[Federal Register Volume 68, Number 35 (Friday, February 21, 2003)]
[Rules and Regulations]
[Pages 8450-8456]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-4085]
[[Page 8450]]
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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: Interim rule with request for comments.
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SUMMARY: DOD has issued 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.
DATES: Effective date: March 1, 2003.
Comment date: Comments on the interim rule should be submitted to
the address shown below on or before April 22, 2003.
ADDRESSES: Respondents may submit comments directly on the World Wide
Web at http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm. As an
alternative, respondents may e-mail comments to: [email protected].
Please cite DFARS Case 2002-D001 in the subject line of e-mailed
comments.
Respondents that cannot submit comments using either of the above
methods may submit comments to: Defense Acquisition Regulations
Council, Attn: Ms. Sandra Haberlin, OUSD(AT&L)DPAP(DAR), IMD 3C132,
3062 Defense Pentagon, Washington, DC 20301-3062; facsimile (703) 602-
0350. Please cite DFARS Case 2002-D001.
At the end of the comment period, interested parties may view
public comments on the World Wide Web at http://emissary.acq.osd.mil/dar/dfars.nsf.
FOR FURTHER INFORMATION CONTACT: Ms. Sandra Haberlin, (703) 602-0289.
SUPPLEMENTARY INFORMATION:
A. Background
This interim rule adds a new DFARS subpart and a contract clause to
implement section 1008 of the National Defense Authorization Act for
Fiscal Year 2001 (Public Law 106-398). The rule--
[sbull] Requires contractors to submit electronically, and DOD to
process electronically, requests for payment under DOD contracts;
[sbull] Requires DOD to transmit any supporting documentation
electronically within DOD;
[sbull] Identifies three acceptable electronic forms for
transmission of payment requests; and
[sbull] Identifies six specific situations where using electronic
payment methods is unduly burdensome.
DOD published a proposed DFARS rule in the Federal Register on May
31, 2002 (67 FR 38057). Seventeen respondents submitted comments on the
rule. Based on an analysis of these comments, DOD has made substantive
changes to the rule, and, therefore, has published an interim rule with
another request for comments. The main difference between the proposed
and interim rules is that one of the six exemption categories has
changed. In the proposed rule, at DFARS 232.7002(a)(6), an exemption
applied to cases where the Secretary of Defense determines that the
requirement for using electronic means is unduly burdensome. In the
interim rule, the exemption has been revised to apply in those cases
where the contractor is unable to submit, or DOD is unable to receive,
a payment request in electronic form, and the contracting officer, the
payment office, and the contractor mutually agree to an alternative
method. This revised exemption provides contracting officers the
flexibility to work solutions to unique payment situations to ensure
that contractors are paid on time for work they have performed. In
addition, the interim rule revises the clause at DFARS 252.246-7000,
Material Inspection and Receiving Report, to state that contractor
submission of material inspection and receiving information by using
the Wide Area WorkFlow-Receipt and Acceptance (WAWF-RA) electronic form
fulfills the requirement for a material inspection and receiving report
(DD Form 250).
A discussion of the comments on the proposed rule is provided
below.
1. Comment: Completely support the rule as it will reduce
administrative cost, time, and effort, and will further speed payment
to the contractor. DOD Response: Concur.
2. Comment: Does the requirement to submit payment requests in
electronic form apply to contracts without solicitations? DOD Response:
Yes. ``Solicitation'' means any request to submit offers or quotations
to the government, and, therefore, would cover the great majority of
procurements. As indicated at DFARS 201.304(6), ``The Director of
Defense Procurement and Acquisition Policy publishes changes to the
DFARS in the Federal Register and electronically via the World Wide
Web. Each change includes an effective date. 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.'' If
no solicitation is issued, the rule applies to contracts issued after
the effective date.
3. Comment: Recommend clarification in DFARS 232.7004 that the
contract clause is only to be used in solicitations and contracts
resulting from solicitations first issued after October 1, 2002. DOD
Response: Do not concur. The normal practice is to cite the effective
date in the DATES section of the Federal Register notice, and not in
the regulations. This eliminates the need to revise the regulations
later to remove obsolete dates. The effective date for this interim
rule is March 1, 2003, to allow payment systems to complete the latest
upgrades and provide military departments and defense agencies
sufficient time to finalize implementation plans with contractors.
4. Comment: There are many problems with the WAWF-RA software
application, such as--
a. The current version of WAWF-RA does not process Foreign Military
Sales (FMS);
b. If a mistake is made when processing the electronic DD Form 250
(Material Inspection and Receiving Report), the program will not allow
changes and the submitter has to initiate a completely new DD Form 250.
If a change has to be made after the DD Form 250 is accepted, the
payment request must be processed manually; and
c. Construction contracts should be exempt, because the percentage
of completion progress payments under construction contracts require so
much paperwork, and because the contracting officer needs to approve
the invoice and make sure the progress payments are correct.
DOD Response: The WAWF-RA software is an evolving application and
will mature over time. Various software modules/versions are currently
in development that will process additional types of invoices in the
future, such as FMS, construction contracts, and discounts. For
example, the FMS module will be added to the WAWF-RA system in the
spring of 2003. It is noted that, until such time as WAWF-RA processes
the above mentioned types of invoices, the contracting officer may
authorize a contractor to submit a payment request in other than
electronic form (see DFARS 232.7002(a)(6)).
5. Comment: The respondent inquired about using WAWF-RA for a
contract with the Defense Contract Management Agency (DCMA), but was
advised that
[[Page 8451]]
WAWF-RA was still being tested. DOD Response: The various versions of
WAWF-RA go through a number of tests before deployment. For example,
WAWF-RA, Version 3.0, currently is being tested, with full deployment
anticipated in the spring of 2003. The respondent needs to contact DCMA
again for further guidance.
6. Comment: DOD has not yet put into place fully functional
electronic commerce systems that interface with all DOD payment systems
for all invoice types. For example, the WAWF-RA system will not
currently accept the electronic submission of the following invoice
types: performance-based payments, commercial financing requests,
invoices containing withholds, corrected invoices, credit invoices, and
classified invoices. DOD Response: Classified invoices are exempt from
the electronic submission requirement in accordance with DFARS
232.7002(a)(3). The other types of invoices and financing requests will
be addressed in a future version of WAWF-RA.
7. Comment: The benefits of DOD's successful ``Direct Submittal''
initiative needs to be retained. If invoices must be routed through
WAWF-RA rather than directly to the payment systems, WAWF-RA
functionally should enable ``Direct Submittal'' approved contracts to
route automatically through to the payment office without any DCMA or
Defense Contract Audit Agency (DCAA) manual intervention. To facilitate
the electronic payment of invoice requests, government payment
practices should be evaluated, and DCMA, DCAA, and the Defense Finance
and Accounting Service (DFAS) should issue clear guidance to eliminate,
wherever possible, invoice backup documentation and administrative
contracting officer (ACO) approvals. DOD Response: Submission of
invoices under ``Direct Submittal'' approved contracts will be
addressed in a future WAWF-RA version, which is currently being tested.
8. Comment: The WAWF-RA system has a major problem, namely, it only
allows for 1 MG of attachments. DOD Response: WAWF-RA is being modified
to accept attachments up to 5 MG.
9. Comment: The respondent tried in the past to sign up for Web
invoicing, but could not use the application because of a restriction
on its use if the DD Form 250 (Material Inspection and Receiving
Report) had to be signed by an ACO. Is the restriction still in effect,
or is there another form of transmission that can accommodate a signed
DD Form 250? DOD Response: DFARS 252.246-7000, Material Inspection and
Receiving Report, has been revised to state that using WAWF-RA to
submit material inspection and receiving information fulfills the
requirement for a DD Form 250. WAWF-RA will support ACOs electronically
signing material inspection and receiving information when they are
accepting supplies or services or when they are approving service
invoices.
10. Comment: There is a conflict between the proposed DFARS
coverage and the existing DFARS concerning the use of DD Form 250,
which can be used as a receiving report and/or invoice. Suggest that
the language in existing DFARS 246.370 or DFARS Appendix F, Material
Inspection and Receiving Report, be revised to conform to the
objectives of the WAWF-RA program. DOD Response: Concur. Each delivery
of supplies or services (except deliveries under Fast Payment
Procedures--FAR subpart 13.4) requires evidence of acceptance, which is
normally documented by a DD Form 250. Prior to implementation of this
rule, DFARS 252.246-7000 required the contractor to prepare and submit
the DD Form 250 by following the instructions in DFARS Appendix F. The
conflict arose because the DFARS required contractors to submit a paper
copy of DD Form 250, whereas the proposed DFARS rule required
contractors to submit payment requests, including material inspection
and receiving reports, in electronic form. To eliminate the conflict,
the rule has been revised at DFARS 252.246-7000 to state that
contractor submission of material inspection and receiving information
by using the WAWF-RA electronic form fulfills the requirement for a
material inspection and receiving report.
11. Comment: Exclude DD Form 250 from initial coverage under DFARS
232.7002(b). It will be more cost-effective at the outset to allocate
scarce resources to comply first with the statutory requirement for
electronic submission of invoices and then focus on developing an
electronic solution for processing the DD Form 250 receiving reports
and other supporting documentation. DOD Response: Section 1008(a)
Public Law 106-398, as implemented by DFARS 232.7002(b), directs DOD
officials to process payment requests and ``any additional
documentation necessary to support the determination and payment'' of
the payment requests (e.g., material inspection and receiving
information) electronically. The legislation does not permit exclusion
of the information on the DD Form 250 from the electronic processing
requirement, unless the contractor is not required to submit the
payment request electronically.
12. Comment: October 1, 2002, is premature for implementation of
this requirement:
a. Recommend that DOD not require electronic payment in
solicitations until after June 30, 2003; this will give more time for
the process to mature and for problems to be worked out.
b. The proposed implementation date of October 1, 2002, is not
possible for several reasons, including that the WAWF-RA system is not
sufficiently programmed to accept all contract invoices, and training
will take time.
c. To avoid a huge influx of vendors on October 1, 2002, new
solicitations over $100,000 should be implemented on October 1, 2002,
and solicitations under $100,000 should be phased in over the next
year.
d. For the past several years, the respondent's company has been in
the process of converting to another electronic system, which will go
live in the first quarter of 2003. The company intends to wait to
switch to the government electronic data interchange (EDI) electronic
invoicing system until it transitions to its new system.
e. Not all of DFAS Columbus Commercial Pay Services' entitlement
systems will be capable of receiving and processing invoices and
receiving reports electronically by the October 2002 implementation
date.
f. DFAS Columbus systems will not be able to accommodate the
variety of supporting documentation currently required to be submitted
with invoices, e.g., the 591 Report on contracts issued by the Defense
Reutilization and Marketing Service, and non-standard supporting
documentation required for Public Vouchers (SF 1034).
g. Is the date of June 30, 2001, referred to in the Federal
Register Background SUPPLEMENTARY INFORMATION correct, or should it be
June 30, 2002?
DOD Response: The original applicability date for compliance with
the electronic invoicing legislative requirement was June 30, 2001;
however, the legislation also permitted DOD to delay implementation of
section 1008 to no later than October 1, 2002. Accordingly, DOD
published a notice in the Federal Register (66 FR 43841) on August 21,
2001, which announced a delay in implementation until October 1, 2002.
Because DOD's automated payment systems were limited to certain types
of payment requests, DOD was unable to meet the October 1, 2002,
statutory implementation date. By March 1, 2003, the systems will be
capable of processing nearly 100 percent of payment requests. For those
systems that are not ready, the interim rule provides the contracting
officer the
[[Page 8452]]
flexibility to work solutions to unique payment situations to ensure
that contractors are paid on time for work they have performed.
13. Comment: Recommend that DOD establish reasonable and flexible
grace periods to enable contractors to convert from paper invoices to
electronic submissions as either new DOD payment systems or invoice
types are incorporated into the WAWF-RA or other electronic systems.
This flexibility should also specifically include permitting a
contractor to use only one payment request system for all of its
covered contracts. DOD Response: Partially concur. Use of an electronic
form other than one of the forms listed at DFARS 232.7003(a) was
already permitted by DFARS 232.7003(b)(1) of the proposed rule (now
DFARS 232.7003(b)). The DFARS language does not prohibit the contractor
from using one payment request system for all of its covered contracts.
However, DOD has revised the rule at DFARS 252.232-7003(c) to permit,
either before or after contract award, the contractor (with the
agreement of the contracting officer and the payment office) to use a
nonelectronic method in certain circumstances.
14. Comment: There has not been any word about WAWF-RA in several
years. DOD Response: Information on DOD's WAWF-RA is readily available
from numerous sources on the Internet, including: http://www.wawftraining.com/ for online WAWF training; https://rmb.ogden.disa.mil for general information on WAWF or to register;
www.dcma.mil (click on Electronic Invoicing) for DCMA; www.dfas.mil/ecedi for DFAS; www.disa.mil and [email protected] for the Defense
Information Systems Agency; and www.peoards.navy.mil (click on
Initiatives, WAWF) for the Department of the Navy.
15. Comment: Training information and other assistance should be
made available, particularly to small businesses, to assist in
complying with the interim DFARS rule. It would also be beneficial for
DOD to schedule public meetings to discuss important implementation
actions required of both DOD activities and contractors. DOD Response:
Information and training are readily available for contractors and DOD
personnel via the Internet addresses identified in DOD Response to
Comment 14. Computer-based training is also available on
compact disk. DOD military departments and defense agencies also may
provide supplemental training.
16. Comment: Field activities are not provided additional manning
to implement electronic invoicing. Learning to use WAWF-RA is very time
consuming, but easy to use after you learn how to use it. There are
insufficient travel funds to train vendors in remote Alaskan locations.
DOD Response: Refer to DOD responses to Comments 14 and
15.
17. Comment: Many small businesses will be unable to submit
invoices electronically on their own. There is concern about small
business contractors that are not on line yet. Some small businesses do
not own a computer, and the rule may deter them from doing business
with the government. The government's new e-payment requirement may
alienate many small businesses. There will be a great deal of
difficulty for DOD contractors, particularly small businesses, to
comply with the rule. DOD Response: DOD invited small businesses to
submit comments on the proposed DFARS rule; however, none were
received. There is no indication from small business concerns that they
will be unable to comply with the rule. In addition, the interim rule
removes the higher-level waiver request provision of the proposed rule.
The new paragraph (a)(6) of DFARS 232.7002 provides authority for the
contracting officer to permit the contractor to submit a payment
request using an alternative method, if the contracting officer, the
payment office, and the contractor mutually agree.
18. Comment: Recommend including a definition of ``unduly
burdensome'' and to whom it applies (contractor or payment office). DOD
Response: The interim rule removed the term ``unduly burdensome.''
Therefore, a definition is unnecessary.
19. Comment: DOD should acknowledge the implementation challenges
and address enforcement accordingly. Initially, broad waiver polices
should be issued, including requiring clear documentation as part of
the contract file without the need for higher-level approvals. DOD
Response: DOD agrees that higher-level approval of waiver requests is
unnecessary. Accordingly, as indicated in DOD Response to Comment
17, the interim rule has been revised to provide authority to
the contracting officer.
20. Comment: The following types of low volume invoices should be
specifically enumerated in DFARS 232.7002(a)(6) (regarding SECDEF
waiver if unduly burdensome): alternate liquidation rate billing
adjustments, short payment refund requests, retroactive contract price
change billings, etc. DOD Response: It is inappropriate to waive low
volume type invoices, e.g., short payment refund requests, retroactive
contract price change billings, etc. (Alternate liquidation rate
billing adjustments are not invoices but adjustments to prior
billings.) Although current systems may not be able to accommodate
electronic processing of them, it is anticipated that future editions
of WAWF-RA, Web Invoicing System (WInS), or American National Standards
Institute (ANSI) X.12 EDI formats will. If the government is unable to
receive such payment requests in electronic form, DFARS 252.232-7003(c)
permits the contractor, with the agreement of the contracting officer
and the payment office, to use another method.
21. Comment: Recommend adding public voucher billings (SF 1034) for
cost-reimbursement and time-and-materials contracts to the list of
types of payment requests that the contractor must submit in electronic
form. DOD Response: DFARS 252.232-7003(a)(3) defines payment requests
as including both contract financing payments and invoice payments.
DFARS 252.232-7003(a)(1) states that contract financing payments and
invoice payments have the meanings given in FAR 32.001. Since public
vouchers are a type of invoice payment, no change is needed to the
rule.
22. Comment: Recommend adding a new paragraph (c) to DFARS 232.7002
to make it clear that, while submissions using electronic forms are
required, the contracting officer and the contractor may authorize any
individual payment request (or group of payment requests) otherwise
required to use electronic forms to be submitted using other than
electronic forms without constituting a violation of paragraph (b) or
paragraph (d) of the 252.232-7003 contract clause. DOD Response: DOD
agrees that the contracting officer should have discretion on whether
to authorize the use of a method other than electronic form. However,
rather than adding a new paragraph (c), the interim rule revises the
exception at DFARS 232.7002(a)(6) to permit the contractor to submit
the payment request in other than electronic form with the agreement of
the contracting officer and the payment office.
23. Comment: Recommend adding to DFARS 232.7003(b), a description
of an acceptable type of concurrence between the payment and contract
administration offices, for example, MOU/MOA, or verbal. DOD Response:
DOD believes it is preferable to provide sufficient flexibility to
permit the parties (contracting officer, payment
[[Page 8453]]
office, and contract administration office) to use any method of
documentation that the parties deem appropriate.
24. Comment: Recommend adding a new paragraph (7) to DFARS
232.7002(a) to exempt from the inclusion of the clause those situations
where the contracting officer knows in advance of the release of the
solicitation that, by the time of contract award, contractors will be
unable to submit, or the Government will be unable to receive, payment
requests using any of the electronic forms, or that there are invoice
types for which no cost-effective electronic solution is available. In
addition, recommend including a provision (identical to 252.232-
7003(b)(4)) to DFARS 232.7003(a) that permits the contracting officer
to authorize the use of another electronic form. This authority is
particularly critical during the solicitation stage of a procurement.
If used, the contracting officer must disclose in the appropriate place
in the solicitation the alternatives to the electronic forms designated
under 252.232-7003(b)(1) through (b)(3). Paragraph 232.7003(b) is
insufficient because it only operates after contract award. DOD
Response: DOD agrees that it is inappropriate to restrict the
contracting officer's exemption authority to only those situations that
occur after contract award, and that the exemption authority should
apply to both solicitations (pre-award) and contracts (post-award).
Accordingly, the interim rule has removed the phrase ``after contract
award,'' and provides the contracting officer the authority, either
pre-award or post-award, to permit the contractor to use--
a. An electronic form other than one of the forms listed at DFARS
232.7003(a) (see DFARS 232.7003(b) and 252.232-7003(b)(4)); or
b. A nonelectronic method (see DFARS 232.7002(a)(6) and 252.232-
7003(c)).
25. Comment: Recommend substituting the word ``Government'' for the
word ``DOD'' in DFARS 232.7003(b)(2) to be more accurate in assessing
capabilities and to be consistent with the use of the phrase in
paragraph (c) of 252.232-7003. DOD Response: For consistency and
because the DFARS only applies to DOD, the term ``Government'' has been
changed to ``DOD'' in paragraph (c) of 252.232-7003.
26. Comment: Recommend adding ``as designated by the contracting
officer'' at the end of the first sentence of 252.232-7003(b), because
the contracting officer needs to designate the acceptable format for
various reasons, such as standardization at a command, and not all
current forms are processed by WAWF-RA and WInS. DOD Response: DFARS
232.7003(a) identifies three acceptable electronic forms for the
transmission of payment requests, namely, WAWF-RA, WInS, and the ANSI
X.12 EDI formats. DOD believes that utilization of these standardized
systems will result in more timely and efficient submission and
processing of invoices, and will also facilitate timely and accurate
payment. However, the proposed and the interim rules do authorize the
contracting officer to permit another electronic format (e.g., a
locally developed electronic format) if the payment office and the
contract administration office concur (see DFARS 232.7003(b)).
27. Comment: Is there a need to include the agreement of the
payment office (as in DFARS 232.7003(b)) in 252.232-7003(c) in order to
permit the contractor to use another method of submission of payment
requests? In contrast, one respondent recommends adding ``and concurred
with by the payment office'' at the end of DFARS 252.232-7003(b)(4),
and another recommends adding ``and the payment office'' at the end of
DFARS 252.232-7003(c). DOD Response: Although the contracting officer
does have to obtain agreement from the DOD payment office prior to
authorizing the contractor to submit a payment request using a
different electronic form, this action need not be stipulated in the
contract clause at DFARS 252.232-7003. Provisions contained in the
contract clause apply to the parties of the contract, namely, the
contractor and the contracting officer. Internal DOD procedures need
only be included in the text at DFARS subpart 232.70.
28. Comment: Recommend adding to DFARS 232.7003(b)(1) a description
of electronic forms other than those listed. Need clarification of the
description of ``electronic form'' in DFARS 252.232-7003(a)(2).
Interpretation of the current wording could lead to the submission of
faxed, e-mailed, or scanned documents that are not automatically
uploaded into the respective entitlement system. These forms may not
have the necessary internal controls associated with receiving these
forms. DOD Response: The acceptable electronic forms for transmission
are WAWF-RA, WInS, and ANSI X.12 EDI formats, as identified in DFARS
232.7003(a) and DFARS 252.232-7003(b). It is not practicable to attempt
to list all other acceptable electronic forms of transmission that the
contracting office may authorize. However, DOD agrees that faxed, e-
mail, and scanned documents are not considered acceptable electronic
means of submission. Therefore, the interim rule revises the definition
of ``electronic form'' at DFARS 252.232-7003(a)(2) by adding the
following new sentence: ``Facsimile, e-mail, and scanned documents are
not acceptable electronic forms.''
29. Comment: Recommend inserting the phrase ``except as provided in
232.7002(a)'' at the end of the sentence in DFARS 252.232-7003(a)(3)
(i.e., definition of payment request) to recognize that, even though
the basic contract payment requests are subject to the standard
requirements for using electronic formats, there may be certain
specific transactions permitted under the contract where electronic
payments would not be feasible or desirable. DOD Response: Paragraph
(a)(3) of DFARS 252.232-7003 simply defines ``payment request.'' Since
it does not address the electronic submission requirement, it would be
inappropriate to include a reference to the exceptions in this
definition.
30. Comment: The respondent is receiving modifications where line
items have been established for incremental funding with inspection and
acceptance requirements and delivery dates cited. There will not be
anything delivered for this funding CLIN. The rule should specify that
this type of CLIN should not be established as it impedes the closeout
process, and reflects CLINs in the database that will never be
satisfied and show up as delinquent line items. DOD Response: The
comment is outside the scope of this case.
31. Comment: Some large businesses indicate that there will be
costs for the government to pay for them to switch their method of
invoicing. DOD Response: The costs to implement a revised method of
invoicing is considered a normal cost of doing business and is usually
recovered by the contractor as an indirect expense allocable to all
contracts. DOD believes that the costs to implement electronic
invoicing will be outweighed by the benefits received, such as reduced
administrative cost, time, and effort; less payment errors; and more
timely payments to contractors.
32. Comment: Recommend the use of a program called DESTRAP, which
was developed by a local company to process Quality Deficient Reports
Form 202. The government owns the rights to this program and it could
be modified to use DD Form 250. DOD Response: Paragraph (b)(4) of DFARS
252.232-7003 permits the contracting officer to authorize the use of
another electronic form.
[[Page 8454]]
33. Comment: Recommend adding the commercial item financing, FAR
clauses 52.232-29 through 52.232-31, to the table in the Federal
Register. DOD Response: The table in the Federal Register (67 FR 38057)
listed five FAR clauses, currently approved by OMB, that require
contractors to collect information in order to provide nonelectronic
payment requests. DOD has added the commercial item financing FAR
clauses at FAR 52.232-29, Terms for Financing of Purchases of
Commercial Items, and FAR 52.232-30, Installment Payments for
Commercial Items, to the table since these clauses include the
requirement for the contractor to submit payment requests. FAR 52.232-
31, Invitation to Propose Financing Terms, invites the offeror to
propose terms under which the government will make performance-based
contract financing payments during contract performance, but does not
include the actual requirement for the contractor to submit payment
requests, i.e., performance-based financing payments. Therefore, FAR
52.232-31 has not been added to the table in paragraph C. (Paperwork
Reduction Act) of the Federal Register notice.
34. Comment: Concerned that--
(a) DFAS cannot consistently process government purchase card
electronic certifications for payment. How will they be consistent with
contractors/vendors?
(b) DFAS's current system for receipt of RPR's, invoices, contracts
(if not available through the standard procurement system-I) is not
consistent; information must be sent multiple times before action/
payment is made;
(c) 99 percent of payments made by the respondent's office utilize
the government purchase card (an exception). Interest payments have
been made to Citibank because of DFAS errors, loss of documents, etc.
DOD Response: The respondent's concerns apply to the government's
internal operating procedures, not the proposed DFARS rule, and
therefore are outside the scope of this case. However, results from the
use of WAWF-RA so far indicate that its use substantially reduces
interest payments. For example, DCMA has processed invoices valued at
over $700 million using WAWF-RA, with less than $100 in interest
penalties.
35. Comment: Prompt Payment Act implications regarding invoice
receipt dates and the electronic return of improper invoices are not
addressed. DOD Response: The provisions of the Prompt Payment Act apply
to payment requests processed electronically. The Prompt Payment Act is
addressed in FAR subpart 32.9 and DFARS subpart 232.9; therefore, it
need not be addressed in this DFARS rule.
36. Comment: Recommend that DOD describe the interface(s) it will
use to accommodate existing contractor systems and quickly publish a
detailed implementation schedule for each invoice type, electronic
solution, and DOD payment office. DOD Response: It is inappropriate to
describe electronic interfaces in DFARS; the issue is beyond the scope
of the subject case. The respondent's concern will be forwarded to the
WAWF-RA Program Office for appropriate action.
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 does not expect this 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 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 an exemption
to the requirement for electronic submission in cases where the
contractor is unable to submit a payment request in electronic form.
Therefore, DOD has not performed an initial regulatory flexibility
analysis. DOD invites comments from small businesses and other
interested parties. DOD also will consider comments from small entities
concerning the affected DFARS subparts in accordance with 5 U.S.C. 610.
Such comments should be submitted separately and should cite DFARS Case
2002-D001.
C. Paperwork Reduction Act
The rule does not impose any additional information collection
requirements that require the 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 nonelectronic payment requests
already have been approved by OMB as indicated below.
----------------------------------------------------------------------------------------------------------------
OMB control
FAR clause number Clause title number Expiration date
----------------------------------------------------------------------------------------------------------------
52.216-7....................... Allowable Cost and Payment....... 9000-0069 Dec. 31, 2005
52.232-7....................... Payments Under Time-and-Materials 9000-0070 July 31, 2005
and Labor-Hour Contracts.
52.232-12...................... Advance Payments................. 9000-0073 July 31, 2005
52.232-16...................... Progress Payments................ 9000-0010 Sept. 30, 2005
52.232-29...................... Terms for Financing of Purchases 9000-0138 Sept. 30, 2004
of Commercial Items.
52.232-30...................... Installment Payments for 9000-0138 Sept. 30, 2004
Commercial Items.
52.232-32...................... Performance-Based Payments....... 9000-0138 Sept. 30, 2004
----------------------------------------------------------------------------------------------------------------
D. Determination to Issue an Interim Rule
A determination has been made under the authority of the Secretary
of Defense that urgent and compelling reasons exist to publish an
interim rule prior to affording the public an opportunity to comment.
This action is necessary to implement section 1008 of the National
Defense Authorization Act for Fiscal Year 2001 (Pub. L. 106-398), which
requires contractors to submit, and DOD to process, payment requests in
electronic form. The statutory date for implementation of the
electronic invoicing requirement was October 1, 2002. However, because
DOD's automated payment systems were limited to certain types of
payment requests, DOD was unable to meet the October 1, 2002,
implementation date. By March 1, 2003, DOD's automated systems will be
capable of processing nearly 100 percent of payment requests. Comments
received in response to the publication of this interim rule will be
considered in the formation of the final rule.
[[Page 8455]]
List of Subjects in 48 CFR Parts 232 and 252
Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
Therefore, 48 CFR parts 232 and 252 are amended as follows:
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
2. Subpart 232.70 is added to read as follows:
Subpart 232.70--Electronic Submission and Processing of Payment
Requests
Sec.
232.7000 Scope of subpart.
232.7001 Definitions.
232.7002 Policy.
232.7003 Procedures.
232.7004 Contract clause.
232.7000 Scope of subpart.
This subpart prescribes policies and procedures for submitting and
processing payment requests in electronic form to comply with 10 U.S.C.
2227.
232.7001 Definitions.
Electronic form and payment request, as used in this subpart, are
defined in the clause at 252.232-7003, Electronic Submission of Payment
Requests.
232.7002 Policy.
(a) Contractors shall submit payment requests in electronic form,
except for--
(1) Purchases paid for with a Governmentwide commercial purchase
card;
(2) Awards made to foreign vendors for work performed outside the
United States;
(3) Classified contracts or purchases (see FAR 4.401) when
electronic submission and processing of payment requests could
compromise the safeguarding of classified information or national
security;
(4) Contracts awarded by deployed contracting officers in the
course of military operations, including, but not limited to,
contingency operations as defined in 10 U.S.C. 101(a)(13) or
humanitarian or peacekeeping operations as defined in 10 U.S.C.
2302(7), or contracts awarded by contracting officers in the conduct of
emergency operations, such as responses to natural disasters or
national or civil emergencies;
(5) Purchases to support unusual or compelling needs of the type
described in FAR 6.302-2; and
(6) Cases where--
(i) The contractor is unable to submit, or DOD is unable to
receive, a payment request in electronic form; and
(ii) The contracting officer, the payment 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.
232.7003 Procedures.
(a) The accepted electronic forms for transmission are--
(1) Wide Area WorkFlow-Receipt and Acceptance (see Web site --
https://rmb.ogden.disa.mil);
(2) Web Invoicing System (see Web site--https://ecweb.dfas.mil);
and
(3) American National Standards Institute (ANSI) X.12 electronic
data interchange (EDI) formats (see Web site--http://www.X12.org for
information on EDI formats; see Web site--http://www.dfas.mil/ecedi for
EDI implementation guides).
(b) 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 in
paragraph (a) of this section.
232.7004 Contract clause.
Except as provided in 232.7002(a), use the clause at 252.232-7003,
Electronic Submission of Payment Requests, in solicitations and
contracts.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
252.212-7001 [Amended]
3. Section 252.212-7001 is amended as follows:
a. By revising the clause date to read ``(MAR 2003)''; and
b. In paragraph (b) by adding, in numerical order, the entry ``----
252.232-7003 Electronic Submission of Payment Requests (MAR 2003) (10
U.S.C. 2227).''.
4. Section 252.232-7003 is added to read as follows:
252.232-7003 Electronic Submission of Payment Requests.
As prescribed in 232.7004, use the following clause:
Electronic Submission of Payment Requests (MAR 2003)
(a) Definitions. As used in this clause--
(1) Contract financing payment and invoice payment have the
meanings given in section 32.001 of the Federal Acquisition
Regulation.
(2) Electronic form means any automated system that transmits
information electronically from the initiating system to all
affected systems. Facsmile, e-mail, and scanned documents are not
acceptable electronic forms.
(3) Payment request means any request for contract financing
payment or invoice payment submitted by the Contractor under this
contract.
(b) Except as provided in paragraph (c) of this clause, the
Contractor shall submit payment requests using one of the following
electronic forms:
(1) Wide Area WorkFlow-Receipt and Acceptance (WAWF-RA).
Information regarding WAWF-RA is available on the Internet at
https://rmb.ogden.disa.mil.
(2) Web Invoicing System (WInS). Information regarding WInS is
available on the Internet at https://ecweb.dfas.mil.
(3) American National Standards Institute (ANSI) X.12 electronic
data interchange (EDI) formats.
(i) Information regarding EDI formats is available on the
Internet at http://www.X12.org.
(ii) EDI implementation guides are available on the Internet at
http://www.dfas.mil/ecedi.
(4) Another electronic form authorized by the Contracting
Officer.
(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, and the payment office.
(d) In addition to the requirements of this clause, the
Contractor shall meet the requirements of the appropriate payment
clauses in this contract when submitting payments requests.
(End of clause)
5. Section 252.246-7000 is revised to read as follows:
252.246-7000 Material Inspection and Receiving Report.
As prescribed in 246.370, use the following clause:
Material Inspection and Receiving Report (MAR 2003)
(a) At the time of each delivery of supplies or services under
this contract, the Contractor shall prepare and furnish to the
Government a material inspection and receiving report in the manner
and to the extent required by Appendix F, Material Inspection and
Receiving Report, of the Defense FAR Supplement.
(b) Contractor submission of the material inspection and
receiving information required by Appendix F of the Defense FAR
Supplement by using the Wide Area WorkFlow-Receipt and Acceptance
(WAWF-RA) electronic form (see paragraph (b)(1) of
[[Page 8456]]
the clause at 252.232-7003) fulfills the requirement for a material
inspection and receiving report (DD Form 250).
(End of clause)
[FR Doc. 03-4085 Filed 2-20-03; 8:45 am]
BILLING CODE 5001-08-P