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/ 

54696 Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Proposed Rules 

dar/dfars.nsf/pubcomm. Follow the 

instructions for submitting comments. 

• E-mail: dfars@osd.mil. Include 

DFARS Case 2003–D079 in the subject 

line of the message. 

• Fax: (703) 602–0350. 

• Mail: Defense Acquisition 

Regulations Council, Attn: Ms. Robin 

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

IMD 3C132, 3062 Defense Pentagon, 

Washington, DC 20301–3062. 

• 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—

• Clarify text on the use of option 

clauses for industrial capability 

production planning; 

• Delete unnecessary text on 

determinations for interagency 

acquisitions under the Economy Act; 

• Delete restrictive requirements 

relating to the use of master agreements 

for vessel repair; 

• Delete obsolete procedures for 

acquisition of bakery and dairy 

products; 

• Lower the level for approval of 

profit on undefinitized contract actions 

for which substantial performance has 

been completed; and 

• Delete guidance on the use of 

options; and procedures for preparation 

of master agreements and job orders, for 

breakout and acquisition of spare parts, 

and for acquisition of work over and 

above contract requirements. 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, streamlines, 

and clarifies DFARS requirements, 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–D079. 

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 Parts 217 and 

252 

Government procurement. 

Michele P. Peterson, 

Editor, Defense Acquisition Regulations 

System. 

Therefore, DoD proposes to amend 48 

CFR Parts 217 and 252 as follows: 

1. The authority citation for 48 CFR 

Parts 217 and 252 continues to read as 

follows: 

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

Chapter 1. 

PART 217—SPECIAL CONTRACTING 

METHODS 

2. Section 217.202 is revised to read 

as follows: 

217.202 Use of options. 

See PGI 217.202 for guidance on the 

use of options. 

217.208 [Amended] 

3. Section 217.208 is amended in the 

first sentence by revising the 

parenthetical to read ‘‘(10 U.S.C. 

2305(a)(5))’’. 

4. Section 217.208–70 is amended by 

revising paragraph (b) introductory text 

and paragraph (b)(1) to read as follows: 

217.208–70 Additional clauses. 

* * * * * 

(b) When a surge option is needed in 

support of industrial capability 

production planning, use the clause at 

252.217–7001, Surge Option, in 

solicitations and contracts. 

(1) Insert the percentage of increase 

the option represents in paragraph (a) of 

the clause to ensure adequate quantities 

are available to meet item requirements. 

* * * * * 

217.503 [Removed] 

5. Section 217.503 is removed. 

6. Sections 217.7103 and 217.7103–1 

are revised to read as follows: 

217.7103 Master agreements and job 

orders. 

217.7103–1 Content and format of master 

agreements. 

Follow the procedures at PGI 

217.7103–1 for preparation of master 

agreements. 

7. Section 217.7103–3 is amended by 

revising paragraph (b) and removing 

paragraphs (c) through (f). The revised 

text reads as follows: 

217.7103–3 Solicitations for job orders. 

* * * * * 

(b) Follow the procedures at PGI 

217.7103–3 when preparing 

solicitations for job orders. 

217.7103–4 [Removed] 

8. Section 217.7103–4 is removed. 

217.7103–5 through 217.7103–7 

[Redesignated] 

9. Sections 217.7103–5 through 

217.7103–7 are redesignated as sections 

217.7103–4 through 217.7103–6, 

respectively. 

10. Newly designated section 

217.7103–4 is amended by revising 

paragraph (b) and removing paragraph 

(c). The revised text reads as follows: 

217.7103–4 Emergency work. 

* * * * * 

(b) Follow the procedures at PGI 

217.7103–4 when processing this type 

of undefinitized contract action. 

11. Newly designated section 

217.7103–5 is revised to read as follows: 

217.7103–5 Repair costs not readily 

ascertainable. 

Follow the procedures at PGI 

217.7103–5 if the nature of any repairs 

is such that their extent and probable 

cost cannot be ascertained readily. 

Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Proposed Rules 54697 

Subpart 217.72 [Removed and 

Reserved] 

12. Subpart 217.72 is removed and 

reserved. 

13. Section 217.7404–5 is amended by 

revising paragraphs (b)(1) and (2) to read 

as follows: 

217.7404–5 Exceptions. 

* * * * * 

(b) * * *

(1) A contingency operation; or 

(2) A humanitarian or peacekeeping 

operation. 

217.7404–6 [Amended] 

14. Section 217.7404–6 is amended in 

the introductory text by removing 

‘‘agency’’ and adding in its place 

‘‘contracting activity’’. 

217.7405 [Removed] 

15. Section 217.7405 is removed. 

217.7406 [Redesignated] 

16. Section 217.7406 is redesignated 

as section 217.7405. 

17. Section 217.7500 is amended by 

removing the parenthetical ‘‘(as defined 

in appendix E)’’. 

217.7501 through 217.7504 [Redesignated] 

18. Sections 217.7501 through 

217.7504 are redesignated as sections 

217.7502 through 217.7505, 

respectively. 

19. A new section 217.7501 is added 

to read as follows: 

217.7501 Definition. 

Replenishment parts, as used in this 

subpart, means repairable or 

consumable parts acquired after the 

initial provisioning process. 

217.7502 [Amended] 

20. Newly designated section 

217.7502 is amended as follows: 

a. In paragraph (b)(1) by removing 

‘‘217.7503’’ and adding in its place ‘‘PGI 

217.7504’’; and 

b. In paragraph (c) by removing 

‘‘217.7504’’ and adding in its place 

‘‘217.7505’’. 

21. Newly designated sections 

217.7503 and 217.7504 are revised to 

read as follows: 

217.7503 Spares acquisition integrated 

with production. 

Follow the procedures at PGI 

217.7503 for acquiring spare parts 

concurrently with the end item. 

217.7504 Acquisition of parts when data is 

not available. 

Follow the procedures at PGI 

217.7504 when acquiring parts for 

which the Government does not have 

the necessary data. 

22. Section 217.7506 is added to read 

as follows: 

217.7506 Spare parts breakout program. 

See PGI 217.7506 and DoD 4140.1–R, 

DoD Supply Chain Materiel 

Management Regulation, Chapter 8, 

Section C8.3, for spare parts breakout 

requirements. 

217.7600 [Removed] 

23. Section 217.7600 is removed. 

24. Section 217.7601 is revised to read 

as follows: 

217.7601 Provisioning. 

(a) Follow the procedures at PGI 

217.7601 for contracts with provisioning 

requirements. 

(b) For technical requirements of 

provisioning, see DoD 4140.1–R, DoD 

Supply Chain Materiel Management 

Regulation, Chapter 2, Section C2.2. 

217.7602 through 217.7603–3 [Removed] 

25. Sections 217.7602 through 

217.7603–3 are removed. 

217.7700 [Removed] 

26. Section 217.7700 is removed. 

27. Section 217.7701 is revised to read 

as follows: 

217.7701 Procedures. 

Follow the procedures at PGI 

217.7701 when acquiring over and 

above work. 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

252.217–7004 [Amended] 

28. Section 252.217–7004 is amended 

as follows: 

a. By revising the clause date to read 

‘‘(XXX 2005)’’; and 

b. In paragraph (a), in the first 

sentence, by removing ‘‘in accordance 

with FAR part 14 or 15, as applicable’’. 

252.217–7017 through 252.217–7025 

[Removed and Reserved] 

29. Sections 252.217–7017 through 

252.217–7025 are removed and 

reserved. 

252.217–7027 [Amended] 

30. Section 252.217–7027 is amended 

in the introductory text by removing 

‘‘217.7406’’ and adding in its place 

217.7405’’. 

Appendix E to Chapter 2 [Removed and 

Reserved] 

31. Appendix E to Chapter 2 is 

removed and reserved. 

[FR Doc. 05–18472 Filed 9–15–05; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

48 CFR Part 239 

[DFARS Case 2003–D094] 

Defense Federal Acquisition 

Regulation Supplement; Exchange or 

Sale of Government-Owned 

Information Technology 

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 

delete obsolete procedures for the 

exchange or sale of Government-owned 

information technology. 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–D094, 

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–D094 in the subject 

line of the message. 

Æ Fax: (703) 602–0350. 

Æ Mail: Defense Acquisition 

Regulations Council, Attn: Ms. Gabrielle 

Ward, 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. 

Gabrielle Ward, (703) 602–2022. 

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