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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: July 13, 2001

SUBJECT: Army; Report On Use of Employees of Non-Federal Entities To Provide Services

SOURCE: Federal Register, July 12, 2001, Vol. 66, No. 135, page 36711

AGENCIES: Department of the Army

ACTION: Final Rule

SYNOPSIS: The Army is removing Title 32 of the Code of Federal Regulations (CFR), Part 668, Contractor Manhour Reporting Requirement. 32 CFR Part 668 had been added to implement 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. However, Section 343 merely called for contractor reporting of the number of direct labor and indirect labor work year equivalents during Fiscal Year 2000, which ended September 30, 2000.

EDITOR'S NOTE: For more on the addition and suspension of 32 CFR Part 668, see the December 26, 2000, FEDERAL CONTRACTS DISPATCH "Army; Report On Use of Contractor Employees to Provide Services", and the June 27, 2001, FEDERAL CONTRACTS DISPATCH "Army; Report On Use of Contractor Employees to Provide Services."

EFFECTIVE DATE: July 13, 2001.

FOR FURTHER INFORMATION CONTACT: Mr. John R. Conklin, at e-mail: john.conklin@saalt.army.mil, or Dr. John C. Anderson at 703-614-8247 or e-mail: John.Anderson@hqda.army.mil.

SUPPLEMENTAL INFORMATION: Section 343 of Public Law 106-65, Fiscal Year 2000 Department of Defense Authorization Act, required 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 required the Secretary of Defense to prepare the report "to the extent practicable using information available from existing data collection and reporting systems available to the Department of Defense and the non-Federal entities..."

To implement Section 343, the Army decided "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 32 CFR Part 668, which required the contractor to identify the number and value of direct, and associated indirect, labor work year equivalents for contracted services in support of the Army. 32 CFR Part 668 was extensively revised and finalized on December 26, 2000.

As a result of a number of legal and technical/procedural issues and significant complaints from industry about the scope and methodology of the Army final rule and the rulemaking process, Director of Defense Procurement Deidre Lee issued in memorandums dated May 5, 2001, and June 5, 2001, directing the Army to cease using the standard contract requirements language in covered contracts absent approval by the Director of Defense Procurement and conducting applicable rulemaking procedures. Also, the Office of Management and Budget (OMB) concluded that the final rule made significant changes to the interim rule without changing the Paperwork Reduction Act estimates and assumptions, and without allowing for additional public comment on the proposed changes in violation of the requirements of the Paperwork Reduction Act. Therefore, the Army is removing 32 CFR Part 668.

In the notice of the 32 CFR Part 668 removal, the Army states the following:

"The Army's requirement for information on unit level contractor manpower equivalents, as stated in the December 26, 2000, final rule, remains. The Army needs this information for a host of reasons, including planning, programming and budgeting, and prioritization and allocation of resources. From March 2000 to the present, the Army collected over $9.2 billion in contract data from approximately 1,200 contractors. Although this data has yet to be validated and analyzed in depth, initial indications are that the numbers of contract manpower equivalents reported by contractors were lower (for the associated values) than those estimated employing algorithms currently used by the Department of the Army and the Department of Defense for reporting to Congress."

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2001 by Panoptic Enterprises. All Rights Reserved.

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