Federal Acquisition Regulation: Requirements for DD Form 254, Contract Security Classification Specification, 40061-40064 [2020-12762]
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Federal Register / Vol. 85, No. 128 / Thursday, July 2, 2020 / Rules and Regulations
Item V—Orders Issued Via Fax or
Electronic Commerce (FAR Case 2018–
022)
This final rule amends a FAR clause
to permit the issuance of task or
delivery orders via facsimile or
electronic commerce and clarify when
an order is considered ‘‘issued’’ when
using these methods. As a result,
contracting officers will no longer need
to include supplemental ordering
language in the contract when
anticipating the use of fax or electronic
commerce to issue task or delivery
orders. The authority to issue orders
orally must still be separately
authorized in the contract. A common
understanding of when a task or
delivery order is considered issued, in
such situations, will be applied
Governmentwide.
Item VI—Technical Amendments
William F. Clark,
Director, Office of Government-wide
Acquisition Policy, Office of Acquisition
Policy, Office of Government-wide Policy.
Federal Acquisition Circular (FAC) 2020–
07 is issued under the authority of the
Secretary of Defense, the Administrator of
General Services, and the Administrator of
National Aeronautics and Space
Administration.
Unless otherwise specified, all Federal
Acquisition Regulation (FAR) and other
directive material contained in FAC 2020–07
is effective July 2, 2020 except for Items I, III,
IV and V, which are effective August 3, 2020,
and item II, which is effective August 31,
2020.
Kim Herrington,
Acting Principal Director, Defense Pricing
and Contracting, Department of Defense.
Jeffrey A. Koses,
Senior Procurement Executive/Deputy CAO,
Office of Acquisition Policy, U.S. General
Services Administration.
William G. Roets, II,
Acting Assistant Administrator, Office of
Procurement, National Aeronautics and
Space Administration.
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GENERAL SERVICES
ADMINISTRATION
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
48 CFR Parts 1, 2, 4, 52, and 53
[FAC 2020–07; FAR Case 2015–002; Item
I; Docket No. FAR–2015–0002; Sequence
No. 1]
RIN 9000–AN40
Federal Acquisition Regulation:
Requirements for DD Form 254,
Contract Security Classification
Specification
Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Final rule.
AGENCY:
DoD, GSA, and NASA are
issuing a final rule amending the
Federal Acquisition Regulation (FAR) to
require electronic submission of the DD
Form 254, Contract Security
Classification Specification.
DATES: Effective: August 3, 2020.
FOR FURTHER INFORMATION CONTACT: Mr.
Curtis E. Glover, Sr., Procurement
Analyst, at 202–501–1448 or
curtis.glover@gsa.gov for clarification of
content. For information pertaining to
status or publication schedules, contact
the Regulatory Secretariat Division at
202–501–4755. Please cite FAR Case
2015–002.
SUPPLEMENTARY INFORMATION:
SUMMARY:
Editorial changes are made at FAR
5.205, 9.109–4, 27.405–3, 52.209–13,
and 52.212–5.
[FR Doc. 2020–12761 Filed 7–1–20; 8:45 am]
DEPARTMENT OF DEFENSE
I. Background
DoD, GSA, and NASA published a
proposed rule in the Federal Register at
84 FR 33201 on July 12, 2019, proposing
to amend the FAR to update and clarify
the requirements for using the DD Form
254, Contract Security Classification
Specification. This rule amends the
FAR, in part, to provide procedures for
use of the DD Form 254 and the
requirement to use the Procurement
Integrated Enterprise Environment
(PIEE), to—
• Streamline the submission process
for the existing DD Form 254 and enable
businesses to submit an electronic form
once, instead of repeated paper
submissions;
• Require use of the DD Form 254 by
nondefense agencies that have
industrial security services agreements
with DoD, and DoD components, to
specify the security classification for a
contract involving access to information
classified as ‘‘Confidential,’’ ‘‘Secret,’’ or
‘‘Top Secret;’’
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• Require agency preparation of the
DD Form 254 using the National
Industrial Security Program Contracts
Classification System module of the
PIEE unless a nondefense agency has an
existing DD Form 254 information
system.
Five respondents submitted
comments on the proposed rule.
II. Discussion and Analysis
The Civilian Agency Acquisition
Council and the Defense Acquisition
Regulations Council (the Councils)
reviewed the public comments in the
development of the final rule. A
discussion of the comments is provided
as follows:
A. Summary of Significant Changes
There were no changes from the
proposed rule as a result of the public
comments received. There were minor
editorial changes made to the proposed
rule, see Section C below.
B. Analysis of Public Comments
1. Commercial and Government Entity
(CAGE) Code Reporting
Comment: Two respondents
expressed concern regarding the use of
‘‘Unique CAGE code’’; stating that in
some instances a facility will have
multiple locations with the same CAGE
codes. Clarification of the term
‘‘unique’’ CAGE code was requested.
Response: In accordance with the
National Industrial Security Program
Operating Manual (NISPOM) DoD
5220.22–M and FAR 52.204–16(g), each
contractor and subcontractor location of
performance listed on a DD Form 254 is
required to have a unique CAGE code;
and registration in the System for
Award Management (SAM) is not
required for contractor and
subcontractor performance locations
solely for the purposes of the DD Form
254. FAR 52.204–16, Commercial and
Government Entity (CAGE) Code
Reporting, as prescribed at FAR
4.1804(a), is amended to add paragraph
(g) to require subcontractors requiring
access to classified information under a
contract to be identified with a CAGE
code on the DD Form 254. Contractors
shall ensure that a subcontractor
requiring access to classified
information provide its CAGE code with
its name and location address or
otherwise include it prominently in the
proposal. In addition, each location of
subcontractor performance must be
listed on the DD Form 254 and is
required to reflect a corresponding
unique CAGE code for each listed
location unless the work is being
performed at a Government facility, in
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which case the agency location code
shall be used. The CAGE code must be
for that name and location address. The
CAGE code is required prior to award.
Each listed location must have a unique
CAGE code classifying only a single
location.
Comment: Two respondents opposed
the removal of the current CAGE code
requirement and stressed the continued
need to not increase risk of sharing
classified information with an uncleared
facility or one where the clearance is no
longer active or authorized.
Response: The rule does not decrease
the security professional’s ability to
verify security clearance and
safeguarding levels as directed by
NISPOM via the National Industrial
Security System (NISS). The rule will
require electronic submission of the DD
Form 254, Contract Security
Classification Specification.
2. DD Form 254
Comment: Two respondents
recommended submission of the DD
Form 254 by company name with an
‘‘option’’ to file by CAGE code and if
possible link the form to the website for
storage and potential reuse to avoid
uploading as part of an application
‘‘process’’ via the contractor’s tools and
processes for DD Form 254 submission.
Response: The intent of the rule is for
use of the DD Form 254 for each specific
contractual requirement requiring
access to classified information. While
the NISS website does not currently link
to the DD Form 254 repository, Defense
Counterintelligence and Security
Agency will evaluate that capability
during future assessment of
requirements.
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3. Support for the Rule
Comment: Two respondents
acknowledged that streamlining the DD
Form 254 for electronic submission via
the National Industrial Security Program
(NISP) Contracts Classification System
is beneficial as well as clarification of
the SAM requirements.
Response: The Government
acknowledges the benefits with
establishment of the rule to provide
streamlined submission process
procedures for use of the DD Form 254
through the PIEE, to enable businesses
to submit an electronic form once,
instead of repeated paper submissions.
4. Paperwork Reduction Act
Applicability
Comment: One respondent conveyed
concerns regarding the Paperwork
Reduction Act burdens associated with
the use of DD Form 254.
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Response: The Paperwork Reduction
Act (44 U.S.C. chapter 35) applies;
however, the proposed changes to the
FAR do not impose additional
information collection requirements to
the paperwork burden previously
approved under the Office of
Management and Budget (OMB) Control
Number 0704–0567, entitled
‘‘Department of Defense Contract
Security Classification Specification’’.
5. Out of Scope
Comment: One respondent
commented on a variety of topics
unrelated to the rule.
Response: Comments are out of scope.
C. Other Changes
There were minor administrative
revisions to the format of the provision
FAR 52.204–16, Commercial and
Government Entity Code Reporting, and
the clause FAR 52.204–18, Commercial
and Government Entity Code
Maintenance, including deleting use of
the alternates at FAR 52.204–16(g) and
FAR 52.204–18(f), incorporating the
paragraphs at FAR 52.204–16(g) and
FAR 52.204–18(f) into the base clause
for clarity. Additionally, there were
minor clarifying edits to the FAR text at
FAR 4.402(d)(1) and (2), FAR
4.403(c)(1), and 52.204–16(b) and (g). As
a result of conforming changes,
revisions to FAR 4.1804 will no longer
be required.
III. Applicability to Contracts at or
Below the Simplified Acquisition
Threshold (SAT) and for Commercial
Items, Including Commercially
Available Off-the-Shelf (COTS) Items
This rule does not create any new
provisions or clauses, nor does it change
the applicability of any existing
provisions or clauses included in
solicitations and contracts valued at or
below the SAT, or for commercial items,
including COTS items.
IV. Executive Orders 12866 and 13563
E.O.s 12866 and 13563 direct agencies
to assess all costs and benefits of
available regulatory alternatives and, if
regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
and safety effects, distributive impacts,
and equity). E.O. 13563 emphasizes the
importance of quantifying both costs
and benefits, of reducing costs, of
harmonizing rules, and of promoting
flexibility. This is not a significant
regulatory action and, therefore, was not
subject to review under section 6(b) of
E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This
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rule is not a major rule under 5 U.S.C.
804.
V. Executive Order 13771
This rule is not subject to E.O. 13771,
Reducing Regulation and Controlling
Regulatory Costs, because this rule is
not a significant regulatory action under
E.O. 12866.
VI. Regulatory Flexibility Act
DoD, GSA, and NASA have prepared
a Final Regulatory Flexibility Analysis
(FRFA) consistent with the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq. The
FRFA is summarized as follows:
This final rule is to revise the FAR to
update and clarify the requirements for using
the DD Form 254, Contract Security
Classification Specification. The Government
uses the DD Form 254 to convey security
requirements to contractors when contract
performance requires access to classified
information. Prime contractors also use the
DD Form 254 to convey security
requirements to subcontractors that require
access to classified information to perform on
a subcontract. Subcontractors may also use
the DD Form 254 if access to classified
information is required to convey security
requirements to additional subcontractors.
There were no significant issues raised by
the public comments in response to the
initial regulatory flexibility analysis.
The final rule will apply to small
businesses awarded contracts or subcontracts
by Executive agencies covered by the
National Industrial Security Program that
require access to classified information.
Currently, the Defense Security Service
monitors approximately 13,500 contractor
facilities that are cleared for access to
classified information. Approximately 9,000
facilities are considered less-complex, which
includes small businesses and smaller
security operations. Subject matter experts
estimate that 5,400 (60 percent) of the 9,000
less-complex facilities are small businesses.
The final rule does not impose any
Paperwork Reduction Act reporting,
recordkeeping, or other compliance
requirements on any small entities. The rule
does not impose any new reporting,
recordkeeping or other compliance
requirements. The rule does not duplicate,
overlap, or conflict with any other Federal
rules.
DoD, GSA, and NASA were unable to
identify any alternatives to the rule which
would reduce the impact on small entities
and still meet the requirements of the rule.
Interested parties may obtain a copy of
the FRFA from the Regulatory
Secretariat Division. The Regulatory
Secretariat Division has submitted a
copy of the FRFA to the Chief Counsel
for Advocacy of the Small Business
Administration.
VII. Paperwork Reduction Act
The Paperwork Reduction Act (44
U.S.C. chapter 35) applies; however, the
changes to the FAR do not impose
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additional information collection
requirements to the paperwork burden
previously approved under the Office of
Management and Budget (OMB) Control
Number 0704–0567, entitled
‘‘Department of Defense Contract
Security Classification Specification’’.
The rule addresses use of CAGE codes
on the DD Form 254, however, it does
not impact information collection
requirements concerning the CAGE
code, OMB Control Number 9000–0185,
Commercial and Government Entity
Code.
List of Subjects in 48 CFR Parts 1, 2, 4,
52, and 53
Government procurement.
William F. Clark,
Director, Office of Government-wide
Acquisition Policy, Office of Acquisition
Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA
amend 48 CFR parts 1, 2, 4, 52, and 53
as set forth below:
■ 1. The authority citation for 48 CFR
parts 1, 2, 4, 52, and 53 continues to
read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C.
chapter 137; and 51 U.S.C. 20113.
PART 1—FEDERAL ACQUISITION
REGULATIONS SYSTEM
2. In section 1.106 amend the table
following by adding an entry for ‘‘DD
Form 254’’ at the end of the table to read
as follows:
1.106 OMB approval under the Paperwork
Reduction Act.
*
*
*
DD Form 254 ........................
OMB
control No.
*
*
0706–0567
PART 2—DEFINITIONS OF WORDS
AND TERMS
3. In section 2.101, amend paragraph
(b) by adding in alphabetical order the
defined term ‘‘Commercial and
Government Entity (CAGE) code’’ to
read as follows:
■
2.101
Definitions.
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Commercial and Government Entity
(CAGE) code means—
(1) An identifier assigned to entities
located in the United States or its
outlying areas by the Defense Logistics
Agency (DLA) Commercial and
Government Entity (CAGE) Branch to
identify a commercial or government
entity by unique location; or
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PART 4—ADMINISTRATIVE AND
INFORMATION MATTERS
4. Amend section 4.402 by—
a. Removing from paragraph (b)
introductory text ‘‘and the Director of
Central Intelligence,’’ and adding ‘‘the
Director of National Intelligence, and
the Secretary of Homeland Security’’ in
its place;
■ b. Removing from paragraph (b)(2)
‘‘Industrial Security Regulation (DOD
5220.22–R).’’ and adding ‘‘DoD Manual
5220.22, Volume 2, ‘‘National Industrial
Security Program: Industrial Security
Procedures for Government
Activities.’’’’ in its place; and
■ c. Redesignating paragraph (d) as (e),
and adding a new paragraph (d) to read
as follows:
■
■
4.402
■
FAR segment
(2) An identifier assigned by a
member of the North Atlantic Treaty
Organization (NATO) or by the NATO
Support and Procurement Agency
(NSPA) to entities located outside the
United States and its outlying areas that
the DLA Commercial and Government
Entity (CAGE) Branch records and
maintains in the CAGE master file. This
type of code is known as a NATO CAGE
(NCAGE) code.
*
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General.
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(d) Nondefense agencies that have
industrial security services agreements
with DoD, and DoD components, shall
use the DD Form 254, Contract Security
Classification Specification, to provide
security classification guidance to U.S.
contractors, and subcontractors as
applicable, requiring access to
information classified as ‘‘Confidential’’,
‘‘Secret’’, or ‘‘Top Secret’’.
(1) Provided that the data submittal is
unclassified, the DD Form 254 shall be
completed electronically in the NISP
Contract Classification System (NCCS),
which is accessible via the Procurement
Integrated Enterprise Environment
(PIEE) at https://wawf.eb.mil.
Nondefense agencies with an existing
DD Form 254 information system may
use that system.
(2)(i) A contractor, or subcontractor (if
applicable), requiring access to
classified information under a contract
shall be identified with a Commercial
and Government Entity (CAGE) code on
the DD Form 254 (see subpart 4.18 for
information on obtaining and validating
CAGE codes).
(ii) Each location of contractor or
subcontractor performance listed on the
DD Form 254 is required to reflect a
corresponding unique CAGE code for
each listed location unless the work is
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40063
being performed at a Government
facility, in which case the agency
location code shall be used. Each
subcontractor location requiring access
to classified information must be listed
on the DD Form 254.
(iii) Contractor and subcontractor
performance locations listed on the DD
Form 254 are not required to be
separately registered in the System for
Award Management (SAM) solely for
the purposes of a DD Form 254 (see
subpart 4.11 for information on
registering in SAM).
*
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■ 5. Amend section 4.403 by removing
from paragraph (c) introductory text
‘‘contract as follows’’ and adding
‘‘contract as identified in the
requirement documentation as follows’’
in its place, and revising paragraph
(c)(1) to read as follows:
4.403 Responsibilities of contracting
officers.
*
*
*
*
*
(c) * * *
(1) Nondefense agencies that have
industrial security services agreements
with DoD, and DoD components, shall
use the Contract Security Classification
Specification, DD Form 254. The
contracting officer, or authorized agency
representative, is the approving official
for the DD Form 254 associated with the
prime contract and shall ensure the DD
Form 254 is properly prepared,
distributed by and coordinated with
requirements and security personnel in
accordance with agency procedures, see
4.402(d)(1).
*
*
*
*
*
4.1801
[Amended]
6. Amend section 4.1801 by removing
the defined term ‘‘Commercial and
Government Entity (CAGE) code’’.
■
PART 52—SOLICITATION PROVISIONS
AND CONTRACT CLAUSES
7. Amend section 52.204–16 by—
a. Revising the date of the provision;
b. Removing from the end of
paragraph (a)(1) ‘‘entity; or’’ and adding
‘‘entity by unique location; or’’ in its
place;
■ c. Revising paragraph (b);
■ d. In paragraph (c)(2) removing the
word ‘‘offeror’’ and adding ‘‘Offeror’’ in
its places;
■ e. Revising paragraph (e); and
■ f. Adding paragraph (g).
The revisions and addition read as
follows:
■
■
■
52.204–16 Commercial and Government
Entity Code Reporting.
*
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Commercial and Government Entity Code
Reporting (Aug 2020)
contract for each location of contract,
including subcontract, performance. * * *
DEPARTMENT OF DEFENSE
*
*
GENERAL SERVICES
ADMINISTRATION
*
*
*
*
(b) The Offeror shall provide its CAGE
code with its offer with its name and location
address or otherwise include it prominently
in its proposal. The CAGE code must be for
that name and location address. Insert the
word ‘‘CAGE’’ before the number. The CAGE
code is required prior to award.
*
*
*
*
*
(e) When a CAGE code is required for the
immediate owner and/or the highest-level
owner by Federal Acquisition Regulation
(FAR) 52.204–17 or 52.212–3(p), the Offeror
shall obtain the respective CAGE code from
that entity to supply the CAGE code to the
Government.
*
*
*
*
*
(g) If the solicitation includes FAR clause
52.204–2, Security Requirements, a
subcontractor requiring access to classified
information under a contract shall be
identified with a CAGE code on the DD Form
254. The Contractor shall require a
subcontractor requiring access to classified
information to provide its CAGE code with
its name and location address or otherwise
include it prominently in the proposal. Each
location of subcontractor performance listed
on the DD Form 254 is required to reflect a
corresponding unique CAGE code for each
listed location unless the work is being
performed at a Government facility, in which
case the agency location code shall be used.
The CAGE code must be for that name and
location address. Insert the word ‘‘CAGE’’
before the number. The CAGE code is
required prior to award.
*
*
*
(End of clause)
10. Amend section 52.204–20 by—
■ a. Revising the date of the provision;
and
■ b. Removing from paragraph (a)(1)
‘‘entity; or’’ and adding ‘‘entity by
unique location; or’’ in its place.
The revision reads as follows:
■
52.204–20
Predecessor of Offeror.
*
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Predecessor of Offeror (Aug 2020)
*
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*
PART 53—FORMS
11. Amend section 53.204–1 by
revising the introductory text to read as
follows:
■
53.204–1 Safeguarding classified
information within industry (DD Form 254,
DD Form 441).
Ownership or Control of Offeror (Aug 2020)
*
53.300
■
■
■
■
8. Amend section 52.204–17 by
revising the title and the date of the
provision and removing from paragraph
(a)(1) ‘‘entity; or’’ and adding ‘‘entity by
unique location; or’’ in its place.
The revision reads as follows:
■
52.204–17
Offeror.
Ownership or Control of
*
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*
*
*
*
*
*
9. Amend section 52.204–18 by—
a. Revising the date of the clause;
b. Removing from paragraph (a)(1)
‘‘entity; or’’ and adding ‘‘entity by
unique location; or’’ in its place;
■ c. Revising the first sentence of
paragraph (b); and
■ d. Adding paragraph (f).
The revisions and addition read as
follows:
[Amended]
Commercial and Government Entity Code
Maintenance (Aug 2020)
12. In section 53.300 amend the table
in paragraph (b) in the table 53–2 by
removing from Form DD 254 url, https://
www.dtic.mil/whs/directives/forms/
eforms/dd0254.pdf and adding https://
www.esd.whs.mil/Portals/54/
Documents/DD/forms/dd/dd0254.pdf;
and removing from Form DD 441 url,
https://www.dtic.mil/whs/directives/
forms/eforms/dd0441_2017.pdf and
adding https://www.esd.whs.mil/
Portals/54/Documents/DD/forms/dd/
dd0441_2020.pdf in their places,
respectively.
*
[FR Doc. 2020–12762 Filed 7–1–20; 8:45 am]
52.204–18 Commercial and Government
Entity Code Maintenance.
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*
(b) Contractors shall ensure that the CAGE
code is maintained throughout the life of the
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NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
48 CFR Parts 2, 3, 9, 13, 16, 22, 25, and
52
[FAC 2020–07; FAR Case 2018–004; Item
II; Docket No. FAR–2018–0011; Sequence
No. 1]
RIN 9000–AN65
Federal Acquisition Regulation:
Increased Micro-Purchase and
Simplified Acquisition Thresholds
Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Final rule.
AGENCY:
DoD, GSA, and NASA are
issuing a final rule amending the
Federal Acquisition Regulation (FAR) to
implement a section of the National
Defense Authorization Act (NDAA) for
Fiscal Year (FY) 2017 and several
sections of the NDAA for FY 2018 that
increase the micro-purchase threshold
(MPT), increase the simplified
acquisition threshold (SAT), and clarify
certain procurement terms, as well as
align some non-statutory thresholds
with the MPT and SAT.
DATES: Effective: August 31, 2020.
FOR FURTHER INFORMATION CONTACT: Mr.
Michael O. Jackson, Procurement
Analyst, at 202–208–4949 or
michaelo.jackson@gsa.gov for
clarification of content. For information
pertaining to status or publication
schedules, contact the Regulatory
Secretariat Division at 202–501–4755.
Please cite FAC 2020–07, FAR Case
2018–004.
SUPPLEMENTARY INFORMATION:
SUMMARY:
The following forms, which are
prescribed by the Department of
Defense, shall be used by DoD
components and those nondefense
agencies with which DoD has
agreements to provide industrial
security services for the National
Industrial Security Program if contractor
access to classified information is
required, as specified in subpart 4.4 and
the clause at 52.204–2:
*
*
*
*
*
(End of provision)
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(f) If the contract includes Federal
Acquisition Regulation clause 52.204–2,
Security Requirements, the contractor shall
ensure that subcontractors maintain their
CAGE code(s) throughout the life of the
contract.
I. Background
DoD, GSA, and NASA published a
proposed rule on October 2, 2019, at 84
FR 52420, to implement section 217(b)
of the NDAA for FY 2017 (Pub. L. 114–
328) and sections 805, 806, and 1702(a)
of the NDAA for FY 2018 (Pub. L. 115–
91).
Section 217(b) amends 41 U.S.C. 1902
to increase the MPT for acquisitions
from institutions of higher education or
related or affiliated nonprofit entities, or
from nonprofit research organizations or
independent research institutes, from
$3,500 to $10,000, or a higher amount
as determined appropriate by the head
of the agency and consistent with clean
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[Federal Register Volume 85, Number 128 (Thursday, July 2, 2020)]
[Rules and Regulations]
[Pages 40061-40064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-12762]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1, 2, 4, 52, and 53
[FAC 2020-07; FAR Case 2015-002; Item I; Docket No. FAR-2015-0002;
Sequence No. 1]
RIN 9000-AN40
Federal Acquisition Regulation: Requirements for DD Form 254,
Contract Security Classification Specification
AGENCY: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the
Federal Acquisition Regulation (FAR) to require electronic submission
of the DD Form 254, Contract Security Classification Specification.
DATES: Effective: August 3, 2020.
FOR FURTHER INFORMATION CONTACT: Mr. Curtis E. Glover, Sr., Procurement
Analyst, at 202-501-1448 or [email protected] for clarification of
content. For information pertaining to status or publication schedules,
contact the Regulatory Secretariat Division at 202-501-4755. Please
cite FAR Case 2015-002.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA published a proposed rule in the Federal
Register at 84 FR 33201 on July 12, 2019, proposing to amend the FAR to
update and clarify the requirements for using the DD Form 254, Contract
Security Classification Specification. This rule amends the FAR, in
part, to provide procedures for use of the DD Form 254 and the
requirement to use the Procurement Integrated Enterprise Environment
(PIEE), to--
Streamline the submission process for the existing DD Form
254 and enable businesses to submit an electronic form once, instead of
repeated paper submissions;
Require use of the DD Form 254 by nondefense agencies that
have industrial security services agreements with DoD, and DoD
components, to specify the security classification for a contract
involving access to information classified as ``Confidential,''
``Secret,'' or ``Top Secret;''
Require agency preparation of the DD Form 254 using the
National Industrial Security Program Contracts Classification System
module of the PIEE unless a nondefense agency has an existing DD Form
254 information system.
Five respondents submitted comments on the proposed rule.
II. Discussion and Analysis
The Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (the Councils) reviewed the public comments in the
development of the final rule. A discussion of the comments is provided
as follows:
A. Summary of Significant Changes
There were no changes from the proposed rule as a result of the
public comments received. There were minor editorial changes made to
the proposed rule, see Section C below.
B. Analysis of Public Comments
1. Commercial and Government Entity (CAGE) Code Reporting
Comment: Two respondents expressed concern regarding the use of
``Unique CAGE code''; stating that in some instances a facility will
have multiple locations with the same CAGE codes. Clarification of the
term ``unique'' CAGE code was requested.
Response: In accordance with the National Industrial Security
Program Operating Manual (NISPOM) DoD 5220.22-M and FAR 52.204-16(g),
each contractor and subcontractor location of performance listed on a
DD Form 254 is required to have a unique CAGE code; and registration in
the System for Award Management (SAM) is not required for contractor
and subcontractor performance locations solely for the purposes of the
DD Form 254. FAR 52.204-16, Commercial and Government Entity (CAGE)
Code Reporting, as prescribed at FAR 4.1804(a), is amended to add
paragraph (g) to require subcontractors requiring access to classified
information under a contract to be identified with a CAGE code on the
DD Form 254. Contractors shall ensure that a subcontractor requiring
access to classified information provide its CAGE code with its name
and location address or otherwise include it prominently in the
proposal. In addition, each location of subcontractor performance must
be listed on the DD Form 254 and is required to reflect a corresponding
unique CAGE code for each listed location unless the work is being
performed at a Government facility, in
[[Page 40062]]
which case the agency location code shall be used. The CAGE code must
be for that name and location address. The CAGE code is required prior
to award. Each listed location must have a unique CAGE code classifying
only a single location.
Comment: Two respondents opposed the removal of the current CAGE
code requirement and stressed the continued need to not increase risk
of sharing classified information with an uncleared facility or one
where the clearance is no longer active or authorized.
Response: The rule does not decrease the security professional's
ability to verify security clearance and safeguarding levels as
directed by NISPOM via the National Industrial Security System (NISS).
The rule will require electronic submission of the DD Form 254,
Contract Security Classification Specification.
2. DD Form 254
Comment: Two respondents recommended submission of the DD Form 254
by company name with an ``option'' to file by CAGE code and if possible
link the form to the website for storage and potential reuse to avoid
uploading as part of an application ``process'' via the contractor's
tools and processes for DD Form 254 submission.
Response: The intent of the rule is for use of the DD Form 254 for
each specific contractual requirement requiring access to classified
information. While the NISS website does not currently link to the DD
Form 254 repository, Defense Counterintelligence and Security Agency
will evaluate that capability during future assessment of requirements.
3. Support for the Rule
Comment: Two respondents acknowledged that streamlining the DD Form
254 for electronic submission via the National Industrial Security
Program (NISP) Contracts Classification System is beneficial as well as
clarification of the SAM requirements.
Response: The Government acknowledges the benefits with
establishment of the rule to provide streamlined submission process
procedures for use of the DD Form 254 through the PIEE, to enable
businesses to submit an electronic form once, instead of repeated paper
submissions.
4. Paperwork Reduction Act Applicability
Comment: One respondent conveyed concerns regarding the Paperwork
Reduction Act burdens associated with the use of DD Form 254.
Response: The Paperwork Reduction Act (44 U.S.C. chapter 35)
applies; however, the proposed changes to the FAR do not impose
additional information collection requirements to the paperwork burden
previously approved under the Office of Management and Budget (OMB)
Control Number 0704-0567, entitled ``Department of Defense Contract
Security Classification Specification''.
5. Out of Scope
Comment: One respondent commented on a variety of topics unrelated
to the rule.
Response: Comments are out of scope.
C. Other Changes
There were minor administrative revisions to the format of the
provision FAR 52.204-16, Commercial and Government Entity Code
Reporting, and the clause FAR 52.204-18, Commercial and Government
Entity Code Maintenance, including deleting use of the alternates at
FAR 52.204-16(g) and FAR 52.204-18(f), incorporating the paragraphs at
FAR 52.204-16(g) and FAR 52.204-18(f) into the base clause for clarity.
Additionally, there were minor clarifying edits to the FAR text at FAR
4.402(d)(1) and (2), FAR 4.403(c)(1), and 52.204-16(b) and (g). As a
result of conforming changes, revisions to FAR 4.1804 will no longer be
required.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT) and for Commercial Items, Including Commercially
Available Off-the-Shelf (COTS) Items
This rule does not create any new provisions or clauses, nor does
it change the applicability of any existing provisions or clauses
included in solicitations and contracts valued at or below the SAT, or
for commercial items, including COTS items.
IV. Executive Orders 12866 and 13563
E.O.s 12866 and 13563 direct agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). E.O. 13563 emphasizes the
importance of quantifying both costs and benefits, of reducing costs,
of harmonizing rules, and of promoting flexibility. This is not a
significant regulatory action and, therefore, was not subject to review
under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated
September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.
V. Executive Order 13771
This rule is not subject to E.O. 13771, Reducing Regulation and
Controlling Regulatory Costs, because this rule is not a significant
regulatory action under E.O. 12866.
VI. Regulatory Flexibility Act
DoD, GSA, and NASA have prepared a Final Regulatory Flexibility
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5
U.S.C. 601, et seq. The FRFA is summarized as follows:
This final rule is to revise the FAR to update and clarify the
requirements for using the DD Form 254, Contract Security
Classification Specification. The Government uses the DD Form 254 to
convey security requirements to contractors when contract
performance requires access to classified information. Prime
contractors also use the DD Form 254 to convey security requirements
to subcontractors that require access to classified information to
perform on a subcontract. Subcontractors may also use the DD Form
254 if access to classified information is required to convey
security requirements to additional subcontractors.
There were no significant issues raised by the public comments
in response to the initial regulatory flexibility analysis.
The final rule will apply to small businesses awarded contracts
or subcontracts by Executive agencies covered by the National
Industrial Security Program that require access to classified
information. Currently, the Defense Security Service monitors
approximately 13,500 contractor facilities that are cleared for
access to classified information. Approximately 9,000 facilities are
considered less-complex, which includes small businesses and smaller
security operations. Subject matter experts estimate that 5,400 (60
percent) of the 9,000 less-complex facilities are small businesses.
The final rule does not impose any Paperwork Reduction Act
reporting, recordkeeping, or other compliance requirements on any
small entities. The rule does not impose any new reporting,
recordkeeping or other compliance requirements. The rule does not
duplicate, overlap, or conflict with any other Federal rules.
DoD, GSA, and NASA were unable to identify any alternatives to
the rule which would reduce the impact on small entities and still
meet the requirements of the rule.
Interested parties may obtain a copy of the FRFA from the Regulatory
Secretariat Division. The Regulatory Secretariat Division has submitted
a copy of the FRFA to the Chief Counsel for Advocacy of the Small
Business Administration.
VII. Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. chapter 35) applies;
however, the changes to the FAR do not impose
[[Page 40063]]
additional information collection requirements to the paperwork burden
previously approved under the Office of Management and Budget (OMB)
Control Number 0704-0567, entitled ``Department of Defense Contract
Security Classification Specification''.
The rule addresses use of CAGE codes on the DD Form 254, however,
it does not impact information collection requirements concerning the
CAGE code, OMB Control Number 9000-0185, Commercial and Government
Entity Code.
List of Subjects in 48 CFR Parts 1, 2, 4, 52, and 53
Government procurement.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of
Acquisition Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 1, 2, 4, 52, and
53 as set forth below:
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1. The authority citation for 48 CFR parts 1, 2, 4, 52, and 53
continues to read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51
U.S.C. 20113.
PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM
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2. In section 1.106 amend the table following by adding an entry for
``DD Form 254'' at the end of the table to read as follows:
1.106 OMB approval under the Paperwork Reduction Act.
------------------------------------------------------------------------
OMB control
FAR segment No.
------------------------------------------------------------------------
* * * * *
DD Form 254............................................. 0706-0567
------------------------------------------------------------------------
PART 2--DEFINITIONS OF WORDS AND TERMS
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3. In section 2.101, amend paragraph (b) by adding in alphabetical
order the defined term ``Commercial and Government Entity (CAGE) code''
to read as follows:
2.101 Definitions.
* * * * *
Commercial and Government Entity (CAGE) code means--
(1) An identifier assigned to entities located in the United States
or its outlying areas by the Defense Logistics Agency (DLA) Commercial
and Government Entity (CAGE) Branch to identify a commercial or
government entity by unique location; or
(2) An identifier assigned by a member of the North Atlantic Treaty
Organization (NATO) or by the NATO Support and Procurement Agency
(NSPA) to entities located outside the United States and its outlying
areas that the DLA Commercial and Government Entity (CAGE) Branch
records and maintains in the CAGE master file. This type of code is
known as a NATO CAGE (NCAGE) code.
* * * * *
PART 4--ADMINISTRATIVE AND INFORMATION MATTERS
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4. Amend section 4.402 by--
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a. Removing from paragraph (b) introductory text ``and the Director of
Central Intelligence,'' and adding ``the Director of National
Intelligence, and the Secretary of Homeland Security'' in its place;
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b. Removing from paragraph (b)(2) ``Industrial Security Regulation (DOD
5220.22-R).'' and adding ``DoD Manual 5220.22, Volume 2, ``National
Industrial Security Program: Industrial Security Procedures for
Government Activities.'''' in its place; and
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c. Redesignating paragraph (d) as (e), and adding a new paragraph (d)
to read as follows:
4.402 General.
* * * * *
(d) Nondefense agencies that have industrial security services
agreements with DoD, and DoD components, shall use the DD Form 254,
Contract Security Classification Specification, to provide security
classification guidance to U.S. contractors, and subcontractors as
applicable, requiring access to information classified as
``Confidential'', ``Secret'', or ``Top Secret''.
(1) Provided that the data submittal is unclassified, the DD Form
254 shall be completed electronically in the NISP Contract
Classification System (NCCS), which is accessible via the Procurement
Integrated Enterprise Environment (PIEE) at https://wawf.eb.mil.
Nondefense agencies with an existing DD Form 254 information system may
use that system.
(2)(i) A contractor, or subcontractor (if applicable), requiring
access to classified information under a contract shall be identified
with a Commercial and Government Entity (CAGE) code on the DD Form 254
(see subpart 4.18 for information on obtaining and validating CAGE
codes).
(ii) Each location of contractor or subcontractor performance
listed on the DD Form 254 is required to reflect a corresponding unique
CAGE code for each listed location unless the work is being performed
at a Government facility, in which case the agency location code shall
be used. Each subcontractor location requiring access to classified
information must be listed on the DD Form 254.
(iii) Contractor and subcontractor performance locations listed on
the DD Form 254 are not required to be separately registered in the
System for Award Management (SAM) solely for the purposes of a DD Form
254 (see subpart 4.11 for information on registering in SAM).
* * * * *
0
5. Amend section 4.403 by removing from paragraph (c) introductory text
``contract as follows'' and adding ``contract as identified in the
requirement documentation as follows'' in its place, and revising
paragraph (c)(1) to read as follows:
4.403 Responsibilities of contracting officers.
* * * * *
(c) * * *
(1) Nondefense agencies that have industrial security services
agreements with DoD, and DoD components, shall use the Contract
Security Classification Specification, DD Form 254. The contracting
officer, or authorized agency representative, is the approving official
for the DD Form 254 associated with the prime contract and shall ensure
the DD Form 254 is properly prepared, distributed by and coordinated
with requirements and security personnel in accordance with agency
procedures, see 4.402(d)(1).
* * * * *
4.1801 [Amended]
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6. Amend section 4.1801 by removing the defined term ``Commercial and
Government Entity (CAGE) code''.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
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7. Amend section 52.204-16 by--
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a. Revising the date of the provision;
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b. Removing from the end of paragraph (a)(1) ``entity; or'' and adding
``entity by unique location; or'' in its place;
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c. Revising paragraph (b);
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d. In paragraph (c)(2) removing the word ``offeror'' and adding
``Offeror'' in its places;
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e. Revising paragraph (e); and
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f. Adding paragraph (g).
The revisions and addition read as follows:
52.204-16 Commercial and Government Entity Code Reporting.
* * * * *
[[Page 40064]]
Commercial and Government Entity Code Reporting (Aug 2020)
* * * * *
(b) The Offeror shall provide its CAGE code with its offer with
its name and location address or otherwise include it prominently in
its proposal. The CAGE code must be for that name and location
address. Insert the word ``CAGE'' before the number. The CAGE code
is required prior to award.
* * * * *
(e) When a CAGE code is required for the immediate owner and/or
the highest-level owner by Federal Acquisition Regulation (FAR)
52.204-17 or 52.212-3(p), the Offeror shall obtain the respective
CAGE code from that entity to supply the CAGE code to the
Government.
* * * * *
(g) If the solicitation includes FAR clause 52.204-2, Security
Requirements, a subcontractor requiring access to classified
information under a contract shall be identified with a CAGE code on
the DD Form 254. The Contractor shall require a subcontractor
requiring access to classified information to provide its CAGE code
with its name and location address or otherwise include it
prominently in the proposal. Each location of subcontractor
performance listed on the DD Form 254 is required to reflect a
corresponding unique CAGE code for each listed location unless the
work is being performed at a Government facility, in which case the
agency location code shall be used. The CAGE code must be for that
name and location address. Insert the word ``CAGE'' before the
number. The CAGE code is required prior to award.
(End of provision)
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8. Amend section 52.204-17 by revising the title and the date of the
provision and removing from paragraph (a)(1) ``entity; or'' and adding
``entity by unique location; or'' in its place.
The revision reads as follows:
52.204-17 Ownership or Control of Offeror.
* * * * *
Ownership or Control of Offeror (Aug 2020)
* * * * *
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9. Amend section 52.204-18 by--
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a. Revising the date of the clause;
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b. Removing from paragraph (a)(1) ``entity; or'' and adding ``entity by
unique location; or'' in its place;
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c. Revising the first sentence of paragraph (b); and
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d. Adding paragraph (f).
The revisions and addition read as follows:
52.204-18 Commercial and Government Entity Code Maintenance.
* * * * *
Commercial and Government Entity Code Maintenance (Aug 2020)
* * * * *
(b) Contractors shall ensure that the CAGE code is maintained
throughout the life of the contract for each location of contract,
including subcontract, performance. * * *
* * * * *
(f) If the contract includes Federal Acquisition Regulation
clause 52.204-2, Security Requirements, the contractor shall ensure
that subcontractors maintain their CAGE code(s) throughout the life
of the contract.
(End of clause)
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10. Amend section 52.204-20 by--
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a. Revising the date of the provision; and
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b. Removing from paragraph (a)(1) ``entity; or'' and adding ``entity by
unique location; or'' in its place.
The revision reads as follows:
52.204-20 Predecessor of Offeror.
* * * * *
Predecessor of Offeror (Aug 2020)
* * * * *
PART 53--FORMS
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11. Amend section 53.204-1 by revising the introductory text to read as
follows:
53.204-1 Safeguarding classified information within industry (DD Form
254, DD Form 441).
The following forms, which are prescribed by the Department of
Defense, shall be used by DoD components and those nondefense agencies
with which DoD has agreements to provide industrial security services
for the National Industrial Security Program if contractor access to
classified information is required, as specified in subpart 4.4 and the
clause at 52.204-2:
* * * * *
53.300 [Amended]
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12. In section 53.300 amend the table in paragraph (b) in the table 53-
2 by removing from Form DD 254 url, https://www.dtic.mil/whs/directives/forms/eforms/dd0254.pdf and adding https://www.esd.whs.mil/Portals/54/Documents/DD/forms/dd/dd0254.pdf; and removing from Form DD 441 url,
https://www.dtic.mil/whs/directives/forms/eforms/dd0441_2017.pdf and
adding https://www.esd.whs.mil/Portals/54/Documents/DD/forms/dd/dd0441_2020.pdf in their places, respectively.
[FR Doc. 2020-12762 Filed 7-1-20; 8:45 am]
BILLING CODE 6820-EP-P
