[Federal Register Volume 88, Number 245 (Friday, December 22, 2023)]
[Proposed Rules]
[Pages 88554-88558]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27941]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 212, 215, 234, and 252

[Docket DARS-2023-0047]
RIN 0750-AL83


Defense Federal Acquisition Regulation Supplement: Data 
Requirements for Commercial Products for Major Weapon Systems (DFARS 
Case 2023-D010)

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 implement a section of the James M. 
Inhofe National Defense Authorization Act for Fiscal Year 2023 that 
clarifies the data to be provided for certain procurements related to 
major weapon systems.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before February 20, 2024, to be 
considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2023-D010, using 
either of the following methods:
    [cir] Federal eRulemaking Portal: https://www.regulations.gov. 
Search for DFARS Case 2023-D010. Select ``Comment'' and follow the 
instructions to submit a comment. Please include ``DFARS Case 2023-
D010'' on any attached documents.
    [cir] Email: <a href="/cdn-cgi/l/email-protection#c5aab6a1eba1a3a4b7b685a8a4aca9eba8aca9"><span class="__cf_email__" data-cfemail="5b34283f753f3d3a29281b363a323775363237">[email protected]</span></a>. Include DFARS Case 2023-D010 in 
the subject line of the message.
    Comments received generally will be posted without change to 
https://www.regulations.gov, including any personal information 
provided. To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission 
to verify posting.

FOR FURTHER INFORMATION CONTACT: Ms. Jeanette Snyder, 703-508-7524.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD is proposing to revise the DFARS to implement section 803 of 
the James M. Inhofe National Defense Authorization Act (NDAA) for 
Fiscal Year (FY) 2023 (Pub. L. 117-263). Section 803 modifies 10 U.S.C. 
3455 to

[[Page 88555]]

provide additional guidance regarding data requirements to support a 
determination of commerciality and price reasonableness for certain 
procurements associated with major weapon systems.

II. Discussion and Analysis

    This rule proposes to modify DFARS 234.7002 to implement section 
803 of the James M. Inhofe NDAA for FY 2023. Section 803 clarifies the 
data an offeror is required to provide when a subsystem of major weapon 
system or a component or spare part for a major weapon system or 
subsystem is proposed as a commercial product. This proposed rule also 
clarifies the data to be provided to the contracting officer to 
determine price reasonableness for such actions. This proposed rule 
affords the offeror the flexibility to either submit the data or 
provide the contracting officer access to the data and to redact 
certain customer information.
    This proposed rule modifies the solicitation provision at DFARS 
252.215-7010, Requirements for Certified Cost or Pricing Data and Data 
Other Than Certified Cost or Pricing Data, to align with the revisions 
made to DFARS 234.7002. This proposed rule also makes conforming 
changes to DFARS parts 212 and 215 to add cross-references to DFARS 
234.7002.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT), for Commercial Products (Including Commercially 
Available Off-the-Shelf (COTS) Items), and for Commercial Services

    This proposed rule amends the provision at DFARS 252.215-7010, 
Requirements for Certified Cost or Pricing Data and Data Other Than 
Certified Cost or Pricing Data. However, this proposed rule does not 
impose any new requirements on contracts at or below the SAT, for 
commercial products including COTS items, or for commercial services. 
The provision will continue to apply to acquisitions at or below the 
SAT, to acquisitions of commercial products, excluding COTS items, and 
to acquisitions of commercial services.

IV. Expected Impact of the Rule

    DoD does not expect this proposed rule, when finalized, to have a 
significant impact on offerors because it merely clarifies the data an 
offeror is required to provide to the contracting officer when a 
subsystem of a major weapon system or a component or spare part of a 
major weapon system or subsystem is proposed as a commercial product. 
Specifically, this proposed rule clarifies the data an offeror is 
required to provide to support the contracting officer's determination 
of price reasonableness and commerciality. This proposed rule will also 
allow an offeror to give the contracting officer access to the data, in 
lieu of submitting it, and to redact certain customer information from 
such data.
    This proposed rule is expected to result in the timely submission 
of data, which may decrease the time it takes for a contracting officer 
to determine a product to be commercial, to determine price 
reasonableness, and to award the contract.

V. 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, as amended.

VI. Regulatory Flexibility Act

    DoD does not expect this proposed rule, when finalized, 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 this rule merely clarifies the data to be provided for 
certain procurements related to major weapon systems. However, an 
initial regulatory flexibility analysis has been performed and is 
summarized as follows:
    This proposed rule is necessary to implement section 803 of the 
James M. Inhofe National Defense Authorization Act (NDAA) for Fiscal 
Year (FY) 2023. Section 803 clarifies the data an offeror is required 
to provide when a subsystem of a major weapon system or a component or 
spare part for a major weapon system or subsystem is proposed as a 
commercial product. Section 803 also clarifies the data to be provided 
to the contracting officer to determine price reasonableness for such 
actions. In addition, section 803 affords the offeror the flexibility 
to either submit the data or provide the contracting officer access to 
the data and to redact certain customer information.
    The objective of this proposed rule is to implement section 803 of 
the James M. Inhofe NDAA for FY 2023, which modifies 10 U.S.C. 3455. 
The legal basis of the rule is section 803 of the James M. Inhofe NDAA 
for FY 2023.
    Based on data from the Federal Procurement Data System for fiscal 
years 2021 through 2023, DoD awarded an average of approximately 50,260 
commercial contracts related to major weapon systems to an average of 
2,685 unique small entities per year. Therefore, this proposed rule is 
expected to apply to approximately 2,685 small entities per fiscal 
year.
    This proposed rule does not impose any new reporting, 
recordkeeping, or other compliance requirements for small entities. The 
information being collected falls under the currently approved 
information collection recordkeeping requirements under OMB control 
number 0704-0574, Defense Federal Acquisition Regulation Supplement 
(DFARS) Part 215; Only One Offer and Related Clauses in DFARS 252.
    This proposed rule does not duplicate, overlap, or conflict with 
any other Federal rules.
    There are no known alternatives that would accomplish the stated 
objectives of the applicable statute.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this proposed rule on 
small entities.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this proposed 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 2023-
D010), in correspondence.

VII. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) applies to this 
proposed rule. However, these changes to the DFARS do not impose 
additional information collection requirements to the paperwork burden 
previously approved by the Office of Management and Budget (OMB) under 
OMB Control Number 0704-0574, entitled Defense Federal Acquisition 
Regulation Supplement (DFARS) Part 215; Only One Offer and Related 
Clauses in DFARS 252.

[[Page 88556]]

List of Subjects in 48 CFR Parts 212, 215, 234, and 252

    Government procurement.

Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 212, 215, 234, and 252 are proposed to be 
amended as follows:

0
1. The authority citation for parts 212, 215, 234, and 252 continues to 
read as follows:

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

PART 212--ACQUISITION OF COMMERCIAL PRODUCTS AND COMMERCIAL 
SERVICES

0
2. Amend section 212.102 by revising paragraph (a)(iii)(A) to read as 
follows:


212.102  Applicability.

    (a) * * *
    (iii) * * *
    (A) Determine in writing that the acquisition meets the 
``commercial product'' or ``commercial service'' definition in FAR 
2.101. See 234.7002(b) and (c) for subsystems of major weapon systems 
and components and spare parts of major weapon systems and subsystems;
* * * * *
0
3. Amend section 212.209 by revising paragraph (a)(1) to read as 
follows:


212.209  Determination of price reasonableness.

    (a) * * *
    (1) In the case of major weapon systems, for subsystems of major 
weapon systems and components and spare parts of major weapon systems 
and subsystems acquired as commercial products in accordance with 
subpart 234.70, shall use information submitted under 234.7002(e); and
* * * * *

PART 215--CONTRACTING BY NEGOTIATION

0
4. Amend section 215.403-1 by revising paragraph (c)(3)(A) to read as 
follows:


215.403-1  Prohibition on obtaining certified cost or pricing data (10 
U.S.C. chapter 271 and 41 U.S.C. chapter 35).

* * * * *
    (c) * * *
    (3) * * *
    (A) Follow the procedures at PGI 215.403-1(c)(3) for pricing 
commercial products or commercial services, except see 234.7002(e) for 
pricing commercial subsystems of major weapon systems and components 
and spare parts of major weapon systems and subsystems.
* * * * *


215.403-3  [Amended]

0
5. Amend section 215.403-3 in paragraph (c) by removing ``234.7002(d)'' 
and adding ``234.7002(e)'' in its place.

PART 234--MAJOR SYSTEM ACQUISITION

0
6. Amend section 234.7002--
0
a. By revising paragraph (b)(2);
0
b. By adding paragraph (b)(3);
0
c. By revising paragraphs (c)(1)(ii) and (c)(2);
0
d. By redesignating paragraph (d) as paragraph (e);
0
e. By adding a new paragraph (d); and
0
f. By revising newly redesignated paragraphs (e) introductory text, and 
(e)(1) through (3);
0
g. In newly redesignated paragraph (e)(4), by removing ``paragraph 
(d)(3)'' and ``paragraphs (d)(1) and (2)'' and adding ``paragraph 
(e)(1)'' in their places; and
0
h. In newly redesignated paragraph (e)(5), by removing ``paragraphs 
(d)(1) and (2)'' and ``PGI 234.7002(d)(5)'' and adding ``paragraph 
(e)(1)'' and ``PGI 234.7002(e)(5)'' in their places, respectively.
    The revisions and additions read as follows:


234.7002  Policy.

* * * * *
    (b) * * *
    (2) The contracting officer determines in writing that the 
subsystem is a commercial product in accordance with 212.102(a)(iii). 
For a subsystem of a major weapon system proposed as a commercial 
product that has not previously been determined to be a commercial 
product (see 212.102(a)(ii)), follow the procedures in paragraph (d) of 
this section.
    (3) This paragraph (b) shall apply only to subsystems of major 
weapon systems that are acquired by DoD through a--
    (i) Prime contract;
    (ii) Modification to a prime contract; or
    (iii) Subcontract under a prime contract for the acquisition of a 
subsystem proposed as a commercial product that has not previously been 
determined to be a commercial product (see 212.102(a)(ii)).
    (c) * * *
    (1) * * *
    (ii) The contracting officer determines in writing that the 
component or spare part is a commercial product in accordance with 
212.102(a)(iii). For a component or spare part proposed as a commercial 
product that has not previously been determined to be a commercial 
product (see 212.102(a)(ii)), follow the procedures in paragraph (d) of 
this section.
    (2) This paragraph (c) shall apply only to components and spare 
parts that are acquired by DoD through a--
    (i) Prime contract;
    (ii) Modification to a prime contract; or
    (iii) Subcontract under a prime contract for the acquisition of a 
component or spare part proposed as a commercial product that has not 
previously been determined to be a commercial product (see 
212.102(a)(ii)).
    (d) Commerciality determination. To the extent necessary to make a 
commercial product determination in accordance with 212.102(a)(iii) 
that relies on paragraph (1), (2), (3), (4), or (5) of the ``commercial 
product'' definition at FAR 2.101 for a subsystem, component, or spare 
part as described in paragraphs (b) and (c) of this section, the 
contracting officer shall require the offeror to--
    (1) Identify the comparable commercial product the offeror sells to 
the general public or nongovernmental entities for other than 
governmental purposes;
    (2) Provide a comparison between the physical characteristics and 
functionality of the comparable commercial product and the subsystem, 
component, or spare part, including--
    (i) For products under paragraph (3)(i) of the ``commercial 
product'' definition at FAR 2.101, a description of the modification 
and documentation to support that the modification is customarily 
available in the marketplace; or
    (ii) For products under paragraph (3)(ii) of the ``commercial 
product'' definition at FAR 2.101, a detailed description of the 
modification and detailed technical data to demonstrate that the 
modification is minor (e.g., information on production processes and 
material differences); and
    (3) Provide the national stock number (NSN) for the comparable 
commercial product, if one is assigned, and the NSN for the subsystem, 
component, or spare part, if one is assigned; or
    (4) If the offeror does not sell a comparable commercial product to 
the general public or nongovernmental entities for other than 
governmental purposes--
    (i) Notify the contracting officer in writing that it does not sell 
such a comparable product; and
    (ii) Provide the contracting officer a comparison of the physical

[[Page 88557]]

characteristics and functionality of the comparable commercial product 
and the subsystem, component, or spare part, if available.
    (e) Relevant information to determine price reasonableness. For 
products relying on paragraph (3)(ii) of the commercial product 
definition at FAR 2.101, see FAR 15.403-1(c)(3)(iii)(C). See 212.209(a) 
for requirements of 10 U.S.C. 3453 with regard to market research.
    (1) Unless an exception at FAR 15.403-1(b)(1) or (2) applies--
    (i) To the extent necessary to make a determination of price 
reasonableness, the contracting officer shall require the offeror to 
submit or provide to the contracting officer access to a representative 
sample, as determined by the contracting officer, of prices paid for 
the same or similar commercial products under comparable terms and 
conditions by both Government and commercial customers and the terms 
and conditions of such sales.
    (ii) If the contracting officer determines that the offeror cannot 
provide or give access to sufficient information described in this 
paragraph (e)(1) to determine the reasonableness of price, the 
contracting officer shall require the offeror to submit or provide the 
contracting officer access to a representative sample, as determined by 
the contracting officer, of the prices paid for the same or similar 
commercial products sold under different terms and conditions and the 
terms and conditions of such sales.
    (2) The contracting officer shall allow the offeror to redact only 
information provided pursuant to paragraph (e)(1) of this section that 
identifies the customer, if the offeror certifies in writing for each 
sale that the customer is a--
    (i) Government customer (e.g., Federal, State, local, or foreign 
government);
    (ii) Commercial customer purchasing the product for governmental 
purposes; or
    (iii) Commercial customer purchasing the product for a commercial, 
mixed, or unknown purpose.
    (3) If the contracting officer determines--
    (i) That the information submitted pursuant to paragraph (e)(1) of 
this section is not sufficient to determine the reasonableness of price 
because the comparable commercial product(s) provided by the offeror 
are not a valid basis for a price analysis; or
    (ii) That the proposed price is not reasonable after evaluating 
sales data, then the contracting officer shall obtain approval from an 
official one level above the contracting officer, without power of 
delegation, to require the offeror to submit other relevant information 
regarding the basis for price or cost, including information on labor 
costs, material costs, and overhead rates.
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
7. Amend section 252.215-7010--
0
a. By removing the provision date ``JAN 2023'' and adding ``DATE'' in 
its place;
0
b. In paragraph (a) in the definition of ``Sufficient non-Government 
sales'' by removing ``by FAR'' and adding ``by Federal Acquisition 
Regulation (FAR)'' in its place;
0
c. By redesignating paragraphs (b)(1)(ii)(B) through (E) as 
(b)(1)(ii)(C) through (F);
0
d. By adding a new paragraph (b)(1)(ii)(B);
0
e. In paragraph (d)(1) by removing ``DFARS 215.402(a)(i) and 215.404-
1(b)'' and adding ``Defense Federal Acquisition Regulation Supplement 
(DFARS) 215.402(a)(i), 215.404-1(b), and 234.7002(e)'' in its place;
0
f. By redesignating paragraphs (d)(3) and (4) as (d)(4) and (5);
0
g. By adding a new paragraph (d)(3);
0
h. In newly redesignated paragraph (d)(4) by removing ``FAR 15.403-3'' 
and adding ``FAR 15.403-3 or DFARS 234.7002(e)'' in its place;
0
i. In Alternate I--
0
i. By revising the provision title and date;
0
ii. In paragraph (a) in the definition of ``Sufficient non-Government 
sales'' by removing ``by FAR'' and adding ``by Federal Acquisition 
Regulation (FAR)'';
0
iii. By redesignating paragraphs (b)(1)(ii)(B) through (E) as 
(b)(1)(ii)(C) through (F);
0
iv. By adding a new paragraph (b)(1)(ii)(B);
0
v. In paragraph (d)(1) by removing ``DFARS 215.402(a)(i) and 215.404-
1(b)'' and adding ``Defense Federal Acquisition Regulation Supplement 
(DFARS) 215.402(a)(i), 215.404-1(b), and 234.7002(e)'' in its place;
0
vi. By redesignating paragraphs (d)(3) and (4) as (d)(4) and (5);
0
vii. By adding a new paragraph (d)(3); and
0
viii. In newly redesignated paragraph (d)(4) by removing ``FAR 15.403-
3'' and adding ``FAR 15.403-3 or DFARS 234.7002(e)'' in its place.
    The additions and revision read as follows:


252.215-7010  Requirements for Certified Cost or Pricing Data and Data 
Other Than Certified Cost or Pricing Data.

* * * * *
    (b) * * *
    (1) * * *
    (ii) * * *
    (B) For subsystems of a major weapon system and components and 
spare parts of a major weapon system or subsystem of a major weapon 
system that have not previously been determined to be commercial--
    (1) The comparable commercial product the Offeror sells to the 
general public or nongovernmental entities;
    (2) A comparison between the physical characteristics and 
functionality of the comparable commercial product and the subsystem, 
component, or spare part, including--
    (i) For products under paragraph 3(i) of the ``commercial product'' 
definition at FAR 2.101, a description of the modification and 
documentation to support that the modification is customarily available 
in the marketplace; or
    (ii) For products under paragraph (3)(ii) of the ``commercial 
product'' definition at FAR 2.101, a detailed description of the 
modification and detailed technical data to demonstrate that the 
modification is minor (e.g., information on production processes and 
material differences); and
    (3) The national stock number (NSN) for the comparable commercial 
product, if one is assigned, and the NSN for the subsystem, component, 
or spare part, if one is assigned; or
    (4) If the Offeror does not sell a comparable commercial product to 
the general public or nongovernmental entities for purposes other than 
government purposes, the Offeror shall--
    (i) Notify the Contracting Officer in writing that it does not sell 
such a comparable product; and
    (ii) Provide the Contracting Officer with a comparison of the 
physical characteristics and functionality of the most comparable 
commercial product in the commercial market.
* * * * *
    (d) * * *
    (3) If the Offeror redacts data that identifies the customer, then 
the Offeror shall include, for each sale, the following signed 
statement with the data submitted:

    ``By submission of this data, the Offeror [Offeror insert 
company name] certifies that the customer was [Offeror insert one or 
more of the following as applicable: a government customer; a 
commercial customer purchasing the same or similar product for 
governmental purposes (e.g., Federal, state, local, or foreign 
government); or a commercial customer purchasing the same or similar 
product for a commercial, mixed, or unknown purpose].''
* * * * *

[[Page 88558]]

    Alternate I. * * *

Requirements for Certified Cost or Pricing Data and Data Other Than 
Certified Cost or Pricing Data--Alternate I (Date)

* * * * *
    (b) * * *
    (1) * * *
    (ii) * * *
    (B) For subsystems of a major weapon system and components and 
spare parts of a major weapon system or subsystem of a major weapon 
system that have not previously been determined to be commercial--
    (1) The comparable commercial product the Offeror sells to the 
general public or nongovernmental entities;
    (2) A comparison between the physical characteristics and 
functionality of the comparable commercial product and the subsystem, 
component, or spare part, including--
    (i) For products under paragraph 3(i) of the ``commercial product'' 
definition at FAR 2.101, a description of the modification and 
documentation to support that the modification is customarily available 
in the marketplace; or
    (ii) For products under paragraph (3)(ii) of the ``commercial 
product'' definition at FAR 2.101, a detailed description of the 
modification and detailed technical data to demonstrate that the 
modification is minor (e.g., information on production processes and 
material differences); and
    (3) The national stock number (NSN) for the comparable commercial 
product, if one is assigned, and the NSN for the subsystem, component, 
or spare part; or
    (4) If the Offeror does not sell a comparable commercial product to 
the general public or nongovernmental entities for purposes other than 
government purposes, the Offeror shall--
    (i) Notify the Contracting Officer in writing that it does not sell 
such a comparable product; and
    (ii) Provide the Contracting Officer with a comparison of the 
physical characteristics and functionality of the most comparable 
commercial product in the commercial market.
* * * * *
    (d) * * *
    (3) If the Offeror redacts data that identifies the customer, then 
the Offeror shall include, for each sale, the following signed 
statement with the data submitted:

    ``By submission of this data, the Offeror [Offeror insert 
company name] certifies that the customer was [Offeror insert one or 
more of the following as applicable: a government customer (e.g., 
Federal, state, local, or foreign government); a commercial customer 
purchasing the same or similar product for governmental purposes; or 
a commercial customer purchasing the same or similar product for a 
commercial, mixed, or unknown purpose].''
* * * * *
[FR Doc. 2023-27941 Filed 12-21-23; 8:45 am]
BILLING CODE 6001-FR-P


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