[Federal Register Volume 70, Number 99 (Tuesday, May 24, 2005)]
[Rules and Regulations]
[Pages 29640-29643]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-10225]
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DEPARTMENT OF DEFENSE
48 CFR Parts 207, 208, 216, 217, and 237
[DFARS Case 2002-D024]
Defense Federal Acquisition Regulation Supplement; Approval of
Service Contracts and Task and Delivery Orders
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 801(b)
of the National Defense Authorization Act for Fiscal Year 2002 and
Section 854 of the National Defense Authorization Act for Fiscal Year
2005. Section 801(b) requires DoD to establish and implement a
management structure for the procurement of services. Section 854
requires DoD agencies to comply with certain review and approval
requirements before using a non-DoD contract to procure supplies or
services in amounts exceeding the simplified acquisition threshold.
DATES: Effective date: May 24, 2005.
Comment date: Comments on the interim rule should be submitted to
the address shown below on or before July 25, 2005, to be considered in
the formation of the final rule.
ADDRESSES: You may submit comments, identified by DFARS Case 2002-D024,
using any of the following methods:
[cir] Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
[cir] Defense Acquisition Regulations Web Site: http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm. Follow the instructions for
submitting comments.
[cir] E-mail: [email protected]. Include DFARS Case 2002-D024 in the
subject line of the message.
[cir] Fax: (703) 602-0350.
[cir] Mail: Defense Acquisition Regulations Council, Attn: Ms.
Robin Schulze, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon,
Washington, DC 20301-3062.
[cir] Hand Delivery/Courier: Defense Acquisition Regulations
Council, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA
22202-3402.
[[Page 29641]]
All comments received will be posted to http://emissary.acq.osd.mil/dar/dfars.nsf.
FOR FURTHER INFORMATION CONTACT: Ms. Robin Schulze, (703) 602-0326.
SUPPLEMENTARY INFORMATION:
A. Background
DoD published an interim rule at 68 FR 56563 on October 1, 2003, to
implement Section 801(b) of the National Defense Authorization Act for
Fiscal Year 2002 (Public Law 107-107). The rule established
requirements for DoD to obtain certain approvals before acquiring
services through use of a DoD contract or task order that is not
performance based, or through any contract or task order that is
awarded by an agency other than DoD.
Section 854 of the National Defense Authorization Act for Fiscal
Year 2005 (Public Law 108-375) placed additional restrictions on the
use of contracts awarded by an agency other than DoD. Section 854
provides that a DoD agency may not procure goods or services through a
contract entered into by a non-DoD agency for an amount exceeding the
simplified acquisition threshold, unless the procurement is
accomplished in accordance with review and approval procedures
prescribed by the agency head.
Seventeen sources submitted comments on the interim rule published
on October 1, 2003. This second interim rule contains changes resulting
from public comments; changes implementing Section 854 of Public Law
108-375; and changes implementing the requirements of a DoD policy
memorandum dated October 29, 2004, on the proper use of non-DoD
contracts for the acquisition of supplies and services. A discussion of
the comments received on the interim rule published on October 1, 2003,
is provided below:
1. Comment: Several respondents requested clarification of the
rule's applicability. Some were concerned that rule restricts the
ability of DoD agencies to use the General Services Administration
(GSA) Federal Supply Schedule program as well as other multi-agency
contract programs, and that the rule will cause delays in acquiring
necessary products and services. Some respondents requested revision of
the rule to exclude orders placed by DoD agencies under these programs.
One respondent recommended establishment of a blanket approval for
certain non-DoD acquisition providers. Some respondents were concerned
that the language specifying a ``Prohibition'' on the acquisition of
services was overly restrictive.
DoD Response: The rule is not intended to prohibit DoD use of non-
DoD contracts. DoD recognizes that, in many cases, use of non-DoD
contracts is an effective way to accomplish acquisitions in support of
DoD's mission. The intent of the rule is to require appropriate review
and oversight of DoD acquisitions under non-DoD contracts to ensure
that such acquisitions are in the best interest of DoD and comply with
all applicable statutory and regulatory requirements. The rule has been
revised to further clarify its applicability and review requirements.
In addition, the text formerly at 237.170-2, Prohibition on acquisition
of services, has been removed, as it was considered to be unnecessary
and subject to misinterpretation.
2. Comment: Two respondents requested establishment of a minimum
dollar threshold for application of the rule. One respondent believed
it is in DoD's best interest to establish a contract value threshold of
greater than $3 million. The respondent stated that the benefits are
not believed to outweigh the costs of imposing performance-based
requirements on all contracts and task orders. Another respondent
suggested using the simplified acquisition threshold as a minimum
dollar threshold for actions that require approvals if purchased
outside of DoD and if the statement of work is not performance based.
DoD Response: The rule has been revised to specify the simplified
acquisition threshold as the threshold above which review and approval
is required for orders issued under non-DoD contracts, as required by
Section 854 of Public Law 108-375. The thresholds for review and
approval of service contracts that are not performance based, which
were specified in the interim rule published on October 1, 2003, are
still considered to be appropriate and are included in this second
interim rule. The rule provides sufficient flexibility for DoD
departments and agencies to establish review programs commensurate with
management structures.
3. Comment: One respondent stated that additional approvals should
not be required of a DoD agency when it is awarding performance-based
task orders against Federal Supply Schedules and Governmentwide
acquisition contracts; and that approval requirements should be the
same when DoD awards a contract or task order for services that is not
performance-based, whether placed against a DoD contract, a Federal
Supply Schedule, or a Governmentwide acquisition contract. Another
respondent asked whether approval must be obtained for a task order
issued against other agency's contract when the statement of work is
already contained within the contract and may not be performance based.
DoD Response: Approval in accordance with agency procedures,
established within the requirements of the DFARS rule, is needed for
any acquisition of services that is not performance based and for
acquisitions under non-DoD contracts. Both approval requirements must
be met.
4. Comment: One respondent recommended an exemption for healthcare
personal services contracts awarded under the authority of 10 U.S.C.
1091 and DFARS 237.104, because use of performance-based contracting
may not always be practical for these services.
DoD Response: Section 801(b) does not exempt any categories of
services from its requirements. Although there may be certain
categories of services that may not always be appropriate for
performance-based contracting, DoD does not want to preclude the
possibility of using such an approach in those situations where it is
deemed appropriate.
5. Comment: Several respondents requested that the Economy Act be
addressed. One respondent recommended that the Economy Act procedures
be updated to include a requirement for a statement in the
determination and findings to verify that the contract work statement
is performance based.
DoD Response: Requirements for interagency acquisitions under the
Economy Act are addressed in FAR Subpart 17.5 and DFARS Subpart 217.5.
No changes to those requirements are needed for implementation of this
rule.
6. Comment: One respondent requested that the interim rule be
withdrawn and reissued as a proposed rule to allow for industry
feedback. The respondent stated that the interim rule negatively
impacts the DoD procurement process, undermines GSA ordering
procedures, and adversely affects GSA vendors and DoD customers.
DoD Response: The first interim rule and this second interim rule
implement statutory requirements. Therefore, to meet those statutory
requirements, DoD considers immediate implementation to be necessary.
However, as with any interim rule, the public is provided an
opportunity to comment and DoD must consider all comments.
[[Page 29642]]
7. Comment: One respondent requested amendment of the rule to
address use of the Intra-Governmental Transaction (IGT) portal to
track, monitor, and report the types of services acquired by DoD. It
was also suggested that DoD establish a Service Acquisition Agency
Review Board that would negotiate Service Level Agreements with outside
agencies and a Contract Vehicle Review Board that would evaluate
outside contract vehicles and provide a list of approved vehicles for
use by all DoD branches.
DoD Response: These comments are considered to be outside the scope
of this case.
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
contains internal DoD approval requirements, intended to ensure that
acquisitions of supplies and services are accomplished in accordance
with existing statutes and regulations. Therefore, DoD has not
performed 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 2002-D024.
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 854 of the National Defense
Authorization Act for Fiscal Year 2005 (Public Law 108-375). Section
854 requires DoD agencies to comply with certain review and approval
requirements before using a non-DoD contract to procure supplies or
services in amounts exceeding the simplified acquisition threshold.
Section 854 became effective on April 26, 2005. 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 207, 208, 216, 217, and 237
Government procurement.
Michele P. Peterson,
Editor, Defense Acquisition Regulations System.
0
Therefore, 48 CFR Parts 207, 208, 216, 217, and 237 are amended as
follows:
0
1. The authority citation for 48 CFR Parts 207, 208, 216, 217, and 237
continues to read as follows:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
PART 207--ACQUISITION PLANNING
0
2. Section 207.105 is amended by adding paragraph (b)(4) to read as
follows:
207.105 Contents of written acquisition plans.
* * * * *
(b) * * *
(4) Acquisition considerations. When supplies or services will be
acquired by placing an order under a non-DoD contract (e.g., a Federal
Supply Schedule contract), regardless of whether the order is placed by
DoD or by another agency on behalf of DoD, address the method of
ensuring that the order will be consistent with DoD statutory and
regulatory requirements applicable to the acquisition and the
requirements for use of DoD appropriated funds.
* * * * *
PART 208--REQUIRED SOURCES OF SUPPLIES AND SERVICES
0
3. Section 208.404 is amended by redesignating paragraph (a) as
paragraph (a)(ii) and by adding paragraph (a)(i) to read as follows:
208.404 Using schedules.
(a)(i) Departments and agencies shall comply with the review and
approval requirements established in accordance with Subpart 217.78
when placing orders for supplies or services in amounts exceeding the
simplified acquisition threshold.
* * * * *
PART 216--TYPES OF CONTRACTS
0
4. Section 216.505 is amended by designating the existing text as
paragraph (2) and by adding paragraph (1) to read as follows:
216.505 General.
(1) Departments and agencies shall comply with the review and
approval requirements established in accordance with Subpart 217.78
when placing orders under non-DoD contracts in amounts exceeding the
simplified acquisition threshold.
* * * * *
PART 217--SPECIAL CONTRACTING METHODS
0
5. Subpart 217.78 is added to read as follows:
Subpart 217.78--Contracts or Delivery Orders Issued by a Non-DoD
Agency
Sec.
217.7800 Scope of subpart.
217.7801 Definitions.
217.7802 Policy.
217.7800 Scope of subpart.
This subpart--
(a) Implements Section 854 of the National Defense Authorization
Act for Fiscal Year 2005 (Public Law 108-375); and
(b) Prescribes policy for the acquisition of supplies and services
through the use of contracts or orders issued by non-DoD agencies.
217.7801 Definitions.
As used in this subpart--
Assisted acquisition means a contract awarded or a task or delivery
order placed on behalf of DoD by a non-DoD agency.
Direct acquisition means a task or delivery order placed by a DoD
official under a contract awarded by a non-DoD agency.
217.7802 Policy.
Departments and agencies shall establish and maintain procedures
for reviewing and approving orders placed for supplies and services
under non-DoD contracts, whether through direct acquisition or assisted
acquisition, when the amount of the order exceeds the simplified
acquisition threshold. These procedures shall include--
(a) Evaluating whether using a non-DoD contract for the acquisition
is in the best interest of DoD. Factors to be considered include--
(1) Satisfying customer requirements;
(2) Schedule;
(3) Cost effectiveness (taking into account discounts and fees);
and
(4) Contract administration (including oversight);
(b) Determining that the tasks to be accomplished or supplies to be
provided are within the scope of the contract to be used;
[[Page 29643]]
(c) Reviewing funding to ensure that it is used in accordance with
appropriation limitations;
(d) Providing unique terms, conditions, and requirements to the
assisting agency for incorporation into the order or contract as
appropriate to comply with all applicable DoD-unique statutes,
regulations, directives, and other requirements; and
(e) Collecting data on the use of assisted acquisition for
analysis.
PART 237--SERVICE CONTRACTING
0
6. Section 237.170-2 is revised to read as follows:
237.170-2 Approval requirements.
(a) Acquisition of services through a contract or task order that
is not performance based.
(1) For acquisitions at or below $50,000,000, obtain the approval
of the official designated by the department or agency.
(2) For acquisitions exceeding $50,000,000, obtain the approval of
the senior procurement executive.
(b) Acquisition of services through use of a contract or task order
issued by a non-DoD agency. Comply with the review and approval
requirements established in accordance with Subpart 217.78 when
acquiring services through use of a contract or task order issued by a
non-DoD agency.
237.170-3 [Removed]
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7. Section 237.170-3 is removed.
[FR Doc. 05-10225 Filed 5-23-05; 8:45 am]
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