54694 Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Proposed Rules 

Public Law 105–261. The department or 

agency—

(i) Shall submit the acquisition plan 

to the address in PGI 207.103(h); and 

(ii) Shall not proceed with the 

procurement until the SMCA provides 

written concurrence with the 

acquisition plan. In the case of a nonconcurrence, the SCMA will resolve 

issues with the Army Office of the 

Executive Director for Conventional 

Ammunition. 

207.104 [Removed] 

4. Section 207.104 is removed. 

5. Section 207.105 is revised to read 

as follows: 

207.105 Contents of written acquisition 

plans. 

In addition to the requirements of 

FAR 7.105, planners shall follow the 

procedures at PGI 207.105. 

6. Section 207.471 is amended by 

revising paragraphs (b) and (c) to read 

as follows: 

207.471 Funding requirements. 

* * * * * 

(b) DoD leases are either capital leases 

or operating leases. See FMR 7000.14–

R, Volume 4, Chapter 7, Section 070207. 

(c) Capital leases are essentially 

installment purchases of property. Use 

procurement funds for capital leases, as 

these are essentially installment 

purchases of property. 

[FR Doc. 05–18477 Filed 9–15–05; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

48 CFR Part 216 

[DFARS Case 2003–D078] 

Defense Federal Acquisition 

Regulation Supplement; Types of 

Contracts 

AGENCY: Department of Defense (DoD). 

ACTION: Proposed rule with request for 

comments. 

SUMMARY: DoD is proposing to amend 

the Defense Federal Acquisition 

Regulation Supplement (DFARS) to 

update text on the selection and use of 

contract types. This proposed rule is a 

result of a transformation initiative 

undertaken by DoD to dramatically 

change the purpose and content of the 

DFARS. 

DATES: Comments on the proposed rule 

should be submitted in writing to the 

address shown below on or before 

November 15, 2005, to be considered in 

the formation of the final rule. 

ADDRESSES: You may submit comments, 

identified by DFARS Case 2003–D078, 

using any of the following methods: 

Æ Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

Æ Defense Acquisition Regulations 

Web Site: http://emissary.acq.osd.mil/ 

dar/dfars.nsf/pubcomm. Follow the 

instructions for submitting comments. 

Æ E-mail: dfars@osd.mil. Include 

DFARS Case 2003–D078 in the subject 

line of the message. 

Æ Fax: (703) 602–0350. 

Æ Mail: Defense Acquisition 

Regulations Council, Attn: Ms. Robin 

Schulze, OUSD(AT&L)DPAP(DAR), IMD 

3C132, 3062 Defense Pentagon, 

Washington, DC 20301–3062. 

Æ Hand Delivery/Courier: Defense 

Acquisition Regulations Council, 

Crystal Square 4, Suite 200A, 241 18th 

Street, Arlington, VA 22202–3402. 

All comments received will be posted 

to http://emissary.acq.osd.mil/dar/ 

dfars.nsf. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Robin Schulze, (703) 602–0326. 

SUPPLEMENTARY INFORMATION: 

A. Background 

DFARS Transformation is a major 

DoD initiative to dramatically change 

the purpose and content of the DFARS. 

The objective is to improve the 

efficiency and effectiveness of the 

acquisition process, while allowing the 

acquisition workforce the flexibility to 

innovate. The transformed DFARS will 

contain only requirements of law, DoDwide policies, delegations of FAR 

authorities, deviations from FAR 

requirements, and policies/procedures 

that have a significant effect beyond the 

internal operating procedures of DoD or 

a significant cost or administrative 

impact on contractors or offerors. 

Additional information on the DFARS 

Transformation initiative is available at 

http://www.acq.osd.mil/dpap/dars/ 

dfars/transformation/index.htm. 

This proposed rule is a result of the 

DFARS Transformation initiative. The 

proposed DFARS changes—

Æ Streamline text on the use of 

economic price adjustment clauses; 

Æ Increase, from 3 to 5 years, the 

standard maximum ordering period 

under basic ordering agreements; 

Æ Delete obsolete text on the use of 

cost-plus-fixed-fee contracts for 

environmental restoration; 

Æ Delete unnecessary text on design 

stability and use of incentive provisions; 

and 

Æ Delete procedures for selecting 

contract type and for use of special 

economic price adjustment clauses, 

incentive contracts, and basic ordering 

agreements. Text on these subjects will 

be relocated to the new DFARS 

companion resource, Procedures, 

Guidance, and Information (PGI). 

Additional information on PGI is 

available at http://www.acq.osd.mil/ 

dpap/dars/pgi. 

This rule was not subject to Office of 

Management and Budget review under 

Executive Order 12866, dated 

September 30, 1993. 

B. 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 the rule updates and 

streamlines DFARS text on the use of 

various contract types, but makes no 

significant change to DoD contracting 

policy. Therefore, DoD has not 

performed an initial regulatory 

flexibility analysis. DoD invites 

comments from small businesses and 

other interested parties. DoD also will 

consider comments from small entities 

concerning the affected DFARS subparts 

in accordance with 5 U.S.C. 610. Such 

comments should be submitted 

separately and should cite DFARS Case 

2003–D078. 

C. Paperwork Reduction Act 

The Paperwork Reduction Act does 

not apply because the rule does not 

impose any information collection 

requirements that require the approval 

of the Office of Management and Budget 

under 44 U.S.C. 3501, et seq. 

List of Subjects in 48 CFR Part 216 

Government procurement. 

Michele P. Peterson, 

Editor, Defense Acquisition Regulations 

System. 

Therefore, DoD proposes to amend 48 

CFR part 216 as follows: 

1. The authority citation for 48 CFR 

part 216 continues to read as follows: 

Authority: 41 U.S.C. 421 and 48 CFR 

Chapter 1. 

PART 216—TYPES OF CONTRACTS 

216.104 [Removed] 

2. Section 216.104 is removed. 

3. Section 216.104–70 is revised to 

read as follows: 

216.104–70 Research and development. 

Follow the procedures at PGI 

216.104–70 for selecting the appropriate 

research and development contract type. 

4. Section 216.203–4 is revised to read 

as follows: 

Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Proposed Rules 54695 

216.203–4 Contract clauses. 

(1) Generally, use the clauses at FAR 

52.216–2, Economic Price Adjustment—

Standard Supplies, FAR 52.216–3, 

Economic Price Adjustment—

Semistandard Supplies, and FAR 

52.216–4, Economic Price Adjustment—

Labor and Material, only when—

(i) The total contract price exceeds the 

simplified acquisition threshold; and 

(ii) Delivery or performance will not 

be completed within 6 months after 

contract award. 

(2) Follow the procedures at PGI 

216.203–4 when using an economic 

price adjustment clause based on cost 

indexes of labor or material. 

5. Section 216.306 is amended by 

revising paragraph (c)(ii) to read as 

follows: 

216.306 Cost-plus-fixed-fee contracts. 

(c) * * * 

(ii) The prohibition in paragraph (c)(i) 

of this section does not apply to 

contracts specifically approved in 

writing, setting forth the reasons 

therefor, in accordance with the 

following: 

(A) The Secretaries of the military 

departments are authorized to approve 

such contracts that are for 

environmental work only, provided the 

environmental work is not classified as 

construction, as defined by 10 U.S.C. 

2801. 

(B) The Secretary of Defense or 

designee must approve such contracts 

that are not for environmental work 

only or are for environmental work 

classified as construction. 

6. Sections 216.402–2 through 

216.403–2 are revised to read as follows: 

216.402–2 Technical performance 

incentives. 

See PGI 216.402–2 for guidance on 

establishing performance incentives. 

216.403 Fixed-price incentive contracts. 

216.403–2 Fixed-price incentive 

(successive targets) contracts. 

See PGI 216.403–2 for guidance on 

the use of fixed-price incentive 

(successive targets) contracts. 

216.404 [Removed] 

7. Section 216.404 is removed. 

8. Section 216.405–1 is revised to read 

as follows: 

216.405–1 Cost-plus-incentive-fee 

contracts. 

See PGI 216.405–1 for guidance on 

the use of cost-plus-incentive-fee 

contracts. 

9. Section 216.405–2 is revised to read 

as follows: 

216.405–2 Cost-plus-award-fee contracts. 

(b) Application. The cost-plus-awardfee (CPAF) contract may include 

provisional award fee payments. A 

provisional award fee payment is a 

payment made within an evaluation 

period prior to a final evaluation for that 

period. The contracting officer may 

include provisional award fee payments 

in a CPAF contract on a case-by-case 

basis, provided those payments—

(i) Are made no more frequently than 

monthly; 

(ii) Are limited to no more than—

(A) For the initial award fee 

evaluation period, 50 percent of the 

award fee available for that period; and 

(B) For subsequent award fee 

evaluation periods, 80 percent of the 

evaluation score for the prior evaluation 

period times the award fee available for 

the current period, e.g., if the contractor 

received 90 percent of the award fee 

available for the prior evaluation period, 

provisional payments for the current 

period shall not exceed 72 percent (90 

percent × 80 percent) of the award fee 

available for the current period; 

(iii) Are superceded by an interim or 

final award fee evaluation for the 

applicable evaluation period. If 

provisional payments have exceeded the 

payment determined by the evaluation 

score for the applicable period, the 

contracting officer shall collect the debt 

in accordance with FAR 32.606; and 

(iv) May be discontinued, or reduced 

in such amounts deemed appropriate by 

the contracting officer, when the 

contracting officer determines that the 

contractor will not achieve a level of 

performance commensurate with the 

provisional payment. The contracting 

officer shall notify the contractor in 

writing of any discontinuance or 

reduction in provisional award fee 

payments. 

(c) Limitations. 

(i) The CPAF contract shall not be 

used—

(A) To avoid—

(1) Establishing cost-plus-fixed-fee 

contracts when the criteria for cost-plusfixed-fee contracts apply; or 

(2) Developing objective targets so a 

cost-plus-incentive-fee contract can be 

used; or 

(B) For either engineering 

development or operational system 

development acquisitions that have 

specifications suitable for simultaneous 

research and development and 

production, except a CPAF contract may 

be used for individual engineering 

development or operational system 

development acquisitions ancillary to 

the development of a major weapon 

system or equipment, where—

(1) It is more advantageous; and 

(2) The purpose of the acquisition is 

clearly to determine or solve specific 

problems associated with the major 

weapon system or equipment. 

(ii) Do not apply the weighted 

guidelines method to CPAF contracts for 

either the base (fixed) fee or the award 

fee. 

(iii) The base fee shall not exceed 3 

percent of the estimated cost of the 

contract exclusive of the fee. 

(S–70) See PGI 216.405–2 for 

guidance on the use of CPAF contracts. 

10. Section 216.470 is revised to read 

as follows: 

216.470 Other applications of award fees. 

See PGI 216.470 for guidance on other 

applications of award fees. 

11. Section 216.703 is revised to read 

as follows: 

216.703 Basic ordering agreements. 

(c) Limitations. The period during 

which orders may be placed against a 

basic ordering agreement may not 

exceed 5 years. 

(d) Orders. Follow the procedures at 

PGI 216.703(d) for issuing orders under 

basic ordering agreements. 

[FR Doc. 05–18473 Filed 9–15–05; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

48 CFR Parts 217 and 252 

[DFARS Case 2003–D079] 

Defense Federal Acquisition 

Regulation Supplement; Special 

Contracting Methods 

AGENCY: Department of Defense (DoD). 

ACTION: Proposed rule with request for 

comments. 

SUMMARY: DoD is proposing to amend 

the Defense Federal Acquisition 

Regulation Supplement (DFARS) to 

update text on the use of special 

contracting methods. This proposed rule 

is a result of a transformation initiative 

undertaken by DoD to dramatically 

change the purpose and content of the 

DFARS. 

DATES: Comments on the proposed rule 

should be submitted in writing to the 

address shown below on or before 

November 15, 2005, to be considered in 

the formation of the final rule. 

ADDRESSES: You may submit comments, 

identified by DFARS Case 2003–D079, 

using any of the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Defense Acquisition Regulations 

Web site: http://emissary.acq.osd.mil/