Skip to Content

Proposed Rule

Defense Federal Acquisition Regulation Supplement; Contract Termination

Document Details

Information about this document as published in the Federal Register.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble Start Printed Page 39980


Department of Defense (DoD).


Proposed rule with request for comments.


DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to update text pertaining to termination of contracts. This proposed rule is a result of a transformation initiative undertaken by DoD to dramatically change the purpose and content of the DFARS.


Comments on the proposed rule should be submitted in writing to the address shown below on or before September 12, 2005, to be considered in the formation of the final rule.


You may submit comments, identified by DFARS Case 2003-D046, using any of the following methods:

  • Federal eRulemaking Portal: Follow the instructions for submitting comments.
  • Defense Acquisition Regulations Web Site:​dar/​dfars.nsf/​pubcomm. Follow the instructions for submitting comments.
  • E-mail: Include DFARS Case 2003-D046 in the subject line of the message.
  • Fax: (703) 602-0350.
  • Mail: Defense Acquisition Regulations Council, Attn: Ms. Deborah Tronic, OUSD (AT&L) DPAP (DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062.
  • Hand Delivery/Courier: Defense Acquisition Regulations Council, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 22202-3402.

All comments received will be posted to​dar/​dfars.nsf.

Start Further Info


Ms. Deborah Tronic, (703) 602-0289.

End Further Info End Preamble Start Supplemental Information


A. Background

DFARS Transformation is a major DoD initiative to dramatically change the purpose and content of the DFARS. The objective is to improve the efficiency and effectiveness of the acquisition process, while allowing the acquisition workforce the flexibility to innovate. The transformed DFARS will contain only requirements of law, DoD-wide policies, delegations of FAR authorities, deviations from FAR requirements, and policies/procedures that have a significant effect beyond the internal operating procedures of DoD or a significant cost or administrative impact on contractors or offerors. Additional information on the DFARS Transformation initiative is available at​dpap/​dfars/​transf.htm.

This proposed rule is a result of the DFARS Transformation initiative. The proposed DFARS changes—

  • Relocate text on termination of Canadian Commercial Corporation contracts, from Part 225, Foreign Acquisition, to a more appropriate location in Part 249, Termination of Contracts;
  • Delete unnecessary cross-references; and
  • Delete text on preparation of contract termination status reports, completion of forms to document termination settlements, preparation of settlement negotiation memoranda, and congressional notification of significant contract terminations. This text will be relocated to the new DFARS companion resource, Procedures, Guidance, and Information (PGI), available at​dpap/​dars/​pgi.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

B. 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 the rule makes no significant change to DoD contracting policy. Therefore, DoD has not performed an initial regulatory flexibility analysis. DoD invites comments from small businesses and other interested parties. DoD also will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2003-D046.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

Start List of Subjects

List of Subjects in 48 CFR Parts 225 and 249

  • Government procurement
End List of Subjects Start Signature

Michele P. Peterson,

Editor, Defense Acquisition Regulations System.

End Signature

Therefore, DoD proposes to amend 48 CFR parts 225 and 249 as follows:

1. The authority citation for 48 CFR parts 225 and 249 continues to read as follows:

Start Authority

Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

End Authority Start Part


2. Section 225.870-6 is revised to read as follows:

Termination procedures.

When contract termination is necessary, follow the procedures at 249.7000.

End Part Start Part


3. Sections 249.105-1 and 249.105-2 are revised to read as follows:

Termination status reports.

Follow the procedures at PGI 249.105-1 for reporting status of termination actions.

Release of excess funds.

See PGI 249.105-2 for guidance on recommending the release of excess funds.


4. Sections 249.106 through 249.108-4 are removed.

5. Sections 249.109-7 and 249.110 are revised to read as follows:

Settlement by determination.

Follow the procedures at PGI 249.109-7 for settlement of a convenience termination by determination.

Settlement negotiation memorandum.

Follow the procedures at PGI 249.110 for preparation of a settlement negotiation memorandum.

6. Section 249.7000 is amended by revising paragraph (a)(3) and adding paragraphs (e) through (g) to read as follows:

Terminated contracts with Canadian Commercial Corporation.

(a) * * *

(3) The Canadian Supply Manual, Chapter 11, Section 11.146, available at​acquisitions/​text/​sm/​sm-e.html.

* * * * *
Start Printed Page 39981

(e) The Canadian Commercial Corporation will continue administering contracts that the U.S. contracting officer terminates.

(f) The Canadian Commercial Corporation will settle all Canadian subcontracts in accordance with the policies, practices, and procedures of the Canadian Government.

(g) The U.S. agency administering the contract with the Canadian Commercial Corporation shall provide any services required by the Canadian Commercial Corporation, including disposal of inventory, for settlement of any subcontracts placed in the United States. Settlement of such U.S. subcontracts will be in accordance with this regulation.

7. Section 249.7001 is revised to read as follows:

Congressional notification on significant contract terminations.

Congressional notification is required for any termination involving a reduction in employment of 100 or more contractor employees. Proposed terminations must be cleared through department/agency liaison offices before release of the termination notice, or any information on the proposed termination, to the contractor. Follow the procedures at PGI 249.7001 for congressional notification and release of information.

End Part End Supplemental Information

[FR Doc. 05-13306 Filed 7-11-05; 8:45 am]