[Federal Register Volume 68, Number 240 (Monday, December 15, 2003)]
[Rules and Regulations]
[Pages 69628-69631]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-30764]


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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 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 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:

----------------------------------------------------------------------------------------------------------------
                                                                               OMB control
         FAR clause number                      FAR clause title                  number        Expiration date
----------------------------------------------------------------------------------------------------------------
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