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[Federal Register Volume 76, Number 182 (Tuesday, September 20, 2011)]
[Rules and Regulations]
[Pages 58138-58140]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-23953]

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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: Final rule.

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SUMMARY: DoD is issuing a final rule amending 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

DATES: Effective Date: September 20, 2011.

FOR FURTHER INFORMATION CONTACT: Mr. Julian E. Thrash, 703-602-0310.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD published a proposed rule in the Federal Register at 76 FR 
21847 on April 19, 2011, to add DFARS language that provides offerors 
the opportunity to propose an alternative line item structure in 
solicitations for commercial items and initial provisioning spares. 
This 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. No public comments were received 
regarding the proposed rule.
    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 establishes and 
standardizes 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. 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.

III. Regulatory Flexibility Act

    DoD certifies that this final rule will not 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.

IV. Paperwork Reduction Act

    The rule does not contain any 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).

[[Page 58139]]

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

    Government procurement.

Mary Overstreet,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 204, 212, and 252 are amended as follows:

0
1. The authority citation for 48 CFR parts 204, 212, and 252 continues 
to read as follows:

    Authority:  41 U.S.C. 1303 and 48 CFR chapter 1.

PART 204--ADMINISTRATIVE MATTERS

0
2. Amend section 204.7103 by adding a new 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 204.71, which provides explicit guidance on the use of contract line 
items and subline items, and with PGI 204.71.

0
3. Revise section 204.7109 to read as follows:

204.7109  Solicitation provision and contract clause.

    (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 252.204-7011, Alternative Line Item 
Structure, in solicitations for commercial items and initial 
provisioning spares.

PART 212--ACQUISITION OF COMMERCIAL ITEMS

0
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 the provisions and clauses prescribed elsewhere in DFARS 
as follows:
    (A) Use the provision at 252.204-7011, 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).
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
5. Add section 252.204-7011 to read as follows:

252.204-7011  Alternative Line Item Structure.

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

ALTERNATIVE LINE-ITEM STRUCTURE (SEP 2011)

    (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 section 211.274 of the Defense Federal 
Acquisition Regulation Supplement), 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 subpart 204.71 of the Defense 
Federal Acquisition Regulation Supplement and PGI 204.71. A sample 
solicitation line-item structure and a corresponding offer of a 
proposed alternative line-item structure follow.
    Solicitation:

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

[[Page 58140]]

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            Item No.                  Supplies/Service        Quantity        Unit      Unit Price      Amount
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0001............................  Computer, Desktop with             20            EA  ............  ...........
                                   CPU, Keyboard and Mouse.
0002............................  Monitor.................           20            EA  ............  ...........
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(End of provision)
[FR Doc. 2011-23953 Filed 9-19-11; 8:45 am]
BILLING CODE 5001-08-P
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