DFARS Rule Prohibits Cost-type Contracts for Production of Major Defense Acquisition Programs

An interim rule issued by the Department of Defense amends the Defense Federal Acquisition Regulation Supplement to prohibit DoD from entering into cost-type contracts for production of major defense acquisition programs.

The rule adds new DFARS 216.102, Policies, which provides that in accordance with Section 811 of the National Defense Authorization Act for Fiscal Year 2013 (PL 112-239), the use of any cost-reimbursement line item for the acquisition of production of MDAPs is prohibited unless the exception at DFARS 234.004(2)(ii) applies.

Under the exception, the Under Secretary of Defense for Acquisition, Technology, and Logistics can submit to the congressional defense committees a written certification that the particular cost-type contract is needed to provide a required capability in a timely, cost-effective manner.  The USD(AT&L) must also provide an explanation of the steps taken to ensure that the use of cost-type pricing is limited to only those line items or portions of the contact where the pricing is needed to achieve the purpose of the exception.

DoD defined Section 811’s prohibition on entering into cost-type contracts to explicitly state the prohibition also applies to cost-reimbursement line items.

The effective date of the rule is January 29, 2014, and comments referencing DFARS Case 2013-D016 are due March 31, 2014.

For more information, see the Federal Register notice.

About William Van Huis

Bill Van Huis is a Senior Writer/Analyst for Wolters Kluwer Law & Business who tracks and analyzes new regulations impacting federal government contracting. He also follows court decisions involving bid protests and contract disputes. You can find his work in WK publications like Government Contract Reports and the FAR and DFARS Matrix Tools. Bill is a Certified Professional Contracts Manager, and he has a law degree from Southern Illinois University, where he graduated summa cum laude. Prior to joining WK, Bill worked both inside and outside state and local government in the areas of procurement and municipal finance. Bill also worked as a staff attorney for the Illinois Supreme Court.
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