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Federal Register / Vol. 86, No. 186 / Wednesday, September 29, 2021 / Proposed Rules c Subcontracts. Include the substance of this clause, including this paragraph c, in all subcontracts with small business concerns, including subcontracts with small business concerns for the acquisition of commercial items.

9. Amend section 52.2446 by a. Revising the date of the clause; and b. Removing from paragraph c1xix DEC 2013 and adding DATE in its place.
The revision reads as follows:

52.2446
Items.

Subcontracts for Commercial

Subcontracts for Commercial Items DATE

FR Doc. 202120852 Filed 92821; 8:45 am
to submit a comment. Please include your name, company name if any, and DFARS Case 2017D018 on any attached documents.
Email: osd.dfars@mail.mil. Include DFARS Case 2017D018 in the subject line of the message.
Comments received generally will be posted without change to https
www.regulations.gov, including any personal information provided. To confirm receipt of your comments, please check https
www.regulations.gov, approximately two to three days after submission to verify posting.
FOR FURTHER INFORMATION CONTACT: Mr.
David E. Johnson, telephone 571372
6115.
SUPPLEMENTARY INFORMATION:

BILLING CODE 6820EPP

I. Background DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System 48 CFR Parts 225, 231, 242, and 252
Docket DARS20190039
RIN 0750AJ27

Defense Federal Acquisition Regulation Supplement: Treatment of Incurred Independent Research and Development Costs DFARS Case 2017D018
Defense Acquisition Regulations System, Department of Defense DoD.
ACTION: Proposed rule.
AGENCY:

DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement DFARS to implement a section of the National Defense Authorization Act for Fiscal Year 2017 that makes amendments regarding the treatment of independent research and development expenditures and requires the Defense Contract Audit Agency to provide an annual report to Congress on independent research and development and bid and proposal expenditures.

SUMMARY:

Comments on the proposed rule should be submitted in writing to the address shown below on or before November 29, 2021, to be considered in the formation of a final rule.
ADDRESSES: Submit comments identified by DFARS Case 2017D018, using any of the following methods:
Federal eRulemaking Portal:
https www.regulations.gov. Search for DFARS Case 2017D018. Select Comment and follow the instructions
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DATES:

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Section 824 of the National Defense Authorization Act NDAA for Fiscal Year FY 2017 Pub. L. 114328
amends 10 U.S.C. 2372 to require that regulations may not infringe on the independence of a contractor to choose which technologies to pursue in its independent research and development IR&D program if the chief executive officer CEO of the contractor determines that IR&D expenditures will advance the needs of DoD for future technology and advanced capability.
Section 824 amends 10 U.S.C. 2372 to remove the list that limits the allowability of IR&D costs to seven activities of potential interest to DoD. In lieu of the list of activities of potential interest to DoD, section 824 requires a CEO determination that IR&D expenses will advance the needs of DoD for future technology and advanced capability.
Section 824 also decouples IR&D and bid and proposal B&P costs by moving the language pertaining to B&P costs out of 10 U.S.C. 2372 and placing it in the new 10 U.S.C. 2372a. This change ensures that regulations pertaining to B&P costs are separated from regulations pertaining to IR&D costs.
Section 824 also amends 10 U.S.C.
2313a by adding a requirement for the Defense Contract Audit Agency to submit an annual report to Congress of all incurred IR&D and B&P costs of contractors in the prior Government fiscal year.
II. Discussion and Analysis In accordance with 10 U.S.C. 2372d, the rule adds language at DFARS
231.20518ciiiA1 to require contractor CEOs to determine that IR&D
expenditures will advance the needs of DoD for future technology and advanced capability. In addition, the rule adds a
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requirement at DFARS 231.205
18iiicA2 for major contractors to include a statement in the submission to the Defense Technical Information Center DTIC that the CEO of the contractor has made the determination required by 10 U.S.C. 2372. This statement serves as evidence for DoD, when determining whether IR&D costs are allowable. Major contractors are already required to upload IR&D
activities in DTIC in order to provide DoD with information on the progress of these activities; this rule simply adds a requirement for those major contractors to include a statement in the DTIC input that the determination required by 10
U.S.C. 2372 has been made as a means for DoD to know that those costs are allowable.
Since the list of seven activities of potential interest to DoD was deleted from 10 U.S.C. 2372, the requirement for the Defense Contract Management Agency DCMA administrative contracting officer ACO or corporate ACO CACO to compare the IR&D
activities uploaded in DTIC to the list of seven IR&D activities of potential interest to DoD no longer exists.
Therefore, DFARS 242.7713a is modified to remove the ACO and CACO
responsibilities for determining if an activity is of potential interest to DoD.
The rule also adds language to clarify that IR&D and B&P costs will be reported independently from other incurred indirect costs in a new paragraph at DFARS 231.20518civ.
This change corresponds to 10 U.S.C.
2372a and 10 U.S.C. 2372aa, which require allowable IR&D and B&P costs to be reported independently.
The proposed rule decouples IR&D
and B&P by stating IR&D and B&P
instead of IR&D/B&P throughout the text based on the amendment to 10
U.S.C. 2372, which segregates IR&D and B&P costs. However, for the purposes of calculating the threshold that requires major contractors to submit IR&D
activities and statements regarding the CEO determinations in DTIC, the rule does not change the calculation, which combines IR&D and B&P, to ensure the definition of major contractor remains the same.
DFARS 242.7713c1 is modified in the proposed rule to change the content of the communication from DoD to contractors from the planned or expected DoD future needs to the planned or expected needs of DoD for future technology and advanced capability. In addition, the responsibilities of the Office of the Under Secretary of Defense for Research and Engineering are expanded to include providing on the DTIC website
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