[Federal Register: April 16, 1999 (Volume 64, Number 73)] [Rules and Regulations] [Page 18827-18828] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr16ap99-15] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF DEFENSE 48 CFR Part 231 [DFARS Case 98-D019] Defense Federal Acquisition Regulation Supplement; Restructuring Savings Repricing Clause AGENCY: Department of Defense (DoD). ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: The Director of Defense Procurement has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to specify that contracting officers should consider using a repricing clause in noncompetitive fixed-price contracts that are negotiated during the period between the time a business combination is announced and [[Page 18828]] the time the contractor's forward pricing rates are adjusted to reflect the impact of restructuring. EFFECTIVE DATE: April 16, 1999. FOR FURTHER INFORMATION CONTACT: Ms. Sandra Haberlin, Defense Acquisition Regulations Council, PDUSD (A&T) DP (DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0131; telefax (703) 602-0350. Please cite DFARS Case 98-D019. SUPPLEMENTARY INFORMATION: A. Background This final rule amends DFARS 231.205-70, External restructuring costs, to specify that contracting officers should consider including a downward-only repricing clause in noncompetitive fixed-price contracts that are negotiated during the period between the time a business combination is announced and the time the contractor's forward pricing rates are adjusted to reflect the impact of restructuring. Since the late 1980's, defense contractors have been restructuring their business operations to increase efficiencies and become more competitive in the defense marketplace. Many of the restructuring activities result from business combinations (such as mergers or acquisitions) and often lead to reduced overall costs and future savings. The repricing clause should ensure that DoD receives its appropriate share of restructuring savings. A proposed DFARS rule was published in the Federal Register on November 30, 1998 (63 FR 65727). Nine sources submitted comments in response to the proposed rule. All comments were considered in the development of the final rule. B. Regulatory Flexibility Act DoD certifies that this final rule will not 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 most contracts awarded to small entities use simplified acquisition procedures or are awarded on a competitive fixed-price basis, and do not require application of the cost principle contained in this rule. C. Paperwork Reduction Act The Paperwork Reduction Act does not apply because the 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 231 Government procurement. Michele P. Peterson, Executive Editor, Defense Acquisition Regulations Council. Therefore, 48 CFR Part 231 is amended as follows: 1. The authority citation for 48 CFR Part 231 continues to read as follows: Authority: 41 U.S.C. 421 and 48 CFR Chapter 1. PART 231--CONTRACT COST PRINCIPLES AND PROCEDURES 2. Section 231.205-70 is amended by adding paragraph (f) to read as follows: Sec. 231.205-70 External restructuring costs. * * * * * (f) Contracting officer responsibilities. (1) The contracting officer, in consultation with the cognizant ACO, should consider including a repricing clause in noncompetitive fixed-price contracts that are negotiated during the period between-- (i) The time a business combination is announced; and (ii) The time the contractor's forward pricing rates are adjusted to reflect the impact of restructuring. (2) The decision to use a repricing clause will depend upon the particular circumstances involved, including-- (i) When the restructuring will take place; (ii) When restructuring savings will begin to be realized; (iii) The contract performance period; (iv) Whether the contracting parties are able to make a reasonable estimate of the impact of restructuring on the contract; and (v) The size of the potential dollar impact of restructuring on the contract. (3) If the contracting officer decides to use a repricing clause, the clause must provide for a downward-only price adjustment to ensure that DoD receives its appropriate share of restructuring net savings. [FR Doc. 99-9559 Filed 4-15-99; 8:45 am] BILLING CODE 5000-04-M