[Federal Register Volume 84, Number 83 (Tuesday, April 30, 2019)]
[Rules and Regulations]
[Pages 18161-18163]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-08481]
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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: Final rule.
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SUMMARY: DoD is issuing a final rule amending the Defense Federal
Acquisition Regulation Supplement (DFARS) to expand the prescription
for using the Federal Acquisition (FAR) Government property clause.
DATES: Effective April 30, 2019.
FOR FURTHER INFORMATION CONTACT: Ms. Kimberly Bass, telephone 571-372-
6174.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published a proposed rule in the Federal Register at 81 FR
73002 on October 21, 2016, 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. One respondent submitted comments in response to the proposed
rule.
II. Discussion and Analysis
A. Summary of Significant Changes From the Proposed Rule
There are no changes from the proposed rule.
B. Analysis of Public Comments
1. Support for Continued Discretionary Use of the FAR Clause
Comment: The respondent recommends that DFARS 245.107 be left ``as
is'' and that contracting officers should insert FAR clause 52.245-1
into purchase orders for repair based on the type and cost of property
to be repaired.
Response: A determination for when provisions and clauses are used
is driven primarily by the goods or services being procured and the
type of contract being contemplated. Tying the use of FAR 52.245-1 to
only some forms of Government-furnished property (GFP) and not others
would be impractical given the variety of property classes, types,
values, uses, and conditions. Discretion, in the case of inserting FAR
clause 52.245-1 in purchase orders for repair, has led to inconsistent
treatment of GFP. Moreover, the discretionary use of FAR 52.245-1 has
been shown to drive process inconsistency, compromise accountability,
and promote nonstandard processes. This complicates the administration
of contracts, particularly upon contract closeout when proper
disposition and adjudication of remaining Government property is
crucial.
2. Training for Contracting Officers
Comment: The respondent also stated that appropriate training
should be provided to contracting officers on use of the Government
property clause, rather than require a blanket prescription that fails
to incorporate materiality.
Response: The purpose of this rule is to achieve greater
accountability of GFP, decrease the risk of misuse or loss of
Government property, and mitigate potential ownership issues. As stated
previously, tying the use of FAR clause 52.245-1 to a specific property
class or type would be impractical given the variety of property types,
values, uses, and conditions. By extension, training contracting
officers on the potential materiality of asset types relative to the
use FAR clause 52.245-1 would be unrealistic and ultimately exacerbate
the accountability gap this rule seeks to close.
3. Impact to Small Business
Comment: The respondent states the rule would adversely impact
small business participation in repair, maintenance, and calibration
activities, and that small businesses would be required to implement
costly property systems to comply with the Government
[[Page 18162]]
property clause and associated DFARS clauses invoked by its use.
Response: Many small businesses that do business with the Federal
Government have well-established property management systems by virtue
of existing purchase orders for repair or other contracts that contain
FAR clause 52.245-1. Further, many of the requirements contained in FAR
52.245-1, e.g., receiving reports, discrepancy reports and property
records, are typical commercial practices, and so not unduly
burdensome. For example, customary commercial practice is to create
receiving reports and keep records for incoming assets regardless of
the source of such assets. In addition, the policy at FAR 45.103(b)
permits contractors to use their own existing property management
procedures, practices, and systems to account for and manage Government
property.
4. Need for Further Analysis by DoD
Comment: The respondent states that DoD should perform further
analysis to ensure that its proposal is cost effective, and that the
Government should ensure that cost savings from greater tracking of
Government property included in contracts that meet the simplified
acquisition threshold outweighs the increased cost of repair and
possible contracting delays.
Response: This rule is part of a larger DoD effort to resolve DoD's
material weakness relative to Government furnished property and
accountability of assets is an important part of audit readiness.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-the-Shelf Items
This rule applies to purchase orders awarded for repair, overhaul
or maintenance of equipment, including, commercial items and
commercially available off-the-shelf items. This includes purchase
orders awarded under FAR part 12 procedures, where the value of repair,
overhaul or maintenance services is at or below the simplified
acquisition threshold. This rule does not apply to contracts for the
acquisition of supplies, to include commercial items and commercially
available off-the-shelf items.
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 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. E.O. 13771
This final rule is not subject to E.O. 13771, because this rule is
not significant under E.O. 12866.
VI. Regulatory Flexibility Act
A final regulatory flexibility analysis has been prepared
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.,
and is summarized as follows:
The objective of this rule is to strengthen the management and
accountability of Government-furnished property (GFP) by amending the
Defense Federal Acquisition Regulation Supplement (DFARS) to require
that Federal Acquisition Regulation (FAR) clause 52.245-1, Government
Property, be incorporated in all DoD purchase orders involving repair,
maintenance, overhaul, or modification of Government property. This
rule is necessary because the current language at FAR 45.107 provides
an exception whereby contracting officers can choose not to include the
clause in purchase orders for repairs of 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.
There were no significant issues raised by the public in response
to the initial regulatory flexibility analysis.
This rule will apply to small businesses that are awarded purchase
orders for repair of Government property, where such purchase orders
did not previously contain FAR clause 52.245-1. According to 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 SAT to 530 unique vendors, of which 328
(approximately 56% percent) were small businesses.
Entities affected by this rule would be required to prepare a
property record and receiving report for the GFP 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.
DoD did not identify any significant alternatives to the rule that
would have less impact on small businesses and still achieve
accountability of GFP and resolve potential risks of loss or disputes
for the ownership of property acquired with Government funds.
VII. Paperwork Reduction Act
This rule contains information collection requirements that have
been approved by the Office of Management and Budget under the
Paperwork Reduction Act (44 U.S.C. chapter 35). This information
collection requirement has been assigned OMB Control Number 0704-0557,
entitled DFARS Part 245; Use of the Government Property Clause for
Repair of Government-furnished Property.
List of Subjects in 48 CFR Part 245
Government procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.
Therefore, 48 CFR 245 is 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
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 FAR 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.
[[Page 18163]]
(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. 2019-08481 Filed 4-29-19; 8:45 am]
BILLING CODE 5001-06-P