[Federal Register Volume 68, Number 99 (Thursday, May 22, 2003)]
[Rules and Regulations]
[Pages 28092-28093]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-12303]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 32, and 52

[FAC 2001-14; FAR Case 2000-308; Item III]
RIN 9000-AJ17


Federal Acquisition Regulation; Prompt Payment Under Cost-
Reimbursement Contracts for Services

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 adopt, as final, 
the interim rule published at 66 FR 53485, October 22, 2001. This rule 
requires an agency to pay an interest penalty whenever it makes an 
interim payment under a cost reimbursement contract for services more 
than 30 days after the agency receives a proper invoice from the 
contractor.

DATES: Effective Date: May 23, 2003.
    Applicability Date: This final rule applies to cost-reimbursement 
contracts for services, irrespective of award date, if interim payments 
requests under such contracts are due on or after December 15, 2000. In 
no event may agencies pay late payment penalty interest for any delay 
in payment that occurred prior to December 15, 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. Edward Loeb at (202) 501-0650. Please cite FAC 
2001-14, FAR case 2000-308.

SUPPLEMENTARY INFORMATION: 

A. Background

    DoD, GSA, and NASA published an interim rule in the Federal 
Register at 66 FR 53485, October 22, 2001, with request for comments. 
This FAR amendment eliminated the prior policy and contract clause 
prohibition on payment of late payment penalty interest for late 
interim finance payments under cost-reimbursement contracts for 
services. It added new policy and a contract clause, Alternate I to the 
FAR clause at 52.232-25, to provide for those penalty payments.
    The interim FAR rule implemented section 1010 of the Floyd D. 
Spence National Defense Authorization Act for Fiscal Year 2001 (Pub. L. 
106-398). Section 1010 requires an agency to pay an interest penalty, 
in accordance with regulations issued by the Office of Management and 
Budget (OMB), whenever an interim payment under a cost reimbursement 
contract for services is paid more than 30 days after the agency 
receives a proper invoice from the contractor. The Act does not permit 
payment of late payment interest penalty for any period prior to 
December 15, 2000. OMB published an interim rule in the Federal 
Register at 65 FR 78403, December 15, 2000, and a final rule at 67 FR 
79515, December 30, 2002. OMB's rule revised the prompt payment 
regulations at 5 CFR part 1315 to implement section 1010 of Public Law 
106-398.
    The Councils received no public comments to the interim FAR rule 
and have agreed to convert the interim rule to a final rule without 
change. The applicability date, however, has changed as explained 
below. The Federal Register notice published in conjunction with the 
FAR interim rule stated that ``The policy and clause apply to all 
covered contracts awarded on or after December 15, 2000 * * * agencies 
may apply the FAR changes made by this rule to contracts awarded prior 
to December 15, 2000, at their discretion * * *.'' (66 FR 53485, 
October 22, 2001.) This was consistent with OMB regulations. 
Subsequently, as a result of enactment of the National Defense 
Authorization Act for Fiscal Year 2002 (Pub. L. 107-107) on December 
28, 2001, agencies no longer have this discretion. Section 1007 of 
Public Law 107-107 states that this policy applies to cost-
reimbursement contracts for services awarded before, on, or after 
December 15, 2000. Section 1007 retains the prohibition against payment 
of late payment interest penalty for any period prior to December 15, 
2000. For this reason, the applicability of the rule has been revised 
to reflect this change.

[[Page 28093]]

    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 the rule only applies 
to the very limited number of contractors that are awarded cost-
reimbursement service contracts and that are paid more than 30 days 
after the agency receives a proper invoice.

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 2, 32, and 52

    Government procurement.

    Dated: May 13, 2003.
Laura G. Smith,
Director, Acquisition Policy Division.

Interim Rule Adopted as Final Without Change

0
Accordingly, DoD, GSA, and NASA adopt the interim rule amending 48 CFR 
parts 2, 32, and 52 which was published in the Federal Register at 66 
FR 53485, October 22, 2001, as a final rule without change.

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

[FR Doc. 03-12303 Filed 5-22-03; 8:45 am]
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