[Federal Register Volume 74, Number 6 (Friday, January 9, 2009)]
[Rules and Regulations]
[Pages 864-866]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-215]
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GENERAL SERVICES ADMINISTRATION
48 CFR Parts 543 and 552
[GSAR Amendment 2005-04; GSAR Case 2008-G513 (Change 25); Docket 2009-
0012; Sequence 2]
RIN 3090-AI83
General Services Administration Acquisition Regulation; GSAR Case
2008-G513; Rewrite of GSAR Part 543, Contract Modifications
AGENCIES: General Services Administration (GSA), Office of the Chief
Acquisition Officer.
ACTION: Final rule.
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SUMMARY: The General Services Administration (GSA) is amending the GSA
Acquisition Regulation (GSAR) to revise the language that provides
requirements for contract modifications.
DATES: Effective Date: January 9, 2009.
FOR FURTHER INFORMATION CONTACT: Ms. Jeritta Parnell at (202) 501-4082,
for clarification of content. For information pertaining to the status
or publication schedules, contact the Regulatory Secretariat (VPR),
Room 4041, GS Building, Washington, DC 20405, (202) 501-4755. Please
cite Amendment 2005-04, GSAR case 2008-G513 (Change 25).
SUPPLEMENTARY INFORMATION:
A. Background
The GSA is amending the GSAR to revise 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 be 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.
The GSA published a proposed rule with request for comments in the
Federal Register at 73 FR 35614 on June 24, 2008. There were four
public comments from two respondents. One respondent recommended adding
the phrase ``impacted by the change'' to paragraph (e) of the clause at
552.243-71 to limit the equitable adjustment to only the work impacted
by the change. The GSA agrees and the language was revised to include
this recommendation. The second respondent made three suggestions
regarding internal GSA procedures. These suggestions are outside the
scope of the GSAR case as published. Additional editorial corrections
were made in paragraphs (b), (d), and (j)(2)of the clause at 552.243-
71.
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 General Services Administration certifies that this final rule
will not 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 rule updates, clarifies, and
reorganizes existing language.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the GSAR do not impose recordkeeping or information collection
requirements, or otherwise collect information from offerors,
contractors, or members of the public that require 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: December 8, 2008.
David A. Drabkin,
Senior Procurement Executive, Office of the Chief Acquisition Officer,
General Services Administration.
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Therefore, GSA amends 48 CFR parts 543 and 552 as set forth below:
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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 MODIFICATONS
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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]
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3. Remove section 552.243-70.
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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
(JAN 2009)
(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 proposal 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 cost requests
for adjustment of the contract's required
[[Page 865]]
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 impacted by the
change. 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) of this clause; and
(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.
(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 subcontractor[s] 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 below 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).
(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 was 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
[[Page 866]]
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), 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]
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5. Remove section 552.243-72.
[FR Doc. E9-215 Filed 1-8-09; 8:45 am]
BILLING CODE 6820-61-P