81 FR 65606 - Defense Federal Acquisition Regulation Supplement: Temporary Extension of Test Program for Comprehensive Small Business Subcontracting Plans (DFARS Case 2015-D013)
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System Federal Register Volume 81, Issue 185 (September 23, 2016)
Defense Acquisition Regulations System
Federal Register Volume 81, Issue 185 (September 23, 2016)
| Page Range | 65606-65610 | |
| FR Document | 2016-22573 |
[Federal Register Volume 81, Number 185 (Friday, September 23, 2016)] [Proposed Rules] [Pages 65606-65610] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-22573] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Parts 211, 215, 219, 242, and 252 [Docket DARS-2016-0027] RIN 0750-AJ00 Defense Federal Acquisition Regulation Supplement: Temporary Extension of Test Program for Comprehensive Small Business Subcontracting Plans (DFARS Case 2015-D013) AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Proposed rule. ----------------------------------------------------------------------- SUMMARY: DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2015 and a section of the National Defense Authorization Act for Fiscal Year 2016, both of which provide revisions to the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans. DATES: Comments on the proposed rule should be submitted in writing to the address shown below on or before November 22, 2016, to be considered in the formation of a final rule. ADDRESSES: Submit comments identified by DFARS Case 2015-D013, using any of the following methods: [cir] Federal eRulemaking Portal: http://www.regulations.gov. Search for ``DFARS Case 2015-D013.'' Select ``Comment Now'' and follow the instructions provided to submit a comment. Please include ``DFARS Case 2015-D013'' on any attached documents. [cir] Email: [email protected]. Include DFARS Case 2015-D013 in the subject line of the message. [cir] Fax: 571-372-6094. [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. Jennifer Johnson, OUSD (AT&L) DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060. Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To confirm receipt of your comment(s), please check 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: Ms. Jennifer Johnson, telephone 571- 372-6100. SUPPLEMENTARY INFORMATION: I. Background DoD is proposing to revise the DFARS to implement section 821 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015 and section 872 of the NDAA for FY 2016, both of which revise the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans. Section 821 of the NDAA for FY 2015 provides for contractors participating in the Test Program to report, on a semiannual basis, the amount of first-tier subcontract dollars awarded; the total number of subcontracts active under the Test Program that would have otherwise required a subcontracting plan under 15 U.S.C. 637(d); costs incurred in negotiating, complying with, and reporting on comprehensive subcontracting plans; and costs avoided by adoption of a comprehensive subcontracting plan. This information is expected to assist in determining if Test Program participants have achieved cost savings while enhancing opportunities for small businesses. In addition, section 821--Repeals section 402 of Public Law 101-574, which suspended liquidated damages under comprehensive small business subcontracting plans; Requires consideration, as part of the past performance evaluation of an offeror, of any failure to make a good faith effort to comply with its comprehensive subcontracting plan; Extends the Test Program through December 31, 2017; Increases the threshold for participation in the Test Program from $5,000,000 to $100,000,000; and Prohibits negotiation of comprehensive subcontracting plans with contractors who failed to meet the subcontracting goals of their comprehensive subcontracting plan for the prior fiscal year. Section 872 of the NDAA for FY 2016 removes the prohibition on negotiation of comprehensive subcontracting plans with contractors who failed to meet the subcontracting goals of their comprehensive subcontracting plan for the prior fiscal year. II. Discussion and Analysis This rule proposes to amend DFARS subparts 211.5, 215.3, 219.7, 242.15, and 252.2 as summarized in the following paragraphs: A. Subpart 211.5, Liquidated Damages Section 211.500 is added to clarify that subpart 211.5 and Federal Acquisition Regulation (FAR) subpart 11.5 do not apply to liquidated damages for comprehensive subcontracting plans under the Test Program, and to include a reference to DFARS 219.702-70. B. Subpart 215.3, Source Selection Section 215.305 is amended to require contracting officers to consider an offeror's failure to make a good faith effort to comply with its comprehensive subcontracting plan as part of the past performance evaluation. C. Subpart 219.7, The Small Business Subcontracting Program Section 219.702-70, Statutory requirements for the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans, renumbers section 219.702 and incorporates new requirements stemming from section 821 of the NDAA for FY 2015. [cir] Paragraph (1) is renumbered as paragraph (a) and amended to include the title of the Test Program. [cir] Paragraph (2), which addressed the nonapplicability of liquidated damages, is deleted in its entirety. [cir] Paragraph (b) is added to provide the current requirements for participation in the Test Program. These requirements are expressly stated in 15 U.S.C. 637 note, as amended by section 821 of the NDAA for FY 2015 and section 872 of the NDAA for FY 2016. To participate in the Test Program, the contractor must have furnished to DoD, during the immediately preceding fiscal year under at least three contracts, supplies, services, or construction in the aggregate amount of at least $100 million. [cir] Paragraph (c) is added to describe the establishment and use of comprehensive subcontracting plans. [cir] Paragraph (d) is added to provide the process to determine the need to assess liquidated damages for failure to make a good faith effort to comply with the comprehensive subcontracting plan. Paragraph (e) is added to describe the calculation and application of liquidated damages. This rule sets forth the following methodology for assessing liquidated damages: The participant contractor shall be subject to the payment of liquidated damages if, after allowing the contractor [[Page 65607]] an opportunity to demonstrate that it has made a good faith effort to comply with its comprehensive subcontracting plan, the contracting officer makes a final decision that the contractor failed to make a good faith effort to comply with its plan. The amount of liquidated damages owed to the Government shall be the amount of anticipated damages sustained by the Government, including but not limited to additional expenses of administration, reporting, and contract monitoring. [cir] Paragraph (3) is renumbered as paragraph (f) and amended to revise the expiration date for the Test Program from December 31, 2014, to December 31, 2017. Section 219.708, Contract Clauses, is amended as follows: [cir] Paragraph (b)(1)(B) guidance on use of clause 252.219-7004 is updated and aligned with the revised flowdown instructions in paragraph (g) of the clause. A correction is made to the Code of Federal Regulations to remove the phrase ``and FAR 52.219-9, Small Business Subcontracting Plan(DoD Contracts),''. Paragraph (b)(1)(B)(2)(ii) is removed as the information is now contained at FAR 19.708(b)(1)(iii). [cir] Paragraph (b)(2), is amended to instruct contracting officers to use the clause at 252.219-7004, Small Business Subcontracting Plan (Test Program), in lieu of FAR 52.219-16, Liquidated Damages-- Subcontracting Plan. D. Subpart 242.15, Contractor Performance Information Section 242.1502 is added to require that past performance evaluations include an assessment of the contractor's performance against, and efforts to achieve, the goals in its comprehensive subcontracting plan. E. Subpart 252.2, Text of Provisions and Clauses Clause 252.219-7003, Small Business Subcontracting Plan (DoD Contracts), basic clause and its Alternate I, are amended to advise that contractors must insert (i.e., ``flow down'') the clause at 252.219-7004, Small Business Subcontracting Plan (Test Program), to subcontractors who participate in the Test Program. Clause 252.219-7004, Small Business Subcontracting Plan (Test Program), is amended to incorporate new requirements stemming from section 821 of the NDAA for FY 2015. [cir] Paragraph (a) provides definitions for additional terms used in connection with the Test Program. [cir] Paragraph (c) is amended to advise participant contractors of the requirements for participation in the Test Program. [cir] Paragraph (d) is amended to include the reporting requirements for contractors with comprehensive subcontracting plans. The reports must present the data by North American Industry Classification System code, by major defense acquisition program, by contract (for certain contracts with a value exceeding $100,000,000), and by military department. [cir] Paragraph (f) is added to address liquidated damages under a comprehensive subcontracting plan. [cir] Paragraph (g) flowdown instructions are clarified and updated. III. Applicability to Contracts at or Below the Simplified Acquisition Threshold and for Commercial Items, Including Commercially Available Off-the-Shelf Items This rule proposes to amend the clauses at DFARS 252.219-7003, Small Business Subcontracting Plan (DoD Contracts), and 252.219-7004, Small Business Subcontracting Plan (Test Program), in order to implement section 821 of the NDAA for FY 2015. The requirements of section 821 were enacted to promote utilization of small businesses and to determine the success of the Test Program at reducing administrative burdens while enhancing subcontracting opportunities for small businesses. Section 821 advances the interests of small business subcontractors by encouraging test program participants to comply with their comprehensive subcontracting plans. A. Contracts at or Below the Simplified Acquisition Threshold 41 U.S.C. 1905 governs the applicability of laws to contracts or subcontracts in amounts not greater than the simplified acquisition threshold (SAT). It is intended to limit the applicability of laws to such contracts or subcontracts. 41 U.S.C. 1905 provides that if a provision of law contains criminal or civil penalties, or if the FAR Council makes a written determination that it is not in the best interest of the Federal Government to exempt contracts or subcontracts at or below the SAT, the law will apply to them. The Director, Defense Procurement and Acquisition Policy (DPAP), is the appropriate authority to make comparable determinations for regulations to be published in the DFARS, which is part of the FAR system of regulations. B. Contracts for the Acquisition of Commercial Items, Including Commercially Available Off the Shelf Items 41 U.S.C. 1906 governs the applicability of laws to contracts for the acquisition of commercial items, and is intended to limit the applicability of laws to contracts for the acquisition of commercial items. 41 U.S.C. 1906 provides that if a provision of law contains criminal or civil penalties, or if the FAR Council makes a written determination that it is not in the best interest of the Federal Government to exempt commercial item contracts, the provision of law will apply to contracts for the acquisition of commercial items. Likewise, 41 U.S.C. 1907 governs the applicability of laws to commercially available off-the-shelf (COTS) items, with the Administrator for Federal Procurement Policy the decision authority to determine that it is in the best interest of the Government to apply a provision of law to acquisitions of COTS items in the FAR. The Director, DPAP, is the appropriate authority to make comparable determinations for regulations to be published in the DFARS, which is part of the FAR system of regulations. C. Applicability Determination This proposed rule does not apply the requirements of section 821 of the NDAA for FY 2015 to contracts at or below the SAT, but does apply the requirements of section 821 to contracts for the acquisition of commercial items, including COTS items, as defined at FAR 2.101. The prescriptions for these clauses currently require their use in solicitations and contracts for commercial items, including COTS items. This rule merely revises these clauses to implement the new requirements of section 821; consequently, exclusion of acquisitions of commercial and COTS items from these requirements would create confusion among contractors and the contracting workforce and would result in fewer subcontracting opportunities for small businesses. By applying the requirements of section 821 to acquisitions of commercial items, the burden on contractors is no greater than the burden on contractors who have other types of subcontracting plans. DoD will make the final determination with regard to application to commercial items after receipt and analysis of public comments. [[Page 65608]] IV. Executive Orders 12866 and 13563 Executive Orders (E.O.s) 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). E.O. 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 E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804. V. Regulatory Flexibility Act DoD does not expect this proposed 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 small entities do not participate in the Test Program. However, an initial regulatory flexibility analysis has been performed and is summarized as follows: DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement section 821 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015 (Pub. L. 113-291) and section 872 of the NDAA for FY 2016 (Pub. L. 114-92). Section 821 of the NDAA for FY 2015 provides several changes to the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans (Test Program), including new reporting and eligibility requirements, an extension of the Test Program, and authority to assess liquidated damages. Section 872 of the NDAA for FY 2016 removes one of the eligibility requirements. The objectives of this proposed rule are to collect data to assist in assessing the successes or shortcomings of the Test Program and to provide the means to hold Test Program participants accountable for failure to make a good faith effort to comply with their comprehensive subcontracting plans. The authorizing legislation is section 821 of the NDAA for FY 2015 and section 872 of the NDAA for FY 2016. The rule will not apply to small entities. The rule, however, may have an indirect positive economic impact on small entities, because the rule encourages Test Program participants to make a good faith effort to comply with their comprehensive subcontracting plans. The rule does not impose any reporting or recordkeeping requirements on small entities. There are new semiannual reporting requirements for Test Program participants who are, as a matter of eligibility for the program, other than small businesses. The rule does not duplicate, overlap, or conflict with any other Federal rules. There are no known, significant, alternative approaches to the rule that would meet the requirements of the applicable statutes. DoD invites comments from small business concerns 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 2015-D013), in correspondence. VI. Paperwork Reduction Act The rule does not contain 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), because the rule does not impose a collection of information on ten or more members of the public. List of Subjects in 48 CFR Parts 211, 215, 219, 242, and 252. Government procurement. Jennifer L. Hawes, Editor, Defense Acquisition Regulations System. Therefore, 48 CFR parts 211, 215, 219, 242, and 252 are proposed to be amended as follows: 0 1. The authority citation for parts 211, 215, 219, 242, and 252 continues to read as follows: Authority: 41 U.S.C. 1303 and 48 CFR chapter 1. PART 211--DESCRIBING AGENCY NEEDS 0 2. Add section 211.500 to read as follows: 211.500 Scope. This subpart and FAR subpart 11.5 do not apply to liquidated damages for comprehensive subcontracting plans under the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans. See 219.702-70 for coverage of liquidated damages for comprehensive subcontracting plans. PART 215--CONTRACTING BY NEGOTIATION 0 3. Amend section 215.305(a)(2) by-- 0 a. Designating the text as paragraph (a)(2)(A); and 0 b. Adding paragraph (a)(2)(B). The addition reads as follows: 215.305 Proposal evaluation. (a)(2) * * * (B) Contracting officers shall consider an offeror's failure to make a good faith effort to comply with its comprehensive subcontracting plan under the Test Program described at 219.702-70 as part of the evaluation of the past performance. PART 219--SMALL BUSINESS PROGRAMS 219.702 [Redesignated as 219.702-70] 0 4. Redesignate section 219.702 as 219.702-70; and revise it to read as follows: 219.702-70 Statutory requirements for the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans. (a) In accordance with 15 U.S.C. 637 note, DoD has established a test program to determine whether comprehensive subcontracting plans on a corporate, division, or plant-wide basis will reduce administrative burdens while enhancing subcontracting opportunities for small and small disadvantaged business concerns. This program is referred to as the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans (Test Program). (b) Eligibility requirements. To become and remain eligible to participate in the Test Program, a business concern is required to have furnished supplies or services (including construction) under at least three DoD contracts during the preceding fiscal year, having an aggregate value of at least $100 million. (c) Comprehensive subcontracting plans. (1) The Defense Contract Management Agency will designate the contracting officer who shall negotiate and approve comprehensive subcontracting plans with eligible participants on an annual basis. (2) Test Program participants use their comprehensive subcontracting plans, in lieu of individual subcontracting plans, when performing any DoD contract or subcontract that requires a subcontracting plan. (d) Assessment. The contracting officer designated to manage the comprehensive subcontracting plan shall conduct a compliance review during the fiscal year after the close of [[Page 65609]] the fiscal year for which the plan is applicable. The contracting officer shall compare the approved percentage or dollar goals to the total, actual subcontracting dollars covered by the comprehensive subcontracting plan. (1) If the contractor has failed to meet its approved subcontracting goal(s), the contracting officer shall give the contractor written notice specifying the failure, advising of the potential for assessment of liquidated damages, permitting the contractor to demonstrate what good faith efforts have been made, and providing a period of 15 working days (or longer period at the contracting officer's discretion) within which to respond. The contracting officer may take the contractor's failure to respond to the notice as an admission that no valid explanation exists. (2) The contracting officer shall review all available information to determine whether the contractor has failed to make a good faith effort to comply with the plan. (3) If, after consideration of all relevant information, the contracting officer determines that the contractor failed to make a good faith effort to comply with the comprehensive subcontracting plan, the contracting officer shall issue a final decision. The contracting officer's final decision shall include the right of the contractor to appeal under the Disputes clause. The contracting officer shall distribute a copy of the final decision to all cognizant contracting officers for the contracts covered under the plan. (e) Liquidated damages. The amount of liquidated damages shall be the amount of anticipated damages sustained by the Government, including but not limited to additional expenses of administration, reporting, and contract monitoring, and shall be identified in the comprehensive subcontracting plan. Liquidated damages shall be in addition to any other remedies the Government may have. (f) Expiration date. The Test Program expires on December 31, 2017. 0 5. Amend section 219.708 by-- 0 a. Revising paragraph (b)(1)(B); 0 b. Revising paragraph (b)(2); and 0 c. Removing from paragraph (c)(1) ``test program described in 219.702'' and adding ``Test Program described in 219.702-70'' in its place. The revisions read as follows: 219.708 Contract clauses. (b)(1) * * * (B) In contracts with contractors that have comprehensive subcontracting plans approved under the Test Program described in 219.702-70, including contracts using FAR part 12 procedures for the acquisition of commercial items, use the clause at 252.219-7004, Small Business Subcontracting Plan (Test Program), instead of the clauses at 252.219-7003, Small Business Subcontracting Plan (DoD Contracts), FAR 52.219-9, Small Business Subcontracting Plan, and FAR 52.219-16, Liquidated Damages--Subcontracting Plan. (2) In contracts with contractors that have comprehensive subcontracting plans approved under the Test Program described in 219.702-70, do not use the clause at FAR 52.219-16, Liquidated Damages--Subcontracting Plan. * * * * * PART 242--CONTRACT ADMINISTRATION AND AUDIT SERVICES 0 6. Add subpart 242.15, consisting of 242.1502, to read as follows: Subpart 242.15--Contractor Performance Information 242.1502 Policy. (g) Past performance evaluations in the Contractor Performance Assessment Reporting System shall include an assessment of the contractor's performance against, and efforts to achieve, the goals identified in its comprehensive small business subcontracting plan when the contract contains the clause at 252.219-7004, Small Business Subcontracting Plan (Test Program). PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES 0 7. Amend section 252.219-7003 by-- 0 a. In the basic clause-- 0 i. Removing the clause date of ``(MAR 2016)'' and adding ``(DATE)'' in its place; 0 ii. Adding paragraph (g); and 0 b. In Alternate I-- 0 i. Removing the clause date of ``(MAR 2016)'' and adding ``(DATE)'' in its place; and 0 ii. Adding paragraph (g). The additions read as follows. 252.219-7003 Small Business Subcontracting Plan (DoD Contracts). * * * * * (g) Include the clause at 252.219-7004, Small Business Subcontracting Plan (Test Program), in subcontracts with subcontractors that participate in the Test Program described in DFARS 219.702-70, where the subcontract is expected to exceed $700,000 ($1.5 million for construction of any public facility) and to have further subcontracting opportunities. * * * * * Alternate I. * * * * * * * * (g) Include the clause at 252.219-7004, Small Business Subcontracting Plan (Test Program), in subcontracts with subcontractors that participate in the Test Program described in DFARS 219.702-70, where the subcontract is expected to exceed $700,000 ($1.5 million for construction of any public facility) and to have further subcontracting opportunities. * * * * * 0 8. Revise section 252.219-7004 to read as follows: 252.219-7004 Small business subcontracting plan (Test Program). As prescribed in 219.708(b)(1)(B), use the following clause: Small Business Subcontracting Plan (Test Program) (Date) (a) Definitions. As used in this clause-- Covered small business concern means a small business concern, veteran-owned small business concern, service-disabled veteran-owned small business concern, HUBZone small business concern, women-owned small business concern, or small disadvantaged business concern as these terms are defined in FAR 2.101. Electronic Subcontracting Reporting System (eSRS) means the Governmentwide, electronic, Web-based system for small business subcontracting program reporting. The eSRS is located at http://www.esrs.gov. Failure to make a good faith effort to comply with a comprehensive subcontracting plan means a willful or intentional failure to perform in accordance with the requirements of the Contractor's approved comprehensive subcontracting plan or willful or intentional action to frustrate the plan. Subcontract means any agreement (other than one involving an employer-employee relationship) entered into by a Federal Government prime Contractor or subcontractor calling for supplies or services required for performance of the contract or subcontract. (b) The Contractor's comprehensive small business subcontracting plan and its successors, which are authorized by and approved under the Test Program of 15 U.S.C. 637 note, as amended, shall be included in and made a part of this contract. Upon expulsion from the Test Program or expiration of the Test Program, the Contractor shall negotiate an individual subcontracting plan for all future contracts that meet the requirements of 15 U.S.C. 637(d). (c) Eligibility requirements. To become and remain eligible to participate in the Test Program, a business concern is required to have furnished supplies or services (including construction) under at least three DoD contracts during the preceding fiscal year, having an aggregate value of at least $100 million. [[Page 65610]] (d) Reports. (1) The Contractor shall report semiannually for the six-month periods ending March 31 and September 30, the information in paragraphs (d)(1)(i) through (v) of this section within 30 days after the end of the reporting period. Submit the report at https://www.esrs.gov. (i) A list of contracts covered under its comprehensive small business subcontracting plan, to include the Commercial and Government Entity (CAGE) code and Data Universal Numbering System (DUNS) number. (ii) The amount of first-tier subcontract dollars awarded during the six-month period covered by the report to covered small business concerns, with the information set forth separately by-- (A) North American Industrial Classification System (NAICS) code; (B) Major defense acquisition program, as defined in 10 U.S.C. 2430(a); (C) Contract number, if the contract is for maintenance, overhaul, repair, servicing, rehabilitation, salvage, modernization, or modification of supplies, systems, or equipment, and the total value of the contract, including options, exceeds $100 million; and (D) Military department. (iii) Total number of subcontracts active under the Test Program that would have otherwise required a subcontracting plan. (iv) Costs incurred in negotiating, complying with, and reporting on its comprehensive subcontracting plan. (v) Costs avoided through the use of a comprehensive subcontracting plan. (2) The Contractor shall-- (i) Ensure that subcontractors with subcontracting plans agree to submit an Individual Subcontract Report (ISR) and/or Summary Subcontract Report (SSR) using the Electronic Subcontracting Reporting System (eSRS). (ii) Provide its contract number, its DUNS number, and the email address of the Contractor's official responsible for acknowledging or rejecting the ISR to all first-tier subcontractors, who will be required to submit ISRs, so they can enter this information into the eSRS when submitting their reports. (iii) Require that each subcontractor with a subcontracting plan provide the prime contract number, its own DUNS number, and the email address of the subcontractor's official responsible for acknowledging or rejecting the ISRs to its subcontractors with subcontracting plans who will be required to submit ISRs. (iv) Acknowledge receipt or reject all ISRs submitted by its subcontractors using eSRS. (3) The Contractor shall submit SSRs using eSRS at http://www.esrs.gov. The reports shall provide information on subcontract awards to small business concerns, veteran-owned small business concerns, service-disabled veteran-owned small business concerns, HUBZone small business concerns, small disadvantaged business concerns, and women-owned small business concerns. Purchases from a corporation, company, or subdivision that is an affiliate of the prime Contractor or subcontractor are not included in these reports. Subcontract award data reported by prime contractors and subcontractors shall be limited to awards made to their immediate next-tier subcontractors. Credit cannot be taken for awards made to lower-tier subcontractors unless the Contractor or subcontractor has been designated to receive a small business or small disadvantaged business credit from a member firm of the Alaska Native-- Corporations or an Indian tribe. Only subcontracts involving performance in the U.S. or its outlying areas should be included in these reports. (i) This report may be submitted on a corporate, company, or subdivision (e.g., plant or division operating as a separate profit center) basis, as negotiated in the comprehensive subcontracting plan with the Defense Contract Management Agency. (ii) This report encompasses all subcontracting under prime contracts and subcontracts with the Department of Defense, regardless of the dollar value of the subcontracts, and is based on the negotiated comprehensive subcontracting plan. (iii) The report shall be submitted semi-annually for the six months ending March 31 and the twelve months ending September 30. Reports are due 30 days after the close of each reporting period. (iv) The authority to acknowledge receipt or reject the SSR resides with the Defense Contract Management Agency. (e) The failure of the Contractor or subcontractor to comply in good faith with the clause of this contract entitled ``Utilization of Small Business Concerns,'' or an approved plan required by this clause, shall be a material breach of the contract. (f) Liquidated damages. The Contracting Officer designated to manage the comprehensive subcontracting plan will exercise the functions of the Contracting Officer, as identified in paragraphs (f)(1) through (4), on behalf of all DoD departments and agencies that awarded contracts covered by the Contractor's comprehensive subcontracting plan. (1) To determine the need for liquidated damages, the Contracting Officer will conduct a compliance review during the fiscal year after the close of the fiscal year for which the plan is applicable. The Contracting Officer will compare the approved percentage or dollar goals to the total, actual subcontracting dollars covered by the plan. (2) If the Contractor has failed to meet its approved subcontracting goal(s), the Contracting Officer will provide the Contractor written notice specifying the failure, advising of the potential for assessment of liquidated damages, and permitting the Contractor to demonstrate what good faith efforts have been made. The Contracting Officer may take the Contractor's failure to respond to the notice within 15 working days (or longer period at the Contracting Officer's discretion) as an admission that no valid explanation exists. (3) If, after consideration of all relevant information, the Contracting Officer determines that the Contractor failed to make a good faith effort to comply with the comprehensive subcontracting plan, the Contracting Officer will issue a final decision to the Contractor to that effect and require the Contractor to pay liquidated damages to the Government in the amount identified in the comprehensive subcontracting plan. (4) The Contractor shall have the right of appeal under the clause in this contract entitled ``Disputes'' from any final decision of the Contracting Officer. (g) The Contractor shall include in subcontracts that offer subcontracting opportunities, are expected to exceed $700,000 ($1.5 million for construction of any public facility), and are required to include the clause at 52.219-8, Utilization of Small Business Concerns-- (1) FAR 52.219-9, Small Business Subcontracting Plan, and 252.219-7003 Small Business Subcontracting Plan (DoD Contracts)-- Basic; (2) 52.219-9, Small Business Subcontracting Plan, with its Alternate III, and 252.219-7003, Small Business Subcontracting Plan (DoD Contracts)--Alternate I, to allow for submission of SF 294s in lieu of ISRs; or (3) 252.219-7004, Small Business Subcontracting Plan (Test Program), in subcontracts with subcontractors that participate in the Test Program described in DFARS 219.702-70. (End of clause) [FR Doc. 2016-22573 Filed 9-22-16; 8:45 am] BILLING CODE 5001-06-P
![65606 Federal Register / Vol. 81, No. 185 / Friday, September 23, 2016 / Proposed Rules
§ 90.267, except as provided in www.regulations.gov, including any II. Discussion and Analysis
§ 90.219(d)(3)(ii): personal information provided. To This rule proposes to amend DFARS
* * * * * confirm receipt of your comment(s), subparts 211.5, 215.3, 219.7, 242.15, and
[FR Doc. 2016–21638 Filed 9–22–16; 8:45 am]
please check www.regulations.gov, 252.2 as summarized in the following
approximately two to three days after paragraphs:
BILLING CODE 6712–01–P
submission to verify posting (except
allow 30 days for posting of comments A. Subpart 211.5, Liquidated Damages
submitted by mail). Section 211.500 is added to clarify
DEPARTMENT OF DEFENSE that subpart 211.5 and Federal
FOR FURTHER INFORMATION CONTACT: Ms.
Defense Acquisition Regulations Jennifer Johnson, telephone 571–372– Acquisition Regulation (FAR) subpart
System 6100. 11.5 do not apply to liquidated damages
for comprehensive subcontracting plans
SUPPLEMENTARY INFORMATION:
48 CFR Parts 211, 215, 219, 242, and under the Test Program, and to include
252 I. Background a reference to DFARS 219.702–70.
DoD is proposing to revise the DFARS B. Subpart 215.3, Source Selection
[Docket DARS–2016–0027]
to implement section 821 of the
Section 215.305 is amended to require
RIN 0750–AJ00 National Defense Authorization Act
contracting officers to consider an
(NDAA) for Fiscal Year (FY) 2015 and
Defense Federal Acquisition offeror’s failure to make a good faith
section 872 of the NDAA for FY 2016,
Regulation Supplement: Temporary effort to comply with its comprehensive
both of which revise the Test Program
Extension of Test Program for subcontracting plan as part of the past
for Negotiation of Comprehensive Small
Comprehensive Small Business performance evaluation.
Business Subcontracting Plans. Section
Subcontracting Plans (DFARS Case 821 of the NDAA for FY 2015 provides C. Subpart 219.7, The Small Business
2015–D013) for contractors participating in the Test Subcontracting Program
Program to report, on a semiannual • Section 219.702–70, Statutory
AGENCY: Defense Acquisition
basis, the amount of first-tier requirements for the Test Program for
Regulations System, Department of
subcontract dollars awarded; the total Negotiation of Comprehensive Small
Defense (DoD).
number of subcontracts active under the Business Subcontracting Plans,
ACTION: Proposed rule. Test Program that would have otherwise renumbers section 219.702 and
SUMMARY: DoD is proposing to amend required a subcontracting plan under 15 incorporates new requirements
the Defense Federal Acquisition U.S.C. 637(d); costs incurred in stemming from section 821 of the NDAA
Regulation Supplement (DFARS) to negotiating, complying with, and for FY 2015.
implement a section of the National reporting on comprehensive Æ Paragraph (1) is renumbered as
Defense Authorization Act for Fiscal subcontracting plans; and costs avoided paragraph (a) and amended to include
Year 2015 and a section of the National by adoption of a comprehensive the title of the Test Program.
Defense Authorization Act for Fiscal subcontracting plan. This information is Æ Paragraph (2), which addressed the
Year 2016, both of which provide expected to assist in determining if Test nonapplicability of liquidated damages,
revisions to the Test Program for Program participants have achieved cost is deleted in its entirety.
Negotiation of Comprehensive Small savings while enhancing opportunities Æ Paragraph (b) is added to provide
Business Subcontracting Plans. for small businesses. the current requirements for
In addition, section 821— participation in the Test Program. These
DATES: Comments on the proposed rule • Repeals section 402 of Public Law requirements are expressly stated in 15
should be submitted in writing to the 101–574, which suspended liquidated U.S.C. 637 note, as amended by section
address shown below on or before damages under comprehensive small 821 of the NDAA for FY 2015 and
November 22, 2016, to be considered in business subcontracting plans; section 872 of the NDAA for FY 2016.
the formation of a final rule. • Requires consideration, as part of To participate in the Test Program, the
ADDRESSES: Submit comments the past performance evaluation of an contractor must have furnished to DoD,
identified by DFARS Case 2015–D013, offeror, of any failure to make a good during the immediately preceding fiscal
using any of the following methods: faith effort to comply with its year under at least three contracts,
Æ Federal eRulemaking Portal: http:// comprehensive subcontracting plan; supplies, services, or construction in the
www.regulations.gov. Search for • Extends the Test Program through aggregate amount of at least $100
‘‘DFARS Case 2015–D013.’’ Select December 31, 2017; million.
‘‘Comment Now’’ and follow the • Increases the threshold for Æ Paragraph (c) is added to describe
instructions provided to submit a participation in the Test Program from the establishment and use of
comment. Please include ‘‘DFARS Case $5,000,000 to $100,000,000; and comprehensive subcontracting plans.
2015–D013’’ on any attached • Prohibits negotiation of Æ Paragraph (d) is added to provide
documents. comprehensive subcontracting plans the process to determine the need to
Æ Email: osd.dfars@mail.mil. Include with contractors who failed to meet the assess liquidated damages for failure to
DFARS Case 2015–D013 in the subject subcontracting goals of their make a good faith effort to comply with
line of the message. comprehensive subcontracting plan for the comprehensive subcontracting plan.
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Æ Fax: 571–372–6094. the prior fiscal year. Paragraph (e) is added to describe the
Æ Mail: Defense Acquisition Section 872 of the NDAA for FY 2016 calculation and application of
Regulations System, Attn: Ms. Jennifer removes the prohibition on negotiation liquidated damages. This rule sets forth
Johnson, OUSD (AT&L) DPAP/DARS, of comprehensive subcontracting plans the following methodology for assessing
Room 3B941, 3060 Defense Pentagon, with contractors who failed to meet the liquidated damages:
Washington, DC 20301–3060. subcontracting goals of their • The participant contractor shall be
Comments received generally will be comprehensive subcontracting plan for subject to the payment of liquidated
posted without change to http:// the prior fiscal year. damages if, after allowing the contractor
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![65608 Federal Register / Vol. 81, No. 185 / Friday, September 23, 2016 / Proposed Rules
IV. Executive Orders 12866 and 13563 their comprehensive subcontracting PART 215—CONTRACTING BY
Executive Orders (E.O.s) 12866 and plans. NEGOTIATION
13563 direct agencies to assess all costs The rule does not impose any
reporting or recordkeeping requirements ■ 3. Amend section 215.305(a)(2) by—
and benefits of available regulatory ■ a. Designating the text as paragraph
alternatives and, if regulation is on small entities. There are new
semiannual reporting requirements for (a)(2)(A); and
necessary, to select regulatory ■ b. Adding paragraph (a)(2)(B).
approaches that maximize net benefits Test Program participants who are, as a
The addition reads as follows:
(including potential economic, matter of eligibility for the program,
environmental, public health and safety other than small businesses. 215.305 Proposal evaluation.
effects, distributive impacts, and The rule does not duplicate, overlap, (a)(2) * * *
equity). E.O. 13563 emphasizes the or conflict with any other Federal rules. (B) Contracting officers shall consider
importance of quantifying both costs There are no known, significant, an offeror’s failure to make a good faith
and benefits, of reducing costs, of alternative approaches to the rule that effort to comply with its comprehensive
harmonizing rules, and of promoting would meet the requirements of the subcontracting plan under the Test
flexibility. This is not a significant applicable statutes. Program described at 219.702–70 as part
regulatory action and, therefore, was not DoD invites comments from small of the evaluation of the past
subject to review under section 6(b) of business concerns and other interested performance.
E.O. 12866, Regulatory Planning and parties on the expected impact of this
Review, dated September 30, 1993. This rule on small entities. PART 219—SMALL BUSINESS
rule is not a major rule under 5 U.S.C. DoD will also consider comments PROGRAMS
804. from small entities concerning the
existing regulations in subparts affected 219.702 [Redesignated as 219.702–70]
V. Regulatory Flexibility Act by this rule in accordance with 5 U.S.C. ■ 4. Redesignate section 219.702 as
DoD does not expect this proposed 610. Interested parties must submit such 219.702–70; and revise it to read as
rule to have a significant economic comments separately and should cite 5 follows:
impact on a substantial number of small U.S.C. 610 (DFARS Case 2015–D013), in
219.702–70 Statutory requirements for the
entities within the meaning of the correspondence. Test Program for Negotiation of
Regulatory Flexibility Act, 5 U.S.C. 601, VI. Paperwork Reduction Act Comprehensive Small Business
et seq., because small entities do not Subcontracting Plans.
participate in the Test Program. The rule does not contain any (a) In accordance with 15 U.S.C. 637
However, an initial regulatory flexibility information collection requirements that note, DoD has established a test program
analysis has been performed and is require the approval of the Office of to determine whether comprehensive
summarized as follows: Management and Budget under the subcontracting plans on a corporate,
DoD is proposing to amend the Paperwork Reduction Act (44 U.S.C. division, or plant-wide basis will reduce
Defense Federal Acquisition Regulation chapter 35), because the rule does not administrative burdens while enhancing
Supplement (DFARS) to implement impose a collection of information on subcontracting opportunities for small
section 821 of the National Defense ten or more members of the public. and small disadvantaged business
Authorization Act (NDAA) for Fiscal List of Subjects in 48 CFR Parts 211, concerns. This program is referred to as
Year (FY) 2015 (Pub. L. 113–291) and 215, 219, 242, and 252. the Test Program for Negotiation of
section 872 of the NDAA for FY 2016 Comprehensive Small Business
(Pub. L. 114–92). Section 821 of the Government procurement.
Subcontracting Plans (Test Program).
NDAA for FY 2015 provides several Jennifer L. Hawes, (b) Eligibility requirements. To
changes to the Test Program for Editor, Defense Acquisition Regulations become and remain eligible to
Negotiation of Comprehensive Small System. participate in the Test Program, a
Business Subcontracting Plans (Test Therefore, 48 CFR parts 211, 215, 219, business concern is required to have
Program), including new reporting and 242, and 252 are proposed to be furnished supplies or services
eligibility requirements, an extension of amended as follows: (including construction) under at least
the Test Program, and authority to three DoD contracts during the
■ 1. The authority citation for parts 211,
assess liquidated damages. Section 872 preceding fiscal year, having an
of the NDAA for FY 2016 removes one 215, 219, 242, and 252 continues to read
aggregate value of at least $100 million.
of the eligibility requirements. as follows:
(c) Comprehensive subcontracting
The objectives of this proposed rule Authority: 41 U.S.C. 1303 and 48 CFR plans. (1) The Defense Contract
are to collect data to assist in assessing chapter 1. Management Agency will designate the
the successes or shortcomings of the contracting officer who shall negotiate
Test Program and to provide the means PART 211—DESCRIBING AGENCY
and approve comprehensive
to hold Test Program participants NEEDS
subcontracting plans with eligible
accountable for failure to make a good ■ 2. Add section 211.500 to read as participants on an annual basis.
faith effort to comply with their follows: (2) Test Program participants use their
comprehensive subcontracting plans. comprehensive subcontracting plans, in
The authorizing legislation is section 211.500 Scope. lieu of individual subcontracting plans,
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821 of the NDAA for FY 2015 and This subpart and FAR subpart 11.5 do when performing any DoD contract or
section 872 of the NDAA for FY 2016. not apply to liquidated damages for subcontract that requires a
The rule will not apply to small comprehensive subcontracting plans subcontracting plan.
entities. The rule, however, may have an under the Test Program for Negotiation (d) Assessment. The contracting
indirect positive economic impact on of Comprehensive Small Business officer designated to manage the
small entities, because the rule Subcontracting Plans. See 219.702–70 comprehensive subcontracting plan
encourages Test Program participants to for coverage of liquidated damages for shall conduct a compliance review
make a good faith effort to comply with comprehensive subcontracting plans. during the fiscal year after the close of
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![65610 Federal Register / Vol. 81, No. 185 / Friday, September 23, 2016 / Proposed Rules
(d) Reports. (1) The Contractor shall report reported by prime contractors and Contractor to pay liquidated damages to the
semiannually for the six-month periods subcontractors shall be limited to awards Government in the amount identified in the
ending March 31 and September 30, the made to their immediate next-tier comprehensive subcontracting plan.
information in paragraphs (d)(1)(i) through subcontractors. Credit cannot be taken for (4) The Contractor shall have the right of
(v) of this section within 30 days after the awards made to lower-tier subcontractors appeal under the clause in this contract
end of the reporting period. Submit the unless the Contractor or subcontractor has entitled ‘‘Disputes’’ from any final decision
report at https://www.esrs.gov. been designated to receive a small business of the Contracting Officer.
(i) A list of contracts covered under its or small disadvantaged business credit from (g) The Contractor shall include in
comprehensive small business a member firm of the Alaska Native— subcontracts that offer subcontracting
subcontracting plan, to include the Corporations or an Indian tribe. Only opportunities, are expected to exceed
Commercial and Government Entity (CAGE) subcontracts involving performance in the $700,000 ($1.5 million for construction of
code and Data Universal Numbering System U.S. or its outlying areas should be included any public facility), and are required to
(DUNS) number. in these reports. include the clause at 52.219–8, Utilization of
(ii) The amount of first-tier subcontract (i) This report may be submitted on a Small Business Concerns—
dollars awarded during the six-month period corporate, company, or subdivision (e.g., (1) FAR 52.219–9, Small Business
covered by the report to covered small plant or division operating as a separate Subcontracting Plan, and 252.219–7003
business concerns, with the information set profit center) basis, as negotiated in the Small Business Subcontracting Plan (DoD
forth separately by— comprehensive subcontracting plan with the Contracts)—Basic;
(A) North American Industrial Defense Contract Management Agency. (2) 52.219–9, Small Business
Classification System (NAICS) code; (ii) This report encompasses all Subcontracting Plan, with its Alternate III,
(B) Major defense acquisition program, as subcontracting under prime contracts and and 252.219–7003, Small Business
defined in 10 U.S.C. 2430(a); subcontracts with the Department of Defense, Subcontracting Plan (DoD Contracts)—
(C) Contract number, if the contract is for regardless of the dollar value of the Alternate I, to allow for submission of SF
maintenance, overhaul, repair, servicing, subcontracts, and is based on the negotiated 294s in lieu of ISRs; or
rehabilitation, salvage, modernization, or comprehensive subcontracting plan. (3) 252.219–7004, Small Business
modification of supplies, systems, or (iii) The report shall be submitted semi- Subcontracting Plan (Test Program), in
equipment, and the total value of the annually for the six months ending March 31 subcontracts with subcontractors that
contract, including options, exceeds $100 and the twelve months ending September 30. participate in the Test Program described in
million; and Reports are due 30 days after the close of DFARS 219.702–70.
(D) Military department. each reporting period.
(End of clause)
(iii) Total number of subcontracts active (iv) The authority to acknowledge receipt
under the Test Program that would have or reject the SSR resides with the Defense [FR Doc. 2016–22573 Filed 9–22–16; 8:45 am]
otherwise required a subcontracting plan. Contract Management Agency. BILLING CODE 5001–06–P
(iv) Costs incurred in negotiating, (e) The failure of the Contractor or
complying with, and reporting on its subcontractor to comply in good faith with
comprehensive subcontracting plan. the clause of this contract entitled DEPARTMENT OF DEFENSE
(v) Costs avoided through the use of a ‘‘Utilization of Small Business Concerns,’’ or
comprehensive subcontracting plan. an approved plan required by this clause, Defense Acquisition Regulations
(2) The Contractor shall— shall be a material breach of the contract. System
(i) Ensure that subcontractors with (f) Liquidated damages. The Contracting
subcontracting plans agree to submit an Officer designated to manage the
48 CFR Part 219 and Appendix I to
Individual Subcontract Report (ISR) and/or comprehensive subcontracting plan will
Summary Subcontract Report (SSR) using the exercise the functions of the Contracting Chapter 2
Electronic Subcontracting Reporting System Officer, as identified in paragraphs (f)(1) [Docket DARS–2016–0033]
(eSRS). through (4), on behalf of all DoD departments
(ii) Provide its contract number, its DUNS and agencies that awarded contracts covered RIN 0750–AJ05
number, and the email address of the by the Contractor’s comprehensive
Contractor’s official responsible for subcontracting plan. Defense Federal Acquisition
acknowledging or rejecting the ISR to all (1) To determine the need for liquidated Regulation Supplement: Amendment
first-tier subcontractors, who will be required damages, the Contracting Officer will to Mentor-Protégé Program (DFARS
to submit ISRs, so they can enter this conduct a compliance review during the Case 2016–D011)
information into the eSRS when submitting fiscal year after the close of the fiscal year for
their reports. which the plan is applicable. The Contracting AGENCY: Defense Acquisition
(iii) Require that each subcontractor with a Officer will compare the approved Regulations System, Department of
subcontracting plan provide the prime percentage or dollar goals to the total, actual Defense (DoD).
contract number, its own DUNS number, and subcontracting dollars covered by the plan. ACTION: Proposed rule.
the email address of the subcontractor’s (2) If the Contractor has failed to meet its
official responsible for acknowledging or approved subcontracting goal(s), the SUMMARY: DoD is proposing to amend
rejecting the ISRs to its subcontractors with Contracting Officer will provide the the Defense Federal Acquisition
subcontracting plans who will be required to Contractor written notice specifying the Regulation Supplement (DFARS) to
submit ISRs. failure, advising of the potential for implement a section of the National
(iv) Acknowledge receipt or reject all ISRs assessment of liquidated damages, and
permitting the Contractor to demonstrate
Defense Authorization Act for Fiscal
submitted by its subcontractors using eSRS.
(3) The Contractor shall submit SSRs using what good faith efforts have been made. The Year 2016 that provides amendments to
eSRS at http://www.esrs.gov. The reports Contracting Officer may take the Contractor’s the DoD Pilot Mentor-Protégé Program.
shall provide information on subcontract failure to respond to the notice within 15 DATES: Comments on the proposed rule
awards to small business concerns, veteran- working days (or longer period at the should be submitted in writing to the
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owned small business concerns, service- Contracting Officer’s discretion) as an address shown below on or before
disabled veteran-owned small business admission that no valid explanation exists. November 22, 2016, to be considered in
concerns, HUBZone small business concerns, (3) If, after consideration of all relevant the formation of a final rule.
small disadvantaged business concerns, and information, the Contracting Officer
women-owned small business concerns. determines that the Contractor failed to make ADDRESSES: Submit comments
Purchases from a corporation, company, or a good faith effort to comply with the identified by DFARS Case 2016–D011,
subdivision that is an affiliate of the prime comprehensive subcontracting plan, the using any of the following methods:
Contractor or subcontractor are not included Contracting Officer will issue a final decision Æ Federal eRulemaking Portal: http://
in these reports. Subcontract award data to the Contractor to that effect and require the www.regulations.gov. Search for
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Document Created: 2016-09-23 01:43:37
Document Modified: 2016-09-23 01:43:37
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Proposed Rules | |
| Action | Proposed rule. | |
| Dates | Comments on the proposed rule should be submitted in writing to | |
| Contact | Ms. Jennifer Johnson, telephone 571- 372-6100. | |
| FR Citation | 81 FR 65606 | |
| RIN Number | 0750-AJ00 | |
| CFR Citation | 48
CFR
211 48 CFR 215 48 CFR 219 48 CFR 242 48 CFR 252 |
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