[Federal Register Volume 72, Number 177 (Thursday, September 13, 2007)]
[Rules and Regulations]
[Pages 52293-52299]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-18039]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 211, 245, and 252

RIN 0750-AF24


Defense Federal Acquisition Regulation Supplement; Reports of 
Government Property (DFARS Case 2005-D015)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Interim rule with request for comments.

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SUMMARY: DoD has issued an interim rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to revise requirements for 
reporting of Government property in the possession of DoD contractors. 
The rule replaces existing DD Form 1662 reporting requirements with 
requirements for DoD contractors to electronically submit, to the Item 
Unique Identification (IUID) Registry, the IUID data applicable to the 
Government property in the contractor's possession. This will result in 
more efficient and accurate reporting of Government property in the 
possession of contractors.

DATES: Effective date: September 13, 2007.
    Comment date: Comments on the interim rule should be submitted to 
the address shown below on or before November 13, 2007, to be 
considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2005-D015, 
using any of the following methods:
    [cir] Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    [cir] E-mail: [email protected]. Include DFARS Case 2005-D015 in the 
subject line of the message.
    [cir] Fax: (703) 602-7887.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Mr. 
Michael Benavides, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense 
Pentagon, Washington, DC 20301-3062.
    [cir] Hand Delivery/Courier: Defense Acquisition Regulations 
System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA 
22202-3402.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided.

[[Page 52294]]


FOR FURTHER INFORMATION CONTACT: Mr. Michael Benavides, (703) 602-1302.

SUPPLEMENTARY INFORMATION:

A. Background

    The clause at DFARS 252.245-7001 requires contractors to submit an 
annual report for all DoD property for which the contractor is 
accountable. The report must be prepared in accordance with the 
requirements of DD Form 1662 or an approved substitute. DD Form 1662 
provides for reporting of only summary level totals for each of the 
various types of Government property (e.g., special test equipment, 
industrial plant equipment), and does not consider capitalization 
requirements or useful lives, nor can it be used for existence, 
completeness, or valuation purposes. The limited data produced through 
use of DD Form 1662 is considered to be insufficient for complete 
visibility and control of DoD property.
    This interim rule replaces DD Form 1662 reporting with requirements 
for contractors to electronically submit, to the Item Unique 
Identification (IUID) Registry, the IUID data for DoD tangible personal 
property in the possession of the contractor. Policy is added at DFARS 
211.274-4, with a corresponding contract clause at 252.211-7007, to 
specify IUID requirements for reporting of Government property. This 
data will be used to populate DoD information systems for more 
effective and efficient accountability and control of DoD property.
    In accordance with the convention at FAR 1.108(d), the IUID 
reporting requirements will apply to contracts resulting from 
solicitations issued on or after the effective date of this interim 
rule. However, DoD contractors with existing contracts containing DD 
Form 1662 reporting requirements are encouraged to request contract 
modifications to designate use of the procedures specified in this 
interim rule as the approved substitute for DD Form 1662, as permitted 
by the clause at DFARS 252.245-7001. The rule does not apply to: 
Property under any statutory leasing authority; property to which the 
Government has acquired a lien or title solely because of partial, 
advance, progress, or performance-based payments; software and 
intellectual property; or real property.
    DoD published a proposed rule at 71 FR 14151 on March 21, 2006. 
Seventeen sources submitted comments on the proposed rule. As a result 
of these comments, the interim rule contains additional changes that: 
Clarify the definition of ``equipment'' and the types of property that 
must be reported in the IUID Registry; exclude items under $5,000 from 
reporting unless otherwise specified in the contract; and provide more 
specific procedures regarding data submission. In addition, the clause 
prescription has been moved to DFARS Part 211, to permit collocation of 
item identification and valuation requirements applicable to Government 
property and delivered items. A discussion of the public comments is 
provided below.
    1. Comment: Five respondents requested that issuance of this rule 
be postponed until publication of the final rule amending the 
Government property requirements of FAR Part 45 (FAR Case 2004-0025), 
to ensure the definitions in both rules are consistent (e.g., 
equipment, personal property, material).
    DoD Response: The final rule revising FAR Part 45 was published on 
May 15, 2007 (72 FR 27364). The definitions in this DFARS rule have 
been revised, where appropriate, to align with the FAR Part 45 
definitions.
    2. Comment: One respondent requested definition of ``reasonable 
inventory adjustments'' as the term is used in 252.245-7001(c)(2).
    DoD Response: This interim rule does not use the term ``reasonable 
inventory adjustments.'' Therefore, the term is not defined in the 
rule. However, ``inventory adjustments'' are changes made to the 
official accountability record when physical counts and official 
records do not agree. All such changes require specific approval and 
documentation to support the adjustment, normally to include results of 
reconciliation efforts to determine and resolve the cause of such 
disagreement.
    3. Comment: One respondent requested that the rule include 
definitions of ``real property'' and ``reportable property'' with 
regard to property in the possession of the contractor (PIPC).
    DoD Response: PIPC does not include real property, and real 
property is excluded from IUID reporting requirements. PIPC includes 
only tangible ``personal'' property in the custody of the contractor. 
Further, the level of reporting varies for different classes of PIPC 
and, therefore, a single definition for ``reportable property'' might 
be misleading. PIPC is meant to distinguish tangible personal property 
in the custody of contractors from all Government property that is 
owned or leased by the Government.
    4. Comment: One respondent commented that, under various FAR 52.245 
clauses, contractors are the custodians of Government property in their 
possession and fiduciary owners of the associated property records, and 
that requiring contractors to transmit detailed back-up data on the 
Government property in their possession changes this relationship and 
imposes new financial reporting requirements on organizational groups 
better suited to maintaining the accountability of property.
    DoD Response: The Government-furnished property IUID requirements 
do not alter the underlying principle of the FAR clauses, that the 
contractor remains the custodian or ``steward'' of the Government's 
property. Also, the IUID reporting requirements do not impose any 
financial reporting or accounting activities of Government assets on 
contractors. Fiduciary responsibility is always with the Government.
    5. Comment: Three respondents expressed concern that the rule 
places a financial burden on both Government agencies and contractors 
without providing a plan for funding to agencies to implement the rule, 
including implementation costs for Government property already in the 
possession of contractors. In addition, it was stated that the 
provisions do not address the engineering and technical aspects of 
marking the items, yet there may be substantial inventories of items at 
certain contractors' facilities, and changing the technical data for 
all the items may take more time and money.
    DoD Response: The provisions of this rule are not retroactive and, 
therefore, will not be applicable to property already in the possession 
of contractors. Existing contracts containing DD Form 1662 reporting 
requirements are not subject to the requirements of this rule unless 
the contractor voluntarily elects to transition to IUID reporting 
requirements.
    6. Comment: Two respondents recommended that the prescription for 
the clause acknowledge that contracts in place prior to this clause 
revision are not subject to the reporting change.
    DoD Response: In accordance with the convention at FAR 1.108(d), 
FAR and DFARS changes apply to solicitations issued on or after the 
effective date of the change unless otherwise specified. Therefore, no 
additional language regarding applicability is needed for this rule to 
address existing contracts.
    7. Comment: One respondent commented that the rule has some serious 
deficiencies in content and clarity that need to be resolved to allow 
DoD to achieve a new level of fiduciary accounting accuracy, and 
recommended postponing the issuance of this rule until the FAR Part 45 
rewrite is issued,

[[Page 52295]]

as this rule is a subset of the larger and more comprehensive Part 45 
rewrite.
    DoD Response: DoD cannot achieve greater fiscal accountability 
unless it implements a solution that captures additional data for 
Government property in the possession of contractors. As stated in the 
DoD response to Comment 1 above, the FAR Part 45 final rule was 
published on May 15, 2007 (72 FR 27364).
    8. Comment: Several respondents requested that a dollar threshold 
be established for reporting that does not require recording of low-
value items in the IUID Registry. In addition, it was suggested that 
contractor-acquired property be excluded from the reporting requirement 
to be consistent with various DoD instructions and guidance previously 
provided to contractors.
    DoD Response: DoD has revised the rule to exclude items valued 
below $5,000 from the IUID Registry, unless otherwise specified in the 
contract clause at 252.211-7007. The rule also clarifies that 
contractor-acquired property is excluded from reporting requirements.
    9. Comment: One respondent requested clarification as to whether DD 
Form 1662 reporting will be required for Government property that has 
not been marked.
    DoD Response: DD Form 1662 reporting will not be required. The 
reporting (annually via DD Form 1662 or otherwise) of non-UID items and 
material will no longer be required, unless otherwise specified in the 
contract.
    10. Comment: One respondent requested that the reporting 
requirement be kept the same as the data currently required by the 
clause at DFARS 252.211-7003, Item Identification and Valuation, to 
ease the administration for contractors, since that data is the same as 
the data that is already required for deliverables and other financial 
reporting.
    DoD Response: The master data is the same. However, many of the 
additional data elements are optional. For example, mark data is an 
optional data element that was added to accommodate virtual unique item 
identifiers (UIIs) if the compliant 2D data matrix is not permanently 
marked with the UII data on the item.
    11. Comment: Three respondents requested that the requirement to 
update PIPC records in the IUID Registry when PIPC is ``consumed or 
expended'' be deleted, with the rationale being that ``consumed'' 
material is not part of PIPC. The comments further suggested that 
Government-furnished material would not be uniquely identified.
    DoD Response: As items with a UII go through the excess process, 
the IUID Registry must be updated to record the disposition. These 
items will include equipment, as well as DoD serially managed, 
controlled, or mission essential items, whether equipment or material.
    12. Comment: One respondent requested clarification as to whether 
the Government or the contractor is responsible for marking Government 
property furnished under new contracts.
    DoD Response: The contractor is responsible for marking any 
unmarked Government property furnished under a contract. Marking 
unmarked items is included in the requirement to provide IUID data 
electronically into the IUID Registry, and must be done prior to the 
items leaving the contractor's stewardship, possession, or control.
    13. Comment: One respondent requested that the requirement to 
report PIPC that has not been marked by the Government be waived, 
because it will be burdensome for contractors to obtain the information 
from the requirements office that is needed to register the item, e.g., 
acquisition cost, contract under which the item was manufactured, 
purchase date. Further, if the property is a depot rebuilt item, the 
respondent indicated there may not be a way to determine the original 
manufacturer, acquisition cost, or contract under which the item was 
originally delivered to the Government.
    DoD Response: The required data to be reported for the items that 
will require IUID is not significantly different from the detailed data 
currently maintained in the contractor's stewardship accountability 
records. There are several optional data fields. For example, the 
manufacturer and original acquisition contract information for a depot 
rebuilt item is requested, if known, but it is not mandatory.
    14. Comment: One respondent stated that the rule should address who 
is responsible for researching and correcting errors in the IUID 
Registry, for errors made by a transferring contractor.
    DoD Response: The transfer of property from one accountable 
contractor to another is a transaction that is typically initiated by 
the program office directing the shipment of the property and validated 
by the losing and gaining contractors. If the data in the IUID Registry 
is not consistent with the contract for the accountable contractor of 
record, an error will be generated and the record cannot be registered 
until the discrepancy is corrected. The initial responsibility for 
correcting errors is with the submitter of the data. It should also be 
noted that contractors are still required to maintain stewardship 
accountability records and implement the proper controls for Government 
property in their custody, and they are still subject to audits and 
inspections.
    15. Comment: One respondent asked whether UIIs that include 
contractor-unique Commercial and Government Entity (CAGE) codes or Data 
Universal Numbering System (DUNS) numbers should be revised when the 
property is transferred to another contractor.
    DoD Response: UIIs with contractor-unique CAGE codes or DUNS 
numbers are not revised when the property is transferred to another 
contractor. The contractor that originally assigns the UII guarantees 
its uniqueness, and the UII for an item, once assigned, is never 
changed.
    16. Comment: One respondent requested that the requirement to 
update PIPC records in the IUID Registry for PIPC ``delivered or 
shipped from a contractor's plant'' be revised to PIPC ``physically 
delivered (shipped from the contractor's plant),'' to eliminate non-
value marking of ship-in-place items.
    DoD Response: While contractor-acquired property is not recorded in 
the IUID Registry, contractor-acquired property that transitions to a 
follow-on contract becomes Government-furnished property under the 
subsequent contract and, therefore, requires that a UII be assigned and 
recorded in the IUID Registry. This may include ship-in-place items.
    17. Comment: One respondent noted that the title of the guidebook 
and the related link referenced in the rule need to be updated.
    DoD Response: DoD has included this change in the interim rule.
    18. Comment: Two respondents requested that the IUID data 
submission requirements be included in the contract clause, instead of 
referring to a guide for the data submission requirements, as the 
Government could change the guide without requesting public comment.
    DoD Response: DoD has revised the contract clause as recommended, 
to include additional IUID data submission requirements. The guidebook 
link is included in the clause as a reference to the procedures for 
providing the IUID data electronically into the IUID Registry. Any 
changes to the IUID data submission requirements in the clause will be 
vetted through the normal public comment process.
    19. Comment: One respondent stated that requiring contractors to 
update the

[[Page 52296]]

registry to reconcile contractor and Government records was a violation 
of the ``one record database'' concept.
    DoD Response: The IUID Registry will be used for reporting of PIPC, 
and replaces the annual reporting requirement only. It does not replace 
the contractor's stewardship accountability recordkeeping requirements.
    20. Comment: Two respondents disagreed with the statement in the 
preamble that the requirements of the rule are not expected to 
significantly change the burden hours approved by the Office of 
Management and Budget (OMB), indicating that the administrative burden 
and paperwork required to meet the requirements of the rule will 
greatly expand the burden hours previously approved by OMB. One 
respondent further requested that only one yearly reconciliation be 
required, to limit the burden on contractors.
    DoD Response: Under this rule, contractors are only required to 
report a portion of the property presently reported on DD Form 1662. 
For example, contractors will not report low-value items (under $5,000) 
unless otherwise specified in the contract. In addition, contractors 
will not report contractor-acquired property. The data that will be 
reported is not significantly different from the detailed data 
currently maintained in the contractor's stewardship accountability 
records. Like the contractor's stewardship accountability records, 
updates are only required when there are significant changes or updates 
as defined in the rule. If a contractor updates the IUID Registry on a 
transaction basis, the contractor will not need to again update the 
IUID Registry semi-annually. If the contractor does not update the IUID 
Registry on a transaction basis, semi-annual updates will be required 
only to synchronize the contractor's data with the IUID Registry. 
Annual summary reporting is no longer required. The decrease in scope 
and size, from an annual roll-up of 100 percent of the Government 
property in a contractor's custody, to maintenance of only the portion 
of PIPC requiring IUID more than offsets the burden hours.
    21. Comment: One respondent requested elimination of the 
requirement for contractors to maintain real property records in the 
owning military department's real property inventory system, and that 
the owning agency maintain the records, because contractors are 
normally granted ``use rights'' and the Government retains 
accountability.
    DoD Response: The requirement for contractors to maintain real 
property records in the owning military department's real property 
inventory system has been excluded from the interim rule.
    22. Comment: One respondent requested clarification as to whether 
the prime contractor or the subcontractor is responsible for marking 
and registering the UII and item level master data for PIPC, if the 
PIPC is received without an existing UII.
    DoD Response: The prime contractor is responsible for ensuring that 
the requirement is met for all DoD property in the custody of its 
subcontractors. Registration of items in the IUID Registry should also 
be controlled by the prime contractor, whose contract is the 
accountable contract on record in the IUID Registry for PIPC. Prime 
contractors also have the clause at DFARS 252.211-7003, Item 
Identification and Valuation, in the contract and are required to flow 
the IUID requirements down to their subcontractors. This may be done by 
including the clause at DFARS 252.211-7003 in all subcontracts, so that 
items received from suppliers meet the requirement, or by establishing 
alternative marking agreements with subcontractors. When registering an 
embedded item, a parent item must be registered prior to registering 
any embedded components, subassemblies, or parts within that parent 
item.
    23. Comment: One respondent requested that the phrase ``furnished 
to the contractor by the Government'' be deleted from paragraphs 
III.A.1 and 3 of the guidebook, because Government-furnished property 
has already been defined, making the terminology redundant.
    DoD Response: The content of the guidebook is beyond the scope of 
this DFARS rule. However, the IUID Program Office agrees the 
terminology is redundant and is revising the guidebook accordingly.
    24. Comment: One respondent recommend that ``unique item identifier 
(UII)'' be defined, since the term is used in the rule.
    DoD Response: The definition of ``UII'' and other key definitions 
from the clause at DFARS 252.211-7003, Item Identification and 
Valuation, have been added to the clause at DFARS 252.211-7007.
    25. Comment: One respondent suggested that the terminology in the 
definition of ``property in the possession of the contractor'' be 
changed to refer to ``organizational property'' instead of ``personal 
property,'' because ``personal property'' is generally understood to 
mean all property other than real property.
    DoD Response: The definition of ``property in the possession of the 
contractor'' is meant to distinguish tangible personal property in the 
custody of contractors from all Government property that is owned or 
leased by the Government. It does not include real property.
    26. Comment: Two respondents requested clarification of the on-line 
guidebook as to whether ``controlled'' or ``public'' access is the 
correct access level for contractors, and whether ``contractor access'' 
is the same as ``controlled access.''
    DoD Response: The content of the guidebook is beyond the scope of 
this DFARS rule. However, there are two levels of access, 
``controlled'' and ``public,'' and the levels are the same for both 
contractor and Government users. Controlled access requires validation 
of authority to access the data, and is limited depending on the role 
assigned. Controlled access is further distributed to access for 
Government roles such as Program Manager or Legacy Submitter and 
Contractor roles. Public access is a limited view that only returns a 
unique item identifier and is available without pre-registration or a 
user id and password. The user guide for the IUID Registry available at 
https://www.bpn.gov/iuid/ provides greater detail regarding access to 
the IUID Registry.
    27. Comment: Two respondents requested clarification as to who pays 
the cost of ``marking'' the items, when the Government provides the UII 
to the contractor but requires the contractor to mark any unmarked 
items, indicating that contractors who do not manufacture items that 
require marking would have to contract to ``mark'' these items.
    DoD Response: If a contractor receives PIPC that has not been 
registered or marked, the contractor is required to assign the UII, 
register the IUID data, and mark the item, or mark the item and update 
the IUID Registry, if the UII has been provided but the item has not 
been marked. The cost for IUID is generally an allowable cost, and 
contractors submitting offers on requirements that include IUID should 
include the costs in accordance with Cost Accounting Standard and FAR 
requirements. In addition, there is a memorandum available on the UID 
Web site at http://www.acq.osd.mil/dpap/UID/policy.htm that discusses 
pricing and accounting for costs associated with IUID.
    28. Comment: One respondent indicated that Paragraphs 12 and 13 of 
the guidebook were repetitive and confusing.

[[Page 52297]]

    DoD Response: The content of the guidebook is beyond the scope of 
this DFARS rule. However, the IUID Program Office is revising the 
format of the guidebook to clarify the referenced requirements. 
Paragraph 12 addresses the requirement for contractors to assign a UII 
to an embedded item that does not have an existing UII, whenever the 
embedded item is removed from its parent while in the contractor's 
custody. Paragraph 13 addresses the requirement to maintain the data in 
the IUID Registry for embedded items that have an existing UII assigned 
prior to it being provided to the contractor as PIPC.
    29. Comment: Two respondents recommended that the rule be revised 
to make the Government, not the contractor, responsible for 
establishing the UII.
    DoD Response: The Government will provide the UII if it already 
exists, or if it is created and the item is marked under a legacy IUID 
implementation strategy before providing the item to the contractor as 
PIPC. In addition, all contracts awarded under solicitations issued 
after January 1, 2004, should have the clause at DFARS 252.211-7003, 
Item Identification and Valuation, and any items delivered that are 
subsequently provided to contractors as PIPC will already have a UII 
established. However, if a contractor receives PIPC that has not been 
registered or marked, the contractor is required to assign the UII, 
register the IUID data, and mark the item.
    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 has prepared an initial regulatory flexibility analysis 
consistent with 5 U.S.C. 603. A copy of the analysis may be obtained 
from the point of contact specified herein. The analysis is summarized 
as follows:
    This interim rule amends the DFARS to require DoD contractors to 
electronically submit, to the IUID Registry, the IUID data for DoD 
property in the contractor's possession. The existing requirements for 
contractor reporting of Government property rely on a paper-based 
administrative infrastructure, and do not provide DoD with sufficient 
information to validate the existence, completeness, or valuation of 
Government property in the possession of contractors. This rule will 
facilitate DoD compliance with the Chief Financial Officers Act of 1990 
(Pub. L. 101-576) and the financial reporting requirements imposed by 
the Federal Accounting Standards Advisory Board.
    The rule generally will apply to DoD contractors with Government-
furnished property valued at $5,000 or more. The objective of the rule 
is to improve the accountability and control of DoD assets. Use of the 
IUID Registry will enable DoD to maintain accurate records of its 
property inventories. The Chief Financial Officers Act of 1990 requires 
the production of complete, reliable, timely, and consistent financial 
information with regard to Federal programs.
    The clause at DFARS 252.245-7001 requires contractors to maintain 
records of DoD property in their possession and to submit an annual 
report using DD Form 1662 or an approved substitute. The interim rule 
replaces DD Form 1662 reporting with requirements for use of the IUID 
Registry as an electronic means of recording and reporting DoD property 
in the contractor's possession. This will improve the accuracy and 
efficiency of the existing reporting and recordkeeping requirements.
    DoD considers the approach described in the interim rule to be the 
most practical and beneficial for both Government and industry. 
Continued reliance on the current reporting process would not permit 
the level of accountability that DoD needs to comply with statutory and 
regulatory requirements related to the management of Government 
property. DoD already has adopted the use of IUID technology as the 
standard marking approach for all items in DoD's inventory system. 
Therefore, it logically follows that DoD property in the possession of 
contractors should also be recorded and reported using IUID technology.
    DoD invites comments from small businesses and other interested 
parties. DoD also will consider comments from small entities concerning 
the affected DFARS subparts in accordance with 5 U.S.C. 610. Such 
comments should be submitted separately and should cite DFARS Case 
2005-D015.

C. Paperwork Reduction Act

    The information collection requirements associated with contractor 
reporting of Government property have been approved by the Office of 
Management and Budget, under Clearance Number 0704-0246, for use 
through April 30, 2009. The requirements of this interim rule are not 
expected to significantly change the burden hours approved under 
Clearance Number 0704-0246.

D. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense that urgent and compelling reasons exist to publish an 
interim rule prior to affording the public an opportunity to comment. 
DoD published a proposed rule on March 21, 2006, addressing 
requirements for use of the IUID Registry for reporting of Government 
property in the possession of contractors, to replace the DD Form 1662 
reporting system. The vast majority of comments received on the 
proposed rule were accepted and incorporated into this interim rule. 
Because of the additional changes in this rule, DoD believes it is 
necessary to solicit further public comments. Numerous DoD contractors 
have already voluntarily transitioned to the use of the IUID Registry 
for reporting of Government property. Immediate implementation of this 
DFARS rule is needed to clearly establish policy for IUID reporting of 
Government property, in recognition of the burdens associated with 
supporting dual reporting systems. DoD considers the IUID Registry to 
be the most practical and beneficial reporting method for both 
Government and industry. Comments received in response to this interim 
rule will be considered in the formation of the final rule.

List of Subjects in 48 CFR Parts 211, 245, and 252

    Government procurement.

Michele P. Peterson,
Editor, Defense Acquisition Regulations System.

0
Therefore, 48 CFR parts 211, 245, and 252 are amended as follows:
0
1. The authority citation for 48 CFR parts 211, 245, and 252 continues 
to read as follows:

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

PART 211--DESCRIBING AGENCY NEEDS

0
2. Section 211.274 is revised to read as follows:


211.274  Item identification and valuation requirements.

0
3. Section 211.274-4 is revised to read as follows:


211.274-4  Policy for item unique identification of Government 
property.

    (a) It is DoD policy that DoD item unique identification, or a DoD-
recognized unique identification equivalent, is required for tangible

[[Page 52298]]

personal property in accordance with 211.274-2, for items--
    (1) In the possession of the Government and furnished to a 
contractor for the performance of a contract; or
    (2) Directly acquired by the Government and subsequently furnished 
to a contractor for the performance of a contract.
    (b) The policy in paragraph (a) of this subsection does not apply 
to--
    (1) Property under any statutory leasing authority;
    (2) Property to which the Government has acquired a lien or title 
solely because of partial, advance, progress, or performance-based 
payments;
    (3) Software and intellectual property; or
    (4) Real property.

0
4. Section 211.274-5 is added to read as follows:


211.274-5  Contract clauses.

    (a)(1) Use the clause at 252.211-7003, Item Identification and 
Valuation, in solicitations and contracts that--
    (i) Require item identification or valuation, or both, in 
accordance with 211.274-2 and 211.274-3; or
    (ii) Contain the clause at 252.211-7007.
    (2) Complete paragraph (c)(1)(ii) of the clause with the contract 
line, subline, or exhibit line item number and description of any 
item(s) below $5,000 in unit acquisition cost for which DoD unique item 
identification or a DoD recognized unique identification equivalent is 
required in accordance with 211.274-2(a)(2) or (3).
    (3) Complete paragraph (c)(1)(iii) of the clause with the 
applicable attachment number, when DoD unique item identification or a 
DoD recognized unique identification equivalent is required in 
accordance with 211.274-2(a)(4) for DoD serially managed subassemblies, 
components, or parts embedded within deliverable items.
    (4) Use the clause with its Alternate I if--
    (i) An exception in 211.274-2(b) applies; or
    (ii) Items are to be delivered to the Government and none of the 
criteria for placing a unique item identification mark applies.
    (b)(1) Use the clause at 252.211-7007, Item Unique Identification 
of Government Property, in solicitations and contracts that contain the 
clause at--
    (i) FAR 52.245-1, Government Property; or
    (ii) FAR 52.245-2, Government Property Installation Operation 
Services.
    (2) Complete paragraph (b)(2)(ii) of the clause as applicable.

PART 245--GOVERNMENT PROPERTY


245.505-14  [Removed]

0
5. Section 245.505-14 is removed.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


252.211-7003  [Amended]

0
6. Section 252.211-7003 is amended in the introductory text by removing 
``211.274-4'' and adding in its place ``211.274-5(a)''.

0
7. Section 252.211-7007 is added to read as follows:


252.211-7007  Item unique identification of Government property.

    As prescribed in 211.274-5(b), use the following clause:

ITEM UNIQUE IDENTIFICATION OF GOVERNMENT PROPERTY (SEP 2007)

    (a) Definitions. As used in this clause--
    2D data matrix symbol means the 2-dimensional Data Matrix ECC 
200 as specified by International Standards Organization/
International Electrotechnical Commission (ISO/IEC) Standard 16022: 
Information Technology--International Symbology Specification--Data 
Matrix.
    Acquisition cost, for Government-furnished property in the 
possession of the Contractor (PIPC), means the amount identified in 
the contract, or in the absence of such identification, the fair 
market value. For property acquired or fabricated by the Contractor 
as Contractor-acquired PIPC, and subsequently transferred or 
delivered as Government-furnished PIPC, it is the original 
acquisition cost.
    Concatenated unique item identifier means--
    (1) For items that are serialized within the enterprise 
identifier, the linking together of the unique identifier data 
elements in order of the issuing agency code, enterprise identifier, 
and unique serial number within the enterprise identifier; or
    (2) For items that are serialized within the original part, lot, 
or batch number, the linking together of the unique identifier data 
elements in order of the issuing agency code; enterprise identifier; 
original part, lot, or batch number; and serial number within the 
original part, lot, or batch number.
    DoD recognized unique identification equivalent means a unique 
identification method that is in commercial use and has been 
recognized by DoD. All DoD recognized unique identification 
equivalents are listed at http://www.acq.osd.mil/dpap/UID/equivalents.html.
    Equipment means a tangible item that is functionally complete 
for its intended purpose, durable, nonexpendable, and needed for the 
performance of a contract. Equipment is not intended for sale, and 
does not ordinarily lose its identity or become a component part of 
another article when put into use.
    Item unique identification (IUID) means a system of assigning, 
reporting, and marking DoD property in the possession of the 
Contractor with unique item identifiers that have machine-readable 
data elements to distinguish an item from all other like and unlike 
items.
    IUID Registry means the DoD data repository that receives input 
from both industry and Government sources and provides storage of, 
and access to, data that identifies and describes tangible 
Government personal property, including property in the possession 
of the Contractor.
    Material means property that may be consumed or expended during 
the performance of a contract, component parts of a higher assembly, 
or items that lose their individual identity through incorporation 
into an end item. Material does not include equipment, special 
tooling, or special test equipment.
    Parent item means the item assembly, intermediate component, or 
subassembly that has an embedded item with a unique item identifier 
or DoD recognized unique identification equivalent.
    Property in the possession of the Contractor (PIPC) means 
tangible personal property, to which the Government has title, that 
is in the stewardship or possession of, or is controlled by, the 
Contractor for the performance of a contract. PIPC consists of both 
tangible Government-furnished property and Contractor-acquired 
property and includes equipment and material.
    Unique item identifier (UII) means a set of data elements marked 
on items that is globally unique and unambiguous.
    Virtual UII means the data elements for an item that have been 
captured in the IUID Registry, but have not yet been physically 
marked on an item with a DoD compliant 2D data matrix symbol.
    (b) Procedures for assigning and registering.
    (1) The Contractor shall provide IUID data for the IUID Registry 
for all Government-furnished PIPC requiring DoD unique 
identification under this contract, including Government-furnished 
PIPC located at subcontractor and alternate locations.
    (2) Unless the Government provides the UII, the Contractor shall 
establish a concatenated UII or a DoD recognized unique 
identification equivalent for--
    (i) Government-furnished PIPC with a unit acquisition cost of 
$5,000 or more; and
    (ii) The following items of Government-furnished PIPC for which 
the unit acquisition cost is less than $5,000:

------------------------------------------------------------------------
  Contract line, subline, or exhibit line
        item number (if applicable)               Item description
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------

    (3) Virtual UIIs may be assigned by the Contractor for existing 
Government-furnished PIPC requiring item unique identification, if 
the property can be accurately and uniquely

[[Page 52299]]

identified using existing innate serialized identity until an event 
occurs requiring physical marking with the DoD compliant 2D data 
matrix.
    (4) The Contractor shall assign and register a UII and the 
master item data for any subassembly, component, or part that does 
not have an existing UII when it is removed from a parent item and 
remains with the Contractor as a stand-alone item.
    (5) Contractor-acquired PIPC is excluded from the IUID Registry. 
The Contractor shall report to the IUID Registry as Government-
furnished PIPC any Contractor-acquired PIPC that--
    (i) Is delivered to the Government; or
    (ii) Is transferred by contract modification or other contract 
provision/requirement to another contract (including items that are 
transferred in place).
    (6) If the initial transfer of Contractor-acquired PIPC is a 
delivery to DoD, the requirements of the Item Identification and 
Valuation clause of this contract (DFARS 252.211-7003) shall be 
applied when determining the requirement for item unique 
identification.
    (7) The Contractor shall submit the UII and the master item data 
into the IUID Registry in accordance with the data submission 
procedures in the Item Unique Identification of Government Property 
Guidebook at http://www.acq.osd.mil/dpap/UID/guides.htm.
    (i) The following data is required for Government-furnished PIPC 
items received without a UII:
    (A) UII type.
    (B) Concatenated UII.
    (C) Item description.
    (D) Foreign currency code.
    (E) Unit of measure.
    (F) Acquisition cost.
    (G) Mark information.
    (1) Bagged or tagged code.
    (2) Contents.
    (3) Effective date.
    (4) Added or removed flag.
    (5) Marker code.
    (6) Marker identifier.
    (7) Medium code.
    (8) Value.
    (H) Custody information.
    (1) Prime contractor identifier.
    (2) Accountable contract number.
    (3) Category code.
    (4) Received date.
    (5) Status code.
    (ii) The following data is required only for Government-
furnished PIPC items received without a UII for specific ``UII 
types,'' as specified in the Item Unique Identification of 
Government Property Guidebook:
    (A) Issuing agency code.
    (B) Enterprise identifier.
    (C) Original part number.
    (D) Batch/lot number.
    (E) Serial number.
    (iii) The following data is optional for Government-furnished 
PIPC items received without a UII:
    (A) Acquisition contract number.
    (B) Contract line item number/subline item number/exhibit line 
item number.
    (C) Commercial and Government Entity (CAGE) code or Data 
Universal Numbering System (DUNS) number in the acquisition 
contract.
    (D) Current part number.
    (E) Current part number effective date (required if current part 
number is provided).
    (F) Acceptance location.
    (G) Acceptance date.
    (H) Ship-to code.
    (I) Sent date.
    (J) Manufacturer identifier.
    (K) Manufacturer code (required if manufacturer identifier is 
provided).
    (L) Parent UII (for embedded items).
    (c) Procedures for updating. (1) The Contractor shall update the 
IUID Registry for changes in status, mark, custody, or disposition 
of Government-furnished PIPC under this contract, for PIPC-
    (i) Delivered or shipped from the Contractor's plant, under 
Government instructions, except when shipment is to a subcontractor 
or other location of the Contractor;
    (ii) Consumed or expended, reasonably and properly, or otherwise 
accounted for, in the performance of the contract as determined by 
the Government property administrator, including reasonable 
inventory adjustments;
    (iii) Disposed of; or
    (iv) Transferred to a follow-on or other contract.
    (2) The Contractor shall update the IUID Registry for changes to 
the mark information to add or remove other serialized 
identification marks and to update a virtual UII to a fully 
compliant UII when the 2D data matrix symbol is added to the item.
    (3) The Contractor shall update the IUID Registry for any 
changes to the current part number or the current part number 
effective date.
    (4) The Contractor shall update the IUID Registry for any 
changes to the parent item of a DoD serially managed embedded 
subassembly, component, or part.
    (5) The Contractor shall update the IUID Registry for all 
Government-furnished PIPC under this contract, so that the IUID 
Registry reflects the same information that is recorded in the 
Contractor's property records for Government-furnished PIPC as 
transactions occur, or at least semi-annually by March 31 and 
September 30 of each year.
    (d) Procedures for marking. (1) When an event occurs that 
requires the physical marking of the item with the 2D data matrix 
symbol, the Contractor shall use the previously assigned virtual UII 
as the permanent UII.
    (2) The Contractor shall use MIL-STD-130M (or later version) 
when physically marking existing PIPC with the compliant 2D data 
matrix symbol. The Contractor that has possession of the PIPC shall 
use due diligence to maintain the integrity of the UII and shall 
replace a damaged, destroyed, or lost mark with a replacement mark 
that contains the same UII data elements, as necessary. The 
Contractor shall apply the required 2D data matrix symbol to an 
identification plate, band, tag, or label securely fastened to the 
item, or directly to the surface of the item to be compliant.
    (3) When an item cannot be physically marked or tagged due to a 
lack of available space to mark identifying information or because 
marking or tagging would have a deleterious effect, the Contractor 
shall--
    (i) Attach to the item a tag that has the identifying 
information marked on the tag;
    (ii) Place the item in a supplemental bag or other package that 
encloses the item and has a tag attached to the bag or package that 
has the identifying information marked on the tag; or
    (iii) Apply the identifying information to the unit pack in 
addition to, or in combination with, the identification marking 
information specified in MIL-STD-129. When combining marking 
requirements for a unit pack, the Contractor shall follow the 
manner, method, form, and format of MIL-STD-129 and shall fulfill 
the informational requirements of that standard.
    (4) When the item has the tag removed or the item is removed 
from the bag to be installed as an embedded item in a parent item, 
the Contractor shall--
    (i) Assign a UII or a virtual UII to the parent item if a UII 
does not already exist;
    (ii) Mark the parent item with the DoD compliant 2D data matrix 
symbol, if feasible; and
    (iii) Update the IUID Registry to indicate that the tagged or 
bagged UII item has become an embedded item within the parent item.
    (5) In the event a previously tagged or bagged embedded item is 
subsequently removed from use, the Contractor shall tag or bag and 
mark the item again with the original UII.

(End of clause)


252.245-7001  [Removed]

0
8. Section 252.245-7001 is removed.

[FR Doc. E7-18039 Filed 9-12-07; 8:45 am]
BILLING CODE 5001-08-P