DFARS CHANGE NOTICE 20081124

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 212, 215, 247, and 252

Defense Federal Acquisition Regulation Supplement; Carriage Vessel Overhaul, Repair, and Maintenance (DFARS Case 2007-D001)

AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has adopted as final, with changes, an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Section 1017 of the National Defense Authorization Act for Fiscal Year 2007. Section 1017 requires DoD to establish an evaluation criterion, for use in obtaining carriage of cargo by vessel, that considers the extent to which an offeror has had overhaul, repair, and maintenance work for covered vessels performed in shipyards located in the United States or Guam.

DATES: Effective Date: November 24, 2008.

FOR FURTHER INFORMATION CONTACT: Mr. Mark Gomersall, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone 703-602-0302; facsimile 703-602-7887. Please cite DFARS Case 2007-D001.

SUPPLEMENTARY INFORMATION:

A. Background DoD published an interim rule at 72 FR 49204 on August 28, 2007, to implement Section 1017 of the National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364). Section 1017 requires DoD to issue an acquisition policy that establishes, as a criterion required to be considered in obtaining carriage of cargo by vessel for DoD, the extent to which an offeror of such carriage has had overhaul, repair, and maintenance work for covered vessels performed in shipyards located in the United States or Guam.

Nine sources submitted comments on the interim rule. A discussion of the comments is provided below.

1. Comment: Some respondents took exception to the rule's use of the term ``evaluation factor or subfactor'' with regard to consideration of the amount of work an offeror has performed in U.S. shipyards. The respondents suggested this evaluation criterion should be established as a significant factor in evaluation of offers.

DoD Response: The text at DFARS 247.573-2(c) has been revised to replace the term ``evaluation factor or subfactor'' with ``evaluation criterion,'' consistent with the language in Section 1017(a) of Public Law 109-364. The decision as to the relative value of the evaluation criterion is appropriately the responsibility of the source selection authority.

2. Comment: Some respondents expressed concern that the rule does not specifically state that the term ``covered vessels'' includes all covered vessels in an offeror's fleet. Other respondents suggested a more strict definition of ``covered vessels,'' which would be applicable only to the vessels the offeror is proposing to use in the procurement under evaluation.

DoD Response: The definition of ``covered vessel'' in the provision at 252.247-7026 is consistent with Section 1017(b) of Public Law 109-364. DoD interprets this definition to include all covered vessels in an offeror's fleet, and not just those offered under a specific solicitation. The text at DFARS 247.573-2(c)(3) has been amended to clarify this point.

3. Comment: One respondent recommended that the rule clarify that the evaluation preference would apply only in the case where DoD is soliciting offers for vessel carriage of its cargo in the coastwise or noncontiguous trade, not in other trades. Further, the respondent recommended that rule define the term ``coastwise or noncontiguous trade.'' The respondent suggested that this would mean referring to a voyage that meets the tests of: former Section 27 of the Merchant Marine Act, 1920; former 46 U.S.C. 12166; and former Section 2 of the Shipping Act, 1916. Therefore, the preference would not apply to carriage of cargo to a point that can be served by a vessel that has a registry endorsement such as Guam, which is considered part of the non-contiguous trade but is not a Jones Act trade.

DoD Response: The final rule clarifies that the evaluation preference applies only to solicitations requiring a covered vessel. Further, DoD agrees that the preference would not apply to carriage of cargo to a point that can be served by a vessel that has a registry endorsement, such as Guam. Vessels with a registry endorsement provided for under Section 12111 (formerly Section 12105) of Title 46 of the United States Code are not covered vessels. The final rule does not include a definition of ``coastwise or noncontiguous trade,'' as this term is already covered under Section 27 of the Merchant Marine Act, which is referenced in the definition of ``covered vessel'' in the provision at 252.247-7026.

4. Comment: One respondent suggested revising the statutory references in the definition of ``covered vessel'' to reflect the recodification of Title 46 of the United States Code on October 6, 2006.

DoD Response: DoD has revised the definition of ``covered vessel'' to reflect the current statutory references.

5. Comment: Some respondents stated that the 15-day work period within the definition of ``overhaul, repair, and maintenance work'' at 252.247-7026 was too long, while another respondent opposed any shortening of this time period.

DoD Response: DoD intended the definition to represent meaningful work, such as annual, regulatory, and scheduled overhaul, repair, and maintenance. Based on comments received regarding the length of time required for typical repairs, DoD has revised the time period for work categorized as ``overhaul, repair, and maintenance'' from 15 to 5 calendar days.

6. Comment: Some respondents recommended the definition of ``shipyard'' be changed to include ship repair facilities as well as ship building facilities. One respondent stated that the scope and nature of the overhaul, repair, and maintenance work, and not whether the work is performed in a shipyard that is capable of building a ship, should be considered in the evaluation criteria. Another respondent stated that, since the rule defines ``shipyard'' as a facility capable of building a ship, the size of ship a shipyard must be capable of building should be included within the definition.

DoD Response: DoD agrees that ``shipyard,'' as used within this DFARS rule, should be defined as a facility capable of performing overhaul, repair, and maintenance work, and the definition has been revised accordingly. Additionally, the definition of ``overhaul, repair, and maintenance work'' has been revised to remove the word ``pierside'' as a qualifier for the term ``shipyard.''

7. Comment: One respondent suggested adding a definition of ``foreign shipyard,'' to be defined as ``any shipyard that is not located in the United States.''

DoD Response: DoD has added definitions of ``U.S. shipyard'' and ``foreign shipyard,'' consistent with the definitions in Section 1017 of Public Law 109-364.

8. Comment: One respondent recommended that the rule be clarified such that the overhaul, repair, and maintenance reports required by the rule cover work performed at any shipyard, anywhere in the world.

DoD Response: The reporting requirement at DFARS 252.247-7026(c) has been revised to address work performed both in U.S. and foreign shipyards.

9. Comment: Some respondents suggested that the evaluation criterion be qualified such that certain foreign shipyard repairs would not receive adverse consideration under specific situations. One respondent suggested that repairs in foreign shipyards, due to accident, emergency, Act of God, or an infirmity to the vessel, should not receive adverse consideration in the evaluation criterion regarding the amount of work performed in U.S. shipyards, if it is determined that safety considerations warranted taking the vessel to the nearest shipyard. Two respondents suggested that foreign shipyard repairs should not receive adverse consideration due to non-availability of U.S. shipyards if an offeror can demonstrate that it contacted U.S. shipyards seeking a berth for a repair and was told that space was not available on a timely basis. One respondent suggested that the criterion should specifically recognize that U.S. vessels that do not call at a U.S. port for two years or more should not be adversely affected by the failure to have routine shipyard work performed at U.S. shipyards.

DoD Response: DoD recognizes that overhaul, repair, and maintenance work required due to an emergency situation or direction from the U.S. Government should not adversely affect an evaluation. Therefore, the final rule excludes repairs of this type from the evaluation criterion. All other foreign overhaul, repair, and maintenance work will be considered under the evaluation criterion, consistent with the statutory intent of maintaining the national defense industrial base.

10. Comment: One respondent suggested that a case could be made that facilities covered by NAFTA are effectively less foreign than facilities not covered by NAFTA.

DoD Response: The statute makes no provisions for evaluation consideration for overhaul, repair, and maintenance work performed at facilities covered by NAFTA.

11. Comment: Two respondents opposed the time period for reporting overhaul, repair, and maintenance work (current calendar year and four previous calendar years), while one respondent stated support for this time period.

DoD Response: The time period in the rule is considered appropriate, as it captures a complete maintenance and repair cycle for Coast Guard inspected ships.

12. Comment: Two respondents suggested the evaluation criterion should consider not only overhaul, repair, and maintenance work, but also new construction.

DoD Response: The statute makes no provisions for new construction. The Jones Act provides an incentive for new construction in U.S. shipyards. In addition, the redefinition of ``shipyard'' as ``a facility capable of performing overhaul, repair, and maintenance work on covered vessels'' in the final rule broadens the scope of shipyard repair facilities.

13. Comment: One respondent stated that the rule does not extend far enough to offer true support and reward for carriers that have environmentally sound practices and provisions of efficient services.

DoD Response: The scope of this rule is limited to implementation of Section 1017 of Public Law 109-364.

14. Comment: One respondent suggested a broader definition of ``ship'' that would include non-self-propelled vessels.

DoD Response: The rule refers to ``covered vessels'' rather than ``ship''. The rule's definition of ``covered vessel'' is consistent with Section 1017(b) of Public Law 109-364.

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 has prepared a final regulatory flexibility analysis consistent with 5 U.S.C. 604. A copy of the analysis may be obtained from the point of contact specified herein. The analysis is summarized as follows:

The objective of the rule is to maintain a strong national ship repair industrial base. Therefore, the rule provides an evaluation preference for use in DoD solicitations for carriage of cargo by vessel, to apply to those entities that use domestic shipyards for vessel overhaul, repair, and maintenance. The rule is expected to have a positive effect on entities owning domestic shipyards, by encouraging the use of those shipyards. DoD will use the information required by the solicitation provision to evaluate offers and to prepare annual reports to Congress, as required by Section 1017 of Public Law 109-364.

C. Paperwork Reduction Act The Office of Management and Budget has approved the information collection requirements of this rule under Control Number 0704-0445.

List of Subjects in 48 CFR Parts 212, 215, 247, and 252

Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System.

Accordingly, the interim rule amending 48 CFR Parts 212, 215, 247, and 252, which was published at 72 FR 49204 on August 28, 2007, is adopted as a final rule with the following changes:

1. The authority citation for 48 CFR Parts 212, 215, 247, and 252 continues to read as follows:

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

PART 247--TRANSPORTATION

2. Section 247.570 is amended by revising paragraph (a)(2) to read as follows:

247.570 Scope.

* * * * *

(a) * * *

(2) Section 1017 of the National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364), which requires consideration, in solicitations requiring a covered vessel, of the extent to which offerors have had overhaul, repair, and maintenance work performed in shipyards located in the United States or Guam;

* * * * *

3. Section 247.571 is revised to read as follows:

247.571 Definitions.

Covered vessel, foreign shipyard, overhaul, repair, and maintenance work, and shipyard, as used in this subpart, have the meaning given in the provision at 252.247-7026, Evaluation Preference for Use of Domestic Shipyards--Applicable to Acquisition of Carriage by Vessel for DoD Cargo in the Coastwise or Noncontiguous Trade.

4. Section 247.572 is amended by revising paragraph (d)(1) to read as follows:

247.572 Policy.

* * * * *

(d) * * *

(1) When obtaining carriage requiring a covered vessel, the contracting officer must consider the extent to which offerors have had overhaul, repair, and maintenance work for covered vessels performed in shipyards located in the United States or Guam; and

* * * * *

5. Section 247.573-2 is amended as follows:

a. By revising paragraphs (c)(2) and (3); and0

b. In paragraph (d)(3)(i) introductory text and paragraph (d)(3)(i)(C), by removing ``247.573-1(d)'' and adding in its place ``247.573-1(c)''. The revised text reads as follows:

247.573-2 Direct purchase of ocean transportation services.

* * * * *

(c) * * *

(2) An evaluation criterion for offeror participation in the Voluntary Intermodal Sealift Agreement; and

(3) An evaluation criterion considering the extent to which offerors have had overhaul, repair, and maintenance work for all covered vessels in an offeror's fleet performed in shipyards located in the United States or Guam. Work performed in foreign shipyards shall not be evaluated under this criterion if--

(i) Such work was performed as emergency repairs in foreign shipyards due to accident, emergency, Act of God, or an infirmity to the vessel, and safety considerations warranted taking the vessel to a foreign shipyard; or (ii) Such work was paid for or reimbursed by the U.S. Government.

* * * * *

6. Section 247.573-3 is amended by revising paragraphs (a)(1) and (b) to read as follows:

247.573-3 Annual reporting requirement.

(a) * * *

(1) Prepare a report containing all information received from all offerors in response to the provision at 252.247-7026 during the previous calendar year; and

* * * * *

(b) The Director of Acquisition, U.S. Transportation Command, will submit a consolidated annual report to the congressional defense committees, by June 1st of each year, in accordance with Section 1017 of Public Law 109-364.

7. Section 247.574 is amended by revising paragraph (e) to read as follows:

247.574 Solicitation provisions and contract clauses.

* * * * *

(e) Use the provision at 252.247-7026, Evaluation Preference for Use of Domestic Shipyards--Applicable to Acquisition of Carriage by Vessel for DoD Cargo in the Coastwise or Noncontiguous Trade, in solicitations that require a covered vessel for carriage of cargo for DoD. See 247.573-3 for reporting of the information received from offerors in response to the provision. See 247.573-2(c)(3) for the required evaluation criterion.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

8. Section 252.247-7026 is amended by revising the clause date and paragraphs (a) through (c) to read as follows:

252.247-7026 Evaluation Preference for Use of Domestic Shipyards--Applicable to Acquisition of Carriage by Vessel for DoD Cargo in the Coastwise or Noncontiguous Trade.

* * * * *

EVALUATION PREFERENCE FOR USE OF DOMESTIC SHIPYARDS--APPLICABLE TO ACQUISITION OF CARRIAGE BY VESSEL FOR DOD CARGO IN THE COASTWISE OR NONCONTIGUOUS TRADE (NOV 2008)

(a) Definitions. As used in this provision--

Covered vessel means a vessel--

(1) Owned, operated, or controlled by the offeror; and

(2) Qualified to engage in the carriage of cargo in the coastwise or noncontiguous trade under Section 27 of the Merchant Marine Act, 1920 (46 U.S.C. 12101, 12132, and 55102), commonly referred to as ``Jones Act''; 46 U.S.C. 12102, 12112, and 12119; and Section 2 of the Shipping Act, 1916 (46 U.S.C. 50501).

Foreign shipyard means a shipyard that is not a U.S. shipyard.

Overhaul, repair, and maintenance work means work requiring a shipyard period greater than or equal to 5 calendar days.

Shipyard means a facility capable of performing overhaul, repair, and maintenance work on covered vessels.

U.S. shipyard means a shipyard that is located in any State of the United States or in Guam.

(b) This solicitation includes an evaluation criterion that considers the extent to which the offeror has had overhaul, repair, and maintenance work for covered vessels performed in U.S. shipyards.

(c) The offeror shall provide the following information with its offer, addressing all covered vessels for which overhaul, repair, and maintenance work has been performed during the period covering the current calendar year, up to the date of proposal submission, and the preceding four calendar years:

(1) Name of vessel.

(2) Description and cost of qualifying shipyard work performed in U.S. shipyards.

(3) Description and cost of qualifying shipyard work performed in foreign shipyards and whether--

(i) Such work was performed as emergency repairs in foreign shipyards due to accident, emergency, Act of God, or an infirmity to the vessel, and safety considerations warranted taking the vessel to a foreign shipyard; or

(ii) Such work was paid for or reimbursed by the U.S. Government.

(4) Names of shipyards that performed the work.

(5) Inclusive dates of work performed.

* * * * *

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 252

Defense Federal Acquisition Regulation Supplement; Least Developed Countries That Are Designated Countries DFARS Case 2008-D019

AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to update the list of ``least developed'' countries that are designated as eligible countries under the Trade Agreements Act, in accordance with direction from the United States Trade Representative.

DATES: Effective Date: November 24, 2008.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone 703-602-0328; facsimile 703-602-7887. Please cite DFARS Case 2008-D019.

SUPPLEMENTARY INFORMATION:

A. Background The United States Trade Representative has revised the list of ``least developed'' countries that are designated as eligible countries under the Trade Agreements Act (19 U.S.C. 2501, et seq.), to add Liberia and to remove Cape Verde. This final rule makes corresponding changes to the list of designated countries in the clauses at DFARS 252.225-7021, Trade Agreements, and 252.225-7045, Balance of Payments Program--Construction Material Under Trade Agreements.

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

B. Regulatory Flexibility Act This rule will not have a significant cost or administrative impact on contractors or offerors, or a significant effect beyond the internal operating procedures of DoD. Therefore, publication for public comment under 41 U.S.C. 418b is not required. However, DoD will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should cite DFARS Case 2008-D019.

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 252

Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR part 252 is amended as follows:

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

1. The authority citation for 48 CFR part 252 continues to read as follows:

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

252.212-7001 [Amended]

2. Section 252.212-7001 is amended as follows:

a. By revising the clause date to read ``(NOV 2008)''; and

b. In paragraph (b)(9) by removing ``(MAR 2007)'' and adding in its place ``(NOV 2008)''.

3. Section 252.225-7021 is amended by revising the clause date and paragraph (a)(3)(iii) to read as follows:

252.225-7021 Trade Agreements.

* * * * *

TRADE AGREEMENTS (NOV 2008)

(a) * * *

(3) * * *

(iii) A least developed country (Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Djibouti, East Timor, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Maldives, Mali, Mauritania, Mozambique, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, Tanzania, Togo, Tuvalu, Uganda, Vanuatu, Yemen, or Zambia); or

* * * * *

4. Section 252.225-7045 is amended as follows:0

a. By revising the clause date; and

b. In paragraph (a), in the definition of ``Designated country'', by revising paragraph (3) to read as follows:

252.225-7045 Balance of Payments Program--Construction Material Under Trade Agreements.

* * * * *

BALANCE OF PAYMENTS PROGRAM--CONSTRUCTION MATERIAL UNDER TRADE

AGREEMENTS (NOV 2008)

(a) * * *

Designated country means--

* * * * *

(3) A least developed country (Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Djibouti, East Timor, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Maldives, Mali, Mauritania, Mozambique, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, Tanzania, Togo, Tuvalu, Uganda, Vanuatu, Yemen, or Zambia); or* * * * *

From the Federal Register Online via GPO Access [wais.access.gpo.gov

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 216

Defense Federal Acquisition Regulation Supplement; Limitations on DoD Non-Commercial Time-and-Materials Contracts DFARS Case 2007-D021

AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to address review and documentation requirements pertaining to the use of time-and-materials contracts for the acquisition of non-commercial services. The rule provides for the same level of review for both commercial and non-commercial DoD time-and-materials contracts.

DATES: Effective Date: November 24, 2008.

FOR FURTHER INFORMATION CONTACT: Ms. Angie Sawyer, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone 703-602-8384; facsimile 703-602-7887. Please cite DFARS Case 2007-D021.

SUPPLEMENTARY INFORMATION:

A. Background Section 16.601(d) of the Federal Acquisition Regulation (FAR) requires that, before using a time-and-materials contract, the contracting officer must prepare a determination and findings that no other contract type is suitable. For time-and-materials contracts for commercial services, FAR 12.207(b)(2) specifies the minimum content for the determination and findings, and FAR 12.207(c) contains additional requirements with regard to the use of indefinite-delivery contracts priced on a time-and-materials basis.

To provide for the same level of oversight in the award of all DoD time-and-materials contracts, this rule amends DFARS 216.601 to establish determination and findings requirements for DoD non-commercial time-and-materials contracts, similar to those required by FAR 12.207 for commercial services contracts.

DoD published a proposed rule at 73 FR 21891 on April 23, 2008. DoD received no comments on the proposed rule. Therefore, DoD has adopted the proposed rule as a final rule without change.

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 relates to internal DoD review and documentation requirements with regard to the selection of contract type.

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 216

Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR Part 216 is amended as follows:

PART 216--TYPES OF CONTRACTS

1. The authority citation for 48 CFR Part 216 continues to read as follows:

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

2. Section 216.601 is amended by adding paragraph (d) to read as follows:

216.601 Time-and-materials contracts.

(d) Limitations.

(i) The determination and findings shall contain sufficient facts and rationale to justify that no other contract type is suitable. At a minimum, the determination and findings shall--

(A) Include a description of the market research conducted;

(B) Establish that it is not possible at the time of placing the contract or order to accurately estimate the extent or duration of the work or to anticipate costs with any reasonable degree of certainty;

(C) Establish that the requirement has been structured to minimize the use of time-and-materials requirements (e.g., limiting the value or length of the time-and-materials portion of the contract or order; establishing fixed prices for portions of the requirement); and

(D) Describe the actions planned to minimize the use of time-and-materials contracts on future acquisitions for the same requirements.

(ii) For indefinite-delivery contracts, the contracting officer shall--

(A) Structure contracts that authorize time-and-materials orders to also authorize orders on a cost-reimbursement, incentive, or fixed-price basis, to the maximum extent practicable; and

(B) Execute the determination and findings for--

(1) Each order placed on a time-and-materials basis if the indefinite-delivery contract also authorizes orders on a cost-reimbursement, incentive, or fixed-price basis; or

(2) The basic contract if the indefinite-delivery contract only authorizes time-and-materials orders. The determination and findings shall--

(i) Contain sufficient facts and rationale to justify why orders on a cost-reimbursement, incentive, and fixed-price basis are not practicable; and

(ii) Be approved one level above the contracting officer.

* * * * *

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 211, 245, and 252

Defense Federal Acquisition Regulation Supplement; Reports of Government Property (DFARS Case 2005-D015)

AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has adopted as final, with changes, an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to update requirements for reporting of Government property in the possession of DoD contractors. The rule replaces DD Form 1662 reporting requirements with requirements for DoD contractors to electronically submit, to the Item Unique Identification (IUID) Registry, the IUID data applicable to the Government property in the contractor's possession.

DATES: Effective Date: November 24, 2008.

FOR FURTHER INFORMATION CONTACT: Mr. Michael Benavides, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone 703-602-1302; facsimile 703-602-7887. Please cite DFARS Case 2005-D015.

SUPPLEMENTARY INFORMATION:

A. Background

DoD published an interim rule at 72 FR 52293 on September 13, 2007, to require reporting of DoD property in the possession of contractors through use of the DoD IUID Registry. Three sources submitted comments on the interim rule. A discussion of the comments is provided below.

1. Marking Requirements

a. Comment: Concerning the clause at DFARS 252.211-7007 and the requirement to create a unique item identifier (UII) for certain Government property, physically mark it, and load the required data into the IUID Registry when an item is shipped: There needs to be a notification mechanism on shipping paperwork to identify an item in a given shipment that is IUID compliant. Without some type of information on the documentation indicating that a UII is present, the physical mark could be overlooked and the receiver might create a new UII using its data elements and load the item into the Registry, causing multiple entries for a single item. Under the interim rule, the physical mark is the only indicator to a receiver that a UII is present and must be read to obtain the number for look-up in the Registry. This would seem to be inadequate.

DoD Response: To avoid any confusion, the marking requirement has been excluded from the final rule. Therefore, the recommended notification mechanism is unnecessary.

b. Comment: The interim rule imposes a requirement on contractors to arbitrarily mark items furnished by the Government but received by the contractor without a physical marking. Prior to marking an item with a UII, a contractor would need to perform an appropriate analysis to determine the method, content, and location of the mark. In many cases, the contractor that receives Government-furnished items is not the manufacturer of the items and does not have design authority or sufficient technical knowledge to conduct an analysis and determine the appropriate marking. Moreover, many of the items in the aerospace and defense industry are flight safety critical items for which contractors cannot accept the responsibility/liability of altering the items. Specific requirements for marking of ``unmarked'' items should be addressed on a contract-by-contract basis so that the contractor does not void any warranties or adversely affect the form, fit, or function of the item.

DoD Response: The clause at DFARS 252.211-7007 has been amended to address only reporting requirements. The final rule contains no marking requirements.

c. Comment: Paragraph (d)(5) of the clause at DFARS 252.211-7007 requires re-marking of previously tagged or bagged embedded items that are subsequently removed from use. This paragraph should be deleted. Once identified, an item is always identified. This information should be provided as a bill of material for all UII items, including embedded UIIs as part of the contract.

DoD Response: Marking requirements have been excluded from the final rule.

2. Items Subject to Reporting Requirements

a. Comment: The DFARS rule should clearly exclude reparables, since reparables do not meet the definition of property in the possession of contractors as defined in the Item Unique Identification Property Guidebook; i.e., reparables are not provided to the contractor for performance of a contract but rather for repair. This should be addressed at DFARS 211.274-4(b). In addition, Government-furnished material that is not part of the end item deliverable in a bill of materials should not be subject to reporting under the rule. This should also be addressed at DFARS 211.274-4(b). Express recognition of these exclusions will provide clarification and will enable the Government to obtain the full cost of a deliverable end item that is in keeping with the intent, in part, of the Chief Financial Officer's Act of 1990 (Pub. L. 101-576).

DoD Response: The final rule excludes reparables and Government-furnished material from IUID reporting requirements, in addition to the following: Items with an acquisition value of less than $5,000 that are not serially managed, mission essential, sensitive, or controlled inventory, unless the terms and conditions of the contract state otherwise; contractor-acquired property; property under any statutory leasing authority; property to which the Government has acquired a lien or title solely because of partial, advance, progress, or performance-based payments; intellectual property or software; and real property.

b. Comment: At DFARS 252.211-7007(b)(4), add the words ``for use'' so that the paragraph reads: ``The Contractor shall assign and register a UII and the master item data for any subassembly, component, or part that does not have an existing UII when it is removed for use from a parent item and remains with the Contractor as a stand-alone item.'' This will eliminate any requirement to identify items that are removed for disposition.

DoD Response: The referenced paragraph (b)(4) has been excluded from the final rule. The rule has been revised to clarify the types of property that require reporting to the DoD IUID Registry, i.e., equipment, special tooling, special test equipment.

3. Reporting Mechanism

Comment: Although the rules for UII creation and marking are similar for new procurement items and legacy items, the mechanism for loading UII data to the IUID Registry for legacy items (e.g., reparable items not yet registered) differs from the mechanism for loading new procurement items, which is accomplished through Wide Area WorkFlow (WAWF). Specifically, the Material Inspection and Receiving Report required for acceptance of service items (e.g., contract line items for the repair of Government items) is not to be used to submit IUID data for supply items. That is, a contractor may not report via WAWF a new UII for a Government-owned item that the contractor has repaired. Please provide clarification to reflect this difference and provide guidance for the registration of IUID data for legacy items, specifically addressing repaired items.

DoD Response: The rule has been revised to clarify the mechanism for reporting items to the DoD IUID Registry. Specifically, that reporting is via direct input to the DoD IUID Registry, not via WAWF. WAWF was built as the input mechanism for the acquisition of new items (not Government-furnished equipment). Additionally, the final rule excludes reparables from IUID reporting requirements.

4. Data Submission Requirements

a. Comment: At 252.211-7007(b)(7), add the phrase ``the version of------, cited in the Contract Schedule'' to the end of the first sentence, so that the sentence reads: ``The Contractor shall submit the UII and the master item data into the IUID Registry in accordance with the data submission procedures in the Item Unique Identification of Government Property Guidebook at: http://www.acq.osd.mil/dpap/pdi/UID/guides.html <http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.acq.osd.mil/dpap/pdi/UID/guides.html> the version of------, cited in the Contract Schedule.'' This would be similar to the language used to invoke the applicable version of MIL-STD-130 at DFARS 252.211-7003. Also suggest adding Section IV of the document entitled DD 1662 Transition Instruction (August 23, 2005). This will clarify data to be provided when information is entered into the Registry.

DoD Response: The rule has been revised to more clearly specify data submission requirements, and the reference to the Government Property Guidebook has been excluded from the final rule. Accordingly, there is no need to add Section IV of the document entitled DD 1662 Transition Instruction (August 23, 2005).

b. Comment: The first sentence in paragraph (c)(1) of the clause at DFARS 252.211-7007 should be revised to state that updates to the IUID Registry should be accomplished ``in accordance with the recognized data submission methods on the IUID Web site.''

DoD Response: The contract clause in the final rule clearly specifies reporting requirements and also provides a reference to the DoD IUID Registry Web site.

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 has prepared a final regulatory flexibility analysis consistent with 5 U.S.C. 604. A copy of the analysis may be obtained from the point of contact specified herein. The analysis is summarized as follows:

This rule amends the DFARS to require DoD contractors to electronically submit, to the DoD IUID Registry, the IUID data applicable to the Government property in the contractor's possession. The previous, paper-based DD Form 1662 reporting system did not provide DoD with sufficient information to validate the existence, completeness, or valuation of Government property in the possession of contractors. The objective of the rule is to improve the accountability and control of DoD assets. DoD considers use of the IUID Registry to be the most practical and beneficial reporting method for both Government and industry. Continued reliance on the prior paper-based reporting method would not permit the level of accountability that DoD needs to comply with statutory and regulatory requirements related to the management of Government property. DoD already has adopted the use of IUID technology as the standard marking approach for all items in DoD's inventory system. Therefore, it logically follows that DoD property in the possession of contractors should also be recorded and reported using IUID technology.

C. Paperwork Reduction Act The information collection requirements associated with contractor reporting of Government property have been approved by the Office of Management and Budget, under Clearance Number 0704-0246, for use through April 30, 2009. The requirements of this rule are not expected to significantly change the burden hours approved under Clearance Number 0704-0246.

List of Subjects in 48 CFR Parts 211, 245, and 252

Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System.

Accordingly, the interim rule amending 48 CFR parts 211, 245, and 252, which was published at 72 FR 52293 on September 13, 2007, is adopted as a final rule with the following changes:

1. The authority citation for 48 CFR Parts 211, 245, and 252 continues to read as follows:

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

PART 211--DESCRIBING AGENCY NEEDS

2. Section 211.274-4 is revised to read as follows:

211.274-4 Policy for reporting of Government-furnished equipment in the DoD Item Unique Identification (IUID) Registry.

It is DoD policy that Government-furnished equipment be recorded in the DoD IUID Registry, except for--

(a) Items with an acquisition cost of less than $5,000 that are not identified as serially managed, mission essential, sensitive, or controlled inventory, unless the terms and conditions of the contract state otherwise;

(b) Government-furnished material;

(c) Reparables;

(d) Contractor-acquired property as defined in FAR Part 45;

(e) Property under any statutory leasing authority;

(f) Property to which the Government has acquired a lien or title solely because of partial, advance, progress, or performance-based payments;

(g) Intellectual property or software; and

(h) Real property.

3. Section 211.274-5 is amended by revising paragraph (b)(1) introductory text to read as follows:

211.274-5 Contract clauses.

* * * * *

(b)(1) Use the clause at 252.211-7007, Reporting of Government-Furnished Equipment in the DoD Item Unique Identification (IUID) Registry, in solicitations and contracts that contain the clause at--* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

4. Section 252.211-7007 is revised to read as follows:

252.211-7007 Reporting of Government-Furnished Equipment in the DoD Item Unique Identification (IUID) Registry.

As prescribed in 211.274-5(b), use the following clause:

REPORTING OF GOVERNMENT-FURNISHED EQUIPMENT IN THE DOD ITEM UNIQUE

IDENTIFICATION (IUID) REGISTRY (NOV 2008)

(a) Definitions. As used in this clause--

2D data matrix symbol means the 2-dimensional Data Matrix ECC 200 as specified by International Standards Organization/International Electrotechnical Commission (ISO/IEC) Standard 16022: Information Technology--International Symbology Specification--Data Matrix.

Acquisition cost, for Government-furnished equipment, means the amount identified in the contract, or in the absence of such identification, the item's fair market value.

Concatenated unique item identifier means--

(1) For items that are serialized within the enterprise identifier, the linking together of the unique identifier data elements in order of the issuing agency code, enterprise identifier, and unique serial number within the enterprise identifier; e.g., the enterprise identifier along with the contractor's property internal identification, i.e., tag number is recognized as the serial number; or

(2) For items that are serialized within the original part, lot, or batch number, the linking together of the unique identifier data elements in order of the issuing agency code; enterprise identifier; original part, lot, or batch number; and serial number within the original part, lot, or batch number.

Equipment means a tangible item that is functionally complete for its intended purpose, durable, nonexpendable, and needed for the performance of a contract. Equipment is not intended for sale, and does not ordinarily lose its identity or become a component part of another article when put into use.

Government-furnished equipment means an item of special tooling, special test equipment, or equipment, in the possession of, or directly acquired by, the Government and subsequently furnished to the Contractor (including subcontractors and alternate locations) for the performance of a contract.

Item means equipment, special tooling, or special test equipment, to include such equipment, special tooling, or special test equipment that is designated as serially managed, mission essential, sensitive, or controlled inventory (if previously identified as such in accordance with the terms and conditions of the contract).

Item unique identification (IUID) means a system of assigning, reporting, and marking DoD property with unique item identifiers that have machine-readable data elements to distinguish an item from all other like and unlike items.

IUID Registry means the DoD data repository that receives input from both industry and Government sources and provides storage of, and access to, data that identifies and describes tangible Government personal property.

Material means property that may be consumed or expended during the performance of a contract, component parts of a higher assembly, or items that lose their individual identity through incorporation into an end item. Material does not include equipment, special tooling, or special test equipment.

Reparable means an item, typically in unserviceable condition, furnished to the Contractor for maintenance, repair, modification, or overhaul.

Sensitive item means an item potentially dangerous to public safety or security if stolen, lost, or misplaced, or that shall be subject to exceptional physical security, protection, control, and accountability. Examples include weapons, ammunition, explosives, controlled substances, radioactive materials, hazardous materials or wastes, or precious metals.

Serially managed item means an item designated by DoD to be uniquely tracked, controlled, or managed in maintenance, repair, and/or supply systems by means of its serial number. Special test equipment means either single or multipurpose integrated test units engineered, designed, fabricated, or modified to accomplish special purpose testing in performing a contract. It consists of items or assemblies of equipment including foundations and similar improvements necessary for installing special test equipment, and standard or general purpose items or components that are interconnected and interdependent so as to become a new functional entity for special testing purposes. Special test equipment does not include material, special tooling, real property, or equipment items used for general testing purposes, or property that with relatively minor expense can be made suitable for general purpose use.

Special tooling means jigs, dies, fixtures, molds, patterns, taps, gauges, and all components of these items, including foundations and similar improvements necessary for installing special tooling, and which are of such a specialized nature that without substantial modification or alteration their use is limited to the development or production of particular supplies or parts thereof or to the performance of particular services. Special tooling does not include material, special test equipment, real property, equipment, machine tools, or similar capital items.

Unique item identifier (UII) means a set of data elements permanently marked on an item that is globally unique and unambiguous and never changes, in order to provide traceability of the item throughout its total life cycle. The term includes a concatenated UII or a DoD recognized unique identification equivalent.

Virtual UII means the UII data elements assigned to an item that is not marked with a DoD compliant 2D data matrix symbol, e.g., enterprise identifier, part number, and serial number; or the enterprise identifier along with the Contractor's property internal identification, i.e., tag number.

(b) Requirement for item unique identification of Government-furnished equipment. Except as provided in paragraph (c) of this clause--

(1) Contractor accountability and management of Government-furnished equipment shall be performed at the item level; and

(2) Unless provided by the Government, the Contractor shall establish a virtual UII or a DoD recognized unique identification for items that are--

(i) Valued at $5,000 or more in unit acquisition cost; or

(ii) Valued at less than $5,000 in unit acquisition cost and are serially managed, mission essential, sensitive, or controlled inventory, as identified in accordance with the terms and conditions of the contract.

(c) Exceptions. Paragraph (b) of this clause does not apply to--

(1) Government-furnished material;

(2) Reparables;

(3) Contractor-acquired property;

(4) Property under any statutory leasing authority;

(5) Property to which the Government has acquired a lien or title solely because of partial, advance, progress, or performance-based payments;

(6) Intellectual property or software; or

(7) Real property.

(d) Procedures for establishing UIIs. To permit reporting of virtual UIIs to the DoD IUID Registry, the Contractor's property management system shall enable the following data elements in addition to those required by paragraph (f)(1)(iii) of the Government Property clause of this contract (FAR 52.245-1):

(1) Parent UII.

(2) Concatenated UII.

(3) Received/Sent (shipped) date.

(4) Status code.

(5) Current part number (if different from the original part number.

(6) Current part number effective date.

(7) Category code (``E'' for equipment).

(8) Contract number.

(9) Commercial and Government Entity (CAGE) code.

(10) Mark record.

(i) Bagged or tagged code (for items too small to individually tag or mark).

(ii) Contents (the type of information recorded on the item, e.g., item internal control number).

(iii) Effective date (date the mark is applied).

(iv) Added or removed code/flag.

(v) Marker code (designates which code is used in the marker identifier, e.g., D=CAGE, UN=DUNS, LD=DODAAC).

(vi) Marker identifier, e.g., Contractor's CAGE code or DUNS number).

(vii) Medium code; how the data is recorded, e.g., barcode, contact memory button.

(viii) Value, e.g., actual text or data string that is recorded in its human readable form.

(ix) Set (used to group marks when multiple sets exist); for the purpose of this clause, this defaults to ``one (1)''.

(e) Procedures for updating the DoD IUID Registry. The Contractor shall update the DoD IUID Registry at https://www.bpn.gov/iuid <http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=https://www.bpn.gov/iuid> for changes in status, mark, custody, or disposition of items--

(1) Delivered or shipped from the Contractor's plant, under Government instructions, except when shipment is to a subcontractor or other location of the Contractor;

(2) Consumed or expended, reasonably and properly, or otherwise accounted for, in the performance of the contract as determined by the Government property administrator, including reasonable inventory adjustments;

(3) Disposed of; or

(4) Transferred to a follow-on or other contract.

(End of clause)

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 201, 202, 213, and 215

Defense Federal Acquisition Regulation Supplement; Technical Amendments

AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD is making technical amendments to the Defense Federal Acquisition Regulation Supplement (DFARS) to update references and the list of Army contracting activities.

DATES: Effective Date: November 24, 2008.

FOR FURTHER INFORMATION CONTACT: Ms. Michele Peterson, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone 703-602-0311; facsimile 703-602-7887.

SUPPLEMENTARY INFORMATION: This final rule amends DFARS text as follows:

- 201.201-1. Updates the reference to the DoD publication addressing the operation of the Defense Acquisition Regulations Council.

- 202.101. Updates the list of Army contracting activities.

- 213.301. Updates the Web link to the DoD Government charge card guidebook.

- 215.404-71-4. Updates cross-references.

List of Subjects in 48 CFR Parts 201, 202, 213, and 215

Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System.

Therefore, 48 CFR Parts 201, 202, 213, and 215 are amended as follows:

1. The authority citation for 48 CFR Parts 201, 202, 213, and 215 continues to read as follows:

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

PART 201--FEDERAL ACQUISITION REGULATIONS SYSTEM

201.201-1 [Amended]

2. Section 201.201-1 is amended in paragraph (c) by removing ``DoDI 5000.63'' and adding in its place ``DoD Instruction 5000.35''.

PART 202--DEFINITIONS OF WORDS AND TERMS

3. Section 202.101 is amended in the definition of ``Contracting activity'' by revising the list with the heading ``ARMY'' to read as follows:

202.101 Definitions.

* * * * *

Army

Headquarters, U.S. Army Contracting Command

Joint Contracting Command--Iraq/Afghanistan

National Guard Bureau

Program Executive Office for Simulation, Training, and Instrumentation

U.S. Army Aviation and Missile Life Cycle Management Command

U.S. Army Communications-Electronics Life Cycle Management Command

U.S. Army Corps of Engineers

U.S. Army Expeditionary Contracting Command

U.S. Army Intelligence and Security Command

U.S. Army Joint Munitions and Lethality Life Cycle Management Command

U.S. Army Medical Command

U.S. Army Medical Research and Materiel Command

U.S. Army Mission and Installation Contracting Command

U.S. Army Research, Development, and Engineering Command

U.S. Army Space and Missile Defense Command

U.S. Army Sustainment Command

U.S. Army Tank-Automotive and Armaments Life Cycle Management Command

* * * * *

PART 213--SIMPLIFIED ACQUISITION PROCEDURES

213.301 [Amended]

4. Section 213.301 is amended in paragraph (4), in the first sentence, by removing http://www.acq.osd.mil/dpap/pcard/pcardguidebook. and adding in its place http://www.acq.osd.mil/dpap/dpap/pdi/pc/docs/.

PART 215--CONTRACTING BY NEGOTIATION

215.404-71-4 [Amended]

5. Section 215.404-71-4 is amended in paragraph (e)(1) as follows:0

a. By removing ``paragraph (c)'' and adding in its place ``paragraph (f)''; and

b. By removing ``paragraph (d)'' and adding in its place ``paragraph (g)''.

END OF DCN 20081124