[Federal Register Volume 65, Number 248 (Tuesday, December 26, 2000)]
[Rules and Regulations]
[Pages 81357-81362]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-32628]


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DEPARTMENT OF DEFENSE

Department of the Army

32 CFR Part 668


Report On Use of Employees of Non-Federal Entities to Provide 
Services to the Department of the Army

AGENCY: Office of the Assistant Secretary of the Army (Manpower and 
Reserve Affairs), and Office of the Assistant Secretary of the Army 
(Acquisition, Logistics and Technology), Department of the Army, DoD.

ACTION: Final rule.

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SUMMARY: This final rule implements Section 343 of the FY 2000 
Department of Defense Authorization Act, Section 129a and Section 
2461(g) of title 10 within the Department of the Army by means of a 
reporting requirement included in certain contract actions described in 
the rule.

EFFECTIVE DATE: December 26, 2000.

ADDRESSES: Office of the Assistant Secretary of the Army for Manpower & 
Reserve Affairs (ASA (M&RA)), Attention SAMR-FMMR, Rm. 2A672, 
Washington, DC 20310, or contact the following persons by e-mail or 
phone as indicated below.

FOR FURTHER INFORMATION CONTACT: Dr. John Anderson, SAMR-FMMR, Phone 
703-614-8247, e-mail: [email protected] or John R. Conklin, 
SAAL-ZPS, e-mail: [email protected]

SUPPLEMENTARY INFORMATION:

a. Background

    (1) The Department of the Army previously announced an interim rule 
to establish basic contractor-reporting requirements to identify the 
number and value of direct, and associated indirect, labor work year 
equivalents for contracted services in support of the Army. The interim 
rule, effective on the date of publication, was published in the 
Federal Register (65 FR 13906) dated Wednesday, March 15, 2000. 
Comments and responses pertaining to the new reporting requirements are 
provided in b. below.
    (2) Major changes to the Interim Rule are outlined herein and 
further explained in ``b.'' below. In response to numerous 
administrative questions and requests for clarification from both 
public and private sector sources, Part 668 has been completely 
reorganized and rewritten for better readability, clarity and 
completeness; and to allow easier implementation by the Army 
contracting community and Army contractors. To further assist with this 
objective, the Final Rule will be cited and further implemented as 
appropriate in the Army Federal Acquisition Regulation Supplement.
    (3) The substantive changes resulting from the Public Comment 
process are as follows:
    (a) Section 668.1(b)(1)(i) excepting FAR Part 12 contract actions 
from inclusion of the reporting requirement, and mandatory reporting, 
is deleted in its entirety. With the effective date of this Final Rule, 
the reporting requirement will be included in all contracts specified 
in the amended Sec. 668.1(c)(3) (including those entered into using 
Part 12 procedures, unless otherwise exempt). All affected contractors 
shall be requested to provide reportable data from October 1, 1999 (or 
later start of contract date), in order to insure complete, accurate 
and useful information to Congress and Army planners.
    (b) Section 668(b)(1)(iii) is deleted, and will be moved to 
Sec. 668.2(e).
    (c) Section 668.2 is renamed ``Contract Reporting Requirements.'' 
Section 668.2(a) is changed (in Sec. 668.2(d)) by amending ``relevant 
composite indirect labor rate'' to read ``relevant annualized average 
or composite indirect labor rates'' in order to clarify that rates 
reported (for hours and dollar value) do not have to be adjusted for 
every reporting period; and will further clarify that actual estimated 
hours and dollars may always be reported (in lieu of rates) for 
indirect labor related to the direct labor reported. To this end, the 
ASA (M&RA) secure website (https://contractormanpower.us.army.mil) will 
be amended to add appropriate fields and clarifications.
    (d) A new Sec. 668.2(g) is added to clarify that prime contractors 
may use their discretion to determine whether sub-contractors will 
report their information directly to the data collection web site, or 
to the prime contractors for validation and submission to the 
collection web site.
    (e) The current paragraph (c), titled ``Reporting format'' is 
redesignated as paragraph (i) and corresponding changes are made to the 
list of required data elements;
    (f) The secure Army website and its URL address is now highlighted 
in Section 668.2(a) and (i). The website is the principal source of 
detailed information on the reporting process, Help Desk functions, and 
other information and assistance.

b. Comments and Responses

    Comments and responses are provided as follows:
    Comment: Contractor recommended that the rule clarify that it is 
permissible for a contractor to use an algorithm of the overall 
relation of total indirect labor hours to the total direct and indirect 
hours on an annualized basis for the purposes of reporting the 
composite indirect rate.
    Response: The rule will be clarified to reflect the permissibility 
for contractors to report using an annualized average composite 
indirect rate for estimating indirect man-hours rather than a rate 
developed for the specific reporting period.
    Comment: Public sector union requested clarification on the meaning 
of the ``composite indirect rate'' for estimating value.
    Response: The composite indirect rate for estimating value (as 
opposed to hours) is intended to capture the labor-related charges 
included in the indirect pools. This rate, when multiplied against the 
value of direct labor hours is intended to provide an estimate of all 
of the compensation related charges associated with the reportable 
services under the contract action during the reporting period (i.e., 
both direct and indirect labor charges). These compensation charges 
include: salaries and wages; directors' fees; bonuses (including 
stock); incentive awards; employee stock options; stock appreciation 
rights; employee insurance; fringe benefits (e.g., vacation, sick 
leave, holidays, military leave, supplemental unemployment benefit 
plans); contributions to pension plans (defined benefit, defined 
contribution); other post-retirement benefits, annuity, and employee 
incentive compensation and deferred compensation plans; early 
retirement plans; off-site pay; incentive pay; hardship pay; severance 
pay; and COLA differential. Contractors may also report estimated total 
hours and dollars for (related) indirect labor (as opposed to providing 
average composite rates). Either method chosen should be

[[Page 81358]]

consistently reported. The Final Rule, at Section 668.2(d)(2), contains 
these clarifications; and the secure Army website will be amended to 
reflect the new data fields.
    Comment: Contractor questioned application of reporting requirement 
to Time and Materials (T&M) and Firm Fixed Price (FFP) contracts since 
the contractor invoices the Government based on its fully burdened 
labor rates, as proposed under T&M, and agreed upon prices or rates 
under FFP, and does not otherwise usually disclose actual labor costs 
(under T&M) or actual labor hours or costs under FFP. Conversely, 
public sector unions requested that the Rule be clarified to apply the 
reporting requirement to firm fixed price type contracts, on the basis 
that, assuming the numbers (hours and value) are known and collected by 
the contractors for their own business purposes, the numbers should be 
reported to the secure Army website since they are not to be used for 
billing nor for audit, or any other purposes beyond those stated in the 
Rule (reporting and manpower planning).
    Response: The Army is not requesting this contractor manpower 
information as a basis for future negotiation, payment or post-audit 
under the contract(s) reported; and is treating all provided 
information, especially any estimated indirect labor hour or rate/value 
information, as proprietary when specifically associated with a 
contractor by name and contract number. The Rule will clarify that 
reporting the requested information is not required when a contractor 
would be forced to create a new, internal cost accounting, allocation 
or payroll system in order to reasonably identify the requested data. 
However, it is unlikely that a contractor would be able to operate in 
accordance with generally accepted accounting principles, and in 
compliance with taxation and benefits laws and regulations, without 
having the requested information readily available either at the time 
of a request for progress payment, submission of invoices or vouchers, 
or quarterly. Lastly, the data as reported by contractors will not be 
furnished through or to Army contracting offices, but directly to the 
office responsible for manpower reporting to Congress and providing 
gross data to Army planners. Accordingly, firm fixed price contracts 
and time and materials contracts shall fall within the scope of the 
reporting requirement and the Final Rule is clarified to reflect that 
change.
    Comment: Public sector union questioned the exclusion of Federal 
Acquisition Regulation (FAR) Part 12 service contracts from the scope 
of the reporting requirement.
    Response: Initially, FAR Part 12 contracts were exempted on the 
basis that the reporting requirement could detract from the commercial 
practices tenet, and based on the sparse use of those procedures for 
service contracts in general. However, on review of the comments, and 
reflection on the remaining exceptions for reporting, it was determined 
that, if contractors possessed the needed data as a matter of common 
business practice, and if the reporting requirement was minimally 
burdensome and intrusive, then it should be reported, notwithstanding 
the use of Part 12. In addition, Army contracting personnel notified us 
that the number and size/scope of Part 12 Service contracts was quite 
large and increasing, contrary to our initial expectations. Given the 
intended scope of both section 2461(g) of title 10 and section 343 of 
the Fiscal Year 2000 National Defense Authorization Act, excluding the 
significant and growing numbers of service contracts awarded under Part 
12 will detract from the reliability of information collected and 
undercut the purposes of data collection. Accordingly, the Final Rule 
eliminates the exception for contracts entered into under the authority 
and procedures of FAR Part 12.
    Comment: Public sector unions questioned the exclusion of contracts 
below $100,000 in value from the scope of the rule.
    Response: The $100,000 exclusion is intended to minimize the 
workload burden in compiling the report, and covers a relatively small 
number of contractor support man-hours provided under a large number of 
contract actions. The Rule will, however, be clarified to explain that 
the $100,000 refers to the total estimated value of the contract in the 
case of Task Order or Delivery Order contracts. Individual orders under 
such contracts that are reported using a DD Form 350, Individual 
Contracting Action Report (i.e., greater than $25,000) shall be 
reported). The Army may periodically consider eliminating this 
exclusion in the event the exclusion is misused or results in a 
substantial number of service contracts and manpower information being 
excluded from the requirement in a way that would impair the 
reliability of the overall data.
    Comment: Public sector unions questioned the scope of the 
proprietary nature of the data and requested that the Army address how 
it intends on making the data available to the public. Army Major 
Command Chiefs of Staff and their contracting offices queried how they 
would be informed about contractor compliance with the reporting 
requirement.
    Response: For the purposes of this data collection effort, 
information reported on direct or indirect labor hours and rates, and 
the value of those hours, when associated with a contract number and 
contractor identity, is treated as proprietary. It was and is 
considered essential to the data collection effort to ensure this level 
of information security to reporting contractors. Data subject to 
potential release to Army sources or the public, or under the Freedom 
of Information Act, would include information such as the identity of 
contractors reporting; the number of contract actions reported on; and 
the overall number of labor hours and value of various categories of 
support services reported, and other aggregations, but in no event will 
there be public release of specific reported data when linked to 
contractor name and or contract number. The Final Rule is clarified to 
provide that proprietary information may be provided to internal Army 
sources for purposes of evaluating and enforcing compliance with the 
reporting requirement, provided the information is appropriately marked 
and treated as proprietary. For purposes of assuring compliance with 
the reporting requirement, the Army may eventually decide to make a 
summarization of non-proprietary, releasable data available through a 
web site; however this will not be possible in the near future due to 
the late implementation by many contracting activities and the need for 
a validation process and cycle using the Federal Procurement Data 
System database.
    Comment: A member of the public suggested that the rule clarify how 
sub-contractors would report this information. In addition, a 
contractor suggested that sub-contracting its payroll system excluded 
it from the scope of the reporting requirement.
    Response: Clarifying language is included in the Final Rule making 
clear that prime contractors may either require their sub-contractors 
to directly report the information required by this rule to the data 
collection web site; or the prime contractor may report subcontractor-
provided information to the data collection web site (identifying the 
source of the numbers to the extent practicable). In addition, 
clarifying language is included in the Final Rule that sub-contracting 
the payroll system of a contractor is not a basis for exclusion of the 
contractor from the reporting requirement.
    Comment: An Army contracting office queried whether the reporting

[[Page 81359]]

requirement applied to Army contracts awarded by them using General 
Services Administration (GSA) contract vehicles.
    Response: Clarifying language is included in the Final Rule that 
the reporting requirement applies to Army contract actions, valued at 
greater than $100,000, awarded by Army contracting offices using GSA 
contract vehicles.
    Comment: Contractor suggested that the submission of an invoice 
with an additional attachment be allowed in lieu of the web-based data 
collection, at the option of the contractor.
    Response: Using multiple data collection formats and methods is 
impracticable for the Government and would adversely affect the 
reliability and cost of the data collection. In addition, the inclusion 
of attachments on an invoice would, for all practical purposes, 
eliminate the access protections afforded by using a secure web site 
not associated with contracting channels, for all data collection.
    Comment: Public sector union suggested that the reporting 
requirement be extended to cover manufacturing work analogous to the 
work performed at Army arsenals and some Army depots (primarily 
remanufacturing).
    Response: The final rule applies only to services covered by 
federal supply class or service codes covered by the ``Research and 
Development,'' and the ``Other Services and Construction'' codes. The 
final rule does not include a reporting requirement for the acquisition 
of supplies and equipment by purchase, lease or barter. However, when 
non-incidental services are discretely included in such contract 
actions, and these services may be characterized under the Other 
Services and Construction codes or Research and Development codes, they 
shall be subject to the reporting requirement. Just as, in 
manufacturing work performed at Army arsenals, support services that 
the Arsenals contract for must be reported.
    Comment: Public sector comments from overseas commands recommended 
that foreign vendors/contractors providing services to the Army 
overseas (such as in Contingency support in theaters of operation) be 
excepted from the reporting requirement. The concern is certain foreign 
contractors may not be able to connect to the Internet; may not be 
conversant with our language, our accounting rules and assumptions, and 
may be distrustful of providing potentially business- (or tax) 
sensitive information to a foreign government (i.e., the United 
States), notwithstanding the stated purpose and pledge to protect such 
data as proprietary.
    Response: One of the purposes of this minimal burden data 
collection effort is for Army Leadership to gain visibility over the 
total resources (manpower and associated costs) necessary to accomplish 
mission requirements, as reliance on contractor support has increased. 
A recent (October 19, 2000) Memorandum to all Army Commanders and Heads 
of Staff Agencies, signed by the Vice Chief of Staff, GEN John M. 
Keane, states: ``Defined in both functional and appropriation terms by 
theater, this [CME] information will address a material weakness 
capturing the ``contractor shadow workforce'' support to our forces. 
This information is very important to Army planning and programming, 
the Quadrennial Defense Review, and for assuring full visibility of all 
costs in activity based costing initiatives.'' If foreign contractors 
are unable to comply with the entirety of the reporting requirement, 
without creating a whole new allocation system or system of records, 
they can exempt themselves from that part of the reporting which they 
can certify as infeasible. This must be supported with a written 
certification outlining the portion of the reporting which is 
impracticable and the reasons therefore. In certain extreme cases 
(e.g., when the contractor has no capability to use the Internet), the 
Army contracting office shall be required to report the relevant data 
and estimates to the best of their ability.

General

    The Interim Rule included an exception to the requirement for 
reporting when a contractor did not have an internal system for 
aggregating billable hours in the direct and indirect pools, or an 
internal payroll accounting system, and did not otherwise have to 
provide this information to the Government. Since these circumstances 
and facts are not known in advance by contracting officers, this 
``exemption'' (as somewhat restated) has been moved from Sec. 668.1 
(which instructs contracting officers), to Sec. 668.2, ``Contract 
Reporting Requirements'' (which will instruct offerors and contractors 
in solicitations and contracts). A corresponding requirement has been 
added for a written certification of these facts to be submitted by the 
offeror/contractor.
    There were a number of suggestions from both public and private 
sector sources (some mentioned above) for total exemption from 
reporting for various circumstances, mostly irrelevant to the purpose 
of the data collection or its availability. The Rule has been amended 
to clarify that even partial reporting of the data elements required is 
significantly more useful to the Army than no report at all.

a. Procedural Requirements

(1) Regulatory Flexibility Act

    The rule does not require the preparation of a regulatory 
flexibility analysis since it is not expected to have a significant 
economic impact on a substantial number of small entities (i.e. small 
and small disadvantaged businesses).

(2) Unfunded Mandates Act

    The rule does not impose an enforceable duty among small 
governments (i.e. States and local governments).

(3) Paperwork Reduction Act

    Pursuant to the Paperwork Reduction Act of 1995, the reporting 
provisions of this rule have been approved by the Office of Management 
and Budget (OMB) and assigned OMB control number 0702-0112, with an 
expiration date of August 31, 2003.

(4) Executive Order 12866 (Regulatory Planning & Review)

    This is not a significant regulatory action in that it is not 
likely to result in a rule that will have an annual effect on the 
economy of $100 million or more or adversely affect productivity, the 
environment, public health or safety.

(5) Executive Order 13132 (Federalism)

    It has been determined that this rule does not have sufficient 
Federalism implications to warrant the preparation of a Federalism 
Assessment. The provisions contained in this rule will have little or 
no direct effect on States or local governments.

(6) Submission to Congress and the General Accounting Office (GAO)

    Pursuant to 5 U.S.C., Chapter 8, the rule will be forwarded to both 
Houses of Congress and the GAO in the final rule announcement together 
with the GAO prescribed special reporting form for this purpose.
    In this document, the Army Department adopts the interim rule 
published March 15, 2000 as final with the above described changes as 
set forth below. (Because of the number of changes and the significant 
reorganization of the Rule, the amended part 668 is provided in full.)

List of Subjects in 32 CFR Part 668

    Government contracts; Reporting and record keeping requirements.


    Accordingly, the interim rule adding Subchapter L consisting of 
part 668 to

[[Page 81360]]

32 CFR chapter V, which was published in 65 FR 13906 (March 15, 2000), 
is adopted as a final rule and part 668 is revised to read as follows:

Subchapter L--Army Contracting

PART 668--CONTRACTOR MANHOUR REPORTING REQUIREMENT

Sec.
668.1   General.
668.2   Contract reporting requirements.

    Authority: Sec 343 of Pub.L. 106-65, 113 Stat. 569 (10 U.S.C. 
129a and 2461(g)).


Sec. 668.1  General.

    (a) Scope. This part sets forth reporting requirements, and related 
policies and procedures, for labor work year equivalents performed by 
contractors (also called Contractor Man-year Equivalents (CMEs)) in 
support of the Army, pursuant to 10 U.S.C. 129a, 10 U.S.C. 2461(g), and 
Section 343 of Public Law 106-65.
    (b) Purpose and Background. (1) Purpose. The purpose of this data 
collection and related contractor reporting is to respond to 
Congressional requests, and to internal Army manpower and force 
management planning information requirements, to quantify the extent of 
CMEs used to support Army operations and management broadly under the 
Federal Supply Class and Service Codes for ``Research and Development'' 
and ``Other Services and Construction.'' The data collected will 
provide unprecedented Departmental level visibility of the missions 
supported and functions performed by contractors in support of major 
Army organizational elements at the tactical level and higher, by 
linking the Federal Supply Class and Service Code data to appropriation 
data and organizational data on an Army-wide basis. This information 
will also provide visibility of contractor manpower capabilities and 
labor costs in support of Army missions and functions.
    (2) Background. The lack of adequate and reliable data on the 
missions supported and functions performed by service contractors, as 
well as the resources expended by the Department on those contractors 
on an Army-wide basis, has resulted in uninformed assumptions and 
decisionmaking in the Planning, Programming and Budgeting System 
process. This, in turn, results in a failure to properly prioritize or 
validate the relative importance of missions performed or supported by 
contractors, as opposed to the very intense prioritization and mission 
validation decisions made with regard to the Department's expenditures 
on the more visible in-house performance of similar functions. This can 
unduly skew the prioritization of in-house resources and manpower. In 
addition, the CME data will provide information needed at HQDA to 
assess whether, and to what extent, contractors may be performing 
functions that the Army senior leadership has determined to be 
inherently Governmental, or commercial functions, which, when 
contracted out beyond a certain level of reliance, increase operational 
risks to overall Army mission capabilities and readiness. When 
evaluating military capabilities in the generating forces and operating 
forces under the Quadrennial Defense Review and Total Army Analysis 
simulations, a critical unit of analysis for assessing military 
capability is the manpower available to perform a function as linked to 
major Army organizational elements. The capabilities provided by 
service contractors consume at least one third of the Department's 
obligation authority; and yet, due to lack of reliable data, senior 
Army planners lack the ability to assess the total manpower 
capabilities within a function and major Army organization to the 
extent that the organization and function may rely heavily on 
contractor support. The data collected under this reporting requirement 
will remedy these defects by compiling and integrating contractor 
manpower and cost data in aggregated functional categories associated 
with the major Army organizational elements, in order to make this 
critical information visible to HQDA planning and programming 
officials.
    (c) Applicability. These reporting requirements apply to all 
Department of the Army agencies, commands, and activities and to 
contracting actions awarded by such activities Army-wide, except as set 
forth in paragraph (c)(3) of this section.
    (1) Policy. These requirements shall be cited and further 
implemented as necessary in the Army Federal Acquisition Regulation 
Supplement, and shall be promulgated to procurement and manpower 
channels Army-wide. Changes to the administrative aspects of this 
section (such as reporting formats, methods of incorporation of the 
requirements into solicitations and contracts, waivers and exemptions), 
may be published in the Army FAR Supplement after coordination with the 
Deputy Assistant Secretary of the Army (Force Management, Manpower and 
Resources). The objective of this reporting requirement is to collect 
as much significant CME data as possible to allow accurate reporting to 
Congress and for Army planning purposes. The reporting should not be 
viewed as an ``all or nothing'' requirement. Even partial reporting, 
e.g., direct labor hours, appropriation data, place of performance, 
Army customer, etc., will be helpful.
    (2) Contracting office responsibilities. Contracting officers shall 
ensure that the reporting requirements set forth herein are included in 
all covered contract actions. Although every effort has been made to 
facilitate reporting and to reduce administrative burden on both 
contractors and contracting offices, there may be situations when a 
contractor is properly exempt in part or cannot comply with the 
requirement (e.g., foreign contractor who has no internet access or 
capability; or is unable to comply without extraordinary costs or 
effort not recoverable in normal overhead). At the discretion of the 
contracting officer, contractor self-exemption may be more liberally 
construed and applied in the case of small foreign contractors not 
reporting as sub-contactors, with contract values generally less than 
$200,000, if they lack internet access or are a non-English speaking 
firm that would have to employ a translator and/or an English speaking 
financial specialist to calculate, collect and report all of the data. 
In such cases, and in those situations where the contracting officer 
failed to timely include this requirement in solicitations and 
contracts, the contracting office is required to report the required 
information, to the best of their ability, by the end of the reporting 
period (end of contract period or end of fiscal year). Army Heads of 
Contracting Activities and their Principal Assistants Responsible for 
Contracting shall ensure that contracting offices found to be 
significantly non-compliant with these requirements, are tasked to 
directly report the required data to the Army website. The secure Army 
website will support surrogate reporting of contract(or) data by 
contracting offices. Classified contract actions are not, per se, 
exempt from reporting (guidance at DoD FAR Supplement 48 CFR 202.670-8 
applies). No classified information will be included in a contracting 
office report.
    (3) Covered actions. The contract reporting requirements specified 
in Sec. 668.2 below shall be included in all Army solicitations issued 
and contract actions awarded (including orders under GSA Schedule 
contracts and contracts awarded by other agencies that allow direct 
ordering by the Army), and all bilateral modifications of existing Army 
contracts, after March 15, 2000, except the following:

[[Page 81361]]

    (i) Contracts valued at $100,000 or below. Indefinite Delivery 
contracts estimated to exceed $100,000 in value shall contain the 
requirement for reporting, for all orders placed in excess of $25,000. 
Orders placed against GSA Schedule contracts or contracts awarded by 
non-Army agencies, shall contain the requirement if the value of the 
order exceeds $100,000.
    (ii) Contracts awarded by an Army contracting office solely as a 
contracting agent in support of non-Army customer(s) and requirements. 
The reporting requirement is limited to contractor labor hour and cost 
data in support of Army customers and requirements. If the organization 
receiving the benefit of the services is an Army organization, then the 
contractor labor hour data is reportable as an Army requirement, even 
though the appropriations funding all or part of the requirement may be 
other than Army appropriations.
    (iii) Contracts for the acquisition of supplies and equipment. The 
reporting requirement applies only to services covered by Federal 
Supply Class or Service codes for ``Research and Development,'' and 
``Other Services and Construction.'' However, when non-incidental 
services are discretely included in a contract for supplies and 
equipment, and can be characterized as ``Research and Development,'' or 
``Other Services and Construction,'' contractors shall be required to 
characterize and report such services under this requirement. (Example: 
Ongoing facility management or maintenance and quality assurance 
services separately priced under the contract.)
    (4) Effective dates for reporting. For covered contracts in effect 
prior to March 15, 2000, including previously exempt contract actions 
(such as those entered into under FAR Part 12 (48 CFR Part 12) 
procedures prior to December 31, 2000), once a contract is modified to 
include this reporting requirement, reporting is required retroactive 
to October 1, 1999, or the start of the contract/order, whichever is 
later.


Sec. 668.2  Contract Reporting Requirements.

    The below requirement will be included in all solicitations and 
contract actions (including orders) as specified in Sec. 668.1:

Reporting of Contractor Manpower Data Elements

    (a) Scope. The following sets forth contractual requirements, 
and related policies and procedures, for reporting of contractor 
labor work year equivalents (also called Contractor Man-year 
Equivalents (CMEs)) in support of the Army, pursuant to 10 U.S.C. 
129a, 10 U.S.C. 2461(g), and Section 343 of Public Law 106-65. 
Reporting shall be accomplished electronically by direct contractor 
submission to a secure Army Web Site: https://contractormanpower.us.army.mil/.
    (b) Purpose. The purpose of this reporting requirement is to 
respond to Congressional requests; significantly improve reports to 
Congress and to internal Army manpower and force management planners 
and decisionmakers; and, to broadly quantify the extent of CMEs used 
to support Army operations and management under the Federal Supply 
Class and Service Codes for ``Research and Development'' and ``Other 
Services and Construction.'' The Army's objective is to collect as 
much significant CME data as possible to allow accurate reporting to 
Congress and for Army planning purposes. The reporting data elements 
should not be viewed as an ``all or nothing'' requirement. Even 
partial reporting, e.g., direct labor hours, appropriation data, 
place of performance, Army customer, etc., will be helpful.
    (c) Applicability. This reporting requirement applies only to 
services covered by Federal Supply Class or Service codes for 
``Research and Development,'' and ``Other Services and 
Construction.'' If the contractor is uncertain of the coding of the 
services performed under this contract/order, or the scope and 
frequency of reporting, guidance may be obtained from the Army Web 
Site Help Desk, other HQDA contacts cited at the Web Site, or from 
the contracting officer. Classified contract actions are not, per 
se, exempt from this requirement. Report submissions shall not 
contain classified information.
    (d) Requirements. The contractor is required to report the 
following contractor manpower information, associated with 
performance of this contract action in support of Army requirements, 
to the Office, Assistant Secretary of the Army (Manpower and Reserve 
Affairs), using the secure Army data collection web-site at https://contractormanpower.us.army.mil/:
    (1) Direct Labor. Direct labor hours and the value of those 
hours;
    (2) Indirect Labor. Composite indirect labor hours associated 
with the reported direct hours, and the value of those indirect 
labor hours plus compensation related costs for direct labor hours 
ordinarily included in the indirect pools; or two distinct, relevant 
annual composite or average indirect labor rates. If used in lieu of 
raw indirect labor hours and the value of those indirect hours, the 
rates may be annualized average estimates for the reporting 
contractor and need not be developed for each reporting period.
    (i) Composite Indirect Rate for Indirect Manhours. If provided, 
the composite indirect labor rate will be used to grossly estimate 
the number of indirect hours associated with services reported in 
each period, when multiplied by the reported direct labor hours.
    (ii) Composite Indirect Rate for Compensation Value. If 
provided, a different composite indirect labor rate will be used to 
grossly estimate the value of compensation related charges not 
included in the value of direct labor charges, when multiplied by 
the reported direct labor value. This rate shall include: salaries 
and wages for indirect labor hours; directors' fees; bonuses 
(including stock); incentive awards; employee stock options; stock 
appreciation rights; employee insurance, fringe benefits (e.g., 
vacation, sick leave, holidays, military leave, supplemental 
unemployment benefit plans); contributions to pension plans (defined 
benefit, defined contribution); other post-retirement benefits, 
annuity, and employee incentive compensation and deferred 
compensation plans; early retirement plans; off-site pay; incentive 
pay; hardship pay; severance pay; and COLA differential;
    (iii) Actual Estimated Indirect Labor Hours and Value(s). 
Contractors may choose to report estimated total hours and dollars 
for indirect labor (related to the reported direct labor) and 
compensation charges not reported as direct labor charges (as 
opposed to providing average composite rates). Either method chosen 
should be consistently reported.
    (e) Reporting Exemption(s). In the rare event the contractor is 
unable to comply with these reporting requirements without creating 
a whole new cost allocation system or system of records (such as a 
payroll accounting system), or due to similar insurmountable 
practical or economic reasons, the contractor may claim an exemption 
to at least a portion of the reporting requirement by certifying in 
writing to the contracting officer the clear underlying reason(s) 
for exemption from the specified report data elements, and further 
certifying that they do not otherwise have to provide the exempted 
information, in any form, to the United States Government. This 
certification is subject to audit and potential legal action under 
Title 18, United States Code. The contractor may not claim an 
exemption on the sole basis that they are a foreign contractor; that 
services are provided pursuant to a firm fixed price or time and 
materials contract or similar instrument; or on the basis that they 
have sub-contracted their payroll system, or have too many 
subcontractors. If the contracting officer, by written notice, 
determines that the ``self-exemption'' is lacking in basis or 
credibility, the contractor shall comply with the subsequent 
direction of the contracting officer, whose decision is final in 
this matter.
    (f) Uses and Safeguarding of Information. The information 
submitted will be treated as contractor proprietary information when 
associated with a contractor name or contract number. The Assistant 
Secretary of the Army (Manpower and Reserve Affairs) will oversee 
the aggregation of this information and will exclude contract number 
and contractor name from any use of this data (except as necessary 
for internal Army verification and validation measures). The 
planning factor(s) derived from this data by ASA (M&RA) and its 
contract support (if any) will be used solely for Army manpower 
planning purposes and will not be applied to any specific 
acquisition(s). Detailed data by contract number and name will not 
be released to any Governmental entity other than ASA (M&RA), except 
for purposes of assessing compliance with the reporting

[[Page 81362]]

requirement itself, and will only be used for the stated purposes 
(reporting and planning). Any potentially sensitive data released 
within the Army or to its contractor will be clearly marked as 
Contractor Proprietary. Non-sensitive roll-up information may 
eventually be published for public inspection after such data has 
been validated as deemed appropriate.
    (g) Sub-Contractor(s). The contractor shall ensure that all 
reportable sub-contractor data is timely reported to the data 
collection web site (citing this contract/order number). At the 
discretion of the prime contractor, this reporting may be done 
directly by subcontractors to the data collection site; or by the 
prime contractor after consolidating and rationalizing all 
significant data from their sub-contractors.
    (h) Report schedule. The contractor is required to report the 
required information to the Office of the Assistant Secretary of the 
Army (Manpower and Reserve Affairs) data collection web site 
generally contemporaneous with submission of a request for payment 
(for example, voucher, invoice, or request for progress payment), 
but not less frequently than quarterly, retroactive to October 1, 
1999, or the start of the contract/order, whichever is later. 
Deviation from this schedule requires approval of the contracting 
officer.
    (i) Reporting format. The information required should be 
reported electronically to the M&RA data collection point, at 
https://contractormanpower.us.army.mil. This web site identifies and 
explains all the mandatory data elements and format required to 
assure reliable and consistent collection of the data required by 
law, and includes, but is not limited to, identification of the 
information collected pursuant to Sec. 668.2(d)(1) and (2) as 
related to:
    (1) Reporting to Congress or Army Leadership. Data elements 
required for reports to Congress and Army manpower planning, such 
as: the applicable federal supply class or service code, 
appropriation data (and estimated value for each appropriation where 
more than one appropriation funds a contract), major Army 
organizational element receiving or reviewing the work, and place of 
performance/theater of operation where contractor performs the work.
    (2) Data Credibility. Data elements required for purposes of 
assuring credible and consistent reporting and general compliance 
with the reporting requirement, such as: beginning and ending dates 
for reporting period; contract number (including task or delivery 
order number); name and address of contracting office; name, address 
and point of contact for contractor; and total estimated value of 
contract.
    (j) Reporting Flexibility. Contractors are encouraged to 
communicate with the help desk identified at the data collection web 
site to resolve reporting difficulties. The web site reporting pages 
include a ``Remarks'' field to accommodate non-standard data entries 
if needed to facilitate simplified reporting and to minimize 
reporting burdens arising out of unique circumstances. For example, 
contractors may use the remarks field to identify multiple delivery 
orders associated with a single data submission or record, so long 
as the contract number, federal supply or service code, major Army 
organizational element receiving or reviewing the work, and 
contracting office are the same for the reporting period for that 
set of delivery orders, rather than entering a separate data 
submission or record for each individual delivery order. Subcontract 
data may also be consolidated in a single report for a reporting 
period. Other changes to facilitate reporting may be authorized by 
the contracting officer or the Help Desk (under Army policy 
direction and oversight).

Robert Bartholomew III,
Deputy Assistant Secretary (Force Management, Manpower and Resources).

Edward G. Elgart,
Acting Deputy Assistant Secretary of the Army (Procurement).
[FR Doc. 00-32628 Filed 12-22-00; 8:45 am]
BILLING CODE 3710-08-U