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
44250 Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Proposed Rules

insurance/pension costs in Government

contracts. Insurance/pension specialists

and the Defense Contract Audit Agency

(DCAA) assist ACOs in making these

determinations by conducting CIPRs.

(b) CIPRs can take the following

forms:

(1) Initial CIPR. A comprehensive

review of the contractor’s insurance

program, pension plan, and other

deferred compensation plan. Includes a

detailed review of the contractor’s

policies, procedures, and practices to

determine whether the programs and

plans in compliance with FAR and Cost

Accounting Standards (CAS).

(2) Special CIPR. A review of the

contractor’s insurance program, pension

plan, or other deferred compensation

plan where the review concentrates on

specific significant areas.

(3) Incurred cost CIPR. A review of

costs incurred for insurance, pension, or

other deferred compensation to

determine allowability and compliance

with FAR, CAS, and contract clauses.

(4) Forward pricing CIPR. A review of

costs proposed for insurance, pension,

or other deferred compensation to

determine allowability and compliance

with FAR and CAS.

(c) As the DoD Executive Agency, the

Defense Logistics Agency provides

program management and participates

with DCAA in the performance of all

CIPRs meeting the criteria in 242.7302.

(d) When special reviews of the

contractor’s insurance/pension program

are desired, forward a request to the

ACO. The review should be performed

as part of an ACO-initiated special CIPR

or, if possible, as part of the incurred

cost or forward pricing CIPR if one is

scheduled to be conducted in the near

future.

242.7302 Requirements.

(a) An initial CIPR shall be conducted

within 2 years after a contractor first

exceeds $40 million of annual

qualifying sales to the Government.

Qualifying sales are sales for which

certified cost or pricing data were

required under 10 U.S.C. 2306a, as

implemented in FAR 15.804, or which

are contracts other than firm-fixed-price

or fixed-price with economic price

adjustment. Sales include prime

contracts, subcontracts, and

modifications to such contracts and

subcontracts.

(b) A special CIPR shall be performed

for all contractors (including, but not

limited to, those meeting the

requirements in paragraph (a) of this

section), when any of the following

circumstances exists and it is

anticipated that there may be a

significant impact on Government

contract costs:

(1) Information reveals a deficiency in

the contractor’s insurance/pension

program.

(2) The contractor proposes or

implements changes in the insurance,

pension, or deferred compensation

plans.

(3) The contractor is involved in a

merger, acquisition, or divestiture.

(4) Follow-up on contractor

implementation of prior CIPR

recommendations is needed.

(5) Verification of Government

recovery of credits is needed.

(c) Incurred cost and forward pricing

CIPRs shall be performed when it is

determined that participation of an

insurance/pension specialist is essential

to determine cost allowability.

242.7303 Responsibilities.

(a) The administrative contracting

officer is responsible for—

(1) Determining the need for a CIPR

under 242.7302;

(2) Requesting and scheduling the

reviews with the appropriate Defense

Logistics Agency activity;

(3) Notifying the contractor of the

proposed date and purpose of the

review, and obtaining any preliminary

data needed by the insurance/pension

specialist and DCAA;

(4) Reviewing the CIPR report,

advising the contractor of the results,

and asking the contractor to submit any

significant changes in insurance/

pension plans for review and

acceptance prior to making the change;

(5) Providing other interested

contracting officers copies of documents

related to the CIPR;

(6) Ensuring adequate follow-up on all

CIPR recommendations; and

(7) Performing contract administration

responsibilities related to Cost

Accounting Standards administration as

delineated in FAR subparts 30.2 and

30.6.

(b) The insurance/pension specialist

responsible for—

(1) Preparing and maintaining the

schedule of CIPRs to be performed

during the next 12 months and

providing the military departments and

DCAA a copy of the schedule;

(2) Heading the team that conducts

the review (the team leader). Another

party may be designated as the team

leader when agreed to by both the

insurance/pension specialist and that

party. The team leader is responsible

for—

(i) Maintaining complete

documentation for CIPR reports;

(ii) To the extent possible, resolving

discrepancies between adult reports and

CIPR draft reports prior to releasing the

final CIPR report;

(iii) Preparing and distributing the

final CIPR report;

(iv) Providing the final audit report

and/or the insurance/pension

specialist’s report as an attachment to

the CIPR report; and

(v) Preparing a draft letter for the

administrative contracting officer’s use

in notifying the contractor of CIPR

results; and

(3) When requested, advising

administrative contracting officers and

other Government representatives

concerning contractor insurance/

pension matters.

(c) DCAA is responsible for—

(1) Participating as a member of the

CIPR team;

(2) Submitting information and advice

to the team based on analysis of the

contractor’s books, accounting records,

and other related data;

(3) Issuing an audit report to the

insurance/pension specialist for

incorporation into the final CIPR report;

and

(4) Performing contract audit

responsibilities related to Cost

Accounting Standards administration as

delineated in FAR subparts 30.2 and

30.6.

[FR Doc. 97–21891 Filed 8–19–97; 8:45 am]

BILLING CODE 5000–04–M

DEPARTMENT OF TRANSPORTATION

Research and Special Programs

Administration

49 CFR Part 199

[RSPA Docket PS–128; Amdt. 199–15]

RIN 2137–AC84

Drug and Alcohol Testing; Substance

Abuse Professional Evaluation for

Drug Use

AGENCY: Research and Special Programs

Administration (RSPA), DOT.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Research and Special

Programs Administration proposes to

modify current procedures in its drug

testing regulations governing situations

in which pipeline employees test

positive on a drug test. The proposed

changes would require pipeline

operators to require employees who test

positive for the presence of prohibited

drugs or who refuse to take a required

drug test to be evaluated by a substance

abuse professional (SAP), who could

require an employee to undergo a

rehabilitation program prior to the