[Federal Register Volume 66, Number 235 (Thursday, December 6, 2001)]
[Rules and Regulations]
[Pages 63335-63336]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-30262]


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DEPARTMENT OF DEFENSE

48 CFR Parts 212 and 237

[DFARS Case 2000-D306]


Defense Federal Acquisition Regulation Supplement; Performance-
Based Contracting Using Federal Acquisition Regulation Part 12 
Procedures

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for comments.

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SUMMARY: DoD has issued an interim rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement Section 821(b) 
of the National Defense Authorization Act for Fiscal Year 2001. Section 
821(b) permits DoD to treat certain performance-based service contracts 
and task orders as contracts for the procurement of commercial items.

DATES: Effective date: December 6, 2001.
    Comment date: Comments on the interim rule should be submitted to 
the address shown below on or before February 4, 2002, to be considered 
in the formation of the final rule.

ADDRESSES: Respondents may submit comments directly on the World Wide 
Web at http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm. As an 
alternative, respondents may e-mail comments to: dfars@acq.osd.mil. 
Please cite DFARS Case 2000-D306 in the subject line of e-mailed 
comments.
    Respondents that cannot submit comments using either of the above 
methods may submit comments to: Defense Acquisition Regulations 
Council, Attn: Ms. Sandra Haberlin, OUSD(AT&L)DP(DAR), IMD 3C132, 3062 
Defense Pentagon, Washington, DC 20301-3062; facsimile (703) 602-0350. 
Please cite DFARS Case 2000-D306.
    At the end of the comment period, interested parties may view 
public comments on the World Wide Web at http://emissary.acq.osd.mil/dar/dfars.nsf.

FOR FURTHER INFORMATION CONTACT: Ms. Sandra Haberlin, (703) 602-0289.

SUPPLEMENTARY INFORMATION:

A. Background

    This interim rule amends DFARS Part 212, Acquisition of Commercial 
Items, and DFARS Part 237, Service Contracting, to implement Section 
821(b) of the National Defense Authorization Act for Fiscal Year 2001 
(Public Law 106-398).
    Section 821(b) of Public Law 106-398 establishes an incentive for 
the use of performance-based service contracts. Section 821(b) permits 
a contracting officer to use the same procedures used for the 
acquisition of commercial items under Part 12 of the Federal 
Acquisition Regulation (FAR) for a performance-based service contract 
or task order, if certain conditions are met. These conditions 
include--
    1. The contract or task order must--
    (a) Be firm-fixed-price;
    (b) Have a value of $5 million or less;
    (c) Set forth specifically each task to be performed;
    (d) Define each task in measurable, mission-related terms; and
    (e) Identify the specific end products or output to be achieved for 
each task;
    2. The contractor must provide similar services at the same time to 
the general public under terms and conditions similar to those in the 
contract or task order; and
    3. The procedures in FAR Subpart 13.5, Test Program for Certain 
Commercial Items, must not be used.
    Since procurements undertaken pursuant to the authority of Section

[[Page 63336]]

821(b) will be conducted under FAR Part 12, the clauses at FAR 52.212-4 
and 52.212-5 will be incorporated into resulting contracts. In this 
regard, when soliciting offers, contracting officers may need to modify 
paragraph (a) of the provision at 52.212-4 in particular, addressing 
inspection and acceptance, as may be necessary to ensure the contract's 
remedies adequately protect the Government's interests. For example, 
contracting officers may wish to negotiate the inclusion of commercial 
remedies such as extension of contract performance or the right to 
reduce the contract price to reflect the reduced value of the services 
performed when defects in services cannot be corrected by 
reperformance.
    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 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 rule 
pertains only to those small entities that will be awarded performance-
based service contracts or task orders meeting the conditions specified 
in the rule. Therefore, DoD has not prepared 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 subparts in accordance with 5 
U.S.C. 610. Such comments should be submitted separately and should 
cite DFARS Case 2000-D306.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the rule does 
not impose any information collection requirements that require the 
approval of the Office of Management and Budget under 44 U.S.C. 3501, 
et seq.

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 821(b) of the National Defense 
Authorization Act for Fiscal Year 2001 (Public Law 106-398). Section 
821(b) establishes an incentive for the use of performance-based 
service contracts by permitting DoD to treat a performance-based 
service contract as a contract for the procurement of commercial items 
if certain conditions are met. Section 821(b) became effective on 
October 30, 2000, and the contracting authority provided under that 
section expires on October 30, 2003. 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 212 and 237

    Government procurement.

Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.

    Therefore, 48 CFR Parts 212 and 237 are amended as follows:
    1. The authority citation for 48 CFR Parts 212 and 237 continues to 
read as follows:

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 212--ACQUISITION OF COMMERCIAL ITEMS

    2. Subpart 212.1 is added to read as follows:

Subpart 212.1--Acquisition of Commercial Items--General


212.102  Applicability.


212.102  Applicability.

    (a)(i) In accordance with Section 821 of the National Defense 
Authorization Act for Fiscal Year 2001 (Public Law 106-398), the 
contracting officer also may use FAR part 12 for any performance-based 
contracting for services if the procedures in FAR Subpart 13.5 are not 
used, and the contract or task order--
    (A) Is entered into on or before October 30, 2003;
    (B) Has a value of $5 million or less;
    (C) Meets the definition of performance-based contracting at FAR 
2.101;
    (D) Uses quality assurance surveillance plans;
    (E) Includes performance incentives where appropriate;
    (F) Specifies a firm-fixed price; and
    (G) Is awarded to an entity that provides similar services at the 
same time to the general public under terms and conditions similar to 
those in the contract.
    (ii) In exercising the authority specified in paragraph (a)(i) of 
this section, the contracting officer should modify paragraph (a) of 
the clause at FAR 52.212-4 as may be necessary to ensure the contract's 
remedies adequately protect the Government's interests.

PART 237--SERVICE CONTRACTING

    3. Subpart 237.6 is added to read as follows:

Subpart 237.6--Performance-Based Contracting


237.601  General.


237.601  General.

    See 212.102 for the use of FAR part 12 procedures with performance-
based contracting.

[FR Doc. 01-30262 Filed 12-5-01; 8:45 am]
BILLING CODE 5000-04-U