[Federal Register Volume 79, Number 121 (Tuesday, June 24, 2014)]
[Rules and Regulations]
[Pages 35700-35701]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-14584]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Part 237
RIN 0750-AI05
Defense Federal Acquisition Regulation Supplement: Private Sector
Notification Requirements of In-Sourcing Actions (DFARS Case 2012-D036)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
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SUMMARY: DoD has adopted as final, with changes, an interim rule
amending the Defense Federal Acquisition Regulation Supplement (DFARS)
to implement a section of the National Defense Authorization Act (NDAA)
for Fiscal Year 2012 regarding private sector notification of in-
sourcing actions.
DATES: Effective June 24, 2014.
FOR FURTHER INFORMATION CONTACT: Ms. Janetta Brewer, telephone 571-372-
6104.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published an interim rule in the Federal Register at 78 FR
65218 on October 31, 2013, to establish procedures for the timely
notification of any contractor that performs a function that the
Secretary plans to convert (in-source) to performance by DoD civilian
employees and provide the congressional defense committees a copy of
any such notification. One respondent submitted comments in response to
the interim rule.
II. Discussion and Analysis
DoD reviewed the public comments in the development of the final
rule. A discussion of the comments is provided below. No changes were
made to the final rule based on the public comments; however, one
editorial change is being made to clarify a reference.
A. Analysis of Public Comments
Comment: The respondent commented that, while the interim rule
requires the contracting officer to notify an affected incumbent
contractor about an in-sourcing decision within 20 business days of
receiving the decision from the in-sourcing program official, the rule
does not specifically address how soon DoD can commence the in-sourcing
action after issuing the notice. The respondent stated the rule should
require issuance of the in-sourcing notice in a reasonable amount of
time prior to DoD's commencement of the in-sourcing action.
Response: No action was taken as a result of this comment. DoD
guidance at DFARS 237.102-79 and in the memorandum at DFARS Procedures,
Guidance and Information 237.102-79, reflects that the in-sourcing of
contracted services falls into the following three categories of
justification (1) inherently Governmental functions (2) work closely
associated with inherently Governmental functions, critical in nature,
and unauthorized personal services, and (3) cost-based in-sourcing
decisions. The nature of the contracts in these three categories is
such that it is essential for the Government to have the ability to
take in-sourcing actions once notification is provided to affected
incumbent contractors.
Comment: The respondent suggested including specific details of the
rationale for the in-sourcing decision in the notice to the contractors
to ensure meaningful insight about the rationale.
Response: No action was taken on this comment as DoD included
language requiring that a summary of why the service is being insourced
be included in the notice and therefore, as written, the rule fulfills
the objective of transparency and accountability.
B. Other Changes
Editorial changes were made to clarify where the OASD memorandum
``Private Sector Notification Requirements in Support of In Sourcing
Actions,'' dated January 29, 2013, can be found in the DFARS Procedures
Guidance and Information.
III. 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
[[Page 35701]]
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.
IV. Regulatory Flexibility Act
A final regulatory flexibility analysis has been prepared
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.,
and is summarized as follows:
This final rule amends DFARS 237.102-79 to implement section 938 of
the National Defense Authorization Act (NDAA) for Fiscal Year 2012
regarding private sector notification of in-sourcing actions. Section
938 of the NDAA requires the Secretary of Defense to establish
procedures for the timely notification of any contractor who performs a
function that the Secretary plans to convert (in-source) to performance
by DoD civilian employees and provide the congressional defense
committees a copy of any such notification. The rule requires the
contracting officer to notify an affected incumbent contractor about an
in-sourcing decision within 20 business days of receiving the decision
from the in-sourcing program official.
The public did not raise any issues in response to the initial
regulatory flexibility analysis. This rule is not expected to have a
significant economic impact on a substantial number of small entities.
The final rule has very limited application and only potentially
applies to entities that have contracts with DoD agencies performing
services that fall into the following three categories for potential
justification for in-sourcing: (1) Inherently Governmental functions
(2) work closely associated with inherently Governmental functions,
critical in nature, and unauthorized personal services, and (3) cost-
based in-sourcing decisions. During the acquisition planning phase,
requirements are scrutinized under FAR subpart 7.5 to preclude contract
awards for inherently Governmental functions and unauthorized personal
service contracts. Because of this prohibition and screening of
requirements, it is expected that this rule will not have a significant
impact on a substantial number of contracts evaluated under category
(1) for inherently Governmental functions or under category (2) for
unauthorized personal services. Effective March 2013, data fields were
added to FPDS to capture award information for contract actions that
are (1) critical functions, i.e. a function that is necessary to the
agency being able to effectively perform and maintain control its
mission and operations, and (2) functions closely associated with
inherently Governmental functions. FPDS data was reviewed for a full
one-year period (March 2013 through February 2014) for awards coded as
critical functions or functions closely associated with inherently
Governmental functions. The FPDS data reviewed reflected that only
7,786 contracts and task orders for critical functions or functions
closely associated with inherently Governmental functions were awarded
to small entities, compared to a total of 71,274 awards for other
functions that were made to small entities during this same period.
(The data reflect awards greater than the simplified action threshold
of $150,000.) It is unknown as to how many of the 7,786 awards made to
small entities may be evaluated and justified for future in-sourcing
action. There is no FPDS data available to evaluate the potential
universe of actions that might fall under the third category of cost-
based in-sourcing decisions.
There are no projected reporting, recordkeeping, and other
compliance requirements associated with this rule. The rule does not
duplicate, overlap, or conflict with any other Federal rules. DoD was
unable to identify any significant alternatives consistent with the
stated objectives of the statute.
V. 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).
List of Subjects in 48 CFR Part 237
Government procurement.
Amy G. Williams,
Deputy, Defense Acquisition Regulations System.
Accordingly, the interim rule amending 48 CFR part 237, which was
published in the Federal Register at 78 FR 65218 on October 31, 2013,
is adopted as a final rule with the following change:
PART 237--SERVICE CONTRACTING
0
1. The authority citation for 48 CFR part 237 continues to read as
follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
0
2. Amend section 237.102-79 by revising the last sentence in the
paragraph to read as follows:
237.102-79 Private sector notification requirements in support of in-
sourcing actions.
* * * See the OASD (RFM) memorandum entitled ``Private Sector
Notification Requirements in Support of In-sourcing Actions,'' dated
January 29, 2013, for further information, which is available at PGI
237.102-79.
[FR Doc. 2014-14584 Filed 6-23-14; 8:45 am]
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