[Federal Register Volume 62, Number 235 (Monday, December 8, 1997)]
[Proposed Rules]
[Pages 64545-64546]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-31935]


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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1843 and 1852


Equitable Adjustments Under Contracts for Construction, 
Dismantling, Demolishing, or Removing Improvements

AGENCY: Office of Procurement, Contract Management Division, National 
Aeronautics and Space Administration (NASA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: This is a proposed rule amending the NASA Federal Acquisition 
Regulation Supplement (NFS) to set forth a clause that may be used for 
equitable adjustments under contracts for construction, and 
dismantling, demolishing, or removing improvements that are 
contemplated to be fixed-price and exceed the simplified acquisition 
threshold.

DATES: Comments must be received on or before February 6, 1998.

ADDRESSES: Submit comments to Mr. Joseph Le Cren, NASA Headquarters, 
Code HK, Washington, DC 20546.

FOR FURTHER INFORMATION CONTACT:
Mr. Joseph Le Cren, Telephone: (202) 358-0444.

SUPPLEMENTARY INFORMATION:

Background

    Some NASA field installations have used clauses containing ceilings 
on indirect costs and profit as a means for handling equitable 
adjustments under construction contracts. Instead of each installation 
using its own clause, there is a consensus that it would be in both 
NASA's and the contractors' interests to have a standard clause to 
establish greater consistency throughout the agency. The proposed 
clause also would reduce the administrative burden associated with the 
development of an equitable adjustment clause on an installation-by-
installation or contract-by-contract basis.
    Neither the use of the proposed clause nor the language contained 
in it would be mandatory. This flexibility is being provided so that 
the clause is used only when it is considered appropriate and to allow 
for differences, such as in terminology, that exist in the construction 
industry in different parts of the United States. The ceiling indirect 
cost and profit rates contained in the clause, although not mandatory, 
are benchmarks as to what is generally considered reasonable. The rates 
are considered reasonable based on NASA's experience with equitable 
adjustments for construction. In addition, the ceiling rates contained 
in the proposed clause are the same as those that have been used for 
many years by both the General Services Administration and the 
Department of Veterans Affairs. The rates used by these agencies have 
significance since they have much larger construction budgets than 
NASA.

Impact

    NASA certifies that this proposed regulation will not have a 
significant economic effect on a substantial number of small entities 
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). This rule 
does not impose any reporting or record keeping requirements subject to 
the Paperwork Reduction Act.

List of Subjects in 48 CFR Parts 1843 and 1852

    Government procurement.
Tom Luedtke,
Deputy Associate Administrator for Procurement.

    Accordingly, 48 CFR Parts 1843 and 1852 are amended as follows:
    1. The authority citation for 48 CFR Parts 1843 and 1852 continues 
to read as follows:

    Authority: 42 U.S.C. 2473(c)(1).

PART 1843--CONTRACT MODIFICATIONS


1843.205-70  [Amended]

    2. In section 1843.205-70, the designated paragraphs (a), (b), and 
(c) are redesignated as paragraphs (a)(1), (2) and (3), and a new 
paragraph (b) is added to read as follows:


1843.205-70  NASA contract clause.

* * * * *
    (b) the contracting officer may insert a clause substantially as 
stated at 1852.243-72, Equitable Adjustments, in solicitations and 
contracts for--
    (1) Dismantling, demolishing, or removing improvements; or
    (2) Construction, when the contract amount is expected to exceed 
the simplified acquisition threshold and a fixed-price contract is 
contemplated.

PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


1852.243-72  [Added]

    3. Section 1852.243-72 is added to read as follows:


1852.243-72  Equitable Adjustments.

    As prescribed in 1843.205-70(b), insert the following clause.

Equitable Adjustments

    (a) The provisions of all other clauses contained in this 
contract which provide for an equitable adjustment, including those 
clauses incorporated by reference with the exception of the 
``Suspension of Work'' clause (FAR 52.242-14), are supplemented as 
follows:
    Upon written request, the Contractor shall submit a proposal for 
review by the Government. The proposal shall be submitted to the 
contracting officer within the time limit indicated in the request 
or any extension thereto subsequently granted. The proposal shall 
provide an itemized breakdown of all increases and decreases in the 
contract for the Contractor and each subcontractor in at least the 
following detail: material quantities and costs; direct labor hours 
and rates for each trade; the associated FICA, FUTA, SUTA, and 
Workmen's Compensation Insurance; and equipment hours and rates.

[[Page 64546]]

    (b) The overhead percentage cited below shall be considered to 
include all indirect costs including, but not limited to, field and 
office supervisors and assistants, incidental job burdens, small 
tools, and general overhead allocations. ``Commission'' is defined 
as profit on work performed by others. The percentages for overhead, 
profit, and commission are negotiable according to the nature, 
extent, and complexity of the work involved, but in no case shall 
they exceed the following ceilings:

------------------------------------------------------------------------
                                       Overhead     Profit    Commission
                                       (percent)   (percent)   (percent)
------------------------------------------------------------------------
To Contractor on work performed by                                      
 other than its own forces..........  ..........  ..........          10
To first tier subcontractor on work                                     
 performed by its subcontractors....  ..........  ..........          10
To Contractor and/or subcontractors                                     
 on work performed with their own                                       
 forces.............................          10          10  ..........
------------------------------------------------------------------------

    (c) Not more than four percentages for overhead, profit, and 
commission shall be allowed regardless of the number of 
subcontractor tiers.
    (d) The Contractor or subcontractor shall not be allowed 
overhead or commission on the overhead, profit, and/or commission 
received by its subcontractors.
    (e) Equitable adjustments for deleted work shall include 
credits, limited to the same percentages for overhead, profit, and 
commission in paragraph (b) of this clause.
    (f) On proposals covering both increases and decreases in the 
amount of the contract, the application of the overhead, profit, and 
commission shall be on the net change in direct costs for the 
Contractor or the subcontractor performing the work.
    (g) After receipt of the Contractor's proposal, the contracting 
officer shall act within a reasonable period, provided that when the 
necessity to proceed with a change does not permit time to properly 
check the proposal, or in the event of a failure to reach an 
agreement on a proposal, the contracting officer may order the 
Contractor to proceed on the basis of the price being determined at 
the earliest practicable date. In such a case, the price shall not 
be more than the increase or less than the decrease proposed.

(End of clause)

[FR Doc. 97-31935 Filed 12-5-97; 8:45 am]
BILLING CODE 7510-01-M