Defense Federal Acquisition Regulation Supplement: Commercial Item Determinations (DFARS Case 2020-D033)

Cited as:85 FR 74636
Court:Defense Acquisition Regulations System
Publication Date:23 Nov 2020
Record Number:2020-25430
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(i) Are located in an area designated
by the Federal Emergency Management
Agency (FEMA) as a floodplain area
having special flood hazards; or
(ii) Are otherwise determined by the
Commissioner to be subject to a flood
hazard.
(2) No mortgage may be insured that
covers property improvements located
in an area that has been identified by
FEMA as an area having special flood
hazards, unless the community in
which the area is situated is
participating in the NFIP and flood
insurance is obtained by the borrower.
Such flood insurance shall be in the
form of the standard policy issued
under the National Flood Insurance
Program (NFIP) or private flood
insurance as defined in § 203.16a. Such
requirement for flood insurance shall be
effective one year after the date of
notification by FEMA to the chief
executive officer of a flood prone
community that such community has
been identified as having special flood
hazards.
* * * * *
§ 206.134 [Amended]
8. In § 206.134, amend paragraph
(b)(3) by adding the phrase ‘‘or obtain
equivalent private flood insurance
coverage, as defined in § 203.16a’’ after
‘‘National Flood Insurance Program’’.
Dana T. Wade,
Assistant Secretary for Housing, Federal
Housing Commissioner.
[FR Doc. 2020–25105 Filed 11–20–20; 8:45 am]
BILLING CODE 4210–67–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Part 212
[Docket DARS–2020–0044]
RIN 0750–AL19
Defense Federal Acquisition
Regulation Supplement: Commercial
Item Determinations (DFARS Case
2020–D033)
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
further implement a section of the
National Defense Authorization Act for
Fiscal Year 2018 that provides that a
contract for an item using Federal
Acquisition Regulation (FAR) part 12
procedures shall serve as a prior
commercial item determination.
DATES
: Comments on the proposed rule
should be submitted in writing to the
address shown below on or before
January 22, 2021, to be considered in
the formation of a final rule.
ADDRESSES
: Submit comments
identified by DFARS Case 2020–D033,
using any of the following methods:
ÆRegulations.gov: http://
www.regulations.gov. Search for
‘‘DFARS Case 2020–D033’’. Select
‘‘Submit a Comment Now’’ and follow
the instructions provided to submit a
Comment. Please ‘‘DFARS Case 2020–
D033’’ on any attached document.
ÆEmail: osd.dfars@mail.mil. Include
DFARS Case 2020–D033 in the subject
line of the message.
ÆMail: Defense Acquisition
Regulations System, Attn: Ms. Heather
Kitchens, OUSD(A&S)DPC/DARS, Room
3B938, 3060 Defense Pentagon,
Washington, DC 20301–3060.
Comments received generally will be
posted without change to http://
www.regulations.gov, including any
personal information provided. To
confirm receipt of your comment(s),
please check www.regulations.gov,
approximately two to three days after
submission to verify posting (except
allow 30 days for posting of comments
submitted by mail).
FOR FURTHER INFORMATION CONTACT
: Ms.
Heather Kitchens, telephone 571–372–
6104.
SUPPLEMENTARY INFORMATION
:
I. Background
DoD published a proposed rule in the
Federal Register at 84 FR 65322 on
November 27, 2019, under DFARS Case
2019–D029 to implement sections 877
and 878 of the National Defense
Authorization Act (NDAA) for Fiscal
Year (FY) 2017 (Pub. L. 114–328) and
further implement section 848 of the
NDAA for FY 2018 (Pub. L. 115–91).
DoD is publishing a second proposed
rule under DFARS Case 2020–D033 to
further implement section 848, because
of substantial changes from the first
proposed rule. Section 848 modifies 10
U.S.C. 2380(b) to provide that a contract
for an item using FAR part 12
procedures shall serve as a prior
commercial item determination, unless
the appropriate official determines in
writing that the use of such procedures
was improper or that it is no longer
appropriate to acquire the item using
commercial item acquisition
procedures. This rule also proposes to
remove the procedures at DFARS
subpart 212.70, established pursuant to
section 856 of the NDAA for FY 2016
(Pub. L. 114–92), which apply to
procurements of more than $1 million
previously procured under a prime
contract using FAR part 12 procedures.
The authority for these procedures
expires on November 25, 2020.
II. Discussion and Analysis
One respondent submitted public
comments with regard to prior use of
part 12 procedures and commercial item
determinations in response to the first
proposed rule. DoD reviewed the public
comments in the development of this
second proposed rule. A discussion of
the comments and the changes made to
the rule as a result of those comments
is provided, as follows:
A. Summary of Significant Changes
From the Proposed Rule
1. Moves to paragraph 212.102(a)(ii)
the coverage on prior commercial item
determinations proposed originally at
paragraph 212.102(a)(iii), in order to
precede the paragraph on commercial
item determinations.
2. Rewrites the coverage at
212.102(a)(ii) to shift emphasis to prior
use of commercial item determinations.
3. Changes the applicability of the
proposed paragraph on commercial item
determinations at 212.102(a)(iii) to
apply to acquisitions at any dollar
value, not just those that exceed $1
million.
B. Analysis of Public Comments
Comment: One respondent
recommended revision of the proposed
rule to direct contracting officers to rely
on prior use of FAR part 12 procedures
or prior commercial item
determinations and only request
waivers on a case-by-case basis. The
respondent believed that the proposed
rule, as written, would undermine this
policy objective, and recommended
rewrite of proposed DFARS
212.102(a)(ii)(A) and (a)(iii)(B)(2).
Response: DoD has increased the
emphasis on the requirement to rely on
prior use of FAR part 12 procedures.
However, some recommendations were
not accepted, such as removal of the
limited applicability to acquisition of
commercial items pursuant to
212.102(a)(i)(A), and the requirement of
higher-level approvals for certain
commercial item determinations. The
following are responses to specific
aspects of the respondent’s comments
on the first proposed rule:
1. Applicability to statutory
exceptions (212.102(a)(i)(B)). 10 U.S.C.
2380(b)(1) requirement with regard to
prior use of FAR part 12 procedures
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serving as prior commercial item
determination does not apply to items
purchased using FAR part 12
procedures that are not commercial
items, but only treated as commercial
items (i.e., 41 U.S.C. 1903 and 10 U.S.C.
2380a). It does not make sense to infer
a commercial item determination for
acquisitions of items that may not be
commercial items, and do not require a
commercial item determination.
Further, applicability of these statutory
exceptions to treat certain items as
commercial items is not dependent on
the particular items being purchased,
but on circumstances peculiar to a
particular acquisition, that cannot be
extrapolated to other acquisitions of the
same item. DoD concluded that the 10
U.S.C. 2380(b)(1) statement ‘‘shall serve
as a prior commercial item
determinations for such item for
purposes of this chapter’’ is applicable
only if a commercial item determination
is applicable to the item.
2. Applicability at all dollar values.
According to 10 U.S.C. 2380, as
amended by section 848 of the NDAA
for FY 2018, unless certain
determinations are made, a contract for
an item acquired using commercial item
acquisition procedures under part 12 of
the Federal Acquisition Regulation shall
serve as a prior commercial item
determination with respect to such item
for purposes of this chapter. This law
does not distinguish between
acquisitions above or below $1 million.
DoD concluded that it, therefore, applies
regardless of dollar value.
3. Prior use of FAR part 12 procedures
(212.102(a)(ii)). Due to amendment of 10
U.S.C. 2380 by section 848 of the NDAA
for FY 2019, the consideration of
whether FAR part 12 procedures have
been previously used should be the next
step in the decision-making process
(after determining that a statutory
exception does not apply). Therefore,
these paragraphs have been relocated
from 212.102(a)(iii) to 212.102(a)(ii),
because prior use of part 12 procedures
needs to be considered prior to the need
for a new commercial item
determination. In order to determine
whether part 12 procedures have been
previously used, the contracting officer
shall review the Commercial Item
Determination Database, or may utilize
other available evidence. The
contracting officer shall document the
file accordingly.
This proposed rule limits to DoD
contracts the requirement that prior use
of part 12 procedures shall serve as a
commercial item determination, because
this is a DoD statute, implemented in
the DFARS, and DoD does not control
how civilian agencies make commercial
item determinations and use FAR part
12 procedures, nor does it have the data
on civilian agency commercial item
determinations in its commercial item
determination database.
DoD has not accepted all of the
recommended changes to the prior use
of FAR part 12 procedures, because
there are nuances relating to other
statutes that need to be addressed; this
rule also addresses 10 U.S.C. 2306a(b)(4)
and 10 U.S.C. 2380b. This rule also
retains the delegation to the head of the
contracting activity of the function
assigned in the statute to the senior
procurement executive.
4. Million dollar threshold for
commercial item determinations (when
there is no evidence of prior use of FAR
part 12 procedures for the acquisition of
commercial items (212.102(a)(iii)). The
million dollar threshold was based on
policy, to avoid overly burdensome
requirements on lower dollar value
acquisitions. If contracting officers are
accepting prior use of part 12
procedures, even below $1 million, as
commercial item determinations for
subsequent buys, then it is necessary to
apply the same standards at any dollar
value, since these determinations can
form the basis for much larger
acquisitions.
C. Other Changes
The rule proposes to delete, add, or
amend some of the pointers to DFARS
Procedures, Guidance, and Information
(PGI) to conform to the current PGI.
III. Applicability to Contracts at or
Below the Simplified Acquisition
Threshold and for Commercial Items,
Including Commercially Available Off-
the-Shelf Items
This rule does not create any new
solicitation provisions or contract
clauses, or amend any existing
provisions or clauses.
IV. 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, dated September 30, 1993. This
rule is not a major rule under 5 U.S.C.
804.
V. Executive Order 13771
This rule is not expected to be subject
to E.O. 13771, because this rule is not
a significant regulatory action under
E.O. 12866.
VI. 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. However, an initial regulatory
flexibility analysis has been performed
and is summarized as follows:
This proposed rule is necessary in
order to further implement section 848
of the National Defense Authorization
Act (NDAA) for Fiscal Fear (FY) 2018
(10 U.S.C. 2380(b)).
The objective of this rule is to address
the use of FAR part 12 procedures and
commercial item determinations. If the
Commercial Item Determination
Database contains a prior commerciality
determination, or the contracting officer
has other evidence that an item has
previously been acquired by DoD using
commercial item acquisition procedures
under FAR part 12, the prior contract
shall serve as a prior determination that
an item is a commercial item, as defined
in FAR 2.101. The legal basis for the
rule is the NDAA section cited as the
reason for the action.
DoD awarded contracts to an average
of 40,689 unique entities (including
30,806 small businesses) each year from
FY 2016 through FY 2018. This rule
impacts the procedures for commercial
item determinations for products and
services offered to the Government.
This rule does not impose any new
reporting, recordkeeping, or other
compliance requirements.
The 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 there is no
significant impact on small entities. Any
impact is expected to be beneficial.
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 2020–D033), in
correspondence.
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VII. Paperwork Reduction Act
The rule does not contain any new
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 212
Government procurement.
Jennifer D. Johnson,
Regulatory Control Officer, Defense
Acquisition Regulations System.
Therefore, 48 CFR part 212 is
proposed to be amended as follows:
PART 212—ACQUISITION OF
COMMERCIAL ITEMS
1. The authority citation for part 212
continues to read as follows:
Authority: 41 U.S.C. 1303 and 48 chapter
1.
2. Revise section 212.102 to read as
follows:
212.102 Applicability.
(a)(i) Use of FAR part 12 procedures.
Use of FAR part 12 procedures is based
on—
(A) A determination that an item is a
commercial item, as defined in FAR
2.101 (see paragraph (a)(iii) of this
section); or
(B) Applicability of one of the
following statutes that provide for
treatment as a commercial item and use
of part 12 procedures, even though the
item may not meet the definition of
‘‘commercial item’’ at FAR 2.101 and
does not require a commercial item
determination:
(1) 41 U.S.C. 1903—Supplies or
services to be used to facilitate defense
against or recovery from cyber, nuclear,
biological, chemical, or radiological
attack pursuant to FAR 12.102(f); or
(2) 10 U.S.C. 2380a—Supplies or
services from nontraditional defense
contractors pursuant to 212.102(a)(iv).
(ii) Prior use of FAR part 12
procedures. (A) Pursuant to 10 U.S.C.
2380(b), except as provided in
paragraph (a)(ii)(B) of this section or
unless the item was acquired pursuant
to paragraph (a)(i)(B) of this section, if
the Commercial Item Determination
(CID) Database (for website see PGI
212.102(a)(iii)(3)) contains a prior
commerciality determination, or the
contracting officer has other evidence
that an item has been acquired
previously by DoD using commercial
item acquisition procedures under FAR
part 12, then the prior contract shall
serve as a determination that an item is
a commercial item, as defined in FAR
2.101. The contracting officer shall
document the file accordingly.
(B)(1) If the item to be acquired meets
the criteria in paragraph (a)(ii)(A) of this
section the item may not be acquired
using other than FAR part 12
procedures unless the head of a
contracting activity issues a
determination as specified in paragraph
(a)(ii)(B)(2)(ii) of this section.
(2) Pursuant to 10 U.S.C.
2306a(b)(4)(A), the contracting officer
may presume that a prior commercial
item determination made by a military
department, a defense agency, or
another component of DoD shall serve
as a determination for subsequent
procurements of such item. In
accordance with 10 U.S.C. 2306a(b)(4)
and 10 U.S.C. 2380(b), if the contracting
officer questions a prior determination
to use part 12 procedures and instead
chooses to proceed with a procurement
of an item previously determined to be
a commercial item using procedures
other than FAR part 12 procedures, the
contracting officer shall request a review
by the head of the contracting activity
that will conduct the procurement. Not
later than 30 days after receiving a
request for review, the head of a
contracting activity shall—
(i) Confirm that the prior use of FAR
part 12 procedures was appropriate and
still applicable; or
(ii) Issue a determination that the
prior use of FAR part 12 procedures was
improper or that it is no longer
appropriate to acquire the item using
FAR part 12 procedures, with a written
explanation of the basis for the
determination.
(iii) Commercial item determination.
Unless the procedures in paragraph
(a)(ii) of this section are applicable,
when using FAR part 12 procedures for
acquisitions of commercial items
pursuant to 212.102(a)(i)(A), the
contracting officer shall—
(A) Determine in writing that the
acquisition meets the commercial item
definition in FAR 2.101;
(B) Include the written determination
in the contract file;
(C) Obtain approval at one level above
the contracting officer when a
commercial item determination relies
on paragraphs (1)(ii), (3), (4), or (6) of
the ‘‘commercial item’’ definition at
FAR 2.101; and
(D) Follow the procedures and
guidance at PGI 212.102(a)(iii) regarding
file documentation and commercial
item determinations.
(iv) Nontraditional defense
contractors. In accordance with 10
U.S.C. 2380a, contracting officers—
(A) Except as provided in paragraph
(a)(iii)(B) of this section, may treat
supplies and services provided by
nontraditional defense contractors as
commercial items. This permissive
authority is intended to enhance
defense innovation and investment,
enable DoD to acquire items that
otherwise might not have been
available, and create incentives for
nontraditional defense contractors to do
business with DoD. It is not intended to
recategorize current noncommercial
items; however, when appropriate,
contracting officers may consider
applying commercial item procedures to
the procurement of supplies and
services from business segments that
meet the definition of ‘‘nontraditional
defense contractor’’ even though they
have been established under traditional
defense contractors. The decision to
apply commercial item procedures to
the procurement of supplies and
services from nontraditional defense
contractors does not require a
commercial item determination and
does not mean the item is commercial;
(B) Shall treat services provided by a
business unit that is a nontraditional
defense contractor as commercial items,
to the extent that such services use the
same pool of employees as used for
commercial customers and are priced
using methodology similar to
methodology used for commercial
pricing; and
(C) Shall document the file when
treating supplies or services from a
nontraditional defense contractor as
commercial items in accordance with
paragraph (a)(iii)(A) or (B) of this
section.
(v) Commercial item guidebook. For a
link to the commercial item guidebook,
see PGI 212.102(a)(iii)(4).
Subpart 212.70 [Removed and
reserved]
3. Remove and reserve subpart 212.70,
consisting of sections 212.7000 and
212.7001.
[FR Doc. 2020–25430 Filed 11–20–20; 8:45 am]
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