SUPPLEMENTARY INFORMATION:

I. Background

DoD is proposing to revise the DFARS to implement section 822 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2022 (Pub. L. 117-81), which amends 10 U.S.C. 4025. Section 822 provides the authority to carry out advanced technology prize programs to award contracts to recognize outstanding achievements in basic, advanced, and applied research; technology development; and prototype development. Section 822 specifies the award of a contract as a prize is a competitive procedure if the solicitation is widely advertised. Section 822 also requires approval of such awards that exceed $10,000 and congressional reporting for contracts that exceed $10 million.

II. Discussion and Analysis

This proposed rule includes changes to the DFARS to implement section 822 of the NDAA for FY 2022. Changes are proposed to DFARS 206.102-70, Other competitive procedures, to provide that the award of a contract, for the competitive selection of prize recipients, is a competitive procedure, when the solicitation is widely advertised including through the Governmentwide point of entry ( https://sam.gov).

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 proposed 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 simplified acquisition threshold, for commercial products including COTS items, or for commercial services.

IV. Expected Impact of the Rule

Prior to the enactment of the NDAA for FY 2022, 10 U.S.C. 4025 (formerly 10 U.S.C. 2374a) did not provide for the award of contracts as prizes for outstanding achievements in basic, advanced, and applied research; technology development; and prototype development. This proposed rule will implement the authority to award contracts as prizes under certain conditions.

DoD expects this proposed rule, when finalized, may increase participation in prize competitions and decrease the lead time to deliver to the warfighter achievements in basic, advanced, and applied research; technology development; and prototype development. This proposed rule may help to expand the defense industrial base by providing a way for entities that are new to DoD procurement to obtain DoD contracts. It may also streamline the competitive process, which could reduce Government administrative costs associated with competitive negotiated acquisitions. For this reason, the difference in the cost of managing a contract instead of another type of prize is expected to be negligible.

Data provided from the Office of the Under Secretary of Defense for Research and Engineering indicates there were a total of 809 cash prizes awarded from FY 2021 to FY 2023, or approximately 270 per year, worth a total of about $3.5 million annually. DoD estimates 20 percent of these 270 historical cash prize awards, or 54 cash prize awards worth a total of approximately $700,000, would be converted to contracts. Therefore, DoD estimates that approximately 54 entities per year would be awarded contracts or a combination of contracts, other agreements ( e.g., grants, cooperative agreements, other transaction agreements), and cash prizes as a result of the changes in this proposed rule.

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, as amended.

VI. Regulatory Flexibility Act

DoD does not expect this proposed rule, when finalized, 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 DoD estimates that ( printed page 31681) approximately 127 small businesses would be awarded contracts or a combination of contracts and other prizes. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:

DoD is proposing to implement section 822 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2022 (Pub. L. 117-81), which amends 10 U.S.C. 4025, Prizes for advanced technology achievements. Section 822 provides advanced technology prize programs authority to award contracts to recognize outstanding achievements in basic, advanced, and applied research; technology development; and prototype development. This proposed rule also provides that the award of a contract as a prize is a competitive procedure if the prize program solicitation is widely advertised. Section 822 also requires approval of such awards exceeding $10,000 and congressional reporting for contracts exceeding $10 million.

The objective of the proposed rule is to implement section 822 of the NDAA for FY 2022, which is the legal basis for the rule.

DoD does not have data on contracts awarded as prizes to recognize outstanding achievements in basic, advanced, and applied research; technology development; and prototype development. Contracts were not authorized as a prize. However, analyzing data provided from the Office of the Under Secretary of Defense for Research and Engineering, there were 809 cash prizes awarded from FY 2021 to FY 2023. During this three-year period, DoD awarded a total of 636 cash prizes to small businesses, which is an average of 212 per year. DoD estimates 20 percent of the 212 historical cash prize awards per year would be converted to contracts. Therefore, DoD estimates that approximately 42 small businesses per year would be awarded contracts or a combination of contracts and other prizes as a result of this proposed rule. Therefore, DoD does not anticipate that this proposed rule, when finalized, will have a significant impact on small entities.

This rule does not impose any new reporting, recordkeeping, or other compliance requirements for small entities.

This rule does not duplicate, overlap, or conflict with any other Federal rules.

There are no known alternatives that would accomplish the stated objectives of the applicable statute.

DoD invites comments from small business concerns and other interested parties on the expected impact of this proposed rule on small entities.

DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this proposed 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 2022-D014), in correspondence.

VII. Paperwork Reduction Act

This proposed 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).

Therefore, 48 CFR part 206 is proposed to be amended as follows:

1. The authority citation for 48 CFR part 206 continues to read as follows:

Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.

2. Amend section 206.102-70 by—

a. Designating the text as paragraph (a); and

b. Adding a new paragraph (b) to read as follows: