0694.0053.SupptngStmt.060410

SUPPORTING STATEMENT
U.S. Department of Commerce
Bureau of Industry and Security
Defense Priorities and Allocations System
OMB Control No. 0694-0053

A. Justification
1. Explain the circumstances that make the collection of information necessary.
Under Title I of the Defense Production Act of 1950, as amended (50 U.S.C. App. 2061, et seq.)
(DPA), the President is given authority to require priority performance of contracts and orders
and to allocate materials, services, and facilities, to promote the national defense. Similar
priorities authority is found in Section 18 of the Selective Service Act of 1948 (50 U.S.C. App.
468). This authority is used to ensure the timely delivery of products, materials, and services to
meet current national defense requirements. The definition of “national defense” in Section
702(14) of the DPA provides that this term includes “emergency preparedness activities”
conducted pursuant to Title VI of the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (Stafford Act) (42 U.S.C. 5195a(b)) and “critical infrastructure protection and
restoration.”
Section 704 of the DPA authorizes the President to make such regulations and issue such orders
as the President determines to be appropriate to carry out the provisions of the Act. Section 705
of the DPA authorizes the President to obtain information by regulation, subpoena, or otherwise
as may be necessary or appropriate to the enforcement or administration of the Act and
implementing regulations. The DPA also provides for criminal sanctions and certain civil
remedies.
Under Section 201 of Executive Order 12919 (“National Defense Industrial Resources
Preparedness”), this authority has been delegated by the President to the Secretary of Commerce
for industrial resources. Within the Department of Commerce (DOC) this authority is
administered by the Office of Strategic Industries and Economic Security (SIES), Bureau of
Industry and Security (BIS) through the Defense Priorities and Allocations System (DPAS)
regulation (15 CFR 700) for approved national defense programs.
Under Section 202 of Executive Order 12919, three Secretaries are delegated the authority to
make the determination that a program is necessary or appropriate to promote the national
defense: the Secretary of Defense with respect to military production and construction, military
assistance to foreign nations, stockpiling, outer space, and directly related activities; the
Secretary of Energy with respect to energy production and construction, distribution, and use,
and directly related activities; and the Secretary of Homeland Security with respect to essential
civilian needs supporting national defense, including civil defense, continuity of government,
and directly related activities. These authorities have been re-delegated within their respected
departments.

DOC has re-delegated its authority to the following agencies to place, in accordance with the
DPAS regulation, priority ratings on contracts or orders (DO and DX) necessary or appropriate
to promote the national defense: the Department of Defense (DOD) in support of DOD programs
determined by DOD as necessary or appropriate to support the national defense; the Department
of Energy (DOE) in support of DOE programs determined by DOE as necessary or appropriate
to maximize domestic energy supplies; the General Services Administration (GSA) in support of
its general supply system for programs approved by the Secretaries of Defense, Energy, and
Homeland Security; and the Department of Homeland Security (DHS) in support of (i) DHS and
(ii) state, local, and tribal government programs determined by DHS as necessary or appropriate
to promote the national defense. In addition, DHS may endorse and forward to DOC for
appropriate action the requests of other U.S. agencies, and owners and operators of critical
infrastructure to place rated orders in support of programs determined by DHS as necessary or
appropriate to promote the national defense.
DOD and its industrial suppliers are the largest users of the DPAS, which is a standard clause in
most DOD contracts and purchase orders (estimated at over 300,000 rated-contracts annually).
In addition, other federal agencies, foreign governments, and international organizations are
often approved to place priority ratings on contracts or orders, in accordance with the DPAS on a
case by case basis.
The DPA was originally enacted to support our mobilization efforts for the Korean War, based
on our World War II experience. Realizing that we must maintain a national defense
preparedness and military readiness capability to cope with any future emergency, Congress
extended the DPA in 1953 and has repeatedly extended it on average every 2-4 years since that
time.
The goals of the DPAS are to (1) assure the timely availability of industrial resources to meet
current national defense requirements and, (2) provide a regulatory framework for rapid
industrial response in case of national emergency. In pursuing these goals, SIES attempts to
minimize disruptions to normal commercial activities. The DPAS facilitates defense
procurement throughout the entire chain of industrial supply, from prime contractor to the lowest
tier supplier of raw materials.
Because the DPAS is a regulatory system, provisions are included to ensure that transactions
under the regulation can be audited to determine compliance with it, and for criminal and civil
enforcement purposes. To facilitate this audit process, every person subject to the regulation is
required to retain records of such transactions for at least three years, and to produce these
records for inspection on demand, pursuant to the regulation. This requirement also puts these
persons on notice that certain business records must be retained and made available for audit
purposes.
To ensure the system=s effective and efficient operation, as well as to ensure compliance with its
requirements, several customer notification requirement provisions are also included. Two such
provisions are provided in section 700.13(d) as follows:

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Section 700.13(d)(1) requires that a person receiving a defense rated contract or purchase
order must notify the customer of acceptance or rejection of the order in writing within
fifteen (15) working days after receipt of a lower priority rated (ADO@) order or within ten
(10) working days for a higher priority rated (ADX@) order. Orders may be accepted
either in writing or electronically. If the order is rejected, the person must give the
customer the reasons for the rejection in writing.
Section 700.13(d)(2) requires that if a person has accepted a defense rated order and
subsequently finds that deliveries to the customer against the order will be delayed, the
person must notify the customer immediately, give the reasons for the delay, and advise
of the new shipment date. If the notification is given verbally, written or electronic
notification must be provided within five (5) working days.

2. Explain how, by whom, how frequently, and for what purpose the information will be
used. If the information collected will be disseminated to the public or used to support
information that will be disseminated to the public, then explain how the collection
complies with all applicable Information Quality Guidelines.
The record keeping requirement is necessary to support the administration and enforcement of
the DPAS regulation. It assures the availability of records for at least 3 years of transactions that
are directly related to the placement of contracts or purchase orders under the DPAS by
contractors with suppliers to acquire items (materials, products, and services) needed to fill
defense orders. Such records would include administrative, accounting, purchasing, scheduling,
production, and shipping records, the receipt and acceptance or rejection of contractors' orders by
suppliers, and any other relevant and material record to evidence the timely production and
delivery of items. The requirement implements the Section 705 authority of the DPA (see #1
above).
The requirement to retain records for at least 3 years generally imposes no additional burden on a
person as most business entities maintain records of transactions for at least three years both for
internal operations, management, and audit purposes as well as in response to the requirements
of other government agencies such as the Internal Revenue Service. However, we are unable to
specifically reference any business record keeping requirements imposed by other agencies.
The customer notification requirements are also necessary to support the administration of, and
compliance with, the DPAS, and to promote its effectiveness and efficiency. Because timeliness
of supplier performance is a basic element of the DPAS, these requirements assure that the
customer will receive notification that the supplier has in fact received the customer=s defense
rated contract and will begin performance against the order as required. Likewise, if the order is
rejected, the customer will be able to take prompt action to either seek another supplier or work
with the supplier to overcome the rejection. If the rejection can not be resolved and there is no
alternate source of supply, the customer can seek Government special priorities assistance as
provided in the DPAS.

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These customer notification requirements, especially in view of the widespread use of electronic
communications, generally imposes very little additional burden on suppliers as defense rated
orders are rarely rejected and most suppliers in the ordinary course of their business will notify
their customers of late delivery, especially when on-time delivery is Aof the essence@.
The Section 515 Information Quality Guidelines apply to this information collection and comply
with all applicable information quality guidelines, i.e., OMB, Department of Commerce, and
specific operating unit guidelines.

3. Describe whether, and to what extent, the collection of information involves the use of
automated, electronic, mechanical, or other technological techniques or other forms of
information technology.
The records required to be maintained by the DPAS regulation are generally identical to the
records usually established and maintained in the ordinary course of a person's business, both for
internal operation, management, and audit purposes and to respond to the record keeping
requirements of other government agencies such as the Internal Revenue Service. Therefore,
there is generally no additional record keeping burden imposed by the DPAS regulation. As
most persons now have computerized access to records, the record keeping burden is further
minimized.
Except for supplier rejection of a rated order, electronic customer notification is specifically
authorized in the DPAS. This is because given the consequences and implications of rated order
rejection, it is important that such notification be provided directly in writing by a responsible
company official and not by automatic electronic response. Since very few rated orders are
rejected and since most persons (including small business entities) use computers and electronic
communications (e.g., e-mail) in the ordinary course of their business, the burden imposed by
customer notification under the DPAS is minimal.

4. Describe efforts to identify duplication.
Each defense rated order is unique as to item, quantity, date, contractor, subcontractor, and
supplier. For audit purposes, there is no other source of records available. Also, the customer
notification requirements associated with acceptance, rejection or performance against these
orders are also unique and there is no other available source of this information.

5. If the collection of information involves small businesses or other small entities, describe
the methods used to minimize burden.
This collection does not impact small businesses.

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6. Describe the consequences to the Federal program or policy activities if the collection is
not conducted or is conducted less frequently.
Without the record keeping and customer notification requirements, the ability to successfully
administer the DPAS, ensure compliance with its provisions, and ensure its effectiveness and
efficiency in meeting its stated goals, would be greatly diminished with a substantial negative
impact on industry usage of the DPAS and compliance with its provisions at all levels.

7. Explain any special circumstances that require the collection to be conducted in a
manner inconsistent with OMB guidelines.
The DPAS customer notification requirement is also triggered by a person's receipt of a rated
order or when it becomes known that the person will be unable to meet the required delivery date
or dates set forth in the rated order. A copy of the customer notification is not sent to the
Government. This written notification may be required less than 30 days after receipt of an order
or when it is known that an order delivery date(s) cannot be met.

8. Provide a copy of the PRA Federal Register notice that solicited public comments on the
information collection prior to this submission. Summarize the public comments received
in response to that notice and describe the actions taken by the agency in response to those
comments. Describe the efforts to consult with persons outside the agency to obtain their
views on the availability of data, frequency of collection, the clarity of instructions and
recordkeeping, disclosure, or reporting format (if any), and on the data elements to be
recorded, disclosed, or reported.
The notice requesting public comment was published in the Federal Register on March 15, 2010,
pp. 12173-12174. No comments were received.
9. Explain any decisions to provide payments or gifts to respondents, other than
remuneration of contractors or grantees.
There is no decision to provide any payment or gift to respondents.

10. Describe any assurance of confidentiality provided to respondents and the basis for
assurance in statute, regulation, or agency policy.
Confidentiality of any information obtained during an audit is safeguarded under Section 705(d)
of the DPA (50 U.S.C. App. 2155).
This section provides a criminal penalty for any person who willfully publishes or discloses
information collected under the authority of the Act which is deemed confidential or with
reference to which a request for confidential treatment is made by the person furnishing the
information.

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11. Provide additional justification for any questions of a sensitive nature, such as sexual
behavior and attitudes, religious beliefs, and other matters that are commonly considered
private.
There are no questions of a sensitive nature.

12. Provide an estimate in hours of the burden of the collection of information.
BURDEN HOURS -- The number of defense rated orders continuously varies and it is not
possible to estimate the quantity of such orders received and in process throughout the U.S.
defense industrial base during a particular time period. However, it has been roughly and
conservatively estimated by the Department of Defense that there are at least 700,000 defense
rated orders received by a respondent universe of at least 18,000 entities in any one year
(including an estimated 300,000 prime contracts and 400,000 subcontracts and purchase orders).
Although the record keeping burden imposed by the regulations is minimal, if we assume that
each entity spends one additional minute to establish and maintain a special record for each
defense rated order received, a total annual burden of 11,667 hours is suggested for this record
keeping activity.
Every rated order received must be accepted or rejected as required by the DPAS. Thus, if we
assume that of the total number of defense rated orders received (700,000), approximately .05%
or 350 are rejected with 699,650 accepted and, if each entity spends up to 5 seconds to accept the
order and up to 15 minutes to reject the order, a total hourly annual burden of approximately
1,060 hours is suggested for this acceptance or rejection activity.
Furthermore, if we also assume that of the total number of rated orders received, deliveries on
1% or 7,000 of these orders will be delayed and will require that the customer be notified, and
each entity spends up to 15 minutes to prepare and send the notification, a total hourly annual
burden of 1,750 hours is suggested for this notification activity.
It should be noted that many respondents (primarily smaller entities) receive only a few defense
rated orders while defense rated orders may be the principal business, or the only business, for
other respondents. In addition, most entities, including small entities, have access to
computerized record keeping and electronic communication and would use this capability to
maintain records in the ordinary course of business and to communicate acceptance of an order
or to notify the customer of delayed delivery.
The following exhibit summarizes the burden hours:
700,000 create order record x 1 minute =
699,650 orders x 5 seconds =
350 orders x 15 minutes =
7,000 orders x 15 minutes =

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11,667.0 hrs
972.0 hrs
87.5 hrs
1,750.0 hrs
14,476.5 hrs

Rounded to the nearest whole hour, the estimated total annual public burden is 14,477 hours.
ANNUALIZED COST TO RESPONDENTS
Record Keeping -- The annual record keeping cost to the public is $233,340. This is based on
the annual receipt of 700,000 rated orders by the respondent universe at one minute of extra time
per respondent to make a record of such receipt x $20.00/hour. Please note that this expense
amounts to only 33 cents per order.
Customer Notification -- The annual customer notification cost to the public is $56,190. This is
based on 699,650 accepted rated orders at 5 seconds per response x $20.00/hr; 350 rejected
orders at 15 minutes per response x $20.00/hr; and 7,000 delivery delay notifications at 15
minutes per response x $20.00/hr:
699,650 orders x 5 seconds =
350 orders x 15 minutes =
7,000 orders x 15 minutes =

972.0 hrs
87.5 hrs
1,750.0 hrs
2,809.5 hrs

2,810 hours x $20.00/hr = $56,200
Total annualized cost to respondents of the burden imposed by the DPAS record keeping and
customer notification requirements is $289,540.

13. Provide an estimate of the total annual cost burden to the respondents or recordkeepers resulting from the collection (excluding the value of the burden hours in
Question 12 above).
Not Applicable.

14. Provide estimates of annualized cost to the Federal government.
There is no cost to the Federal Government associated with the record keeping requirement.

15. Explain the reasons for any program changes or adjustments.
There are two adjustments associated with this submission: (1) an increase in the number of
responses has doubled (707,000 to 1,407,000) as a result of dividing the single IC into multiple
IC’s which will account for the issuance and response to a single defense rated order as two
responses; and (2) a decrease in the cost burden (-$290,000) to remove the labor cost mistakenly
recorded in the previous submission.

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16. For collections whose results will be published, outline the plans for tabulation and
publication.
Not Applicable.

17. If seeking approval to not display the expiration date for OMB approval of the
information collection, explain the reasons why display would be inappropriate.
Not Applicable.

18. Explain each exception to the certification statement.
Not Applicable.

B. COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS
Not Applicable.

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