FR 2021-00613

The Department of Defense (DoD) has issued a final rule to amend the Defense Federal Acquisition Regulation Supplement (DFARS) by removing a specific clause identified as "Tariff Information" (DFARS clause 252.239-7006). This clause required telecommunications service providers to submit certain tariff and non-tariff information, but it is no longer deemed necessary. The rule took effect on January 15, 2021, and is expected to result in cost savings for both the DoD and its contractors. Notably, it removes a reporting burden from contractors, including small businesses.

General Summary

The document is about a regulatory update from the DoD, aimed at streamlining contract procedures by repealing an outdated requirement that telecom contractors provide certain tariff-related information. The rule is part of a broader effort to deregulate and minimize unnecessary compliance obligations.

Significant Issues or Concerns

A few issues emerge from this rule. First, while the document predicts cost savings of $2.03 million annually, it lacks detailed methodology or calculations that explain how this figure was derived. This may lead to ambiguity about the actual economic impact of the change. Second, while the document suggests that small businesses will not be significantly impacted, it does not delve into specific data sources or analyses that support this belief. Without this information, it is unclear if smaller entities are fully relieved or if other indirect impacts were overlooked.

Additionally, the document transitions swiftly from discussing cost savings to regulatory flexibility without establishing a clear linkage, which could hinder comprehensive understanding of the rule's overall impact.

Broad Public Impact

For the general public, these changes might seem routine and obscure, as they largely impact how the DoD manages its contractor relationships. However, these updates suggest a focus on reducing regulatory burdens, which could indirectly benefit the public if it leads to more efficient government operations and lower costs.

Impact on Specific Stakeholders

Telecommunications Contractors: The primary stakeholders affected are telecommunications service providers working with the DoD. These entities will no longer have to fulfill the reporting requirements imposed by the "Tariff Information" clause. This reduction in administrative tasks could enable these businesses to allocate resources more effectively, reducing operational costs.

Small Businesses: The rule underscores that small businesses will no longer face certain regulatory reporting obligations. This is a positive change that aims to lessen the administrative load for these enterprises, potentially improving their ability to compete for government contracts without the burden of compliance costs tied to now-removed requirements.

DoD Procurement Processes: From the DoD's perspective, this deregulation represents a step toward more streamlined procurement operations, helping to avoid unnecessary bureaucracy and focusing on processes that add more direct value to government functions.

Overall, while the rule simplifies aspects of the contracting process and promises cost savings, some details regarding its execution and impacts could benefit from additional clarification and transparency.

The document under review involves a rule from the Defense Department concerning the removal of a specific clause within the Defense Federal Acquisition Regulation Supplement (DFARS). This rule is said to contribute to cost savings, which is the primary financial aspect discussed in the document.

Financial Summary

The rule is anticipated to generate cost savings, specifically for entities involved in telecommunications services with the Department of Defense (DoD). The document importantly states that the removal of the DFARS clause 252.239-7006 is expected to lead to $2.03 million in annualized cost savings. These savings are calculated in perpetuity, are referenced in 2016 dollars, and are discounted at a 7 percent rate. Despite the specific mention of this amount, the document does not provide detailed calculations or a comprehensive breakdown of how these savings will be achieved. This lack of detail may raise questions about the accuracy or reliability of the estimate, as the methodology behind deriving this figure is not explicitly discussed.

Relation to Identified Issues

While the document projects a substantial amount for cost savings, there is an absence of details regarding the beneficiaries of these savings. This could lead to questions about whether the cost reductions might disproportionately favor certain contractors or entities over others, especially given the lack of publicly shared data or analysis to clarify this aspect.

Furthermore, the discussion around cost savings also intersects with regulatory impacts described in other sections of the rule. Specifically, the Regulatory Flexibility Act section suggests that small business entities will not be significantly impacted. The document assumes this outcome without detailing what data or analysis supports this conclusion. This absence of supporting detail could be problematic, as it provides little assurance or visibility into the impacts on smaller businesses that might depend on these contracts.

Regulatory Context

The document also references Executive Orders 12866 and 13563, which guide the evaluation of costs and benefits of regulations. It underscores that the rule is not considered a significant regulatory action, suggesting that the potential benefits, such as projected cost savings, could outweigh any minor regulatory implications. In aligning with Executive Order 13771, the rule is classified as a deregulatory action contributing to the broader goal of reducing federal regulation.

In summary, while the rule is projected to save the DoD $2.03 million annually, there is a notable lack of detailed information explaining the formation of these estimates. Additionally, the implications of these savings for different contractors, especially small businesses, remain somewhat unclear given the cursory explanation within the text. This gap in information could lead to uncertainties about the broader impact of these financial changes on entities involved with DoD contracts.