[Federal Register Volume 74, Number 134 (Wednesday, July 15, 2009)]
[Rules and Regulations]
[Pages 34263-34264]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-16674]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 202, 212, and 234

RIN 0750-AG23


Defense Federal Acquisition Regulation Supplement; Acquisition of 
Commercial Items (DFARS Case 2008-D011)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Interim rule with request for comments.

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SUMMARY: DoD has issued an interim rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement Sections 805 and 
815 of the National Defense Authorization Act for Fiscal Year 2008. The 
rule specifies the conditions under which a time-and-materials or 
labor-hour contract may be used for the acquisition of commercial 
items. In addition, the rule addresses the conditions under which major 
weapon systems and subsystems may be treated as commercial items.

DATES: Effective date: July 15, 2009.
    Comment date: Comments on the interim rule should be submitted in 
writing to the address shown below on or before September 14, 2009, to 
be considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2008-D011, 
using any of the following methods:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> E-mail: <a href="/cdn-cgi/l/email-protection#9bfffdfae9e8dbf4e8ffb5f6f2f7"><span class="__cf_email__" data-cfemail="07636166757447687463296a6e6b">[email protected]</span></a>. Include DFARS Case 2008-D011 in the 
subject line of the message.
    <bullet> Fax: 703-602-7887.
    <bullet> Mail: Defense Acquisition Regulations System, Attn: Ms. 
Angie Sawyer, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense 
Pentagon, Washington, DC 20301-3062.
    <bullet<ls-thn-eq> 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: Ms. Angie Sawyer, 703-602-8384.

SUPPLEMENTARY INFORMATION: 

A. Background

    This interim rule implements Sections 805 and 815 of the National 
Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181). 
Section 805 specifies the types of commercial item acquisitions for 
which time-and-materials and labor-hour contracts may be used. Section 
815 addresses the situations under which major weapon systems, 
subsystems of major weapon systems, and components and spare parts for 
major weapon systems may be acquired using procedures established for 
the acquisition of commercial items. In addition, Section 815 requires 
DoD to modify its regulations to clarify that the terms ``general 
public'' and ``non-governmental entities,'' with regard to sales of 
commercial items, do not include the Federal Government or a State, 
local, or foreign government.
    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 
reinforces existing requirements for the appropriate use of commercial 
acquisition procedures and for ensuring that contract prices are fair 
and reasonable. 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 2008-D011.

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 Sections 805 and 815 of the National 
Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181). 
Section 805 requires DoD to modify its acquisition regulations to 
ensure that time-and-materials and labor-hour contracts are used for 
commercial items only under certain specified circumstances. Section 
815 limits the conditions under which major weapon systems, subsystems 
of major weapon systems, and components and spare parts of major weapon 
systems may be treated as commercial items and acquired under 
procedures established for the acquisition of commercial items. In 
addition, Section 815 requires DoD to modify its regulations on the 
acquisition of commercial items to clarify that the terms ``general 
public'' and ``non-governmental entities'' do not include the Federal 
Government or a State, local, or foreign government. 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 202, 212, and 234

    Government procurement.

Michele P. Peterson,
Editor, Defense Acquisition Regulations System.

0
Therefore, 48 CFR Parts 202, 212, and 234 are amended as follows:

0
1. The authority citation for 48 CFR Parts 202, 212, and 234 continues 
to read as follows:


[[Page 34264]]


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

PART 202--DEFINITIONS OF WORDS AND TERMS

0
2. Section 202.101 is amended by adding a definition of General public 
and non-governmental entities in alphabetical order to read as follows:


202.101  Definitions.

* * * * *
    General public and non-governmental entities, as used in the 
definition of commercial item at FAR 2.101, do not include the Federal 
Government or a State, local, or foreign government (Pub. L. 110-181, 
Section 815(b)).
* * * * *

PART 212--ACQUISITION OF COMMERCIAL ITEMS

0
3. Section 212.207 is added to read as follows:


212.207  Contract type.

    (b) In accordance with Section 805 of the National Defense 
Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), use of time-
and-materials and labor-hour contracts for the acquisition of 
commercial items is authorized only for the following:
    (i) Services acquired for support of a commercial item.
    (ii) Emergency repair services.
    (iii) Any other commercial services only to the extent that the 
head of the agency concerned approves a written determination by the 
contracting officer that--
    (A) The services to be acquired are commercial;
    (B) If the services to be acquired are subject to FAR 15.403-
1(c)(3)(ii), the offeror of the services has submitted sufficient 
information in accordance with that subsection;
    (C) Such services are commonly sold to the general public through 
use of time-and-materials or labor-hour contracts; and
    (D) The use of a time-and-materials or labor-hour contract type is 
in the best interest of the Government.

PART 234--MAJOR SYSTEM ACQUISITION

0
4. Section 234.7002 is revised to read as follows:


234.7002  Policy.

    (a) Major weapon systems. (1) A DoD major weapon system may be 
treated as a commercial item, or acquired under procedures established 
for the acquisition of commercial items, only if--
    (i) The Secretary of Defense determines that--
    (A) The major weapon system is a commercial item as defined in FAR 
2.101; and
    (B) Such treatment is necessary to meet national security 
objectives;
    (ii) The offeror has submitted sufficient information to evaluate, 
through price analysis, the reasonableness of the price for such a 
system; and
    (iii) The congressional defense committees are notified at least 30 
days before such treatment or acquisition occurs. Follow the procedures 
at PGI 234.7002.
    (2) The authority of the Secretary of Defense to make a 
determination under paragraph (a)(1) of this section may not be 
delegated below the level of the Deputy Secretary of Defense.
    (b) Subsystems. A subsystem of a major weapon system (other than a 
commercially available off-the-shelf item) may be treated as a 
commercial item and acquired under procedures established for the 
acquisition of commercial items only if--
    (1) The subsystem is intended for a major weapon system that is 
being acquired, or has been acquired, under procedures established for 
the acquisition of commercial items in accordance with paragraph (a) of 
this section; or
    (2) The contracting officer determines in writing that--
    (i) The subsystem is a commercial item; and
    (ii) The offeror has submitted sufficient information to evaluate, 
through price analysis, the reasonableness of the price for the 
subsystem.
    (c) Components and spare parts. (1) A component or spare part for a 
major weapon system (other than a commercially available off-the-shelf 
item) may be treated as a commercial item only if--
    (i) The component or spare part is intended for--
    (A) A major weapon system that is being acquired, or has been 
acquired, under procedures established for the acquisition of 
commercial items in accordance with paragraph (a) of this section; or
    (B) A subsystem of a major weapon system that is being acquired, or 
has been acquired, under procedures established for the acquisition of 
commercial items in accordance with paragraph (b) of this section; or
    (ii) The contracting officer determines in writing that--
    (A) The component or spare part is a commercial item; and
    (B) The offeror has submitted sufficient information to evaluate, 
through price analysis, the reasonableness of the price for the 
component or spare part.
    (2) This paragraph (c) shall apply only to components and spare 
parts that are acquired by DoD through a prime contract or a 
modification to a prime contract, or through a subcontract under a 
prime contract or modification to a prime contract on which the prime 
contractor adds no, or negligible, value.
    (d) Relevant information. To the extent necessary to make a 
determination under paragraph (a)(1)(ii), (b)(2), or (c)(1)(ii) of this 
section, the contracting officer may request the offeror to submit--
    (1) Prices paid for the same or similar commercial items under 
comparable terms and conditions by both Government and commercial 
customers; and
    (2) Other relevant information regarding the basis for price or 
cost, including information on labor costs, material costs, and 
overhead rates, if the contracting officer determines that the 
information described in paragraph (d)(1) of this section is not 
sufficient to determine price reasonableness.

 [FR Doc. E9-16674 Filed 7-14-09; 8:45 am]
BILLING CODE 5001-08-P


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