[Federal Register Volume 60, Number 127 (Monday, July 3, 1995)]
[Rules and Regulations]
[Pages 34467-34470]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16162]



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DEPARTMENT OF DEFENSE

48 CFR Part 204, 215, 217, and 243


Defense Federal Acquisition Regulation Supplement; Sequence of 
Progress Payments and Contract Modifications

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

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[[Page 34468]]


SUMMARY: The Director of Defense Procurement has amended the Defense 
Federal Acquisition Regulation Supplement (DFARS) to provide additional 
guidance regarding identification of accounting classification 
information in DoD contracts.

DATES: Effective date: July 3, 1995.

FOR FURTHER INFORMATION CONTACT:
Ms. Michele Peterson, Defense Acquisition Regulations Council, PDUSD 
(A&T) DP (DAR), 3062 Defense Pentagon, Washington, DC 20301-3062, 
telephone (703) 602-0131. Please cite DFARS Case 93-D016/95-D012 in all 
correspondence related to this issue.

SUPPLEMENTARY INFORMATION:

A. Background

    This final rule amends DFARS Parts 204, 215, 217, and 243 to 
require contracting officers to clearly identify accounting 
classification information in DoD contracts, so that payments to 
contractors may be made from the appropriate funding source.

B. Regulatory Flexibility Act

    This final rule does not constitute a significant revision within 
the meaning of Public Law 98-577 and publication for public comment is 
not required. Therefore, the Regulatory Flexibility Act does not apply. 
However, comments from small entities concerning the affected DFARS 
subparts will be considered in accordance with Section 610 of the Act. 
Please cite DFARS Case 93-D016/95-D012 in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because this final rule 
does not impose any new information collection requirements which 
require the approval of OMB under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 204, 215, 217, and 243

    Government procurement.
Michele P. Peterson
Executive Editor, Defense Acquisition Regulations Council.

    Therefore, 48 CFR Parts 204, 215, 217, and 243 are amended as 
follows:
    1. The authority citations for 48 CFR Part 204, 215, 217, and 243 
are revised to read as follows:

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

PART 204--ADMINISTRATIVE MATTERS

    2. Section 204.7101 is amended by revising the definition of 
``accounting classification reference number'' and by adding a 
definition of ``nonseverable deliverable'' to read as follows:


204.7101  Definitions.

    Accounting classification reference number (ACRN) means a two 
position alpha or alpha/numeric control code used as a method of 
relating the accounting classification citation to detailed line item 
information contained in the schedule.
 * * * * *
    Nonseverable deliverable, as used in this subpart, means a 
deliverable item that is a single end product or undertaking, entire in 
nature, that cannot be feasibly subdivided into discrete elements or 
phases without losing its identity.
 * * * * *
    3. Section 204.7102 is amended by revising the introductory text of 
paragraph (b) to read as follows:


204.7102  Policy.

 * * * * *
    (b) The numbering procedures are mandatory for all contracts where 
separate contract line item numbers are assigned, unless--
 * * * * *
    4. Section 204.7103-1 is amended by revising the word ``three'' to 
read ``four'' in the introductory text of paragraph (a), and by adding 
a new paragraph (a)(4) to read as follows:


204.7103-1  Criteria for establishing.

 * * * * *
    (a) * * *
    (4) Single accounting classification citation.
    (i) Each contract line item shall reference a single accounting 
classification citation except as provided in paragraph (a)(4)(ii) of 
this subsection.
    (ii) The use of multiple accounting classification citations for a 
contract line item is authorized in the following situations:
    (A) A single, nonseverable deliverable to be paid for with R&D or 
other funds properly incrementally obligated over several fiscal years 
in accordance with DoD policy;
    (B) A single, nonseverable deliverable to be paid for with 
different authorizations or appropriations, such as in the acquisition 
of a satellite or the modification or production tooling used to 
produce items being acquired by several activities; or
    (C) A modification to an existing contract line item for a 
nonseverable deliverable that results in the delivery of a modified 
item(s) where the item(s) and modification are to be paid for with 
different accounting classification citations.
    (iii) When the use of multiple accounting classification citations 
is authorized for a single contract line item, establish informational 
subline items for each accounting classification citation in accordance 
with 204.7104-1(a).
* * * * *
    5. Section 204.7104-1 is amended by adding a new paragraph (a)(3) 
and by revising paragraphs (b)(1) introductory text and (b)(1)(i) to 
read as follows:


204.7104-1  Criteria for establishing.

* * * * *
    (a) * * *
    (3) Informational subline items shall be used to identify each 
accounting classification citation assigned to a single contract line 
item number when use of multiple citations is authorized (see 204.7103-
1(a)(4)(ii)).
    (b) Separately identified subline items. (1) Subline items will be 
used instead of contract line items to facilitate payment, delivery 
tracking, contract funds accounting, or other management purposes. Such 
subline items shall be used when items bought under one contract line 
item number--
    (i) Are to be paid for from more than one accounting 
classification. A subline item shall be established for the quantity 
associated with the single accounting classification citation. 
Establish a line item rather than a subline item if it is likely that a 
subline item may be assigned additional accounting classification 
citations at a later date. Identify the funding as described in 
204.7104-1(a)(3);
* * * * *
    6. Section 204.7104-2 is amended by revising the example in 
paragraph (e)(5); by redesignating paragraphs (e)(7) and (e)(8) as 
paragraphs (e)(8) and (e)(9), respectively; and by adding a new 
paragraph (e)(7) to read as follows:


204.7104-2  Numbering procedures.

* * * * *
    (e) * * *
    (5) * * *

                                                                                                                

[[Page 34469]]
----------------------------------------------------------------------------------------------------------------
      Item No.                Supplies/service           Quantity       Unit        Unit price        Amount    
----------------------------------------------------------------------------------------------------------------
0001                  6105-00-635-6568 50380                                                                    
                      Ref No 63504-WZ Armature                                                                  
0001AA                6105-00-635-6568 50380                     2  Ea..........       $2,895.87       $5,791.74
                      Ref No 63504-WZ Armature Motor                                                            
                       ACRN:AA                                                                                  
0001AB                Packaging ACRN:AA..............            2  Ea..........         $289.58         $579.16
----------------------------------------------------------------------------------------------------------------



* * * * *
    (7) Informational subline items established to identify multiple 
accounting classification citations assigned to a single contract line 
item.

----------------------------------------------------------------------------------------------------------------
         Item No.                Supplies/service        Quantity       Unit        Unit price        Amount    
----------------------------------------------------------------------------------------------------------------
0001......................  Air Vehicle..............            1  Ea..........      $6,700,000      $6,700,000
000101....................  ACRN:AA $3,300,000                                                                  
000102....................  ACRN:AB $2,000,000                                                                  
000103....................  ACRN:AC $1,400,000                                                                  
----------------------------------------------------------------------------------------------------------------

* * * * *
    7. Section 204.7107 is revised to read as follows:


204.7107  Contract accounting classification reference number (ACRN).

    (a) When a contract contains more than one accounting 
classification citation, contracting offices shall use ACRNs. Assigning 
the ACRNs is the responsibility of the contracting office issuing the 
contract, basic ordering agreement, or blanket purchase agreement. This 
authority shall not be delegated. If more than one office will use the 
contract (e.g., ordering officers, other contracting officers), the 
contract must contain instructions for assigning ACRNs.
    (b) ACRNs are used to process certain contract data through the 
Military Standard Contract Administration Procedures (MILSCAP) system. 
The MILSCAP system uses the ACRN to relate certain contract 
administration records to the accounting classification citation used 
to obligate funds on the contract. Among these records are the 
accounting classification trailer record, the supplies schedules data 
record, and the services line item data record. ACRNs are also used to 
associate the various record formats of the contract payment notice as 
described in chapter 9 of the MILSCAP Manual, DoD 4000.25-5-M.
    (c) Procedures for establishing ACRNs. ACRNs consist of a two 
position alpha or alpha/numeric code assigned to each discrete 
accounting classification citation within each contract. ACRNs shall be 
established in accordance with the following guidelines:
    (1) Do not use the letters I and O.
    (2) In no case shall an ACRN apply to more than one accounting 
classification citation, nor shall more than one ACRN be assigned to 
one accounting classification citation.
    (d) Using the ACRN in the contract. (1) Show the ACRN as a detached 
prefix to the accounting classification citation in the accounting and 
appropriation data block or, if there are too many accounting 
classification citations to fit reasonably in that block, in section G 
(Contract Administration Data).
    (2) ACRNs need not prefix accounting classification citations if 
the accounting classification citations are present in the contract 
only for the transportation officer to cite to Government bills of 
lading.
    (3) If the contracting officer is making a modification to a 
contract and using the same accounting classification citations, which 
have had ACRNs assigned to them, the modification need cite only the 
ACRNs in the accounting and appropriations data block or on the 
continuation sheets.
    (e) Showing the ACRN in the contract. If there is more than one 
ACRN in a contract, all the ACRNs will appear in several places in the 
schedule (e.g., ACRN:AA).
    (1) Ship-to/mark-for block. Show the ACRN beside the identify code 
of each activity in the ship-to/mark-for block unless only one 
accounting classification citation applies to a line item or subline 
item. Only one ACRN may be assigned to the same ship-to/mark-for within 
the same contract line or subline item number unless multiple 
accounting classification citations apply to a single nonseverable 
deliverable unit such that the item cannot be related to an individual 
accounting classification citation.
    (2) Supplies/services column. (i) If only one accounting 
classification citation applies to a line item or a subline item, the 
ACRN may be shown in the supplies/services column near the item 
description.
    (ii) If more than one accounting classification citation applies to 
a single contract line item, identify each assigned ACRN and the amount 
of associated funds using informational subline items (see 204.7104-
1(a)).
    (3) Payment instructions. (i) When a contract line item is funded 
by multiple accounting classification citations, the contracting 
officer shall provide adequate instructions in section G (Contract 
Administration Data), under the heading ``Payment Instructions for 
Multiple Accounting Classification Citations,'' to permit the paying 
office to charge the accounting classification citations assigned to 
that contract line item (see 204.7104-1(a)) in a manner that reflects 
the performance of work on the contract. If additional accounting 
classification citations are subsequently added, the payment 
instructions must be modified to include the accounting classification 
citations.
    (ii) Payment instructions shall provide a methodology for the 
paying office to assign payments to the appropriate accounting 
classification citation(s), based on anticipated contract work 
performance. The method established should be consistent with the 
reasons for the establishment of the line items. The payment method may 
be based upon a unique distribution profile devised to reflect how the 
funds represented by each of the accounting classification citations 
support contract performance. Payment methods that direct that payments 
be made from the earliest available fiscal year funding sources, or 
that provide for proration across accounting classification citations 
assigned to the line item, or a combination thereof, may be used if 
that methodology reasonably reflects how 

[[Page 34470]]
each of the accounting classification citations supports contract 
performance.
* * * * *

PART 215--CONTRACTING BY NEGOTIATION

    8. A new section 215.406-2 is added to read as follows:


215.406-2  Part I--The schedule.

    (g) When a contract contains both fixed-priced and cost-
reimbursement line items or subline items, the contracting officer 
shall provide, in Section B, Supplies or Services and Prices/Costs, an 
identification of contract type specified for each contract line item 
or subline item to facilitate appropriate payment.

PART 217--SPECIAL CONTRACTING METHODS

    9. Section 217.7405 is revised to read as follows:


217.7405  Definitizations.

    For each definitization modification, the contracting officer shall 
include all data required by 243.171.
    10. Section 217.7406 is added to read as follows:


217.7406  Contract clause.

    Use the clause at 252.217.7027, Price Ceiling, in all undefinitized 
contract actions and solicitations associated with UCAs. Insert the 
not-to-exceed amount.

PART 243--CONTRACT MODIFICATIONS

    11. Section 243.171 is added to read as follows:


243.171  Obligation or deobligation of funds.

    For each contract modification, the contracting officer shall 
identify, in Section G, Contract Administration Data (Uniform Contract 
Format), or the contract schedule (Simplified Contract Format), under 
the heading ``Summary for the Payment Office,'' information sufficient 
to permit the paying office to readily identify the changes for each 
contract line and subline item as follows--
    (a) The amount of funds obligated by prior contract actions, to 
include the total cost and fee if a cost-type contract; the target fee 
at time of contract award if a cost-plus-incentive-fee contract; the 
base fee if a cost-plus-award-fee contract; or the target price and 
target profit if a fixed-price incentive contract;
    (b) The amount of funds obligated or deobligated by the instant 
modification, categorized by the types of contracts specified in 
paragraph (a) of this section; and
    (c) The total cumulative amount of obligated or deobligated funds, 
categorized by the types of contracts specified in paragraph (a) of 
this section.

[FR Doc. 95-16162 Filed 6-30-95; 8:45 am]
BILLING CODE 5000-04-M