[Federal Register Volume 81, Number 204 (Friday, October 21, 2016)]
[Proposed Rules]
[Pages 73002-73004]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25316]



  Federal Register / Vol. 81, No. 204 / Friday, October 21, 2016 / 
Proposed Rules  

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 245

[Docket DARS-2016-0035]
RIN 0750-AJ11


Defense Federal Acquisition Regulation Supplement: Use of the 
Government Property Clause (DFARS Case 2015-D035)

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 expand the prescription for use of the 
Federal Acquisition Regulation (FAR) Government property clause.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before December 20, 2016, to be 
considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2015-D035, using 
any of the following methods:
    [cir] Federal eRulemaking Portal: http://www.regulations.gov. 
Search for ``DFARS Case 2015-D035.'' Select ``Comment Now'' and follow 
the instructions provided to submit a comment. Please include ``DFARS 
Case 2015-D035'' on any attached documents.
    [cir] Email: [email protected]. Include DFARS Case 2015-D035 in 
the subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Mr. 
Thomas Ruckdaschel, OUSD(AT&L)DPAP/DARS, Room 3B941, 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. Thomas Ruckdaschel, telephone 571-
372-6088.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD is proposing to amend DFARS 245.107 to strengthen the 
management and accountability of Government-furnished property (GFP). 
DoD has identified a gap in the current process that hinders full 
implementation of achieving accountability for GFP due to an exception 
to the use of the clause at FAR 52.245-1, Government Property.
    DoD has implemented a transactional information technology solution 
to track, report, and manage GFP using the Wide Area WorkFlow suite of 
tools. This has been implemented through requirements in FAR clause 
52.245-1, Government Property, and use of associated DFARS clauses 
relating to Government property. The basic property receipt and record 
keeping requirements of FAR clause 52.245-1, and as proposed in this 
rule, mirror customary commercial record keeping practices. Customary 
commercial practice is to create receiving reports and keep records for 
incoming assets regardless of the source of such assets. A recent 
industry association survey revealed that all its member firms create 
receiving reports and establish records in some form to track GFP.

II. Discussion and Analysis

    The current language at FAR 45.107 provides an exception whereby 
contracting officers can choose not to include the clause in purchase 
orders for property repairs, when the unit acquisition cost of 
Government property to be repaired does not exceed the simplified 
acquisition threshold (SAT). Acquisition value alone, however, is not 
an indicator of the criticality or sensitivity of the property. For 
example, the acquisition cost of individual items of firearms, body 
armor, night-vision equipment, computers, or cryptologic devices may be 
below the SAT, but the accountability requirements for these items are 
fairly stringent. Omission of the Government property clause in 
purchase orders for repairs of these types of items increases risk of 
misuse or loss of the property and could call into dispute their 
ownership. To address this accountability gap, DoD is proposing to 
amend DFARS 245.107(1)(i) to require the use of FAR clause 52.245-1, 
Government Property, in all purchase orders for repair, maintenance, 
overhaul, or modification of Government property regardless of the unit 
acquisition cost of the items to be repaired. The rule also facilitates 
compliance with DoD Instruction 4161.02 entitled ``Accountability and 
Management of Government Contract Property,'' which requires DoD 
components to use electronic transactions when transferring Government 
property to a contractor and upon return of property to DoD. Use of FAR 
clause 52.245-1, in conjunction with the following associated DFARS 
clauses, creates an electronic end-to-end process for GFP management--
     252.245-7001, Tagging, Labeling, and Marking of 
Government-Furnished Property;
     252.245-7002, Reporting Loss of Government Property;
     252.245-7003, Contractor Property Management System 
Administration; and
     252.211-7007, Reporting of Government-Furnished Property.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold and for Commercial Items, Including Commercially Available 
Off-the-Shelf Items

    This rule does not add any new provisions or clauses; however, the 
rule does change the prescription for DoD use of FAR clause 52.245-1, 
Government Property. DoD is proposing to amend DFARS 245.107(1)(i) to 
require the use of FAR clause 52.245-1, Government Property, in all 
purchase orders for repair, maintenance, overhaul, or modification of 
Government property regardless of the unit acquisition cost of the 
items to be repaired. FAR 45.107(a)(1)(iii) requires the clause to be 
used for contracts or modifications awarded under FAR part 12 
procedures where Government property that exceeds the simplified 
acquisition threshold, as defined in FAR 2.101, is furnished or where 
the contractor is directed to acquire property for use under the 
contract that is titled in the Government. FAR 45.107(d) provides that 
purchase orders for property repair need not include a Government 
property clause when the acquisition cost of Government property to be 
repaired does not exceed the simplified acquisition threshold. This 
DFARS rule, however, will require all DoD purchase orders for repair, 
maintenance, overhaul, or modification of Government property to 
include FAR clause 52.245-1, Government Property, regardless of the 
unit acquisition cost of the items to be repaired.

IV. 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

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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.

V. 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. 
However, an initial regulatory flexibility analysis has been prepared 
and is summarized as follows:
    DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to expand the prescription for use of the 
Federal Acquisition Regulation (FAR) clause 52.245-1, Government 
Property. The current language at FAR 45.107 provides an exception 
whereby contracting officers can choose not to include FAR clause 
52.245-1 in purchase orders for repairs of Government-furnished 
property (GFP), when the unit acquisition cost of Government property 
to be repaired does not exceed the simplified acquisition threshold 
(SAT). Acquisition value alone, however, is not an indicator of the 
criticality or sensitivity of the property. As an example, the 
acquisition cost of individual items of firearms, body armor, night-
vision equipment, computers, or cryptologic devices may be below the 
SAT, but the accountability requirements for these items are fairly 
stringent. Omission of the Government property clause in purchase 
orders for repairs of these types of items increases the risk of misuse 
or loss of the property and could call into dispute their ownership.
    The objective of this rule is to strengthen the management and 
accountability of GFP. This rule proposes to amend DFARS 245.107 by 
requiring that FAR clause 52.245-1, Government Property, be 
incorporated in all DoD purchase orders involving repair, maintenance, 
overhaul, or modification of Government property, regardless of the 
unit acquisition cost of the Government property to be repaired.
    Based on data available in the Federal Procurement Data System for 
fiscal year 2015, DoD awarded 735 purchase orders involving the repair 
of Government property at or below the simplified acquisition threshold 
to 530 unique vendors, of which 328 (approximately 56 percent) were 
small businesses.
    This rule contains reporting and recordkeeping requirements for 
those entities that repair Government property under purchase orders 
that contain the FAR 52.245-1 clause. Entities affected by this rule 
would be required to prepare a property record and receiving report for 
the Government property provided. Additionally, entities would be 
required to acknowledge receipt of assets in the Wide Area WorkFlow 
system. The professional skill sets required are those of mid-level 
administrative personnel.
    This rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    There are no known significant alternatives to the rule to achieve 
accountability of Government-furnished property and resolve potential 
risks of loss or disputes for the ownership of property acquired with 
Government funds.
    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 2015-D035), in 
correspondence.

VI. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) applies. The 
proposed rule contains information collection requirements. 
Accordingly, DoD has submitted a request for approval of a new 
information collection requirement concerning DFARS Case 2015-D035 to 
the Office of Management and Budget.
    A. Public reporting burden for this collection of information is 
estimated to average one-half hour or 30 minutes per response, 
including time for reviewing instructions, searching existing data 
sources, gathering and maintaining the data needed, and completing and 
reviewing the collection of information.
    The annual reporting burden is estimated as follows:
    Number of respondents: 530.
    Responses per respondent: 3.8 approximately.
    Total annual responses: 2,000.
    Preparation hours per response: 0.5 hours.
    Total response burden hours: 735.
    Recordkeeping burden hours: 265.
    Total annual burden hours: 1,000.
    Frequency: On occasion.
    Affected Public: Businesses or other for-profit institutions.
    B. Request for Comments Regarding Paperwork Burden. Written 
comments and recommendations on the proposed information collection, 
including suggestions for reducing this burden, should be sent to Ms. 
Jasmeet Seehra at the Office of Management and Budget, Desk Officer for 
DoD, Room 10236, New Executive Office Building, Washington, DC 20503, 
or email [email protected], with a copy to the Defense 
Acquisition Regulations System, Attn: Mr. Thomas Ruckdaschel, 
OUSD(AT&L)DPAP/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 
20301-3060. Comments can be received from 30 to 60 days after the date 
of this notice, but comments to OMB will be most useful if received by 
OMB within 30 days after the date of this notice.
    Public comments are particularly invited on: Whether this 
collection of information is necessary for the proper performance of 
functions of the DFARS, and will have practical utility; whether our 
estimate of the public burden of this collection of information is 
accurate, and based on valid assumptions and methodology; ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and ways in which we can minimize the burden of the 
collection of information on those who are to respond, through the use 
of appropriate technological collection techniques or other forms of 
information technology.
    To request more information on this proposed information collection 
or to obtain a copy of the proposal and associated collection 
instruments, please write to the Defense Acquisition Regulations 
System, Attn: Mr. Thomas Ruckdaschel, OUSD(AT&L)DPAP/DARS, Room 3B941, 
3060 Defense Pentagon, Washington, DC 20301-3060, or email 
[email protected]. Include DFARS Case 2015-D035 in the subject line of 
the message.

List of Subjects in 48 CFR Part 245

    Government procurement.

Jennifer L. Hawes,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR 245 is proposed to be amended as follows:

PART 245--GOVERNMENT PROPERTY

0
1. The authority citation for part 245 continues to read as follows:

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

0
2. Amend section 245.107 by--
0
a. Removing paragraph (6);
0
b. Redesignating paragraphs (1) through (5) as paragraphs (2) through 
(6), respectively; and

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0
c. Adding a new paragraph (1).
    The addition reads as follows:


245.107   Contract clauses.

    (1)(i) In lieu of the prescription at FAR 45.107(d), use the clause 
at 52.245-1, Government Property, in all purchase orders for repair, 
maintenance, overhaul, or modification of Government property 
regardless of the unit acquisition cost of the items to be repaired.
    (ii) For negotiated fixed-price contracts awarded on a basis other 
than submission of certified cost or pricing data for which Government 
property is provided, use the clause at FAR 52.245-1, Government 
Property, without its Alternate I.
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[FR Doc. 2016-25316 Filed 10-20-16; 8:45 am]
 BILLING CODE 5001-06-P