[Federal Register Volume 63, Number 208 (Wednesday, October 28, 1998)]
[Proposed Rules]
[Pages 57878-57879]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28782]


      

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Part III





Department of Defense

General Services Administration

National Aeronautics and Space Administration





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48 CFR Part 46



Federal Acquisition Regulation: Conditionally Accepted Items; Proposed 
Rule

  Federal Register / Vol. 63, No. 208 / Wednesday, October 28, 1998 / 
Proposed Rules  

[[Page 57878]]



DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 46

[FAR Case 98-002]
RIN 9000-A117


Federal Acquisition Regulation; Conditionally Accepted Items

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

ACTION: Proposed rule with request for comments.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council are proposing to amend the Federal 
Acquisition Regulation (FAR) to require that, when conditionally 
accepting nonconforming items, amounts withheld from payments should be 
at least sufficient to cover the cost and related profit to correct 
deficiencies and complete unfinished work; and that the basis for the 
amounts withheld shall be documented in the contract file. 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.

DATES: Comments should be submitted on or before December 28, 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), Attn: Ms Laurie 
Duarte 1800 F Street, NW, Room 4035, Washington, DC 20405.
    E-mail comments submitted over Internet should be addressed to: 
[email protected].
    Please cite FAR case 98-002 in all correspondence related to this 
case.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, 1800 F 
Street, NW, 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 FAR case 98-002.

SUPPLEMENTARY INFORMATION:

A. Background

    This proposed rule implements the recommendation of General 
Accounting Office Report GAO/NSIAD-98-20 Defense Acquisition, Guidance 
Is Needed On Payments For Conditionally Accepted Items, dated December 
12, 1997. The rule amends FAR 46.101 to add a definition of 
``conditional acceptance,'' and amends FAR 46.407 to provide procedures 
for the conditional acceptance of supplies and services.

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 use 
of conditional acceptance is not widespread. Therefore, an Initial 
Regulatory Flexibility Analysis has 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 should cite 5 U.S.C. 601, et seq. (FAR case 
98-002), 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 46

    Government procurement.

    Dated: October 22, 1998.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
    Therefore, it is proposed that 48 CFR Part 46 be amended as set 
forth below:

PART 46--QUALITY ASSURANCE

    1. The authority citation for 48 CFR Part 46 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 46.101 is amended by adding, in alphabetical order, the 
definition ``Conditional acceptance'' to read as follows:


46.101  Definitions.

* * * * *
    Conditional acceptance means acceptance of supplies or services 
that do not conform to contract quality requirements, or are otherwise 
incomplete, that the contractor is required to correct or otherwise 
complete by a specified date.
* * * * *
    3. Section 46.407 is amended by revising paragraphs (c)(1) and (f) 
to read as follows:


46.407  Nonconforming supplies or services.

* * * * *
    (c)(1) In situations not covered by paragraph (b) of this section, 
the contracting officer shall ordinarily reject supplies or services 
when the nonconformance is critical or major, or the supplies or 
services are otherwise incomplete. However, there may be circumstances 
(e.g., reasons of economy or urgency) when acceptance or conditional 
acceptance of such supplies or services is determined by the 
contracting officer to be in the best interest of the Government. The 
contracting officer shall make this determination based upon--
    (i) Advice of the technical activity that the item is safe to use 
and will perform its intended purpose;
    (ii) Information regarding the nature and extent of the 
nonconformance or otherwise incomplete supplies or services;
    (iii) A request from the contractor for acceptance of the 
nonconforming or otherwise incomplete supplies or services (if 
feasible);
    (iv) A recommendation for acceptance, conditional acceptance, or 
rejection, with supporting rationale; and
    (v) The contract adjustment considered appropriate, including any 
adjustment offered by the contractor.
* * * * *
    (f) When supplies or services are accepted with critical or major 
nonconformances as authorized in paragraph (c) of this section, the 
contract shall be modified to provide for an equitable price reduction 
or other consideration. In the case of conditional acceptance, amounts 
withheld from payments generally should be at least sufficient to cover 
the estimated cost and related profit to correct deficiencies and 
complete unfinished work. The basis for the amounts withheld shall be 
documented in the contract file. For services, the contracting officer 
can consider identifying the value of the individual work requirements 
or tasks (subdivisions) that may be subject to price or fee reduction. 
This value may be used to determine an equitable adjustment for 
nonconforming services. However, when supplies or services involving 
minor nonconformances are accepted, the contract need not be modified 
unless it appears that the

[[Page 57879]]

savings to the contractor in fabricating the nonconforming supplies or 
performing the services will exceed the cost to the Government of 
processing the modification.
* * * * *
[FR Doc. 98-28782 Filed 10-27-98; 8:45 am]
BILLING CODE 6820-EP-P