83 FR 42787 - Defense Federal Acquisition Regulation Supplement: Repeal of Independent Research and Development Technical Interchange (DFARS Case 2017-D041)
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System Federal Register Volume 83, Issue 165 (August 24, 2018)
Defense Acquisition Regulations System
Federal Register Volume 83, Issue 165 (August 24, 2018)
| Page Range | 42787-42788 | |
| FR Document | 2018-18239 |
[Federal Register Volume 83, Number 165 (Friday, August 24, 2018)] [Rules and Regulations] [Pages 42787-42788] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-18239] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Part 231 [Docket DARS-2017-0013] RIN 0750-AJ51 Defense Federal Acquisition Regulation Supplement: Repeal of Independent Research and Development Technical Interchange (DFARS Case 2017-D041) AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to remove a requirement for major contractors to have a technical interchange with the Government prior to generating independent research and development costs. DATES: Effective August 24, 2018. FOR FURTHER INFORMATION CONTACT: Ms. Carrie Moore, telephone 571-372- 6093. SUPPLEMENTARY INFORMATION: I. Background DoD is amending the DFARS to remove the text at DFARS 231.205- 18(c)(iii)(C)(4), which requires major contractors to engage in and document a technical interchange with the Government, prior to generating independent research and development (IR&D) costs for IR&D projects initiated in fiscal year 2017 and later, in order for those costs to be determined allowable. The removal of this DFARS text supports a recommendation from the DoD Regulatory Reform Task Force. On February 24, 2017, the President signed Executive Order (E.O.) 13777, ``Enforcing the Regulatory Reform Agenda,'' which established a Federal policy ``to alleviate unnecessary regulatory burdens'' on the American people. In accordance with E.O. 13777, DoD established a Regulatory Reform Task Force to review and validate DoD regulations, including the DFARS. A public notice of the establishment of the DFARS Subgroup to the DoD Regulatory Reform Task Force, for the purpose of reviewing DFARS provisions and clauses, was published in the Federal Register at 82 FR 35741 on August 1, 2017. No public comments were received on this DFARS requirement in response to the notice. Subsequently, the DoD Task Force reviewed the requirements of DFARS 231.205-18(c)(iii)(C)(4) and determined that the DFARS coverage was outmoded and recommended removal, since requiring a technical interchange between the Government and major contractors is unnecessary. The objective of the interchange can be met through other means. II. Applicability to Contracts At or Below the Simplified Acquisition Threshold and for Commercial Items, Including Commercially Available Off-the-Shelf Items This rule only removes an unneeded requirement in the DFARS that required a technical interchange between the Government and certain contractors. Therefore, the rule does not impose any new requirements on contracts at or below the simplified acquisition threshold and for commercial items, including commercially available off-the-shelf items. III. Expected Cost Savings Effective November 4, 2016, DFARS 231.205-18(c)(iii)(C)(4) was revised to require contractors to engage in a technical interchange with the Government, prior to the generation of IR&D costs for IR&D projects initiated in fiscal year 2017 and later, in order for those costs to be allowable. This requirement causes the contractor to expend time preparing for a discussion, contacting appropriate Government personnel, and discussing the IR&D project. Since contractors commonly pool all of their IR&D project costs to develop a single billing rate, this requirement would necessitate contractors having to discuss all of the IR&D projects contained in their billing rate. While some contractors may have a single project, many have close to 100 or more, which could be significantly burdensome. This requirement applies to major contractors seeking to include IR&D costs as part of their reimbursable costs under a contract. Major contractors are defined as those whose covered segments allocated a total of more than $11 million in IR&D and bid and proposal costs to covered contracts during the preceding fiscal year; therefore, small entities are not expected to meet the definition of a major contractor or to be impacted. IR&D costs are most commonly included in noncommercial, cost-type contracts that are subject to certified cost and pricing data and cost accounting standards. This rule removes the requirement for major contractors to have a technical interchange with the Government prior to generating IR&D costs. Removal of this requirement will result in freeing contractors to pursue IR&D projects without including the Government in those preliminary decisions. DoD has performed a regulatory cost analysis on this rule. The following is a summary of the estimated public annualized cost savings, calculated in 2016 dollars at a 7-percent discount rate in perpetuity: Annualized 7% -$1.7 million Present Value 7% -$24.0 million To access the full Regulatory Cost Analysis for this rule, go to the Federal eRulemaking Portal at www.regulations.gov, search for ``DFARS Case 2017-D041,'' click ``Open Docket,'' and view ``Supporting Documents.'' [[Page 42788]] 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. Executive Order 13771 This final rule is considered to be an E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, deregulatory action. Details on the estimated cost savings can be found in section III. of this preamble. VI. Publication of This Final Rule for Public Comment Is Not Required by Statute The statute that applies to the publication of the Federal Acquisition Regulation is the Office of Federal Procurement Policy statute (codified at Title 41 of the United States Code). Specifically, 41 U.S.C. 1707(a)(1) requires that a procurement policy, regulation, procedure or form (including an amendment or modification thereof) must be published for public comment if it relates to the expenditure of appropriated funds, and has either a significant effect beyond the internal operating procedures of the agency issuing the policy, regulation, procedure, or form, or has a significant cost or administrative impact on contractors or offerors. This final rule is not required to be published for public comment, because DoD is not issuing a new regulation; rather, this rule merely removes an obsolete requirement from the DFARS. VII. Regulatory Flexibility Act Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under 41 U.S.C. 1707(a)(1) (see section V of this preamble), the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not applicable. Accordingly, no regulatory flexibility analysis is required and none has been prepared. VIII. Paperwork Reduction Act The Paperwork Reduction Act (44 U.S.C. chapter 35) does apply; however, these changes to the DFARS do not impose additional information collection requirements to the paperwork burden previously approved under OMB Control Number 0704-0483, entitled ``Independent Research and Development Technical Descriptions.'' Repeal of this rule does not impact the IR&D reporting that continues to be required annually, when the IR&D project is completed, under OMB Control Number 0704-0483. List of Subjects in 48 CFR Part 231 Government procurement. Jennifer Lee Hawes, Regulatory Control Officer, Defense Acquisition Regulations System. Therefore, 48 CFR part 231 is amended as follows: PART 231--CONTRACT COST PRINCIPLES AND PROCEDURES 0 1. The authority citation for part 231 continues to read as follows: Authority: 41 U.S.C. 1303 and 48 chapter 1. 231.205-18 [Amended] 0 2. Amend section 231.205-18 by: 0 a. Adding ``and'' to the end of paragraph (c)(iii)(C)(2); 0 b. Removing ``; and'' from the end of paragraph (c)(iii)(C)(3) and adding a period in its place; and 0 c. Removing paragraph (c)(iii)(C)(4). [FR Doc. 2018-18239 Filed 8-23-18; 8:45 am] BILLING CODE 5001-06-P
![Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Rules and Regulations 42787
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[FR Doc. 2018–18402 Filed 8–23–18; 8:45 am] ‘‘Enforcing the Regulatory Reform expend time preparing for a discussion,
BILLING CODE 6560–50–P Agenda,’’ which established a Federal contacting appropriate Government
policy ‘‘to alleviate unnecessary personnel, and discussing the IR&D
regulatory burdens’’ on the American project. Since contractors commonly
DEPARTMENT OF DEFENSE people. In accordance with E.O. 13777, pool all of their IR&D project costs to
DoD established a Regulatory Reform develop a single billing rate, this
Defense Acquisition Regulations Task Force to review and validate DoD requirement would necessitate
System regulations, including the DFARS. A contractors having to discuss all of the
public notice of the establishment of the IR&D projects contained in their billing
48 CFR Part 231 DFARS Subgroup to the DoD Regulatory rate. While some contractors may have
Reform Task Force, for the purpose of a single project, many have close to 100
[Docket DARS–2017–0013]
reviewing DFARS provisions and or more, which could be significantly
RIN 0750–AJ51 clauses, was published in the Federal burdensome.
Register at 82 FR 35741 on August 1, This requirement applies to major
Defense Federal Acquisition 2017. No public comments were contractors seeking to include IR&D
Regulation Supplement: Repeal of received on this DFARS requirement in costs as part of their reimbursable costs
Independent Research and response to the notice. Subsequently, under a contract. Major contractors are
Development Technical Interchange the DoD Task Force reviewed the defined as those whose covered
(DFARS Case 2017–D041) requirements of DFARS 231.205– segments allocated a total of more than
18(c)(iii)(C)(4) and determined that the $11 million in IR&D and bid and
AGENCY: Defense Acquisition
DFARS coverage was outmoded and proposal costs to covered contracts
Regulations System, Department of
recommended removal, since requiring during the preceding fiscal year;
Defense (DoD).
a technical interchange between the therefore, small entities are not expected
ACTION: Final rule. Government and major contractors is to meet the definition of a major
SUMMARY: DoD is issuing a final rule unnecessary. The objective of the contractor or to be impacted. IR&D costs
amending the Defense Federal interchange can be met through other are most commonly included in
Acquisition Regulation Supplement means. noncommercial, cost-type contracts that
(DFARS) to remove a requirement for II. Applicability to Contracts At or are subject to certified cost and pricing
major contractors to have a technical Below the Simplified Acquisition data and cost accounting standards.
interchange with the Government prior Threshold and for Commercial Items, This rule removes the requirement for
to generating independent research and Including Commercially Available Off- major contractors to have a technical
development costs. the-Shelf Items interchange with the Government prior
DATES: Effective August 24, 2018. to generating IR&D costs. Removal of
This rule only removes an unneeded this requirement will result in freeing
FOR FURTHER INFORMATION CONTACT: Ms. requirement in the DFARS that required contractors to pursue IR&D projects
Carrie Moore, telephone 571–372–6093. a technical interchange between the without including the Government in
SUPPLEMENTARY INFORMATION: Government and certain contractors. those preliminary decisions.
Therefore, the rule does not impose any
I. Background DoD has performed a regulatory cost
new requirements on contracts at or
DoD is amending the DFARS to below the simplified acquisition analysis on this rule. The following is a
remove the text at DFARS 231.205– threshold and for commercial items, summary of the estimated public
18(c)(iii)(C)(4), which requires major including commercially available off- annualized cost savings, calculated in
contractors to engage in and document the-shelf items. 2016 dollars at a 7-percent discount rate
a technical interchange with the in perpetuity:
Government, prior to generating III. Expected Cost Savings
Annualized 7% ¥$1.7 million
independent research and development Effective November 4, 2016, DFARS
Present Value 7% ¥$24.0 million
(IR&D) costs for IR&D projects initiated 231.205–18(c)(iii)(C)(4) was revised to
sradovich on DSK3GMQ082PROD with RULES
in fiscal year 2017 and later, in order for require contractors to engage in a To access the full Regulatory Cost
those costs to be determined allowable. technical interchange with the Analysis for this rule, go to the Federal
The removal of this DFARS text Government, prior to the generation of eRulemaking Portal at
supports a recommendation from the IR&D costs for IR&D projects initiated in www.regulations.gov, search for
DoD Regulatory Reform Task Force. On fiscal year 2017 and later, in order for ‘‘DFARS Case 2017–D041,’’ click ‘‘Open
February 24, 2017, the President signed those costs to be allowable. This Docket,’’ and view ‘‘Supporting
Executive Order (E.O.) 13777, requirement causes the contractor to Documents.’’
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![42788 Federal Register / Vol. 83, No. 165 / Friday, August 24, 2018 / Rules and Regulations
IV. Executive Orders 12866 and 13563 VIII. Paperwork Reduction Act (DFARS) to remove a clause that is no
Executive Orders (E.O.s) 12866 and The Paperwork Reduction Act (44 longer necessary.
13563 direct agencies to assess all costs U.S.C. chapter 35) does apply; however, DATES: Effective August 24, 2018.
and benefits of available regulatory these changes to the DFARS do not FOR FURTHER INFORMATION CONTACT: Ms.
alternatives and, if regulation is impose additional information Carrie Moore, telephone 571–372–6093.
necessary, to select regulatory collection requirements to the SUPPLEMENTARY INFORMATION:
approaches that maximize net benefits paperwork burden previously approved
(including potential economic, under OMB Control Number 0704–0483, I. Background
environmental, public health and safety entitled ‘‘Independent Research and DoD is amending the DFARS to
effects, distributive impacts, and Development Technical Descriptions.’’ remove the DFARS clause 252.247–
equity). E.O. 13563 emphasizes the Repeal of this rule does not impact the 7006, Removal of Contractor’s
importance of quantifying both costs IR&D reporting that continues to be Employees, and the associated clause
and benefits, of reducing costs, of required annually, when the IR&D prescription at DFARS 247.270–4. The
harmonizing rules, and of promoting project is completed, under OMB DFARS clause served as an agreement
flexibility. This is not a significant Control Number 0704–0483. from the contractor to only use
regulatory action and, therefore, was not experienced, responsible, and capable
subject to review under section 6(b) of List of Subjects in 48 CFR Part 231
people to perform the work under the
E.O. 12866, Regulatory Planning and Government procurement. stevedoring contract. The clause also
Review, dated September 30, 1993. This advised the contractor that the
rule is not a major rule under 5 U.S.C. Jennifer Lee Hawes,
contracting officer may require the
804. Regulatory Control Officer, Defense
Acquisition Regulations System.
contractor to remove from the job,
V. Executive Order 13771 employees who endanger persons or
Therefore, 48 CFR part 231 is property or whose employment is
This final rule is considered to be an amended as follows: inconsistent with the interest of military
E.O. 13771, Reducing Regulation and security.
Controlling Regulatory Costs, PART 231—CONTRACT COST
deregulatory action. Details on the PRINCIPLES AND PROCEDURES II. Discussion and Analysis
estimated cost savings can be found in The information conveyed in DFARS
section III. of this preamble. ■ 1. The authority citation for part 231 clause 252.247–7006 is directly related
continues to read as follows: to performance of the work under a
VI. Publication of This Final Rule for
Public Comment Is Not Required by Authority: 41 U.S.C. 1303 and 48 chapter stevedoring contract. It is more
Statute 1. appropriate to define what the
The statute that applies to the 231.205–18 [Amended] Government considers an experienced,
publication of the Federal Acquisition responsible, and capable employee to be
■ 2. Amend section 231.205–18 by: in a performance work statement, not a
Regulation is the Office of Federal ■ a. Adding ‘‘and’’ to the end of
Procurement Policy statute (codified at contract clause, because those
paragraph (c)(iii)(C)(2); requirements may change depending on
Title 41 of the United States Code). ■ b. Removing ‘‘; and’’ from the end of
Specifically, 41 U.S.C. 1707(a)(1) various factors of the work being
paragraph (c)(iii)(C)(3) and adding a performed. If the need to remove
requires that a procurement policy, period in its place; and
regulation, procedure or form (including employees from performing under the
■ c. Removing paragraph (c)(iii)(C)(4). contract exists, it should be identified in
an amendment or modification thereof)
must be published for public comment [FR Doc. 2018–18239 Filed 8–23–18; 8:45 am] the performance work statement. The
if it relates to the expenditure of BILLING CODE 5001–06–P removal and replacement of employees
appropriated funds, and has either a directly relates to the contractor’s ability
significant effect beyond the internal to perform and staff the work under the
operating procedures of the agency DEPARTMENT OF DEFENSE contract. As such, this DFARS clause is
issuing the policy, regulation, unnecessary and can be removed.
Defense Acquisition Regulations The removal of this DFARS text
procedure, or form, or has a significant System
cost or administrative impact on supports a recommendation from the
contractors or offerors. This final rule is DoD Regulatory Reform Task Force. On
48 CFR Parts 247 and 252 February 24, 2017, the President signed
not required to be published for public
comment, because DoD is not issuing a [Docket DARS–2018–0041] Executive Order (E.O.) 13777,
new regulation; rather, this rule merely ‘‘Enforcing the Regulatory Reform
RIN 0750–AK04 Agenda,’’ which established a Federal
removes an obsolete requirement from
the DFARS. policy ‘‘to alleviate unnecessary
Defense Federal Acquisition
regulatory burdens’’ on the American
VII. Regulatory Flexibility Act Regulation Supplement: Repeal of
people. In accordance with E.O. 13777,
DFARS Clause ‘‘Removal of
Because a notice of proposed DoD established a Regulatory Reform
Contractor’s Employees’’ (DFARS Case
rulemaking and an opportunity for Task Force to review and validate DoD
2018–D042)
public comment are not required to be regulations, including the DFARS. A
given for this rule under 41 U.S.C. AGENCY: Defense Acquisition public notice of the establishment of the
sradovich on DSK3GMQ082PROD with RULES
1707(a)(1) (see section V of this Regulations System, Department of DFARS Subgroup to the DoD Regulatory
preamble), the analytical requirements Defense (DoD). Reform Task Force, for the purpose of
of the Regulatory Flexibility Act (5 ACTION: Final rule. reviewing DFARS provisions and
U.S.C. 601 et seq.) are not applicable. clauses, was published in the Federal
Accordingly, no regulatory flexibility SUMMARY: DoD is issuing a final rule Register at 82 FR 35741 on August 1,
analysis is required and none has been amending the Defense Federal 2017, and requested public input. One
prepared. Acquisition Regulation Supplement public comment was received on this
VerDate Sep<11>2014 00:53 Aug 24, 2018 Jkt 244001 PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 E:\FR\FM\24AUR1.SGM 24AUR1](https://thefederalregister.org/doc/83_FR_42952/page/2.svg)
Document Created: 2018-08-24 04:14:56
Document Modified: 2018-08-24 04:14:56
| 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 August 24, 2018. | |
| Contact | Ms. Carrie Moore, telephone 571-372- 6093. | |
| FR Citation | 83 FR 42787 | |
| RIN Number | 0750-AJ51 |
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