[Federal Register Volume 59, Number 165 (Friday, August 26, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21047]


[[Page Unknown]]

[Federal Register: August 26, 1994]


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DEPARTMENT OF DEFENSE

Department of the Army

48 CFR Part 52

 

Engineer Federal Acquisition Regulation Supplement (EFARS); 
Variation in Estimated Quantity

AGENCY: U.S. Army Corps of Engineers, DOD.

ACTION: Proposed deviation with request for comments.

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SUMMARY: The Corps of Engineers is requesting a deviation from the FAR 
Variation in Estimated Quantity (VEQ) clause at 52.212-11 to revise the 
method for computing price adjustments under the clause (for quantity 
overruns and underruns) to be more equitable both for the Government 
and for the contractor.

DATES: Comments on the proposed deviation, to be included in the EFARS 
clause, should be submitted in writing to the address shown below on or 
before November 1, 1994, to be considered in the formulation of a 
deviation.

ADDRESSES: U.S. Army Corps of Engineers, Principal Assistant 
Responsible for Contracting, ATTN: CEPR-P, 20 Massachusetts Avenue NW., 
Washington, DC 20314-1000.

FOR FURTHER INFORMATION CONTACT:
Ms. Patricia B. Paianton, (202) 272-0961 or 0566. Telefax number: (202) 
504-4752.

SUPPLEMENTARY INFORMATION:

A. Background

    Typical, in the Corps of Engineers, the VEQ clause is used in 
contracts for dredging or construction excavation. When the VEQ clause 
is used, the Government estimates the quantity of units of work to be 
performed, and the solicitation and contract provide a unit price for 
the work. The clause provides that, if the actual quantity is between 
85 percent and 115 percent of the original estimated quantity, the 
original contract unit price will be paid by the Government to the 
contractor, but, if the actual quantity is below 85 percent or above 
115 percent, the unit price may be revised for the underrun or overrun 
quantity only, but not for the quantities within the 85-115 percent 
range of the estimated quantity. The clause states that ``The equitable 
adjustment shall be based upon any increase or decrease in costs due 
solely to the variation above 115 percent or below 85 percent of the 
estimated quantity. * * * (Emphasis added.) Because the FAR VEQ clause 
limits unit price adjustment so those ``due solely to'' the variations 
in costs, it freezes the results of a ``bad bargain'' for the 
Government or the contractor in computing a unit price for increased 
work above 115 percent of the estimated quantity. The revised EFARS 
clause proposed by the Corps provides for repricing based on the 
contractor's profit or loss position as well as changes in costs. This 
will compensate the contractor fairly, but eliminate windfalls for 
either the contractor or the Government.
    The Corps of Engineers is interested in receiving comments on the 
following issues:
    1. Should contracting officers have discretion to use figures 
different from 85 percent and 115 percent?
    2. Should the use of this clause (and its repricing mechanism) be 
limited to ``major'' work items under the contract? How would a major 
work item be defined?
    (3) Should implementing guidance make it clear that issuance of a 
request for repricing by the contracting officer is a discretionary 
decision to be issued only when it is expected that the reduction in 
contract price will exceed the administrative cost involved or is 
otherwise in the Government's interest?

B. Regulatory Flexibility Act

    A Regulatory Analysis is not required by the Regulatory Flexibility 
Act (5 U.S.C. 601-611). The proposed change would not impose a new 
burden on any small businesses. It is estimated that the revised method 
would increase the price paid to a contractor about half the time and 
decrease the price paid to the contractor about half the time and that 
the instances when the clauses would allow reporting the work above 115 
percent or below 85 percent would be few.

C. Paperwork Reduction Act

    The provisions of the Paperwork Reduction Act (44 U.S.C., Ch. 35) 
do not apply. This deviation would not impose a new requirement on ten 
or more offerors or contractors to submit, maintain, retain or disclose 
information.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    The USACE would be granted a deviation from FAR 52.212-11 to use a 
new clause to read as follows:

Variation in Estimated Quantity (Deviation)

    As prescribed at __________, insert the following clause in 
solicitations and contracts for fixed-price construction contracts when 
subdivided items are to be separately priced for payment purpose.

Variation in Estimated Quantity (Deviation) (XXX 1994)--EFARS

    (a) If the quantity of a unit-priced item in this contract is an 
estimated quantity and the actual quantity is at least 85 percent 
but not more than 115 percent of the estimated quantity, payment for 
the actual quantity shall be made at the contract unit price.
    (b) If the actual quantity of a unit-priced quantity varies more 
than 15 percent above or below the original estimated quantity:
    (1) Either party may request an equitable adjustment in the 
contract price as set forth in (2) and (3) below. The party 
requesting the equitable adjustment must establish the basis for the 
equitable adjustment; if no basis is established, payment for actual 
quantity shall be made at the original contract unit price.
    (2) If the actual quantity exceeds 115 percent, payment for 115 
percent shall be made at the original contract unit price, and an 
equitable adjustment may be made in the unit price for the quantity 
above 115 percent. The equitable adjustment in the unit price for 
the balance of the actual quantity above 115 percent shall be based 
on the reasonable costs for that part of the work. Such reasonable 
costs may include reasonable various costs and a reasonable profit; 
additional fixed costs may be included, if incurred and reasonable.
    (3) If the actual quantity is less than 85 percent of the 
original estimated quantity, payment for the actual quantity shall 
be made at the original contract unit price, and an equitable 
adjustment may be made to compensate the contractor for incurred 
reasonable fixed costs that would otherwise be unrecovered.
    (c) If a quantity variation causes an increase in the time 
necessary for completion, the Contractor may request in writing an 
extension of time. The written request must be received by the 
Contracting Officer within 10 days from the beginning of the delay, 
or with such further period as may be granted by the Contracting 
Officer before the date of final settlement of the contract. Upon 
receipt of the written request, the Contracting Officer shall 
ascertain the facts and make an adjustment for extending the 
completion date as, in the judgment of the Contracting Officer, is 
justified.

(end of clause)

Kenneth L. Denton,
Army Federal Register Liaison Officer.
[FR Doc. 94-21047 Filed 8-25-94; 8:45 am]
BILLING CODE 3710-92-M