[Federal Register Volume 64, Number 247 (Monday, December 27, 1999)]
[Rules and Regulations]
[Pages 72448-72450]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33438]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 16, 48, and 52

[FAC 97-15; FAR Case 98-017; Item IX]
RIN 9000-AI35


Federal Acquisition Regulation; Review of Award Fee 
Determinations (Burnside-Ott)

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). The amendment 
implements rulings of the United States Court of Appeals and the United 
States Court of Federal Claims. The rulings are that the Contract 
Disputes Act applies to all disputes arising under Government 
contracts, unless a more specific statute provides for other remedies.

DATES: Effective Date: February 25, 2000.
    Applicability Date: The FAR, as amended by this rule, is applicable 
to solicitations issued on or after February 25, 2000.

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 Mr. Ralph De Stefano, Procurement Analyst, at (202) 
501-1758. Please cite FAC 97-15, FAR case 98-017.

SUPPLEMENTARY INFORMATION:

A. Background

    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 64 FR 24472, May 6, 1999, and received no comments. This 
final rule amends the FAR to implement the rulings of the United States 
Court of Appeals in Burnside-Ott Aviation Training Center v. Dalton, 
Secretary of the Navy, 107 F.3d 854 (Fed. Cir. 1997) and of the United 
States Court of Federal Claims in Rig Masters, Inc. v. The United 
States, 42 (Fed. Cl. 369 (1998)). The rulings are that the Contract 
Disputes Act applies to all disputes arising under Government 
contracts, unless a more specific statute provides for other remedies. 
The rule amends FAR 16.405-2(a) by deleting the statement that award-
fee determinations are not subject to the disputes clause of the 
contract and inserting a statement that such determinations and the 
methodology for determining award fee are unilateral decisions made 
solely at the discretion of the Government. In addition, the rule 
amends--
    (a) FAR 16.406 to conform with the newly revised 16.405-2(a);
    (b) FAR Part 48 to--
    (1) Remove references to the Contract Disputes Act;
    (2) State that certain unilateral decisions are made solely at the 
discretion of the Government; and
    (3) Insert a statement that the contracting officer's determination 
of the duration of the sharing period and the contractor's sharing rate 
is one such decision;
    (c) The clauses at 52.248-1 and 52.248-3 to conform with the newly 
revised Part 48; and
    (d) The clauses at 52.219-10, 52.219-26, and 52.226-1 to remove 
exemptions to the Contract Disputes Act. Also, we made editorial 
revisions to all affected sections for plain language purposes.
    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 rule implements 
court rulings relating to a statute that has been in effect since 1979. 
This final rule retains the government's unilateral decision

[[Page 72449]]

authority in these matters. Therefore, we have not performed a 
Regulatory Flexibility Analysis. We did not receive any comments 
regarding this determination as a result of publication of the proposed 
rule in the Federal Register at 64 FR 24472, May 6, 1999.

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 Parts 16, 48, and 52

    Government procurement.

    Dated: December 20, 1999.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
    Therefore, DoD, GSA, and NASA amend 48 CFR Parts 16, 48, and 52 as 
set forth below:
    1. The authority citation for 48 CFR Parts 16, 48, and 52 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).

PART 16--TYPES OF CONTRACTS

    2. Amend section 16.405-2 by revising the last sentence of 
paragraph (a) to read as follows:


16.405-2  Cost-plus-award-fee contracts.

    (a) * * * This determination and the methodology for determining 
the award fee are unilateral decisions made solely at the discretion of 
the Government.
* * * * *
    3. Amend section 16.406 in paragraphs (a), (b), and the 
introductory text of paragraph (e) by removing ``The contracting 
officer shall insert'' and adding ``Insert'' in their place; and by 
revising paragraph (e)(3) to read as follows:


16.406  Contract clauses.

* * * * *
    (e) * * *
    (3) Expressly provides that the award amount and the award-fee 
determination methodology are unilateral decisions made solely at the 
discretion of the Government.

PART 48--VALUE ENGINEERING

    4. Amend section 48.103 by revising the introductory text of 
paragraph (c); and by adding a new paragraph (c)(4) to read as follows:


48.103  Processing value engineering change proposals.

* * * * *
    (c) The following Government decisions are unilateral decisions 
made solely at the discretion of the Government:
* * * * *
    (4) The contracting officer's determination of the duration of the 
sharing period and the contractor's sharing rate.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    5. Amend section 52.219-10 by revising the date of the clause; in 
the first sentence of paragraph (b) by adding ``Contracting Officer 
to'' following the opening bracket; and by revising the last sentence 
of paragraph (b) to read as follows:


52.219-10  Incentive Subcontracting Program.

* * * * *

INCENTIVE SUBCONTRACTING PROGRAM (FEB 2000)

* * * * *
    (b) * * * Determinations under this paragraph are unilateral 
decisions made solely at the discretion of the Government.
* * * * *
    6. Amend section 52.219-26 by revising the date of the clause and 
the last sentence of paragraph (b) to read as follows:


52.219-26  Small Disadvantaged Business Participation Program--
Incentive Subcontracting.

* * * * *

SMALL DISADVANTAGED BUSINESS PARTICIPATION PROGRAM--INCENTIVE 
SUBCONTRACTING (FEB 2000)

* * * * *
    (b) * * * Determinations under this paragraph are unilateral 
decisions made solely at the discretion of the Government.
* * * * *
    7. Amend section 52.226-1 by revising the date of the clause and 
paragraph (d) to read as follows:


52.226-1  Utilization of Indian Organizations and Indian-Owned Economic 
Enterprises.

* * * * *

UTILIZATION OF INDIAN ORGANIZATIONS AND INDIAN-OWNED ECONOMIC 
ENTERPRISES (FEB 2000)

* * * * *
    (d) The Contracting Officer, subject to the terms and conditions 
of the contract and the availability of funds, will authorize an 
incentive payment of 5 percent of the amount paid to the 
subcontractor. The Contracting Officer will seek funding in 
accordance with agency procedures.

(End of clause)

    8. Amend section 52.248-1--
    a. By revising the date of the clause;
    b. In paragraphs (e)(1) and (e)(2), by removing ``shall'' each time 
it is used (3 times and 1 time, respectively) and adding ``will'' in 
its place;
    c. By revising the last sentence of paragraph (e)(3);
    d. By revising paragraph (j); and
    e. In Alternate II, by revising the date and adding a sentence to 
the end of paragraph (a) to read as follows:


52.248-1  Value Engineering.

* * * * *

VALUE ENGINEERING (FEB 2000)

* * * * *
    (e) * * *
    (3) * * * The decision to accept or reject all or part of any 
VECP is a unilateral decision made solely at the discretion of the 
Contracting Officer.
* * * * *
    (j) Collateral savings. If a VECP is accepted, the Contracting 
Officer will increase the instant contract amount, as specified in 
paragraph (h)(5) of this clause, by a rate from 20 to 100 percent, 
as determined by the Contracting Officer, of any projected 
collateral savings determined to be realized in a typical year of 
use after subtracting any Government costs not previously offset. 
However, the Contractor's share of collateral savings will not 
exceed the contract's firm-fixed-price, target price, target cost, 
or estimated cost, at the time the VECP is accepted, or $100,000, 
whichever is greater. The Contracting Officer will be the sole 
determiner of the amount of collateral savings.
* * * * *
    Alternate II (Feb 2000). * * *
    (a) * * * The decision on which rate applies is a unilateral 
decision made solely at the discretion of the Government.
* * * * *
    9. Amend section 52.248-3 by revising the date of the clause; in 
paragraphs (e)(1) and (e)(2) by removing ``shall'' each time it is used 
(3 times and 1 time, respectively) and adding ``will'' in its place; 
and by revising the last sentence of paragraph (e)(3) and paragraph (g) 
to read as follows:


52.248-3  Value Engineering--Construction.

* * * * *

VALUE ENGINEERING--CONSTRUCTION (FEB 2000)

* * * * *
    (e) * * *
    (3) * * * The decision to accept or reject all or part of any 
VECP is a unilateral decision made solely at the discretion of the 
Contracting Officer.
* * * * *
    (g) Collateral savings. If a VECP is accepted, the Contracting 
Officer will increase the instant contract amount by 20

[[Page 72450]]

percent of any projected collateral savings determined to be 
realized in a typical year of use after subtracting any Government 
costs not previously offset. However, the Contractor's share of 
collateral savings will not exceed the contract's firm-fixed-price 
or estimated cost, at the time the VECP is accepted, or $100,000, 
whichever is greater. The Contracting Officer is the sole determiner 
of the amount of collateral savings.
* * * * *
[FR Doc. 99-33438 Filed 12-23-99; 8:45 am]
BILLING CODE 6820-EP-P