[Federal Register Volume 61, Number 252 (Tuesday, December 31, 1996)] [Rules and Regulations] [Pages 69287-69288] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 96-32805] ----------------------------------------------------------------------- DEPARTMENT OF DEFENSE 48 CFR Parts 1 and 31 [FAC 90-44; FAR Case 96-010; Item I] RIN 9000-AH41 Federal Acquisition Regulation; Automatic Data Processing Equipment Leasing Costs AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Interim rule. ----------------------------------------------------------------------- SUMMARY: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council have agreed to an interim rule which deletes the definition of automatic data processing equipment (ADPE) and the cost principle concerning ADPE leasing costs. This regulatory action was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. This is not a major rule under 5 U.S.C. 804. DATES: Effective Date: December 31, 1996. Comment Due Date: To be considered in the formulation of a final rule, comments should be submitted to the address given below on or before March 3, 1997. ADDRESSES: Comments should be submitted to: General Services Administration, FAR Secretariat, 18th & F Streets NW, Room 4037, Washington, DC 20405. E-Mail comments submitted over the Internet should be addressed to: 96-010@www.ARNET.gov. FOR FURTHER INFORMATION CONTACT: Mr. Jeremy Olson at (202) 501-3221 in reference to this FAR case. For general information, contact the FAR Secretariat, Room 4037, GS Building, Washington, DC 20405 (202) 501-4755. Please cite FAC 90-44, FAR case 96-010. SUPPLEMENTARY INFORMATION: A. Background The cost principle at FAR 31.205-2, Automatic Data Processing Equipment (ADPE) Leasing Costs, was implemented when ADPE was an emerging technology, had limited applications, and was a substantial cost element on Government contracts. For these early computer systems, the hardware itself constituted the major expense, and that fact, coupled with the risks of ownership of this rapidly evolving technology, justified the detailed scrutiny required under the cost principle. In the current technological environment, however, where hardware costs are no longer such a significant expense and computer systems have become ubiquitous in the workplace, the continued application of FAR 31.205-2 is no longer appropriate and is an unnecessary accounting and administrative burden on contractors. The cost principle at FAR 31.205-36, Rental Costs, adequately protects the Government's interests in this cost area without prescribing overly detailed annual requirements. This interim rule deletes the cost principle at 31.205-2, the ADPE definition at 31.001, and references to the term ``ADPE'' found elsewhere in Part 31. B. Regulatory Flexibility Act The interim rule is not expected 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 most contracts awarded to small entities use simplified acquisition procedures, or are awarded on a competitive, fixed-price basis, and do not require application of the FAR cost principles. An Initial Regulatory Flexibility Analysis has, therefore, not been performed. Comments are invited from small businesses and other interested parties. Comments from small entities concerning the affected FAR subparts also will be considered in accordance with 5 U.S.C. 601. Such comments must be submitted separately and cite 5 U.S.C. 601, et. seq. (FAR case 96-010) in correspondence. C. Paperwork Reduction Act The interim rule deletes the information collection requirement at FAR 31.205-2, which was previously approved by the Office of Management and Budget (OMB) under Control Number 9000-0072. D. Determination To Issue an Interim Rule A determination has been made under the authority of the Secretary of Defense (DOD), the Administrator of General Services (GSA), and the Administrator of the National Aeronautics and Space Administration (NASA) that, pursuant to 41 U.S.C. 418b, urgent and compelling reasons exist to publish an interim rule prior to affording the public an opportunity to comment. The rule is necessary because the cost principle at FAR 31.205-2 imposes unnecessary administrative and accounting requirements on contractors and the Government, since it requires contractors to annually demonstrate compliance with a number of specific criteria, including obtaining contracting officer approval in certain circumstances. In order for contractors, and ultimately, the Government, to experience cost savings as quickly as possible, it is necessary that an interim rule be published to eliminate this burdensome and obsolete requirement. However, pursuant to Public Law 98-577 and FAR 1.501, public comments received in response to this interim rule will be considered in the formation of the final rule. List of Subjects in 48 CFR Parts 1 and 31 Government procurement. Dated: December 19, 1996. Edward C. Loeb, Director, Federal Acquisition Policy Division. Therefore, 48 CFR parts 1 and 31 are amended as set forth below: 1. The authority citation for 48 CFR parts 1 and 31 continues to read as follows: Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c). PART 1--FEDERAL ACQUISITION REGULATION SYSTEM 1.106 [Amended] 2. Section 1.106 is amended in the list following the introductory paragraph by removing the FAR segment ``31.205-2'' and the corresponding OMB control number ``9000-0072''. [[Page 69288]] PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES 31.001 [Amended] 3. Section 31.001 is amended by removing the definition ``Automatic data processing equipment (ADPE)''. 31.109 [Amended] 4. Section 31.109 is amended by removing paragraph (h)(10) and redesignating paragraphs (h)(11) through (h)(17) as (h)(10) through (h)(16), respectively. 31.205-2 [Removed and reserved] 5. Section 31.205-2 is removed and reserved. 6. Section 31.205-36 is amended in paragraph (a) by revising the first sentence to read as follows: 31.205-36 Rental costs. (a) This subsection is applicable to the cost of renting or leasing real or personal property acquired under ``operating leases'' as defined in Statement of Financial Accounting Standards No. 13 (FAS-13), Accounting for Leases. * * * * * * * * [FR Doc. 96-32805 Filed 12-30-96; 8:45 am] BILLING CODE 6820-EP-M