[Federal Register Volume 76, Number 75 (Tuesday, April 19, 2011)]
[Proposed Rules]
[Pages 21852-21853]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-8958]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Part 245
Defense Federal Acquisition Regulation Supplement; Responsibility
and Liability for Government Property (DFARS Case 2010-D018)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Proposed rule.
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SUMMARY: DoD is issuing a proposed rule to amend the Defense Federal
Acquisition Regulation Supplement (DFARS) to extend the Government
self-insurance policy to Government property provided under negotiated
fixed-price contracts that are awarded on a basis other than submission
of certified cost or pricing data.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before June 20, 2011, to be considered in
the formation of the final rule.
ADDRESSES: You may submit comments, identified by DFARS Case 2010-D018,
using any of the following methods:
[cir] Regulations.gov: http://www.regulations.gov.
Submit comments via the Federal eRulemaking portal by inputting
``DFARS Case 2010-D018'' under the heading ``Enter keyword or ID'' and
selecting ``Search.'' Select the link ``Submit a Comment'' that
corresponds with ``DFARS Case 2010-D018.'' Follow the instructions
provided at the ``Submit a Comment'' screen. Please include your name,
company name (if any), and ``DFARS Case 2010-D018'' on your attached
document.
[cir] E-mail: [email protected]. Include DFARS Case 2010-D018 in the
subject line of the message.
[cir] FAX: 703-602-0350.
[cir] Mail: Defense Acquisition Regulations System, Attn: Mrs.
Jennifer Abi-Najm, OUSD (AT&L) DPAP (DARS), Room 3B855, 3060 Defense
Pentagon, Washington, DC 20301-3060.
Comments received generally will be posted without change to http://regulations.gov, including any personal information provided. To
confirm receipt of your comment, please check http://www.regulations.gov approximately two to three days after submission to
verify posting, except allow 30 days for posting of comments submitted
by mail.
FOR FURTHER INFORMATION CONTACT: Mrs. Jennifer Abi-Najm, 703-602-1013.
SUPPLEMENTARY INFORMATION:
I. Background
This proposed rule will amend the DFARS to extend the Federal
Acquisition Regulation (FAR) Government self-insurance policy for loss
of Government property to negotiated fixed-price contracts awarded on a
basis other than submission of certified cost or pricing data. FAR
45.104, Responsibility and liability for Government property, provides
that contractors are not held liable for loss of Government property
occurring under the following types of contracts:
(1) Cost-reimbursement contracts.
(2) Time-and-materials contracts.
(3) Labor-hour contracts.
(4) Fixed-price contracts awarded on the basis of submission of
certified cost or pricing data.
An exception to the FAR 45.104 policy for Government assumption of
risk of loss is for negotiated fixed-price contracts awarded on a basis
other than submission of certified cost or pricing data. This rule
proposes that DoD contractors not be held liable for loss of Government
property under such contracts, and eliminates the use of Alternate I of
the FAR clause at 52.245-1, Government Property. Use of Alternate I
requires contractors to assume the risk and be responsible for loss of
Government property.
II. Executive Order 12866 and Executive Order 13563
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This is not a significant regulatory action and,
therefore, was not subject to review under Section 6(b) of Executive
Order 12866, Regulatory Planning and Review, dated September 30, 1993.
This rule is not a major rule under 5 U.S.C. 804.
III. Regulatory Flexibility Act
DoD has prepared an initial regulatory flexibility analysis
consistent with 5 U.S.C. 603. A copy of the analysis may be obtained
from the point of contact specified herein. The analysis is summarized
as follows:
[[Page 21853]]
The objective of this rule is to add negotiated fixed-priced
contracts, awarded on a basis other than submission of certified cost
or pricing data, to the list of contracts for which the Government is
self-insuring and assumes risk of loss for Government property provided
under such contracts. The basic premise of this case, that the
Government should be self-insuring under contracts that provide
Government property, is supported by the Government Accountability
Office (GAO) policy contained in GAO publication, GAO-04-261SP
Appropriations Law, and its decisions.
The Government generally self-insures against contractor loss of
Government property acquired or provided under most negotiated
Government contracts. An exception to this policy at FAR 45.104 is for
negotiated fixed-price contracts awarded on a basis other than
submission of certified cost or pricing data. For those contracts, the
contractor is liable for loss of Government property (except for
reasonable fair wear and tear) invoked by use of FAR clause 52.245-1,
Government Property, with its Alternate I.
DoD has approximately 3,000 contractors with contracts that
authorize furnishing some form of Government contract property. The
majority of property (over 80 percent in terms of original acquisition
value) is accountable to large businesses, with the remainder
accountable to small entities.
Any impact of this rule on small entities is expected to be
beneficial. Large businesses with substantial cash reserves may be in a
financial position that enables those firms to select a high insurance
deductible in order to garner lower premiums by electing to become
self-insuring for potential property loss up to the level of the
deductible. Small entities may not have the financial capacity or
capability to select a high insurance deductible in order to be self-
insuring up to the higher thresholds. The effect of small entities not
being able to select higher deductible thresholds may be to incur
higher insurance premiums, which might negatively impact their ability
to compete. The Government assuming the liability for loss of
Government property under negotiated fixed-price contracts awarded on a
basis other than submission of certified cost or pricing data should
provide some relief for the small entities concerning costs to acquire
insurance against risk of loss.
DoD invites comments from small businesses and other interested
parties on the expected impact of this rule on small entities.
DoD will also consider comments from small entities concerning the
existing regulations in subparts affected by this rule in accordance
with 5 U.S.C. 610. Interested parties must submit such comments
separately and should cite 5 U.S.C. 610 (DFARS Case 2010-D018), in
correspondence.
IV. Paperwork Reduction Act
This rule does not impose any information collection requirements
that require the approval of the Office of Management and Budget under
the Paperwork Reduction Act (44 U.S.C. chapter 35).
List of Subjects in 48 CFR Part 245
Government procurement.
Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.
Therefore, 48 CFR part 245 is proposed to be amended as follows:
PART 245-GOVERNMENT PROPERTY
1. The authority citation for 48 CFR part 245 continues to read as
follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
2. Section 245.104 is added to subpart 245.1 to read as follows:
245.104 Responsibility and liability for Government property.
(a) In addition to the contract types listed at FAR 45.104,
contractors are not held liable for loss of Government property under
negotiated fixed-price contracts awarded on a basis other than
submission of certified cost or pricing data.
3. Section 245.107 is revised to read as follows:
245.107 Contract clauses.
(1) Use the clause at 252.245-7000, Government-Furnished Mapping,
Charting, and Geodesy Property, in solicitations and contracts when
mapping, charting, and geodesy property is to be furnished.
(2) Use the clause at 252.245-7001, Tagging, Labeling, and Marking
of Government-Furnished Property, in solicitations and contracts that
contain the clause at FAR 52.245-1, Government Property.
(3) Use the clause at 252.245-7002, Reporting Loss of Government
Property, in solicitations and contracts that contain the clause at FAR
52.245-1, Government Property.
(4) For negotiated fixed-price contracts awarded on a basis other
than submission of certified cost or pricing data for which Government
property is provided, use the clause at FAR 52.245-1, Government
Property, without its Alternate I.
[FR Doc. 2011-8958 Filed 4-18-11; 8:45 am]
BILLING CODE 5001-08-P