DoD Issues Final DFARS Rule on Service Contract Annual Reporting Requirements

Earlier today, on July 9, 2021, the U.S. Department of Defense (DoD) issued a final rule that requires service contractors to report annually certain data regarding contracts or tasks orders over $3 million that are for logistics management services, equipment-related services, knowledge-based services, or electronics and communications services.

By way of background, section 807 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2008 required DoD to establish a data collection system to provide certain data on the purchasing of services by DoD and to submit to Congress an annual inventory of services contracts awarded by or on behalf of DoD.  To accomplish this, in June 2014, DoD first proposed a service contractor data collection rule that required contractors to enter data into a system that was unique to DoD - the Enterprise Contractor Manpower Reporting Application (ECMRA).  Although that rule was never finalized, in the current iteration of the data reporting requirement that has become final, service contractors are required to instead enter certain service contract data in the System for Award Management (SAM) and DoD will access information using the Federal Procurement Data System (FPDS).

In particular, under the final rule, when a contract or task order exceeds $3 million (including options) and is for services in any of the four service acquisition categories described above, contractors are required to report annually in SAM by October 31 the following information with regard to services performed under the contract or order, including services provided under any first-tier contracts:

• The total dollar amount invoiced for services performed during the preceding government fiscal year under the contract or order; and
• The number of contractor direct labor hours, including first-tier subcontractor direct labor hours, expended on the services performed under the contract or order during the previous government fiscal year.

The final rule, which becomes immediately effective, does not apply to contracts at or below the simplified acquisition threshold (SAT) or for commercially available off-the-shelf items (COTS) items, but does apply to contracts for the acquisition of commercial items.  To read or obtain a copy of the final rule go here.

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