Defense Federal Acquisition Regulation Supplement; Weighted GuidelinesFederally Funded Research and Development Centers

DEPARTMENT OF DEFENSE

48 CFR Part 215

[DFARS Case 97-D025]

Defense Federal Acquisition Regulation Supplement; Weighted

Guidelines--Federally Funded Research and Development Centers

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

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SUMMARY: The Director of Defense Procurement is proposing to amend the

Defense Federal Acquisition Regulation Supplement (DFARS) to exempt

Federally Funded Research and Development Centers from the weighted

guidelines method for establishing profit and fee objectives.

DATES: Comment date: Comments on the proposed rule should be submitted

in writing to the address shown below on or before November 14, 1997 to

be considered in the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments to:

Defense Acquisition Regulations Council, Attn: Ms. Amy Williams, PDUSD

(A&T) DP (DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-

3062. Telefax number (703) 602-0350.

E-mail comments submitted over the Internet should be addressed to:

[email protected]

Please cite DFARS Case 97-D025 in all correspondence related to

this issue. E-mail correspondence should cite DFARS Case 97-D025 in the

subject line.

FOR FURTHER INFORMATION CONTACT:

Ms. Amy Williams, (703) 602-0131.

SUPPLEMENTARY INFORMATION:

A. Background

This proposed rule amends DFARS Subpart 215.9 to exempt Federally

Funded Research and Development Centers (FFRDCs) from the weighted

guidelines method for establishing profit and fee objectives. The fee

for an FFRDC is based on assessment of need and, therefore, should not

be subject to the structured, risk-based approach embodied in the

weighted guidelines method of profit/fee computation. The proposed rule

instead requires contracting officers to establish fee objectives for

FFRDCs in accordance with FFRDC fee policies in the DoD FFRDC

Management Plan.

B. Regulatory Flexibility Act

The proposed rule is not expected 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 the rule

applies only to contract actions with Federally Funded Research and

Development Centers. The rule is not applicable to small businesses. An

initial regulatory flexibility analysis has therefore not been

prepared. Comments are invited from small businesses and other

interested parties. Comments from small entities concerning the

affected DFARS subpart also will be considered in accordance with 5

U.S.C. 610. Such comments should be submitted separately and should

cite DFARS Case 97-D025 in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the proposed

rule does not impose any information collection requirements that

require the approval of the Office of Management and Budget under 44

U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 215

Government procurement.

Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.

Therefore, 48 CFR Part 215 is proposed to be amended as follows:

1. The authority citation for 48 CFR Part 215 continues to read as

follows:

Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 215--CONTRACTING BY NEGOTIATION

2. Section 215.902 is amended by revising the introductory text to

read as follows:

215.902 Policy.

Departments and agencies shall use a structured approach for

developing a prenegotiation profit or fee objective (profit objective)

on any negotiated contract action that requires cost analysis, except

on cost-plus-award-fee contracts (see 215.974) or contracts with

Federally Funded Research and Development Centers (FFRDCs) (see

215.975). There are three structured approaches--

* * * * *

3. Section 215.903 is amended by revising paragraphs (b)(1) and

(b)(2) to read as follows:

215.903 Contracting officer responsibilities.

* * * * *

(b) The contracting officer--

(1) Shall use the weighted guidelines method (see 215.971),

unless--

(A) The modified weighted guidelines method applies;

(B) An alternate structured approach is justified;

(C) Developing a fee objective for a cost-plus-award-fee contract;

or

(D) Developing a fee objective for a contract with an FFRDC.

(2) Shall use the modified weighted guidelines method (see 215.972)

on contract actions with nonprofit organizations, except contract

actions with FERDCs;

* * * * *

4. Section 215.972 is amended by revising the section heading and

paragraphs (b) and (c), and by removing paragraph (d). The revised text

read as follows:

215.972 Modified weighted guidelines method for nonprofit

organizations except FFRDCs.

* * * * *

(b) For nonprofit organizations which are entities that have been

identified by the Secretary of Defense or a Secretary of a Department

as receiving sustaining support on a cost-plus-fixed-fee basis from a

particular DoD department or agency, compute a fee objective for

covered actions using the weighted guidelines method in 215.971, with

the following modifications:

(1) Modifications to performance risk (Blocks 21-24 of the DD Form

1547.

(i) If the contracting officer assigns a value from the standard

designated range (see 215.971-2(c), reduce the fee objective by an

amount equal to 1 percent of the costs in Block 18 of the DD Form 1547.

Show the net (reduced) amount on the DD Form 1547.

(ii) If the contracting officer assigns a value from the alternate

designated range, reduce the fee objective by an amount equal to 2

percent of the costs in Block 18 of the DD Form 1547. Shown the net

(reduced) amount on the DD Form 1547.

(2) Modifications to contract type risk (Block 25 of the DD Form

1547). Use a designated range of -1 percent to 0 percent instead of the

values in 215.971-3. There is no normal value.

(c) For all other nonprofit organizations except FFRDCs, compute a

fee objective for covered actions using the weighted guidelines method

in 215.971, modified as described in paragraph (b)(1) of this section.

215.975 [Redesignated]

5. Section 215.975 is redesignated as 215.976.

6. A new section 215.975 is added to read as follows:

215.975 Fee requirements for FFRDCs.

For nonprofit organizations that are FFRDCs, the contracting

officer-

(a) Should consider whether any fee is appropriate. Considerations

shall include the FFRDC's--

(1) Proportion of retained earnings (as established under generally

accepted accounting methods) that relates to DoD contracted effort;

(2) Facilities capital acquisition plans;

(3) Working capital funding as assessed on operating cycle cash

needs;

(4) Contingency funding; and

(5) Provision for funding unreimbursed costs deemed ordinary and

necessary to the FFRDC.

(b) Shall, when a fee is considered appropriate, establish the fee

objective in accordance with FFRDC fee policies in the DoD FFRDC

Management Plan.

(c) Shall not use the weighted guidelines method or an alternate

structured approach.

[FR Doc. 97-24386 Filed 9-12-97; 8:45 am]

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