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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: February 22, 2005

SUBJECT: Defense Federal Acquisition Regulation Supplement (DFARS); Government Source Inspection Requirements

SOURCE: Federal Register, February 22, 2005, Vol. 70, No. 34, page 8539

AGENCIES: Department of Defense (DOD)

ACTION: Final Rule

SYNOPSIS: DOD is amending DFARS Subpart 246.4, Government Contract Quality Assurance, to eliminate government source inspection requirements for contracts or delivery orders valued below $250,000 unless certain conditions exist.

EDITOR’S NOTE: For more on the proposed rule, see the September 15, 2003, FEDERAL CONTRACTS DISPATCHDefense Federal Acquisition Regulation Supplement (DFARS); Government Source Inspection Requirements.”

EFFECTIVE DATE: February 22, 2005.

FOR FURTHER INFORMATION CONTACT: Michele Peterson, Defense Acquisition Regulations Council, OUSD (AT&L) DPAP (DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062; 703-602-0311; fax: 703-602-0350.

SUPPLEMENTAL INFORMATION: To permit DOD contract administration offices to devote more resources to high-risk contracts, DOD published a proposed rule on September 15, 2003, to eliminate government contract quality assurance at source on contracts or delivery orders valued below $250,000 unless certain conditions are met.

The proposed rule would add DFARS 246.402, Government Contract Quality Assurance At Source, which would prohibit quality assurance at source on contracts or delivery orders below $250,000 unless:

     "(1)Mandated by DOD regulation;
     "(2)Required by a memorandum of agreement between the acquiring department or agency and the contract administration agency; or
     "(3)The contracting officer determines that --
     "(i)Contract technical requirements are significant (e.g., the technical requirements include drawings, test procedures, or performance requirements);
     "(ii)Critical product features/characteristics or specific acquisition concerns have been identified; and
     "(iii)The contract is being awarded to --
     "(A)A manufacturer or producer; or
     "(B)A non-manufacturer or non-producer and specific government verifications have been identified as necessary and feasible to perform."

In addition, since Federal Acquisition Regulation (FAR) 46.404, Government Contract Quality Assurance for Acquisitions At or Below the Simplified Acquisition Threshold, states that the government shall inspect contracts at or below the simplified acquisition threshold at destination "unless a special condition exists," the rule proposed to add DFARS 246.404, which would prohibit quality assurance at source on contracts or delivery orders "unless the criteria at [DFARS] 246.402 have been met."

Thirty-seven respondents submitted comments on the proposed rule. The proposed rule is adopted as final except that the text of DFARS 246.402(3)(ii) is revised to clarify what is meant by “critical product features/characteristics or specific acquisition concerns”:

     "(ii)The product being acquired --
           "(A) Has critical characteristics;
           "(B) Has specific features identified that make Government contract quality assurance at source necessary; or
           "(C) Has specific acquisition concerns identified that make Government contract quality assurance at source necessary...”

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953.

Copyright 2005 by Panoptic Enterprises. All Rights Reserved.

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