[Federal Register Volume 64, Number 185 (Friday, September 24, 1999)]
[Rules and Regulations]
[Pages 51845-51846]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-24422]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Part 46
[FAC 97-14; FAR Case 98-002; Item XIII]
RIN 9000-AI17
Federal Acquisition Regulation; Conditionally Accepted Items
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) have agreed on a final rule
amending 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 contracting officer must document the basis for the amounts
withheld in the contract file.
EFFECTIVE DATE: November 23, 1999.
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 97-14, FAR case 98-002.
SUPPLEMENTARY INFORMATION:
A. Background
The Councils published a proposed rule in the Federal Register on
October 28, 1998, (63 FR 57878). This final 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
[[Page 51846]]
FAR 46.407 to provide procedures for the conditional acceptance of
supplies and services.
The Councils received public comments from two respondents and
considered them in finalizing the rule.
This rule was not subject to Office of Management and Budget review
under Section 6(b) of Executive Order 12866, Regulatory Planning and
Review, dated September 30, 1993. This rule is not a major rule under 5
U.S.C. 804.
B. Regulatory Flexibility Act
The Department of Defense, the General Services Administration, and
the National Aeronautics and Space Administration certify that this
final rule will not 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. No additional requirements are imposed on
small businesses.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the FAR do not impose information collection requirements that 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: September 14, 1999.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
Therefore, DoD, GSA, and NASA amend 48 CFR Part 46 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. Amend section 46.101 by adding, in alphabetical order, the
definition ``Conditional acceptance'' to read as follows:
46.101 Definitions.
* * * * *
Conditional acceptance, as used in this part, 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. Amend section 46.407 as follows:
a. Remove from paragraph (a) ``Contracting officers'' and insert
``The contracting officer'', in its place;
b. Remove from the first sentence of paragraph (b) ``Contractors
ordinarily shall be given'' and from the second sentence ``shall'' and
insert ``The contracting officer ordinarily must give the contractor'',
and ``must'', respectively;
c. Revise paragraph (c)(1);
d. Remove from the first and second sentences of paragraph (c)(2)
``shall'' and insert ``must,'' in their places;
e. Remove from paragraph (e) ``Contracting officers shall'' and
insert ``The contracting officer must'';
f. Revise paragraph (f); and
g. Remove from the first and last sentences of the introductory
text of paragraph (g) ``shall'' and insert ``must,'' in their places;
Revised text read as follows:
46.407 Nonconforming supplies or services.
* * * * *
(c)(1) In situations not covered by paragraph (b) of this section,
the contracting officer ordinarily must 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 the contracting officer
determines acceptance or conditional acceptance of supplies or services
is in the best interest of the Government. The contracting officer must
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
contracting officer must modify the contract 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 contracting
officer must document in the contract file the basis for the amounts
withheld. 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 savings to the contractor in fabricating the
nonconforming supplies or performing the nonconforming services will
exceed the cost to the Government of processing the modification.
* * * * *
[FR Doc. 99-24422 Filed 9-23-99; 8:45 am]
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