[Federal Register Volume 75, Number 109 (Tuesday, June 8, 2010)]
[Rules and Regulations]
[Pages 32638-32639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13524]



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DEPARTMENT OF DEFENSE



Defense Acquisition Regulations System



48 CFR Parts 217 and 234




Defense Federal Acquisition Regulation Supplement; Contract 

Authority for Advanced Component Development or Prototype Units (DFARS 

Case 2009-D034)



AGENCY: Defense Acquisition Regulations System, Department of Defense 

(DoD).



ACTION: Interim rule with request for comments.



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SUMMARY: DoD is issuing an interim rule amending the Defense Federal 

Acquisition Regulation Supplement (DFARS) to implement section 819 of 

the National Defense Authorization Act for Fiscal Year 2010. Section 

819 places limitations on certain types of line items and contract 

options that may be included in contracts initially awarded pursuant to 

competitive solicitations. When the prohibition applies, it limits the 

dollar value, period of performance, and time for exercise of such 

contract line items or contract options.



DATES: Effective Date: June 8, 2010.

    Comment Date: Comments on the interim rule should be submitted in 

writing to the address shown below on or before August 9, 2010, to be 

considered in the formation of the final rule.



ADDRESSES: Submit comments identified by DFARS Case 2009-D034, using 

any of the following methods:

    [cir] Federal eRulemaking Portal: http://www.regulations.gov. 

Follow the instructions for submitting comments.

    [cir] E-mail: <a href="/cdn-cgi/l/email-protection#157173746766557a66713b787c79"><span class="__cf_email__" data-cfemail="d5b1b3b4a7a695baa6b1fbb8bcb9">[email protected]</span></a>. Include DFARS Case 2009-D034 in the 

subject line of the message.

    [cir] Fax: 703-602-0350.

    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. 

Meredith Murphy, OUSD(AT&L)DPAP(DARS), Room 3B855, 3060 Defense 

Pentagon, Washington, DC 20301-3060.

    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided.



FOR FURTHER INFORMATION CONTACT: Ms. Meredith Murphy, 703-602-1302.



SUPPLEMENTARY INFORMATION:



A. Background



    This DFARS case implements section 819 of the National Defense 

Authorization Act for Fiscal Year 2010 (Pub. L. 111-84, enacted October 

28, 2009). Section 819 is entitled ``Contract Authority for Advanced 

Component Development or Prototype Units.''

    Section 819 is intended to prevent a contract for new technology 

that is initially awarded as a result of competition from becoming a 

noncompetitive effort for the development of advanced components or the 

procurement of prototype units. To do so, section 819 places 

limitations on the (a) Dollar value, (b) period of performance, and (c) 

time for exercise of contract line items or contract options for 

advanced component development or procurement of prototype items. 

Specifically, the contract line item or contract option must be limited 

to the minimal amount of initial or additional prototype items that 

will allow for timely competitive solicitation and award of a follow-on 

development or production contract for those items. The term of the 

contract line item or contract option cannot be for a period longer 

than 12 months, and the dollar value of the work to be performed 

pursuant to the contract line item or contract option may not exceed 

the lesser of the amount that is three times the dollar value of the 

work previously performed under the contract or $20 million.

    Because the coverage is most likely to apply to major systems 

acquisitions, it has been added as a new DFARS subsection 234.005-1, 

entitled ``Competition.'' However, because the language applies to the 

exercise and content of certain contract options, a reference to 

234.005-1 has been added to DFARS 217.202, entitled ``Use of Options.''

    This is not a significant regulatory action and, therefore, is not 

subject to review under section 6(b) of Executive Order 12866, 

Regulatory Planning and Review, dated September 30, 1993. This rule is 

not a major rule under 5 U.S.C. 804.



B. Regulatory Flexibility Act



    DoD does not expect that this interim rule will 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 does not impose any additional requirements on small 

businesses. Therefore, an Initial Regulatory Flexibility Analysis has 

not been performed. DoD invites comments from small business concerns 

and other interested parties on the expected impact of this rule on 

small entities.

    DoD will also consider comments from small entities concerning the 

existing regulations in subparts affected by this rule in accordance 

with 5 U.S.C. 610. Interested parties must submit such comments 

separately and should cite 5 U.S.C. 610 (DFARS Case 2009-D034) in 

correspondence.



C. Paperwork Reduction Act



    The Paperwork Reduction Act does not apply because the interim rule 

does not contain any information collection requirements that require 

the approval of the Office of Management and Budget under 44 U.S.C., et 

seq.



D. Determination To Issue an Interim Rule



    A determination has been made under the authority of the Secretary 

of Defense (DoD) that urgent and compelling circumstances exist to 

promulgate this interim rule without prior opportunity for public 

comments. This action is necessary because section 819 of the National 

Defense Authorization Act for Fiscal Year 2010 became effective upon 

enactment on October 28, 2009. Section 819 places limitations on 

certain types of line items and contract options that may be included 

in contracts initially awarded pursuant to competitive solicitations. 

In order to prevent a contract for new technology that is initially 

awarded as a result of competition from becoming a noncompetitive 

effort for the development of advanced components or procurement of 

prototype units, it is necessary to publish this rule as an interim 

rule prior to affording the public an opportunity to comment. However, 

pursuant to 41 U.S.C. 418b and FAR 1.501-3, DoD will consider public 

comments received in response to this interim rule in the formation of 

the final rule.



[[Page 32639]]



List of Subjects in 48 CFR Parts 217 and 234



    Government procurement.



Ynette R. Shelkin,

Editor, Defense Acquisition Regulations System.



0

Therefore, 48 CFR parts 217 and 234 are amended as follows:

0

1. The authority citation for 48 CFR parts 217 and 234 continues to 

read as follows:



    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.



PART 217--SPECIAL CONTRACTING METHODS



0

2. Section 217.202 is revised as follows:





217.202  Use of options.



    (1) See PGI 217.202 for guidance on the use of options.

    (2) See 234.005-1 for limitations on the use of contract options 

for the provision of advanced component development or prototype of 

technology developed under the contract or the delivery of initial or 

additional prototype items.



PART 234--MAJOR SYSTEM ACQUISITION



0

3. Section 234.005-1 is added to read as follows:





234.005-1  Competition.



    (1) A contract that is initially awarded from the competitive 

selection of a proposal resulting from a general solicitation may 

contain a contract line item or contract option for the provision of 

advanced component development or prototype of technology developed 

under the contract or the delivery of initial or additional prototype 

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:

    (i) The contract line item or contract option shall be limited to 

the minimal amount of initial or additional prototype items that will 

allow for timely competitive solicitation and award of a follow-on 

development or production contract for those items.

    (ii) The term of the contract line item or contract option shall be 

for not more than 12 months.

    (iii) The dollar value of the work to be performed pursuant to the 

contract line item or contract option shall not exceed the lesser of--

    (A) The amount that is three times the dollar value of the work 

previously performed under the contract; or

    (B) $20 million.

    (2) A contract line item or contract option may not be exercised 

under this authority after September 30, 2014.



[FR Doc. 2010-13524 Filed 6-7-10; 8:45 am]

BILLING CODE 5001-08-P




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