DEPARTMENT OF DEFENSE Statement of Regulatory Priorities Background The Department of Defense (DoD) is the largest Federal d epart ment consi s ting of 3 Military depa rtments (Army, Navy, and Air Force), 10 Unified Combatant Commands, 14 Defense agencies, and 10 DoD Field Activities. It has 1, 434,761 military personnel and 770,569 civilians assigned as of June 30, 2010, and over 200 large an d medium installations in the continental United States, U. S. territories, and foreign countries. The overall size, composition, and dispersion of DoD, coupled with an innovative regulatory program, presents a challenge to the management of the Defense regulatory effort s under Executive Order 12866 "Regulatory Planning and Review" of September 30, 1993. Because of its diversified nature, DoD is affected by the regulat ions i ssued by regulatory agencies such as the Departments of Energy , Health and Human Services, Housing and Urban Development, Labor, Transportation, Treasury, Commerce, and State, and the Office of Personnel Management, General Services Administration, and Environmental Protection Agency. In order to develop the best possible regula tions that embody the principles and objectives embedded in Executive Order 12866, there must be coordination of proposed regulations among the regulatory agencies and the affected DoD components. Coordinating the proposed regulations in advance throughout an organization as large as DoD is straightforward, yet a formidable undertaking. DoD is not a regulatory agency, but occasiona lly it issues reg u lations that have an effect on the public. These regulations, while small in number compared to the regulating agencies, can be significant as defined in Executive Order 12866. In addition, some of DoD's regulations may affect the regulatory agencies. DoD, as an int egral part of its program, not only receives coordinating actions from the regulating agencies , but coordinates with the agencies that are affected by its regulations as well.
Overall Priorities The Department needs to function at a reas on able co st, while en suring that it does not impose ineffective and unnecessarily burdensome regula tions on the public. The rulemaking process should be responsive, efficient, cost-effective, and both fair and perceived as fair. This is being done in DoD while reacting to the contradictory pressures of providing more services with fewer resources. The Department of Defense, as a matte r of overall priority for its regulatory program, fully incorporates the provisions of the President's priorities and objectives under Executive Order 12866. The Department also participates with GSA, NASA, and OFPP to form the Federal Acquisition Regulatory Coun cil. The FAR Cou ncil assists in the direction and coordination of Government wide procurement policy and Government wide proc urement regulator activities in the Federal Government (41 U.S.C. 421). Together, DOD, GSA, and NASA jointly issue and maintain the Federal Acquisition Regulation.
Administration Priorities: 1. Rulemakings that promote open Government and that use discl osu re as a regulatory tool. The Department plans to:

• Revise the Federal Acquisition Regulation (FAR) to inform contractors of this statutory requirem ent to make F ederal Awardee Performance and Integrity Information System information, excluding past performance reviews, available to the public;

• Finalize the FAR rule that implements the requi remen t for reporting first-tier subcontracting data for new contracts using Recovery Act funds; and

• Finalize the FAR rule that implements th e Federal Fu nding Acco un tability and Transparency Act of 2006, which requires the Office of M anagement and Budget (OMB) to establish a free,public, website containing full disclosure of all F ederal contract award information. This rule requires contractors to report executive compensation and first-tier subcontractor awards on unclassified contracts expected to be $25,000 or more, except contracts with individuals.

2. Rulemakings that simplify or streamline r egulations and re duce or eliminate unjustified burdens. The Department plans to:

• Revise the FAR to delete part 2 of the SF 330, whic h colle cts general qualifications data not related to a particular planned contract action. The Online Representations and Certifications Application (ORCA) now collects this data centrally from interested Architect-Engineer vendors at the time they complete the other representations and certifications in ORCA;

• Revise the FAR to incorporate changes from a final Department of Labor rule that removes the requirem ent to submit complete social secu rity numbers and home addresses of individual workers in weekly payroll submissions. Remo val of this personal information from payroll records avoids unnecessary disclosure issues;

• Finalize the revision of DFARS requirement s for reporting the loss, theft, damage, or destructio n of Government property;

• Review of the DFARS requirements for reporting Government Furnished Equipment and Government Furni shed Material in the DoD Item Unique Identificati on (IUID) registry;

• Remove the DFARS requirement to use DD Forms 2626 and 2631 to report past performance information for construction and architect/engine er services instead of the standard FAR procedures;

• Revise the DFARS to permit offerors to provide alternative line-ite m stru cture from that sho wn in the solicitation to reflect the offeror’s business practices for selling and billing commercial items and initial provisioning spares for weapon systems;

• Delete redundant DFARS text that limits pl acement of orde rs a gainst contracts with contractors that have been debarred suspended or proposed for debarment. This requirement is now incorporated into the FAR;

• Propose changes to simplify and clarify the DF ARS coverag e of patents, data, and copyrights, dramatically reducing the amount of regulato ry text and the number of required clauses;

• Simplify and clarify the DFARS coverage of multiyear acquisitions;

• Establish a method in the DFARS for electronic issuance of orders; and

• Improve the contract c l os eout process. 3. Regulations of Particular Interest to Small Business Of interest to small businesses are regulations to:

• Implement in the FAR changes to the re quirem ent for small disa dvantaged businesses certification;

• Revise the FAR to implement changes in t he HUBZo ne Prog ram, in accordance with Small Business Administration regulations;

• Consider revisions to the FAR to address t he findings of the Rothe case that Federal contracting progra m s for minority-owned and othe r small businesses that implement 10 U.S.C. 2323 are “facially” unconstitutional;

• Establish a DoD program to enhance participation of Historically Black Colleges and Universities a nd Minority-Serving Instit utions in defense research programs;

• Conform the DFARS to the FAR with respect to the use of the Electronic Subcon tractingReporting System; and

• Require public disclosure of justificati on and ap proval documents for noncompetitive 8(a) contracts over $20 million.

4. Regulations with international effects or interest
Of international effect or interest a re regulatio ns to:

• Implement in the FAR statutory certification requirement that each offeror does not engage in any activity for whi c h sanctions may be imposed under section 5 of the Iran Sanctions Act. Also implements a procurement prohibition rela ting to contracts with persons that export sensitive technology to Iran;

• Establish in the FAR processes and criteria fo r waiver of the pro h i bition on contracting with entities that conduct restrict ed business operations in Sudan;

• Implement in the DFARS the determinat ions regardin g partici pation of South Caucasus/Central and South Asian states in acquisitions in support of operations in Afghanistan;

• Finalize the FAR rule that prohibits Government contracts with any foreign in co rporated entity that is treated as an inverted domestic corporation under section 835(b) of the Homeland Security Act of 2002 or any subsidiary of such entity;

• Implement in the FAR and DFARS the annual co nsolidated appropriation act exemption from the Buy American Act/Balan ce of Payme nts Progra m restrictions on the acquisition of foreign commercial information technology items as construction material; and

• Finalize in the FAR and DFARS the rules that increase trad e ag reements thresholds, as specified by the United St ates Trade Representative. Specific DoD Priorities: For this Regulatory Plan, there are seven sp ecific Do D priorities, all of which reflect the established regulatory principles. In those ar eas where rulemaking or participation in the regulatory process is required, DoD has st udied and developed policy and regulations that incorporate the provisions of the President's pr iorities and objectives under the Executive order. DoD has focused its regulatory resources on the most serious environmental, health, and safety risks. Perhaps most significant is that eac h of the priorities described below promulgates regulations to offset the resource impacts of Federal decisions on the public or to improve the quality of public life, such as those regulations concerning acquisition, security, homeowners, education, and health affairs.

1. Regulatory Program of the U.S. Army Co rps of Enginee rs

In 1988, the Army Corps of Engineers publis hed a s appendix B of 33 CFR p art 325, a rule that governs compliance with the National Environment al Policy Act (NEPA) for the Army’s Regulatory Program. On April 2, 2010, the Assistant Secretary of the Army for Civil Works announced that the Army Corps of Engineers would conduct rulemaking to modify appendix B to reflect a limited change in policy addressing permit applications for surface coal mining activities in Appalachia. The modification of appendix B will focus on the N EPA scope of review for co nsidering the effects of surface coal mining in Appalachia on the aquat ic environment, to enhance protection of aquatic
resources.

2. Defense Procurement and Acquisition PolicyThe Department of Defense contin uously reviews the DFARS and continues to lead Government efforts to:

• Revise the DFARS to implement the Weapons System Acquisition Reform Act of 2009 – including a c quisition strategies to ensure co mpetition throughout life-cycle of major defense acquisition programs and address organizational conflicts of interest in major defense acquisition programs;

• Revise DFARS to ensure continuation of contract o rse rvices in support of mission essential functions during an emergency, such as an influenza pandemic;

• Clarify DoD policy in the DFARS regarding t he definition and a dmin istration of contractor business systems to improve the effectivenes s of DCMA/DCAA oversight of contractor business systems;

• Implement in the DFARS statutory requirement to inspect military facilities, infrastructure, and equipment for safety and h abitability prio r to use;

• Revise the FAR to implement the Executive or ders rela ting to allowability of labor relatio ns costs, non-displacement of qualified workers, notification of employee rights under Federal labor laws, and Federal leadership in environmental, energy, and economic performance;

• Revise the FAR to adopt biobased procurement pr eferen ce s and collect contractor information on use of biobased products;

• Revise the FAR to address service contractoremployee personal conflicts of interest and organizationa l conflict s of interest and limi t contractor access to information; and

• Provide enhanced competition for task- and de liver y-orde r contracts and additional market research before awarding a task or delivery orde r in excess of the simplified acquisition threshold.
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. Logistics and Materiel Readin e ss, Department of Defense The Department of Defense published or plan s to publi s h rul es on co ntractors supporting the military in contingency operations:

• Final Rule: Private Security Contractors (PSC s) Ope r ating in Contingency Operations. In order to meet the mandate of section 862 of the 2008 National Defense Authorization Act, this rule establishes policy, assigns responsibilities and provid es procedures for the regulation of the selection, accountability, training, equipping, and conduct of personnel performing private security functions under a covered contract during contingency operations. It also assigns responsibilities and establishes procedures for incident reporting, use of and accountability for equipment, rules for the use of force, and a process for administrative action or the removal, as appropriate, of PSCs and PSC personnel. DoD published an interim final rule on July 17, 2009 (74 FR 34690 to 34694) with an effective date of July 17, 2009. The comment period end ed August 31, 2009. DoD, in coordination with the Department of State and the United States Agency for International Development, have prepared a final rule, which includes the responses to the public comments, and incorporates changes to the interim final rule, where appropriate. The final rule is expected to be published the first or second quarter of FY 2011.

• Interim Final Rule: Operational Contract Suppor t for Contin gen cy Operations. This rule will incorporate the latest changes and lessons learned into policy and procedures for program management for the preparation and execution of contracted support and the integration of DoD contractor personnel into military contingency o perations outside the United States. DoD anticipates publishing the interim final rule in the first or second quarter of FY 2011. 4. Installations and Environment, Department of Defense The Department of Defense published a rule to assist eligible military and civilian Federal employee h om eowne rs:• Final Rule: This rule authorizes the Homeowners Assistance Program (HAP) under section 3374 of title 42, United States Code, to assist eligible military and civilian Federal employee homeowners when the real estate market is adversely affected by closure or reduction-inscope of operations. In accordance with DoD Directive 5101.1, “DoD Executive Agent,” designates the Secretary of the Army as the DoD Executive Agent for administering, managing, and executing the HAP. Additionally, th is rule allows the Department of Defense to temporarily expand the existing HAP in compliance with section 1001 of the American Recovery and Reinvestment Act of 2009. This temporary expansion covers certain persons affected by BRAC 2005, certain persons on pe rmanent change of station orders, and certain wounded persons and surviving spouses. This rule updates policy, delegates authority, and assigns responsibilities for managing Expanded H AP. This is an economically significant rule. DoD published an interim final rule on September 30, 2009 (74 FR 50109-50115), with an effective date of September 30, 2009. The comment period ended October 30, 2009. The final rule published November 16, 2010 (75 FR 69871) with an effective date of January 18, 2011. 5. Military Personnel Policy, Department of Defense The Department of Defense published or plans to publish a rule implementing the Post-9/11 Veterans Educ ational Assistance Act of 2008, title V, Public Law 110-252 (the “Post-9/11 GI Bill”):

• Interim Final Rule: This rule establishes policy, assigns responsibilities, and prescribes procedures for carrying out the Post-9/11 GI Bill. It estab lishes policy for the use of supplemental educational assistance “kickers,” fo r members with critical skills or specialties, or for members serving additional service; fo r authorizing the transferability of education benefits; and for the DoD Education Benefits Fund Board of Actuaries. DoD published an interim final rule on June 25, 2009 (74 FR 30212 to 30220) with an effective date of June 25, 2009. The comment period ended July 27, 2009. DoD anticipates finalizing this rule in the spring of 2011. 6. Military Community and Family Policy, Department of Defense The Dep artment of Defe nse p ublished or plans to publish a rule to implement policy, assign responsibilities, and prescribe procedures for the operation of voluntary education programs within DoD.

• Proposed Rule: This rule implements policy, assigns responsibilities, and prescribes proc ed ures for the operation of voluntary education programs within DoD. Included are: Procedures for Service members participating in education programs; guidelines for establishing, maintaining, and operating vo luntary education programs; procedures for obtaining on-base voluntary education programs and services; minimum criteria for selecting institutions to deliver highereducation programs and services on military installations; and the Memorandum of Understanding between educational institutions and DoD prior to the disbursement of tuition assistance funds. Th is is an economically significant rule. The proposed rule published August 6, 2010 (75 FR 47504-47515). The comment period ends October 5, 2010. DoD anticipates finalizing th is rule in the spring or fall of FY 2011. 7. Health Affairs, Department of Defense The Department of Defense is able to meet its dual mission of wartime readiness and peacetime health care by operatin g an e xtensive network of medical treatment facilities. This network includes DoD’s own military treatment facilities supplemented by civilian health care providers, facilities, and services under c ontract to DoD through the TRICARE program. TRICARE is a major health care program des igned to improve the management and integration of DoD’s health care delivery system. The program’s goal is to increase access to health care services, improve health care quality, and control health care costs. The TRICARE Management Activity has published or plans to publish the following rules:

• Final rule on CHAMPUS/TRICARE: Inclusion of TRICARE Retail Pharmacy Program in Fede ral Procurement of Pharmaceuticals. This rule provided an additional opportunity for comment on the final rule of March 17, 2009, im plementing provisions of section 703 of theNational Defense Authorization Act for Fiscal Year 2008. This statute extended pharmaceutical Federal Ceiling Prices to TRIC ARE Retail Pharmacy Program prescriptions. The Department of Defense (DoD) issued a final rule on March 17, 2009, implementing the law. On November 30, 2009, the U.S. District Co urt for the District of Columbia “ordered that the final rule is remanded without vacatur fo r the Defense Department to consider in its discretion whether to readopt the current iterat ion of the rule or adopt another approach to implement 10 U.S.C. 1074g(f).” As part of DoD's reconsideration, DoD solicited public comments on the implementation of the statute, DoD's resulting regulations, and the matters addressed for DoD's consideration in the Cour t's Memorandum Opinion. The proposed rule was published February 9, 2010 (75 FR 6335-6336). The comment period ended on March 11, 2010. DoD anticipates publishing a second fi nal rule in the first quarter of FY 2011.

• Final rule on TRICARE: Relationship Be tween the TRICARE Pro g ram and EmployerSponsored Group Health Coverage. This rule implements section 1097c of title 10, United States Code. This law prohibits employers fr om offering incentives to TRICARE-eligible employees to not enroll, or to terminate enrollment, in an employer-offered Group Health Plan (GHP) that is or would be primary to TR ICARE. Cafeteria plans that comport with section 125 of the Internal Revenue Code will be permissible so long as the plan treats all employees the same and does not illegally take TRICARE eligibility into account. The proposed rule was published March 28, 2008 (73 FR 16612). The comment period ended May 27, 2008. The final rule published April 9, 2010 (75 FR 18051 to 18055) with an effective date of June 18, 2010.

• Proposed rule on TRICARE: Sole Community Hospital Payment Reform. This rule impleme n ts the statutory provision in section 1079(j)(2) of title 10, United States Code that TRICARE payment methods for institutional care shall be determined to the extent practicable in accordance with the same reimbursement rules as those that apply to payments to providers of services of the sa me type under Medicare. This proposed rule implements a reimbursement methodology similar to that furnished to Medicare beneficiaries for services provided by sole community hos pitals. DoD anticipates publishing a proposed rule in the first or second quarter of FY 2011.

• Proposed rule on TRICARE: Long Term Care Ho spital Prosp e ctive Payment System. This rule adopts a reimbursement methodology for Long Term Care Hospitals similar to Medicare’s Long Term Care Hospital Pros pective Payment System. DoD anticipates publishing a proposed rule in the spring of FY 2011. 8. Networks and Information Integration, Department of Defense The Department of Defense will publish a rule regarding Defense Industrial Base Voluntary Cyber Security and Informa t ion A ssurance Information Sharing:

• Interim Final Rule: This rule establishes cy ber threat i n formation sharing, reporting, and analysis mechanisms between DoD and cleared Defe nse Industrial Base (DIB) contractors to enhance cyber threat situational awareness and threat response. The rule establishes a voluntary information sharing environment wi th DIB partners to address the unacceptable risk and imminent threat to national and economic security stemming from the unauthorized access by U.S. adversaries or business competit ors to critical DoD unclassified information resident on, or transiting, DIB unclassified netwo rks. The rule describes the collaborative DoD and DIB corporate-level partnership to enhan ce security of DIB networks; increase USG and industry knowledge of adv anced cyber threats; provide near-real time cyber threat information sharing and understand the impact of data compromise on DoD operational activities. Participation in the DIB Cyber Secu rity/Information Assurance program is voluntary and open to all qualified cleared contractors. DoD anticipates publishing an interim final rule in the second quarter of FY 2011.The 2 Actions Described in the Regulatory Plan

Title Regulation Identifier Number Rulemaking Stage

TRICARE; Reimbursement of Sole Community Hospitals 0720-AB41 Proposed Rule Stage
Voluntary Education Programs 0790-AI50 Final Rule Stage

Department of Defense (DOD) Office of Assistant Secretary for Health Affairs ( DODOASHA ) RIN: 0720-AB41

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Title: TRICARE; Reimbursement of Sole Community Hospitals Abstract: This proposed rule is to implement the statutory provision at 10 U.S.C. 1079(j)(2) that TRICARE payment methods for institutional care be determined, to the extent practicable, in accordance with the same reimbursement rules as those that apply to payments to providers of services of the same type under Medicare. This proposed rule implements a reimbursement methodology similar to that furnished to Medicare beneficiaries for inpatient services provided by Sole Community Hospitals (SCHs). It will be phased in over a several-year period.

Priority: Economically Significant Agenda Stage of Rulemaking: Proposed Rule Major: Yes Unfunded Mandates: No CFR Citation: 32 CFR 199 (To search for a specific CFR, visit the Code of Federal Regulations ) Legal Authority: 5 USC 301; 10 USC ch 55 Legal Deadline: None

Regulatory Plan: Statement of Need: This rule is being published to implement the statutory provision in 10 U.S.C. 1079(j)(2), that TRICARE payment methods for institutional care be determined, to the extent practicable, in accordance with the same reimbursement rules as apply to payments to providers of services of the same type under Medicare. This proposed rule implements a reimbursement methodology similar to that furnished to Medicare beneficiaries for inpatient services provided by Sole Community Hospitals.

Legal Basis: There is a statutory basis for this proposed rule: 10 U.S.C. 1079(j)(2).

Alternatives: Alternatives were considered for phasing in the needed reform and an alternative was selected for a gradual, smooth transition.

Costs and Benefits: We estimate the total reduction (from the proposed changes in this rule) in hospital revenues under the SCH reform for its first year of implementation (assumed for purposes of this RIA to be FY 2011), compared to expenditures in that same period without the proposed SCH changes, to be approximately $190 million. The estimated impact for FYs 2012 through 2015 (in $ millions) is $208, $229, $252, and $278 respectively.

Risks: Failure to publish this proposed rule would result in noncompliance with a statutory provision. Timetable:
Action Date FR Cite
NPRM 12/00/2010

Regulatory Flexibility Analysis Required: Business; Organizations Government Levels Affected: No

Federalism: No Energy Affected: No Agency Contact: Marty Maxey Department of Defense Office of Assistant Secretary for Health Affairs 1200 Defense Pentagon Washington , DC 20301 Phone: 303 676-3627Department of Defense (DOD) Office of the Secretary ( OS ) RIN: 0790-AI50

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Title: Voluntary Education Programs Abstract: This rule implements policy, assigns responsibilities, and prescribes procedures for the operation of voluntary education programs within DoD. Included are: Procedures for Service members participating in education programs; guidelines for establishing, maintaining, and operating voluntary education programs, including but not limited to, instructor-led courses offered on-installation and off-installation, as well as via distance learning; procedures for obtaining on-base voluntary education programs and services; minimum criteria for selecting institutions to deliver higher education programs and services on military installations; the establishment of a DoD Voluntary Education Partnership Memorandum of Understanding between DoD and educational institutions receiving tuition assistance payments; and procedures for other education programs for Service members and their adult family members.

Priority: Economically Significant Agenda Stage of Rulemaking: Final Rule Major: Yes Unfunded Mandates: No CFR Citation: 32 CFR 68 (To search for a specific CFR, visit the Code of Federal Regulations ) Legal Authority: 10 USC 2005; 10 USC 2007 Legal Deadline: None

Regulatory Plan: Statement of Need: This rule implements policy, assigns responsibilities, and prescribes procedures for the operation of voluntary education programs within DoD. Included are: Procedures for Service members participating in education programs; guidelines for establishing, maintaining, and operating voluntary education programs, including but not limited to, instructor-led courses offered on-installation and off-installation, as well as via distance learning; procedures for obtaining on-base voluntary education programs and services; minimum criteria for selecting institutions to deliver higher education programs and services on military installations; the establishment of a DoD Voluntary Education Partnership Memorandum of Understanding between DoD and educational institutions receiving tuition assistance payments; and procedures for other education programs for Service members and their adult family members.

Legal Basis: sections 2005 and 2007 of title 10, United States Code

Alternatives: None.

Costs and Benefits: Voluntary Education Programs include: High School Completion /Diploma; Military Tuition Assistance (TA); Postsecondary Degree Programs; Independent Study and Distance Learning Programs; College Credit Examination Program; Academic Skills Program; and Certification/Licensure Programs. Funding for Voluntary Education Programs during 2009 was $800 million, which included tuition assistance and operational costs. This funding provided more than 650,000 individuals (Service members and their adult family members) the opportunity to participate in Voluntary Education Programs around the world.

Risks: None. Timetable:
Action Date FR Cite
NPRM 08/06/2010 75 FR 47504 NPRM Comment Period End 10/05/2010
Final Action 04/00/2011

Regulatory Flexibility Analysis Required: No Government Levels Affected: No Small Entities Affected: No Federalism: No Energy Affected: No Agency Contact: Kerrie Tucker Department of Defense Office of the Secretary Defense Pentagon Washington , DC 20301 Phone: 703 602-4949 Extension: 117