[Federal Register Volume 60, Number 245 (Thursday, December 21, 1995)]
[Proposed Rules]
[Page 66472]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30996]




[[Page 66471]]

_______________________________________________________________________

Part III

Department of Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________



48 CFR Parts 52 and 44



Allowable Cost and Payment Clause and Contractors' Purchasing Systems 
Reviews; Proposed Rule

  Federal Register  / Vol. 60, No. 245 / Thursday, December 21, 1995 / 
Proposed Rules  

[[Page 66472]]


DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 52

[FAR Case 93-024]
RIN 9000-AG74


Federal Acquisition Regulation; Allowable Cost and Payment Clause

AGENCIES Department of Defense (DOD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council are proposing changes to the Federal 
Acquisition Regulation (FAR) to clarify payment provisions for large 
business prime contractors which are awarded cost-type contracts. This 
regulatory action was not subject to Office of Management and Budget 
review under Executive Order 12866, dated September 30, 1993.

DATES: Comments should be submitted on or before February 20, 1996 to 
be considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments on: 
General Services Administration, FAR Secretariat (VRS), 18th and F 
Streets, NW, Room 4037, Washington, DC 20405.
    Please cite FAR case 93-024 in all correspondence related to this 
case.

FOR FURTHER INFORMATION CONTACT:
Jeremy F. Olson at (202) 501-3221 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 93-
024.

SUPPLEMENTARY INFORMATION: 

A. Background

    The Office of Federal Procurement Policy SWAT Team on Civilian 
Agency Contracting in its report of December 1992, entitled ``Improving 
Contracting Practices and Management Controls on Cost-Type Federal 
Contracts'', recommended several FAR revisions which were viewed to 
have Government-wide benefit.
    One area identified for clarification included the payment 
provisions in FAR clauses 52.216-7, Allowable Cost and payment, and 
52.232-7, Payment Under Time-and-Materials and Labor-Hour Contracts. 
The SWAT Team concluded that these clauses did not clearly convey the 
Government's intent that payments to subcontractors by large business 
prime contractors were not billable to the Government until the 
contractor had actually paid the subcontractors. The proposed rule 
amends these payment clauses to clarify that, on cost-type 
contracts,payments to subcontractors are not billable by large business 
prime contractors until the subcontractors have been paid by the prime 
contractor.

B. Regulatory Flexibility Act

    This proposed rule is not expected 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 rule 
only applies to large business entities who wish to be reimbursed under 
cost-type contracts. An Initial Regulatory Flexibility Analysis has, 
therefore, not been performed. Comments from small entities concerning 
the affected FAR subpart will be considered in accordance with 5 U.S.C. 
610 of the Act. Such comments must be submitted separately and cite 
(FAR case 93-024), 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 Part 52

    Government procurement.

    Dated: December 15, 1995.
Edward C. Loeb,
Acting Director, Office of Federal Acquisition Policy.

    Therefore, it is proposed that 48 CFR Part 52 be amended as set 
forth below:

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    1. The authority citation for 48 CFR Part 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).

    2. Section 52.216-7 is amended by revising the clause date and 
paragraph (b)(i)(iii) to read as follows:


52.216-7  Allowable cost and payment.

* * * * *

Allowable Cost and Payment (Date)

* * * * *
    (b) * * *
    (1) * * *
    (iii) The amount of progress and other payments that have been 
paid by cash, check or other form of payment to the Contractor's 
subcontractors under similar cost standards.
* * * * *
    3. Section 52.232-7 is amended by revising the clause date and the 
second sentence of paragraph (b)(2) to read as follows:


52.232-7  Payments under time-and-materials and labor-hour contracts.

* * * * *

Payments Under Time-and-Materials and Labor-Hour Contracts (Date)

* * * * *
    (b) * * *
    (2) * * * Reimbursable costs in connection with subcontracts 
shall be limited to the amounts paid to the subcontractor for items 
and services purchased directly for the contract only when cash, 
checks, or other form of payment has been made for such purchased 
items or services; however, this requirement shall not apply to a 
Contractor that is a small business concern. * * *
* * * * *
[FR Doc. 95-30996 Filed 12-20-95; 8:45 am]
BILLING CODE 6820-EP-M