

Response: The Councils do not concur 

with the respondent’s recommendation. 

The statutes do not set forth an 

exclusion for contracts subject to TINA. 

Furthermore, TINA does not ensure that 

the Government does not pay excessive 

pass-through charges as required by the 

statutes. 

Issue 13: Two respondents 

recommended that the final rule include 

an exemption for all commercial item 

acquisitions since, as currently written, 

commercial items/services procured by 

DoD through time-and-materials or 

labor-hour contracts could be subject to 

the pass-through clause. One of these 

respondents believed that applying 

these requirements to commercial 

contracts would be unnecessary; 

contrary to TINA; inconsistent with the 

Federal Acquisition Streamlining Act, 

as well as the Services Acquisition 

Reform Act; and exceed Congressional 

authority. 

Response: The Councils do not concur 

with these respondents’ 

recommendations. The statutes do not 

set forth an exemption for commercial 

item/service time-and-materials or 

labor-hour contracts. Furthermore, the 

Councils do not believe it would be 

within the spirit of the statute to 

implement such exemptions. 

Issue 14: Two respondents 

recommended that FAR 52.215–23(e) be 

removed as redundant or re-worded to 

specifically address what additional 

records or data the contracting officer 

requires access to that is not currently 

addressed by FAR 52.215–2. 

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77744 Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Rules and Regulations 

Response: The Councils do not concur 

with the respondent’s recommendation. 

The audit and records FAR clause at 

52.215–2 does not provide access to all 

of the necessary records to show 

excessive pass-through charges. The 

final rule maintains the access to 

records FAR provision at 52.215–23(e) 

because it is needed to fully implement 

the statutes and ensure that the 

Government is not paying excessive 

pass-through charges. 

Issue 15: One respondent 

recommended that the 70 percent 

threshold be raised to 90 percent which 

reflects the level initially contemplated 

by Congress in the Senate version of the 

bill (section 844 of S2766). The 

respondent believed there was no basis 

for the 70 percent threshold. 

Response: The Councils disagree with 

this recommendation. As permitted by 

section 852 of the ‘‘John Warner NDAA 

for FY 2007’’, the Councils have 

identified 70 percent as the threshold 

whereby a greater risk is assumed by the 

Government in paying excessive passthrough charges. The Councils consider 

this 70 percent threshold reasonable, 

because it affords the parties an 

opportunity to address subcontracting 

management requirements above this 

level in more detail and to ensure the 

contracting officer is able to determine 

the disclosed subcontract management 

functions are of benefit to the 

Government. The statute requires that 

the Government not pay excessive passthrough charges on any contract, 

subcontract, or order. 

Issue 16: One respondent 

recommended that the flowdown 

provisions of the solicitation provision 

and clause be limited to first-tier 

subcontractors. The respondent believed 

that there was little benefit in micromanaging pass-through charges deep 

into the supply chain. 

Response: The Councils do not concur 

with the respondent’s recommendation. 

It is very apparent from the language of 

the statutes that Congressional intent is 

to flow down this requirement beyond 

the first tier-subcontract level. 

Issue 17: One respondent 

recommends that the final rule include 

a set of narrowly defined definitions for 

all key terms, such as, but not limited 

to ‘‘no or negligible value’’, ‘‘substantial 

value’’, and ‘‘added value’’. 

Response: In general, the Councils do 

not concur with the respondent’s 

recommendation. The Councils believe 

that the respondent’s recommended 

definitions are not necessary, as they are 

universally understood within the 

acquisition community. However, the 

rule does provide definitions of five of 

the more commonly understood terms, 

including ‘‘no or negligible value’’ and 

‘‘added value’’. 

Issue 18: One respondent 

recommended that the definition of 

‘‘added value’’ in FAR 52.215–23(a), 

where ‘‘e.g.’’ is included in parentheses, 

be changed to ‘‘including, but not 

limited to’’. 

Response: The Councils do not concur 

with the respondent’s recommendation. 

The term ‘‘e.g.’’ means for example, 

which does not imply that these 

functions are all inclusive. 

Issue 19: One respondent 

recommended that the pass-through 

provision and clause be limited to only 

sole source contracts (firm-fixed-price, 

time and materials, or otherwise) below 

the TINA threshold. 

Response: The Councils do not concur 

with the respondent’s recommendation. 

The statutes do not limit 

implementation of the requirements on 

such a limited basis. 

Issue 20: One respondent 

recommended that the intent of FAR 

52.215–23(d) be clarified since, as 

written, it is an open invitation to 

contracting officers to revisit contract 

terms and price agreements after the 

fact, which is unfair and unproductive, 

and further be clarified as to how this 

section will be implemented in light of 

other contract compliance requirements 

and/or other operative contract clauses. 

Response: The Councils do not concur 

with the respondent’s recommendation. 

This is not an invitation to revisit 

contract terms or price agreements. This 

is a compliance function performed 

under, and in conjunction with, 

standard contract administration. 

Issue 21: One respondent 

recommended that the final rule 

specifically address small business 

goals. The respondent did not want to 

have the rule inadvertently discourage 

substantial subcontracting to small firms 

that do provide value added solutions. 

In general, the respondent 

recommended clarifying intent and 

wording of the final rule to prevent 

contracting officers from leaving out 

legitimate small firms or discouraging 

prime contractors from subcontracting. 

Specifically, the respondent 

recommended that the following 

language be added to the rule, ‘‘not 

intended to penalize companies with 

substantial small business goals that 

may on individual task orders exceed 70 

percent’’. 

Response: The Councils disagree with 

including the respondent’s 

recommended language. It is not the 

Government’s intention to establish a 

disincentive for a company from 

achieving their small business 

subcontractor goals. This rule merely 

requires that the Government not pay 

excessive pass-through charges to 

contractors who add no or negligible 

value. The contracting officer has the 

discretion to make the determination 

whether the contractor has added value. 

Issue 22: One respondent 

recommended that the definition of 

value-added at FAR 52.215–23(a) be 

‘‘expanded to include all activities with 

respect to subcontractor sourcing, 

selection, negotiation, and 

administration that facilitate 

performance of services and delivery of 

goods to the Government and reduce 

Government’s risk.’’ 

Response: The Councils disagree. The 

recommended language is too broad and 

does not adhere to the intent of the 

statute. The interim rule language 

provided examples for the contracting 

officer to consider, but ultimately this is 

a contracting officer determination. 

Issue 23: One respondent 

recommended that the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) language in the second interim 

rule that was published in the Federal 

Register at 73 FR 27464, May 13, 2008, 

be eliminated since it is no longer 

required based upon this rule. 

Response: Although this comment is 

outside the scope of this case, the 

language has been removed from the 

DFARS (DFARS Case 2006–D057, 75 FR 

48278, effective August 10, 2010). 

C. Regulatory Planning and Review 

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. 

D. Regulatory Flexibility Act 

The Department of Defense, the 

General Services Administration, and 

the National Aeronautics and Space 

Administration certify 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 we do 

not expect a significant number of 

entities to propose excessive passthrough charges under contracts or 

subcontracts, and the information 

required from offerors and contractors 

regarding pass-through charges is 

minimal. 

E. Paperwork Reduction Act 

The Paperwork Reduction Act does 

apply; however, these changes to the 

FAR do not impose additional 

information collection requirements to 

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Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Rules and Regulations 77745 

the paperwork burden previously 

approved under OMB Control Number 

9000–0173. 

List of Subjects in 48 CFR Parts 15, 31, 

and 52 

Government procurement. 

Dated: November 24, 2010. 

Millisa Gary, 

Acting Director, Acquisition Policy Division. 

Interim Rule Adopted as Final With 

Changes 

■ Accordingly, the interim rule 

amending 48 CFR parts 15, 31, and 52, 

which was published in the Federal 

Register at 74 FR 52853, October 14, 

2009, is adopted as final with the 

following changes: 

PART 15—CONTRACTING BY 

NEGOTIATION 

■ 1. The authority citation for 48 CFR 

part 15 continues to read as follows: 

Authority: 40 U.S.C. 121(c); 10 U.S.C. 

chapter 137; and 42 U.S.C. 2473(c). 

■ 2. Amend section 15.408 by— 

■ a. Removing from paragraph 

(n)(2)(i)(B)(2)(iii) the word ‘‘or’’; 

■ b. Removing the period from the end 

of paragraph (n)(2)(i)(B)(2)(iv) and 

adding a semicolon in its place; and 

■ c. Adding paragraphs (n)(2)(i)(B)(2)(v) 

and (n)(2)(i)(B)(2)(vi) to read as follows: 

15.408 Solicitation provisions and 

contract clauses. 

* * * * * 

(n) * * * 

(2)(i) * * * 

(B) * * * 

(2) * * * 

(v) A fixed-price incentive contract 

awarded on the basis of adequate price 

competition; or 

(vi) A fixed-price incentive contract 

for the acquisition of a commercial item. 

[FR Doc. 2010–30566 Filed 12–10–10; 8:45 am] 

BILLING CODE 6820–EP–P 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Parts 3, 5, 7, and 10 

[FAC 2005–47; Item VII; Docket 2010–0110, 

Sequence 1] 

Federal Acquisition Regulation; 

Technical Amendments 

AGENCIES: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Final rule. 

SUMMARY: This document makes 

amendments to the Federal Acquisition 

Regulation (FAR) in order to make 

editorial changes. 

DATES: Effective Date: December 13, 

2010. 

FOR FURTHER INFORMATION CONTACT: The 

FAR Secretariat, 1275 First St., NE., 

Washington, DC 20417, (202) 501–4755, 

for information pertaining to status or 

publication schedules. Please cite FAC 

2005–47, Technical Amendments. 

SUPPLEMENTARY INFORMATION: This 

document makes amendments to the 

Federal Acquisition Regulation (FAR) in 

48 CFR parts 3, 5, 7, and 10 for purposes 

of updating. 

List of Subjects in 48 CFR Parts 3, 5, 7, 

and 10 

Government procurement. 

Dated: November 24, 2010. 

Millisa Gary, 

Acting Director, Acquisition Policy Division. 

■ Therefore, DoD, GSA, and NASA 

amend 48 CFR parts 3, 5, 7, and 10 as 

set forth below: 

■ 1. The authority citation for 48 CFR 

parts 3, 5, 7, and 10 continues to read 

as follows: 

Authority: 40 U.S.C. 121(c); 10 U.S.C. 

chapter 137; and 42 U.S.C. 2473(c). 

PART 3—IMPROPER BUSINESS 

PRACTICES AND PERSONAL 

CONFLICTS OF INTEREST 

3.104–1 [Amended] 

■ 2. Amend section 3.104–1 by 

removing from the definition ‘‘Federal 

agency procurement,’’ in the second 

sentence, the word ‘‘innovative’’ and 

adding the word ‘‘innovation’’ in its 

place. 

PART 5—PUBLICIZING CONTRACT 

ACTIONS 

5.601 [Amended] 

■ 3. Amend section 5.601 by removing 

from paragraphs (a), (b)(1), and (b)(2) 

‘‘http://www.contractdirectory.gov’’ and 

adding ‘‘http:// 

www.contractdirectory.gov/ 

contractdirectory/’’ in its place. 

PART 7—ACQUISITION PLANNING 

7.105 [Amended] 

■ 4. Amend section 7.105 by removing 

from paragraph (b)(1), in the second 

sentence, ‘‘http:// 

www.contractdirectory.gov’’ and adding 

‘‘http://www.contractdirectory.gov/ 

contractdirectory/’’ in its place. 

PART 10—MARKET RESEARCH 

10.002 [Amended] 

■ 5. Amend section 10.002 by removing 

from paragraph (b)(2)(iv) ‘‘http:// 

www.contractdirectory.gov’’ and adding 

‘‘http://www.contractdirectory.gov/ 

contractdirectory/’’ in its place. 

[FR Doc. 2010–30567 Filed 12–10–10; 8:45 am] 

BILLING CODE 6820–EP–P 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Chapter 1 

[Docket FAR 2010–0077, Sequence 9] 

Federal Acquisition Regulation; 

Federal Acquisition Circular 2005–47; 

Small Entity Compliance Guide 

AGENCIES: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Small Entity Compliance Guide. 

SUMMARY: This document is issued 

under the joint authority of the 

Secretary of Defense, the Administrator 

of General Services and the 

Administrator of the National 

Aeronautics and Space Administration. 

This Small Entity Compliance Guide has 

been prepared in accordance with 

section 212 of the Small Business 

Regulatory Enforcement Fairness Act of 

1996. It consists of a summary of rules 

appearing in Federal Acquisition 

Circular (FAC) 2005–47, which amend 

the FAR. An asterisk (*) next to a rule 

indicates that a regulatory flexibility 

analysis has been performed. Interested 

parties may obtain further information 

regarding these rules by referring to FAC 

2005–47, which precedes this 

document. These documents are also 

available via the Internet at http:// 

www.regulations.gov. 

DATES: For effective dates see separate 

documents, which follow. 

FOR FURTHER INFORMATION CONTACT: The 

analyst whose name appears in the table 

below. Please cite FAC 2005–47 and the 

specific FAR case number. For 

information pertaining to status or 

publication schedules, contact the 

Regulatory Secretariat at (202) 501– 

4755. 

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