The DoD is the Critical Early Adopter
RFID Law Journal
Newsletter No. 1
August 31, 2006
While the RFID industry has spilled plenty of ink talking up Wal-Mart’s “Next 300,” the Department of Defense (the "DoD") has been methodically rolling out its RFID tagging requirements. Suppliers beware. The applicable DoD regulations contain teeth that will impact tens of thousands of manufacturers over the coming 12-18 months. Compliance failures can jeopardize a manufacturer’s DoD revenue stream, and as such, RFID could easily become a 4-letter word for an organization that ignores the warning signs and fails to develop a concrete plan for addressing the DoD’s passive RFID requirements.
The Department of Defense is in the midst of the single largest transformation in the way it conducts business in its history. The DoD views the automation of its supply chain as a competitive advantage (i.e., an “offensive” weapon) essential to the successful implementation of its Agile Warfighter Initiative. Following the First Gulf War, the DoD started an ambitious RFID deployment initiative viewed as necessary to improve the efficiency of its supply chain. Over the past decade, the DoD has endeavored to bring the factory to the foxhole by deploying active RFID systems throughout its 16,000 mile supply chain, including tagging outbound items at critical choke points, tracking actively tagged ship containers with GPS tracking systems, and linking to U.S. soldiers in the field equipped with mobile RFID systems.
In July, 2004, the DoD undertook the next logical step, announcing its final policy statement requiring its suppliers to tag their pallets and cases with passive RFID tags. Mandatory deployment of passive RFID tags by suppliers represents the final mile in the DoD's effort to link the factory to the foxhole. Under DFAR 252.211-7006 (RFID), the DoD mandated that effective as of November 14, 2005, its suppliers shipping specified classes of goods into its two largest U.S. depots (Susquehanna, Pennsylvania and San Joaquin, California) would be required to use passive RFID tags at the pallet and case level. Vendor compliance with this requirement is measured, and non-compliance may affect vendor invoices and scorecards. There is a limited opportunity to obtain (partial) cost reimbursement (e.g., for installing a RFID system), but the DoD is expected to phase out reimbursement eligibility in 2008.
In May, 2006, the DoD announced an interim rule that substantially expands the RFID tagging requirement – significantly increasing the classes of affected goods and depots. Indeed, at about the same time, the DoD awarded a sizeable contract to wire all of its CONUS (Continental United States) DLA depots for RFID by the end of 2006. As a result, RFID could be affecting tens of thousands of suppliers by the end of 2006.
This RFID mandate is intertwined with another significant initiative – the rollout of the Wide Area Workflow (WAWF). In deploying, promoting and (ultimately mandating the use of the WAWF), the DoD is, in effect, transitioning its suppliers from a paper invoice system to an electronic invoice system. In April, 2005, the WAWF added the RFID tag identification as an additional data element in the Material Inspection Receiving Report, meaning that suppliers who are required to affix passive RFID tags to materials must also send an Advance Ship Notice (ASN) via the WAWF. Coupled together, the WAWF and RFID requirements are expected to provide the backbone for an electronic supply chain enabling improved insight into the DoD’s assets and increased visibility of materials in its supply chain. A paperless invoice system is not far away.
As a result of these initiatives, DoD commercial suppliers will face significant pressure to meet WAWF and RFID requirements. At this point, suppliers asking for exemptions from RFID requirements will likely be placing themselves at a distinct competitive disadvantage vis-à-vis other bidders. As the DoD moves the adoption cycle toward a significant inflection point, it is imperative that DoD suppliers equip themselves with the expertise to understand the requirements and develop and implement a plan for satisfying these mandates.
A number of resources are linked for your educational benefit. To read the existing RFID mandate regulations and the interim rule:
www.acq.osd.mil/dpap/dars/dfars/html/current/211_2.htm#211.275-2.
www.acq.osd.mil/dpap/dars/dfars/html/current/211_3.htm#211.275-3.
www.acq.osd.mil/dpap/dars/dfars/html/current/252211.htm#252.211-7006. www.acq.osd.mil/log/rfid/DFARS.htm.
The DoD provides a number of educational resources to its suppliers.
RFID Policy: www.acq.osd.mil/log/rfid/rfid_policy.htm.
RFID Supplier Guide: www.acq.osd.mil/log/rfid/supplierguide.htm.
Regulatory Flexibility Analysis: www.acq.osd.mil/log/rfid/regflex.htm.
The DoD is sponsoring workshops for their suppliers. Additionally, 93 Procurement Technical Assistance Centers sponsor compliance workshops. You can learn more from your local PTAC: http://www.dla.mil/db/.
The Wide Area Workflow is an essential component of the paperless supply chain. Companies shipping significant volumes need to address WAWF issues now, as the DoD is entering the late stage of transitioning suppliers to this electronic payment system. Additionally, without an automated solution for RFID and WAWF, DoD suppliers will likely face increased clerical costs to meet the ASN requirements (i.e., manual entry into WAWF in conjunction with RFID shipments). You can learn more about the interaction between these requirements at www.acq.osd.mil/log/rfid/advance_shipment_ntc.htm.
The WAWF link is https://wawf.eb.mil/.
An important, related auto ID technology is Unique Identification. The U.S. federal government has mandated the use of UID to enable better tracking of its assets. RFID Law Journal will cover these requirements in future supplements, but you can learn more at http://www.uniqueid.org/.
© 2006 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID Law issues at http://www.rfidlawjournal.com or contact us at the RFID Law Journal by writing to our Editor: editor@RFIDLawJournal.com. The information provided herein is for your informational purposes only and is not to be construed as legal or other advice or as a substitute for legal counsel or other appropriate advice. Online readers should not act upon this information without seeking professional counsel from a trusted advisor. Usage of this material is subject to the terms and conditions set forth at www.rfidlawjournal.com.
RFID Law Journal
Newsletter No. 1
August 31, 2006
While the RFID industry has spilled plenty of ink talking up Wal-Mart’s “Next 300,” the Department of Defense (the "DoD") has been methodically rolling out its RFID tagging requirements. Suppliers beware. The applicable DoD regulations contain teeth that will impact tens of thousands of manufacturers over the coming 12-18 months. Compliance failures can jeopardize a manufacturer’s DoD revenue stream, and as such, RFID could easily become a 4-letter word for an organization that ignores the warning signs and fails to develop a concrete plan for addressing the DoD’s passive RFID requirements.
The Department of Defense is in the midst of the single largest transformation in the way it conducts business in its history. The DoD views the automation of its supply chain as a competitive advantage (i.e., an “offensive” weapon) essential to the successful implementation of its Agile Warfighter Initiative. Following the First Gulf War, the DoD started an ambitious RFID deployment initiative viewed as necessary to improve the efficiency of its supply chain. Over the past decade, the DoD has endeavored to bring the factory to the foxhole by deploying active RFID systems throughout its 16,000 mile supply chain, including tagging outbound items at critical choke points, tracking actively tagged ship containers with GPS tracking systems, and linking to U.S. soldiers in the field equipped with mobile RFID systems.
In July, 2004, the DoD undertook the next logical step, announcing its final policy statement requiring its suppliers to tag their pallets and cases with passive RFID tags. Mandatory deployment of passive RFID tags by suppliers represents the final mile in the DoD's effort to link the factory to the foxhole. Under DFAR 252.211-7006 (RFID), the DoD mandated that effective as of November 14, 2005, its suppliers shipping specified classes of goods into its two largest U.S. depots (Susquehanna, Pennsylvania and San Joaquin, California) would be required to use passive RFID tags at the pallet and case level. Vendor compliance with this requirement is measured, and non-compliance may affect vendor invoices and scorecards. There is a limited opportunity to obtain (partial) cost reimbursement (e.g., for installing a RFID system), but the DoD is expected to phase out reimbursement eligibility in 2008.
In May, 2006, the DoD announced an interim rule that substantially expands the RFID tagging requirement – significantly increasing the classes of affected goods and depots. Indeed, at about the same time, the DoD awarded a sizeable contract to wire all of its CONUS (Continental United States) DLA depots for RFID by the end of 2006. As a result, RFID could be affecting tens of thousands of suppliers by the end of 2006.
This RFID mandate is intertwined with another significant initiative – the rollout of the Wide Area Workflow (WAWF). In deploying, promoting and (ultimately mandating the use of the WAWF), the DoD is, in effect, transitioning its suppliers from a paper invoice system to an electronic invoice system. In April, 2005, the WAWF added the RFID tag identification as an additional data element in the Material Inspection Receiving Report, meaning that suppliers who are required to affix passive RFID tags to materials must also send an Advance Ship Notice (ASN) via the WAWF. Coupled together, the WAWF and RFID requirements are expected to provide the backbone for an electronic supply chain enabling improved insight into the DoD’s assets and increased visibility of materials in its supply chain. A paperless invoice system is not far away.
As a result of these initiatives, DoD commercial suppliers will face significant pressure to meet WAWF and RFID requirements. At this point, suppliers asking for exemptions from RFID requirements will likely be placing themselves at a distinct competitive disadvantage vis-à-vis other bidders. As the DoD moves the adoption cycle toward a significant inflection point, it is imperative that DoD suppliers equip themselves with the expertise to understand the requirements and develop and implement a plan for satisfying these mandates.
A number of resources are linked for your educational benefit. To read the existing RFID mandate regulations and the interim rule:
www.acq.osd.mil/dpap/dars/dfars/html/current/211_2.htm#211.275-2.
www.acq.osd.mil/dpap/dars/dfars/html/current/211_3.htm#211.275-3.
www.acq.osd.mil/dpap/dars/dfars/html/current/252211.htm#252.211-7006. www.acq.osd.mil/log/rfid/DFARS.htm.
The DoD provides a number of educational resources to its suppliers.
RFID Policy: www.acq.osd.mil/log/rfid/rfid_policy.htm.
RFID Supplier Guide: www.acq.osd.mil/log/rfid/supplierguide.htm.
Regulatory Flexibility Analysis: www.acq.osd.mil/log/rfid/regflex.htm.
The DoD is sponsoring workshops for their suppliers. Additionally, 93 Procurement Technical Assistance Centers sponsor compliance workshops. You can learn more from your local PTAC: http://www.dla.mil/db/.
The Wide Area Workflow is an essential component of the paperless supply chain. Companies shipping significant volumes need to address WAWF issues now, as the DoD is entering the late stage of transitioning suppliers to this electronic payment system. Additionally, without an automated solution for RFID and WAWF, DoD suppliers will likely face increased clerical costs to meet the ASN requirements (i.e., manual entry into WAWF in conjunction with RFID shipments). You can learn more about the interaction between these requirements at www.acq.osd.mil/log/rfid/advance_shipment_ntc.htm.
The WAWF link is https://wawf.eb.mil/.
An important, related auto ID technology is Unique Identification. The U.S. federal government has mandated the use of UID to enable better tracking of its assets. RFID Law Journal will cover these requirements in future supplements, but you can learn more at http://www.uniqueid.org/.
© 2006 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID Law issues at http://www.rfidlawjournal.com or contact us at the RFID Law Journal by writing to our Editor: editor@RFIDLawJournal.com. The information provided herein is for your informational purposes only and is not to be construed as legal or other advice or as a substitute for legal counsel or other appropriate advice. Online readers should not act upon this information without seeking professional counsel from a trusted advisor. Usage of this material is subject to the terms and conditions set forth at www.rfidlawjournal.com.
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