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Defense Federal Acquisition Regulation Supplement; Conforming Changes-Standards of Conduct and Extraordinary Contractual Actions (DFARS Case 2008-D004)

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


Final rule.


DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to update text addressing contractor standards of conduct and the handling of extraordinary contractual actions. The DFARS changes are consistent with changes made to the Federal Acquisition Regulation.


Effective Date: August 12, 2008.

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Ms. Amy Williams, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone 703-602-0328; facsimile 703-602-7887. Please cite DFARS Case 2008-D004.

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A. Background

This final rule updates DFARS text for consistency with changes made to the Federal Acquisition Regulation (FAR) as follows:

○ Removes DFARS Subpart 203.70, Contractor Standards of Conduct, and the corresponding contract clause at 252.203-7002, since policy on this subject was added to the FAR at 72 FR 65873 on November 23, 2007.

○ Adds DFARS 203.1004 to provide address information for use in completion of the clause at FAR 52.203-14, Display of Hotline Poster(s).

○ Revises DFARS Part 250 for consistency with the structure of FAR Part 50, as revised at 72 FR 63027 on November 7, 2007. The DFARS changes update headings, numbering, and cross-references, and reflect the dollar threshold currently specified in the FAR with regard to delegation of authority for approval of extraordinary contractual actions.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. Start Printed Page 46815

B. Regulatory Flexibility Act

This rule will not have a significant cost or administrative impact on contractors or offerors, or a significant effect beyond the internal operating procedures of DoD. Therefore, publication for public comment under 41 U.S.C. 418b is not required. However, DoD will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 2008-D004.

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.

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List of Subjects in 48 CFR Parts 203, 250, and 252

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Michele P. Peterson,

Editor, Defense Acquisition Regulations System.

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1. The authority citation for

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

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2. Subpart 203.10 is added to read as follows:

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Subpart 203.10—Contractor Code of Business Ethics and Conduct

Contract clauses.

(b)(2)(ii) Insert the following address in paragraph (b)(3) of the clause at FAR 52.203-14, Display of Hotline Poster(s): DoD Inspector General, ATTN: Defense Hotline, 400 Army Navy Drive, Washington, DC 22202-2884.

Subpart 203.70 [Removed]

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3. Subpart 203.70 is removed.

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4. Part 250 is revised to read as follows:

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Subpart 250.1—Extraordinary Contractual Actions

Limitations on payment.
Delegation of and limitations on exercise of authority.
Delegation of authority.
Contract adjustment boards.
Contract adjustments.
Contract adjustment.
Processing cases.
Residual powers.
Special procedures for unusually hazardous or nuclear risks.
Indemnification under contracts involving both research and development and other work.
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Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

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Subpart 250.1—Extraordinary Contractual Actions


Secretarial level, as used in this subpart, means—

(1) An official at or above the level of an Assistant Secretary (or Deputy) of Defense or of the Army, Navy, or Air Force; and

(2) A contract adjustment board established by the Secretary concerned.

Limitations on payment.

See 10 U.S.C. 2410(b) for limitations on Congressionally directed payment of a request for equitable adjustment to contract terms or a request for relief under Public Law 85-804.


Follow the procedures at PGI 250.101-3 for preparation of records.

Delegation of and limitations on exercise of authority.
Delegation of authority.

(b) Authority under FAR 50.104 to approve actions obligating $55,000 or less may not be delegated below the level of the head of the contracting activity.

(d) In accordance with the acquisition authority of the Under Secretary of Defense (Acquisition, Technology, and Logistics (USD (AT&L)) under 10 U.S.C. 133, in addition to the Secretary of Defense and the Secretaries of the military departments, the USD (AT&L) may exercise authority to indemnify against unusually hazardous or nuclear risks.


(a) Military departments. The Departments of the Army, Navy, and Air Force will specify delegations and levels of authority for actions under the Act and the Executive Order in departmental supplements or agency acquisition guidance.

(b) Defense agencies. Subject to the restrictions on delegations of authority in 250.102-1(b) and FAR 50.102-1, the directors of the defense agencies may exercise and redelegate the authority contained in the Act and the Executive Order. The agency supplements or agency acquisition guidance shall specify the delegations and levels of authority.

(1) Requests to obligate the Government in excess of $55,000 must be submitted to the USD (AT&L) for approval.

(2) Requests for indemnification against unusually hazardous or nuclear risks must be submitted to the USD(AT&L) for approval before using the indemnification clause at FAR 52.250-1, Indemnification Under Public Law 85-804.

(c) Approvals. The Secretary of the military department or the agency director must approve any delegations in writing.

Contract adjustment boards.

The Departments of the Army, Navy, and Air Force each have a contract adjustment board. The board consists of a Chair and not less than two nor more than six other members, one of whom may be designated the Vice-Chair. A majority constitutes a quorum for any purpose and the concurring vote of a majority of the total board membership constitutes an action of the board. Alternates may be appointed to act in the absence of any member.

Contract adjustments.
Contract adjustment.

(a) Contractor requests should be filed with the procuring contracting officer (PCO). However, if filing with the PCO is impractical, requests may be filed with an authorized representative, an administrative contracting officer, or the Office of General Counsel of the applicable department or agency, for forwarding to the cognizant PCO.

Processing cases.

(1) At the time the request is filed, the activity shall prepare the record described at PGI 250.101-3(1)(i) and forward it to the appropriate official within 30 days after the close of the month in which the record is prepared.

(2) The officer or official responsible for the case shall forward to the contract adjustment board, through departmental channels, the documentation described at PGI 250.103-5. Start Printed Page 46816

(3) Contract adjustment boards will render decisions as expeditiously as practicable. The Chair shall sign a memorandum of decision disposing of the case. The decision shall be dated and shall contain the information required by FAR 50.103-6. The memorandum of decision shall not contain any information classified “Confidential” or higher. The board's decision will be sent to the appropriate official for implementation.


For requests denied or approved below the Secretarial level, follow the disposition procedures at PGI 250.103-6.

Residual powers.
Special procedures for unusually hazardous or nuclear risks.
Indemnification under contracts involving both research and development and other work.

When indemnification is to be provided on contracts requiring both research and development work and other work, the contracting officer shall insert an appropriate clause using the authority of both 10 U.S.C. 2354 and Public Law 85-804.

(a) The use of Public Law 85-804 is limited to work which cannot be indemnified under 10 U.S.C. 2354 and is subject to compliance with FAR 50.104.

(b) Indemnification under 10 U.S.C. 2354 is covered by 235.070.

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5. Section 252.203-7002 is removed.

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[FR Doc. E8-18504 Filed 8-11-08; 8:45 am]