35700 Federal Register / Vol. 79, No. 121 / Tuesday, June 24, 2014 / Rules and Regulations 

V. Paperwork Reduction Act 

This 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 Parts 202 and 

217 

Government procurement. 

Amy G. Williams, 

Deputy, Defense Acquisition Regulations 

System. 

Therefore, 48 CFR parts 202 and 217 

are amended as follows: 

■ 1. The authority citation for 48 CFR 

parts 202 and 217 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 revising 

the definition of ‘‘congressional defense 

committees’’ to read as follows: 

202.101 Definitions. 

Congressional defense committees 

means— 

(1) In accordance with 10 U.S.C. 

101(a)(16), except as otherwise specified 

in paragraph (2) of this definition or as 

otherwise specified by statute for 

particular applications— 

(i) The Committee on Armed Services 

of the Senate; 

(ii) The Committee on Appropriations 

of the Senate; 

(iii) The Committee on Armed 

Services of the House of 

Representatives; and 

(iv) The Committee on Appropriations 

of the House of Representatives. 

(2) For use in subpart 217.1, see the 

definition at 217.103. 

* * * * * 

PART 217—SPECIAL CONTRACTING 

METHODS 

■ 3. Amend section 217.103 by adding, 

in alphabetical order, the definition for 

‘‘congressional defense committees’’ to 

read as follows: 

217.103 Definitions. 

* * * * * 

Congressional defense committees 

means— 

(1) The Committee on Armed Services 

of the Senate; 

(2) The Committee on Appropriations 

of the Senate; 

(3) The Subcommittee on Defense of 

the Committee on Appropriations of the 

Senate; 

(4) The Committee on Armed Services 

of the House of Representatives; 

(5) The Committee on Appropriations 

of the House of Representatives; and 

(6) The Subcommittee on Defense of 

the Committee on Appropriations of the 

House of Representatives. 

* * * * * 

[FR Doc. 2014–14585 Filed 6–23–14; 8:45 am] 

BILLING CODE 5001–06–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Part 237 

RIN 0750–AI05 

Defense Federal Acquisition 

Regulation Supplement: Private Sector 

Notification Requirements of InSourcing Actions (DFARS Case 2012– 

D036) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Final rule. 

SUMMARY: DoD has adopted as final, 

with changes, an interim rule amending 

the Defense Federal Acquisition 

Regulation Supplement (DFARS) to 

implement a section of the National 

Defense Authorization Act (NDAA) for 

Fiscal Year 2012 regarding private 

sector notification of in-sourcing 

actions. 

DATES: Effective June 24, 2014. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Janetta Brewer, telephone 571–372– 

6104. 

SUPPLEMENTARY INFORMATION: 

I. Background 

DoD published an interim rule in the 

Federal Register at 78 FR 65218 on 

October 31, 2013, to establish 

procedures for the timely notification of 

any contractor that performs a function 

that the Secretary plans to convert (insource) to performance by DoD civilian 

employees and provide the 

congressional defense committees a 

copy of any such notification. One 

respondent submitted comments in 

response to the interim rule. 

II. Discussion and Analysis 

DoD reviewed the public comments in 

the development of the final rule. A 

discussion of the comments is provided 

below. No changes were made to the 

final rule based on the public 

comments; however, one editorial 

change is being made to clarify a 

reference. 

A. Analysis of Public Comments 

Comment: The respondent 

commented that, while the interim rule 

requires the contracting officer to notify 

an affected incumbent contractor about 

an in-sourcing decision within 20 

business days of receiving the decision 

from the in-sourcing program official, 

the rule does not specifically address 

how soon DoD can commence the insourcing action after issuing the notice. 

The respondent stated the rule should 

require issuance of the in-sourcing 

notice in a reasonable amount of time 

prior to DoD’s commencement of the insourcing action. 

Response: No action was taken as a 

result of this comment. DoD guidance at 

DFARS 237.102–79 and in the 

memorandum at DFARS Procedures, 

Guidance and Information 237.102–79, 

reflects that the in-sourcing of 

contracted services falls into the 

following three categories of 

justification (1) inherently 

Governmental functions (2) work 

closely associated with inherently 

Governmental functions, critical in 

nature, and unauthorized personal 

services, and (3) cost-based in-sourcing 

decisions. The nature of the contracts in 

these three categories is such that it is 

essential for the Government to have the 

ability to take in-sourcing actions once 

notification is provided to affected 

incumbent contractors. 

Comment: The respondent suggested 

including specific details of the 

rationale for the in-sourcing decision in 

the notice to the contractors to ensure 

meaningful insight about the rationale. 

Response: No action was taken on this 

comment as DoD included language 

requiring that a summary of why the 

service is being insourced be included 

in the notice and therefore, as written, 

the rule fulfills the objective of 

transparency and accountability. 

B. Other Changes 

Editorial changes were made to clarify 

where the OASD memorandum ‘‘Private 

Sector Notification Requirements in 

Support of In Sourcing Actions,’’ dated 

January 29, 2013, can be found in the 

DFARS Procedures Guidance and 

Information. 

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 


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Federal Register / Vol. 79, No. 121 / Tuesday, June 24, 2014 / Rules and Regulations 35701 

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 

A final regulatory flexibility analysis 

has been prepared consistent with the 

Regulatory Flexibility Act, 5 U.S.C. 601, 

et seq., and is summarized as follows: 

This final rule amends DFARS 

237.102–79 to implement section 938 of 

the National Defense Authorization Act 

(NDAA) for Fiscal Year 2012 regarding 

private sector notification of in-sourcing 

actions. Section 938 of the NDAA 

requires the Secretary of Defense to 

establish procedures for the timely 

notification of any contractor who 

performs a function that the Secretary 

plans to convert (in-source) to 

performance by DoD civilian employees 

and provide the congressional defense 

committees a copy of any such 

notification. The rule requires the 

contracting officer to notify an affected 

incumbent contractor about an insourcing decision within 20 business 

days of receiving the decision from the 

in-sourcing program official. 

The public did not raise any issues in 

response to the initial regulatory 

flexibility analysis. This rule is not 

expected to have a significant economic 

impact on a substantial number of small 

entities. The final rule has very limited 

application and only potentially applies 

to entities that have contracts with DoD 

agencies performing services that fall 

into the following three categories for 

potential justification for in-sourcing: 

(1) Inherently Governmental functions 

(2) work closely associated with 

inherently Governmental functions, 

critical in nature, and unauthorized 

personal services, and (3) cost-based insourcing decisions. During the 

acquisition planning phase, 

requirements are scrutinized under FAR 

subpart 7.5 to preclude contract awards 

for inherently Governmental functions 

and unauthorized personal service 

contracts. Because of this prohibition 

and screening of requirements, it is 

expected that this rule will not have a 

significant impact on a substantial 

number of contracts evaluated under 

category (1) for inherently 

Governmental functions or under 

category (2) for unauthorized personal 

services. Effective March 2013, data 

fields were added to FPDS to capture 

award information for contract actions 

that are (1) critical functions, i.e. a 

function that is necessary to the agency 

being able to effectively perform and 

maintain control its mission and 

operations, and (2) functions closely 

associated with inherently 

Governmental functions. FPDS data was 

reviewed for a full one-year period 

(March 2013 through February 2014) for 

awards coded as critical functions or 

functions closely associated with 

inherently Governmental functions. The 

FPDS data reviewed reflected that only 

7,786 contracts and task orders for 

critical functions or functions closely 

associated with inherently 

Governmental functions were awarded 

to small entities, compared to a total of 

71,274 awards for other functions that 

were made to small entities during this 

same period. (The data reflect awards 

greater than the simplified action 

threshold of $150,000.) It is unknown as 

to how many of the 7,786 awards made 

to small entities may be evaluated and 

justified for future in-sourcing action. 

There is no FPDS data available to 

evaluate the potential universe of 

actions that might fall under the third 

category of cost-based in-sourcing 

decisions. 

There are no projected reporting, 

recordkeeping, and other compliance 

requirements associated with this rule. 

The rule does not duplicate, overlap, or 

conflict with any other Federal rules. 

DoD was unable to identify any 

significant alternatives consistent with 

the stated objectives of the statute. 

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 237 

Government procurement. 

Amy G. Williams, 

Deputy, Defense Acquisition Regulations 

System. 

Accordingly, the interim rule 

amending 48 CFR part 237, which was 

published in the Federal Register at 78 

FR 65218 on October 31, 2013, is 

adopted as a final rule with the 

following change: 

PART 237—SERVICE CONTRACTING 

■ 1. The authority citation for 48 CFR 

part 237 continues to read as follows: 

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

chapter 1. 

■ 2. Amend section 237.102–79 by 

revising the last sentence in the 

paragraph to read as follows: 

237.102–79 Private sector notification 

requirements in support of in-sourcing 

actions. 

* * * See the OASD (RFM) 

memorandum entitled ‘‘Private Sector 

Notification Requirements in Support of 

In-sourcing Actions,’’ dated January 29, 

2013, for further information, which is 

available at PGI 237.102–79. 

[FR Doc. 2014–14584 Filed 6–23–14; 8:45 am] 

BILLING CODE 5001–06–P 


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