Published Proposed Rule

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expected impact of this rule on small
entities.
DoD will also consider comments
from small entities concerning the
existing regulations in subparts affected
by this rule in accordance with 5 U.S.C.
610. Interested parties must submit such
comments separately and should cite 5
U.S.C. 610 (DFARS Case 2011–D052), in
correspondence.

212.301 Solicitation provisions and
contract clauses for the acquisition of
commercial items.

IV. Paperwork Reduction Act

PART 242—CONTRACT
ADMINISTRATION AND AUDIT
SERVICES

This rule contains information
collection requirements in the clause at
DFARS 252.247–70XX, Application for
U.S. Government Shipping
Documentation/Instructions, and the
associated form, DD Form 1659,
Application for U.S. Government
Shipping Documentation/Instructions
(previously, the clause at DFARS
252.242–7003), currently approved
through March 31, 2013, under OMB
Control Number 0704–0250, titled
DFARS part 242, Contract
Administration and Audit Services, in
accordance with the Paperwork
Reduction Act (44 U.S.C. chapter 35).
The reduction in paperwork burden
realized through use of electronic
request systems is negligible because
preparation of the DD Form 1659, a
common practice since 1991, is not a
significant administrative burden.
Additionally, there is a negligible
impact on paperwork burden resulting
from revisions to the DD form, because
only the single word ‘‘Government,’’ in
front of ‘‘Bill(s) of Lading’’ is being
revised, and two terms are being
updated. There are no substantive
changes being made either to the form
or to the associated clause at DFARS
252.247–70XX.
List of Subjects in 48 CFR Parts 212,
242, 247, 252, and 253
Accounting, Government
procurement.

emcdonald on DSK29S0YB1PROD with PROPOSALS2

Ynette R. Shelkin,
Editor, Defense Acquisition Regulations
System.

Therefore, DoD proposes to amend 48
CFR parts 212, 242, 247, 252, and 253
as follows:
1. The authority citation for 48 CFR
parts 212, 242, 247, 252, and 253 is
revised to read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR
chapter 1.

2. In section 212.301, add paragraph
(f)(iv)(N) to read as follows:

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Subpart 242.14—[Removed]

PART 247—TRANSPORTATION
4. Add subpart 247.1, consisting of
section 247.101, to read as follows:
Subpart 247.1—General
247.101

Policies

(h) Shipping documents covering
f.o.b. origin shipments. (i) Procedures
for the contractor to obtain bills of
lading are in the clause at 252.247–
70XX, Application for U.S. Government
Shipping Documentation/Instructions.
(ii) The term ‘‘commercial bills of
lading’’ includes the use of any
commercial form or procedure.
5. Revise section 247.207 to read as
follows:
247.207 Solicitation provisions, contract
clauses, and special requirements.

(1) Use the clause at 252.247–7003,
Pass-Through of Motor Carrier Fuel
Surcharge Adjustment to the Cost
Bearer, in solicitations and contracts for
carriage, including acquisitions of
commercial items, in which a motor
carrier, broker, or freight forwarder will
provide or arrange truck transportation
services that provide for a fuel-related
adjustment.
(2) Use the clause at 252.247–70XX,
Application for U.S. Government
Shipping Documentation/Instructions,
in solicitations and contracts, including
acquisitions of commercial items, when
shipping under Bills of Lading and
Domestic Route Order under f.o.b.
origin contracts, Export Traffic Release
regardless of f.o.b. terms, or foreign
military sales shipments.
6. In subpart 247.2, add sections
247.207–11 and 247.207–70 to read as
follows:

For reporting of volume movements
within the contiguous United States,
follow the procedures at PGI 247.207–
11.

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Demurrage and detention

Follow the procedures for demurrage
and detention charges at PGI 247.207–
70.
PART 252—SOLICITATION
PROVISIONS AND CONTRACT
CLAUSES
252.242–7003

[Removed and Reserved]

7. Section 252.242–7003 is removed
and reserved.
8. Section 252.247–70XX is added to
read as follows:
252.247–70XX Application for U.S.
Government Shipping Documentation/
Instructions.

3. Remove subpart 242.14.

247.207–11 Volume movements within the
contiguous United States.

PART 212—ACQUISITION OF
COMMERCIAL ITEMS

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(f) * * *
(iv) * * *
(N) Use the clause at 252.247–70XX,
Application for U.S. Government
Shipping Documentation/Instructions,
as prescribed in 247.207.
*
*
*
*
*

247.207–70
charges.

As prescribed in 247.207, use the
following clause:
APPLICATION FOR U.S.
GOVERNMENT SHIPPING
DOCUMENTATION/INSTRUCTIONS
(DATE)
(a) Except as provided in paragraph (b) of
this clause, the Contractor shall request bills
of lading by submitting a DD Form 1659,
Application for U.S. Government Shipping
Documentation/Instructions, to the—
(1) Transportation Officer, if named in the
contract schedule; or
(2) Contract administration office.
(b) If an automated system is available for
shipment requests, use service/agency
systems (e.g., Navy’s Global Freight
Management–Electronic Transportation
Acquisition (GFM–ETA) and Financial Air
Clearance Transportation System (FACTS)
Shipment Processing Module, Air Force’s
Cargo Movement Operations System,
DCMA’s Shipment Instruction Request (SIR)
e-Tool application, and DLA’s Distribution
Standard System Vendor Shipment Module)
in lieu of DD Form 1659.

(End of clause)
[FR Doc. 2012–1494 Filed 1–27–12; 8:45 am]
BILLING CODE 5001–06–P

DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Parts 232 and 252
RIN 0750–AH54

Defense Federal Acquisition
Regulation Supplement; PerformanceBased Payments (DFARS Case 2011–
D045)
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Proposed rule.
AGENCY:

DoD is proposing to amend
the Defense Federal Acquisition

SUMMARY:

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Federal Register / Vol. 77, No. 19 / Monday, January 30, 2012 / Proposed Rules
Regulation Supplement (DFARS) to
provide detailed guidance and
instructions on the use of the
performance-based payments analysis
tool.
Comments on the proposed rule
should be submitted in writing to the
address shown below on or before
March 30, 2012, to be considered in the
formation of the final rule.

DATES:

You may submit comments,
identified by DFARS Case 2011–D045,
using any of the following methods:
Regulations.gov: http://www.
regulations.gov.
Submit comments via the Federal
eRulemaking portal by inserting
‘‘DFARS Case 2011–D045’’ under the
heading ‘‘Enter keyword or ID’’ and
selecting ‘‘Search.’’ Select the link
‘‘Submit a Comment’’ that corresponds
with ‘‘DFARS Case 2011–D045.’’ Follow
the instructions provided at the ‘‘Submit
a Comment’’ screen. Please include your
name, company name (if any), and
‘‘DFARS Case 2011–D045’’ on your
attached document. Follow the
instructions for submitting comments.
Email: dfars@osd.mil. Include DFARS
Case 2011–D045 in the subject line of
the message.
Fax: (703) 602–0350.
Mail: Defense Acquisition Regulations
System, Attn: Mr. Mark Gomersall,
OUSD (AT&L) DPAP (DARS), Room
3B855, 3060 Defense Pentagon,
Washington, DC 20301–3060.
Comments received generally will be
posted without change to http://www.
regulations.gov, including any personal
information provided. To confirm
receipt of your comment(s), please
check www.regulations.gov
approximately two to three days after
submission to verify posting (except
allow 30 days for posting of comments
submitted by mail).

ADDRESSES:

Mr.
Mark Gomersall, telephone (703) 602–
0302.

FOR FURTHER INFORMATION CONTACT:

SUPPLEMENTARY INFORMATION:

emcdonald on DSK29S0YB1PROD with PROPOSALS2

I. Background
This rule proposes to provide
requirements for the use of the
performance-based payments (PBP)
analysis tool. The PBP analysis tool is
a cash-flow model for evaluating
alternative financing arrangements, and
is required to be used by all contracting
officers contemplating the use of
performance-based payments on new
fixed-price type contract awards
resulting from solicitations issued on or
after July 1, 2011.

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II. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and
13563 direct agencies to assess all costs
and benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). E.O. 13563 emphasizes the
importance of quantifying both costs
and benefits, of reducing costs, of
harmonizing rules, and of promoting
flexibility. This is a significant
regulatory action and, therefore, was
subject to review under section 6(b) of
E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This
rule is not a major rule under 5 U.S.C.
804.
III. Regulatory Flexibility Act
DoD has prepared an initial regulatory
flexibility analysis consistent with 5
U.S.C. 603. A copy of the analysis may
be obtained from the point of contact
specified herein. The analysis is
summarized as follows:
This rule proposes to provide detailed
guidance and instructions on the use of
the performance-based payments (PBP)
analysis tool. The objective of the rule
is to amend the DFARS to provide
requirements for the use of the PBP
analysis tool. The PBP analysis tool is
a cash-flow model for evaluating
alternative financing arrangements, and
is required to be used by all contracting
officers contemplating the use of
performance-based payments on new
fixed-price type contract awards
resulting from solicitations issued on or
after July 1, 2011.
DoD does not expect this proposed
rule 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 requiring the use of the
PBP analysis tool by all contracting
officers contemplating the use of
performance-based payments on new
fixed-price type contract awards does
not require contractors to expend
significant effort or cost. Since
performance-based payments are
already the preferred Government
financing method, this rule is not
expected to increase the frequency of
use of such financing situations. No
known alternatives to the rule have been
identified.
At this time, DoD is unable to
estimate the number of small entities to
which this rule will apply. Therefore,
DoD invites comments from small
business concerns and other interested

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4639

parties on the expected impact of this
rule on small entities.
DoD will also consider comments
from small entities concerning the
existing regulations in subparts affected
by this rule in accordance with 5 U.S.C.
610. Interested parties must submit such
comments separately and should cite 5
U.S.C. 610 (DFARS Case 2011–D045) in
correspondence.
IV. Paperwork Reduction Act
The proposed rule contains new
information collection requirements that
require the approval of the Office of
Management and Budget under the
Paperwork Reduction Act (44 U.S.C.
chapter 35). DoD invites public
comments on the following aspects of
the proposed rule: (a) Whether the
proposed collection of information is
necessary for the proper performance of
the functions of DoD, including whether
the information will have practical
utility; (b) the accuracy of the estimate
of the burden of the proposed
information collection; (c) ways to
enhance the quality, utility, and clarity
of the information to be collected; and
(d) ways to minimize the burden of the
information collection on respondents,
including the use of automated
collection techniques or other forms of
information technology. The following
is a summary of the information
collection requirement.
Title: Defense Federal Acquisition
Regulation Supplement (DFARS) Part
232, Contract Financing.
Type of Request: New collection.
Number of Respondents: 570.
Responses per Respondent: 1.
Annual Responses: 570.
Average Burden per Response: 1.0
hours.
Annual Burden Hours: 570.
Needs and Uses: This information
collection is necessary in order to use
the PBP analysis tool, required by all
contracting officers contemplating the
use of performance-based payments on
new fixed-price type contract awards.
Affected Public: Businesses or other
for-profit and not-for-profit institutions.
Frequency: On occasion.
Written comments and
recommendations on the proposed
information collection should be sent to
Ms. Jasmeet Seehra at the Office of
Management and Budget, Desk Officer
for DoD, Room 10236, New Executive
Office Building, Washington, DC 20503,
or email Jasmeet_K._Seehra@omb.eop.
gov, with a copy to the Defense
Acquisition Regulations System, Attn:
Mr. Mark Gomersall, OUSD (AT&L)
DPAP (DARS), Room 3B855, 3060
Defense Pentagon, Washington, DC
20301–3060. Comments can be received

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Federal Register / Vol. 77, No. 19 / Monday, January 30, 2012 / Proposed Rules

from 30 to 60 days after the date of this
notice, but comments to OMB will be
most useful if received by OMB within
30 days after the date of this notice.
To request more information on this
proposed information collection or to
obtain a copy of the proposal and
associated collection instruments,
please write to the Defense Acquisition
Regulations System, Attn: Mr. Mark
Gomersall, OUSD (AT&L) DPAP
(DARS), Room 3B855, 3060 Defense
Pentagon, Washington, DC 20301–3060,
or email dfars@osd.mil. Include DFARS
Case 2011–D045 in the subject line of
the message.
List of Subjects in 48 CFR Parts 232 and
252
Government procurement.
Ynette R. Shelkin,
Editor, Defense Acquisition Regulations
System.

Therefore, 48 CFR parts 232 and 252
are proposed for amendment as follows:
1. The authority citation for 48 CFR
parts 232 and 252 is revised to read as
follows:
Authority: 41 U.S.C. 1303 and 48 CFR
chapter 1.

PART 232—CONTRACT FINANCING
2. In section 232.1001, add paragraph
(a) to read as follows:
232.1001

Policy.

(a) As with all contract financing, the
purpose of performance-based payments
is to assist the contractor in the payment
of costs incurred during the
performance of the contract. Therefore,
performance-based payments should
never exceed total cost incurred at any
point during the contract. See PGI
232.1001 for additional information on
use of performance-based payments.
3. In section 232.1004, revise the
section heading and add paragraph (b)
to read as follows:
232.1004

Procedures.

emcdonald on DSK29S0YB1PROD with PROPOSALS2

(b) Prior to using performance-based
payments, the contracting officer shall—

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(i) Agree with the offeror on price
using customary progress payments
before negotiation begins on the use of
performance-based payments, except for
modifications to contracts that already
use performance-based payments;
(ii) Analyze the performance-based
payments schedule using the
performance-based payments (PBP)
analysis tool. The PBP analysis tool is
on the DPAP Web site in the Cost,
Pricing, and Finance section,
performance-based payments analysis
tool, at http://www.acq.osd.mil/dpap/
cpf/Performance_based_payments.html.
(A) If performance-based payments
are desired, the contractor shall submit
a proposed performance-based
payments schedule which includes all
performance-based payments events,
completion criteria, and event values,
along with the expected expenditure
profile. If performance-based payments
are deemed practical, the Government
will evaluate and negotiate the details of
the performance-based payments
schedule.
(B) For modifications to contracts that
already use performance-based
payments financing, the basis for
negotiation must include performancebased payments. The (PBP) analysis tool
will be used in the same manner to help
determine the price for the
modification. The only difference is that
the baseline assuming customary
progress payments will reflect an
objective profit rate instead of a
negotiated profit rate;
(iii) Negotiate the consideration to be
received by the Government if the
performance-based payments payment
schedule will be more favorable to the
contractor than customary progress
payments;
(iv) Obtain the approval of the
business clearance approving official, or
one level above the contracting officer,
whichever is higher, for the negotiated
consideration; and
(v) Document in the contract file that
the performance-based payments
schedule provides a mutually beneficial

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settlement position that reflects
adequate consideration to the
Government for the improved contractor
cash flow.
*
*
*
*
*
4. Add section 232.1005 to read as
follows:
232.1005

Contract clauses.

The contracting officer shall include
the following clauses in contracts that
include performance-based payments:
(a) For performance-based payments
made on a whole-contract basis, use the
clause at 252.232–70XX, PerformanceBased Payments—Whole-Contract Basis.
(b) For performance-based payments
made on a deliverable-item basis, use
the clause at 252.232–70YY,
Performance-Based Payments—
Deliverable-Item Basis.
PART 252–SOLICITATION
PROVISIONS AND CONTRACT
CLAUSES
5. Add sections 252.232–70XX and
252.232–70YY to read as follows:
252.232–70XX Performance-Based
Payments—Whole-Contract Basis.

As prescribed in 232.1005(a), use the
following clause:
Performance-Based Payments—WholeContract Basis (DATE)
(a) Performance-based payments shall form
the basis for the contract financing payments
provided under this contract, and shall apply
to the whole contract. The performancebased payments schedule (Contract
Attachment __) describes the basis for
payment, to include identification of the
individual payment events, evidence of
completion, and amount of payment due
upon completion of each event.
(b)(i) At no time shall cumulative
performance-based payments exceed
cumulative contract cost incurred under this
contract. To ensure compliance with this
requirement, the Contractor shall, in addition
to providing the information required by FAR
52.232–32, submit supporting information for
all payment requests using the following
format:

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(End of clause)
252.232–70YY Performance-Based
Payments—Deliverable-Item Basis.

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As prescribed in 232.1005(b), use the
following clause:

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Performance-Based Payments—DeliverableItem Basis (DATE)
(a) Performance-based payments shall form
the basis for the contract financing payments
provided under this contract and shall apply
to Contract Line Items (CLINs) ll, ll,
and ll. The performance-based payments
schedule (Contract Attachment ll)
describes the basis for payment, to include
identification of the individual payment
events, CLINs to which each event applies,

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evidence of completion, and amount of
payment due upon completion of each event.
(b)(i) At no time shall cumulative
performance-based payments exceed
cumulative contract cost incurred under
CLINs ll, ll, and ll. To ensure
compliance with this requirement, the
Contractor shall, in addition to providing the
information required by FAR 52.232–32,
submit supporting information for all
payment requests using the following format:

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(ii) The Contractor shall not submit
payment requests more frequently than
monthly.
(iii) Incurred cost is determined by the
Contractor’s accounting books and records.

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(ii) The Contractor shall not submit
payment requests more frequently than
monthly.

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(iii) Incurred cost is determined by the
Contractor’s accounting books and records.

(End of clause)
[FR Doc. 2012–1498 Filed 1–27–12; 8:45 am]
BILLING CODE 5001–06–P

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