Source: http://farsite.hill.af.mil/reghtml/changes/dac/DCN20050726.htm
Timestamp: 2019-03-20 01:47:28
Document Index: 186711266

Matched Legal Cases: ['art 219', 'art 226', 'art 19', 'art 219', 'ART 231', 'ART 231', 'art 31', 'art 31', 'art 231', 'art 42', 'art 242']

DCN20050726
DCN 20050726
DoD published the following changes and proposed changes to the DFARS on July 26, 2005:
Permits sole source awards to small business concerns owned by Native Hawaiian organizations, for manufacturing contracts exceeding $5,000,000 and non-manufacturing contracts exceeding $3,000,000 under the 8(a) Program. Competition normally is required for 8(a) awards of these dollar values, except for awards to Indian tribes or Alaska Native Corporations. This change provides small business concerns owned by Native Hawaiian organizations the same status that is provided to Indian tribes and Alaska Native Corporations under the 8(a) Program. The change implements provisions of the DoD appropriations acts for fiscal years 2004 and 2005. Affected subparts/sections: Part 219 Table of Contents; 219.8 The Federal Register notice for this rule :
SUMMARY: DoD has issued an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement DoD appropriations act provisions permitting the award of sole source contracts to small business concerns owned by Native Hawaiian Organizations. The rule applies to manufacturing contacts exceeding $5,000,000 and non-manufacturing contracts exceeding $3,000,000 that are awarded under the Small Business Administration's 8(a) Program.
DATES: Effective Date: July 26, 2005.
Comment date: Comments on the interim rule should be submitted to the address shown below on or before September 26, 2005 to be considered in the formation of the final rule.
ADDRESSES: You may submit comments, identified by DFARS Case 2004-D031, using any of the following methods:
E-mail: dfars@osd.mil. Include DFARS Case 2004-D031 in the subject line of the message.
.FOR FURTHER INFORMATION CONTACT: Ms. Deborah Tronic, (703) 602-0289.
A. Background Section 8021 of the DoD Appropriations Act for Fiscal Year 2004 (Pub. L. 108-87) and Section 8021 of the DoD Appropriations Act for Fiscal Year 2005 (Pub. L. 108-287) provide funding for the DoD Indian Incentive Program, which is implemented in DFARS Subpart 226.1. The appropriations act provisions also require that small business concerns owned by Native Hawaiian Organizations be provided the same status as Indian tribes and Alaska Native Corporations with regard to contract awards under the Small Business Administration's (SBA) 8(a) Program. Under the 8(a) Program, as implemented in FAR Subpart 19.8, competition is required for manufacturing contracts exceeding $5,000,000 and non-manufacturing contracts exceeding $3,000,000, unless (1) there is not a reasonable expectation that at least two eligible and responsible 8(a) firms will submit offers at a fair market price, or (2) SBA accepts the requirement on behalf of a concern owned by an Indian tribe or an Alaska Native Corporation. This interim rule expands the competition exceptions to include requirements accepted on behalf of a small business concern owned by a Native Hawaiian Organization. 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 has prepared an initial regulatory flexibility analysis consistent with 5 U.S.C. 603. The analysis is summarized as follows:
This interim rule amends the DFARS to implement DoD appropriations act provisions permitting the award of sole source contracts to small business concerns owned by Native Hawaiian Organizations. The rule applies to manufacturing contacts exceeding $5,000,000 and non-manufacturing contracts exceeding $3,000,000 that are awarded under the Small Business Administration's 8(a) Program. The objective of the rule is to provide small business concerns owned by Native Hawaiian Organizations the same status that is provided to Indian tribes and Alaska Native Corporations under the 8(a) Program. Awards to these entities are exempted from the competition requirements that would otherwise apply to award of manufacturing contacts exceeding $5,000,000 and non-manufacturing contracts exceeding $3,000,000 under the Program. The legal basis for the rule is Section 8021 of the DoD Appropriations Act for Fiscal Year 2004 (Pub. L. 108-87) and Section 8021 of the DoD Appropriations Act for Fiscal Year 2005 (Pub. L. 108-287). The rule will benefit small business concerns that are owned by Native Hawaiian Organizations by permitting sole source contract awards to these concerns.
A copy of the analysis may be obtained from the point of contact specified herein. DoD invites comments from small businesses and other interested parties. DoD also will consider comments from small entities concerning the affected DFARS subpart in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2004-D031.
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 8021 of the DoD Appropriations Act for Fiscal Year 2004 (Pub. L. 108-87) and Section 8021 of the DoD Appropriations Act for Fiscal Year 2005 (Pub. L. 108-287). These statutes require that small business concerns owned by Native Hawaiian Organizations be provided the same status as Indian tribes and Alaska Native Corporations with regard to contract awards under the Small Business Administration's 8(a) Program. Application of this status will permit small business concerns owned by Native Hawaiian Organizations to receive sole source contract awards under the 8(a) Program, in amounts exceeding the thresholds at which competition would otherwise be required. Comments received in response to this interim rule will be considered in the formation of the final rule.
Therefore, 48 CFR part 219 is amended as follows:0
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1
Sole Source 8(a) Awards to Small Business Concerns Owned
by Native Hawaiian Organizations
DFARS Case 2004-D031
[219.805-1 General.
(b)(2)(A) For acquisitions that exceed the competitive threshold and use fiscal year 2004 or 2005 appropriated funds, the SBA also may accept the requirement for a sole source 8(a) award on behalf of a small business concern owned by a Native Hawaiian Organization (Section 8021 of Pub. L. 108-87 and Section 8021 of Pub. L. 108-287).
(3) Whose business activities will principally benefit such Native Hawaiians.]
Business Restructuring Costs—Delegation of Authority to Make Determinations Relating to Payment (DFARS Case 2004-D026)
[DFARS Case 2004-D026]
Defense Federal Acquisition Regulation Supplement; Business Restructuring Costs--Delegation of Authority To Make Determinations Relating to Payment
SUMMARY: DoD has issued an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Section 819 of the National Defense Authorization Act for Fiscal Year 2005. Section 819 contains changes concerning delegation of authority to make determinations relating to payment of defense contractors for business restructuring costs.
ADDRESSES: You may submit comments, identified by DFARS Case 2004-D026, using any of the following methods:
E-mail: dfars@osd.mil. Include DFARS Case 2004-D026 in the subject line of the message.
Mail: Defense Acquisition Regulations Council, Attn: Mr. Bill Sain, OUSD (AT&L) DPAP (DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062.
Hand Delivery/Courier: Defense Acquisition Regulations Council, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402. All comments received will be posted to http://emissary.acq.osd.mil/dar/dfars.nsf
FOR FURTHER INFORMATION CONTACT: Mr. Bill Sain, (703) 602-0293.
A. Background 10 U.S.C. 2325(a)(1), Limitation on Payment of Restructuring Costs, prohibits DoD from reimbursing a defense contractor for restructuring costs arising from a business combination that occurs after November 18, 1997, unless the Secretary of Defense determines in writing either: (i) That the amount of projected savings for DoD associated with the restructuring will be at least twice the amount of the costs allowed; or (ii) that the amount of projected savings for DoD associated with the restructuring will exceed the amount of the costs allowed and that the business combination will result in the preservation of a critical capability that otherwise might be lost to DoD.
10 U.S.C. 2325(a)(2) previously prohibited the Secretary of Defense from delegating the authority to make such written savings determinations below the level of an Assistant Secretary of Defense. The Secretary of Defense delegated the authority to make such determinations to the Under Secretary of Defense (Acquisition, Technology, and Logistics) (USD(AT&L)), or his Principal Deputy. Section 819 of the National Defense Authorization Act for Fiscal Year 2005 (Public Law 108-375) amended 10 U.S.C. 2325(a)(2) to permit the Director of the Defense Contract Management Agency to make the required written determination of savings when restructuring costs are expected to be less than $25 million over a 5-year period.
To implement Section 819, this interim rule adds paragraph (c)(4)(ii) to DFARS 231.205-70, External restructuring costs. The rule also makes changes to DFARS 231.205-70(b)(4), (c), and (e)(6) to remove unnecessary references to USD(AT&L) certifications for pre-November 19, 1997, business combinations; and makes editorial changes to DFARS 231.205-70(e)(6) to clarify the existing requirement for projected restructuring costs and savings to be computed on a present value basis.
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 cost principle addressed in this rule applies only to DoD contractors that incur restructuring costs for external restructuring activities. 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 subpart in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2004-D026.
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 819 of the National Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108-375). Section 819 amended 10 U.S.C. 2325 to permit delegation of authority to the Director of the Defense Contract Management Agency for determinations relating to payment of defense contractors for business restructuring costs. Section 819 became effective upon enactment on October 28, 2004. Comments received in response to this interim rule will be considered in the formation of the final rule.
A Microsoft Word format document showing all additions and deletions made by
Business Restructuring Costs–Delegation of Authority
to Make Determinations Relating to Payment
DFARS Case 2004-D026
PART 231–CONTRACT COST PRINCIPLES AND PROCEDURES
SUBPART 231.2–CONTRACTS WITH COMMERCIAL ORGANIZATIONS
(4) “Restructuring costs” means the costs, including both direct and indirect, of restructuring activities. Restructuring costs that may be allowed include, but are not limited to, severance pay for employees, early retirement incentive payments for employees, employee retraining costs, relocation expense for retained employees, and relocation and rearrangement of plant and equipment. For purposes of this definition, if restructuring costs associated with external restructuring activities allocated to DoD contracts are less than $2.5 million, the costs shall not be subject to the audit, review, certification, and determination requirements of paragraph (c)(1[4]) of this subsection; instead, the normal rules for determining cost allowability in accordance with FAR Part 31 shall apply.
(c) Limitations on cost allowability. (1) Restructuring costs associated with external restructuring activities shall not be allowed unless--
(i[1]) Such costs are allowable in accordance with FAR Part 31 and DFARS Part 231;
(ii[2]) An audit of projected restructuring costs and restructuring savings is performed;
(iii[3]) The cognizant administrative contracting officer (ACO) reviews the audit report and the projected costs and projected savings, and negotiates an advance agreement in accordance with paragraph (d) of this subsection; and
(iv[4)(i]) For business combinations that occur after November 18, 1997, the Under Secretary of Defense (Acquisition, Technology, and Logistics) or the Principal Deputy [The official designated in paragraph (c)(4)(ii) of this subsection] determines in writing that the audited projected savings[, on a present value basis,] for DoD resulting from the restructuring will exceed either—
(B) The cost[s] allowed, and the business combination will result in the preservation of a critical capability that might otherwise be lost to DoD.
[(ii)(A) If the amount of restructuring costs is expected to exceed $25 million over a 5-year period, the designated official is the Under Secretary of Defense (Acquisition, Technology, and Logistics) or the Principal Deputy. This authority may not be delegated below the level of an Assistant Secretary of Defense.
(B) For all other cases, the designated official is the Director of the Defense Contract Management Agency. The Director may not delegate this authority.]
(e) Information needed to obtain certification and [a] determination.
(6) The cognizant ACO’s recommendation for certification, or [a] determination, or both, as applicable. This recommendation must clearly indicate one of the following, consistent with paragraph (c)(1[4])(iv) of this subsection:
(i) Contractor projections of future of future cost savings resulting for DoD from the business combination are based on audited cost data and should result in overall reduced costs for the Department.
(ii) The audited projected savings for DoD will exceed the costs allowed by a factor of at least two to one [on a present value basis].
(iii) The business combination will result in the preservation of a critical capability that might otherwise be lost to DoD, and the audited projected savings [for DoD] will exceed the costs allowed [on a present value basis].
A Microsoft Word format document showing the additions and deletions to PGI:
to Make Determinations
PGI 231—CONTRACT COST PRINCIPLES AND PROCEDURES
PGI 231.2–CONTRACTS WITH COMMERCIAL ORGANIZATIONS
(d) Procedures and ACO responsibilities. The cognizant ACO shall-
(1[i]) Promptly execute a novation agreement, if one is required, in accordance with FAR Subpart 42.12 and DFARS Subpart 242.12 and include the provision at DFARS 242.1204(e[i]).
(2[ii]) Direct the contractor to segregate restructuring costs and to suspend these amounts from any billings, final contract price settlements, and overhead settlements until the certification, or determination, or both, as applicable, in DFARS 231.205-70(c)(1[4])(iv) is obtained.
(3[iii]) * * *
(4[iv]) * * *
(5[v]) Upon receipt of the contractor’s proposal, as soon as practicable, adjust forward pricing rates to reflect the impact of projected restructuring savings. If restructuring costs are included in forward pricing rates prior to execution of an advance agreement in accordance with paragraph (d)(8) of this subsection, the contracting officer shall include a repricing clause in each fixed-price action that is priced based on the rates. The repricing clause must provide for a downward price adjustment to remove restructuring costs if the certification, or determination, or both, as applicable, required by DFARS 231.205-70(c)(1[4])(iv) is not obtained.
(6[vi]) * * *
(7[vii]) Upon receipt of the audit report, determine [on a present value basis] if— restructuring savings will exceed restructuring costs on a present value basis. However, for business combinations that occur on or after November 18, 1997,
[(A) T]the audited projected [restructuring] savings for DoD must [will] exceed the [restructuring] costs allowed by a factor of at least two to one on a present value basis[, as required by DFARS 231.205-70(c)(4)(i)(A); or
[(B) If the audited projected restructuring savings will exceed the restructuring costs allowed in a case where the business combination will result in the preservation of a critical capability that otherwise might be lost to DoD, as required by DFARS 231.205-70(c)(4)(i)(B)], unless the determination at DFARS 231.205-70(c)(1)(iv)(B) applies.
(8[viii]) Negotiate an advance agreement with the contractor setting forth, at a minimum, a cumulative cost ceiling for restructuring projects and, when necessary, a cost amortization schedule. The costs may not exceed the amount of projected restructuring savings on a present value basis. The advance agreement shall not be executed until the certification, or determination, or both, as applicable, required by DFARS 231.205-70(c)(1[4])(iv) is obtained.
(9[ix])[(A)] Submit [a recommendation for determination] to-
[(1) T]the Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), ATTN: OUSD(AT&L)DPAP(P)[, if DFARS 231.205-70(c)(4)(ii)(A) applies; or
(2) To the Director of the Defense Contract Management Agency, ATTN: HQ DCMA-OCB, if DFARS 231.205-70(c)(4)(ii)(B) applies] , a recommendation for certification, or determination, or both, as applicable.
[(B)] Include the information described in DFARS 231.205-70(e).
(10[x]) Consult with the Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics)[, or with the Director of the Defense Contract Management Agency, as appropriate], when DFARS 231.205-70(c)(1[4])(iv)(B) applies.
[DFARS Case 2004-D035]
Defense Federal Acquisition Regulation Supplement; Berry Amendment Memoranda
SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement policy regarding acquisitions for which DoD determines that domestic items are not available to fulfill DoD requirements in a satisfactory quality and sufficient quantity at U.S. market prices.
DATES: Effective July 26, 2005.
FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition Regulations Council, OUSD (AT&L) DPAP (DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0328; facsimile (703) 602-0350. Please cite DFARS Case 2004-D035.
A. Background 10 U.S.C. 2533a (the Berry Amendment) requires DoD to acquire certain items from domestic sources. 10 U.S.C. 2533a(c) provides an exception to this requirement if the Secretary of Defense or the Secretary of the military department concerned determines that satisfactory quality and sufficient quantity of such items cannot be procured as and when needed at U.S. market prices. DoD has issued the following memoranda regarding domestic nonavailability determinations under 10 U.S.C. 2533a(c):
The Deputy Secretary of Defense memorandum of May 1, 2001, provides that the Under Secretary of Defense for Acquisition, Technology, and Logistics, and the Secretaries of the military departments may make domestic nonavailability determinations under the Berry Amendment, but may not redelegate this authority. The memorandum also requires an analysis of alternatives, and a certification as to why such alternatives are unacceptable.
The Under Secretary of Defense (Acquisition, Technology, and Logistics) memorandum of October 22, 2004, requires Congressional notification of any domestic nonavailability determinations involving titanium or products containing titanium.
This final rule amends DFARS 225.7002-2(b) to reflect the requirements of the DoD memoranda.
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 is not required. However, DoD will consider comments from small entities concerning the affected DFARS subpart in accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 2004-D035.
Berry Amendment Memoranda
DFARS Case 2004-D035
[(1) The following officials are authorized, without power of redelegation, to make such a domestic nonavailability determination:
(5) See PGI 225.7002-2(b)(5) for related policy memoranda.]
PGI 225—FOREIGN ACQUISITION
PGI 225.7002 Restrictions on food, clothing, fabrics, specialty metals, and hand or measuring tools.
(b) Domestic nonavailability determination.
(3) Defense agencies.
ATTN: OUSD(AT&L)DPAP(PAIC)
(B) The Director, Defense Procurement and Acquisition Policy, will forward the request to the Under Secretary of Defense (Acquisition, Technology, and Logistics) as appropriate.
(C) If the domestic nonavailability determination is for the acquisition of titanium or a product containing titanium, the submission shall also include the associated congressional notification letters required by DFARS 225.7002-2(b)(4), for concurrent signature by the Under Secretary of Defense (Acquisition, Technology, and Logistics). The defense agency does not need to take any further action with regard to DFARS 225.7002-2(b)(4).
(4) Army, Navy, and Air Force.
Send the copy of the congressional notification and the domestic nonavailability determination for the acquisition of titanium or a product containing titanium to—
(5) Related policy memoranda.
The DoD memoranda regarding domestic nonavailabilty determinations implemented in DFARS 225.7002-2(b) are as follows:
Deputy Secretary of Defense memorandum of May 1, 2001, Subject: The Berry Amendment, provides policy regarding domestic nonavailability determinations. This memorandum is implemented at DFARS 225.7002-2(b)(1) through (3).
END OF DCN 20050726