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[Federal Register Volume 78, Number 153 (Thursday, August 8, 2013)]
[Proposed Rules]
[Pages 48404-48407]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-18976]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 232 and 252

RIN 0750-AI02

Defense Federal Acquisition Regulation Supplement: Clauses With 
Alternates--Contract Financing (DFARS Case 2013-D014)

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

ACTION: Proposed rule.

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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to create an overarching prescription for 
the set of contract financing related clauses with one or more 
alternates. The rule also proposes to add a separate prescription for 
the basic clause as well as the alternate. In addition, the proposed 
rule would include the full text of the clause alternate.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before October 7, 2013, to be considered 
in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2013-D014, using 
any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov. Submit comments 
via the Federal eRulemaking portal by entering ``DFARS Case 2013-D014'' 
under the heading ``Enter keyword or ID'' and selecting ``Search.'' 
Select the link ``Submit a Comment'' that corresponds with ``DFARS Case 
2013-D014.'' Follow the instructions provided at the ``Submit a 
Comment'' screen. Please include your name, company name (if any), and 
``DFARS Case 2013-D014'' on your attached document.
    [cir] Email: dfars@osd.mil. Include DFARS Case 2013-D014 in the 
subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. 
Annette Gray, 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. To 
confirm receipt of your comment(s), please check www.regulations.gov, 
approximately two to three days after submission to verify posting 
(except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: Annette Gray, Defense Acquisition 
Regulations System, OUSD(AT&L)DPAP/DARS, Room 3B855, 3060 Defense 
Pentagon, Washington, DC 20301-3060. Telephone 571-372-6093; facsimile 
571-372-6101.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD is proposing to amend the DFARS to create an overarching 
prescription for the contract financing clause with one alternate. The 
rule also proposes to add a separate prescription for the basic clause 
as well as the alternate. For clarity, the preface of the alternate 
will continue to explain what portions of the alternate are different 
from the basic clause.
    Separate prescriptions for the basic and alternates of DFARS 
clauses will facilitate the use of automated contract writing systems. 
The proposed rule will not revise the prescriptions in any substantive 
way or change the applicability of the clause or its alternate.
    The inclusion of the full text of each clause alternate aims to 
make the terms of a clause alternate clearer to offerors and to DoD 
contracting officers. The current convention for alternates is to show 
only the changed paragraphs from the basic provision or clause. This 
proposed rule would include the full text of each clause and each 
alternate, which will assist in making solicitation and contract terms 
and conditions easier to read and understand. By placing alternates in 
full text, all paragraph substitutions from the basic clause will have 
already been made. Inapplicable paragraphs from the basic clause that 
are superseded by the alternate will not be included in the 
solicitation or contract in order to prevent confusion.
    Although this rule proposes to include the text of the alternate in 
full, it retains the language that precedes the clause or alternate, 
which includes the location of the alternate's prescription and a 
statement that identifies which paragraphs were changed from the basic 
clause. Further, alternates are proposed to have individual titles that 
tie them to the basic clause, e.g., ``Limitation of Government's 
Obligation--Alternate I'' in lieu of ``Alternate I.''

II. Discussion

    This proposed rule addresses only the single DFARS part 232 clause 
that has an alternate. The remaining prescriptions in part 232 are not 
proposed to be changed in any way by this rule. The affected clause is 
252.232-7007, Limitation of Government's Obligation, with one 
alternate. The naming convention results in proposed new clause titles, 
e.g., Limitation of Government's Obligation--Basic and Limitation of 
Government's Obligation--Alternate I.
    An umbrella prescription is proposed to be added for the elements 
common to the basic clause and alternate. The specific prescription for 
the basic clause and alternate would then address only the requirements 
for their use that enable the selection of the basic or the alternate. 
For example, the revised prescription for Limitation of Government's 
Obligation--Alternate I would read as follows: ``Use the clause

[[Page 48405]]

at 252.232-7007, Limitation of Government's Obligation--Alternate I, if 
only one line item will be incrementally funded.'' The planned changes 
will increase the clarity and ease of use, but will not revise the 
applicability in any way. The text of the current DFARS 252.232-7007, 
Alternate I, would no longer consist solely of paragraph (a), but would 
include the entire text of DFARS 252.232-7007 (basic clause) with the 
revised paragraph (a) substituted for the corresponding paragraph of 
the basic clause. Inapplicable paragraphs from the basic version of the 
clause that are superseded by the alternate will not be included in the 
solicitation or contract in order to prevent confusion.
    Further, this proposed rule would also revise the applicable 
preface, i.e., the language in part 232 that precedes a provision, 
clause, or alternate. The proposed rule would replace the current 
preface language with a statement that identifies the specific changes 
from the basic version of the solicitations provision or clause.

III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 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 does not expect this proposed rule to have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., 
because it merely revises the prescriptions for solicitation provisions 
and clauses with alternates to be unique, as well as includes the full 
text of each provision or clause in each alternate. However, an initial 
regulatory flexibility analysis has been performed and is summarized as 
follows:
    The purpose of this proposed rule is to amend the DFARS to create 
unique prescriptions for the basic version and each alternate of DFARS 
part 232 solicitation provisions and contract clauses, and to include 
the full text of each clause alternate.
    The use of automated contract writing systems will be facilitated 
by having unique prescriptions for the basic version and each alternate 
of DFARS solicitations provisions and clauses. The current convention 
requires the prescription for the basic provision or clause to address 
all the possibilities covered by the alternates, and then the 
prescription for each alternate addresses only what is different for 
the use of that particular alternate. This rule will revise the 
prescriptions so that the basic solicitation provision or clause and 
each alternate is unique and stands on its own. The prescriptions will 
not be revised in any way to change when they are applicable to 
offerors, contractors, or subcontractors.
    Additionally, the inclusion of the full text of each provision or 
clause alternate aims to make the terms of a provision or clause 
alternate clearer to offerors, as well as to DoD contracting officers. 
Instead of the current convention for alternates to show only 
paragraphs changed from the basic version of the provision or clause, 
this rule proposes to include the full text of each version of the 
clause. This will assist in making the terms of the clause clearer, 
because all paragraph substitutions will have already been made. 
Inapplicable paragraphs from the basic version of the clause that are 
superseded by the alternate are not included in the solicitation or 
contract to prevent confusion.
    Potential offerors, including small businesses, may be affected by 
this rule by seeing an unfamiliar format for clause alternates in 
solicitations and contracts issued by DoD contracting activities. An 
average of 12,618,521 new contracts was awarded in Fiscal Years 2011 
and 2012, and an average of 1,557,852 of these actions (12.35%) was 
awarded to small businesses. It is unknown how many of these contracts 
were awarded that included an alternate to a DFARS provision or clause. 
Nothing substantive will change in solicitations or contracts for 
potential offerors, and only the appearance of how clause alternates 
are presented in the solicitations and contracts will be changed.
    This rule may result in potential offerors, including small 
businesses, expending more time to become familiar with and to 
understand the new format of the clause alternates in full text 
contained in contracts issued by any DoD contracting activity. The rule 
also anticipates saving contractors time by making all paragraph 
substitutions from the basic version of the clause, and not requiring 
the contractors to read inapplicable paragraphs contained in the basic 
version of the clause where alternates are also included in the 
solicitations and contracts. The overall burden caused by this rule is 
expected to be negligible and will not be any greater on small 
businesses than it is on large businesses.
    This rule does not add any new information collection requirements. 
The rule does not duplicate, overlap, or conflict with any other 
Federal rules. No alternatives were identified that will accomplish the 
objectives of the rule.
    DoD invites comments from small business concerns 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 2013-D014), in 
correspondence.

V. Paperwork Reduction Act

    The rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 232 and 252

    Government procurement.

Manuel Quinones,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 232 and 252 are proposed to be amended as 
follows:

0
1. The authority citation for parts 232 and 252 continues to read as 
follows:

    Authority:  41 U.S.C. 1303 and 48 CFR Chapter 1.

PART 232--CONTRACT FINANCING

232.704-70  [Amended]

0
2. Amend section 232.704-70 by--
0
a. In paragraph (a), removing ``Limitation of Government's Obligation, 
the contracting officer'' and adding ``Limitation of Government's 
Obligation--Basic or Limitation of Government's Obligation--Alternate 
I, the contracting officer'' in its place.
0
b. In paragraph (c), removing ``Limitation of Government's Obligation, 
sufficient funds'' and adding ``Limitation of Government's Obligation--
Basic or Limitation of Government's Obligation--Alternate I, sufficient 
funds'' in its place.

[[Page 48406]]

0
3. Revise section 232.705-70 to read as follows:

232.705-70  Clause for limitation of Government's obligation.

    Use the basic or the alternate of the clause at 252.232-7007, 
Limitation of Government's Obligation, in solicitations and resultant 
incrementally funded fixed-price contracts. The contracting officer may 
revise the contractor's notification period, in paragraph (c) of the 
clause, from ``ninety'' to ``thirty'' or ``sixty'' days, as 
appropriate.
    (a) Use the clause Limitation of Government's Obligation--Basic, if 
more than one line item will be incrementally funded.
    (b) Use the clause Limitation of Government's Obligation--Alternate 
I, if only one line item will be incrementally funded.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
4. Revise section 252.232-7007 to read as follows:

252.232-7007  Limitation of Government's Obligation.

    As prescribed in 232.705-70, use one of the following clauses:
    (a) Limitation of Government's Obligation--Basic. For the specific 
prescription for the use of the basic clause, see 232.705-70(a).

LIMITATION OF GOVERNMENT'S OBLIGATION--BASIC (DATE)

    (a) Contract line item(s) ---------- through ---------- are 
incrementally funded. For these item(s), the sum of $---------- of 
the total price is presently available for payment and allotted to 
this contract. An allotment schedule is set forth in paragraph (j) 
of this clause.
    (b) For item(s) identified in paragraph (a) of this clause, the 
Contractor agrees to perform up to the point at which the total 
amount payable by the Government, including reimbursement in the 
event of termination of those item(s) for the Government's 
convenience, approximates the total amount currently allotted to the 
contract. The Contractor is not authorized to continue work on those 
item(s) beyond that point. The Government will not be obligated in 
any event to reimburse the Contractor in excess of the amount 
allotted to the contract for those item(s) regardless of anything to 
the contrary in the clause entitled ``Termination for Convenience of 
the Government.'' As used in this clause, the total amount payable 
by the Government in the event of termination of applicable contract 
line item(s) for convenience includes costs, profit, and estimated 
termination settlement costs for those item(s).
    (c) Notwithstanding the dates specified in the allotment 
schedule in paragraph (j) of this clause, the Contractor will notify 
the Contracting Officer in writing at least ninety days prior to the 
date when, in the Contractor's best judgment, the work will reach 
the point at which the total amount payable by the Government, 
including any cost for termination for convenience, will approximate 
85 percent of the total amount then allotted to the contract for 
performance of the applicable item(s). The notification will state 
(1) the estimated date when that point will be reached and (2) an 
estimate of additional funding, if any, needed to continue 
performance of applicable line items up to the next scheduled date 
for allotment of funds identified in paragraph (j) of this clause, 
or to a mutually agreed upon substitute date. The notification will 
also advise the Contracting Officer of the estimated amount of 
additional funds that will be required for the timely performance of 
the item(s) funded pursuant to this clause, for a subsequent period 
as may be specified in the allotment schedule in paragraph (j) of 
this clause or otherwise agreed to by the parties. If after such 
notification additional funds are not allotted by the date 
identified in the Contractor's notification, or by an agreed 
substitute date, the Contracting Officer will terminate any item(s) 
for which additional funds have not been allotted, pursuant to the 
clause of this contract entitled ``Termination for Convenience of 
the Government.''
    (d) When additional funds are allotted for continued performance 
of the contract line item(s) identified in paragraph (a) of this 
clause, the parties will agree as to the period of contract 
performance which will be covered by the funds. The provisions of 
paragraphs (b) through (d) of this clause will apply in like manner 
to the additional allotted funds and agreed substitute date, and the 
contract will be modified accordingly.
    (e) If, solely by reason of failure of the Government to allot 
additional funds, by the dates indicated below, in amounts 
sufficient for timely performance of the contract line item(s) 
identified in paragraph (a) of this clause, the Contractor incurs 
additional costs or is delayed in the performance of the work under 
this contract and if additional funds are allotted, an equitable 
adjustment will be made in the price or prices (including 
appropriate target, billing, and ceiling prices where applicable) of 
the item(s), or in the time of delivery, or both. Failure to agree 
to any such equitable adjustment hereunder will be a dispute 
concerning a question of fact within the meaning of the clause 
entitled ``Disputes.''
    (f) The Government may at any time prior to termination allot 
additional funds for the performance of the contract line item(s) 
identified in paragraph (a) of this clause.
    (g) The termination provisions of this clause do not limit the 
rights of the Government under the clause entitled ``Default.'' The 
provisions of this clause are limited to the work and allotment of 
funds for the contract line item(s) set forth in paragraph (a) of 
this clause. This clause no longer applies once the contract is 
fully funded except with regard to the rights or obligations of the 
parties concerning equitable adjustments negotiated under paragraphs 
(d) and (e) of this clause.
    (h) Nothing in this clause affects the right of the Government 
to terminate this contract pursuant to the clause of this contract 
entitled ``Termination for Convenience of the Government.''
    (i) Nothing in this clause shall be construed as authorization 
of voluntary services whose acceptance is otherwise prohibited under 
31 U.S.C. 1342.
    (j) The parties contemplate that the Government will allot funds 
to this contract in accordance with the following schedule:

On execution of contract..................  $----------
(month) (day), (year).....................  $----------
(month) (day), (year).....................  $----------
(month) (day), (year).....................  $----------
 

    (End of clause)
    (b) Limitation of Government's Obligation--Alternate I. For the 
specific prescription for the use of Alternate I, see 232.705-70(b). 
Alternate I uses a different paragraph (a) than the basic clause.

LIMITATION OF GOVERNMENT'S OBLIGATION--ALTERNATE I (DATE)

    (a) Contract line item ---------- is incrementally funded. The 
sum of $---------- is presently available for payment and allotted 
to this contract. An allotment schedule is contained in paragraph 
(j) of this clause.
    (b) For item(s) identified in paragraph (a) of this clause, the 
Contractor agrees to perform up to the point at which the total 
amount payable by the Government, including reimbursement in the 
event of termination of those item(s) for the Government's 
convenience, approximates the total amount currently allotted to the 
contract. The Contractor is not authorized to continue work on those 
item(s) beyond that point. The Government will not be obligated in 
any event to reimburse the Contractor in excess of the amount 
allotted to the contract for those item(s) regardless of anything to 
the contrary in the clause entitled ``Termination for Convenience of 
the Government.'' As used in this clause, the total amount payable 
by the Government in the event of termination of applicable contract 
line item(s) for convenience includes costs, profit, and estimated 
termination settlement costs for those item(s).
    (c) Notwithstanding the dates specified in the allotment 
schedule in paragraph (j) of this clause, the Contractor will notify 
the Contracting Officer in writing at least ninety days prior to the 
date when, in the Contractor's best judgment, the work will reach 
the point at which the total amount payable by the Government, 
including any cost for termination for convenience, will approximate 
85 percent of the total amount then allotted to the contract for 
performance of the applicable item(s). The notification will state 
the estimated date when that point will be reached and an estimate 
of additional funding, if any, needed to continue performance of 
applicable line items up to the next scheduled date for allotment of 
funds identified in paragraph (j) of this clause, or to a mutually 
agreed upon substitute date. The notification will also advise the 
Contracting Officer of the

[[Page 48407]]

estimated amount of additional funds that will be required for the 
timely performance of the item(s) funded pursuant to this clause, 
for a subsequent period as may be specified in the allotment 
schedule in paragraph (j) of this clause or otherwise agreed to by 
the parties. If after such notification additional funds are not 
allotted by the date identified in the Contractor's notification, or 
by an agreed substitute date, the Contracting Officer will terminate 
any item(s) for which additional funds have not been allotted, 
pursuant to the clause of this contract entitled ``Termination for 
Convenience of the Government.''
    (d) When additional funds are allotted for continued performance 
of the contract line item(s) identified in paragraph (a) of this 
clause, the parties will agree as to the period of contract 
performance which will be covered by the funds. The provisions of 
paragraphs (b) through (d) of this clause will apply in like manner 
to the additional allotted funds and agreed substitute date, and the 
contract will be modified accordingly.
    (e) If, solely by reason of failure of the Government to allot 
additional funds, by the dates indicated below, in amounts 
sufficient for timely performance of the contract line item(s) 
identified in paragraph (a) of this clause, the Contractor incurs 
additional costs or is delayed in the performance of the work under 
this contract and if additional funds are allotted, an equitable 
adjustment will be made in the price or prices (including 
appropriate target, billing, and ceiling prices where applicable) of 
the item(s), or in the time of delivery, or both. Failure to agree 
to any such equitable adjustment hereunder will be a dispute 
concerning a question of fact within the meaning of the clause 
entitled ``Disputes.''
    (f) The Government may at any time prior to termination allot 
additional funds for the performance of the contract line item(s) 
identified in paragraph (a) of this clause.
    (g) The termination provisions of this clause do not limit the 
rights of the Government under the clause entitled ``Default.'' The 
provisions of this clause are limited to the work and allotment of 
funds for the contract line item(s) set forth in paragraph (a) of 
this clause. This clause no longer applies once the contract is 
fully funded except with regard to the rights or obligations of the 
parties concerning equitable adjustments negotiated under paragraphs 
(d) and (e) of this clause.
    (h) Nothing in this clause affects the right of the Government 
to terminate this contract pursuant to the clause of this contract 
entitled ``Termination for Convenience of the Government.''
    (i) Nothing in this clause shall be construed as authorization 
of voluntary services whose acceptance is otherwise prohibited under 
31 U.S.C. 1342.
    (j) The parties contemplate that the Government will allot funds 
to this contract in accordance with the following schedule:

On execution of contract..................  $----------
(month) (day), (year).....................  $----------
(month) (day), (year).....................  $----------
(month) (day), (year).....................  $----------
 

    (End of clause)
    * To be inserted after negotiation.

[FR Doc. 2013-18976 Filed 8-7-13; 8:45 am]
BILLING CODE 5001-06-P
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