6006 Federal Register / Vol. 76, No. 22 / Wednesday, February 2, 2011 / Rules and Regulations 

because any start-up costs that 

contractors will incur to comply with 

the rule are expected to be minimal. 

Moreover, the rule excludes items, as 

determined by the head of the agency, 

that are to be used to support a 

contingency operation; or to facilitate 

defense against or recovery from 

nuclear, biological, chemical, or 

radiological attack; or for which 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 identification after delivery 

of an item acquired from a small 

business concern or a commercial item 

acquired under FAR part 8 or part 12. 

The rule does not duplicate, overlap, 

or conflict with any other Federal rules. 

DoD considers the approach described 

in the rule to be the most practical and 

beneficial for both Government and 

industry. 

V. Paperwork Reduction Act 

The Paperwork Reduction Act (Pub. 

L. 96–511) does not apply because the 

rule does not impose additional 

information collection requirements that 

require the approval of the Office of 

Management and Budget under 44 

U.S.C. 3501, et seq. 

List of Subjects in 48 CFR Parts 245 and 

252 

Government procurement. 

Ynette R. Shelkin, 

Editor, Defense Acquisition Regulations 

System. 

Therefore, 48 CFR parts 245 and 252 

are amended as follows: 

■ 1. The authority citation for 48 CFR 

parts 245 and 252 continues to read as 

follows: 

Authority: 41 U.S.C. 421 and 48 CFR 

chapter 1. 

PART 245—GOVERNMENT PROPERTY 

■ 2. In section 245.102, paragraph (4) is 

added to read as follows: 

245.102 Policy. 

* * * * * 

(4) Government-furnished property 

identification. 

(i) It is DoD policy that Governmentfurnished property be tagged, labeled, or 

marked based on DoD marking 

standards (MIL Standard 130) or other 

standards, when the requiring activity 

determines that such items are subject 

to serialized item management (seriallymanaged items). The list of 

Government-furnished property subject 

to serialized item management will be 

identified in the contract in accordance 

with PGI 245.201–71, GFP attachments 

to solicitations and awards. 

(ii) Exceptions. The Contractor will 

not be required to tag, label, or mark— 

(A) Government-furnished property 

that was previously tagged, labeled, or 

marked; 

(B) Items, as determined by the head 

of the agency, that are to be used to 

support a contingency operation; or to 

facilitate defense against or recovery 

from nuclear, biological, chemical, or 

radiological attack; 

(C) Items for which 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 identification after delivery of an 

item acquired from a small business 

concern or a commercial item acquired 

under FAR part 12 or part 8. 

(1) The determination and findings 

shall be executed by— 

(i) The Component Acquisition 

Executive for an Acquisition Category 

(ACAT) I program; or 

(ii) The head of the contracting 

activity for all other programs. 

(2) A copy of the executed 

determination and findings shall be 

provided to the DoD Unique Item 

Identification Policy Office at this 

address: OUSD (AT&L) DPAP/Program 

Development and Implementation, 

Room 3B855, 3060 Defense Pentagon, 

Washington, DC 20301–3060; or by 

facsimile to 703–602–6047. 

(D) Items that are contractor-acquired 

property; 

(E) Property under any statutory 

leasing authority; 

(F) Property to which the Government 

has acquired a lien or title solely 

because of partial, advance, progress, or 

performance-based payments; 

(G) Intellectual property or software; 

or 

(H) Real property. 

245.107–70 [Redesignated as 245.107] 

■ 3. Section 245.107–70 is redesignated 

as 245.107 and revised to read as 

follows: 

245.107 Contract clauses. 

(a) Use the clause at 252.245–7000, 

Government-Furnished Mapping, 

Charting, and Geodesy Property, in 

solicitations and contracts when 

mapping, charting, and geodesy 

property is to be furnished. 

(b) Use the clause at 252.245–7001, 

Tagging, Labeling, and Marking of 

Government-Furnished Property, in 

solicitations and contracts that contain 

the clause at FAR 52.245–1, 

Government Property. 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

■ 4. In section 252.245–7000, the 

introductory text is amended by 

removing ‘‘245.107–70’’ and adding in 

its place ‘‘245.107(a)’’. 

■ 5. Add section 252.245–7001 to read 

as follows: 

252.245–7001 Tagging, Labeling, and 

Marking of Government-Furnished Property 

As prescribed in 245.107(b), use the 

following clause: 

TAGGING, LABELING, AND MARKING OF 

GOVERNMENT-FURNISHED PROPERTY 

(FEB 2011) 

(a) Definitions. As used in this clause— 

Government-furnished property is defined 

in the clause at FAR 52.245–1, Government 

Property. 

Serially-managed item means an item 

designated by DoD to be uniquely tracked, 

controlled, or managed in maintenance, 

repair, and/or supply systems by means of its 

serial number. 

(b) The Contractor shall tag, label, or mark 

Government-furnished property items 

identified in the contract as subject to 

serialized item management (seriallymanaged items). 

(c) The Contractor is not required to tag, 

label, or mark Government-furnished 

property previously tagged, labeled, or 

marked. 

(End of clause) 

[FR Doc. 2011–2043 Filed 2–1–11; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 245 and 252 

[DFARS Case 2008–D049] 

RIN 0750–AG64 

Defense Federal Acquisition 

Regulation Supplement; Reporting of 

Government Property Lost, Stolen, 

Damaged, or Destroyed 

AGENCY: Defense Acquisition 

Regulations System; Department of 

Defense (DoD). 

ACTION: Final rule. 

SUMMARY: DoD is issuing a final rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to require contractors to report 

loss of Government property to the 

Defense Contract Management Agency 

(DCMA) eTools application. 

DATES: Effective Date: February 2, 2011. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Clare Zebrowski, 703–602–0289. 


emcdonald on DSK2BSOYB1PROD with RULES3
Federal Register / Vol. 76, No. 22 / Wednesday, February 2, 2011 / Rules and Regulations 6007 

SUPPLEMENTARY INFORMATION: 

I. Background 

This final rule provides a clause at 

DFARS 252.245–7002, Reporting Loss of 

Government Property, that requires DoD 

contractors to report the loss, theft, 

damage, and destruction of Government 

property to the DCMA eTools 

application. The final rule changes— 

• DFARS 245.102(4), Policy, to make 

editorial changes to remove 

subparagraphs that unnecessarily 

duplicate language contained in the 

clause at 252.245–7002, Reporting Loss 

of Government Property. This paragraph 

has been redesignated as 245.102(5). 

• DFARS 245.107(2), Contract 

clauses, to correct the prescription for 

use of the clause at 252.245–7002, 

Reporting Loss of Government Property, 

by removing the reference to FAR 

52.245–2, Government Property 

Installation Operation Services. This 

paragraph has been redesignated as 

245.107(c). 

• Clause 252.245–7002, Reporting 

Loss of Government Property, to— 

Æ Revise the clause title; 

Æ Change the defined term 

‘‘acquisition cost’’ to ‘‘unit acquisition 

cost’’ and expand the definition to 

include contractor-acquired property; 

Æ Revise the definition for 

‘‘Government property’’ to state that the 

term is defined in the clause at FAR 

52.245–1, Government Property; 

Æ Add a new definition for ‘‘loss of 

Government property’’; 

Æ Revise the paragraph (b) title and 

(b)(1) to accommodate the new 

definition of ‘‘Loss of Government 

property’’. 

Æ Revise paragraph (b)(1) to add the 

word ‘‘unit’’ to reflect that reporting 

value shall be at ‘‘unit acquisition cost,’’ 

and to provide an updated Web page for 

accessing the eTools application; 

• Revise paragraph (b)(3) to make 

editorial and format changes; 

• Revise paragraph (b)(4) to make 

editorial changes and to delete reference 

to two specific property clauses and 

instead state that the reporting 

requirements do not change any other 

liability or other reporting requirement 

that may exist under the contract. 

II. Discussion and Analysis 

Three respondents submitted four 

comments on the proposed rule, which 

was published at 75 FR 22729 on April 

30, 2010. Comments were due June 29, 

2010. A discussion of the comments 

received follows: 

A. Clause Prescription 

Comment: One respondent 

recommended revising paragraph 

245.107(2) to remove the reference to 

FAR 52.245–2, Government Property 

Installation Operation Services, as the 

loss of property reporting requirement 

stems directly from FAR 52.245–1 and 

not from 52.245–2. 

DoD Response: DoD has revised the 

language accordingly. 

B. Definition of ‘‘Government Property’’ 

Comment: One respondent 

recommended that the definition of 

‘‘Government property’’ in the proposed 

clause should make clear that it 

includes all property acquired by the 

contractor through indirect cost 

accounts. 

DoD Response: The recommendation 

is outside the scope of the rule. The rule 

does not seek to alter or modify the 

definition of Government property as 

prescribed in the Federal Acquisition 

Regulations (FAR 52.245–1). However, 

in order to clarify the Government 

property definition, DoD has replaced 

the definition of ‘‘Government property’’ 

in the clause with a reference to the 

definition of ‘‘Government property’’ in 

FAR 52.245–1. 

C. Use of Term ‘‘Losses’’ 

Comment: One respondent 

recommended modifying the clause 

language in paragraph (b) to replace the 

term ‘‘lost, stolen, damaged, or 

destroyed’’ with ‘‘losses’’ to maintain 

simplicity and consistency. 

DoD Response: A new definition for 

‘‘loss of Government property’’ has been 

added to the clause at 252.245–7002, 

Reporting Loss of Government Property. 

D. Definition of ‘‘Estimated Harm’’/ 

‘‘Acquisition Cost’’ 

Comment: One respondent 

recommended adding a new definition 

of ‘‘estimated harm’’ to the proposed 

clause at 252.245–70XX and stated that 

estimated harm should consider other 

factors such as residual value, 

replacement cost, and care and handling 

cost. The respondent stated that the 

estimated harm should be expressed as 

a numeric value, and that providing 

only the acquisition cost without 

providing estimated harm to the 

Government is misleading and may 

result in poor decisions. According to 

the respondent, industry experience has 

proven that there typically is minimal or 

no harm to the Government and, even 

though the Government is self insured, 

replacement of lost items rarely occurs. 

Similarly, a respondent stated the 

need to address the materiality of the 

loss and that without this information, 

decision makers may be misled and 

losses may be overstated. Further, 

according to the respondent, the rule 

should then explain how to compensate 

the Government for losses when the 

‘‘indirect costs used to buy the property’’ 

have been partially allocated to 

Government contracts and partially 

allocated to commercial work or firmfixed-price contracts. 

DoD Response: These 

recommendations are outside the scope 

of the rule. The clause seeks only to 

require the electronic reporting of data 

pertaining to Government property 

losses. It does not require reporting of 

the estimated harm or materiality of 

such losses to the Government. 

However, in order to clarify the 

reporting value, the clause definition of 

‘‘acquisition cost’’ has been revised to a 

definition of ‘‘unit acquisition cost.’’ The 

new definition clarifies that for 

Government-furnished property, the 

unit acquisition cost is the dollar value 

assigned by the Government and 

identified in the contract; and adds the 

method for determining the reporting 

value for contractor-acquired property. 

The revised definition is more 

comprehensive and clarifies the 

property values to be reported. 

The final rule also revises paragraph 

(b)(4) of the clause to remove the 

references to 52.245–1 and 52.245–2, 

since the contract may contain other 

liability or other reporting requirements. 

This change clarifies that the new clause 

does not impact any other contractual 

reporting or liability requirements. 

III. Executive Order 12866 

This rule was not subject to Office of 

Management and Budget review under 

Executive Order 12866, dated 

September 30, 1993. This rule is not a 

major rule under 5 U.S.C. 804. 

IV. Regulatory Flexibility Act 

DoD has prepared a final regulatory 

flexibility analysis consistent with 5 

U.S.C. 604. A copy of the analysis may 

be obtained from the individual 

specified herein. The analysis is 

summarized as follows: 

The objective of this rule is to provide 

DoD with a single repository for 

reporting loss of Government property 

to improve accountability and control of 

DoD assets and contractor oversight. 

None of the comments from the three 

respondents was in response to the 

initial regulatory flexibility analysis. 

Therefore, there is no change to the rule 

in this regard. 

The rule applies to DoD contractors 

provided with Government property. 

The clause at 252.245–7002, Reporting 

Loss of Government Property, requires 

the contractor to use the Defense 

Contract Management Agency eTools 

software application for reporting loss of 


emcdonald on DSK2BSOYB1PROD with RULES3
6008 Federal Register / Vol. 76, No. 22 / Wednesday, February 2, 2011 / Rules and Regulations 

Government property. The eTools 

software can be accessed from the 

DCMA homepage External Web Access 

Management application at http:// 

www.dcma.mil/aboutetools.cfm. 

Unless otherwise provided for in the 

contract, these requirements do not 

apply to normal and reasonable 

inventory adjustments, i.e., losses of 

low-risk consumable material such as 

common hardware, as agreed to by the 

contractor and the Government property 

administrator. Such losses are typically 

a product of normal process variation. 

The contractor shall ensure that its 

property management system provides 

adequate management control measures, 

e.g., statistical process controls, as a 

means of managing such variation. 

Reporting requirements apply to 

losses of Government property outside 

normal process variation, e.g., because 

of— 

(1) Theft; 

(2) Inadequate storage; 

(3) Inadequate security; or 

(4) ‘‘Acts of God.’’ 

This rule is not expected 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 any start-up costs that 

contractors will incur to comply with 

the rule are expected to be minimal. The 

rule is expected to have a positive or 

beneficial impact on small entities by 

making available a Governmentprovided software application to use for 

reporting purposes. The rule does not 

duplicate, overlap, or conflict with any 

other Federal rules. 

V. Paperwork Reduction Act 

This final rule does not significantly 

increase the information collection 

requirements set forth under FAR 

52.245–1(f)(vi), approved by the Office 

of Management and Budget under OMB 

clearance number 9000–0075. The rule 

will have a minimal impact on 

contractors, as such reporting is already 

common practice and is on an exception 

basis, i.e., only when reportable 

property is lost. There were no 

comments received on the proposed 

rule concerning information collection. 

List of Subjects in 48 CFR Parts 245 and 

252 

Government procurement. 

Ynette R. Shelkin, 

Editor, Defense Acquisition Regulations 

System. 

Therefore, 48 CFR parts 245 and 252 

are amended as follows: 

■ 1. The authority citation for 48 CFR 

parts 245 and 252 continues to read as 

follows: 

Authority: 41 U.S.C. 421 and 48 CFR 

chapter 1. 

PART 245—GOVERNMENT PROPERTY 

245.102 Policy. 

■ 2. Section 245.102 is amended by 

adding paragraph (5) to read as follows: 

* * * * * 

(5) Reporting loss of Government 

property. The Defense Contract 

Management Agency (DCMA) eTools 

software application is the DoD data 

repository for reporting loss of 

Government property in the possession 

of contractors. The requirements and 

procedures for reporting loss of 

Government property to eTools are set 

forth in the clause at 252.245–7002, 

Reporting Loss of Government Property, 

prescribed at 245.107. 

■ 3. Section 245.107 is amended by 

adding paragraph (c) to read as follows: 

245.107 Contract clauses. 

* * * * * 

(c) Use the clause at 252.245–7002, 

Reporting Loss of Government Property, 

in solicitations and contracts that 

contain the clause at FAR 52.245–1, 

Government Property. 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

■ 4. Add section 252.245–7002 to read 

as follows: 

252.245–7002 Reporting Loss of 

Government Property. 

As prescribed in 245.107(c), use the 

following clause: 

REPORTING LOSS OF GOVERNMENT 

PROPERTY (FEB 2011) 

(a) Definitions. As used in this clause— 

Government property is defined in the 

clause at FAR 52.245–1, Government 

Property. 

Loss of Government property means 

unintended, unforeseen, or accidental loss, 

damage, or destruction of Government 

property that reduces the Government’s 

expected economic benefits of the property. 

Loss of Government property does not 

include purposeful destructive testing, 

obsolescence, normal wear and tear, or 

manufacturing defects. Loss of Government 

property includes, but is not limited to— 

(1) Items that cannot be found after a 

reasonable search; 

(2) Theft; 

(3) Damage resulting in unexpected harm 

to property requiring repair to restore the 

item to usable condition; or 

(4) Destruction resulting from incidents 

that render the item useless for its intended 

purpose or beyond economical repair. 

Unit acquisition cost means— 

(1) For Government-furnished property, the 

dollar value assigned by the Government and 

identified in the contract; and 

(2) For Contractor-acquired property, the 

cost derived from the Contractor’s records 

that reflect consistently applied, generally 

acceptable accounting principles. 

(b) Reporting loss of Government property. 

(1) The Contractor shall use the Defense 

Contract Management Agency (DCMA) 

eTools software application for reporting loss 

of Government property. Reporting value 

shall be at unit acquisition cost. The eTools 

‘‘LTDD of Government Property’’ toolset can 

be accessed from the DCMA home page 

External Web Access Management 

application at http://www.dcma.mil/ 

aboutetools.cfm. 

(2) Unless otherwise provided for in this 

contract, the requirements of paragraph (b)(1) 

of this clause do not apply to normal and 

reasonable inventory adjustments, i.e., losses 

of low-risk consumable material such as 

common hardware, as agreed to by the 

Contractor and the Government Property 

Administrator. Such losses are typically a 

product of normal process variation. The 

Contractor shall ensure that its property 

management system provides adequate 

management control measures, e.g., statistical 

process controls, as a means of managing 

such variation. 

(3) The Contractor shall report losses of 

Government property outside normal process 

variation, e.g., losses due to— 

(i) Theft; 

(ii) Inadequate storage; 

(iii) Lack of physical security; or 

(iv) ‘‘Acts of God.’’ 

(4) This reporting requirement does not 

change any liability provisions or other 

reporting requirements that may exist under 

this contract. 

(End of clause) 

[FR Doc. 2011–2044 Filed 2–1–11; 8:45 am] 

BILLING CODE 5001–08–P 


emcdonald on DSK2BSOYB1PROD with RULES3