Tuesday, 

July 13, 2010 

Part III 

Department of 

Defense 

Defense Acquisition Regulations System 

48 CFR Parts 205, 210, 212, et al. 

Defense Federal Acquisition Regulation 

Supplements; Interim and Final Rules 


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40712 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Rules and Regulations 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 212, 232, and 252 

RIN 0750–AG56 

Defense Federal Acquisition 

Regulation Supplement; Payments in 

Support of Emergencies and 

Contingency Operations (DFARS Case 

2009–D020) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Interim rule with request for 

comments. 

SUMMARY: DoD is issuing an interim rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to bring DoD into compliance 

with OMB implementation of the 

Prompt Payment Act by exempting 

military contingencies, and certain 

payments related to emergencies and 

the release or threatened release of 

hazardous substances. 

DATES: Effective Date: July 13, 2010. 

Comment date: Comments on this 

interim rule should be submitted in 

writing to the address shown below on 

or before September 13, 2010, to be 

considered in the formation of the final 

rule. 

ADDRESSES: You may submit comments, 

identified by DFARS Case 2009–D020, 

using any of the following methods: 

Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

E-mail: dfars@osd.mil. Include 

DFARS Case 2009–D020 in the subject 

line of the message. 

Fax: 703–602–0350. 

Mail: Defense Acquisition Regulations 

System, Attn: Mr. Julian E. Thrash, 

OUSD (AT&L) DPAP/DARS, Room 

3B855, 3060 Defense Pentagon, 

Washington, DC 20301–3060. 

Comments received generally will be 

posted without change to http:// 

www.regulations.gov, including any 

personal information provided. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Julian E. Thrash, 703–602–0310. 

SUPPLEMENTARY INFORMATION: 

A. Background 

This rule implements the full 

authority granted by 5 CFR 1315.1 for 

payments covered by 5 CFR 1315.1(b)(2) 

that are either certified for payment in 

an operational area, or are contingent 

upon the receipt of necessary 

supporting documentation (i.e., 

contract, invoice, receiving report) 

emanating from an operational area. 

5 CFR part 1315 exempts Prompt 

Payment Act compliance for payments 

related to emergencies (defined in the 

Disaster Relief Act of 1974, Pub. L. 93– 

288, as amended (42 U.S.C. 5121, et 

seq.); contingency operations (as 

defined in 10 U.S.C. 101(a)(13)); and the 

release/threatened release of hazardous 

substances (as defined in 4 U.S.C. 9606, 

Section 106). DoD requires the 

flexibility provided by 5 CFR 1315, 

Exemption from the Prompt Payment 

Act, because of the potential for 

unstable environments during 

emergencies and contingency 

operations. 

This DFARS change will provide DoD 

needed flexibility in limited 

circumstances. The head of the 

contracting activity shall make 

subsequent determinations, after 

consultation with the cognizant 

comptroller, as the operational area 

evolves into a more stable business 

environment to enable the provisions of 

FAR 32.9 to apply. 

This DFARS change adds section 

232.901, Applicability, which provides 

criteria that the head of the contracting 

activity will use in determining when 

conditions exist that limit normal 

business operations during emergencies 

and contingency operations. It also adds 

DFARS 232.908, Contract clauses, 

which prescribes the use of the new 

clause 252.232–7011, Payments in 

Support of Emergencies and 

Contingency Operations. A conforming 

change is also required to 212.301, 

Solicitation provisions and contract 

clauses for the acquisition of 

commercial items. 

This rule was 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. 

B. Regulatory Flexibility Act 

DoD does not expect this rule to have 

a significant economic impact on small 

entities within the meaning of the 

Regulatory Flexibility Act, 5 U.S.C. 601, 

et seq. However, an initial regulatory 

flexibility analysis has been performed 

as follows: 

This initial regulatory flexibility 

analysis has been prepared consistent 

with 5 U.S.C. 604. 

1. Reasons for the Action 

On May 22, 2008, the Department of 

Defense Inspector General (DoD IG) 

issued the results of an audit, Report 

No. D–2008–098, entitled ‘‘Internal 

Controls Over Payments Made in Iraq, 

Kuwait, and Egypt.’’ The audit report 

cited inconsistencies in FAR 32.9, 

DFARS 232.9, and 5 CFR in regard to 

compliance with the Prompt Payment 

Act for military contingency operations. 

The report further recommended that 

DoD establish procedures to address 

contingency operations. 

During emergencies and contingency 

operations, the operational area can be 

so fluid and dynamic that carrying out 

normal business practices can be 

extremely challenging. It is necessary 

for the head of the contracting activity 

(HCA) to have the authority to 

appropriately respond to emergency and 

contingency operations accordingly 

whenever limited operational 

conditions exist. This includes the 

payment of contractors. 

This interim rule will bring DoD into 

compliance with OMB implementation 

of the Prompt Payment Act, which 

exempts military contingencies. 

2. Objectives of, and Legal Basis for, the 

Rule 

The objectives of this rule allow the 

HCA to make a determination of 

whether stable business operations exist 

in theater, which allows the Prompt 

Payment Act to apply in an emergency 

and contingency operation. If stable 

conditions don’t exist, then the HCA is 

authorized to apply the clause at 

252.232–7011. When this clause is used, 

it will be used instead of the appropriate 

payment clause at FAR 52.232–25, 

52.232–26, or 52.232–27. DFARS 

232.901 will require the HCA to make 

subsequent determinations as the 

operational area evolves into a more 

stable environment to enable the 

provisions of the Prompt Payment Act 

to apply. It will also require the 

contracting officer to notify, by contract 

modification, each contractor that has a 

contract containing DFARS clause 

252.232.7011, that it is no longer 

applicable, and the applicable FAR 

Prompt Payment clause in the contract 

applies. 

3. Description of and Estimate of the 

Number of Small Entities to Which the 

Rule Will Apply 

This interim rule will have an 

economic impact on small entities. It is 

expected the rule will initially be 

applied to contracts supporting 

Afghanistan. Currently, normal business 

operations are hindered in Afghanistan 

due to the uncertain environment and 

instability in the region. It may be 

impractical for U.S. forces to adequately 

match receipt of necessary supporting 

documentation (i.e., contract, invoice, 

and receiving report) in such an 

operational area. It is expected that the 

HCA for Afghanistan could exempt 


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Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Rules and Regulations 40713 

‘‘payments made in the theater of 

operations’’ from Prompt Payment Act 

interest and interest penalties. 

A review of Federal Procurement Data 

System (FPDS) data for FY08 shows that 

of the 140 awards made to U.S. firms, 

only 21 were made to small business 

entities. This total represents 15% of all 

awards made during this time period. 

Therefore, the overall impact of this rule 

is not expected to have a significant 

aggregate economic impact on a 

substantial number of small entities 

within the meaning of the Regulatory 

Flexibility Act, 5 U.S.C. 601, et seq. 

However, a regulatory flexibility 

analysis was completed because there is 

an economic impact to consider. 

4. Description of Projected Reporting, 

Recordkeeping, and Other Compliance 

Requirements of the Rule, Including an 

Estimate of the Classes of Small Entities 

Which Will Be Subject to the 

Requirement and the Type of 

Professional Skills Necessary for 

Preparation of the Report or Record 

There is no reporting requirement 

established by this rule. See preceding 

item 3 regarding an estimate of the effect 

on small entities that will be subject to 

this requirement. 

5. Relevant Federal Rules Which May 

Duplicate, Overlap, or Conflict With the 

Rule 

This rule does not duplicate, overlap, 

or conflict with any other Federal rules. 

6. Description of any Significant 

Alternatives to the Rule Which 

Accomplish the Stated Objectives of 

Applicable Statutes and Which 

Minimize Any Significant Economic 

Impact of the Rule on Small Entities 

There are no significant alternatives 

which accomplish the stated objectives. 

This rule will bring DoD into 

compliance with OMB implementation 

of the Prompt Payment Act, which 

exempts military contingencies. 

DoD invites comments from small 

businesses and other interested parties 

on the expected impact of this rule on 

small entities. 

DoD will also consider comments 

from small entities concerning the 

existing regulations in subparts affected 

by this rule in accordance with 5 U.S.C. 

610. Interested parties must submit such 

comments separately and should cite 5 

U.S.C 610 (DFARS case 2009–D020), in 

correspondence. 

C. Paperwork Reduction Act 

The Paperwork Reduction Act does 

not apply, because the rule does not 

impose any information collection 

requirements that require the approval 

of the Office of Management and Budget 

under 44 U.S.C. 3501, et seq. 

D. Determination To Issue an Interim 

Rule 

A determination has been made under 

the authority of the Secretary of Defense 

that urgent and compelling reasons exist 

to publish an interim rule prior to 

affording the public an opportunity to 

comment. Specifically, during 

emergencies and contingency 

operations, the operational area can be 

so fluid and dynamic that carrying out 

normal business practices can become 

impractical. It is necessary for the head 

of the contracting activity to have the 

authority to incorporate the Payments in 

Support of Emergencies and 

Contingency Operations clause 

provided by 252.232–7011, when an 

unstable business environment exists. 

This case brings DoD into compliance 

with OMB implementation of the 

Prompt Payment Act, which exempts 

military contingencies under 5 CFR 

1315.1(b)(2). 

List of Subjects in 48 CFR Parts 212, 

232, and 252 

Government procurement. 

Ynette R. Shelkin, 

Editor, Defense Acquisition Regulations 

System. 

■ Therefore, 48 CFR parts 212, 232, and 

252 are amended as follows: 

■ 1. The authority citation for 48 CFR 

parts 212, 232, and 252 continues to 

read as follows: 

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

chapter 1. 

PART 212—ACQUISITION OF 

COMMERCIAL ITEMS 

■ 2. Section 212.301 is amended by 

adding paragraph (f)(xiv) to read as 

follows: 

212.301 Solicitation provisions and 

contract clauses for the acquisition of 

commercial items. 

(f) * * * 

(xiv) Use the clause at 252.232–7011, 

Payments in Support of Emergencies 

and Contingency Operations, as 

prescribed in 232.908. 

PART 232—CONTRACT FINANCING 

■ 3. Section 232.901 is added to read as 

follows: 

232.901 Applicability. 

(1) FAR subpart 32.9, Prompt 

Payment, does not apply when— 

(i) There is— 

(A) An emergency, as defined in the 

Disaster Relief Act of 1974; 

(B) A contingency operation (see FAR 

2.101(b)); or 

(C) The release or threatened release 

of hazardous substances (as defined in 

4 U.S.C. 9606, Section 106); and 

(ii) The head of the contracting 

activity has made a determination, after 

consultation with the cognizant 

comptroller, that conditions exist that 

limit normal business operations; and 

(iii) Payments will be made in the 

operational area or made contingent 

upon receiving supporting 

documentation (i.e., contract, invoice, 

and receiving report) from the 

operational area. 

(2) Criteria limiting normal business 

operations during emergencies and 

contingency operations that restrict the 

use of FAR 32.9 may include such 

conditions as— 

(i) Support infrastructure, hardware, 

communications capabilities, and 

bandwidth are not consistently available 

such that normal business operations 

can be carried out; 

(ii) Support resources, facilities, and 

banking needs are not consistently 

available for use as necessary in 

carrying out normal business 

operations; 

(iii) Military mission priorities 

override the availability of appropriately 

skilled personnel in support of backoffice operations; 

(iv) Mobility impairments and 

security concerns restrict free movement 

of personnel and documents necessary 

for timely processing; 

(v) Foreign vendors are not familiar 

with or do not understand DoD contract 

requirements (i.e., proper invoice, 

receiving documentation, and 

contracting terms); or 

(vi) Documents received in support of 

payment requests and shipments require 

language translations that cannot be 

performed and documented within 

normal business processing times. 

(3) Subsequent Determinations. The 

head of the contracting activity shall 

make subsequent determinations, after 

consultation with the cognizant 

comptroller, as the operational area 

evolves into either a more stable or less 

stable environment. 

(i) If the head of the contracting 

activity determines that the operational 

area has evolved into a more stable 

environment, the contracting officer 

shall notify, by issuance of a contract 

modification, each contractor 

performing in the operational area 

under review. The modification 

deactivates clause 252.232–7011 and 

activates the applicable FAR Prompt 

Payment clause in the contract. 

(ii) If after deactivation of clause 

252.232–7011, the head of the 


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40714 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Rules and Regulations 

contracting activity subsequently 

determines that the operational area has 

evolved into a less stable environment, 

the head of the contracting activity will 

make a determination that conditions 

exist that limit normal business 

operations. The contracting officer will 

then reactivate clause 252.232–7011 by 

issuance of a contract modification. 

■ 4. Section 232.908 is added to read as 

follows: 

232.908 Contract clauses 

Use the clause at 252.232–7011, 

Payments in Support of Emergencies 

and Contingency Operations, in 

solicitations and contracts in addition to 

the approved clause prescribed in FAR 

32.908 in acquisitions that meet the 

applicability criteria at 232.901(1). 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

■ 5. Section 252.232–7011 is added to 

read as follows: 

252.232–7011 Payments in Support of 

Emergencies and Contingency Operations. 

As prescribed in section 232.908, use 

the following clause: 

PAYMENTS IN SUPPORT OF 

EMERGENCIES AND CONTINGENCY 

OPERATIONS (JUL 2010) 

(a) Definitions of pertinent terms are set 

forth in sections 2.101, 32.001, and 32.902 of 

the Federal Acquisition Regulation. 

(b) Notwithstanding any other payment 

clause in this contract, the Government will 

make invoice payments under the terms and 

conditions specified in this clause. The 

Government considers payment as being 

made on the day a check is dated or the date 

of an electronic funds transfer 

(c) Invoice payments. 

(1) Due date. 

(i) Payment will be made as soon as 

possible once a proper invoice is received 

and matched with the contract and the 

receiving/acceptance report. 

(ii) If the contract does not require 

submission of an invoice for payment (e.g., 

periodic lease payments), the due date will 

be as specified in the contract. 

(2) Contractor’s invoice. The Contractor 

shall prepare and submit invoices to the 

designated billing office specified in the 

contract. A proper invoice should include the 

items listed in paragraphs (c)(2)(i) through 

(c)(2)(x) of this clause. 

(i) Name and address of the Contractor. 

(ii) Invoice date and invoice number. (The 

Contractor should date invoices as close as 

possible to the date of the mailing or 

transmission.) 

(iii) Contract number or other authorization 

for supplies delivered or services performed 

(including order number and contract line 

item number). 

(iv) Description, quantity, unit of measure, 

unit price, and extended price of supplies 

delivered or services performed. 

(v) Shipping and payment terms (e.g., 

shipment number and date of shipment, 

discount for prompt payment terms). Bill of 

lading number and weight of shipment will 

be shown for shipments on Government bills 

of lading. 

(vi) Name and address of Contractor 

official to whom payment is to be sent (must 

be the same as that in the contract or in a 

proper notice of assignment). 

(vii) Name (where practicable), title, phone 

number, and mailing address of person to 

notify in the event of a defective invoice. 

(viii) Taxpayer Identification Number 

(when required). The taxpayer identification 

number is required for all payees subject to 

the U.S. Internal Revenue Code. 

(ix) Electronic funds transfer banking 

information. 

(A) The Contractor shall include electronic 

funds transfer banking information on the 

invoice only if required elsewhere in this 

contract. 

(B) If electronic funds transfer banking 

information is not required to be on the 

invoice, in order for the invoice to be a 

proper invoice, the Contractor shall have 

submitted correct electronic funds transfer 

banking information in accordance with the 

applicable solicitation provision (e.g., 

52.232–38, Submission of Electronic Funds 

Transfer Information with Offer), contract 

clause (e.g., 52.232–33, Payment by 

Electronic Funds Transfer—Central 

Contractor Registration, or 52.232–34, 

Payment by Electronic Funds Transfer-Other 

Than Central Contractor Registration), or 

applicable agency procedures. 

(C) Electronic funds transfer banking 

information is not required if the 

Government waived the requirement to pay 

by electronic funds transfer. 

(x) Any other information or 

documentation required by the contract (e.g., 

evidence of shipment). 

(3) Discounts for prompt payment. The 

designated payment office will take costeffective discounts if the payment is made 

within the discount terms of the contract. 

(4) Contract financing payment. If this 

contract provides for contract financing, the 

Government will make contract financing 

payments in accordance with the applicable 

contract financing clause. 

(5) Overpayments. If the Contractor 

becomes aware of a duplicate contract 

financing or invoice payment or that the 

Government has otherwise overpaid on a 

contract financing or invoice payment, the 

Contractor shall— 

(i) Remit the overpayment amount to the 

payment office cited in the contract along 

with a description of the overpayment, 

including the— 

(A) Circumstances of the overpayment 

(e.g., duplicate payment, erroneous payment, 

liquidation errors, date(s) of overpayment); 

(B) Affected contract number and delivery 

order number, if applicable; 

(C) Affected contract line item or subline 

item, if applicable; and 

(D) Contractor point of contact; and 

(ii) Provide a copy of the remittance and 

supporting documentation to the Contracting 

Officer. 

(d) This clause is applicable until 

otherwise notified by the Contracting Officer. 

Upon notification by issuance of a contract 

modification, the appropriate FAR Prompt 

Payment clause in the contract becomes 

applicable. 

(End of clause) 

[FR Doc. 2010–16892 Filed 7–12–10; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 205 and 210 

Defense Federal Acquisition 

Regulation Supplement; Publication of 

Notification of Bundling of Contracts 

of the Department of Defense (DFARS 

Case 2009–D033) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Interim rule with request for 

comments. 

SUMMARY: DoD is issuing an interim rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to implement section 820 of 

the National Defense Authorization Act 

for Fiscal Year 2010 (Pub. L. 111–84, 

enacted October 28, 2009). 

DATES: Effective Date: July 13, 2010. 

Comment Date: Comments on the 

interim rule should be submitted in 

writing to the address shown below on 

or before September 13, 2010, to be 

considered in the formation of the final 

rule. 

ADDRESSES: Submit comments 

identified by DFARS Case 2009–D033, 

using any of the following methods: 

Æ Federal eRulemaking Portal: 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

Æ E-mail: dfars@osd.mil. Include 

DFARS Case 2009–D033 in the subject 

line of the message. 

Æ Fax: 703–602–0350. 

Æ Mail: Defense Acquisition 

Regulations System, Attn: Ms. Meredith 

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

Room 3B855, 3060 Defense Pentagon, 

Washington, DC 20301–3060. 

Comments received generally will be 

posted without change to http:// 

www.regulations.gov, including any 

personal information provided. 

FOR FURTHER INFORMATION CONTACT: 

Meredith Murphy, Defense Acquisition 

Regulations System, 

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

3B855, 3060 Defense Pentagon, 

Washington, DC 20301–3060. 

Telephone 703–602–1302; facsimile 

703–602–0350. 


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