Defense Federal Acquisition Regulation Supplement; Lease of Vessels, Aircraft, and Combat Vehicles (DFARS Case 2006-D013)

Summary:

DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement statutory provisions relating to the leasing of vessels, aircraft, and combat vehicles. The rule applies to long-term leases and charters and to contracts with a substantial termination liability.

Table of Contents

For further information contact:

Ms. Cassandra Freeman, Defense Acquisition Regulations System, OUSD (ATL) DPAP (DARS), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone 703-602-8383; facsimile 703-602-7887. Please cite DFARS Case 2006-D013.

Supplementary information:

A. Background

10 U.S.C. 2401, as amended by Section 815 of the National Defense Authorization Act for Fiscal Year 2006 (Pub. L. 109-163), permits a military department to award a long-term lease or charter, or a contract with a substantial termination liability, for a vessel, aircraft, or combat vehicle, only if the Secretary of the military department is specifically authorized by law to award the contract and provides the appropriate notifications to the congressional defense committees.

Prior to the enactment of Public Law 109-163, the provisions of 10 U.S.C. 2401 applied to vessels and aircraft. Section 815 of Public Law 109-163 amended 10 U.S.C. 2401 to also include combat vehicles.

DoD published a proposed rule at 72 FR 28662 on May 22, 2007, to address the provisions of 10 U.S.C. 2401. Five sources submitted comments on the proposed rule. A discussion of the comments is provided below.

1. Comment: The proposed rule unduly applies its requirements to all leases and charters instead of only long-term leases and charters.

DoD Response: The rule has been amended to clarify that its requirements apply only to long-term leases and charters, and to contracts that provide for a substantial termination liability, consistent with the statutory provisions.

2. Comment: One respondent stated that the approval authority specified in the proposed rule (head of the agency) is not consistent with the approval authority specified in the statute (Secretary of the military department). Another respondent recommended delegation of the approval authority to the head of the contracting activity, to be consistent with the implementation of 10 U.S.C. 2401a at DFARS 207.470, for approval of leases and charters with terms of 18 months or more.

DoD Response: The final rule specifies the Secretary of the military department as the approval authority, consistent with 10 U.S.C. 2401. However, in accordance with FAR 1.108(b), the Secretary of the military department may delegate this authority as deemed appropriate.

3. Comment: The term “similar agreement” should be deleted from the rule, since this term is not defined in the DFARS or in the statute.

DoD Response: The term has been excluded from the final rule.

4. Comment: The rule should identify under what circumstances DoD can lease vessels, aircraft, and combat vehicles and how the decision to lease should be determined. In addition, the rule should include the definitions of the terms “long-term lease” and “substantial termination liability” found in 10 U.S.C. 2401(d).

DoD Response: The recommended changes have not been adopted. The rule is intended to inform contracting officers of the requirements of 10 U.S.C. 2401, but is not intended to address all aspects of leasing. Leasing is a highly specialized area that requires close coordination between the contracting officer and legal counsel.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

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 the rule primarily relates to DoD planning and budget considerations with regard to the leasing of vessels, aircraft, and combat vehicles.

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 207

Government procurement.

Michele P. Peterson,

Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR Part 207 is amended as follows:

Part 207—acquisition planning

1. The authority citation for 48 CFR Part 207 continues to read as follows:

Authority:

41 U.S.C. 421 and 48 CFR Chapter 1.

2. Section 207.470 is amended as follows: a. By redesignating paragraphs (a) and (b) as paragraphs (b) and (c) respectively; b. By adding a new paragraph (a); and c. In newly designated paragraph (c), by removing “Except as provided in paragraph (a) of this section” and adding in its place “Except as provided in paragraphs (a) and (b) of this section”.

The new paragraph (a) reads as follows:

207.470

(a)Requirement for authorization of certain contracts relating to vessels, aircraft, and combat vehicles. The contracting officer shall not enter into any contract for the lease or charter of any vessel, aircraft, or combat vehicle, or any contract for services that would require the use of the contractor's vessel, aircraft, or combat vehicle, unless the Secretary of the military department concerned has satisfied the requirements of 10 U.S.C. 2401, when—

(1) The contract will be a long-term lease or charter as defined in 10 U.S.C. 2401(d)(1); or

(2) The terms of the contract provide for a substantial termination liability as defined in 10 U.S.C. 2401(d)(2). Also see PGI 207.470.

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