DATE: December 26, 2000

FROM: Barry McVay, CPCM

SUBJECT: Army; Report On Use of Contractor Employees to Provide Services

SOURCE: Federal Register, December 26, 2000, Vol. 65, No. 248, page 81357

AGENCIES: Department of the Army

ACTION: Final Rule

SYNOPSIS: The Army is completely reorganizing and rewriting its implementation of the Fiscal Year 2000 Department of Defense Authorization Act (Public Law 106-65), Section 343, Report on Use of Employees of Non-Federal Entities to Provide Services to Department of Defense, which was published as an interim rule on March 15, 2000. Section 343 directs the Secretary of Defense to provide to Congress not later than March 1, 2001, a report summarizing the number of direct labor and indirect labor work year equivalents performed by contractors providing services to the Department of Defense (DOD) in FY2000, categorized by federal supply class or service code, appropriation supporting the services, and major organizational element of DOD procuring the services.

EDITOR'S NOTE: The Army's Section 343 implementing regulations are in Title 32 of the Code of Federal Regulations, Chapter V, Subchapter L - Army Contracting, Part 668 - Contractor Manhour Reporting Requirement, Sections 668.1, General, and 668.2, Contract Administration Data.

For more on the interim rule, see the March 15, 2000, FEDERAL CONTRACTS DISPATCH "Army; Report On Use of Contractor Employees to Provide Services."

EFFECTIVE DATE: December 26, 2000.

ADDRESSES: Office of the Assistant Secretary of the Army for Manpower & Reserve Affairs (ASA (M&RA)), Attention SAMR-FMMR, Room 2A672, Washington, DC 20310.

FOR FURTHER INFORMATION CONTACT: Dr. John Anderson, SAMR-FMMR, 703-614-8247, e-mail: John.Anderson@hqda.army.mil; or John R. Conklin, SAAL-ZP, e-mail: John.Conklin@sarda.army.mil.

SUPPLEMENTAL INFORMATION: Section 343 of Public Law 106-65 requires the Secretary of Defense to report to Congress by March 1, 2001, "the use during the previous fiscal year of non-Federal entities to provide services to the Department of Defense." It requires that the information be collected from existing data collection and reporting systems "to the extent practicable," and that the information "(1) specify the number of work year equivalents performed by individuals employed by non-Federal entities in providing services to the Department, including both direct and indirect labor attributable to the provision of the services; (2) categorize the information by Federal supply class or service code; and (3) indicate the appropriation from which the services were funded and the major organizational element of the Department procuring the services." However, the Secretary of Defense may not require non-federal entities (that is, contractors) to provide information beyond that which is currently provided to DOD "except for the number of direct and indirect work year equivalents associated with Department of Defense contracts, identified by contract number, to the extent this information is available to the contractor from existing data collection systems."

The Army is one of DOD's services and is to provide this information to the Secretary. The Army decided that "the only way to collect the required information economically, in a timely way, accurately and credibly, with the least burden on the public and expense to the Government, is to request contemporaneous submission directly from affected contractors."

On March 15, 2000, the Army published an interim rule establishing contractor reporting requirements to identify the number and value of direct, and associated indirect, labor work year equivalents for contracted services in support of the Army. The Army requested comments on the interim rule.

There were numerous administrative questions and requests for clarification from both public and private sector sources. Therefore, the Army has decided to completely reorganize and rewrite Part 668 for better readability, clarity, and completeness. This should allow easier implementation by the Army contracting community and Army contractors. In addition, the Army has decided to further implement this rule in the Army Federal Acquisition Regulation Supplement (AFARS).

The final rule requires contractors with contracts awarded before March 15, 2000, to report from October 1, 1999, or the date the contract began, whichever is later, except for the following:

(EDITOR'S NOTE: Acquisitions under Federal Acquisition Regulation (FAR) Part 12, Acquisition of Commercial Items, had been exempt by the interim rule. That exemption is removed by the final rule, and contractors with contracts for commercial services that were exempt under the interim rule (that is, commercial service contracts entered into under FAR Part 12 procedures prior to December 26, 2000) are required to report retroactively to October 1, 1999, or when the contract began, whichever is later.)

Contractors will be required to provide information on direct and indirect labor electronically to the Office of the Assistant Secretary of the Army (Manpower and Reserve Affairs) data collection web site (https://contractormanpower.us.army.mil) "generally contemporaneous with submission of a request for payment (for example, voucher, invoice, or request for progress payment), but not less frequently than quarterly, retroactive to October 1, 1999, or the start of the contract/order, whichever is later." However, "in the rare event the contractor is unable to comply with these reporting requirements without creating a whole new cost allocation system or system of records (such as a payroll accounting system), or due to similar insurmountable practical or economic reasons, the contractor may claim an exemption to at least a portion of the reporting requirement by certifying in writing to the contracting officer the clear underlying reason(s) for exemption from the specified report data elements, and further certifying that they do not otherwise have to provide the exempted information, in any form, to the United States government." Nevertheless, the contracting officer can determine that the "self-exemption" is "lacking in basis or credibility," and can direct the contractor to comply with the reporting requirements. The contracting officer's decision in this matter is final.

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

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