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[Federal Register Volume 76, Number 87 (Thursday, May 5, 2011)]
[Rules and Regulations]
[Pages 25566-25568]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-10967]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 216 and 252

RIN 0750-AH20

Defense Federal Acquisition Regulation Supplement (DFARS); 
Electronic Ordering Procedures (DFARS Case 2009-D037)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Final rule.

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SUMMARY: DoD is issuing a final rule to amend the Defense Federal 
Acquisition Regulation Supplement (DFARS) to address electronic 
business procedures for placing orders. This final rule adds a new 
DFARS clause to clarify this process.

DATES: Effective date: May 5, 2011.

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

SUPPLEMENTARY INFORMATION: 

[[Page 25567]]

I. Background

    DoD published a proposed rule in the Federal Register at 75 FR 
60690, on October 1, 2010. This case establishes a standard method for 
the issuance of orders via electronic means. DoD currently has the 
capability to distribute orders electronically on a routine basis and 
can post to a Web site that any contractor can access. In order to make 
this possible, the DFARS needs to provide language that will make those 
procedures a routine part of contract order distribution. This will 
enable DoD to further the goals of the E-Government Act of 2002 (Pub. 
L. 107-347).
    The public comment period closed November 30, 2010. Five 
respondents submitted comments to the proposed rule, which are 
addressed below.

II. Discussion and Analysis

A. Effective Way To Do Business

    Comment: One respondent opined that requiring vendors and the 
Government to communicate exclusively via electronic means will be the 
most effective way for the Government to do business in the future.
    Response: Concur this could be the most effective way to 
communicate, however, e-mail and facsimile will continue to be 
permitted as a means of communication.

B. Elements of an Order

    Comment: One respondent expressed concern that many elements of an 
order are not universal, and are not automatically posted to the 
Electronic Document Access (EDA) system from the contract writing 
systems (i.e., attachments and appendices). The respondent opined that 
ordering officials would thus be forced to either use e-mail to get 
some elements of the order to the contractor or, alternatively, to 
manually replace the automatically uploaded documents in EDA with 
manually compiled complete documents. The respondent suggested that 
neither approach would be efficient.
    Response: As a matter of policy, DoD already requires posting of 
the contract or order, including its attachments, to EDA. This rule 
merely leverages that existing requirement to codify rules for 
electronic issuance of orders. Use of e-mail will not be necessary.

C. Use of E-Mail

    Comment: A respondent questioned whether it is wise to take e-mail 
totally off the table, when FAR 52.216-18, Ordering, currently permits 
ordering officials to specify e-mail as an ``electronic commerce 
method'' so long as it is authorized in the schedule. The respondent 
recommended that the DFARS clause should explicitly permit the use of 
e-mail as a recognized electronic commerce method. The respondent 
recommended, in the alternative, that the Government permit the use of 
e-mail on a ``by-exception basis'' or at the discretion of the 
contracting officer.
    Response: DoD considered the use of e-mail as a primary method of 
distribution, but rejected its use because of the lack of an audit 
trail. DoD was also concerned that the delivery and receipt of e-mail 
is subject to interruption without notice due to firewall and spam 
filter configurations.

D. Changes to 252.216-70XX(c)(1), Ordering

    Comment: A respondent suggested that the term ``notice'' in 
252.216-70XX(c)(1), Ordering, should be defined. Another respondent 
stated the final rule should be clearer about who in the company will 
be receiving the awards to reduce the possibility for miscommunication. 
Another respondent stated that electronic commerce is a term 
specifically identified in Federal Acquisition Regulation (FAR) Part 2, 
and is broader than just the EDA, which is not defined in the FAR or 
DFARS. The respondent further stated that limiting the Government's 
electronic communication options to the EDA only will prevent ordering 
officials from using other means of electronic commerce in the event 
EDA is not accessible (e.g., system is down or contingency contracting 
where EDA may not be available), and that use of the broader term 
``electronic commerce'' would allow for the flexibility to adopt the 
use of new methods of electronic communication as they arise.
    Response: Contract load notification lists can be set up in EDA for 
a specific contract or delivery order. Each contract or delivery order 
requires its own notification list. Notification lists may be created 
for contracts that do not yet exist in EDA. When a contract loads into 
EDA, the notification process activates and EDA e-mails the 
notification to the addresses on the lists. Notification e-mail 
messages are sent once per day. Therefore, it is not necessary to 
define what constitutes a notice.
    DoD has chosen EDA as its primary means of establishing an official 
shared copy of the contract. This case leverages that decision. This 
case is not intended to prohibit the use of other electronic commerce 
tools to transmit data about the contract, but only to address EDA as 
the location of the document.

E. Encryption

    Comment: A respondent suggested that DoD should allow for an 
alternate means of electronic communication that provides for secure 
transmission of files (such as deliverables, reports, financial, and 
Privacy Act data) back to the issuer. The respondent further stated 
that e-mail is a very simple, widespread, and known technology, and 
that many regulations require strong encryption when sending sensitive 
(controlled unclassified information, personally identifiable 
information, etc.) data over the internet. The respondent recommended 
that DoD should be encrypting files before transmitting them, and that 
including (in the clause) the option to use e-mail would set the stage 
for enhanced, electronic communications between DoD and its many small 
contractors, via the Internet's ubiquitous direct communication tool.
    Response: EDA shares data using secure hypertext transfer protocol 
(https), which encrypts all data in transit, and is universally used by 
both industry and Government to protect sensitive data. EDA fulfills 
DoD's requirement for the secure transmission of data.

F. Registration in EDA

    Comment: A respondent asked whether contractor registration in EDA 
will eventually become mandatory like Central Contractor Registration 
(CCR) (i.e., a pre-condition for receiving a contract). The respondent 
went on to suggest that DoD would have a difficult time getting 
industry (and particularly small businesses) to use EDA without a 
mandatory registration requirement.
    Response: An implicit condition of this ordering clause is that 
vendors who wish to receive notice of electronic orders must create an 
account in EDA. In order to create an account, the vendor must know the 
Commercial and Government Entity (CAGE) or the Data Universal Numbering 
System (DUNS) number for the business unit, and specify it in their EDA 
registration. The electronic business point of contact for that CAGE/
DUNS as identified in CCR must authorize, via e-mail, the applicant for 
the EDA vendor user account as someone who may access documents for 
that CAGE/DUNS.

G. Access to EDA

    Comment: A respondent noted that there is a general lag between the 
time when an order is released in the contract writing system, and the 
time when it is available in EDA, and that this is a practical downside 
of not

[[Page 25568]]

permitting the use of e-mail to issue orders. Two respondents expressed 
concern that there may be occasions when contractors cannot readily 
gain access to EDA or that there may be contractors who object to 
registering in the EDA system.
    Response: Historical data shows that, on average, actions are 
posted to EDA within one to two days. This average compares very 
favorably with the averages associated with mailing or any other 
distribution process. There are two EDA sites, one at http://eda.ogden.disa.mil/, and the other at http://eda.cols.disa.mil/, to 
ensure connectivity. These two sites allow for an overall 99.1% average 
system availability. EDA is a very reliable means of conducting DoD's 
business, and the issue of EDA nonavailability is not considered 
significant.

H. Exceptions

    Comment: A respondent recommended striking facsimile and mail as 
acceptable methods of issuing orders in order to more firmly promote 
the use of electronic business.
    Response: The objective of the case is not to eliminate paper 
methods but to establish a regular process for electronic methods.
    DoD has considered the public comments, and has decided to make no 
major changes to the text that was proposed in the Federal Register at 
75 FR 60690, on October 1, 2010. However, there is one small change 
made at 216.506(a), where the name ``Ordering'' was added to the clause 
prescription as the title for FAR 52.216-18. This final rule makes the 
following DFARS changes:
     Adds DFARS 216.506(a) to require a new clause 252.216-
7006, Ordering, in lieu of the clause at 52.216-18, Ordering, in 
solicitations, and contracts when a definite-quantity contract, a 
requirements contract, or an indefinite-quantity contract is 
contemplated; and
     Add a new clause at DFARS 252.216-7006, Ordering.

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 has prepared a final regulatory flexibility analysis consistent 
with 5 U.S.C. 604 and is summarized below. A copy of the analysis may 
be obtained from the point of contact specified herein.
    The objective of this rule is to establish a standard method for 
distributing orders via electronic means. DoD currently has the 
capability to distribute orders electronically on a routine basis, and 
posts those orders to a Web site that any contractor can access.
    This DFARS change will provide standard contract language that will 
make those order distribution procedures a routine part of contract 
order placement. This rule will enable DoD to further the goals of the 
E-Government Act of 2002.
    For Fiscal Year 2009, DoD made awards to 6,097 small business 
unique Data Universal Numbering System (DUNS) numbers using the clause 
at FAR 52.216-18, Ordering. The benefit of this rule to small business 
is that it will make electronic distribution procedures a routine part 
of order issuance. This change will ultimately help improve the 
management, and promotion of electronic Government services and 
processes, and will establish a framework to improve public access to 
Government information, and services.
    This rule was published as a proposed rule in the Federal Register 
at 75 FR 60690, on October 1, 2010. No comments were received from 
small entities on the affected DFARS subpart with regard to small 
businesses. We anticipate that there will be limited, if any, 
additional costs imposed on small businesses.

V. Paperwork Reduction Act

    This rule does not impose 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).

List of Subjects in 48 CFR Parts 216 and 252

    Government procurement.

Mary Overstreet,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 216 and 252 are amended as follows:

0
1. The authority citation for 48 CFR parts 216 and 252 continues to 
read as follows:

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

PART 216--TYPES OF CONTRACTS

0
2. Amend section 216.506 by adding paragraph (a) to read as set forth 
below.

216.506  Solicitation provisions and contract clauses.

    (a) Insert the clause at 252.216-7006, Ordering, in lieu of the 
clause at 52.216-18, Ordering, in solicitations and contracts when a 
definite-quantity contract, a requirements contract, or an indefinite-
quantity contract is contemplated.
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
3. Add section 252.216-7006 to read as follows:

252.216-7006  Ordering.

    As prescribed in 216.506(a), use the following clause:

    ORDERING (MAY 2011)
    (a) Any supplies and services to be furnished under this 
contract shall be ordered by issuance of delivery orders or task 
orders by the individuals or activities designated in the contract 
schedule. Such orders may be issued from -------------------- 
through ------------------------ [insert dates].
    (b) All delivery orders or task orders are subject to the terms 
and conditions of this contract. In the event of conflict between a 
delivery order or task order and this contract, the contract shall 
control.
    (c)(1) If issued electronically, the order is considered 
``issued'' when a copy has been posted to the Electronic Document 
Access system, and notice has been sent to the Contractor.
    (2) If mailed or transmitted by facsimile, a delivery order or 
task order is considered ``issued'' when the Government deposits the 
order in the mail or transmits by facsimile. Mailing includes 
transmittal by U.S. mail or private delivery services.
    (3) Orders may be issued orally only if authorized in the 
schedule.
    (End of Clause)

[FR Doc. 2011-10967 Filed 5-4-11; 8:45 am]
BILLING CODE 5001-08-P
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