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Defense Federal Acquisition Regulation Supplement; Requirements Applicable to Undefinitized Contract Actions (DFARS Case 2008-D029)

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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 address requirements for DoD management and oversight of undefinitized contract actions, consistent with the provisions of Section 809 of the National Defense Authorization Act for Fiscal Year 2008.


Effective Date: July 29, 2009.

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Ms. Cassandra Freeman, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone 703-602-8383; facsimile 703-602-7887. Please cite DFARS Case 2008-D029.

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A. Background

Section 809 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181) required DoD to issue guidance to ensure the implementation and enforcement of requirements applicable to undefinitized contract actions. On August 29, 2008, the Director, Defense Procurement and Acquisition Policy, issued a memorandum to DoD departments and agencies as required by Section 809 of Public Law 110-181. This final rule amends the DFARS to address the requirements of the August 29, 2008 memorandum, specifically, requirements for DoD departments and agencies to submit semi-annual reports regarding undefinitized contract actions exceeding $5 million; for obligation of funds for the undefinitized period consistent with the contractor's proposal for that period; and for compliance with existing DFARS policy relating to profit computation for undefinitized contract actions.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.Start Printed Page 37650

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-D029.

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 217 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. Section 217.7404-4 is amended by designating the existing text as paragraph (a) and adding paragraph (b) to read as follows:

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Limitations on obligations.
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(b) In determining the appropriate amount to obligate, the contracting officer shall assess the contractor's proposal for the undefinitized period and shall obligate funds only in an amount consistent with the contractor's requirements for the undefinitized period.

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3. Section 217.7404-6 is revised to read as follows:

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Allowable profit.

When the final price of a UCA is negotiated after a substantial portion of the required performance has been completed, the head of the contracting activity shall ensure the profit allowed reflects—

(a) Any reduced cost risk to the contractor for costs incurred during contract performance before negotiation of the final price;

(b) The contractor's reduced cost risk for costs incurred during performance of the remainder of the contract; and

(c) The requirements at 215.404-71-3(d)(2). The risk assessment shall be documented in the contract file.

[Redesignated as 217.7406]
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4. Section 217.7405 is redesignated as section 217.7406.

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5. A new section 217.7405 is added to read as follows:

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Plans and reports.

(a) To provide for enhanced management and oversight of UCAs, departments and agencies shall—

(1) Prepare and maintain a Consolidated UCA Management Plan; and

(2) Prepare semi-annual Consolidated UCA Management Reports addressing each UCA with an estimated value exceeding $5 million.

(b) Consolidated UCA Management Reports and Consolidated UCA Management Plan updates shall be submitted to the Office of the Director, Defense Procurement and Acquisition Policy, by October 31 and April 30 of each year in accordance with the procedures at PGI 217.7405.

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6. Section 252.217-7027 is amended in the introductory text by removing “217.7405” and adding in its place “217.7406”.

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[FR Doc. E9-17947 Filed 7-28-09; 8:45 am]