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[Federal Register Volume 76, Number 22 (Wednesday, February 2, 2011)]
[Rules and Regulations]
[Pages 6004-6006]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-2043]

[[Page 6003]]

Vol. 76

Wednesday,

No. 22

February 2, 2011

Part IV

Department of Defense

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Defense Acquisition Regulations System

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48 CFR Parts 245 and 252

Defense Federal Acquisition Regulation Supplements; Marking of 
Government-Furnished Property; Reporting of Government Property Lost, 
Stolen, Damaged, or Destroyed; Final Rules

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

[[Page 6004]]

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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.

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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 Government-Furnished 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).

[[Page 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 Government-furnished 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 Government-furnished 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 Government-
furnished property that is subject to serialized item management. The 
clause at DFARS 252.211-7001, Tagging, Labeling, and Marking of 
Government-Furnished 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.,

[[Page 6006]]

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:

0
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

0
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 Government-furnished 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 (serially-managed 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]

0
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

0
4. In section 252.245-7000, the introductory text is amended by 
removing ``245.107-70'' and adding in its place ``245.107(a)''.

0
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 (serially-managed 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
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