[Federal Register: March 30, 2004 (Volume 69, Number 61)]
[Rules and Regulations]
[Page 16481-16483]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30mr04-9]
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DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Part 3
RIN 0790-AG97
Transactions Other Than Contracts, Grants, or Cooperative
Agreements for Prototype Projects
AGENCY: Office of the Secretary, DoD.
ACTION: Final rule.
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SUMMARY: This final rule implements section 822 of the National Defense
Authorization act for Fiscal Year 2002, Public Law 107-107, 115 Stat.
1182. Section 822 provides for award of a follow-on production contract
to traditional Defense contractors, without further competition, when
the other transaction (OT) agreement for the prototype project provided
for at least one-third non-Federal cost-share, consistent with law, and
the OT agreement for the prototype project
[[Page 16482]]
satisfies certain additional conditions of law.
DATES: The final rule is effective March 30, 2004. This final rule will
become effective for solicitations issued on March 30, 2004, or those
issued 30 days after March 30, 2004. This final rule may be used for
new prototype awards that result from solicitations issued prior to
March 30, 2004.
FOR FURTHER INFORMATION CONTACT: David Boyd, (703) 697-6710.
SUPPLEMENTARY INFORMATION:
Background and Purpose
Section 845 of the National Defense Authorization Act for Fiscal
Year 1994, Public Law 103-160, 107 Stat. 1721, as amended, authorizes
the Secretary of a Military Department, the Director of Defense
Advanced Research Projects Agency and any other official designated by
the Secretary of Defense, to enter into transactions other than
contracts, grants or cooperative agreements in certain situations for
prototype projects that are directly relevant to weapons or weapon
systems proposed to be acquired or developed by the Department of
Defense. Such transactions are commonly referred to as ``other
transaction'' agreements for prototype projects. To the extent that a
particular statute or regulation is limited in its applicability to the
use of a procurement contract, it would generally not apply to ``other
transactions'' for prototype projects.
Use of OT authority is authorized by law in the absence of the
significant participation of a nontraditional Defense contractor, when
at least one-third of the costs of the prototype project are to be
provided by non-Federal parties to the agreement. The authority granted
by section 822 of the National Defense Authorization Act for Fiscal
Year 2002 provides for the authority to continue such prototype
projects into production without competition in certain circumstances.
The circumstances are identified in this rule. Additionally, a rule
will be issued to the Defense Federal Acquisition Regulation Supplement
that exempts such production contracts from further competition,
notwithstanding the requirements of section 2304 of title 10, United
States Code.
In implementing the law, the Department clarifies that the number
of production units and target prices proposed for production must be
evaluated during the competition for the prototype project. This is
consistent with the law's competition requirement and is the basis for
being exempted from the need for further competition for the stated
production quantity.
A proposed rule was published in the Federal Register for public
comment on May 20, 2003 (68 FR 27497). No comments were received.
Regulatory Evaluation
Executive Order 12866, ``Regulatory Planning and Review''
It has been determined that this rule is not a significant rule as
defined under section 3(f)(1) through 3(f)(4) of Executive Order 12866.
Unfunded Mandates Reform Act (Sec. 202, Pub. L. 104-4)
It has been certified that this rule does not contain a Federal
mandate that may result in the expenditure by State, local and tribal
governments, in aggregate, or by the private sector, of $100 million or
more in any one year.
Pub. L. 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. 601)
It has been certified that this rule is not subject to the
Regulatory Flexibility Act (5 U.S.C. 601 et seq.) because it would not,
if promulgated, have a significant economic impact on a substantial
number of small entities. The rule does not require additional
recordkeeping or other significant expense by project participants.
Pub. L. 96-511, ``Paperwork Reduction Act of 1995'' (44 U.S.C. 3501 et
seq.)
It has been certified that this rule does not impose any reporting
or record keeping requirements under the Paperwork Reduction Act of
1995.
Federalism (Executive Order 13132)
It has been certified that this rule does not have federalism
implications, as set forth in Executive Order 13132.
List of Subjects in 32 CFR Part 3
Government procurement, Transactions for prototype projects.
0
Accordingly, 32 CFR part 3 is amended to read as follows:
PART 3--TRANSACTIONS OTHER THAN CONTRACTS, GRANTS, OR COOPERATIVE
AGREEMENTS FOR PROTOTYPE PROJECTS
0
1. The authority citation for 32 CFR part 3 contiinues to read as
follows:
Authority: Section 845 of Public Law (103-160, 107 Stat. 1721,
as amended.
Sec. 3.4 [Amended]
0
2. Section 3.4 is amended to add new definitions in aphabetical order
to read as follows:
* * * * *
Contracting Officer. A person with the authority to enter into,
administer, and/or terminate contracts and make related determinations
and findings as defined in Chapter 1 of Title 48, CFR, Federal
Acquisition Regulation, Section 2.101(b).
* * * * *
Project Manager. The government manager for the prototype project.
* * * * *
0
3. New Sec. 3.9 is added to read as follows:
Sec. 3.9 Follow-on production contracts.
(a) Authority. A competitively awarded OT agreement for a prototype
project that satisfies the condition set forth in law that requires
non-Federal parties to the OT agreement to provide at least one-third
of the costs of the prototype project may provide for the award of a
follow-on production contract to the awardee of the OT prototype
agreement for a specific number of units at specific target prices,
without further competition.
(b) Conditions. The Agreements Officer must do the following in the
award of the prototype project:
(1) Ensure non-Federal parties to the OT prototype agreement offer
at least one-third of the costs of the prototype project pursuant to
subsection (d)(1)(B)(i), 10 U.S.C. 2371 note.
(2) Use competition to select parties for participation in the OT
prototype agreement and evaluate the proposed quantity and target
prices for the follow-on production units as part of that competition.
(3) Determine the production quantity that may be procured without
further competition, by balancing of the level of the investment made
in the project by the non-Federal parties with the interest of the
Federal Government in having competition among sources in the
acquisition of the product or products prototyped under the project.
(4) Specify the production quantity and target prices in the OT
prototype agreement and stipualte in the agreement that the Contracting
Officer for the follow-on contract may award a production contract
without further competition if the awardee successfully completes the
prototype project and agrees to production quantities and prices that
do not exceed those specified in the OT prototype agreement (see part
206.001 of the Defense Federal Acquisition Regulation Supplement).
(c) Limitation. As a matter of policy, establishing target prices
for production units should only be considered when the risk of the
prototype project permits realistic production pricing without placing
undue risks on the awardee.
[[Page 16483]]
(d) Documentation. (1) The Agreements Officer will need to provide
information to the Contracting Officer from the agreement and award
file that the conditions set forth in paragraph (b) of this section
have been satisfied.
(2) The information shall contain, at a minimum:
(i) The competitive procedures used;
(ii) How the production quantities and target prices were evaluated
in the competition;
(iii) The percentage of cost-share; and
(iv) The production quantities and target prices set forth in the
OT agreement.
(3) The Project Manager will provide evidence of successful
completion of the prototype project to the Contracting Officer.
Dated: March 12, 2004.
Patricia L. Toppings,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 04-7044 Filed 3-29-04; 8:45 am]
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