[Federal Register Volume 73, Number 122 (Tuesday, June 24, 2008)]
[Proposed Rules]
[Pages 35615-35617]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-14253]
GENERAL SERVICES ADMINISTRATION
48 CFR Parts 543 and 552
[GSAR Case 2008-G513; Docket 2008-0007; Sequence 10]
RIN 3090-AI55
General Services Acquisition Regulation; GSAR Case 2008-
G513;Rewrite of Part 543, Contract Modifications
AGENCY: Office of the Chief Acquisition Officer, General Services
Administration.
ACTION: Proposed rule.
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SUMMARY: The General Services Administration (GSA) is proposing to
amend the General Services Acquisition Regulation (GSAR) to revise GSAM
language pertaining to requirements for contract modifications.
DATES: Interested parties should submit written comments to the
Regulatory Secretariat on or before August 25, 2008 to be considered in
the formulation of a final rule.
ADDRESSES: Submit comments identified by GSAR Case 2008-G513 by any of
the following methods:
Regulations.gov: http://www.regulations.gov.Submit
comments via the Federal eRulemaking portal by inputting ``GSAR Case
2008-G513'' under the heading ``Comment or Submission.'' Select the
link ``Send a Comment or Submission'' that corresponds with GSAR Case
2008-G513. Follow the instructions provided to complete the ``Public
Comment and Submission Form.'' Please include your name, company name
(if any), and ``GSAR Case 2008-G513'' on your attached document.
Fax: 202-501-4067.
Mail: General Services Administration, Regulatory
Secretariat Division (VPR), 1800 F Street, NW, Room 4041, ATTN:
Laurieann Duarte, Washington, DC 20405.
Instructions: Please submit comments only and cite GSAR Case 2008-
G513 in all correspondence related to this case. All comments received
will be posted without change to http://www.regulations.gov, including
any personal and/or business confidential information provided.
FOR FURTHER INFORMATION CONTACT: For clarification regarding content,
please contact Ms. Jeritta Parnell at (202) 501-4082. For information
pertaining to the status or publication schedules, please contact the
Regulatory Secretariat Division (VPR), Room 4041, GS Building,
Washington, DC 20405, (202) 501-4755. Please cite GSAR Case 2008-G513.
SUPPLEMENTARY INFORMATION:
A. Background
The GSA is amending the General Services Administration Acquisition
Regulation (GSAR) to revise the prescriptions for clauses included in
543.205, Contract clauses. The associated clauses located in 552.243
are amended to delete the clause at 552.243-70, Pricing of Adjustments,
to revise the clause at 552.243-71, Equitable Adjustments, and to
relocate the clause at 552.243-72, Modifications (Multiple Award
Schedule) to GSAR 552.238.
This proposed rule is a result of the General Services
Administration Acquisition Manual (GSAM) rewrite initiative. The
initiative was undertaken by GSA to revise the GSAM so as to maintain
consistency with the Federal Acquisition Regulation (FAR) and implement
streamlined and innovative acquisition procedures that contractors,
offerors, and GSA contracting personnel can use when entering into and
administering contractual relationships. The GSAM incorporates the GSAR
as well as internal agency acquisition policy.
The GSA will rewrite each part of the GSAR and GSAM, and as each
GSAR part is rewritten, GSA will publish it in the Federal Register.
This proposed rule revises GSAR 543.205, Contract clauses, and
associated clauses in GSAR 552.243. The information in GSAR 543.205,
Contract clauses, is revised to remove 543.205(a)(1) and 543.205(b) and
re-numbered accordingly. The information in 543.205(a)(1) is deleted.
This clause prescription is no longer necessary. The information in
543.205(b) is relocated to Part 538. The prescription for the clause at
552.243-71, Equitable Adjustment, is revised to include the clause
title for FAR 52.243-4, Changes. The clause at 552.243-70, Pricing of
Adjustments, is deleted. Information formerly contained in this clause
is now contained in the revised clause at 552.243-71, Equitable
Adjustments. The clause at 552.243-71, Equitable Adjustments, is
revised to clarify costs, overhead, profit, and proposal preparation
costs. The clause at 552.243-72, Modifications, (Multiple Award
Schedule) is relocated to GSAR Part 538.
Discussion of Comments
There were three public comments received in response to the
``Advanced Notice of Proposed Rulemaking.'' One commenter requested
that the ``Overhead, Profit, and Commission''
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section needed to be ``reworded to be clearer about the breakdown and
distinctions between Subcontractor and Prime Commission, and Overhead
and Profit, and the maximum allowable amounts for each.'' The Agency
agreed and the clause at 552.243-71, Equitable Adjustments, was revised
to reflect this suggested change. The second commenter recommended that
the ``Changes'' clause should be applicable to orders. The GSAM was
never intended to be a stand-alone document: it merely supplements the
FAR. The term ``order'' is defined in FAR 2.101, and therefore, should
not be repeated in the GSAM. The third commenter recommended that GSA
reconsider the timing of solicitation refreshes and associated
modifications to existing contract terms and conditions. This issue
will be addressed in the rewrite of GSAR Part 538.
This is not a significant regulatory action and, therefore, was not
subject to review under Section 6(b) of Executive Order 12866,
Regulatory Planning and Review, dated September 30, 1993. This rule is
not a major rule under 5 U.S.C. 804.
B. Regulatory Flexibility Act
The GSA does not expect this proposed rule to have a significant
economic impact on a substantial number of small entities within the
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.,
because the revisions are not considered substantive. The revisions
only update, clarify, and reorganize existing coverage. An Initial
Regulatory Flexibility Analysis has, therefore, not been performed. We
invite comments from small businesses and other interested parties. The
GSA will consider comments from small entities concerning the affected
GSAR Part 543 in accordance with 5 U.S.C. 610. Interested parties must
submit such comments separately and should cite 5 U.S.C. 601, et seq.
(GSAR case 2008-G513), in all correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the proposed
changes to the GSAM do not impose information collection requirements
that require the approval of the Office of Management and Budget under
44 U.S.C. 3501, et seq.
List of Subjects in 48 CFR Parts 543 and 552
Government procurement.
Dated: June 13, 2008
Al Matera,
Director, Office of Acquisition Policy.
Therefore, GSA proposes to amend 48 CFR parts 543 and 552 as set
forth below:
1. The authority citation for 48 CFR parts 543 and 552 continues to
read as follows:
Authority: 40 U.S.C. 121(c).
PART 543--CONTRACT MODIFICATIONS
2. Revise section 543.205 to read as follows:
543.205 Contract clauses.
The contracting officer shall insert 552.243-71, Equitable
Adjustments, in solicitations and contracts containing FAR 52.243-4,
Changes.
PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
552.243-70 [Removed]
3. Remove section 552.243-70.
4. Revise section 552.243-71 to read as follows:
552.243-71 Equitable Adjustments.
As prescribed in 543.205, insert the following clause:
EQUITABLE ADJUSTMENTS (DATE)
(a) This clause governs the determination of equitable
adjustments to which the Contractor may be entitled under the
``Changes'' clause prescribed by FAR 52.243-4, the ``Differing Site
Conditions'' clause prescribed by FAR 52.236-2, and any other
provision of this contract allowing entitlement to an equitable
adjustment. This clause does not govern determination of the
Contractor's relief allowable under the ``Suspension of Work''
clause prescribed by FAR 52.242-14.
(b) At the written request of the Contracting Officer, the
Contractor shall submit a proposal, in accordance with the
requirements set forth herein, for an equitable adjustment to the
contract for changes or other conditions that may entitle a
Contractor to an equitable adjustment. If the Contractor deems an
oral or written order to be a change to the contract, it shall
promptly submit to the Contracting Officer a proposal for equitable
adjustment attributable to such deemed change. The change shall also
conform to the requirements set forth herein.
(c) The proposal shall be submitted within the time specified in
the ``Changes'' clause, or such other time as may reasonably be
required by the Contracting Officer. In the case of a proposal
submitted based on the ``Differing Site Conditions'' clause, the
notice requirement of that clause shall be met.
(d) Proposals for equitable adjustments, including no costs
requests for adjustment of the contract's required completion date,
shall include a detailed breakdown of the following elements, as
applicable:
(1) Direct Costs.
(2) Markups.
(3) Change to the time for completion specified in the contract.
(e) Direct Costs. The Contractor shall separately identify each
item of deleted and added work associated with the change or other
condition giving rise to entitlement to an equitable adjustment,
including increases or decreases to unchanged work. For each item of
work so identified, the Contractor shall propose for itself and, if
applicable, its first two tiers of subcontractors, the following
direct costs:
(1) Material cost broken down by trade, supplier, material
description, quantity of material units, and unit cost (including
all manufacturing burden associated with material fabrication and
cost of delivery to site, unless separately itemized).
(2) Labor cost broken down by trade, employer, occupation,
quantity of labor hours, and burdened hourly labor rate, together
with itemization of applied labor burdens (exclusive of employer's
overhead, profit, and any labor cost burdens carried in employer's
overhead rate).
(3) Cost of equipment required to perform the work, identified
with material to be placed or operation to be performed.
(4) Cost of preparation and/or revision to shop drawings and
other submittals with detail set forth in paragraphs (e)(1) and
(e)(2) of this clause.
(5) Delivery costs, if not included in material unit costs.
(6) Time-related costs not separately identified as direct
costs, and not included in the Contractor's or subcontractors'
overhead rates, as specified in paragraph (g).
(7) Other direct costs.
(f) Marked-up costs of subcontractors below the second tier may
be treated as other direct costs of a second tier subcontractor,
unless the Contracting Officer requires a detailed breakdown under
paragraph (i) of this clause.
(g) Extensions of time and time-related costs. The Contractor
shall propose a daily rate for each firm's time-related costs during
the affected period, and, for each firm, the increase or decrease in
the number of work days of performance attributable to the change or
other condition giving rise to entitlement to an equitable
adjustment, with supporting analysis. Entitlement to time and time-
related costs shall be determined as follows:
(1) Increases or decreases to a firm's time-related costs shall
be allowed only if such increase or decrease necessarily and
exclusively results from the change or other condition giving rise
to entitlement to an equitable adjustment.
(2) The Contractor shall not be entitled to an extension of time
or recovery of its own time-related costs except to the extent that
such change or other condition necessarily and exclusively causes
its duration of performance to extend beyond the completion date
specified in the contract.
(3) Costs may be characterized as time-related costs only if
they are incurred solely to support performance of this contract and
the increase or decrease in such costs is solely dependent upon the
duration of a firm's performance of work.
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(4) Costs may not be characterized as time-related costs if they
are included in the calculation of a firm's overhead rate.
(5) Equitable adjustment of time and time-related costs shall
not be allowed unless the analysis supporting the proposal complies
with provisions specified elsewhere in this contract regarding the
Contractor's project schedule.
(h) Markups. For each firm whose direct costs are separately
identified in the proposal, the Contractor shall propose an overhead
rate, profit rate, and where applicable, a bond rate and insurance
rate. Markups shall be determined and applied as follows:
(1) Overhead rates shall be negotiated, and may be subject to
audit and adjustment.
(2) Profit rates shall be negotiated, but shall not exceed ten
percent, unless entitlement to a higher rate of profit may be
demonstrated.
(3) The Contractor and its subcontractors shall not be allowed
overhead or profit on the overhead or profit received by a
subcontractor, except to the extent that the subcontractor's costs
are properly included in other direct costs as specified in
paragraph (f) of this clause.
(4) Overhead rates shall be applied to the direct costs of work
performed by a firm, and shall not be allowed on the direct costs of
work performed by a subcontractor to that firm at any tier except as
set forth in paragraphs (h)(6) and (h)(7) of this clause.
(5) Profit rates shall be applied to the sum of a firm's direct
costs and the overhead allowed on the direct costs of work performed
by that firm.
(6) Overhead and profit shall be allowed on the direct costs of
work performed by a subcontractor within two tiers of a firm at
rates equal to only fifty percent of the overhead and profit rates
negotiated pursuant to paragraphs (h)(1) and (h)(2) of this clause
for that firm, but not in excess of ten percent when combined.
(7) Overhead and profit shall not be allowed on the direct costs
of a subcontractor more than two tiers below the firm claiming
overhead and profit for subcontractor direct costs.
(8) If changes to a Contractor's or subcontractor's bond or
insurance premiums are computed as a percentage of the gross change
in contract value, markups for bond and insurance shall be applied
after all overhead and profit is applied. Bond and insurance rates
shall not be applied if the associated costs are included in the
calculation of a firm's overhead rate.
(9) No markup shall be applied to a firm's costs other than
those specified herein.
(i) At the request of the Contracting Officer, the Contractor
shall provide such other information as may be reasonably necessary
to allow evaluation of the proposal. If the proposal includes
significant costs incurred by a subcontractor below the second tier,
the Contracting Officer may require the same detail for those costs
as required for the first two tiers of subcontractors, and markups
shall be applied to these subcontractor costs in accordance with
paragraph (h) of this clause.
(j) Proposal preparation costs. If performed by the firm
claiming them, proposal preparations costs shall be included in the
labor hours proposed as direct costs. If performed by an outside
consultant or law firm, proposal preparation costs shall be treated
as other direct costs to the firm incurring them. Requests for
proposal preparation costs shall include the following:
(1) A copy of the contract or other documentation identifying
the consultant or firm, the scope of the services performed, the
manner in which the consultant or firm was to be compensated, and if
compensation was paid on an hourly basis, the fully burdened and
marked-up hourly rates for the services provided.
(2) If compensation were paid on an hourly basis, documentation
of the quantity of hours worked, including descriptions of the
activities for which the hours were billed, and applicable rates.
(3) Written proof of payment of the costs requested. The
sufficiency of the proof shall be determined by the Contracting
Officer.
(k) Proposal preparation costs shall be allowed only if--
(1) The nature and complexity of the change or other condition
giving rise to entitlement to an equitable adjustment warrants
estimating, scheduling, or other effort not reasonably foreseeable
at the time of contract award;
(2) Proposed costs are not included in a firm's time-related
costs or overhead rate; and
(3) Proposed costs were incurred prior to a Contracting
Officer's unilateral determination of an equitable adjustment under
the conditions set forth in paragraph (o) of this clause, or were
incurred prior to the time the request for equitable adjustment
otherwise became a matter in dispute.
(l) Proposed direct costs, markups, and proposal preparation
costs shall be allowable in the determination of an equitable
adjustment only if they are reasonable and otherwise consistent with
the contract cost principles and procedures set forth in Part 31 of
the Federal Acquisition Regulation (48 CFR part 31) in effect on the
date of this contract. Characterization of costs as direct costs,
time-related costs, or overhead costs must be consistent with the
requesting firm's accounting practices on other work under this
contract and other contracts.
(m) If the Contracting Officer determines that it is in the
Government's interest that the Contractor proceed with a change
before negotiation of an equitable adjustment is completed, the
Contracting Officer may order the Contractor to proceed on the basis
of a unilateral modification to the contract increasing or
decreasing the contract price by an amount to be determined later.
Such increase or decrease shall not exceed the increase or decrease
proposed by the Contractor.
(n) If the parties cannot agree to an equitable adjustment, the
Contracting Officer may determine the equitable adjustment
unilaterally.
(o) The Contractor shall not be entitled to any proposal
preparation costs incurred subsequent to the date of a unilateral
determination or denial of the request if the Contracting Officer
issues a unilateral determination or denial under any of the
following circumstances:
(1) The Contractor fails to submit a proposal within the time
required by this contract or such time as may reasonably be required
by the Contracting Officer.
(2) The Contractor fails to submit additional information
requested by the Contracting Officer within the time reasonably
required.
(3) Agreement to an equitable adjustment cannot be reached
within 60 days of submission of the Contractor's proposal or receipt
of additional requested information, despite the Contracting
Officer's diligent efforts to negotiate the equitable adjustment.
(End of clause)
552.243-72 [Removed]
5. Remove section 552.243-72.
[FR Doc. E8-14253 Filed 6-23-08; 8:45 am]
BILLING CODE 6820-61-S