25144 Federal Register / Vol. 87, No. 82 / Thursday, April 28, 2022 / Rules and Regulations 

determination as specified in paragraph 

(a)(ii)(B)(2)(ii) of this section. 

(2) Pursuant to 10 U.S.C. 

2306a(b)(4)(A), the contracting officer 

may presume that a prior commercial 

item determination made by a military 

department, a defense agency, or 

another component of DoD shall serve 

as a determination for subsequent 

procurements of such item. In 

accordance with 10 U.S.C. 2306a(b)(4) 

and 10 U.S.C. 2380(c), if the contracting 

officer questions a prior determination 

to use FAR part 12 procedures and 

instead chooses to proceed with a 

procurement of an item previously 

determined to be a commercial item 

using procedures other than FAR part 

12 procedures, the contracting officer 

shall request a review by the head of the 

contracting activity that will conduct 

the procurement. Not later than 30 days 

after receiving a request for review, the 

head of the contracting activity shall— 

(i) Confirm that the prior use of FAR 

part 12 procedures was appropriate and 

still applicable; or 

(ii) Issue a determination that the 

prior use of FAR part 12 procedures was 

improper or that it is no longer 

appropriate to acquire the item using 

FAR part 12 procedures, with a written 

explanation of the basis for the 

determination. 

(iii) Commercial item determination. 

Unless the procedures in paragraph 

(a)(ii) of this section are applicable, 

when using FAR part 12 procedures for 

acquisitions of commercial items 

pursuant to 212.102(a)(i)(A) that exceed 

the simplified acquisition threshold, the 

contracting officer shall— 

(A) Determine in writing that the 

acquisition meets the commercial 

product or commercial service 

definition in FAR 2.101; 

(B) Include the written determination 

in the contract file; 

(C) Obtain approval at one level above 

the contracting officer when a 

commercial item determination relies 

on paragraph (1)(ii), (3), or (4) of the 

‘‘commercial product’’ definition at FAR 

2.101 or paragraph (2) of the 

‘‘commercial service’’ definition at FAR 

2.101; and 

(D) Follow the procedures and 

guidance at PGI 212.102(a)(iii) regarding 

file documentation and commercial 

item determinations. 

(iv) Nontraditional defense 

contractors. In accordance with 10 

U.S.C. 2380a, contracting officers— 

(A) Except as provided in paragraph 

(a)(iv)(B) of this section, may treat 

supplies and services provided by 

nontraditional defense contractors as 

commercial items. This permissive 

authority is intended to enhance 

defense innovation and investment, 

enable DoD to acquire items that 

otherwise might not have been 

available, and create incentives for 

nontraditional defense contractors to do 

business with DoD. It is not intended to 

recategorize current noncommercial 

items; however, when appropriate, 

contracting officers may consider 

applying commercial item procedures to 

the procurement of supplies and 

services from business segments that 

meet the definition of ‘‘nontraditional 

defense contractor’’ even though they 

have been established under traditional 

defense contractors. The decision to 

apply commercial item procedures to 

the procurement of supplies and 

services from nontraditional defense 

contractors does not require a 

commercial item determination and 

does not mean the item is commercial; 

(B) Shall treat services provided by a 

business unit that is a nontraditional 

defense contractor as commercial items, 

to the extent that such services use the 

same pool of employees as used for 

commercial customers and are priced 

using methodology similar to 

methodology used for commercial 

pricing; and 

(C) Shall document the file when 

treating supplies or services from a 

nontraditional defense contractor as 

commercial items in accordance with 

paragraph (a)(iv)(A) or (B) of this 

section. 

(v) Commercial item guidebook. For a 

link to the commercial item guidebook, 

see PGI 212.102(a)(v). 

Subpart 212.70 [Removed and 

Reserved] 

■ 3. Remove and reserve subpart 212.70, 

consisting of sections 212.7000 and 

212.7001. 

[FR Doc. 2022–08812 Filed 4–27–22; 8:45 am] 

BILLING CODE 5001–06–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 217, 234, and 235 

[Docket DARS–2021–0020] 

RIN 0750–AL49 

Defense Federal Acquisition 

Regulation Supplement: Contract 

Authority for Development and 

Demonstration of Prototypes (DFARS 

Case 2021–D025) 

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 that amends the types 

of line items and contract options that 

may be included, subject to limitations, 

in certain contracts initially awarded 

pursuant to competitive solicitations. 

DATES: Effective April 28, 2022. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Barbara J. Salcido, telephone 571–372– 

6102. 

SUPPLEMENTARY INFORMATION: 

I. Background 

DoD published a proposed rule in the 

Federal Register at 86 FR 59951 on 

October 29, 2021, to revise the DFARS 

to implement paragraph (a)(2) of section 

831 of the National Defense 

Authorization Act (NDAA) for Fiscal 

Year (FY) 2021 (Pub. L. 116–283). 

Section 831(a)(2) amends 10 U.S.C. 

2302e(a) to revise the type of contract 

line items or options that may be 

included, without additional 

competition, in contracts initially 

awarded from the competitive selection 

of a proposal resulting from a broad 

agency announcement. 

One respondent submitted a public 

comment in response to the proposed 

rule. 

II. Discussion and Analysis 

DoD reviewed the public comment in 

the development of the final rule. The 

public comment is outside the scope of 

this rule; therefore, there are no changes 

made to the final rule. 

III. Applicability to Contracts at or 

Below the Simplified Acquisition 

Threshold (SAT), 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 or their applicability to 

contracts at or below the simplified 

acquisition threshold, for commercial 

products including COTS items, or for 

commercial services. 

IV. Expected Impact of the Rule 

The final rule impacts DoD 

acquisition planning decisions for 

contract awards that will result from the 

competitive selection of a proposal in 

response to a broad agency 

announcement for which DoD intends 

to include a contract line item or option 


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Federal Register / Vol. 87, No. 82 / Thursday, April 28, 2022 / Rules and Regulations 25145 

for the development and demonstration 

of technology developed under the 

contract. The final rule broadens the 

scope of effort for which these contract 

line items and contract options can be 

awarded and the type of funding that 

may be used to fund these line items or 

options. This final rule also helps 

streamline the process for moving 

technologies developed under such 

contracts from science and technology 

into production. 

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 under 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: 

This final rule implements paragraph 

(a)(2) of section 831 of the National 

Defense Authorization Act (NDAA) for 

Fiscal Year (FY) 2021 (Pub. L. 116–283). 

The objective of this rule is to revise the 

type of contract line items or options 

that may be included, without 

additional competition, in contracts 

initially awarded from the competitive 

selection of a proposal resulting from a 

broad agency announcement. 

When awarding such a contract, 

contracting officers may now include a 

contract line item or contract option for 

the ‘‘development and demonstration’’ 

of technology developed under the 

contract. This revision provides a 

broader scope of effort and funding for 

which these contract line items and 

contract options can be awarded, which 

in turn helps streamline the process for 

moving technologies developed under 

such contracts from science and 

technology into production. 

There were no significant issues 

raised by public comments in response 

to the initial regulatory flexibility 

analysis. 

Based on data from the Federal 

Procurement Data System for FY 2018 

through FY 2020, on average, DoD 

annually awards 300 contracts to 200 

unique small entities using the 

competitive selection of proposals 

resulting from a broad agency 

announcement. 

This rule does not impose any new 

reporting, recordkeeping, or other 

compliance requirements. 

There are no significant alternatives to 

this rule that would accomplish the 

objective of the statute. 

VIII. 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 Parts 217, 

234, and 235 

Government procurement. 

Jennifer D. Johnson, 

Editor/Publisher, Defense Acquisition 

Regulations System. 

Therefore, 48 CFR parts 217, 234, and 

235 are amended as follows: 

■ 1. The authority citation for 48 CFR 

parts 217, 234, and 235 continues to 

read as follows: 

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

chapter 1. 

PART 217—SPECIAL CONTRACTING 

METHODS 

■ 2. Amend section 217.202 by revising 

paragraph (2) to read as follows: 

217.202 Use of options. 

* * * * * 

(2) For a contract that is initially 

awarded from the competitive selection 

of a proposal resulting from a broad 

agency announcement, see 234.005–1 

for the use of contract options for the 

development and demonstration or 

initial production of technology 

developed under the contract or the 

delivery of initial or additional items. 

PART 234—MAJOR SYSTEM 

ACQUISITION 

■ 3. Amend section 234.005–1 by 

revising the introductory text and 

paragraph (1) to read as follows: 

234.005–1 Competition. 

A contract that is initially awarded 

from the competitive selection of a 

proposal resulting from a broad agency 

announcement (see 235.016) may 

contain a contract line item or contract 

option using funds not limited to those 

identified in 235.016 for the 

development and demonstration or 

initial production of technology 

developed under the contract, or the 

delivery of initial or additional items if 

the item or a prototype thereof is created 

as the result of work performed under 

the contract, only when it adheres to the 

following limitations: 

(1) The contract line item or contract 

option shall be limited to the delivery 

of the minimal amount of initial or 

additional items or prototypes that will 

allow for timely competitive solicitation 

and award of a follow-on development 

or production contract for those items. 

* * * * * 

PART 235—RESEARCH AND 

DEVELOPMENT CONTRACTING 

■ 4. Amend section 235.006–71 by 

revising paragraph (b) to read as follows: 

235.006–71 Competition. 

* * * * * 

(b) For a contract that is initially 

awarded from the competitive selection 

of a proposal resulting from a broad 

agency announcement, see 234.005–1 

for the use of contract line items or 

contract options for the development 

and demonstration or initial production 

of technology developed under the 

contract or the delivery of initial or 

additional items. 

[FR Doc. 2022–08815 Filed 4–27–22; 8:45 am] 

BILLING CODE 5001–06–P 


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