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[Federal Register Volume 78, Number 241 (Monday, December 16, 2013)]
[Rules and Regulations]
[Pages 76067-76074]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-29771]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 211, 212, 218, 246, 252, and Appendix F to Chapter 2

RIN 0750-AH64

Defense Federal Acquisition Regulation Supplement: Item Unique 
Identifier Update (DFARS Case 2011-D055)

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 update and clarify 
requirements for unique identification and valuation of items delivered 
under DoD contracts.

DATES: Effective December 16, 2013.

FOR FURTHER INFORMATION CONTACT: Mr. Dustin Pitsch, telephone 571-372-
6090.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD published a proposed rule in the Federal Register at 77 FR 
35921 on June 15, 2012. The comment period closed on August 14, 2012. 
This rule proposed to revise the prescription and the clause at DFARS 
252.211-7003 to update and clarify instructions for the identification 
and valuation processes. Five respondents submitted public comments in 
response to the proposed rule.

II. Discussion and Analysis

    DoD reviewed the public comments in the development of the final 
rule. A discussion of the comments and the changes made to the rule as 
a result of those comments is provided, as follows.

A. Summary of Significant Changes

    The final rule incorporates the following significant changes from 
the proposed rule:
     Paragraphs 211.274-2(a)(2) and (3) are revised to 
consolidate requirements.
     The definition of ``data matrix'' within the clause at 
252.211-7003 is modified from the proposed rule to clarify the 
specification with which contractors must comply.
     The words ``at its own expense'' at 252.211-7003(c)(1)(v) 
are removed as a result of a public comment.
     The statement ``or registered in the DoD Item Unique 
Identification Registry'' is added at 252.211-7003(c)(2).
     The phrase ``ECC200 data matrix specification'' is added 
at 252.211-7003(c)(3) to note the exact specification within the listed 
standard.
     252.211-7003(c)(5)(D) is revised to read ``Verify that the 
marks on items and labels on shipments, storage containers, and 
packages are machine readable and conform to the applicable standards. 
The contractor shall use an automatic identification technology device 
for this verification that has been programmed to the requirements of 
Appendix A, MIL-STD-130, latest version.''
     252.211-7003(f)(1) is revised to include the sentence ``If 
WAWF is not required by this contract, and the contractor is not using 
WAWF, follow the procedure at http://dodprocurementtoolbox.com/site/uidregistry/.''
     252.211-7003(f)(2)(ii) is revised to clarify that a fill-
in is necessary when this circumstance applies.
     Changes previously proposed to update the Web site at 
252.225-7039(b)(1)(ii)(B) are no longer required as DFARS final rule 
2013-D037 published November 18, 2013 deleted this clause as coverage 
is now located in the FAR.
     In Appendix F-103(e)(1), the last sentence is revised to 
read ``WAWF

[[Page 76068]]

shall be used to report Unique Item Identifiers (UIIs) at the line item 
level, unless an exception to WAWF applies, and can also be used to 
report UIIs embedded at the line item level.''
     In Appendix F paragraph F-301(b)(18)(i), the fifth 
sentence in this paragraph is revised to read: ``However, if the 
contract has Item Unique Identification (IUID) requirements and the 
receiving report is being processed in WAWF the unit price must 
represent the acquisition cost that will be recorded in the IUID 
registry.'' This change is being made to ensure the instructions in 
Appendix F conform to the coverage in the clause.

B. Analysis of Public Comments

1. Commercial Provision/Clause List
    Comment: One respondent noted that DFARS clause 252.211-7003 is in 
the commercial provision/clause list at DFARS 212.301(f)(iv), and 
recommended that clause 252.211-7007 be added.
    Response: Clause 252.211-7007 was added on August, 29, 2012, to the 
commercial provision/clause list at 212.301(f) as the result of DFARS 
final rule 2012-D001, Reporting of Government-Furnished Property.
2. Burden Added by New Reporting
    Comment: One respondent stated that the rule adds new reporting 
requirements that will add to the burden of reporting. The respondent 
noted that the reporting requirements for special tooling, special test 
equipment, warranty items and type designation of items are all new 
with this rule.
    Response: Reporting of items of special tooling or special test 
equipment for a major defense acquisition program, which is designated 
for preservation and storage in accordance with the requirements of 
section 815 of the National Defense Authorization Act for Fiscal Year 
2009 (Pub. L. 110-417), is required to register and track these items. 
The special tooling, special test equipment, and warranty requirements 
have already been accounted for under final rule 2012-D001, Reporting 
of Government-Furnished Property. Reporting of warranty serialized 
items is required to identify and track warranted items so that DoD can 
obtain warranty benefits. Reporting of type designation is required to 
properly account for end items of DoD equipment and is a burden on the 
Government to ensure that it is added to line item structure. This is 
critical for auditability of property accountability.
3. Benefits/Outcome
    Comment: One respondent commented that the benefits listed at DFARS 
211.274-1 in the proposed rule would only occur with proper 
implementation and suggests adding text to clarify that merely tracking 
items will not automatically achieve desired results.
    Response: DoD recognizes that item unique identification is a 
prerequisite to enabling enhancements in DoD logistics, contracting, 
and financial business transactions.
    Comment: One respondent commented that the additional funding 
needed to implement the requirements merely changes where the budget 
impact hits, on invoices submitted by contractors rather than DoD 
achieving the necessary line item increases. The respondent also stated 
that the contractors' workforce burden is greatly increased by having 
additional quality inspection requirements, having to UID mark the 
additional items such as Government-furnished material (GFM), having to 
enter the items in the UID Registry, having increased physical 
inventory responsibilities, having additional steps to carry out when 
transferring contractor-acquired material at no cost to another 
contract (becomes GFM), subsequent mandatory verifications, and new 
packaging requirements, and that these additional burdens represent 
neither increased productivity nor increased efficiency.
    Response: The cost burden of implementing item unique 
identification was recognized as an allowable cost in the Director, 
Defense Procurement and Acquisition Policy, Memorandum, dated July 9, 
2004, Subject: ``Contract Pricing and Cost Accounting Compliance with 
DFARS 252.211-7003'', and this case does not change the way DoD is 
using item unique identification.
    Comment: One respondent stated that this requirement is passing a 
nontrivial DoD records responsibility along to the contractor in the 
immediate time frame, with no concurrent change in contract dollars to 
pay for the activity (unless through billing under a cost type 
contract), and suggested deleting the revision to 211.274-2(a)(4)(v), 
which makes item unique identification required for any, ``DoD serially 
managed item (reparable or nonreparable).''
    Response: The intent is not to pass the records responsibility to 
the contractors, since the change applies to contracts, which include 
this clause; therefore the mechanism for paying the contractor to 
perform the activity can be included in the contract price. Note that 
in the final rule this criterion is now located at 211.274-2(a)(3)(i).
4. Policy Is Unreasonable
    Comment: One respondent commented that the marking requirements 
implemented by this rule are impracticable and would put contractors at 
risk of charging the Government for unallowable unreasonable costs, 
noting that a reasonable cost is described in FAR 31.201-3(a): ``A cost 
is reasonable if in its nature and amount, it does not exceed that 
which would be incurred by a prudent person in the conduct of 
competitive business . . .'' The respondent also noted that the 
implementing marking requirements in this rule would constitute abuse 
as defined in the Government Accountability Office Yellow Book: ``Abuse 
involves behavior that is deficient or improper when compared with 
behavior that a prudent person would consider a reasonable and 
necessary business practice given the facts and circumstances . . .''
    Response: This case is not changing existing policy for reporting 
IUID; it is clarifying the categories of items subject to item unique 
identification and the methods for reporting items to the DoD Item 
Unique Identification Registry.
5. Warranty Cost
    Comment: One respondent suggested that warranted serialized items 
that require IUID be identified in the contract due to the significant 
administrative cost that would be incurred if IUID is required on all 
warranted serialized items. The suggested change would modify the text 
at 211.274-2(a)(4)(iii) to read: ``Warranted serialized item as 
identified in the contract.''
    Response: The DFARS 211.274-2(a)(4)(iii) reference, which the 
respondent proposed revising, reflects long-standing DoD policy that 
DoD unique item identification, or DoD recognized unique identification 
equivalent, is required for any warranted serialized item. See DFARS 
final rule 2009-D018 (76 33166 published June 8, 2011).
6. Special Test Equipment
    Comment: One respondent recommended against requiring IUID for 
special test equipment because special test equipment becomes obsolete 
too quickly.
    Response: DFARS 211.274-2(3)(iv) implements the policy of Public 
Law 110-417, which requires that major defense acquisition programs 
designate items of special tooling and special test

[[Page 76069]]

equipment for preservation and storage upon the termination of 
production. Any issues concerning obsolescence of special test 
equipment at the termination of production would be mitigated by the 
program manager by following the guidance in SD-22, Diminishing 
Manufacturing Sources and Material Shortages: A Guidebook of Best 
Practices for Implementing a Robust DMSMS Management Program, dated 
August 2012.
7. New Requirements
    Comment: One respondent pointed out that the requirements at 
211.274-2(a)(4)(v) and (vi) are both new requirements and contradict 
the rule's statement that no new requirements are being added. The 
respondent recommends modifying the text at 211.274-2(a)(4)(vi) to add 
``as defined in the contract'' to the end of the sentence.
    Response: These requirements are not considered to be new 
requirements as they are clarifying and formalizing existing practices, 
and they are not anticipated to add any additional burden to the 
information collection required by the rule. In the final rule these 
criteria are located within 211.274-2(a)(3).
8. Marking
    Comment: One respondent suggested that the required determination 
and findings conclusions stated in 211.274-2(b)(2) are three separate 
exceptions and should be listed exclusively.
    Response: There are only two conditions for the 211.274-2(b)(2) 
exceptions. They are: (1) it is more cost effective for the Government 
requiring activity to assign, mark, and register the unique item 
identifier after delivery for an item acquired from a small business 
concern, and (2) it is more cost effective for the Government requiring 
activity to assign, mark, and register the unique item identifier after 
delivery for a commercial item acquired under FAR part 8 or part 12.
    Comment: One respondent commented that the marking requirement at 
252.211-7003(c)(1)(v) would not benefit the Government or the 
contractor and will ultimately lead to additional cost to the 
Government. The respondent suggested removing this requirement from the 
clause.
    Response: DFARS 252.211-7003(c)(1)(v) only addresses items for 
which the contractor elects to create and mark a unique item identifier 
with a data matrix for its own purposes of traceability, even though 
the item is delivered to DoD and does not require DoD unique 
identification. This provision is included to ensure that any items 
marked under it and subsequently delivered to DoD will be reported to 
the DoD Item Unique Identification Registry by the contractor to avoid 
having DoD items with unique identification markings that are not 
registered.
    Comment: One respondent opined that the requirement added at 
252.211-7003(c)(5)(i)(D) to verify that IUID markings are readable and 
that they conform with the applicable standards is too broad of a 
requirement that adds unnecessary redundancy to the marking process and 
would serve only to increase cost that would be passed on to the 
Government.
    Response: DFARS 252.211-7003(c)(5)(i)(B) requires that unique item 
identifier marking comply with the criteria of MIL STD 130, 
Identification Marking of U.S. Military Property, latest version. 
Paragraph 252.211-7003(c)(5)(i)(C) requires that shipments, storage 
containers, and packages that contain uniquely identified items be 
labeled in accordance with the requirements of MIL STD 129, latest 
version. The 252.211-7003(c)(5)(i)(D) provision to verify that unique 
item identifier markings are readable and that they conform with the 
applicable standards is a prudent requirement to assure compliance with 
paragraphs (B) and (C).
    Comment: One respondent recommended deleting ``or when item unique 
identification is provided under paragraph (c)(1)(v)'' and instead 
adding ``either as part of, or associated with'' at 252.211-7003(d) in 
order to enable reporting IUID-related data elements to the Registry 
for occasional use of paper material inspection and receiving reports.
    Response: The purpose of the 252.211-7003(d) and (e) clause 
language is to require reporting of the item unique identification data 
to the DoD Item Unique Identification Registry for end items and 
embedded items, respectively, marked with a unique item identifier. 
Paragraph (f) of 252.211-7003 specifies the various methods for 
reporting these data.
9. Tracking Buildings or Property
    Comment: One respondent suggested editing the prescription for 
clause 252.211-7003 to specify that it applies to ``tangible durable 
personal property'' supplies to clarify that it does not apply to real 
property.
    Response: The inclusion of the term ``item'', which is defined in 
252.211-7003(a) as a single hardware article or a single unit formed by 
a grouping of subassemblies, components, or constituent parts, is a 
sufficient distinction to avoid confusion with real property.
10. Definitions
    Comment: One respondent commented that the definition for ``data 
matrix'' is not true all of the time as in some circumstances the 
modules in the matrix can be round.
    Response: As specified in 252.211-7003(c)(3), DoD will only accept 
a data matrix symbol that complies with ISO/IEC International Standard 
16022, Information Technology--International Symbology Specification--
Data Matrix. This standard defines a module as a single cell in a 
matrix symbology used to encode one bit of data. In data matrix, the 
module is nominally a square shape.
    Comment: One respondent suggested modifying the definition for 
``type designation'' because the explanation of a complete ``item'' is 
inconsistent with other instances within the regulations, standards, 
and guides.
    Response: To be consistent with other instances of ``type 
designation'' usage, the words ``a complete item, such as'' are not 
included in the final rule.
11. Unit
    Comment: One respondents suggested modifying 252.211-7003(c)(1)(i) 
because the use of the term ``unit'' is inconsistent with other 
instances within the regulations, standards, and guides.
    Response: 252.211-7003(c)(1)(i) uses the term ``unit acquisition 
cost'', which is the actual cost at the time of purchase and is the 
proper measure of value.
12. Internal Use Items
    Comment: One respondent suggested editing 252.211-7003(c)(3) to 
include an exemption on marking items that are for internal use only.
    Response: The DoD requirement is to have the contractor mark items 
that are delivered to DoD under the terms of a contract and to allow 
the collection of data where contractors voluntarily mark items.
13. MIL STD 130 and MIL STD 129
    Comment: One respondent noted that requiring adherence to a 
military standard (e.g., MIL STD 130 and MIL STD 129) creates an open 
ended standard that would not be possible to price at the time of award 
and requests the deletion of 252.211-7003(c)(5)(i)(D) language: 
``Verify that the marks on items, shipments and storage containers and 
packages are machine readable and conform to the applicable 
standards.'' The respondent also suggested clarifying that the 
requirement corresponds to the standard in place at

[[Page 76070]]

the time of award and should be cited in the contract.
    Response: This is a function of compliance with the requirements of 
MIL-STD-130 and MIL-STD-129, which are accomplished as a matter of 
course prior to the delivery of marked items. Clause 252.211-7003 
requires compliance with the latest versions of MIL STD 130 and MIL STD 
129 as of the time of award.
    Comment: One respondent requested adding language that states the 
MIL STD 129 requirement should only apply to shipping.
    Response: The requirement at 252.211-7003(c)(5)(i)(C) reinforces 
the requirements in paragraph 4.4 of MIL STD 129 that ``For shipments 
of UII items, the 2D (PDF417) symbol shall be used for listing the 
concatenated UIIs (DI 25S) and the data normally included in the linear 
(Code 39) identification bar codes (see 4.4.2.3 and 4.4.3.3.1).'' MIL-
STD-129 requirements only apply to markings on labels and containers of 
items being shipped or stored, as specified in the contract.
14. Text Clarification
    Comment: One respondent suggested editing the new text at 252.211-
7003(d)(12) to read ``Type designation of the item when specified in 
the contract specifications.'' The respondent noted that this change 
would clarify that this information is only required when it has been 
provided in the contract.
    Response: 252.211-7003(d)(12) is modified in the final rule to 
read: ``Type designation of the item as specified in the contract 
schedule, if any.'' Use of the term ``specifications'' is not 
appropriate in this instance.
    Comment: One respondent suggested editing the new text at 252.211-
7003(d)(14) to read: ``Whether the item was sold with a limited 
warranty.'' The respondent opined that tracking if items were sold with 
a warranty makes more sense than tracking if the item is covered by a 
warranty because most warranties expire and there is no current process 
for updating this information.
    Response: The DoD requirement is to determine if the item is 
covered by a warranty at the time it is delivered to the DoD. If the 
contractor acquires an item under warranty and subsequently delivers it 
to DoD, then DoD wants to gain the benefits of that warranty. DFARS 
subpart 246.7 provides procedures for capturing warranty details, 
including duration.
15. Wide Area WorkFlow (WAWF)
    Comment: One respondent recommended editing 252.211-7003(f)(1) to 
allow contractors the option of submitting item information directly to 
the registry without the stipulation ``If WAWF is not required by this 
contract''.
    Response: If the WAWF clause 252.232-7003 is in the contract, then 
WAWF shall be used to deliver the item unique identification data to 
the DoD Item Unique Identification Registry. If the WAWF clause is not 
in the contract, then direct submission will have to be used. This 
ensures that the data about the item is reviewed as part of inspection 
and acceptance of the item.
16. Registration/Reporting
    Comment: One respondent suggested removing the words ``DoD serially 
managed reparables'' from the requirement at 252.211-7003(c)(1)(iii).
    Response: DoD serially managed reparables may be for new 
acquisition or be furnished to a contractor for repair. In either case, 
they shall be subject to item unique identification marking.
    Comment: One respondent suggested adding notes to the new 
requirements at 252.211-7003(c)(1)(iii) and (iv) to clarify which 
category of items these refer to out of the categories ``ACQ'' or 
``GFP''.
    Response: The comment applies to the registration process. Links to 
instructions for reporting item unique identification data to the DoD 
Item Unique Identification Registry are found in 252.211-7003(f).
    Comment: One respondent suggested removing ``at its own expense'' 
from 252.211-7003(c)(1)(v).
    Response: The phrase ``at its own expense'' is deleted from 
252.211-7003(c)(1)(v).
    Comment: One respondent suggested adding a line at 252.211-
7003(c)(vi), which would state: ``DoD serially managed reparables as 
specified in Attachment Number ----. (Note: Corresponds to IUID 
Registry Category ``LEG'').''
    Response: DoD serially managed reparables may be for new 
acquisitions or be furnished to a contractor for repair. In either case 
they would be subject to item unique identification marking.
    Comment: One respondent suggested revising 252.211-7003(c)(2), to 
state: ``The unique item identifier assignment and the component data 
element combination shall not be duplicated on any other item marked 
and/or registered in the IUID Registry by the contractor (because STE 
(GFP) may have a UII assigned and registered, but not marked).''
    Response: DFARS 252.211-7003(c)(2) is revised to read: ``The unique 
item identifier assignment and component data element combination shall 
not be duplicated on any other item marked or registered in the DoD 
Item Unique Identification Registry by the contractor.''
    Comment: One respondent suggested adding a nine-item list of pieces 
of information to be submitted directly to the IUID Registry for legacy 
items at 252.211-7003(f), similar to the list in the proposed rule at 
252.211-7003(e).
    Response: Instructions for reporting item unique identification 
data on reparable items furnished to a contractor for repair are 
included under 252.211-7003(d).
    Comment: One respondent suggested adding a new 252.211-7003(f)(3), 
which would state: ``reparable items shall be reported by direct data 
submission to the IUID Registry following the procedures and formats 
at: http://www.acq.osd.mil/dpap/pdi/uid/data_submission_information.html.''
    Response: The reparables furnished to a contractor for repair would 
be reported as either end items or embedded items under (f)(1) or 
(f)(2), as appropriate.
17. Government-Furnished Property (GFP) Policy Changes
    Comment: One respondent disagrees with changing 211.274-4 to 
address GFP instead of Government-furnished equipment and noted that 
not all of the exceptions to GFP would have been considered GFP anyhow. 
This respondent stated that the changes made to this section, to 
include the removal of exceptions for items valued at less than $5,000 
and Government-furnished material, will be extremely burdensome to 
large contractors and will add tens of thousands of items that will 
need to be marked and tracked with IUID and recommended that the policy 
changes not be made.
    Response: The text at 211.274-4 was modified on August 29th, 2012, 
by final rule 2012-D001 and is not further modified by this rule. The 
five exceptions in the proposed rule were incorporated into the DFARS 
by the final rule 2012-D001 as well as two other exceptions: ``Property 
released as work in process'' and ``Nonserial managed items (reporting 
is limited to receipt transactions only).''
18. Business Systems Rule
    Comment: One respondent disagrees with limiting this rule to small 
businesses involved in manufacturing. This respondent stated that the 
business systems rule came to pass because major contractors' business 
systems were assessed as poor, so a control environment argument is 
unwarranted.

[[Page 76071]]

The respondent also stated that the exposure is greater at major 
contractors, and major contractors are more likely to use SAP AG 
software, which abrogates the loan/payback transaction.
    Response: This comment is outside the scope of this case. The scope 
is limited to clarifying the categories of items subject to item unique 
identification and the methods for reporting items to the DoD Item 
Unique Identification Registry.

III. 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 does not expect this final rule 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 the 
changes being made do not increase the burden of the item unique 
identification requirements, nor do they cause the requirement to be 
applicable to any additional small businesses. However, a final 
regulatory flexibility analysis has been prepared consistent with the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., and is summarized as 
follows:
    The changes are being made to refine the language of the 
regulations and update the clause and prescription to comply with 
existing item unique identification policy. This DFARS final rule also 
clarifies the reporting requirements for special tooling and special 
test equipment, warranty, and type designation, updates text to 
describe the reason for the policy, clears up language that has been 
confusing in practice, and adds an alternative method of data 
submission using either hard copy or a wide-area-workflow attachment. 
The rule also eliminates Alternate I of DFARS 252.211-7003, which cited 
reporting requirements covered by other mechanisms.
    This rule will apply to small businesses involved in manufacturing. 
There are currently 1,495 small businesses registered in the Item 
Unique Identification Registry, out of 2,431 total companies 
registered. The changes made by this rule will not affect the number of 
businesses that are required to be registered in the Item Unique 
Identification Registry.
    There were no comments in response to the initial regulatory 
flexibility analysis. The Chief Counsel for Advocacy of the Small 
Business Administration did not file any comments.
    This rule does not add any new information collection requirements 
as it only clarifies existing requirements.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    No alternatives were determined that will accomplish the objectives 
of the rule.

IV. Paperwork Reduction Act

    This rule does not add any new 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) beyond those already 
covered by OMB Control Numbers 0704-0246 and 0704-0248. OMB Control 
Number 0704-0246, titled ``Defense Federal Acquisition Regulations 
Supplement (DFARS) Part 245, Government Property, related clauses in 
DFARS 252, and related forms in DFARS 253,'' includes information 
collection requirements for DFARS subpart 211.274. OMB Control Number 
0704-0248, titled ``Defense Federal Acquisition Regulations Supplement 
(DFARS) Appendix F, Material Inspection and Receiving Report and 
related forms,'' covers all information submitted through the Wide Area 
WorkFlow system.

List of Subjects in 48 CFR Parts 211, 212, 218, 246, 252, and 
Appendix F to Chapter 2

    Government procurement.

Manuel Quinones,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 211, 212, 218, 246, 252, and Appendix F to 
Chapter 2 are amended as follows:

0
1. The authority citation for 48 CFR parts 211, 212, 218, 246, 252, and 
Appendix F to chapter 2 continues to read as follows:

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

PART 211--DESCRIBING AGENCY NEEDS

0
2. Section 211.274-1 is revised to read as follows:

211.274-1  General.

    Item unique identification and valuation is a system of marking, 
valuing, and tracking items delivered to DoD that enhances logistics, 
contracting, and financial business transactions supporting the United 
States and coalition troops. Through item unique identification policy, 
which capitalizes on leading practices and embraces open standards, 
DoD--
    (a) Achieves lower life-cycle cost of item management and improves 
life-cycle property management;
    (b) Improves operational readiness;
    (c) Provides reliable accountability of property and asset 
visibility throughout the life cycle;
    (d) Reduces the burden on the workforce through increased 
productivity and efficiency; and
    (e) Ensures item level traceability throughout lifecycle to 
strengthen supply chain integrity, enhance cyber security, and combat 
counterfeiting.

0
3. Section 211.274-2 is amended by--
0
a. Revising the section heading;
0
b. Revising paragraph (a);
0
c. Revising paragraph (b) introductory text; and
0
d. Revising paragraph (b)(2).
    The revisions read as follows:

211.274-2  Policy for item unique identification.

    (a) It is DoD policy that DoD item unique identification, or a DoD 
recognized unique identification equivalent, is required for all 
delivered items, including items of contractor-acquired property 
delivered on contract line items (see PGI 245.402-71 for guidance when 
delivery of contractor acquired property is required)--
    (1) For which the Government's unit acquisition cost is $5,000 or 
more;
    (2) For which the Government's unit acquisition cost is less than 
$5,000 when the requiring activity determines that item unique 
identification is required for mission essential or controlled 
inventory items; or
    (3) Regardless of value for any--
    (i) DoD serially managed item (reparable or nonreparable) or 
subassembly, component, or part embedded within a subassembly, 
component, or part;
    (ii) Parent item (as defined in 252.211-7003(a)) that contains the 
embedded subassembly, component, or part;
    (iii) Warranted serialized item;

[[Page 76072]]

    (iv) Item of special tooling or special test equipment, as defined 
at FAR 2.101, for a major defense acquisition program that is 
designated for preservation and storage in accordance with the 
requirements of section 815 of the National Defense Authorization Act 
for Fiscal Year 2009 (Pub. L. 110-417); and
    (v) High risk item identified by the requiring activity as 
vulnerable to supply chain threat, a target of cyber threats, or 
counterfeiting.
    (b) Exceptions. The contractor will not be required to provide DoD 
item unique identification if--
* * * * *
    (2) 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 identifier after delivery, 
and the item is either acquired from a small business concern, or is a 
commercial item acquired under FAR part 12 or part 8.
* * * * *

0
4. Section 211.274-3 is amended by--
0
a. Revising paragraph (a); and
0
b. Amending paragraph (c) by removing the word ``need'' and adding in 
its place ``shall''.
    The revision reads as follows:

211.274-3  Policy for valuation.

    (a) It is DoD policy that contractors shall be required to identify 
the Government's unit acquisition cost for all deliverable end items to 
which item unique identification applies.
* * * * *

0
5. Section 211.274-6 is amended by--
0
a. Revising paragraph (a); and
0
b. Amending paragraph (c)(1) by removing the clause title ``Item 
Identification and Valuation'' and adding in its place ``Item Unique 
Identification and Valuation''.
    The revision reads as follows:

211.274-6  Contract clauses.

    (a)(1) Use the clause at 252.211-7003, Item Unique Identification 
and Valuation, in solicitations and contracts, including solicitations 
and contracts using FAR part 12 procedures for the acquisition of 
commercial items, that require item identification or valuation, or 
both, in accordance with 211.274-2 and 211.274-3.
    (2) Identify in paragraph (c)(1)(ii) of the clause the contract 
line, subline, or exhibit line item number and description of any 
item(s) below $5,000 in unit acquisition cost for which DoD item unique 
identification or a DoD recognized unique identification equivalent is 
required in accordance with 211.274-2(a)(2).
    (3) Identify in paragraph (c)(1)(iii) of the clause the applicable 
attachment number, when DoD item unique identification or a DoD 
recognized unique identification equivalent is required in accordance 
with 211.274-2(a)(3)(i) through (v).
* * * * *

PART 212--ACQUISITION OF COMMERCIAL ITEMS

212.301  [Amended]

0
6. Section 212.301 is amended in paragraph (f)(ix) by removing the 
clause title ``Item Identification and Valuation'' and adding in its 
place ``Item Unique Identification and Valuation''.

PART 218--EMERGENCY ACQUISITIONS

0
7. Section 218.201(2) is revised to read as follows:

218.201  Contingency operation.

* * * * *
    (2) Policy for item unique identification. Contractors will not be 
required to provide DoD item unique identification if the items, as 
determined by the head of the agency, are to be used to support a 
contingency operation. See 211.274-2(b).
* * * * *

PART 246--QUALITY ASSURANCE

246.710  [Amended]

0
8. Section 246.710 is amended in paragraph (5)(i) introductory text by 
removing the clause title ``Item Identification and Valuation'' and 
adding in its place ``Item Unique Identification and Valuation''.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
9. Amend section 252.211-7003 by--
0
a. Revising the section heading;
0
b. Revising the clause heading and the clause date;
0
c. Amending paragraph (a) by removing the definition title ``DoD unique 
item identification'' and adding in its place ``DoD item unique 
identification'';
0
d. Adding to paragraph (a), in alphabetical order, definitions for 
``Data matrix'' and ``Type designation'';
0
e. Revising paragraph (c);
0
f. Revising paragraph (d) introductory text;
0
g. Adding paragraphs (d)(12) through (14);
0
h. Revising paragraph (e) introductory text;
0
i. Revising paragraph (f);
0
j. Revising paragraph (g); and
0
k. Removing Alternate I.

252.211-7003  Item unique identification and valuation.

* * * * *

ITEM UNIQUE IDENTIFICATION AND VALUATION (DEC 2013)

    (a) * * *
    Data matrix means a two-dimensional matrix symbology, which is made 
up of square or, in some cases, round modules arranged within a 
perimeter finder pattern and uses the Error Checking and Correction 200 
(ECC200) specification found within International Standards 
Organization (ISO)/International Electrotechnical Commission (IEC) 
16022.
* * * * *
    Type designation means a combination of letters and numerals 
assigned by the Government to a major end item, assembly or 
subassembly, as appropriate, to provide a convenient means of 
differentiating between items having the same basic name and to 
indicate modifications and changes thereto.
* * * * *
    (c) Unique item identifier. (1) The Contractor shall provide a 
unique item identifier for the following:
    (i) Delivered items for which the Government's unit acquisition 
cost is $5,000 or more, except for the following line items:

------------------------------------------------------------------------
 Contract line, subline, or exhibit
           line item No.                       Item description
------------------------------------------------------------------------
                                     ...................................
------------------------------------------------------------------------

    (ii) Items for which the Government's unit acquisition cost is less 
than $5,000 that are identified in the Schedule or the following table:

------------------------------------------------------------------------
 Contract line, subline, or exhibit
           line item No.                       Item description
------------------------------------------------------------------------
                                     ...................................
------------------------------------------------------------------------

(If items are identified in the Schedule, insert ``See Schedule'' in 
this table.)

    (iii) Subassemblies, components, and parts embedded within 
delivered items, items with warranty requirements, DoD serially managed 
reparables and DoD serially managed nonreparables as specified in 
Attachment Number ----.
    (iv) Any item of special tooling or special test equipment as 
defined in FAR 2.101 that have been designated for preservation and 
storage for a Major Defense Acquisition Program as specified in 
Attachment Number ----.

[[Page 76073]]

    (v) Any item not included in paragraphs (c)(1)(i), (ii), (iii), or 
(iv) of this clause for which the contractor creates and marks a unique 
item identifier for traceability.
    (2) The unique item identifier assignment and its component data 
element combination shall not be duplicated on any other item marked or 
registered in the DoD Item Unique Identification Registry by the 
contractor.
    (3) The unique item identifier component data elements shall be 
marked on an item using two dimensional data matrix symbology that 
complies with ISO/IEC International Standard 16022, Information 
technology--International symbology specification--Data matrix; ECC200 
data matrix specification.
    (4) Data syntax and semantics of unique item identifiers. The 
Contractor shall ensure that--
    (i) The data elements (except issuing agency code) of the unique 
item identifier are encoded within the data matrix symbol that is 
marked on the item using one of the following three types of data 
qualifiers, as determined by the Contractor:
    (A) Application Identifiers (AIs) (Format Indicator 05 of ISO/IEC 
International Standard 15434), in accordance with ISO/IEC International 
Standard 15418, Information Technology--EAN/UCC Application Identifiers 
and Fact Data Identifiers and Maintenance and ANSI MH 10.8.2 Data 
Identifier and Application Identifier Standard.
    (B) Data Identifiers (DIs) (Format Indicator 06 of ISO/IEC 
International Standard 15434), in accordance with ISO/IEC International 
Standard 15418, Information Technology--EAN/UCC Application Identifiers 
and Fact Data Identifiers and Maintenance and ANSI MH 10.8.2 Data 
Identifier and Application Identifier Standard.
    (C) Text Element Identifiers (TEIs) (Format Indicator 12 of ISO/IEC 
International Standard 15434), in accordance with the Air Transport 
Association Common Support Data Dictionary; and
    (ii) The encoded data elements of the unique item identifier 
conform to the transfer structure, syntax, and coding of messages and 
data formats specified for Format Indicators 05, 06, and 12 in ISO/IEC 
International Standard 15434, Information Technology-Transfer Syntax 
for High Capacity Automatic Data Capture Media.
    (5) Unique item identifier.
    (i) The Contractor shall--
    (A) Determine whether to--
    (1) Serialize within the enterprise identifier;
    (2) Serialize within the part, lot, or batch number; or
    (3) Use a DoD recognized unique identification equivalent (e.g. 
Vehicle Identification Number); and
    (B) Place the data elements of the unique item identifier 
(enterprise identifier; serial number; DoD recognized unique 
identification equivalent; and for serialization within the part, lot, 
or batch number only: Original part, lot, or batch number) on items 
requiring marking by paragraph (c)(1) of this clause, based on the 
criteria provided in MIL-STD-130, Identification Marking of U.S. 
Military Property, latest version;
    (C) Label shipments, storage containers and packages that contain 
uniquely identified items in accordance with the requirements of MIL-
STD-129, Military Marking for Shipment and Storage, latest version; and
    (D) Verify that the marks on items and labels on shipments, storage 
containers, and packages are machine readable and conform to the 
applicable standards. The contractor shall use an automatic 
identification technology device for this verification that has been 
programmed to the requirements of Appendix A, MIL-STD-130, latest 
version.
    (ii) The issuing agency code--
    (A) Shall not be placed on the item; and
    (B) Shall be derived from the data qualifier for the enterprise 
identifier.
    (d) For each item that requires item unique identification under 
paragraph (c)(1)(i), (ii), or (iv) of this clause or when item unique 
identification is provided under paragraph (c)(1)(v), in addition to 
the information provided as part of the Material Inspection and 
Receiving Report specified elsewhere in this contract, the Contractor 
shall report at the time of delivery, as part of the Material 
Inspection and Receiving Report, the following information:
    (1) * * *
    (12) Type designation of the item as specified in the contract 
schedule, if any.
    (13) Whether the item is an item of Special Tooling or Special Test 
Equipment.
    (14) Whether the item is covered by a warranty.
    (e) For embedded subassemblies, components, and parts that require 
DoD item unique identification under paragraph (c)(1)(iii) of this 
clause or when item unique identification is provided under paragraph 
(c)(1)(v), the Contractor shall report as part of the Material 
Inspection and Receiving Report specified elsewhere in this contract, 
the following information:
* * * * *
    (f) The Contractor shall submit the information required by 
paragraphs (d) and (e) of this clause as follows:
    (1) End items shall be reported using the receiving report 
capability in Wide Area WorkFlow (WAWF) in accordance with the clause 
at 252.232-7003. If WAWF is not required by this contract, and the 
contractor is not using WAWF, follow the procedures at http://dodprocurementtoolbox.com/site/uidregistry/.
    (2) Embedded items shall be reported by one of the following 
methods--
    (i) Use of the embedded items capability in WAWF;
    (ii) Direct data submission to the IUID Registry following the 
procedures and formats at http://dodprocurementtoolbox.com/site/uidregistry/; or
    (iii) Via WAWF as a deliverable attachment for exhibit line item 
number (fill in) ----, Unique Item Identifier Report for Embedded 
Items, Contract Data Requirements List, DD Form 1423.
    (g) Subcontracts. If the Contractor acquires by contract any items 
for which item unique identification is required in accordance with 
paragraph (c)(1) of this clause, the Contractor shall include this 
clause, including this paragraph (g), in the applicable subcontract(s), 
including subcontracts for commercial items.

0
11. Amend Appendix F to Chapter 2 by--
0
a. Revising section F-103(e)(1);
0
b. Revising paragraph section F-301(b)(18) introductory text; and
0
c. Revising paragraph F-301(b)(18)(i).
    The revisions read as follows:

APPENDIX F TO CHAPTER 2--MATERIAL INSPECTION AND RECEIVING REPORT

* * * * *

F-103 Use.

* * * * *
    (e) * * *
    (1) Item Unique Identification (IUID), when the clause at DFARS 
252.211-7003, Item Unique Identification and Valuation is used in 
the contract, reporting of IUID data is required. WAWF captures the 
IUID data and forwards the data to the IUID registry after 
acceptance. WAWF shall be used to report Unique Item Identifiers 
(UIIs) at the line item level, unless an exception to WAWF applies, 
and can also be used to report UIIs embedded at the line item level.
* * * * *

F-301 Preparation instructions.

* * * * *
    (b) * * *
    (18) Unit price. The contractor shall enter unit prices on all 
WAWF RR copies.
    (i) The contractor shall enter unit prices for each item of 
property fabricated or acquired for the Government and delivered to 
a

[[Page 76074]]

contractor as Government furnished property (GFP). Get the unit 
price from Section B of the contract. If the unit price is not 
available, use an estimate. The estimated price should be the 
contractor's estimate of what the items cost the Government. When 
the price is estimated, enter ``Estimated Unit Price'' in the 
description field. However, if the contract has Item Unique 
Identification (IUID) requirements and the receiving report is being 
processed in WAWF, the unit price must represent the acquisition 
cost that will be recorded in the IUID registry. Therefore, the unit 
price is required (see the clause at DFARS 252.211-7003, Item Unique 
Identification and Valuation). When delivering GFP via WAWF to 
another contractor, WAWF will initiate a property transfer if the 
vendor who is initiating the WAWF RR is also registered as a vendor 
property shipper in WAWF and the vendor receiving the property is 
also a vendor property receiver in WAWF.
* * * * *
[FR Doc. 2013-29771 Filed 12-13-13; 8:45 am]
BILLING CODE 5001-06-P
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