48278 Federal Register / Vol. 75, No. 153 / Tuesday, August 10, 2010 / Rules and Regulations 

(3) Basic ordering agreements; 

(4) Indefinite-delivery contracts; 

(5) Any other type of contract 

providing for the use of UCAs; and 

(6) Unpriced change orders with an 

estimated value exceeding $5 million. 

(b)(1) Use the clause at 252.217–7027, 

Contract Definitization, in— 

(i) All UCAs; 

(ii) Solicitations associated with 

UCAs; 

(iii) Basic ordering agreements; 

(iv) Indefinite-delivery contracts; 

(v) Any other type of contract 

providing for the use of UCAs; and 

(vi) Unpriced change orders with an 

estimated value exceeding $5 million. 

(2) Insert the applicable information 

in paragraphs (a), (b), and (d) of the 

clause. 

(3) If, at the time of entering into the 

UCA or unpriced change order, the 

contracting officer knows that the 

definitive contract action will meet the 

criteria of FAR 15.403–1, 15.403–2, or 

15.403–3 for not requiring submission of 

cost or pricing data, the words ‘‘and cost 

or pricing data’’ may be deleted from 

paragraph (a) of the clause. 

PART 243—CONTRACT 

MODIFICATIONS 

■ 7. Revise section 243.204 to read as 

follows: 

243.204 Administration. 

Follow the procedures at PGI 243.204 

for administration of change orders. 

243.204–70 [Redesignated as 243.204–71] 

■ 8. Redesignate section 243.204–70 as 

section 243.204–71. 

■ 9. Add a new section 243.204–70 to 

read as follows: 

243.204–70 Definitization of change 

orders. 

243.204–70–1 Scope. 

(a) This subsection applies to 

unpriced change orders with an 

estimated value exceeding $5 million. 

(b) Unpriced change orders for foreign 

military sales and special access 

programs are not subject to this 

subsection, but the contracting officer 

shall apply the policy and procedures to 

them to the maximum extent 

practicable. If the contracting officer 

determines that it is impracticable to 

adhere to the policy and procedures of 

this subsection for an unpriced change 

order for a foreign military sale or a 

special access program, the contracting 

officer shall provide prior notice, 

through agency channels, to the Deputy 

Director, Defense Procurement and 

Acquisition Policy (Contract Policy and 

International Contracting), 3060 Defense 

Pentagon, Washington, DC 20301–3060. 

243.204–70–2 Price ceiling. 

Unpriced change orders shall include 

a not-to-exceed price. 

243.204–70–3 Definitization schedule. 

(a) Unpriced change orders shall 

contain definitization schedules that 

provide for definitization by the earlier 

of— 

(1) The date that is 180 days after 

issuance of the change order (this date 

may be extended but may not exceed 

the date that is 180 days after the 

contractor submits a qualifying 

proposal); or 

(2) The date on which the amount of 

funds obligated under the change order 

is equal to more than 50 percent of the 

not-to-exceed price. 

(b) Submission of a qualifying 

proposal in accordance with the 

definitization schedule is a material 

element of the contract. If the contractor 

does not submit a timely qualifying 

proposal, the contacting officer may 

suspend or reduce progress payments 

under FAR 32.503–6, or take other 

appropriate action. 

243.204–70–4 Limitations on obligations. 

(a) The Government shall not obligate 

more than 50 percent of the not-toexceed price before definitization. 

However, if a contractor submits a 

qualifying proposal before 50 percent of 

the not-to-exceed price has been 

obligated by the Government, the 

limitation on obligations before 

definitization may be increased to no 

more than 75 percent (see 232.102–70 

for coverage on provisional delivery 

payments). 

(b) Obligations should be consistent 

with the contractor’s requirements for 

the undefinitized period. 

243.204–70–5 Exceptions. 

(a) The limitations in 243.204–70–2, 

243.204–70–3, and 243.204–70–4 do not 

apply to unpriced change orders for the 

purchase of initial spares. 

(b) The limitations in 243.204–70–4(a) 

do not apply to unpriced change orders 

for ship construction and ship repair. 

(c) The head of the agency may waive 

the limitations in 243.204–70–2, 

243.204–70–3, and 243.204–70–4 for 

unpriced change orders if the head of 

the agency determines that the waiver is 

necessary to support— 

(1) A contingency operation; or 

(2) A humanitarian or peacekeeping 

operation. 

243.204–70–6 Allowable profit. 

When the final price of an unpriced 

change order is negotiated after a 

substantial portion of the required 

performance has been completed, the 

head of the contracting activity shall 

ensure the profit allowed reflects— 

(a) Any reduced cost risk to the 

contractor for costs incurred during 

contract performance before negotiation 

of the final price; 

(b) The contractor’s reduced cost risk 

for costs incurred during performance of 

the remainder of the contract; and 

(c) The extent to which costs have 

been incurred prior to definitization of 

the contract action (see 215.404–71– 

3(d)(2)). The risk assessment shall be 

documented in the contract file. 

243.204–70–7 Plans and reports. 

To provide for enhanced management 

and oversight of unpriced change 

orders, departments and agencies 

shall— 

(a) Include in the Consolidated 

Undefinitized Contract Action (UCA) 

Management Plan required by 217.7405, 

the actions planned and taken to ensure 

that unpriced change orders are 

definitized in accordance with this 

subsection; and 

(b) Include in the Consolidated UCA 

Management Report required by 

217.7405, each unpriced change order 

with an estimated value exceeding $5 

million. 

■ 10. Add section 243.205–72 to read as 

follows: 

243.205–72 Unpriced change orders. 

See the clause prescriptions at 

217.7406 for all unpriced change orders 

with an estimated value exceeding $5 

million. 

[FR Doc. 2010–19674 Filed 8–9–10; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 215, 231, and 252 

[DFARS Case 2006–D057] 

Defense Federal Acquisition 

Regulation Supplement; Excessive 

Pass-Through Charges 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Final rule. 

SUMMARY: DoD is issuing a final rule to 

delete the DFARS language 

implementing section 852 of the 

National Defense Authorization Act for 

Fiscal Year 2007 that ensures that passthrough charges on contracts or 

subcontracts that are entered into for or 

on behalf of DoD are not excessive in 


wwoods2 on DSK1DXX6B1PROD with RULES_PART 1
Federal Register / Vol. 75, No. 153 / Tuesday, August 10, 2010 / Rules and Regulations 48279 

relation to the cost of work performed 

by the relevant contractor or 

subcontractor. The interim DFARS rule 

language, which implements the 

requirements of section 852, was made 

obsolete with the publication of the FAR 

interim rule at 74 FR 52853 on October 

14, 2009. 

DATES: Effective Date: August 10, 2010. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Mark Gomersall, Defense Acquisition 

Regulations System, OUSD (AT&L) 

DPAP (DARS), Room 3B855, 3060 

Defense Pentagon, Washington, DC 

20301–3060. Telephone 703–602–0302; 

facsimile 703–602–0350. Please cite 

DFARS Case 2006–D057. 

SUPPLEMENTARY INFORMATION: 

A. Background 

Section 852 of the National Defense 

Authorization Act (NDAA) for Fiscal 

Year 2007 required DoD to prescribe 

regulations to ensure that pass-through 

charges on contracts or subcontracts that 

are entered into for or on behalf of DoD 

are not excessive in relation to the cost 

of work performed by the relevant 

contractor or subcontractor. DoD 

published an interim rule at 72 FR 

20758 on April 26, 2007, to amend the 

DFARS to include a solicitation 

provision and contract clause in DoD 

contracts to implement the requirements 

of section 852. 

Fourteen sources submitted 

comments on the interim rule. Public 

comments were addressed in a second 

interim rule published at 73 FR 27464 

on May 13, 2008, when the interim rule 

language was revised in response to 

comments received. DoD determined at 

that time that it did not expect the rule 

to have a significant impact on a 

substantial number of small entities 

within the meaning of the Regulatory 

Flexibility Act, 5 U.S.C. 601, et seq. FAR 

interim rule 2008–031, published at 74 

FR 52853 on October 14, 2009, 

implemented the requirements of 

section 866 of the NDAA for FY09 on 

the issue of excessive pass-through 

charges. The FAR rule language is 

duplicative of the interim DFARS rule 

language implementing section 852. 

This rule was not subject to Office of 

Management and Budget review under 

Executive Order 12866, dated 

September 30, 1993. 

B. Regulatory Flexibility Act 

This final rule removes interim rule 

DFARS language made obsolete by 

publication of FAR rule language on 

October 14, 2009. Therefore, the 

Regulatory Flexibility Act does not 

apply to this final rule because it does 

not constitute a significant DFARS 

revision within the meaning of 41 

U.S.C. 418b and FAR 1.501, and 

publication for public comment was not 

required. 

C. Paperwork Reduction Act 

The Paperwork Reduction Act does 

not apply because the rule does not 

impose additional information 

collection requirements that require the 

approval of the Office of Management 

and Budget under 44 U.S.C. 3501, et 

seq. 

List of Subjects in 48 CFR Parts 215, 

231, and 252 

Government procurement. 

Ynette R. Shelkin, 

Editor, Defense Acquisition Regulations 

System. 

■ Therefore, 48 CFR parts 215, 231, and 

252 are amended as follows: 

■ 1. The authority citation for 48 CFR 

parts 215, 231, and 252 continues to 

read as follows: 

Authority: 41 U.S.C. 421 and 48 CFR 

chapter 1. 

PART 215—CONTRACTING BY 

NEGOTIATION 

215.408 [Amended] 

■ 2. Section 215.408 is amended by 

removing paragraphs (3) and (4). 

PART 231—CONTRACT COST 

PRINCIPLES AND PROCEDURES 

231.201–2 [Removed] 

■ 3. Section 231.201–2 is removed. 

231.203 [Removed] 

■ 4. Section 231.203 is removed. 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

252.217–7003 [Removed and Reserved] 

■ 5. Section 252.217–7003 is removed 

and reserved. 

252.217–7004 [Removed and Reserved] 

■ 6. Section 252.217–7004 is removed 

and reserved. 

[FR Doc. 2010–19672 Filed 8–9–10; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 225 and 252 

[DFARS Case 2009–D024] 

Defense Federal Acquisition 

Regulation Supplement; Reporting of 

Commercially Available Off-the-Shelf 

Items That Contain Specialty Metals— 

Deletion of Obsolete Clause 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Final rule. 

SUMMARY: DoD is issuing this final rule 

to amend the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) by deleting the requirement for 

contractors to report commercially 

available off-the-shelf items that contain 

foreign specialty metals and are 

incorporated into noncommercial end 

items. 

DATES: Effective Date: August 10, 2010. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Amy Williams, Defense Acquisition 

Regulations System, OUSD (AT&L) 

DPAP (DARS), 3060 Defense Pentagon, 

Room 3B855, Washington, DC 20301– 

3060. Telephone 703–602–0328; 

facsimile 703–602–0350. Please cite 

DFARS Case 2009–D024. 

SUPPLEMENTARY INFORMATION: 

A. Background 

This final rule deletes DFARS clause 

252.225–7029, Reporting of 

Commercially Available Off-the-Shelf 

Items that Contain Specialty Metals and 

are Incorporated into Noncommercial 

End Items. This requirement was 

incorporated in the DFARS to 

implement section 804, paragraph (i), of 

the National Defense Authorization Act 

for Fiscal Year 2008 (Pub. L. 110–181). 

Paragraph (i) requires the Government 

to report to Congress for fiscal years 

2008 and 2009 on the use of the 

exception to the specialty metals 

restrictions of 10 U.S.C. 2533b for 

commercially available off-the-shelf 

items that are incorporated in 

noncommercial end items. In order to 

obtain information for this report, the 

DFARS clause 252.225–7029, Reporting 

of Commercially Available Off-the-Shelf 

Items that Contain Specialty Metals and 

are Incorporated into Noncommercial 

End Items, was added to the DFARS on 

July 29, 2009 (74 FR 37626). This 

requirement is now obsolete, because 

the reporting requirement does not 

extend beyond fiscal year 2009. 


wwoods2 on DSK1DXX6B1PROD with RULES_PART 1