[Federal Register Volume 73, Number 68 (Tuesday, April 8, 2008)]
[Proposed Rules]
[Pages 19035-19039]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-7293]





48 CFR Parts 32, 43, 52, and 53

[FAR Case 2005-032; Docket 2008-0002; Sequence 4]
RIN: 9000-AI47

Federal Acquisition Regulation; FAR Case 2005-032, Contractor's 
Request for Progress Payments

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

ACTION: Proposed rule.


[[Page 19036]]

SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) are proposing to amend the 
Federal Acquisition Regulation (FAR) to implement recommendations to 
improve the regulations at FAR 32.001, 32.5, and 52.232-16 related to 
requests for progress payments and the Standard Form (SF) 1443, 
Contractor's Request for Progress Payments form used to request those 
progress payments.

DATES: Interested parties should submit written comments to the FAR 
Secretariat on or before June 9, 2008 to be considered in the 
formulation of a final rule.

ADDRESSES: Submit comments identified by FAR Case 2005-032 by any of 
the following methods:
     Regulations.gov: http://www.regulations.gov. Submit 
comments via the Federal eRulemaking portal by inputting ``FAR Case 
2005-032'' under the heading ``Comment or Submission''. Select the link 
``Send a Comment or Submission'' that corresponds with FAR Case 2005-
032. Follow the instructions provided to complete the ``Public Comment 
and Submission Form''. Please include your name, company name (if any), 
and ``FAR Case 2005-032'' on your attached document.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (VPR), 1800 F Street, NW, Room 4035, ATTN: Diedra Wingate, 
Washington, DC 20405.
    Instructions: Please submit comments only and cite FAR case 2005-
032 in all correspondence related to this case. All comments received 
will be posted without change to http://www.regulations.gov, including 
any personal and/or business confidential information provided.

FOR FURTHER INFORMATION CONTACT Ms. Meredith Murphy, Procurement 
Analyst, at (202) 208-6925 for clarification of content. For 
information pertaining to status or publication schedules, contact the 
FAR Secretariat at (202) 501-4755. Please cite FAR case 2005-032.


A. Background

    The proposed changes to FAR 32.001, 32.501-3, 32.503-6, 52.232-16 
and the SF 1443, Contractor's Request for Progress Payments are to (1) 
address revisions to the paid cost rule, and (2) simplify the form and 
related regulations, and instructions to improve clarity. These 
proposed changes originated as a part of a review of the SF 1443 and 
related regulations by the Department of Defense (DoD). As a part of 
this review, the DoD requested input from both Department contracting 
professionals and the general public (see Federal Register 69 FR 67899, 
dated November 22, 2004). The recommendations resulting from that 
effort were considered in developing the proposed rule language 
reported herein.
    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. Discussion

    The Councils are revising the following FAR provisions:
    1. FAR 32.001 is revised to add a definition for the term 
``Liquidate.'' This proposed change is made to ensure that all parties 
understand what is meant by this term which is used frequently 
throughout FAR Part 32.
    2. FAR 32.501-3(a)(1) is revised to ensure that the term ``contract 
price'' is used consistently in 32.501-3 and the SF 1443. This change 
is proposed to clarify that ``contract price'' includes the total 
amount to be paid for complete performance of the contract, to include 
the not-to-exceed amounts on unpriced modifications. Related changes 
are proposed to the instructions for Item 5 of the SF 1443.
    3. FAR 32.503-1 is deleted, in its entirety. The language requiring 
the contractor to use the SF 1443 to request progress payments is moved 
to 52.232-16(g)(3). This change is made to move the requirement to use 
the form into the contract clause. New language is added allowing 
electronic submission of the SF 1443.
    4. FAR 32.503-6(f) and (g), and 52.232-16(a)(9) and (c)(5) are 
revised to clarify the computation of the loss ratio.
    5. FAR 52.232-16(g)(2) is added to require that contractors use 
current estimates to complete when preparing the SF 1443. Related 
changes are proposed for the SF 1443 Line 12b and related instructions.
    6. Various other changes to the SF 1443 and related instructions 
are also proposed:
    (a) Line 4 ``Contract Number'' is changed to require that the 
contractor include the Delivery or Task Order number, if applicable, so 
that the paying office can associate the SF 1443 with the correct 
    (b) Lines 9--11 are revised to reflect changes made to the ``paid 
cost rule'' in an earlier Final Rule.
    (c) Line 14 is revised to make the language on the form consist 
with that of 52.232-16. A related change is also made to Line 20.
    (d) Line 23 is revised to clarify that the amount on this line is 
the dollars that have been liquidated as well as the dollars to be 
    (e) Minor editorial changes are proposed for various portions of 
the SF 1443 and related instructions.

C. 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 this proposed rule will not change the rules for buying or add 
a new information collection requirement. It will not have a 
significant economic impact to simplify the SF 1443 and related 
regulations and instructions. Further, most contracts awarded to small 
entities use the simplified acquisition procedures or are awarded on a 
competitive, fixed-price basis; neither of these requires the 
completion of the SF 1443. 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 32, 43, 
52, and 53 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 2005-032), in correspondence.

D. 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 Parts 32, 43, 52, and 53

    Government procurement.

    Dated: April 1, 2008.
Al Matera,
Director, Office of Acquisition Policy.
    Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 32, 43, 
52, and 53 as set forth below:
    1. The authority citation for 48 CFR parts 32, 43, 52, and 53 
continues to read as follows:

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

[[Page 19037]]


    2. Amend Section 32.001 by adding, in alphabetical order, the 
definition ``Liquidate'' to read as follows:

32.001  Definitions.

* * * * *
    Liquidate means to decrease a payment for an accepted supply item 
or service under a contract for the purpose of recouping financing 
payments previously paid to the contractor.
* * * * *
    3. Amend section 32.501-3 by revising paragraphs (a)(1) and (a)(3) 
to read as follows:

32.501-3  Contract price.

    (a) * * *
    (1) Under firm-fixed price contracts, the contract price is the 
current amount fixed by the contract plus the not-to-exceed amount for 
any unpriced modifications.
* * * * *
    (3) Under a fixed-price incentive contract, the contract price is 
the target price plus the not-to-exceed amount of unpriced 
modifications. However, if the contractor's properly incurred costs 
exceed the target price, the contracting officer may provisionally 
increase the price up to the ceiling or maximum price.
* * * * *

32.503-1  [Reserved]

    4. Remove and reserve section 32.503-1.
    5. Amend section 32.503-6 by revising paragraphs (a)(3), (f), and 
(g)(1)(i) to read as follows:

32.503-6  Suspension or reduction of payments.

    (a) * * *
    (3) In all cases, the contracting officer shall--
    (i) Act fairly and reasonably.
    (ii) Base decisions on substantial evidence.
    (iii) Document the contract file. Findings made under paragraph (c) 
of the Progress Payments clause shall be in writing.
* * * * *
    (f) Fair value of undelivered work. Progress payments must be 
commensurate with the fair value of work accomplished in accordance 
with contract requirements. The contracting officer must adjust 
progress payments when necessary to ensure that the fair value of 
undelivered work equals or exceeds the amount of unliquidated progress 
payments. On loss contracts contracts, the application of a loss ratio 
as provided at paragraph (g) of this section constitutes this 
    (g) * * *
    (1) * * *
    (i) Revise the current contract price used in progress payment 
computations (the current ceiling price under fixed-price incentive 
contracts) to include the not-to-exceed amount for any pending change 
orders and unpriced orders.
* * * * *


43.102  [Amended]

    6. Amend section 43.102 by removing from paragraph (b) the word 
``maximum'' and adding the word ``ceiling'' in its place.


    7. Amend section 52.232-16 by revising the date of the clause; by 
adding paragraph (a)(9); and by revising paragraphs (c)(5) and (g) to 
read as follows:

52.232-16  Progress Payments.

* * * * *
    (a) * * *
    (9) The costs applicable to items delivered, invoiced, and 
accepted shall not include costs in excess of the contract price of 
the items.
* * * * *
    (c) * * *
    (5) The fair value of the undelivered work is less than the 
amount of unliquidated progress payments for that work.
* * * * *
    (g) Reports, forms, and access to records. (1) The Contractor 
shall promptly furnish reports, certificates, financial statements, 
and other pertinent information (including estimates to complete) 
reasonably requested by the Contracting Officer for the 
administration of this clause. Also, the Contractor shall give the 
Government reasonable opportunity to examine and verify the 
Contractor's books, records, and accounts.
    (2) The Contractor shall furnish estimates to complete that have 
been developed or updated within six months of the date of the 
progress payment request. The estimates to complete shall represent 
the Contractor's best estimate of total costs to complete all 
remaining contract work required under the contract. The estimates 
shall include sufficient detail to permit Government verification.
    (3) Each Contractor request for progress payment shall:
    (i) Be submitted on Standard Form 1443, Contractor's Request for 
Progress Payment, or the electronic equivalent as required by agency 
regulations, in accordance with the form instructions and the 
contract terms; and
    (ii) Include any additional supporting documentation requested 
by the Contracting Officer.
* * * * *


53.232  [Amended]

    8. Amend section 53.232 by removing ``(10/82)'' and adding 
``(Date)'' in its place; and by removing ``, as specified in 
    9. Revise section 53.301-1443 to read as follows:

53.301-1443  Contractor's Request for Progress Payments and Related 


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[FR Doc. E8-7293 Filed 4-7-08; 8:45 am]