[Federal Register Volume 69, Number 110 (Tuesday, June 8, 2004)]
[Rules and Regulations]
[Page 31912]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-12932]


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DEPARTMENT OF DEFENSE

48 CFR Part 242

[DFARS Case 2002-D015]


Defense Federal Acquisition Regulation Supplement; Production 
Surveillance and Reporting

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

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SUMMARY: DoD has issued a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to eliminate requirements for 
contract administration offices to perform production surveillance on 
contractors that have only Criticality Designator C (low-urgency) 
contracts. This change will permit contract administration offices to 
devote more resources to critical and high-risk contracts.

EFFECTIVE DATE: June 8, 2004.

FOR FURTHER INFORMATION CONTACT: Mr. Steven Cohen, Defense Acquisition 
Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense 
Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0293; 
facsimile (703) 602-0350. Please cite DFARS Case 2002-D015.

SUPPLEMENTARY INFORMATION:

A. Background

    This final rule revises DFARS 242.1104 to eliminate requirements 
for contract administration offices to perform production surveillance 
on contractors that have only Criticality Designator C (low-urgency) 
contracts, and for monitoring of progress on any Criticality Designator 
C contract, unless production surveillance or contract monitoring is 
specifically requested by the contracting officer. This change will 
enable contract administration offices to use production surveillance 
resources in a more effective manner.
    DoD published a proposed rule at 68 FR 50495 on August 21, 2003. 
One respondent submitted comments on the proposed rule. The respondent 
disagreed with the proposed change, because a Criticality Designator C 
contract could become more critical at a later date. DoD agrees that 
this situation could occur. However, DoD does not believe the general 
policy should be driven by exceptional situations. The rule provides 
flexibility for contracting officers to request production surveillance 
and contract monitoring when deemed necessary. Therefore, DoD has 
adopted the proposed rule as a final rule without change.
    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 certifies that this final rule will not 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 DFARS changes in this rule primarily affect the allocation 
of Government resources to production surveillance functions.

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.

List of Subjects in 48 CFR Part 242

    Government procurement.

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

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Therefore, 48 CFR Part 242 is amended as follows:
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1. The authority citation for 48 CFR Part 242 continues to read as 
follows:

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

PART 242--CONTRACT ADMINISTRATION AND AUDIT SERVICES

0
2. Section 242.1104 is revised to read as follows:


242.1104  Surveillance requirements.

    (a) The cognizant contract administration office (CAO)--
    (i) Shall perform production surveillance on all contractors that 
have Criticality Designator A or B contracts;
    (ii) Shall not perform production surveillance on contractors that 
have only Criticality Designator C contracts, unless specifically 
requested by the contracting officer; and
    (iii) When production surveillance is required, shall--
    (A) Conduct a periodic risk assessment of the contractor to 
determine the degree of production surveillance needed for all 
contracts awarded to that contractor. The risk assessment shall 
consider information provided by the contractor and the contracting 
officer;
    (B) Develop a production surveillance plan based on the risk level 
determined during a risk assessment;
    (C) Modify the production surveillance plan to incorporate any 
special surveillance requirements for individual contracts, including 
any requirements identified by the contracting officer; and
    (D) Monitor contract progress and identify potential contract 
delinquencies in accordance with the production surveillance plan. 
Contracts with Criticality Designator C are exempt from this 
requirement unless specifically requested by the contracting officer.

[FR Doc. 04-12932 Filed 6-7-04; 8:45 am]
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