[Federal Register Volume 83, Number 57 (Friday, March 23, 2018)]
[Rules and Regulations]
[Pages 12682-12685]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-05937]
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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-Prot[eacute]g[eacute] Program (DFARS Case 2016-D011)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
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SUMMARY: DoD is issuing a final rule amending 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-Prot[eacute]g[eacute] Program.
DATES: Effective March 23, 2018.
FOR FURTHER INFORMATION CONTACT: Ms. Jennifer D. Johnson, telephone
571-372-6100.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published a proposed rule in the Federal Register at 81 FR
65610 on September 23, 2016, to propose revisions to the DFARS to
implement section 861 of the National Defense Authorization Act (NDAA)
for Fiscal Year (FY) 2016 (Pub. L. 114-92). Section 861 provides
several amendments to the DoD Pilot Mentor-Prot[eacute]g[eacute]
Program (``the Program''), including new reporting requirements for
mentor firms to provide information to DoD's Office of Small Business
Programs to support decisions regarding continuation of particular
mentor-prot[eacute]g[eacute] agreements. In addition, section 861 adds
new eligibility criteria; adds limitations on a prot[eacute]g[eacute]
firm's participation in the Program; adds new elements to mentor-
prot[eacute]g[eacute] agreements; extends the Program for three years
to September 30, 2021; and amends requirements for business development
assistance provided by a mentor firm and for reimbursement of fees
assessed by the mentor firm.
II. Discussion and Analysis
One respondent submitted a public comment in response to the
proposed rule. DoD reviewed the public comment in the development of
the final rule.
A. Summary of Significant Changes From the Proposed Rule
There are no changes made to the final rule as a result of the
public comment; however, one conforming change is made.
B. Analysis of Public Comments
Comment: The respondent requested that DoD revise the Program's
eligibility criteria for prot[eacute]g[eacute] firms to include
Historically Black Colleges and Universities (HBCUs) and Minority
Institutions (MIs). Allowing HBCUs and MIs to participate in the
Program as prot[eacute]g[eacute]s would provide the opportunity for
teaming arrangements with DoD prime contractors, as well as good
research opportunities.
Response: The eligibility criteria are based on the statutory
authority for the Program (10 U.S.C. 2302 note), which provides that a
``disadvantaged small business concern'' meeting certain criteria may
participate as a prot[eacute]g[eacute] in the Program. The statutory
definition of ``disadvantaged small business concern'' does not include
HBCUs or MIs. Therefore, the statute does not support the inclusion of
HBCUs and MIs as prot[eacute]g[eacute]s. However, HBCUs and MIs have a
role in the Program as providers of assistance to prot[eacute]g[eacute]
firms.
C. Other Changes From the Proposed Rule
A conforming change is made to the definition of ``nontraditional
defense contractor'' in Appendix I, Paragraph I-101.2, to reflect the
definition for this term that was established in the final rule
``Procurement of Commercial Items (DFARS Case 2016-D006)'' (see 83 FR
4431, dated January 31, 2018). Several Appendix I references are
revised to reflect that, as of February 1, 2018, the Office of Small
Business Programs is now organizationally located within DoD under
Acquisition and Sustainment (A&S) in lieu of Acquisition Technology and
Logistics (AT&L).
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-the-Shelf Items
This final rule does not add any new provisions or clauses or
impact any existing provisions or clauses.
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. Executive Order 13771
This rule is not subject to E.O. 13771, because this rule is not a
significant regulatory action under E.O. 12866.
VI. 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 final rule amends the Defense Federal Acquisition Regulation
Supplement (DFARS) to implement section 861 of the National Defense
Authorization Act (NDAA) for Fiscal Year (FY) 2016, which provides
amendments to the DoD Pilot Mentor-Prot[eacute]g[eacute] Program (``the
Program''). Specifically, section 861 provides new reporting
requirements for mentor firms that will provide information to DoD's
Office of Small Business Programs to support decisions regarding
continuation of particular mentor-prot[eacute]g[eacute] agreements. In
addition, section 861 adds new eligibility criteria; adds limitations
on a prot[eacute]g[eacute] firm's participation in the Program; adds
new elements to mentor-prot[eacute]g[eacute] agreements; extends the
Program for three additional years; and amends requirements for
business development assistance provided by a mentor firm and for
reimbursement of fees assessed by the mentor firm. The objectives of
this rule are to implement statutory amendments to the Program and to
provide DoD's
[[Page 12683]]
Office of Small Business Programs with information to support decisions
regarding continuation of particular mentor-prot[eacute]g[eacute]
agreements.
There were no issues raised by the public in response to the
initial regulatory flexibility analysis provided in the proposed rule.
The rule will apply to small entities that participate in the
Program. There are currently 85 small entities participating in the
Program as prot[eacute]g[eacute] firms and six small entities
participating as mentors.
The rule imposes new reporting requirements on mentor firms,
including mentors who are small businesses, regarding assistance they
have provided to their prot[eacute]g[eacute] firms and the success this
assistance has had. Although prot[eacute]g[eacute] firms are not
required to submit these reports, the mentor firms will need to obtain
supporting information from the prot[eacute]g[eacute] firms in order to
ascertain the success of the assistance provided.
DoD has not identified any alternatives that are consistent with
the stated objectives of the applicable statute.
VII. Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. Chapter 35) applies. The
rule contains information collection requirements. OMB has cleared this
information collection requirement under OMB Control Number 0704-0332,
titled: Defense Federal Acquisition Regulation Supplement (DFARS)
Appendix I.
List of Subjects in 48 CFR Part 219 and Appendix I to Chapter 2
Government procurement.
Jennifer L. Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.
Therefore, 48 CFR part 219 and appendix I to chapter 2 are amended
as follows:
0
1. The authority citation for 48 CFR part 219 and appendix I to chapter
2 continues to read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 219--SMALL BUSINESS PROGRAMS
219.7100 [Amended]
0
2. Amend section 219.7100 by--
0
a. Removing ``Section 831'' and adding ``section 831'' in its place;
and
0
b. Adding the phrase ``, as amended through November 25, 2015'' to the
end of the first sentence.
0
3. Amend section 219.7102 by--
0
a. Revising paragraph (a);
0
b. Removing paragraph (b); and
0
c. Redesignating paragraphs (c) and (d) as paragraphs (b) and (c),
respectively.
0
d. In the newly redesignated paragraph (c)(2), removing ``Subpart'' and
adding ``subpart'' in its place.
The revision reads as follows:
219.7102 General.
* * * * *
(a) Mentor firms and prot[eacute]g[eacute] firms that meet the
criteria in Appendix I, section I-102.
* * * * *
219.7103-2 [Amended]
0
4. Amend section 219.7103-2, in paragraph (e)(3), by removing
``219.7102(d)(1)(ii)'' and adding ``219.7102(c)(1)(ii)'' in its place.
219.7104 [Amended]
0
5. Amend section 219.7104 by--
0
a. In paragraph (b)--
0
i. Removing ``Advance agreements are encouraged.'';
0
ii. Removing ``before October 1, 2018'' and adding ``not later than
September 30, 2021'' in its place; and
0
b. In paragraph (d), removing ``before October 1, 2018'' and adding
``not later than September 30, 2021'' in its place.
0
6. Amend Appendix I to Chapter 2 as follows:
0
a. In section I-100, revise paragraph (a).
0
b. Remove section I-101.1.
0
c. Redesignate section I-101.2 as section I-101.1.
0
d. Add new section I-101.2.
0
e. Revise section I-101.4.
0
f. Remove section I-101.5.
0
g. Redesignate section I-101.6 as section I-101.5.
0
h. In the newly redesignated section I-101.5, remove ``Section'' and
add ``section'' in its place.
0
i. Remove section I-101.7.
0
j. Redesignate section I-101.8 as section I-101.6.
0
k. In the redesignated section I-101.6, remove ``Section'' and add
``section'' in its place.
0
l. In section I-102, revise paragraphs (a) through (d).
0
m. Amend section I-103 by--
0
i. In paragraph (a), removing ``September 30, 2015'' and adding
``September 30, 2018'' in its place; and
0
ii. In paragraph (b), removing ``September 30, 2018'' and adding
``September 30, 2021'' in its place;
0
n. Amend section I-104 by--
0
i. Revising paragraph (a);
0
ii. In paragraph (c), removing ``as defined in I-101.5'';
0
iii. In paragraph (d), removing ``I-107(f)'' and adding ``I-106(d)'' in
its place; and
0
iv. Revising paragraph (e).
0
o. Amend section I-105 by--
0
i. Revising paragraph (b)(1);
0
ii. In paragraphs (b)(2) through (b)(6), removing ``company's'' and
``company'' and adding ``entity's'' and ``entity'', respectively in
each place they appear;
0
iii. Revising paragraph (b)(7); and
0
iv. Revising paragraph (c);
0
p. Amend section I-106 by--
0
i. In paragraph (d)(1)(i), removing ``business development, '';
0
ii. In paragraph (d)(1)(iii), adding ``described in I-107(g)'' to the
end of the sentence;
0
iii. In paragraph (d)(2), removing ``Award of subcontracts'' and adding
``Award of subcontracts to the prot[eacute]g[eacute] firm'' in its
place;
0
iv. Removing paragraph (d)(6); and
0
v. Redesignating paragraph (d)(7) as (d)(6);
0
vi. In the newly redesignated paragraph (d)(6)(i), removing ``Section''
and adding ``section'' in its place.
0
q. Amend section I-107 by--
0
i. In the introductory text, removing ``will contain the following
elements:'' and adding ``shall contain--'' in its place;
0
ii. Revising paragraph (b);
0
iii. In paragraph (d), removing ``I-102'' and adding ``I-102(a)'' in
its place; and
0
iv. Revising paragraphs (e), (f), and (g).
0
r. Amend section I-109 by--
0
i. Redesignating paragraph (e) as paragraph (f); and
0
ii. Adding new paragraph (e).
0
s. Amend section I-110.1, in paragraph (a), by removing ``DoD
Comprehensive Subcontracting Plan Test Program'' and adding ``DoD Test
Program for Negotiation of Comprehensive Small Business Subcontracting
Plans'' in its place; and removing ``entity employing the severely
disabled'' and adding ``entity employing severely disabled
individuals'' in its place.
0
t. Amend section I-110.2, in paragraphs (a) introductory text, (b)
introductory text, and (c) by removing ``OUSD(AT&L)'' and adding
``OUSD(A&S)'' in each place.
0
u. Amend section I-112.1 by--
0
i. In the section heading, removing ``SF 294s'' and adding ``Standard
Forms 294'' in its place; and
0
ii. In paragraph (b), removing ``SDB'' and adding ``applicable'' in its
place; and removing ``I-101.3 or I-101.5'' and adding ``I-102(b)'' in
its place.
0
v. Revise section I-112.2.
The revisions and additions read as follows:
[[Page 12684]]
Appendix I to Chapter 2--Policy and Procedures for the DOD Pilot Mentor
Prot[eacute]g[eacute] Program
I-100 Purpose.
(a) This Appendix I to 48 CFR chapter 2 implements the Pilot
Mentor-Prot[eacute]g[eacute] Program (hereafter referred to as the
``Program'') established under section 831 of Public Law 101-510,
the National Defense Authorization Act for Fiscal Year 1991 (10
U.S.C. 2302 note), as amended through November 25, 2015. The purpose
of the Program is to provide incentives to major DoD contractors to
furnish eligible small business concerns with assistance designed
to--
(1) Enhance the capabilities of eligible small business concerns
to perform as subcontractors and suppliers under DoD contracts and
other contracts and subcontracts; and
(2) Increase the participation of such business concerns as
subcontractors and suppliers under DoD contracts, other Federal
Government contracts, and commercial contracts.
* * * * *
I-101.2 Nontraditional Defense Contractor
An entity that is not currently performing and has not performed
any contract or subcontract for DoD that is subject to full coverage
under the cost accounting standards prescribed pursuant to 41 U.S.C.
1502 and the regulations implementing such section, for at least the
1-year period preceding the solicitation of sources by DoD for the
procurement (10 U.S.C. 2302(9)).
* * * * *
I-101.4 Severely Disabled Individual
An individual who is blind or severely disabled as defined in 41
U.S.C. 8501.
* * * * *
I-102 Participant Eligibility
(a) To be eligible to participate as a mentor, an entity must--
(1) Be eligible for the award of Federal contracts;
(2) Demonstrate that it--
(i) Is qualified to provide assistance that will contribute to
the purpose of the Program;
(ii) Is of good financial health and character; and
(iii) Is not on a Federal list of debarred or suspended
contractors; and
(3) Be capable of imparting value to a prot[eacute]g[eacute]
firm because of experience gained as a DoD contractor or through
knowledge of general business operations and Government contracting,
as demonstrated by evidence that such entity--
(i) Received DoD contracts and subcontracts equal to or greater
than $100 million during the previous fiscal year;
(ii) Is an other-than-small business, unless a waiver to the
small business exception has been obtained from the Director, Small
Business Programs (SBP), OUSD(A&S);
(iii) Is a prime contractor to DoD with an active subcontracting
plan; or
(iv) Has graduated from the 8(a) Business Development Program
and provides documentation of its ability to serve as a mentor.
(b) To be eligible to participate as a prot[eacute]g[eacute], an
entity must be--
(1) A small business concern;
(2) Eligible for the award of Federal contracts;
(3) Less than half the Small Business Administration (SBA) size
standard for its primary North American Industry Classification
System (NAICS) code;
(4) Not owned or managed by individuals or entities that
directly or indirectly have stock options or convertible securities
in the mentor firm; and
(5) At least one of the following:
(i) A qualified HUBZone small business concern.
(ii) A women-owned small business concern.
(iii) A service-disabled veteran-owned small business concern.
(iv) An entity owned and controlled by an Indian tribe.
(v) An entity owned and controlled by a Native Hawaiian
organization.
(vi) An entity owned and controlled by socially and economically
disadvantaged individuals.
(vii) A qualified organization employing severely disabled
individuals.
(viii) A nontraditional defense contractor.
(ix) An entity that currently provides goods or services in the
private sector that are critical to enhancing the capabilities of
the defense supplier base and fulfilling key DoD needs.
(c) Mentor firms may rely in good faith on a written
representation that the entity meets the requirements of paragraph
(b) of this section, except that a mentor firm is required to
confirm a prot[eacute]g[eacute]'s status as a HUBZone small business
concern (see FAR 19.703(d)).
(d) If at any time the SBA (or DoD in the case of entities
employing severely disabled individuals) determines that a
prot[eacute]g[eacute] is ineligible, assistance that the mentor firm
furnishes to the prot[eacute]g[eacute] after the date of the
determination may not be considered assistance furnished under the
Program.
* * * * *
I-104 Selection of Prot[eacute]g[eacute] Firms
(a) Mentor firms will be solely responsible for selecting
prot[eacute]g[eacute] firms that qualify under I-102(b). Mentor
firms are encouraged to identify and select concerns that have not
previously received significant prime contract awards from DoD or
any other Federal agency.
* * * * *
(e) A prot[eacute]g[eacute] firm may not be a party to more than
one DoD mentor-prot[eacute]g[eacute] agreement at a time, and may
only participate in the Program during the 5-year period beginning
on the date the prot[eacute]g[eacute] firm enters into its first
mentor-prot[eacute]g[eacute] agreement.
I-105 Mentor Approval Process
* * * * *
(b) * * *
(1) A statement that the entity meets the requirements in I-
102(a), specifying the criteria in I-102(a)(3) under which the
entity is applying.
* * * * *
(7) The total dollar amount and percentage of subcontracts that
the entity awarded to firms qualifying under I-102(b)(5)(ii) through
(viii) during the 2 preceding fiscal years. (Show DoD subcontract
awards separately.) If the entity was required to submit a Summary
Subcontract Report (SSR) in the Electronic Subcontracting Reporting
System, the request must include copies of the final reports for the
2 preceding fiscal years.
* * * * *
(c) A template of the mentor application is available at: http://www.acq.osd.mil/osbp/sb/programs/mpp/resources.shtml.
* * * * *
I-107 Elements of a Mentor-Prot[eacute]g[eacute] Agreement
* * * * *
(b) The NAICS code(s) that represent the contemplated supplies
or services to be provided by the prot[eacute]g[eacute] firm to the
mentor firm and a statement that, at the time the agreement is
submitted for approval, the prot[eacute]g[eacute] firm does not
exceed the size standard in I-102(b)(3);
* * * * *
(e) Assurances that--
(1) The mentor firm does not share, directly or indirectly, with
the prot[eacute]g[eacute] firm ownership or management of the
prot[eacute]g[eacute] firm;
(2) The mentor firm does not have an agreement, at the time the
mentor firm enters into a mentor-prot[eacute]g[eacute] agreement, to
merge with the prot[eacute]g[eacute] firm;
(3) The owners and managers of the mentor firm are not the
parent, child, spouse, sibling, aunt, uncle, niece, nephew,
grandparent, grandchild, or first cousin of an owner or manager of
the prot[eacute]g[eacute] firm;
(4) The mentor firm has not, during the 2-year period before
entering into a mentor-prot[eacute]g[eacute] agreement, employed any
officer, director, principal stock holder, managing member, or key
employee of the prot[eacute]g[eacute] firm;
(5) The mentor firm has not engaged in a joint venture with the
prot[eacute]g[eacute] firm during the 2-year period before entering
into a mentor-prot[eacute]g[eacute] agreement, unless such joint
venture was approved by SBA prior to making any offer on a contract;
(6) The mentor firm is not, directly or indirectly, the primary
party providing contracts to the prot[eacute]g[eacute] firm, as
measured by the dollar value of the contracts; and
(7) The SBA has not made a determination of affiliation or
control;
(f) A preliminary assessment of the developmental needs of the
prot[eacute]g[eacute] firm;
(g) A developmental program for the prot[eacute]g[eacute] firm
including--
(1) The type of assistance the mentor will provide to the
prot[eacute]g[eacute] and how that assistance will--
(i) Increase the prot[eacute]g[eacute]'s ability to participate
in DoD, Federal, and/or commercial contracts and subcontracts; and
(ii) Increase small business subcontracting opportunities in
industry categories where eligible prot[eacute]g[eacute]s or other
small business firms are not dominant in the company's vendor base;
(2) Factors to assess the prot[eacute]g[eacute] firm's
developmental progress under the Program,
[[Page 12685]]
including specific milestones for providing each element of the
identified assistance;
(3) A description of the quantitative and qualitative benefits
to DoD from the agreement, if applicable; and
(4) Goals for additional awards for which the
prot[eacute]g[eacute] firm can compete outside the Program;
* * * * *
I-109 Reimburseable Agreements
* * * * *
(e) DoD may not reimburse any fee to the mentor firm for
services provided to the prot[eacute]g[eacute] firm pursuant to I-
106(d)(6) or for business development expenses incurred by the
mentor firm under a contract awarded to the mentor firm while
participating in a joint venture with the prot[eacute]g[eacute]
firm.
* * * * *
I-112.2 Program Specific Reporting Requirements
(a) Mentors must report on the progress made under active
mentor-prot[eacute]g[eacute] agreements semiannually for the periods
ending March 31st and September 30th throughout the Program
participation term of the agreement. The September 30th report must
address the entire fiscal year.
(1) Reports are due 30 days after the close of each reporting
period.
(2) Each report must include the following data on performance
under the mentor-prot[eacute]g[eacute] agreement:
(i) Dollars obligated (for reimbursable agreements).
(ii) Expenditures.
(iii) Dollars credited, if any, toward applicable subcontracting
goals as a result of developmental assistance provided to the
prot[eacute]g[eacute] and a copy of the ISR or SF 294 and/or SSR for
each contract where developmental assistance was credited.
(iv) Any new awards of subcontracts on a competitive or
noncompetitive basis to the prot[eacute]g[eacute] firm under DoD
contracts or other contracts, including the value of such
subcontracts.
(v) All technical or management assistance provided by mentor
firm personnel for the purposes described in I-106(d).
(vi) Any extensions, increases in the scope of work, or
additional payments not previously reported for prior awards of
subcontracts on a competitive or noncompetitive basis to the
prot[eacute]g[eacute] firm under DoD contracts or other contracts,
including the value of such subcontracts.
(vii) The amount of any payment of progress payments or advance
payments made to the prot[eacute]g[eacute] firm for performance
under any subcontract made under the Program.
(viii) Any loans made by the mentor firm to the
prot[eacute]g[eacute] firm.
(ix) All Federal contracts awarded to the mentor firm and the
prot[eacute]g[eacute] firm as a joint venture, designating whether
the award was a restricted competition or a full and open
competition.
(x) Any assistance obtained by the mentor firm for the
prot[eacute]g[eacute] firm from the entities listed at I-106(d)(6).
(xi) Whether there have been any changes to the terms of the
mentor-prot[eacute]g[eacute] agreement.
(xii) A narrative describing the following:
(A) The success assistance provided under I-106(d) has had in
addressing the developmental needs of the prot[eacute]g[eacute]
firm.
(B) The impact on DoD contracts.
(C) Any problems encountered.
(D) Any milestones achieved in the prot[eacute]g[eacute] firm's
developmental program.
(E) Impact of the agreement in terms of capabilities enhanced,
certifications received, and technology transferred.
(3) In accordance with section 861, paragraph (b)(2), of the
National Defense Authorization Act for Fiscal Year 2016 (Pub. L.
114-92), the reporting requirements specified in paragraphs
(a)(2)(iv) through (a)(2)(xii)(C) of this section apply
retroactively to mentor-prot[eacute]g[eacute] agreements that were
in effect on November 25, 2015. Mentors must submit reports as
described in paragraph (a) of this section.
(4) A recommended reporting format and guidance for its
submission are available at: http://www.acq.osd.mil/osbp/sb/programs/mpp/resources.shtml.
(b) The prot[eacute]g[eacute] must provide data, annually by
October 31st, on the progress made during the prior fiscal year by
the prot[eacute]g[eacute] in employment, revenues, and participation
in DoD contracts during--
(1) Each fiscal year of the Program participation term; and
(2) Each of the 2 fiscal years following the expiration of the
Program participation term.
(c) The prot[eacute]g[eacute] report required by paragraph (b)
of this section may be provided as part of the mentor report for the
period ending September 30th required by paragraph (a) of this
section.
(d) Progress reports must be submitted--
(1) For credit agreements, to the cognizant Component Director,
SBP, that approved the agreement, and the mentor's cognizant DCMA
administrative contracting officer; and
(2) For reimbursable agreements, to the cognizant Component
Director, SBP, the contracting officer, the DCMA administrative
contracting officer, and the program manager.
* * * * *
[FR Doc. 2018-05937 Filed 3-22-18; 8:45 am]
BILLING CODE 5001-06-P