DEPARTMENT OF DEFENSE Statement of Regulatory Priorities Background The Department of Defense (DoD) is the largest Federal departmen t, consisting of 3 Military departments (Army, Navy, and Air Force), 10 Unified Combatant Commands, 14 Defense Agencies, and 10 DoD Field Activities. It has 1, 434,450 military personnel and 782,386 civilians assigned as of March 31, 2011, and over 200 larg e and 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 efforts under Executive Order (E.O.) 12866 "Regulatory Planning and Review" of September 30, 1993. Because of its diversified nature, DoD is affected by the regulations issued by regulatory agencies such as the Departments of Energy , Health and Human Services, Housing and Urban Development, Labor, Transportation, and the Environmental Protection Agency. In order to develop the best possible regulations that em body the principles and objectives embedded in E.O. 12866, there must be coordination of propo sed 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 regulations that have an effect on the public. These regulations, while small in number compared to the regulating agencies, can be significant as defined in E.O. 12866. In addition, some of DoD's regulations may affect the regulatory agencies. DoD, as an integral part of its program, not only receives coordinating actions from the regulating agencies, but coordinat es with the agencies that are affected by its regulations as well. Overall Priorities The Department needs to function at a reas onable cost, while ensuring 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 beingdone 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 (E.O.) 12866. Retrospective Review of Existing Regulations Pursuant to section 6 of Executive Or der 13563 "Improving Regulation and Regulatory Review (January 18, 2011), the following R egulatory Identifier Numbers (RINs) have been identified as associated with retrospective re view and analysis in the Department’s final retrospective review of regulations plan. All are ofparticular interest to small businesses. Some of these entries on this list may be completed actions, which do not appear in The Regulatory Plan. However, more information can be found about these completed rulemakings in past publications of the Unified Agenda on Reginfo.gov in the Completed Actions section for that agency. These rulemakings can also be found on Regulations.gov. The final agency plans can be found at: http://www.regulations.gov/exchange/topic/eo-13563

 0750-AH19 - Accelerated Payments to Sma ll Business (DFARS Case 2011-D008)

 0750-AH44 - Extension of DoD Mentor-P rotégé Pilot Program (DFARS Case 2011- D050)

 0750-AH45 - Deletion of Text Implementing 10 U.S.C. 2323 (DFARS Case 2011- D038)
Administration Priorities: 1. Rulemakings that are expected to have high net benefits well in excess of costs. The Department plans to—

 Finalize the DFARS rule to permit offerors to propose an alternative line item structure to reflect the offeror’s business practices for selling and billing commercial items, and initial provisioning of spares for weapon systems. This rule should prevent misalignment of line item structure in receipt documents and invoices, which causes manual intervention and can delay payment;

 Finalize the DFARS rule to conduct discussions prior to contract award for sourceselections of $100 million or more. A DoD st udy showed a significant positive correlation between high-dollar source selections thatwere conducted without discussions and protests sustained. This rule should re duce the number of protests filed and their resultant costs to contractors and the Government; and

 Finalize the DFARS rule to implement secti on 866 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2011 establ ishing a pilot program to acquire military purpose nondevelopmental items. This pilo t program is designed to test whether the streamlined procedures, similar to those ava ilable 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 Do D and (2) provide items developed exclusively at private expense to meet validat ed military requirements. (2011-D034) 2. Rulemakings that promote Open Government and use disclosure as a regulatory tool. The Department plans to—

 Finalize the Federal Acquisition Regulation (F AR) to inform contractors of the statutory requirement of section 3010 of Public Law 111-212, to make Federal Awardee Performance and Integrity Information System information, excluding past performance reviews, available to the public;

 Finalize the FAR rule that implements secti on 743 of Division C of the Fiscal Year 2010 Consolidated Appropriations Act, which requires agencies to develop inventories of their service contacts, including number and wo rk location of contractor employees;

 Finalize the FAR rule to establish standa rd evaluation factors and rating scales for documenting contractor performance;

 Finalize the FAR rule that implements the Federal Funding Accountability and Transparency Act of 2006, which requires the Office of Management and Budget (OMB) to establish a free, public, website containing fu ll disclosure of all Federal contract award information. This rule requires contractors toreport executive compensation and first-tier subcontractor awards on unclassified contracts expected to be $25,000 or more, except contracts with individuals;

 Finalize the FAR rule that implements section 811 of the NDAA for FY 2010, whichrequires a written justification and approval prior to awarding a sole-source contract in an amount over $20 million under the 8(a) program; and

 Finalize the DFARS rule to implement section 814 of the NDAA for FY 2010, which imposed additional reporting requirements for awards of single task and delivery-order
contracts 3. Rulemakings that streamline regul ations and reduce unjustified burdens. The Department plans to—

 Finalize the DFARS rule to remove the requirement to use DD Forms 2626 and 2631 to report past performance information for co nstruction and architect-engineer services and to instead provide the performance reports electronically;

 Finalize the DFARS rule to amend the definition of “qualifying country end product” to make it comparable to the change in the defin ition of “domestic end product” by waiving the component test for qualifying country end products;

 Finalize the DFARS rule to update appendix F, Material Inspection and Receiving Report, to incorporate procedures for using the electronic Wide Area WorkFlow (WAWF) Receiving Report, which is required for use in most contracts in lieu of the DD Form 250. WAWF is the electronic tool for documenti ng receipt and acceptance of supplies and services and for electronic invoicing; and

 Finalize the rule for DFARS coverage of patent s, data, and copyrights, which significantly reduces the amount of regulatory textand the number of required clauses. 4. Efforts to minimize burdens on small businesses Of interest to Small Businesses are regulations to—

 Finalize the DFARS rule to accelerate paym ents to all DoD small business contractors. 5. Rules to be modified, streamlined, expanded, or repealed to make the agency’s regulatory program more effective or l ess burdensome in achieving the regulatory objectives. DFARS Case 2011-D028—Removes component te st for COTS items that are qualifying country end products. Require only determination of country of origin of the COTS item, not the components of the COTS item.

 DFARS Case 2011-D013—Only One Offer. Motivate effective competition by driving behavior to allow sufficient time for submission of offers.

 DFARS Case 2011-D008—Accelerate Small Business Payments. Accelerate payments to all small businesses, not just small disadvantaged businesses.

 DFARS Case 2010-D018—Responsibility and Liability for Government Property. Includes fixed-price contracts that are aw arded on the basis of adequate competition on the list of contract types whereby contractors are not held liable for loss of Government property.

 DFARS Case 2010-D001—Patents, Data, and Copyrights. Rewrite of DFARS part 227, Patents, Data, and Copyrights.

 DFARS Case 2009-D026—Multiyear Contract ing. Comprehensive review of DFARS subpart 217.1 to simplify and clarify the coverage of multiyear acquisition.

Specific DoD Priorities: For this regulatory plan, there are six specif ic DoD priorities, all of which reflect the established regulatory principles. In those areas where rulemaking or participation in the regulatory process is required, DoD has studied and developed policy and r egulations that incorporate the provisions of the President's priorities 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, energy projects, education, and health affairs. 1. Defense Procurement and Acquisition PolicyThe Department of Defense continuously reviews the DFARS and continues to lead Government efforts to—

 Revise the DFARS to specify circumstances under which the U.S. Government needs to obtain data other than certified cost or pric ing data from Canadian contractors via the Canadian Commercial Corporation.

 Revise the DFARS to provide detailed gui dance and instruction to DoD contracting officers for the use of DoD's performance-bas ed payments analysis tool when contemplating the use of performance-based payments on new fixed-price type contracts.

 Revise the DFARS to implement a DoD Better Buying Power initiative by providing a proposal-adequacy checklist in a provision to ensure offerors take responsibility for providing thorough, accurate, and complete proposals.

 Revise the DFARS to address standards and structures for the safeguarding of unclassified DoD information.

 Revise the DFARS to implement the DoD Better Buying Power initiative to address acquisitions using competitive procedures in which only one offer is received. With some exceptions, the contracting officer must resolicit for an additional period of at least 30 days, if the solicitation allowed fewer than 30 days for receipt of proposals and only one offer is received. If a period of at least 30 days was allo wed for receipt of proposals, the contracting officer must determine prices to be fair and re asonable through price or cost analysis or enter negotiations with the offeror.

 Revise the DFARS to implement a DoD Better Buying Power initiative by requiring contractors to submit annual technical desc riptions for their independent research and development projects.

 Revise the DFARS to establish means for cleared contractors, who have unclassified U.S. Government information resident on or transiting through contractor information systems, to share cyber threat information.

 Revise the FAR to implement section 841 ofthe National Defense Authorization Act for FY 2009, which required a review of the FAR cove rage on organizational conflicts of interest (OCIs). Finalize the DFARS rule to clarify DoD policy regarding the definition and administration of contractor business systems to improve the effectiveness of DCM A/DCAA oversight of contractor business systems;

 Finalize the DFARS rule to implement a DoD Better Buying Power initiative to increase the use of fixed-price incentive (firm target) contracts; 2. Logistics and Materiel Readiness, Department of Defense The Department of Defense published or plans to publish rules on co ntractors supporting the military in contingency operations:

 Final Rule: Private Security Contractors ( PSCs) Operating in Contingency Operations, Combat Operations or Other Significant Military Operations. In order to meet the mandate of
section 862 of the 2008 National De fense Authorization Act (NDAA) 

### ( as amended by section 813 (b) of the 2010 NDAA and section 832 of the 2011 NDAA), this rule establishes policy, assigns responsibilities, and provides procedu res for the regulation of the selection, accountability, training, equipping, and conduct of personnel perfor ming private security functions under a covered contract during contingency operations, combat operations, or other significant military 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 ended August 31, 2009. DoD, in coordination with the Department of State and the United States Agency for International Development, prepared a final rule, which included the responses to the public comments, and incorporated changes to the interim final rule, where appropriate. The final rule also incorporated the legislative changes requ ired by section 813 (b) of the 2010 NDAA and section 832 of the 2011 NDAA. The final rule was published August 11, 2011 (76 FR 49650), with an effective date of September 12, 2011.

 Interim Final Rule: Operational Contract Support. This rule will incorporate the latest changes and lessons learned into policy and procedures for operational contract support(OCS), including OCS program management, contract support integration, and the integration of DoD contractor personnel in to contingency operations outside the United States. DoD anticipates publishing the interim final rule in the first or second quarter of FY 2012.

3. Installations and Environment, Department of Defense The Department of Defense will publish a rule r egarding the process for evaluating the impact of certain types of structures on military operations and readiness:

 Interim Final Rule: This rule implements policy, assigns responsibilities, and prescribes procedures for the establishment and operati on of a process for evaluation of proposed projects submitted to the Secretary of Transp ortation under section 44718 of title 49, United States Code. The evaluation process is establis hed for the purpose of identifying any adverse impact of proposed projects on military operatio ns and readiness, minimizing or mitigating such adverse impacts, and determining if any such projects pose an unacceptable risk to the national security of the United States. The rule also includes procedures for the operation of a central DoD siting clearinghouse to facilitate both informal and formal reviews of proposed projects. This rule was required by secti on 358 of Public Law 111-383. DoD anticipates publishing an interim final rule in fourth quarter of FY 2011. 4. Military Community and Family Policy, Department of Defense The Department of Defense plans to publish a final rule to implement policy, assign responsibilities, and prescribe procedures for the operation of voluntary education programs within DoD:

 Final Rule: Voluntary Education Programs. In this rule, the Department of Defense (DoD) implements policy, assigns responsibilities, and prescribes procedures for the operation of voluntary education programs within DoD. Several of the subject areas in this rule include: 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 viadistance learning; procedures for obtaini ng on-base voluntary education programs and services; minimum criteria for selecting instit utions to deliver higher education programs and services on military installations; the establishm ent of a DoD Voluntary Education Partnership Memorandum of Understanding (MOU) between DoD and educational institutions receiving tuition assistance payments; and procedures for other education programs for Service members and their adult family members. T he new requirement for a signed MOU with DoD from participating educational institutions w ill be effective January 1, 2012. The Department published a proposed rule on August 6, 2010 (75 FR 47504 to 47514). The comment period ended October 10, 2010, which contained a tota l of 110 comments. Several comments from the general public were accepted, including suggestions to clarify terms such as “one single tuition rate” and a “needs assessment.” DoD anticipates publishing the final rule during the first quarter of FY 2012. 5. Health Affairs, Department of Defense The Department of Defense is able to meet its dual mission of wartime readiness and peacetime health care by operating an extensive 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 TRICARE: Reimbursement of Sole Community Hospitals and Adjustment to Reimbursement of Critical Access Hospitals. The rule implements the statutory provision in 10 United States Code 1079(j)(2) that TRICARE payment methods for institutional care shall be determined to the extent practicable in acco rdance with the same reimbursement rules as those that apply to payments to providers of se rvices of the same type under Medicare. This rule implements a reimbursement methodology similar to that furnished to Medicare beneficiaries for services provided by sole community hospitals. It is projected that implementation of this rule will result in a health care savings of $31 million per year withproposed phase-in period and an estimated init ial start-up cost of $200,000. Any on-going administrative costs would be minimal and there are no applicable risks to the public. The proposed rule was published July 5, 2011 (76 FR 39043). The comment period ended on September 6, 2011. DoD anticipates publishing a final rule in the second quarter of FY 2012.

 Final rule on TRICARE: TRICARE Young Adult. Th e purpose of this interim final rule is to establish the TRICARE Young Adult program im plementing ssection 702 of the Ike Skelton NDAA for FY 2011 (Pub. L. 111-383) to provide medical coverage to unmarried children under the age of 26 who no longer meet the age requirements for TRICARE eligibility (age 21, or 23 if enrolled in a full-time course of study at an institution ofhigher learning approved by the Secretary of Defense) and who are not e ligible for medical coverage from an eligible employer-sponsored plan (as defined in section 5000A(f)(2) of the Internal Revenue Code of 1986). If qualified, they can purchase TRICAR E Standard/Extra or TRICARE Prime benefits coverage. The particular TRICARE plan available depends on the military sponsor's eligibility and the availability of the TRICARE plan in the dependent's geographic location. It is projected that implementation of this rule will re sult in an estimated init ial start-up cost of $3,000,000. Premiums are designed to cover t he anticipated health care costs, as well as ongoing administrative costs. The interim final rule was published April 27, 2011 (76 FR 23479), with an immediate effective date. The comment period ended June 27, 2011. DoD anticipates publishing a final rule in the first quarter of FY 2012. 6. Personnel and Readiness, Department of Defense The Department of Defense will publish a rule regarding Service Academies:

 Final Rule: Service Academies. This rule es tablishes policy, assigns responsibilities, and prescribes procedures for Department of De fense oversight of t he Service Academies. Administrative costs are negligible and benef its are clear, concise rules that enable the Secretary of Defense to insure that the Serv ice Academies are efficiently operated and meet the needs of the armed forces. The proposed rule was published October 18, 2007 (72 FR 59053), and included policy that has since changed. The final rule, particularly the explanation of separation policy, will reflect rec ent changes in the Don't Ask, Don't Tell policy. DoD anticipates publishing the final ru le in the second quarter of FY 2012.