6004 Federal Register / Vol. 76, No. 22 / Wednesday, February 2, 2011 / Rules and Regulations 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 245 and 252 

[DFARS Case 2008–D050] 

RIN 0750–AG44 

Defense Federal Acquisition 

Regulation Supplement; Marking of 

Government-Furnished Property 

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 tag, 

label, or mark Government-furnished 

property items identified in the contract 

as subject to serialized item 

management. 

DATES: Effective Date: February 2, 2011. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Clare Zebrowski, 703–602–0289. 

SUPPLEMENTARY INFORMATION: 

I. Background 

This final rule provides a clause at 

DFARS 252.245–7001, Tagging, 

Labeling, and Marking of GovernmentFurnished Property, requiring 

contractors to tag, label, or mark 

Government-furnished property items 

identified in the contract when such 

items are subject to serialized item 

management. The final rule has been 

changed as follows— 

• The proposed coverage in DFARS 

211.274 has been relocated to DFARS 

subpart 245.1. 

• DFARS 245.102(4) now provides 

the complete list of exceptions to the 

policy to require tagging, labeling, and 

marking of property, rather than 

including the exceptions in the clause, 

because the Government will identify to 

the contractor the items that require 

tagging, labeling, or marking. The list 

had been expanded to include 

exceptions based on determinations by 

the agency. 

• Adds DFARS clause 252.245–7001, 

in lieu of proposed DFARS 252.211– 

70YY, to align with coverage being 

relocated from DFARS part 211 to part 

245. 

• The proposed definition of 

‘‘Government-furnished property’’ has 

been deleted and replaced with a 

reference to the definition in FAR 

52.245–1. 

II. Discussion and Analysis 

DoD published a proposed rule at 75 

FR 25160 on May 7, 2010, and the 

public comment period closed on July 6, 

2010. Three respondents submitted 

comments that are grouped into four 

categories. The following is a discussion 

of the comments and the changes 

included in this final rule as a result of 

those comments. 

A. Location of Coverage 

Comment: One respondent 

recommended that DFARS 211.274–5 

should be redesignated as DFARS 

245.102–70, as the mechanics for 

implementing this rule are not included 

at DFARS 211.274, but in FAR 52.245– 

1, Government Property. 

DoD Response: The coverage has been 

relocated to DFARS part 245 from part 

211. 

Comment: One respondent 

recommended that the contract clause 

be placed in DFARS section 252.245, as 

opposed to DFARS 252.211. 

DoD Response: DoD has made this 

change to coincide with the related 

recommendation to move the policy for 

marking Government-furnished 

property from DFARS part 211 to part 

245. 

B. Accountability 

Comment: One respondent asked if 

the rule will require contractors to 

conduct periodic inventories, and if so, 

who is to receive the results of the 

inventories. 

DoD Response: The rule does not 

contain a requirement for contractors to 

conduct physical inventories. However, 

the contractor is responsible under FAR 

52.245–1, Government Property, 

paragraph (f)(1)(iv), to periodically 

perform, record, and disclose physical 

inventory results. Physical inventory 

results are generally provided to the 

assigned Government property 

administrator or other responsible 

Government official during a property 

management system analysis or audit. 

Comment: One respondent asked if 

the contracting officer will be 

responsible for ensuring property 

accountability. 

DoD Response: The contracting officer 

is responsible for ensuring that the 

contractor complies with all contract 

terms and conditions, to include 

Government property accountability. 

Comment: One respondent asked if a 

chain of custody is feasible for property 

accountability or should accountability 

be delegated to a different Government 

official. 

DoD Response: The contracting officer 

is responsible for ensuring compliance 

with the terms and conditions of the 

contract. However, the contracting 

officer may appoint a property 

administrator (FAR 45.101) to 

administer the contract requirements 

relating to Government property in the 

possession of a contractor. 

Comment: One respondent 

recommended that the rule specifically 

detail a tracking procedure, which could 

mirror existing policy for tracking 

Government property throughout DoD. 

DoD Response: The respondent’s 

recommendation is outside the scope of 

the rule. It should be noted, however, 

that FAR 52.245–1, Government 

Property, paragraph (b)(1), already 

requires contractors to have a system to 

manage (control, use, preserve, protect, 

repair, and maintain) Government 

property in their possession. 

Comment: One respondent 

recommended that the rule address who 

will be held responsible for lost, 

missing, or stolen property, and if 

contractors will be responsible for 

designating a responsible officer. 

DoD Response: Contractor 

responsibility and liability requirements 

for lost, missing, or stolen property are 

provided under FAR 52.245–1, 

Government Property. Accordingly, it is 

neither necessary nor appropriate for 

the rule to require contractors to 

designate a responsible person, persons, 

or positions. 

Comment: One respondent stated that 

the final rule should address the full 

cycle necessary to achieve the desired 

end-state of accountability and control. 

DoD Response: The end-state to 

which the respondent refers is based on 

a variety of factors, many of which are 

beyond the scope of this rule. However, 

the tagging, labeling, and marking 

requirements contained in this rule are 

important enablers toward the desired 

end-state of accountability and control. 

Contractor responsibilities for 

accountability and control are provided 

under FAR 52.245–1, Government 

Property. 

C. Policy 

Comment: One respondent 

recommended a cross reference at 

211.274–5 to policy at 245.102–70, with 

addition of policy at DFARS 245.102–70 

regarding the requirement for 

contractors to tag, label, or mark items 

of Government-furnished property 

identified in the contract when the 

Government-furnished material and 

Government-furnished property are 

subject to serialized item management. 

DoD Response: DoD has moved the 

entire discussion of policy to 

245.102(4). 


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Federal Register / Vol. 76, No. 22 / Wednesday, February 2, 2011 / Rules and Regulations 6005 

Comment: One respondent 

recommended that the rule address 

potential conflicts with related sections 

of the CFR. 

DoD Response: DoD is unable to 

respond in detail to the comment as the 

respondent did not identify any specific 

potential conflicts. 

Comment: One respondent asked if 

marked items will be annotated in the 

initial contract documents. Another 

respondent recommended that the 

Government provide drawings and 

instructions to the contractor on how 

and where to mark the Governmentfurnished property. 

DoD Response: The rule requires 

identification in the contract of all 

Government-furnished property subject 

to serialized item management, in 

accordance with Procedures, Guidance, 

and Information 245.201–71, GFP 

attachments to solicitations and awards. 

Comment: One respondent 

recommended that the rule include a 

reference to 48 CFR (DFARS) 245.105. 

DoD Response: The requirements of 

DFARS 245.105 are not directed at 

contractors. Rather, they are directed at 

the Government agency responsible for 

contract administration. Contractor 

responsibilities for accountability and 

control are provided under FAR 52.245– 

1, Government Property. 

D. Exceptions 

Comment: One respondent asked 

what the impact of the rule is on the 

exceptions listed in 48 CFR (DFARS) 

211.274–2(b). 

DoD Response: The exceptions at 

211.274–2 are exceptions to the 

requirement that the contractor be 

required to provide DoD unique item 

identification for delivered items based 

on determinations by the agency. The 

impact to the rule of not including the 

exceptions at DFARS 211.274–2(b) 

would be to create inconsistency in 

application of contractor requirements 

for marking, tagging, and labeling. 

While the exceptions at DFARS 

211.274–2(b) apply to new deliverables, 

the principle applies to Governmentfurnished property as well. In 

recognition of this, DoD has addressed 

the potential inconsistent application by 

including these exceptions in the final 

rule. The exceptions listed at DFARS 

211.274–2(b) have been added to 

DFARS 245.102(4). 

Comment: One respondent asked if 

the exceptions to UID reporting for 

Government-furnished equipment at 

DFARS 211.274–4 are to remain 

unchanged, or will the section now only 

apply to non-Government-furnished 

contractor property. 

DoD Response: The exceptions cited 

in DFARS 211.274–4 apply to the 

reporting requirements under DFARS 

252.211–7007, Reporting of 

Government-Furnished Equipment in 

the DoD Item Unique Identification 

Registry. The exceptions do not apply to 

the requirements of this rule. 

Comment: One respondent 

recommended that the rule include 

specific language assuring that 

contractor-acquired special tooling and 

special test equipment, having been 

physically marked by the contractor, 

and subsequently transferred in-place, 

does not have to be retagged, relabeled, 

or remarked until the tooling or test 

equipment leaves the contractor’s 

possession or accountability. 

DoD Response: The exception 

provided at paragraph (c)(1) of the 

proposed clause was sufficient to cover 

this concern. This statement has been 

retained in paragraph (c) of the final 

clause, to ensure that the contractor 

does not need to tag, label, or mark 

Government-furnished property that has 

already been tagged, labeled, or marked. 

E. Definition 

Comment: One respondent 

recommended that the definition of 

‘‘Government-furnished property’’ not be 

repeated in the rule since it appears in 

both FAR part 45 and 52.245–1. 

DoD Response: The final rule has 

been changed to reference the FAR 

definition. 

F. Clause Prescription 

Comment: One respondent 

recommended deleting the proposed 

reference at DFARS 211.274–6 to FAR 

52.245–2, Government Property 

Installation Operation Services, as a 

condition for use of DFARS 252.245– 

70YY. 

DoD Response: Use of the clause at 

252.245–7001, Tagging, Labeling, and 

Marking of Government-Furnished 

Property, is not dependent on the 

presence of FAR 52.252–2. The new 

clause prescription at DFARS 245.107 

now refers only to the presence of the 

FAR clause 52.245–1, Government 

Property. 

G. Applicability to international and 

FMS contracts 

Comment: One respondent asked if 

the rule applies to foreign Government 

and international contracts under 48 

CFR (DFARS) 245.3. 

DoD Response: The rule applies to 

contracts with foreign Governments and 

international organizations under 

DFARS 245.3. 

Comment: One respondent asked 

about the impact on FMS sales. 

DoD Response: The security 

assistance community will derive the 

same tagging, labeling, and marking 

benefits of this rule. The new DFARS 

clause is mandatory for all DoD 

contracts that contain the FAR clause 

52.245–1, Government Property, 

including those for foreign customers. 

H. Applicability to existing contracts 

Comment: One respondent noted that 

on-going contracts were not priced to 

consider the implementation of this 

rule. Therefore, there may be a need for 

pricing adjustments for those contracts. 

DoD Response: The clause does not 

apply to existing contracts unless the 

contracting officer executes a bilateral 

contract modification, consistent with 

FAR 1.108(d), which would require 

consideration. 

III. Executive Order 12866 

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 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 the rule is to improve 

the accountability and control of DoD 

assets. The tagging, labeling, and 

marking requirements are consistent 

with DoD’s use of unique identifiers to 

track and trace property items 

throughout their lifecycle. Three 

respondents provided twenty-three 

comments on the proposed rule. None 

of the comments was in response to the 

initial regulatory flexibility analysis. 

Therefore, there is no change to the rule 

in this regard. 

The rule will apply to DoD 

contractors provided with Governmentfurnished property that is subject to 

serialized item management. The clause 

at DFARS 252.211–7001, Tagging, 

Labeling, and Marking of GovernmentFurnished Property, requires the 

contractor to tag, label, or mark 

Government-furnished property items 

identified in the contract when the 

requiring activity determines that such 

items are subject to serialized item 

management (serially-managed items). 

This final 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., 


emcdonald on DSK2BSOYB1PROD with RULES3
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. 


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