25148 Federal Register / Vol. 87, No. 82 / Thursday, April 28, 2022 / Rules and Regulations 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 227 and 252 

[Docket DARS–2019–0048] 

RIN 0750–AK71 

Defense Federal Acquisition 

Regulation Supplement: Validation of 

Proprietary and Technical Data 

(DFARS Case 2018–D069) 

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 2019 that amended the 

statutory presumption of development 

exclusively at private expense for 

commercial items in the procedures 

governing the validation of asserted 

restrictions on technical data. 

DATES: Effective April 28, 2022. 

FOR FURTHER INFORMATION CONTACT: Mr. 

David E. Johnson, telephone 202–913– 

5764. 

SUPPLEMENTARY INFORMATION: 

I. Background 

DoD published a proposed rule in the 

Federal Register at 85 FR 53755 on 

August 31, 2020, to implement section 

865 of the National Defense 

Authorization Act (NDAA) for Fiscal 

Year (FY) 2019 (Pub. L. 115–232), which 

repeals several years of congressional 

adjustments to the statutory 

presumption of development at private 

expense for commercial items in the 

validation procedures at paragraph (f) of 

10 U.S.C. 2321. The DFARS 

implementation of this mandatory 

presumption has evolved accordingly to 

track the statutory changes, with the 

primary coverage found at paragraph (c) 

of section 227.7103–13, and paragraph 

(b) of the contract clause at 252.227– 

7037, Validation of Restrictive Markings 

on Technical Data. One respondent 

submitted written public comments in 

response to the proposed rule. 

II. Discussion and Analysis 

DoD reviewed the public comments 

submitted in writing and discussed by 

the attendees at the virtual public 

meeting on November 19, 2020, 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 

Based on comments received, 

language was added to DFARS 

227.7103–13(c) and DFARS 252.227– 

7037(e) to indicate the information that 

supports the challenge notice must be 

included in the challenge notice, subject 

to handling procedures for classified 

information or controlled unclassified 

information (CUI). 

B. Analysis of Public Comments 

1. DoD Must Provide Sufficient 

Information To Support the Challenge 

Notice 

Comment: The respondent requested 

elimination of the phrase ‘‘to the 

maximum extent practicable’’ in the 

proposed revisions to DFARS 227.7103– 

13(c)(2) and DFARS 252.227– 

7037(e)(1)(i) and (f) because this phrase 

does not appear in the underlying 

statute. The respondent asserted that 

this language introduces uncertainty as 

to whether and when the contracting 

officer must provide sufficient 

information to overcome the 

presumption. The respondent asserted 

that the Government should furnish CUI 

in the manner in which the Government 

conventionally furnishes other CUI to 

contractors. If classified information 

cannot be provided with the challenge 

notice in an unclassified 

communication, then the classified 

information may be contemporaneously 

furnished via alternate means that 

complies with the applicable security 

requirements. 

Response: DoD adopted the 

respondent’s recommendation to 

remove the phase ‘‘to the maximum 

extent practicable.’’ In view of the 

respondent’s comments, the rule has 

also been revised to indicate that the 

challenge notice will include sufficient 

information to reasonably demonstrate 

that a commercial item was not 

developed exclusively at private 

expense, subject to the handling 

procedures for classified information 

and controlled unclassified information. 

Such handling procedures may include, 

but are not limited to, contemporaneous 

communications (referenced in the 

challenge notice) that consist of 

classified information transmitted via 

secured channels. 

2. DoD Should Restore 10 U.S.C. 2320 

and 2321 to the DFARS List of Statutes 

Which Are Inapplicable to Subcontracts 

for Commercial Items and Eliminate 

Mandatory Flowdown Requirements 

Comment: The respondent 

recommended that, because section 865 

repealed several congressional 

amendments to the statutory 

presumption of development 

exclusively at private expense, 10 U.S.C. 

2320 and 2321 should be included in 

the DFARS 212.504 exclusionary list of 

statutes that are inapplicable to 

contracts and subcontracts for the 

acquisition of commercial items. The 

respondent also recommended 

removing the mandatory flowdown 

requirements in the contract clauses at 

DFARS 252.227–7013, 252.227–7015, 

and 252.227–7037. 

Response: This case implements 

specific amendments to 10 U.S.C. 

2321(f), and the applicability of those 

implementing revisions to contracts for 

the acquisition of commercial items is 

addressed in Section III of this 

preamble. To the extent the 

respondent’s recommendations are 

directed to the applicability of the 

entirety of 10 U.S.C. 2320 and 2321 to 

commercial items contracts and 

subcontracts and extend beyond the 

proposed implementation of 10 U.S.C. 

2321(f), those recommendations are 

beyond the scope of this case. DoD 

acknowledges that the respondent’s 

concerns and recommendations address 

broader scope issues also raised in the 

Section 813 Government-Industry 

Advisory Panel Report, and cognizant 

DoD policy stakeholders, including the 

Intellectual Property (IP) Cadre, are 

considering such issues as part of DoD’s 

overarching efforts to review and 

improve its IP policies and 

implementing procedures. 

3. Mandatory Flowdown Requirements 

for Supplier Agreements Are 

Inconsistent With the Federal 

Acquisition Streamlining Act 

Comment: The respondent 

recommended elimination of mandatory 

flowdown language in the clauses at 

DFARS 252.227–7037(l), 252.227– 

7013(k)(2), and 252.227–7015(e), which 

require contractors to use the clauses in 

other contractual instruments for 

commercial items with suppliers at any 

tier if the other contractual instruments 

require the delivery of technical data. 

The respondent asserted that this 

mandatory flowdown is both 

inconsistent with the Federal 

Acquisition Streamlining Act of 1994 

(FASA) and undermines DoD’s efforts to 

acquire commercial items. 


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Federal Register / Vol. 87, No. 82 / Thursday, April 28, 2022 / Rules and Regulations 25149 

Response: This case implements 

specific amendments to 10 U.S.C. 

2321(f), and the applicability of those 

implementing revisions to contracts for 

the acquisition of commercial items is 

addressed in Section III of this 

preamble. To the extent the 

respondent’s recommendations are 

directed to the application of the 

mandatory flowdown requirements for 

the entirety of multiple clauses to 

suppliers at any tier and ‘‘other 

contractual instruments’’ for 

commercial items and extend beyond 

implementation of 10 U.S.C. 2321(f), 

those recommendations are beyond the 

scope of this case. DoD acknowledges 

that the respondent’s concerns and 

recommendations address broader scope 

issues also raised in the Section 813 

Government-Industry Advisory Panel 

Report, and cognizant DoD policy 

stakeholders, including the IP Cadre, are 

considering such issues as part of DoD’s 

overarching efforts to review and 

improve its IP policies and 

implementing procedures. 

4. DFARS 252.227–7013 Should Not 

Apply to Commercial Items With ‘‘Of a 

Type’’ or ‘‘Minor’’ Modifications 

Comment: The respondent noted that 

the current DFARS policy permits use of 

both DFARS clauses at 252.227–7013 

(for technical data related to 

noncommercial and commercial 

technology developed with Government 

funds) and 252.227–7015 (for technical 

data related to commercial technology 

developed at private expense). The 

respondent expressed concern that this 

paradigm creates a complicated mix of 

commercial and noncommercial terms 

along with potentially costly portionmarking. The respondent also asserted 

that these rules may discourage 

companies from selling modified 

commercial items to the Government. 

The respondent recommended that the 

noncommercial technical data rights 

clause at DFARS 252.227–7013 should 

not apply to commercial items with ‘‘of 

a type’’ or ‘‘minor’’ modifications. The 

respondent stated that DFARS 252.227– 

7037 and the associated prescriptive 

guidance should be revised to clarify 

that Government funds used to modify 

a commercial item shall not be used as 

the basis for rebutting the presumption 

of development exclusively at private 

expense so long as the modified item 

continues to meet the commercial item 

definition at Federal Acquisition 

Regulation (FAR) 2.101. The respondent 

also suggested revising DFARS 252.227– 

7013, 252.227–7015, and the associated 

guidance for contracting officers to 

clarify that 252.227–7013 shall not 

apply to commercial items modified at 

Government expense so long as the 

modified item continues to meet the 

commercial item definition at FAR 

2.101. 

Response: This case implements 

specific amendments to 10 U.S.C. 

2321(f), and the applicability of those 

implementing revisions to contracts for 

the acquisition of commercial items is 

addressed in Section III of this 

preamble. To the extent that the 

respondent’s recommendations are 

directed to the applicability of DFARS 

252.227–7013 to commercial items with 

‘‘of a type’’ or ‘‘minor’’ modifications 

and extend beyond implementation of 

10 U.S.C. 2321(f), those 

recommendations are beyond the scope 

of this case. DoD acknowledges that the 

respondent’s concerns and 

recommendations address broader scope 

issues also raised in the Section 813 

Government-Industry Advisory Panel 

Report, and cognizant DoD policy 

stakeholders, including the IP Cadre, are 

considering such issues as part of DoD’s 

overarching efforts to review and 

improve its IP policies and 

implementing procedures. 

C. Other Changes 

Minor editorial changes are made in 

DFARS clause 252.227–7037 to the 

expressed time periods to conform to 

standard rule drafting conventions. 

III. Applicability to Contracts at or 

Below the Simplified Acquisition 

Threshold, for Commercial Products 

(Including Commercially Available Offthe-Shelf Items), and for Commercial 

Services 

This rule amends the contract clause 

at 252.227–7037 and the prescription at 

DFARS 227.7103–13. However, this rule 

does not impose any new requirements 

on contracts at or below the simplified 

acquisition threshold (SAT), for 

commercial products (including 

commercially available off-the-shelf 

(COTS) items), or for commercial 

services. The prescription and clause 

will continue to apply to acquisitions at 

or below the SAT and to acquisitions of 

commercial products (including COTS 

items). 

A. Applicability to Contracts at or Below 

the Simplified Acquisition Threshold 

41 U.S.C. 1905 governs the 

applicability of laws to contracts or 

subcontracts in amounts not greater 

than the simplified acquisition 

threshold. It is intended to limit the 

applicability of laws to such contracts or 

subcontracts. 41 U.S.C. 1905 provides 

that if a provision of law contains 

criminal or civil penalties, or if the 

Federal Acquisition Regulatory Council 

makes a written determination that it is 

not in the best interest of the Federal 

Government to exempt contracts or 

subcontracts at or below the SAT, the 

law will apply to them. The Principal 

Director, Defense Pricing and 

Contracting (DPC), is the appropriate 

authority to make comparable 

determinations for regulations to be 

published in the DFARS, which is part 

of the FAR system of regulations. DoD 

has made that determination. Therefore, 

this rule does apply to contracts at or 

below the simplified acquisition 

threshold. 

B. Applicability to Contracts for the 

Acquisition of Commercial Products 

(Including COTS Items) and 

Commercial Services 

10 U.S.C. 2375 governs the 

applicability of laws to contracts and 

subcontracts for the acquisition of 

commercial products (including COTS 

items) and commercial services and is 

intended to limit the applicability of 

laws to contracts for the acquisition of 

commercial products (including COTS 

items) and commercial services. 10 

U.S.C. 2375 provides that if a provision 

of law contains criminal or civil 

penalties, or if the Under Secretary of 

Defense for Acquisition and 

Sustainment (USD(A&S)) makes a 

written determination that it is not in 

the best interest of the Federal 

Government to exempt commercial 

product or commercial service 

contracts, the provision of law will 

apply to contracts for the acquisition of 

commercial products or commercial 

services. 

Due to delegations of authority from 

USD(A&S), the Principal Director, DPC, 

is the appropriate authority to make this 

determination. DoD has made that 

determination to apply this rule to the 

acquisition of commercial products 

(including COTS items), if otherwise 

applicable. 

C. Determination 

This rule implements statutory 

requirements regarding the presumption 

of development at private expense for 

commercial products (including COTS 

items) in validations of asserted 

restrictions. Not applying the rule to 

contracts at or below the SAT would 

exclude contracts at low dollar values 

for commercial products intended to be 

covered by this rule. An exclusion for 

contracts at or below the SAT would 

therefore undermine the overarching 

purpose of the rule. Therefore, DoD has 

determined that it is in the best interest 

of the Federal Government to apply the 

rule to contracts valued at or below the 

SAT. 


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25150 Federal Register / Vol. 87, No. 82 / Thursday, April 28, 2022 / Rules and Regulations 

Given that the requirements of section 

865 of the NDAA for FY 2019 were 

enacted to return to a presumption of 

development exclusively at private 

expense for commercial products, DoD 

has determined that it is in the best 

interest of the Federal Government to 

apply the rule to contracts for the 

acquisition of commercial products, 

including COTS items, as those terms 

are defined at FAR 2.101. An exception 

for contracts for the acquisition of 

commercial products, including COTS 

items, would exclude contracts 

intended to be covered by the law, 

thereby undermining the overarching 

public policy purpose of the law. 

IV. Expected Impact of the Rule 

The final rule applies the statutory 

requirements regarding the presumption 

of development at private expense for 

commercial items in validations of 

asserted restrictions. Specifically, the 

rule returns the coverage at DFARS 

227.7103–13 and 252.227–7037 

substantially back to the original 

Federal Acquisition Streamlining Actimplementing language with regard to 

the presumption of development 

exclusively at private expense for 

commercial items. This statutory change 

places the burden of proof on DoD, not 

on the contractor or subcontractor, for 

commercial items. 

Under the new rule, DoD is required 

to presume that the contractor or 

subcontractor has justified the asserted 

restriction on the basis that the item was 

developed exclusively at private 

expense for commercial items, 

regardless of whether the contractor or 

subcontractor submits a justification in 

response to the Government’s challenge 

notice. In such a case, the challenge to 

the use or release restriction may be 

sustained only if information provided 

by DoD demonstrates that the item was 

not developed exclusively at private 

expense. Within the validation 

procedures, the presumption of 

development at private expense for 

commercial items is primarily designed 

to protect the contractors’ interests. 

The impact of these changes may be 

positive, for both the public and the 

Government, because the Government 

will not initiate challenges when it does 

not have sufficient information to 

support the initiation of a challenge. 

Contractors will not be required to 

respond to challenges or pre-challenge 

requests for information regarding 

commercial items. Therefore, if DoD 

does not have information 

demonstrating that a commercial item 

was not developed exclusively at 

private expense, a contracting officer 

may reasonably decide not to initiate a 

challenge. DoD does not have data on 

the number of challenges that may be 

avoided. 

If DoD does not have sufficient 

information to successfully initiate a 

challenge to a contractor’s restrictive 

markings on technical data for 

commercial items, DoD will have to 

comply with those restrictive markings. 

Such information may exist but be in 

the custody and control of the 

contractor. For contractors, the impact 

may be positive, as it would limit how 

DoD could use technical data related to 

a contractor’s commercial item. For the 

Government, the markings may impact 

DoD’s ability to use the technical data 

to obtain competitive procurement of an 

item and thus result in higher costs. 

DoD does not have data on the number 

of times this situation is likely to occur. 

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 

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: 

DoD is proposing to implement 

section 865 of the National Defense 

Authorization Act (NDAA) for Fiscal 

Year (FY) 2019 (Pub. L. 115–232), which 

revised 10 U.S.C. 2321. Section 865 of 

the NDAA for FY 2019 repeals 

amendments to 10 U.S.C. 2321(f) made 

by the NDAAs for FY 2007 through FY 

2016. The impact is to return the 

DFARS coverage at section 227.7103–13 

and the contract clause at 252.227–7037, 

Validation of Restrictive Markings on 

Technical Data, substantially back to its 

original language implementing the 

Federal Acquisition Streamlining Act of 

1994. Section 865 also codifies and 

revises DoD challenges to contractorasserted restrictions on technical data 

pertaining to a commercial item, i.e., 

DoD is required to presume that the 

contractor or subcontractor has justified 

the asserted restriction on the basis that 

the item was developed exclusively at 

private expense, regardless of whether 

the contractor or subcontractor submits 

a justification in response to the 

Government’s challenge notice. In such 

a case, the challenge to the use or 

release restriction may be sustained 

only if information provided by DoD 

demonstrates that the item was not 

developed exclusively at private 

expense. 

There were no public comments 

received in response to the initial 

regulatory flexibility analysis. 

This final rule will apply to small 

entities that have contracts with DoD 

requiring delivery of technical data. 

Based on data from Electronic Data 

Access for FY 2018 through FY 2020, 

DoD estimates that an average of 814 

contractors may be impacted by the 

changes in this final rule. Of those 

entities, approximately 507 (62 percent) 

are small entities. 

This final rule does not impose any 

new reporting, recordkeeping, or other 

compliance requirements for small 

entities. 

There are no known alternatives 

which would accomplish the stated 

objectives of the applicable statute. 

VIII. Paperwork Reduction Act 

The Paperwork Reduction Act (44 

U.S.C. chapter 35) applies to this rule. 

However, these changes to the DFARS 

do not impose additional information 

collection requirements to the 

paperwork burden previously approved 

under OMB Control Number 0704–0369, 

entitled ‘‘DFARS Subparts 227.71, 

Rights in Technical Data; and Subpart 

227.72, Rights in Computer Software 

and Computer Software Documentation, 

and related provisions and clauses.’’ 


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Federal Register / Vol. 87, No. 82 / Thursday, April 28, 2022 / Rules and Regulations 25151 

List of Subjects in 48 CFR Parts 227 and 

252 

Government procurement. 

Jennifer D. Johnson, 

Editor/Publisher, Defense Acquisition 

Regulations System. 

Therefore, 48 CFR parts 227 and 252 

are amended as follows: 

■ 1. The authority citation for parts 227 

and 252 continues to read as follows: 

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

chapter 1. 

PART 227—PATENTS, DATA, AND 

COPYRIGHTS 

■ 2. Amend section 227.7103–13 by— 

■ a. Revising paragraph (c); 

■ b. In paragraph (d)(2)(i) removing 

‘‘subsection’’ and adding ‘‘section’’ in 

its place; and 

■ c. Revising paragraph (d)(4). 

The revisions read as follows: 

227.7103–13 Government right to review, 

verify, challenge, and validate asserted 

restrictions. 

* * * * * 

(c) Challenge considerations and 

presumption—(1) Requirements to 

initiate a challenge. Contracting officers 

shall have reasonable grounds to 

challenge the validity of an asserted 

restriction. Before issuing a challenge to 

an asserted restriction, carefully 

consider all available information 

pertaining to the assertion. 

(2) Commercial items—presumption 

regarding development exclusively at 

private expense. 10 U.S.C. 2320(b)(1) 

and 2321(f) establish a presumption and 

procedures regarding validation of 

asserted restrictions for technical data 

related to commercial items on the basis 

of development exclusively at private 

expense. Contracting officers shall 

presume that a commercial item was 

developed exclusively at private 

expense whether or not a contractor or 

subcontractor submits a justification in 

response to a challenge notice. The 

contracting officer shall not challenge a 

contractor’s assertion that a commercial 

item was developed exclusively at 

private expense unless the Government 

can specifically state the reasonable 

grounds to question the validity of the 

assertion. The challenge notice shall 

include sufficient information to 

reasonably demonstrate that the 

commercial item was not developed 

exclusively at private expense. In order 

to sustain the challenge, the contracting 

officer shall provide information 

demonstrating that the commercial item 

was not developed exclusively at 

private expense. The challenge notice 

and all related correspondence shall be 

subject to handling procedures for 

classified information and controlled 

unclassified information. A contractor’s 

or subcontractor’s failure to respond to 

the challenge notice cannot be the sole 

basis for issuing a final decision 

denying the validity of an asserted 

restriction. 

(d) * * * 

(4) Challenge notice. The contracting 

officer shall not issue a challenge notice 

unless there are reasonable grounds to 

question the validity of an assertion. For 

commercial items, also see paragraph 

(c)(2) of this section. The contracting 

officer may challenge an assertion 

whether or not supporting 

documentation was requested under 

paragraph (d)(2) of this section. 

Challenge notices shall be in writing 

and issued to the contractor or, after 

consideration of the situations described 

in paragraph (d)(3) of this section, the 

person asserting the restriction. The 

challenge notice shall include the 

information in paragraph (e) of the 

clause at 252.227–7037. 

* * * * * 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

■ 3. Amend section 252.227–7037 by— 

■ a. Revising the section heading; 

■ b. In the introductory text, removing 

‘‘27.7104(e)(5)’’ and adding 

‘‘227.7104(e)(5)’’ in its place; 

■ c. Revising the clause date; 

■ d. Revising paragraph (b); 

■ e. In paragraph (c) removing 

‘‘paragraph (b)(1)’’ and adding 

‘‘paragraph (b)’’ in its place; 

■ f. In paragraph (d)(2) removing 

‘‘Contracting Officer shall’’ and adding 

‘‘Contracting Officer will’’ in its place; 

■ g. Revising paragraphs (e)(1) 

introductory text and (e)(1)(i); 

■ h. In paragraph (e)(1)(ii) removing 

‘‘sixty (60) days’’ and adding ‘‘60 days’’ 

in its place; 

■ i. In paragraph (e)(2) removing ‘‘shall’’ 

and adding ‘‘will’’ in its place; 

■ j. In paragraph (e)(3) removing 

‘‘Contract Disputes’’ and adding 

‘‘Contract Disputes,’’ in its place; 

■ k. In paragraph (e)(4) removing ‘‘shall 

formulate’’ and ‘‘shall afford’’ and 

adding ‘‘will formulate’’ and ‘‘will 

afford’’ in their places, respectively; 

■ l. Revising paragraph (f); 

■ m. In paragraph (g)(1) removing 

‘‘shall’’ and ‘‘sixty (60) days’’ wherever 

they appear and adding ‘‘will’’ and ‘‘60 

days’’ in their places, respectively; 

■ n. Revising paragraph (g)(2)(i); 

■ o. In paragraph (g)(2)(ii) removing 

‘‘ninety (90) days’’ wherever it appears 

and ‘‘ninety (90)-day period’’ and 

adding ‘‘90 days’’ and ‘‘90-day period’’ 

in their places, respectively; 

■ p. In paragraph (g)(2)(iii) removing 

‘‘ninety (90) days’’ and ‘‘one (1) year’’ 

and adding ‘‘90 days’’ and ‘‘1 year’’ in 

their places, respectively; 

■ q. In paragraphs (h)(2)(i) and (ii) 

removing ‘‘Government shall’’ and 

adding ‘‘Government will’’ in its place; 

and 

■ r. In paragraph (i) introductory text— 

■ i. Removing ‘‘three (3) years’’ 

wherever it appears and adding ‘‘3 

years’’ in its place; and 

■ ii. Removing ‘‘disclosure or use’’ and 

adding ‘‘disclosure, or use’’ in its place. 

The revisions read as follows: 

252.227–7037 Validation of Restrictive 

Markings on Technical Data. 

* * * * * 

Validation of Restrictive Markings on 

Technical Data (APR 2022) 

* * * * * 

(b) Commercial items—presumption 

regarding development exclusively at 

private expense. The Contracting Officer 

will presume that the Contractor’s or a 

subcontractor’s asserted use or release 

restrictions with respect to a 

commercial item are justified on the 

basis that the item was developed 

exclusively at private expense. The 

Contracting Officer will not issue a 

challenge unless there are reasonable 

grounds to question the validity of the 

assertion that the commercial item was 

developed exclusively at private 

expense. 

* * * * * 

(e) * * * 

(1) Notwithstanding any provision of 

this contract concerning inspection and 

acceptance, if the Contracting Officer 

determines that a challenge to the 

restrictive marking is warranted, the 

Contracting Officer will send a written 

challenge notice to the Contractor or 

subcontractor asserting the restrictive 

markings. The challenge notice and all 

related correspondence shall be subject 

to handling procedures for classified 

information and controlled unclassified 

information. Such challenge will— 

(i) State the specific grounds for 

challenging the asserted restriction 

including, for commercial items, 

sufficient information to reasonably 

demonstrate that the commercial item 

was not developed exclusively at 

private expense; 

* * * * * 

(f) Final decision when Contractor or 

subcontractor fails to respond. Upon a 

failure of a Contractor or subcontractor 

to submit any response to the challenge 

notice the Contracting Officer will issue 

a final decision to the Contractor or 


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25152 Federal Register / Vol. 87, No. 82 / Thursday, April 28, 2022 / Rules and Regulations 

subcontractor in accordance with the 

Disputes clause of this contract. In order 

to sustain the challenge for commercial 

items, the Contracting Officer will 

provide information demonstrating that 

the commercial item was not developed 

exclusively at private expense. This 

final decision will be issued as soon as 

possible after the expiration of the time 

period of paragraph (e)(1)(ii) or (e)(2) of 

this clause. Following issuance of the 

final decision, the Contracting Officer 

will comply with the procedures in 

paragraphs (g)(2)(ii) through (iv) of this 

clause. 

(g) * * * 

(2)(i) If the Contracting Officer 

determines that the validity of the 

restrictive marking is not justified, the 

Contracting Officer will issue a final 

decision to the Contractor or 

subcontractor in accordance with the 

Disputes clause of this contract. In order 

to sustain the challenge for commercial 

items, the Contracting Officer will 

provide information demonstrating that 

the commercial item was not developed 

exclusively at private expense. 

Notwithstanding paragraph (e) of the 

Disputes clause, the final decision will 

be issued within 60 days after receipt of 

the Contractor’s or subcontractor’s 

response to the challenge notice, or 

within such longer period that the 

Contracting Officer has notified the 

Contractor or subcontractor that the 

Government will require. The 

notification of a longer period for 

issuance of a final decision will be made 

within 60 days after receipt of the 

response to the challenge notice. 

* * * * * 

[FR Doc. 2022–08811 Filed 4–27–22; 8:45 am] 

BILLING CODE 5001–06–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 232 and 252 

[Docket DARS–2022–0009] 

RIN 0750–AL53 

Defense Federal Acquisition 

Regulation Supplement: Repeal of 

DFARS Provision ‘‘Payment in Local 

Currency (Afghanistan)’’ (DFARS Case 

2022–D001) 

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 solicitation 

provision that is no longer necessary. 

DATES: Effective April 28, 2022. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Barbara J. Salcido, telephone 571–372– 

6102. 

SUPPLEMENTARY INFORMATION: 

I. Background 

As required at DFARS subpart 232.72, 

Payment in Local Currency 

(Afghanistan), DFARS solicitation 

provision 252.232–7014, Payment in 

Local Currency (Afghanistan), is 

included in all solicitations, including 

solicitations using Federal Acquisition 

Regulation (FAR) part 12 procedures for 

the acquisition of commercial items, for 

performance in Afghanistan. The 

provision notifies host nation (Afghan) 

vendors that the contract resulting from 

the solicitation will be paid in local 

currency (Afghani) via electronic funds 

transfer to a local (Afghan) banking 

institution unless an exception applies. 

It also notifies host nation vendors that 

contracts would not be awarded if they 

did not bank locally. Host nation 

vendors were required to submit 

quotations and offers in U.S. dollars, but 

the contract would be converted to 

Afghani using the current U.S. budget 

rate (i.e., U.S. Treasury rate of exchange) 

upon award. 

Due to the drawdown of operations in 

Afghanistan, the text at DFARS 232.72 

and solicitation provision 252.232–7014 

are no longer required. The U.S. 

Department of the Treasury has placed 

the Taliban, the de facto government in 

Afghanistan, on the Office of Foreign 

Assets Control Sanction List. Therefore, 

payment cannot be made to an Afghan 

vendor in Afghani via electronic funds 

to an Afghan banking institution. 

Consequently, this rule is repealing 

DFARS subpart 232.72 and solicitation 

provision 252.232–7014, since these 

requirements are rendered inoperable 

with the drawdown of operations in 

Afghanistan. 

II. Publication of This Final Rule for 

Public Comment Is Not Required by 

Statute 

The statute that applies to the 

publication of the FAR is 41 U.S.C. 

1707, Publication of Proposed 

Regulations. Subsection (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 rule is merely 

removing an obsolete solicitation 

provision from the DFARS. The rule 

does not have a significant cost or 

administrative impact on contractors or 

offerors and does not have a significant 

effect beyond DoD’s internal operating 

procedures. 

III. Applicability to Contracts at or 

Below the Simplified Acquisition 

Threshold, for Commercial Products 

Including Commercially Available Offthe-Shelf Items, and for Commercial 

Services 

This rule only removes obsolete 

DFARS subpart 232.72, Payment in 

Local Currency (Afghanistan), and 

DFARS solicitation provision 252.232– 

7014, Payment in Local Currency 

(Afghanistan). The rule does not impose 

any new requirements on contracts 

valued at or below the simplified 

acquisition threshold, for commercial 

products including commercially 

available off-the-shelf items, or for 

commercial services. 

IV. Executive Orders 12866 and 13563 

Executive Orders (E.O.) 12866 and 

E.O. 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. 

V. 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 


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