[Federal Register Volume 77, Number 116 (Friday, June 15, 2012)]
[Proposed Rules]
[Pages 35921-35925]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-14289]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 211, 212, 218, 246, 252 and Appendix F to Chapter 2

RIN 0750-AH64


Defense Federal Acquisition Regulation Supplement: Item Unique 
Identifier Update (DFARS Case 2011-D055)

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

ACTION: Proposed rule.

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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to update and clarify requirements for 
unique identification and valuation of items delivered under DoD 
contracts. The proposed rule revises the applicable prescription and 
contract clause to reflect the current requirements.

DATES: Comment Date: Comments on the proposed rule should be submitted 
in writing to the address shown below on or before August 14, 2012, to 
be considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2011-D055, using 
any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov. Submit comments 
via the Federal eRulemaking portal by inputting ``DFARS Case 2011-
D055'' under the heading ``Enter keyword or ID'' and selecting 
``Search.'' Select the link ``Submit a Comment'' that corresponds with 
``DFARS Case 2011-D055.'' Follow the instructions provided at the 
``Submit a Comment'' screen. Please include your name, company name (if 
any), and ``DFARS Case 2011-D055'' on your attached document.
    [cir] Email: [email protected]. Include DFARS Case 2011-D055 in the 
subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Mr. 
Dustin Pitsch, OUSD (AT&L) DPAP/DARS, Room 3B855, 3060 Defense 
Pentagon, Washington, DC 20301-3060.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To 
confirm receipt of your comment(s), please check www.regulations.gov, 
approximately two to three days after submission to verify posting 
(except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: Mr. Dustin Pitsch, telephone 571-372-
6090.

SUPPLEMENTARY INFORMATION:

I. Background

    The contract clause at DFARS 252.211-7003, Item Identification and 
Valuation, requires unique identification for all delivered items for 
which the Government's unit acquisition cost is $5,000 or more and for 
other items designated by the Government. In addition, the clause 
requires identification of the Government's unit acquisition cost for 
all delivered items, and provides

[[Page 35922]]

instructions to contractors regarding the identification and valuation 
processes.
    This proposed rule revises the prescription and the clause at DFARS 
252.211-7003 to update and clarify instructions for the identification 
and valuation processes. The changes include--
     Adding definitions for data matrix and type designation;
     Specifically addressing item unique identification 
requirements for items with warranty requirements; DoD serially managed 
items, and special tooling or special test equipment;
     Clarifying of data submission requirements for a Major 
Defense Acquisition Program; and,
     Adding an alternative data submission method using either 
hard copy or a wide-area-workflow attachment.

II. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This rule is not a major rule 
under 5 U.S.C. 804.

III. Regulatory Flexibility Act

    DoD does not expect this proposed rule to have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., 
because the changes being made do not increase the burden of the item 
unique identification requirements, nor do they cause the requirement 
to be applicable to any additional small businesses. However, an 
initial regulatory flexibility analysis has been performed and is 
summarized as follows:
    The proposed changes are being made to refine the language of the 
regulations and update the clause and prescription to comply with 
existing item unique identification policy. This DFARS case also adds 
reporting requirements for special tooling and special test equipment, 
warranty, and type designation, updates text to describe the reason for 
the policy, clears up language that has been confusing in practice, and 
adds an alternative method of data submission using either hard copy or 
a wide-area-workflow attachment. It also eliminates Alternate I of 
DFARS 252.211-7003, which cites reporting requirements covered by other 
mechanisms.
    This rule will apply to small businesses involved in manufacturing. 
There are currently 1,495 small businesses registered in the Item 
Unique Identification Registry, out of 2,431 total companies 
registered. The changes made by this rule will not affect the number of 
businesses required to be registered in the Item Unique Identification 
Registry.
    This rule does not add any new information collection requirements 
as it only clarifies existing requirements.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    No alternatives were determined that will accomplish the objectives 
of the rule.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this rule in accordance 
with 5 U.S.C. 610. Interested parties must submit such comments 
separately and should cite 5 U.S.C. 610 (DFARS Case 2011-D055), in 
correspondence.

IV. Paperwork Reduction Act

    This rule does not add any new information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act (44 U.S.C. chapter 35) beyond those already 
covered by OMB Control Numbers 0704-0246 and 0704-0248. OMB Control 
Number 0704-0246, titled ``Defense Federal Acquisition Regulations 
Supplement (DFARS) Part 245, Government Property, related clauses in 
DFARS 252, and related forms in DFARS 253,'' which includes information 
collection requirements for DFARS subpart 211.274. OMB Control Number 
0704-0248, titled ``Defense Federal Acquisition Regulations Supplement 
(DFARS) Appendix F, Material Inspection and Receiving Report and 
related forms,'' which covers all information submitted through the 
Wide Area Workflow system.

List of Subjects in 48 CFR Parts 211, 212, 218, 246, 252 and 
Appendix F

    Government procurement.

Mary Overstreet,
Editor, Defense Acquisition Regulations System.

    Therefore 48 CFR parts 211, 212, 218, 246, 252, and Appendix F are 
amended as follows:
    1. The authority citation for 48 CFR parts 211, 218, and 246 is 
revised to read as follows:

    Authority:  41 U.S.C. 1303 and 48 CFR chapter 1.

PART 211--DESCRIBING AGENCY NEEDS

    2. The section heading for section 211.274 is revised to read as 
follows:


211.274  Item unique identification and valuation requirements.

    3. Revise section 211.274-1 to read as follows:


211.274-1  General.

    Item unique identification and valuation is a system of marking, 
valuing, and tracking items delivered to DoD that enhances logistics, 
contracting, and financial business transactions supporting the United 
States and coalition troops. Through item unique identification policy, 
which capitalizes on leading practices and embraces open standards, 
DoD--
    (a) Achieves lower life-cycle cost of item management and improve 
life-cycle property management;
    (b) Improves operational readiness;
    (c) Provides reliable accountability of property and asset 
visibility throughout the life cycle;
    (d) Reduces the burden on the workforce through increased 
productivity and efficiency; and
    (e) Ensures item level traceability throughout lifecycle to 
strengthen supply chain integrity, enhance cyber security and combat 
counterfeiting.
    4. Section 211.274-2 is amended by--
    a. Revising the section heading;
    b. Revising paragraph (a);
    c. Revising paragraph (b) introductory text;
    d. Revising paragraph (b)(2) introductory text; and
    e. Revising paragraph (b)(2)(ii).
    The revisions read as follows:


211.274-2  Policy for item unique identification.

    (a) It is DoD policy that DoD item unique identification, or a DoD 
recognized unique identification equivalent, is required for all 
delivered items, including items of contractor-acquired property 
delivered on contract

[[Page 35923]]

line items (see PGI 245.402-71 for guidance when delivery of contractor 
acquired property is required)--
    (1) For which the Government's unit acquisition cost is $5,000 or 
more;
    (2) For which the Government's unit acquisition cost is less than 
$5,000, when identified by the requiring activity as serially managed;
    (3) For mission essential, controlled inventory, or other items 
when the Government's unit acquisition cost is less than $5,000, and 
the requiring activity determines that permanent identification is 
required; or
    (4) Regardless of value for any--
    (i) DoD serially managed subassembly, component, or part embedded 
within a subassembly, component, or part;
    (ii) Parent item (as defined in 252.211-7003(a)) that contains the 
embedded subassembly, component, or part;
    (iii) Warranted serialized item;
    (iv) Item of special tooling or special test equipment as defined 
at FAR 2.101 for a major defense acquisition program that is designated 
for preservation and storage in accordance with the requirements of 
section 815 of the National Defense Authorization Act for Fiscal Year 
2009 (Pub. L. 110-417);
    (v) DoD serially managed item (reparable or nonreparable); and
    (vi) High risk item identified by the requiring activity as 
vulnerable to supply chain threat, a target of cyber threats, or 
counterfeiting.
    (b) Exceptions. The Contractor will not be required to provide DoD 
item unique item identification if--
    (1) * * *
    (2) A determination and findings has been executed concluding that 
it is more cost effective for the Government requiring activity to 
assign, mark, and register the unique item identifier after delivery, 
and the item is acquired from a small business concern, or is a 
commercial item acquired under FAR part 12 or part 8.
    (i) * * *
    (ii) Send a signed copy of the determination and findings required 
by paragraph (b)(2)(i) of this subsection to DPAP, PDI, 3060 Defense 
Pentagon, 3E1044, Washington, DC 20301-3060; or by email to [email protected].
    5. Section 211.274-3 is amended by--
    a. Revising paragraph (a); and
    b. Amending paragraph (c) by removing the word ``need'' and adding 
in its place the word ``shall''.


211.274-3  Policy for valuation.

    (a) It is DoD policy that contractors shall be required to identify 
the Government's unit acquisition cost for all deliverable end items to 
which item unique identification applies.
* * * * *
    6. Section 211.274-4 is amended by--
    a. Revising the section heading;
    b. Revising the introductory text;
    c. Removing paragraphs (a), (b), and (c);
    d. Redesignating paragraphs (d) through (h) as paragraphs (a) 
through (e); and
    e. In the newly redesignated paragraph (a), removing the word 
``Part'' and adding in its place the word ``part''.
    The revisions read as follows:


211.274-4  Policy for reporting of Government-furnished property.

    It is DoD policy that Government-furnished property be recorded in 
the DoD Item Unique Identification Registry, except for--
* * * * *
    7. Amend section 211.274-6 by--
    a. Revising paragraph (a); and
    b. Amending paragraph (c)(1) to remove the words ``252.211-7003, 
Item Identification and Valuation'' and insert in its place the words 
``252.211-7003, Item Unique Identification and Valuation''.
    The revisions read as follows:


211.274-6  Contract clauses.

    (a)(1) Use the clause at 252.211-7003, Item Unique Identification 
and Valuation, in solicitations and contracts--
    (i) For supplies, unless the conditions in 211.274-2(b) apply;
    (ii) For services that involve the furnishing of supplies, unless 
the conditions in 211.274-2(b) apply;
    (iii) That contain the clause at FAR 52.245-1; or
    (iv) That contain the clause at 252.211-7007.
    (2) Complete paragraph (c)(1)(i) of the clause with the contract 
line, subline, or exhibit line item numbers of any line items excluded 
from coverage in accordance with 211.274-2(b)(3).
    (3) Identify in paragraph (c)(1)(ii) of the clause 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 item unique 
identification or a DoD recognized unique identification equivalent is 
required in accordance with 211.274-2(a)(2) or (3).
    (4) Identify in paragraph (c)(1)(iii) of the clause the applicable 
attachment number, when DoD item unique identification or a DoD 
recognized unique identification equivalent is required in accordance 
with 211.274-2(a)(4) (i) through (vi).
* * * * *

PART 212--ACQUISITION OF COMMERCIAL ITEMS

    8. The authority citation for 48 CFR part 212 continues to read as 
follows:

    Authority:  41 U.S.C. 1303 and 48 CFR chapter 1.


212.301  [Amended]

    9. Section 212.301(f)(iv)(D) is amended by--
    a. Removing the words ``252.211-7003, Item Identification and 
Valuation'' and adding in its place the words ``252.211-7003, Item 
Unique Identification and Valuation''; and
    b. Removing ``211.274-4'' and adding in its place ``211.274-6(a)''.

PART 218--EMERGENCY ACQUISITIONS

    10. Section 218.201(2) is revised to read as follows:


218.201  Contingency operation.

* * * * *
    (2) Policy for item unique identification. Contractors will not be 
required to provide DoD item unique identification if the items, as 
determined by the head of the agency, are to be used to support a 
contingency operation. See 211.274-2(b).
* * * * *

PART 246--QUALITY ASSURANCE


246.710  [Amended]

    11. Section 246.710(5)(i) is amended by removing ``252.211-7003, 
Item Identification and Valuation'' and adding in its place ``252.211-
7003, Item Unique Identification and Valuation''.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    12. The authority citation for 48 CFR part 252 continues to read as 
follows:

    Authority:  41 U.S.C. 1303 and 48 CFR chapter 1.

    13. Section 252.211-7003 is amended by--
    a. Revising the section heading;
    b. Revising the clause heading;
    c. Removing from the clause heading ``(JUN 2011)'' and adding in 
its place ``(DATE)'';
    d. Amending paragraph (a) definitions by--
    (i) Adding, in alphabetical order, definitions for ``Data matrix'' 
and ``Type designation'';
    (ii) Removing the definition title ``DoD unique item 
identification'' and adding in its place ``DoD item unique 
identification''.
    e. Revising paragraph (c);

[[Page 35924]]

    f. Amending paragraph (d) by--
    i. Revising the introductory text; and
    ii. Adding subparagraphs (12), (13), and (14).
    g. Amending paragraph (e) by revising the introductory text;
    h. Revising paragraph (f); and
    i. Removing Alternate I of the basic clause.
    The additions and revisions read as follows:


252.211-7003  Item Unique Identification and Valuation.

    As prescribed in 211.274-6(a), use the following clause:

ITEM UNIQUE IDENTIFICATION AND VALUATION (DATE)

    (a) * * *
    ``Data matrix'' means a two-dimensional matrix symbology, which 
is made up of square modules arranged within a perimeter finder 
pattern and uses the Error Checking and Correction 200 (Reed-Solomon 
error correction algorithm). * * *
    ``Type designation'' means a combination of letters and numerals 
assigned by the Government to a complete item, such as a major end 
item, assembly or subassembly, as appropriate, to provide a 
convenient means of differentiating between items having the same 
basic name and to indicate modifications and changes thereto.
* * * * *
    (c) Unique item identifier.
    (1) The Contractor shall provide a unique item identifier for 
the following:
    (i) Delivered items for which the Government's unit acquisition 
cost is $5,000 or more, except for the following line items:
Contract Line, Subline, or
Exhibit Line Item Number
Item Description

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    (ii) Items for which the Government's unit acquisition cost is 
less than $5,000 that are identified in the Schedule or the 
following table:
Contract Line, Subline, or
Exhibit Line Item Number
Item Description

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    (If items are identified in the Schedule, insert ``See 
Schedule'' in this table.)
    (iii) Subassemblies, components, and parts embedded within 
delivered items, items with warranty requirements, DoD serially 
managed reparables and DoD serially managed nonreparables as 
specified in Attachment Number ----.
    (iv) Any item of special tooling or special test equipment as 
defined in FAR 2.101 that have been designated for preservation and 
storage for a Major Defense Acquisition Program as specified in 
Attachment Number ----.
    (v) Any item not included in (i), (ii), (iii), and (iv) for 
which the contractor, at its own expense, creates and marks a unique 
item identifier for traceability.
    (2) The unique item identifier assignment and component data 
element combination shall not be duplicated on any other item marked 
by the contractor.
    (3) The unique item identifier component data elements shall be 
marked on an item using two dimensional data matrix symbology that 
complies with ISO/IEC International Standard 16022, Information 
technology--International symbology specification--Data matrix.
    (4) Data syntax and semantics of unique item identifiers. The 
Contractor shall ensure that--
    (i) The data elements (except issuing agency code) of the unique 
item identifier are encoded within the data matrix symbol that is 
marked on the item using one of the following three types of data 
qualifiers, as determined by the Contractor:
    (A) Application Identifiers (AIs) (Format Indicator 05 of ISO/
IEC International Standard 15434), in accordance with ISO/IEC 
International Standard 15418, Information Technology--EAN/UCC 
Application Identifiers and Fact Data Identifiers and Maintenance 
and ANSI MH 10.8.2 Data Identifier and Application Identifier 
Standard.
    (B) Data Identifiers (DIs) (Format Indicator 06 of ISO/IEC 
International Standard 15434), in accordance with ISO/IEC 
International Standard 15418, Information Technology--EAN/UCC 
Application Identifiers and Fact Data Identifiers and Maintenance 
and ANSI MH 10.8.2 Data Identifier and Application Identifier 
Standard.
    (C) Text Element Identifiers (TEIs) (Format Indicator 12 of ISO/
IEC International Standard 15434), in accordance with the Air 
Transport Association Common Support Data Dictionary; and
    (ii) The encoded data elements of the unique item identifier 
conform to the transfer structure, syntax, and coding of messages 
and data formats specified for Format Indicators 05, 06, and 12 in 
ISO/IEC International Standard 15434, Information Technology--
Transfer Syntax for High Capacity Automatic Data Capture Media.
    (5) Unique item identifier.
    (i) The Contractor shall--
    (A) Determine whether to--
    (1) Serialize within the enterprise identifier;
    (2) Serialize within the part, lot, or batch number; or
    (3) Use a DoD recognized unique identification equivalent (e.g. 
Vehicle Identification Number); and
    (B) Place the data elements of the unique item identifier 
(enterprise identifier; serial number; DoD recognized unique 
identification equivalent; and for serialization within the part, 
lot, or batch number only: original part, lot, or batch number) on 
items requiring marking by paragraph (c)(1) of this clause, based on 
the criteria provided in MIL-STD-130, Identification Marking of U.S. 
Military Property, latest version.
    (C) Label shipments and storage containers and packages that 
contain uniquely identified items in accordance with the 
requirements of MIL-STD-129, Military Marking for Shipment and 
Storage, latest version.
    (D) Verify that the marks on items, shipments and storage 
containers and packages are machine readable and conform to the 
applicable standards.
    (ii) The issuing agency code--
    (A) Shall not be placed on the item; and
    (B) Shall be derived from the data qualifier for the enterprise 
identifier.
    (d) For each item that requires item unique identification under 
paragraph (c)(1)(i), (ii) or (iv) of this clause or when item unique 
identification is provided under paragraph (c)(1)(v) in addition to 
the information provided as part of the Material Inspection and 
Receiving Report specified elsewhere in this contract, the 
Contractor shall report at the time of delivery, as part of the 
Material Inspection and Receiving Report, the following information:
* * * * *
    (12) Type designation of the item as specified in the contract 
specifications, if any.
    (13) Whether the item is an item of Special Tooling or Special 
Test Equipment.
    (14) Whether the item is covered by a warranty.
    (e) For embedded subassemblies, components, and parts that 
require DoD item unique identification under paragraph (c)(1)(iii) 
of this clause or when item unique identification is provided under 
paragraph (c)(1)(v), the Contractor shall report as part of the 
Material Inspection and Receiving Report specified elsewhere in this 
contract, the following information:
* * * * *
    (f) The Contractor shall submit the information required by 
paragraphs (d) and (e) of this clause as follows:
    (1) End items shall be reported using the receiving report 
capability in WAWF in accordance with the clause at 252.232-7003. If 
WAWF is not required by this contract, follow the procedures at 
http://www.acq.osd.mil/dpap/pdi/uid/data_submission_information.html.
    (2) Embedded items shall be reported by one of the following 
methods--
    (i) Use of the embedded items capability in WAWF;
    (ii) Direct data submission to the IUID Registry following the 
procedures and formats at http://www.acq.osd.mil/dpap/pdi/uid/data_submission_information.html; or
    (iii) Via WAWF as a deliverable attachment for exhibit line item 
---- Unique Item Identifier Report for Embedded Items, Contract Data 
Requirements List, DD Form 1423.
* * * * *
    (End of clause)

    14. Amend section 252.225-7039 by--
    a. Removing from the clause heading ``(AUG 2011)'' and adding in 
its place ``(DATE)''; and
    b. Revising paragraph (b)(1)(ii)(B) to read as follows.


252.225-7039  Contractors Performing Private Security Functions.

* * * * *

[[Page 35925]]

    (b) * * *
    (B) In addition, all weapons that are Government-furnished property 
must be assigned a unique identifier in accordance with the clauses at 
DFARS 252.211-7003, Item Unique Identification and Valuation, and DFARS 
252.245-7001, Tagging, Labeling, and Marking of Government-Furnished 
Property, and physically marked in accordance with MIL-STD 130 (current 
version) and DoD directives and instructions. The items must be 
registered in the DoD Item Unique Identification (IUID) Registry 
(https://www.bpn.gov/iuid/);
* * * * *

Appendix F: Material Inspection And Receiving Report

F-103 [Amended]

F-301 [Amended]

    15. The authority citation for 48 CFR chapter 2 appendix F 
continues to read as follows:

    Authority:  41 U.S.C. 1303 and 48 CFR chapter 1.

    16. Section F-103, paragraph (e)(1) is amended by removing ``DFARS 
252.211-7003, Item Identification and Valuation'' and adding in its 
place ``DFARS 252.211-7003, Item Unique Identification and 
Evaluation''.
    17. Section F-301, paragraph (18)(i) is amended by removing ``DFARS 
252.211-7003, Item Identification and Valuation'' and adding in its 
place ``DFARS 252.211-7003, Item Unique Identification and 
Evaluation''.
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[FR Doc. 2012-14289 Filed 6-14-12; 8:45 am]
BILLING CODE 5001-06-P