[Federal Register: June 5, 2000 (Volume 65, Number 108)]
[Rules and Regulations]               
[Page 35576-35577]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05jn00-6]                         

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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 3

RIN 0790-AG79

 
Transactions Other Than Contracts, Grants, or Cooperative 
Agreements for Prototype Projects

AGENCY: Office of the Secretary, DoD.

ACTION: Interim rule.

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SUMMARY: This interim rule requires inclusion of a clause as required 
by law, providing for Comptroller General access to records in 
transactions other than contracts, grants or cooperative agreements for 
prototype projects that provide for total payments in excess of 
$5,000,000. This rule is published in the Federal Register for public 
comment because it directly impacts the public by prescribing conduct 
that must be followed by a party to, or entity that participates in the 
performance of, any such transaction.

DATES: The interim rule will be effective July 5, 2000. Comments on the 
interim rule should be submitted in writing to the address specified 
below on or before August 4, 2000, to be considered in the formation of 
the final rule.

ADDRESSES: Interested parties should submit written comments on the 
interim rule to: Office of the Director, Defense Procurement, Attn: Ms. 
Teresa Brooks, PDUSD(A&T)/DP(DSPS), 3060 Defense Pentagon, Washington, 
DC 20301-3060. Telefax (703) 693-9616.

FOR FURTHER INFORMATION CONTACT: Teresa Brooks, (703) 695-4258.

SUPPLEMENTARY INFORMATION:

Background and Purpose

    Section 845 of the National Defense Authorization Act for Fiscal 
Year 1994, Pub. L. 103-160, as amended by section 804 of the National 
Defense Authorization Act for Fiscal Year 1997, Pub. L. 104-201 and 
section 241 of the Strom Thurmond National Defense Authorization Act 
for Fiscal Year 1999, Pub. L. 105-261, authorizes the Secretary of a 
Military Department, the Director of Defense Advanced Research Projects 
Agency and any other official designated by the Secretary of Defense, 
to enter into transactions other than contracts, grants or cooperative 
agreements for prototype projects that are directly relevant to weapons 
or weapon systems proposed to be acquired or developed by the 
Department of Defense. Such transactions are commonly referred to as 
``other transaction'' agreements for prototype projects.
    Section 801 of the National Defense Authorization Act for Fiscal 
Year 2000 establishes a requirement that an ``other transaction'' 
agreement for a prototype project that provides for payments in a total 
amount in excess of $5,000,000 include a clause that provides 
Comptroller General access to records.
    To the extent that a particular statute or regulation is limited in 
its applicability to the use of a procurement contract, it would 
generally not apply to ``other transactions'' for prototype projects. 
The requirement for Comptroller General access on ``other 
transactions'' for prototype projects that provide for payments that 
exceed $5,000,000 is the first statutory requirement mandating 
conditions that must be included in an ``other transactions'' 
agreement. The content of this rule may also be included in a future 
DoD issuance.

Regulatory Evaluation

Executive Order 12866, ``Regulatory Planning and Review''

    It has been determined that this rule is not a significant rule as 
defined under section 3(f)(1) through 3(f)(4) of Executive Order 12866.

Pub. L. 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. 601)

    It has been certified that this part is not subject to the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.) because it would not, 
if promulgated, have a significant economic impact on a substantial 
number of small entities. The rule requires only that the Comptroller 
General be provided access to records of certain projects. It does not 
require additional record keeping or other significant expense by 
project participants.

Pub. L. 96-511, ``Paperwork Reduction Act of 1995'' (44 U.S.C. et seq.)

    It has been certified that this rule does not impose any reporting 
or record keeping requirements under the Paperwork Reduction Act of 
1995.

List of Subjects in 32 CFR Part 3

    Grant programs.

    Accordingly, Title 32, Chapter 1 is amended to add part 3 to read 
as follows:

PART 3--TRANSACTIONS OTHER THAN CONTRACTS, GRANTS, OR COOPERATIVE 
AGREEMENTS FOR PROTOTYPE PROJECTS

Sec.
3.1  Purpose.
3.2  Applicability.
3.3  Definitions.
3.4  Policy.


    Authority: Section 801, Pub. L. 106-65.


Sec. 3.1  Purpose.

    This part implements section 801 of the National Defense 
Authorization Act for Fiscal Year 2000 (Pub. L. 106-65). It establishes 
the requirement for the inclusion of a clause in transactions other 
than contracts, grants or cooperative agreements for prototype projects 
awarded under authority of 10 U.S.C. 2371 that provides Comptroller 
General access to records when payments total an amount in excess of 
$5,000,000.


Sec. 3.2  Applicability.

    This part applies to the Secretary of a Military Department, the 
Directors of the Defense Agencies, and any other official designated by 
the Secretary of Defense to enter into transactions other than 
contracts, grants or cooperative agreements for prototype projects that 
are directly relevant to weapons or weapon systems proposed to be 
acquired or developed by the Department of Defense, under authority of 
10 U.S.C. 2371. Such transactions are commonly referred to as ``other 
transaction'' agreements and are hereafter referred to as agreements.


Sec. 3.3  Definitions.

    Contracting activity. An element of an agency designated by the 
agency head and delegated broad authority regarding acquisition 
functions. It also means elements designated by the director of a 
defense agency that has been delegated contracting authority through 
its agency charter.
    Head of the contracting activity. The official who has overall 
responsibility for managing the contracting activity.


Sec. 3.4  Policy.

    (a) Except as provided in paragraph (b) of this section, a clause 
must be included in solicitations and agreements for prototype projects 
awarded under authority of 10 U.S.C. 2371, that provide for total 
government payments in excess of $5,000,000 to allow Comptroller 
General access to records that directly pertain to such agreements.
    (b) The clause referenced in paragraph (a) of this section will not 
apply with respect to a party or entity, or subordinate element of a 
party or entity,

[[Page 35577]]

that has not entered into any other contract, grant, cooperative 
agreement or ``other transaction'' agreement that provides for audit 
access by a government entity in the year prior to the date of the 
agreement.
    (c) The head of the contracting activity (HCA) that is carrying out 
the agreement may waive the applicability of the Comptroller General 
access requirement if the HCA determines it would not be in the public 
interest to apply the requirement to the agreement. The waiver will be 
effective with respect to the agreement only if the HCA transmits a 
notification of the waiver to the Committees on Armed Services of the 
Senate and the House of Representatives, the Comptroller General, and 
the Director, Defense Procurement before entering into the agreement. 
The notification must include the rationale for the determination.
    (d) The HCA must notify the Director, Defense Procurement of 
situations where there is evidence that the Comptroller General Access 
requirement caused companies to refuse to participate or otherwise 
restricted the Department's access to companies that typically do not 
do business with the Department.
    (e) In no case will the requirement to examine records under the 
clause referenced in paragraph (a) of this section apply to an 
agreement where more than three years have passed after final payment 
is made by the government under such an agreement.
    (f) The clause referenced in paragraph (a) of this section must 
provide for the following:
    (1) The Comptroller General of the General of the United States, in 
the discretion of the Comptroller General, shall have access to and the 
right to examine records of any party to the agreement or any entity 
that participates in the performance of this agreement that directly 
pertain to, and involve transactions relating to, the agreement.
    (2) Excepted from the Comptroller General Access requirement is any 
party to this agreement or any entity that participates in the 
performance of the agreement, or any subordinate element of such party 
or entity, that has not entered into any other contract, grant, 
cooperative agreement, or ``other transaction'' agreement that provides 
for audit access by a government entity in the year prior to the date 
of the agreement.
    (3) This clause shall not be construed to require any party or 
entity, or any subordinate element of such party or entity, that 
participates in the performance of the agreement, to create or maintain 
any record that is not otherwise maintained in the ordinary course of 
business or pursuant to a provision of law.
    (4) The Comptroller General shall have access to the records 
described in this clause until three years after the date the final 
payment is made by the United States under this agreement.
    (5) The recipient of the agreement shall flow down this provision 
to any entity that participates in the performance of the agreement.

    Dated: May 24, 2000.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 00-13521 Filed 6-2-00 8:45 am]
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