Defense Far Supplement (DFARS) Change Notice 20041101.

DoD published the following changes to the DFARS on Nov. 1, 2004. In addition, DoD launched its new DFARS companion resource, Procedures, Guidance, and Information (PGI), available at <http://www.acq.osd.mil/dpap/dars/pgi>.

Interim Rule

Transition of Weapons-Related Prototype Projects to Follow-On Contracts (DFARS Case 2003-D106)

Establishes a pilot program that permits contracting officers to use FAR Part 12 (Acquisition of Commercial Items) procedures to award follow-on contracts for the production of items begun as prototype projects under other transaction agreements. The follow-on contract must be awarded to a nontraditional defense contractor; must not exceed $50,000,000; and must be either firm-fixed-price or fixed-price with economic price adjustment. This change implements Section 847 of the National Defense Authorization Act for Fiscal Year 2004 and is intended to ease the transition of nontraditional defense contractors from prototype transactions to standard contracts. The Federal Register notice for this rule is available at <http://www.acq.osd.mil/dpap/dars/dars/fedregs/2003d106f.txt>.

Final Rules -- DFARS Transformation

The following changes are a result of DFARS Transformation, which is a major DoD initiative to dramatically change the purpose and content of the DFARS. The transformed DFARS will contain only requirements of law, DoD-wide policies, delegations of FAR authorities, deviations from FAR requirements, and policies/procedures that have a significant effect on the public. The objective is to improve the efficiency and effectiveness of the acquisition process, while allowing the acquisition workforce the flexibility to innovate. Additional information on the DFARS Transformation initiative is available at <http://www.acq.osd.mil/dpap/dfars/transf.htm>.

Procedures. Guidance. and Information (DFARS Case 2003-D090)

Defines a new DFARS companion resource, Procedures, Guidance, and Information (PGI), which contains mandatory and non-mandatory internal DoD procedures, non-mandatory guidance, and supplemental information. Use of PGI will enable DoD to more rapidly convey internal administrative and procedural information to the acquisition workforce. PGI will not contain policy or procedures that significantly affect the public and, therefore, will not be published in the Federal Register or the Code of Federal Regulations. PGI is available at <http://www.acq.osd.mil/dpap/dars/pgi>. The HTML version of the DFARS, available at <http://www.acq.osd.mil/dpap/dfars>, contains links to PGI. The Federal Register notice for this rule is available at <http://www.acq.osd.mil/dpap/dars/dars/fedregs/2003d090f.txt>.

Publicizing Contract Actions (DFARS Case 2003-D016)

Deletes unnecessary text on cooperative agreement holders, paid advertisements, and synopsis requirements; and relocates a synopsis format to PGI. The Federal Register notice for this rule is available at <http://www.acq.osd.mil/dpap/dars/dars/fedregs/2003d016f.txt>.

Cost Principles and Procedures (DFARS Case 2003-D036)

Deletes obsolete and duplicative text on contract cost principles; and relocates procedural text on government responsibilities relating to contractor restructuring costs to PGI. The Federal Register notice for this rule is available at <http://www.acq.osd.mil/dpap/dars/dars/fedregs/2003d036f.txt>.

Laws Inapplicable to Commercial Subcontracts (DFARS Case 2003-D018)

Clarifies a potential source of confusion in the DFARS over the application of the Buy American Act and the Trade Agreements Act to subcontracts. The FAR clauses that implement the acts are only required for prime contracts and apply the restrictions on the end item delivered to the government. Prime contractors are not required to further apply the acts' restrictions to individual components purchased under subcontracts. However, prior to this DFARS change, the Trade Agreements Act and the Buy American Act were listed as laws inapplicable to subcontracts for commercial items. While the DFARS was technically correct, it was unnecessary to state this exception because the laws only apply at the prime contract level for end items, not to individual components. By stating that the laws are inapplicable to subcontracts for commercial items, the DFARS may be misinterpreted to mean that commercial components do not count in the calculation of whether domestic components exceed 50 percent of the value of the components of an end item. Additionally, the DFARS could further be misinterpreted to mean the prime contractor need not comply with the acts for a subcontracted item delivered to the government as the end item. The prime contractor is responsible for providing an end product that meets the requirements of the acts.

To correct this potential source of confusion, this DFARS change removes the Buy American Act and the Trade Agreements Act from the list of laws inapplicable to subcontracts for commercial items. This change will not impact the proper implementation of the Buy American Act and the Trade Agreements Act. However, contracting officers and prime contractors should be aware of the potential for confusion in this area. The Federal Register notice for this rule is available at <http://www.acq.osd.mil/dpap/dars/dars/fedregs/2003d018f.txt>.

Final Rule

Purchases from Federal Prison Industries (DFARS Case 2004-D005)

Deletes DFARS text on purchase of products from Federal Prison Industries. The DFARS text is no longer necessary as a result of FAR policy on this subject that was published in Federal Acquisition Circular 2001-21 on March 26, 2004. The Federal Register notice for this rule is available at <http://www.acq.osd.mil/dpap/dars/dars/fedregs/2004d005f.txt>.

Technical Amendments

Updates Internet addresses for DoD activity address codes and order code assignments and adds a link to PGI for information on use of Federal Supply Schedules. The Federal Register notice for this rule is available at <http://www.acq.osd.mil/dpap/dars/dars/fedregs/techamend20041101.txt>.