[Federal Register Volume 60, Number 169 (Thursday, August 31, 1995)]
[Rules and Regulations]
[Pages 45376-45378]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21628]
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DEPARTMENT OF DEFENSE
48 CFR Parts 228 and 252
[DFARS Case 95-D305]
Defense Federal Acquisition Regulation Supplement; Alternatives
to Miller Act Bonds
AGENCY: Department of Defense (DoD).
ACTION: Interim rule with request for comment.
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SUMMARY: The Director of Defense Procurement is amending the Defense
Federal Acquisition Regulation Supplement (DFARS) to provide
alternatives to Miller Act bond requirements for construction contracts
between $25,000 and $100,000.
DATES: Effective Date: August 31, 1995.
Comment Date: Comments on the interim rule should be submitted in
writing to the address below on or before October 30, 1995, to be
considered in the formulation of the final rule.
ADDRESSES: Interested parties should submit written comments to:
Defense Acquisition Regulations Council, Attn: Ms. Amy Williams,
PDUSD(A&T)DP(DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC
20301-3062. Telefax number (703) 602-0350. Please cite DFARS Case 95-
D305
[[Page 45377]]
in all correspondence related to this issue.
FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, (703) 602-0131.
SUPPLEMENTARY INFORMATION:
A. Background
This interim DFARS rule provides alternative payment protections
for construction contracts between $25,000 and $100,000, pending
implemention of Section 4104(b)(2) of the Federal Acquisition
Streamlining Act of 1994, Pub. L. 103-355 (FASA), in the FAR. Section
4104(b)(2) of FASA requires FAR revisions to provide alternatives to
payment bonds as payment protections for suppliers of labor and
material under construction contracts between $25,000 and $100,000.
Federal Acquisition Circular 90-29 (60 FR 34732, July 3, 1995) revised
FAR Part 13 to exclude construction contracts and subcontracts at or
below the simplified acquisition threshold ($100,000) from Miller Act
bond requirements, in accordance with Section 4101(b)(1) of FASA.
B. Regulatory Flexibility Act
This interim rule may 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
provides alternatives to payment bonds as payment protection for
construction contracts between $25,000 and $100,000. The objective of
the rule is to make it easier for small businesses to provide payment
protections under construction contracts. An Initial Regulatory
Flexibility Analysis (IRFA) has been prepared and may be obtained from
the address specified herein. A copy of the IRFA has been submitted to
the Chief Counsel for Advocacy of the Small Business Administration.
Comments are invited from small businesses and other interested
parties. Comments from small entities concerning the affected DFARS
subparts will be considered in accordance with Section 610 of the Act.
Such comments must be submitted separately and cite DFARS Case 95-D305
in correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act applies. The applicable OMB Control
Number is 9000-0045.
D. Determination of Issue an Interim Rule
A determination has been made under the authority of the Secretary
of Defense to issue this rule as an interim rule. Urgent and compelling
reasons exist to promulgate this rule without prior opportunity for
public comment because it is necessary to provide payment protections
for construction contracts between $25,000 and $100,000. However,
comments received in response to this interim rule will be considered
in formulating the final rule.
List of Subjects in 48 CFR Parts 228 and 252
Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council
Therefore, 48 CFR Part 228 and 252 are amended as follows:
1. The authority citation for 48 CFR Parts 228 and 252 continues to
read as follows:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
PART 228--BONDS AND INSURANCE
2. Sections 228.171, 228.171-1, 228.171-2, and 228.171-3 are added
to read as follows:
228.171 Alternative payment protections in construction contracts
between $25,000 and $100,000.
228.171-1 General. For construction contracts greater than
$25,000, but not greater than $100,000, the contracting officer shall
select one or more of the following payment protections which the
contractor may submit to the Government for the protection of suppliers
of labor and material:
(a) A payment bond.
(b) An irrevocable letter of credit.
(c) A tripartite escrow agreement. The prime contractor establishes
an escrow account in a Federally insured financial institution and
enters into a tripartite escrow agreement with the financial
institution, as escrow agent, and all of the suppliers of labor and
material. The escrow agreement shall establish the terms of payment
under the contract and of resolution of disputes among the parties. The
Government makes payments to the contractor's escrow account, and the
escrow agent distributes the payments in accordance with the agreement,
or triggers the disputes resolution procedures if required.
(d) Certificates of deposit. The contractor deposits certificates
of deposit with the contracting officer, in an acceptable form,
executable by the contracting officer, and immediately refundable in an
amount equal to the penal amount of the payment bond waived.
(e) A deposit of the types of security listed in 28.204.
228.171-2 Amount required.
(a) The requirements at FAR 28.102-2(b), for the amount of payment
bonds, also apply to the alternative payment protections described in
228.171-1. In addition, the payment protection must provide protection
for the full contract performance period plus one year, and must
authorize the contracting officer to immediately access funds at any
time within the contracting officer's discretion.
(b) The requirements at FAR 28.102-2(c), for the penal sum of bonds
for requirements and indefinite-quantity contracts, also apply to the
alternative payment protections described in 228.171-1.
228.171-3 Contract clause.
Use the clause at 252.228-7007, Alternative Payment Protections, in
solicitations and contracts for construction, when the estimated or
actual value exceeds $25,000 but does not exceed $100,000. Complete the
clause by specifying the payment protection or protections selected
(see 228.171-1), the penal amount required, and the deadline for
submission.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
3. Section 252.228-7007 is added to read as follows:
252.228-7007 Alternative Payment Protections.
As prescribed in 228.171-3, use the following clause:
Alternative Payment Protections (Aug. 1995)
(a) The Contractor shall submit one of the following payment
protections:
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(b) The penal sum of the payment protection shall be in the
amount of $________.
(c) The submission of the payment protection is required by
________.
(d) The payment protection shall provide protection for the full
contract performance period plus a one-year period, and shall
authorize the Contracting Officer to immediately access funds at any
time and withhold funds pending resolution by administrative or
judicial proceedings or mutual agreement of the parties, except for
escrow agreements which provide for a disputes resolution procedure.
(e) Except for escrow agreements which provide their own
protection procedures, the Contracting Officer is authorized to
access funds under the payment protection when it has been alleged
in writing by a supplier of labor or material that nonpayment has
occurred.
(f) When a tripartite escrow agreement is used, the Contractor
shall utilize only suppliers of labor and material who signed the
escrow agreement.
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(End of clause)
[FR Doc. 95-21628 Filed 8-30-95; 8:45 am]
BILLING CODE 5000-04-M