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Federal Register / Vol. 86, No. 129 / Friday, July 9, 2021 / Rules and Regulations will contain the proposed DFARS
clauses.
2. Paperwork Reduction Act Constraints Comment: One respondent stated that the rule conflicts with Paperwork Reduction Act constraints on rulemaking, namely that the rule must:
1 Be necessary for the proper performance of the agency; 2 not be duplicative of information otherwise reasonably accessible to the agency; and 3 reduce, to the extent practicable and appropriate, the burden on persons who shall provide information to or for the agency.
Response: The rule complies with the Paperwork Reduction Act. The information collection is necessary in order for DoD to meet the requirement of 10 U.S.C. 2330a, as amended, to collect certain service contract data and report annually to Congress. The rule is not duplicative of information otherwise reasonably accessible to DoD. DoD
systems do not currently collect all of the data elements required by the statute.
The information collection requirement has been narrowly tailored to minimize the impact of reporting and maximize the use of existing records already maintained by contractors and by the Government. To minimize the impact, the information will be collected electronically, help-desk support will be provided to users, and reporting requirements will be limited to a small number of data elements.

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3. Burden Estimates Comment: Two respondents commented that the rule underestimates the number of contractors that will be impacted. One respondent indicated that the total estimated number of respondents of 13,269, including 7,962
for small businesses, seems low, since the GSA Schedules alone have 20,000
contractors and 80% of the contractors are small businesses. One respondent stated that the estimate for the total number of annual responses of approximately 54,000 appears low. In addition, several respondents commented that the estimate of an average of 1.4 hours per response is too low, citing reasons such as: 1 The billions of dollars in services for which DoD contracts for annually and the corresponding volume of data required to be entered, 2 the limitation of the ECMRA bulk upload capability, or 3
the impact on response time resulting from the flow down of the reporting requirement to subcontractors. One respondent stated that the burden is disproportionally high for small
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businesses that are less likely to have the necessary internal infrastructure.
Response: The estimated burdens for respondents and responses published in the previously proposed rule have been updated to reflect the revised requirements of 10 U.S.C. 2330a, as amended.
As a result, this final rule amends the DFARS to require contractors to annually report certain data on applicable contracts in order to meet the data requirements of the statute and DoDs total workforce management efforts. Three respondents submitted public comments in response to this second proposed rule.
II. Discussion and Analysis DoD reviewed the public comments in the development of the final rule. A
discussion of the comments and the changes made to the rule as a result of those comments is provided, as follows:
A. Summary of Significant Changes From the Proposed Rule No significant changes were made to the rule as a result of public comments.
Minor changes were made to clarify the intent of the rule in regard to the requirement to report subcontract data.
Public comments requested clarification on whether the rule required contractors to report direct labor hours and costs for all subcontracts that support the contract or just those subcontracts awarded to directly perform services under the contract, otherwise referred to as first-tier subcontracts under the similar service contract inventory reporting requirements at Federal Acquisition Regulation FAR 4.17. The intent of the rule is to require contractors to report the direct labor hours only for subcontracts the contractor directly awarded for the purpose of acquiring services for performance of the prime contract, similar to the subcontract reporting requirement at FAR 4.17. As a result, the term first-tier was added as a modifier to the definition of subcontract and a definition of firsttier subcontract was added to section 204.1701 and DFARS clause 252.204
7023, Reporting Requirements for Contracted Services, and its alternate I.
B. Analysis of Public Comments A discussion of the comments is provided as follows:
a. General Support Comment: Two respondents expressed general support for the rule.
Response: DoD acknowledges support for the rule.

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b. Exemptions to Rule Comment: Two respondents recommended that commercial service contracts be exempt from the rule, as companies providing commercial services may not have a system to track labor hours by contract and/or by subcontractor and may need to implement a new system to comply with the rule. Alternately, a respondent recommended that specific contracts or certain types of commercial contracts be exempt from the reporting requirements for the rule.
Response: The statute requires DoD to collect data on specific service purchases in excess of $3 million, regardless of contract type, and does not provide for exemptions to the reporting requirement. As a result, the rule applies to all contracts that meet the criteria at 10 U.S.C. 2330aa and does not provide for exemptions.
c. Usefulness of Data Comment: A respondent advised that the rule weakens the utility of service contract inventories by limiting them to staff augmentation contracts and contracts closely associated with inherently governmental functions, and preventing the adoption of the Enterprise-wide Contractor Manpower Reporting Application ECMRA.
Response: The rule implements the statute and supports DoD total workforce management efforts by requiring reporting on contracts valued in excess of $3 million for logistics management services, equipmentrelated services, knowledge-based services, or electronics and communications services. The rule does not further limit the reporting requirement to only those contracts that are also staff augmentation contracts or contracts for services closely associated with inherently governmental functions.
The rule also incorporates the policy of Secretary of Defense Memorandum, Revised Department of Defense Contractor Manpower Reporting Initiative, dated October 16, 2019, jointly signed by the Under Secretary of Defense USD for Acquisition and Sustainment and Acting USD for Personnel and Readiness. The memo requires reporting of manpower data relating to the performance of services be done in the System for Award Management SAM, instead of ECMRA, in order to be consistent with the existing service contract reporting requirements of the FAR.
Comment: A respondent expressed concern that the rule only requires reporting on the aggregate labor hours performed under the contract annually
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