[Federal Register: December 15, 2003 (Volume 68, Number 240)]
[Rules and Regulations]
[Page 69628-69631]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15de03-17]
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DEPARTMENT OF DEFENSE
48 CFR Parts 232 and 252
[DFARS Case 2002-D001]
Defense Federal Acquisition Regulation Supplement; Electronic
Submission and Processing of Payment Requests
AGENCY: Department of Defense (DoD).
ACTION: Final rule.
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SUMMARY: DoD has adopted as final, with changes, an interim rule
amending the Defense Federal Acquisition Regulation Supplement (DFARS)
to implement Section 1008 of the National Defense Authorization Act for
Fiscal Year 2001. Section 1008 requires contractors to submit, and DoD
to process, payment requests in electronic form.
EFFECTIVE DATE: December 15, 2003.
FOR FURTHER INFORMATION CONTACT: Mr. Thaddeus Godlewski, Defense
Acquisition Regulations Council, OUSD (AT&L) DPAP (DAR), IMD 3C132,
3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-
2022; facsimile (703) 602-0350. Please cite DFARS Case 2002-D001.
SUPPLEMENTARY INFORMATION:
A. Background
DoD published an interim rule at 68 FR 8450 on February 21, 2003,
to implement Section 1008 of the National Defense Authorization Act for
Fiscal Year 2001 (Public Law 106-398). Section 1008 requires
contractors to submit, and DoD to process, payment requests in
electronic form. Seventeen sources submitted comments on the interim
rule. A discussion of the comments is provided below. Differences
between the interim and final rules are discussed in the DoD response
to Comment 9 below. In addition, DoD has revised the language at
232.7002(a)(6)(ii) and 252.232-7003(c) to further address the
involvement of the contract administration office in decisions to
permit exceptions to the rule.
1. Comment: The rule should permit agencies to implement procedures
identifying criteria for exemptions, incorporation of the DFARS clause
in existing contracts, and the method for documenting an alternate
payment method between the contracting officer, the Defense Finance and
Accounting Service (DFAS), and the vendor when the vendor cannot comply
with the DFARS policy.
DoD Response: Concur in part. The DFARS rule does not preclude
agencies from providing guidance to contracting officers to address the
particular situations of the agency that may warrant an exemption from
the policy. DoD believes the language at DFARS 232.7002(a)(1) through
(6) provides sufficient flexibility for agencies to implement this
policy without needing specific additional exemption authority.
As for existing contracts, DoD does not believe it is necessary to
specify whether the clause applies retroactively. Policy on the
applicability of DFARS changes is provided in DFARS 201.304(6), which
states, ``* * * Unless guidance accompanying a change states otherwise,
contracting officers must include any new or revised clauses,
provisions, or forms in solicitations issued on or after the effective
date of the change.'' This rule does not deviate from the policy in
DFARS 201.304(6) and, therefore, requires no additional instructions
regarding applicability.
2. Comment: The rule should provide leeway to exclude classified
procurement systems from any mandated changes implemented.
DoD Response: Concur. Classified invoices are exempt from the
electronic submission requirement in accordance with DFARS
232.7002(a)(3).
3. Comment: How will DoD know that contracting offices are fully
functional? Comments were submitted in response to the proposed rule
published on May 31, 2002, which expressed concerns regarding the
ability of agency software to comply with the electronic submission
requirements.
DoD Response: In response to a comment received on the proposed
rule published at 67 FR 38057 on May 31, 2002, DFARS 232.7002(a)(6) was
added to the interim rule. This paragraph permits the contracting
officer to authorize a contractor to submit a payment request in other
than electronic form until such time as the agency is able to process
payments electronically. Knowing which contracting offices are fully
functional is an internal DoD implementation issue, which is outside
the scope of this case. DoD anticipates that agencies will implement
internal controls to monitor progress in complying with this policy.
4. Comment: One company indicated that it was not set up to send
electronic invoices or accept electronic purchase orders. The company
does not accept e-mail or FAX orders, and does not accept credit cards.
Changing to all electronic payments would be a hardship to a small
company such as itself that does limited Government business.
DoD Response: DoD believes this situation is adequately addressed
at DFARS 232.7002(a)(6), which permits an exception to the policy if
the contractor is unable to submit a payment request in electronic
form.
5. Comment: There is a concern that one DoD payment office may be
implementing a policy stating that, once it begins paying under
contract via Wide Area WorkFlow-Receipt and Acceptance (WAWF-RA), there
shall be no invoices on that contract that will be paid manually.
DoD Response: DoD believes it should be a rare instance where
manual payments are needed after payment has been made electronically
under a contract. However, DoD believes this situation is adequately
addressed at DFARS 232.7002(a)(6), which permits submission of a
payment request in other than electronic form if the contractor is
unable to submit or DoD is unable to receive a payment request in
electronic form, and the parties (contracting officer, payment office,
contract administration office, and contractor) agree on an alternative
method. While a particular payment office may have a general policy
such as the one described by the respondent, DoD anticipates that such
a policy would be flexible enough to accommodate unique circumstances
that may arise during contract performance.
6. Comment: How will vendors know what DFAS payment systems are
available to accept invoicing through WAWF-RA and whether there will be
staff available for testing of different payment systems for electronic
invoicing? In addition, will purchasing agencies have all the required
information to give vendors for electronic invoicing when orders are
called in for supplies?
DoD Response: Information regarding DFAS and electronic payment is
available at http://www.dfas.mil/ecedi. If the required information is not
available on that web site, the cognizant contracting officer should be
able to assist the contractor.
7. Comment: There should be a 6-month grace period during which
paper invoices will continue to be acceptable
[[Page 69629]]
after a new electronic submission has been added.
DoD Response: Do not concur. DoD believes the language at DFARS
232.7002(a)(6) provides sufficient flexibility to address
implementation concerns. This policy permits submission of a payment
request in other than electronic form if the contractor is unable to
submit or DoD is unable to receive a payment request in electronic
form, and the parties agree on an alternative method.
8. Comment: The rule should consider that not every company or
Government representative is located in an area with relatively
inexpensive high-speed broadband internet access.
DoD Response: Concur in principle. DoD agrees that not every
company or Government agency currently has high-speed broadband
internet access. However, DoD believes this is adequately addressed at
DFARS 232.7002(a)(6), which permits exceptions to the policy if the
contractor is unable to submit or DoD is unable to receive a payment
request in electronic form.
9. Comment: The second sentence of 252.232-7003(a)(2) should be
revised to state that scanned documents are acceptable. Many
contractors scan their data into a file and then attach it to the WAWF-
RA program, which is part of the system.
DoD Response: Concur. The language at 252.232-7003(a)(2) was
included in the interim rule to address a concern that scanned
documents, by themselves, are not acceptable electronic forms for
submission of payment requests. However, DoD recognizes that this may
be misinterpreted to preclude scanning documents and then including
them within the WAWF-RA program. Therefore, the language at 252.232-
7003(a)(2) has been revised to state that scanned documents are not
acceptable unless they are part of a submission using one of the forms
of acceptable electronic transmission. Currently, neither ANSI X12 nor
WInS can accept attachments. These are electronic data interchanges
(EDI), so the only information flowing is data.
The language at 232.7002(b) has also been revised to specify that
scanned documents are acceptable electronic forms for processing
supporting documentation. DoD believes this change is necessary to
clarify what constitutes electronic form for the processing of
supporting documentation, and to be consistent with the language at
252.232-7003(a)(2).
10. Comment: Everyone should use WAWF-RA to electronically process
invoices.
DoD Response: Do not concur. The rule identifies three acceptable
electronic forms for transmission of payment requests, including but
not limited to WAWF-RA. DoD does not believe it would be beneficial to
limit transmission to WAWF-RA only.
11. Comment: It should be made explicit that it is the contracting
officer's responsibility to approve an exemption as part of payment
administration.
DoD Response: Concur in part. This responsibility is addressed at
DFARS 232.7003(b), which states, ``If the payment office and the
contract administration office concur, the contracting officer may
authorize a contractor to submit a payment request using an electronic
form other than those listed.* * *''
12. Comment: One company stated that it was set up to receive
orders/releases through EDI, but was unsure if this would be sufficient
to satisfy the requirements of the new DFARS policy.
DoD Response: As stated in DFARS 252.232-7003(b), EDI format is an
acceptable form of electronic submission. However, the respondent
should ensure that the submission is in one of the American National
Standards Institute (ANSI) formats, in accordance with the DFARS
policy. If the respondent is not using an ANSI format, it may adopt one
of the ANSI formats or may request that its current electronic form be
authorized by the contracting officer.
13. Comment: The clause at DFARS 252.232-7003 should be clarified,
because some DoD officials and contractors believe the clause requires
the contractor to electronically submit receiving reports.
DoD Response: Do not concur. DFARS 252.232-7003 requires
contractors to submit payment requests electronically. Unless a
contractor submits a receiving report as a payment request, the
requirements of DFARS 252.232-7003 do not apply. DoD believes that the
clause clearly limits the electronic submission requirement to payment
requests.
14. Comment: DFARS 252.246-7000, Material Inspection and Receiving
Report, should be clarified if contractors are required to distribute
material inspection and receiving reports submitted in WAWF-RA to non-
active WAWF-RA users by some other means.
DoD Response: Concur in part. DoD agrees that, if contractors were
required to distribute these documents to non-active WAWF-RA users, the
rule would need to specifically state this requirement. However, DoD
does not believe the rule should have such a requirement, because such
additional distribution would be redundant and costly to both DoD and
industry. The policy does not require contractors to otherwise
distribute material inspection and receiving reports submitted in WAWF-
RA, because the distribution recipients have access to WAWF-RA.
15. Comment: There is not adequate training for vendors as to the
type of invoicing document they are required to submit for payment. In
the paper world, payment offices pay off of any type of document, e.g.,
commercial invoice, public voucher, 2-in-1.
DoD Response: Do not concur. Whether submitting an invoice
electronically or by paper, the vendor must submit the proper document.
For example, a commercial invoice submitted under a contract that
requires submission of public vouchers will not constitute an
acceptable submission, regardless of whether that submission is made
electronically or non-electronically.
Training is readily available for contractors and DoD personnel
from numerous Internet sources, including the WAWF-RA site at http://www.wawftraining.com
; for DCMA at www.dcma.mil (click on Electronic
Invoicing); for DFAS at http://www.dfas.mil/ecedi; and for DISA at
www.disa.mil/acq/wawf/index.html and https://wawf-ra.slidell.disa.mil.
16. Comment: Detailed guidance and training should be provided to
all DoD payment staff regarding the payment request types for which
payment invoicing is permitted.
DoD Response: Concur in principle. DoD believes adequate training
is available, as discussed in the response to Comment 15 above.
17. Comment: While the training information is available on the
Internet and by the military departments and defense agencies, there
remains an urgent need to inform the contracting community about the
requirement to invoice electronically.
DoD Response: Concur. To ensure the widest dissemination possible,
an information release will be issued informing the public when the
final rule is published.
18. Comment: The final rule should be clear with regard to the
applicability date for the policy.
DoD Response: The interim rule became effective on March 1, 2003,
and the final rule will become effective on the date of publication in
the Federal Register. The DFARS changes in these rules apply to
solicitations issued on or after the effective date of the change.
(Also see the DoD response to Comment 1 above.)
[[Page 69630]]
19. Comment: One respondent was interested in the outcome of
interfaces from the WAWF-RA Program Office referred to in Comment
36 of the February 21, 2003, Federal Register publication.
DoD Response: This comment is outside the scope of this case.
20. Comment: WAWF-RA does not currently accommodate third parties
providing DD Form 250 processing as a service to contractors. An
interface with a third party should be built into the WAWF-RA
application.
DoD Response: While this recommendation is outside the scope of
this case, the WAWF-RA Program Office has indicated that a future
version of WAWF-RA will accommodate third parties providing DD Form 250
processing.
21. Comment: All options for electronic submission should include
both the FTP and EDI batch solution to accommodate contractors that
have high transaction counts and a simple web solution for contractors
with low transaction counts.
DoD Response: While this recommendation is outside the scope of
this case, the WAWF-RA Program Office has indicated that WAWF-RA does
allow electronic submission in both FTP and EDI batch solution.
22. Comment: DoD should maintain a detailed schedule of electronic
solutions available. The schedule should include a list of available
solutions by invoice type, payment system, and payment office. The
schedule should also show all system limitations, invoice types for
which paper submission is acceptable, and the date when compliance with
electronic submission for newly deployed solutions is required.
DoD Response: This comment is outside the scope of this case.
23. Comment: In migrating to one common electronic commerce system,
existing electronic commerce solutions permitted by statute should be
remapped into the specification required by the common system rather
than requiring contractors to incur the significant cost of remapping.
DoD Response: This comment is outside the scope of this case.
This rule was not subject to Office of Management and Budget review
under Executive Order 12866, dated September 30, 1993.
B. 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 any start-up costs that contractors will incur to comply with
the rule are expected to be minimal, and should be offset by the
reduced administrative costs that are expected to result from the
electronic submission and processing of invoices. In addition, the rule
provides for exceptions to electronic submission requirements in cases
where the contractor is unable to submit a payment request in
electronic form.
C. Paperwork Reduction Act
This rule does not impose any additional information collection
requirements that require approval of the Office of Management and
Budget (OMB) under 44 U.S.C. 3501, et seq. The information collection
requirements for contractors to provide non-electronic payment requests
already have been approved by OMB as indicated below:
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OMB control
FAR clause number FAR clause title number Expiration date
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52.216-7........................... Allowable cost and payment........... 9000-0069 12/31/2005
52.232-7........................... Payments under time-and-materials and 9000-0070 7/31/2005
labor-hour contracts.
52.232-12.......................... Advance payments..................... 9000-0073 7/31/2005
52.232-16.......................... Progress payments.................... 9000-0010 9/30/2005
52.232-29.......................... Terms for financing of purchases of 9000-0138 9/30/2004
commercial items.
52.232-30.......................... Installment payments for commercial 9000-0138 9/30/2004
items.
52.232-32.......................... Performance-based payments........... 9000-0138 9/30/2004
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List of Subjects in 48 CFR Parts 232 and 252
Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
0
Accordingly, the interim rule amending 48 CFR parts 232 and 252 which
was published at 68 FR 8450 on February 21, 2003, is adopted as a final
rule with the following changes:
0
1. The authority citation for 48 CFR parts 232 and 252 continues to
read as follows:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
PART 232--CONTRACT FINANCING
0
2. Section 232.7002 is amended by revising paragraphs (a)(6)(ii) and
(b) to read as follows:
232.7002 Policy.
(a) * * *
(6) * * *
(ii) The contracting officer, the payment office, the contract
administration office, and the contractor mutually agree to an
alternative method.
(b) DoD officials receiving payment requests in electronic form
shall process the payment requests in electronic form. Any supporting
documentation necessary for payment, such as receiving reports,
contracts, contract modifications, and required certifications, also
shall be processed in electronic form. Scanned documents are acceptable
forms for processing supporting documentation.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
252.212-7001 [Amended]
0
3. Section 252.212-7001 is amended as follows:
0
a. By revising the clause date to read ``(DEC 2003)''; and
0
b. In entry ``252.232-7003'', by removing ``(MAR 2003)'' and adding in
its place ``(DEC 2003)''.
0
4. Section 252.232-7003 is amended by revising the clause date and
paragraphs (a)(2) and (c) to read as follows:
252.232-7003 Electronic Submission of Payment Requests.
* * * * *
ELECTRONIC SUBMISSION OF PAYMENT REQUESTS (DEC 2003)
(a) * * *
(2) Electronic form means any automated system that transmits
information electronically from the initiating system to all
affected systems. Facsimile, e-mail, and scanned documents are not
acceptable electronic forms for submission of payment requests.
However, scanned documents are acceptable when they are part of a
submission of a payment request made using one of the electronic
forms provided for in paragraph (b) of this clause.
* * * * *
[[Page 69631]]
(c) If the Contractor is unable to submit a payment request in
electronic form, or DoD is unable to receive a payment request in
electronic form, the Contractor shall submit the payment request
using a method mutually agreed to by the Contractor, the Contracting
Officer, the contract administration office, and the payment office.
* * * * *
[FR Doc. 03-30764 Filed 12-12-03; 8:45 am]
BILLING CODE 5001-08-P