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[Federal Register Volume 76, Number 125 (Wednesday, June 29, 2011)]
[Rules and Regulations]
[Pages 38048-38050]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-16316]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 212 and 252

RIN 0750-AH27

Defense Federal Acquisition Regulation Supplement; Pilot Program 
for Acquisition of Military-Purpose Nondevelopmental Items (DFARS Case 
2011-D034)

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

ACTION: Interim rule.

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SUMMARY: DoD is issuing an interim rule to amend the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement section 866 of 
the National Defense Authorization Act for Fiscal Year 2011. Section 
866 authorized the Secretary of Defense to establish a pilot program to 
assess the feasibility and advisability of acquiring military-purpose 
nondevelopmental items in accordance with the streamlined procedures of 
the pilot program.

DATES: Effective Date: June 29, 2011.
    Comment date: Comments on the interim rule should be submitted in 
writing to the address shown below on or before August 29, 2011, to be 
considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2011-D034, 
using any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov. Submit comments 
via the Federal eRulemaking portal by inputting ``DFARS Case 2011-
D034'' under the heading ``Enter keyword or ID'' and selecting 
``Search.'' Select the link ``Submit a Comment'' that corresponds with 
``DFARS Case 2011-D034.'' Follow the instructions provided at the 
``Submit a Comment'' screen. Please include your name, company name (if 
any), and ``DFARS Case 2011-D034'' on your attached document.
    [cir] E-mail: dfars@osd.mil. Include DFARS Case 2011-D034 in the 
subject line of the message.
    [cir] Fax: 703-602-0350.
    [cir] Mail: Defense Acquisition Regulations Council, Attn: Mr. 
Manuel Quinones, OUSD(AT&L)DPAP(DAR), Room 3B855, 3060 Defense 
Pentagon, Washington, DC 20301-3060.
    Instructions: Please submit comments only and cite ``DFARS Case 
2011-D034'' in all correspondence related to this case. All comments 
received will be posted without change to http://www.regulations.gov, 
including any personal information provided.
    To confirm receipt of your comment(s), please check http://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: Mr. Manuel Quinones, telephone 703-
602-8383.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 866 of the National Defense Authorization Act (NDAA) for 
Fiscal Year (FY) 2011 (Pub. L. 111-383), enacted on January 7, 2011, 
authorized the Secretary of Defense to carry out a pilot program to 
assess the feasibility and advisability of acquiring military-purpose 
nondevelopmental items in accordance with the streamlined procedures of 
the pilot program. The authority for this pilot program expires on 
January 6, 2016. Under this pilot program, DoD may enter into contracts 
with nontraditional defense contractors for the purpose of--

    --Enabling DoD to acquire items that otherwise might not have been 
available to DoD;
    --Assisting DoD in the rapid acquisition and fielding of 
capabilities needed to meet urgent operational needs; and
    --Protecting the interests of the United States in paying fair and 
reasonable prices for the item or items acquired.

    This pilot program is designed to test whether the streamlined 
procedures, similar to those available for commercial items, can serve 
as an effective incentive for nontraditional defense contractors to (1) 
channel investment and innovation into areas that are useful to DoD and 
(2) provide items developed exclusively at private expense to meet 
validated military requirements.

[[Page 38049]]

II. Executive Orders 12866 and 13563

    Executive Orders 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). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This is a significant regulatory action and, therefore, 
was subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

III. Regulatory Flexibility Act

    DoD has prepared an initial regulatory flexibility analysis 
consistent with 5 U.S.C. 604. A copy of the analysis may be obtained 
from the point of contact specified herein. The analysis is summarized 
as follows.
    DoD is issuing an interim rule to amend the DFARS to implement 
section 866 of the National Defense Authorization Act for Fiscal Year 
2011 (Pub. L. 111-383). Section 866 authorized the Secretary of Defense 
to establish a pilot program to assess the feasibility and advisability 
of acquiring military-purpose nondevelopmental items.
    The objective of this rule is to establish a new DoD pilot program 
at DFARS Subpart 212.71, entitled Pilot Program for Acquisition of 
Military-Purpose Nondevelopmental Items. Under this pilot program, DoD 
may enter into contracts with nontraditional defense contractors for 
the purpose of (1) Enabling DoD to acquire items that otherwise might 
not have been available to DoD; (2) assisting DoD in the rapid 
acquisition and fielding of capabilities needed to meet urgent 
operational needs; and (3) protecting the interests of the United 
States in paying fair and reasonable prices for the item or items 
acquired. It is anticipated that items similar to commercial all-
terrain vehicles or programmable robots, which can be modified for use 
in a contingency environment, may result from use of this authority. 
The legal basis is section 866 of the National Defense Authorization 
Act for Fiscal Year 2011.
    Since this is a new pilot program, data to support potential impact 
to small entities is not yet available. Consistent with the overall 
purpose of the program to attract nontraditional defense contractors, 
DoD anticipates that this rule will have a positive economic impact to 
small entities.
    The interim rule affects contractors that are not currently 
performing and have not performed, for at least the one-year period 
preceding the solicitation of sources by DoD for the procurement or 
transaction, any of the following for DoD--

    --Any contract or subcontract that is subject to full coverage 
under the cost accounting standards prescribed pursuant to section 26 
of the Office of Federal Procurement Policy Act (41 U.S.C. 1502) and 
the regulations implementing such section; or
    --Any other contract in excess of the certified cost or pricing 
data threshold under which the contractor is required to submit 
certified cost or pricing data.

    This interim rule does not impose any new reporting, recordkeeping 
or other compliance requirements on contractors. There are no rules 
that duplicate, overlap or conflict with this rule. There are no known 
significant alternatives to the rule.
    Accordingly, DoD does not expect this 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.
    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 2011-D034) in 
correspondence.

IV. Paperwork Reduction Act

    The rule does not impose 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).

V. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comments. The rule 
implements section 866 of the National Defense Authorization Act for 
Fiscal Year 2011 (Pub. L. 111-383). Section 866 was effective upon 
enactment on January 7, 2011. This action is necessary as DoD continues 
to search for ways to acquire and deploy innovative technologies and 
solutions to meet urgent operational needs. Without this interim rule, 
DoD will be unable to test whether the streamlined procedures similar 
to those available for commercial items can serve as an effective 
incentive for non-traditional defense contractors to (1) channel 
investment and innovation into areas that are useful to DOD and (2) 
provide items developed exclusively at private expense to meet 
validated military requirements.

List of Subjects in 48 CFR Parts 212 and 252

    Government procurement.

Mary Overstreet,
Editor, Defense Acquisition Regulations System.
    Therefore, 48 CFR parts 212 and 252 are amended as follows:

0
1. The authority citation for 48 CFR parts 212 and 252 continues to 
read as follows:

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

PART 212--ACQUISITION OF COMMERCIAL ITEMS

0
2. Amend part 212 by adding new subpart 212.71 to read as follows:

Subpart 212.71--Pilot Program for Acquisition of Military-Purpose 
Nondevelopmental Items

212.7100 Scope.
212.7101 Definitions.
212.7102 Pilot program.
212.7103 Solicitation provision.
212.7100 Scope.

    This subpart establishes the pilot program authorized by section 
866 of the National Defense Authorization Act for Fiscal Year 2011 
(Pub. L. 111-383).

212.7101  Definitions.

    Military-purpose nondevelopmental item, nondevelopmental item, and 
nontraditional defense contractor, as used in this subpart, are defined 
in the provision at 252.212-7002.

212.7102  Pilot program.

212.7102-1  Contracts under the program.

    The contracting officer may enter into contracts with 
nontraditional defense contractors for the acquisition of military-
purpose nondevelopmental items. See PGI 212.7102 for file documentation 
requirements. Each contract entered into under the pilot program 
shall--
    (a) Be awarded using competitive procedures;

[[Page 38050]]

    (b) Be a firm-fixed-price contract, or a fixed-price contract with 
an economic price adjustment clause;
    (c) Be in an amount not in excess of $50 million;
    (d) Provide--
    (1) For the delivery of an initial lot of production quantities of 
completed items not later than nine months after the date of the award 
of such contract; and
    (2) That failure to make delivery as provided for under paragraph 
(d)(1) may result in termination for cause; and
    (e) Be--
    (1) Exempt from the requirement to submit certified cost or pricing 
data;
    (2) Exempt from the cost accounting standards under section 26 of 
the Office of Procurement Policy Act (41 U.S.C. 1502); and
    (3) Subject to the requirement to provide data other than certified 
cost or pricing data for the purpose of price reasonableness 
determinations.

212.7102-2  Reporting requirements.

    Departments and agencies shall prepare a consolidated annual report 
to provide information about contracts awarded under this pilot 
authority. The report shall be submitted to the Office of the Deputy 
Director, Defense Procurement and Acquisition Policy (Contract Policy 
and International Contracting), by October 31 each year in accordance 
with the procedures at PGI 212.7102. See PGI 212.7102 for annual 
reporting format.

212.7102-3  Sunset of the pilot authority.

    (a) The authority to carry out the pilot program described in this 
subpart expires on January 6, 2016.
    (b) The expiration under paragraph (a) of this section of the 
authority to carry out the pilot program will not affect the validity 
of any contract awarded under the pilot program before the expiration 
of the pilot program under that paragraph.

212.7103  Solicitation provision.

    Use the provision at 252.212-7002, Pilot Program for Acquisition of 
Military-Purpose Nondevelopmental Items, in all solicitations that meet 
the applicability criteria of 212.7102-1 for this pilot program.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
3. Amend part 252 by adding new section 252.212-7002 to read as 
follows:

252.212-7002  Pilot Program for Acquisition of Military-Purpose 
Nondevelopmental Items.

    As prescribed in 212.7103, use the following provision:

PILOT PROGRAM FOR ACQUISITION OF MILITARY-PURPOSE NONDEVELOPMENTAL 
ITEMS (JUN 2011)

    (a) Definitions. As used in this provision--
    Military-purpose nondevelopmental item means a nondevelopmental 
item that meets a validated military requirement, as determined in 
writing by the responsible program manager, and has been developed 
exclusively at private expense. An item shall not be considered to 
be developed at private expense if development of the item was paid 
for in whole or in part through--
    (1) Independent research and development costs or bid and 
proposal costs, per the definition in FAR 31.205-18, that have been 
reimbursed directly or indirectly by a Federal agency or have been 
submitted to a Federal agency for reimbursement; or
    (2) Foreign government funding.
    ``Nondevelopmental item'' is defined in FAR 2.101 and for the 
purpose of this subpart also includes previously developed items of 
supply that require modifications other than those customarily 
available in the commercial marketplace if such modifications are 
consistent with the requirement of DFARS 212.7102-2(d)(1).
    Nontraditional defense contractor means an entity that is not 
currently performing and has not performed, for at least the one-
year period preceding the solicitation of sources by the Department 
of Defense for the procurement or transaction, any of the following 
for the Department of Defense--
    (1) Any contract or subcontract that is subject to full coverage 
under the cost accounting standards prescribed pursuant to Section 
26 of the Office of Federal Procurement Policy Act (41 U.S.C. 
section 1502) and the regulations implementing such section; or
    (2) Any other contract in excess of the certified cost or 
pricing data threshold under which the contractor is required to 
submit certified cost or pricing data.
    (b) Notice. This is a procurement action under section 866 of 
the National Defense Authorization Act for Fiscal Year 2011, Pilot 
Program for Acquisition of Military-Purpose Nondevelopmental Items, 
and is subject to the limitations outlined in DFARS 212.7102.
    (c) Representation. By submission of its offer, the offeror 
represents that it is a nontraditional defense contractor.

(End of provision)
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[FR Doc. 2011-16316 Filed 6-28-11; 8:45 am]
BILLING CODE 5001-08-P
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