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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: July 31, 2000

FROM: Barry McVay, CPCM

SUBJECT: Defense Federal Acquisition Regulation Supplement (DFARS); Streamlined Payment Practices

SOURCE: Federal Register, July 31, 2000, Vol. 65, No. 147, page 46625

AGENCIES: Department of Defense (DOD)

ACTION: Final Rule

SYNOPSIS: DOD is amending the DFARS to require use of the governmentwide commercial purchase card as the method of purchase and/or payment for purchases valued at or below the $2,500 micro-purchase threshold unless an exception is authorized.

EFFECTIVE DATE: July 31, 2000.

FOR FURTHER INFORMATION CONTACT: Susan L. Schneider, Defense Acquisition Regulations Council, OUSD(AT&L)DP(DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062; 703-602-0326; fax: 703-602-0350. Cite DFARS Case 98-D026 when referring to this final rule.

SUPPLEMENTAL INFORMATION: On July 20, 1999, DOD published a proposed rule to amend the DFARS to implement a policy memorandum issued by the Principal Deputy Under Secretary of Defense (Acquisition and Technology) on October 2, 1998 (available at http://www.acq.osd.mil/dp/micro2.pdf), and a policy memorandum issued by the Under Secretary of Defense (Personnel and Readiness) on September 25, 1998, Subject: Use of Government-Wide Purchase Cards (available at http://purchasecard.sarda.army.mil/deleon.htm). These memoranda require that the governmentwide commercial purchase card be used to purchase and/or pay for DOD purchases valued at or below $2,500 unless an exception is obtained or applies to the acquisition.

Six respondents submitted comments on the proposed rule, but the proposed rule is finalized without change except for paragraph numbering and punctuation changes.

The following are the main changes being made to the DFARS by this final rule:

• Paragraph (4) of DFARS 208.405-2, Order Placement, is revised to require the use of the governmentwide commercial purchase card for orders of $2,500 or less under Federal Supply Schedule contracts (if permitted under the schedule contract), and makes the use of the purchase card optional for schedule orders over $2,500.
  
  
• DFARS 212.301, Solicitation Provisions and Contract Clauses for the Acquisition of Commercial Items, is amended by adding paragraph (f)(vi), which requires the use of the new clause at DFARS 252.232-7009, Mandatory Payment by Governmentwide Commercial Purchase Card, in solicitations, contracts, and agreements when orders or calls of $2,500 or less are anticipated, and payment by governmentwide commercial purchase card is required under the contract or agreement.
  
  
• DFARS 212.303, Contract Format, DFARS 213.101, General, DFARS 214.201-1, Uniform Contract Format, and DFARS 215.204-1, Uniform Contract Format, are added, and all state that awards above the $2,500 micro-purchase threshold (such as contract line items, delivery schedule, and invoice instructions) "must be structured in a manner that will minimize the generation of invoices valued at or below the micro-purchase threshold."
  
  
• DFARS Subpart 213.2, Actions at or Below the Micro-Purchase Threshold, is added, and consists of one section: DFARS 213.270, Use of the Governmentwide Commercial Purchase Card. DFARS 213.270 requires use of the purchase card for acquisitions of $2,500 or less unless one or more of 11 exceptions apply (such as "the Deputy Secretary of Defense has approved an exception for an electronic commerce/electronic data interchange system or operational requirement that results in a more cost-effective payment process", "a general or flag officer or a member of the Senior Executive Service (SES) makes a written determination", and "the place of performance is entirely outside of any state, territory, or possession of the United States, the District of Columbia, and the Commonwealth of Puerto Rico").
  
  
• DFARS Subpart 232.11, Electronic Funds Transfer, is added. It consists of:
  
  
  • DFARS 232.1108, Payment by Governmentwide Commercial Purchase Card ("the Governmentwide commercial purchase card is the mandatory EFT [electronic funds transfer] payment method for purchases valued at or below the micro-purchase threshold, except as provided in [DFARS] 213.270.")
    
    
  • DFARS 232.1110, Solicitation Provisions and Contract Clauses, which prescribes the use of DFARS 252.232-7009 (in solicitations, contracts, and agreements when "placement of orders or calls valued at or below the micro-purchase threshold is anticipated; and payment by Governmentwide commercial purchase card is required for orders or calls valued at or below the micro-purchase threshold under the contract or agreement").
    
    
• DFARS 252.232-7009, Mandatory Payment by Governmentwide Commercial Purchase Card, is added, and it states: "The Contractor agrees to accept the Governmentwide commercial purchase card as the method of payment for orders or calls valued at or below $2,500 under this contract or agreement."
  
  

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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