[Federal Register Volume 66, Number 202 (Thursday, October 18, 2001)]
[Proposed Rules]
[Page 53050]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-26009]



[[Page 53049]]

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Part IV





Department of Defense

General Services Administration

National Aeronautics and Space Administration





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48 CFR Part 52



Federal Acquisition Regulation; Payments Under Fixed-Price Construction 
Contracts; Proposed Rule

  Federal Register / Vol. 66, No. 202 / Thursday, October 18, 2001 / 
Proposed Rules  

[[Page 53050]]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 52

[FAR Case 2001-012]
RIN 9000-AJ22


Federal Acquisition Regulation; Payments Under Fixed-Price 
Construction Contracts

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

ACTION: Proposed rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) are proposing to amend the 
Federal Acquisition Regulation (FAR) to clarify in the certification 
language of the clause entitled Payments under Fixed-Price Construction 
Contracts that all payments due to subcontractors and suppliers have 
been made by the prime contractor from previous progress payments 
received from the Government.

DATES: Interested parties should submit comments in writing on or 
before December 17, 2001 to be considered in the formulation of a final 
rule.

ADDRESSES: Submit written comments to: General Services Administration, 
FAR Secretariat (MVP), 1800 F Street, NW., Room 4035, ATTN: Laurie 
Duarte, Washington, DC 20405. Submit electronic comments via the 
Internet to: [email protected].
    Please submit comments only and cite FAR case 2001-012 in all 
correspondence related to this case.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS 
Building, Washington, DC, 20405, at (202) 501-4755 for information 
pertaining to status or publication schedules. For clarification of 
content, contact Jeremy Olson, Procurement Analyst, at (202) 501-3221. 
Please cite FAR case 2001-012.

SUPPLEMENTARY INFORMATION

A. Background

    In 1988, Congress passed the Prompt Payment Act Amendments, in part 
to ensure that subcontractors and suppliers were being promptly paid by 
the prime contractors. 31 U.S.C. 3903(b)(1)(B)(ii) requires the 
contractor to certify, with each progress payment request, that 
payments to subcontractors and suppliers have been made from previous 
payments received under the contracts. This certification language is 
reflected in paragraph (c) of FAR 52.232-5, Payments under Fixed-Price 
Construction Contracts.
    An ambiguity in FAR 52.232-5 surfaced as a result of a decision 
issued on April 2, 1999, by the United States Court of Appeals for the 
Sixth Circuit in United States vs. Gatewood, 173 F.3d 983 (6th Cir. 
1999). The Court concluded that certifying that the prime contractor 
has made payments to subcontractors and suppliers is not the same as 
certifying that the prime contractor has made all payments due to 
subcontractors and suppliers.
    The Government's intention has always been that all payments due to 
subcontractors and suppliers be covered by this certification. 
Accordingly, the rule amends FAR 52.232-5 to clarify the Government's 
intent.
    This is not a significant regulatory action and, therefore, was not 
subject to 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 Councils do not expect this proposed rule 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 most contracts awarded to small entities have a dollar value 
less than the simplified acquisition threshold, and, therefore, do not 
have the progress payment type of financing. In addition, this change 
is a clarification of existing policy, rather than the addition of new 
policy. An Initial Regulatory Flexibility Analysis has, therefore, not 
been performed. We invite comments from small businesses and other 
interested parties. The Councils will consider comments from small 
entities concerning the affected FAR Part in accordance with 5 U.S.C. 
610. Interested parties must submit such comments separately and should 
cite 5 U.S.C. 601, et seq. (FAR case 2001-012), in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
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 52

    Government procurement.

    Dated: October 10, 2001.
Al Matera,
Director, Acquisition Policy Division.

    Therefore, DoD, GSA, and NASA propose amending 48 CFR part 52 as 
set forth below:

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    1. The authority citation for 48 CFR part 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).

    2. Amend section 52.232-5 by revising the date of the clause and 
paragraph (c)(2) to read as follows:


52.232-5  Payments under Fixed-Price Construction Contracts.

* * * * *

Payments Under Fixed-Price Construction Contracts (Date)

* * * * *
    (c) * * *
    (2) All payments due to subcontractors and suppliers from previous 
payments received under the contract have been made, and timely 
payments will be made from the proceeds of the payment covered by this 
certification, in accordance with subcontract agreements and the 
requirements of chapter 39 of Title 31, United States Code;
* * * * *
[FR Doc. 01-26009 Filed 10-17-01; 8:45 am]
BILLING CODE 6820-EP-P