FedGovContracts.com

Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: February 10, 2000

FROM: Barry McVay, CPCM

SUBJECT: Defense Federal Acquisition Regulation Supplement (DFARS); Profit Policy

SOURCE: Federal Register, February 10, 2000, Vol. 65, No. 28, page 6574

AGENCIES: Department of Defense (DOD)

ACTION: Advance Notice of Proposed Rulemaking

SYNOPSIS: DOD is soliciting comments from government and industry personnel regarding potential changes to the profit policy in DFARS 215.404-4, Profit, and DFARS 215.404-71-2, Performance Risk. The changes would increase the emphasis placed on technical risk as a factor in developing objective profit amounts. DOD will conduct a public meeting to discuss the potential changes and the comments on the potential changes.

DATES: Written comments on the potential DFARS changes should be submitted no later than February 17, 2000.

The public meeting will be conducted on February 23, 2000, from 9:00 a.m. to 12:00 p.m., local time. The names of individuals expected to attend the public meeting should be submitted to the point of contact no later than February 18, 2000, 4:00 p.m., local time.

ADDRESSES: The potential changes to the DFARS are available in draft form electronically in Microsoft Word 6.0 text format at http://www.acq.osd.mil/dp/cpf. Paper copies may be obtained from Mr. Robert Bemben.

Submit written comments to Mr. Robert Bemben, PDUSD(AT&L) DP/CPF, 3060 Defense Pentagon, Washington, DC 20301-3060; e-mail: bembenrj@acq.osd.mil.

The public meeting will be held at the Headquarters, Defense Logistics Agency, Command Conference Room (Room 2419), 8725 John J. Kingman Road, Fort Belvoir, Virginia. The names of individuals expected to attend the public meeting should be submitted to Mr. Robert Bemben, by telephone, fax, mail, or e-mail. Walk-in attendance will be accommodated, but pre-registration is desired because the names of pre-registrants will be provided to building security to facilitate building access.

FOR FURTHER INFORMATION CONTACT: Mr. Robert Bemben, 703-695-9764; fax: 703-693-9616; e-mail: bembenrj@acq.osd.mil.

SUPPLEMENTAL INFORMATION: Section 813 of the National Defense Authorization Act for Fiscal Year 2000 (Public Law 106-65) directed the Secretary of Defense to review the DOD profit guidelines to consider whether "appropriate modifications, such as placing increased emphasis on technical risk as a factor for determining appropriate profit margins, would provide an increased profit incentive for contractors to develop and produce complex and innovative new technologies." Also, Section 813 requires the Secretary of Defense to make any changes to the profit guidelines that the Secretary determines to be necessary and to report to Congress on the results of the review.

A review of the DOD profit policy has identified potential changes to the DFARS that would increase the emphasis placed on technical risk as a factor in developing objective profit amounts. Draft changes have been prepared and are available in Microsoft Word 6.0 text format at http://www.acq.osd.mil/dp/cpf, or in paper copy from Mr. Robert Bemben, 703-695-9764. Note that the draft changes do not reflect a proposed rule; they are provided for information and discussion purposes only. The purpose of preparing the draft changes is to provide the public with a preliminary indication of changes under consideration, and to solicit comments and suggestions on those changes. After consideration of the comments submitted in writing and those offered at the public meeting, the Director of Defense Procurement may submit a draft proposed rule to the Defense Acquisition Regulations (DAR) Council for consideration. The DAR Council will publish any resulting proposed rule for additional public comments.

The primary draft changes are:

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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