Source: https://regulations.justia.com/regulations/fedreg/2016/09/23/2016-22573.html
Timestamp: 2020-08-12 10:38:23
Document Index: 346361143

Matched Legal Cases: ['§ 90', '§ 90', 'arts 211', 'arts 211', 'art 211', 'art 211', 'art 11', 'art 215', 'art 219', 'art 242', 'art 252', 'arts 211', 'arts 211', 'arts 211', 'ART 211', 'art 11', 'ART 215', 'ART 219', 'art 12', 'ART 242', 'art 242', 'art 242', 'ART 252', 'art 219', 'arts 211', 'art 211', 'art 11', 'arts 211']

Defense Federal Acquisition Regulation Supplement: Temporary Extension of Test Program for Comprehensive Small Business Subcontracting Plans (DFARS Case 2015-D013), 65606-65610 [2016-22573] :: Defense Acquisition Regulations System :: Department Of Defense :: Regulation Tracker :: Justia
Justia Regulation Tracker Department Of Defense Defense Acquisition Regulations System Defense Federal Acquisition Regulation Supplement: Temporary Extension of Test Program for Comprehensive Small Business Subcontracting Plans (DFARS Case 2015-D013), 65606-65610 [2016-22573]
Defense Federal Acquisition Regulation Supplement: Temporary Extension of Test Program for Comprehensive Small Business Subcontracting Plans (DFARS Case 2015-D013), 65606-65610 [2016-22573]
Download as PDF 65606 Federal Register / Vol. 81, No. 185 / Friday, September 23, 2016 / Proposed Rules www.regulations.gov, including any personal information provided. To confirm receipt of your comment(s), please check www.regulations.gov, approximately two to three days after submission to verify posting (except allow 30 days for posting of comments submitted by mail). FOR FURTHER INFORMATION CONTACT: Ms. Jennifer Johnson, telephone 571–372– 6100. § 90.267, except as provided in § 90.219(d)(3)(ii): * * * * * [FR Doc. 2016–21638 Filed 9–22–16; 8:45 am] BILLING CODE 6712–01–P DEPARTMENT OF DEFENSE Defense Acquisition Regulations System SUPPLEMENTARY INFORMATION: 48 CFR Parts 211, 215, 219, 242, and 252 I. Background [Docket DARS–2016–0027] RIN 0750–AJ00 Defense Federal Acquisition Regulation Supplement: Temporary Extension of Test Program for Comprehensive Small Business Subcontracting Plans (DFARS Case 2015–D013) Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Proposed rule. AGENCY: DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2015 and a section of the National Defense Authorization Act for Fiscal Year 2016, both of which provide revisions to the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans. DATES: Comments on the proposed rule should be submitted in writing to the address shown below on or before November 22, 2016, to be considered in the formation of a final rule. ADDRESSES: Submit comments identified by DFARS Case 2015–D013, using any of the following methods: Æ Federal eRulemaking Portal: http:// www.regulations.gov. Search for ‘‘DFARS Case 2015–D013.’’ Select ‘‘Comment Now’’ and follow the instructions provided to submit a comment. Please include ‘‘DFARS Case 2015–D013’’ on any attached documents. Æ Email: osd.dfars@mail.mil. Include DFARS Case 2015–D013 in the subject line of the message. Æ Fax: 571–372–6094. Æ Mail: Defense Acquisition Regulations System, Attn: Ms. Jennifer Johnson, OUSD (AT&L) DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301–3060. Comments received generally will be posted without change to http:// rmajette on DSK2TPTVN1PROD with PROPOSALS SUMMARY: VerDate Sep<11>2014 15:12 Sep 22, 2016 Jkt 238001 DoD is proposing to revise the DFARS to implement section 821 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015 and section 872 of the NDAA for FY 2016, both of which revise the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans. Section 821 of the NDAA for FY 2015 provides for contractors participating in the Test Program to report, on a semiannual basis, the amount of first-tier subcontract dollars awarded; the total number of subcontracts active under the Test Program that would have otherwise required a subcontracting plan under 15 U.S.C. 637(d); costs incurred in negotiating, complying with, and reporting on comprehensive subcontracting plans; and costs avoided by adoption of a comprehensive subcontracting plan. This information is expected to assist in determining if Test Program participants have achieved cost savings while enhancing opportunities for small businesses. In addition, section 821— • Repeals section 402 of Public Law 101–574, which suspended liquidated damages under comprehensive small business subcontracting plans; • Requires consideration, as part of the past performance evaluation of an offeror, of any failure to make a good faith effort to comply with its comprehensive subcontracting plan; • Extends the Test Program through December 31, 2017; • Increases the threshold for participation in the Test Program from $5,000,000 to $100,000,000; and • Prohibits negotiation of comprehensive subcontracting plans with contractors who failed to meet the subcontracting goals of their comprehensive subcontracting plan for the prior fiscal year. Section 872 of the NDAA for FY 2016 removes the prohibition on negotiation of comprehensive subcontracting plans with contractors who failed to meet the subcontracting goals of their comprehensive subcontracting plan for the prior fiscal year. PO 00000 Frm 00030 Fmt 4702 Sfmt 4702 II. Discussion and Analysis This rule proposes to amend DFARS subparts 211.5, 215.3, 219.7, 242.15, and 252.2 as summarized in the following paragraphs: A. Subpart 211.5, Liquidated Damages Section 211.500 is added to clarify that subpart 211.5 and Federal Acquisition Regulation (FAR) subpart 11.5 do not apply to liquidated damages for comprehensive subcontracting plans under the Test Program, and to include a reference to DFARS 219.702–70. B. Subpart 215.3, Source Selection Section 215.305 is amended to require contracting officers to consider an offeror’s failure to make a good faith effort to comply with its comprehensive subcontracting plan as part of the past performance evaluation. C. Subpart 219.7, The Small Business Subcontracting Program • Section 219.702–70, Statutory requirements for the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans, renumbers section 219.702 and incorporates new requirements stemming from section 821 of the NDAA for FY 2015. Æ Paragraph (1) is renumbered as paragraph (a) and amended to include the title of the Test Program. Æ Paragraph (2), which addressed the nonapplicability of liquidated damages, is deleted in its entirety. Æ Paragraph (b) is added to provide the current requirements for participation in the Test Program. These requirements are expressly stated in 15 U.S.C. 637 note, as amended by section 821 of the NDAA for FY 2015 and section 872 of the NDAA for FY 2016. To participate in the Test Program, the contractor must have furnished to DoD, during the immediately preceding fiscal year under at least three contracts, supplies, services, or construction in the aggregate amount of at least $100 million. Æ Paragraph (c) is added to describe the establishment and use of comprehensive subcontracting plans. Æ Paragraph (d) is added to provide the process to determine the need to assess liquidated damages for failure to make a good faith effort to comply with the comprehensive subcontracting plan. Paragraph (e) is added to describe the calculation and application of liquidated damages. This rule sets forth the following methodology for assessing liquidated damages: • The participant contractor shall be subject to the payment of liquidated damages if, after allowing the contractor E:\FR\FM\23SEP1.SGM 23SEP1 Federal Register / Vol. 81, No. 185 / Friday, September 23, 2016 / Proposed Rules an opportunity to demonstrate that it has made a good faith effort to comply with its comprehensive subcontracting plan, the contracting officer makes a final decision that the contractor failed to make a good faith effort to comply with its plan. • The amount of liquidated damages owed to the Government shall be the amount of anticipated damages sustained by the Government, including but not limited to additional expenses of administration, reporting, and contract monitoring. Æ Paragraph (3) is renumbered as paragraph (f) and amended to revise the expiration date for the Test Program from December 31, 2014, to December 31, 2017. • Section 219.708, Contract Clauses, is amended as follows: Æ Paragraph (b)(1)(B) guidance on use of clause 252.219–7004 is updated and aligned with the revised flowdown instructions in paragraph (g) of the clause. A correction is made to the Code of Federal Regulations to remove the phrase ‘‘and FAR 52.219–9, Small Business Subcontracting Plan(DoD Contracts),’’. Paragraph (b)(1)(B)(2)(ii) is removed as the information is now contained at FAR 19.708(b)(1)(iii). Æ Paragraph (b)(2), is amended to instruct contracting officers to use the clause at 252.219–7004, Small Business Subcontracting Plan (Test Program), in lieu of FAR 52.219–16, Liquidated Damages—Subcontracting Plan. rmajette on DSK2TPTVN1PROD with PROPOSALS D. Subpart 242.15, Contractor Performance Information Section 242.1502 is added to require that past performance evaluations include an assessment of the contractor’s performance against, and efforts to achieve, the goals in its comprehensive subcontracting plan. E. Subpart 252.2, Text of Provisions and Clauses • Clause 252.219–7003, Small Business Subcontracting Plan (DoD Contracts), basic clause and its Alternate I, are amended to advise that contractors must insert (i.e., ‘‘flow down’’) the clause at 252.219–7004, Small Business Subcontracting Plan (Test Program), to subcontractors who participate in the Test Program. • Clause 252.219–7004, Small Business Subcontracting Plan (Test Program), is amended to incorporate new requirements stemming from section 821 of the NDAA for FY 2015. Æ Paragraph (a) provides definitions for additional terms used in connection with the Test Program. Æ Paragraph (c) is amended to advise participant contractors of the VerDate Sep<11>2014 15:12 Sep 22, 2016 Jkt 238001 requirements for participation in the Test Program. Æ Paragraph (d) is amended to include the reporting requirements for contractors with comprehensive subcontracting plans. The reports must present the data by North American Industry Classification System code, by major defense acquisition program, by contract (for certain contracts with a value exceeding $100,000,000), and by military department. Æ Paragraph (f) is added to address liquidated damages under a comprehensive subcontracting plan. Æ Paragraph (g) flowdown instructions are clarified and updated. III. Applicability to Contracts at or Below the Simplified Acquisition Threshold and for Commercial Items, Including Commercially Available Offthe-Shelf Items This rule proposes to amend the clauses at DFARS 252.219–7003, Small Business Subcontracting Plan (DoD Contracts), and 252.219–7004, Small Business Subcontracting Plan (Test Program), in order to implement section 821 of the NDAA for FY 2015. The requirements of section 821 were enacted to promote utilization of small businesses and to determine the success of the Test Program at reducing administrative burdens while enhancing subcontracting opportunities for small businesses. Section 821 advances the interests of small business subcontractors by encouraging test program participants to comply with their comprehensive subcontracting plans. A. Contracts at or Below the Simplified Acquisition Threshold 41 U.S.C. 1905 governs the applicability of laws to contracts or subcontracts in amounts not greater than the simplified acquisition threshold (SAT). It is intended to limit the applicability of laws to such contracts or subcontracts. 41 U.S.C. 1905 provides that if a provision of law contains criminal or civil penalties, or if the FAR Council makes a written determination that it is not in the best interest of the Federal Government to exempt contracts or subcontracts at or below the SAT, the law will apply to them. The Director, Defense Procurement and Acquisition Policy (DPAP), is the appropriate authority to make comparable determinations for regulations to be published in the DFARS, which is part of the FAR system of regulations. PO 00000 Frm 00031 Fmt 4702 Sfmt 4702 65607 B. Contracts for the Acquisition of Commercial Items, Including Commercially Available Off the Shelf Items 41 U.S.C. 1906 governs the applicability of laws to contracts for the acquisition of commercial items, and is intended to limit the applicability of laws to contracts for the acquisition of commercial items. 41 U.S.C. 1906 provides that if a provision of law contains criminal or civil penalties, or if the FAR Council makes a written determination that it is not in the best interest of the Federal Government to exempt commercial item contracts, the provision of law will apply to contracts for the acquisition of commercial items. Likewise, 41 U.S.C. 1907 governs the applicability of laws to commercially available off-the-shelf (COTS) items, with the Administrator for Federal Procurement Policy the decision authority to determine that it is in the best interest of the Government to apply a provision of law to acquisitions of COTS items in the FAR. The Director, DPAP, is the appropriate authority to make comparable determinations for regulations to be published in the DFARS, which is part of the FAR system of regulations. C. Applicability Determination This proposed rule does not apply the requirements of section 821 of the NDAA for FY 2015 to contracts at or below the SAT, but does apply the requirements of section 821 to contracts for the acquisition of commercial items, including COTS items, as defined at FAR 2.101. The prescriptions for these clauses currently require their use in solicitations and contracts for commercial items, including COTS items. This rule merely revises these clauses to implement the new requirements of section 821; consequently, exclusion of acquisitions of commercial and COTS items from these requirements would create confusion among contractors and the contracting workforce and would result in fewer subcontracting opportunities for small businesses. By applying the requirements of section 821 to acquisitions of commercial items, the burden on contractors is no greater than the burden on contractors who have other types of subcontracting plans. DoD will make the final determination with regard to application to commercial items after receipt and analysis of public comments. E:\FR\FM\23SEP1.SGM 23SEP1 65608 Federal Register / Vol. 81, No. 185 / Friday, September 23, 2016 / Proposed Rules IV. Executive Orders 12866 and 13563 Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804. rmajette on DSK2TPTVN1PROD with PROPOSALS V. Regulatory Flexibility Act DoD does not expect this proposed 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 small entities do not participate in the Test Program. However, an initial regulatory flexibility analysis has been performed and is summarized as follows: DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement section 821 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015 (Pub. L. 113–291) and section 872 of the NDAA for FY 2016 (Pub. L. 114–92). Section 821 of the NDAA for FY 2015 provides several changes to the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans (Test Program), including new reporting and eligibility requirements, an extension of the Test Program, and authority to assess liquidated damages. Section 872 of the NDAA for FY 2016 removes one of the eligibility requirements. The objectives of this proposed rule are to collect data to assist in assessing the successes or shortcomings of the Test Program and to provide the means to hold Test Program participants accountable for failure to make a good faith effort to comply with their comprehensive subcontracting plans. The authorizing legislation is section 821 of the NDAA for FY 2015 and section 872 of the NDAA for FY 2016. The rule will not apply to small entities. The rule, however, may have an indirect positive economic impact on small entities, because the rule encourages Test Program participants to make a good faith effort to comply with VerDate Sep<11>2014 15:12 Sep 22, 2016 Jkt 238001 their comprehensive subcontracting plans. The rule does not impose any reporting or recordkeeping requirements on small entities. There are new semiannual reporting requirements for Test Program participants who are, as a matter of eligibility for the program, other than small businesses. The rule does not duplicate, overlap, or conflict with any other Federal rules. There are no known, significant, alternative approaches to the rule that would meet the requirements of the applicable statutes. 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 2015–D013), in correspondence. VI. Paperwork Reduction Act The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35), because the rule does not impose a collection of information on ten or more members of the public. List of Subjects in 48 CFR Parts 211, 215, 219, 242, and 252. Government procurement. Jennifer L. Hawes, Editor, Defense Acquisition Regulations System. Therefore, 48 CFR parts 211, 215, 219, 242, and 252 are proposed to be amended as follows: ■ 1. The authority citation for parts 211, 215, 219, 242, and 252 continues to read as follows: Authority: 41 U.S.C. 1303 and 48 CFR chapter 1. PART 211—DESCRIBING AGENCY NEEDS 2. Add section 211.500 to read as follows: ■ 211.500 Scope. This subpart and FAR subpart 11.5 do not apply to liquidated damages for comprehensive subcontracting plans under the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans. See 219.702–70 for coverage of liquidated damages for comprehensive subcontracting plans. PO 00000 Frm 00032 Fmt 4702 Sfmt 4702 PART 215—CONTRACTING BY NEGOTIATION 3. Amend section 215.305(a)(2) by— a. Designating the text as paragraph (a)(2)(A); and ■ b. Adding paragraph (a)(2)(B). The addition reads as follows: ■ ■ 215.305 Proposal evaluation. (a)(2) * * * (B) Contracting officers shall consider an offeror’s failure to make a good faith effort to comply with its comprehensive subcontracting plan under the Test Program described at 219.702–70 as part of the evaluation of the past performance. PART 219—SMALL BUSINESS PROGRAMS 219.702 [Redesignated as 219.702–70] 4. Redesignate section 219.702 as 219.702–70; and revise it to read as follows: ■ 219.702–70 Statutory requirements for the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans. (a) In accordance with 15 U.S.C. 637 note, DoD has established a test program to determine whether comprehensive subcontracting plans on a corporate, division, or plant-wide basis will reduce administrative burdens while enhancing subcontracting opportunities for small and small disadvantaged business concerns. This program is referred to as the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans (Test Program). (b) Eligibility requirements. To become and remain eligible to participate in the Test Program, a business concern is required to have furnished supplies or services (including construction) under at least three DoD contracts during the preceding fiscal year, having an aggregate value of at least $100 million. (c) Comprehensive subcontracting plans. (1) The Defense Contract Management Agency will designate the contracting officer who shall negotiate and approve comprehensive subcontracting plans with eligible participants on an annual basis. (2) Test Program participants use their comprehensive subcontracting plans, in lieu of individual subcontracting plans, when performing any DoD contract or subcontract that requires a subcontracting plan. (d) Assessment. The contracting officer designated to manage the comprehensive subcontracting plan shall conduct a compliance review during the fiscal year after the close of E:\FR\FM\23SEP1.SGM 23SEP1 rmajette on DSK2TPTVN1PROD with PROPOSALS Federal Register / Vol. 81, No. 185 / Friday, September 23, 2016 / Proposed Rules the fiscal year for which the plan is applicable. The contracting officer shall compare the approved percentage or dollar goals to the total, actual subcontracting dollars covered by the comprehensive subcontracting plan. (1) If the contractor has failed to meet its approved subcontracting goal(s), the contracting officer shall give the contractor written notice specifying the failure, advising of the potential for assessment of liquidated damages, permitting the contractor to demonstrate what good faith efforts have been made, and providing a period of 15 working days (or longer period at the contracting officer’s discretion) within which to respond. The contracting officer may take the contractor’s failure to respond to the notice as an admission that no valid explanation exists. (2) The contracting officer shall review all available information to determine whether the contractor has failed to make a good faith effort to comply with the plan. (3) If, after consideration of all relevant information, the contracting officer determines that the contractor failed to make a good faith effort to comply with the comprehensive subcontracting plan, the contracting officer shall issue a final decision. The contracting officer’s final decision shall include the right of the contractor to appeal under the Disputes clause. The contracting officer shall distribute a copy of the final decision to all cognizant contracting officers for the contracts covered under the plan. (e) Liquidated damages. The amount of liquidated damages shall be the amount of anticipated damages sustained by the Government, including but not limited to additional expenses of administration, reporting, and contract monitoring, and shall be identified in the comprehensive subcontracting plan. Liquidated damages shall be in addition to any other remedies the Government may have. (f) Expiration date. The Test Program expires on December 31, 2017. ■ 5. Amend section 219.708 by— ■ a. Revising paragraph (b)(1)(B); ■ b. Revising paragraph (b)(2); and ■ c. Removing from paragraph (c)(1) ‘‘test program described in 219.702’’ and adding ‘‘Test Program described in 219.702–70’’ in its place. The revisions read as follows: 219.708 Contract clauses. (b)(1) * * * (B) In contracts with contractors that have comprehensive subcontracting plans approved under the Test Program described in 219.702–70, including contracts using FAR part 12 procedures VerDate Sep<11>2014 15:12 Sep 22, 2016 Jkt 238001 for the acquisition of commercial items, use the clause at 252.219–7004, Small Business Subcontracting Plan (Test Program), instead of the clauses at 252.219–7003, Small Business Subcontracting Plan (DoD Contracts), FAR 52.219–9, Small Business Subcontracting Plan, and FAR 52.219– 16, Liquidated Damages— Subcontracting Plan. (2) In contracts with contractors that have comprehensive subcontracting plans approved under the Test Program described in 219.702–70, do not use the clause at FAR 52.219–16, Liquidated Damages—Subcontracting Plan. * * * * * PART 242—CONTRACT ADMINISTRATION AND AUDIT SERVICES 6. Add subpart 242.15, consisting of 242.1502, to read as follows: ■ Subpart 242.15—Contractor Performance Information 242.1502 Policy. (g) Past performance evaluations in the Contractor Performance Assessment Reporting System shall include an assessment of the contractor’s performance against, and efforts to achieve, the goals identified in its comprehensive small business subcontracting plan when the contract contains the clause at 252.219–7004, Small Business Subcontracting Plan (Test Program). PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 7. Amend section 252.219–7003 by— a. In the basic clause— ■ i. Removing the clause date of ‘‘(MAR 2016)’’ and adding ‘‘(DATE)’’ in its place; ■ ii. Adding paragraph (g); and ■ b. In Alternate I— ■ i. Removing the clause date of ‘‘(MAR 2016)’’ and adding ‘‘(DATE)’’ in its place; and ■ ii. Adding paragraph (g). The additions read as follows. ■ ■ 252.219–7003 Small Business Subcontracting Plan (DoD Contracts). * * * * * (g) Include the clause at 252.219– 7004, Small Business Subcontracting Plan (Test Program), in subcontracts with subcontractors that participate in the Test Program described in DFARS 219.702–70, where the subcontract is expected to exceed $700,000 ($1.5 million for construction of any public PO 00000 Frm 00033 Fmt 4702 Sfmt 4702 65609 facility) and to have further subcontracting opportunities. * * * * * Alternate I. * * * * * * * * (g) Include the clause at 252.219– 7004, Small Business Subcontracting Plan (Test Program), in subcontracts with subcontractors that participate in the Test Program described in DFARS 219.702–70, where the subcontract is expected to exceed $700,000 ($1.5 million for construction of any public facility) and to have further subcontracting opportunities. * * * * * ■ 8. Revise section 252.219–7004 to read as follows: 252.219–7004 Small business subcontracting plan (Test Program). As prescribed in 219.708(b)(1)(B), use the following clause: Small Business Subcontracting Plan (Test Program) (Date) (a) Definitions. As used in this clause— Covered small business concern means a small business concern, veteran-owned small business concern, service-disabled veteranowned small business concern, HUBZone small business concern, women-owned small business concern, or small disadvantaged business concern as these terms are defined in FAR 2.101. Electronic Subcontracting Reporting System (eSRS) means the Governmentwide, electronic, Web-based system for small business subcontracting program reporting. The eSRS is located at http://www.esrs.gov. Failure to make a good faith effort to comply with a comprehensive subcontracting plan means a willful or intentional failure to perform in accordance with the requirements of the Contractor’s approved comprehensive subcontracting plan or willful or intentional action to frustrate the plan. Subcontract means any agreement (other than one involving an employer-employee relationship) entered into by a Federal Government prime Contractor or subcontractor calling for supplies or services required for performance of the contract or subcontract. (b) The Contractor’s comprehensive small business subcontracting plan and its successors, which are authorized by and approved under the Test Program of 15 U.S.C. 637 note, as amended, shall be included in and made a part of this contract. Upon expulsion from the Test Program or expiration of the Test Program, the Contractor shall negotiate an individual subcontracting plan for all future contracts that meet the requirements of 15 U.S.C. 637(d). (c) Eligibility requirements. To become and remain eligible to participate in the Test Program, a business concern is required to have furnished supplies or services (including construction) under at least three DoD contracts during the preceding fiscal year, having an aggregate value of at least $100 million. E:\FR\FM\23SEP1.SGM 23SEP1 rmajette on DSK2TPTVN1PROD with PROPOSALS 65610 Federal Register / Vol. 81, No. 185 / Friday, September 23, 2016 / Proposed Rules (d) Reports. (1) The Contractor shall report semiannually for the six-month periods ending March 31 and September 30, the information in paragraphs (d)(1)(i) through (v) of this section within 30 days after the end of the reporting period. Submit the report at https://www.esrs.gov. (i) A list of contracts covered under its comprehensive small business subcontracting plan, to include the Commercial and Government Entity (CAGE) code and Data Universal Numbering System (DUNS) number. (ii) The amount of first-tier subcontract dollars awarded during the six-month period covered by the report to covered small business concerns, with the information set forth separately by— (A) North American Industrial Classification System (NAICS) code; (B) Major defense acquisition program, as defined in 10 U.S.C. 2430(a); (C) Contract number, if the contract is for maintenance, overhaul, repair, servicing, rehabilitation, salvage, modernization, or modification of supplies, systems, or equipment, and the total value of the contract, including options, exceeds $100 million; and (D) Military department. (iii) Total number of subcontracts active under the Test Program that would have otherwise required a subcontracting plan. (iv) Costs incurred in negotiating, complying with, and reporting on its comprehensive subcontracting plan. (v) Costs avoided through the use of a comprehensive subcontracting plan. (2) The Contractor shall— (i) Ensure that subcontractors with subcontracting plans agree to submit an Individual Subcontract Report (ISR) and/or Summary Subcontract Report (SSR) using the Electronic Subcontracting Reporting System (eSRS). (ii) Provide its contract number, its DUNS number, and the email address of the Contractor’s official responsible for acknowledging or rejecting the ISR to all first-tier subcontractors, who will be required to submit ISRs, so they can enter this information into the eSRS when submitting their reports. (iii) Require that each subcontractor with a subcontracting plan provide the prime contract number, its own DUNS number, and the email address of the subcontractor’s official responsible for acknowledging or rejecting the ISRs to its subcontractors with subcontracting plans who will be required to submit ISRs. (iv) Acknowledge receipt or reject all ISRs submitted by its subcontractors using eSRS. (3) The Contractor shall submit SSRs using eSRS at http://www.esrs.gov. The reports shall provide information on subcontract awards to small business concerns, veteranowned small business concerns, servicedisabled veteran-owned small business concerns, HUBZone small business concerns, small disadvantaged business concerns, and women-owned small business concerns. Purchases from a corporation, company, or subdivision that is an affiliate of the prime Contractor or subcontractor are not included in these reports. Subcontract award data VerDate Sep<11>2014 15:12 Sep 22, 2016 Jkt 238001 reported by prime contractors and subcontractors shall be limited to awards made to their immediate next-tier subcontractors. Credit cannot be taken for awards made to lower-tier subcontractors unless the Contractor or subcontractor has been designated to receive a small business or small disadvantaged business credit from a member firm of the Alaska Native— Corporations or an Indian tribe. Only subcontracts involving performance in the U.S. or its outlying areas should be included in these reports. (i) This report may be submitted on a corporate, company, or subdivision (e.g., plant or division operating as a separate profit center) basis, as negotiated in the comprehensive subcontracting plan with the Defense Contract Management Agency. (ii) This report encompasses all subcontracting under prime contracts and subcontracts with the Department of Defense, regardless of the dollar value of the subcontracts, and is based on the negotiated comprehensive subcontracting plan. (iii) The report shall be submitted semiannually for the six months ending March 31 and the twelve months ending September 30. Reports are due 30 days after the close of each reporting period. (iv) The authority to acknowledge receipt or reject the SSR resides with the Defense Contract Management Agency. (e) The failure of the Contractor or subcontractor to comply in good faith with the clause of this contract entitled ‘‘Utilization of Small Business Concerns,’’ or an approved plan required by this clause, shall be a material breach of the contract. (f) Liquidated damages. The Contracting Officer designated to manage the comprehensive subcontracting plan will exercise the functions of the Contracting Officer, as identified in paragraphs (f)(1) through (4), on behalf of all DoD departments and agencies that awarded contracts covered by the Contractor’s comprehensive subcontracting plan. (1) To determine the need for liquidated damages, the Contracting Officer will conduct a compliance review during the fiscal year after the close of the fiscal year for which the plan is applicable. The Contracting Officer will compare the approved percentage or dollar goals to the total, actual subcontracting dollars covered by the plan. (2) If the Contractor has failed to meet its approved subcontracting goal(s), the Contracting Officer will provide the Contractor written notice specifying the failure, advising of the potential for assessment of liquidated damages, and permitting the Contractor to demonstrate what good faith efforts have been made. The Contracting Officer may take the Contractor’s failure to respond to the notice within 15 working days (or longer period at the Contracting Officer’s discretion) as an admission that no valid explanation exists. (3) If, after consideration of all relevant information, the Contracting Officer determines that the Contractor failed to make a good faith effort to comply with the comprehensive subcontracting plan, the Contracting Officer will issue a final decision to the Contractor to that effect and require the PO 00000 Frm 00034 Fmt 4702 Sfmt 4702 Contractor to pay liquidated damages to the Government in the amount identified in the comprehensive subcontracting plan. (4) The Contractor shall have the right of appeal under the clause in this contract entitled ‘‘Disputes’’ from any final decision of the Contracting Officer. (g) The Contractor shall include in subcontracts that offer subcontracting opportunities, are expected to exceed $700,000 ($1.5 million for construction of any public facility), and are required to include the clause at 52.219–8, Utilization of Small Business Concerns— (1) FAR 52.219–9, Small Business Subcontracting Plan, and 252.219–7003 Small Business Subcontracting Plan (DoD Contracts)—Basic; (2) 52.219–9, Small Business Subcontracting Plan, with its Alternate III, and 252.219–7003, Small Business Subcontracting Plan (DoD Contracts)— Alternate I, to allow for submission of SF 294s in lieu of ISRs; or (3) 252.219–7004, Small Business Subcontracting Plan (Test Program), in subcontracts with subcontractors that participate in the Test Program described in DFARS 219.702–70. (End of clause) [FR Doc. 2016–22573 Filed 9–22–16; 8:45 am] BILLING CODE 5001–06–P DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Part 219 and Appendix I to Chapter 2 [Docket DARS–2016–0033] RIN 0750–AJ05 Defense Federal Acquisition Regulation Supplement: Amendment ´ ´ to Mentor-Protege Program (DFARS Case 2016–D011) Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Proposed rule. AGENCY: DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2016 that provides amendments to ´ ´ the DoD Pilot Mentor-Protege Program. DATES: Comments on the proposed rule should be submitted in writing to the address shown below on or before November 22, 2016, to be considered in the formation of a final rule. ADDRESSES: Submit comments identified by DFARS Case 2016–D011, using any of the following methods: Æ Federal eRulemaking Portal: http:// www.regulations.gov. Search for SUMMARY: E:\FR\FM\23SEP1.SGM 23SEP1
[Pages 65606-65610]
[FR Doc No: 2016-22573]
Defense Authorization Act for Fiscal Year 2015 and a section of the
National Defense Authorization Act for Fiscal Year 2016, both of which
provide revisions to the Test Program for Negotiation of Comprehensive
ADDRESSES: Submit comments identified by DFARS Case 2015-D013, using
Search for ``DFARS Case 2015-D013.'' Select ``Comment Now'' and follow
Case 2015-D013'' on any attached documents.
[cir] Email: osd.dfars@mail.mil. Include DFARS Case 2015-D013 in
Jennifer Johnson, OUSD (AT&L) DPAP/DARS, Room 3B941, 3060 Defense
DoD is proposing to revise the DFARS to implement section 821 of
and section 872 of the NDAA for FY 2016, both of which revise the Test
Plans. Section 821 of the NDAA for FY 2015 provides for contractors
participating in the Test Program to report, on a semiannual basis, the
amount of first-tier subcontract dollars awarded; the total number of
subcontracts active under the Test Program that would have otherwise
required a subcontracting plan under 15 U.S.C. 637(d); costs incurred
in negotiating, complying with, and reporting on comprehensive
subcontracting plans; and costs avoided by adoption of a comprehensive
subcontracting plan. This information is expected to assist in
determining if Test Program participants have achieved cost savings
while enhancing opportunities for small businesses.
evaluation of an offeror, of any failure to make a good faith effort to
comply with its comprehensive subcontracting plan;
Program from $5,000,000 to $100,000,000; and
This rule proposes to amend DFARS subparts 211.5, 215.3, 219.7,
242.15, and 252.2 as summarized in the following paragraphs:
Section 211.500 is added to clarify that subpart 211.5 and Federal
Acquisition Regulation (FAR) subpart 11.5 do not apply to liquidated
damages for comprehensive subcontracting plans under the Test Program,
and to include a reference to DFARS 219.702-70.
Section 215.305 is amended to require contracting officers to
consider an offeror's failure to make a good faith effort to comply
with its comprehensive subcontracting plan as part of the past
Section 219.702-70, Statutory requirements for the Test
Plans, renumbers section 219.702 and incorporates new requirements
stemming from section 821 of the NDAA for FY 2015.
[cir] Paragraph (1) is renumbered as paragraph (a) and amended to
include the title of the Test Program.
[cir] Paragraph (2), which addressed the nonapplicability of
liquidated damages, is deleted in its entirety.
[cir] Paragraph (b) is added to provide the current requirements
for participation in the Test Program. These requirements are expressly
stated in 15 U.S.C. 637 note, as amended by section 821 of the NDAA for
FY 2015 and section 872 of the NDAA for FY 2016. To participate in the
Test Program, the contractor must have furnished to DoD, during the
immediately preceding fiscal year under at least three contracts,
supplies, services, or construction in the aggregate amount of at least
[cir] Paragraph (c) is added to describe the establishment and use
of comprehensive subcontracting plans.
[cir] Paragraph (d) is added to provide the process to determine
the need to assess liquidated damages for failure to make a good faith
effort to comply with the comprehensive subcontracting plan. Paragraph
(e) is added to describe the calculation and application of liquidated
damages. This rule sets forth the following methodology for assessing
The participant contractor shall be subject to the payment
of liquidated damages if, after allowing the contractor
an opportunity to demonstrate that it has made a good faith effort to
comply with its comprehensive subcontracting plan, the contracting
officer makes a final decision that the contractor failed to make a
good faith effort to comply with its plan.
The amount of liquidated damages owed to the Government
shall be the amount of anticipated damages sustained by the Government,
reporting, and contract monitoring.
[cir] Paragraph (3) is renumbered as paragraph (f) and amended to
revise the expiration date for the Test Program from December 31, 2014,
[cir] Paragraph (b)(1)(B) guidance on use of clause 252.219-7004 is
updated and aligned with the revised flowdown instructions in paragraph
(g) of the clause. A correction is made to the Code of Federal
Regulations to remove the phrase ``and FAR 52.219-9, Small Business
Subcontracting Plan(DoD Contracts),''. Paragraph (b)(1)(B)(2)(ii) is
removed as the information is now contained at FAR 19.708(b)(1)(iii).
[cir] Paragraph (b)(2), is amended to instruct contracting officers
to use the clause at 252.219-7004, Small Business Subcontracting Plan
(Test Program), in lieu of FAR 52.219-16, Liquidated Damages--
Section 242.1502 is added to require that past performance
evaluations include an assessment of the contractor's performance
against, and efforts to achieve, the goals in its comprehensive
Clause 252.219-7003, Small Business Subcontracting Plan
(DoD Contracts), basic clause and its Alternate I, are amended to
advise that contractors must insert (i.e., ``flow down'') the clause at
252.219-7004, Small Business Subcontracting Plan (Test Program), to
subcontractors who participate in the Test Program.
Clause 252.219-7004, Small Business Subcontracting Plan
(Test Program), is amended to incorporate new requirements stemming
from section 821 of the NDAA for FY 2015.
[cir] Paragraph (a) provides definitions for additional terms used
in connection with the Test Program.
[cir] Paragraph (c) is amended to advise participant contractors of
the requirements for participation in the Test Program.
[cir] Paragraph (d) is amended to include the reporting
requirements for contractors with comprehensive subcontracting plans.
The reports must present the data by North American Industry
Classification System code, by major defense acquisition program, by
contract (for certain contracts with a value exceeding $100,000,000),
and by military department.
[cir] Paragraph (f) is added to address liquidated damages under a
[cir] Paragraph (g) flowdown instructions are clarified and
This rule proposes to amend the clauses at DFARS 252.219-7003,
Small Business Subcontracting Plan (Test Program), in order to
implement section 821 of the NDAA for FY 2015. The requirements of
section 821 were enacted to promote utilization of small businesses and
to determine the success of the Test Program at reducing administrative
burdens while enhancing subcontracting opportunities for small
businesses. Section 821 advances the interests of small business
subcontractors by encouraging test program participants to comply with
their comprehensive subcontracting plans.
threshold (SAT). It is intended to limit the applicability of laws to
such contracts or subcontracts. 41 U.S.C. 1905 provides that if a
provision of law contains criminal or civil penalties, or if the FAR
Council makes a written determination that it is not in the best
at or below the SAT, the law will apply to them. The Director, Defense
Procurement and Acquisition Policy (DPAP), is the appropriate authority
to make comparable determinations for regulations to be published in
the DFARS, which is part of the FAR system of regulations.
B. Contracts for the Acquisition of Commercial Items, Including
Commercially Available Off the Shelf Items
Likewise, 41 U.S.C. 1907 governs the applicability of laws to
commercially available off-the-shelf (COTS) items, with the
Administrator for Federal Procurement Policy the decision authority to
determine that it is in the best interest of the Government to apply a
provision of law to acquisitions of COTS items in the FAR. The
Director, DPAP, is the appropriate authority to make comparable
This proposed rule does not apply the requirements of section 821
of the NDAA for FY 2015 to contracts at or below the SAT, but does
apply the requirements of section 821 to contracts for the acquisition
of commercial items, including COTS items, as defined at FAR 2.101.
The prescriptions for these clauses currently require their use in
This rule merely revises these clauses to implement the new
requirements of section 821; consequently, exclusion of acquisitions of
commercial and COTS items from these requirements would create
confusion among contractors and the contracting workforce and would
result in fewer subcontracting opportunities for small businesses. By
applying the requirements of section 821 to acquisitions of commercial
items, the burden on contractors is no greater than the burden on
contractors who have other types of subcontracting plans. DoD will make
the final determination with regard to application to commercial items
after receipt and analysis of public comments.
because small entities do not participate in the Test Program. However,
Regulation Supplement (DFARS) to implement section 821 of the National
113-291) and section 872 of the NDAA for FY 2016 (Pub. L. 114-92).
Section 821 of the NDAA for FY 2015 provides several changes to the
Test Program for Negotiation of Comprehensive Small Business
Subcontracting Plans (Test Program), including new reporting and
eligibility requirements, an extension of the Test Program, and
authority to assess liquidated damages. Section 872 of the NDAA for FY
2016 removes one of the eligibility requirements.
The objectives of this proposed rule are to collect data to assist
in assessing the successes or shortcomings of the Test Program and to
provide the means to hold Test Program participants accountable for
failure to make a good faith effort to comply with their comprehensive
subcontracting plans. The authorizing legislation is section 821 of the
NDAA for FY 2015 and section 872 of the NDAA for FY 2016.
The rule will not apply to small entities. The rule, however, may
have an indirect positive economic impact on small entities, because
the rule encourages Test Program participants to make a good faith
requirements on small entities. There are new semiannual reporting
requirements for Test Program participants who are, as a matter of
eligibility for the program, other than small businesses.
to the rule that would meet the requirements of the applicable
separately and should cite 5 U.S.C. 610 (DFARS Case 2015-D013), in
Therefore, 48 CFR parts 211, 215, 219, 242, and 252 are proposed to
211.500   Scope.
215.305   Proposal evaluation.
219.702   [Redesignated as 219.702-70]
219.702-70   Statutory requirements for the Test Program for
Negotiation of Comprehensive Small Business Subcontracting Plans.
(a) In accordance with 15 U.S.C. 637 note, DoD has established a
test program to determine whether comprehensive subcontracting plans on
a corporate, division, or plant-wide basis will reduce administrative
burdens while enhancing subcontracting opportunities for small and
small disadvantaged business concerns. This program is referred to as
Subcontracting Plans (Test Program).
during the fiscal year after the close of
the fiscal year for which the plan is applicable. The contracting
officer shall compare the approved percentage or dollar goals to the
total, actual subcontracting dollars covered by the comprehensive
distribute a copy of the final decision to all cognizant contracting
officers for the contracts covered under the plan.
242.1502   Policy.
i. Removing the clause date of ``(MAR 2016)'' and adding ``(DATE)'' in
b. In Alternate I--
small business concern, or small disadvantaged business concern as
comprehensive subcontracting plan means a willful or intentional
failure to perform in accordance with the requirements of the
Contractor's approved comprehensive subcontracting plan or willful
or intentional action to frustrate the plan.
(b) The Contractor's comprehensive small business subcontracting
plan and its successors, which are authorized by and approved under
the Test Program of 15 U.S.C. 637 note, as amended, shall be
included in and made a part of this contract. Upon expulsion from
the Test Program or expiration of the Test Program, the Contractor
participate in the Test Program, a business concern is required to
have furnished supplies or services (including construction) under
at least three DoD contracts during the preceding fiscal year,
having an aggregate value of at least $100 million.
(d) Reports. (1) The Contractor shall report semiannually for
the six-month periods ending March 31 and September 30, the
information in paragraphs (d)(1)(i) through (v) of this section
within 30 days after the end of the reporting period. Submit the
report at https://www.esrs.gov.
business subcontracting plan, to include the Commercial and
Government Entity (CAGE) code and Data Universal Numbering System
the six-month period covered by the report to covered small business
(A) North American Industrial Classification System (NAICS)
(C) Contract number, if the contract is for maintenance,
overhaul, repair, servicing, rehabilitation, salvage, modernization,
or modification of supplies, systems, or equipment, and the total
value of the contract, including options, exceeds $100 million; and
(iv) Costs incurred in negotiating, complying with, and
reporting on its comprehensive subcontracting plan.
(v) Costs avoided through the use of a comprehensive
(i) Ensure that subcontractors with subcontracting plans agree
to submit an Individual Subcontract Report (ISR) and/or Summary
Subcontract Report (SSR) using the Electronic Subcontracting
Reporting System (eSRS).
(ii) Provide its contract number, its DUNS number, and the email
address of the Contractor's official responsible for acknowledging
or rejecting the ISR to all first-tier subcontractors, who will be
required to submit ISRs, so they can enter this information into the
eSRS when submitting their reports.
provide the prime contract number, its own DUNS number, and the
email address of the subcontractor's official responsible for
HUBZone small business concerns, small disadvantaged business
concerns, and women-owned small business concerns. Purchases from a
corporation, company, or subdivision that is an affiliate of the
Subcontract award data reported by prime contractors and
subcontractors shall be limited to awards made to their immediate
next-tier subcontractors. Credit cannot be taken for awards made to
lower-tier subcontractors unless the Contractor or subcontractor has
been designated to receive a small business or small disadvantaged
business credit from a member firm of the Alaska Native--
Corporations or an Indian tribe. Only subcontracts involving
center) basis, as negotiated in the comprehensive subcontracting
plan with the Defense Contract Management Agency.
contracts and subcontracts with the Department of Defense,
regardless of the dollar value of the subcontracts, and is based on
the negotiated comprehensive subcontracting plan.
(iii) The report shall be submitted semi-annually for the six
months ending March 31 and the twelve months ending September 30.
Reports are due 30 days after the close of each reporting period.
(iv) The authority to acknowledge receipt or reject the SSR
(e) The failure of the Contractor or subcontractor to comply in
good faith with the clause of this contract entitled ``Utilization
of Small Business Concerns,'' or an approved plan required by this
clause, shall be a material breach of the contract.
(f)(1) through (4), on behalf of all DoD departments and agencies
that awarded contracts covered by the Contractor's comprehensive
(1) To determine the need for liquidated damages, the
Contracting Officer will conduct a compliance review during the
fiscal year after the close of the fiscal year for which the plan is
applicable. The Contracting Officer will compare the approved
percentage or dollar goals to the total, actual subcontracting
dollars covered by the plan.
Contractor to demonstrate what good faith efforts have been made.
The Contracting Officer may take the Contractor's failure to respond
to the notice within 15 working days (or longer period at the
Contracting Officer's discretion) as an admission that no valid
good faith effort to comply with the comprehensive subcontracting
plan, the Contracting Officer will issue a final decision to the
Contractor to that effect and require the Contractor to pay
liquidated damages to the Government in the amount identified in the
(4) The Contractor shall have the right of appeal under the
clause in this contract entitled ``Disputes'' from any final
decision of the Contracting Officer.
(g) The Contractor shall include in subcontracts that offer
subcontracting opportunities, are expected to exceed $700,000 ($1.5
million for construction of any public facility), and are required
(1) FAR 52.219-9, Small Business Subcontracting Plan, and
252.219-7003 Small Business Subcontracting Plan (DoD Contracts)--
(2) 52.219-9, Small Business Subcontracting Plan, with its
Program), in subcontracts with subcontractors that participate in
the Test Program described in DFARS 219.702-70.