Proposed Rule2022-23277
Defense Federal Acquisition Regulation Supplement: Quick-Closeout Procedures Threshold (DFARS Case 2021-D001)
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
October 28, 2022
Issuing agencies
Defense DepartmentDefense Acquisition Regulations System
Abstract
DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a recommendation from the Government Accountability Office regarding quick-closeout procedures.
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 208 (Friday, October 28, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 208 (Friday, October 28, 2022)]
[Proposed Rules]
[Pages 65505-65506]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-23277]
Federal Register / Vol. 87, No. 208 / Friday, October 28, 2022 /
Proposed Rules
[[Page 65505]]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Part 242
[Docket DARS-2022-0025]
RIN 0750-AL20
Defense Federal Acquisition Regulation Supplement: Quick-Closeout
Procedures Threshold (DFARS Case 2021-D001)
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 recommendation from the
Government Accountability Office regarding quick-closeout procedures.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before December 27, 2022, to be
considered in the formation of a final rule.
ADDRESSES: Submit comments identified by DFARS Case 2021-D001, using
any of the following methods:
[cir] Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Search for ``DFARS Case 2021-D001.'' Select ``Comment'' and follow the
instructions to submit a comment. Please include your name, company
name (if any), and ``DFARS Case 2021-D001'' on any attached documents.
[cir] Email: <a href="/cdn-cgi/l/email-protection#5a35293e743e3c3b28291a373b333674373336"><span class="__cf_email__" data-cfemail="f8978b9cd69c9e998a8bb895999194d6959194">[email protected]</span></a>. Include DFARS Case 2021-D001 in
the subject line of the message.
Comments received generally will be posted without change to
<a href="https://www.regulations.gov">https://www.regulations.gov</a>, including any personal information
provided. To confirm receipt of your comment(s), please check <a href="https://www.regulations.gov">https://www.regulations.gov</a>, approximately two to three days after submission
to verify posting.
FOR FURTHER INFORMATION CONTACT: David E. Johnson, telephone 202-913-
5764.
SUPPLEMENTARY INFORMATION:
I. Background
DoD is proposing to amend the DFARS to implement a recommendation
made by the Government Accountability Office (GAO) in GAO Report 17-
738, Federal Contracting: Additional Management Attention and Action
Needed to Close Contracts and Reduce Audit Backlog, published in
September 2017. In this report, GAO recommended that DoD develop a
means for DoD-wide oversight into both components' progress in meeting
goals on closing contracts and the status of contracts eligible for
closeout. Additionally, the Advisory Panel on Streamlining and
Codifying Acquisition Regulations (Section 809 Panel) recommended
authorizing the settlement of final overhead rates when it is in the
best interest of the Government and closing complete contracts
regardless of dollar value or the percentage of unsettled direct and
indirect costs allocable to the contracts (recommendation 58). The
Section 809 Panel was established pursuant to section 809 of the
National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-
92) to deliver recommendations that could transform the defense
acquisition system to meet the threats and demands of the 21st century.
As a result of the GAO and Section 809 Panel recommendations, DoD
proposes to update the quick-closeout procedures and expand contracts
eligible for quick closeout. In lieu of the thresholds at Federal
Acquisition Regulation (FAR) 42.708(a)(2)(i) and (ii), this proposed
rule provides that cost amounts are insignificant when unsettled direct
and indirect costs are less than $2 million on a contract, task order,
or delivery order, regardless of the total contract, task order, or
delivery order amount. Additionally, Defense Contract Management Agency
(DCMA) administrative contracting officers may negotiate the settlement
of direct and indirect costs for a specific contract, task order, or
delivery order to be closed in advance of the determination of final
direct costs and indirect rates set forth in FAR 42.705 regardless of
the dollar value or percentage of unsettled direct or indirect costs
allocable to the contract.
II. Discussion and Analysis
This proposed rule establishes a DoD-specific threshold for quick-
closeout procedures. Instead of the threshold at FAR 42.708 of $1
million or 10 percent of the total value, DoD contracting officers will
use a threshold of $2 million for contracts, task orders, and delivery
orders. DCMA administrative contracting officers may negotiate the
settlement of direct and indirect costs prior to the determination of
final direct costs and indirect rates regardless of dollar value or
percent of unsettled direct or indirect costs allocable to the
contract. The proposed changes at DFARS 242.708 will increase the
number of DoD contracts subject to quick-closeout procedures.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT), 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 or their applicability to contracts
valued at or below the SAT, for commercial services, or for commercial
products including COTS items.
IV. Expected Impact of the Rule
Presently, at FAR 42.708(a)(2), cost amounts are considered
relatively insignificant when the total unsettled direct costs and
indirect costs to be allocated to any contract, task order, or delivery
order does not exceed the lesser of $1 million or 10 percent of the
total contract, task order, or delivery order. The proposed rule
establishes a DoD-specific threshold of $2 million. The proposed rule
also allows DCMA administrative contracting officers to negotiate the
settlement of direct and indirect costs to be closed in advance of the
determination of final direct costs and indirect rates regardless of
the dollar value or percentage.
By establishing a higher threshold for DoD, this proposed rule
expands the number of contracts subject to quick-closeout procedures.
This rule will be beneficial to contractors and to the Government by
promoting administrative efficiencies. DCMA administrative contracting
officers' workflows will be expedited since settlement of costs may be
negotiated prior to determination of final direct costs and indirect
rates regardless of the dollar value or percent of unsettled direct or
indirect costs allocable to the contract.
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
[[Page 65506]]
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. This rule is not
anticipated to be a major rule under 5 U.S.C. 804.
VII. 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 no additional administrative burden will be placed on small
entities. However, an initial regulatory flexibility analysis has been
performed and is summarized as follows:
This rule proposes to revise the DFARS to implement changes to the
indirect cost rate quick-closeout procedures. GAO Report 17-738,
Federal Contracting: Additional Management Attention and Action Needed
to Close Contracts and Reduce Audit Backlog, published September 2017
recommended that DoD develop a means for Department-wide oversight into
both components' progress in meeting goals on closing contracts and the
status of contracts eligible for closeout. The Advisory Panel on
Streamlining and Codifying Acquisition Regulations (Section 809 Panel)
was established pursuant to section 809 of the National Defense
Authorization Act for Fiscal Year 2016 (Pub. L. 114-92) to deliver
recommendations that could transform the defense acquisition system to
meet the threats and demands of the 21st century. Additionally, the
Section 809 Panel recommended authorizing the settlement of final
overhead rates when it is in the best interest of the Government and
closing complete contracts regardless of dollar value or the percentage
of unsettled direct and indirect costs allocable to the contracts
(recommendation 58).
This proposed rule states that the amount of unsettled direct costs
and indirect costs to be allocated to the contract, task order, or
delivery order will be considered relatively insignificant when the
total unsettled direct costs or indirect costs to be allocated do not
exceed $2 million. Additionally, DCMA administrative contracting
officers may negotiate the settlement of direct and indirect costs for
a specific contract, task order, or delivery order to be closed in
advance of the determination of final direct costs and indirect rates
set forth in FAR 42.705 regardless of the dollar value or percentage of
unsettled direct or indirect costs allocable to the contract.
The objective of the proposed rule is to implement the GAO and
Section 809 Panel recommendations described above. The legal basis for
the rule is 41 U.S.C. 1303.
This proposed rule will likely affect small entities that have been
or will be awarded contracts, task orders, and delivery orders valued
over $2 million. Data was obtained from the Procurement Business
Intelligence Service (PBIS) for contracts that were awarded in fiscal
years 2019 through 2021 and eligible for quick-closeout procedures,
were valued at more than $2 million, and contained one of the following
FAR clauses:
<bullet> 52.216-7, Allowable Cost and Payment (including Alternates
I, II, IV);
<bullet> 52.216-17, Incentive Price Revision--Successive Targets
(including Alternate I);
<bullet> 52.242-3, Penalties for Unallowable Costs; and
<bullet> 52.242-4, Certification of Final Indirect Costs.
Data from PBIS revealed DoD awarded contracts to an average of 832
small businesses per year in fiscal years 2019 through 2021. Therefore,
this proposed rule may apply to approximately 832 unique small
entities.
The proposed rule does not impose any new reporting, recordkeeping,
or compliance requirements.
The proposed rule does not duplicate, overlap, or conflict with any
other Federal rules.
DoD did not identify any significant alternatives that would
minimize or reduce the significant economic impact on small entities,
because this proposed rule is not expected to have a significant impact
on small entities.
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 2021-D001), in
correspondence.
VIII. Paperwork Reduction Act
This 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 Part 242
Government procurement.
Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.
Therefore, 48 CFR part 242 is proposed to be amended as follows:
PART 242--CONTRACT ADMINISTRATION AND AUDIT SERVICES
0
1. The authority citation for 48 CFR part 242 continues to read as
follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
0
2. Add section 242.708 to read as follows:
242.708 Quick-closeout procedure.
(a) Defense Contract Management Agency administrative contracting
officers are authorized to negotiate the settlement of direct and
indirect costs for a specific contract, task order, or delivery order
to be closed in advance of the determination of final direct costs and
indirect rates set forth in FAR 42.705, regardless of the dollar value
or percentage of unsettled direct or indirect costs allocable to the
contract, task order, or delivery order.
(2) In lieu of the thresholds at FAR 42.708(a)(2)(i) and (ii), the
amount of unsettled direct costs and indirect costs to be allocated to
the contract, task order, or delivery order will be considered
relatively insignificant when the total unsettled direct costs and
indirect costs to be allocated to any one contract, task order, or
delivery order do not exceed $2 million, regardless of the total
contract, task order, or delivery order amount.
[FR Doc. 2022-23277 Filed 10-27-22; 8:45 am]
BILLING CODE 5001-06-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on October 28, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.