[Federal Register Volume 62, Number 133 (Friday, July 11, 1997)]
[Rules and Regulations]
[Pages 37146-37147]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18218]


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DEPARTMENT OF DEFENSE

48 CFR Parts 235, 243, and 252

[DFARS Case 97-D302]


Defense Federal Acquisition Regulation Supplement; Certification 
of Requests for Equitable Adjustment

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for comments.

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SUMMARY: The Director of Defense Procurement has issued an interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to implement 10 U.S.C. 2410(a), which requires contractors to certify 
that requests for equitable adjustment that exceed the simplified 
acquisition threshold are made in good faith and that the supporting 
data are accurate and complete.

DATES: Effective date: July 11, 1997. Comment date: Comments on the 
interim rule should be submitted in writing to the address shown below 
on or before September 9, 1997, 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 97-D302 in 
all correspondence related to this issue.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, (703) 602-0131.

SUPPLEMENTARY INFORMATION:

A. Background

    This interim rule adds a clause at DFARS 252.243-7002, 
Certification of Requests for Equitable Adjustment, to implement 10 
U.S.C. 2410(a), as amended by Section 2301 of the Federal Acquisition 
Streamlining Act of 1994 (FASA) Pub. L. 103-355).
    A similar clause previously existed at DFARS 252.233-7000, 
Certification of Claims and Requests for Adjustment or Relief. The 
previous clause implemented 10 U.S.C. 2410e, and required contractor 
certification of requests for equitable adjustment as well as 
certification of claims and requests for relief under Public Law 85-
804. Section 2301 of FASA repealed 10 U.S.C. 2410e, and the clause at 
252.233-7000 was removed from the DFARS on January 17, 1997 (62 FR 
2612).

B. Determination to Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense that urgent and compelling reasons exist to publish this 
interim rule prior to affording the public an opportunity to comment. 
This interim rule amends the DFARS to fully implement 10 U.S.C. 
2410(a), as amended by Section 2301 of FASA. 10 U.S.C. 2410(a) provides 
that a request for equitable adjustment to contract terms or requests 
for relief under Pub. L. 85-804, that exceeds the simplified 
acquisition threshold, may not be paid unless the contractor certifies 
that the request is made in good faith and that the supporting data are 
accurate and complete. Immediate publication of an interim rule is 
necessary to implement the requirements of 10 U.S.C. 2410(a) pertaining 
to requests for equitable adjustment. Requirements pertaining to 
requests for relief under Public Law 85-804 have been implemented in 
the Federal Acquisition Regulation (FAR). However, the requirements 
pertaining to requests for equitable adjustment apply only to 
Department of Defense contracts and are not implemented in the FAR.

C. 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 it is 
estimated that approximately 88 percent of the contractors submitting 
requests for equitable adjustment between $100,000 and $500,000 (above 
the simplified acquisition threshold and below the cost or pricing data 
threshold) may be small businesses. Therefore, an Initial Regulatory 
Flexibility Analysis has been prepared and is summarized as follows: 
The objective of this rule is to implement 10 U.S.C. 2410(a), which 
requires contractors to certify that requests for equitable adjustment 
that exceed the simplified acquisition threshold are made in good faith 
and that the supporting data are accurate and complete. The primary 
impact of the rule relates to requests in the range of $100,000 to 
$500,000, because requests in excess of $500,000 generally require 
submission of cost or pricing data and certification thereof. 
Historically, many of the firms requesting equitable adjustment in 
amounts of $100,000 to $500,000 have been construction contractors. It 
is estimated that the rule will affect approximately 330 small entities 
annually. Accounting skills will be necessary to provide the cost data 
to support the certification. There are no Federal rules that 
duplicate, overlap, or conflict with the rule. The rule minimizes the 
impact on small entities, because it only applies to requests exceeding 
the simplified acquisition threshold, and because the certification has 
been limited to that specifically required by 10 U.S.C. 2410(a).
    A copy of the analysis may be obtained from the address specified 
herein. Comments are invited from small businesses and other interested 
parties. Comments from small entities concerning the affected DFARS 
subparts also will be considered in accordance with 5 U.S.C. 610. Such 
comments should be submitted separately and should cite DFARS Case 97-
D302 in correspondence.

D. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. 3501, et seq.) applies 
because the interim rule contains new information collection 
requirements. Under the emergency processing provisions of 44 U.S.C. 
3507(j) as implemented at 5 CFR 1320.13, the Office of Management and 
Budget (OMB) has granted emergency approval of the information 
collection requirement through August 31, 1997, under OMB Clearance 
Number 0704-0397. The OMB approval required under 44 U.S.C. 3507(a)(2) 
will be obtained prior to publication of the final rule.
    1. Comments: Comments are invited. Particular comments are 
solicited on:

[[Page 37147]]

    a. Whether the collection of information is necessary for the 
proper performance of the functions of the agency, including whether 
the information will have practical utility;
    b. The accuracy of the agency's estimate of the burden of the 
information collection, including the validity of the methodology and 
assumption used;
    c. Ways to enhance the quality, utility, and clarity of the 
information to be collected; and
    d. Ways to minimize the burden of the information collection on 
respondents, including the use of automated collection techniques or 
forms of information technology.
    2. Title, Associated Form, and OMB Number: Contract Modifications--
Defense Federal Acquisition Regulation Supplement Part 243 and 
Associated Clauses at 252.243; OMB Number 0704-0397.
    3. Needs and Uses: The information collection required by the 
clause at 252.243-7002, Certification of Requests for Equitable 
Adjustment, is required by 10 U.S.C. 2410(a). The information is used 
by DoD contracting officers and auditors to evaluate requests for 
equitable adjustment.
    4. Affected Public: Businesses or other for profit or not-for-
profit entities.
    5. Annual Burden Hours: 3,850.
    6. Number of Respondents: 575.
    7. Responses Per Respondent: 1.
    8. Number of Responses: 575.
    9. Average Burden Per Response: 6.7 hours.
    10. Frequency: On occasion.
    11. Supplementary Information: The clause at DFARS 252.243-7002 
requires contractors to certify that requests for equitable adjustment 
that exceed the simplified acquisition threshold are made in good faith 
and that the supporting data are accurate and complete, and to provide 
full disclosure of all relevant facts in support of the requested 
adjustment.

List of Subjects in 48 CFR Parts 235, 243, and 252

    Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.

    Therefore, 48 CFR Parts 235, 243, and 252 are amended as follows:
    1. The authority citation for 48 CFR Parts 235, 243, and 252 
continues to read as follows:

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 235--RESEARCH AND DEVELOPMENT CONTRACTING


235.7006  [Amended]

    2. Section 235.7006 is amended in paragraph (d), in the Exhibit-
Research and Development Streamlined Contract Format, by adding at the 
end of Part II, Section I, the entry ``(I.211) 252.243-7002  
Certification of Requests for Equitable Adjustment''.

PART 243--CONTRACT MODIFICATIONS

    3. Section 243.204-70 is added to read as follows:


243.204-70  Certification of requests for equitable adjustment.

    (a) A request for equitable adjustment to contract terms that 
exceeds the simplified acquisition threshold may not be paid unless the 
contract certifies the request in accordance with the clause at 
252.243-7002.
    (b) The aggregate amount of both the increased and decreased costs 
shall be used in determining when the dollar threshold requiring 
certification is met (see example in FAR 15.804-2(a)(1)(iii)).
    4. Section 243.205-72 is added to read as follows:


243.205-72  Certification of requests for equitable adjustment.

    Use the clause at 252.243-7002, Certification of Requests for 
Equitable Adjustment, in solicitations and contracts estimated to 
exceed the simplified acquisition threshold.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


252.212-7001  [Amended]

    5. Section 252.212-7001 is amended by revising the clause date to 
read ``(JUL 1997)''; and in paragraph (b) by adding, in numerical 
order, the entry ``____ 252.243-7002  Certification of Requests for 
Equitable Adjustment (10 U.S.C. 2410)''.
    6. Section 252.243-7002 is added to read as follows:


252.243-702  Certification of Requests for Equitable Adjustment.

    As prescribed in 243.205-72, use the following clause:

Certification of Requests for Equitable Adjustment (July 1997)

    (a) In accordance with 10 U.S.C. 2410(a), any request for 
equitable adjustment to contract terms that exceeds the simplified 
acquisition threshold shall bear, at the time of submission, the 
following certificate executed by an individual authorized to 
certify the request on behalf of the Contractor:
    I certify that the request is made in good faith, and that the 
supporting data are accurate and complete to the best of may 
knowledge and belief.

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(Official's Name)

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(Title)

    (b) The certification in paragraph (a) of this clause requires 
full disclosure of all relevant facts, including--
    (1) Cost or pricing data if required in accordance with FAR 
15.804-2; and
    (2) Actual cost data and data to support any estimated costs, 
even if cost of pricing data are not required.
    (c) The certification requirement in paragraph (a) of this 
clause does not apply to--(1) Requests for routine contract 
payments; for example, requests for payment for accepted supplies 
and services, routine vouchers under a cost-reimbursement type 
contract, or progress payment invoices; or
    (2) Final adjustments under an incentive provision of the 
contract.
    (d) The amount requested shall accurately reflect the contract 
adjustment for which the Contractor believes the Government is 
liable. The request shall include only costs for performing the 
change, and shall not include any costs that already have been 
reimbursed or that have been separately claimed. All indirect costs 
included in the request shall be properly allocable to the change in 
accordance with applicable acquisition regulations.

(End of clause)

[FR Doc. 97-18218 Filed 7-10-97; 8:45 am]
BILLING CODE 5000-04-M