[Federal Register Volume 63, Number 213 (Wednesday, November 4, 1998)]
[Proposed Rules]
[Pages 59501-59504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28804]



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INTERNATIONAL DEVELOPMENT COOPERATION AGENCY

U.S. Agency for International Development

48 CFR Parts 712, 727, 742, 752, and Chapter 7, Appendix I

[AIDAR Notice 98-2]
RIN 0412-AA30


Miscellaneous Amendments to Acquisition Regulations

AGENCY: U.S. Agency for International Development (USAID).

ACTION: Proposed rule.

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SUMMARY: The U.S. Agency for International Development seeks public 
comment on a proposed rule that would revise the USAID Acquisition 
Regulation (AIDAR), 48 CFR Chapter 7. These revisions are being 
proposed to address current AIDAR deficiencies, some of which result 
from changes in the Federal Acquisition Regulation (FAR, 48 CFR Ch. 1).

DATES: Comments must be received no later than January 4, 1998.

ADDRESSES: Comments on the proposed rule should be addressed to: Ms. 
Diane Howard, Procurement Analyst, Policy Division, Office of 
Procurement (M/OP/P), Room 7.08-082U, 1300 Pennsylvania Ave. (RRB), 
U.S. Agency for International Development, Washington, DC 20523-7801. 
Electronic mail comments are encouraged and may be submitted via 
Internet to [email protected]. Please include the full body of 
electronic mail comments in the text and not as an attachment, as well 
as the name, title, organization, postal address, and E-mail address in 
the text of the message.

FOR FURTHER INFORMATION CONTACT:
M/OP/P, Ms. Diane M. Howard, (202) 712-0206.

SUPPLEMENTARY INFORMATION: USAID is seeking comments on the proposed 
rule as described below:
    A. The FAR was significantly revised as a result of the Federal 
Acquisition Streamlining Act of 1994 (FASA) and the Federal Acquisition 
Reform Act of 1996, now known as the Clinger-Cohen Act of 1996, 
particularly in how it covers the procurement of commercial items. An 
existing AIDAR clause, 752.7008 ``Use of Government Facilities or 
Personnel (APR 1984)'', requires that the unauthorized use of U.S. 
Government facilities (such as office space or equipment), or U.S. 
Government clerical or technical personnel in the performance of the 
services specified in the contract shall result in an offset in the 
amount payable under the contract by an amount equal to the value of 
the U.S. Government facilities or personnel. Although USAID does not 
procure many commercial items, we envision a possible situation in 
which this policy may be in conflict with customary commercial 
practice, if there is a commercial practice of providing the 
purchaser's facilities or personnel to the vendor for use in the normal 
performance of the contract. A new section 712.101 ``Policy'' is 
proposed to address this potential concern; while we believe that the 
situation would rarely arise, the proposed language is intended to 
clarify how it is to be handled, should it arise. We are especially 
interested in receiving comments from vendors, particularly of 
commercial services, who would be in a better position to inform us 
whether our concerns have any basis.
    B. For years before the Federal Acquisition Regulation covered 
Rights in Data and Copyrights (48 CFR Subpart 27.4), AIDAR Appendix I 
contained USAID's policy on academic publication or release to parties 
other than those specifically authorized, of unclassified materials 
gathered or developed under contracts with academic institutions. The 
policy stated in Appendix I is not fully consistent with comparable 
coverage in FAR Subpart 27.4 and the clause at FAR 52.227-14, and USAID 
has determined that the Appendix, which is more restrictive than the 
FAR coverage, should be removed, as we propose to do in this Rule. 
However, some of the concerns addressed in the Appendix still exist, so 
a new Part 727 is proposed to address these concerns by authorizing the 
contracting officer to reserve the right to review data prior to 
publication. Since this proposed rule will not require the contracting 
officer's approval for the manuscript's publication, we do not believe 
that it is contrary to FAR 27.4 or the Rights in Data--General clause 
at FAR 52.227-14. Rather, it will serve to establish the Agency's 
policy regarding publication of material that may have national 
security implications serious enough to adversely affect the conduct of 
U.S. assistance programs and that may have potential repercussions on 
the successful execution of development and other cooperative programs 
in which the United States and foreign countries are involved.
    In addition, the proposed Part 727 includes language to make the 
clause at FAR 52.227-14 applicable to USAID's contracts performed 
overseas and awarded to U.S. organizations, to provide an alternate 
paragraph to add to this clause to reserve USAID's right to restrict 
release of data when release may negatively impact the Government's 
development or diplomatic relationship with the cooperating country, 
and to provide guidance on Rights in Data coverage for overseas 
contracts with non-US entities.
    C. Over the past several years as part of the Agency's 
reengineering efforts under the NPR, we have been trying to standardize 
reporting requirements under our technical assistance contracts. 
Several versions of a ``Reports'' clause have been implemented in our 
contracts since 1994, in lieu of the 1989 version of the clause that 
currently is found at (48 CFR) AIDAR 752.7026. However, these 
standardized ``Reports'' clauses have been found to be inadequate as 
contractor performance monitoring tools. Many times, contractors have 
not been reporting substantive information that is useful to the 
cognizant technical officer (CTO)'s monitoring of the contractor's 
performance, or the CTO has not been making effective use of the 
information being provided, or the reports were submitted too late for 
the information they contained to be of any benefit in improving or 
correcting the contractor's performance.
    We are proposing to add a new section 742.1170 to the AIDAR, as 
well as a new clause as 752.242-70. Although we considered just making 
use of (48 CFR) FAR Subpart 42.11, after conducting an informal 
internal review, we concluded that developing a parallel but stand-
alone AIDAR section would be more effective since we would then be able 
to use terminology and concepts more familiar to USAID program experts, 
who would then be more likely to fully use it. The intent of the 
proposed section is to allow the CTO to be specific about what 
information should be reported and when, so we expect that the 
reporting will be more efficient and timely, and therefore more 
effective. Along with the rest of the Government, USAID has a renewed 
focus on obtaining results in our programs, and we believe that the 
proposed clause, AIDAR 752.242-70 entitled ``Periodic Progress 
Reports'', will provide USAID with a mechanism to tailor the reporting 
requirements to obtain the best information to ensure that we achieve 
the results we need from our contractors. In addition, the optional 
withholding provision in paragraph (b) of the clause provides the 
Agency with an enforcement tool that will reduce the contractors to 
comply. Supplementary guidance on how to tailor the reporting 
requirements and circumstances that may warrant exercising the 
withholding will be

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issued to contracting officers and CTOs in a Contract Information 
Bulletin.
    D. USAID has always extensively used indefinite delivery contracts 
which combine features from different contract types; rather than use 
the fixed-price or cost-reimbursement payment clauses in the FAR for 
these hybrid contracts, the AIDAR allowed for the use of FAR 52.232-7 
with an amended preamble, per AIDAR 752.232-7, in those indefinite 
quantity contracts which use a fixed daily rate pricing structure for 
services and reimbursement of other direct costs at cost. However, the 
preamble to the FAR clause in AIDAR 752.232-7 leads to an ambiguity 
regarding how much the Agency is to withhold. Our first step to remove 
this ambiguity is to clarity our terminology by specifying that 
``contract'' in this context includes ``task order'' or ``delivery 
order''.
    We also propose to modify paragraph (a)(2) of FAR 52.232-7, which 
states that the amount to be withheld is ``5 percent of the amounts due 
under this paragraph (a), but the total amount withheld shall not 
exceed $50,000''. The ambiguity arises because 5 percent is being 
withheld under each task order, many of which are issued from different 
Agency contracting activities and paid from different paying offices 
around the world. The result has been withholdings under the basic 
contract which exceed $50,000, even though this is inconsistent with 
the FAR's capping the withholdings at $50,000 per contract. USAID's use 
of these types of contracts has increased in recent years, and the size 
and duration of task orders under these contracts has gown to the point 
where there are frequent orders over $1,000,000 and for a year or 
longer. Under these circumstances, for some contractors, withholding 
$50,000 for each of possibly three or four task orders is a significant 
financial burden. However, limiting to $50,000 per basic contract the 
amount withheld for some contracts having as much as $10 million in 
task orders outstanding at any one time would not sufficiently protect 
the Agency, as intended by the FAR clause. Because of the difficulties 
that would arise in trying to coordinate cumulative withholdings per 
contract when payments are being made from so many different paying 
offices, we are proposing to modify the AIDAR implementation of the FAR 
clause by reducing the withholding percentage to one percent per task 
order, up to a maximum of $50,000 per task order, and have no limit 
specified for the basic contract. While we believe this is a reasonable 
compromise between not unduly burdening contractors with excessive 
withholdings and still protecting the Agency's interests by making the 
cap per task order, we are very interested in the pubic's opinion and 
comments. A modification of this nature will require a deviation to the 
FAR clause, which we intend to seek prior to formulating the final 
rule, after considering comments received in response to this proposed 
rule.
    The changes in this proposed rule are not considered significant 
under FAR 1.301 or FAR 1.501. The proposed rule does not establish a 
new collection of information as contemplated by the Paperwork 
Reduction Act nor will it have an impact on a substantial number of 
small entities within the meaning of the Regulatory Flexibility Act, 5 
U.S.C. 601, et seq. Although the proposed changes affecting 
withholdings under indefinite quantity contracts may result in 
cumulative withholdings over $50,000 per basic contract, the limit 
specified in the FAR, we do not anticipate that this will have a 
negative impact on small businesses, since, overall, the withholdings 
will be less than they are now. We conducted a survey of existing task 
orders with small businesses and found that none of the orders 
currently being implemented would reach the $50,000 cap per task order 
using a one percent withholding. In addition, using the reduced 
withholding, a task order would have to have $5,000,000 worth of 
burdened labor costs before this threshold is reached, which is an 
unusually large order for the small businesses with whom USAID 
typically contracts. Finally, since $5,000,000 is the maximum in annual 
receipts for qualifying as a small business in the typical SIC codes 
under which USAID's services contracts usually fall, a firm may no 
longer be considered a small business if it were to receive orders of 
this size. Therefore, an Initial Regulatory Flexibility Analysis has 
not been performed. Comments or questions may be addressed as specified 
in the FOR FURTHER INFORMATION CONTACT section of the Preamble.

List of Subjects in 48 CFR Parts 712, 727, 742, and 752

    Government procurement.

    Therefore, it is proposed that 48 CFR Chapter 7 be amended as set 
forth below:
    1. The authority citations in Parts 742 and 752 continue to read as 
follows:

    Authority: Sec. 621, Pub. L. 87-195, 75 Stat. 445, (22 U.S.C. 
2381) as amended; E.O. 12163, Sept. 29, 1979, 44 FR 56673; 3 CFR 
1979 Comp., p. 435.

    2. A new Part 712 is added to subchapter B to read as follows:

PART 712--ACQUISITION OF COMMERCIAL ITEMS

    Authority: Sec. 621, Pub. L. 87-195, 75 Stat. 445, (22 U.S.C. 
2381) as amended; E.O. 12163, Sept. 29, 1979, 44 FR 56673; 3 CFR 
1979 Comp., p. 435.


712.101  Policy.

    USAID policy regarding the acquisition of commercial items 
prohibits the use of Government facilities or personnel in the 
performance of such contracts, unless customary commercial practice for 
the item or service being acquired involves the use of the purchaser's 
facilities or personnel. In the latter case, USAID shall comply with 
customary commercial practice but shall ensure that the contract terms, 
including price, reflect this practice, unless a waiver is obtained in 
accordance with FAR 12.302. If a waiver is approved, then the 
contracting officer shall include the clause at 752.7008 in the 
contract.
    3. A new part 727 is added to subchapter E to read as follows:

PART 727--PATENTS, DATA, AND COPYRIGHTS

Subpart 727.4--Rights in Data and Copyrights

Sec.
727.401  Definitions.
727.409  Solicitation provisions and contract clauses.
727.470  USAID policy on academic publications.

    Authority: Sec. 621, Pub. L. 87-195, 75 Stat. 445, (22 U.S.C. 
2381) as amended; E.O. 12163, Sept. 29, 1979, 44 FR 56673; 3 CFR 
1979 Comp., p. 435.

Subpart 727.4--Rights in Data and Copyrights


727.401  Definitions.

    Contract manuscript means a report or other data [as defined in FAR 
27.401] which is prepared and delivered to the Agency under the terms 
of the contract.
    Non-contract manuscript means an article, book or other data 
compilation based upon experience and information gained under a USAID 
contract but not prepared or delivered under the contract.


727.409  Solicitation provisions and contract clauses.

    (a) Notwithstanding the exception in FAR 27.409(a)(1)(iii), and as 
provided for in paragraph (n) of the same section, USAID procedures are 
to include the clause at FAR 52.227.14 in contracts with U.S. entities, 
regardless of place of performance, and in contracts with non-

[[Page 59503]]

U.S. entities for performance in the U.S., to the same extent that the 
clause would be included in contracts with U.S. entities for 
performance in the U.S. In contracts performed overseas, where the 
release or publication of data first produced in the performance of the 
contract may be sensitive to U.S. Government relations with the 
cooperating country, the contracting officer shall also use the clause 
at 752.227-14.
    (b) For contracts with non-U.S. entities involving performance 
overseas, contracting officers shall include the substance of the 
clause at FAR 52.227-14 but adapted as necessary to comply with 
applicable laws in the country of performance. Legal advice shall be 
obtained to the extent necessary in adapting the clause. A deviation is 
not required.


727.470  USAID policy on academic publications.

    (a) USAID policy favors and encourages the publication of scholarly 
research as well as the maximum availability, distribution, and use of 
knowledge developed in its programs and will not require an academic 
institution to obtain permission to publish the written work produced 
under a contract. USAID does, however, ask for the opportunity to 
review the manuscript, for comment only, prior to publication.
    (1) In the case of a contract manuscript as defined in section 
727.401 of this subpart, USAID reserves the right to disclaim 
endorsement of the opinions expressed.
    (2) In the case of a non-contract manuscript as defined in section 
727.401 of this subpart, USAID reserves the right to dissociate itself 
from sponsorship or publication.
    (b)(1) To implement the policy stated in paragraph (a) of this 
section, the contracting officer may reserve the right to review all 
manuscripts prior to release for publication in those exceptional cases 
where conditions exist making its reasonably foreseeable, in light of 
the contract's scope of work and the manner and place of performance, 
that the written work to be prepared and delivered under the contract 
may have adverse repercussions on the relations and programs of the 
United States. Where this right is reserved, it must be so specified in 
the contract in accordance with paragraph (c) of this section.
    (2) When deciding whether to reserve the right of review prior to 
release, the contracting officer shall consult with other USAID 
technical offices (such as the strategic objective/results package 
team, LPA, GC, etc.), as appropriate, and shall carefully consider all 
relevant factors of the specific contract, including:
    (i) The extent to which prompt and full performance of the contract 
will require access, facilitated by reason of the contract, to 
information not generally available to scholars;
    (ii) The extent to which the work involves matters of political 
concern to foreign countries, particularly where any substantial part 
of the work is to be performed therein;
    (iii) The extent to which, by reason of USAID's close involvement 
and cooperation in the performance of the contract, the work product 
may be so identified with USAID itself as to prevent effective 
disclaimer of USAID endorsement thereof;
    (iv) The extent to which the objective of the contract is to 
provide advice to USAID or to a foreign government of immediate 
operational significance in the conduct of the USAID program or the 
implementation of governmental programs in the host country;
    (v) The desires of the host country.
    (c) The actual contractual language reserving to the contracting 
officer the right to review a manuscript prior to release for 
publication must be worded to reflect the agreement reached in the 
contract negotiations. In order to allow enough time for USAID to 
adequately review and then determine its position regarding the 
manuscript, the contractual language shall provide for at least a two 
week (10 business days) timeframe for the USAID review to take place 
prior to the manuscript being submitted to the publisher.

PART 742--CONTRACT ADMINISTRATION


742.1170  [Added]

    4. A new section 742.1170 and subsections 742.1170-1 through 
742.1170-4 are added to read as follows:


742.1170  Performance monitoring and progress reporting.


742.1170  General.

    Performance monitoring is a function of contract administration 
used to determine contractor progress towards achieving the goals and 
objectives of the contract and to identify any factors that may delay 
or prevent the accomplishment of those goals and objectives. 
Performance monitoring requires USAID personnel, particularly the 
Cognizant Technical Officer, to maintain adequate knowledge of the 
contractor's activities and progress in order to ensure that USAID's 
objectives, as stated in the contract's Statement of Work, will be 
achieved.


742.1170-2  Applicability.

    (a) This section applies to USAID non-personal, professional/
technical services contracts exceeding the simplified acquisition 
threshold, but may be applied to other USAID contracts (except personal 
services contracts awarded in accordance with Appendices D and J), if 
the contracting officer and requiring office determine that doing so is 
in the best interests of the Agency. This determination shall be 
documented in the contract file.
    (b) The underlying principles of FAR Subpart 42.11 apply to USAID 
contracts and are inherent to this section. However, not all of the 
specific requirements and terminology in FAR 42.11 are compatible with 
the types of technical assistance contracts usually awarded by USAID. 
Therefore, this section 742.1170 shall apply in lieu of the 
requirements of FAR Subpart 42.11.
    (c) The progress reports discussed in this section are separate 
from the performance evaluation reports prepared in accordance with FAR 
42.15 and internal Agency procedures, although they may be used by 
USAID personnel or their authorized representatives when evaluating the 
contractor's performance. Furthermore, the policies, procedures and 
limitations of this section do not apply to technical reports, studies, 
papers, etc., the acquisition of which may be part of or even the sole 
purpose of the contract.


742.1170-3  Policy.

    (a) The contractor is responsible for timely contract performance. 
Performance monitoring by USAID does not obviate this responsibility.
    (b) The Strategic Objective Team (SOT), particularly the Cognizant 
Technical Officer and the Contracting Officer, will determined how to 
monitor the contractor's performance to protect the Government's 
interests, by considering:
    (1) The contract requirements for reporting progress;
    (2) The contract performance schedule;
    (3) The contractor's implementation plan or workplan;
    (4) The contractor's history of contract performance;
    (5) The contractor's experience with the services or supplies being 
provided under the contract;
    (6) The contractor's financial capability;
    (7) Any other factors the SOT considers appropriate and necessary 
to adequately monitor contractor

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performance (for example, the day-to-day working proximity of the SOT, 
CTO, or contracting officer to the contractor's place of performance).
    (c) In monitoring contractor performance, the SOT (particularly the 
cognizant technical officer and contracting officer) shall utilize any 
of the contractor's existing systems or processes for monitoring 
progress, provided that doing so is not contrary to the terms of the 
contract. The SOT shall not require anything from the contractor that 
is outside the claims of waivers, of changes, or of other contract 
modifications. Further, progress reports shall not require information 
already available from other sources.


742.1170-4  Progress reporting requirements and contract clause.

    (a) When information on contract performance status is needed, the 
contract may include a requirement for the contractor to submit 
periodic progress reports, tailored to address specific contract 
requirements but limited to only that information essential to USAID's 
needs in monitoring the contractor's progress.
    (b) Because the cognizant technical officer (CTO) is the individual 
most familiar with the contractor's performance, the progress reports 
shall be directed to the CTO, who shall review the reports and advise 
the contracting officer of any required action, including any action 
needed to address potential or actual delays in performance. Such 
advice shall be in writing and provided in sufficient time for the 
contracting officer to take necessary action, and shall provide a 
definite recommendation, if action is appropriate. The requirements of 
this paragraph do not relieve the contractor of notification 
requirements identified elsewhere in the contract.
    (c) The contracting officer shall insert the clause at 752.242-70, 
Periodic Progress Reports, in solicitations and contracts when progress 
reporting is required, as specified in this section. When this clause 
is used, the contract shall specify appropriate reporting instructions 
in Section G of the contract.

PART 752--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


752.227-14  [Added]

    5. A new section 752.227-14 is added to read as follows:


752.227-14  Rights in data--General (overseas).

    As prescribed in 727.409(a), the following paragraph (d) shall be 
used in lieu of paragraph (d) in FAR 52.227-14 in all contracts 
requiring performance overseas:

Rights in Data--General (Overseas) (XXXX 1998)

    (d)(1) For all data first produced or specifically used by the 
Contractor in the performance of this contract in the United States, 
its territories, or Puerto Rico, the Contractor shall have the right 
to use, release to others, reproduce, distribute, or publish such 
data, except to the extent such data may be subject to the Federal 
export control or national security laws or regulations, or unless 
otherwise provided in this paragraph of this clause or expressly set 
forth in this contract.
    (2) For all data first produced or specifically used by the 
Contractor in the overseas performance of this contract, the 
Contractor shall not release, reproduce, distribute, or publish such 
data without the written permission of the Contracting Officer.
    (3) The Contractor agrees that to the extent it receives or is 
given access to data necessary for the performance of this contract 
which contain restrictive markings, the Contractor shall treat the 
data in accordance with such markings unless otherwise specifically 
authorized in writing by the Contracting Officer.


752.232-7  [Revised]

    5. Section 752.232-7 is revised to read as follows:


752.232-7  Payments under Time-and-Materials and Labor-Hour Contracts.

    USAID uses the payment clause contained in FAR 52.232-7, PAYMENT 
UNDER THE TIME-AND-MATERIALS AND LABOR-HOUR CONTRACTS, in indefinite 
delivery (task order) contracts for professional services, modified as 
follows:

Payment Under Time-and-Materials and Labor-Hour Contracts (XXXX 1998)

    (a) The following preamble will be included:
    Certain terms used in this clause shall be interpreted as 
follows:
    The term ``contract(s)'' includes ``delivery order(s)'' and 
``task orders''; ``hour(s)'', or ``hourly'' may be calculated in 
terms of ``day(s)'' or ``daily (8 hours)''; and ``materials'' 
includes ``other direct costs''.
    (b) Paragraph (a)(2) of the FAR clause is revised to read as 
follows:
    Unless otherwise prescribed in the Schedule, the Contracting 
Officer shall withhold one (1) percent of the amount due under each 
task order, but the total amount withheld per task order shall not 
exceed $50,000. Amounts withheld under an individual task order 
shall be retained until the execution and delivery of a release for 
each task order by the Contractor as provided in paragraph (f) 
below.


752.242-70  [Added]

    6. A new section 752.242-70 is added to read as follows:


752.242-70  Periodic progress reports.

    As prescribed in 742.1170-3(c), insert the following clause in 
contracts for which periodic progress reports are required from the 
contractor. The term ``contract'' shall be interpreted as ``task 
order'' or ``delivery order'' when this clause is used in an 
indefinite-delivery contract.

Periodic Progress Reports (August 1998)

    (a) The contractor shall prepare and submit progress reports as 
specified in the Schedule of this contract. These reports are 
separate from the interim and final performance evaluation reports 
prepared by USAID in accordance with FAR 42.15 and internal Agency 
procedures, but they may be used by USAID personnel or their 
authorized representatives when evaluating the contractor's 
performance.
    (b) During any delay in furnishing a progress report required 
under this contract, the contracting officer may withhold from 
payment an amount not to exceed US$25,000 (or local currency 
equivalent) or 5 percent of the amount of this contract, whichever 
is less, until such time as the contracting officer determines that 
the delay no longer has a detrimental effect on the Government's 
ability to monitor the contractor's progress.


752.7008  [Amended]

    7. Section 752.7008 is amended by adding ``, and in commercial 
contracts when required in 712.101'' after ``contracts'' in the 
introductory paragraph.


752.7026  [Removed]

    8. Section 752.7026 is removed and reserved.

Appendix I to Chapter 7--[Removed]

    9. Under the authority of Sec. 621, Pub. L. 87-195, 75 Stat. 445, 
(22 U.S.C. 2381) as amended; E.O. 12163, Sept. 29, 1979, 44 FR 56673; 3 
CFR 1979 Comp., p. 435, Chapter 7 is amended by removing Appendix I and 
reserving it.

    Dated: September 21, 1998.
Marcus L. Stevenson,
Procurement Executive.
[FR Doc. 98-28804 Filed 11-3-98; 8:45 am]
BILLING CODE 6116-01-M