Federal Register / Vol. 73, No. 7 / Thursday, January 10, 2008 / Rules and Regulations 1823 

the Office of Management and Budget 

under Control Numbers 0704–0229, 

0704–0245, and 0704–0259. This rule 

does not impose information collection 

requirements beyond those already 

required by existing DFARS 

representations and certifications. 

List of Subjects in 48 CFR Parts 204, 

212, and 252 

Government procurement. 

Michele P. Peterson, 

Editor, Defense Acquisition Regulations 

System. 

■ Therefore, 48 CFR parts 204, 212, and 

252 are amended as follows: 

■ 1. The authority citation for 48 CFR 

parts 204, 212, and 252 continues to 

read as follows: 

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

Chapter 1. 

PART 204—ADMINISTRATIVE 

MATTERS 

■ 2. Subpart 204.12 is added to read as 

follows: 

Subpart 204.12—Annual 

Representations and Certifications 

204.1202 Solicitation provision and 

contract clause. 

When using the provision at FAR 

52.204–8, Annual Representations and 

Certifications—

(1) Use the provision with 252.204–

7007, Alternate A, Annual 

Representations and Certifications; and 

(2) Do not include the following 

representations and certifications: 

(i) 252.209–7005, Reserve Officer 

Training Corps and Military Recruiting 

on Campus. 

(ii) 252.212–7000, Offeror 

Representations and Certifications—

Commercial Items. 

(iii) 252.216–7003, Economic Price 

Adjustment—Wage Rates or Material 

Prices Controlled by a Foreign 

Government. 

(iv) 252.225–7000, Buy American 

Act—Balance of Payments Program 

Certificate. 

(v) 252.225–7020, Trade Agreements 

Certificate. 

(vi) 252.225–7031, Secondary Arab 

Boycott of Israel. 

(vii) 252.225–7035, Buy American 

Act—Free Trade Agreements—Balance 

of Payments Program Certificate. 

(viii) 252.225–7042, Authorization to 

Perform. 

(ix) 252.229–7003, Tax Exemptions 

(Italy). 

(x) 252.229–7005, Tax Exemptions 

(Spain). 

(xi) 252.239–7011, Special 

Construction and Equipment Charges. 

(xii) 252.247–7022, Representation of 

Extent of Transportation by Sea. 

PART 212—ACQUISITION OF 

COMMERCIAL ITEMS 

■ 3. Section 212.301 is amended by 

adding paragraph (f) introductory text to 

read as follows: 

212.301 Solicitation provisions and 

contract clauses for the acquisition of 

commercial items. 

(f) The following additional 

provisions and clauses apply to DoD 

solicitations and contracts for the 

acquisition of commercial items. If the 

offeror has completed the provisions 

listed in paragraph (f)(i) or (ii) of this 

section electronically as part of its 

annual representations and 

certifications at https://orca.bpn.gov, the 

contracting officer may consider this 

information instead of requiring the 

offeror to complete these provisions for 

a particular solicitation. 

* * * * * 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

■ 4. Section 252.204–7007 is added to 

read as follows: 

252.204–7007 Alternate A, Annual 

Representations and Certifications. 

Alternate A, Annual Representations 

and Certifications (JAN 2008) 

As prescribed in 204.1202, substitute 

the following paragraph (c) for 

paragraph (c) of the provision at FAR 

52.204–8: 

(c) The offeror has completed the 

annual representations and 

certifications electronically via the 

Online Representations and 

Certifications Application (ORCA) Web 

site at https://orca.bpn.gov/. After 

reviewing the ORCA database 

information, the offeror verifies by 

submission of the offer that the 

representations and certifications 

currently posted electronically have 

been entered or updated within the last 

12 months, are current, accurate, 

complete, and applicable to this 

solicitation (including the business size 

standard applicable to the NAICS code 

referenced for this solicitation), as of the 

date of this offer, and are incorporated 

in this offer by reference (see FAR 

4.1201); except for the changes 

identified below [offeror to insert 

changes, identifying change by clause 

number, title, date]. These amended 

representation(s) and/or certification(s) 

are also incorporated in this offer and 

are current, accurate, and complete as of 

the date of this offer. 

FAR/DFARS clause No. Title Date Change 

Any changes provided by the offeror 

are applicable to this solicitation only, 

and do not result in an update to the 

representations and certifications posted 

on ORCA. 

[FR Doc. E8–177 Filed 1–9–08; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 207, 209, 234, 235, and 

252 

RIN 0750–AF80 

Defense Federal Acquisition 

Regulation Supplement; Lead System 

Integrators (DFARS Case 2006–D051) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Interim rule with request for 

comments. 

SUMMARY: DoD has issued an interim 

rule amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to implement Section 807 of 

the National Defense Authorization Act 

for Fiscal Year 2007. Section 807 places 

limitations on contractors acting as lead 

system integrators in the acquisition of 

major DoD systems. Such contractors 

may have no direct financial interest in 

the development or construction of any 

individual system or element of any 


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1824 Federal Register / Vol. 73, No. 7 / Thursday, January 10, 2008 / Rules and Regulations 

system of systems unless an exception 

applies. 

DATES: Effective date: January 10, 2008. 

Comment date: Comments on the 

interim rule should be submitted in 

writing to the address shown below on 

or before March 10, 2008, to be 

considered in the formation of the final 

rule. 

ADDRESSES: You may submit comments, 

identified by DFARS Case 2006–D051, 

using any of the following methods: 

∑ Federal eRulemaking Portal: 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

∑ E-mail: dfars@osd.mil. Include 

DFARS Case 2006–D051 in the subject 

line of the message. 

∑ Fax: 703–602–7887. 

∑ Mail: Defense Acquisition 

Regulations System, Attn: Mr. Michael 

Benavides, OUSD(AT&L)DPAP(DARS), 

IMD 3D139, 3062 Defense Pentagon, 

Washington, DC 20301–3062. 

∑ Hand Delivery/Courier: Defense 

Acquisition Regulations System, Crystal 

Square 4, Suite 200A, 241 18th Street, 

Arlington, VA 22202–3402. 

Comments received generally will be 

posted without change to http:// 

www.regulations.gov, including any 

personal information provided. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Michael Benavides, 703–602–1302. 

SUPPLEMENTARY INFORMATION: 

A. Background 

This interim rule implements Section 

807 of the National Defense 

Authorization Act for Fiscal Year 2007 

(Pub. L. 109–364). Section 807 provides 

that, with certain exceptions, no entity 

performing lead system integrator 

functions in the acquisition of a major 

system by DoD may have any direct 

financial interest in the development or 

construction of any individual system or 

element of any system of systems. The 

interim rule adds DFARS policy, and a 

corresponding solicitation provision 

and contract clause, to implement the 

requirements of Section 807 of Public 

Law 109–364. 

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 application of the rule is 

limited to contractors performing lead 

system integrator functions for major 

DoD systems. 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 

2006–D051. 

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. 

D. Determination To Issue an Interim 

Rule 

A determination has been made under 

the authority of the Secretary of Defense 

that urgent and compelling reasons exist 

to publish an interim rule prior to 

affording the public an opportunity to 

comment. This interim rule implements 

Section 807 of the National Defense 

Authorization Act for Fiscal Year 2007 

(Pub. L. 109–364). Section 807 places 

limitations on contractors acting as lead 

system integrators in the acquisition of 

major DoD systems. Such contractors 

may have no direct financial interest in 

the development or construction of any 

individual system or element of any 

system of systems unless an exception 

applies. Section 807 requires DoD to 

update the acquisition regulations to 

address these limitations. Comments 

received in response to this interim rule 

will be considered in the formation of 

the final rule. 

List of Subjects in 48 CFR Parts 207, 

209, 234, 235, and 252 

Government procurement. 

Michele P. Peterson, 

Editor, Defense Acquisition Regulations 

System. 

■ Therefore, 48 CFR parts 207, 209, 234, 

235, and 252 are amended as follows: 

■ 1. The authority citation for 48 CFR 

parts 207, 209, 234, 235, and 252 

continues to read as follows: 

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

Chapter 1. 

PART 207—ACQUISITION PLANNING 

■ 2. Section 207.106 is amended by 

adding paragraph (S–71) to read as 

follows: 

207.106 Additional requirements for major 

systems. 

* * * * * 

(S–71) See 209.570 for policy 

applicable to acquisition strategies that 

consider the use of lead system 

integrators. 

PART 209—CONTRACTOR 

QUALIFICATIONS 

■ 3. Subpart 209.5 is added to read as 

follows: 

Subpart 209.5—Organizational and 

Consultant Conflicts of Interest 

Sec. 

209.570 Limitations on contractors acting as 

lead system integrators. 

209.570–1 Definitions. 

209.570–2 Policy. 

209.570–3 Procedures. 

209.570–4 Solicitation provision and 

contract clause. 

Subpart 209.5—Organizational and 

Consultant Conflicts of Interest 

209.570 Limitations on contractors acting 

as lead system integrators. 

209.570–1 Definitions. 

Lead system integrator, as used in this 

section, is defined in the clause at 

252.209–7007, Prohibited Financial 

Interests for Lead System Integrators. 

See PGI 209.570–1 for additional 

information. 

209.570–2 Policy. 

(a) Except as provided in paragraph 

(b) of this subsection, 10 U.S.C. 2410p 

prohibits any entity performing lead 

system integrator functions in the 

acquisition of a major system by DoD 

from having any direct financial interest 

in the development or construction of 

any individual system or element of any 

system of systems. 

(b) The prohibition in paragraph (a) of 

this subsection does not apply if—

(1) The Secretary of Defense certifies 

to the Committees on Armed Services of 

the Senate and the House of 

Representatives that—

(i) The entity was selected by DoD as 

a contractor to develop or construct the 

system or element concerned through 

the use of competitive procedures; and 

(ii) DoD took appropriate steps to 

prevent any organizational conflict of 

interest in the selection process; or 

(2) The entity was selected by a 

subcontractor to serve as a lower-tier 

subcontractor, through a process over 

which the entity exercised no control. 

209.570–3 Procedures. 

In making a responsibility 

determination before awarding a 

contract for the acquisition of a major 

system, the contracting officer shall—

(a) Determine whether the prospective 

contractor meets the definition of ‘‘lead 

system integrator’’; 

(b) Consider all information regarding 

the prospective contractor’s direct 


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Federal Register / Vol. 73, No. 7 / Thursday, January 10, 2008 / Rules and Regulations 1825 

financial interests in view of the 

prohibition at 209.570–2(a); and 

(c) Follow the procedures at PGI 

209.570–3. 

209.570–4 Solicitation provision and 

contract clause. 

(a) Use the provision at 252.209–7006, 

Limitations on Contractors Acting as 

Lead System Integrators, in solicitations 

for the acquisition of a major system 

when the acquisition strategy envisions 

the use of a lead system integrator. 

(b) Use the clause at 252.209–7007, 

Prohibited Financial Interests for Lead 

System Integrators—

(1) In solicitations that include the 

provision at 252.209–7006; and 

(2) In contracts when the contractor 

will fill the role of a lead system 

integrator for the acquisition of a major 

system. 

PART 234—MAJOR SYSTEM 

ACQUISITION 

■ 4. Section 234.004 is added to read as 

follows: 

234.004 Acquisition strategy. 

See 209.570 for policy applicable to 

acquisition strategies that consider the 

use of lead system integrators. 

PART 235—RESEARCH AND 

DEVELOPMENT CONTRACTING 

■ 5. Section 235.008 is added to read as 

follows: 

235.008 Evaluation for award. 

See 209.570 for limitations on the 

award of contracts to contractors acting 

as lead system integrators. 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

■ 6. Sections 252.209–7006 and 

252.209–7007 are added to read as 

follows: 

252.209–7006 Limitations on Contractors 

Acting as Lead System Integrators. 

As prescribed in 209.570–4(a), use the 

following provision: 

Limitations on Contractors Acting As 

Lead System Integrators (JAN 2008) 

(a) Definitions. Lead system 

integrator, lead system integrator with 

system responsibility, and lead system 

integrator without system responsibility, 

as used in this provision, have the 

meanings given in the clause of this 

solicitation entitled ‘‘Prohibited 

Financial Interests for Lead System 

Integrators’’ (DFARS 252.209–7007). 

(b) General. Unless an exception is 

granted, no contractor performing lead 

system integrator functions in the 

acquisition of a major system by the 

Department of Defense may have any 

direct financial interest in the 

development or construction of any 

individual system or element of any 

system of systems. 

(c) Representations. (1) The offeror 

represents that it does 

[ ] does not [ ] propose to perform 

this contract as a lead system integrator 

with system responsibility. 

(2) The offeror represents that it does 

[ ] does not [ ] propose to perform this 

contract as a lead system integrator 

without system responsibility. 

(3) If the offeror answered in the 

affirmative in paragraph (c)(1) or (2) of 

this provision, the offeror represents 

that it does [ ] does not [ ] have any 

direct financial interest as described in 

paragraph (b) of this provision with 

respect to the system(s), subsystem(s), 

system of systems, or services described 

in this solicitation. 

(d) If the offeror answered in the 

affirmative in paragraph (c)(3) of this 

provision, the offeror should contact the 

Contracting Officer for guidance on the 

possibility of submitting a mitigation 

plan and/or requesting an exception. 

(e) If the offeror does have a direct 

financial interest, the offeror may be 

prohibited from receiving an award 

under this solicitation, unless the 

offeror submits to the Contracting 

Officer appropriate evidence that the 

offeror was selected by a subcontractor 

to serve as a lower-tier subcontractor 

through a process over which the offeror 

exercised no control. 

(f) This provision implements the 

requirements of 10 U.S.C. 2410p, as 

added by section 807 of the National 

Defense Authorization Act for Fiscal 

Year 2007 (Pub. L. 109–364). 

(End of provision) 

252.209–7007 Prohibited Financial 

Interests for Lead System Integrators. 

As prescribed in 209.570–4(b), use the 

following clause: 

Prohibited Financial Interests for Lead 

System Integrators (JAN 2008) 

(a) Definitions. As used in this 

clause—

(1) Lead system integrator includes 

lead system integrator with system 

responsibility and lead system integrator 

without system responsibility. 

(2) Lead system integrator with system 

responsibility means a prime contractor 

for the development or production of a 

major system if the prime contractor is 

not expected at the time of award, as 

determined by the Contracting Officer, 

to perform a substantial portion of the 

work on the system and the major 

subsystems. 

(3) Lead system integrator without 

system responsibility means a contractor 

under a contract for the procurement of 

services whose primary purpose is to 

perform acquisition functions closely 

associated with inherently 

governmental functions (see section 

7.503(d) of the Federal Acquisition 

Regulation) with regard to the 

development or production of a major 

system. 

(b) Limitations. The Contracting 

Officer has determined that the 

Contractor meets the definition of lead 

system integrator with [ ] without [ ] 

system responsibility. Unless an 

exception is granted, the Contractor 

shall not have any direct financial 

interest in the development or 

construction of any individual system or 

element of any system of systems while 

performing lead system integrator 

functions in the acquisition of a major 

system by the Department of Defense 

under this contract. 

(c) Agreement. The Contractor agrees 

that during performance of this contract 

it will not acquire any direct financial 

interest as described in paragraph (b) of 

this clause, or, if it does acquire or plan 

to acquire such interest, it will 

immediately notify the Contracting 

Officer. The Contractor further agrees to 

provide to the Contracting Officer all 

relevant information regarding the 

change in financial interests so that the 

Contracting Officer can determine 

whether an exception applies or 

whether the Contractor will be allowed 

to continue performance on this 

contract. If a direct financial interest 

cannot be avoided, eliminated, or 

mitigated to the Contracting Officer’s 

satisfaction, the Contracting Officer may 

terminate this contract for default for 

the Contractor’s material failure to 

comply with the terms and conditions 

of award or may take other remedial 

measures as appropriate in the 

Contracting Officer’s sole discretion. 

(d) Notwithstanding any other clause 

of this contract, if the Contracting 

Officer determines that the Contractor 

misrepresented its financial interests at 

the time of award or has violated the 

agreement in paragraph (c) of this 

clause, the Government may terminate 

this contract for default for the 

Contractor’s material failure to comply 

with the terms and conditions of award 

or may take other remedial measures as 

appropriate in the Contracting Officer’s 

sole discretion. 

(e) This clause implements the 

requirements of 10 U.S.C. 2410p, as 

added by section 807 of the National 


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1826 Federal Register / Vol. 73, No. 7 / Thursday, January 10, 2008 / Rules and Regulations 

Defense Authorization Act for Fiscal 

Year 2007 (Pub. L. 109–364). 

(End of clause) 

[FR Doc. E8–175 Filed 1–9–08; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 207 and 237 

RIN 0750–AF87 

Defense Federal Acquisition 

Regulation Supplement; Functions 

Exempt From Private Sector 

Performance (DFARS Case 2007–D019) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Final rule. 

SUMMARY: DoD has issued a final rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to address procedures for 

preparation of the written determination 

required by the Federal Acquisition 

Regulation (FAR), that none of the 

functions to be performed by contract 

are inherently governmental. 

DATES: Effective Date: January 10, 2008. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Michael Benavides, Defense Acquisition 

Regulations System, OUSD (AT&L) 

DPAP(DARS), IMD 3D139, 3062 Defense 

Pentagon, Washington, DC 20301–3062. 

Telephone 703–602–1302; facsimile 

703–602–7887. Please cite DFARS Case 

2007–D019. 

SUPPLEMENTARY INFORMATION: 

A. Background 

This final rule amends the DFARS to 

address procedures for preparation of 

the written determination required by 

FAR 7.503(e), that none of the functions 

to be performed by contract are 

inherently governmental. The rule 

requires DoD personnel to prepare the 

determination using DoD Instruction 

1100.22, Guidance for Determining 

Workforce Mix, and to also include a 

determination that none of the functions 

to be performed are exempt from private 

sector performance, as addressed in DoD 

Instruction 1100.22. 

This rule was not subject to Office of 

Management and Budget review under 

Executive Order 12866, dated 

September 30, 1993. 

B. Regulatory Flexibility Act 

This rule will not have a significant 

cost or administrative impact on 

contractors or offerors, or a significant 

effect beyond the internal operating 

procedures of DoD. Therefore, 

publication for public comment under 

41 U.S.C. 418b is not required. 

However, DoD will consider comments 

from small entities concerning the 

affected DFARS subparts in accordance 

with 5 U.S.C. 610. Such comments 

should cite DFARS Case 2007–D019. 

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 207 and 

237 

Government procurement. 

Michele P. Peterson, 

Editor, Defense Acquisition Regulations 

System. 

■ Therefore, 48 CFR parts 207 and 237 

are amended as follows: 

■ 1. The authority citation for 48 CFR 

parts 207 and 237 continues to read as 

follows: 

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

Chapter 1. 

PART 207—ACQUISITION PLANNING 

■ 2. Section 207.503 is amended by 

adding paragraph (e) to read as follows: 

207.503 Policy. 

(e) The written determination 

required by FAR 7.503(e), that none of 

the functions to be performed by 

contract are inherently governmental—

(i) Shall be prepared using DoD 

Instruction 1100.22, Guidance for 

Determining Workforce Mix; and 

(ii) Shall include a determination that 

none of the functions to be performed 

are exempt from private sector 

performance, as addressed in DoD 

Instruction 1100.22. 

* * * * * 

PART 237—SERVICE CONTRACTING 

■ 3. Section 237.102 is added to read as 

follows: 

237.102 Policy. 

(c) In addition to the prohibition on 

award of contracts for the performance 

of inherently governmental functions, 

contracting officers shall not award 

contracts for functions that are exempt 

from private sector performance. See 

207.503(e) for the associated 

documentation requirement. 

[FR Doc. E8–195 Filed 1–9–08; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 209, 217, and 246 

RIN 0750–AF86 

Defense Federal Acquisition 

Regulation Supplement; Ship Critical 

Safety Items (DFARS Case 2007–D016) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Interim rule with request for 

comments. 

SUMMARY: DoD has issued an interim 

rule amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to implement Section 130 of 

the National Defense Authorization Act 

for Fiscal Year 2007. Section 130 

requires DoD to establish a quality 

control policy for the procurement, 

modification, repair, and overhaul of 

ship critical safety items. 

DATES: Effective date: January 10, 2008. 

Comment date: Comments on the 

interim rule should be submitted in 

writing to the address shown below on 

or before March 10, 2008, to be 

considered in the formation of the final 

rule. 

ADDRESSES: You may submit comments, 

identified by DFARS Case 2007–D016, 

using any of the following methods: 

• Federal eRulemaking Portal: 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: dfars@osd.mil. Include 

DFARS Case 2007–D016 in the subject 

line of the message. 

• Fax: 703–602–7887. 

• Mail: Defense Acquisition 

Regulations System, Attn: Mr. Michael 

Benavides, OUSD (AT&L) DPAP 

(DARS), IMD 3D139, 3062 Defense 

Pentagon, Washington, DC 20301–3062. 

• Hand Delivery/Courier: Defense 

Acquisition Regulations System, Crystal 

Square 4, Suite 200A, 241 18th Street, 

Arlington, VA 22202–3402. 

Comments received generally will be 

posted without change to http:// 

www.regulations.gov, including any 

personal information provided. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Michael Benavides, 703–602–1302. 

SUPPLEMENTARY INFORMATION: 

A. Background 

This interim rule implements Section 

130 of the National Defense 

Authorization Act for Fiscal Year 2007 

(Pub. L. 109–364). Section 130 requires 

DoD to prescribe in regulations a quality 


yshivers on PROD1PC62 with RULES