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[Federal Register Volume 76, Number 75 (Tuesday, April 19, 2011)]
[Proposed Rules]
[Pages 21847-21849]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-8966]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 204, 212, and 252

RIN 0750-AH02

Defense Federal Acquisition Regulation Supplement (DFARS), 
Alternative Line-Item Structure (DFARS Case 2010-D017)

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 establish a standard procedure for 
offerors to propose an alternative line-item structure that reflects 
the offeror's business practices for selling and billing commercial 
items and initial provisioning spares for weapon systems. A new 
solicitation provision is provided to facilitate offerors' ability to 
propose such changes to the solicitation structure in their offer.

DATES: Comments on this proposed rule should be submitted in writing to 
the address shown below on or before June 20, 2011, to be considered in 
the formation of the final rule.

ADDRESSES: Submit comments identified by DFARS Case 2010-D017, using 
any of the following methods:
    Regulations.gov: http://www.regulations.gov. Submit 
comments via the Federal eRulemaking portal by inputting ``DFARS Case 
2010-D017'' under the heading ``Enter keyword or ID'' and selecting 
``Search.'' Select the link ``Submit a Comment'' that corresponds with 
``DFARS Case 2010-D017.'' Follow the instructions provided at the 
``Submit a Comment'' screen. Please include your name, company name (if 
any), and ``DFARS Case 2010-D017'' on your attached document. Follow 
the instructions for submitting comments.
     E-mail: dfars@osd.mil. Include DFARS Case 2010-D017 in the 
subject line of the message.
     Fax: 703-602-0350.
     Mail: Defense Acquisition Regulations System, Attn: Mr. 
Julian Thrash, 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 http://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. Julian Thrash, 703-602-0310.

I. Background

    DoD is proposing to add new DFARS language that provides offerors 
the opportunity to propose an alternative line-item structure in 
solicitations for commercial items and initial provisioning spares. 
This proposed DFARS change will allow offerors to provide information 
about their products that may not have been known to the Government 
prior to issuance of the solicitation.
    DoD identified the need to propose an alternative line-item 
structure during process reviews and working group sessions that 
assessed destination-acceptance procedures. The process reviews 
performed by DoD cross-service working groups, which were chartered by 
the Defense Finance and Accounting System, examined issues causing 
problems in the receipt and acceptance phase for contract deliverables 
and payments.
    This group determined that the level of detail in the requirements 
description and line-item structure is not always sufficient for 
delivery, payment, and subsequent inventory management of the items 
delivered. For example, the contract line item may be for a desktop 
computer, but the actual items delivered, invoiced, and inventoried may 
reflect a separate monitor, keyboard, and central processing unit. The 
resultant misalignment of transaction detail (i.e., contract line item, 
invoiced unit, delivery and inventory unit) is the cause of failures in 
the electronic processes of the DoD's business enterprise requiring 
manual intervention with potential delays in contractor payment.
    To address this recurring problem, this rule is establishing and 
standardizing a process to enable offerors to propose changes in their 
offer to the solicitation's line-item structure. Establishing such a 
process is a first step towards managing variation in these 
transactions by eliminating or reducing manual intervention.

II. Proposed DFARS Changes

    DoD is proposing to revise the DFARS by adding--

--Paragraph (g) at 204.7103-1, Criteria for establishing;
--A provision prescription at 204.7109(b);
--Reference to the new provision at 212.301 Solicitation provisions and 
contract clauses for the acquisition of commercial items; and
--A provision at 252.204-70XX, Alternative Line-Item Structure.

    Although DoD believes the authority to use an alternative line-item 
structure currently exists within the Federal Acquisition Regulation 
(FAR), offerors may not be aware of, or be reluctant to use, this 
authority to propose an alternative line-item structure. For example--

--FAR 15.203(a)(2) permits the contracting officer to authorize 
offerors to propose alternative terms, conditions, and contract line-
item number structure.
--FAR 12.213, Other Commercial Practices, encourages the contracting 
officer to consider other commercial practices for incorporation into 
the solicitation and contract, if appropriate. FAR 52.212-1(e), 
Instructions to Offerors--Commercial Items, Multiple Offers, encourages 
offerors to submit multiple offers presenting alternative terms and 
conditions for commercial items for satisfying the requirements of the 
solicitation.

    Notwithstanding the above, offerors may not understand that they 
have this latitude as they are not proposing alternate line-item 
structure to reflect

[[Page 21848]]

their business practices. DoD expects that formalizing the ability to 
propose an alternative line-item structure in a standard DFARS 
provision for commercial items and initial provisioning spares for 
weapon systems will prevent contract administration and payment 
problems. Therefore, DoD welcomes public comment on this subject.

III. Executive Order 12866 and Executive Order 13563

    Executive Orders 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). Executive 
Order 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 Executive 
Order 12866, Regulatory Planning and Review, dated September 30, 1993. 
This rule is not a major rule under 5 U.S.C. 804.

IV. Regulatory Flexibility Act

    DoD does not expect this 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 
does not impose any additional requirements on small businesses. 
Further, this change does not add to, or delete from existing 
requirements or authorities for entities to include alternative line-
item structures in their offers. This rule is formalizing a process to 
facilitate offerors' ability to request changes to the line-item 
structure. Therefore, DoD has not performed an initial regulatory 
flexibility analysis. DoD invites comments from small businesses 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 2010-D017), in 
correspondence.

V. Paperwork Reduction Act

    The rule does not impose 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).

List of Subjects in 48 CFR Parts 204, 212, and 252

    Government procurement.

Mary Overstreet,
Editor, Defense Acquisition Regulations System.
    Therefore, DoD proposes to amend 48 CFR parts 204, 212, and 252 as 
follows:
    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 MATTERS

    2. Amend Section 204.7103-1 by adding paragraph (g) to read as 
follows:

204.7103-1  Criteria for establishing.

* * * * *
    (g) Certain commercial items and initial provisioning spares for 
weapons systems are requested and subsequently solicited using units of 
measure such as kit, set, or lot. However, there are times when 
individual items within that kit, set, or lot are not grouped and 
delivered in a single shipment. This creates potential contract 
administration issues with inspection, acceptance, and payment. In such 
cases, solicitations should be structured to allow offerors to provide 
information about products that may not have been known to the 
Government prior to solicitation and propose an alternate line-item 
structure as long as the alternate is consistent with the requirements 
of DFARS 204.71, which provides explicit guidance on the use of 
contract line items and subline items, and PGI 204.71.
    3. Revise section 204.7109 to read as follows:

204.7109  Contract clauses.

    (a) Use the clause at 252.204-7006, Billing Instructions, in 
solicitations and contracts if Section G includes--
    (1) Any of the standard payment instructions at PGI 204.7108(d)(1) 
through (6); or
    (2) Other payment instructions, in accordance with PGI 
204.7108(d)(12), that require contractor identification of the contract 
line item(s) on the payment request.
    (b) Use the provision at 252.204-70XX, Alternative Line-Item 
Structure, in solicitations for commercial items and initial 
provisioning spares.

PART 212--ACQUISITION OF COMMERCIAL ITEMS

    4. Amend section 212.301 by revising paragraph (f)(iv) to read as 
follows:

212.301  Solicitation provisions and contract clauses for the 
acquisition of commercial items.

    (f) * * *
    (iv) Use provisions and clauses prescribed elsewhere in DFARS as 
follows:
    (A) Use the provision at 252.204-70XX, Alternative Line Item 
Structure, as prescribed in 204.7109(b).
    (B) Use the provision at 252.209-7001, Disclosure of Ownership or 
Control by the Government of a Terrorist Country, as prescribed in 
209.104-70(a).
    (C) Use the clause at 252.211-7003, Item Identification and 
Valuation, as prescribed in 211.274-4.
    (D) Use the clause at 252.211-7006, Radio Frequency Identification, 
as prescribed in 211.275-3.
    (E) Use the provision at 252.225-7010, Commercial Derivative 
Military Article--Specialty Metals Compliance Certificate, as 
prescribed in 225.7003-5(b).
    (F) Use the clause at 252.225-7040, Contractor Personnel Authorized 
to Accompany U.S. Armed Forces Deployed Outside the United States, as 
prescribed in 225.7402-4.
    (G) Use the clause at 252.225-7043, Antiterrorism/Force Protection 
Policy for Defense Contractors Outside the United States, in 
solicitations and contracts that include the clause at 252.225-7040.
    (H) Use the clause at 252.232-7009, Mandatory Payment by 
Governmentwide Commercial Purchase Card, as prescribed in 232.1110.
    (I) Use the clause at 252.232-7010, Levies on Contract Payments, as 
prescribed in 232.7102.
    (J) Use the clause at 252.232-7011, Payments in Support of 
Emergencies and Contingency Operations, as prescribed in 232.908.
    (K) Use the clause at 252.246-7003, Notification of Potential 
Safety Issues, as prescribed in 246.371.
    (L) Use the provision at 252.247-7026, Evaluation Preference for 
Use of Domestic Shipyards--Applicable to Acquisition of Carriage by 
Vessel for DoD Cargo in the Coastwise or Noncontiguous Trade, as 
prescribed in 247.574(e).
    (M) Use the clause at 252.247-7027, Riding Gang Member 
Requirements, as prescribed in 247.574(f).
* * * * *

[[Page 21849]]

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    5. Add section 252.204-70XX to read as follows:

252.204-70XX  Alternative Line-Item Structure.

    As prescribed in 204.7109(b), insert the following provision:

ALTERNATIVE LINE-ITEM STRUCTURE (DATE)

    (a) Line items are the basic structural elements in a 
solicitation or contract that provide for the organization of 
contract requirements to facilitate pricing, delivery, inspection, 
acceptance and payment. Line items are organized into contract line 
items, subline items, and exhibit line items. Separate line items 
should be established to account for separate pricing, 
identification (see DFARS 211.274), deliveries, or funding. The 
Government recognizes that the line item structure in this 
solicitation may not conform to every offeror's practices. Failure 
to correct these issues can result in difficulties in accounting for 
deliveries and processing payments. Therefore, offerors are invited 
to propose an alternative line item structure for items on which 
bids, proposals, or quotes are requested in this solicitation to 
ensure that the resulting contract structure is economically and 
administratively advantageous to the Government and the Contractor.
    (b) If an alternative line-item structure is proposed, the 
structure must be consistent with DFARS 204.71 and PGI 204.71. A 
sample line-item structure and a proposed alternative structure are 
as follows:

    Solicitation

----------------------------------------------------------------------------------------------------------------
         Item No.                 Supplies/service          Quantity         Unit        Unit price     Amount
----------------------------------------------------------------------------------------------------------------
0001.....................  Computer, Desktop with CPU,             20  EA.............  ...........  ...........
                            Monitor, Keyboard and Mouse.
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    Alternative line-item structure offer where monitors are shipped 
separately.

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      Item No.               Supplies/service            Quantity          Unit          Unit price     Amount
----------------------------------------------------------------------------------------------------------------
0001...............  Computer, Desktop with CPU,                20  EA................  ...........  ...........
                      Keyboard and Mouse.
0002...............  Monitor.........................           20  EA................  ...........  ...........
----------------------------------------------------------------------------------------------------------------

    (End of provision)]

[FR Doc. 2011-8966 Filed 4-18-11; 8:45 am]
BILLING CODE 5001-08-P
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