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DOD issues final rule amending the DFARS in order to improve billing and payment instructions in DOD contracts.

DOD has issued a final rule amending the Defense Federal Acquisition Regulations Supplement ("DFARS") that the agency claims will result in improved payment and billing instructions for DOD contracts. According to the agency, the purpose behind the final rule is to improve the effectiveness and efficiency of the acquisition process, while at the same time allowing the workforce the opportunity to be flexible and innovative. As previously reported, DOD issued a proposed rule on June 25, 2004, and this final rule was enacted after incorporating various concerns raised during the public comment period after the publication of the proposed rule. (See Final Edition August 2004 (discussing 69 Fed. Reg. 35564)). Specifically, the changes that were made as a result of comments submitted during the public comment period include the following: (1) DOD will no longer require contractor payment requests to identify the line items that "best" reflect work performance; instead, the final rule includes a requirement for payment requests to identify the line items that "reasonably" reflect the performance; and (2) the final rule allows contracting officers to require line-item billing only when line-item billing provides significant benefits to the government. Additionally, the final rule alters the DFARS by (1) clarifying the definition of "accounting, classification reference number" at DFARS 204.7101; (2) amending DFARS 204.7103-1 to add text addressing contract type in the establishment of contract line items, which the agency notes will help to avoid confusion regarding time-and-materials/labor hour contracts, as those contracts can reflect both fixed-price and cost-reimbursement contracts; and (3) adding a clause addressing contract line-item information needed in contractor payment requests. This rule became effective October 11, 2005. (70 Fed. Reg. 58980, 10/11/05)

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Title Annotation:Regulations
Publication:Contract Management
Date:Dec 1, 2005
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