44248 Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Proposed Rules

Act of 1994 (Pub. L. 103–355) and Office

of Federal Procurement Policy Letter

92–5, Past Performance Information.

Subsequent to publication of the

proposed rule, numerous policy issues

relating to the collection and

appropriate use of past performance

information were identified. The DoD

Past Performance Integrated Process

Action Team (IPT) is currently

determining the appropriate resolution

to these issues. Therefore, DFARS Case

95–D715 is closed and the proposed

rule is withdrawn. A new DFARS case

will be opened after the DoD Past

Performance IPT develops its

recommendations.

FOR FURTHER INFORMATION CONTACT:

Defense Acquisition Regulations

Council, Attn: Ms. Melissa Rider,

PDUSD (A&T) DP (DAR), IMD 3D139,

3062 Defense Pentagon, Washington, DC

20301–3062. Telephone (703) 602–0131;

telefax (703) 602–0350.

Michele P. Peterson,

Executive Editor, Defense Acquisition

Regulations Council.

[FR Doc. 97–21889 Filed 8–19–97; 8:45 am]

BILLING CODE 5000–04–M

DEPARTMENT OF DEFENSE

48 CFR Part 231

[DFARS Case 96–D303]

Defense Federal Acquisition

Regulation Supplement; Cost

Reimbursement Rules for Indirect

Costs—Private Sector

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for

comments.

SUMMARY: The Director of Defense

Procurement is proposing to amend the

Defense Federal Acquisition Regulation

Supplement (DFARS) to provide

additional guidance on defense

capability preservation agreements.

DATES: Comments on the proposed rule

should be submitted in writing to the

address shown below on or before

October 20, 1997, to be considered in

the formulation of the final rule.

ADDRESSES: Interested parties should

submit written comments to: Defense

Acquisition Regulations Council, Attn:

Ms. Sandra G. Haberlin, PDUSD (A&T)

DP (DAR), IMD 3D139, 3062 Defense

Pentagon, Washington, DC 20301–3062.

Telefax number (703) 602–0350. Please

cite DFARS Case 96–D303 in all

correspondence related to this issue.

FOR FURTHER INFORMATION CONTACT:

Ms. Sandra G. Haberlin, (703) 602–0131.

SUPPLEMENTARY INFORMATION:

A. Background

Section 808 of the National Defense

Authorization Act for Fiscal Year 1996

(Public Law 104–106) permits DoD to

enter into a defense capability

preservation agreement with a defense

contractor where it would facilitate the

achievement of the policy objectives set

forth in 10 U.S.C. 2501(b). Such an

agreement would permit the contractor

to claim certain indirect costs,

attributable to its private sector work, on

its defense contracts. To implement

Section 808, an interim rule was

published in the Federal Register on

May 13, 1996 (61 FR 21973), that added

DFARS subsection 231.205–71, Defense

capability preservation agreements.

This proposed rule revises subsection

231.205–71 to add additional guidance

for evaluating requests for defense

capability preservation agreements, and

to add cost reimbursement rules to

apply if DoD enters into such an

agreement with a contractor.

Specifically, this rule differs from the

interim rule by (1) redesignating

paragraph (b) as paragraph (e); (2)

adding paragraphs (b) Definition, (c)

Purpose and guidelines, and (d) Costreimbursement rules; and (3) making

editorial changes. Due to the differences

between the two rules, a proposed rule

is being promulgated to obtain further

public comment prior to finalizing the

rule.

Public comments on the interim rule

were received from three sources. All

comments were considered in the

development of this proposed rule.

B. Regulatory Flexibility Act

This proposed rule is not expected 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 most contracts awarded to

small entities use simplified acquisition

procedures or are awarded on a

competitive, fixed-price basis, and do

not require application of the cost

principle contained in this rule. An

initial regulatory flexibility analysis has,

therefore, not been performed.

Comments are invited from small

businesses and other interested parties.

Comments from small entities

concerning the affected DFARS subpart

also will be considered in accordance

with 5 U.S.C. 610. Such comments

should be submitted separately and

should cite DFARS Case 96–D303 in

correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act (44

U.S.C. 3501, et seq.) applies because the

proposed rule contains information

collection requirements. The Office of

Management and Budget (OMB) has

approved an information collection

concerning defense capability

preservation agreements through July

31, 1999, under OMB Control Number

0704–0387, based on the requirements

in the interim rule. However, the actual

number of respondents requesting

defense capability preservation

agreements since publication of the

interim rule on May 13, 1996, is lower

than previously estimated. Accordingly,

the estimate of the annual number of

respondents is decreased from 50 to 10,

and the estimated annual information

collection burden is decreased from

4000 to 800 hours.

List of Subjects in 48 CFR Part 231

Government procurement.

Michele P. Peterson,

Executive Editor, Defense Acquisition

Regulations Council.

Therefore, it is proposed that 48 CFR

Part 231 be amended as follows:

1. The authority citation for 48 CFR

Part 231 continues to read as follows:

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

Chapter 1.

PART 231—CONTRACT COST

PRINCIPLES AND PROCEDURES

2. Section 231.205–71 is revised to

read as follows:

231.205–71 Defense capability

preservation agreements.

(a) Scope and authority. Where it

would facilitate the achievement of the

policy objectives set forth in 10 U.S.C.

2501(b), DoD may enter into a defense

capability preservation agreement with

a contractor. As authorized by Section

808 of the National Defense

Authorization Act for Fiscal Year 1996

(Public Law 104–106), such an

agreement would permit the contractor

to claim certain indirect costs

attributable to its private sector work as

allowable costs on its defense contracts.

(b) Definition. ‘‘Incremental indirect

cost,’’ as used in this subsection, means

an additional indirect cost that results

from performing private sector work

described in a defense capability

preservation agreement.

(c) Purpose and guidelines. The

purpose of a defense capability

preservation agreement is to broaden

and strengthen the industrial base by

providing an incentive for a company to

obtain new private sector work, thereby

reducing DoD’s cost of doing business.
Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Proposed Rules 44249

DoD will use the following guidelines to

evaluate requests for defense capability

preservation agreements:

(1) the Under Secretary of Defense for

Acquisition and Technology must make

a determination that an agreement

would facilitate the achievement of the

policy objectives set forth in 10 U.S.C.

2501(b).

The primary consideration in making

this determination is whether an

agreement would promote future growth

in the amount of private sector work

that a company is able to obtain.

(2) An agreement generally will be

considered only for a company or

business segment with little or no

private sector work.

(3) The agreement shall apply to

prospective private sector work only,

and shall not extend beyond 5 years.

(4) The agreement must project an

overall benefit to DoD, including net

savings. This would be achieved by

demonstrating that private sector work

will absorb costs that otherwise would

be absorbed by DoD.

(d) Cost-reimbursement rules. If DoD

enters into a defense capability

preservation agreement with a

contractor, the following costreimbursement rules apply:

(1) The agreement shall require the

contractor to allocate the following costs

to private sector work:

(i) The direct costs attributable to the

private sector work;

(ii) The incremental indirect costs

attributable to the private sector work;

and

(iii) The non-incremental indirect

costs to the extent that the revenue

attributable to the private sector work

exceeds the sum of the costs specified

in paragraphs (d)(1)(i) and (d)(1)(ii) of

this subsection.

(2) The agreement shall require that

the sum of the costs specified in

paragraphs (d)(1)(ii) and (d)(1)(iii) of

this subsection not exceed the amount

of indirect costs that would have been

allocated to the private sector work in

accordance with the contractor’s

established accounting practices.

(3) DoD may agree to modify the

amount calculated in accordance with

paragraph (d)(1) of this subsection if it

determines that a modification is

appropriate to the particular situation.

In so doing, DoD may agree to the

allocation of a smaller or larger portion

of the amount calculated in accordance

with paragraph (d)(1) of this subsection,

to private sector work.

(i) Any smaller amount shall not be

less than the sum of the costs specified

in paragraphs (d)(1)(i) and (d)(1)(ii) of

this subsection.

(ii) Any larger amount shall not

exceed the sum of the costs specified in

paragraph (d)(1)(i) of this subsection

and the amount of indirect costs that

would have been allocated to the private

sector work in accordance with the

contractor’s established accounting

practices.

(iii) In determining whether such a

modification is appropriate, DoD will

consider factors such as the impact of

pre-existing firm-fixed-price DoD

contracts on the amount of costs that

would be reimbursed by DoD, the

impact of pre-existing private sector

work on the cost benefit that would be

received by the contractor, and the

extent to which allocating a smaller or

larger portion of costs to private sector

work would provide a sufficient

incentive for the contractor to obtain

additional private sector work.

(e) Procedure. A contractor may

submit a request for a defense capability

preservation agreement, together with

appropriate justification, through the

Deputy Under Secretary of Defense for

Industrial Affairs and Installations, to

the Under Secretary of Defense for

Acquisition and Technology, who has

exclusive approval or disapproval

authority. The contractor should also

provide an informational copy of any

such request to the cognizant

administrative contracting officer.

[FR Doc. 97–21892 Filed 8–19–97; 8:45 am]

BILLING CODE 5000–04–M

DEPARTMENT OF DEFENSE

48 CFR Part 242

[DFARS Case 97–D012]

Defense Federal Acquisition

Regulation Supplement; Contractor

Insurance/Pension Reviews

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for

comments.

SUMMARY: The Director of Defense

Procurement is proposing to amend the

Defense Federal Acquisition Regulation

Supplement (DFARS) to revise guidance

pertaining to the conduct of Contractor/

Insurance Pension Reviews (CIPRs).

DATES: Comments on the proposed rule

should be submitted in writing to the

address shown below on or before

October 20, 1997 to be considered in the

formulation of the final rule.

ADDRESSES: Interested parties should

submit written comments to: Defense

Acquisition Regulations Council, Attn:

Mr. R. G. Layser, PDUSD (A&T) DP

(DAR), IMD 3D139, 3062 Defense

Pentagon, Washington, DC 20301–3062.

Telefax number (703) 602–0350. Please

cite DFARS Case 97–D012 in all

correspondence related to this issue.

FOR FURTHER INFORMATION CONTACT:

Rick Layser, (703) 602–0131.

SUPPLEMENTARY INFORMATION:

A. Background

This proposed rule amends DFARS

Subpart 242.73 to more clearly define

requirements for conducting CIPRs; to

eliminate the requirement for

conducting a CIPR every 2 years; and to

require the performance of special

CIPRs under certain circumstances.

B. Regulatory Flexibility Act

The proposed rule is not expected 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 the rule applies only to

contractors whose annual qualifying

sales to the Government exceed $40

million, and no small entities are known

to meet this criteria. An initial

regulatory flexibility analysis has,

therefore, not been performed.

Comments are invited from small

businesses and other interested parties.

Comments from small entities

concerning the affected DFARS subpart

also will be considered in accordance

with 5 U.S.C. 610. Such comments

should be submitted separately and

should cite DFARS Case 97–D012 in

correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does

not apply because the proposed rule

imposes no information collection

requirements that require Office of

Management and Budget approval

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

List of Subjects in 48 CFR Part 242

Government procurement.

Michele P. Peterson,

Executive Editor, Defense Acquisition

Regulations Council.

Therefore, 48 CFR Part 242 is

proposed to be amended as follows:

1. The authority citation for 48 CFR

Part 242 continues to read as follows:

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

Chapter 1.

PART 242—CONTRACT

ADMINISTRATION

2. Sections 242.7301 through

242.2703 are revised to read as follows:

242.7301 General.

(a) The administrative contracting

officer (ACO) is responsible for

determining the allowability of