Interim Rule: Limitation on Use of Cost-Reimbursement Line Items

By: Homer Winter

On January 29, 2014, the Department of Defense published an interim rule (DFARS Case 2013-D016) amending the Defense Federal Acquisition Regulation Supplement to carry out section 811 of the National Defense Authorization Act for Fiscal Year 2013. The interim rule requires the DoD to implement acquisition procedures that prohibit the use of cost-type contracts for the production of major defense acquisition programs (MDAPS). This interim rule pertains to all MDAPS contracts entered into on or after October 1, 2014.

There is one exception to the interim rule: the DoD is permitted to submit a written certification to Congressional defense committees when a cost-type contract is required to provide capabilities in a timely and economical manner. Further, the DoD must provide an explanation of the actions taken to limit the use of cost-type line items to the extent possible.

While it was determined that there were urgent and compelling reasons to issue this interim rule, the DoD will consider public comments in the formation of the final rule. Public comments are due by March 31, 2014.

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