Overview of DFARS Case 2009 -D 008 Presented

Overview of DFARS Case 2009 -D 008 Presented By: Tom Ruckdaschel July 2011

The information contained in this presentation represents only the personal views of the presenter and not necessarily those of the United States Government, Do. D or DCMA. The information presented should not be construed as changing or modifying any statute, regulation, Do. D 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 ongoing or future property management system analysis. 2

Where DCMA Fits Under Do. D Secretary of Defense Under Secretary of Defense (Acquisition, Technology & Logistics) Assistant Secretary of Defense (Acquisition) Chairman Joint Chief of Staff (Combat Support Agency) Army Navy Air Force Marine Corps

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Our CONUS Presence Special Programs • Special Programs East • Special Programs South • Special Programs West Eastern CMOs Headquarters - Boston Western CMOs Headquarters – Carson • • • Denver Boeing Huntington Beach Lathrop Lockheed Martin Denver Boeing Long Beach Los Angeles Palmdale Phoenix Santa Ana Lockheed Martin Sunnyvale Raytheon Tucson NPO Central CMOs Headquarters - Chicago • • • Chicago Dallas Dayton Detroit Lockheed Martin Forth Worth Bell Helicopter Forth Worth Huntsville Boeing St. Louis Twin Cities AMP AIMO • • • • Atlanta Baltimore Boston Garden City Hartford Manassas Lockheed Martin Marietta Lockheed Martin Moorestown Orlando Philadelphia Boeing Philadelphia Sikorsky Aircraft Springfield Raytheon Tewksbury APO NSEO 5

Our International Presence 6

DCMA Core Functions • Contract Management • Cost and Pricing FAR 42. 302(a)(b) • Property and Plant Clearance • Quality Assurance • Engineering and Analysis Support • Delivery Schedule Management • Earned Value Management • Contract Safety • Transportation 7

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” • Do. D 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 -D 008

DFARS Parts 245. 6/7 (cont. ) • Proposed rule published 3, 2010 • Major change: establishes a DFARS clause for property disposition/plant clearance • Do. D does not have its own clause for property disposition • Why is this important? • Unlike other life-cycle events, disposition authority is mostly statutory • PCARRS not contractually binding Dec. property

Quick Overview PCARSS • Plant Clearance Automated Reutilization and Screening System • The “automated Inventory Schedule” • Deployment began in 1995 • Used by most Do. D contractors [SF 1428]

DFARS Parts 245. 6/7 (cont. ) • Included in the new DFARS clause • Makes clear that contractor use of PCARSS is contractually required “The contractor shall complete SF 1428, Inventory Schedule B, within the PCARSS. ”

Highlights (cont. ) New DFARS 245. 107: “Use the clause at 252. 245 -70 XX in solicitations and contracts that contain 52. 245 -1. ” Bottom line: the new DFARS clause is mandatory for Do. D 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 Do. D-wide; must take place before sale • Requiring agency has priority • 245. 604 -3, Sale • Informal/formal bids • 252. 245 -70 XX, new definitions • Commerce Control List Items • Munitions List Items • Scrap

Revised/New Scrap Policy (cont. ) • New definition of scrap • Derived from Do. D Instruction 2030. 8 (Trade Security Controls) “Scrap means property that has no value except for its basic material content. For purposes of demilitarization, scrap is defined as recyclable waste and discarded materials derived from items that have been rendered useless beyond repair, rehabilitation, or restoration such that the item's original identity, utility, form, fit and function have been destroyed. Items can be classified as scrap if processed by cutting, tearing, crushing, mangling, shredding, or melting. Intact or recognizable Munitions List or Commerce Control List Items, components, and parts are not `scrap. '' 19

Fed. Register Notice-Dec 2010 Lists all changes

“The Contractor shall demilitarize contractor inventory possessing offensive or defense characteristics, and not required within Do. D, in accordance with the terms and conditions of the contract and, consistent with Defense Demilitarization Manual, Do. D 4160. 21 -M-1, edition in effect as of the date of this contract. ” This language makes clear that demilitarization requirements should be spelled out –up front 21

Summary • Be aware that: • The rule includes a new clause -- 252. 245 -70 XX • The clause will require Do. D 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 22

Useful Information • 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 4 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 23

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Any Questions? email tom. ruckdaschel@dcma. mil Telephone (804) 734 -0505