[Federal Register Volume 85, Number 109 (Friday, June 5, 2020)]
[Proposed Rules]
[Pages 34569-34576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11754]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 204, 212, and 252
[Docket DARS-2020-0007]
RIN 0750-AK30
Defense Federal Acquisition Regulation Supplement: Data
Collection and Inventory for Services Contracts (DFARS Case 2018-D063)
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 to implement a section of the United States Code
that requires the collection of data on certain DoD service contracts.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before August 4, 2020, to be considered
in the formation of a final rule.
ADDRESSES: Submit comments identified by DFARS Case 2018-D063, using
any of the following methods:
[cir] Regulations.gov: http://www.regulations.gov. Search for
``DFARS Case 2018-D063'' under the heading ``Enter keyword or ID'' and
select ``Search.'' Select ``Comment Now'' and follow the instructions
provided to submit a comment. Please include ``DFARS Case 2018-D063''
on any attached document.
[cir] Email: [email protected]. Include DFARS Case 2018-D063 in
the subject line of the message.
[cir] Fax: 571-372-6094.
[cir] Mail: Defense Acquisition Regulations System, Attn: Ms.
Carrie Moore, OUSD(A&S)DPC/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).
[[Page 34570]]
FOR FURTHER INFORMATION CONTACT: Ms. Carrie Moore, telephone 571-372-
6093.
SUPPLEMENTARY INFORMATION:
I. Background
Under Defense Federal Acquisition Regulation System (DFARS) case
2012-D051, DoD published a proposed rule in the Federal Register at 79
FR 32522 on June 5, 2014, to implement section 807 of the National
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2008 (10 U.S.C.
2330a). Section 807 required DoD to: Establish a data collection system
that provides certain data on the purchasing of services by DoD, and
submit to Congress an annual inventory of service contracts awarded by
or on behalf of the DoD. The proposed rule required contractors to
enter the contract data required by the statute into a DoD-unique
database, Enterprise Contractor Manpower Reporting Application (ECMRA).
Fourteen respondents submitted comments in response to the proposed
rule.
Subsequently, section 812 of the NDAA for FY 2017 amended 10 U.S.C.
2330a to narrow the scope of contracts to which the data collection
requirement applies. As a result, DFARS Case 2012-D051 was closed and
rolled into this new DFARS case to implement 10 U.S.C. 2330a, as
amended.
Under a similar but different statute, Federal agencies, other than
DoD, are required by Federal Acquisition Regulation (FAR) subpart 4.17
to report annually on activities performed by service contractors.
Since the publication of the proposed rule DFARS case 2012-D051, DoD
has elected to adopt the approach used by other Federal agencies to
collect service contract data. The approach uses the Federal
Procurement Data System (FPDS), an existing source of contract
information for the Federal Government, to provide a majority of the
information required by 10 U.S.C. 2330a. The data that is not available
in FPDS is entered annually by the contractor in the System for Award
Management (SAM). Adopting a Governmentwide approach to collecting
service contract data reduces burden on both industry and DoD, improves
data integrity and accuracy, and reforms DoD's business practices for
greater performance and affordability.
II. Discussion and Analysis
A. Discussion of Proposed Rule
This rule proposes to revise the DFARS to implement 10 U.S.C.
2330a, as amended by section 812 of the NDAA for FY 2017. This rule
will require contractors to report data in SAM on an annual basis when
they are awarded a DoD contract or task order that is valued in excess
of $3 million and is for logistics management services, equipment
related services, knowledge-based services, or electronics and
communications services.
When applicable, contractors will be required to annually report:
(1) The total dollar amount invoiced for, and (2) the total number of
direct labor hours expended on services performed under the contract or
task order during the preceding fiscal year. The total number of direct
labor hours reported to SAM should be the total of both the contractor
hours and its subcontractors' hours. A new basic DFARS clause and an
alternate I clause have been created to advise applicable contractors
of the policy and requirements for reporting data in SAM.
B. Analysis of Public Comments
DoD reviewed the public comments received in response to DFARS Case
2012-D051. A discussion of the comments is provided as follows:
1. Exemptions
Comment: Several respondents recommended that the rule exempt
certain areas including: Research and development projects; architect
and engineering services; telecommunications and transmission and
internet; and actions using criteria similar to the Service Contract
Labor Standards exemptions in FAR 22.1003-4(d)(1).
Response: This rule implements 10 U.S.C. 2330a, as amended by
section 812 of the NDAA for FY 2017, which requires reporting for only
four service acquisition portfolio groups: Logistics management
services, equipment related services, knowledge-based services, and
electronics and communications services. No further exemptions are
available under the law.
Comment: Several respondents recommended that contracted services
that meet the definition of commercial items be exempt from ECMRA
reporting.
Response: The intent of the statute is to enhance DoD's ability to
manage the total force, inclusive of military, civilian, and contractor
personnel. Specifically, section 2330a requires the military
departments and defense agencies to ensure that the inventory of
contracts for services required by the statute is used to inform
strategic workforce planning decisions under 10 U.S.C. 129a, develop
budget justification materials for services in accordance with 10
U.S.C. 235, and ensure services contracts are not for the performance
of inherently governmental functions. An exception for services that
meet the definition of a commercial item would exclude significant sums
expended by DoD on commercial service acquisitions intended to be
covered by the law. Therefore, services meeting the definition of a
commercial item are not exempt from the reporting requirement.
Comment: Several respondents recommended that firm fixed-price
service contracts be exempt from the ECMRA reporting requirement,
because these contracts acquire services in their entirety, not as
individuals (full-time equivalents).
Response: In accordance with paragraph (b) of 10 U.S.C. 2330a, the
data required to be collected under the statute includes service
contracts and orders that contain firm fixed-prices for the specific
tasks to be performed. Therefore, firm fixed-price contracts for the
applicable services are not exempt under the proposed rule.
Comment: One respondent recommended that the rule exempt DoD
intelligence community agency contracts, because the existing exemption
for ``classified services'' is not sufficient to cover the exempt
contracts entered into by DoD intelligence community agencies.
Response: The statute does not provide for exemptions to the
reporting requirement; therefore, the proposed rule does not provide
for exemptions, in order to comply with the law.
Comment: One respondent recommended that, due to the difficulty in
tracking labor for service contracts where contractor employees may
spend only small fractions of their time servicing the Government
contract (such as refuse collection and software as a service), the
rule should be changed to exempt such contracts by using the criteria
similar to the Service Contract Labor Standards exemptions (see FAR
22.1003-4(d)(1)).
Response: Title 10 U.S.C. 2330a, as amended by section 812 of the
NDAA for FY 2017, now limits data collection to four service
acquisition portfolio groups: Logistics management services, equipment
related services, knowledge-based services, and electronics and
communications services. Under this proposed rule, only service
contracts with a total estimated value exceeding $3 million that are
for services in one of the four portfolio groups must be reported in
SAM.
Comment: One respondent questioned whether Congress intended DoD to
report contracts for services that are integrally related to supplies,
or contracts where the services are a
[[Page 34571]]
relatively small dollar value in relation to the supplies.
Response: Title 10 U.S.C. 2330a requires the collection of data on
``each purchase of services by a military department or Defense
Agency'' that meets a certain dollar threshold and is for certain
services. The proposed rule clarifies that the requirement applies to
contracts or orders that have a total estimated value, including
options, exceeding $3 million and are for services in one of the four
service acquisition portfolio groups.
2. Expansion of Reporting Requirement
Comment: Two respondents suggested that the ECMRA reporting
requirement be extended to contracts for services valued at or below
the simplified acquisition threshold (SAT). Doing so would be
consistent with the congressional intent in 10 U.S.C. 2330a for DoD to
provide a total inventory of contracted for services.
Response: Title 10 U.S.C. 2330a(a), as amended by section 812 of
the NDAA for FY 2017, now only requires the collection of data on
service contracts, under certain portfolio groups, that exceed $3
million. This proposed rule implements the statutory threshold.
Applying the rule to service contracts below $3 million is not
necessary to implement the statute and would impose an unnecessary
burden on the public and DoD.
Comment: One respondent suggested that the final rule clarify that
services provided ancillary to a lease or rental contract (such as auto
repair and maintenance services incidental to a vehicle lease) are
subject to ECMRA reporting requirement. The respondent also recommended
that the final rule clarify that the ECMRA reporting requirements apply
to contracts for destruction, demolition, and removal.
Response: Title 10 U.S.C. 2330a(a), as amended by section 812 of
the NDAA for FY 2017, specifies that the service acquisition portfolio
group for equipment related services is included in the required
reporting group. It is expected that contracts for equipment-related
services with a total estimated value, including options, exceeding $3
million will be reported in SAM.
3. Duplicative of Existing Systems
Comment: Two respondents indicated that the rule is duplicative of
the existing FAR rule on service contract reporting that applies to
civilian agencies (see FAR subpart 4.17). Respondents stated that there
should not be two parallel systems, one for civilian agencies and
another for defense agencies, because this situation causes confusion
and compliance problems within industry.
Response: FAR subpart 4.17 does not apply to DoD. This proposed
rule enables DoD to fulfill its obligation under 10 U.S.C. 2330a. Since
publication of the proposed rule under 2012-D051, DoD has adopted the
use of FPDS to collect a majority of the required data, in an effort to
standardize the reporting process for contractors across the Federal
Government.
Comment: Several respondents suggested that the ECMRA system is
duplicative of other Government systems, such as FPDS, which can also
be used to estimate the data provided in the annual inventory of
contracts for services.
Response: DoD has adopted the service contract reporting process
used by other Federal agencies and no longer require contractor
reporting in ECMRA. This proposed rule will enable DoD to use FPDS to
obtain a majority of the information required by 10 U.S.C. 2330a. FPDS
does not provide data on the direct labor hours expended and dollar
amounts invoiced for contracted services. Therefore, this proposed rule
requires applicable contractors to enter the labor hours and dollar
amounts in SAM, which is the process used by other Federal agencies, in
accordance with FAR subpart 4.17.
Comment: Two respondents suggested that the separate instances of
ECMRA (Army, Navy, Air Force, and other DoD agencies) be combined into
one DoD-wide ECMRA system.
Response: The use of ECMRA is no longer necessary. This proposed
rule requires contractors to enter information in SAM.
Comment: Two respondents suggested that the rule is duplicative of
existing DoD reporting requirements, such as: (1) The Army's contractor
manpower reporting requirement; and (2) the Secretary of Defense
Memorandum entitled ``Enterprise-wide Contractor Manpower Reporting
Application,'' dated November 2012, that requires all new contracts for
services to include a contract line item for contractor manpower
reporting and a requirement in the performance work statement for
contractor manpower reporting.
Response: This rule will replace, not duplicate, the existing Army
contract manpower reporting requirement and the requirements in the
November 2012 Memorandum from the Under Secretary of Defense for
Acquisition, Technology, and Logistics and the Acting Principal Deputy
Under Secretary of Defense for Personnel and Readiness.
Comment: Two respondents suggested that the rule exceeds the scope
of congressional intent, because DoD is already using its internal
records and systems to achieve the statutory objective of the inventory
of contracts for services.
Response: The rule does not exceed the scope of congressional
intent, because existing systems and reports do not fully capture all
of the data required by 10 U.S.C. 2330a.
4. Flow Down to Subcontracts
Comment: Two respondents suggested that the requirement for
subcontract reporting be changed. One respondent suggested that the
prime contractor be required only to flow down the clause to
subcontractors and relieved of the responsibility of reporting for
subcontractors. The other respondent suggested that subcontractor data
not be reported at all, as this is inconsistent with commercial
practice.
Response: The proposed rule does not contain a requirement to flow
down a clause. Instead, this proposed rule requires contractors to
include its subcontractor labor hours in the total number of labor
hours the contractor reports annually to SAM. The proposed rule leaves
the process for collecting subcontractor data up to the discretion of
each contractor.
5. Need for Additional Resources
Comment: One respondent suggested that more resources be provided
to the Office of the Under Secretary of Defense for Personnel and
Readiness workforce that administers and coordinates the inventory of
contracts for services.
Response: This suggestion is beyond the scope of the rule.
6. ECMRA Process
Comment: One respondent noted that the ECMRA interface for the
Fourth Estate (other DoD agencies and field activities) is not yet
fully operational, in contrast to what is stated in the proposed rule.
For example, there is no operational help desk support for Fourth
Estate activities. The respondent suggests that the final rule should
be delayed until ECMRA is consolidated into a common portal for all DoD
agencies, or until the ECMRA instance for Fourth Estate activities is
fully resourced.
Response: The use of ECMRA is no longer necessary. This proposed
rule requires contractors to enter information in SAM.
Comment: One respondent questioned how the Government validates
data provided by contractors in ECMRA. The respondent suggested that
ECMRA be linked to Wide Area WorkFlow and that the contracting officer
or the contracting
[[Page 34572]]
officer's representative be allowed to inspect payroll data in order to
validate contractor data entered into ECMRA.
Response: Agencies are responsible for ensuring the contractor
submits information in SAM that is reasonable and consistent with
available contract information. Agencies may use any contract data
available, as appropriate and necessary, to meet this responsibility.
Comment: One respondent suggested that the rule be clearer about
how the ECMRA will protect nonpublic data, such as direct labor hours
and cost data.
Response: The use of ECMRA is no longer necessary.
Comment: One respondent requested clarification on the procedures
to follow when the services under one contract support two or more DoD
services or agencies.
Response: This proposed rule requires contractors to enter
information in SAM, which is a single system able to collect all
requisite data under this rule.
Comment: One respondent suggested that ECMRA should have a built-in
capability for an overall point of contact at each agency level who can
gather and manage the ECMRA information and that data be gathered at a
centralized location.
Response: The use of ECMRA is no longer necessary. This proposed
rule requires contractors to enter information in SAM, which is a
Governmentwide system.
Comment: One respondent noted that it is unduly restrictive to
allow only one contractor user per contract to view the data for that
contract in ECMRA.
Response: The use of ECMRA is no longer necessary. This proposed
rule requires contractors to enter information in SAM.
Comment: One respondent suggested that the rule should clarify the
contractor's responsibilities in the event that the Government-
populated information in ECMRA is incorrect.
Response: The use of ECMRA is no longer necessary. This proposed
rule requires contractors to enter information in SAM. Contractors may
contact the SAM Helpdesk or the contracting officer in the event that
data needs to be updated in SAM.
Comment: One respondent suggested that the requiring activity, and
not the contracting officer, be responsible for verifying the
contractor's ECMRA compliance is documented.
Response: In accordance with FAR 1.602-2, the contracting officer
is responsible for ensuring compliance with the terms of the contract.
Comment: A respondent suggested that a DD Form 1423, Contract Data
Requirements List, be included as a requirement in the rule.
Response: The proposed DFARS clauses convey the requirement for
contractor reporting to SAM; therefore, a DD Form 1423 is not
necessary.
7. Proposed Clause Changes
Comment: One respondent requested clarification regarding the
prescription for the clause at DFARS 252.237-70XX with regard to
indefinite-delivery, indefinite-quantity contracts. The respondent
asked whether the clause must be included only if the expected dollar
value of the individual task or delivery orders will exceed the SAT or
if the total dollar value of all the task or delivery orders issued
under the contract will exceed the SAT.
Response: The rule requires information reporting on each task
order that meets the criteria and threshold for service contract
reporting. The proposed rule does not require reporting at the contract
level for indefinite-delivery contracts. The rule proposes a basic
clause that applies to solicitations, contracts (other than indefinite-
delivery contracts), and task orders awarded under non-DoD indefinite-
delivery contracts; and an alternate clause that applies to DoD issued
solicitations and contracts for indefinite-delivery type contracts. The
basic clause and the alternate clause implement the reporting
requirement for contracts and/or task orders that have a total
estimated value, including options, exceeding $3 million and are for
services in the four specified service acquisition portfolio groups.
The basic clause advises contractors to report on the effort performed
under the contract or the task order awarded under a non-DoD contract.
The alternate clause advises the contractor to report on the effort
performed under each task order awarded under a DoD indefinite-delivery
contract that meets the criteria and threshold for service contract
reporting.
Comment: One respondent suggested that the rule include a link to
the product service code (PSC) manual available at www.acquisition.gov,
to aid contracting personnel in determining the types of services to
which the proposed rule applies or does not apply.
Response: The applicable PSCs will be identified in the DFARS
Procedures, Guidance, and Information upon publication of the final
rule.
Comment: One respondent suggested that the rule require the
contracting officer to prepare a determination designating specifically
the services to which the ECMRA reporting requirement would apply.
Response: It is not necessary for the contracting officer to
prepare such a determination or provide further clarification to the
contractor. This proposed rule only applies the requirement to report
in SAM, via the DFARS clause, to those contracts and orders that meet
the thresholds and criteria for service contract reporting, as
expressed in 10 U.S.C. 2330a.
8. Definition Clarification
Comment: One respondent noted that many terms, including ``direct
labor hours'' and ``cost data,'' are not defined in the proposed rule.
Response: This proposed rule only uses the term ``direct labor
hours,'' which is defined in FAR 2.101.
Comment: Two respondents recommended that the term ``services'' be
better defined for the purposes of informing both the Government and
contractor when the proposed rule applies and when the contractor is
responsible for entering data into ECMRA.
Response: This proposed rule only applies the requirement to report
in SAM, via the DFARS clause, to those contracts and orders that meet
or are expected to meet the thresholds and criteria for service
contract reporting, as expressed in 10 U.S.C. 2330a. When awarded a
contract, or task order placed under a non-DoD contract, this rule
proposes a basic clause to notify contractors of the requirement to
report in SAM on the effort performed under the award. When awarded an
indefinite-delivery contract under which orders will be placed that may
meet the thresholds and criteria for service contract reporting, this
rule proposes an alternate clause to notify contractors of the
requirement to report in SAM on the effort performed for a task order
issued under the contract that meets the service contract reporting
thresholds and criteria.
9. Major Rule
Comment: One respondent suggested that the Government reconsider
whether this is a major rule. Title 5 U.S.C. 804 defines a major rule
as one which the Office of Management and Budget (OMB) determines will
cause a major increase in costs or prices for individual industries, or
have a significant adverse effect on competition, employment,
investment, productivity, or innovation. This rule imposes new
reporting requirements, particularly for commercial item contractors
that provide professional services and supplies. These contractors
would not have been previously subject to the type of manpower
reporting required by this
[[Page 34573]]
rule. For small businesses, the need to build compliant procedures and
automated systems could be a barrier to participating in the federal
market. This is particularly the case when the cumulative effect of
multiple and duplicative data reporting requirements is considered. The
ultimate result over time will be a decrease in competition and
innovation in the Federal market.
Response: This rule is not a major rule in that it does not have a
significant impact on competition, employment, investment,
productivity, innovation, or on the ability of U.S. enterprises to
compete with foreign enterprises. Similar reporting requirements for
civilian agencies have appeared in FAR subpart 4.17 since 2014, so many
contractors already have experience with this type of reporting
requirement. The scope of this rule has been decreased, because 10
U.S.C. 2330a, as amended by section 812 of the NDAA for FY 2017, limits
data collection to four service acquisition portfolios and applies only
to contracts and task orders exceeding $3 million in total estimated
value, including options.
10. Initial Regulatory Flexibility Analysis
Comment: Two respondents stated that the proposed reporting system
did not have a goal of minimizing the burden to small business and that
the constant flow of new regulations to businesses have little regard
for the benefit to the Government or burden on businesses.
Response: The burden applied to small businesses is the minimum
consistent with applicable laws, Executive orders, regulations, and
prudent business practices. The information collection requirement has
been narrowly tailored to maximize the use of existing records already
maintained by contractors and by the Government. To further minimize
the impact, DoD is adopting the existing system and process used by the
rest of the Government to obtain the requisite information from
contractors, which maintains a familiar and consistent reporting
requirement for contractors; and the information is collected
electronically, help-desk support and user guides are available for
SAM, and reporting requirements will be limited to a small number of
data elements to facilitate ease of reporting and reduce contractor
burden. In addition, the NDAA for FY 2017 raised the threshold for
reporting to $3 million from the SAT and limited the data reporting to
four service acquisition portfolio groups.
11. Paperwork Reduction Act
a. Government Systems Already in Place
Comment: Two respondents stated that the Government has systems in
place for collecting the required data and the rule would require
duplicative contractor reporting that is not necessary for compliance.
Two respondents noted that there will be two rules, one for DOD and the
other non-DOD, which could potentially apply under a single contract
vehicle and that determining which set of rules apply will be
burdensome.
Response: The rule will not require duplicative reporting by
contractors. The DoD and non-DoD reporting requirements are based on
separate statutes. Further, the information collection requirement
associated with this DFARS Case 2018-D063, once cleared by OMB, will
supersede the reporting requirements approved under OMB Control Number
0704-0491, entitled ``DoD Inventory of Contracts for Services
Compliance.'' Contracts awarded by DoD, or on behalf of DoD, will
contain the proposed DFARS clauses.
b. Paperwork Reduction Act Constraints
Comment: One respondent stated that the rule conflicts with
Paperwork Reduction Act constraints on rulemaking, namely that the rule
must: (1) Be necessary for the proper performance of the agency; (2)
not be duplicative of information otherwise reasonably accessible to
the agency; and (3) reduce, to the extent practicable and appropriate,
the burden on persons who shall provide information to or for the
agency.
Response: The rule complies with the Paperwork Reduction Act. The
information collection is necessary in order for DoD to meet the
requirement of 10 U.S.C. 2330a, as amended, to collect certain service
contract data and report annually to Congress. The rule is not
duplicative of information otherwise reasonably accessible to DoD. DoD
systems do not currently collect all of the data elements required by
the statute.
The information collection requirement has been narrowly tailored
to minimize the impact of reporting and maximize the use of existing
records already maintained by contractors and by the Government. To
minimize the impact, the information will be collected electronically,
help-desk support will be provided to users, and reporting requirements
will be limited to a small number of data elements.
c. Burden Estimates
Comment: Two respondents commented that the rule underestimates the
number of contractors that will be impacted. One respondent indicated
that the total estimated number of respondents of 13,269, including
7,962 for small businesses, seems low, since the GSA Schedules alone
have 20,000 contractors and 80% of the contractors are small
businesses. One respondent stated that the estimate for the total
number of annual responses of approximately 54,000 appears low. In
addition, several respondents commented that the estimate of an average
of 1.4 hours per response is too low, citing reasons such as: (1) The
billions of dollars in services for which DoD contracts for annually
and the corresponding volume of data required to be entered, (2) the
limitation of the ECMRA bulk upload capability, or (3) the impact on
response time resulting from the flow down of the reporting requirement
to subcontractors. One respondent stated that the burden is
disproportionally high for small businesses that are less likely to
have the necessary internal infrastructure.
Response: The estimated burdens for respondents and responses
published in the previously proposed rule have been updated to reflect
the revised requirements of 10 U.S.C. 2330a, as amended.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-the-Shelf Items
A. Background
Consistent with the determinations that DoD made with regard to
application of the requirements of section 846 of the NDAA for FY 2011,
DoD does not intend to apply the requirements of 10 U.S.C. 2330a, as
amended by section 812 of the NDAA for FY 2017, to contracts at or
below the simplified acquisition threshold (SAT) or for commercially
available off-the shelf items (COTS) items, but does intend to apply
the rule to contracts for the acquisition of commercial items.
Section 846 of the NDAA for FY 2011 and section 812 of the NDAA for
FY 2017 are silent on applicability to contracts and subcontracts in
amounts no greater than the SAT or for the acquisition of commercial
items. Title 10 U.S.C. 2330a(a), as amended by section 812 of the NDAA
for FY 2017, however, only requires the collection of data on service
contracts, under certain portfolio groups, that exceed $3 million,
which effectively precludes application
[[Page 34574]]
to acquisitions under the SAT. Also, the statute does not provide for
civil or criminal penalties. Therefore, the statute does not apply to
contracts or subcontracts in amounts not greater than the SAT or to the
acquisition of commercial items unless the Principal Director, Defense
Pricing and Contracting, makes a written determination as provided in
41 U.S.C. 1905 and 10 U.S.C. 2375.
B. Applicability to Contracts for the Acquisition of Commercial Items,
Excluding COTS Items
Title 10 U.S.C. 2375 exempts contracts and subcontracts for the
acquisition of commercial items, including COTS items, from provisions
of law enacted after October 13, 1994, that, as determined by the Under
Secretary of Defense for Acquisition and Sustainment (USD (A&S)), set
forth policies, procedures, requirements, or restrictions for the
acquisition of property or services unless--
The provision of law--
[cir] Provides for criminal or civil penalties;
[cir] Requires that certain articles be bought from American
sources pursuant to 10 U.S.C. 2533a or that strategic materials
critical to national security be bought from American sources pursuant
to 10 U.S.C. 2533b; or
[cir] Specifically refers to 10 U.S.C. 2375 and states that it
shall apply to contracts and subcontracts for the acquisition of
commercial items (including COTS items); or
USD(A&S) determines in writing that it would not be in the
best interest of the Government to exempt contracts or subcontracts for
the acquisition of commercial items from the applicability of the
provision.
This authority has been delegated to the Principal Director,
Defense Pricing and Contracting.
Consistent with 10 U.S.C. 2375, DoD has determined that it is in
the best interest of the United States to apply the requirements of 10
U.S.C. 2330a to the acquisition of commercials items, excluding COTS
items. The intent of the statute is to enhance DoD's ability to manage
the total force, inclusive of military, civilian, and contractor
personnel. Specifically, section 2330a, as amended, requires the
military departments and defense agencies to ensure that the inventory
of contracts for services required by the statute is used to inform
strategic workforce planning decisions under 10 U.S.C. 129a and develop
budget justification materials for services in accordance with 10
U.S.C. 235. An exception for services that meet the definition of a
commercial item would exclude significant sums expended by DoD on
contracted services intended to be covered by the law, thereby
undermining the overarching public policy purpose of the law.
Therefore, this rule will apply to the acquisition of commercial items,
excluding COTS.
IV. Expected Cost Impact
This rule will require a contractor to report data in SAM on an
annual basis for a DoD contract or task order that is valued in excess
of $3 million and is for logistics management services, equipment
related services, knowledge-based services, or electronics and
communications services.
When applicable, contractors will be required to annually report
the total dollar amount invoiced for and the total number of direct
labor hours expended on services performed under the contract or task
order during the preceding fiscal year. The total number of direct
labor hours reported to SAM should be the total of both the contractor
hours and its subcontractors' hours. Significant costs are avoided by
using existing Government systems (FPDS and SAM) to collect elements of
the required data.
The following is a summary of the estimated public and Government
costs calculated in perpetuity in 2016 dollars at a 7-percent discount
rate:
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Summary Public Government Total
----------------------------------------------------------------------------------------------------------------
Present Value................................................... $10,441,186 $7,830,886 $18,272,072
Annualized Costs................................................ 730,883 548,162 1,279,045
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To access the full Regulatory Cost Analysis for this rule, go to
the Federal eRulemaking Portal at www.regulations.gov, search for
``DFARS Case 2018-D063,'' click ``Open Docket,'' and view ``Supporting
Documents.''
V. 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.
VI. Executive Order 13771
This rule is not expected to be subject to E.O. 13771, because this
rule is not a significant regulatory action under E.O. 12866.
VII. 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 rule only requires annual reporting of two data items for a
limited number and type of service contracts. However, an initial
regulatory flexibility analysis has been performed and is summarized as
follows:
The Department of Defense is proposing to amend the Defense Federal
Acquisition Regulation Supplement (DFARS) to establish a data
collection system that provides management information on each purchase
of services by a military department or defense agency in excess of $3
million for the following service acquisition portfolio groups:
Logistics management services; equipment related services; knowledge-
based services; and, electronics and communications services.
The objective of this proposed rule is to implement 10 U.S.C.
2330a, as modified by section 812 of the National Defense Authorization
Act (NDAA) for Fiscal Year (FY) 2017 (Pub. L. 114-328).
Based on data from the Federal Procurement Data System for FY 2016
through 2018, DoD awards annually an average of 4,386 service contracts
and orders to 1,934 unique entities that have an estimated value
greater than $3M and are within the four portfolio groups outlined in
the rule. Of the 4,386 contracts and orders awarded annually,
approximately 2,059 (47%) are made to 1,227 (63%) unique small
businesses entities.
[[Page 34575]]
This proposed rule requires all contractors that are awarded a
contract or order in excess of $3 million for services in any of the
four service acquisition portfolio groups to report contract data in
SAM. The contractor is required to report the total amount invoiced for
services performed during the preceding fiscal year and the number of
direct labor hours, including subcontractor hours, expended on services
performed during the preceding fiscal year. The Government estimates
that a journeyman level contractor employee with basic knowledge of the
contract would be required to enter the data. The contractor employee
may also need to gather additional billing information from the
organization in order to complete the data input in SAM.
This rule does not duplicate, overlap, or conflict with any other
Federal rules. There are no known significant alternative approaches to
the proposed rule that would meet the requirements of the applicable
statute.
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 2018-
D063), in correspondence.
VIII. Paperwork Reduction Act
The rule contains information collection requirements that require
the approval of the Office of Management and Budget (OMB) under the
Paperwork Reduction Act (44 U.S.C. chapter 35). Accordingly, DoD has
submitted a request for approval of a new information collection
requirement concerning DFARS Case 2018-D063, Data Collection and
Inventory for Services Contracts, to the Office of Management and
Budget. Upon OMB clearance of this new collection and publication of
the associated final DFARS rule, a related program clearance, OMB
Control Number 0704-0491, DoD Enterprise-wide Contractor Manpower
Reporting Application (ECMRA), will be discontinued.
A. Public reporting burden for this collection of information is
estimated to average 2 hours per response, including the time for
gathering and maintaining the data and completing and reviewing the
collection of information.
The annual reporting burden estimated as follows:
Respondents: 1,934.
Responses per respondent: 2.267, approximately.
Total annual responses: 4,386.
Hours per response: 2 hours.
Total response burden hours: 8,772.
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: Carrie Moore
OUSD(A&S)DPC/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC
20301-3060. Comments can be received from 30 to 60 days after the date
of this notification, but comments to OMB will be most useful if
received by OMB within 30 days after the date of this notification.
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: Carrie Moore, OUSD(A&S)DPC/DARS, Room 3B941, 3060 Defense
Pentagon, Washington, DC 20301-3060, or email [email protected].
Include DFARS Case 2018-D063 in the subject line of the message.
List of Subjects in 48 CFR Parts 204, 212, and 252
Government procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 204, 212, and 252 are proposed to be
amended as follows:
0
1. The authority citation for 48 CFR parts 204, 212, and 252 continue
to read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 204--ADMINISTRATIVE AND INFORMATION MATTERS
0
2. Add subpart 204.17, consisting of 204.1700, 204.1703, and 204.1705,
to read as follows:
Subpart 204.17--Service Contracts Inventory
Sec.
204.1700 Scope of subpart.
204.1703 Reporting requirements.
204.1705 Contract clauses.
Subpart 204.17--Service Contracts Inventory
204.1700 Scope of subpart.
This subpart prescribes the requirement to report certain
contracted services in accordance with 10 U.S.C. 2330a.
204.1703 Reporting requirements.
(a) Thresholds. (i) Service contractor reporting of information is
required in the System for Award Management (SAM) when a contract or
order--
(A) Has a total estimated value, including options, that exceeds $3
million; and
(B) Is for services in the following service acquisition portfolio
groups (see PGI 204.1703 for a list of applicable product and service
codes):
(1) Logistics management services.
(2) Equipment related services.
(3) Knowledge-based services.
(4) Electronics and communications services.
(ii) Contractor reporting is required annually, by October 31, on
the services performed under the contract or order, including any
subcontracts, during the preceding Government fiscal year.
(iii) For indefinite-delivery contracts, basic ordering agreements,
and blanket purchase agreements--
(A) Contractor reporting is required for each order issued under
the contract or agreement that meets the requirements of paragraph
(a)(i) of this section; and
(B) Service contract reporting is not required for the basic
contract or agreement.
(b) Agency reporting responsibilities. In the event the agency
believes that revisions to the contractor-reported information are
warranted, the agency shall notify the contractor.
204.1705 Contract clauses.
(a)(i) Use the basic or the alternate of the clause 252.204-70XX,
Reporting Requirements for Contracted Services, in solicitations,
contracts, agreements, and orders, including solicitations and
[[Page 34576]]
contracts using FAR part 12 procedures for the acquisition of
commercial items, that--
(A) Have a total estimated value, including options, that exceeds
$3 million; and
(B) Are for services in the following service acquisition portfolio
groups--
(1) Logistics management services;
(2) Equipment related services;
(3) Knowledge-based services; or
(4) Electronics and communications services.
(ii) Use the basic clause in solicitations and contracts, except
solicitations and resultant awards of indefinite-delivery contracts,
and orders placed under non-DoD contracts that meet the criteria in
paragraph (a)(i) of this section; or
(iii) Use the alternate I clause in solicitations and resultant
awards of indefinite-delivery contracts, basic ordering agreements, and
blanket purchase agreements, when one or more of the orders under the
contract or agreement are expected to meet the criteria in paragraph
(a)(i) of this section.
PART 212--ACQUISITION OF COMMERCIAL ITEMS
0
3. Amend section 212.301 by adding paragraph (f)(ii)(j) to read as
follows:
212.301 Solicitation provisions and contract clauses for the
acquisition of commercial items.
* * * * *
(f) * * *
(ii) * * *
(j) Use the clause at 252.204-70XX, Reporting Requirements for
Contracted Services, to comply with 10 U.S.C. 2330a.
(1) Use the basic clause as prescribed in 204.1705(a)(i) and (ii);
and
(2) Use the alternate I clause as prescribed in 204.1705 (a)(i) and
(iii).
* * * * *
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
4. Add section 252.204-70XX to read as follows:
252.204-70XX Reporting Requirements for Contracted Services.
Basic. As prescribed in 204.1705(a)(i) and (ii), use the following
clause:
Reporting Requirements for Contracted Services-Basic (DATE)
(a) The contractor shall report annually, by October 31, at
www.sam.gov, on the services performed under this contract or order,
including any subcontracts, during the preceding Government fiscal
year (October 1-September 30).
(b) The Contractor shall report the following information for
the contract or order:
(1) The total dollar amount invoiced for services performed
during the preceding Government fiscal year under the contract or
order.
(2) The number of Contractor direct labor hours, to include
subcontractor direct labor hours, as applicable, expended on the
services performed under the order or contract during the previous
Government fiscal year.
(c) The Government will review Contractor reported information
for reasonableness and consistency with available contract
information. In the event the Government believes that revisions to
the Contractor reported information are warranted, the Government
will notify the Contractor. Upon notification, the Contractor shall
revise the reported information or provide the Government with a
supporting rationale for the information.
(End of clause)
Alternate I. As prescribed in 204.1705(a)(i) and (iii), use the
following clause, which substitutes ``contract or agreement for each
order'' in lieu of ``contract or order'' in paragraph (a) and ``order''
in lieu of ``contract or order'' in paragraphs (b) and (b)(1) and (2),
and identifies the dollar threshold and service acquisition portfolio
groups for which orders under the contract or agreement require service
contract reporting.
Reporting Requirements for Contracted Services-Alternate I (DATE)
(a) The contractor shall report annually, by October 31, at
www.sam.gov, on services performed during the preceding Government
fiscal year (October 1-September 30) under this contract or
agreement for each order, including any subcontract, which exceeds
$3 million for services in the following service acquisition
portfolio groups:
(1) Logistics management services.
(2) Equipment related services.
(3) Knowledge-based services.
(4) Electronics and communications services.
(b) The Contractor shall report the following information for
the order:
(1) The total dollar amount invoiced for services performed
during the preceding Government fiscal year under the order.
(2) The number of Contractor direct labor hours, to include
subcontractor direct labor hours, as applicable, expended on the
services performed under the order during the previous Government
fiscal year.
(c) The Government will review Contractor reported information
for reasonableness and consistency with available contract
information. In the event the Government believes that revisions to
the Contractor reported information are warranted, the Government
will notify the Contractor. Upon notification, the Contractor shall
revise the reported information or provide the Government with a
supporting rationale for the information.
(End of clause)
[FR Doc. 2020-11754 Filed 6-4-20; 8:45 am]
BILLING CODE 5001-06-P