Source: https://www.federalregister.gov/documents/2014/11/06/2014-26266/defense-federal-acquisition-regulation-supplement-inflation-adjustment-of-acquisition-related
Timestamp: 2018-03-25 02:18:28
Document Index: 791332338

Matched Legal Cases: ['arts 202', 'art 249', 'arts 202', 'arts 202', 'art 207', 'art 211', 'art 218', 'art 219', 'art 228', 'art 236', 'art 250']

65912-65917 (6 pages)
List of Subjects in 48 CFR Parts 202, 203, 205, 207, 211, 212, 215, 217, 218, 219, 225, 228, 234, 236, 237, 250, and 252
https://www.federalregister.gov/d/2014-26266 https://www.federalregister.gov/d/2014-26266
Submit comments identified by DFARS Case 2014-D025, using any of the following methods:
○ Regulations.gov: http://www.regulations.gov. Submit comments via the Federal eRulemaking portal by entering “DFARS Case 2014-D025” under the heading “Enter keyword or ID” and selecting “Search.” Select the link “Submit a Comment” that corresponds with “DFARS Case 2014-D025.” Follow the instructions provided at the “Submit a Comment” screen. Please include your name, company name (if any), and “DFARS Case 2014-D025” on your attached document.
○ Email: osd.dfars@mail.mil. Include DFARS Case 2014-D025 in the subject line of the message.
○ Mail: Defense Acquisition Regulations System, Attn: Ms. Amy G. Williams, OUSD (AT&L) DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060.Start Printed Page 65913
Ms. Amy G. Williams, Defense Acquisition Regulations System, OUSD (AT&L) DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060. Telephone 571-372-6106.
This rule proposes to amend multiple DFARS parts to further implement 41 U.S.C. 1908. Section 1908 requires an adjustment every five years (on October 1 of each year evenly divisible by five) of statutory acquisition-related thresholds for inflation, using the Consumer Price Index (CPI) for all urban consumers, except for the Construction Wage Rate Requirements statute (Davis-Bacon Act), Service Contract Labor Standards statute, and trade agreements thresholds (see FAR 1.109). As a matter of policy, DoD is also proposing to use the same methodology to adjust some nonstatutory DFARS acquisition-related thresholds. All proposed threshold adjustments would become effective on October 1, 2015.
FAR case 2014-022 proposes comparable changes to acquisition-related thresholds in the FAR.
This is the third review of DFARS acquisition-related thresholds since the statute was enacted on October 28, 2004 (section 807 of the National Defense Authorization Act for Fiscal Year (FY) 2004). The last review was conducted under DFARS case 2009-D003. The final rule was published under that case in the Federal Register on August 2, 2010 (75 FR 45072), effective October 1, 2010.
This case builds on the review of DFARS thresholds in 2005 and 2010, using the same interpretation of an acquisition-related threshold. 41 U.S.C. 1908 is applicable to “a dollar threshold that is specified in law as a factor in defining the scope of the applicability of a policy, procedure, requirement, or restriction provided in that law to the procurement of property or services by an Executive agency, as the [FAR] Council determines.”
There are other thresholds in the DFARS that, while not specified in law, nevertheless meet all the other criteria. These thresholds may have their origin in Executive order or regulation.
Therefore, as used in this case, “acquisition-related threshold” has a broader meaning, i.e., a threshold that is specified in law, Executive order, or regulation as a factor in defining the scope of the applicability of a policy, procedure, requirement, or restriction provided in that law, Executive order, or regulation to the procurement of property or services by an Executive agency, as determined by the FAR Council. Acquisition-related thresholds are generally tied to the value of a contract, subcontract, or modification.
Examples of thresholds that are not “acquisition-related,” as defined in this case, are thresholds relating to claims, penalties, withholding, payments, required levels of insurance, small business size standards, liquidated damages, etc. This report does not address thresholds that are not acquisition-related.
If an acquisition-related threshold is based on statute, the matrix at http://www.acq.osd.mil/​dpap/​dars/​pgi/​docs/​2014-D025_​(p)_​TAB_​E_​matrix_​Sep_​12_​14.xls identifies the statute, and the statutory threshold, including the original threshold and any subsequent revisions to it.
With the exception of thresholds set by the Construction Wage Rate Requirements statute (Davis Bacon Act), the Service Contract Labor Standards statute, and trade agreements, 41 U.S.C. 1908 requires adjustment of the acquisition-related thresholds for inflation using the Consumer Price Index (CPI) for all-urban consumers. Acquisition-related thresholds in statutes that were in effect on October 1, 2000, are only subject to escalation from that date forward. Acquisition-related thresholds in statutes that took effect after October 1, 2000, are escalated from the date that they took effect. For purposes of this proposed rule, the matrix includes calculation of escalation based on the estimated CPI value for March 2015 (currently estimated at 243.0) divided by the CPI for the date of enactment of the statute or regulation (October 2000, for statutes enacted prior to October 1, 2000). DoD will subsequently adjust as necessary before issuance of the final rule.
The calculations in this proposed rule are all based on the base year amount, because escalated amounts in the 2005 rule were subject to rounding and using those amounts as the base would distort future calculations.
In 2010, some thresholds (e.g., $3,000), although subject to inflation calculation, did not actually change, because the inflation in 2010 was insufficient to overcome the rounding requirements—i.e., the escalation factor, when applied, did not cause the escalated values to be high enough to round to the next higher value. However, in FY 2015, thresholds that did not escalate in 2010 will now escalate because of five additional years of inflation. Likewise, some thresholds that were escalated in 2010 (e.g., $150,000) will not escalate in 2015.
This rule proposes to remove the major defense acquisition program thresholds (expressed in FY 1990 constant dollars) from the definition of “major weapon system” at DFARS 234.7001. The current major defense acquisition program thresholds in FY 2014 constant dollars are set forth in DoD Instruction 5000.02, established in accordance with the authority in 10 U.S.C. 2430(b), which allows the Secretary of Defense to adjust the amounts (and the base fiscal year) provided in subsection (a)(2) on the basis of DoD escalation rates (rather than the CPI for all urban consumers). The most recent thresholds were calculated by the DoD Comptroller, and coordinated with the Cost Assessment and Program Evaluation (CAPE) Office and the DoD General Counsel. In accordance with 10 U.S.C. 2430(b), Start Printed Page 65914these thresholds were reported to Congress in December 2013. There is no need to provide these thresholds in the DFARS. The term “major defense acquisition program” is already defined in DFARS 202.1 and used in multiple DFARS parts (e.g., 204, 209, 215, and 216).
No statutory authorization is required to escalate thresholds that were set as policy within the DFARS. Escalation of the DoD policy acquisition-related thresholds is generally recommended using the same formula applied to the statutory thresholds, unless a reason has been provided for not doing so. Escalation is calculated using the same procedures as were explained for the statutory thresholds, to provide consistency.
However, nonstatutory thresholds that exceed $10 million may be rounded as follows:
$10 million-<$100 million—Nearest $5 million
$100 million-<$1 billion—Nearest $50 million
$1 billion or more—Nearest $500 million
This rule proposes to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement 41 U.S.C. 1908 and to amend other acquisition-related dollar thresholds that are based on policy rather than statute in order to adjust for the changing value of the dollar. 41 U.S.C. 1908 requires adjustment every five years of statutory acquisition-related dollar thresholds, except for Construction Wage Rate Requirements statute (Davis-Bacon Act), Service Contract Labor Standards statute, and trade agreements thresholds. While reviewing all statutory acquisition-related thresholds, this case presented an opportunity to also review all nonstatutory acquisition-related thresholds in the DFARS that are based on policy.
The objective of the case is to maintain the status quo, by adjusting acquisition-related thresholds for inflation. The legal basis is 41 U.S.C. 1908. The statute does not authorize the DFARS to escalate thresholds originating in Executive orders or the implementing agency (such as the Department of Labor or the Small Business Administration), unless the Executive order or agency regulations are first amended.
This rule will likely affect to some extent all small business concerns that submit offers or are awarded contracts by the Federal Government. However, most of the threshold changes proposed in this rule are not expected to have any significant economic impact on small business concerns because any threshold changes are intended to maintain the status quo by adjusting for changes in the value of the dollar. Often any impact will be beneficial, by preventing burdensome requirements from applying to more and more acquisitions, as the dollar loses value.
DoD will also consider comments from small entities concerning the existing regulations in subparts affected by the 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 2014-D025), in correspondence.
The Paperwork Reduction Act does apply. The proposed changes to the FAR do not impose new information collection requirements that require the approval of the Office of Management and Budget (OMB) under 44 U.S.C. 3501, et seq. By adjusting the thresholds for inflation, the status quo for the current information collection requirements are maintained under the following OMB clearance numbers:
However, the rule contains one information collection requirement that requires the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35). Accordingly, DoD has submitted to the Office of Management and Budget a request for approval of a new information collection requirement entitled “DFARS Part 249, Termination of Contracts, and Associated DFARS Clauses at 252.249.”
A. Public reporting burden for this collection of information is estimated to average approximately .75 hours per Start Printed Page 65915response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.
Preparation hours per response: Approximately .75 hours
Total response Burden Hours: 193.
To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to the Defense Acquisition Regulations System, Attn: Ms. Amy G. Williams, OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060, or email osd.dfars@mail.mil. Include DFARS Case 2014-D025 in the subject line of the message.
Therefore, 48 CFR parts 202, 203, 205, 207, 211, 212, 215, 217, 218, 219, 225, 228, 234, 236, 237, 250, and 252 are proposed to be amended as follows:
1. The authority citation for 48 CFR parts 202, 203, 205, 212, 215, 217, 225, 234, 237, and 252 continues to read as follows:
a. Designating the definition of “Simplified acquisition threshold” in alphabetical order in the list of definitions; and
b. In the definition of “Simplified acquisition threshold”, removing “$300,000” and adding $400,000” in its place.
4. Amend section 205.303 by removing “$6.5 million” and adding “$7 million” in its place for the following—
a. In paragraph (a)(i) introductory text, in two places;
b. In paragraph (a)(i)(A); and
c. In paragraph (a)(i)(B), in two places.
5. Amend section 205.470 by removing “$1,000,000” and adding “$1.5 million” in its place.
6. The authority citation for part 207 is revised to read as follows:
7. Amend section 207.170-3 in paragraph (a) introductory text by removing “$6 million” and adding “$6.5 million” in its place.
8. The authority citation for part 211 is revised to read as follows:
9. Amend section 211.503 in paragraph (b) by removing “$650,000” and adding “$700,000” in its place in two places.
10. Amend section 212.7102-1 in paragraph (c) by removing “$50 million” and adding “$55 million” in its place.
11. Amend section 215.403-1 in paragraphs (c)(3)(B) and (c)(4)(B) by removing “$15,000,000” and adding “$20 million” in its place.
12. Amend section 217.170 by—
a. Revising paragraph (e)(1)(iv); and
b. In paragraph (e)(5) by removing “$100 million” and adding “$139.5 million” in its place.
(iv) Include a cancellation ceiling in excess of $139.5 million (see 10 U.S.C. 2306c(d)(4) and 10 U.S.C. 2306b(g)).
13. Amend section 217.171 in paragraph (d) by removing “$625.5 million” and adding “$698.5 million” in its place.
14. Amend section 217.172 in paragraphs (c), (e)(1), and (e)(2) by removing “$500 million” and adding “$698.5 million” in its place.
End Amendment Part Start Part Start Printed Page 65916
15. The authority citation for part 218 is revised to read as follows:
16. Amend section 218.270 by removing “$300,000” and adding “$400,000” in its place.
17. The authority citation for part 219 is revised to read as follows:
18. Amend section 219.502-1 in paragraph (2) by removing “$350,000” and adding “$400,000” in its place in both places.
19. Amend section 219.502-2 by—
a. In paragraph (a)(i), removing “$2.5 million” and adding “$3 million” in its place; and
b. In paragraph (a)(iii), removing “$350,000” and adding “$400,000” in its place.
20. Amend section 225.7204 by—
a. In paragraphs (a) and (b), removing “$12.5 million” and adding “$14 million” it its place in both places; and
b. In paragraph (c), removing “$650,000” and adding “$700,000” in its place.
21. Amend section 225.7703-2 in paragraph (b)(2)(ii) by removing “$85.5 million” and adding “$95.5 million” in its place.
22. The authority citation for part 228 is revised to read as follows:
23. Amend section 228.102-1 by—
24. Revise section 234.7001 to read as follows:
25. The authority citation for part 236 is revised to read as follows:
26. Amend section 236.601 in paragraph (1) by removing “$1,000,000” and adding “$1.5 million” in its place.
27. Amend section 237.170-2 in paragraphs (a)(1) and (2) by removing “$85.5 million” and adding “$95.5 million” in its place in both places.
28. The authority citation for part 250 is revised to read as follows:
29. Amend section 250.102-1 in paragraph (b) by removing “$65,000” and adding “$70,000” in its place.
30. Amend section 250.102-1-70 in paragraph (b)(1) by removing “$65,000” and adding “$70,000” in its place.
31. Amend section 252.203-7004 by—
a. Removing the clause date “DEC 2012” and adding “DATE” in its place; and
b. In paragraph (c) introductory text, removing “$5 million” and adding “$5.5 million” in its place.
32. Amend section 252.209-7004 by—
a. Removing the clause date “MAR 2014” and adding “DATE” in its place; and
33. Amend section 252.209-7009 by—
34. Amend section 252.225-7003 by—
a. Removing the clause date “OCT 2010” and adding “DATE” in its place;
b. In paragraph (b)(1), removing “$12.5 million” and adding “$14 million” in its place; and
35. Amend section 252.225-7004 by—
a. Removing the clause date “OCT 2010” and adding “DATE” in its place; and
36. Amend section 252.225-7006 by—
b. In paragraph (f)(1), removing “$650,000” and adding “$700,000” in its place.
37. Amend section 252.225-7017 by—
a. Removing the clause date “JAN 2014” and adding “DATE” in its place; and
38. Amend section 252.225-7018 by—
a. Removing the clause date “JAN 2014” and adding “DATE” in its place;
c. In paragraphs (d)(1) and (2), removing “$3,000” and adding “$3,500” in both places.
39. Amend section 252.249-7002 by—
a. Removing the clause date “OCT 2010” and adding “DATE” in its place; and Start Printed Page 65917
[FR Doc. 2014-26266 Filed 11-5-14; 8:45 am]