[Federal Register Volume 71, Number 14 (Monday, January 23, 2006)]
[Proposed Rules]
[Pages 3446-3448]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-701]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 201, 205, 211, 216, 217, 219, 223, 225, 228, 232, 236,
237, and 252
[DFARS Case 2004-D022]
RIN 0750-AF16
Defense Federal Acquisition Regulation Supplement; Inflation
Adjustment of Acquisition-Related Thresholds
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Proposed rule with request for comments.
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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to adjust acquisition-related thresholds
for inflation. Section 807 of the National Defense Authorization Act
for Fiscal Year 2005 requires periodic adjustment of statutory
acquisition-related dollar thresholds for inflation, except those
established by the Davis-Bacon Act, the Service Contract Act, or trade
agreements. This proposed rule also amends other acquisition-related
thresholds that are based on policy rather than statute.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before March 24, 2006, to be considered
in the formation of the final rule.
ADDRESSES: You may submit comments, identified by DFARS Case 2004-D022,
using any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: [email protected]. Include DFARS Case 2004-D022 in the
subject line of the message.
Fax: (703) 602-0350.
Mail: Defense Acquisition Regulations System, Attn: Ms.
Amy Williams, OUSD(AT&L)DPAP(DARS), IMD 3C132, 3062 Defense Pentagon,
Washington, DC 20301-3062.
Hand Delivery/Courier: Defense Acquisition Regulations
System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA
22202-3402.
Comments received will be posted without change to http://www.regulations.gov, including any personal information provided.
FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, (703) 602-0328.
SUPPLEMENTARY INFORMATION:
A. Background
This proposed rule implements Section 807 of the National Defense
Authorization Act for Fiscal Year 2005 (Pub. L. 108-375). Section 807
provides for adjustment of statutory acquisition-related dollar
thresholds every 5 years, except for those established by the Davis-
Bacon Act, the Service Contract Act, or trade agreements. This case
presented an opportunity to review all acquisition-related dollar
thresholds, including those that are non-statutory. The proposed rule
published at 70 FR 73415 on December 12, 2005 (FAR Case 2004-033),
contained comparable changes to acquisition-related dollar thresholds
in the FAR.
Definition of Acquisition-Related Threshold
The statute defines an acquisition-related threshold as a dollar
threshold that is specified in law as a factor in defining the scope of
the applicability of a policy, procedure, requirement, or restriction
provided in that law to the procurement of property or services by an
executive agency, as determined by the FAR Council. The statute also
impacts acquisition-related thresholds in the DFARS, since the DFARS is
part of the FAR System. Acquisition-related thresholds are generally
tied to the value of a contract, subcontract, or modification. Examples
of thresholds that are not viewed as ``acquisition-related'' are
thresholds relating to claims, penalties, withholding, payments,
required levels of insurance, small business size standards, and
liquidated damages.
Acquisition-Related Thresholds Not Subject to Escalation Adjustment
Under This Proposed Rule
The statute does not permit escalation of acquisition-related
thresholds established by the Davis Bacon Act, the Service Contract
Act, or trade agreements. Additionally, the statute does not authorize
the escalation of thresholds set by Executive order or by the
implementing agency, unless the Executive order or agency regulations
are first amended.
Analysis of Statutory Acquisition-Related Thresholds
A matrix showing the thresholds reviewed in preparation of this
proposed rule is available at http://www.acq.osd.mil/dpap/dars/dfars/changenotice/index.htm#2004-D022. The statute requires adjustment of
acquisition-related thresholds for inflation using the Consumer Price
Index (CPI) for all-urban consumers. Acquisition-related thresholds in
[[Page 3447]]
statutes that were in effect on October 1, 2000, are subject to 5 years
of inflation. For purposes of this proposed rule, the matrix includes
calculation of escalation based on the CPI from December 1999 to
December 2004 (the most recent available data when the proposed rule
was in preparation), which calculates as 13.07 percent. Acquisition-
related thresholds in statutes that took effect after October 1, 2000,
are escalated proportionately for the number of months between the
effective date of the statute and October 1, 2005. The final rule will
be adjusted to the actual CPI data for October 2000 through October
2005.
After the escalation factor is applied to the acquisition-related
threshold, the threshold must be rounded as follows:
< $10,000--Nearest $500
$10,000-<$100,000--Nearest $5,000
$100,000-<$1,000,000--Nearest $50,000
$1,000,000 or more--Nearest $500,000
At the current rate of inflation, this means that thresholds of
$1,000, $10,000, $100,000, and $1,000,000, although subject to
inflation calculation, will not actually be changed until 2010, because
the inflation is insufficient to overcome the rounding requirements.
Analysis of Non-Statutory Acquisition-Related Thresholds
No statutory authorization is required to escalate thresholds that
were set as policy within the DFARS. Policy acquisition-related
thresholds have been escalated using the same formula applied to the
statutory thresholds.
Further Explanation of Proposed Changes
217.170-217.174. The thresholds relating to economic order quantity
($20 million), unfunded contingent liability ($20 million), and
multiyear contracts for systems or components ($500 million) are
repeated annually in the Defense Appropriations Act and, therefore,
cannot be escalated unless correspondingly increased in the
Appropriations Act. The $500 million threshold relating to multiyear
contracts for services does not appear in the annual appropriations
acts and, therefore, is proposed for escalation. The $100 million
threshold relating to a contract cancellation ceiling does not appear
in annual appropriations acts, but was the basis for additional
requirements in Section 814 of the National Defense Authorization Act
for Fiscal Year 2005 (Pub. L. 108-375). Therefore, the $100 million
threshold is not proposed for escalation.
223.803(2). This text is proposed for deletion, as it applies only
to contracts awarded before June 1, 1993, and the underlying statute
has been repealed.
228.102-1. The threshold of $25,000 is proposed for escalation to
$30,000, for consistency with the proposed change to FAR 28.102-1
published at 70 FR 73415 on December 12, 2005. The $100,000 threshold
at 228.102-1(1) was not implemented until June 2003, and, therefore, is
not proposed for escalation.
232.404(a)(9). This threshold was increased from $500 to $2,500 in
the final DFARS rule published at 70 FR 75412 on December 20, 2005. The
threshold is now proposed for escalation to $3,000, for consistency
with the micro-purchase threshold of $3,000 included in the proposed
FAR rule published at 70 FR 73415 on December 12, 2005.
237.170-2. This approval requirement implements Section 801(b) of
the National Defense Authorization Act for Fiscal Year 2002 (Pub. L.
107-107), but the threshold is not set by statute. The threshold of $50
million was derived from the justification and approval (J&A) threshold
for DoD senior procurement executive approval at FAR 6.304(a)(4). This
J&A threshold is now $75 million and was proposed for escalation to
$77.5 million in the proposed FAR rule published at 70 FR 73415 on
December 12, 2005. Therefore, this proposed rule includes a
corresponding increase at DFARS 237.170-2.
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
adjustment of acquisition-related dollar thresholds is intended to keep
pace with inflation and thus maintain the status quo. 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 2004-D022.
C. Paperwork Reduction Act
The proposed changes to the DFARS do not impose any new information
collection requirements that require the approval of the Office of
Management and Budget (OMB) under 44 U.S.C. 3501, et seq. The
information collection requirements of the provision and clauses at
252.225-7003, 252.225-7004, and 252.225-7006 are approved for use
through May 31, 2007, under OMB Clearance Number 0704-0229.
List of Subjects in 48 CFR Parts 201, 205, 211, 216, 217, 219, 223,
225, 228, 232, 236, 237, and 252
Government procurement.
Michele P. Peterson,
Editor, Defense Acquisition Regulations System.
Therefore, DoD proposes to amend 48 CFR parts 201, 205, 211, 216,
217, 219, 223, 225, 228, 232, 236, 237, and 252 as follows:
1. The authority citation for 48 CFR parts 201, 205, 211, 216, 217,
219, 223, 225, 228, 232, 236, 237, and 252 continues to read as
follows:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
PART 201--FEDERAL ACQUISITION REGULATIONS SYSTEM
2. Section 201.109 is added to read as follows:
201.109 Statutory acquisition-related dollar thresholds-adjustment for
inflation.
(d) A matrix showing calculation of the most recent escalation
adjustments of statutory acquisition-related dollar thresholds is
available at PGI 201.109.
PART 205--PUBLICIZING CONTRACT ACTIONS
205.303 [Amended]
3. Section 205.303 is amended by removing ``$5 million'' and adding
in its place ``$5.5 million'' as follows:
a. In paragraph (a)(i) introductory text, in the first and second
sentences;
b. In paragraph (a)(i)(A), in the second sentence; and
c. In paragraph (a)(i)(B), in the first and second sentences.
PART 211--DESCRIBING AGENCY NEEDS
211.503 [Amended]
4. Section 211.503 is amended in paragraph (b), in the first and
second sentences, by removing ``$500,000'' and adding in its place
``$550,000''.
PART 216--TYPES OF CONTRACTS
216.203-4 [Amended]
5. Section 216.203-4 is amended in paragraph (c)(2), in the first
sentence, by removing ``$50,000'' and adding in its place ``$55,000''.
[[Page 3448]]
PART 217--SPECIAL CONTRACTING METHODS
6. Section 217.170 is amended by revising paragraph (d)(1)(i) to
read as follows:
217.170 General.
* * * * *
(d)(1) * * *
(i) Exceed $500 million for supplies (see 217.172(c) and
217.172(e)(4)) or $565.5 million for services (see 217.171(a)(6));
* * * * *
217.171 [Amended]
7. Section 217.171 is amended in paragraph (a)(6) by removing
``$500 million'' and adding in its place ``$565.5 million''.
PART 219--SMALL BUSINESS PROGRAMS
219.502-2 [Amended]
8. Section 219.502-2 is amended in paragraph (a)(i) by removing
``$2 million'' and adding in its place ``$2.5 million''.
PART 223--ENVIRONMENT, ENERGY AND WATER EFFICIENCY, RENEWABLE
ENERGY TECHNOLOGIES, OCCUPATIONAL SAFETY, AND DRUG-FREE WORKPLACE
9. Section 223.803 is revised to read as follows:
223.803 Policy.
No DoD contract may include a specification or standard that
requires the use of a class I ozone-depleting substance or that can be
met only through the use of such a substance unless the inclusion of
the specification or standard is specifically authorized at a level no
lower than a general or flag officer or a member of the Senior
Executive Service of the requiring activity in accordance with Section
326, Public Law 102-484 (10 U.S.C. 2301 (repealed) note). This
restriction is in addition to any imposed by the Clean Air Act and
applies after June 1, 1993, to all DoD contracts, regardless of place
of performance.
PART 225--FOREIGN ACQUISITION
225.7204 [Amended]
10. Section 225.7204 is amended as follows:
a. In paragraphs (a) and (b) by removing ``$10 million'' and adding
in its place ``$11.5 million''; and
b. In paragraph (c) by removing ``$500,000'' and adding in its
place ``$550,000''.
PART 228--BOND INSURANCE
228.102-1 [Amended]
11. Section 228.102-1 is amended in the second sentence of the
introductory text and in paragraph (1) by removing ``$25,000'' and
adding in its place ``$30,000''.
PART 232--CONTRACT FINANCING
232.404 [Amended]
12. Section 232.404 is amended in paragraph (a)(9) by removing
``$2,500'' and adding in its place ``$3,000''.
232.502-1 [Amended]
13. Section 232.502-1 is amended in paragraph (b)(1) by removing
``$50,000'' and adding in its place ``$55,000''.
PART 236--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS
236.601 [Amended]
14. Section 236.601 is amended in paragraph (1)(ii) by removing
``$500,000'' and adding in its place ``$550,000''.
PART 237--SERVICE CONTRACTING
237.170-2 [Amended]
15. Section 237.170-2 is amended in paragraphs (a)(1) and (2) by
removing ``$50,000,000'' and adding in its place ``$77.5 million''.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
16. Section 252.209-7004 is amended by revising the clause date and
paragraph (a) to read as follows:
252.209-7004 Subcontracting with firms that are owned or controlled by
the government of a terrorist country.
* * * * *
Subcontracting With Firms That Are Owned or Controlled by the
Government of a Terrorist Country (XXX 2006)
(a) Unless the Government determines that there is a compelling
reason to do so, the Contractor shall not enter into any subcontract in
excess of $30,000 with a firm, or a subsidiary of a firm, that is
identified in the Excluded Parties List System as being ineligible for
the award of Defense contracts or subcontracts because it is owned or
controlled by the government of a terrorist country.
* * * * *
252.225-7003 [Amended]
17. Section 252.225-7003 is amended as follows:
a. By revising the clause date to read ``(XXX 2006)'';
b. In paragraph (b)(1) by removing ``$10 million'' and adding in
its place ``$11.5 million''; and
c. In paragraph (b)(2)(i) by removing ``$500,000'' and adding in
its place ``$550,000''.
252.225-7004 [Amended]
18. Section 252.225-7004 is amended as follows:
a. By revising the clause date to read ``(XXX 2006)''; and
b. In paragraph (b)(1) by removing ``$500,000'' and adding in its
place ``$550,000''.
252.225-7006 [Amended]
19. Section 252.225-7006 is amended as follows:
a. By revising the clause date to read ``(XXX 2006)''; and
b. In paragraph (f)(1) by removing ``$500,000'' and adding in its
place ``$550,000''.
252.232-7009 [Amended]
20. Section 252.232-7009 is amended as follows:
a. By revising the clause date to read ``(XXX 2006)''; and
b. By removing ``$2,500'' and adding in its place ``$3,000''.
252.249-7002 [Amended]
21. Section 252.249-7002 is amended as follows:
a. By revising the clause date to read ``(XXX 2006)''; and
b. In paragraph (d)(1) by removing ``$500,000'' and adding in its
place ``$550,000''.
[FR Doc. E6-701 Filed 1-20-06; 8:45 am]
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