4638 Federal Register / Vol. 77, No. 19 / Monday, January 30, 2012 / Proposed Rules 

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–D052), in 

correspondence. 

IV. Paperwork Reduction Act 

This rule contains information 

collection requirements in the clause at 

DFARS 252.247–70XX, Application for 

U.S. Government Shipping 

Documentation/Instructions, and the 

associated form, DD Form 1659, 

Application for U.S. Government 

Shipping Documentation/Instructions 

(previously, the clause at DFARS 

252.242–7003), currently approved 

through March 31, 2013, under OMB 

Control Number 0704–0250, titled 

DFARS part 242, Contract 

Administration and Audit Services, in 

accordance with the Paperwork 

Reduction Act (44 U.S.C. chapter 35). 

The reduction in paperwork burden 

realized through use of electronic 

request systems is negligible because 

preparation of the DD Form 1659, a 

common practice since 1991, is not a 

significant administrative burden. 

Additionally, there is a negligible 

impact on paperwork burden resulting 

from revisions to the DD form, because 

only the single word ‘‘Government,’’ in 

front of ‘‘Bill(s) of Lading’’ is being 

revised, and two terms are being 

updated. There are no substantive 

changes being made either to the form 

or to the associated clause at DFARS 

252.247–70XX. 

List of Subjects in 48 CFR Parts 212, 

242, 247, 252, and 253 

Accounting, Government 

procurement. 

Ynette R. Shelkin, 

Editor, Defense Acquisition Regulations 

System. 

Therefore, DoD proposes to amend 48 

CFR parts 212, 242, 247, 252, and 253 

as follows: 

1. The authority citation for 48 CFR 

parts 212, 242, 247, 252, and 253 is 

revised to read as follows: 

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

chapter 1. 

PART 212—ACQUISITION OF 

COMMERCIAL ITEMS 

2. In section 212.301, add paragraph 

(f)(iv)(N) to read as follows: 

212.301 Solicitation provisions and 

contract clauses for the acquisition of 

commercial items. 

(f) * * * 

(iv) * * * 

(N) Use the clause at 252.247–70XX, 

Application for U.S. Government 

Shipping Documentation/Instructions, 

as prescribed in 247.207. 

* * * * * 

PART 242—CONTRACT 

ADMINISTRATION AND AUDIT 

SERVICES 

Subpart 242.14—[Removed] 

3. Remove subpart 242.14. 

PART 247—TRANSPORTATION 

4. Add subpart 247.1, consisting of 

section 247.101, to read as follows: 

Subpart 247.1—General 

247.101 Policies 

(h) Shipping documents covering 

f.o.b. origin shipments. (i) Procedures 

for the contractor to obtain bills of 

lading are in the clause at 252.247– 

70XX, Application for U.S. Government 

Shipping Documentation/Instructions. 

(ii) The term ‘‘commercial bills of 

lading’’ includes the use of any 

commercial form or procedure. 

5. Revise section 247.207 to read as 

follows: 

247.207 Solicitation provisions, contract 

clauses, and special requirements. 

(1) Use the clause at 252.247–7003, 

Pass-Through of Motor Carrier Fuel 

Surcharge Adjustment to the Cost 

Bearer, in solicitations and contracts for 

carriage, including acquisitions of 

commercial items, in which a motor 

carrier, broker, or freight forwarder will 

provide or arrange truck transportation 

services that provide for a fuel-related 

adjustment. 

(2) Use the clause at 252.247–70XX, 

Application for U.S. Government 

Shipping Documentation/Instructions, 

in solicitations and contracts, including 

acquisitions of commercial items, when 

shipping under Bills of Lading and 

Domestic Route Order under f.o.b. 

origin contracts, Export Traffic Release 

regardless of f.o.b. terms, or foreign 

military sales shipments. 

6. In subpart 247.2, add sections 

247.207–11 and 247.207–70 to read as 

follows: 

247.207–11 Volume movements within the 

contiguous United States. 

For reporting of volume movements 

within the contiguous United States, 

follow the procedures at PGI 247.207– 

11. 

247.207–70 Demurrage and detention 

charges. 

Follow the procedures for demurrage 

and detention charges at PGI 247.207– 

70. 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

252.242–7003 [Removed and Reserved] 

7. Section 252.242–7003 is removed 

and reserved. 

8. Section 252.247–70XX is added to 

read as follows: 

252.247–70XX Application for U.S. 

Government Shipping Documentation/ 

Instructions. 

As prescribed in 247.207, use the 

following clause: 

APPLICATION FOR U.S. 

GOVERNMENT SHIPPING 

DOCUMENTATION/INSTRUCTIONS 

(DATE) 

(a) Except as provided in paragraph (b) of 

this clause, the Contractor shall request bills 

of lading by submitting a DD Form 1659, 

Application for U.S. Government Shipping 

Documentation/Instructions, to the— 

(1) Transportation Officer, if named in the 

contract schedule; or 

(2) Contract administration office. 

(b) If an automated system is available for 

shipment requests, use service/agency 

systems (e.g., Navy’s Global Freight 

Management–Electronic Transportation 

Acquisition (GFM–ETA) and Financial Air 

Clearance Transportation System (FACTS) 

Shipment Processing Module, Air Force’s 

Cargo Movement Operations System, 

DCMA’s Shipment Instruction Request (SIR) 

e-Tool application, and DLA’s Distribution 

Standard System Vendor Shipment Module) 

in lieu of DD Form 1659. 

(End of clause) 

[FR Doc. 2012–1494 Filed 1–27–12; 8:45 am] 

BILLING CODE 5001–06–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 232 and 252 

RIN 0750–AH54 

Defense Federal Acquisition 

Regulation Supplement; PerformanceBased Payments (DFARS Case 2011– 

D045) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Proposed rule. 

SUMMARY: DoD is proposing to amend 

the Defense Federal Acquisition 


emcdonald on DSK29S0YB1PROD with PROPOSALS2
Federal Register / Vol. 77, No. 19 / Monday, January 30, 2012 / Proposed Rules 4639 

Regulation Supplement (DFARS) to 

provide detailed guidance and 

instructions on the use of the 

performance-based payments analysis 

tool. 

DATES: Comments on the proposed rule 

should be submitted in writing to the 

address shown below on or before 

March 30, 2012, to be considered in the 

formation of the final rule. 

ADDRESSES: You may submit comments, 

identified by DFARS Case 2011–D045, 

using any of the following methods: 

Regulations.gov: http://www.

regulations.gov. 

Submit comments via the Federal 

eRulemaking portal by inserting 

‘‘DFARS Case 2011–D045’’ under the 

heading ‘‘Enter keyword or ID’’ and 

selecting ‘‘Search.’’ Select the link 

‘‘Submit a Comment’’ that corresponds 

with ‘‘DFARS Case 2011–D045.’’ Follow 

the instructions provided at the ‘‘Submit 

a Comment’’ screen. Please include your 

name, company name (if any), and 

‘‘DFARS Case 2011–D045’’ on your 

attached document. Follow the 

instructions for submitting comments. 

Email: dfars@osd.mil. Include DFARS 

Case 2011–D045 in the subject line of 

the message. 

Fax: (703) 602–0350. 

Mail: Defense Acquisition Regulations 

System, Attn: Mr. Mark Gomersall, 

OUSD (AT&L) DPAP (DARS), Room 

3B855, 3060 Defense Pentagon, 

Washington, DC 20301–3060. 

Comments received generally will be 

posted without change to http://www.

regulations.gov, including any personal 

information provided. To confirm 

receipt of your comment(s), please 

check 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. 

Mark Gomersall, telephone (703) 602– 

0302. 

SUPPLEMENTARY INFORMATION: 

I. Background 

This rule proposes to provide 

requirements for the use of the 

performance-based payments (PBP) 

analysis tool. The PBP analysis tool is 

a cash-flow model for evaluating 

alternative financing arrangements, and 

is required to be used by all contracting 

officers contemplating the use of 

performance-based payments on new 

fixed-price type contract awards 

resulting from solicitations issued on or 

after July 1, 2011. 

II. 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 a significant 

regulatory action and, therefore, was 

subject to review under section 6(b) of 

E.O. 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. 603. A copy of the analysis may 

be obtained from the point of contact 

specified herein. The analysis is 

summarized as follows: 

This rule proposes to provide detailed 

guidance and instructions on the use of 

the performance-based payments (PBP) 

analysis tool. The objective of the rule 

is to amend the DFARS to provide 

requirements for the use of the PBP 

analysis tool. The PBP analysis tool is 

a cash-flow model for evaluating 

alternative financing arrangements, and 

is required to be used by all contracting 

officers contemplating the use of 

performance-based payments on new 

fixed-price type contract awards 

resulting from solicitations issued on or 

after July 1, 2011. 

DoD does not expect this proposed 

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, 

et seq., because requiring the use of the 

PBP analysis tool by all contracting 

officers contemplating the use of 

performance-based payments on new 

fixed-price type contract awards does 

not require contractors to expend 

significant effort or cost. Since 

performance-based payments are 

already the preferred Government 

financing method, this rule is not 

expected to increase the frequency of 

use of such financing situations. No 

known alternatives to the rule have been 

identified. 

At this time, DoD is unable to 

estimate the number of small entities to 

which this rule will apply. Therefore, 

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–D045) in 

correspondence. 

IV. Paperwork Reduction Act 

The proposed rule contains new 

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). DoD invites public 

comments on the following aspects of 

the proposed rule: (a) Whether the 

proposed collection of information is 

necessary for the proper performance of 

the functions of DoD, including whether 

the information will have practical 

utility; (b) the accuracy of the estimate 

of the burden of the proposed 

information collection; (c) ways to 

enhance the quality, utility, and clarity 

of the information to be collected; and 

(d) ways to minimize the burden of the 

information collection on respondents, 

including the use of automated 

collection techniques or other forms of 

information technology. The following 

is a summary of the information 

collection requirement. 

Title: Defense Federal Acquisition 

Regulation Supplement (DFARS) Part 

232, Contract Financing. 

Type of Request: New collection. 

Number of Respondents: 570. 

Responses per Respondent: 1. 

Annual Responses: 570. 

Average Burden per Response: 1.0 

hours. 

Annual Burden Hours: 570. 

Needs and Uses: This information 

collection is necessary in order to use 

the PBP analysis tool, required by all 

contracting officers contemplating the 

use of performance-based payments on 

new fixed-price type contract awards. 

Affected Public: Businesses or other 

for-profit and not-for-profit institutions. 

Frequency: On occasion. 

Written comments and 

recommendations on the proposed 

information collection should be sent to 

Ms. Jasmeet Seehra at the Office of 

Management and Budget, Desk Officer 

for DoD, Room 10236, New Executive 

Office Building, Washington, DC 20503, 

or email Jasmeet_K._Seehra@omb.eop.

gov, with a copy to the Defense 

Acquisition Regulations System, Attn: 

Mr. Mark Gomersall, OUSD (AT&L) 

DPAP (DARS), Room 3B855, 3060 

Defense Pentagon, Washington, DC 

20301–3060. Comments can be received 


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4640 Federal Register / Vol. 77, No. 19 / Monday, January 30, 2012 / Proposed Rules 

from 30 to 60 days after the date of this 

notice, but comments to OMB will be 

most useful if received by OMB within 

30 days after the date of this notice. 

To request more information on this 

proposed information collection or to 

obtain a copy of the proposal and 

associated collection instruments, 

please write to the Defense Acquisition 

Regulations System, Attn: Mr. Mark 

Gomersall, OUSD (AT&L) DPAP 

(DARS), Room 3B855, 3060 Defense 

Pentagon, Washington, DC 20301–3060, 

or email dfars@osd.mil. Include DFARS 

Case 2011–D045 in the subject line of 

the message. 

List of Subjects in 48 CFR Parts 232 and 

252 

Government procurement. 

Ynette R. Shelkin, 

Editor, Defense Acquisition Regulations 

System. 

Therefore, 48 CFR parts 232 and 252 

are proposed for amendment as follows: 

1. The authority citation for 48 CFR 

parts 232 and 252 is revised to read as 

follows: 

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

chapter 1. 

PART 232—CONTRACT FINANCING 

2. In section 232.1001, add paragraph 

(a) to read as follows: 

232.1001 Policy. 

(a) As with all contract financing, the 

purpose of performance-based payments 

is to assist the contractor in the payment 

of costs incurred during the 

performance of the contract. Therefore, 

performance-based payments should 

never exceed total cost incurred at any 

point during the contract. See PGI 

232.1001 for additional information on 

use of performance-based payments. 

3. In section 232.1004, revise the 

section heading and add paragraph (b) 

to read as follows: 

232.1004 Procedures. 

(b) Prior to using performance-based 

payments, the contracting officer shall— 

(i) Agree with the offeror on price 

using customary progress payments 

before negotiation begins on the use of 

performance-based payments, except for 

modifications to contracts that already 

use performance-based payments; 

(ii) Analyze the performance-based 

payments schedule using the 

performance-based payments (PBP) 

analysis tool. The PBP analysis tool is 

on the DPAP Web site in the Cost, 

Pricing, and Finance section, 

performance-based payments analysis 

tool, at http://www.acq.osd.mil/dpap/

cpf/Performance_based_payments.html. 

(A) If performance-based payments 

are desired, the contractor shall submit 

a proposed performance-based 

payments schedule which includes all 

performance-based payments events, 

completion criteria, and event values, 

along with the expected expenditure 

profile. If performance-based payments 

are deemed practical, the Government 

will evaluate and negotiate the details of 

the performance-based payments 

schedule. 

(B) For modifications to contracts that 

already use performance-based 

payments financing, the basis for 

negotiation must include performancebased payments. The (PBP) analysis tool 

will be used in the same manner to help 

determine the price for the 

modification. The only difference is that 

the baseline assuming customary 

progress payments will reflect an 

objective profit rate instead of a 

negotiated profit rate; 

(iii) Negotiate the consideration to be 

received by the Government if the 

performance-based payments payment 

schedule will be more favorable to the 

contractor than customary progress 

payments; 

(iv) Obtain the approval of the 

business clearance approving official, or 

one level above the contracting officer, 

whichever is higher, for the negotiated 

consideration; and 

(v) Document in the contract file that 

the performance-based payments 

schedule provides a mutually beneficial 

settlement position that reflects 

adequate consideration to the 

Government for the improved contractor 

cash flow. 

* * * * * 

4. Add section 232.1005 to read as 

follows: 

232.1005 Contract clauses. 

The contracting officer shall include 

the following clauses in contracts that 

include performance-based payments: 

(a) For performance-based payments 

made on a whole-contract basis, use the 

clause at 252.232–70XX, PerformanceBased Payments—Whole-Contract Basis. 

(b) For performance-based payments 

made on a deliverable-item basis, use 

the clause at 252.232–70YY, 

Performance-Based Payments— 

Deliverable-Item Basis. 

PART 252–SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

5. Add sections 252.232–70XX and 

252.232–70YY to read as follows: 

252.232–70XX Performance-Based 

Payments—Whole-Contract Basis. 

As prescribed in 232.1005(a), use the 

following clause: 

Performance-Based Payments—WholeContract Basis (DATE) 

(a) Performance-based payments shall form 

the basis for the contract financing payments 

provided under this contract, and shall apply 

to the whole contract. The performancebased payments schedule (Contract 

Attachment __) describes the basis for 

payment, to include identification of the 

individual payment events, evidence of 

completion, and amount of payment due 

upon completion of each event. 

(b)(i) At no time shall cumulative 

performance-based payments exceed 

cumulative contract cost incurred under this 

contract. To ensure compliance with this 

requirement, the Contractor shall, in addition 

to providing the information required by FAR 

52.232–32, submit supporting information for 

all payment requests using the following 

format: 


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Federal Register / Vol. 77, No. 19 / Monday, January 30, 2012 / Proposed Rules 4641 

(ii) The Contractor shall not submit 

payment requests more frequently than 

monthly. 

(iii) Incurred cost is determined by the 

Contractor’s accounting books and records. 

(End of clause) 

252.232–70YY Performance-Based 

Payments—Deliverable-Item Basis. 

As prescribed in 232.1005(b), use the 

following clause: 

Performance-Based Payments—DeliverableItem Basis (DATE) 

(a) Performance-based payments shall form 

the basis for the contract financing payments 

provided under this contract and shall apply 

to Contract Line Items (CLINs) ll, ll, 

and ll. The performance-based payments 

schedule (Contract Attachment ll) 

describes the basis for payment, to include 

identification of the individual payment 

events, CLINs to which each event applies, 

evidence of completion, and amount of 

payment due upon completion of each event. 

(b)(i) At no time shall cumulative 

performance-based payments exceed 

cumulative contract cost incurred under 

CLINs ll, ll, and ll. To ensure 

compliance with this requirement, the 

Contractor shall, in addition to providing the 

information required by FAR 52.232–32, 

submit supporting information for all 

payment requests using the following format: 


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4642 Federal Register / Vol. 77, No. 19 / Monday, January 30, 2012 / Proposed Rules 

(ii) The Contractor shall not submit 

payment requests more frequently than 

monthly. 

(iii) Incurred cost is determined by the 

Contractor’s accounting books and records. 

(End of clause) 

[FR Doc. 2012–1498 Filed 1–27–12; 8:45 am] 

BILLING CODE 5001–06–P 


emcdonald on DSK29S0YB1PROD with PROPOSALS2EP30JA12.001</GPH>