6096661 Contracting and Procurement, Office of - Notice of Final Rulemaking - To align Chapter 41 (Use of District Property and Sources by Contractors) of Title 27 DCMR with the the Procurement Practices Reform Act of 2010
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OFFICE OF CONTRACTING AND PROCUREMENT
NOTICE OF FINAL RULEMAKING
The Chief Procurement Officer of the District of Columbia, pursuant to the authority set forth in Sections 204 and 1106 of the Procurement Practices Reform Act of 2010, effective April 8, 2011 (D.C. Law 18-371; D.C. Official Code §§ 2-352.04 and 2-361.06 (2012 Repl.)) (the “Act”), hereby gives notice of the intent to adopt this final rulemaking to amend Chapter 41 (Use of District Property and Sources by Contractors) of Title 27 (Contracts and Procurement) of the District of Columbia Municipal Regulations (DCMR).
The rulemaking updates Chapter 41 and implements the provisions in the Act that apply to contractor use of District supply sources, including the use and responsibility of District vehicles, property, and facilities. The current Chapter 41 contains regulations that are outdated and inconsistent with the Act.
The Chief Procurement Officer gave notice of his intent to adopt these rules on December 9, 2015, and the proposed rules were published in the D.C. Register on April 22, 2016, at 63 DCR 6151. No comments were received and no changes have been made to the text of the rules as published. The CPO took final action to adopt these rules on June 15, 2016 and they will become effective upon publication of this notice in the D.C. Register.
Chapter 41, USE OF DISTRICT PROPERTY AND SOURCES BY CONTRACTORS, of Title 27 DCMR, CONTRACTS AND PROCUREMENT, is amended as follows:
Section 4100, CONTRACTOR USE OF DISTRICT SUPPLY SOURCES, is amended to read as follows:
4100 CONTRACTOR USE OF DISTRICT SUPPLY SOURCES
4100.1 When it is in the best interest of the District, and if goods or services required in the performance of a District contract are available from District supply sources, the contracting officer may authorize contractors to use these sources in performing the following types of contracts:
(a) Cost-reimbursement; or
(b) Other types of contracts when the contracting officer determines that a substantial dollar portion of the contract is of a cost-reimbursement nature, or that the contract cost can be reduced by authorizing the use of District supply sources by the contractor.
4100.2 The authorization to the contractor to use District supply sources shall include, but not be limited to, consideration of the following factors:
(a) The administrative cost of placing orders with District supply sources and the program impact of delay factors, if any;
(b) The lower cost of items available through District supply sources;
(c) The suitability of items available through District supply sources;
(d) Delivery factors, such as cost and time; and
(e) The recommendations of the contractor.
4100.3 The contracting officer shall issue authorizations to subcontractors to use District supply sources through, and with the approval of, the contractor.
4100.4 The contracting officer may include in the authorization to use District supply sources any limitations or conditions deemed necessary, such as the following:
(a) A limitation on the authority to purchase from District supply sources to any overhead supplies, but not production supplies;
(b) A limitation on the authority for use of District sources to a specific dollar amount;
(c) A restriction on the authorization to use certain facilities or to specific contracts; or
(d) A specific provision setting forth whether vesting of title will differ from other property acquired or otherwise furnished by the contractor for use under the contract.
4100.5 When ordering from District supply sources, contractors shall follow all applicable rules, regulations, procedures, and contract terms.
4100.6 When ordering from District supply sources, contractors shall comply with the requirements of the contracting officer’s authorization and order only those items required for performance of the contract.
4100.7 Title to property acquired by the contractor under the contracting officer’s authorization may vest in either the District or the contractor, as provided in the contract. If the contract is silent on the vesting of title, title shall vest in the District.
4100.8 Supplies or services provided to a contractor from District supply sources do not contain any representation or warranty as to quality or suitability unless otherwise provided in a contract.
Section 4101, CONTRACTOR USE OF DISTRICT VEHICLES AND RELATED SERVICES, is amended to read as follows:
4101 CONTRACTOR USE OF DISTRICT VEHICLES AND RELATED SERVICES
4101.1 When it is in the best interest of the District, the contracting officer may authorize contractors in writing to use District-owned or leased vehicles and related services (including fuel and lubricants, vehicle inspection, maintenance, repair, and vehicle storage), in accordance with the provisions of this section.
4101.2 The contracting officer may authorize a contractor to use District-owned or leased vehicles and related services only if:
(a) The number of vehicles and related services required for use by the contractor is predictable and expected to remain fairly constant;
(b) The proposed contract or contracts will bear the entire cost of the vehicle program;
(c) The vehicles will not be used for any purpose other than carrying out the contract for which the vehicles were provided;
(d) The contractor does not have and would not be expected to have an existing and continuing capability for providing the vehicles from its own resources; and
(e) Substantial savings are expected.
4101.3 District-owned or leased vehicles and related services used by the contractor under this section shall be used only in connection with the performance of one (1) or more specific District contracts for which use of the vehicles and related services was authorized.
4101.4 Before authorizing a contractor to use District-owned or leased vehicles and related services, the contracting officer shall do the following:
(a) Determine whether the authorization will accomplish the District’s contractual objectives and reduce costs;
(b) Obtain evidence that the contractor has in effect insurance in accordance with the provisions of the contract;
(c) Arrange for periodic checks to ensure that contractors are using the District-owned or leased vehicles and related services in accordance with the terms of the authorization;
(d) Ensure that the contractor establishes and enforces penalties for employees who use or authorize the use of District-owned or leased vehicles or related services for purposes other than the performance of District contracts for which use of the vehicles and related services was authorized; and
(e) Obtain a written statement from the contractor that the contractor will assume, without the right of reimbursement from the District, the cost or expense and liability of any use of the District-owned or leased vehicles and related services not related to the performance of the contract.
Section 4102, USE OF DISTRICT PROPERTY AND FACILITIES, is amended to read as follows:
4102 USE OF DISTRICT PROPERTY AND FACILITIES
4102.1 Except as provided otherwise in this chapter or the contract, each contractor and subcontractor shall furnish all property and facilities necessary to perform District contracts.
Section 4103, FACILITIES CONTRACTS, is repealed and replaced with:
4103 [RESERVED]
Section 4104, PROVISION OF MATERIAL FOR PERFORMING CONTRACTS, is amended to read as follows:
4104 PROVISION OF MATERIAL FOR PERFORMING CONTRACTS
4104.1 Except as provided otherwise in this section, each contractor and subcontractor shall furnish all material for performing District contracts.
4104.2 The contracting officer may provide material to the contractor or subcontractor when necessary to achieve significant economy, standardization, expedited production, or when it is otherwise determined to be in the best interest of the District.
4104.3 The solicitation shall specify material that the District will furnish in sufficient detail to enable offerors to accurately evaluate and respond to the solicitation.
Section 4106, CONTRACTOR RESPONSIBILITY FOR DISTRICT PROPERTY, is amended to read as follows:
4106 CONTRACTOR RESPONSIBILITY FOR DISTRICT PROPERTY
4106.1 Except as provided in the contract, the contractor shall be directly responsible and accountable for all District property, including all District property in the possession or control of a subcontractor.
4106.2 The contractor shall maintain and make available all property control records required under this chapter and account for all District property until relieved of the responsibility by the contracting officer under the terms of the contract or this section.
4106.3 The contractor shall assume responsibility for the control of District property upon:
(a) Delivery of District furnished property into the contractor’s custody or control; or
(b) Delivery to the contractor, when property is purchased by the contractor and the contract calls for reimbursement by the District. This requirement shall not alter or modify contractual requirements relating to passage of title.
4106.4 Property to which the District has acquired a lien or title solely as a result of advance, progress, or partial payments shall not be subject to the requirements of §§ 4106 and 4107 of this chapter.
4106.5 The contractor shall require subcontractors provided with District property under the prime contract to comply with the requirements of §§ 4106 and 4107 of this chapter. Procedures for ensuring subcontractor compliance shall be included in the contractor’s property control system.
4106.6 Unless the contract or contracting officer provides otherwise, the contractor shall be relieved of property control responsibility for District property by the occurrence of any of the following:
(a) Reasonable and proper consumption of property in the performance of the contract as determined by the contracting officer;
(b) Retention by the contractor, with the approval of the contracting officer, of property for which the District has received adequate consideration;
(c) The authorized sale of property, provided the proceeds are received by the District;
(d) Shipment from the contractor’s plant, under District instructions, except when shipment is to a subcontractor or other location of the contractor; or
(e) A written determination by the contracting officer of the contractor’s liability for any property that is lost, damaged, destroyed, or consumed in excess of that normally anticipated in a manufacturing or processing operation, which is followed by reimbursement of the District of any amount required in the determination. If the property is rendered unserviceable by damage, the property shall be properly disposed of, and the determination shall refer to the documents evidencing disposal.
Section 4107, PROPERTY CONTROL SYSTEMS, is amended to read as follows:
4107 PROPERTY CONTROL SYSTEMS
4107.1 The contractor shall establish and maintain a system to record, control, protect, preserve, and maintain all District property. The system shall be reviewed and approved by the contracting officer before District property is provided or made available to the contractor. If the contracting officer finds any portion of the contractor’s property control system to be inadequate, the contractor shall be required to take any necessary corrective action before the system can be approved.
4107.2 The property control system, and implementation of the property control system, may be reviewed at any time during the period of the contract by the contracting officer.
4107.3 If the contracting officer finds any portion of the contractor’s property control system, or implementation of its property control system, to be inadequate, the contractor shall be required to take any necessary corrective action ordered by the contracting officer and the contracting officer may suspend the contractor’s authority to use District property until the corrective action is taken.
4107.4 If District property is found to be in the possession or control of the contractor, although not provided under any contract, the contractor shall promptly record the property and furnish to the contracting officer all known circumstances and data pertaining to its receipt and a statement about whether it is needed for the performance of the contract.
4107.5 If unrecorded District property is found in the possession or control of the contractor, both the cause of the discrepancy and actions taken or needed to prevent recurrence shall be determined and reported to the contracting officer.
4107.6 The contractor shall promptly report to the contracting officer all District property it receives in excess of the amounts needed to complete full performance under the contracts providing it or authorizing its use.
4107.7 The contractor shall furnish written receipts for all or specified classes of District property only when the contracting officer deems it essential for maintaining acceptable property controls.
4107.8 If overages, shortages, or damages are discovered upon receipt of District property, the contractor shall provide a statement of the condition and apparent causes to the contracting officer. Only the quantity of property actually received shall be recorded on the official records.
Section 4109, CONTRACTOR LIABILITY FOR DISTRICT PROPERTY, is amended to read as follows:
4109 CONTRACTOR LIABILITY FOR DISTRICT PROPERTY
4109.1 Contractors shall be responsible and liable for District property in their possession, unless otherwise specified in the contract.
4109.2 When the District provides District property directly to a subcontractor, the provisions of this section shall apply to the subcontractor.
4109.3 Subcontractors shall be liable for loss of or damage to District property furnished through the prime contractor.
4109.4 A prime contractor that provides District property to a subcontractor shall not be relieved of any responsibility to the District that the prime contractor may have under the terms of the prime contract.
4109.5 Subject to the terms of the contract and the circumstances surrounding the particular case, the contractor shall be liable for shortages, loss, damages, or destruction of District property. The contractor shall also be liable when the use or consumption of District property unreasonably exceeds the allowances provided for by the contract.
4109.6 The contractor shall investigate and report to the contracting officer all cases of loss, damage, or destruction of District property in its possession or control as soon as the facts become known, or when requested by the contracting officer. A report shall also be furnished when completed and accepted products or end items are lost, damaged, or destroyed while in the contractor’s possession or control.
4109.7 The contractor shall require any of its subcontractors possessing or controlling District property accountable under the contract to investigate and report to the contractor all instances of loss, damage, or destruction of District property.
Section 4110, DISTRICT RECORDS: GENERAL PROVISIONS, is amended to read as follows:
4110 DISTRICT RECORDS: GENERAL PROVISIONS
4110.1 The contractor’s property control records shall constitute the District’s official property records unless an exception has been authorized by the contracting officer.
4110.2 The contractor shall establish and maintain adequate control records for all District property, including property provided to, and in the possession or control of, a subcontractor.
4110.3 The property control records specified in §§ 4110 and 4111 of this chapter shall be the minimum required by the District. The contracting officer may impose additional requirements as appropriate.
4110.4 Unless the contracting officer directs otherwise, if a subcontractor has an approved property control system for District property provided under its own prime contracts, the contractor shall use the records created and maintained under that system as the property control records for District property controlled by the subcontractor.
4110.5 The contractor’s property control system shall provide financial accounts for District property in the contractor’s possession or control.
4110.6 The property control system shall be subject to internal control standards and shall be supported by property records for all property.
4110.7 The records shall be safeguarded from tampering or destruction.
4110.8 The contractor shall make the property control records available to the contracting officer and to other authorized District personnel promptly after a request from the contracting officer or other authorized District personnel.
4110.9 The contractor shall maintain separate property records for each contract. However, the contractor may maintain a consolidated property record if it provides the required information and is specifically authorized by the contracting officer.
4110.10 The contractor’s property control system shall contain a system or technique to locate any item of District property within a reasonable period of time.
Section 4111, CONTENTS OF PROPERTY CONTROL RECORDS, is amended to read as follows:
4111 CONTENTS OF PROPERTY CONTROL RECORDS
4111.1 Official District property records shall identify all District property and provide a complete, current, auditable record of all transactions.
4111.2 The contractor’s property control records shall provide the following basic information for every item of District property in the contractor’s possession regardless of value:
(a) The name, description, and commodity code;
(b) Quantity received, issued, and on hand;
(c) Unit price;
(d) Contract number;
(e) Location;
(f) Disposition; and
(g) Posting reference and date of transaction.
Section 4113, CARE, MAINTENANCE, AND USE OF DISTRICT PROPERTY, is amended to read as follows:
4113 CARE, MAINTENANCE, AND USE OF DISTRICT PROPERTY
4113.1 The contractor shall be responsible for the proper care, maintenance, and use of District property in its possession or control from the time of receipt until properly relieved of responsibility, in accordance with sound industrial practice and the terms of the contract and this chapter.
4113.2 The removal of District property to storage, or its contemplated transfer, shall not relieve the contractor of the responsibilities set forth in this chapter.
4113.3 The contractor shall be responsible for a preventive maintenance program which includes the following:
(a) Inspection of buildings at periodic intervals to ensure detection of deterioration and the need for repairs;
(b) Inspection of equipment at periodic intervals to ensure detection of maladjustment, wear, or impending breakdown;
(c) Regular lubrication of bearings and moving parts in accordance with a lubrication plan;
(d) Adjustments for wear, repair, or replacement of worn or damaged parts and the elimination of causes of deterioration;
(e) Removal of sludge, chips, and cutting oils from equipment that will not be used for a period of time; and
(f) Taking necessary precautions to prevent deterioration caused by contamination, corrosion, and other substances.
4113.4 The contractor’s maintenance program shall provide for disclosing and reporting to the contracting officer the need for major repair, replacement, and other capital rehabilitation work for District property in its possession or control.
4113.5 The contractor shall keep records of maintenance actions performed and any deficiencies in District property discovered as a result of inspections.
Section 4114, PROPERTY USE PROCEDURES, is amended to read as follows:
4114 PROPERTY USE PROCEDURES
4114.1 The contractor shall establish written procedures to ensure that District property will be used only for those purposes authorized in the contract and that required approvals are obtained. The contractor’s written procedures shall include;
(a) Establishment of a minimum level of use below which an analysis of need shall be made and retention justified;
(b) Provision for recording authorized and actual use consistent with the established use levels;
(c) A requirement for periodic analyses of needs for District property utilization based upon known requirements; and
(d) Provision for prompt reporting to the contracting officer of all property for which retention is not justified.
4114.2 The contractor’s property control records shall provide a basis for determining and allocating rental charges.
4114.3 The contractor’s or subcontractor’s authority to purchase, retain, or dispose of contractor inventory of District property shall be subject to the contract provisions and to any District restrictions on the disposition of property that is hazardous to public health, safety, or welfare.
Section 4199, DEFINITIONS, is amended to read as follows:
4199 DEFINITIONS
4199.1 When used in this chapter, the following terms and phrases shall have the meanings ascribed:
District property - all property owned by or leased to the District or acquired by the District under the terms of the contract, including property in the possession of or directly acquired by the District and subsequently made available to the contractor.
District supply sources - sources available to the District from which the contractor or subcontractor may obtain supplies for use in certain contracts.
Facilities - property used for production, maintenance, research, development, or testing. The term “facilities” includes personal property of a capital nature (including equipment, machine tools, test equipment, furniture, vehicles, and accessory and auxiliary items) for use in manufacturing goods, in performing services, or for any administrative or general plant purpose, and real property (land and rights in land, ground improvements, utility distribution systems, and buildings and other structures), but does not include material.
Material - property that may be incorporated into or attached to a deliverable end item or that may be consumed or expended in performing a contract. The term includes assemblies, components, parts, raw and processed materials, and small tools and goods that may be consumed in normal use in performing a contract.
Preventive maintenance - maintenance performed on a regularly scheduled basis to prevent the occurrence of defects and to detect and correct minor defects before they result in serious consequences.
Property - all property, both real and personal, including facilities and material.
