[Federal Register Volume 73, Number 227 (Monday, November 24, 2008)]
[Rules and Regulations]
[Pages 70906-70909]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-27779]


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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: Final rule.

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SUMMARY: DoD has adopted as final, with changes, an interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to update requirements for reporting of Government property in the 
possession of DoD contractors. The rule replaces 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.

DATES: Effective Date: November 24, 2008.

FOR FURTHER INFORMATION CONTACT: Mr. Michael Benavides, Defense 
Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3D139, 
3062 Defense Pentagon, Washington, DC 20301-3062. Telephone 703-602-
1302; facsimile 703-602-7887. Please cite DFARS Case 2005-D015.

SUPPLEMENTARY INFORMATION:

A. Background

    DoD published an interim rule at 72 FR 52293 on September 13, 2007, 
to require reporting of DoD property in the possession of contractors 
through use of the DoD IUID Registry. Three sources submitted comments 
on the interim rule. A discussion of the comments is provided below.

1. Marking Requirements

    a. Comment: Concerning the clause at DFARS 252.211-7007 and the 
requirement to create a unique item identifier (UII) for certain 
Government property, physically mark it, and load the required data 
into the IUID Registry when an item is shipped: There needs to be a 
notification mechanism on shipping paperwork to identify an item in a 
given shipment that is IUID compliant. Without some type of information 
on the documentation indicating that a UII is present, the physical 
mark could be overlooked and the receiver might create a new UII using 
its data elements and load the item into the Registry, causing multiple 
entries for a single item. Under the interim rule, the physical mark is 
the only indicator to a receiver that a UII is present and must be read 
to obtain the number for look-up in the Registry. This would seem to be 
inadequate.
    DoD Response: To avoid any confusion, the marking requirement has 
been excluded from the final rule. Therefore, the recommended 
notification mechanism is unnecessary.
    b. Comment: The interim rule imposes a requirement on contractors 
to

[[Page 70907]]

arbitrarily mark items furnished by the Government but received by the 
contractor without a physical marking. Prior to marking an item with a 
UII, a contractor would need to perform an appropriate analysis to 
determine the method, content, and location of the mark. In many cases, 
the contractor that receives Government-furnished items is not the 
manufacturer of the items and does not have design authority or 
sufficient technical knowledge to conduct an analysis and determine the 
appropriate marking. Moreover, many of the items in the aerospace and 
defense industry are flight safety critical items for which contractors 
cannot accept the responsibility/liability of altering the items. 
Specific requirements for marking of ``unmarked'' items should be 
addressed on a contract-by-contract basis so that the contractor does 
not void any warranties or adversely affect the form, fit, or function 
of the item.
    DoD Response: The clause at DFARS 252.211-7007 has been amended to 
address only reporting requirements. The final rule contains no marking 
requirements.
    c. Comment: Paragraph (d)(5) of the clause at DFARS 252.211-7007 
requires re-marking of previously tagged or bagged embedded items that 
are subsequently removed from use. This paragraph should be deleted. 
Once identified, an item is always identified. This information should 
be provided as a bill of material for all UII items, including embedded 
UIIs as part of the contract.
    DoD Response: Marking requirements have been excluded from the 
final rule.

2. Items Subject to Reporting Requirements

    a. Comment: The DFARS rule should clearly exclude reparables, since 
reparables do not meet the definition of property in the possession of 
contractors as defined in the Item Unique Identification Property 
Guidebook; i.e., reparables are not provided to the contractor for 
performance of a contract but rather for repair. This should be 
addressed at DFARS 211.274-4(b). In addition, Government-furnished 
material that is not part of the end item deliverable in a bill of 
materials should not be subject to reporting under the rule. This 
should also be addressed at DFARS 211.274-4(b). Express recognition of 
these exclusions will provide clarification and will enable the 
Government to obtain the full cost of a deliverable end item that is in 
keeping with the intent, in part, of the Chief Financial Officer's Act 
of 1990 (Pub. L. 101-576).
    DoD Response: The final rule excludes reparables and Government-
furnished material from IUID reporting requirements, in addition to the 
following: Items with an acquisition value of less than $5,000 that are 
not serially managed, mission essential, sensitive, or controlled 
inventory, unless the terms and conditions of the contract state 
otherwise; contractor-acquired property; 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; intellectual property or software; and real property.
    b. Comment: At DFARS 252.211-7007(b)(4), add the words ``for use'' 
so that the paragraph reads: ``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 for use from a 
parent item and remains with the Contractor as a stand-alone item.'' 
This will eliminate any requirement to identify items that are removed 
for disposition.
    DoD Response: The referenced paragraph (b)(4) has been excluded 
from the final rule. The rule has been revised to clarify the types of 
property that require reporting to the DoD IUID Registry, i.e., 
equipment, special tooling, special test equipment.

3. Reporting Mechanism

    Comment: Although the rules for UII creation and marking are 
similar for new procurement items and legacy items, the mechanism for 
loading UII data to the IUID Registry for legacy items (e.g., reparable 
items not yet registered) differs from the mechanism for loading new 
procurement items, which is accomplished through Wide Area WorkFlow 
(WAWF). Specifically, the Material Inspection and Receiving Report 
required for acceptance of service items (e.g., contract line items for 
the repair of Government items) is not to be used to submit IUID data 
for supply items. That is, a contractor may not report via WAWF a new 
UII for a Government-owned item that the contractor has repaired. 
Please provide clarification to reflect this difference and provide 
guidance for the registration of IUID data for legacy items, 
specifically addressing repaired items.
    DoD Response: The rule has been revised to clarify the mechanism 
for reporting items to the DoD IUID Registry. Specifically, that 
reporting is via direct input to the DoD IUID Registry, not via WAWF. 
WAWF was built as the input mechanism for the acquisition of new items 
(not Government-furnished equipment). Additionally, the final rule 
excludes reparables from IUID reporting requirements.

4. Data Submission Requirements

    a. Comment: At 252.211-7007(b)(7), add the phrase ``the version 
of------, cited in the Contract Schedule'' to the end of the first 
sentence, so that the sentence reads: ``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/pdi/UID/guides.html the version of------, cited in the Contract Schedule.'' 
This would be similar to the language used to invoke the applicable 
version of MIL-STD-130 at DFARS 252.211-7003. Also suggest adding 
Section IV of the document entitled DD 1662 Transition Instruction 
(August 23, 2005). This will clarify data to be provided when 
information is entered into the Registry.
    DoD Response: The rule has been revised to more clearly specify 
data submission requirements, and the reference to the Government 
Property Guidebook has been excluded from the final rule. Accordingly, 
there is no need to add Section IV of the document entitled DD 1662 
Transition Instruction (August 23, 2005).
    b. Comment: The first sentence in paragraph (c)(1) of the clause at 
DFARS 252.211-7007 should be revised to state that updates to the IUID 
Registry should be accomplished ``in accordance with the recognized 
data submission methods on the IUID Web site.''
    DoD Response: The contract clause in the final rule clearly 
specifies reporting requirements and also provides a reference to the 
DoD IUID Registry Web site.
    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 a final regulatory flexibility analysis consistent 
with 5 U.S.C. 604. A copy of the analysis may be obtained from the 
point of contact specified herein. The analysis is summarized as 
follows:
    This rule amends the DFARS to require DoD contractors to 
electronically submit, to the DoD IUID Registry, the IUID data 
applicable to the Government property in the contractor's possession. 
The previous, paper-based DD Form 1662 reporting system did not provide 
DoD with sufficient information to

[[Page 70908]]

validate the existence, completeness, or valuation of Government 
property in the possession of contractors. The objective of the rule is 
to improve the accountability and control of DoD assets. DoD considers 
use of the IUID Registry to be the most practical and beneficial 
reporting method for both Government and industry. Continued reliance 
on the prior paper-based reporting method 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.

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 rule are not expected 
to significantly change the burden hours approved under Clearance 
Number 0704-0246.

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

    Government procurement.

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

0
Accordingly, the interim rule amending 48 CFR parts 211, 245, and 252, 
which was published at 72 FR 52293 on September 13, 2007, is adopted as 
a final rule with the following changes:
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 211.274-4 is revised to read as follows:


211.274-4  Policy for reporting of Government-furnished equipment in 
the DoD Item Unique Identification (IUID) Registry.

    It is DoD policy that Government-furnished equipment be recorded in 
the DoD IUID Registry, except for--
    (a) Items with an acquisition cost of less than $5,000 that are not 
identified as serially managed, mission essential, sensitive, or 
controlled inventory, unless the terms and conditions of the contract 
state otherwise;
    (b) Government-furnished material;
    (c) Reparables;
    (d) Contractor-acquired property as defined in FAR Part 45;
    (e) Property under any statutory leasing authority;
    (f) Property to which the Government has acquired a lien or title 
solely because of partial, advance, progress, or performance-based 
payments;
    (g) Intellectual property or software; and
    (h) Real property.

0
3. Section 211.274-5 is amended by revising paragraph (b)(1) 
introductory text to read as follows:


211.274-5  Contract clauses.

* * * * *
    (b)(1) Use the clause at 252.211-7007, Reporting of Government-
Furnished Equipment in the DoD Item Unique Identification (IUID) 
Registry, in solicitations and contracts that contain the clause at--
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
4. Section 252.211-7007 is revised to read as follows:


252.211-7007  Reporting of Government-Furnished Equipment in the DoD 
Item Unique Identification (IUID) Registry.

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

REPORTING OF GOVERNMENT-FURNISHED EQUIPMENT IN THE DOD ITEM UNIQUE 
IDENTIFICATION (IUID) REGISTRY (NOV 2008)

    (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 equipment, means the 
amount identified in the contract, or in the absence of such 
identification, the item's fair market value.
    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; e.g., the 
enterprise identifier along with the contractor's property internal 
identification, i.e., tag number is recognized as the serial number; 
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.
    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.
    Government-furnished equipment means an item of special tooling, 
special test equipment, or equipment, in the possession of, or 
directly acquired by, the Government and subsequently furnished to 
the Contractor (including subcontractors and alternate locations) 
for the performance of a contract.
    Item means equipment, special tooling, or special test 
equipment, to include such equipment, special tooling, or special 
test equipment that is designated as serially managed, mission 
essential, sensitive, or controlled inventory (if previously 
identified as such in accordance with the terms and conditions of 
the contract).
    Item unique identification (IUID) means a system of assigning, 
reporting, and marking DoD property 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.
    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.
    Reparable means an item, typically in unserviceable condition, 
furnished to the Contractor for maintenance, repair, modification, 
or overhaul.
    Sensitive item means an item potentially dangerous to public 
safety or security if stolen, lost, or misplaced, or that shall be 
subject to exceptional physical security, protection, control, and 
accountability. Examples include weapons, ammunition, explosives, 
controlled substances, radioactive materials, hazardous materials or 
wastes, or precious metals.
    Serially managed item means an item designated by DoD to be 
uniquely tracked, controlled, or managed in maintenance, repair, 
and/or supply systems by means of its serial number.
    Special test equipment means either single or multipurpose 
integrated test units engineered, designed, fabricated, or modified 
to accomplish special purpose testing in performing a contract. It 
consists of items or assemblies of equipment including foundations 
and similar improvements necessary for installing special test

[[Page 70909]]

equipment, and standard or general purpose items or components that 
are interconnected and interdependent so as to become a new 
functional entity for special testing purposes. Special test 
equipment does not include material, special tooling, real property, 
or equipment items used for general testing purposes, or property 
that with relatively minor expense can be made suitable for general 
purpose use.
    Special tooling means jigs, dies, fixtures, molds, patterns, 
taps, gauges, and all components of these items, including 
foundations and similar improvements necessary for installing 
special tooling, and which are of such a specialized nature that 
without substantial modification or alteration their use is limited 
to the development or production of particular supplies or parts 
thereof or to the performance of particular services. Special 
tooling does not include material, special test equipment, real 
property, equipment, machine tools, or similar capital items.
    Unique item identifier (UII) means a set of data elements 
permanently marked on an item that is globally unique and 
unambiguous and never changes, in order to provide traceability of 
the item throughout its total life cycle. The term includes a 
concatenated UII or a DoD recognized unique identification 
equivalent.
    Virtual UII means the UII data elements assigned to an item that 
is not marked with a DoD compliant 2D data matrix symbol, e.g., 
enterprise identifier, part number, and serial number; or the 
enterprise identifier along with the Contractor's property internal 
identification, i.e., tag number.
    (b) Requirement for item unique identification of Government-
furnished equipment. Except as provided in paragraph (c) of this 
clause--
    (1) Contractor accountability and management of Government-
furnished equipment shall be performed at the item level; and
    (2) Unless provided by the Government, the Contractor shall 
establish a virtual UII or a DoD recognized unique identification 
for items that are--
    (i) Valued at $5,000 or more in unit acquisition cost; or
    (ii) Valued at less than $5,000 in unit acquisition cost and are 
serially managed, mission essential, sensitive, or controlled 
inventory, as identified in accordance with the terms and conditions 
of the contract.
    (c) Exceptions. Paragraph (b) of this clause does not apply to--
    (1) Government-furnished material;
    (2) Reparables;
    (3) Contractor-acquired property;
    (4) Property under any statutory leasing authority;
    (5) Property to which the Government has acquired a lien or 
title solely because of partial, advance, progress, or performance-
based payments;
    (6) Intellectual property or software; or
    (7) Real property.
    (d) Procedures for establishing UIIs. To permit reporting of 
virtual UIIs to the DoD IUID Registry, the Contractor's property 
management system shall enable the following data elements in 
addition to those required by paragraph (f)(1)(iii) of the 
Government Property clause of this contract (FAR 52.245-1):
    (1) Parent UII.
    (2) Concatenated UII.
    (3) Received/Sent (shipped) date.
    (4) Status code.
    (5) Current part number (if different from the original part 
number.
    (6) Current part number effective date.
    (7) Category code (``E'' for equipment).
    (8) Contract number.
    (9) Commercial and Government Entity (CAGE) code.
    (10) Mark record.
    (i) Bagged or tagged code (for items too small to individually 
tag or mark).
    (ii) Contents (the type of information recorded on the item, 
e.g., item internal control number).
    (iii) Effective date (date the mark is applied).
    (iv) Added or removed code/flag.
    (v) Marker code (designates which code is used in the marker 
identifier, e.g., D=CAGE, UN=DUNS, LD=DODAAC).
    (vi) Marker identifier, e.g., Contractor's CAGE code or DUNS 
number).
    (vii) Medium code; how the data is recorded, e.g., barcode, 
contact memory button.
    (viii) Value, e.g., actual text or data string that is recorded 
in its human readable form.
    (ix) Set (used to group marks when multiple sets exist); for the 
purpose of this clause, this defaults to ``one (1)''.
    (e) Procedures for updating the DoD IUID Registry. The 
Contractor shall update the DoD IUID Registry at https://www.bpn.gov/iuid for changes in status, mark, custody, or 
disposition of items--
    (1) Delivered or shipped from the Contractor's plant, under 
Government instructions, except when shipment is to a subcontractor 
or other location of the Contractor;
    (2) 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;
    (3) Disposed of; or
    (4) Transferred to a follow-on or other contract.


(End of clause)

 [FR Doc. E8-27779 Filed 11-21-08; 8:45 am]
BILLING CODE 5001-08-P