Daily Rules, Proposed Rules, and Notices of the Federal Government
DoD published a proposed rule under DFARS Case 2009-D043 in the
DoD reviewed the public comments in the development of the final rule. A discussion of the comments and the changes made to the rule as a result of those comments is provided, as follows:
The revisions modify and standardize contractor Government property reporting requirements, making revisions that are necessary given DoD's emphasis on property accountability. The final rule alters the requirements of the current clause, which requires Defense contractors to report (primarily) Government-furnished equipment items valued at $5,000 or more, to a new requirement to report all serialized Government-furnished property regardless of unit acquisition value. The revised reporting requirement includes electronic receipt requirements, which will be expanded to non-serialized items by 2014. This effort is consistent with Secretary of Defense memorandum dated October 13, 2011, which emphasizes both asset accountability and the need to accelerate key elements of DoD's audit readiness plans.
“A phased approach by program and department, shall be taken to populate the IUID Registry as determined and directed by the Director, Defense Procurement & Acquisition Policy.”
The respondent further stated that including the proposed DFARS text in part 211, rather than DFARS part 245, makes the requirements part of a Government-furnished property reporting system rather than part of the contractor's Government property system.
A phased implementation, as suggested by the respondent, would not be consistent with Secretary of Defense memorandum dated October 13, 2011, “Improving Financial Information and Achieving Audit Readiness,” which emphasizes both asset accountability and the need to accelerate key elements of DoD's audit readiness plans.
DoD agrees that, as reflected in the proposed rules and final rule, DFARS part 211 is the appropriate place for including DoD policy for reporting Government-furnished property required to be recorded in the IUID registry because item identification and valuation, addressed at DFARS subpart 211.2, are considered to be elements of the specifications, or requirements, for a contract.
The respondent also raised issues regarding paragraph (e) of the clause, entitled “Procedures for establishing Unique Item Identifiers,” stating that there is “great efficiency in continuing the usage of virtual Unique Item Identifiers as Special Tooling and Special Test Equipment Unique Item Identifiers with concatenated CAGE plus Property Tag.”
Also citing paragraph (e) of the clause, the respondent proposed the deletion of item (5), the “mark record” data element. The respondent stated that the enabling of the contractor's reporting system to “pull data” to populate the mark record requirements should be sufficient. The respondent proposed to delete all the sub-elements under “(5) Mark record” because this is already a reportable event and is defined in paragraph (f) of the clause. Further, the respondent proposed deletion because its position is that material reporting should not be required.
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.
A final regulatory flexibility analysis has been prepared consistent with the Regulatory Flexibility Act, 5 U.S.C. 601,
This final rule revises and standardizes reporting requirements for Government-furnished property to include items uniquely and non-uniquely identified and clarify policy for contractor access to Government supply sources. The clause at 252.211-7007 is significantly revised to eliminate the reported material weakness for DoD with regard to accounting for its property in the hands of contractors.
A number of issues were raised by the single respondent submitting comments in response to the second proposed rule. These resulted in some minor changes to clarify the rule. No comments were submitted by the Chief Counsel for Advocacy of the Small Business Administration.
The Defense Contract Management Agency, which has the overall responsibility for managing Government-furnished property, estimates that approximately 4,400 contractors possess Government-furnished property and, of this total, approximately one-fourth, or 1,100 contractors, are small businesses. All contractors in possession of Government property will be equally affected by the revision in reporting rules.
This rule will remove the mandatory $5,000 unit acquisition cost dollar threshold for reporting. This will not significantly impact items valued at less than $5,000 in unit acquisition cost, as they were also previously required to be reported if they were serially managed, mission essential, sensitive, or controlled inventory. There is potential for eventual elimination of some other electronic reporting tools, such as DoD's Commercial Asset Visibility (CAV) system. There are presently over 900 separate applications of CAV, all of which can be eliminated given the new reporting constructs contained within this rule. This will result in greater efficiency and considerable cost savings to both Government and industry.
All DoD contractors with Government-furnished property will be equally affected. However, DoD's Item Unique Identification (IUID) Registry is already in use by contractors with Government-furnished property. Under this final rule, DoD contractors will continue to use the IUID Registry for property reporting, but they will report somewhat different classes of property than they had been, and DoD will phase out the use of other property management systems.
DoD is responsible for entering new items in the IUID Registry, and contractors will be responsible only for reporting a change in state of the item. In the associated information collection justification, DoD estimated that the data are entered by the equivalent of a GS-11, step 5, that there will be approximately 5 responses annually per contractor, and that each response will take approximately one hour.
These changes were necessitated by the requirement for DoD to establish and maintain proper accountability for its property. The approach selected is designed to provide a single, electronic property management system and eliminate the many overlapping and parallel accountability systems currently in use. The result should be less costly for the DoD and its contractors, including small entities, while providing enhanced accountability.
This rule affects the information collection requirements in Government property reporting provisions prescribed at DFARS part 211, currently approved under OMB Control Number 0704-0246 (which covers DFARS part 245, Government Property, DFARS section
Therefore, 48 CFR parts 211, 212, and 252 are amended as follows:
41 U.S.C. 1303 and 48 CFR Chapter 1.
(b) * * *
(2) * * *
(ii) The DoD Unique Identification Policy Office must receive a copy of the determination and findings required by paragraph (b)(2)(i) of this subsection. Follow the procedures at PGI 211.274-2.
(a) It is DoD policy that all Government-furnished property be recorded in the DoD Item Unique Identification (IUID) Registry, as defined in the clause at 252.211-7007, Reporting of Government-Furnished Property.
(b) The following items are not required to be reported:
(1) Contractor-acquired property, as defined in FAR part 45.
(2) Property under any statutory leasing authority.
(3) Property to which the Government has acquired a lien or title solely because of partial, advance, progress, or performance-based payments.
(4) Intellectual property or software.
(5) Real property.
(6) Property released as work in process.
(7) Non-serial managed items (reporting is limited to receipt transactions only).
The revisions read as follows:
(a)(1) Use the clause at
(b) Use the clause at
41 U.S.C. 1303 and 48 CFR chapter 1.
(F) Use the clause at 252.211-7007, Reporting of Government-Furnished Property, as prescribed in 211.274-6.
As prescribed in
“Commercial and Government entity (CAGE) code” means—
(i) A code assigned by the Defense Logistics Agency Logistics Information Service to identify a commercial or Government entity; or
(ii) A code assigned by a member of the North Atlantic Treaty Organization that the Defense Logistics Agency Logistics Information Service records and maintains in the CAGE master file. The type of code is known as an “NCAGE code.”
“Contractor-acquired property” has the meaning given in FAR clause 52.245-1. Upon acceptance by the Government, contractor-acquired property becomes Government-furnished property.
“Government-furnished property” has the meaning given in FAR clause 52.245-1.
“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. The IUID Registry is—
(i) The authoritative source of Government unit acquisition cost for items with unique item identification (see DFARS 252.211-7003) that were acquired after January 1, 2004;
(ii) The master data source for Government-furnished property; and
(iii) An authoritative source for establishing the acquisition cost of end-item equipment.
“National stock number (NSN)” means a 13-digit stock number used to identify items of supply. It consists of a four-digit Federal Supply Code and a nine-digit National Item Identification Number.
(i) The combination of a Government-assigned type designation and an approved item name;
(ii) Names assigned to kinds and groups of products; or
(iii) Formal designations assigned to products by customer or supplier (such as model number or model type, design differentiation, or specific design series or configuration).
“Part or identifying number (PIN)” means the identifier assigned by the original design activity, or by the controlling nationally recognized standard, that uniquely identifies (relative to that design activity) a specific item.
“Reparable” means an item, typically in unserviceable condition, furnished to the Contractor for maintenance, repair, modification, or overhaul.
“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.
“Supply condition code” means a classification of materiel in terms of readiness for issue and use or to identify action underway to change the status of
“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.
“Unit acquisition cost” has the meaning given in FAR clause 52.245-1.
(1) Up to and including December 31, 2013, report serially managed Government-furnished property with a unit-acquisition cost of $5,000 or greater.
(2) Beginning January 1, 2014, report—
(i) All serially managed Government-furnished property, regardless of unit-acquisition cost; and
(ii) Contractor receipt of non-serially managed items. Unless tracked as an individual item, the Contractor shall report non-serially managed items to the Registry in the same unit of packaging, e.g., original manufacturer's package, box, or container, as it was received.
(1) Contractor-acquired property;
(2) Property under any statutory leasing authority;
(3) Property to which the Government has acquired a lien or title solely because of partial, advance, progress, or performance-based payments;
(4) Intellectual property or software;
(5) Real property; or
(6) Property released for work in process.
(1) Received/Sent (shipped) date.
(2) Status code.
(3) Accountable Government contract number.
(4) Commercial and Government Entity (CAGE) code on the accountable Government contract.
(5) 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.
(6) Appropriate supply condition code, required only for reporting of reparables, per Appendix 2 of DoD 4000.25-2-M, Military Standard Transaction Reporting and Accounting Procedures manual (
(e) When Government-furnished property is in the possession of subcontractors, Contractors shall ensure that reporting is accomplished using the data elements required in paragraph (d) of this clause.
(1) Except as provided in paragraph (g)(2), the Contractor shall update the IUID Registry at
(i) Received by the Contractor;
(ii) Delivered or shipped from the Contractor's plant, under Government instructions, except when shipment is to a subcontractor or other location of the Contractor;
(iii) 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;
(iv) Disposed of; or
(v) Transferred to a follow-on or other contract.
(2) The Contractor need not report to the IUID Registry those transactions reported or to be reported to the following DCMA etools:
(i) Plant Clearance Automated Reutilization and Screening System (PCARSS); or
(ii) Lost, Theft, Damaged or Destroyed (LTDD) system.
(3) The contractor shall update the IUID Registry as transactions occur or as otherwise stated in the Contractor's property management procedure.
The revisions and additions read as follows:
(c) When placing orders for Government stock on a reimbursable basis, the Contractor shall—
(d) When placing orders for Government stock on a non-reimbursable basis, the Contractor shall—
(1) Comply with the requirements of the Contracting Officer's authorization; and
(2) When using electronic transactions to submit requisitions on a non-reimbursable basis only, place orders by authorizing contract number using the Defense Logistics Management System (DLMS) Supplement to Federal Implementation Convention 511R, Requisition; and acknowledge receipts by authorizing contract number using the DLMS Supplement 527R, Receipt, Inquiry, Response and Material Receipt Acknowledgement.