[Federal Register Volume 59, Number 59 (Monday, March 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6895]


[Federal Register: March 28, 1994]


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DEPARTMENT OF DEFENSE
48 CFR Parts 45 and 52

[FAR Case 91-93]


Federal Acquisition Regulation; Special Tooling Under Fixed Price 
Contracts

AGENCIES: Department of Defense (DOD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

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SUMMARY: The Civilian Agency Acquisition Council (CAAC) and the Defense 
Acquisition Regulations Council (DARC) are proposing revisions to the 
Federal Acquisition Regulation (FAR) to amend the Government's policy 
on managing and controlling special tooling, for which the Government 
has the right to title. This regulatory action was not subject to 
Office of Management and Budget review pursuant to Executive Order No. 
12866 dated September 30, 1993.

DATES: Comments should be submitted on or before May 27, 1994 to be 
considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to: 
General Services Administration, FAR Secretariat (VRS), 18th & F 
Streets, NW., room 4037, Washington, DC 20405.
    Please cite FAR case 91-93 in all correspondence related to this 
case.

FOR FURTHER INFORMATION CONTACT:
Mr. Jack O'Neill at (202) 501-3856 in reference to this FAR case. For 
general information, contact the FAR Secretariat, room 4037, GS 
Building, Washington, DC 20405, (202) 501-4755. Please cite FAR case 
91-93.

SUPPLEMENTARY INFORMATION:

A. Background

    The CAAC and the DARC published a final rule on FAR 52.245-17, 
Special Tooling, in Federal Acquisition Circular 84-53, in the Federal 
Register at 54 FR 48978, November 28, 1989. The purpose of this change 
was to clarify that the special tooling clause is used in fixed-price 
contracts when the Government will furnish special tooling to the 
contractor, or the contractor will acquire or fabricate special 
tooling, and the Government intends to maintain rights to the special 
tooling until it takes full title or has no further interests in the 
tooling. The change listed the type of information the contractors must 
keep in their property control system and defined the reporting 
requirements for the special tooling. As a result of concern expressed 
by some contractors over the increased recordkeeping requirements 
required by the clause, revisions were made to that clause and are 
contained in this proposed rule. Specifically, we reverted to managing 
right-to-title special tooling under an improved special tooling 
clause, 52.245-17, and to managing existing Government-owned special 
tooling under the clause at 52.245-2, Government Property (Fixed Price 
Contracts), as we did prior to FAC 84-53. The revised clause at 52.245-
17 requires contractors to maintain minimal records for right-to-title 
special tooling, and we have removed data requirements such as 
contracts under which the special tooling was originally acquired, 
complete hierarchy of part numbers, tool part number, and some 
retention codes. We did add the following data to the lists of special 
tooling required under the contract: (1) The part number of the item on 
which used and the next higher assembly, as well as the retention code; 
(2) storage method code; (3) weight and dimensions; and (4) excess 
code. These additions are necessary to permit the Government to make 
informed retention or disposal decisions. We also added a paragraph at 
FAR 45.306-1 to state that Government-owned special tooling shall be 
subject to the Government property clause, and we moved a paragraph 
from FAR 45.306-5 addressing the method of acquisition to a more 
appropriate location at FAR 45.306-4.

B. Regulatory Flexibility Act

    The proposed rule is not expected to have a significant economic 
impact on a substantial number of small entities within the meaning of 
the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule 
applies to special tooling on Government contracts which, in most 
cases, is furnished to large businesses for large dollar production 
contracts. An Initial Regulatory Flexibility Analysis has, therefore, 
not been performed. Comments are invited from small entities concerning 
the affected FAR subpart and will be considered in accordance with 
section 610 of the Act. Such comments must be submitted separately and 
should cite 5 U.S.C. 601, et seq. (FAR case 91-93), in correspondence.

C. Paperwork Reduction Act

    This rule does not impose any additional reporting or recordkeeping 
requirements which require the approval of the Office of Management and 
Budget (OMB) under 44 U.S.C. 3501, et seq. However, it does reduce the 
amount of information required from contractors. A revised clearance 
for FAR Part 45 concerning Special Tooling Under Fixed Price Contracts 
and reducing the burden hours by a total of 585,600 is being submitted 
to OMB for approval. Public comments concerning this request will be 
invited through a Federal Register notice.

List of Subjects in 48 CFR Parts 45 and 52

    Government procurement.
Albert A. Vicchiolla,
Director, Office of Federal Acquisition Policy.

    Therefore, it is proposed that 48 CFR parts 45 and 52 be amended as 
set forth below:
    1. The authority citation for 48 CFR parts 45 and 52 continues to 
read as follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 45--GOVERNMENT PROPERTY

    2. Section 45.306-1 is amended by adding paragraph (c) to read as 
follows:


45.306-1  Providing existing special tooling.

* * * * *
    (c) Contracting Officers shall include a Government property clause 
(see 45.106) in contracts that provide Government-owned special tooling 
to a contractor.


45.306-5  [Redesignated as 45.306-4, revised and reserved]

    3. Section 45.306-5 is redesignated as 45.306-4 and revised to read 
as follows:


45.306-4  Contract clause.

    (a) The contracting officer shall insert the clause at 52.245-17, 
Special Tooling, in solicitations and contracts when--
    (1) A negotiated fixed price contract is contemplated; and
    (2) The Government decides to acquire the right to take title to 
the special tooling acquired or fabricated by the contractor and it is 
not possible to identify the special tooling; or
    (3) The contract is the gaining contract for special tooling 
transferred from another contract and the Government decides to retain 
the right to take title to the special tooling at some future date.
    (b) The clause at 52.245-17, Special Tooling, does not apply to 
items of special tooling under a fixed price contract for which the 
Government has decided to acquire the right to take title and the 
contracting officer has identified the items, either individually or, 
for items costing less than $5,000; as a group, in the Schedule.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


52.245-2  [Amended]

    4. Section 52.245-2 is amended by revising the clause date to read 
``(DATE)''; removing the second sentence of paragraph (c)(2); and 
inserting the phrase ``and special tooling other than that subject to 
the special tooling clause'' after the words ``special test equipment'' 
in paragraph (c)(3) of the clause.
    5. Section 52.245-17 is revised to read as follows:


52.245-17  Special Tooling.

    As prescribed in 45.306-4, insert the following clause:

Special Tooling (Date)

    (a) Definition and application. (1) Special tooling means jigs, 
dies, fixtures, molds, patterns, taps, gauges, other equipment and 
manufacturing aids, all components of these items, and replacements 
of these items that 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 
performing particular services. The term does not include material, 
special test equipment, facilities (except foundations and similar 
improvements necessary for installing special tooling), general or 
special machine tools, or similar capital items.
    (2) This clause does not apply to any items of special tooling--
    (i) Acquired by the Contractor before the effective date of this 
contract, or replacement of such items, whether or not altered for 
use in performing this contract;
    (ii) Specifically excluded by the schedule of this contract.
    (b) Title. The Government has the right to take title to all 
special tooling subject to this clause until such time as the right 
to take title is relinquished by the Contracting Officer as provided 
for in subparagraph (i)(3) of this clause.
    (c) Risk of loss. Except to the extent that the Government shall 
have otherwise assumed the risk of loss to special tooling 
applicable to this clause, in the event of the loss, theft or 
destruction of or damage to any such property, the repair or 
replacement shall be accomplished by the Contractor at its own 
expense.
    (d) Use of special tooling. (1) The Contractor agrees to use the 
special tooling only in performing this contract or as otherwise 
approved by the Contracting Officer.
    (2) In the event the Government elects to remove any special 
tooling that is required to continue contract performance, the 
contract shall be equitably adjusted in accordance with the 
procedures of the changes clause of this contract.
    (e) Property control. The Contractor shall maintain adequate 
records of all special tooling in accordance with sound industrial 
practice. The records shall be made available for Government 
inspection at all reasonable times. As a minimum, the following 
information shall be included in the Contractor's records:
    (1) Nomenclature.
    (2) Quantity.
    (3) Unit (or group) price.
    (4) Number of the contract under which the tooling is 
accountable.
    (5) Location.
    (6) Tool identification number.
    (f) Maintenance. The Contractor shall maintain special tooling 
in accordance with sound industrial practice. These requirements do 
not apply to those items designated by the Contracting Officer for 
disposal as scrap or identified as of no further interest to the 
Government under paragraph (i), Disposition instructions, of this 
clause.
    (g) Identification of excess special tooling. The Contractor 
shall promptly identify and report all special tooling in excess of 
the amounts needed to complete full performance under this contract 
(see subparagraph (h)(3) of this clause).
    (h) Lists of special tooling. The Contractor shall prepare and 
distribute lists of special tooling as described below:
    (1) Initial list of special tooling. The Contractor shall 
furnish the Government an initial list of all special tooling 
subject to this clause. The list shall be furnished within 60 days 
after delivery of the first production end item under this contract 
unless a later date is prescribed. The list shall specify the 
following:
    (i) Nomenclature.
    (ii) Quantity.
    (iii) Unit (or group) price.
    (iv) Number of the contract under which the tooling is 
accountable.
    (v) Location of each item. If special tooling is located at a 
subcontractor vendor, specify alternate CAGE code or name and 
address if code is not available.
    (vi) Tool identification number.
    (vii) Part number of item on which used and next higher 
assembly.
    (viii) Retention codes. Assign one or more of the following to 
each item of special tooling:
    Code A. Spares Tooling. Required to produce a provisioned spare 
part or assembly.
    Code B. Judgment (Insurance) Tooling. Fabrication tools for 
parts that are not provisioned spares but which in the judgment of 
the Contractor will be required at some time for logistic support of 
the end item.
    Code C. Rate Tooling. Necessary to economically produce at 
increased rates (e.g., for mobilization or surge) but not essential 
for parts fabrication at low production rates.
    Code D. Assembly Tooling. Required for manufacture of the end 
product but not required for production of spare parts. Those items 
having no postproduction need except for potential modification or 
resumed production programs.
    Code E. Repair Tooling. Items which are capable of being used 
for repair of provisioned parts or assemblies.
    Code F. Replaceable Tooling. Spares or judgment tooling which, 
in the opinion of the Contractor, can be effectively and 
economically replaced by ``soft'' tooling on an ``as required'' 
basis in lieu of retention of the ``hard'' production tooling for 
supporting postproduction requirements.
    Code G. Maintenance Tooling. Items which are capable of being 
used for depot level maintenance of the applicable end item or 
components thereof.
    Code H. Crash Damage Tooling. Items which apply to provisioned 
or nonprovisioned parts or assemblies which are designated as, or 
have the potential of being, required for crash damage repairs.
    (ix) Storage method code. Assign one of the following: Code J. 
Inside storage. Code K. Outside storage. Code L. Special storage 
required.
    (x) Estimated unpacked weight of tool in pounds, if over 25 
pounds.
    (xi) Estimated unpacked dimensions (length, width, and height in 
feet) of tool, if over 3 cubic feet.
    (2) Final list of special tooling. The Contractor shall furnish 
the Contracting Officer a final list of special tooling, subject to 
this clause, not later than 90 days prior to the scheduled 
deliveries of the last production end item under this contract.
    (3) Excess special tooling. Lists of special tooling excess to 
this contract shall be furnished within 60 days of the date that the 
item is determined to be excess. The Contractor shall include in 
this list the applicable excess code as follows:
    Code X. Excess due to changes in design or specification of the 
end items.
    Code Y. Excess due to nonserviceable or nonrepairable condition.
    Code Z. Excess due to no further requirements.
    (4) Format of lists. Lists furnished by the Contractor shall 
state the type of list and shall include all information from 
subparagraph (h)(1) of this clause, unless otherwise directed by the 
Contracting Officer. All lists will be grouped by retention code as 
prescribed in subdivision (h)(1)(viii) of this clause and further 
listed in tool identification number sequence.
    (5) Distribution of lists. The Contractor shall submit the lists 
to each of the following recipients unless otherwise directed:
    (i) The Contracting Officer.
    (ii) The Administrative Contracting Officer.
    (iii) The inventory control point designated by the contracting 
office.
    (i) Disposition instructions. The Contracting Officer shall 
provide the Contractor with written disposition instructions within 
180 days of receipt of the list as prescribed by subparagraph (h)(2) 
of this clause and within 90 days of receipt of excess special 
tooling lists reported in accordance with subparagraph (h)(3) of 
this clause. The Contracting Officer may direct disposition by any 
of the methods listed in subparagraphs (i)(1) through (i)(3) of this 
clause, or a combination of such methods. The Contractor shall 
comply with such disposition instructions.
    (1) The Contracting Officer may identify specific items of 
special tooling to be retained or give the Contractor a list 
specifying the products, parts, or services including follow-on 
requirements for which the Government may require special tooling 
and request the Contractor to identify all usable items of special 
tooling on hand that were designed for or used in the production or 
performance of such products, parts, or services. Once items of 
usable special tooling required by the Government are identified, 
the Contracting Officer may--
    (i) Direct the Contractor, in writing, to transfer specified 
items of special tooling to follow-on contracts requiring their use. 
The notification shall specify whether the Government is taking 
title to the special tooling or reserving the right to take title. 
Those items specified by the Contracting Officer shall be subject to 
the provisions of the gaining contract(s); or
    (ii) Request the Contractor to enter into an appropriate storage 
contract for special tooling specified to be retained by the 
Contractor for the Government. Tooling to be stored shall be stored 
pursuant to a storage contract between the Government and the 
Contractor; or
    (iii) Direct the Contractor to transfer title to the Government 
(to the extent not previously transferred) and deliver to the 
Government those items of special tooling which are specified for 
removal from the Contractor's plant.
    (2) The Contracting Officer may direct the Contractor to sell, 
or dispose of as scrap, for the account of the Government, any 
special tooling not specified by the Government pursuant to 
subparagraph (i)(1) of this clause. To the extent that the 
Contractor incurs any costs occasioned by compliance with such 
direction, for which it is not otherwise compensated, the contract 
price shall be equitably adjusted in accordance with the procedures 
of the changes clause of this contract. The net proceeds of all 
sales shall either be credited to the cost of contract performance 
or otherwise paid to the Government as directed by the Contracting 
Officer. Sale of the special tooling to the prime contractor or any 
of its subcontractors is subject to the prior written approval of 
the Contracting Officer.
    (3) The Contracting Officer may furnish the Contractor with a 
statement disclaiming further Government interest or right in 
specified tooling.
    (4) If the Contracting Officer fails to give disposition 
instructions as required by subparagraphs (i)(1), (2), or (3) of 
this clause, the Contractor may, at Government risk and expense--
    (i) Retain the special tooling in place; or
    (ii) Remove and store the special tooling at the Contractor's 
plant or in a public warehouse consistent with sound industrial 
practice and the item's security classification.
    The Contractor will notify the Contracting Officer by certified 
mail, at least 30 days in advance, before taking any action under 
this subparagraph.
    Except as provided in this subparagraph, the Government shall 
not be liable to the Contractor for failure to give written notice 
required by subparagraphs (i) (1), (2) or (3) of this clause.
    (5) Restoration of the Contractor's premises. Unless otherwise 
provided in the contract, the Government has no obligation to 
restore or rehabilitate the Contractor's premises under any 
circumstances (e.g., abandonment, disposition upon completion of 
need, or upon contract completion).
    (j) Access to special tooling. The Contractor shall provide 
access to special tooling subject to this clause at all reasonable 
times to all individuals designated by the Contracting Officer.
    (k) Storage or shipment. The Contractor shall promptly arrange 
for either the shipment or the storage of special tooling specified 
in accordance with the final disposition instructions of this 
clause. Tooling to be shipped shall be properly packaged, packed and 
marked in accordance with the directions of the Contracting Officer. 
All operation sheets or other appropriate data necessary to show the 
manufacturing operations or processes for which the items were used 
or designed shall accompany special tooling to be shipped or stored 
or shall otherwise be provided to the Government as directed by the 
Contracting Officer. To the extent that the Contractor incurs costs 
for storage, shipment, packing, crating, or handling under this 
paragraph and is not otherwise compensated for, the contract price 
shall be equitably adjusted in accordance with the procedures of the 
changes clause of this contract.
    (l) Subcontract provisions. To perform this contract, the 
Contractor may place subcontracts (including purchase orders) 
involving the use of special tooling. If the full cost of the 
tooling is charged to those subcontracts, the Contractor agrees to 
include in the subcontract appropriate provisions to obtain 
Government rights and data comparable to the rights of the 
Government under this clause (unless the Contractor and Contracting 
Officer agree, in writing, that such rights are not of interest to 
the Government). The Contractor agrees to exercise such rights for 
the benefit of the Government as directed by the Contracting 
Officer.

(End of Clause)

[FR Doc. 94-6895 Filed 3-25-94; 8:45 am]
BILLING CODE 6820-34-M