Overview of DFARS Case2009-D008

Presented By:

Tom Ruckdaschel

July 2011

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The information contained in this presentation represents only the personal views of the presenter and not necessarily those of the United States Government, DoD or DCMA. The information presented should not be construed as changing or modifying any statute, regulation, DoD or DCMA policy or guidance, or any term(s) of any contract with the United States Government or any department or agency of the United States Government. The information presented also does not affect in any way, any on-going or future property management system analysis.

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DCMA Core Functions

• Contract Management

• Cost and Pricing

• Property and Plant Clearance

• Quality Assurance

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• Delivery Schedule Management

• Earned Value Management

• Contract Safety

• Transportation

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FAR 42.302(a)(b)

Property and Plant Clearance

• Four Business Areas:• Property Center (CONUS)• DCMA International (OCONUS)• Contingency Contracting (Iraq/Afghan)• Special Programs

• Ensure contractors meet FAR/DFARS requirements

• Provide effective and efficient oversight & surveillance (property audits)

• Perform reutilization screening (of excess property, as required) [Plant Clearance Center]

• Evaluate contractor reported property loss, damage destruction, theft

Important Terminology

• Federal Acquisition Regulation (FAR)• Defense Federal Acquisition Regulations Supplement

(DFARS)• Procedures, Guidance and Information (PGI)• Contractor Inventory (FAR Part 45.101)• Plant Clearance Officer (FAR Part 45.101)• PCARSS: Plant Clearance Automated Reutilization

Screening System

Current Issues

• Problem statement: “General uncertainty in property disposition/plant clearance; wide swings in policy interpretation; many “myths and legends”

• DoD DFARS Parts 245.5, 245.6/7—in need of substantial update and reform• Obsolete policy and terminology (somewhere between 35 and 40

years old)• Not contractually binding on contractors (no clauses)

• FAR also requires clarification…so:• Two proposed rules in play:

• FAR Case 2009-009• DFARS Case 2009-D008

DFARS Parts 245.6/7 (cont.)

• Proposed rule published Dec. 3, 2010

• Major change: establishes a DFARS clause for property disposition/plant clearance

• DoD does not have its own clause for property disposition

• Why is this important?• Unlike other life-cycle events, property

disposition authority is mostly statutory

• PCARRS not contractually binding

• Plant Clearance Automated Reutilization and Screening System

• The “automated Inventory Schedule” [SF 1428]

• Deployment began in 1995• Used by most DoD

contractors

Quick Overview PCARSS

• Included in the new DFARS clause clause

• Makes clear that contractor use of PCARSS is contractually required

DFARS Parts 245.6/7 (cont.)

“The contractor shall complete SF 1428, Inventory Schedule B, within the PCARSS.”

Highlights (cont.)

New DFARS 245.107: “Use the clause at 252.245-70XX in solicitations and contracts that contain 52.245-1.”

Bottom line: the new DFARS clause is mandatory for DoD contracts containing the FAR clause

What about legacy contracts? I knew you would ask…

What’s Changed

• Deletes:• Obsolete special processing requirements

• Industrial Plant Equipment (not since 1994)• Contractor Inventory Redistribution System• Automated Data Processing Equipment

• Obsolete supply condition codes• Inventory Schedule “D”• Modified Plant Clearance language

• Clarifies:• Scrap requirements• Demilitarization requirements• Trade Security Control issues

Overview: New PGI

• PGI 245.602-70—• Contains procedures in assigning a plant clearance case; establishing a case file • Clarifies use of DLA Disposition Services (“DRMO”)• Provides new direction for Plant Clearance Officers on Trade Security Controls (TSC):

• Ensure prospective buyers are not an ineligible transferee (those on the excluded party list)• Cross reference contractor inventory to an NSN and DEMIL code• Consult with DEMIL Program Office/Trade Security Control Program office (can property be

sold to the public? Is a TSC assessment required?)• Provide end use certificate as required

Overview: Scrap Disposal

• Revised/update definition of scrap• Scrap procedures

• No requirement for Govt “approval”• Consistent with FAR Case 2010-009

• Procedure should provide for the “effective and efficient disposition of scrap”• Minimize costs• Maximize proceeds• Contain appropriate internal controls (mitigate improper release)

• Commingling of Government owned/contractor owned scrap is “allowed’ with PLCO approval

Highlights (cont.)

• 245.603-3, Screening• Must be DoD-wide; must take place before sale

• Requiring agency has priority

• 245.604-3, Sale• Informal/formal bids

• 252.245-70XX, new definitions• Commerce Control List Items

• Munitions List Items

• Scrap

Revised/New Scrap Policy (cont.)

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Fed. Register Notice-Dec 2010

Lists allchanges

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“The Contractor shall demilitarize contractor inventory possessing offensive or defense characteristics, and not required within DoD, in accordance with the terms and conditions of the contract and, consistent with Defense Demilitarization Manual, DoD 4160.21-M-1, edition in effect as of the date of this contract.”

This language makes clear that demilitarizationrequirements should be spelled out –up front

Summary

• Be aware that:• The rule includes a new clause -- 252.245-70XX

• The clause will require DoD contractors to:

• use PCARSS

• develop a scrap procedure (if applicable)

• ensure proper review of sales buyers

• Also…that the Government has to include demilitarization requirements within contract terms and conditions

• Other discussion items• Export controls• Trade Security Control clearances• Property disposal overseas

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• Review DFARS and FAR proposed and interim rules

• Change Notices:

http://www.acq.osd.mil/dpap/dars/change_notices.html

• Submission input of public comments:

http://www.acq.osd.mil/dpap/dars/out_for_public_comment.html

View public comments on proposed & interim rules

• DFARS rules:

http://www.acq.osd.mil/dpap/dars/out_for_public_comment.html

• FAR rules: www.regulations.gov

• View status of open cases

• DFARS rules: http://www.acq.osd.mil/dpap/dars/case_status.html

• FAR rules: http://www.acq.osd.mil/dpap/dars/far_case_status.html

Useful Information

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Any Questions?

email tom.ruckdaschel@dcma.milTelephone (804) 734-0505