[Federal Register Volume 60, Number 55 (Wednesday, March 22, 1995)]
[Proposed Rules]
[Pages 15220-15223]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7120]
[[Page 15219]]
_______________________________________________________________________
Part VIII
Department of Defense
General Services Administration
National Aeronautics and Space Administration
8______________________________________________________________________
48 CFR Parts 12 and 52
Federal Acquisition Regulation (FAR); Subcontracts for Commercial
Items; Proposed Rule
Federal Register / Vol. 60, No. 55 / Wednesday, March 22, 1995 /
Proposed Rules
[[Page 15220]]
DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 12 and 52
[FAR Case 94-791]
RIN 9000-AG47
Federal Acquisition Regulations; Subcontracts for Commercial
Items
agencies: Department of Defense (DOD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
action: Proposed rule.
-----------------------------------------------------------------------
summary: At 60 FR 11198, March 1, 1995, a proposed rule was published
in the Federal Register to amend the Federal Acquisition Regulation
(FAR) to implement portions of Title VIII of the Federal Acquisition
Streamlining Act of 1994 (the Act) dealing with the acquisition of
commercial items. The background and the regulatory text of that
proposed rule stated that the list of laws and the list of clauses
would be published at a later date. This case provides the complete
list of laws determined to be inapplicable to Executive agency
contracts and subcontracts for commercial items and the clauses
determined to be applicable to subcontracts for the acquisition of
commercial items. This regulatory action was subject to Office of
Management and Budget review under Executive Order 12866, dated
September 30, 1993.
DATES: Comments should be submitted on or before May 22, 1995, to be
considered in the formulation of a final rule.
Public Meeting: April 3, 1995, 1 p.m. at: General Services
Administration Auditorium, 18th & F Streets, NW, First Floor,
Washington, DC 20405.
Written and Oral Statements: Statements prepared for oral
presentation must be sent to the FAR Secretariat at the address given
below, not later than March 29, 1995.
ADDRESSES: Interested parties should submit written comments to:
General Services Administration, FAR Secretariat (VRS), 18th & F
Streets, NW, Room 4037, Washington, DC 20405.
Please cite FAR case 94-791 in all correspondence related to this
case.
FOR FURTHER INFORMATION CONTACT: Colonel Laurence M. Trowel, Commercial
Items Team Leader, at (703) 695-3858 in reference to this FAR case. For
general information, contact the FAR Secretariat, Room 4037, GS
Building, Washington, DC 20405 (202) 501-4755. Please cite FAR case 94-
791.
SUPPLEMENTARY INFORMATION:
A. Background
The Federal Acquisition Streamlining Act of 1994 (Pub. L. 103-355)
provides authorities that streamline the acquisition process and
minimize burdensome Government-unique requirements. Major changes that
can be expected in the acquisition process as a result of
implementation of the Act include changes in the areas of Commercial
Item Acquisition, Simplified Acquisition Procedures, the Truth in
Negotiations Act, and Introduction of the Federal Acquisition Computer
Network (FACNET).
This notice announces proposed revisions developed under FAR Case
94-791, Subcontracts for Commercial Items. FAR Case 94-790, published
as a proposed rule at 60 FR 11198, March 1, 1995, proposed revisions to
the FAR to implement portions of Title VIII of the Federal Acquisition
Streamlining Act of 1994. In the supplementary information, paragraph
A, Background, and at the following three citations in that proposed
rule, the Federal Register notice indicated that the list of laws
determined to be inapplicable to subcontracts for the acquisition of
commercial items in accordance with section 8003(a) of the Act and the
list of clauses applicable to subcontracts for the acquisition of
commercial items would be published in the Federal Register in a future
proposed rule under FAR case 94-791:
--Proposed FAR 12.403, Applicability of certain laws to subcontracts
for the acquisition of commercial items, at paragraphs (a), (b), and
(c);
--Proposed FAR 52.212-5, Contract Terms and Conditions Required to
Implement Statutes or Executive Orders--Commercial Items, at paragraph
(d); and
--Proposed FAR 52.244-XX, Subcontracts for Commercial Items and
Commercial Components, at paragraph (d).
This proposed rule revises the earlier rule by providing the full
list of laws determined to be inapplicable to prime contracts at
12.402, and provides the list of laws determined to be inapplicable to
subcontracts at 12.403. In addition, this proposed rule includes the
clauses determined to be applicable to subcontracts for the acquisition
of commercial items at 52.212-5 paragraph (d) and 522.244-XX, paragraph
(d).
An area of concern discussed extensively by the Team was the
applicability of the Buy American Act (41 U.S.C. 10 (a)-(d)) and Trade
Agreements Act (19 U.S.C. 2512(a)) to subcontracts. The Buy American
Act requires that ``only such unmanufactured articles, materials, and
supplies as have been mined or produced in the United States, and only
such manufactured articles, materials, and supplies as have been
manufactured in the United States substantially all from articles,
materials, or supplies mined, produced, or manufactured, as the case
may be, in the United States, shall be acquired for public use.'' The
effect of this language is that prime contractors must consider the
cost and origin of components in determining whether an end item
manufactured in the United States meets the definition of a domestic
end product. While the Act does not specifically use the terms
``subcontract'' or ``subcontractors,'' concern was raised that
including these two laws on the list of laws inapplicable to
subcontractors would result in confusion regarding whether the cost and
origin of subcontractor components needed to be considered for
commercial items. Consequently, the decision was made to leave these
two laws off the list at 12.403 and solicit further public comment on
the issue.
The proposed rule at 12.402 and 12.403 includes the full list of
laws (Civilian and DOD-unique) determined to be inapplicable at both
the prime and subcontractor level. Including the full list of laws in
this case provides the public with a complete view of the Government's
implementation of Section 8003. The final disposition of the DOD-unique
laws, with respect to inclusion in the FAR, will be determined during
the resolution of public comments.
Public Meeting. The FAR Council is interested in an exchange of
ideas and opinions on this rule. For that reason, the FAR Council is
conducting a series of public meetings. A public meeting will be held
on April 3, 1995, with respect to FAR Case 94-790, Acquisition of
Commercial Items. This rule, FAR Case 94-791, will also be discussed at
the April 3rd meeting. The public is encouraged to furnish its views;
the Council anticipates that public comments will be very helpful in
formulating final rules.
Persons or organizations wishing to make presentations will be
allowed 10 minutes each, provided they notify the FAR Secretariat at
(202) 501-4755 and submit written statements of the presentation by
March 29, 1995. Persons or organizations with similar positions
[[Page 15221]] are encouraged to select a common spokesman for
presentation of their views. This meeting, in conjunction with the
Federal Register notice soliciting public comments on the rule, will be
the only opportunity for the public to present its views.
B. Regulatory Flexibility Act
This proposed rule will 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. This rule will have a
beneficial impact by significantly limiting the flow down of
Government-unique terms and conditions to subcontractors at all levels
thereby minimizing the burden on a significant number of small
businesses.
An Initial Regulatory Flexibility Analysis (IRFA) was provided to
the Chief Counsel for Advocacy for the Small Business Administration in
conjunction with FAR Case 94-790, Acquisition of Commercial Items. That
IRFA applies to this rule as well. A copy of the IRFA may be obtained
from the FAR Secretariat. Comments are invited. Comments from small
entities concerning the affected FAR subpart will be considered in
accordance with 5 U.S.C. 610. Such comments must be submitted
separately and should cite 5 U.S.C. 601 et seq. (FAR Case 94-791), in
correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the proposed
changes to the FAR do not impose recordkeeping or information
collection requirements, or collections of information from offerors,
contractors, or members of the public which 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 12 and 52
Government procurement.
Dated: March 20, 1995.
Edward Loeb,
Deputy Project Manager for the Implementation of the Federal
Acquisition Streamlining Act of 1994.
Therefore, it is proposed that 48 CFR Parts 12 and 52 be amended as
set forth below:
1. The authority citation for 48 CFR Parts 12 and 52 continues to
read as follows:
Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 12--ACQUISITION OF COMMERCIAL ITEMS
2. In the table of contents, the title of Part 12 is revised as set
forth above.
3. Section 12.402 is revised to read as follows:
12.402 Applicability of certain laws to executive agency contracts for
the acquisition of commercial items.
(a) The following laws are not applicable to executive agency
contracts for the acquisition of commercial items:
(1) 41 U.S.C. 43, Walsh-Healey Act (see 48 CFR (FAR) part 22,
subpart 22.6);
(2) 41 U.S.C. 254(a) and 10 U.S.C. 2306(b), Contingent Fees (see 48
CFR (FAR) 3.404);
(3) 41 U.S.C. 416(a)(6), Minimum Response Time for Offers under
Office of Federal Procurement Policy Act (see 48 CFR (FAR) 5.203);
(4) 41 U.S.C. 701 et seq., Drug-Free Workplace Act of 1988 (see 48
CFR (FAR) 23.501);
(5) 10 U.S.C. 2384(b), Requirement to Identify Suppliers and
Sources of Supply (see 48 CFR (DFARS) part 217, subpart 217.73);
(6) 10 U.S.C. 2397, Reports by Employees or Former Employees of
Defense Contractors;
(7) 10 U.S.C. 2397c, Defense Contractor Requirements Concerning
Former DoD Officials;
(8) 10 U.S.C. 2408, Prohibition on Persons Convicted of Defense-
Related Felonies (see 48 CFR (DFARS) 203.57); and
(9) 10 U.S.C. 2410b, Contractor Inventory Accounting System
Standards (see 48 CFR (DFARS) part 242, subpart 242.72).
(b) Certain requirements of the following laws have been eliminated
for executive agency contracts for the acquisition of commercial items:
(1) 33 U.S.C. 1368, Requirement for a certificate and clause under
the Federal Walter Pollution Control Act (see 48 CFR (FAR) 23.105);
(2) 40 U.S.C. 327 et seq., Requirement for a certificate and clause
under the Contract Work Hours and Safety Standards Act (see 48 CFR
(FAR) 22.305);
(3) 41 U.S.C. 57(a) and (b), and 58, Requirement for a clause and
certain other requirements related to the Anti-Kickback Act of 1986
(see 48 CFR (FAR) 3.502);
(4) 41 U.S.C. 423e(1)(B), Requirement for certain certifications
under the Procurement Integrity Act (see 48 CFR (FAR) 3.104-9);
(5) 42 U.S.C. 7606, Requirement for a certificate and clause under
the Clean Air Act (see 48 CFR (FAR) 23.105); and
(6) 49 U.S.C. 40118, Requirement for a certificate and clause under
Fly American provisions (see 48 CFR (FAR) 47.405).
(c) The applicability of the following laws have been modified in
regards to executive agency contracts for the acquisition of commercial
items:
(1) 41 U.S.C. 253g and 10 U.S.C. 2402, Prohibition on Limiting
Subcontractor Direct Sales to the United States (see 48 CFR (FAR)
3.503);
(2) 41 U.S.C. 254(d) and 10 U.S.C. 2306a, Truth in Negotiations Act
(see 48 CFR (FAR) 15.804);
(3) 41 U.S.C. 422, Cost Accounting Standards (see 48 CFR (FAR) Part
99); and
(4) 10 U.S.C. 2397b, Limits on Employment for Certain Former DoD
Officials (see 48 CFR (FAR) 203.170).
(d) The FAR prescription, provision or clause for each of these
statutes has been revised in the appropriate part to reflect their
proper application to the acquisition of commercial items.
4. Section 12.403 is revised to read as follows:
12.403 Applicability of certain laws to subcontracts for the
acquisition of commercial items.
(a) The following laws are not applicable to subcontracts under
either a contract for the acquisition of commercial items or a
subcontract for the acquisition of commercial items:
(1) 15 U.S.C. 644(d), Requirements relative to labor surplus areas
under the Small Business Act (see 49 CFR (FAR) part 19, subpart 19.2);
(2) 41 U.S.C. 43, Walsh-Healey Act (see 48 CFR (FAR) part 22,
subpart 22.6);
(3) 41 U.S.C. 253d, Validation of Proprietary Data Restrictions
(see 48 CFR (FAR) part 27, subpart 27.4);
(4) 41 U.S.C. 254(a) and 10 U.S.C. 2306(b), Contingent Fees (see 48
CFR (FAR) part 3, subpart 3.4);
(5) 41 U.S.C. 416(a)(6), Minimum Response Time for Offers under
Office of Federal Procurement Policy Act (see 48 CFR (FAR) part 5,
subpart 5.2);
(6) 41 U.S.C. 418a, Rights in Technical Data (see 48 CFR (FAR) part
27, subpart 27.4);
(7) 41 U.S.C. 701 et seq., Drug-Free Workplace Act of 1988 (see 48
CFR (FAR) 23.5);
(8) 46 U.S.C. 1241(b), Transportation in American Vessels of
Government Personnel and Certain Cargo (see 48 CFR (FAR) part 47,
subpart 47.5);
(9) 49 U.S.C. 40118, Fly American provisions (see 48 CFR (FAR) part
47, subpart 47.4);
(10) Pub. L. 90-469, William Langer Jewel Bearing Plant Special Act
(see 48 CFR (FAR) part 8, subpart 8.2); [[Page 15222]]
(11) 10 U.S.C. 2301, note, as amended by Section 2091, Pub. L. 103-
355, Payment Protections for Subcontractors and Suppliers (see 48 CFR
(FAR) part 28, subpart 28.1 and part 32, subpart 32.1);
(12) 10 U.S.C. 2241, note (Pub. L. 102-396, Section 9005, as
amended by Pub. L. 103-139, Section 8005), Limitations on Procurement
of Food, Clothing, and Specialty Metals Not Produced in the United
States (see 48 CFR (DFARS) part 225, subpart 225.70);
(13) 10 U.S.C. 2320, Rights in Technical Data (see 48 CFR (DFARS)
part 227, subpart 227.4);
(14) 10 U.S.C. 2321, Validation of Proprietary Data Restrictions
(see 48 CFR (DFARS) part 227, subpart 227.4);
(15) 10 U.S.C. 2327, note (Pub. L. 103-160, Section 843), Reporting
Requirement Regarding Dealings with Terrorist Countries (see 48 CFR
(DFARS) part 209, subpart 209.1);
(16) 10 U.S.C. 2391, note (Pub. L. 101-510, Section 4201(a)(1)(B)),
Notification of Substantial Impact on Employment (see 48 CFR (DFARS)
part 249, subpart 249.70);
(17) 10 U.S.C. 2393, Prohibition Against Doing Business with
Certain Offerors or Contractors (see 48 CFR (DFARS) part 209, subpart
209.4);
(18) 10 U.S.C. 2501, note (Pub. L. 103-160, Section 1372),
Notification of Proposed Program Termination (see 48 CFR (DFARS) part
249, subpart 249.70);
(19) 10 U.S.C. 2534, Miscellaneous Limitations on the Procurement
of Goods other than United States Goods (see 48 CFR (DFARS) part 225,
subparts 225.7004, 225.7007, 225.7010, and 225.7016);
(20) 10 U.S.C. 2631, Cargo Preference Act (see 48 CFR (DFARS)
247.5); and
(21) National Defense Authorization Acts, Appropriations Acts, and
Other Statutory Restrictions on Foreign Purchases as follows: Pub. L.
100-202, Section 8088, Polyacrylonitrile Based Carbon Fiber; Pub. L.
101-511, Section 8041, Anchor and Mooring Chain; Pub. L. 102-172,
Section 8111, Carbon, Alloy and Armor Steel Plates; Pub. L. 102-396,
Section 9108, Four Ton Dolly Jacks; Pub. L. 102-484, Section 832, Anti
friction Bearings; Pub. L. 103-139, Section 8090, Aircraft Fuel Cells;
Pub. L. 103-139, Section 8124, Totally Enclosed Lifeboat Survival
Systems; Pub. L. 103-335, Section 8023, Supercomputers; Pub. L. 103-
335, Section 8050, Multibeam Sonar Mapping Systems; Pub. L. 103-335,
Section 8115, Ship Propellers; and Pub. L. 103-335, Section 8120, 120
mm Mortars and Ammunition.
(b) Certain requirements of the following laws have been eliminated
for subcontracts under either a contract for the acquisition of
commercial items or subcontract for the acquisition of commercial
items:
(1) 33 U.S.C. 1368, Requirement for a certificate and clause under
the Federal Water Pollution Control Act (see 48 CFR (FAR) part 23,
subpart 23.1);
(2) 40 U.S.C. 327 et seq., Requirement for a certificate and clause
under the Contract Work Hours and Safety Standards Act (see 48 CFR
(FAR) part 22, subpart 22.3);
(3) 41 U.S.C. 423e(1)(B), Requirement for certain certifications
under the Procurement Integrity Act (see 48 CFR (FAR) part 3, subpart
3.1); and
(4) 42 U.S.C. 7606, Requirements for a certificate and clause under
the Clean Air Act (see 48 CFR (FAR) part 23, subpart 23.1).
(c) The applicability of the following laws have been modified in
regards to subcontracts under either a contract for the acquisition of
commercial items or a subcontract for the acquisition of commercial
items:
(1) 41 U.S.C. 253g and 10 U.S.C. 2402, Prohibition on Limiting
Subcontractor Direct Sales to the United States (see 48 CFR (FAR) part
3, subpart 3.5);
(2) 41 U.S.C. 254(d) and 10 U.S.C. 2306a, Truth in Negotiations Act
(see 48 CFR (FAR) part 15, subpart 15.8); and
(3) 41 U.S.C. 422, Cost Accounting Standards (see 48 CFR (FAR) part
99).
(d) The FAR prescription, provision or clause for each of these
statutes has been revised in the appropriate part to reflect their
proper application to the acquisition of commercial items.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
5. Section 52.212-5 is revised to read as follows:
52.212-5 Contract Terms and Conditions Required to Implement Statutes
or Executive Orders--Commercial Items.
As prescribed in 12.302(b)(4), insert the following clause:
Contract Terms and Conditions Required to Implement Statutes or
Executive Orders--Commercial Items (XXX 1995)
(a) The Contractor agrees to comply with the following FAR
clauses, which are incorporated in this contract by reference, to
implement provisions of law or executive orders applicable to
acquisitions of commercial items:
(1) 52.219-8, Utilization of Small Business Concerns and Small
Disadvantaged Business Concerns (15 U.S.C. 637 (d)(2) and (3));
(2) 52.222-3, Convict Labor (E.O. 11755); and
(3) 52.233-3, Protest After Award (31 U.S.C. 3553 and 40 U.S.C.
759).
(b) The Contractor agrees to comply with the following FAR and
FIRMR clauses in this paragraph (b) that are indicated as being
incorporated in this contract by reference to implement provisions
of law or executive orders applicable to acquisitions of commercial
items or components:
____ (1) 52.203-6, Restrictions on Subcontractor Sales to the
Government, with Alternate I (41 U.S.C. 253g and 10 U.S.C. 2402).
____ (2) 52.203-10, Price or Fee Adjustment for Illegal or
Improper Activity (41 U.S.C. 423).
____ (3) 52.219-14, Limitation on Subcontracting (15 U.S.C.
637(a)(14)).
____ (4) 52.222-26, Equal Opportunity (E.O. 11246).
____ (5) 52.222-35, Affirmative Action for Special Disabled and
Vietnam Era Veterans (38 U.S.C. 2012).
____ (6) 52.222-36, Affirmative Action for Handicapped Workers
(29 U.S.C. 793).
____ (7) 52.222-37, Employment Reports on Special Disabled
Veterans and Veterans of the Vietnam Era (38 U.S.C. 2012).
____ (8) 52.225-3, Buy American Act--Supplies (41 U.S.C. 10).
____ (9) 52.225-9, Buy American Act--Trade Agreements Act--
Balance of Payments Program (41 U.S.C. 10, 19 U.S.C. 2501-2582).
____ (10) 52.225-17, Buy American Act--Supplies Under European
Community Sanctions for End Products (E.O. 12849).
____ (11) 52.225-18, European Community Sanctions for End
Products (E.O. 12849).
____ (12) 52.225-19, European Community Sanctions for Services
(E.O. 12849).
____ (13) 52.225-21, Buy American Act--North American Free Trade
Agreement Implementation Act--Balance of Payments Program (41 U.S.C.
10, Pub. L. 103-187).
____ (14) 52.247-64, Preference for Privately Owned US Flagged
Commercial Vessels (46 U.S.C. 1241).
____ (15) 201-39.5202-3, Procurement Authority (FIRMR).
(This acquisition is being conducted under ______ delegation of
GSA's exclusive procurement authority for FIP resources. The
specific GSA DPA case number is ______.)
(c) The Contractor agrees to comply with the following FAR
clauses in this paragraph (c), applicable to commercial services,
that are indicated as being incorporated in this contract by
reference to implement provisions of law or executive orders
applicable to acquisitions of commercial items or components:
____ (1) 52.222-41, Service Contract Act of 1965, as amended (41
U.S.C. 351, et seq.).
____ (2) 52.222-42, Statement of Equivalent Rates for Federal
Hires (29 U.S.C. 206 and 41 U.S.C. 351, et seq.).
____ (3) 52.222-43, Fair Labor Standards Act and Service
Contract Act--Price Adjustment (Multiple Year and Option Contracts)
(29 U.S.C. 206 and 41 U.S.C. 351 et seq.).
____ (4) 52.222-44, Fair Labor Standards Act and Service
Contract Act--Price Adjustment (29 U.S.C. 206 and 41 U.S.C. 351 et
seq.).
____ (5) 52.222-47, SCA Minimum Wages and Fringe Benefits
Applicable to Successor Contract Pursuant to Predecessor Contractor
Collective Bargaining Agreement (CBA) (41 U.S.C. 351 et
seq.). [[Page 15223]]
(d) Notwithstanding the requirements of the clauses in
paragraphs (a), (b) or (c) of this clause, the Contractor is not
required to include any FAR clause, other than those listed below,
in a subcontract for commercial items or commercial components--
(1) 52.222-26, Equal Opportunity (E.O. 11246);
(2) 52.222-35, Affirmative Action for Special Disabled and
Vietnam Era Veterans (38 U.S.C. 2012(a)); and
(3) 52.222-36, Affirmative Action for Handicapped Workers (29
U.S.C. 793).
(End of clause)
6. Section 52.244-XX is added to read as follows:
52.244-XX Subcontracts for Commercial Items and Commercial Components.
As prescribed in 44.403, insert the following clause:
Subcontracts for Commercial Items and Commercial Components (XXX 1995)
(a) Definition. Commercial item, as used in this clause, has the
meaning contained in the clause at 52.202-1, Definitions.
Subcontract, as used in this clause, includes a transfer of
commercial items between divisions, subsidiaries, or affiliates of
the Contractor or subcontractor.
(b) To the maximum extent practicable, the Contractor shall
incorporate, and require its subcontractors at all levels to
incorporate, commercial items or nondevelopmental items other than
commercial items, as components of items to be supplied under this
contract.
(c) If in awarding a subcontract for commercial items an
exception under 15.804-1(a) does not apply, the subcontractor may be
required to submit cost or pricing data and comply with the
appropriate clauses prescribed in FAR Part 15.
(d) Notwithstanding any other clause of this contract, the
Contractor is not required to include any FAR provision or clause,
other than those listed below and as may be required by paragraph
(c) of this clause, in a subcontract for commercial items or
commercial components:
(1) 52.203-12, Limitation on Payments to Influence Certain
Federal Transactions (31 U.S.C. 1352);
(2) 52.222-26, Equal Opportunity (E.O. 11246);
(3) 52.222-35, Affirmative Action for Special Disabled and
Vietnam Era Veterans (38 U.S.C. 2012(a)); and
(4) 52.222-36, Affirmative Action for Handicapped Workers (29
U.S.C. 793).
(e) The Contractor shall include the terms of this clause,
including this paragraph (e), in subcontracts awarded under this
contract.
(End of clause)
[FR Doc. 95-7120 Filed 3-21-95; 8:45 am]
BILLING CODE 6820-34-M