[Federal Register Volume 67, Number 207 (Friday, October 25, 2002)]
[Rules and Regulations]
[Pages 65509-65512]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-27109]


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DEPARTMENT OF DEFENSE

48 CFR Parts 208, 239, 251, and 252

[DFARS Case 2000-D023]


Defense Federal Acquisition Regulation Supplement; Enterprise 
Software Agreements

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

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SUMMARY: DoD has issued a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to add policy pertaining to 
the use of enterprise software agreements for the acquisition of 
commercial software and software maintenance.

EFFECTIVE DATE: October 25, 2002.

FOR FURTHER INFORMATION CONTACT: Ms. Susan Schneider, Defense 
Acquisition Regulations Council, OUSD (AT&L) DP (DAR), IMD 3C132, 3062 
Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-0326; 
facsimile

[[Page 65510]]

(703) 602-0350. Please cite DFARS Case 2000-D023.

SUPPLEMENTARY INFORMATION:

A. Background

    This rule adds a new DFARS Subpart 208.74 to address the use of 
enterprise software agreements for the acquisition of commercial 
software and software maintenance in accordance with the DoD Enterprise 
Software Initiative. This initiative promotes the use of enterprise 
software agreements with contractors that offer DoD favorable terms and 
pricing for commercial software and related services. Associated DFARS 
changes are made in Parts 208, 239, 251, and 252.
    DoD published a proposed rule at 67 FR 4231 on January 29, 2002. 
Five sources submitted comments on the proposed rule. DoD considered 
all comments in the development of the final rule. A discussion of the 
comments is provided below:
    Comment: Due to a lack of central budget control, ``profit 
centers'' cannot bargain as a unit to establish an Enterprise Software 
Agreement (ESA), and vendors must contract with each organization 
individually. DoD Response: The lack of a centralized approach to DoD 
software budgeting is a prime reason for the existence of the 
Enterprise Software Initiative (ESI). By consolidating established 
department and agency requirements for commercial software, ESI gains 
pricing and terms concessions not normally available to the individual 
or the small command buyer.
    Comment: New vendors may be at a competitive disadvantage. Lack of 
objective performance criteria will deny new vendors the opportunity to 
compete on merit versus familiarity. DoD Response: ESI does not 
eliminate the need for acquisition planning and market research. Use of 
ESAs is not mandatory, but must be considered only when requirements 
for products available under the agreements have already been 
established.
    Comment: The term ``most favored customer'' at 208.7403(e)(2) is 
vague and should be eliminated from the rule. DoD Response: The intent 
is to give the software product manager (SPM) the opportunity to adjust 
the ESA to provide the best value to the customer. The language at 
208.7403(e)(2) has been revised to more clearly convey this intent.
    Comment: The rule will reduce the number of vendors able to market 
and sell commercial software products to DoD. DoD Response: Authorized 
commercial resellers with General Services Administration (GSA) Federal 
Supply Schedules are eligible to carry ESAs for commercial software 
products. In this sense, the software manufacturer determines the 
universe of potentially eligible resellers, and the resellers 
themselves decide whether or not to apply for and maintain a GSA 
Schedule, and whether or not to comply with the terms and conditions of 
a DoD ESA.
    Comment: The ``nonstandard'' methods of the rule may encourage 
software manufacturers to keep products off ESAs. DoD Response: The use 
of blanket purchase agreements against GSA Schedules is a standard DoD 
acquisition practice. There is no evidence to indicate that this rule 
will discourage manufacturers from seeking ESAs or from placing 
commercial products on ESAs.
    Comment: Industrial funding fees will cancel potential savings of 
volume purchases. DoD Response: No additional resources are required to 
manage ESAs. DoD ESAs result in lower overhead for contract maintenance 
and result in net savings or cost avoidance for the Government.
    Comment: Use of BPAs against GSA Schedules for the acquisition of 
software implies incorporation of the clause at FAR 52.227-14, Rights 
of Data. This clause may conflict with DoD policy on intellectual 
property rights and uses. The rule should follow DoD, not GSA, policy. 
DoD Response: Use of BPAs against GSA Schedules is a standard 
acquisition practice in DoD and is in accordance with FAR subpart 8.4 
and DFARS subpart 208.4.
    Comment: Customized terms and conditions must often be negotiated. 
The 90-day process for allowing the SPM to negotiate on behalf of the 
purchaser adds needless delay and cost. DoD Response: Many ESAs contain 
special provisions for pricing and other terms and conditions. Should 
those provisions not be sufficient, the SPM is given up to 90 days to 
renegotiate the ESA. Historically, the turn-around time has been much 
quicker than 90 days. However, purchasers have the option to pursue a 
waiver to the use of the ESA if the SPM cannot negotiate satisfactory 
terms and conditions within the purchaser's required timeframe.
    Comment: The use of the term ``commercial software or related 
services such as software maintenance'' is overly broad. The phrase 
``related services'' should be deleted. DoD Response: The phrase 
``related services'' does address a broad range of services. It is the 
intent of ESI to address software asset management across the spectrum 
and throughout the life cycle of enterprise software management, rather 
than limit its scope to software acquisition and software maintenance.
    Comment: The term ``software maintenance'' should be defined. DoD 
Response: A definition of ``software maintenance'' has been added at 
208.7401.
    Comment: Read literally, the rule could require DoD customers to 
acquire hardware without preloaded software. DoD Response: The rule is 
not intended to preclude the acquisition of preloaded software with 
computers from the original equipment manufacturer. The language at 
208.7400(a) has been revised to clarify the intent.
    Comment: The rule appears to support the development of software 
acquisition processes without the benefit of public comment. This may 
result in processes inconsistent with Federal Acquisition Streamlining 
Act requirements pertaining to the acquisition of commercial items. DoD 
Response: DoD policy is to make maximum practical use of GSA Schedules, 
and ESI has established BPAs against GSA Schedules for DoD use. 
Software asset management encompasses all aspects of life-cycle 
management. Should any elements of implementing the software asset 
management process require public comment, those elements will be 
published accordingly as has been done for this DFARS rule.
    Comment: Software manufacturers and resellers cannot be expected to 
offer the favorable terms and discounts sought through ESI without 
DoD's commitment to purchase the quantities that result in the lowest 
prices. There is no evidence that DoD is willing or is able to make 
such a commitment. DoD Response: Many manufacturers and resellers have 
offered favorable terms and conditions without a commitment to specific 
quantities, for a chance at increased market share or additional DoD 
exposure.
    Comment: The acquisition procedures in 208.7403 should be revised 
for clarity and for consistency with DoD Chief Information Officer 
Guidance and Policy Memorandum No. 12-8430 dated July 26, 2000, 
pertaining to requirements for use of ESAs, rationale for use of 
alternate sources, and reimbursement of funds to the SPM. DoD Response: 
This section has been revised to clarify procedures for determining 
when use of an ESA is appropriate, and to clarify documentation 
requirements when use of an alternate source is deemed necessary. 
However, SPM reimbursement of funds is a procedure handled outside of 
the contracting arena, and, therefore, is not considered

[[Page 65511]]

appropriate for inclusion in this DFARS rule.
    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

    DoD certifies that this final rule will not 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 most enterprise software agreements are blanket purchase 
agreements established under Federal Supply Schedules. Establishment of 
such agreements is already permitted by section 8.404(b)(4) of the 
Federal Acquisition Regulation.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the rule does 
not impose any information collection requirements that require the 
approval of the Office of Management and Budget under 44 U.S.C. 3501, 
et seq.

List of Subjects in 48 CFR Parts 208, 239, 251, and 252

    Government procurement.

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


    Therefore, 48 CFR Parts 208, 239, 251, and 252 are amended as 
follows:
    1. The authority citation for 48 CFR Parts 208, 239, 251, and 252 
continues to read as follows:

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

PART 208--REQUIRED SOURCES OF SUPPLIES AND SERVICES

    2. Section 208.001 is amended by revising paragraph (a)(1)(v) to 
read as follows:


208.001  Priorities for use of Government supply sources.

    (a)(1)(v) See Subpart 208.70, Coordinated Acquisition, and Subpart 
208.74, Enterprise Software Agreements.
* * * * *

    3. Subpart 208.74 is added to read as follows:

Subpart 208.74--Enterprise Software Agreements

Sec.
208.7400 Scope of subpart.
208.7401 Definitions.
208.7402 General.
208.7403 Acquisition procedures.


208.7400  Scope of subpart.

    This subpart prescribes policy and procedures for acquisition of 
commercial software and software maintenance, including software and 
software maintenance that is acquired--
    (a) As part of a system or system upgrade, where practicable;
    (b) Under a service contract;
    (c) Under a contract or agreement administered by another agency 
(e.g., under an interagency agreement);
    (d) Under a Federal Supply Schedule contract or blanket purchase 
agreement established in accordance with FAR 8.404(b)(4); or
    (e) By a contractor that is authorized to order From a Government 
supply source pursuant to FAR 51.101.


208.7401  Definitions.

    As used in this subpart--
    Enterprise software agreement means an agreement or a contract that 
is used to acquire designated commercial software or related services 
such as software maintenance.
    Enterprise Software Initiative means an initiative led by the DoD 
Chief Information Officer to develop processes for DoD-wide software 
asset management.
    Golden Disk means a purchased license or entitlement to distribute 
an unlimited or bulk number of copies of software throughout DoD.
    Software maintenance means services normally provided by a software 
company as standard services at established catalog or market prices, 
e.g., the right to receive and use upgraded versions of software, 
updates, and revisions.
    Software product manager means the Government official who manages 
an enterprise software agreement.


208.7402  General.

    Departments and agencies shall fulfill requirements for commercial 
software and related services, such as software maintenance, in 
accordance with the DoD Enterprise Software Initiative (ESI) (see Web 
site at http://www.don-imit.navy.mil/esi). ESI promotes the use of 
enterprise software agreements (ESAs) with contractors that allow DoD 
to obtain favorable terms and pricing for commercial software and 
related services. ESI does not dictate the products or services to be 
acquired.


208.7403  Acquisition procedures.

    (a) After requirements are determined, the requiring official shall 
review the information at the ESI website to determine if the required 
commercial software or related services are available from DoD 
inventory (e.g., Golden Disks and DoD-wide software maintenance 
agreements). If the software or services are available, the requiring 
official shall fulfill the requirement from the DoD inventory.
    (b) If the required commercial software or related services are not 
in the DoD inventory, and not on an ESA, the contracting officer or 
requiring official may fulfill the requirement by other means. Existing 
ESAs are listed on the ESI website.
    (c) If the commercial software or related services are on an ESA, 
the contracting officer or requiring official shall review the terms 
and conditions and prices in accordance with otherwise applicable 
source selection requirements.
    (d) If an ESA's terms and conditions and prices represent the best 
value to the Government, the contracting officer or requiring official 
shall fulfill the requirement for software or services through the ESA.
    (e) If existing ESAs do not represent the best value to the 
Government, the software product manager (SPM) shall be given an 
opportunity to provide the same or a better value to the Government 
under the ESAs before the contracting officer or requiring official may 
continue with alternate acquisition methods.
    (1) The contracting officer or requiring official shall notify the 
SPM of specific concerns about existing ESA terms and conditions or 
prices through the ESI webpage.
    (2) The SPM shall consider adjusting, within the scope of the ESA, 
terms and conditions or prices to provide the best value to the 
customer.
    (i) Within 3 working days, the SPM shall--
    (A) Update the ESA;
    (B) Provide an estimated date by which the update will be 
accomplished; or
    (C) Inform the contracting officer or requiring official that no 
change will be made to the ESA.
    (ii) If the SPM informs the contracting officer or requiring 
official that no change will be made to the ESA terms and conditions or 
prices, the contracting officer or requiring official may fulfill the 
requirement by other means.
    (iii) If the SPM does not respond within 3 working days or does not 
plan to adjust the ESA within 90 days, the contracting officer or 
requiring official may fulfill the requirement by other means.
    (3) A management official designated by the department or agency 
may waive the requirement to obtain commercial software or related 
services through an ESA after the steps in paragraphs (e)(1) and 
(e)(2)(i) of this section are complete. The rationale for use of an 
alternate source shall be included in the waiver

[[Page 65512]]

request and shall be provided to the SPM.

PART 239--ACQUISITION OF INFORMATION TECHNOLOGY

    4. Subpart 239.1 is added to read as follows:

Subpart 239.1--General

Sec.
239.101 Policy.


239.101  Policy.

    See Subpart 208.74 when acquiring commercial software or software 
maintenance.

PART 251--USE OF GOVERNMENT SOURCES BY CONTRACTORS

    5. Section 251.102 is amended as follows:
    a. By revising paragraph (f);
    b. In Table 51-1, by revising paragraph 1.;
    c. In Table 51-1, in paragraph 2.b.(1) in the last sentence, and in 
paragraph 2.b.(2) in the last sentence, by removing ``telefax'' and 
adding in its place ``facsimile'; and
    d. In Table 51-1, by adding paragraph 2.c. to read as follows:


251.102  Authorization to use Government supply sources.

* * * * *
    (f) The authorizing agency is also responsible for promptly 
considering requests of the DoD supply source for authority to refuse 
to honor requisitions from a contractor that is indebted to DoD and has 
failed to pay proper invoices in a timely manner.

Table 51-1, Authorization To Purchase From Government Supply Sources

* * * * *
    1. You are hereby authorized to use Government sources in 
performing Contract No. -------- for ---------------- [insert 
applicable military department or defense agency], as follows: --------
-------- [Insert applicable purchasing authority given to the 
contractor.]
    2. * * *
    c. Enterprise Software Initiative. Place orders in accordance with 
the terms and conditions of the attached Enterprise Software 
Agreement(s), or instructions for obtaining commercial software or 
software maintenance from Enterprise Software Initiative inventories, 
and this authorization. Attach a copy of this authorization to the 
order (unless a copy was previously furnished to the Enterprise 
Software Agreement contractor).
    Insert the following statement in the order:
    This order is placed under written authorization from ---------- 
dated (*----------). In the event of any inconsistency between the 
terms and conditions of this order, and those of the Enterprise 
Software Agreement, the latter will govern.
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    6. Section 252.251-7000 is amended as follows:
    a. By revising the clause date and paragraph (a);
    b. By removing paragraph (b) and redesignating paragraphs (c) 
through (f) as paragraphs (b) through (e); and
    c. In newly designated paragraph (c)(4), in the last sentence, by 
removing ``Such'' and adding in its place ``The''. The revised text 
reads as follows:


252.251-7000  Ordering From Government Supply Sources.

* * * * *

Ordering from Government Supply Sources (OCT 2002)

    (a) When placing orders under Federal Supply Schedules, Personal 
Property Rehabilitation Price Schedules, or Enterprise Software 
Agreements, the Contractor shall follow the terms of the applicable 
schedule or agreement and authorization. Include in each order:
    (1) A copy of the authorization (unless a copy was previously 
furnished to the Federal Supply Schedule, Personal Property 
Rehabilitation Price Schedule, or Enterprise Software Agreement 
contractor).
    (2) The following statement: Any price reductions negotiated as 
part of an Enterprise Software Agreement issued under a Federal 
Supply Schedule contract shall control. In the event of any other 
inconsistencies between an Enterprise Software Agreement, 
established as a Federal Supply Schedule blanket purchase agreement, 
and the Federal Supply Schedule contract, the latter shall govern.
    (3) The completed address(es) to which the Contractor's mail, 
freight, and billing documents are to be directed.
* * * * *
[FR Doc. 02-27109 Filed 10-24-02; 8:45 am]
BILLING CODE 5001-08-P