DATE: December 6, 2001

SUBJECT: Defense Federal Acquisition Regulation Supplement (DFARS); Performance-Based Contracting Using FAR Part 12 Procedures

SOURCE: Federal Register, December 6, 2001, Vol. 66, No. 235, page 63335

AGENCIES: Department of Defense (DOD)

ACTION: Interim Rule

SYNOPSIS: DOD is amending DFARS Part 212, Acquisition of Commercial Items, to implement Section 821(b) of the National Defense Authorization Act for Fiscal Year 2001 (Public Law 106-398), which permits DOD to treat certain performance-based service contracts and task orders as contracts for the procurement of commercial items.

EDITOR'S NOTE: For more on the acquisition-related provisions of Public Law 106-398, see the November 2, 2000, FEDERAL CONTRACTS DISPATCH "Enactment of the National Defense Authorization Act of Fiscal Year 2001."

DATES: This interim rule is effective December 6, 2001. Comments on the interim rule must be submitted no later than February 4, 2002.

ADDRESSES: Respondents may submit comments directly on the web site at http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm. As an alternative, respondents may e-mail comments to: dfars@acq.osd.mil. Also, respondents who cannot submit comments through the web site or by e-mail may submit comments to Defense Acquisition Regulations Council, Attn: Sandra Haberlin, OUSD(AT&L)DP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062, or by fax to 703-602-0350. Cite DFARS Case 2000-D306 when making comments on this interim rule.

FOR FURTHER INFORMATION CONTACT: Sandra Haberlin, 703-602-0289.

SUPPLEMENTAL INFORMATION: Paragraph (b) of Public Law 106-398, Section 821, Improvements in Procurements of Services, establishes an incentive for DOD use of performance-based service contracts. It permits a contracting officer to use the same procedures used for the acquisition of commercial items under Federal Acquisition Regulation (FAR) Part 12 for a performance-based service contract or task order if certain conditions are met. These conditions include:

  1. The contract or task order must:
    1. Be firm-fixed-price;
    2. Have a value of $5 million or less;
    3. Set forth specifically each task to be performed;
    4. Define each task in measurable, mission-related terms; and
    5. Identify the specific end products or output to be achieved for each task;

  2. The contractor must provide similar services at the same time to the general public under terms and conditions similar to those in the contract or task order; and

  3. The procedures in FAR Subpart 13.5, Test Program for Certain Commercial Items, must not be used.

The contracting authority provided under Section 821(b) expires on October 30, 2003, three years after enactment of Public Law 106-398.

To implement Section 821(b), DFARS Subpart 212.1, Acquisition of Commercial Items -- General, is added. It consists of DFARS 212.102, Applicability, which reflects the above conditions on the use of the authority. Also, DFARS 212.102 includes subparagraph (a)(ii) which states that "the contracting officer should modify paragraph (a) of the clause at FAR 52.212-4 [Contract Terms and Conditions -- Commercial Items] as may be necessary to ensure the contract's remedies adequately protect the government's interests." In the introduction to the interim rule is the following statement: "...when soliciting offers, contracting officers may need to modify paragraph (a) of the provision at [FAR] 52.212-4 in particular, addressing inspection and acceptance, as may be necessary to ensure the contract's remedies adequately protect the government's interests. For example, contracting officers may wish to negotiate the inclusion of commercial remedies such as extension of contract performance or the right to reduce the contract price to reflect the reduced value of the services performed when defects in services cannot be corrected by reperformance."

In addition, DFARS Subpart 237.6, Performance-Based Contracting, is added. It consists of DFARS 237.601, General, which states, "See [DFARS] 212.102 for the use of FAR Part 12 procedures with performance-based contracting."

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2001 by Panoptic Enterprises. All Rights Reserved.

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