[Federal Register Volume 81, Number 185 (Friday, September 23, 2016)]
[Rules and Regulations]
[Pages 65565-65567]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22570]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 227 and 252
[Docket DARS-2016-0010]
RIN 0750-AI91
Defense Federal Acquisition Regulation Supplement: Rights in
Technical Data (DFARS Case 2016-D008)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
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SUMMARY: DoD is issuing a final rule to amend the Defense Federal
Acquisition Regulation Supplement (DFARS) to implement a section of the
National Defense Authorization Act for Fiscal Year 2016 that addresses
rights in technical data relating to major weapon systems, expanding
application of the presumption that a commercial item has been
developed entirely at private expense.
DATES: Effective September 23, 2016.
FOR FURTHER INFORMATION CONTACT: Ms. Amy G. Williams, telephone 571-
372-6106.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published a proposed rule in the Federal Register at 81 FR
28812 on May 10, 2016, to implement section 813(a) of the National
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016 (Pub. L.
114-92). Section 813(a) modifies 10 U.S.C. 2321(f) to address rights in
technical data relating to major weapon systems.
Until now, except for commercially available off-the-shelf (COTS)
items, a contracting officer's challenge to asserted restrictions on
technical data relating to a major system was sustained unless the
contractor or subcontractor submitted information demonstrating that
the item was developed exclusively at private expense.
Section 813(a) revised 10 U.S.C. 2321(f) in two primary ways: (1)
The major systems rule was narrowed to apply only to major weapon
systems; and (2) the exception to the major systems rule for
commercially available off-the-shelf (COTS) items was expanded to
include three additional exceptions. More specifically, the formerly
COTS-only exception was expanded to include (i) COTS items with
modifications of a type customarily available in the commercial
marketplace or minor modifications made to meet Federal Government
requirements; (ii) commercial subsystems or components of a major
weapon system, if the major weapon system was acquired as a commercial
item in accordance with 10 U.S.C. 2379(a); and (iii) components of a
subsystem, if the subsystem was acquired as a commercial item in
accordance with 10 U.S.C. 2379(b).
There were no public comments submitted in response to the proposed
rule. There are no significant changes from the proposed rule made in
the final rule.
Although there were no comments received on the substance of the
proposed rule, DoD did receive a request to suspend the rulemaking
process on any case (including this case) relating to rights in
technical data until such time as the final report of the Government-
Industry Advisory Panel (the Panel), established in accordance with
section 813(b) of the NDAA for FY 2016, has been submitted to Congress.
After consultation with the Chair of the Panel, DoD determined to
proceed with publication of the final rule on this case. This case
implements section 813(a) of the NDAA for FY 2016, the same section
that set up the Panel, with no indication that DoD should delay
implementation. Furthermore, the law is very prescriptive and the
proposed rule is a nearly verbatim implementation of the statutory
language, so there could be no substantive change to this rule without
a corresponding statutory change to 10 U.S.C. 2321. The statute was
effective upon implementation, and is expected to be beneficial to
industry, including small businesses.
II. Discussion and Analysis
In order to implement the statutory changes for validation of
asserted restrictions on technical data, and apply the revised
requirements and procedures to validation of asserted restrictions on
computer software, this final rule amends--
DFARS 227.7103-13, Government right to review, verify,
challenge, and validate asserted restrictions;
DFARS 227.7203-13, Government right to review, verify,
challenge, and validate asserted restrictions;
DFARS 252.227-7019, Validation of Asserted Restrictions--
Computer Software; and
DFARS 252.227-7037, Validation of Restrictive Markings on
Technical Data.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT) and for Commercial Items, Including Commercially
Available Off-the-Shelf (COTS) Items
This final rule does not add any new provisions or clauses or add
new requirements to existing provision or clauses. Rather, when
acquiring major weapon systems, it expands the circumstances relating
to commerciality in which the contracting officer shall presume that
development was exclusively at private expense.
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.
V. Regulatory Flexibility Act
A final regulatory flexibility analysis (FRFA) has been prepared
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.
The FRFA is summarized as follows:
This rule was initiated to implement section 813(a) of the National
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016 (Pub. L.
114-92). The objective of this rule is to reduce the requirement to
respond to Government
[[Page 65566]]
challenges of restricted rights, by expanding the applicability of the
presumption regarding development exclusively at private expense in
accordance with section 813(a) of the NDAA for FY 2016.
There were no public comments in response to the initial regulatory
flexibility analysis.
DoD cannot accurately determine the number of small entities that
will be affected by this change in the regulations, because DoD does
not have sufficient information about subcontract awards of subsystems
and components of major weapon systems. However, DoD estimates an
annual reduction of 50 prechallenge requests for information and 2
challenges of asserted technical data restrictions. DoD further
estimates, based on data from the DoD FY 2014 Small Business
Procurement Scorecard, that this reduction in challenges will affect
about 17 small businesses (52 x 0.33).
The final rule reduces the requirement to respond to Government
challenge of restricted rights. Under current regulations, the
presumption regarding development exclusively at private expense does
not apply to major systems or subsystems or components thereof, except
for commercially available off-the-shelf items. This rule expands
applicability of the presumption regarding development exclusively at
private expense with regard to a major weapon system, or a subsystem or
component thereof, to cover--
A commercial subsystem or component of a major weapon
system, if the major weapon system was acquired as a commercial item in
accordance with DFARS subpart 234.70 (10 U.S.C. 2379(a));
A component of a subsystem, if the subsystem was acquired
as a commercial item in accordance with DFARS subpart 234.70 (10 U.S.C.
2379(b)); and
Commercially available off-the-shelf items with
modifications of a type customarily available in the commercial
marketplace or minor modifications made to meet Federal Government
requirements.
The classes of small entities that will be affected by this
reduction are small businesses that provide any items in the above
categories that are not challenged due to the new statute.
This rule reduces the burden on small entities to the maximum
extent permitted by the statute.
VI. Paperwork Reduction Act
This rule contains information collection requirements that have
been approved by the Office of Management and Budget under the
Paperwork Reduction Act (44 U.S.C. chapter 35). This information
collection requirement has been assigned OMB Control Number 0704-0369,
entitled ``Defense Federal Acquisition Regulation Supplement (DFARS)
Subpart 227.71, Rights in Technical Data, and Subpart 227.72, Rights in
Computer Software and Computer Software Documentation, and related
provisions and clauses.''
List of Subjects in 48 CFR Parts 227 and 252
Government procurement.
Jennifer L. Hawes,
Editor, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 227 and 252 are amended as follows:
0
1. The authority citation for parts 227 and 252 continues to read as
follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 227--PATENTS, DATA, AND COPYRIGHTS
0
2. Amend section 227.7103-13 by--
0
a. Revising the section heading;
0
b. In paragraph (c)(1), removing ``commercial item, component, or
process'' and adding ``commercial item'' in its place and removing
``the item, component or process'' and adding ``that item'' in its
place; and
0
c. Revising paragraphs (c)(2)(i) and (ii).
The revisions read as follows:
227.7103-13 Government right to review, verify, challenge, and
validate asserted restrictions.
* * * * *
(c) * * *
(2) * * *
(i) Commercial items. Except as provided in paragraph (c)(2)(ii) of
this section, contracting officers shall presume that a commercial item
was developed exclusively at private expense whether or not a
contractor or subcontractor submits a justification in response to a
challenge notice. When a challenge is warranted, a contractor's or
subcontractor's failure to respond to the challenge notice cannot be
the sole basis for issuing a final decision denying the validity of an
asserted restriction.
(ii) Major weapon systems. When the contracting officer challenges
an asserted restriction regarding technical data for a major weapon
system or a subsystem or component thereof on the basis that the
technology was not developed exclusively at private expense--
(A) The presumption in paragraph (c)(2)(i) of this section applies
to--
(1) A commercial subsystem or component of a major weapon system,
if the major weapon system was acquired as a commercial item in
accordance with subpart 234.70 (10 U.S.C. 2379(a));
(2) A component of a subsystem, if the subsystem was acquired as a
commercial item in accordance with subpart 234.70 (10 U.S.C. 2379(b));
and
(3) Any other component, if the component is a commercially
available off-the-shelf item or a commercially available off-the-shelf
item with modifications of a type customarily available in the
commercial marketplace or minor modifications made to meet Federal
Government requirements; and
(B) In all other cases, the contracting officer shall sustain the
challenge unless information provided by the contractor or
subcontractor demonstrates that the item was developed exclusively at
private expense.
* * * * *
227.7203-13 [Amended]
0
3. Amend section 227.7203-13 by--
0
a. In the section heading, adding a comma after ``challenge'';
0
b. Removing paragraph (d); and
0
c. Redesignating paragraphs (e), (f), and (g) as paragraphs (d), (e),
and (f), respectively.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
4. Amend section 252.227-7019 by--
0
a. Removing the clause date ``(SEP 2011)'' and adding ``(SEP 2016)'' in
its place;
0
b. Removing paragraph (f);
0
c. Redesignating paragraphs (g), (h), (i), and (j) as paragraphs (f),
(g), (h), and (i), respectively;
0
d. In newly redesignated paragraph (f)(5)--
0
i. Removing ``(g)(1)'' and adding ``(f)(1)'' in its place;
0
ii. Removing ``Officer will'' and adding ``Officer shall'' in its
place; and
0
iii. Removing ``paragraph (f) of this clause and'';
0
f. In newly redesignated paragraph (f)(6) introductory text, removing
``the written explanation furnished pursuant to paragraph (f)(1) of
this clause, or any other'' and adding ``any'' in its place;
0
g. In newly redesignated paragraph (g)(1) introductory text, removing
``(h)(3)'' and adding ``(g)(3)'' in its place; and
0
h. In newly redesignated paragraph (g)(3), removing ``(h)(1)'' and
adding ``(g)(1)'' in its place.
[[Page 65567]]
0
5. Amend section 252.227-7037 by--
0
a. Removing the clause date ``(JUN 2013)'' and adding ``(SEP 2016)'' in
its place; and
0
b. Revising paragraphs (b)(1) and (2).
The revisions read as follows:
252.227-7037 Validation of restrictive markings on technical data.
* * * * *
(b) * * *
(1) Commercial items. (i) Except as provided in paragraph (b)(2) of
this clause, the Contracting Officer will presume that the Contractor's
or a subcontractor's asserted use or release restrictions with respect
to a commercial item is justified on the basis that the item was
developed exclusively at private expense.
(ii) The Contracting Officer will not challenge such assertions
unless the Contracting Officer has information that demonstrates that
the commercial item was not developed exclusively at private expense.
(2) Major weapon systems. In the case of a challenge to a use or
release restriction that is asserted with respect to data of the
Contractor or a subcontractor for a major weapon system or a subsystem
or component thereof on the basis that the major weapon system,
subsystem, or component was developed exclusively at private expense--
(i) The presumption in paragraph (b)(1) of this clause applies to--
(A) A commercial subsystem or component of a major weapon system,
if the major weapon system was acquired as a commercial item in
accordance with DFARS subpart 234.70 (10 U.S.C. 2379(a));
(B) A component of a subsystem, if the subsystem was acquired as a
commercial item in accordance with DFARS subpart 234.70 (10 U.S.C.
2379(b)); and
(C) Any other component, if the component is a commercially
available off-the-shelf item or a commercially available off-the-shelf
item with modifications of a type customarily available in the
commercial marketplace or minor modifications made to meet Federal
Government requirements; and
(ii) In all other cases, the challenge to the use or release
restriction will be sustained unless information provided by the
Contractor or a subcontractor demonstrates that the item or process was
developed exclusively at private expense.
* * * * *
[FR Doc. 2016-22570 Filed 9-22-16; 8:45 am]
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