[Federal Register Volume 87, Number 53 (Friday, March 18, 2022)]
[Rules and Regulations]
[Pages 15812-15813]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-05532]


-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 204

[Docket DARS-2021-0017]
RIN 0750-AL48


Defense Federal Acquisition Regulation Supplement: Contract 
Closeout Authority for DoD Services Contracts (DFARS Case 2021-D012)

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 implement a section of the 
National Defense Authorization Act for Fiscal Year 2021.

DATES: Effective March 18, 2022.

FOR FURTHER INFORMATION CONTACT: Ms. Kimberly R. Ziegler, telephone 
571-372-6095.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD published a proposed rule in the Federal Register at 86 FR 
48366 on August 30, 2021, to implement section 820 of the National 
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 (Pub. L. 
116-283). Section 820 authorizes DoD contracting officers to close out 
certain physically complete contracts or groups of contacts through 
modification of such contracts, without completing the requirements of 
Federal Acquisition Regulation (FAR) 4.804-5(a)(3) through (15) based 
upon the age of the contract action.
    Two respondents submitted public comments in response to the 
proposed rule.

II. Discussion and Analysis

    DoD reviewed the public comments in the development of the final 
rule. A discussion of the comments and the changes made to the rule as 
a result of those comments is provided, as follows:

A. Summary of Significant Changes From the Proposed Rule

    There are no changes from the proposed rule as a result of public 
comments.

B. Analysis of Public Comments

1. Support for the Rule
    Comment: The respondent supported the rule and requested DoD 
publish the final rule expeditiously.
    Response: DoD acknowledges the support.
2. Expansion of the Statutory Criteria
    Comment: The respondent expressed concern that the rule, as well as 
the current DFARS text that implemented the statutory direction in the 
NDAA for FY 2017, reflects the language in section 820 of the FY 2021 
NDAA. The respondent asserts that the statutory language will not 
achieve the intent of Congress without further clarification.
    Response: This final rule implements the statutory authority 
provided in section 820 of the NDAA for FY 2021. There is nothing in 
the statute to indicate Congress had any intent other than the plain 
language meaning of that section as stated. DoD previously published a 
final rule at 84 FR 18153 on April 30, 2019, to implement section 836 
of the NDAA for FY 2017.
3. Additional Guidance for the Workforce
    Comment: The respondent recommends DoD develop Procedures, 
Guidance, and Information (PGI) for the acquisition workforce that 
includes additional guidance on the application of the eligibility 
criteria and establishment of costs.
    Response: DoD has no indication that the acquisition workforce 
requires an update to the PGI on contract closeout.

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

    This rule does not create any new solicitation provisions or 
contract clauses. It does not impact any existing solicitation 
provisions or contract clauses.

IV. Expected Impact of the Rule

    DFARS 204.804(3)(i) currently provides for the expedited closeout 
of contracts or groups of contracts without completion of a 
reconciliation audit or other corrective actions required by FAR 4.804-
5(a)(3) through (15) if certain criteria are met. If a contract was 
entered into at least 17 years prior to the current fiscal year, is 
physically complete, and has been determined not reconcilable, the 
contracting officer may close the contract through a negotiated 
settlement.
    This final rule reduces the age requirement from 17 years to 10 
years for military construction and shipbuilding and 7 years for all 
other contract actions. The rule adds a new requirement that these 
contracts must be physically complete at least 4 years prior to the 
current fiscal year.
    The expanded authority will apply to more recent contracts, subject 
to the other criteria in DFARS 204.804(3)(i), to reduce the current 
backlog and administration requirements for contracts eligible for 
closeout.

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, dated September 30, 1993.

VI. Congressional Review Act

    As required by the Congressional Review Act (5 U.S.C. 801-808) 
before an interim or final rule takes effect, DoD will submit a copy of 
the interim or final rule with the form, Submission of Federal Rules 
Under the Congressional Review Act, to the U.S. Senate, the U.S. House 
of Representatives, and the Comptroller General of the United States. A 
major rule under the Congressional Review Act cannot take effect until 
60 days after it is published in the Federal Register. The Office of 
Information and Regulatory Affairs has determined that this rule is not 
a major rule as defined by 5 U.S.C. 804.

VII. Regulatory Flexibility Act

    DoD does not expect this 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 this rule 
implements requirements primarily for the Government. However, a final 
regulatory flexibility analysis (FRFA) has been prepared consistent 
with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is 
summarized as follows:
    This rule amends the Defense Federal Acquisition Regulation 
Supplement

[[Page 15813]]

(DFARS) to implement section 820 of the National Defense Authorization 
Act (NDAA) for Fiscal Year (FY) 2021 (Pub. L. 116-283). Section 820 
expands the application of the expedited contract closeout authority of 
section 836 of the NDAA for FY 2017, implemented at DFARS 
204.804(3)(i)(A), to certain contracts or groups of contracts that were 
awarded at least 7 to 10 FYs before the current FY and have completed 
performance or delivery at least 4 years prior to the current FY. The 
new 10-year standard will apply to contracts or groups of contracts for 
military construction, as defined in 10 U.S.C. 2801, or shipbuilding, 
while the 7-year standard will apply to all other contracts.
    The objective of the rule is to implement the requirements of 
section 820, which expands the application of the expedited contract 
closeout authority of section 836 of the NDAA for FY 2017 to more 
recent, physically complete contracts. The legal basis of the rule is 
section 820 of the NDAA for FY 2021.
    There were no significant issues raised by the public in response 
to the initial regulatory flexibility analysis.
    This rule will likely affect small entities that have been or will 
be awarded DoD contracts, including those under FAR part 12 procedures 
for the acquisition of commercial products, including commercially 
available off-the-shelf items, and commercial services. Data was 
obtained from the Electronic Data Access module of the Procurement 
Integrated Enterprise Environment for contracts that were physically 
completed at least 4 years ago and are eligible for closeout between 
the new standard of 7 or 10 years and the previous standard of at least 
17 fiscal years after award. These numbers were then compared to the 
Federal Procurement Data System (FPDS) to estimate the number of 
contracts awarded to small entities. Contracts subject to the previous 
standard of 17 years are included in this estimate.
    As of April 2021, the FPDS data indicate that approximately 29,200 
contracts, eligible for expedited closeout under the 7-year standard, 
were awarded to an estimated 4,490 unique small entities. An additional 
estimated 1,775 contracts, subject to the 10-year standard, were 
awarded to approximately 576 small entities. As a result, DoD estimates 
that approximately 5,066 small entities will have the opportunity to 
benefit from the expanded expedited contract authorities provided in 
this rule.
    The rule does not impose any new reporting, recordkeeping, or 
compliance requirements.
    There are no practical alternatives that will accomplish the 
objectives of the statute.

VIII. Paperwork Reduction Act

    This rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Part 204

    Government procurement.

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

    Therefore, 48 CFR part 204 is amended as follows:

PART 204--ADMINISTRATIVE AND INFORMATION MATTERS

0
1. The authority citation for 48 CFR part 204 continues to read as 
follows:

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

0
2. Amend section 204.804 by revising paragraph (3)(i) to read as 
follows:


204.804   Closeout of contract files.

* * * * *
    (3)(i) In accordance with section 836 of the National Defense 
Authorization Act for Fiscal Year 2017 (Pub. L. 114-328), section 824 
of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 
115-91), and section 820 of the National Defense Authorization Act for 
Fiscal Year 2021 (Pub. L. 116-283), contracting officers may close out 
contracts or groups of contracts through issuance of one or more 
modifications to such contracts without completing a reconciliation 
audit or other corrective action in accordance with FAR 4.804-5(a)(3) 
through (15), as appropriate, if each contract--
    (A)(1) For military construction (as defined at 10 U.S.C. 2801) or 
shipbuilding, was awarded at least 10 fiscal years before the current 
fiscal year; or
    (2) For all other contracts, was awarded at least 7 fiscal years 
before the current fiscal year;
    (B) The performance or delivery was completed at least 4 years 
prior to the current fiscal year; and
    (C) Has been determined by a contracting official, at least one 
level above the contracting officer, to be not otherwise reconcilable, 
because--
    (1) The contract or related payment records have been destroyed or 
lost; or
    (2) Although contract or related payment records are available, the 
time or effort required to establish the exact amount owed to the U.S. 
Government or amount owed to the contractor is disproportionate to the 
amount at issue.
* * * * *
[FR Doc. 2022-05532 Filed 3-17-22; 8:45 am]
BILLING CODE 5001-06-P