Defense Federal Acquisition Regulation Supplement: Reporting of Government-Furnished Property (DFARS Case 2012-D001), 64885-64891 [2011-27062]

Agencies

• Defense Acquisition Regulations System
• DEPARTMENT OF DEFENSE

[Federal Register Volume 76, Number 202 (Wednesday, October 19, 2011)]
[Proposed Rules]
[Pages 64885-64891]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-27062]



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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 211 and 252

RIN 0750-AG83


Defense Federal Acquisition Regulation Supplement: Reporting of 
Government-Furnished Property (DFARS Case 2012-D001)

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

ACTION: Proposed rule and notice of public meeting.

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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to revise and expand reporting 
requirements for Government-furnished property to include items 
uniquely and non-uniquely identified and clarify policy for contractor 
access to Government supply sources.

DATES: Public Meeting: DoD is hosting a public meeting to discuss the 
proposed rule on November 17, 2011, at 1 p.m. EST.
    Submission of Comments: Comments on the proposed rule should be 
submitted in writing to the address shown below on or before December 
19, 2011, to be considered in the formation of the final rule.

ADDRESSES: Public Meeting: The public meeting will be held in the 
Defense Acquisition Regulations Council (DARC) Conference Room, 241 
18th Street South, Suite 200A, Arlington, VA 22202-3409.
    Submission of Comments: You may submit comments, identified by 
DFARS Case 2012-D001, using any of the following methods:
    [cir] Regulations.gov: https://www.regulations.gov. Submit comments 
via the Federal eRulemaking portal by entering ``DFARS Case 2012-D001'' 
under the heading ``Enter keyword or ID'' and selecting ``Search.'' 
Select the link ``Submit a Comment'' that corresponds with ``DFARS Case 
2012-D001.'' Follow the instructions provided at the ``Submit a 
Comment'' screen. Please include your name, company name (if any), and 
``DFARS Case 2012-D001'' on your attached document.
    [cir] E-mail: dfars@osd.mil. Include DFARS Case 2012-D001 in the 
subject line of the message.
    [cir] Fax: 703-602-0350.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Meredith 
Murphy, OUSD(AT&L)DPAP/DARS, Room 3B855, 3060 Defense Pentagon, 
Washington, DC 20301-3060.
    Comments received generally will be posted without change to https://www.regulations.gov, including any personal information provided. To 
confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission 
to verify posting (except allow 30 days for posting of comments 
submitted by mail).

FOR FURTHER INFORMATION CONTACT: Ms. Meredith Murphy, telephone 703-
602-1302.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD published a proposed rule under DFARS Case 2009-D043 at 75 FR 
80426 on December 22, 2010. The due date for public comments under 
DFARS Case 2009-D043 was extended from February 22, 2011, to April 8, 
2011, by 76 FR 9527 on February 18, 2011. DoD has closed that case into 
this new case, DFARS Case 2012-D001, but will address the comments 
received in response to that case in this Federal Register notice for 
DFARS Case 2012-D001. This proposed rule would require contractors to 
report serially managed Government-furnished property to the DoD Item 
Unique Identification (IUID) Registry. Current DFARS policy requires 
contractors to report to the DoD IUID Registry property that is 
classified as equipment, special tooling, and special test equipment 
items valued at $5,000 or more, and items valued at less than $5,000 
when required in accordance with contract terms and conditions. This 
proposed rule would also rename and revise the clause at DFARS 252.211-
7007, Reporting of Government-Furnished Equipment in the IUID Registry, 
accordingly, and make the clause applicable to commercial-item 
procurements. DFARS clause 252.251-7000, Ordering from Government 
Supply Sources, is also proposed for revision to require electronic 
receipts of property obtained from a Government supply source.
    Public Meeting Registration: Individuals wishing to attend the 
public meeting should register least one week in advance to ensure 
adequate room accommodations and to facilitate admittance into the 
meeting. Registrants will be given priority if room constraints require 
limits on attendance. Attendees are encouraged to arrive at least 15 
minutes early. To register, please go to--https://www.acq.osd.mil/dpap/dars/government_furnished_property.html and submit the following 
information:
    (1) Company or organization name.
    (2) Full names of persons attending.
    (3) Identity if desiring to speak (limit to a 10-minute 
presentation per company or organization).
    (4) Last four digits of social security number for each person 
attending (non-Federal employees only).
    Send questions about registration or the submission of comments to 
the e-mail address at the Web site previously identified. Please cite 
``Public meeting, DFARS Case 2012-D001'' in the subject line of the e-
mail.
    Attendees should bring a valid picture ID for in-processing. From 
the entrance to Suite 200A, they will be directed to the DARC 
Conference Room. If an attendee's name is not on the list provided in 
advance of the meeting, the attendee will still be allowed into the 
meeting, if seating is available.
    Special Accommodations: The public meeting site is physically 
accessible to people with disabilities. Requests for sign language 
interpretation or other auxiliary aids should be directed to Ms. 
Meredith Murphy, telephone 703-602-1302, at least 10 working days prior 
to the meeting.
    Presentations: If you wish to make a presentation, please submit a 
copy of your presentation to the Web site identified in this section or 
to facsimile 703-602-0350, no later than November 3, 2011. Please cite 
``Public Meeting, DFARS Case 2012-D001'' in all correspondence related 
to this public meeting. The submitted presentations will be the only 
record of the public meeting. If you intend to have your presentation 
considered as a public comment for the formation of a final rule, the 
presentation must be submitted separately as a written comment as 
instructed below.

II. Discussion and Analysis of the Public Comments

    Comments were received from five respondents in response to the 
proposed rule under DFARS case 2009-D043. DoD reviewed the public 
comments in the formation of the proposed rule. This notice also 
addresses comments received at the public meeting held on March 18, 
2011. Members of industry, DoD, and other Government agencies attended 
the public meeting. The following concerns were discussed at the public 
meeting:
    The attendees' primary issues concerned the potential systems 
changes that they think may be necessary to accommodate the 
requirements of the rule; the perceived lack of DoD business rules 
associated with the Government-furnished property reporting 
requirements; and a

[[Page 64886]]

lack of sufficient information, in general, on the system requirements 
associated with the GFP module of DoD's IUID Registry.
    Based on the public comments received and the concerns discussed at 
the public meeting, the following clarifications to the DFARS are 
included in this proposed rule:
     Reporting of supply condition codes is required only for 
the reporting of reparables.
     Contractor reporting of Government-furnished property may 
occur as transactions occur or as otherwise stated in the contractor's 
property management procedure.
     Material released to work in process need not be reported.
     Unless tracked as an individual item, material shall be 
reported to the registry in the same unit of pack, e.g., original 
manufacturer's package, box, or container, as it was received or 
otherwise acquired.
     Residual material that is not serially managed, e.g., 
contractor inventory in partially opened original manufacturer's 
package, box, or containers, need not be reported, but should be 
disposed of in accordance with contract terms and conditions.
    A discussion of the specific comments and the changes made as a 
result of those comments are provided herein. The comments were grouped 
into five categories by subject matter so that they could be addressed 
consistently. Comments on compliance with the Executive orders on 
Regulatory Planning and Review and Improving Regulation and Regulatory 
Review, the analysis of the Regulatory Flexibility Act, and the 
Paperwork Reduction Act are addressed in those sections of this notice.

A. Reporting

1. Reporting of All Government-Furnished Property
    Comment: One respondent indicated that eliminating the $5,000 floor 
for property reporting would add hundreds of thousands of items to 
reporting requirements. Referencing paragraph (b)(2) of the clause at 
DFARS 252.211-7007 (``All GFP without an existing UII assigned shall be 
reported to the GFP Hub''), the respondent recommended deleting this 
language or at least clarifying it by stating ``All accountable GFP'' 
because the proposed rule would have the effect of requiring reporting 
of ``materials, consumables, etc.''
    Response: The goal of this rule is to establish enterprisewide 
visibility of Government property. While there may be some few 
additional property items subject to reporting, the intent of the rule 
is to move away from strict reporting by dollar value alone and toward 
reporting designed to increase traceability. The result would 
standardize and simplify reporting overall. The rule draws clear 
distinctions between types of tracking requirements, i.e., property 
items are either individually tracked or are otherwise managed in bulk. 
In this proposed rule, DoD has clarified the reporting requirement and 
added definitions to eliminate confusion.
2. Reporting of Material Released to Manufacturing Engineering
    Comment: A respondent expressed concern that the reutilization of 
equipment might be negatively impacted by use of the clause at DFARS 
252.211-7007. The respondent stated that, if the reporting requirements 
become too cumbersome, they will serve as a disincentive to contractors 
to request excess property out of the Plant Clearance Automated 
Reutilization and Reporting System (PCARSS) or from other excess lists.
    Response: DoD does not anticipate the outcome described by the 
respondent. Further, the reutilization requirements are currently in 
the existing contract clause.
3. Reporting of Material to the Registry in Same Unit of Pack as 
Acquired
    Comment: One respondent said it did not know whether the proposed 
definitions in paragraph (a) of the clause at 252.211-7007 meant 
installing items in higher assemblies or how it should handle 
Government-furnished property that is assembled with contractor-
acquired property and subsequently delivered or placed back in 
inventory until needed. The respondent also stated that it concurred 
with the management of all items at the end item.
    Response: DoD has not proposed new policy regarding installation of 
Government property or contractor-acquired property into higher 
assemblies. The additional definitions included in the proposed rule 
clarify that there is no policy change.
4. Reporting of Non-Serially Managed Residual Material
    Comment: One respondent recommended that consumables, expendables, 
and sunk costs should be considered, defined, and a determination made 
as to what is included or excluded from this rule.
    Response: The proposed rule draws clear distinctions among the 
requirements for tracking items -- property items are either 
individually tracked, i.e., serially managed, or otherwise managed in 
bulk, i.e., non-serially managed. Paragraph (g)(2) of the clause 
252.211-7007 addresses serially managed consumed or expended items and 
paragraph (h) addresses non-serially managed residual material.
5. Reporting of Supply Condition Codes Only for Reparables
    Comment: One respondent stated that contractors need to understand 
how reporting of supply condition codes is going to be required and who 
will be the authoritative source for condition coding. The respondent 
asked if this information could be found on Government shipping 
documents, and, if not, what business rule would be applied if the 
supply condition code was not supplied. The respondent pointed out that 
the definitions of the various supply condition codes are already 
listed in 245.606-5 and recommended that the definitions be deleted 
from the clause at 252.211-7007. The same respondent asked that the 
DFARS include ``Condition Code (S),'' applicable to the property 
management process and required for PCARSS processing. In addition, the 
respondent recommended changing the definition of ``unit of issue'' to 
``unit of measure,'' in order to be consistent with FAR 52.245-1.
    Response: DoD has added a reference to Appendix 2 of DoD 4000.25-2, 
Military Standard Transaction Reporting and Accounting Procedures 
manual, along with a hyperlink to the URL. It is not necessary to add 
condition code ``S.'' Such codes are needed only for reparable items; 
this is not a change from current practice. The proposed rule has been 
revised to make that clear. DoD has revised the definition of ``unit of 
issue'' to add ``unit of measure.''
6. Frequency of Reporting
    Comment: The reporting requirements in the clause at DFARS 252.211-
7007 are, according to one respondent, transactionally based and would 
require a daily upload to the GFP Hub. The respondent offered several 
alternatives to daily updates and noted that requiring daily updates 
would not take into account current approved practices.
    Response: The frequency of reporting should be consistent with a 
contractor's property management procedures; DoD has not proposed 
creating differences from current reporting requirements in the clause 
at DFARS 252.211-7007. The proposed rule under 2009-D043 did not 
require contractors to provide daily uploads, and this proposed rule 
makes it clear that reporting requirements are based on transactions as 
they occur.

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There is no requirement to report Government-furnished material 
consumed under receipt-and-issue processes, issued to the floor, or 
otherwise consumed.
7. Disclaimer
    Comment: One respondent asked whether contractors could include a 
disclaimer that protects them once data is submitted and which would 
relieve the contractor of responsibility in the event of manipulation 
or theft.
    Response: No disclaimer is needed. Agencies are required to ensure 
the authentication and confidentiality of data commensurate with the 
risk and magnitude of the harm from loss, misuse, or unauthorized 
access to, or modification of, the information (see FAR 4.502(c)). The 
data submissions that would be required if the proposed rule is 
implemented do not differ in context from those now submitted by 
contractors under the clauses at 252.211-7007, Reporting of Government-
Furnished Equipment in the DoD Item Unique Identification (IUID) 
Registry, and 252.245-7002, Reporting Loss of Government Property, or 
electronic invoicing through wide area workflow.
8. Marking Requirements
    Comment: DFARS 211.274-6(c)(2) reads: ``Require the contractor to 
mark major end items under the terms and conditions of the contract.'' 
One respondent stated that this paragraph is redundant to DFARS 
211.274-6(c)(1) and should be deleted. The respondent also requested 
DoD to ``(c)larify that these items are already marked and in the IUID 
Registry and that this effort is to acknowledge receipt * * *'' and so 
state.
    Response: Subsection 211.274-6 is entitled ``Contract clauses,'' 
and it contains only clause prescriptions. 211.274-6(c) prescribes the 
use of the clause at 252.211-7008, ``Use of Government-Assigned Serial 
Numbers,'' which is not the subject of this proposed rule. Therefore, 
the respondent's comment is out of scope.

 B. Property Tracking Systems

    Comment: One respondent submitted multiple comments on the 
introduction of the ``GFP Hub'' at DFARS 252.211-7007(a) and expressed 
concern that it was premature because of the lack of experience with it 
in industry and its unproven benefits. Similar issues were raised by a 
second respondent at the public meeting. The respondents asked that 
clear business rules be developed for the GFP Hub before it becomes a 
requirement for contractor use. The respondents thought that the 
introduction of the GFP Hub would require the reporting of additional 
data fields and material that was irrelevant to operation and financial 
reporting and that the requirement for receipt notification of MILSTRIP 
items at 252.211-7007 was a new requirement. In addition, the first 
respondent suggested that including hyperlinks in regulations was 
improper without regulatory review. A respondent also noted that the 
U.S. Army is moving to establish the Defense Property Accountability 
System (DPAS) as its property accounting system of record, and the Army 
requires GFP to be recorded in DPAS as well.
    Response: The Department of the Army has decided to use DPAS as its 
accountable property system of record. DoD's goal is to remedy 
Government Accountability Office (GAO)-identified gaps in 
enterprisewide visibility. The data provided, if the proposed rule is 
implemented, will establish enterprisewide visibility of DoD items and 
will be available to users in the logistics, financial, and property 
accountability arenas. This visibility will facilitate reutilization 
and preclude the simultaneous acquisition and disposal of needed items. 
The data currently generated in non-standardized reports at the program 
level does not have DoD enterprisewide visibility, which is the basic 
objective of the proposed rule. It is not DoD's intention to apply the 
final rule on this matter to existing programs; thus, it will not 
require duplicate records.
    Further, consistent with DoD policy, the activity furnishing the 
property, not the contractor, would normally ensure that the items to 
be furnished are entered into the registry. Each DoD component is 
responsible for populating the DoD IUID Registry in order to capture 
Unique Item Identifiers (UIIs) and their pedigree data (reference DoDI 
8320.4). A final rule would provide for electronic receipt 
notification, which is consistent with ASTM standard E2605-08, Standard 
Practice for Receiving Property, and which the respondent's member 
companies have supported.
    In this proposed rule, the use of the term ``GFP Hub'' has been 
eliminated, and DoD has clarified that the IUID Registry contains a GFP 
module that is an essential element of the IUID Registry for items of 
Government property that do not have a UID assigned. Contractors 
already report Government-furnished property to the IUID Registry. 
Therefore, separate interfaces with the IUID Registry will not be 
needed. DoD fielded changes to Wide Area Workflow on July 10, 2011. 
Changes to the IUID Registry were made on July 24, 2011. These new 
functionalities have been made available to industry so that it might 
gain experience with the capabilities and provide input on future 
enhancements. Further, DoD has provided industry with copies of the 
business rules associated with this proposed rule.
    The proposed rule will not result in duplicate or triplicate 
reporting. Moreover, Government-furnished property data assembled at 
the contract level and reported via a Contract Data Requirements List 
(CDRL) would not provide DoD with enterprisewide visibility of items, 
which is a focus of the proposed rule. The requirements of the proposed 
rule would enable the eventual elimination of the Commercial Asset 
Visibility (CAV) system--a client server system, with several hundred 
iterations, each requiring its own unique property reporting 
methodology. Elimination of the CAV system will result in significant 
cost savings for both DoD and industry.
    Several important clarifications have been made in this proposed 
rule. Specifically, reporting requirements for non-serially managed 
items are different from those for serially managed items; property 
items are either individually tracked, i.e., serially managed, or 
otherwise managed in bulk, i.e., non-serially managed. Non-serially 
managed material should be reported to the IUID Registry in the same 
unit of pack, e.g., box, container, as acquired. Reporting supply 
condition codes is required solely for reparables. Material released to 
work in progress need not be reported. (See paragraphs (f) through (h) 
of the clause at 252.211-7007, Reporting of Government-Furnished 
Property.) Also, contractors will be required to report Government 
property only as transactions occur or as otherwise established in the 
contractor's own property management procedures. (See paragraph (i) of 
the clause at 252.211-7007, Reporting of Government-Furnished 
Property.) Dollar thresholds are not appropriate because they create 
needless variation. For example, controlled and sensitive items cannot 
be managed by dollar thresholds.
    With regard to use of hyperlinks in the regulations, hyperlinks are 
used judiciously and where their use makes sense.

 C. Costs

    Comment: A respondent indicated that ``(t)he Government should keep 
in mind that fixed-price contracts that require this level of detailed 
part management will require equitable adjustments to comply.''

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    Response: The Government does not intend to incorporate the 
property management rules in this proposed rule into existing 
contracts. Therefore, there should be no equitable adjustments 
associated with the application of these amended rules into the DFARS.
    Comment: One respondent indicated a need for more information so 
that contractors understand what to identify as acquisition cost on 
items received. The same respondent requested a definition for ``full 
cost'' as that term is used in the definition of IUID Registry at 
252.211-7007(a).
    Response: The unit acquisition cost for Government-furnished 
property items is the value assigned by the Government in accordance 
with FAR 45.201. Establishing these types of costs is not a contractor 
responsibility. The term ``full cost,'' in the context of the 
definition of the ``IUID Registry'' in the proposed rule, refers to the 
Government's unit acquisition cost, defined under 252.211-7003.
    Comment: One respondent recommended adding a Contract Data 
Requirements List (CDRL) to contracts for material position reports 
because of the affordability issues associated with this requirement. 
The respondent commented that this might be driven by the elimination 
of the DD 1662 and that contractors would need to double staff for 
duplicate recordkeeping and reconciling systems. Another respondent 
noted that paragraph 2-8 of Army Regulation (AR) 710-2, dated March 28, 
2008, establishes recording of items with a unit cost over $5,000. The 
respondent stated that requiring contractors to tag all items under 
$5,000 will increase resources and costs required to record property 
formally at this lower threshold.
    Response: The proposed rule is not driven by the elimination of the 
DD form 1662. The Government is not requiring contractors to develop or 
maintain two databases. Further, data assembled at the contract level 
via a CDRL would not provide the Department with enterprisewide 
information, a major objective of this proposed rule. With regard to 
the second comment, DoD requires reporting based on the level of 
traceability, not the dollar value. This requirement has been clarified 
in this proposed rule.

D. Limitation to Cost-Reimbursement Contracts or Line Items

    Comment: One respondent asked why use of the clause at 252.211-
7003, when usage is based on the delivery of contractor-acquired 
property, is limited to cost reimbursement contracts (211.274-
6(a)(1)(ii).
    Response: The clause prescription is limited to cost-reimbursement 
contracts or cost-reimbursement line items that may result in the 
delivery of contractor-acquired property because the concept of 
contractor-acquired property does not apply to other types of 
contracts.

E. Editorial Comments

    Eight editorial changes were suggested. The editorial changes have 
been accommodated in the proposed rule.

III. Executive Orders 12866 and 13563

    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 a significant regulatory action and, therefore, was 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.
    Comment: One respondent expressed the opinion that the proposed 
rule under DFARS case 2009-D043 did not meet the intent and criteria of 
the Executive orders on regulatory planning and review.
    Response: E.O. 12866, Regulatory Planning and Review (of September 
30, 1993, as amended by E.O. 13258 of February 26, 2002, and E.O. 
13422, of January 18, 2007) was followed on January 18, 2011, by the 
new E.O. 13563, Improving Regulation and regulatory Review. These E.O.s 
require that the regulatory system must promote economic growth and 
competitiveness, allow for public participation, promote 
predictability, and ensure that regulations are easy to understand. 
Regulations should impose the least burden consistent with obtaining 
regulatory objectives and agencies must determine that the benefits 
justify the costs. The proposed rule published under DFARS case 2009-
D043, was reviewed by the Office of Information and Regulatory Affairs 
prior to publication as are all rules published in the Federal 
Register. The Office of Information and Regulatory Affairs found the 
proposed rule to be in compliance with these Executive Orders and 
cleared the rule for publication.

IV. Regulatory Flexibility Act

    An initial regulatory flexibility analysis was prepared consistent 
with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., and is 
summarized as follows:
    The objective of this proposed rule is to improve the 
accountability and control of DoD assets. This rule proposes to amend 
the DFARS to revise and expand reporting requirements for Government-
furnished property (GFP) to include GFP that is both uniquely and non-
uniquely identified and clarifies policy for contractor access to 
Government supply sources.
    The clause at DFARS 252.211-7007, Reporting of Government-Furnished 
Property, requires contractors to identify and report GFP with existing 
unique-item identification to the DoD IUID Registry; and all GFP 
without an existing unique-item identification is required to be 
reported to the GFP module within the IUID Registry.
    DoD is unable to estimate the number of small entities to which 
this rule applies, and no responses were received from small entities 
to DoD's request for comments. However, ten comments were received from 
an industry association and are summarized and addressed in the 
following paragraphs.
    Comment: One respondent expressed concern that significant 
additional costs would be associated with the changes proposed. The 
respondent was concerned that reporting to the IUID Registry would 
require contractors to double count Government property already 
accounted for in other ways, resulting in duplicate recordkeeping 
requirements. New costs of compliance should probably be doubled, 
stated the respondent.
    Response: Property items reported to the IUID Registry will have 
enterprise-wide visibility, which enhances DoD's ability to reutilize 
items. As the IUID Registry becomes available, other property 
accountability requirements will be rescinded, a goal strongly endorsed 
by the Government Accountability Office (GAO) and DoDI 5000.64 and ASTM 
E53 2279 (both of which were cited by the respondent).
    The data provided if the proposed rule is implemented will 
establish enterprisewide visibility of DoD property and will be 
available to users in the logistics, financial, and property 
accountability arenas. This visibility contributes to the warfighter in 
a variety of ways, such as facilitating reutilization and precluding 
the simultaneous

[[Page 64889]]

acquisition and disposal of needed items.

V. Paperwork Reduction Act

    The Paperwork Reduction Act (Pub. L. 96-511) applies because the 
rule imposes information collection requirements that require the 
approval of the Office of Management and Budget under 44 U.S.C. chapter 
35. The information collection requirements under the proposed rule 
were formerly approved by the Office of Management and Budget under 
clearance number 0704-0246, DFARS part 245, Government Property. The 
requirements of this proposed rule will have only a marginal impact, 
and they are not expected to change the overall burden hours (45,980 
hours) approved under clearance number 0704-0246. The rule proposes to 
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. While this rule proposes to add 
reporting of Government-furnished material and reparables, this 
additional requirement would be offset by the potential for eventual 
elimination of DoD's Commercial Asset Visibility (CAV) system. As 
background, the CAV system is a client-server software application used 
at Government and commercial repair sites to monitor and track the 
progress of repair components through the repair process. There are 
presently over 900 separate applications of CAV, all of which can be 
eliminated, given the new reporting constructs contained within this 
proposed rule. This would result in greater efficiency and considerable 
cost savings to both Government and industry.
    Eight comments were received on the paperwork burden proposed by 
the proposed rule under DFARS case 2009-D043. They are summarized and 
addressed in the following paragraphs.
    Comment: One respondent said that it was not evident what 
additional paperwork will be required.
    Response: DoD anticipates that there will not be any added 
paperwork. The currently required paperwork (OMB Clearance Number 0704-
0246) will be modified, i.e., revised, but will not increase or 
decrease in total amount from the current requirement, so that the 
reporting required for DoD complies with the revised reporting 
requirements under the current FAR Government-property regulations. 
Further, property reporting required by the current DFARS clause at 
252.211-7007, and property reporting that would be required under this 
proposed rule, are Web-enabled and electronic in nature.
    Comment: There were several questions about details of the 
reporting required in the IUID registry.
    Response: DoD anticipates that these questions will be overcome by 
events as industry becomes familiar with the IUID updates that became 
available on July 24, 2011.
    Comment: Two respondents expressed concern that elimination of the 
$5,000 threshold had the potential to result in substantial additional 
reporting, with each contracting officer setting his or her own rules 
and thresholds for individual contracts.
    Response: DoD's goal is to eliminate the establishment of reporting 
requirements by an individual contracting officer or program manager 
and establish the IUID Registry as the standard. This would greatly 
increase consistency and allay the respondents' concerns.

List of Subjects in 48 CFR Parts 211 and 252

    Government procurement.

Mary Overstreet,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 211 and 252 are proposed to be amended as 
follows:
    1. The authority citation for 48 CFR parts 211 and 252 continues to 
read as follows:

     Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.

PART 211--DESCRIBING AGENCY NEEDS

    2. Amend section 211.274-2 by revising paragraph (b)(2)(ii) to read 
as follows:


211.274-2  Policy for unique item identification.

* * * * *
    (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. Send the copy in accordance with the procedures at 
PGI 211.274-2(b).
    3. Revise section 211.274-4 to read as follows:


211.274-4  Policy for reporting of Government-furnished property.

    (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, that 
will not be delivered to, or accepted by, the Government (see PGI 
245.402-71).
    (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) Material released for work in process.
    4. Amend section 211.274-6 by revising paragraphs (a)(1)(ii) and 
(b) to read as follows:


211.274-6  Contract clauses.

    (a)(1) * * *
    (ii) Are cost-reimbursement contracts that may result in the 
delivery of contractor-acquired property (see requirements at PGI 
245.402-71).
* * * * *
    (b) Use the clause at 252.211-7007, Reporting of Government-
Furnished Property, in solicitations and contracts that contain the 
clause at--
    (1) FAR 52.245-1, Government Property; or
    (2) FAR 52.245-2, Government Property Installation Operation 
Services.
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    5. Revise section 252.211-7007 to read as follows:


252.211-7007  Reporting of Government-Furnished Property.

    As prescribed in 211.274-6(b), use the following clause:

Reporting of Government-Furnished Property. ([Date])

    (a) Definitions. As used in this clause--
    Commercial and Government entity (CAGE) code means--
    (i) A code assigned by the Defense Logistics Information Service 
(DLIS) to identify a commercial or Government entity; or
    (ii) A code assigned by a member of the North Atlantic Treaty 
Organization that DLIS records and maintains in the CAGE master 
file. This type of code is known as an ``NCAGE code.''
    Government-furnished property (GFP) means property in the 
possession of, or directly acquired by, the Government and 
subsequently furnished to the Contractor for performance of a 
contract. Government-

[[Page 64890]]

furnished property includes, but is not limited to, spares and 
property furnished for repair, maintenance, overhaul, or 
modification. Government property also includes contractor-acquired 
property if the Contractor-acquired property is a deliverable under 
a cost contract when accepted by the Government for continued use 
under the contract.
    Item means a single hardware article or a single unit formed by 
a grouping of subassemblies, components, or constituent parts.
    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 4-digit Federal Supply 
Code and a 9-digit National Item Identification Number.
    Nomenclature means--
    (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.
    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.
    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 materiel (see https://www2.dla.mil/j-/dlmso/eLibrary/Manuals/dlalmso_pubs.asp).
    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, as defined in the clause at 252.211-7003(a), or a 
DoD recognized unique identification equivalent.
    Unit acquisition cost means--
    (i) For Government-furnished equipment, the dollar value 
assigned by the Government and assigned in the contract; and
    (ii) For Contractor-acquired property, the cost derived from the 
Contractor's records that reflect consistently applied generally 
accepted accounting principles.
    Unit of issue or unit of measure means the physical measurement 
of count or quantity (such as each, dozen, gallon, or kilogram) in 
which an item is procured, stored, and released.
    (b) Requirement for reporting of Government-furnished property 
(GFP) to the DoD Item Unique Identification (IUID) Registry. Except 
as provided in paragraph (c) of this clause, the Contractor shall 
report Government-furnished property to the DoD IUID Registry.
    (c) Exceptions. Paragraph (b) of this clause does not apply to--
    (1) Contractor-acquired property that has not been delivered to, 
and accepted by, the Government;
    (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) Material released for work in process.
    (d) When required by contract terms and conditions, the 
Contractor shall assign a UII to each item of GFP, including those 
items previously reported to the IUID Registry. Upon UII assignment 
and reporting, the Contractor shall update the property record in 
the IUID Registry.
    (e) 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)(A) of the clause 
at FAR 52.245-1:
    (1) Parent UII.
    (2) Category code, if applicable (``ST'' for special tooling, 
``STE'' for special test equipment).
    (3) 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 (MILSTRAP) 
Manual (see https://www2.dla.mil/j-6/dlmso/eLibrary/Manuals/dlalmso_pubs.asp).
    (4) Commercial and Government Entity (CAGE) code on the 
accountable 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.
    (f) Procedures for reporting of Government-furnished property to 
the IUID Registry. Except as provided in paragraph (c) of this 
clause, the Contractor shall establish and report to the IUID 
Registry the information required by FAR clause 52.245-1, paragraphs 
(e) and (f)(1)(iii), in accordance with the data submission 
procedures at https://www.acq.osd.mil/dpap/pdi/uid/data_submission_information.html. Unless tracked as an individual item, material 
shall be reported to the registry in the same unit of pack, e.g., 
original manufacturer's package, box, or container, as it was 
received or otherwise acquired.
    (g) Procedures for updating the DoD IUID Registry. The 
Contractor shall update the DoD IUID Registry at https://www.bpn.gov/iuid for changes in status, mark, custody, condition 
code (for reparables only), or disposition of items that are--
    (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) Serially managed items, 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.
    (h) The Contractor need not report non-serially managed residual 
material, i.e., Contractor inventory in partially opened

[[Page 64891]]

original manufacturer's package, box, or containers, but should 
dispose of such material in accordance with contract terms and 
conditions.
    (i) The Contractor shall make updates as transactions occur or 
as otherwise stated in the Contractor's property management 
procedure.


(End of clause)

    6. Amend section 252.251-7000 by removing the clause date ``(NOV 
2004)'' and adding in its place ``(DATE)'', revising introductory text 
of paragraph (c), redesignating paragraphs (d) and (e) as paragraphs 
(e) and (f), and adding new paragraph (d) to read as follows:


252.251-7000  Ordering from Government supply sources.

* * * * *
    (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.
    (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.
* * * * *
[FR Doc. 2011-27062 Filed 10-18-11; 8:45 am]
BILLING CODE 5001-06-P