Federal Register / Vol. 79, No. 19 / Wednesday, January 29, 2014 / Rules and Regulations 4631 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 202, 207, 209, 216, and 

234 

RIN 0750–AI16 

Defense Federal Acquisition 

Regulation Supplement: Limitation on 

Use of Cost-Reimbursement Line Items 

(DFARS Case 2013–D016) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Interim rule. 

SUMMARY: DoD is issuing an interim rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to implement a section of the 

National Defense Authorization Act for 

Fiscal Year 2013, which prohibits DoD 

from entering into cost-type contracts 

for production of major defense 

acquisition programs. 

DATES: Effective January 29, 2014. 

Comment Date: Comments on the 

interim rule should be submitted in 

writing to the address shown below on 

or before March 31, 2014 to be 

considered in the formation of the final 

rule. 

ADDRESSES: Submit comments 

identified by DFARS Case 2013–D016 

by any of the following methods: 

Æ Regulations.gov: http://

www.regulations.gov. Submit comments 

via the Federal eRulemaking portal by 

entering ‘‘DFARS Case 2013–D016’’ 

under the heading ‘‘Enter Keyword or 

ID’’ and selecting ‘‘Search’’. Select the 

link ‘‘Submit a Comment’’ that 

corresponds with ‘‘DFARS Case 2013– 

D016’’. Follow the instructions provided 

at the ‘‘Submit a Comment’’ screen. 

Please include your name, company 

name (if any), and ‘‘DFARS Case 2013– 

D016’’ on your attached document. 

Æ Email: dfars@mail.mil. Include 

DFARS Case 2013–D016 in the subject 

line of the message. 

Æ Fax: 202–501–4067. 

Æ Mail: Defense Acquisition 

Regulations System, ATTN: Susan 

Williams, OUSD/AT&L/DPAP/DARS, 

3060 Defense Pentagon, Room 3B855, 

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 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: Ms. 

Susan Williams, Senior Procurement 

Analyst, Defense Acquisition 

Regulations System, ATTN: Lesa Scott, 

OUSD/AT&L/DPAP/DARS, 3060 

Defense Pentagon, Room 3B855, 

Washington, DC 20301–3060, telephone 

571–372–6092. 

SUPPLEMENTARY INFORMATION: 

I. Background 

This interim rule amends the DFARS 

to implement section 811 of the 

National Defense Authorization Act 

(NDAA) for Fiscal Year (FY) 2013 (Pub. 

L. 112–239), which was enacted January 

2, 2013. Section 811(a) requires DoD to 

modify the acquisition regulations to 

prohibit DoD from entering into costtype contracts for the production of 

major defense acquisition programs 

(MDAPS) for contracts entered into on 

or after October 1, 2014, with one 

exception in section 811(b). Under 

section 811(b), the Under Secretary of 

Defense for Acquisition, Technology, 

and Logistics may submit to the 

congressional defense committees: (1) A 

written certification that the particular 

cost-type contract is needed to provide 

a required capability in a timely, costeffective manner; and (2) An 

explanation of the steps taken to ensure 

that the use of cost-type pricing is 

limited to only those line items or 

portions of the contact where such 

pricing is needed to achieve the purpose 

of the exception. 

In implementing section 811 of the 

NDAA for FY 2013, DoD further defined 

the prohibition on entering into costtype contracts to explicitly state the 

prohibition also applies to entering into 

cost-reimbursement line items for the 

production of MDAPS. 

II. Discussion and Analysis 

This interim rule makes the following 

changes to the DFARS: 

• The definition for ‘‘major defense 

acquisition program’’ is added to section 

201.101, Definitions, and is removed 

from section 209.571–1, Definitions. 

• Section 207.106(b)(1)(S–74) adds a 

cross-reference to see section 234.004, 

Acquisition Strategy, when selecting 

contract type. 

• A new policy statement is added at 

section 216.102, Policies. 

• A new definition of ‘‘production of 

major defense acquisition program’’ is 

added to section 234.001. 

• Section 234.004, Acquisition 

Strategy, paragraph (2) is revised and 

reformatted. 

III. 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, dated September 30, 1993. This 

rule is not a major rule under 5 U.S.C. 

804. 

IV. Regulatory Flexibility Act 

DoD does not expect this interim 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. 

However, an initial regulatory flexibility 

analysis has been performed and is 

summarized as follows: 

This interim rule implements section 

811 of the National Defense 

Authorization Act for Fiscal Year 2013. 

Small entities are not expected to be 

directly affected by this rule as it 

establishes policy and sets parameters 

for DoD contracting officers concerning 

selection of appropriate contract types 

when entering into contracts for the 

production of major defense acquisition 

programs (MDAPS). Cost-type contracts 

and cost-reimbursement line items may 

not be employed for production of 

MDAPS on or after October 1, 2014. 

Generally, small entities are not 

involved as prime contractors in the 

production of MDAPS due to the 

complex nature of these contracts and 

the associated requirement to employ 

extensive business and management 

systems. 

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 the rule in accordance with 5 U.S.C. 

601. Interested parties must submit such 

comments separately and should cite 5 

U.S.C. 610 (DFARS Case 2013–D016) in 

correspondence. 

V. Paperwork Reduction Act 

The rule does not contain any 

information collection requirements that 


tkelley on DSK3SPTVN1PROD with RULES
4632 Federal Register / Vol. 79, No. 19 / Wednesday, January 29, 2014 / Rules and Regulations 

require the approval of the Office of 

Management and Budget under the 

Paperwork Reduction Act (44 U.S.C. 

chapter 35. 

VI. 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 comment. 

This interim rule implements section 

811 of the National Defense 

Authorization Act for Fiscal Year 2013 

(Pub. L. 112–239). Section 811(a) 

instructs DoD to modify the acquisition 

regulations to prohibit DoD from 

entering into cost-type contracts for the 

production of major defense acquisition 

programs (MDAPS) for contracts entered 

into on or after October 1, 2014, with 

one exception in section 811(b). Under 

section 811(b), the Under Secretary of 

Defense for Acquisition, Technology, 

and Logistics may submit to the 

congressional defense committees: (1) A 

written certification that the particular 

cost-type contract is needed to provide 

a required capability in a timely, costeffective manner; and (2) An 

explanation of the steps taken to ensure 

that the use of cost-type pricing is 

limited to only those line items or 

portions of the contact where such 

pricing is needed to achieve the purpose 

of the exception. If implementation is 

delayed, contracting officers and 

program managers may be unaware of 

the prohibition on using cost-type 

contracts or cost-reimbursement line 

items for production of MDAPS on or 

after October 1, 2014, and, as a 

consequence, unable to perform 

appropriate acquisition planning to 

select a contract type that complies with 

the law. Failure to implement this rule 

in a timely manner may further harm 

the Government, because award of a 

cost-type contract for production of 

MDAPS, at this phase in the acquisition 

cycle, would inappropriately shift the 

responsibility for performance cost risk 

from the contractor to the Government. 

However, pursuant to 41 U.S.C. 1707 

and FAR 1.501–3(b), DoD will consider 

public comments received in response 

to this interim rule in the formation of 

the final rule. 

List of Subjects in 48 CFR Parts 202, 

207, 209, 216, and 234 

Government procurement. 

Manuel Quinones, 

Editor, Defense Acquisition Regulations 

System. 

Therefore, 48 CFR parts 202, 207, 209, 

216, and 234 are amended as follows: 

■ 1. The authority citation for 48 CFR 

parts 202, 207, 209, 216, and 234 

continues to read as follows: 

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

Chapter 1. 

PART 202—DEFINITIONS OF WORDS 

AND TERMS 

■ 2. Amend section 202.101 by adding, 

in alphabetical order, the definition of 

‘‘Major defense acquisition program’’ to 

read as follows: 

202.101 Definitions. 

* * * * * 

Major defense acquisition program is 

defined in 10.U.S.C. 2430(a). 

* * * * * 

PART 207—ACQUISITION PLANNING 

■ 3. Amend section 207.106 by adding 

paragraph (S–74) to read as follows: 

207.106 Additional requirements for major 

systems. 

* * * * * 

(S–74) When selecting contract type, 

see 234.004 (section 811 of the National 

Defense Authorization Act for Fiscal 

Year 2013 (Pub. L. 112–239)). 

PART 209—CONTRACTOR 

QUALIFICATIONS 

209.571–1 Definitions [Amended] 

■ 4. Amend section 209.571–1 by 

removing ‘‘ ‘Major Defense Acquisition 

Program’ is defined in 10 U.S.C. 2430.’’ 

PART 216—TYPES OF CONTRACTS 

■ 5. Add section 216.102 to read as 

follows: 

216.102 Policies. 

In accordance with section 811 of the 

National Defense Authorization Act for 

Fiscal Year 2013 (Pub. L. 112–239), use 

of any cost-reimbursement line item for 

the acquisition of production of major 

defense acquisition programs is 

prohibited unless the exception at 

234.004(2)(ii) applies. 

PART 234—MAJOR SYSTEM 

ACQUISITION 

■ 6. Amend section 234.001 by— 

■ a. Revising the section heading; and 

■ b. Adding, in alphabetical order, the 

definition for ‘‘Production of major 

defense acquisition program’’. 

The revision and addition read as 

follows: 

234.001 Definitions. 

* * * * * 

Production of major defense 

acquisition program means the 

production and deployment of a major 

system that is intended to achieve an 

operational capability that satisfies 

mission needs, or an activity otherwise 

defined as Milestone C under 

Department of Defense Instruction 

5000.02 or related authorities. 

* * * * * 

■ 7. Section 234.004 is amended by 

revising paragraph (2) to read as follows: 

234.004 Acquisition strategy. 

* * * * * 

(2) Contract type. 

(i) In accordance with section 818 of 

the National Defense Authorization Act 

for Fiscal Year 2007 (Pub. L. 109–364), 

for major defense acquisition programs 

at Milestone B— 

(A) The Milestone Decision Authority 

shall select, with the advice of the 

contracting officer, the contract type for 

a development program at the time of 

Milestone B approval or, in the case of 

a space program, Key Decision Point B 

approval; 

(B) The basis for the contract type 

selection shall be documented in the 

acquisition strategy. The 

documentation— 

(1) Shall include an explanation of the 

level of program risk; and 

(2) If program risk is determined to be 

high, shall outline the steps taken to 

reduce program risk and the reasons for 

proceeding with Milestone B approval 

despite the high level of program risk; 

and 

(C) If a cost-type reimbursement 

contract is selected, the contract file 

shall include the Milestone Decision 

Authority’s written determination that— 

(1) The program is so complex and 

technically challenging that it would 

not be practicable to reduce program 

risk to a level that would permit the use 

of a fixed-price type contract; and 

(2) The complexity and technical 

challenge of the program is not the 

result of a failure to meet the 

requirements of 10 U.S.C. 2366a. 

(ii) In accordance with section 811 of 

the National Defense Authorization Act 

for Fiscal Year 2013 (Pub. L. 112–239), 

for contracts entered into on or after 

October 1, 2014, the contracting officer 

shall— 

(A) Not use cost-reimbursement line 

items for the acquisition of production 

of major defense acquisition programs, 

unless USD(AT&L) submits to the 

congressional defense committees— 

(1) A written certification that the 

particular cost-reimbursement line 

times are needed to provide a required 

capability in a timely and cost effective 

manner; and 

(2) An explanation of the steps taken 

to ensure that cost-reimbursement line 


tkelley on DSK3SPTVN1PROD with RULES
Federal Register / Vol. 79, No. 19 / Wednesday, January 29, 2014 / Rules and Regulations 4633 

times are used only when to achieve the 

purposes of the exception; and 

(B) Include a copy of such 

congressional certification in the 

contract file. 

■ 8. Add section 234.005 heading to 

read as follows: 

234.005 General requirements. 

[FR Doc. 2014–01276 Filed 1–28–14; 8:45 am] 

BILLING CODE 5001–06–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Part 252 

RIN 0750–AI15 

Defense Federal Acquisition 

Regulation Supplement: Proposal 

Adequacy Checklist Revision (DFARS 

Case 2013–D033) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Final rule. 

SUMMARY: DoD is issuing a final rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to remove a redundant item 

from the solicitation provision, Proposal 

Adequacy Checklist. 

DATES: Effective January 29, 2014. 

FOR FURTHER INFORMATION CONTACT: 

Susan Williams, telephone 571–372– 

6092. 

SUPPLEMENTARY INFORMATION: 

I. Discussion 

DoD is revising the DFARS to remove 

and reserve item 19 of the solicitation 

provision at DFARS 252.215–7009, 

Proposal Adequacy Checklist. Item 19 

required price analysis for all 

commercial items offered that are not 

available to the general public. Through 

further research and discussion, DOD 

has determined that item 19 listed on 

the Proposal Adequacy Checklist is 

duplicative in nature. DoD has 

concluded that items proposed with a 

commercial basis under subcontracts in 

the proposal require price analysis by 

the offeror. Furthermore, DoD has also 

concluded that question 14 under the 

Material and Service section and 

question 17 under the Subcontracts 

section on the Proposal Adequacy 

Checklist currently address the 

requirement for price analysis of the 

proposed commercial item that is 

produced or performed by others. 

II. Publication of This Final Rule for 

Public Comment Is Not Required by 

Statute 

‘‘Publication of proposed 

regulations,’’ 41 U.S.C. 1707, is the 

statute which applies to the publication 

of the Federal Acquisition Regulation. 

Paragraph (a)(1) of the statute requires 

that a procurement policy, regulation, 

procedure or form (including an 

amendment or modification thereof) 

must be published for public comment 

if it relates to the expenditure of 

appropriated funds, and has either a 

significant effect beyond the internal 

operating procedures of the agency 

issuing the policy, regulation, procedure 

or form, or has a significant cost or 

administrative impact on contractors or 

offerors. This final rule is not required 

to be published for public comment, 

because the changes are not substantive 

and will not place any additional 

burden on the public. 

III. 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, dated September 30, 1993. This 

rule is not a major rule under 5 U.S.C. 

804. 

IV. Regulatory Flexibility Act 

The Regulatory Flexibility Act does 

not apply to this rule because this final 

rule does not constitute a significant 

DFARS revision within the meaning of 

FAR 1.501–1, and 41 U.S.C. 1707 does 

not require publication for public 

comment. 

V. Paperwork Reduction Act 

The rule does not contain 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). 

List of Subjects in 48 CFR Part 252 

Government procurement. 

Manuel Quinones, 

Editor, Defense Acquisition Regulations 

System. 

Therefore, 48 CFR part 252 is 

amended as follows: 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

■ 1. The authority citation for 48 CFR 

part 252 continues to read as follows: 

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

Chapter 1. 

252.215–7009 [Amended] 

■ 2. Amend section 252.215–7009 by— 

■ a. Removing the provision date 

‘‘(MAR 2013)’’ and adding ‘‘(JAN 2014)’’ 

in its place; and 

■ b. Removing from the Proposal 

Adequacy Checklist, item 19— 

■ i. Under the ‘‘References’’ column, 

‘‘FAR 15.408, Table 15–2, Section II, 

Paragraph A’’; and 

■ ii. Under the ‘‘Submission Item’’ 

column, ‘‘Does the proposal include a 

price analysis for all commercial items 

offered that are not available to the 

general public?’’ and adding in its place 

‘‘[Reserved]’’. 

[FR Doc. 2014–01274 Filed 1–28–14; 8:45 am] 

BILLING CODE 5001–06–P 

DEPARTMENT OF TRANSPORTATION 

Federal Railroad Administration 

49 CFR Part 213 

[Docket No. FRA–2011–0058, Notice No. 2] 

RIN 2130–AC28 

Track Safety Standards; Improving Rail 

Integrity 

Correction 

In rule document 2014–01387, 

appearing on pages 4234–4260 in the 

issue of Friday, January 24, 2014, make 

the following correction: 

§ 213.113 Defective rails. [Corrected] 

On page 4256, the Table titled 

‘‘REMEDIAL ACTION TABLE’’, in 

Subpart D—Track Structure, of Part 213, 

is corrected to read as follows: 


tkelley on DSK3SPTVN1PROD with RULES