[Federal Register Volume 61, Number 93 (Monday, May 13, 1996)]
[Rules and Regulations]
[Pages 21973-21975]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11887]



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DEPARTMENT OF DEFENSE

48 CFR Part 231

[DFARS Case 96-D303]


Defense Federal Acquisition Regulation Supplement; Cost 
Reimbursement Rules for Indirect Costs--Private Sector

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for comments.

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SUMMARY: The Director of Defense Procurement has issued an interim rule 
amending the Defense Federal Acquisition Regulation Supplement to 
permit the DoD to enter into a defense

[[Page 21974]]

capability preservation agreement with a defense contractor where it 
would facilitate the achievement of the policy objectives relating to 
defense reinvestment, diversification, and conversion set forth in 10 
U.S.C. 2501(b).

DATES: Effective date: May 13, 1996.
    Comment date: Comments on the interim rule and the associated 
information collection requirement should be submitted in writing to 
the address shown below on or before July 12, 1996, to be considered in 
the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments to: 
Defense Acquisition Regulations Council, Attn: Ms. Sandra G. Haberlin, 
PDUSD (A&T)DP(DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 
20301-3062. Telefax number (703) 602-0350. Please cite DFARS Case 96-
D303 in all correspondence related to this issue.

FOR FURTHER INFORMATION CONTACT:
Ms. Sandra G. Haberlin, (703) 602-0131.

SUPPLEMENTARY INFORMATION:

A. Background

    This interim rule adds Subsection 231.205-71 to the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement Section 808 of 
the National Defense Authorization Act for Fiscal Year 1996 (Pub. L. 
104-106). Section 808 permits the DoD to enter into a defense 
capability preservation agreement with a defense contractor where it 
would facilitate the achievement of the policy objectives relating to 
defense reinvestment, diversification, and conversion set forth in 10 
U.S.C. 2501(b). Such an agreement would permit the contractor to claim 
certain indirect costs, attributable to its private sector work, on its 
defense contracts.

B. Determination to Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense to issue this rule as an interim rule. Compelling reasons 
exist to promulgate this rule without prior opportunity for public 
comment. This rule implements Section 808 of the National Defense 
Authorization Act for Fiscal Year 1996 (Pub. L. 104-106), which was 
effective upon enactment on February 10, 1996. However, comments 
received in response to the publication of this interim rule will be 
considered in formulating the final rule.

C. Regulatory Flexibility Act

    The interim rule is not expected 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 most 
contracts awarded to small entities are awarded on a competitive fixed-
price basis and do not require application of the cost principles 
contained in this rule. An initial regulatory flexibility analysis has 
therefore not been performed. Comments are invited from small 
businesses and other interested parties. Comments from small entities 
concerning the affected DFARS subpart will also be considered in 
accordance with Section 610 of the Act. Such comments must be submitted 
separately and cite 5 U.S.C. 601 et seq. (DFARS Case 96-D303), in 
correspondence.

D. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (Pub. L. 104-13) applies 
because the interim rule contains a new information collection 
requirement. A request for approval of a new information collection 
requirement, under the emergency processing provisions of Section 
3502(j) of the Paperwork Reduction Act, was submitted to the Office of 
Management and Budget and approved through July 31, 1996, under OMB 
Number 0704-0387. The necessary regular request for approval of the 
information collection requirement has been submitted to the Office of 
Management and Budget under Section 3507(d) of the Act.
    Comments are invited. Particular comments are solicited on:
    a. Whether the collection of information is necessary for the 
proper performance of the functions of the agency, including whether 
the information will have practical utility;
    b. The accuracy of the agency's estimate of the burden of the 
information collection;
    c. Ways to enhance the quality, utility, and clarity of the 
information to be collected; and
    d. Ways to minimize the burden of the information collection on 
respondents, including the use of automated collection techniques or 
other forms of information technology.
    Title, Associated Form, and OMB Number: Defense Preservation 
Capability Agreements, DFARS Subsection 231.205-71, OMB Number 0704-
0387.
    Needs and Uses: This information collection requirement is a direct 
result of Section 808 of the National Defense Authorization Act for 
Fiscal Year 1996 (Pub. L. 104-106). Section 808 and this interim rule 
permit the Department of Defense (DoD) to enter into a defense 
capability preservation agreement with a defense contractor. This 
agreement would permit the contractor to claim certain indirect costs 
attributable to its private sector work as allowable costs on its 
defense contracts. Before such an agreement may be entered into, DoD 
must make a determination that the agreement would facilitate DoD's 
achievement of the policy objectives relating to defense reinvestment, 
diversification, and conversion set forth in 10 U.S.C. 2501(b). In 
order to make this determination, DoD must obtain supporting 
information from the contractor requesting the agreement. The 
informational copy to be provided to the cognizant administrative 
contracting officer (ACO) will facilitate early involvement of the ACO, 
who will be a key player in compiling data for evaluation of the 
request.
    Affected Public: Businesses or other for profit.
    Annual Burden Hours: 4,000.
    Number of Respondents: 50.
    Average Burden Per Response: 80 Hours.
    Frequency: On occasion.

Supplementary Information:

Summary of Information Collection

    The collection of information is required each time a defense 
contractor requests to enter into a defense capability preservation 
agreement with DoD, in accordance with Section 808 of Pub. L. 104-106. 
Such an agreement would permit the contractor to claim certain indirect 
costs attributable to its private sector work as allowable costs on its 
defense contracts. The law does not require contractors to submit the 
information. The law does require, however, that before a defense 
capability preservation agreement may be entered into, DoD must make a 
determination that such an agreement would facilitate DoD's achievement 
of the policy objectives relating to defense reinvestment, 
diversification, and conversion set forth in 10 U.S.C. 2501(b). In 
order to make this determination, DoD must obtain supporting 
information from the contractor requesting the agreement. The rule also 
recommends that the contractor submit a copy of any request for such an 
agreement to the cognizant administrative contracting officer.

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List of Subjects in 48 CFR Part 231

    Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.

    Therefore, 48 CFR Part 231 is amended as follows:

PART 231--CONTRACT COST PRINCIPLES AND PROCEDURES

    1. The authority citation for 48 CFR Part 231 continues to read as 
follows:

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

    2. Section 231.205-71 is added to read as follows:


231.205-71  Defense capability preservation agreements.

    (a) Scope and authority. Where it would facilitate the achievement 
of the policy objectives relating to defense reinvestment, 
diversification, and conversion set forth in 10 U.S.C. 2501(b), DoD may 
enter into a ``defense capability preservation agreement'' with a 
contractor. As authorized by Section 808 of the National Defense 
Authorization Act for Fiscal Year 1996 (Public Law 104-106), such an 
agreement would permit the contractor to claim certain indirect costs 
attributable to its private sector work as allowable costs on its 
defense contracts.
    (b) Procedure. A contractor may submit a request for such an 
agreement, together with appropriate justification, through the 
Assistant Secretary of Defense for Economic Security, to the Under 
Secretary of Defense for Acquisition and Technology, who has exclusive 
approval or disapproval authority. The contractor should also provide 
an informational copy of any such request to the cognizant 
administrative contracting officer.

[FR Doc. 96-11887 Filed 5-10-96; 8:45 am]
BILLING CODE 5000-04-M