[Federal Register Volume 63, Number 119 (Monday, June 22, 1998)]
[Rules and Regulations]
[Pages 34078-34079]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16121]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Part 48
[FAC 97-05; FAR Case 96-011; Item X]
RIN 9000-AH37
Federal Acquisition Regulation; No-Cost Value Engineering Change
Proposals
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Interim rule with request for comments.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council have agreed on an interim rule amending
the Federal Acquisition Regulation (FAR) to clarify that no-cost value
engineering change proposals (VECPs) may be used when, in the
contracting officer's judgment, reliance on other VECP approaches
likely would not be more cost-effective, and the no-cost settlement
would provide adequate consideration to the Government. This regulatory
action was not subject to Office of Management and Budget review under
Executive Order 12866, dated September 30, 1993, and is not a major
rule under 5 U.S.C. 804.
DATES: Effective June 22, 1998.
Comment Date: Comments should be submitted to the FAR Secretariat
at the address shown below on or before August 21, 1998 to be
considered in the formulation of a final rule.
ADDRESSES: Interested parties should submit written comments to:
General Services Administration, FAR Secretariat (MVR), 1800 F Street,
NW, Room 4035, Attn: Ms. Laurie Duarte, Washington, DC 20405.
E-Mail comments submitted over the Internet should be addressed to:
[email protected].
Please cite FAC 97-05, FAR case 96-011 in all correspondence
related to this case.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS
Building, Washington, DC 20405, (202) 501-4755, for information
pertaining to status or publication schedules. For clarification of
content, contact Ms. Linda Klein, Procurement Analyst, at (202) 501-
3775. Please cite FAC 97-05, FAR case 96-011.
[[Page 34079]]
SUPPLEMENTARY INFORMATION:
A. Background
This interim rule clarifies that the no-cost VECP guidance at FAR
48.104-3 permits the use of no-cost settlements when the contracting
officer has balanced the administrative costs of negotiating a
settlement against the anticipated savings, and when, in the
contracting officers judgment, reliance on other VECP approaches likely
would not be more cost-effective, and the no-cost settlement would
provide adequate consideration to the Government. The no-cost VECP
alternative was not intended for use when significant cost savings are
anticipated on the instant contract.
B. Regulatory Flexibility Act
The changes 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 could reduce
the number of no-cost VECP settlements negotiated between the
Government and private entities. An Initial Regulatory Flexibility
Analysis (IRFA) has been prepared and is summarized as follows:
This interim rule clarifies that the guidance at FAR 48.104-3,
Sharing alternative--no-cost settlement method, permits use of no-
cost VECPs settlements when the contracting officer has balanced the
administrative costs of negotiating a settlement against the
anticipated savings; and, in the contracting officer's judgment,
reliance on other VECP approaches likely would not be more cost-
effective, and the no-cost settlement would provide adequate
consideration to the Government. The no-cost VECP alternative was
not intended for use when significant cost savings are anticipated
on the instant contract.
A copy of the IRFA has been submitted to the Chief Counsel for Advocacy
of the Small Business Administration and may be obtained from the FAR
Secretariat at the address above. 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 should cite 5 U.S.C 601, et seq. (FAR Case 96-
011), in correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the FAR do not impose recordkeeping or information collection
requirements, or collection 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.
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 urgent and compelling reasons exist to promulgate this
interim rule without prior opportunity for public comment. This action
is necessary to preclude misinterpretation and misuse of existing
guidance and resulting VECP settlements that do not provide the
Government with appropriate consideration. However, pursuant to Pub. L.
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 48
Government procurement.
Dated: June 11, 1998.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
Therefore, 48 CFR Part 48 is amended as set forth below:
PART 48--VALUE ENGINEERING
1. The authority citation for 48 CFR Part 48 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 48.104-3 is revised to read as follows:
48.104-3 Sharing alternative--no-cost settlement method.
In selecting an appropriate mechanism for incorporating a VECP into
a contract, the contracting officer shall analyze the different
approaches available to determine which one would be in the
Government's best interest. Contracting officers should balance the
administrative costs of negotiating a settlement against the
anticipated savings. A no-cost settlement may be used if, in the
contracting officer's judgment, reliance on other VECP approaches
likely would not be more cost-effective, and the no-cost settlement
would provide adequate consideration to the Government. Under this
method of settlement, the contractor would keep all of the savings on
the instant contract, and all savings on its concurrent contracts only.
The Government would keep all savings resulting from concurrent
contracts placed with other sources, savings from all future contracts,
and all collateral savings. Use of this method must be by mutual
agreement of both parties for individual VECPs.
[FR Doc. 98-16121 Filed 6-19-98; 8:45 am]
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