Defense Federal Acquisition Regulation Supplement: Cost and Software Data Reporting for Major Weapons Systems (2021-D028)

SUPPLEMENTARY INFORMATION:

I. Background

DoD is proposing to revise the DFARS to implement 10 U.S.C. 3227(b) and (c) and updates to the DFARS cost and software data reporting requirements made in the Department of Defense Instruction (DoDI) 5000.73, Cost Analysis Guidance and Procedures, and Department of Defense Manual (DoDM) 5000.04, Cost and Software Data Reporting (CSDR). Paragraphs (b) and (c) of 10 U.S.C. 3227 require, unless waived, submission of cost data for contracts expected to exceed $20 million or $50 million for acquisition and sustainment programs expected to exceed $100 million. The data will facilitate cost estimation and comparison across acquisition programs. The changes to the DoDI and the DoDM implement DoDI 5000.02, Operation of the Adaptive Acquisition Framework, which restructured defense acquisition guidance to improve process effectiveness and implement the Adaptive Acquisition Framework.

II. Discussion and Analysis

This rule proposes to modify DFARS subpart 234.71 to implement 10 U.S.C. 3227(b) and (c) and the updates made to DoDI 5000.73 and DoDM 5000.04 resulting from implementation of the Adaptive Acquisition Framework. This proposed rule amends DFARS subpart 234.71 to establish policy and procedures necessary to implement the updates to DoDI 5000.73 and DoDM 5000.04.

The rule also proposes to modify the DFARS to revise cost and software data reporting requirements for contracts above certain thresholds when awarded in support of acquisition or sustainment programs expected to exceed $100 million. This proposed rule modifies DFARS 242.503 to remove cost and software data reporting from postaward conference procedures, because the cost and software data reporting is a separate process.

The solicitation provision at 252.234-7003, Notice of Cost and Software Data Reporting, is proposed for deletion. Revisions are proposed to the contract clause at 252.234-7004, Cost and Software Data Reporting.

III. Applicability to Contracts at or Below the Simplified Acquisition Threshold (SAT), for Commercial Products (Including Commercially Available Off-the-Shelf (COTS) Items), and for Commercial Services

This rule proposes to delete the solicitation provision and its Alternate I at DFARS 252.234-7003, Notice of Cost and Software Data Reporting, and proposes to rename and amend the clause and its Alternate I at DFARS 252.234-7004, Cost and Software Data Reporting. The basic clause at DFARS 252.234-7004 is prescribed at 234.7105(a) and the alternate I clause is prescribed at 234.7105(b). However, this proposed rule does not impose any new requirements on contracts at or below the SAT, for commercial products including COTS items, or for commercial services. The clause does not apply to acquisitions at or below the SAT, to acquisitions of commercial products (including COTS items), or to acquisitions of commercial services.

IV. Expected Impact of the Rule

The proposed rule, if finalized, will impact the Government and large and small contractors. Contracting officers will be required to address CSDR requirements in acquisition plans and are now strongly encouraged to attend CSDR-readiness reviews for contracts meeting the updated thresholds.

Currently, contractors are required to comply with CSDR requirements for major defense acquisition programs. This proposed rule, if finalized, will require approximately 304 unique contractors (including about 112 small entities) per year to comply with CSDR reporting requirements for approximately 6,208 contracts (including about 358 awarded to small entities) per year expected to exceed $20 million and $50 million in support of acquisition and/or sustainment programs expected to exceed $100 million under certain acquisition pathways. Contractors will also be required to comply with CSDR requirements for any contract for a program that is expected to exceed $100 million, which the CSDR plan approval authority determines is high risk or of high technical interest.

DoD expects to benefit by having access to cost and software data for acquisition and sustainment programs in the various acquisition pathways. This data will allow DoD to accomplish more accurate cost estimation and comparison across acquisition programs.

V. 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 not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, as amended.

VI. Regulatory Flexibility Act

DoD does not expect this proposed rule, when finalized, 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 this proposed rule only applies to contracts expected to exceed $20 million or $50 million for acquisition and sustainment programs expected to exceed $100 million. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:

This proposed rule is required to implement 10 U.S.C. 3227(b) and (c) and updates made to DoDI 5000.73, Cost Analysis Guidance and Procedures, and DoDM 5000.04, Cost and Software Data Reporting. Unless waived, 10 U.S.C. 3227(b) and (c) require submission of cost data for contracts expected to exceed $20 million or $50 million for acquisition and sustainment programs expected to exceed $100 million. The data will facilitate cost estimation and comparison across acquisition programs. The updates to the DoDI and DoDM implement DoDI 5000.02, Operation of the Adaptive Acquisition Framework, which restructured defense acquisition guidance to improve process effectiveness and implement the Adaptive Acquisition Framework.

The objective of this proposed rule is to update the DFARS cost and software data reporting requirements to implement 10 U.S.C. 3227(b) and (c) and changes made to DoDI 5000.73, Cost Analysis Guidance and Procedures, and DoDM 5000.04, Cost and Software Data Reporting. The legal basis for this proposed rule is 41 U.S.C. 1303 and 10 U.S.C. 3227(b) and (c).

This proposed rule, when finalized, will require the clause at DFARS 252.234-7004, Cost and Software Data Reporting System, to be included in solicitations and contracts that are expected to exceed $50 million and that meet the requirements for cost and software data reporting. The proposed rule, when finalized, will require alternate I of the clause to be included in solicitations and contracts that are expected to be greater than $20 million, but less than or equal to $50 million, when required by the Cost and Software Data Reporting plan approval authority or when determined to be high-risk or of high-technical interest by the cost and software data reporting plan approval authority. Therefore, DoD considered contracts with this clause that were awarded during the last three fiscal years. According to data from the Procurement Business Intelligence Service, in the last three fiscal years, DoD awarded such contracts to unique small entities as follows: 130 in FY 2021, 99 in FY 2022, and 109 in FY 2023, which averages out to 112 per fiscal year. Therefore, the number of small entities to which this proposed rule may apply is approximately 112.

This proposed rule does not impose any new reporting, recordkeeping, or other compliance requirements for small entities.

This proposed rule does not duplicate, overlap, or conflict with any other Federal rules.

There are no known alternatives that would accomplish the stated objectives of the applicable statute.

DoD invites comments from small business concerns and other interested parties on the expected impact of this proposed rule on small entities.

DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this proposed 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 2021-D028), in correspondence.

VII. Paperwork Reduction Act

The Paperwork Reduction Act (44 U.S.C. chapter 35) applies to this proposed rule. However, these changes to the DFARS do not impose additional information collection requirements to the paperwork burden previously approved by the Office of Management and Budget (OMB) under OMB Control Number 0704-0671, entitled Cost and Software Data Reporting, and OMB Control Number 9000-0149, entitled Subcontract Consent and Contractors' Purchasing System Review.

Therefore, the Defense Acquisition Regulations System proposes to amend 48 CFR parts 234, 242, and 252 as follows:

1. The authority citation for 48 CFR parts 234, 242, and 252 continues to read as follows:

Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.

2. Revise section 234.7100 to read as follows:

3. Revise section 234.7101 to read as follows:

(a) This subpart applies to contracts supporting any acquisition and/or sustainment program, if that program is expected to exceed $100 million in one or more of the following acquisition pathways and to meet the following program criteria, when the contract is expected to exceed either of the following amounts:

(1) $50 million.