[Federal Register Volume 61, Number 252 (Tuesday, December 31, 1996)]
[Rules and Regulations]
[Pages 69297-69298]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32812]


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DEPARTMENT OF DEFENSE
48 CFR Part 43

[FAC 90-44; FAR Case 96-606; Item VIII]
RIN 9000-AH44


Federal Acquisition Regulation; Modification of Existing 
Contracts

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

ACTION: Interim rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council have agreed to an interim rule to amend 
the Federal Acquisition Regulation (FAR) to implement Sections 4402 (d) 
and (e) of the Clinger-Cohen Act of 1996, which authorizes regulations 
to provide for modification of existing contracts without requiring 
consideration, upon request of the contractor, to incorporate changes 
authorized by the Act. This regulatory action was not subject to Office 
of Management and Budget review under Executive Order 12866, dated 
September 30, 1993. This is not a major rule under 5 U.S.C. 804. The 
Federal Acquisition Reform Act of 1996 was subsequently renamed the 
Clinger-Cohen Act of 1996.

DATES: Effective Date: January 1, 1997.
    Comments Due: To be considered in the formulation of a final rule, 
comments should be submitted to the address given below on or before 
March 3, 1997.

ADDRESSES: Comments should be submitted to: General Services 
Administration, Ms. Beverly Fayson, FAR Secretariat, 18th & F Streets 
NW, Room 4037, Washington, DC 20405.
    E-Mail comments submitted over the Internet should be addressed to: 
96-606@www.ARNet.gov.

FOR FURTHER INFORMATION CONTACT: Mr. Ralph DeStefano at (202) 501-
1758 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 FAC 90-44, FAR case 96-606.

SUPPLEMENTARY INFORMATION:

A. Background

    Section 4402(d) of the Clinger-Cohen Act of 1996 (Pub. L. 104-106) 
states that regulations implementing the Act may provide for 
modification of existing contracts without consideration, upon request 
of the contractor, to incorporate changes authorized by the Act. 
Section 4402(e)(2) also states that nothing in the Act requires the 
renegotiation or modification of existing contracts to incorporate 
changes authorized by the Act. This interim rule adopts the policy of 
encouraging, but not requiring, appropriate modifications without 
consideration, upon the request of the contractor. If the contracting 
officer determines that modification of an existing contract is 
appropriate to incorporate changes authorized by the Act, the 
modification should insert the current version of the applicable FAR 
clauses into the contract.

B. Regulatory Flexibility Act

    The changes in 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 it 
enables industry and the Government to gain significant benefits, 
including the potential reduction of contract costs, by authorizing the 
incorporation into existing contracts any of the Clinger-Cohen Act 
changes that will benefit the contracting parties. An Initial 
Regulatory Flexibility Analysis (IRFA) has been prepared and will be 
provided to the Chief Counsel for Advocacy of the Small Business 
Administration. A copy of the IRFA may be obtained from the FAR 
Secretariat. Comments are invited. Comments from small entities 
concerning the affected FAR subpart also will be considered in 
accordance with 5 U.S.C. 610. Such comments must be submitted 
separately and cite 5 U.S.C. 601, et seq. (FAC 90-44, FAR case 96-606), 
in correspondence. The IRFA is summarized as follows:

    This rule will apply to all large and small entities that 
currently have a Government contract. Most likely, contractors will 
not request modification of contracts under $25,000, because the 
usually short period of performance under these contracts will 
discourage modification. The number of active contracts over $25,000 
held by small entities at any point in time is not readily 
available. However, in Fiscal Year 1995, small entities were awarded 
31,421 contracts (number does not include modifications to 
contracts) over $25,000. Small entities may or may not request 
modification of those contracts depending on whether they determine 
that modification of their specific contracts to incorporate 
Clinger-Cohen Act of 1996 changes will be advantageous. This rule 
imposes no new reporting, recordkeeping, or other compliance 
requirements. This rule is the only practical alternative to 
implement subsections 4402 (d) and (e) of the Act.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the interim rule 
does not impose any new reporting or recordkeeping requirements which 
require Office of Management and Budget approval under 44 U.S.C. 3501, 
et seq.

D. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DOD), the Administrator of General Services (GSA), and the 
Administrator of the National Aeronautics and Space Administration 
(NASA) that, pursuant to 41 U.S.C. 418b, urgent and compelling reasons 
exist to publish an interim rule prior to affording the public an 
opportunity to comment. The rule is necessary because immediate 
promulgation of an interim rule will provide significant benefits to 
industry and the Government. Sections 4402 (d) and (e) of the Clinger-
Cohen Act of 1996 authorize contracting officers, if requested by the 
prime contractor, to modify contracts without requiring consideration 
to incorporate changes authorized by the Act.
    Implementation of Sections 4402 (d) and (e) as an interim rule will 
enable industry and the Government to gain immediate benefits, 
including the potential reduction of contract costs. The interim rule 
authorizes the adoption of any of the rules implementing the Clinger-
Cohen Act of 1996 that will benefit the contracting parties. The 
interim rule should involve no substantial risk to industry, since 
contractors must affirmatively request adoption of the rules for an 
existing contract. However, pursuant to Public Law 98-577 and FAR 
1.501, public comments received in response to this interim rule will 
be considered in the formation of the final rule.

List of Subjects in 48 CFR Part 43

    Government procurement.


[[Page 69298]]


    Dated: December 19, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, 48 CFR part 43 is amended as set forth below:

PART 43--CONTRACT MODIFICATIONS

    1. The authority citation for 48 CFR part 43 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 43.102 is amended by revising paragraph (c) to read as 
follows:


43.102  Policy.

* * * * *
    (c) The Federal Acquisition Streamlining Act of 1994, Public Law 
103-355 (FASA), and Section 4402 of the Clinger-Cohen Act of 1996, 
Public Law 104-106, authorize, but do not require, contracting 
officers, if requested by the prime contractor, to modify contracts 
without requiring consideration to incorporate changes authorized by 
FASA or Clinger-Cohen Act amendments into existing contracts. 
Contracting officers are encouraged, if appropriate, to modify 
contracts without requiring consideration to incorporate these new 
policies. The contract modification should be accomplished by inserting 
into the contract, as a minimum, the current version of the applicable 
FAR clauses.

[FR Doc. 96-32812 Filed 12-30-96; 8:45 am]
BILLING CODE 6820-EP-M