Rule2022-05532
Defense Federal Acquisition Regulation Supplement: Contract Closeout Authority for DoD Services Contracts (DFARS Case 2021-D012)
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 18, 2022
Effective
March 18, 2022
Issuing agencies
Defense DepartmentDefense Acquisition Regulations System
Abstract
DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2021.
Full Text
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<title>Federal Register, Volume 87 Issue 53 (Friday, March 18, 2022)</title>
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[Federal Register Volume 87, Number 53 (Friday, March 18, 2022)]
[Rules and Regulations]
[Pages 15812-15813]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-05532]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Part 204
[Docket DARS-2021-0017]
RIN 0750-AL48
Defense Federal Acquisition Regulation Supplement: Contract
Closeout Authority for DoD Services Contracts (DFARS Case 2021-D012)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
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SUMMARY: DoD is issuing a final rule amending the Defense Federal
Acquisition Regulation Supplement (DFARS) to implement a section of the
National Defense Authorization Act for Fiscal Year 2021.
DATES: Effective March 18, 2022.
FOR FURTHER INFORMATION CONTACT: Ms. Kimberly R. Ziegler, telephone
571-372-6095.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published a proposed rule in the Federal Register at 86 FR
48366 on August 30, 2021, to implement section 820 of the National
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 (Pub. L.
116-283). Section 820 authorizes DoD contracting officers to close out
certain physically complete contracts or groups of contacts through
modification of such contracts, without completing the requirements of
Federal Acquisition Regulation (FAR) 4.804-5(a)(3) through (15) based
upon the age of the contract action.
Two respondents submitted public comments in response to the
proposed rule.
II. Discussion and Analysis
DoD reviewed the public comments in the development of the final
rule. A discussion of the comments and the changes made to the rule as
a result of those comments is provided, as follows:
A. Summary of Significant Changes From the Proposed Rule
There are no changes from the proposed rule as a result of public
comments.
B. Analysis of Public Comments
1. Support for the Rule
Comment: The respondent supported the rule and requested DoD
publish the final rule expeditiously.
Response: DoD acknowledges the support.
2. Expansion of the Statutory Criteria
Comment: The respondent expressed concern that the rule, as well as
the current DFARS text that implemented the statutory direction in the
NDAA for FY 2017, reflects the language in section 820 of the FY 2021
NDAA. The respondent asserts that the statutory language will not
achieve the intent of Congress without further clarification.
Response: This final rule implements the statutory authority
provided in section 820 of the NDAA for FY 2021. There is nothing in
the statute to indicate Congress had any intent other than the plain
language meaning of that section as stated. DoD previously published a
final rule at 84 FR 18153 on April 30, 2019, to implement section 836
of the NDAA for FY 2017.
3. Additional Guidance for the Workforce
Comment: The respondent recommends DoD develop Procedures,
Guidance, and Information (PGI) for the acquisition workforce that
includes additional guidance on the application of the eligibility
criteria and establishment of costs.
Response: DoD has no indication that the acquisition workforce
requires an update to the PGI on contract closeout.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT) and for Commercial Products Including Commercially
Available Off-the-Shelf (COTS) Items, and for Commercial Services
This rule does not create any new solicitation provisions or
contract clauses. It does not impact any existing solicitation
provisions or contract clauses.
IV. Expected Impact of the Rule
DFARS 204.804(3)(i) currently provides for the expedited closeout
of contracts or groups of contracts without completion of a
reconciliation audit or other corrective actions required by FAR 4.804-
5(a)(3) through (15) if certain criteria are met. If a contract was
entered into at least 17 years prior to the current fiscal year, is
physically complete, and has been determined not reconcilable, the
contracting officer may close the contract through a negotiated
settlement.
This final rule reduces the age requirement from 17 years to 10
years for military construction and shipbuilding and 7 years for all
other contract actions. The rule adds a new requirement that these
contracts must be physically complete at least 4 years prior to the
current fiscal year.
The expanded authority will apply to more recent contracts, subject
to the other criteria in DFARS 204.804(3)(i), to reduce the current
backlog and administration requirements for contracts eligible for
closeout.
V. 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.
VI. Congressional Review Act
As required by the Congressional Review Act (5 U.S.C. 801-808)
before an interim or final rule takes effect, DoD will submit a copy of
the interim or final rule with the form, Submission of Federal Rules
Under the Congressional Review Act, to the U.S. Senate, the U.S. House
of Representatives, and the Comptroller General of the United States. A
major rule under the Congressional Review Act cannot take effect until
60 days after it is published in the Federal Register. The Office of
Information and Regulatory Affairs has determined that this rule is not
a major rule as defined by 5 U.S.C. 804.
VII. Regulatory Flexibility Act
DoD does not expect this rule to have a significant economic impact
on a substantial number of small entities within the meaning of the
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because this rule
implements requirements primarily for the Government. However, 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 rule amends the Defense Federal Acquisition Regulation
Supplement
[[Page 15813]]
(DFARS) to implement section 820 of the National Defense Authorization
Act (NDAA) for Fiscal Year (FY) 2021 (Pub. L. 116-283). Section 820
expands the application of the expedited contract closeout authority of
section 836 of the NDAA for FY 2017, implemented at DFARS
204.804(3)(i)(A), to certain contracts or groups of contracts that were
awarded at least 7 to 10 FYs before the current FY and have completed
performance or delivery at least 4 years prior to the current FY. The
new 10-year standard will apply to contracts or groups of contracts for
military construction, as defined in 10 U.S.C. 2801, or shipbuilding,
while the 7-year standard will apply to all other contracts.
The objective of the rule is to implement the requirements of
section 820, which expands the application of the expedited contract
closeout authority of section 836 of the NDAA for FY 2017 to more
recent, physically complete contracts. The legal basis of the rule is
section 820 of the NDAA for FY 2021.
There were no significant issues raised by the public in response
to the initial regulatory flexibility analysis.
This rule will likely affect small entities that have been or will
be awarded DoD contracts, including those under FAR part 12 procedures
for the acquisition of commercial products, including commercially
available off-the-shelf items, and commercial services. Data was
obtained from the Electronic Data Access module of the Procurement
Integrated Enterprise Environment for contracts that were physically
completed at least 4 years ago and are eligible for closeout between
the new standard of 7 or 10 years and the previous standard of at least
17 fiscal years after award. These numbers were then compared to the
Federal Procurement Data System (FPDS) to estimate the number of
contracts awarded to small entities. Contracts subject to the previous
standard of 17 years are included in this estimate.
As of April 2021, the FPDS data indicate that approximately 29,200
contracts, eligible for expedited closeout under the 7-year standard,
were awarded to an estimated 4,490 unique small entities. An additional
estimated 1,775 contracts, subject to the 10-year standard, were
awarded to approximately 576 small entities. As a result, DoD estimates
that approximately 5,066 small entities will have the opportunity to
benefit from the expanded expedited contract authorities provided in
this rule.
The rule does not impose any new reporting, recordkeeping, or
compliance requirements.
There are no practical alternatives that will accomplish the
objectives of the statute.
VIII. Paperwork Reduction Act
This rule does not contain any information collection requirements
that require the approval of the Office of Management and Budget (OMB)
under the Paperwork Reduction Act (44 U.S.C. chapter 35).
List of Subjects in 48 CFR Part 204
Government procurement.
Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.
Therefore, 48 CFR part 204 is amended as follows:
PART 204--ADMINISTRATIVE AND INFORMATION MATTERS
0
1. The authority citation for 48 CFR part 204 continues to read as
follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
0
2. Amend section 204.804 by revising paragraph (3)(i) to read as
follows:
204.804 Closeout of contract files.
* * * * *
(3)(i) In accordance with section 836 of the National Defense
Authorization Act for Fiscal Year 2017 (Pub. L. 114-328), section 824
of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L.
115-91), and section 820 of the National Defense Authorization Act for
Fiscal Year 2021 (Pub. L. 116-283), contracting officers may close out
contracts or groups of contracts through issuance of one or more
modifications to such contracts without completing a reconciliation
audit or other corrective action in accordance with FAR 4.804-5(a)(3)
through (15), as appropriate, if each contract--
(A)(1) For military construction (as defined at 10 U.S.C. 2801) or
shipbuilding, was awarded at least 10 fiscal years before the current
fiscal year; or
(2) For all other contracts, was awarded at least 7 fiscal years
before the current fiscal year;
(B) The performance or delivery was completed at least 4 years
prior to the current fiscal year; and
(C) Has been determined by a contracting official, at least one
level above the contracting officer, to be not otherwise reconcilable,
because--
(1) The contract or related payment records have been destroyed or
lost; or
(2) Although contract or related payment records are available, the
time or effort required to establish the exact amount owed to the U.S.
Government or amount owed to the contractor is disproportionate to the
amount at issue.
* * * * *
[FR Doc. 2022-05532 Filed 3-17-22; 8:45 am]
BILLING CODE 5001-06-P
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</html>Indexed from Federal Register on March 18, 2022.
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