81 FR 78012 - Defense Federal Acquisition Regulation Supplement: Pilot Program on Acquisition of Military Purpose Nondevelopmental Items (DFARS Case 2016-D014)

DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System

Federal Register Volume 81, Issue 214 (November 4, 2016)

Page Range		78012-78013
FR Document		2016-26368

DoD is adopting as final, with changes, an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2016 that changes the criteria for the pilot program for acquisition of military purpose nondevelopmental items.

Federal Register, Volume 81 Issue 214 (Friday, November 4, 2016)

[Federal Register Volume 81, Number 214 (Friday, November 4, 2016)]
[Rules and Regulations]
[Pages 78012-78013]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-26368]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 212 and 252

[Docket DARS-2016-0015]
RIN 0750-AI93


Defense Federal Acquisition Regulation Supplement: Pilot Program 
on Acquisition of Military Purpose Nondevelopmental Items (DFARS Case 
2016-D014)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: DoD is adopting as final, with changes, an interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to implement a section of the National Defense Authorization Act for 
Fiscal Year 2016 that changes the criteria for the pilot program for 
acquisition of military purpose nondevelopmental items.

DATES: Effective November 4, 2016.

FOR FURTHER INFORMATION CONTACT: Ms. Carrie Moore, telephone 571-372-
6093.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD published an interim rule in the Federal Register at 80 FR 
42557 on June 30, 2016, to implement section 892 of the National 
Defense Authorization Action (NDAA) for Fiscal Year (FY) 2016 (Pub. L. 
114-92). Section 892 removes the requirements under the pilot program 
for the use of competitive procedures and for awards to be made to 
nontraditional defense contractors. Section 892 also increases the 
threshold for use of the pilot program to contracts up to $100 million. 
Two respondents submitted public comments in response to the interim 
rule.

II. Discussion and Analysis

    DoD reviewed the public comments in the development of the final 
rule. A discussion of the comments received and the changes made to the 
rule as a result of those comments is provided, as follows:

A. Summary of Significant Changes From the Interim Rule

    One change is made in the final rule as a result of a public 
comment. The prescription at DFARS 212.7103 for DFARS provision 
252.212-7002, Pilot Program for Acquisition of Military-Purpose 
Nondevelopmental Items, is revised to clarify its use in solicitations

[[Page 78013]]

when use of the pilot program is planned and the applicability criteria 
are met.

B. Analysis of Public Comments

1. General
    Comment: One respondent recommended rewording the prescription at 
DFARS 212.7103 to clarify proper use of the provision.
    Response: The prescription at DFARS 212.7103 is revised to state, 
``Use the provision at 252.212-7002, Pilot Program for Acquisition of 
Military-Purpose Nondevelopmental Items, in solicitations when use of 
the pilot program is planned and the applicability criteria of 
212.7102-1 are met.''
2. Implementation
    Comment: One respondent suggested revising the text at DFARS 
212.7102-1(d) to capture the removal of the requirement to use 
competitive procedures under the pilot program by adding, ``Each 
contract entered into under the pilot program shall be exempt from the 
requirement for the use of competitive procedures.''
    Response: The respondent's suggestion is outside the scope of the 
authority provided by section 892. The statute removes the requirement 
that each contract under the pilot program be awarded using the 
competitive procedures at 10 U.S.C. chapter 137. Section 892 does not 
provide any further exemptions to the competition requirements outlined 
in the FAR and DFARS. The interim rule accomplishes the goal of section 
892 by removing from the applicability criteria for the pilot program 
at DFARS 212.7102-1 the requirement to award using competitive 
procedures. No additional text is required.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT) and for Commercial Items, Including Commercially 
Available Off-the-Shelf (COTS) Items

    The requirements of section 892 of the NDAA for FY 2016 do not 
apply to contracts at or below the SAT. Additionally, while FAR part 12 
commercial procedures may be used to acquire military purpose 
nondevelopmental items under this pilot program, the rule does not 
apply to the acquisition of commercial items, including COTS items.

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

    A final regulatory flexibility analysis (FRFA) has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
The FRFA is summarized as follows:
    This final rule amends the Defense Federal Acquisition Regulation 
Supplement (DFARS) to implement section 892 of the National Defense 
Authorization Act for Fiscal Year 2016. The objective of the rule is to 
modify the criteria for the pilot program at DFARS 212.71, Pilot 
Program for the Acquisition of Military Purpose Nondevelopmental Items, 
to increase the opportunities for use of the program. The rule removes 
the criteria that contracts must be awarded to ``nontraditional defense 
contractors'' and awards must be made using competitive procedures. The 
rule also increases the dollar threshold for the program to allow use 
on procurements up to $100 million.
    There were no significant issues raised by the public in response 
to the initial regulatory flexibility analysis provided in the interim 
rule.
    The changes to the pilot program will have a positive economic 
impact on small businesses that did not meet the definition of 
``nontraditional defense contractors'' and have developed products that 
could be applied to a military purpose. According to data available in 
the Federal Procurement Data System for FY 2015, 6,514 unique small 
businesses were awarded a DoD contract in excess of the certified cost 
and pricing threshold ($750,000) and therefore did not meet the 
definition of ``nontraditional defense contractor.'' Prior to the 
changes made by this rule these small businesses were not eligible for 
an award under the pilot program. These small businesses will now be 
able to participate in the pilot program if they are developing a 
military purpose nondevelopmental item.
    This rule does not impose any new reporting, recordkeeping, or 
other compliance requirements. No significant alternatives were 
identified during the development of this rule.

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).

List of Subjects in 48 CFR Parts 212 and 252

    Government procurement.

Jennifer L. Hawes,
Editor, Defense Acquisition Regulations System.
    Accordingly, the interim rule amending 48 CFR parts 212 and 252, 
which was published in the Federal Register at 80 FR 42557 on June 30, 
2016, is adopted as a final rule with the following change:

PART 212--ACQUISITION OF COMMERCIAL ITEMS

0
1. The authority citation for part 212 continues to read as follows:

    Authority:  41 U.S.C. 1303 and 48 CFR chapter 1.

0
2. Revise section 212.7103 to read as follows:


212.7103   Solicitation provision.

    Use the provision at 252.212-7002, Pilot Program for Acquisition of 
Military-Purpose Nondevelopmental Items, in solicitations when use of 
the pilot program is planned and the applicability criteria of 
212.7102-1 are met.

[FR Doc. 2016-26368 Filed 11-3-16; 8:45 am]
 BILLING CODE 5001-06-P

78012 Federal Register / Vol. 81, No. 214 / Friday, November 4, 2016 / Rules and Regulations

ACTION: Final rule. V. Executive Orders 12866 and 13563 DEPARTMENT OF DEFENSE
SUMMARY: DoD is issuing a final rule to Executive Orders (E.O.s) 12866 and Defense Acquisition Regulations
amend the Defense Federal Acquisition 13563 direct agencies to assess all costs System
Regulation Supplement (DFARS) to and benefits of available regulatory
remove the acronym for contiguous alternatives and, if regulation is 48 CFR Parts 212 and 252
United States. necessary, to select regulatory
approaches that maximize net benefits [Docket DARS–2016–0015]
DATES: Effective November 4, 2016.
(including potential economic, RIN 0750–AI93
FOR FURTHER INFORMATION CONTACT: Ms. environmental, public health and safety
Julie Hammond, telephone 571–372– effects, distributive impacts, and Defense Federal Acquisition
6174. equity). E.O. 13563 emphasizes the Regulation Supplement: Pilot Program
SUPPLEMENTARY INFORMATION: importance of quantifying both costs on Acquisition of Military Purpose
and benefits, of reducing costs, of Nondevelopmental Items (DFARS Case
I. Background harmonizing rules, and of promoting 2016–D014)
DoD is amending the DFARS to flexibility. This is not a significant
AGENCY: Defense Acquisition
remove the acronym for contiguous regulatory action and, therefore, was not
Regulations System, Department of
United States (CONUS). While the term subject to review under section 6(b) of
Defense (DoD).
‘‘contiguous United States (CONUS)’’ is E.O. 12866, Regulatory Planning and
ACTION: Final rule.
defined in Federal Acquisition Review, dated September 30, 1993. This
Regulation (FAR) 2.101, the acronym is rule is not a major rule under 5 U.S.C. SUMMARY: DoD is adopting as final, with
sometimes misinterpreted as 804. changes, an interim rule amending the
‘‘continental United States.’’ Spelling VI. Regulatory Flexibility Act Defense Federal Acquisition Regulation
out the acronym in the DFARS will Supplement (DFARS) to implement a
eliminate any confusion. The Regulatory Flexibility Act does section of the National Defense
not apply to this rule because this final Authorization Act for Fiscal Year 2016
II. Discussion and Analysis rule does not constitute a significant that changes the criteria for the pilot
DFARS 274.301 is amended to update DFARS revision within the meaning of program for acquisition of military
the reference to transportation guidance FAR 1.501–1, and 41 U.S.C. 1707 does purpose nondevelopmental items.
in DFARS Procedures, Guidance, and not require publication for public DATES: Effective November 4, 2016.
Information and, as a result, remove the comment.
FOR FURTHER INFORMATION CONTACT: Ms.
acronym CONUS. VII. Paperwork Reduction Act Carrie Moore, telephone 571–372–6093.
DFARS 274.301–71 is amended to SUPPLEMENTARY INFORMATION:
spell out ‘‘the contiguous United States’’ The rule does not contain any
in lieu of CONUS. information collection requirements that I. Background
require the approval of the Office of DoD published an interim rule in the
III. Applicability to Contracts at or Management and Budget under the
Below the Simplified Acquisition Federal Register at 80 FR 42557 on June
Paperwork Reduction Act (44 U.S.C. 30, 2016, to implement section 892 of
Threshold (SAT) and for Commercial chapter 35).
Items, Including Commercially the National Defense Authorization
Available Off-the-Shelf (COTS) Items List of Subjects in 48 CFR Part 247 Action (NDAA) for Fiscal Year (FY)
2016 (Pub. L. 114–92). Section 892
This case does not add any new Government procurement. removes the requirements under the
provisions or clauses or impact any pilot program for the use of competitive
existing provisions or clauses. Jennifer L. Hawes,
procedures and for awards to be made
Editor, Defense Acquisition Regulations
IV. Publication of This Final Rule for System. to nontraditional defense contractors.
Public Comment Is Not Required by Section 892 also increases the threshold
Therefore, 48 CFR part 247 is for use of the pilot program to contracts
Statute
amended as follows: up to $100 million. Two respondents
The statute that applies to the submitted public comments in response
publication of the FAR is 41 U.S.C. 1707 PART 247—TRANSPORTATION to the interim rule.
entitled ‘‘Publication of Proposed
Regulations.’’ Paragraph (a)(1) of the ■ 1. The authority citation for 48 CFR II. Discussion and Analysis
statute requires that a procurement part 247 continues to read as follows: DoD reviewed the public comments in
policy, regulation, procedure, or form Authority: 41 U.S.C. 1303 and 48 CFR the development of the final rule. A
(including an amendment or chapter 1. discussion of the comments received
modification thereof) must be published and the changes made to the rule as a
for public comment if it relates to the 247.301 [Amended]
result of those comments is provided, as
expenditure of appropriated funds, and ■ 2. In section 247.301, remove the follows:
has either a significant effect beyond the phrase ‘‘that require shipments to
internal operating procedures of the A. Summary of Significant Changes
destinations outside CONUS’’. From the Interim Rule
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agency issuing the policy, regulation,
procedure, or form, or has a significant 247.301–71 [Amended] One change is made in the final rule
cost or administrative impact on as a result of a public comment. The
contractors or offerors. This final rule is ■ 3. In section 247.301–71, remove prescription at DFARS 212.7103 for
not required to be published for public ‘‘outside CONUS’’ and add ‘‘outside the DFARS provision 252.212–7002, Pilot
comment, because it is just removing contiguous United States’’ in its place. Program for Acquisition of Military-
and spelling out the acronym for [FR Doc. 2016–26367 Filed 11–3–16; 8:45 am] Purpose Nondevelopmental Items, is
‘‘contiguous United States’’. BILLING CODE 5001–06–P revised to clarify its use in solicitations

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Federal Register / Vol. 81, No. 214 / Friday, November 4, 2016 / Rules and Regulations 78013

when use of the pilot program is to the acquisition of commercial items, Data System for FY 2015, 6,514 unique
planned and the applicability criteria including COTS items. small businesses were awarded a DoD
are met. contract in excess of the certified cost
IV. Executive Orders 12866 and 13563
and pricing threshold ($750,000) and
B. Analysis of Public Comments Executive Orders (E.O.s) 12866 and therefore did not meet the definition of
1. General 13563 direct agencies to assess all costs ‘‘nontraditional defense contractor.’’
and benefits of available regulatory Prior to the changes made by this rule
Comment: One respondent alternatives and, if regulation is
recommended rewording the these small businesses were not eligible
necessary, to select regulatory for an award under the pilot program.
prescription at DFARS 212.7103 to approaches that maximize net benefits
clarify proper use of the provision. These small businesses will now be able
(including potential economic, to participate in the pilot program if
Response: The prescription at DFARS environmental, public health and safety
212.7103 is revised to state, ‘‘Use the they are developing a military purpose
effects, distributive impacts, and nondevelopmental item.
provision at 252.212–7002, Pilot equity). E.O. 13563 emphasizes the
Program for Acquisition of Military- This rule does not impose any new
importance of quantifying both costs reporting, recordkeeping, or other
Purpose Nondevelopmental Items, in and benefits, of reducing costs, of
solicitations when use of the pilot compliance requirements. No significant
harmonizing rules, and of promoting alternatives were identified during the
program is planned and the flexibility. This is not a significant
applicability criteria of 212.7102–1 are development of this rule.
regulatory action and, therefore, was not
met.’’ subject to review under section 6(b) of VI. Paperwork Reduction Act
2. Implementation E.O. 12866, Regulatory Planning and
The rule does not contain any
Review, dated September 30, 1993. This
Comment: One respondent suggested information collection requirements that
rule is not a major rule under 5 U.S.C.
revising the text at DFARS 212.7102– require the approval of the Office of
804.
1(d) to capture the removal of the Management and Budget under the
requirement to use competitive V. Regulatory Flexibility Act Paperwork Reduction Act (44 U.S.C.
procedures under the pilot program by A final regulatory flexibility analysis chapter 35).
adding, ‘‘Each contract entered into (FRFA) has been prepared consistent List of Subjects in 48 CFR Parts 212 and
under the pilot program shall be exempt with the Regulatory Flexibility Act, 5 252
from the requirement for the use of U.S.C. 601, et seq. The FRFA is
competitive procedures.’’ summarized as follows: Government procurement.
Response: The respondent’s This final rule amends the Defense Jennifer L. Hawes,
suggestion is outside the scope of the Federal Acquisition Regulation Editor, Defense Acquisition Regulations
authority provided by section 892. The Supplement (DFARS) to implement System.
statute removes the requirement that section 892 of the National Defense
Accordingly, the interim rule
each contract under the pilot program Authorization Act for Fiscal Year 2016.
amending 48 CFR parts 212 and 252,
be awarded using the competitive The objective of the rule is to modify the
which was published in the Federal
procedures at 10 U.S.C. chapter 137. criteria for the pilot program at DFARS
Register at 80 FR 42557 on June 30,
Section 892 does not provide any 212.71, Pilot Program for the
2016, is adopted as a final rule with the
further exemptions to the competition Acquisition of Military Purpose
following change:
requirements outlined in the FAR and Nondevelopmental Items, to increase
DFARS. The interim rule accomplishes the opportunities for use of the program. PART 212—ACQUISITION OF
the goal of section 892 by removing The rule removes the criteria that COMMERCIAL ITEMS
from the applicability criteria for the contracts must be awarded to
pilot program at DFARS 212.7102–1 the ‘‘nontraditional defense contractors’’ ■ 1. The authority citation for part 212
requirement to award using competitive and awards must be made using continues to read as follows:
procedures. No additional text is competitive procedures. The rule also
Authority: 41 U.S.C. 1303 and 48 CFR
required. increases the dollar threshold for the chapter 1.
III. Applicability to Contracts at or program to allow use on procurements
up to $100 million. ■ 2. Revise section 212.7103 to read as
Below the Simplified Acquisition follows:
There were no significant issues
Threshold (SAT) and for Commercial
raised by the public in response to the 212.7103 Solicitation provision.
Items, Including Commercially
initial regulatory flexibility analysis
Available Off-the-Shelf (COTS) Items Use the provision at 252.212–7002,
provided in the interim rule.
The requirements of section 892 of the The changes to the pilot program will Pilot Program for Acquisition of
NDAA for FY 2016 do not apply to have a positive economic impact on Military-Purpose Nondevelopmental
contracts at or below the SAT. small businesses that did not meet the Items, in solicitations when use of the
Additionally, while FAR part 12 definition of ‘‘nontraditional defense pilot program is planned and the
commercial procedures may be used to contractors’’ and have developed applicability criteria of 212.7102–1 are
acquire military purpose products that could be applied to a met.
nondevelopmental items under this military purpose. According to data [FR Doc. 2016–26368 Filed 11–3–16; 8:45 am]
asabaliauskas on DSK3SPTVN1PROD with RULES

pilot program, the rule does not apply available in the Federal Procurement BILLING CODE 5001–06–P

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Document Created: 2018-02-14 08:27:19
Document Modified: 2018-02-14 08:27:19

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		Rules and Regulations
Action		Final rule.
Dates		Effective November 4, 2016.
Contact		Ms. Carrie Moore, telephone 571-372- 6093.
FR Citation		81 FR 78012
RIN Number		0750-AI93
CFR Citation		48 CFR 212 48 CFR 252

81 FR 78012 - Defense Federal Acquisition Regulation Supplement: Pilot Program on Acquisition of Military Purpose Nondevelopmental Items (DFARS Case 2016-D014)

DEPARTMENT OF DEFENSEDefense Acquisition Regulations System

Federal Register Volume 81, Issue 214 (November 4, 2016)

DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System