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Federal Register / Vol. 86, No. 186 / Wednesday, September 29, 2021 / Proposed Rules
communities of interest on DoDs future needs. An email address for additional information is also provided. This change ensures that timely and comprehensive information on DoDs planned or expected needs for future technology and advanced capability is being transmitted from DoD to contractors, as required by 10 U.S.C.
2372c2A.
To support DCAAs compliance with 10 U.S.C. 2313a, the proposed rule adds a contract clause at DFARS 252.242
70XX, Independent Research and Development and Bid and Proposal Incurred Costs, which requires all contractors with noncommercial awards exceeding the simplified acquisition threshold to provide an incurred cost submission of IR&D and B&P costs for the prior Government fiscal year to a website for DCAA to access. The related clause prescription is at DFARS
242.7714.
III. Applicability to Contracts at or Below the Simplified Acquisition Threshold and for Commercial Items, Including Commercially Available OffThe-Shelf Items This rule proposes to create a new clause at DFARS 252.24270XX, Independent Research and Development and Bid and Proposal Incurred Costs.
However, this clause does not impact contracts at or below the simplified acquisition threshold or contracts for the acquisition of commercial items, including commercially available offthe-shelf items.

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IV. Executive Orders 12866 and 13563
Executive Order 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 6b of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993.
V. Congressional Review Act As required by the Congressional Review Act 5 U.S.C. 801808 before an interim or final rule takes effect, DoD
will submit a copy of the interim or final rule with the form, Submission of Federal Rules under the Congressional Review Act, to the U.S. Senate, the U.S.

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House of Representatives, and the Comptroller General of the United States. A major rule under the Congressional Review Act cannot take effect until 60 days after it is published in the Federal Register. This rule is not anticipated to be a major rule under 5
U.S.C. 804.
VI. Regulatory Flexibility Act 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. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:
DoD is proposing to amend the DFARS to implement section 824 of the National Defense Authorization Act NDAA for Fiscal Year FY 2017 Pub.
L. 114328. Section 824 modifies 10
U.S.C. 2372 to require the chief executive officer CEO of the contractor to make a determination that independent research and development IR&D expenditures will advance the needs of the Department of Defense for future technology and advanced capability. Section 824 also amends 10
U.S.C. 2313a to require the Defense Contract Audit Agency DCAA to submit an annual report to Congress on incurred IR&D and bid and proposal B&P costs for all contractors in the prior Government fiscal year. The legal basis for the amendment to the DFARS
is section 824 of the NDAA for FY 2017.
In accordance with 10 U.S.C. 2372d, the proposed rule adds language applicable to contractors at DFARS
231.20518ciiiA1 requiring the CEO of the contractor to determine that IR&D expenditures will advance the needs of DoD for future technology and advanced capability. The proposed rule also adds, at DFARS 231.205
18iiiA2, a requirement for major contractors to include a statement in the Defense Technical Information Center DTIC submission that the CEO of the contractor made the determination required by 10 U.S.C. 2372. To support DCAAs compliance with 10 U.S.C.
2313a, the proposed rule includes a contract clause that requires contractors with noncommercial awards exceeding the simplified acquisition threshold to provide an incurred cost submission of IR&D and B&P costs for the prior Government fiscal year to a website for DCAA to access.
The proposed rule will only apply to small entities that have incurred IR&D
costs or B&P costs associated with noncommercial DoD awards exceeding the simplified acquisition threshold or small businesses that have an IR&D

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program and are considered to be a major contractor, which is defined as having annual expenditures of $1.1
million in combined IR&D and B&P
expenditures.
Based on an internal DoD website, on average for FY 2017 through FY 2019, there were 69 other than small business major contractors that submitted IR&D
activities to DTIC. DoD does not have a list of other than major contractors or small entities that have IR&D programs.
As a result, the burden on the public for developing a statement of the CEO
determination in DTIC is expected to be close to 69 contractors. DoD expects a minimal number of the contractors to be small entities.
DoD determined that for FY 2020, a total of 1,869 contractors submitted incurred cost proposals to the Government claiming IR&D or B&P
costs. This number represents the estimated number of contractors that will be required under the new clause 252.24270XX, Independent Research and Development and Bid and Proposal Incurred Costs, to annually report IR&D
and B&P costs to the Defense Contract Audit Agency. The ratio of small entities to other than small entities is unknown. However, DoD expects the proposed rule will have minimal impact on small entities.
This proposed rule does include new reporting or recordkeeping requirements for small entities. The annual reporting burden is related to adding the statement that the CEO has made a determination to IR&D project submissions in DTIC and submitting IR&D and B&P incurred costs to a DCAA
website. It is expected that, if applicable to a small entity, the CEO of the contractor and an attorney of the contractor would be required to support including a statement that the CEO
made a determination with IR&D project submissions in DTIC and a financial analyst of the contractor would be required to support submitting IR&D
and B&P incurred costs to a website. As stated previously, it is expected that a minimal number of small entities will be impacted by the major contractor requirement to upload to DTIC a statement that the CEO made a determination as there are currently no known small entities classified as major contractors. It is expected that fewer than 1,869 small businesses would be required to upload IR&D and B&P
incurred costs to a DCAA website.
The rule does not duplicate, overlap, or conflict with any other Federal rules.
There are no known significant alternative approaches to the proposed rule that would meet the requirements of the applicable statute.

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