[Federal Register Volume 64, Number 10 (Friday, January 15, 1999)]
[Proposed Rules]
[Pages 2617-2620]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-847]


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DEPARTMENT OF DEFENSE

48 CFR Parts 204, 212, 213, 252, and 253

[DFARS Case 98-D027]


Defense Federal Acquisition Regulation Supplement; Taxpayer 
Identification Numbers and Commercial and Government Entity Codes

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

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SUMMARY: The Director of Defense Procurement is proposing to amend the 
Defense Federal Acquisition Regulation Supplement (DFARS) to add 
procedures for reporting payment information to the Internal Revenue 
Service (IRS); to revise the procedures for obtaining Taxpayer 
Identification Numbers (TINs) and Commercial and Government Entity 
(CAGE) codes when contractors are required to register in the Central 
Contractor Registration (CCR) database; and to make editorial changes.

DATES: Comments on the proposed rule should be submitted in writing to 
the address identified below on or before March 16, 1999, to be 
considered in the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments on the 
proposed rule to: Defense Acquisition Regulation Council, Attn: Ms. 
Sandra G. Haberlin, PDUSD (A&T) DP (DAR), IMD 3D139, 3062 Defense 
Pentagon, Washington, DC 20301-3062. Telefax number (703) 602-0350. E-
mail comments submitted over the Internet should be addressed to: 
[email protected]. Please cite DFARS Case 98-D027 in all correspondence 
related to this issue. E-mail correspondence should cite DFARS Case 98-
D027 in the subject line.

FOR FURTHER INFORMATION CONTACT: Ms. Sandra G. Haberlin, (703) 602-
0131.

SUPPLEMENTARY INFORMATION: 

A. Background

    This proposed rule adds procedures for reporting payment 
information to the IRS; revises the procedures for obtaining TIN and 
CAGE codes when contractors are required to register in the CCR 
database; and makes a number of editorial changes.
    1. Reporting payment information to the IRS. This DFARS rule 
supplements the FAR interim rule (Case No. 97-003) published as Item I 
of FAC 97-09 on October 30, 1998 (63 FR 58586).
    a. The FAR rule renumbered and retitled FAR 4.903, Payment 
information, as FAR 4.904, Reporting payment information to the IRS; 
and deleted the list, previously located at FAR 4.903(b), of the types 
of payments that are exempt from reporting payment information to the 
IRS on Form 1099. The list was deleted as being unnecessary to include 
in the FAR because the payment office is responsible for submitting 
Form 1099 reports to the IRS.
    b. This rule adds a new section at DFARS 204.904, Reporting payment 
information to the IRS. This section contains a list that is similar to 
the one previously found in the FAR, but the DFARS list has been 
updated to comply with the Taxpayer Relief Act of 1997 (Pub. L. 105-
32). Section 1022 of the Act amends 26 U.S.C. 6041A to add payments 
under certain classified contracts to the list of exceptions, and to 
remove payments for services provided by corporations from the list. 
DFARS 204.904 also adds a requirement for the contracting officer to 
provide a statement to the payment office if the contractor is 
providing services subject to Form 1099 reporting to the IRS. This 
statement is not required if the contracting officer concludes that one 
of the exceptions listed at DFARS 204.904(1) applies. this procedure 
was added to the DFARS to facilitate issuance of Form 1099 reports by 
the payment office.
    2. Procedures for obtaining TINs and CAGE code numbers when CCR 
applies. The FAR rule also modified the process for obtaining TINs, by 
permitting agencies to prescribe their own unique procedures for 
obtaining TINs from contractors and for providing the TINs to the 
payment office. DoD uses the CCR database for these purposes. DFARS 
252.204-7004, Required Central Contractor Registration, requires most 
contractors doing business with DoD to register in the CCR database 
prior to award of a contract, basic agreement, basic ordering 
agreement, or blanket purchase agreement. As part of the registration 
process, contractors must provide their TINs and DoD-unique CAGE code 
numbers. DoD payment offices have access to this information through 
the CCR database. This DFARS rule clarifies that the contracting 
officer shall not use the solicitation provisions at FAR 52.204-3, 
Taxpayer Identification, and DFARS 252.204-7001, Commercial and 
Government

[[Page 2618]]

Entity (CAGE) Code Reporting; or paragraph (b) of the provision at FAR 
52.212-3, Offeror Representations and Certifications--Commercial Items, 
when the contractor is required to register in the CCR database, since 
the information requested in these provisions is duplicative of the 
information that the contractor is required to provide during the CCR 
process.
    3. Editorial changes. This DFARS rule makes a number of editorial 
changes, including updating CAGE code information in Subpart 204.72, 
Contractor Identification, and clarifying certain requirements in 
Subpart 204.73, Central Contractor Registration.

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. FAR and DFARS 
requirements already exist for contractors to furnish TINs and CAGE 
codes, and to register in the CCR database. This rule simply clarifies 
that, if the contractor is required to register in the CCR database, 
the contractor is not required to provide a TIN in accordance with FAR 
52.204-3 or paragraph (b) of FAR 52.212-3, or a CAGE code in accordance 
with DFARS 252.204-7001. An initial regulatory flexibility analysis 
has, therefore, not been performed. Comments are invited from small 
businesses and other interested parties. Comments from small entities 
concerning the affected DFARS subparts also will be considered in 
accordance with 5 U.S.C. 610. Such comments should be submitted 
separately and should cite 5 U.S.C. 601, et seq. (DFARS Case 98-D027), 
in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. 3501, et seq.) applies 
because the rule contains information collection requirements. The 
proposed rule decreases the collection requirements currently approved 
under Office of Management and Budget Control Number 0704-0225, since 
the rule limits the use of the solicitation provision at 252.204-7001, 
Commercial and Government Entity (CAGE) Code Reporting, to contractors 
that are not required to register in the CCR database. Therefore, the 
proposed rule reduces the number of respondents by 89,545, and the 
number of burden hours by 22,386.

List of Subjects in 48 CFR Parts 204, 212, 213, 252, and 253

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

    Therefore, 48 CFR Parts 204, 212, 213, 252, and 253 are proposed to 
be amended as follows:
    1. The authority citation for 48 CFR Parts 204, 212, 213, 252, and 
253 continues to read as follows:

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

PART 204--ADMINISTRATION MATTERS

    2. Section 204.203 is added to read as follows:


204.203  Taxpayer identification information.

    (1) The procedures at FAR 4.203(a) and (b) do not apply to 
contracts that include the clause at 252.204-7004, Required Central 
Contractor Registration.
    (2) For DoD basic ordering agreements and indefinite-delivery 
contracts that require the contractor to register in the Central 
Contractor Registration (CCR) database (see Subpart 204.73)--
    (i) The contracting officer issuing the agreement or contract need 
not provide a copy of the completed solicitation provision at FAR 
52.204-3 or 52.212-3(b) to DoD contracting officers placing orders 
under the agreement or contract; and
    (ii) A DoD contracting officer placing an order under the agreement 
or contract need not provide the TIN of type of organization 
information to the payment office.
    (3) For non-DoD basic ordering agreements and indefinite-delivery 
contracts, a DoD contracting officer placing an order under the 
agreement or contract need not provide the TIN or type of organization 
information to the payment office if the contractor must register in 
the CFR database before placement of the order (see Subpart 204.73).


204.602-70  [Removed]

    3. Section 204.602-709 is removed.
    4. Section 204.603 is added to read as follows:


204.603  Solicitation provisions.

    (1) Use the provision at 252.204-7001, Commercial and Government 
Entity (CAGE) Code Reporting, in solicitations when--
    (i) The prospective contractor will not be required to register in 
the Central Contractor Registration database; and
    (ii) The Commercial and Government Entity codes for the prospective 
offerors are not available to the contracting office.
    (2) Use the provision at FAR 52.204-6, Data Universal Numbering 
System (DUNS) Number, in solicitations that--
    (i) Have an estimated value exceeding $25,000; or
    (ii) Have an estimated value of $25,000 or less and include the 
provision at 252.204-7004, Required Central Contractor Registration.
    5. The heading of Subpart 204.9 is revised to read as follows:

Subpart 204.9--Taxpayer Identification Number Information

    6. Sections 204.904 and 204.905 are added to read as follows:


204.904  Reporting payment information to the IRS.

    (1) 26 U.S.C. 6041 and 6041A and 26 CFR 1.6041 require Government 
payors to report to the IRS, on IRS Form 1099, payments of an annual 
cumulative value of $600 or more provided to a contractor, except 
payments for--
    (i) Supplies, unless the supplies are incidental to the furnishing 
of services;
    (ii) Telegram, telephone, freight, storage, or similar charges;
    (iii) Income that must be reported on an IRS Form W-2 (e.g., 
payments to employees or payments under contracts for personal 
services);
    (iv) Any contract with a Federal agency;
    (v) Any contract with a State, the District of Columbia, or a 
possession of the United States, or a political subdivision, agency, or 
instrumentality of any of the foregoing;
    (vi) Any contract with an organization exempt from taxation by 26 
U.S.C. 501(a). Such organizations may include charitable, social 
welfare, labor, agricultural, veterans', and political organizations; 
business leagues; social clubs; fraternal societies; and employees' 
associations. Contracting officers may obtain additional information to 
assist in determining an organization's tax-exempt status via the 
Internet at http://www.irs.ustreas.gov/prod/bus__info/eo/eo-types.html;
    (vii) Any contract with a foreign government or political 
subdivision of a foreign government;
    (viii) Any contract with an international organization listed at 22 
U.S.C. 288;
    (ix) Any classified contract under 26 U.S.C. 6050M. As used in this 
section only, a contract is classified if--
    (A) the existence of the contract or the contract subject matter is 
designated as classified (i.e., requires a specific degree

[[Page 2619]]

of protection against unauthorized disclosure for reasons of national 
security); or
    (B) The head of the agency determines that filing IRS Form 1099 
would interfere with the effective conduct of a confidential law 
enforcement or foreign intelligence activity; or
    (x) Such other services as the IRS may specify in regulations.
    (2) Unless an exception in paragraph (1) of this section applies, 
the contracting officer shall provide, as the last page of the copy of 
the contract sent to the payment office--
    (i) A statement that the contractor is providing services subject 
to Form 1099 payment information reporting to the IRS, as required by 
26 U.S.C. 6041 and 6041A; and
    (ii) The contractor's TIN and type of organization, if the 
contractor is not required to register in the Central Contractor 
Registration database (see Subpart 204.73) prior to award.


204.905  Solicitation provision.

    Do not use the provision at FAR 52.204-3, Taxpayer Identification, 
in solicitations that include the provision at 252.204-7004, Required 
Central Contractor Registration.
    7. Sections 204.7201, 204.7202, and 204.7202-1 are revised to read 
as follows:


204.7201  Definitions.

    (a) Commercial and Government Entity (CAGE) code means-
    (1) A code assigned by the Defense Logistics Information Service 
(DLIS) to identify a commercial or Government entity; or
    (2) A code assigned by a member of the North Atlantic Treaty 
Organization (NATO) that is recorded and maintained by DLIS in the CAGE 
master file.
    (b) Contractor identification code means a code required by the 
contracting office for the purpose of identifying the offeror. The 
three types of contractor identification codes are CAGE codes, Data 
Universal Numbering System (DUNS) numbers, and Taxpayer Identification 
Numbers.


204.7202  General.


204.7202-1  CAGE codes.

    (a) DLIS assigns or records and maintains CAGE codes to identify 
commercial and Government activities. Use of CAGE codes is prescribed 
by 253.204-70(b)(5)(ii)(C); DoD 4000.25-5-M, Military Standard Contract 
Administration Procedures (MILSCAP); and DoD 4130.2-M, Federal Catalog 
System Policy Manual.
    (b)(1) If a prospective contractor is required to register in the 
CCR database (see Subpart 204.73) and does not have a CAGE code, DLIS 
will assign a CAGE code when the prospective contractor submits its 
request for registration in the CCR database.
    (2) If a prospective contractor is not required to register in the 
CCR database, the CAGE code is not already available in the contracting 
office, and the prospective contractor does not respond to the 
provision at 252.204-7001, Commercial and Government Entity (CAGE) Code 
Reporting, use the following procedures:
    (i) To identify the prospective contractor's CAGE code, use--
    (A) The monthly H-series CD ROM that contains the H-4/H-8 CAGE 
master file issued by DLIS. (Their address is: DLIS-VS, Federal Center, 
74 Washington Avenue North, Battle Creek, MI 49017-3084. Their 
telephone numbers are: DSN 932-4726, toll free 1-888-352-9333, or 
commercial (616) 961-4726;
    (B) The on-line access to the CAGE file through the Defense 
Logistics Information System;
    (C) The on-line access to the Defense Logistics Agency CAGE file 
through the DLA Network or dial-up capability; or
    (D) The Internet to access the CAGE Lookup Server at http://
www.dlis.dla.mil/cage__welcome.htm.
    (ii) If no CAGE code is identified using the procedures in 
paragraph (b)(2)(i) of this subsection, ask DLIS to assign a CAGE code. 
Submit a DD Form 2051, Request for Assignment of a CAGE Code, (or 
electronic equivalent) to the address in paragraph (b)(2)(i)(A) of this 
subsection, ATTN: DLIS-SBB. The contracting office completes Section A 
of the DD Form 2051, and the contractor completes Section B. The 
contracting office must verify Section B before submitting the form.
    (c) Direct questions on obtaining computer tapes, electronic 
updates, or code assignments to DLIS (DLIS-SBB) at DSN 932-4358, or 
commercial (616) 961-4358.
    8. Sections 204.7203 and 204.7204 are revised to read as follows:


204.7203  Responsibilities of contracting officers.

    (a) Assist the offeror in obtaining the required CAGE code(s).
    (b) Do not deny a prospective offeror a solicitation or bid set 
because the offeror does not have a contractor identification code.
    (c) If a prospective contractor is not required to register in the 
CCR database, and a CAGE code has not been identified, request the 
assignment of the CAGE code by following the procedures at 204.7202-
1(b)(2)(ii). CAGE codes may be requested at the time the offeror is 
sent a solicitation package or added to the mailing list to ensure that 
a code is assigned in sufficient time to process the DD Form 350, 
Individual Contracting Action Report, without delay.


204.7204  Maintenance of the CAGE file.

    (a) Changes, except name changes, may be submitted in writing--
    (1) By the entity identified by the code, using company letterhead;
    (2) By the contracting office; or
    (3) By the contract administration office (also see FAR Subpart 
42.12, Novation and Change-of-Name Agreements);
    (4) Using the DD Form 2051, facsimile or electronic equivalent, to:

Defense Logistics Information Service, DLIS-SBB, Federal Center, 74 
Washington Avenue North, Battle Creek, MI 49017-3084, Telephone 
Numbers: DSN 932-4358, Commercial (616) 961-4358, Facsimile: (616) 
961-4528, 4388, 4485, Internet:       http//www.dlis.dla.mil/
form2051.htm

    (b) The change-of-name agreement shall be submitted to DLIS-SBB by 
the contracting officer responsible for execution of the agreement (see 
FAR Subpart 42.12). In the event there are no current contracts in 
force, each contracting and contract administration office receiving 
notification of changes from the commercial entity shall forward a copy 
of the change notice annotated with the CAGE code to DLIS-SBB unless 
the change notice indicates that DLIS-SBB has already been notified.
    (c) Additional guidance for maintaining CAGE codes is in Volume 7 
of DoD 4100.39-M, Federal Logistics Information System (FLIS) 
Procedures Manual.
    9. Section 204.7302 is amended by revising paragraphs (a) and (c) 
to read as follows:


204.7302  Policy.

* * * * *
    (a) Purchases paid for with a Governmentwide commercial purchase 
card.
* * * * *
    (c) Classified contracts or purchases (see FAR 4.401) when 
registration in the CCR database, or use of CCR data, could compromise 
the safeguarding of classified information or national security.
* * * * *
    10. Section 204.7303 is amended by revising paragraph (a)(1) and 
paragraph (b) introductory text to read as follows:

[[Page 2620]]

204.7303  Procedures.

    (a)(1) Except as provided in 204.7302, the contracting officer 
shall require each offeror to provide a DUNS number (see 204.603(2)) 
or, if applicable, a DUNS+4 number, with its verbal or written offer, 
regardless of the dollar amount of the offer.
* * * * *
    (b) If the contracting officer determines that a prospective 
contractor is not registered in the CCR database and an exception to 
the registration requirements for the award does not apply (see 
204.7302), the contracting officer shall--
* * * * *

PART 212--ACQUISITION OF COMMERCIAL ITEMS

    11. Section 212.301 is amended by adding paragraph (b)(2) to read 
as follows:


212.301  Solicitation provisions and contract clauses for the 
acquisition of commercial items.

    (b)(2) Paragraph (b) of the provision at FAR 52.212-3 does not 
apply when the solicitation includes the clause at 252.204-7004, 
Required Central Contractor Registration.
* * * * *

PART 213--SIMPLIFIED ACQUISITION PROCEDURES

    12. Section 213.106-3 is added to read as follows:


213.106-3  Award and documentation.

    (e) The procedures at FAR 13.106-3(e) do not apply when the 
contract includes the clause at 252.204-7004, Required Central 
Contractor Registration.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    13. Section 252.204-7001 is amended by revising the introductory 
text, the provision date, paragraph (b) introductory text, and 
paragraph (b)(2) to read as follows:


252.204-7001  Commercial and Government Entity (CAGE) code reporting.

    As prescribed in 204.603(1), use the following provision:

Commercial and Government Entity (CAGE) Code Reporting (XXX 19XX)

 * * * * *
    (b) If the Offeror does not have a CAGE code, it may ask the 
Contracting Officer to request one from the Defense Logistics 
Information Service (DLIS). The Contracting Officer will--
 * * * * *
    (2) Complete section a and forward the form to DLIS; and
* * * * *

PART 253--FORMS

    14. Section 253.204-70 is amended by revising paragraph 
(b)(5)(ii)(F)(3) to read as follows:


253.204-70  DD Form 350, Individual Contracting Action Report.

 * * * * *
    (b) * * *
    (5) * * *
    (ii) * * *
    (F) * * *
    (3) An agency or instrumentality of the Federal Government.
 * * * * *
[FR Doc. 99-847 Filed 1-14-99; 8:45 am]
BILLING CODE 5000-04-M