81908 Federal Register / Vol. 75, No. 249 / Wednesday, December 29, 2010 / Rules and Regulations 

title IV–D, IV–A, IV–B, and IV–E 

programs. 

* * * * * 

(d) * * * 

(1) The parent’s, putative father’s or 

non-parent relative’s name; * * * 

(3) The non-parent relative’s SSN, if 

known. 

(4) Any other information prescribed 

by the Office. 

(e) The director of the IV–D agency or 

his or her designee shall attest annually 

to the following: 

(1)(i) The IV–D agency will only 

obtain information to facilitate the 

location of any individual in accordance 

with section 453(a)(2) of the Act for the 

purpose of establishing parentage, 

establishing, setting the amount of, 

modifying, or enforcing child support 

obligations, or for determining who has 

or may have parental rights with respect 

to a child, or in accordance with section 

453(a)(3) of the Act for enforcing a State 

law with respect to the unlawful taking 

or restraint of a child, or for making or 

enforcing a child custody or visitation 

determination as defined in section 

463(d)(1) of the Act, or in accordance 

with section 453(j)(3) of the Act for the 

purpose of assisting State agencies to 

carry out their responsibilities under 

title IV–D, IV–A, IV–B, and IV–E 

programs. 

* * * * * 

(2) In the case of a submittal made on 

behalf of a resident parent, legal 

guardian, attorney or agent of a child 

not receiving assistance under title IV– 

A, the IV–D agency must verify that the 

requesting individual has complied 

with the provisions of § 302.35 of this 

chapter. 

* * * * * 

PART 307—COMPUTERIZED 

SUPPORT ENFORCEMENT SYSTEMS 

IN OPERATION AFTER OCTOBER 1, 

1997 

■ 10. The authority citation for part 307 

continues to read as follows: 

Authority: 42 U.S.C. 652 through 658, 664, 

666 through 669A, and 1302. 

■ 11. Amend § 307.13 by revising 

paragraphs (a)(3), (4)(iii), and (iv) to 

read as follows: 

§ 307.13 Security and confidentiality for 

computerized support enforcement 

systems in operation after October 1, 1997. 

* * * * * 

(a) * * * 

(3) Permit disclosure of information to 

State agencies administering programs 

under titles IV (including Tribal 

programs under title IV), XIX, and XXI 

of the Act, and SNAP, to the extent 

necessary to assist them to carry out 

their responsibilities under such 

programs in accordance with section 

454A(f)(3) of the Act, to the extent that 

it does not interfere with the IV–D 

program meeting its own obligations 

and subject to such requirements as 

prescribed by the Office. 

(4) * * * 

(iii) NDNH and FCR information may 

be disclosed without independent 

verification to IV–B and IV–E agencies 

to locate parents and putative fathers for 

the purpose of establishing parentage or 

establishing parental rights with respect 

to a child; and 

(iv) NDNH and FCR information may 

be disclosed without independent 

verification to title IV–D, IV–A, IV–B 

and IV–E agencies for the purpose of 

assisting States to carry out their 

responsibilities to administer title IV–D, 

IV–A, IV–B and IV–E programs. 

* * * * * 

[FR Doc. 2010–32424 Filed 12–28–10; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 209 and 252 

[DFARS Case 2009–D015] 

RIN 0750–AG63 

Defense Federal Acquisition 

Regulation Supplement; 

Organizational Conflicts of Interest in 

Major Defense Acquisition Programs 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Final rule. 

SUMMARY: DoD is issuing a final rule to 

amend the Defense Federal Acquisition 

Regulation Supplement (DFARS) to 

implement section 207 of the Weapon 

Systems Acquisition Reform Act of 

2009. Section 207 addresses 

organizational conflicts of interest in 

major defense acquisition programs. 

DATES: Effective Date: December 29, 

2010. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Amy Williams, Defense Acquisition 

Regulations System, 

OUSD(AT&L)(DPAP)(DARS), Room 

3B855, 3062 Defense Pentagon, 

Washington, DC 20301–3060. 

Telephone 703–602–0328; facsimile 

703–602–7887. Please cite DFARS Case 

2009–D015. 

SUPPLEMENTARY INFORMATION: 

I. Background 

DoD is issuing a final rule to amend 

the DFARS to implement section 207 of 

the Weapon Systems Acquisition 

Reform Act of 2009 (WSARA) (Pub. L. 

111–23). Section 207 requires DoD to 

revise the DFARS to provide uniform 

guidance and tighten existing 

requirements relating to organizational 

conflicts of interest (OCIs) of contractors 

in major defense acquisition programs 

(MDAPs). The law sets out situations 

that must be addressed and allows DoD 

to establish such limited exceptions as 

are necessary to ensure that DoD has 

continued access to advice on systems 

architecture and systems engineering 

matters from highly qualified 

contractors, while also ensuring that 

such advice comes from sources that are 

objective and unbiased. 

In developing regulatory language, 

section 207 directed DoD to consider the 

recommendation presented by the Panel 

on Contracting Integrity and further 

directed DoD to consider any findings 

and recommendations of the 

Administrator of the Office of Federal 

Procurement Policy (OFPP) and the 

Director of the Office of Government 

Ethics (OGE) pursuant to section 841(b) 

of the Duncan Hunter National Defense 

Authorization Act (NDAA) for Fiscal 

Year (FY) 2009 (Pub. L. 110–417). 

Section 841(b) of the NDAA for FY 2009 

required review by OFPP, in 

consultation with OGE, of FAR coverage 

of OCIs. Neither OFPP nor OGE has 

issued recommendations to date 

pursuant to section 841(b), but both 

have worked with the FAR Acquisition 

Law Team, which includes 

representatives from DoD and the 

civilian agencies, to draft a proposed 

rule on OCIs under FAR Case 2007–018. 

As part of this process, OFPP, OGE, and 

the FAR Acquisition Law Team 

reviewed comments received in 

response to an Advance Notice of 

Proposed Rulemaking, published in the 

Federal Register at 73 FR 15962 on 

March 26, 2008, and are also 

considering pertinent comments that 

were submitted in response to this 

DFARS Case 2009–D015 in formulation 

of the proposed FAR rule. 

A public meeting was held on 

December 8, 2009 (see 74 FR 57666) to 

provide opportunity for dialogue on the 

possible impact on DoD contracting of 

the section 207 requirements relating to 

OCIs. 

DoD published a proposed rule in the 

Federal Register on April 22, 2010 (75 

FR 20954). The comment period was 

initially scheduled to close on June 21, 

2010. On June 15, 2010, the comment 


srobinson on DSKHWCL6B1PROD with RULES
Federal Register / Vol. 75, No. 249 / Wednesday, December 29, 2010 / Rules and Regulations 81909 

period was extended to July 21, 2010 

(75 FR 33752). 

II. Discussion and Analysis 

DoD received comments from 21 

respondents in response to the proposed 

rule. Some respondents expressed 

general support for the rulemaking. 

Others expressed concern that the rule 

did not achieve the overall objectives of 

section 207, either because the proposed 

coverage was too stringent or not 

sufficiently strong. Based on public 

comments, changes were made to the 

proposed rule, including the following: 

• Removing from the DFARS final 

rule the proposed changes that would 

have provided general regulatory 

coverage on OCIs to temporarily replace 

that in FAR subpart 9.5. 

• Locating the core of the final rule in 

subpart 209.5 and 252.209. 

• Making clear that this final rule 

takes precedence over FAR subpart 9.5, 

to the extent that there are 

inconsistencies. 

• Adding to the policy an explanation 

of the basic goals to promote 

competition and preserve DoD access to 

the expertise of qualified contractors. 

• Tightening the exception for 

‘‘domain experience and expertise’’ to 

require a head of the contracting activity 

determination that DoD needs access to 

the domain experience and expertise of 

the apparently successful offeror; and 

that, based on the agreed-to resolution 

strategy, the apparently successful 

offeror will be able to provide objective 

and unbiased advice. 

• Refining the definition of ‘‘major 

subcontractor’’ to include upper and 

lower limits on application of the 

percentage factor test for determining if 

the value of the subcontract in relation 

to the prime contract warrants 

classifying the subcontract as major; 

specifically— 

Æ A subcontract less than the cost or 

pricing data threshold would not be 

considered a major subcontract; and 

Æ A subcontract equal to or exceeding 

$50 million would automatically be 

considered a major subcontract. 

• Addressing pre-MDAP as well as 

MDAP programs. 

The following is a discussion of the 

comments and the changes included in 

this final rule as a result of those 

comments. Comments on aspects of the 

proposed rule that would have provided 

general coverage on OCIs outside the 

context of major defense acquisition 

programs are being considered in the 

formulation of the FAR rule. 

A. General 

1. Incorporation in DFARS of OCI 

Regulations Beyond WSARA 

Requirements 

Comment: A number of respondents 

took exception to coverage in the 

proposed rule that would have extended 

beyond MDAP to cover all DoD 

procurements, noting that the broader 

OCI changes should be considered for 

inclusion in the FAR rather than the 

DFARS for the following reasons: 

• Congress did not mandate, or even 

suggest, that DoD adopt new regulations 

to completely rewrite the OCI rules 

applicable to all DoD procurements. 

• The manner in which DoD is 

proceeding in relation to the FAR rule 

is an inversion of the way we normally 

proceed, is inefficient, and will be 

confusing and disruptive to DoD and 

industry. 

One respondent said the rule goes 

beyond agency-specific acquisition 

regulations as contemplated and 

authorized by FAR 1.301 et seq., both in 

form and in substance. 

Two respondents endorsed the 

proposed rule’s approach of extending 

the OCI coverage beyond MDAPs, with 

one respondent noting that the same 

OCI policy concerns that Congress 

addressed in connection with MDAPs 

apply across the board. This respondent 

also pointed out that the General 

Accountability Office bid protest case 

law that the proposed rule cites applies 

to all procurements, not only MDAPs. 

Also, the respondent said, application of 

the new OCI coverage to this broad 

spectrum of contracts provides a greater 

level of consistency across 

procurements. 

Response: DoD does not agree that the 

proposed rule violated FAR subpart 1.3 

by addressing OCI issues that go beyond 

those that are specifically applicable in 

the context of MDAPs, but has decided 

to remove coverage from the rule that is 

not required to comply with section 207 

of WSARA. DoD’s intent was to provide 

coverage that would improve all aspects 

of OCI policy affecting the covered 

contract types, not just those aspects 

unique to MDAPs and systems 

engineering and technical assistance 

(SETA) contracting, since some OCI 

issues involved are no different from 

those raised on any other procurement. 

In doing so, DoD also sought to 

temporarily apply those provisions that 

are common to both those contracts 

covered by section 207 and other 

contracts, so that all would benefit from 

the improved coverage until the FAR is 

modified. However, coordinating and 

reconciling the many comments 

received on the proposed general 

coverage with the team developing FAR 

coverage would delay the finalization of 

this rulemaking and could create 

unnecessary confusion. Therefore, DoD 

has concluded that the final DRAFS rule 

will address only MDAP and SETA OCI 

coverage as required by section 207. As 

noted above, comments related to the 

general coverage have been provided to 

the team developing changes to FAR 

coverage on OCIs. 

Comment: Another respondent 

suggested that DoD and the FAR 

Council could use the WSARAmandated changes as a pilot program 

and evaluate the results of the changes 

when developing the DoD-wide and 

Government-wide regulations. This 

respondent further stated that a 

powerful reason to restrict application 

of this rule to MDAP procurements as a 

pilot program is that OCI policy could 

drive significant changes to the 

industrial base. 

Response: This comment is now 

moot, since DoD decided to remove the 

comprehensive coverage from the 

DFARS rule. 

Comment: Another respondent stated 

that, by extending the scope of this rule 

beyond MDAPs, it appeared that DoD 

might have been trying to address the 

difficult issue of what rules to follow for 

programs and technology development 

efforts that start as a non-MDAP and 

then transition to an MDAP. If so, the 

respondent stated, this rule could have 

addressed that issue by limiting its 

applicability to MDAPs and then 

requiring that all potential OCI in nonMDAP programs be exempted or be 

‘‘required to be easily mitigated’’ once 

they cross into the MDAP threshold. 

Response: The issue of addressing 

programs that may become MDAP 

programs has been resolved by revising 

the final rule to cover both pre-MDAP 

and MDAP programs. SETA contracts 

are often required in the early preMDAP phase of a program. 

2. Move From Subpart 9.5 to Subpart 

3.12 

Comment: Various respondents 

recommended that the rule on OCIs 

should remain in DFARS part 209 for 

the following reasons: 

• Four respondents stated their 

opinions that the OCI rules should not 

be moved to DFARS part 203 to avoid 

the perception that OCI is in the same 

category as improper business practices, 

which pertains to conduct that is 

criminal in nature. Two of these 

respondents stated that putting OCI 

coverage in part 209 is inconsistent with 

the notion that mitigation is the 

preferred method of addressing OCI. 

One respondent said it was 


srobinson on DSKHWCL6B1PROD with RULES
81910 Federal Register / Vol. 75, No. 249 / Wednesday, December 29, 2010 / Rules and Regulations 

unreasonable even to imply that an OCI 

inherently constitutes misconduct, since 

OCIs are routine in typical businesss 

settings and a byproduct of defense 

industry consolidation. 

• On the positive side, one 

respondent said that the OCI rules 

should remain in DFARS part 209 

because of their relationship to a 

company’s responsibility. Another 

respondent stated the opinion that a 

contracting officer’s determination of 

whether to accept or reject a mitigation 

plan has the same weight as a 

determination of affirmative 

responsibility. 

• One respondent pointed out that 

while the Government has the 

discretion under both FAR 9.503 and 

the proposed rule to waive OCIs, it 

cannot waive improper business 

practices, such as unlawful gratuities 

and kickbacks. 

• One respondent thought that the 

regulations should remain within 

DFARS part 9 simply for continuity. 

Response: DoD does not agree that 

placing the OCI rules in part 203 vs. part 

209 lends credence to the perception 

that OCI is in the same category as 

conduct that is criminal in nature. We 

note that part 209 also covers criminal 

activity by way of its association with 

suspension and debarment. 

Furthermore, the scope of part 203 has 

been evolving over time, an example 

being the recent FAR rule proposing 

inclusion of a new FAR subpart 3.11 to 

include policy addressing personal 

conflicts of interest by contractor 

employees performing acquisition 

functions closely associated with 

inherently governmental functions—see 

FAR Case 2008–025. And while 

acceptance or rejection of a mitigation 

plan might affect a contractor’s 

responsibility, it is not, in and of itself, 

a determination relating to 

responsibility. 

However, because the FAR proposed 

rule has not yet been published, and 

because the decision has been made to 

limit this rule to implementation of 

OCIs in MDAPs (see section II.A.1.), this 

final rule has been located primarily in 

subpart 209.5, until such time as the 

FAR coverage on OCIs may be relocated. 

B. MDAP Definitions 

1. Major Subcontractor 

Comment: Two respondents 

expressed concerns that the definition 

of ‘‘major subcontractor’’ was arbitrary. 

The proposed clause at 252.203–70WW 

(now 252.209–7009) defined a major 

subcontractor as a subcontractor 

awardee with a subcontract totaling 10 

percent or more of the value of the 

contract. One of the respondents was 

concerned that a subcontractor with 

millions of dollars in subcontracts may 

not be covered, but others with less than 

$1 million would be covered. 

Response: As the clause relates to 

subcontractors for major defense 

acquisition programs which, generally, 

are programs that exceed $1.8 billion 

(Fiscal Year 1990 constant dollars) in 

eventual total expenditure (10 U.S.C. 

2430), a prime contract would not likely 

be issued with a value of only $10 

million, which would be the prime 

contract threshold for a $1 million 

subcontract to meet the 10 percent 

subcontract threshold to be a major 

subcontract. However, DoD agrees with 

the need to enhance the definition. The 

final rule contains— 

• A lower end exclusion of any 

subcontract that is less than the cost or 

pricing data threshold; and 

• An upper bound, such that any 

subcontract that equals or exceeds $50 

million will be considered a major 

subcontract, regardless of whether it 

meets the 10 percent criterion. 

This is modeled after— 

• 15.404–3(c)(1), which specifies 

thresholds for requiring cost or pricing 

data on subcontracts; and 

• DODI 5000.02 Table 4, which 

addresses major contracts and 

subcontracts. 

2. Systems Engineering and Technical 

Assistance 

Comment: Two respondents observed 

that there is no definition of ‘‘Systems 

Engineering and Technical Assistance’’ 

in statute or regulation and noted that 

the FAR defines ‘‘systems engineering’’ 

and ‘‘technical direction,’’ which may 

not necessarily be exactly the same as 

‘‘systems engineering and technical 

assistance.’’ 

One of the respondents expressed 

concerns that the definition of ‘‘Systems 

Engineering and Technical Assistance’’ 

is vague and that the rule should add ‘‘to 

support requirements definition, source 

selection, or evaluation of contractor 

performance in a Major Defense 

Acquisition Program.’’ 

Several respondents proposed that the 

‘‘systems engineering and technical 

assistance’’ definition be restricted to 

activities and functions that relate to 

supporting source selection and testing 

activities that might trigger bias and 

impaired objectivity OCIs. According to 

these respondents, all other support 

should be classified as engineering or 

program support; and the related OCIs 

should be addressed through standard 

mitigation techniques. ‘‘Systems 

Engineering and Technical Assistance’’ 

needs to be better defined and only 

address those circumstances when the 

contractor has ‘‘authority’’ and is in a 

position to unduly influence a program, 

event, or outcome. 

Response: DoD decided to provide a 

unified definition for ‘‘systems 

engineering and technical assistance’’ as 

a single term, as well as the individual 

definitions of ‘‘systems engineering’’ and 

‘‘technical assistance’’, because ‘‘systems 

engineering and technical assistance’’ is 

the statutory term and is the recognized 

term for a particular type of contract. 

DoD sought advice from systems 

engineering and technical assistance 

subject matter experts within DoD to 

arrive at a more comprehensive 

definition of the term. In response to 

public comments, DoD changed the 

requirement from ‘‘substantially all’’ to 

‘‘any’’ and clarified that ‘‘directing other 

contractors’ operations’’ does not apply 

to the operations of subcontractors. It is 

not necessary to include in the 

definition of SETA that it is only for 

MDAPs. SETA contracts could be for 

other types of programs as well. The 

limitation to MDAPs is accomplished 

through the policy statements and the 

clause prescriptions. 

The definition should not restrict the 

meaning to select activities based on the 

presumption of the likelihood of the 

occurrence of an OCI. While potential 

OCIs can be significant concerns in 

source selection and testing activities, 

potential OCIs can exist in other 

activities, with harmful repercussions to 

DoD. The determination of the existence 

of potential for an OCI is situational and 

based on the facts and conditions. It is 

up to the contracting officer to 

determine the potential for an OCI. The 

definition should not be based on the 

presumption that an OCI will occur for 

SETA contracts and will not occur in 

the range of other activities. 

Comment: One respondent made 

several comments about the definitions 

of a number of activities cited within 

the definition of ‘‘systems engineering’’ 

and ‘‘technical assistance’’ and suggested 

further definitional clarity of the 

activities. The respondent asked what 

‘‘determining specifications’’ means and 

what ‘‘determining interface 

requirements’’ means. The respondent 

cited a number of specific actions a 

contractor may be asked to perform and 

asked if the work would fall under the 

DFARS definition of SETA. 

Response: Further definition of the 

activity elements is not required. These 

terms are in common use. It is up to the 

contracting officer, exercising common 

sense, good judgment, sound discretion, 

and the advice of technical experts to 

determine if the activities in a 


srobinson on DSKHWCL6B1PROD with RULES
Federal Register / Vol. 75, No. 249 / Wednesday, December 29, 2010 / Rules and Regulations 81911 

solicitation would be covered by the 

definition of SETA. 

Comment: One respondent 

recommended that the SETA definition 

should include a statement that the 

contractor performs the services, but 

will not be delivering the system. The 

respondent cites Section 203.1270–6 

(now 209.571–7) as the basis for this 

change. 

Response: The consequence of being a 

SETA contractor is outside of, and 

unnecessary for, inclusion within the 

definition of what a SETA contractor is. 

While 209.571–7 prohibits a SETA 

contractor from participating as a 

contractor or major subcontractor on the 

related program, there are certain 

instances listed in 209.571–7 where the 

paragraph does not apply. Changing the 

definition of SETA is unnecessary and 

could lead to erroneous application of 

the rule. 

C. MDAP OCI Policy 

1. Mitigation Preference Is Not 

Appropriate 

Comments: A number of respondents 

objected to the rule’s designation of 

mitigation as the ‘‘preferred method’’ for 

resolving OCIs. 

Two respondents suggested that a 

preference for mitigation would reduce, 

rather than increase, competition for 

Government contracts. Specifically, they 

suggested that the preference appears to 

favor industry interests in the sense that 

it chiefly will benefit large, integrated 

businesses which, but for the 

application of a preference for 

mitigation, might otherwise be 

precluded from competing for certain 

requirements. 

Several respondents expressed 

concern that the preference for 

mitigation would impinge upon the 

contracting officer’s duty and discretion 

to consider all appropriate factors, such 

as the potential costs associated with 

monitoring mitigation plans, when 

determining which method for resolving 

a particular OCI would best serve the 

Government’s interest. 

One respondent stated that 

establishing an outright preference for 

mitigation would create a potential 

ground for bid protests by unsuccessful 

offerors. The respondent opined that 

DoD agencies may find themselves 

defending against claims that 

contracting officers did not take 

adequate affirmative steps to comply 

with the preference by finding ways to 

mitigate potential OCIs. 

Response: DoD carefully considered 

the comments on both sides of this 

issue. While finding that the policy 

rationale supporting the proposed 

preference for mitigation is sound, DoD 

agrees that establishing a formal 

preference may have the unintended 

effect of encouraging contracting officers 

to make OCI resolution decisions 

without considering all appropriate 

facts and information. Therefore, in 

order to make it clear that decisions 

about how best to resolve OCIs arising 

in particular procurements remain a 

matter within the ‘‘common sense, good 

judgment, and sound discretion’’ of DoD 

contracting officers, DoD has removed 

the rule’s stated preference for 

mitigation. 

However, DoD replaced the rule’s 

explicit mitigation preference with a 

more general statement of DoD policy 

interests in this area. Specifically, the 

rule now provides that it is DoD policy 

to promote competition and, to the 

extent possible, preserve DoD access to 

the expertise and experience of highlyqualified contractors. To this end, the 

rule now emphasizes the importance of 

employing OCI resolution strategies that 

do not unnecessarily restrict the pool of 

potential offerors and do not impose per 

se restrictions on the use of particular 

resolution methods, except as may be 

required under part 209.571–7. 

Comment: One respondent stated that 

the rule’s stated policy preference for 

mitigation should be replaced with a 

preference for avoidance in order to 

comply with the ‘‘statutory intent’’ of 

WSARA. The respondent expressed 

concern that various aspects of the rule 

significantly impair the ability of 

contracting officers to employ avoidance 

strategies. Finally, the respondent 

commented that the rule should reflect 

that mitigation is the resolution method 

of last resort. 

Response: As discussed in the 

response to the preceding comment, 

DoD replaced the rule’s explicit 

preference for mitigation with language 

more generally emphasizing that 

contracting officers should seek to 

employ OCI resolution strategies that 

promote competition and do not 

unnecessarily restrict the pool of 

potential offerors. DoD does not agree 

that WSARA requires an across-theboard preference for avoidance. Such a 

preference would give rise to the same 

issues and concerns voiced by other 

respondents relating to contracting 

officer discretion, potential bid protests, 

and the like. To the extent that WSARA 

creates a requirement or preference for 

avoidance, that preference is limited to 

SETA contracts and is appropriately 

addressed at 209.571–7. 

2. Mitigation Preference Is Appropriate 

and Should Even Be Strengthened 

Comments: A number of respondents 

expressed support for the rule’s stated 

preference for using mitigation to 

resolve OCIs. Generally, these 

respondents stated that the preference 

for mitigation would promote 

competition, preserve Government 

access to the broadest range of 

experienced contractors, and promote 

transparency. 

Several respondents expressed 

concern that the rule does not do 

enough to encourage contracting officers 

to use mitigation and that some aspects 

of the rule may, in fact, discourage the 

use of mitigation. 

One respondent suggested that, 

despite its stated preference for 

mitigation, the rule as a whole appears 

actually to favor avoidance and 

neutralization, principally because it 

provides ‘‘no meaningful guidance 

regarding when and how mitigation 

should be used.’’ 

Another respondent stated that the 

preference for mitigation would be more 

compelling if the rule included more 

examples of acceptable mitigation 

methods. 

A third respondent made several 

specific recommendations for bolstering 

the preference for mitigation. The 

respondent suggested that DoD: (1) Add 

a statement ‘‘summarizing the potential 

benefits of mitigation’’ and (2) add 

language requiring contracting officers 

to ‘‘consider the status of the industrial 

base and the number of potential 

sources’’ before determining that 

mitigation was inappropriate. 

Response: As discussed in responses 

to preceding comments, DoD decided to 

replace the rule’s express preference for 

mitigation with language indicating that 

it is DoD policy that contracting officers 

should seek to employ OCI resolution 

strategies that promote competition and 

do not unnecessarily restrict the pool of 

potential offerors. DoD appreciates the 

general concern voiced by these 

respondents that some agencies and 

contracting officers may already be 

either implicitly or explicitly favoring 

avoidance-based resolution strategies. 

DoD recognizes that an explicit 

preference for mitigation may serve a 

useful purpose in cases where agencies 

or contracting officers are unnecessarily 

foreclosing competitive opportunities by 

favoring avoidance over mitigation. 

Therefore, although DoD has removed 

the rule’s express preference for 

mitigation, the rule’s revised policy 

language will have the appropriate 

effect of encouraging contracting officers 

to consider all potential OCI resolution 


srobinson on DSKHWCL6B1PROD with RULES
81912 Federal Register / Vol. 75, No. 249 / Wednesday, December 29, 2010 / Rules and Regulations 

strategies, to pursue resolution 

outcomes that promote competition 

whenever feasible, and to implement 

strategies that are consistent with the 

Government’s best interests, broadly 

speaking. 

A more detailed analysis of the 

methods and benefits of mitigation is 

outside the scope of the present rule and 

may be addressed in the FAR rule on 

OCIs. 

D. Identification of MDAP OCIs 

Comment: One respondent requested 

a clarification in 203.1270–5(a)(2) (now 

209.571–6(a)(2)) of the proposed rule to 

provide that there should not be a 

second OCI evaluation after award when 

the contractor establishes a team 

arrangement and its accepted proposal 

explains the work the prime will do and 

what other team members will do. The 

respondent was concerned that the 

proposed rule implies that there will be 

a reevaluation, although WSARA does 

not require a second evaluation. The 

respondent recommended adding before 

the semicolon in subparagraph (a)(2) the 

following: ‘‘either as part of the initial 

award determination or, if the prime 

contractor makes this disclosure after 

award, then before beginning the 

relevant work’’. 

Response: There is nothing in the 

statement in the proposed rule that 

implies that the timing of the evaluation 

would be after award. In the proposed 

rule, the policy in 203.703 made clear 

that OCIs are to be resolved early in the 

acquisition process. Since this rule is 

limited strictly to MDAP, the 

requirement in current FAR 9.504(a) 

still applies, i.e., the contracting officer 

is required to analyze planned 

acquisitions in order to identify and 

evaluate potential OCIs as early in the 

acquisition process as possible, and to 

avoid, neutralize, or mitigate significant 

potential conflicts before contract 

award. Further details about early 

resolution of OCIs will be addressed in 

the FAR OCI rule. 

Comment: The same respondent also 

commented that the regulation should 

not be silent on how the contracting 

officer is to consider awards to affiliates. 

Response: The policy section on 

identification of OCIs at 209.571–6(a)(2) 

states that the contracting officer ‘‘shall 

consider’’ the proposed award of a major 

subsystem by a prime contractor to 

business units or other affiliates of the 

same corporate entity. Since OCIs are 

very specific to individual situations, 

the regulation cannot provide a precise 

prescription for how the contracting 

officer should consider this, except to 

alert the contracting officer to potential 

conflicts in such situations. 

E. SETA Contracts 

Comment: Four respondents 

expressed concern that the rule’s 

exception for all highly-qualified SETA 

contractors (where the OCI can be 

adequately resolved) is overly broad, 

beyond the limited exception 

contemplated by WSARA, and 

unnecessary in view of the numbers of 

conflict-free SETA contractors. 

One respondent stated that there is 

clear congressional preference for a rule 

prohibiting any systems engineering 

firm from participating in the 

development or construction of a system 

in an MDAP. The respondent quoted 

various sources, including the 

references by the Senate Armed Services 

Committee during debate on SR 111– 

201. 

One respondent recommended that 

the rule should include a requirement 

that the contracting officer also 

determine that there is no other source 

with the requisite domain experience 

and expertise before approving OCI 

mitigation. 

However, another respondent 

expressed concern about whether the 

rule will adequately ensure DoD access 

to advice on systems architecture and 

engineering matters. 

Response: WSARA permits the SETA 

exception contained in the proposed 

rule. A SETA exception is necessary to 

meet DoD needs and the proposed 

exception contained the requirement 

that the OCI must be adequately 

resolved. In the absence of an exception, 

many or all prospective SETA 

contractors may have OCIs and could be 

excluded. As a result, the best-qualified 

or best-priced contractors might be 

unavailable unless future restrictions 

are lifted. However, in response to 

concern that the exception was overly 

broad and would not meet the objective 

of WSARA to ‘‘tighten’’ application of 

OCI policy, DoD revised the exception 

to require a determination by the head 

of the contracting activity that ‘‘an 

exemption is necessary because DoD 

needs the domain experience and 

expertise of the highly qualified, 

apparently successful offeror.’’ The head 

of the contracting activity must further 

determine that, based on the agreed-to 

resolution strategy, the apparently 

successful offeror will be able to provide 

objective and unbiased advice. 

Comment: Another respondent 

objected that the rule did not include an 

exception for performance of SETA 

functions by any affiliate of the 

contractor performing production or 

development work as a prime or major 

contractor, as was referenced in the 

statutory language and the 

accompanying conference report. 

Further, the respondent objected that 

the only acceptable mitigation approach 

for impaired objectivity OCIs for 

MDAPS seemed to be splitting work 

away from a contractor and affiliates, as 

the waiver option is not authorized. 

Response: The SETA exception is not 

unduly restrictive with regard to 

affiliates. It is not true that affiliates of 

the contractor performing the 

production contract could not qualify 

for performance of SETA functions. 

Further, although the waiver option 

was deliberately omitted from the 

exception because the statute requires 

that the contractor must be able to 

provide objective and unbiased advice, 

the rule does not address what 

mitigation approaches would be 

acceptable. 

F. Training and Implementation 

Comment: One respondent stated that 

it is necessary for the rule to address 

training and implementation. The 

respondent stated that contracting 

officers should not be allowed to make 

decisions on OCIs until training is 

completed. 

Response: This is not an entirely new 

requirement. The FAR already requires 

that OCIs be addressed, and there are 

existing training courses that cover 

OCIs. The Government will make 

changes to standard contracting course 

curriculum to implement these changes. 

Comment: The same respondent 

requested more guidance on the use of 

particular data sources to inform their 

decisions, and any required processes to 

implement the rule effectively. For 

example, the respondent suggests that 

contracting officers should separate 

SETA-type work from design- and 

development-type work, and not 

include both types in the same task 

order or other contract vehicle. 

Response: FAR 9.506 procedures 

provide current guidance on sources of 

information to identify and evaluate 

potential organizational conflicts of 

interest. DoD has also added to DFARS 

Procedures, Guidance, and Information 

the guidance about separating SETAtype work from other types of designand development-type work. 

G. Regulatory Flexibility Analysis 

Comment: Three respondents 

commented on the potential impact of 

the regulation on small businesses. 

However, several of the comments 

related to aspects of the rule that have 

been eliminated from this more focused 

final rule. 

One respondent recommended adding 

language into the regulation that would 

exempt from OCI restrictions small 


srobinson on DSKHWCL6B1PROD with RULES
Federal Register / Vol. 75, No. 249 / Wednesday, December 29, 2010 / Rules and Regulations 81913 

businesses that are not involved in 

hardware or major software 

developments. In addition, the same 

respondent recommended imposing the 

OCI restrictions on prime contractors 

and large subcontractors, and allowing 

small subcontractors (those with less 

than 10 percent of total award) and 

small businesses to continue to provide 

both development and contract efforts 

with approved OCI plans. 

Response: DoD notes that the rule, per 

the statute, requires that a SETA 

contract for a major defense acquisition 

program contain a provision prohibiting 

the contractor or any affiliate of the 

contractor from participating as a prime 

contractor or a major subcontractor in 

the development or construction of a 

weapon system under the program. 

Therefore, ‘‘small,’’ i.e., other than major, 

subcontractors are exempted. The 

statute, however, does not provide for a 

specific exemption for small businesses. 

In addition, the rule does allow offerors, 

whether large or small, to continue to 

provide both development and contract 

efforts with approved OCI plans and an 

appropriate determination by the head 

of the contracting activity in accordance 

with 209.571–7(b). 

H. Paperwork Reduction Act 

Comments: Although no respondents 

specifically commented on the 

estimated burden hours published with 

the proposed rule, several respondents 

commented on the burden imposed by 

the disclosure requirement of 252.203– 

XX(e)(1)(ii). 

Response: This requirement is no 

longer included in the rule. The only 

requirement now is for submission of a 

mitigation plan under a SETA contract 

if the offeror is requesting an exception 

to the limitation on future contracting. 

III. Executive Order 12866 

This is a significant regulatory action 

and, therefore, is subject to Office of 

Management and Budget 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 certifies that this final rule will 

not result in 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 the requirements of 

subpart 209.572 do not differ 

substantially from the burden currently 

imposed on offerors and contractors by 

FAR subpart 9.5. 

With regard to major defense 

acquisition programs, the prohibition 

against a SETA contractor participating 

in the development or production 

contract applies only to the prime 

contract or a major subcontract. 

Therefore, small businesses are less 

likely to be affected. Further, the rule 

allows for avoidance, neutralization, or 

mitigation of organizational conflicts of 

interest. A final regulatory flexibility 

analysis has, therefore, not been 

performed. 

V. Paperwork Reduction Act 

The Paperwork Reduction Act (44 

U.S.C. chapter 35) applies because the 

final rule contains information 

collection requirements. 

Title: Defense Federal Acquisition 

Regulation Supplement (DFARS); 

Organizational Conflicts of Interest in 

Major Defense Acquisition Programs. 

Number of Respondents: 150. 

Responses per Respondent: 3. 

Annual Responses: 750. 

Average Burden per Response: 20. 

Annual Burden Hours: 15,000. 

Needs and Uses: DoD needs the 

information required by 252.209–7008 

to identify and resolve organizational 

conflicts of interest, as required by 

section 207 of the Weapon Systems 

Acquisition Reform Act of 2009. 

The burden hours are substantially 

reduced in comparison to the proposed 

rule because the final rule only 

addresses organizational conflicts of 

interest in major defense acquisition 

programs. 

The information collection 

requirements for this final rule have 

been approved under OMB Clearance 

Number 0704–0477, Organizational 

Conflicts of Interest in Major Defense 

Acquisition Programs ICR. 

List of Subjects in 48 CFR Parts 209 and 

252 

Government procurement. 

Amy G. Williams, 

Editor, Defense Acquisition Regulations 

System. 

■ Therefore, 48 CFR parts 209 and 252 

are amended as follows: 

■ 1. The authority citation for 48 CFR 

parts 209 and 252 continues to read as 

follows: 

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

chapter 1. 

PART 209—CONTRACTOR 

QUALIFICATIONS 

■ 2. Sections 209.571, 209.571–0, 

209.571–1, 209.571–2, 209.571–3, 

209.571–4, 209.571–5, 209.571–6, and 

209.571–7, and 209.571–8 are added to 

read as follows: 

* * * * * 

209.571 Organizational conflicts of interest 

in major defense acquisition programs. 

209.571–0 Scope of subpart. 

209.571–1 Definitions. 

209.571–2 Applicability. 

209.571–4 Mitigation. 

209.571–5 Lead system integrators. 

209.571–6 Identification of organizational 

conflicts of interest. 

209.571–7 Systems engineering and 

technical assistance contracts. 

209.571–8 Solicitation provision and 

contract clause. 

* * * * * 

209.571 Organizational conflicts of 

interest in major defense acquisition 

programs. 

209.571–0 Scope of subpart. 

This subpart implements section 207 

of the Weapons System Acquisition 

Reform Act of 2009 (Pub. L. 111–23). 

209.571–1 Definitions. 

As used in this section— 

‘‘Lead system integrator’’ is defined in 

the clause at 252.209–7007, Prohibited 

Financial Interests for Lead System 

Integrators. 

‘‘Major Defense Acquisition Program’’ 

is defined in 10 U.S.C. 2430. 

‘‘Major subcontractor’’ is defined in 

the clause at 252.209–7009, 

Organizational Conflict of Interest— 

Major Defense Acquisition Program. 

‘‘Pre-Major Defense Acquisition 

Program’’ means a program that is in the 

Materiel Solution Analysis or 

Technology Development Phases 

preceding Milestone B of the Defense 

Acquisition System and has been 

identified to have the potential to 

become a major defense acquisition 

program. 

‘‘Systems engineering and technical 

assistance.’’ 

(1) ‘‘Systems engineering’’ means an 

interdisciplinary technical effort to 

evolve and verify an integrated and total 

life cycle balanced set of system, people, 

and process solutions that satisfy 

customer needs. 

(2) ‘‘Technical assistance’’ means the 

acquisition support, program 

management support, analyses, and 

other activities involved in the 

management and execution of an 

acquisition program. 

(3) ‘‘Systems engineering and 

technical assistance’’— 

(i) Means a combination of activities 

related to the development of technical 

information to support various 

acquisition processes. Examples of 

systems engineering and technical 

assistance activities include, but are not 

limited to, supporting acquisition efforts 

such as— 

(A) Deriving requirements; 

(B) Performing technology 

assessments; 


srobinson on DSKHWCL6B1PROD with RULES
81914 Federal Register / Vol. 75, No. 249 / Wednesday, December 29, 2010 / Rules and Regulations 

(C) Developing acquisition strategies; 

(D) Conducting risk assessments; 

(E) Developing cost estimates; 

(F) Determining specifications; 

(G) Evaluating contractor performance 

and conducting independent 

verification and validation; 

(H) Directing other contractors’ (other 

than subcontractors) operations; 

(I) Developing test requirements and 

evaluating test data; 

(J) Developing work statements (but 

see paragraph (ii)(B) of this definition). 

(ii) Does not include— 

(A) Design and development work of 

design and development contractors, in 

accordance with FAR 9.505–2(a)(3) or 

FAR 9.505–2(b)(3), and the guidance at 

PGI 209.571–7; or 

(B) Preparation of work statements by 

contractors, acting as industry 

representatives, under the supervision 

and control of Government 

representatives, in accordance with FAR 

9.505–2(b)(1)(ii). 

209.571–2 Applicability. 

(a) This subsection applies to major 

defense acquisition programs. 

(b) To the extent that this section is 

inconsistent with FAR subpart 9.5, this 

section takes precedence. 

209.571–3 Policy. 

It is DoD policy that— 

(a) Agencies shall obtain advice on 

major defense acquisition programs and 

pre-major defense acquisition programs 

from sources that are objective and 

unbiased; and 

(b) Contracting officers generally 

should seek to resolve organizational 

conflicts of interest in a manner that 

will promote competition and preserve 

DoD access to the expertise and 

experience of qualified contractors. 

Accordingly, contracting officers 

should, to the extent feasible, employ 

organizational conflict of interest 

resolution strategies that do not 

unnecessarily restrict the pool of 

potential offerors in current or future 

acquisitions. Further, contracting 

activities shall not impose across-theboard restrictions or limitations on the 

use of particular resolution methods, 

except as may be required under 

209.571–7 or as may be appropriate in 

particular acquisitions. 

209.571–4 Mitigation. 

(a) Mitigation is any action taken to 

minimize an organizational conflict of 

interest. Mitigation may require 

Government action, contractor action, or 

a combination of both. 

(b) If the contracting officer and the 

contractor have agreed to mitigation of 

an organizational conflict of interest, a 

Government-approved Organizational 

Conflict of Interest Mitigation Plan, 

reflecting the actions a contractor has 

agreed to take to mitigate a conflict, 

shall be incorporated into the contract. 

(c) If the contracting officer 

determines, after consultation with 

agency legal counsel, that the otherwise 

successful offeror is unable to 

effectively mitigate an organizational 

conflict of interest, then the contracting 

officer, taking into account both the 

instant contract and longer term 

Government needs, shall use another 

approach to resolve the organizational 

conflict of interest, select another 

offeror, or request a waiver in 

accordance with FAR 9.503 (but see 

statutory prohibition in 209.571–7, 

which cannot be waived). 

(d) For any acquisition that exceeds 

$1 billion, the contracting officer shall 

brief the senior procurement executive 

before determining that an offeror’s 

mitigation plan is unacceptable. 

209.571–5 Lead system integrators. 

For limitations on contractors acting 

as lead systems integrators, see 209.570. 

209.571–6 Identification of organizational 

conflicts of interest. 

When evaluating organizational 

conflicts of interest for major defense 

acquisition programs or pre-major 

defense acquisition programs, 

contracting officers shall consider— 

(a) The ownership of business units 

performing systems engineering and 

technical assistance, professional 

services, or management support 

services to a major defense acquisition 

program or a pre-major defense 

acquisition program by a contractor who 

simultaneously owns a business unit 

competing (or potentially competing) to 

perform as— 

(1) The prime contractor for the same 

major defense acquisition program; or 

(2) The supplier of a major subsystem 

or component for the same major 

defense acquisition program. 

(b) The proposed award of a major 

subsystem by a prime contractor to 

business units or other affiliates of the 

same parent corporate entity, 

particularly the award of a subcontract 

for software integration or the 

development of a proprietary software 

system architecture; and 

(c) The performance by, or assistance 

of, contractors in technical evaluation. 

209.571–7 Systems engineering and 

technical assistance contracts. 

(a) Agencies shall obtain advice on 

systems architecture and systems 

engineering matters with respect to 

major defense acquisition programs or 

pre-major defense acquisition programs 

from Federally Funded Research and 

Development Centers or other sources 

independent of the major defense 

acquisition program contractor. 

(b) Limitation on Future Contracting. 

(1) Except as provided in paragraph (c) 

of this subsection, a contract for the 

performance of systems engineering and 

technical assistance for a major defense 

acquisition program or a pre-major 

defense acquisition program shall 

prohibit the contractor or any affiliate of 

the contractor from participating as a 

contractor or major subcontractor in the 

development or production of a weapon 

system under such program. 

(2) The requirement in paragraph 

(b)(1) of this subsection cannot be 

waived. 

(c) Exception. (1) The requirement in 

paragraph (b)(1) of this subsection does 

not apply if the head of the contracting 

activity determines that— 

(i) An exception is necessary because 

DoD needs the domain experience and 

expertise of the highly qualified, 

apparently successful offeror; and 

(ii) Based on the agreed-to resolution 

strategy, the apparently successful 

offeror will be able to provide objective 

and unbiased advice, as required by 

209.571–3(a), without a limitation on 

future participation in development and 

production. 

(2) The authority to make this 

determination cannot be delegated. 

209.571–8 Solicitation provision and 

contract clause. 

(a) Use the provision at 252.209–7008, 

Notice of Prohibition Relating to 

Organizational Conflict of Interest— 

Major Defense Acquisition Program, if 

the solicitation includes the clause at 

252.209–7009, Organizational Conflict 

of Interest—Major Defense Acquisition 

Program; and 

(b) Use the clause at 252.209–7009, 

Organizational Conflict of Interest— 

Major Defense Acquisition Program, in 

solicitations and contracts for systems 

engineering and technical assistance for 

major defense acquisition programs or 

pre-major defense acquisition programs. 

* * * * * 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

■ 3. Sections 252.209–7008 and 

252.209–7009 are added to read as 

follows: 


srobinson on DSKHWCL6B1PROD with RULES
Federal Register / Vol. 75, No. 249 / Wednesday, December 29, 2010 / Rules and Regulations 81915 

252.209–7008 Notice of Prohibition 

Relating to Organizational Conflict of 

Interest—Major Defense Acquisition 

Program. 

As prescribed in 209.571–8(a), use the 

following provision: 

NOTICE OF PROHIBITION RELATING TO 

ORGANIZATIONAL CONFLICT OF 

INTEREST—MAJOR DEFENSE 

ACQUISITION PROGRAM (DEC 2010) 

(a) Definitions. ‘‘Major subcontractor’’ is 

defined in the clause at 252.209–7009, 

Organizational Conflict of Interest—Major 

Defense Acquisition Program. 

(b) This solicitation is for the performance 

of systems engineering and technical 

assistance for a major defense acquisition 

program or a pre-major defense acquisition 

program. 

(c) Prohibition. As required by paragraph 

(b)(3) of section 207 of the Weapons System 

Acquisition Reform Act of 2009 (Pub. L. 111– 

23), if awarded the contract, the contractor or 

any affiliate of the contractor is prohibited 

from participating as a prime contractor or a 

major subcontractor in the development or 

production of a weapon system under the 

major defense acquisition program or premajor defense acquisition program, unless 

the offeror submits, and the Government 

approves, an Organizational Conflict of 

Interest Mitigation Plan. 

(d) Request for an exception. If the offeror 

requests an exception to the prohibition of 

paragraph (c) of this provision, then the 

offeror shall submit an Organizational 

Conflict of Interest Mitigation Plan with its 

offer for evaluation. 

(e) Incorporation of Organizational Conflict 

of Interest Mitigation Plan in contract. If the 

apparently successful offeror submitted an 

acceptable Organizational Conflict of Interest 

Mitigation Plan, and the head of the 

contracting activity determines that DoD 

needs the domain experience and expertise 

of the highly qualified, apparently successful 

offeror in accordance with FAR 209.571–7(c), 

then the Contracting Officer will incorporate 

the Organizational Conflict of Interest 

Mitigation Plan into the resultant contract, 

and paragraph (d) of the clause at 252.209– 

7009 will become applicable. 

(End of provision) 

252.209–7009 Organizational Conflict of 

Interest—Major Defense Acquisition 

Program. 

As prescribed in 209.571–8(b), use the 

following clause: 

ORGANIZATIONAL CONFLICT OF 

INTEREST—MAJOR DEFENSE 

ACQUISITION PROGRAM (DEC 2010) 

(a) Definition. 

‘‘Major subcontractor,’’ as used in this 

clause, means a subcontractor that is 

awarded a subcontract that equals or exceeds 

(1) Both the cost or pricing data threshold 

and 10 percent of the value of the contract 

under which the subcontracts are awarded; 

or 

(2) $50 million. 

(b) This contract is for the performance of 

systems engineering and technical assistance 

for a major defense acquisition program or a 

pre-major defense acquisition program. 

(c) Prohibition. Except as provided in 

paragraph (d) of this clause, as required by 

paragraph (b)(3) of section 207 of the 

Weapons System Acquisition Reform Act of 

2009 (Pub. L. 111–23), the Contractor or any 

affiliate of the Contractor is prohibited from 

participating as a prime contractor or major 

subcontractor in the development or 

production of a weapon system under the 

major defense acquisition program or premajor defense acquisition program. 

(d) Organizational Conflict of Interest 

Mitigation Plan. If the Contractor submitted 

an acceptable Organizational Conflict of 

Interest Mitigation Plan that has been 

incorporated into this contract, then the 

prohibition in paragraph (c) of this clause 

does not apply. The Contractor shall comply 

with the Organizational Conflict of Interest 

Mitigation Plan. Compliance with the 

Organizational Conflict of Interest Mitigation 

Plan is a material requirement of the contract. 

Failure to comply may result in the 

Contractor or any affiliate of the Contractor 

being prohibited from participating as a 

contractor or major subcontractor in the 

development or production of a weapon 

system under the program, in addition to any 

other remedies available to the Government 

for noncompliance with a material 

requirement of a contract. 

(End of clause) 

[FR Doc. 2010–32713 Filed 12–28–10; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 225 and 252 

RIN 0750–AG80 

Defense Federal Acquisition 

Regulation Supplement; Foreign 

Participation in Acquisitions in 

Support of Operations in Afghanistan 

(DFARS Case 2009–D012) 

AGENCY: Defense Acquisition 

Regulations System; Department of 

Defense (DoD). 

ACTION: Final rule. 

SUMMARY: DoD is issuing a final rule to 

amend the Defense Federal Acquisition 

Regulation Supplement (DFARS) to 

implement— 

• Waiver of section 302(a) of the 

Trade Agreements Act of 1979, as 

amended, which prohibits acquisitions 

of products or services from 

nondesignated countries, in order to 

allow acquisition from the nine South 

Caucasus/Central and South Asian (SC/ 

CASA) states; and 

• Determination of inapplicability of 

the Balance of Payments Program 

evaluation factor to offers of products 

(other than arms, ammunition, or war 

materials) from the SC/CASA states to 

support operations in Afghanistan. 

DATES: Effective Date: December 29, 

2010. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Amy Williams, Defense Acquisition 

Regulations System, OUSD (AT&L) 

DPAP/DARS), Room 3B855, 3060 

Defense Pentagon, Washington, DC 

20301–3060. Telephone 703–602–0328; 

facsimile 703–602–0350. Please cite 

DFARS Case 2009–D012. 

SUPPLEMENTARY INFORMATION: 

I. Background 

DoD published a proposed rule on 

January 6, 2010 (75 FR 832) to 

implement— 

• A waiver of the procurement 

prohibition of section 302(a) of the 

Trade Agreements Act of 1979 with 

regard to acquisitions by DoD or GSA, 

on behalf of DoD, in support of 

operations in Afghanistan from the 

following nine South Caucasus/Central 

and South Asian (SC/CASA) states: 

Armenia, Azerbaijan, Georgia, 

Kazakhstan, Kyrgyzstan, Pakistan, 

Tajikistan, Turkmenistan, and 

Uzbekistan; and 

• A determination by the Deputy 

Secretary of Defense that it would be 

inconsistent with the public interest to 

apply the provisions of the Balance of 

Payments Program to offers of products 

(other than arms, ammunition, or war 

materials) and construction materials 

from these SC/CASA states acquired in 

direct support of operations in 

Afghanistan. 

In addition, the proposed rule made 

corrections to— 

• Alternate I of 252.225–7035, to 

delete the phrase ‘‘Australian or’’ from 

paragraph (c)(2)(i); and 

• Alternate I of 252.225–7045, to add 

in paragraph (b), line 4, that the Bahrain 

Free Trade Agreement does not apply. 

DoD did not receive any comments on 

the proposed rule. 

Therefore, DoD is finalizing the 

proposed rule with no substantive 

change. The final rule does incorporate 

the following editorial and technical 

corrections: 

• Incorporates the current DFARS 

baseline. 

• Amends various clause prefaces to 

reference the correct clause 

prescriptions. 

• Amends 225.1101(6)(i) to reference 

the World Trade Organization (WTO) 

Government Procurement Agreement 

(GPA) rather than the Trade Agreements 

Act, in conformance with FAR 

225.1101(c)(1). 

• Amends paragraph (d), added by 

Alternate II to the clause at 252.225– 


srobinson on DSKHWCL6B1PROD with RULES