[Federal Register Volume 72, Number 11 (Thursday, January 18, 2007)]
[Proposed Rules]
[Pages 2250-2251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-612]


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DEPARTMENT OF DEFENSE

Department of the Navy

48 CFR Part 5234

[No. USN-2006-0069]


Department of the Navy Acquisition Regulations: Continuous 
Process Improvements (CPI)

AGENCY: Department of the Navy, DoD.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The Deputy for Acquisition Management, Office of the Assistant 
Secretary of the Navy (Research, Development and Acquisition) is 
issuing this advance notice of proposed rulemaking (ANPR) to solicit 
comments that can be used to assist the Department of the Navy (DON) in 
drafting a proposed Navy Marine Corps Acquisition Regulation Supplement 
contract clause or statement of work requirements that will incentivize 
contractors to pursue and implement CPI on DON major defense contracts. 
In particular, the primary focus will be to incentivize proactive 
business process improvement activities that identify increased 
efficiencies, cost avoidance, and cost savings, and provide the 
greatest motivation for contractors to share related savings with the 
DON to the maximum extent practicable.

DATES: Comment Date: Interested parties should submit comments on or 
before March 19, 2007, to be considered in the formulation of any 
proposed rule.
    The DON invites interested parties from both the private and public 
sector to provide comments on the effective use of incentives to 
encourage and reward contractor CPI initiatives aimed toward exceeding 
key objectives or performance parameters on DON major defense 
contracts. Comments are especially welcomed on the specific issues 
discussed in the SUPPLEMENTARY INFORMATION section of this notice. See, 
in particular, the questions posed under ``Solicitation of Public 
Comment.''

ADDRESSES: Interested parties may submit comments, identified by docket 
number and title, by any of the following methods:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Mail: Federal Docket Management System Office, 1160 
Defense Pentagon, Washington, DC 20301-1160.
    Instructions: All submissions received must include the agency 
name, docket number, and title for this Federal Register document. The 
general policy for comments and other submissions from members of the 
public is to make these submissions available for public viewing on the 
Internet at http://www.regulations.gov as they are received without 
change, including any personal identifiers or contact information. 
Please cite ``Continuous Process Improvements'' in all correspondence 
related to this issue.

FOR FURTHER INFORMATION CONTACT: Department of the Navy, Office of the 
Assistant Secretary of the Navy (Research, Development & Acquisition), 
Deputy for Acquisition Management, Attn: Mr. Clarence Belton, Policy, 
1000 Navy Pentagon, Room BF992, Washington, DC 20350-1000, telephone 
number 703-693-4006.

SUPPLEMENTARY INFORMATION:

A. Background

    Companies that have implemented CPI methods and tools have 
significantly reduced waste and non-value added activities, improved 
cycle time, produced repeatable processes, reduced variation, and 
improved customer satisfaction.
    This process has led to improved products and services at a reduced 
cost. The Navy and Marine Corps, as customers of goods and services, 
should receive a fair share of the reduced costs. A contract clause 
should benefit companies that are aggressive in implementing CPI tools 
and methods with quantifiable improved output. The purpose of this ANPR 
is to solicit comments and suggestions on contract requirements aimed 
at motivating and

[[Page 2251]]

rewarding contractors for implementing CPI. After consideration of the 
comments submitted in writing, the DON may publish a draft proposed 
rule for additional public comments.

B. Solicitation of Public Comment

    The DON seeks to better understand how to incentivize contractors 
to incorporate best business practices related to CPI and how such 
contract requirements are used commercially and when their use would be 
in the best interest of the Government. The DON has developed questions 
to obtain this information as part of this ANPR.
    Accordingly, the DON invites the public to provide comments 
addressing the appropriate use of specific contract provisions to 
incentivize contractors to aggressively pursue and initiate CPI that 
identify increased efficiencies, cost avoidance, and cost savings. 
Comments are also requested on the use of solicitation provisions, 
source selection criteria, and performance incentives that will provide 
contractors with the greatest motivation to share related savings with 
the Government to the maximum extent practicable. The DON especially 
welcomes feedback to the following questions:
    1. What contractual mechanisms can the Government use to 
incentivize contractors to implement CPI?
    2. What are some of the contract provisions currently being used in 
supplier and other subcontracts to incentivize CPI?
    3. How can the Government motivate contractors who implement CPI to 
share in related savings to the maximum extent practicable?
    4. Are cost reimbursement or flexibly priced contracts more 
suitable for providing incentives for contractors to implement CPI that 
identify increased efficiencies, cost avoidance, and cost savings, and 
for providing the highest motivation to share in those related savings 
to the maximum extent practicable? Why or why not? What about firm 
fixed-priced contracts?

    Dated: January 11, 2007.
M.A. Harvison,
Lieutenant Commander, Judge Advocate General's Corps, U.S. Navy, 
Federal Register Liaison Officer.
[FR Doc. E7-612 Filed 1-17-07; 8:45 am]
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