Defense Federal Acquisition Regulation Supplement; Unique Item Identification and Valuation, 20831-20838 [05-7981]

Agencies

• DEPARTMENT OF DEFENSE

[Federal Register Volume 70, Number 77 (Friday, April 22, 2005)]
[Rules and Regulations]
[Pages 20831-20838]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-7981]


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DEPARTMENT OF DEFENSE

48 CFR Parts 202, 204, 211, 212, 243, and 252

[DFARS Case 2003-D081]


Defense Federal Acquisition Regulation Supplement; Unique Item 
Identification and Valuation

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

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SUMMARY: DoD has issued a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to establish policy for 
unique identification and valuation of items delivered under DoD 
contracts.

DATES: Effective April 22, 2005.

FOR FURTHER INFORMATION CONTACT: Ms. Michele Peterson, Defense 
Acquisition Regulations Directorate, OUSD(AT&L)DPAP(DAR), IMD 3C132, 
3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-
0311; facsimile (703) 602-0350. Please cite DFARS Case 2003-D081.

SUPPLEMENTARY INFORMATION:

A. Background

    DoD published an interim rule at 68 FR 75196 on December 30, 2003, 
containing policy that requires contractors to provide unique item 
identification (UID) and the Government's unit acquisition cost for 
items delivered under DoD contracts. Thirteen sources submitted 
comments on the interim rule. The following is a discussion of the 
comments and the changes made to the rule as a result of those 
comments:
    1. Comment: A respondent stated that the implementation date of 
January 1, 2004, was too aggressive. The respondent recommended a later 
implementation date that would allow time in which to alert both 
Federal agencies and Federal contractors about the specifics of the new 
rule.
    DoD Response: DoD agrees that the implementation schedule was 
aggressive. However, the rule is considered to be a strategic 
imperative. The implementation schedule could not be slipped.
    2. Comment: We have been instructed to identify ``to be 
determined'' in the clause fill-in. We have also been instructed to 
contact our requirements (logistics) counterparts for their 
determination if this clause applies. According to our counterparts, 
they don't have the technical training or knowledge to make that 
determination. Also, there is currently no training or knowledge in the 
contracting world on a realistic cost for this information.
    DoD Response: The clause must go into all contracts that require 
the delivery of ``items'' as defined in the clause, unless an exception 
applies. Items valued at or above $5,000 must be marked with UID. The 
fill-ins are for items that meet other specified conditions, as well as 
embedded items that meet specified conditions. The implementing 
guidance in section 211.274 has been reworded for clarity to specify 
that the requiring activity determines what embedded items, 
subassemblies, or components require UID. There is less technical 
training or knowledge required than the interim rule implied; however, 
additional information is available at https://www.acq.osd.mil/dpap/uid.
    3. Comment: DoD should give special consideration to communicating, 
aiding, and making available, training to all suppliers that will need 
to comply with this requirement--whether as prime contractors, or as 
subcontractors at any tier.
    DoD Response: Concur. DoD is engaged in a large communication 
effort through its UID Program Office. The UID Web site at https://
www.acq.osd.mil/dpap/uid should be consulted for information and 
resources that are available.
    4. Comment: Both government buying offices and prime contractors 
should be encouraged to make special efforts to assist small and small 
disadvantaged, minority- or women-owned firms and make accommodations 
as needed to help them achieve the goals of this new requirement.
    DoD Response: Concur. Small businesses will find that there are a 
number of vendors, many of which are small businesses themselves, that 
can provide UID marking assistance. Additionally, the final rule 
permits exceptions to marking requirements for items acquired from 
small business concerns when it is more cost effective for the 
Government requiring activity to assign, mark, and register the UID 
after delivery.
    5. Comment: Not all requirements are generated from DoD. How does 
this requirement apply when a foreign government is the customer? A 
related comment was whether UID is applicable to Foreign Military Sales 
(FMS) contracts and whether our FMS customers were consulted about UID 
applicability and advised of potential cost impacts.
    DoD Response: Items valued at or above $5,000, or items delivered 
to DoD that meet other specified conditions, must be marked with UID. 
There is no exception for FMS contracts. This rule has been developed 
with assistance from our allies and in consideration of international 
standards.
    6. Comment: Does UID apply to items that we lease but of which we 
never take ownership?
    DoD Response: Yes. Items valued at or above $5,000, or items 
delivered to DoD that meet other specified conditions, must be marked 
with UID.
    7. Comment: Two respondents asked whether UID and valuation apply 
to classified or COMSEC contracts. One respondent suggested that the 
final rule include instructions to require that all such issues be 
directed to the contracting officer for resolution.
    DoD Response: Yes, the UID and valuation apply to classified 
contracts, unless there is an exemption cited in program directives.
    8. Comment: Does UID apply to furniture that has an acquisition 
cost of $5,000 and above?
    DoD Response: Yes, all items over $5,000 in value require unique 
identification.
    9. Comment: The clause should include a statement that the 
contractor must comply with the most current version of MIL-STD-130.
    DoD Response: Concur. After much consideration, it was considered 
best to refer to the version of MIL-STD-130 that is cited in the 
contract Schedule. This allows for updating, if necessary, at the time 
of award.
    10. Comment: Is UID really appropriate when, in all likelihood, it 
probably will not survive the manufacturing process?
    DoD Response: If an item is valued at or above $5,000, and it is 
delivered to DoD, it must be marked with UID. One of the purposes of 
UID is to be able to track items that may be warehoused for a period of 
time prior to being incorporated into a manufactured end item. The 
property record that was created when the item was delivered should be 
annotated with the item's disposition when it is incorporated into a 
manufactured item.
    11. Comment: One respondent believes that, in an effort to save 
taxpayer dollars, items required for their own base operations, that 
are never used/received by the warfighter (i.e., is not a spare part), 
should be excluded.
    DoD Response: Do not concur. Items valued at or above $5,000, or 
items meeting other specified conditions that

[[Page 20832]]

are delivered to DoD, must be marked with UID. Although our primary 
mission is the warfighter, sound property management and accountability 
are integral to our responsibilities to the taxpayer.
    12. Comment: Paragraph (c)(3) of clause at 252.211-7003 states, 
``The contractor shall (i) mark the encoded data elements (except 
issuing agency code) on the item using any of the following three types 
of data qualifiers as specified elsewhere in the contract.'' Where in 
the contract did you intend this to be specified?
    DoD Response: The phrase ``as specified elsewhere in the contract'' 
has been excluded from the final rule.
    13. Comment: The DoD Guide to Uniquely Identifying Items, Version 
1.3, Nov 25, 2003, p. 18, indicates that the enterprise assigning 
serialization to an item makes the decision regarding which construct 
to use to uniquely identify items, as well as use of the associated 
business rules. The guide also suggests that it should not matter which 
of the three constructs the contractor uses because DoD should be able 
to read any of them. If that is the case, is it necessary to specify 
which type must be used in the contract?
    DoD Response: The final rule clarifies that the determination of 
which construct to use is made by the contractor.
    14. Comment: In the solicitation phase, would it not be better to 
allow contractors to propose which data qualifier they prefer to use 
rather than specifying one in the solicitation?
    DoD Response: The phrase ``as specified elsewhere in the contract'' 
has been excluded from the final rule.
    15. Comment: What ``Data Item Description'' covers UID? Further, is 
a new Data Item Description for UID being developed, or which existing 
one should we use?
    DoD Response: The Data Item Description can be found under 
``References'' on the UID Web site at https://www.acq.osd.mil/uid.
    16. Comment: With regard to DFARS 211.274-2, it is not clear from 
the interim rule when the contract line items/subline items (CLINs/
SLINs) or contract data requirements list (CDRL) will be updated to 
reflect the delivered items that require UID.
    DoD Response: The intent is that the CLIN/SLIN structure should 
reflect the UID requirements at contract award. This may be the result 
of the procurement request and solicitation CLIN/SLIN structure, or it 
may be the result of information provided in the contractor's proposal 
in response to the solicitation. However, if this is not the case, the 
contract should be modified to reflect the CLIN/SLIN structure as 
necessary prior to delivery of the items requiring UID.
    17. Comment: A respondent requested that DoD policy on applying UID 
to existing contracts remain as currently stated to apply UID to 
existing contracts ``where it makes business sense.''
    DoD Response: Concur. This policy has not changed.
    18. Comment: Considering that the new UID labeling requirement 
allows for the use of commonly accepted commercial marks for items that 
are not required to have unique identification, will DoD reconsider the 
application of the UID labeling requirement to contracts for commercial 
items under FAR Part 12?
    DoD Response: The requirement for commonly accepted commercial 
marks for items that are not required to have unique identification has 
been deleted from the rule. Additionally, the final rule permits 
exceptions from UID requirements for commercial items when it is more 
cost effective for the Government requiring activity to assign, mark, 
and register the UID after delivery.
    19. Comment: Is it DoD's intention to apply the UID labeling 
requirement to product orders placed under another agency's contract 
vehicle, such as GSA's Federal Supply Schedule or another agency's 
multiple award indefinite-delivery indefinite-quantity contract?
    DoD Response: Yes. The final rule makes the clause at DFARS 
252.211-7003 mandatory for all solicitations, contracts, and delivery 
orders. DoD believes that inclusion of the clause in delivery orders 
under Federal Supply Schedule (FSS) contracts is consistent with the 
provision at 252.211-7003, Marking, that is currently in FSS contracts 
allowing ordering activities to specify marking requirements in 
delivery orders.
    20. Comment: Does the UID labeling requirement apply to entities 
that resell a manufacturer's product to DoD?
    DoD Response: Yes.
    21. Comment: Does DoD recognize Telcordia as an issuing agency?
    DoD Response: Yes, DoD recognizes IAC ``LB'' for Telcordia.
    22. Comment: Will DoD accept the UID in a MicroPDF417 symbol? The 
majority of North American Telecommunications Service Providers require 
equipment manufacturers to CLEI Code their products. Telcordia GR-383-
CORE identifies MicroPDF417 as the required symbology for CLEI Coded 
product. We currently use MicroPDF417 in our designs and would require 
significant changes to implement Data Matrix 200. There is not 
sufficient space for two symbols, particularly when both will have the 
same information. The MH10.8.3 and MH10.8.2 data syntax will be the 
same for both symbologies. Further, MicroPDF417 has the benefit of 
being either square or rectangular in shape depending on how it is 
specified. This provides increased flexibility when working with space-
constrained product. Scanners capable of reading Data Matrix 200 are 
also capable of reading MicroPDF417, but scanners capable of reading 
MicroPDF417 are not always capable of reading Data Matrix 200.
    DoD Response: No decision has been made as to DoD acceptance of the 
MicroPDF417 symbol.
    23. Comment: Is the part number required in the 2D symbol if we use 
serialization within the enterprise identifier? The examples we see for 
serialization within the enterprise are not clear. We will be using 
data identifier 18V, ANSIT1.220 issuing agency ``LB'', an enterprise 
identifier of ``WECO''. The serial number will use the data identifier 
``S'' to define our unique serial number to form the UID. Do the data 
strings shown below meet the UID requirement?


    CLEI coded product:
    [) >Rs06 Gs18VLBWECOGSS123456789012345678GS11PAABBCCD1E1
    Rs EOT.
    Non-CLEI coded product:
    [) >Rs06 Gs18VLBWECO G
    SS123456789012345678 Rs EOT.
 


    DoD Response: No. The only data identifier available for use in 
Construct 1 in this case is ``25S'', which is defined as 
``18V'' + unique serial number (unique within the enterprise). The 
syntax would be:

[[Page 20833]]



    Non-CLEI coded product (Serialization within the enterprise,
     Construct 1)
    [) >Rs06 Gs25SLBWECO123456789012345678Rs EOT.
    UID would be: LBWECO123456789012345678
    CLEI coded product (Serialization within the part, or product,
     number, Construct 2):
    [) >Rs06 Gs18VLBWECOGS11PAABBCCD1E1
    GS S123456789012345678 Rs EOT.
    Concatenated UID would be: LBWECOAABBCCD1E1123456789012345678
 


    24. Comment: Does the order of the data fields matter? Telcordia 
has defined the CLEI Code as the first data field within the data 
symbol, and that is our current data format. Is the use of data 
identifiers sufficient to assemble the UID from the data string 
regardless of order?
    DoD Response: The data fields should appear at the beginning of the 
syntax in order of concatenation: Construct 1: 25S, Construct 
2: 18V+11P+S.
    25. Comment: Must the UID label be scannable in service? If so, 
what exceptions would be considered?
    DoD Response: Yes. The UID label must be scannable in service. 
There are no exceptions.
    26. Comment: What is the labeling requirement for the first level 
product package label (P2 label)? Will this label require that the UID 
be encoded in a 2D symbol? If so, would this be a PDF417 symbol, Data 
Matrix 200, or other?
    DoD Response: The labeling requirements are those specified in MIL-
STD-129P.
    27. Comment: What is the minimum data set for the UID on the 
shipping label, and is a 2D symbol required? We currently do not 
include product serial number information on our shipping labels. 
Adding UID information to the shipping label would require significant 
IT system changes.
    DoD Response: The labeling requirements are those specified in MIL-
STD-129P.
    28. Comment: Several comments were received regarding the use of 
radio frequency identification (RFID) technology.
    DoD Response: RFID technology is being addressed in separate DoD 
policy. The RFID policy, which addresses the labeling for shipping and 
packaging, is being developed in close coordination with the UID 
Program Office. RFID requirements will not replace or supersede UID 
requirements.
    29. Comment: Is it DoD's understanding that the Christian Doctrine 
may apply, or will the requirement to mark items over $5,000 be 
applicable only to those contracts in which DFARS 252.211-7003 is 
cited?
    DoD Response: DoD does not believe the Christian Doctrine would 
apply in the case of a contract that failed to include the clause at 
252.211-7003.
    30. Comment: Will drawings have to be changed prior to adding the 
physical UID marking to items? If not, will items be rejected for not 
conforming to the drawing? If so, are drawing changes to be bid the 
first time a solicitation is received for a particular item?
    DoD Response: Defining the set of parts to mark, the method in 
which to mark them, the associated engineering analysis required, in 
addition to the process/program documentation, is a coordinated concert 
of activities that must occur simultaneously and with fluidity. The 
involvement of all entities is crucial as each lends a viewpoint to 
marking from different technological, logistical, and supply 
perspectives.
    There must be close coordination with the DoD requiring activities, 
original equipment manufacturers, and vendors in order to minimize the 
manpower burden to accomplish the required changes on engineering 
documentation and to initiate the necessary changes to existing 
manufacturing and maintenance processes. This is true for a marking 
program on either a new end item or on a legacy end item.
    Collaborative methods, or best practices that could be considered 
and are being prototyped today include the following: (1) Replacing 
existing data plates with UID labels; (2) Issuing a global engineering 
change notice; (3) Issuing part marking work orders into the existing 
manufacturing process; and (4) When the necessary marking information 
and criteria do not change the form, fit, or function of the part, the 
change does not require an immediate drawing update but rather can be 
accomplished by a coversheet with the marking instructions, thus 
permitting consolidation of drawing requirements.
    31. Comment: Section 211.274-1(a)(3) is worded such that all lower-
level assemblies of an item on a CDRL require UID marking. The 
respondent suggests rewording the section to ``Subassemblies, 
components, and embedded parts identified on a Contract Data 
Requirements List or other exhibit.''
    DoD Response: Section 211.274-1(a)(3) of the interim rule contained 
guidance to the contracting officer. Paragraph (c)(1)(iii) of the 
clause at 252.211-7003 identifies the marking requirement for 
subassemblies, components, and embedded parts. It reads:
    ``(iii) Subassemblies, components, and parts embedded within 
delivered items as specified in Attachment Number ------.''
    32. Comment: Even though the rule has been revised to clarify the 
responsibility of the vendor, it is our interpretation that DoD must 
assume the primary responsibility for communicating the unique 
identification at time of contract.
    DoD Response: Concur. This should be accomplished through the 
clause at 252.211-7003.
    33. Comment: Electronic invoicing, mandated by DFARS clause 
252.232-7003, will be delayed to accommodate the UID requirements. 
Since many companies now are changing their accounting systems in order 
to be compliant with Wide Area WorkFlow, an additional requirement that 
UID's are included on invoices clearly will cause delays in the 
electronic billing system.
    DoD Response: Do not concur. Currently contractors can separately 
invoice and report UID.
    34. Comment: Small business suppliers may be required to create new 
systems for identification and marking of their products. This will 
result in increased costs to small businesses.
    DoD Response: Small businesses will find there are a number of 
vendors, many of which are small businesses, that can provide UID 
marking assistance at low cost. In addition, the final rule permits 
exceptions to marking requirements for items acquired from small 
business concerns, when it is more cost effective for the Government 
requiring activity to assign, mark, and register the UID after 
delivery.
    35. Comment: Extension of the UID requirement to the building trade 
industry, including electrical and mechanical products, will impose a 
severe business and economic hardship on large and small businesses 
alike to implement the marking and identification requirement on 
products, plus the supporting documentation to shipping documents and 
invoices.
    DoD Response: As stated in the DoD response to Comment 34 above, 
there are a number of vendors that can provide UID assistance at low 
cost. The

[[Page 20834]]

final rule permits exceptions to UID requirements for commercial items 
and for items acquired from small business concerns, when it is more 
cost effective for the Government requiring activity to assign, mark, 
and register the UID after delivery. The required supporting shipping 
documentation represents only a minimal increase in current DoD 
requirements for completion of DD Form 250, Material Inspection and 
Receiving Report.
    36. Comment: One respondent suggested that DoD include ``Consumer 
Electronics Alliance'' in the examples of commonly accepted commercial 
marks.
    DoD Response: The requirement for commonly accepted commercial 
marks for items that are not required to have unique identification has 
been deleted from the rule.
    37. Comment: Please clarify that the ``Issuing Agency Code'' is 
derived and not ``marked'' on the item.
    DoD Response: A change is included in the final rule to clarify 
that Issuing Agency Code is not marked.
    38. Comment: One respondent noted that ``AIT'' means automatic 
identification technology.
    DoD Response: Concur. The change is included in the final rule.
    39. Comment: Please add ``Department of Defense Address Activity 
Code (DoDAAC)'' to registration (or controlling) authority.
    DoD Response: Do not concur. An Issuing Agency Code (IAC) is being 
requested for DoDAAC. DoDAAC should not be added until the IAC is 
approved.
    40. Comment: One respondent suggests rewording Section 252.211-
7003(c)(3)(1)(A) as follows: ``Data Identifiers (DIs) (Format 06), in 
accordance with ISO/IEC International Standard 15418, Information 
Technology--EAN/UCC Application Identifiers and ASC MH 10 Data 
Identifiers and ASC MH 10 Data Identifiers and Maintenance.''
    DoD Response: Concur. The change is included in the final rule.
    41. Comment: A respondent suggests rewording Section 252.211-
7003(c)(3)(1)(C) as follows: ``Text Element Identifiers (TEIs), in 
accordance with the DoD collaborative solution ``DD'' format for use 
until the final solution is approved by ISO JTC1/SC 31. The DoD 
collaborative solution is described in Appendix D of the DoD Guide to 
Uniquely Identifying Items, available at https://www.acq.osd.mil/uid, 
and:''
    DoD Response: Concur. DFARS 252.211-7003(c)(3)(i)(C) has been 
revised to essentially capture the comment.
    42. Comment: The rule poses a substantial problem for commercial 
suppliers and service providers. The problem is that many commercial 
companies use item identification markings that differ significantly 
from the Department's prescribed unique identification markings.
    For these companies to continue to do business with the Department, 
they will either need to establish separate assembly lines and 
procedures to process DoD orders using the Department's unique 
markings, or overhaul and convert their existing systems to meet the 
Department's requirements. For existing DoD suppliers and service 
providers, either of these approaches would pose a very expensive 
proposition. For potential new entrants to the Defense market, the 
requirements may pose a prohibitive barrier.
    DoD Response: This rule is considered to be a strategic imperative. 
DoD acquires a large number of items from commercial suppliers and 
these items can not be excluded from the UID requirements. However, the 
final rule permits exceptions to marking requirements for commercial 
items when it is more cost effective for the Government requiring 
activity to assign, mark, and register the UID after delivery.
    43. Comment: The interim rule may be read as burdensome and 
otherwise inconsistent with commercial practice to require vendors to 
change their delivery processes to accommodate Government-unique 
acquisition cost requirements. Some Department personnel have publicly 
stated that existing practices for completing DD 250 acceptance forms 
would suffice to support the acquisition unit cost requirement imposed 
by the interim rule. But that is not clear in the rule itself. We 
request that the rule be clarified to clearly read that vendors' 
existing DD 250 practices that currently meet DD 250 requirements will 
satisfy the interim rule's unit acquisition cost requirements.
    DoD Response: Do not concur. There are no new or additional burdens 
imposed on vendors as a result of the ``Government's unit acquisition 
cost'' requirements. Currently, vendors are required to put a ``price'' 
on the DD 250. There is nothing in the rule to suggest that existing DD 
250 practices would change.
    44. Comment: Two respondents stated that imposing the interim 
rule's requirements in commercial acquisitions at this time is 
inconsistent with the Federal Acquisition Streamlining Act of 1994 
(``FASA''), which mandates that Government agencies rely to the maximum 
extent practicable on commercial products and services to fill the 
Government's needs. In our view, imposition of the interim rule at this 
time in commercial acquisitions is neither required by statute nor 
consistent with customary commercial practice.
    DoD Response: DoD does not concur that UID requirements are 
inconsistent with FASA. FASA does not restrict DoD's ability to define 
its needs and requirements for supporting the warfighter. However, the 
final rule permits exceptions to marking requirements for commercial 
items when it is more cost effective for the Government requiring 
activity to assign, mark, and register the UID after delivery of the 
item.
    45. Comment: One respondent suggested that implementation of the 
rule for purposes of commercial item acquisitions be changed from 
January 1, 2004, to March 1, 2005. The respondent further recommended 
that, prior to the implementation date, the Department establish a 
working group that will include participants from commercial industry 
to determine what methods would be least intrusive to commercial 
practice, while operating to satisfy the Department's needs. The 
current interim rule seems to impose most of the burden, if not all, on 
the vendor, and may result in vendors having to adopt a ``Government 
only'' line of products at significant expense to both the vendor and 
the Government.
    DoD Response: Do not concur. DoD acquires a large number of 
commercial items, and these items cannot be excluded from UID 
requirements. However, the final rule permits exceptions to marking 
requirements for commercial items when it is more cost effective for 
the Government requiring activity to assign, mark, and register the UID 
after delivery.
    46. Comment: Does the rule apply to real property in DoD buildings 
and facilities?
    DoD Response: Yes. Items valued at or above $5,000, or items that 
are delivered to DoD meeting other specified conditions, must be marked 
with UID.
    47. Comment: Does the rule apply to electrical and mechanical 
equipment and building components making up a building and building 
systems?
    DoD Response: Yes. Items valued at or above $5,000, or items that 
are delivered to DoD meeting other specified conditions, must be marked 
with UID.
    48. Comment: In our February 27, 2004, letter to the Director of 
Defense Procurement, we expressed our concern that not all UID 
implementation costs

[[Page 20835]]

may be recovered under existing accounting procedures. We encourage the 
Department to give early consideration to addressing this issue. We 
stand ready to meet with your representatives at your convenience.
    49. DoD Response: DoD is willing to further discuss and examine 
whether all UID implementation costs may be recovered under existing 
accounting procedures.
    50. Comment: In section 211.274-2(b)(2), Government's unit 
acquisition cost for cost type line, subline, or exhibit line items is 
the contractor's estimated fully burdened unit cost. In informal 
discussions with the Department's staff, we understand that this is 
intended to include a representative element of profit or fee. We 
suggest that this be clarified in the List of Frequently Asked 
Questions or in the Guide to Uniquely Identifying Items.
    DoD Response: Concur. DoD will add to the List of Frequently Asked 
Questions an item that indicates that ``fully burdened unit cost to the 
Government'' would include all direct, indirect, G&A costs, and an 
appropriate portion of fee.
    51. Comment: With regard to section 211.274-3, Contract clause, one 
respondent noted that this section has been improved for both industry 
and the government. It addresses ``items'' requiring UID and clarifies 
application where a CDRL/Exhibit is required for subassemblies, 
components, or embedded items. The respondent recommends that, in order 
to strengthen this principle, several illustrative examples be included 
in the DoD Guide to Uniquely Identified Items.
    DoD Response: Concur. Examples will be included in the next version 
of the DoD Guide to Uniquely Identified Items.
    52. Comment: In the clause at 252.211-7003(c)(1)(iii), there are 
requirements regarding subassemblies, components, and parts embedded 
within items specified in Exhibits or CDRLs. It should be noted that 
not all embedded items fit the category of subassemblies, components, 
or parts. As a hypothetical example, a latch that is permanently 
attached to a watertight door may be purchased but is not carried as a 
spare part, subassembly, or component. Once attached, it is embedded as 
a permanent part of the door and not replaceable. There needs to be 
clarification that such hardware is not to be subject to the 
requirements for assignment of a UID, and the clause need not be flowed 
down to the supplier.
    DoD Response: Concur. This paragraph of the final rule was 
rewritten to clarify that only subassemblies, components, or parts 
embedded within an item that are serially managed, mission essential, 
or controlled inventory item, as determined by the requiring activity, 
may require UID.
    53. Comment: In the clause at 252.211-7003(c)(3), Data syntax and 
semantics, the enterprise responsible for assigning the UID should 
determine the type of data qualifiers to use instead of this 
information being specified on a contract-by-contract basis.
    DoD Response: Concur. The language was changed to avoid requiring a 
subcontractor that produces a common subassembly for use in three 
unique weapon systems to use a different type data qualifier depending 
on the end item application or service agency buying the item.
    54. Comment: We believe that DoD should issue instructions to all 
of its organizations that failure to comply with the DFARS UID 
requirement in the first contract upon which it is imposed shall not be 
reason for refusing delivery or assessing withholds, provided the 
company has a plan in place for compliance and is proceeding in 
accordance with this plan. For example, we understand June 2004 is the 
earliest that Wide Area WorkFlow will be modified to accept DD Form 250 
transactions that include required UID data, and then only for fixed-
price contracts. Current contracts should not be rigidly enforced when 
the system for accepting the data for all contracts is not yet 
available to all suppliers.
    DoD Response: Do not concur. Problems with compliance with the 
DFARS UID requirement should be addressed prior to award of the 
contract. After award, the contractor should be expected to comply with 
contract requirements.
    55. Comment: We believe that special tooling and special test 
equipment and other items of Government property, created and used 
during the course of contracts during 2004, should be exempt from any 
UID marking or evaluation requirements until such items are delivered 
to the Government, or one of its suppliers, on or after January 1, 
2005. Policy and procedure for this class of assets should be published 
as soon as possible.
    DoD Response: Do not concur. Marking is only required when items, 
including special tooling and special test equipment, are delivered to 
the Government. Generally, it is unlikely that special tooling and 
special test equipment used in production under a contract requiring 
UID would have been delivered before January 1, 2005, due to the 
applicability of the rule (contracts resulting from solicitations that 
were issued on or after January 1, 2004).
    56. Comment: The DoD UID policy should be coordinated and 
consistent with all other aspects of DoD acquisition policy. DoD should 
ensure that, as this and the RFID policies evolve, care is taken to 
reconcile the RFID and UID policies, DFARS rule, military standards, 
solicitation instructions, training, and other aspects to ensure 
uniform interpretation and avoid mis-steps on the part of Government or 
industry.
    DoD Response: Concur. RFID policies, military standards related to 
RFID and UID, solicitation instructions, training, and other aspects of 
the policies are being closely coordinated with the UID Program Office.
    57. Comment: Individual program offices should have the flexibility 
to designate which parts should be marked; however, they should not 
dictate the process and procedure for actual marking of parts. 
Individual program offices should be encouraged to work with their 
contractors to identify what parts are to be marked, but a program 
office should not normally tell a contractor what marking construct to 
use, since the contractor's plant, and its supply chain, may already be 
keyed to use of a certain approach, and may incur considerable cost and 
disruption to alter that for a single contract.
    DoD Response: The phrase ``as specified elsewhere in the contact'' 
which permitted specifying the process and procedure for actual marking 
of parts has not been included in the final rule.
    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. The analysis is summarized as follows:
    This rule establishes DoD policy for marking and valuation of items 
delivered under DoD contracts. The objective of the rule is to improve 
the management of DoD assets. DoD believes that the small businesses in 
the manufacturing categories subject to the rule normally use some form 
of product identification already, i.e., bar coding, as part of their 
commercial business practices. DoD is unaware of any small business 
that cannot comply with the UID policy. In fact, there is an increase 
in the number of small businesses providing marking/UID data services 
to industry and DoD. DoD anticipates that most small vendors will be 
able to

[[Page 20836]]

comply using labels and data plates readily and inexpensively available 
in the commercial market. A small business can order labels and data 
plates from a wide array of vendors at a cost of $0.10 to $3.00 per 
item. No specific investment need be made by a small business.
    A copy of the analysis may be obtained from the point of contact 
specified herein.

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 Parts 202, 204, 211, 212, 243, and 252

    Government procurement.

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


0
Accordingly, the interim rule amending 48 CFR parts 202, 204, 211, 212, 
243, and 252, which was published at 68 FR 75196 on December 30, 2003, 
is adopted as a final rule with the following changes:
0
1. The authority citation for 48 CFR parts 202, 204, 211, 212, 243, and 
252 continues to read as follows:

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

PART 211--DESCRIBING AGENCY NEEDS

0
2. Sections 211.274-1 through 211.274-3 are revised and section 
211.274-4 is added to read as follows:


211.274-1  General.

    Unique item identification and valuation is a system of marking and 
valuing items delivered to DoD that will enhance logistics, 
contracting, and financial business transactions supporting the United 
States and coalition troops. Through unique item identification policy, 
which capitalizes on leading practices and embraces open standards, DoD 
can--
    (a) Achieve lower life-cycle cost of item management and improve 
life-cycle property management;
    (b) Improve operational readiness;
    (c) Provide reliable accountability of property and asset 
visibility throughout the life cycle; and
    (d) Reduce the burden on the workforce through increased 
productivity and efficiency.


211.274-2  Policy for unique item identification.

    (a) It is DoD policy that DoD unique item identification, or a DoD 
recognized unique identification equivalent, is required for-
    (1) All delivered items for which the Government's unit acquisition 
cost is $5,000 or more;
    (2) Items for which the Government's unit acquisition cost is less 
than $5,000, when identified by the requiring activity as serially 
managed, mission essential, or controlled inventory;
    (3) Items for which the Government's unit acquisition cost is less 
than $5,000, when the requiring activity determines that permanent 
identification is required; and
    (4) Regardless of value--
    (i) Any DoD serially managed subassembly, component, or part 
embedded within a delivered item; and
    (ii) The parent item (as defined in 252.211-7003(a)) that contains 
the embedded subassembly, component, or part.
    (b) Exceptions. The Contractor will not be required to provide DoD 
unique item identification if--
    (1) The items, as determined by the head of the agency, are to be 
used to support a contingency operation or to facilitate defense 
against or recovery from nuclear, biological, chemical, or radiological 
attack; or
    (2) A determination and findings has been executed concluding that 
it is more cost effective for the Government requiring activity to 
assign, mark, and register the unique item identification after 
delivery of an item acquired from a small business concern or a 
commercial item acquired under FAR Part 12 or Part 8.
    (i) The determination and findings shall be executed by--
    (A) The Component Acquisition Executive for an acquisition category 
(ACAT) I program; or
    (B) The head of the contracting activity for all other programs.
    (ii) The DoD Unique Item Identification Program Office must receive 
a copy of the determination and findings required by paragraph 
(b)(2)(i) of this subsection. Send the copy to DPAP, SPEC ASST, 3060 
Defense Pentagon, 3E1044, Washington, DC 20301-3060; or by facsimile to 
(703) 695-7596.


211.274-3  Policy for valuation.

    (a) It is DoD policy that contractors shall be required to identify 
the Government's unit acquisition cost (as defined in 252.211-7003(a)) 
for all items delivered, even if none of the criteria for placing a 
unique item identification mark applies.
    (b) The Government's unit acquisition cost is--
    (1) For fixed-price type line, subline, or exhibit line items, the 
unit price identified in the contract at the time of delivery;
    (2) For cost-type or undefinitized line, subline, or exhibit line 
items, the contractor's estimated fully burdened unit cost to the 
Government at the time of delivery; and
    (3) For items delivered under a time-and-materials contract, the 
contractor's estimated fully burdened unit cost to the Government at 
the time of delivery.
    (c) The Government's unit acquisition cost of subassemblies, 
components, and parts embedded in delivered items need not be 
separately identified.


211.274-4  Contract clause.

    Use the clause at 252.211-7003, Item Identification and Valuation, 
in solicitations and contracts that require item identification or 
valuation, or both, in accordance with 211.274-2 and 211.274-3.
    (a) Complete paragraph (c)(1)(ii) of the clause with the contract 
line, subline, or exhibit line item number and description of any 
item(s) below $5,000 in unit acquisition cost for which DoD unique item 
identification or a DoD recognized unique identification equivalent is 
required in accordance with 211.274-2(a)(2) or (3).
    (b) Complete paragraph (c)(1)(iii) of the clause with the 
applicable attachment number, when DoD unique item identification or a 
DoD recognized unique identification equivalent is required in 
accordance with 211.274-2(a)(4) for DoD serially managed subassemblies, 
components, or parts embedded within deliverable items.
    (c) Use the clause with its Alternate I if--
    (1) An exception in 211.274-2(b) applies; or
    (2) Items are to be delivered to the Government and none of the 
criteria for placing a unique item identification mark applies.

PART 212--ACQUISITION OF COMMERCIAL ITEMS 212.301 [AMENDED]

0
3. Section 212.301 is amended in paragraph (f)(vi) by removing 
``211.274-3'' and adding in its place ``211.274-4''.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
4. Section 252.211-7003 is revised to read as follows:

[[Page 20837]]

252.211-7003  Item Identification and Valuation.

    As prescribed in 211.274-4, use the following clause:

Item Identification and Valuation (Apr 2005)

    (a) Definitions. As used in this clause'
    Automatic identification device means a device, such as a reader 
or interrogator, used to retrieve data encoded on machine-readable 
media.
    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; 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.
    Data qualifier means a specified character (or string of 
characters) that immediately precedes a data field that defines the 
general category or intended use of the data that follows.
    DoD recognized unique identification equivalent means a unique 
identification method that is in commercial use and has been 
recognized by DoD. All DoD recognized unique identification 
equivalents are listed at https://www.acq.osd.mil/dpap/UID/
equivalents.html.
    DoD unique item identification means a system of marking items 
delivered to DoD with unique item identifiers that have machine-
readable data elements to distinguish an item from all other like 
and unlike items. For items that are serialized within the 
enterprise identifier, the unique item identifier shall include the 
data elements of the enterprise identifier and a unique serial 
number. For items that are serialized within the part, lot, or batch 
number within the enterprise identifier, the unique item identifier 
shall include the data elements of the enterprise identifier; the 
original part, lot, or batch number; and the serial number.
    Enterprise means the entity (e.g., a manufacturer or vendor) 
responsible for assigning unique item identifiers to items.
    Enterprise identifier means a code that is uniquely assigned to 
an enterprise by an issuing agency.
    Government's unit acquisition cost means--
    (1) For fixed-price type line, subline, or exhibit line items, 
the unit price identified in the contract at the time of delivery;
    (2) For cost-type or undefinitized line, subline, or exhibit 
line items, the Contractor's estimated fully burdened unit cost to 
the Government at the time of delivery; and
    (3) For items produced under a time-and-materials contract, the 
Contractor's estimated fully burdened unit cost to the Government at 
the time of delivery.
    Issuing agency means an organization responsible for assigning a 
non-repeatable identifier to an enterprise (i.e., Dun & Bradstreet's 
Data Universal Numbering System (DUNS) Number, Uniform Code Council 
(UCC)/EAN International (EAN) Company Prefix, or Defense Logistics 
Information System (DLIS) Commercial and Government Entity (CAGE) 
Code).
    Issuing agency code means a code that designates the 
registration (or controlling) authority for the enterprise 
identifier.
    Item means a single hardware article or a single unit formed by 
a grouping of subassemblies, components, or constituent parts.
    Lot or batch number means an identifying number assigned by the 
enterprise to a designated group of items, usually referred to as 
either a lot or a batch, all of which were manufactured under 
identical conditions.
    Machine-readable means an automatic identification technology 
media, such as bar codes, contact memory buttons, radio frequency 
identification, or optical memory cards.
    Original part number means a combination of numbers or letters 
assigned by the enterprise at item creation to a class of items with 
the same form, fit, function, and interface.
    Parent item means the item assembly, intermediate component, or 
subassembly that has an embedded item with a unique item identifier 
or DoD recognized unique identification equivalent.
    Serial number within the enterprise identifier means a 
combination of numbers, letters, or symbols assigned by the 
enterprise to an item that provides for the differentiation of that 
item from any other like and unlike item and is never used again 
within the enterprise.
    Serial number within the part, lot, or batch number means a 
combination of numbers or letters assigned by the enterprise to an 
item that provides for the differentiation of that item from any 
other like item within a part, lot, or batch number assignment.
    Serialization within the enterprise identifier means each item 
produced is assigned a serial number that is unique among all the 
tangible items produced by the enterprise and is never used again. 
The enterprise is responsible for ensuring unique serialization 
within the enterprise identifier.
    Serialization within the part, lot, or batch number means each 
item of a particular part, lot, or batch number is assigned a unique 
serial number within that part, lot, or batch number assignment. The 
enterprise is responsible for ensuring unique serialization within 
the part, lot, or batch number within the enterprise identifier.
    Unique item identifier means a set of data elements marked on 
items that is globally unique and unambiguous.
    Unique item identifier type means a designator to indicate which 
method of uniquely identifying a part has been used. The current 
list of accepted unique item identifier types is maintained at 
https://www.acq.osd.mil/dpap/UID/uid_types.html.
    (b) The Contractor shall deliver all items under a contract 
line, subline, or exhibit line item.
    (c) DoD unique item identification or DoD recognized unique 
identification equivalents.
    (1) The Contractor shall provide DoD unique item identification, 
or a DoD recognized unique identification equivalent, for--
    (i) All delivered items for which the Government's unit 
acquisition cost is $5,000 or more; and
    (ii) The following items for which the Government's unit 
acquisition cost is less than $5,000:


 
Contract line, subline, or  exhibit line
                item No.                          Item description:
 
                                          .  ...........................
-----------------------------------------   ----------------------------
                                          .  ...........................
-----------------------------------------   ----------------------------
                                          .  ...........................
-----------------------------------------   ----------------------------
 


    (iii) Subassemblies, components, and parts embedded within 
delivered items as specified in Attachment Number ------.
    (2) The concatenated unique item identifier and the component 
data elements of the DoD unique item identification or DoD 
recognized unique identification equivalent shall not change over 
the life of the item.
    (3) Data syntax and semantics of DoD unique item identification 
and DoD recognized unique identification equivalents. The Contractor 
shall ensure that--
    (i) The encoded data elements (except issuing agency code) of 
the unique item identifier are marked on the item using one of the 
following three types of data qualifiers, as determined by the 
Contractor:
    (A) Data Identifiers (DIs) (Format 06) in accordance with ISO/
IEC International Standard 15418, Information Technology `` EAN/UCC 
Application Identifiers and ANSI MH 10 Data Identifiers and ANSI MH 
10 Data Identifiers and Maintenance.
    (B) Application Identifiers (AIs) (Format 05), in accordance 
with ISO/IEC International Standard 15418, Information Technology `` 
EAN/UCC Application Identifiers and ANSI MH 10 Data Identifiers and 
ANSI MH 10 Data Identifiers and Maintenance.
    (C) Text Element Identifiers (TEIs), in accordance with the DoD 
collaborative solution ``DD'' format for use until the solution is 
approved by ISO/IEC JTC1 SC 31. The ``DD'' format is described in 
Appendix D of the DoD Guide to Uniquely Identifying Items, available 
at https://www.acq.osd.mil/dpap/UID/guides.html; and
    (ii) The encoded data elements of the unique item identifier 
conform to ISO/IEC International Standard 15434, Information 
Technology--Syntax for High Capacity Automatic Data Capture Media.
    (4) DoD unique item identification and DoD recognized unique 
identification equivalents.
    (i) The Contractor shall--
    (A) Determine whether to serialize within the enterprise 
identifier or serialize within the part, lot, or batch number; and
    (B) Place the data elements of the unique item identifier 
(enterprise identifier; serial number; and for serialization within 
the part, lot, or batch number only; original part, lot, or batch 
number) on items requiring marking by paragraph (c)(1) of this 
clause, based on the criteria provided in the version of MIL-

[[Page 20838]]

STD-130, Identification Marking of U.S. Military Property, cited in 
the contract Schedule.
    (ii) The issuing agency code--
    (A) Shall not be placed on the item; and
    (B) Shall be derived from the data qualifier for the enterprise 
identifier.
    (d) For each item that requires unique item identification under 
paragraph (c) of this clause, in addition to the information 
provided as part of the Material Inspection and Receiving Report 
specified elsewhere in this contract, the Contractor shall report at 
the time of delivery, either as part of, or associated with, the 
Material Inspection and Receiving Report, the following information:
    (1) Concatenated unique item identifier; or DoD recognized 
unique identification equivalent.
    (2) Unique item identifier type.
    (3) Issuing agency code (if concatenated unique item identifier 
is used).
    (4) Enterprise identifier (if concatenated unique item 
identifier is used).
    (5) Original part number.
    (6) Lot or batch number.
    (7) Current part number (if not the same as the original part 
number).
    (8) Current part number effective date.
    (9) Serial number.
    (10) Government's unit acquisition cost.
    (e) Embedded DoD serially managed subassemblies, components, and 
parts. The Contractor shall report at the time of delivery, either 
as part of, or associated with the Material Inspection and Receiving 
Report specified elsewhere in this contract, the following 
information:
    (1) Concatenated unique item identifier or DoD recognized unique 
identification equivalent of the parent item delivered under a 
contract line, subline, or exhibit line item that contains the 
embedded subassembly, component, or part.
    (2) Concatenated unique item identifier or DoD recognized unique 
identification equivalent of the embedded subassembly, component, or 
part.
    (3) Unique item identifier type.**
    (4) Issuing agency code (if concatenated unique item identifier 
is used).**
    (5) Enterprise identifier (if concatenated unique item 
identifier is used).**
    (6) Original part number.**
    (7) Lot or batch number.**
    (8) Current part number (if not the same as the original part 
number.**
    (9) Current part number effective date.**
    (10) Serial number.**
    (11) Unit of measure.
    (12) Description.
    ** Once per item.
    (f) The Contractor shall submit the information required by 
paragraphs (d) and (e) of this clause in accordance with the data 
submission procedures at https://www.acq.osd.mil/dpap/UID/
DataSubmission.htm.
    (g) Subcontracts. If paragraph (c)(1) of this clause applies, 
the Contractor shall include this clause, including this paragraph 
(g), in all subcontracts issued under this contract.

(End of clause)

Alternate I (APR 2005)

    As prescribed in 211.274-4(c) delete paragraphs (c), (d), (e), 
(f), and (g) of the basic clause, and add the following paragraphs 
(c) and (d) to the basic clause.
    (c) For each item delivered under a contract line, subline, or 
exhibit line item under paragraph (b) of this clause, in addition to 
the information provided as part of the Material Inspection and 
Receiving Report specified elsewhere in this contract, the 
Contractor shall report the Government's unit acquisition cost.
    (d) The Contractor shall submit the information required by 
paragraph (c) of this clause in accordance with the data submission 
procedures at https://www.acq.osd.mil/dpap/UID/DataSubmission.htm.

[FR Doc. 05-7981 Filed 4-21-05; 8:45 am]
BILLING CODE 5001-08-P