CHARLES E. RUMBAUGH
Arbitrator/Mediator
(310) 373-1981 / FAX (310) 373-4182
(888) ADROffice (toll free)
e-mail: ADROffice@Rumbaugh.net
P.O. Box 2636
Rolling Hills, California 90274
P.O. Box 2095
Burlingame, California 94011
October
10, 2003, Special Regulatory Update
Today
DoD published in the Federal Register an interim rule
“to add policy pertaining to item identification and valuation.
This rule “establishes
requirements for contractors to furnish unique item
identifiers, or other item identification, and to provide
the Government's acquisition cost of items that are to be
delivered under a DoD contract….”
The requirements of this interim rule apply to all
solicitations issued on/after January 1, 2004. Contracting officers must ensure that “all items
delivered to the Government be delivered under a contract line item
and that the Government's acquisition cost of each item be
identified under a contract line item or subline item or an
informational subline item.” MIL-STD-130, “Identification Marking of U.S. Military
Property,” is expected to be modified by January 1st.
“Contracts
shall require that all items delivered to the Government…contain
unique item identification, or a DoD recognized unique
identification equivalent (if one is not already marked), if--
(i) The Government's acquisition cost of the item
is $5,000 or more; or
(ii) The requiring activity determines that
unique identification is necessary for the item (e.g.,
serially managed, mission essential, or controlled inventory piece
of equipment or a repairable item, a consumable item or material
where permanent identification is required, or a component of a
delivered item).”
An
unique identification (UID) is defined in the rule as “a set of
data marked on items that is globally unique, unambiguous, and
robust enough to ensure data information quality throughout life and
to support multi-faceted business applications and users.”
Commonly accepted commercial marks for items may be
acceptable—several acceptable examples are provided.
Item
is defined as “a single article or unit formed by a grouping of
component or constituent parts required to be delivered in
accordance with the terms and conditions of this contract.”
Items over $5,000 must have a separate line/subline in the
contract.
The rule provides in part that items delivered under fixed
price contracts will generally be the “unit price identified at
contract award” and for items under cost type contracts the
“contractor’s fully burdened actual cost for each item, plus a
proportionate amount of the fee at the time the item is delivered to
the Government.”
A
new solicitation provision and contract clause is provided at
252.211-7003, “Item Identification and Valuation.”
“DoD
is particularly interested in receiving comments on the following
topics:
1. The use and definition of the term ‘item’
or some more appropriate term throughout the rule.
2. The valuation portion of the rule,
particularly as it applies to cost-type contracts and the treatment
of non-recurring costs.
3. The statement that the rule does not impose
any new information collection requirements.
4. The impact of the rule on small business.”
Comments are due
on/before November 10, 2004.
COMMENT:
See prior Updates including references to the UID website and
the UID Guide (they are not cited/provided in this interim rule).
·
This could
impact subcontractors at every tier.
·
Commercial
items are not exempt!
·
How many
items below $5,000 will also be subject to these
requirements— notwithstanding the $5,000 threshold?
Is the standard “too relaxed?”
·
How will
indirect costs be computed for deliveries prior to “year-end?”
Will deliveries of the same item in different years—having
different indirect rates—“properly” reflect a different cost?
·
A contract
can no longer provide for items, “not separately priced?”
·
How does one minimize
the risk of a false statement being provided?
·
Why not the
standard 60 days for review given there is no specific findings
and/or cited statutory basis or emergency?
Is the OFPP Act
getting “short-circuited?”
·
Why an
interim rule without any prior notice/comment given the government
has been working on this for months and has had time to publish an
UID Guide? Is the
standard for “interim rules” getting “lowered?”
·
What are the
additional paperwork requirements to your firm?
(The rule states the Paperwork Reduction Act does not
apply!).
·
Is the
government property system going in the “right” direction for
best value contracting?
This
has a significant impact on contracting officers, contractors (at
various tiers), and commercial firms.
Review it and the UID Guide with advisors/counsel.
Charles E. Rumbaugh
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