[Federal Register Volume 67, Number 27 (Friday, February 8, 2002)]
[Rules and Regulations]
[Pages 6118-6119]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-2918]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 42 and 52

[FAC 2001-04; FAR Case 1999-026; 
Item VI]
RIN 9000-AI86


Federal Acquisition Regulation; Final Contract Voucher Submission

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 explicitly state 
the right of the contracting officer to unilaterally determine the 
final contract payment amount when the contractor does not submit the 
final invoice or voucher within the time specified in the contract.

DATES: Effective Date: February 20, 2002.

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 2001-04, FAR case 1999-026.

SUPPLEMENTARY INFORMATION:

A. Background

    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 65 FR 46332, July 27, 2000, with a request for comment. The 
proposed rule amended FAR 42.705, Final indirect cost rates, and FAR 
52.216-7, Allowable Cost and Payment, to--
     Explicitly state that the contracting officer may issue a 
unilateral modification that reflects the contracting officer's 
determination of the amounts due to the contractor under the contract. 
The contracting officer may make this determination if the contractor 
fails to submit a completion invoice or voucher within the time 
specified (normally 120 days after settlement of the final indirect 
cost rates but may be longer, if approved in writing by the contracting 
officer); and
     Make the contracting officer's determination not subject 
to appeal under the Disputes clause of the contract.
    Thirteen respondents submitted public comments to the proposed 
rule. The Councils considered all comments when developing the final 
rule, which was modified as a result. The following issues merit 
noting:
    1. Almost half of the respondents questioned the language in 
paragraphs 42.705(c)(2) and 52.216-7(d)(6)(ii) of the proposed rule 
that stated that the contracting officer's decision would not be 
subject to appeal under the Disputes clause. The Councils agreed that 
precluding the right to appeal is not equitable and may result in 
inaccurate financial payment decisions. The rule has been revised by 
making the contracting officer's decision final and

[[Page 6119]]

binding, but does not preclude contractor appeal under the Disputes 
clause.
    2. Several respondents disagreed with the conclusion that 
contractor failure to submit a final voucher is the leading reason 
contract closeouts are not accomplished in a timely manner. The 
Councils agreed that there are many causes for delays in contract 
closeout and that it would be helpful to list examples of circumstances 
a contracting officer should consider in deciding whether or not to 
extend the time for submission of a final voucher or to issue a final 
decision regarding final payment. The rule has been revised at 
42.705(b) by providing examples of extenuating circumstances that may 
justify the contracting officer's extension of the 120-day due date for 
submission of a completion invoice or voucher.
    3. Several respondents indicated that the rule should define when 
settlement of final indirect rates takes place. The Councils did not 
concur since the actual date of settlement depends on the circumstances 
of the negotiation. Establishing a universal definition of settlement 
date is unnecessary and would reduce the flexibility of both 
contractors and contracting officers.
    4. One respondent stated that the rule should include a provision 
requiring the contracting officer to provide written notice to the 
contractor and to provide an opportunity to respond before the issuance 
of a unilateral determination of amounts due. The Councils did not 
agree. The requirement to submit a timely final invoice is already 
stated in FAR 52.216-7, Allowable Cost and Payment. Therefore, the 
contractor is already responsible for complying with this requirement 
or communicating with the contracting officer if the requirement cannot 
be met. It is unnecessary to repeat contract requirements in separate 
notices.
    5. Several respondents requested that the rule explicitly preclude 
the application of the proposed revised closeout procedures to existing 
contracts. The Councils did not concur. Contracting officers already 
have the authority to determine final voucher payment amounts and issue 
final decisions. While the new language in this rule makes that 
authority explicit, it does not, and should not, impact the contracting 
officer's authority under existing contracts.
    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 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 this rule does not 
change the current policies at FAR 42.705 that require the contractor 
to submit a completion invoice or voucher within 120 days (or longer 
period, if approved in writing by the contracting officer) after 
settlement of the final indirect costs rates. The rule simply makes it 
explicit that if the contractor fails to submit the completion invoice 
or voucher within the time required, the contracting officer may 
determine the amounts due the contractor and record this determination 
in a unilateral modification.

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 42 and 52

    Government procurement.

    Dated: February 1, 2002.
Al Matera,
Director, Acquisition Policy Division.
    Therefore, DoD, GSA, and NASA amend 48 CFR parts 42 and 52 as set 
forth below:

    1. The authority citation for 48 CFR parts 42 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 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES

    2. Amend section 42.705 by revising paragraph (b) and by adding 
paragraph (c) to read as follows:


42.705  Final indirect cost rates.

* * * * *
    (b) Within 120 days (or longer period, if approved in writing by 
the contracting officer,) after settlement of the final annual indirect 
cost rates for all years of a physically complete contract, the 
contractor must submit a completion invoice or voucher reflecting the 
settled amounts and rates. To determine whether a period longer than 
120 days is appropriate, the contracting officer should consider 
whether there are extenuating circumstances, such as the following:
    (1) Pending closeout of subcontracts awaiting Government audit.
    (2) Pending contractor, subcontractor, or Government claims.
    (3) Delays in the disposition of Government property.
    (4) Delays in contract reconciliation.
    (5) Any other pertinent factors.
    (c)(1) If the contractor fails to submit a completion invoice or 
voucher within the time specified in paragraph (b) of this section, the 
contracting officer may--
    (i) Determine the amounts due to the contractor under the contract; 
and
    (ii) Record this determination in a unilateral modification to the 
contract.
    (2) This contracting officer determination must be issued as a 
final decision in accordance with 33.211.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    3. Amend section 52.216-7 in paragraph (d) by redesignating 
paragraph (d)(4) as (d)(5) and paragraph (d)(5) as (d)(4), 
respectively; revising the newly designated (d)(5); adding paragraph 
(d)(6); and by amending paragraph (h)(1) by removing ``paragraph 
(d)(4)'' and adding ``paragraph (d)(5)'' in its place. The revised text 
reads as follows:


52.216-7  Allowable cost and payment

* * * * *

Allowable Cost and Payment (Feb 2002)

* * * * *
    (d) * * *
    (5) Within 120 days (or longer period if approved in writing by 
the Contracting Officer) after settlement of the final annual 
indirect cost rates for all years of a physically complete contract, 
the Contractor shall submit a completion invoice or voucher to 
reflect the settled amounts and rates.
    (6)(i) If the Contractor fails to submit a completion invoice or 
voucher within the time specified in paragraph (d)(5) of this 
clause, the Contracting Officer may--
    (A) Determine the amounts due to the Contractor under the 
contract; and
    (B) Record this determination in a unilateral modification to 
the contract.
    (ii) This determination constitutes the final decision of the 
Contracting Officer in accordance with the Disputes clause.
* * * * *
[FR Doc. 02-2918 Filed 2-7-02; 8:45 am]
BILLING CODE 6820-EP-P