[Federal Register Volume 76, Number 22 (Wednesday, February 2, 2011)]
[Rules and Regulations]
[Pages 6006-6008]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-2044]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 245 and 252
[DFARS Case 2008-D049]
RIN 0750-AG64
Defense Federal Acquisition Regulation Supplement; Reporting of
Government Property Lost, Stolen, Damaged, or Destroyed
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 require contractors to
report loss of Government property to the Defense Contract Management
Agency (DCMA) eTools application.
DATES: Effective Date: February 2, 2011.
FOR FURTHER INFORMATION CONTACT: Ms. Clare Zebrowski, 703-602-0289.
[[Page 6007]]
SUPPLEMENTARY INFORMATION:
I. Background
This final rule provides a clause at DFARS 252.245-7002, Reporting
Loss of Government Property, that requires DoD contractors to report
the loss, theft, damage, and destruction of Government property to the
DCMA eTools application. The final rule changes--
DFARS 245.102(4), Policy, to make editorial changes to
remove subparagraphs that unnecessarily duplicate language contained in
the clause at 252.245-7002, Reporting Loss of Government Property. This
paragraph has been redesignated as 245.102(5).
DFARS 245.107(2), Contract clauses, to correct the
prescription for use of the clause at 252.245-7002, Reporting Loss of
Government Property, by removing the reference to FAR 52.245-2,
Government Property Installation Operation Services. This paragraph has
been redesignated as 245.107(c).
Clause 252.245-7002, Reporting Loss of Government
Property, to--
[cir] Revise the clause title;
[cir] Change the defined term ``acquisition cost'' to ``unit
acquisition cost'' and expand the definition to include contractor-
acquired property;
[cir] Revise the definition for ``Government property'' to state
that the term is defined in the clause at FAR 52.245-1, Government
Property;
[cir] Add a new definition for ``loss of Government property'';
[cir] Revise the paragraph (b) title and (b)(1) to accommodate the
new definition of ``Loss of Government property''.
[cir] Revise paragraph (b)(1) to add the word ``unit'' to reflect
that reporting value shall be at ``unit acquisition cost,'' and to
provide an updated Web page for accessing the eTools application;
Revise paragraph (b)(3) to make editorial and format
changes;
Revise paragraph (b)(4) to make editorial changes and to
delete reference to two specific property clauses and instead state
that the reporting requirements do not change any other liability or
other reporting requirement that may exist under the contract.
II. Discussion and Analysis
Three respondents submitted four comments on the proposed rule,
which was published at 75 FR 22729 on April 30, 2010. Comments were due
June 29, 2010. A discussion of the comments received follows:
A. Clause Prescription
Comment: One respondent recommended revising paragraph 245.107(2)
to remove the reference to FAR 52.245-2, Government Property
Installation Operation Services, as the loss of property reporting
requirement stems directly from FAR 52.245-1 and not from 52.245-2.
DoD Response: DoD has revised the language accordingly.
B. Definition of ``Government Property''
Comment: One respondent recommended that the definition of
``Government property'' in the proposed clause should make clear that
it includes all property acquired by the contractor through indirect
cost accounts.
DoD Response: The recommendation is outside the scope of the rule.
The rule does not seek to alter or modify the definition of Government
property as prescribed in the Federal Acquisition Regulations (FAR
52.245-1). However, in order to clarify the Government property
definition, DoD has replaced the definition of ``Government property''
in the clause with a reference to the definition of ``Government
property'' in FAR 52.245-1.
C. Use of Term ``Losses''
Comment: One respondent recommended modifying the clause language
in paragraph (b) to replace the term ``lost, stolen, damaged, or
destroyed'' with ``losses'' to maintain simplicity and consistency.
DoD Response: A new definition for ``loss of Government property''
has been added to the clause at 252.245-7002, Reporting Loss of
Government Property.
D. Definition of ``Estimated Harm''/``Acquisition Cost''
Comment: One respondent recommended adding a new definition of
``estimated harm'' to the proposed clause at 252.245-70XX and stated
that estimated harm should consider other factors such as residual
value, replacement cost, and care and handling cost. The respondent
stated that the estimated harm should be expressed as a numeric value,
and that providing only the acquisition cost without providing
estimated harm to the Government is misleading and may result in poor
decisions. According to the respondent, industry experience has proven
that there typically is minimal or no harm to the Government and, even
though the Government is self insured, replacement of lost items rarely
occurs.
Similarly, a respondent stated the need to address the materiality
of the loss and that without this information, decision makers may be
misled and losses may be overstated. Further, according to the
respondent, the rule should then explain how to compensate the
Government for losses when the ``indirect costs used to buy the
property'' have been partially allocated to Government contracts and
partially allocated to commercial work or firm-fixed-price contracts.
DoD Response: These recommen da tions are outside the scope of the
rule. The clause seeks only to require the electronic reporting of data
pertaining to Government property losses. It does not require reporting
of the estimated harm or materiality of such losses to the Government.
However, in order to clarify the reporting value, the clause
definition of ``acquisition cost'' has been revised to a definition of
``unit acquisition cost.'' The new definition clarifies that for
Government-furnished property, the unit acquisition cost is the dollar
value assigned by the Government and identified in the contract; and
adds the method for determining the reporting value for contractor-
acquired property. The revised definition is more comprehensive and
clarifies the property values to be reported.
The final rule also revises paragraph (b)(4) of the clause to
remove the references to 52.245-1 and 52.245-2, since the contract may
contain other liability or other reporting requirements. This change
clarifies that the new clause does not impact any other contractual
reporting or liability requirements.
III. Executive Order 12866
This rule was not subject to Office of Management and Budget review
under Executive Order 12866, dated September 30, 1993. This rule is not
a major rule under 5 U.S.C. 804.
IV. Regulatory Flexibility Act
DoD has prepared a final regulatory flexibility analysis consistent
with 5 U.S.C. 604. A copy of the analysis may be obtained from the
individual specified herein. The analysis is summarized as follows:
The objective of this rule is to provide DoD with a single
repository for reporting loss of Government property to improve
accountability and control of DoD assets and contractor oversight.
None of the comments from the three respondents was in response to
the initial regulatory flexibility analysis. Therefore, there is no
change to the rule in this regard.
The rule applies to DoD contractors provided with Government
property. The clause at 252.245-7002, Reporting Loss of Government
Property, requires the contractor to use the Defense Contract
Management Agency eTools software application for reporting loss of
[[Page 6008]]
Government property. The eTools software can be accessed from the DCMA
homepage External Web Access Management application at http://www.dcma.mil/aboutetools.cfm.
Unless otherwise provided for in the contract, these requirements
do not apply to normal and reasonable inventory adjustments, i.e.,
losses of low-risk consumable material such as common hardware, as
agreed to by the contractor and the Government property administrator.
Such losses are typically a product of normal process variation. The
contractor shall ensure that its property management system provides
adequate management control measures, e.g., statistical process
controls, as a means of managing such variation.
Reporting requirements apply to losses of Government property
outside normal process variation, e.g., because of--
(1) Theft;
(2) Inadequate storage;
(3) Inadequate security; or
(4) ``Acts of God.''
This rule is not expected 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. The rule is expected to have a positive or beneficial
impact on small entities by making available a Government-provided
software application to use for reporting purposes. The rule does not
duplicate, overlap, or conflict with any other Federal rules.
V. Paperwork Reduction Act
This final rule does not significantly increase the information
collection requirements set forth under FAR 52.245-1(f)(vi), approved
by the Office of Management and Budget under OMB clearance number 9000-
0075. The rule will have a minimal impact on contractors, as such
reporting is already common practice and is on an exception basis,
i.e., only when reportable property is lost. There were no comments
received on the proposed rule concerning information collection.
List of Subjects in 48 CFR Parts 245 and 252
Government procurement.
Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 245 and 252 are amended as follows:
0
1. The authority citation for 48 CFR parts 245 and 252 continues to
read as follows:
Authority: 41 U.S.C. 421 and 48 CFR chapter 1.
PART 245--GOVERNMENT PROPERTY
245.102 Policy.
0
2. Section 245.102 is amended by adding paragraph (5) to read as
follows:
* * * * *
(5) Reporting loss of Government property. The Defense Contract
Management Agency (DCMA) eTools software application is the DoD data
repository for reporting loss of Government property in the possession
of contractors. The requirements and procedures for reporting loss of
Government property to eTools are set forth in the clause at 252.245-
7002, Reporting Loss of Government Property, prescribed at 245.107.
0
3. Section 245.107 is amended by adding paragraph (c) to read as
follows:
245.107 Contract clauses.
* * * * *
(c) Use the clause at 252.245-7002, Reporting Loss of Government
Property, in solicitations and contracts that contain the clause at FAR
52.245-1, Government Property.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
4. Add section 252.245-7002 to read as follows:
252.245-7002 Reporting Loss of Government Property.
As prescribed in 245.107(c), use the following clause:
REPORTING LOSS OF GOVERNMENT PROPERTY (FEB 2011)
(a) Definitions. As used in this clause--
Government property is defined in the clause at FAR 52.245-1,
Government Property.
Loss of Government property means unintended, unforeseen, or
accidental loss, damage, or destruction of Government property that
reduces the Government's expected economic benefits of the property.
Loss of Government property does not include purposeful destructive
testing, obsolescence, normal wear and tear, or manufacturing
defects. Loss of Government property includes, but is not limited
to--
(1) Items that cannot be found after a reasonable search;
(2) Theft;
(3) Damage resulting in unexpected harm to property requiring
repair to restore the item to usable condition; or
(4) Destruction resulting from incidents that render the item
useless for its intended purpose or beyond economical repair.
Unit acquisition cost means--
(1) For Government-furnished property, the dollar value assigned
by the Government and identified in the contract; and
(2) For Contractor-acquired property, the cost derived from the
Contractor's records that reflect consistently applied, generally
acceptable accounting principles.
(b) Reporting loss of Government property. (1) The Contractor
shall use the Defense Contract Management Agency (DCMA) eTools
software application for reporting loss of Government property.
Reporting value shall be at unit acquisition cost. The eTools ``LTDD
of Government Property'' toolset can be accessed from the DCMA home
page External Web Access Management application at http://www.dcma.mil/aboutetools.cfm.
(2) Unless otherwise provided for in this contract, the
requirements of paragraph (b)(1) of this clause do not apply to
normal and reasonable inventory adjustments, i.e., losses of low-
risk consumable material such as common hardware, as agreed to by
the Contractor and the Government Property Administrator. Such
losses are typically a product of normal process variation. The
Contractor shall ensure that its property management system provides
adequate management control measures, e.g., statistical process
controls, as a means of managing such variation.
(3) The Contractor shall report losses of Government property
outside normal process variation, e.g., losses due to--
(i) Theft;
(ii) Inadequate storage;
(iii) Lack of physical security; or
(iv) ``Acts of God.''
(4) This reporting requirement does not change any liability
provisions or other reporting requirements that may exist under this
contract.
(End of clause)
[FR Doc. 2011-2044 Filed 2-1-11; 8:45 am]
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