[Federal Register Volume 73, Number 151 (Tuesday, August 5, 2008)]
[Proposed Rules]
[Pages 45379-45383]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-17902]



48 CFR Parts 546 and 552

[GSAR Case 2008-G514; Docket 2008-0007; Sequence 14]
RIN 3090-AI69

General Services Acquisition Regulation; GSAR Case 2008-G514; 
Rewrite of GSAR Part 546, Quality Assurance

AGENCY: Office of the Chief Acquisition Officer, General Services 
Administration (GSA).

ACTION: Proposed rule.


SUMMARY: The General Services Administration (GSA) is proposing to 
amend the General Services Acquisition Regulation (GSAR) to revise 
language that provides requirements for quality assurance.

DATES: Interested parties should submit written comments to the 
Regulatory Secretariat on or before October 6, 2008 to be considered in 
the formulation of a final rule.

ADDRESSES: Submit comments identified by GSAR Case 2008-G514 by any of 
the following methods:
     Regulations.gov: http://www.regulations.gov. Submit 

[[Page 45380]]

via the Federal eRulemaking portal by inputting ``GSAR Case 2008-G514'' 
under the heading ``Comment or Submission''. Select the link ``Send a 
Comment or Submission'' that corresponds with GSAR Case 2008-G51. 
Follow the instructions provided to complete the ``Public Comment and 
Submission Form''. Please include your name, company name (if any), and 
``GSAR Case 2008-G514'' on your attached document.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (VPR), 1800 F Street, NW, Room 4041, ATTN: Laurieann 
Duarte, Washington, DC 20405.
    Instructions: Please submit comments only and cite GSAR Case 2008-
G514 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 For clarification of content, contact 
Ms. Jeritta Parnell at (202) 501-4082. For information pertaining to 
the status or publication schedules, contact the Regulatory Secretariat 
(VPR), Room 4041, GS Building, Washington, DC 20405, (202) 501-4755. 
Please cite GSAR Case 2008-G514.


A. Background

    The General Services Administration (GSA) is amending the General 
Services Administration Acquisition Regulation (GSAR) to revise GSAR 
Part 546, Quality Assurance. This proposed rule is a result of the 
General Services Administration Acquisition Manual (GSAM) rewrite 
initiative. The initiative was undertaken by GSA to revise the GSAM so 
as to maintain consistency with the FAR and implement streamlined and 
innovative acquisition procedures that contractors, offerors, and GSA 
contracting personnel can use when entering into and administering 
contractual relationships. The GSAM incorporates the General Services 
Administration Acquisition Regulation (GSAR) as well as internal agency 
acquisition policy.
    GSA will rewrite each part of the GSAR and GSAM, and as each GSAR 
part is rewritten, GSA will publish it in the Federal Register.
    This proposed rule revises GSAR 546 as follows:
    GSAR 546.302-70, Source inspection by Quality Approved Manufacturer 
for fixed-price supply contracts, is revised to include applicability 
to certain programs, i.e., stock, special order program, wildfire. The 
subsection is revised to include reference to FAR 52.246-2, Inspection 
of Supplies--Fixed Price.
    GSAR 546.302-71, Source Inspection, is retained with no revisions.
    GSAR 546.302-72, Destination Inspection, is added to prescribe the 
clause at 552.246-78, Inspection at Destination.
    The language in 546.312, Construction contracts, that prescribes 
the clause at 552.246-72, Final Inspection and Tests, is deleted.
    The language in 546.708, Warranties of data, is revised to place 
emphasis on the role of the contracting officer.
    The language in 546.710, Contract clause, is revised to add the 
clause at 552.246-77, Additional Contract Warranty Provisions for 
Supplies of a Noncomplex Nature. This clause is used when the FAR 
clause at 52.246-17, Warranty of Supplies of a Noncomplex Nature, is 
included in solicitations and contracts. The prescriptive language in 
paragraphs (b), (c), and (d) is deleted. The clauses prescribed in 
paragraphs (b), (c), and (d) are being deleted.
    The clause at 552.246-17, Warranty of Supplies of a Noncomplex 
Nature, is being deleted as it unnecessarily repeats, paraphrases, or 
otherwise restates material contained in the FAR. A new clause 552.246-
77, Additional Contract Warranty Provisions for Supplies of a 
Noncomplex Nature, is added to provide for GSA unique rights and 
    The clause at 552.246.70, Source Inspection by Quality Approved 
Manufacturer, is revised to edit and clarify existing clause language.
    The clause at 552.246-71, Source Inspection by Government, is 
    The clause at 552.246-72, Final Inspection and Tests, is being 
deleted. The FAR provides sufficient guidance.
    The clause at 552.246-73, Warranty Multiple Award Schedule, is 
being relocated to GSAR Part 538.
    The clause at 552.246-75, Guarantees, is being deleted. The FAR 
provides sufficient guidance.
    The clause at 552.246-76, Pesticides, is being deleted. This clause 
was determined to be unnecessary for inclusion in the GSAR.
    The clause at 552.246-78, Inspection at Destination, is being added 
to provide for inspection by Government personnel at destination.

Discussion of Comments

    There were no comments received in response to the ``Advanced 
Notice of Proposed Rulemaking'' pertaining to this GSAR Part.
    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 General Services Administration does 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 the revisions are not considered 
substantive. The revisions delete obsolete coverage, clarify existing 
coverage, and edit current language. An Initial Regulatory Flexibility 
Analysis has, therefore, not been performed. We invite comments from 
small businesses and other interested parties. GSA will consider 
comments from small entities concerning the affected GSAR Parts 546 and 
552 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., (GSAR 
case 2008-G514), in all correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does apply; however, these changes to 
the GSAR do not impose additional information collection requirements 
to the paperwork burden previously approved under OMB Control Number 

List of Subjects in 48 CFR Parts 546 and 552

    Government procurement.

    Dated: July 29, 2008.
Al Matera,
Director, Office of Acquisition Policy.
    Therefore, GSA proposes to amend 48 CFR parts 546 and 552 as set 
forth below:
    1. The authority citation for 48 CFR parts 546 and 552 continues to 
read as follows:

    Authority: 40 U.S.C. 121(c).


    2. Revise section 546.302-70 to read as follows:

546.302-70   Source inspection by Quality Approved Manufacturer for 
fixed-price supply contracts.

    (a) For solicitations issued and contracts awarded by FAS that will 
exceed the simplified acquisition threshold and include the clause at 
52.246-2, Inspection of Supplies--Fixed-Price--

[[Page 45381]]

    (1) The contracting officer shall insert the clause at 552.246-70, 
Source Inspection by Quality Approved Manufacturer, in solicitations 
and contracts that provide for source inspection for the Stock and 
Special Order Programs; and
    (2) The contracting officer may authorize inspection and testing at 
manufacturing plants or other facilities located outside the United 
States, Puerto Rico, or the U.S. Virgin Islands, under paragraph (a)(1) 
of the clause at 552.246-70 under any of the following circumstances 
after coordinating the authorization with QVOC and documenting the 
authorization in the file:
    (i) Inspection services are available from another Federal agency 
with primary inspection responsibility in the geographic area.
    (ii) An inspection interchange agreement exists with another agency 
for inspection at a contractor's plant.
    (iii) Other considerations will ensure more economical and 
effective inspection consistent with the Government's interest.
    (b) When the estimated value of the acquisition is below the 
simplified acquisition threshold and will include the clause at 52.246-
2, Inspection of Supplies--Fixed-Price, insert the clause at 552.246-
70, Source Inspection by Quality Approved Manufacturer, only--
    (1) In solicitations and contracts that support the Wildfire 
program; and
    (2) In contracts when a pattern of acquisitions demonstrates an 
ongoing relationship with the contractor.

546.302-71  [Amended]

    3. Amend section 546.302-71 by removing ``FSS'' and adding ``FAS'' 
in its place.
    4. Add section 546.302-72 to read as follows:

546.302-72   Destination inspection.

    The contracting officer shall include the clause at 552.246-78, 
Inspection at Destination, in supply contracts that require inspection 
at destination.

546.312   [Removed]

    5. Remove section 546.312.

Subpart 546.4 [Removed]

    6. Remove Subpart 546.4.
    7. Revise section 546.708 to read as follows:

546.708   Warranties of data.

    (a) The contracting officer shall use warranties of data only when 
both of the following conditions are applicable:
    (1) Use of a warranty is in the Government's interest and is 
    (2) The contracting director concurs with the decision.
    (b) The contracting officer shall consult with the technical or 
specification manager responsible for developing any warranties of 
    8. Revise section 546.710 to read as follows:

546.710   Contract clause.

    The contracting office shall insert the clause at 552.246--77, 
Additional Contract Warranty Provisions for Supplies of a Noncomplex 
Nature, when using the clause at 52.246-17 in solicitations and 


552.246-17   [Removed]

    9. Remove section 552.246-17.
    10. Revise section 552.246-70 to read as follows:

552.246-70   Source Inspection by Quality Approved Manufacturer.

    As prescribed in 546.302--70, insert the following clause:

Source Inspection By Quality Approved Manufacturer (Date)

    (a) Inspection system and inspection of facilities. (1) The 
inspection system maintained by the Contractor under the Inspection of 
Supplies--Fixed Price clause (FAR 52.246--2) of this contract shall be 
maintained throughout the contract period. Unless otherwise authorized 
in writing by the Contracting Officer, the Contractor shall comply with 
all requirements of editions in effect on the date of the solicitation 
of either Federal Standard 368 or the International Organization for 
Standardization (ISO) Standard 9001:2000 (Quality Management Systems--
Requirements). A documented description of the inspection system shall 
be made available to the Government before contract award. At the sole 
discretion of the Contracting Officer, he/she may authorize in writing 
exceptions to the quality assurance standards identified above. The 
Contractor shall immediately notify the Administrative Contracting 
Officer (ACO) of any changes made in the inspection system during the 
contract period. As used herein, the term ``inspection system'' means 
the Contractor's own facility or any other facility acceptable to the 
Government that will be used to perform inspections or tests of 
materials and components before incorporation into end articles and for 
inspection of such end articles before shipment. When the manufacturing 
plant is located outside of the United States, the Contractor shall 
arrange delivery of the items from a plant or warehouse located in the 
United States (including Puerto Rico and the U.S. Virgin Islands) 
equipped to perform all inspections and tests required by the contract 
or specifications to evidence conformance therewith, or shall arrange 
with a testing laboratory or other facility in the United States, 
acceptable to the Government, to perform the required inspections and 
    (2) In addition to the requirements in Federal Standard 368, ISO 
9001:2000 or as otherwise approved by the Government, records shall 
include the date inspection and testing were performed. These records 
shall be available for--
    (i) 3 years after final payment; or
    (ii) 4 years from the end of the Contractor's fiscal year in which 
the record was created, whichever period expires first.
    (3) Offerors are required to specify, in the space provided 
elsewhere in this solicitation, the name and address of each 
manufacturing plant or other facility where supplies will be available 
for inspection, indicating the item number(s) to which each applies.
    (4) The Contractor shall provide the Administrative Contracting 
Officer (ACO) with the name of the individual and an alternate 
responsible for the inspection system. In the event that the designated 
individual(s) becomes unavailable to oversee the inspection system, the 
Contractor, within 10 calendar days of such event, shall provide the 
ACO with the names of the replacement individual(s).
    (b) Inspection by the Contractor. The Contractor is required to 
demonstrate that the supplies in the shipment have been subject to had 
have passed all inspections and tests required by the contract and meet 
the requirements of the contract.
    (c) Inspection by Government personnel. (1) Although the Government 
will normally rely upon the Contractor's representation as to the 
quality of supplies shipped, it reserves the right under the Inspection 
of Supplies--Fixed Price clause to inspect and test all supplies called 
for by this contract, before acceptance, at all times and places, 
including the point of manufacture. When the Government notifies the 
Contractor of its intent to inspect supplies before shipment, the 
Contractor shall notify or arrange for subcontractors to notify the 
designated GSA quality assurance office 7 workdays before the date when 
supplies will be ready for inspection. Shipment shall not be made until 
inspection by

[[Page 45382]]

the Government is completed and shipment is authorized by the 
    (2) The offeror shall indicate, in the spaces provided below the 
location(s) at which the supplies will be inspected or made available 
for inspection.

                                                                                        Inspection Points
         Item No(s).                  Name of Manufacturer                                   Name, Address (Including County), and                                      Telephone Number
----------                     ----------------                   ----------------------                                                                       ------------
----------                     ----------------                   ----------------------                                                                       ------------
----------                     ----------------                   ----------------------                                                                       ------------

    NOTE: If additional space is needed, the offeror may furnish the 
requested information by an attachment to the offer.
    (3) During the contract period, a Government representative may 
periodically select samples of supplies produced under this contract 
for Government verification, inspection, and testing. Samples selected 
for testing will be disposed of as follows: Samples from an accepted 
lot, not damaged in the testing process, will be returned promptly to 
the Contractor after completion of tests. Samples damaged in the 
testing process will be disposed of as requested by the Contractor. 
Samples from a rejected lot will be returned to the Contractor or 
disposed of in a time and manner agreeable to both the Contractor and 
the Government.
    (d) Quality deficiencies. (1) Notwithstanding any other clause of 
this contract concerning the conclusiveness of acceptance by the 
Government, any supplies or production lots shipped under this contract 
found to be defective in material or workmanship, or otherwise not in 
conformity with the requirements of this contract within a period of --
------[star17]-------- months after acceptance shall, at the 
Government's option, be replaced, repaired, or otherwise corrected by 
the Contractor at no cost to the Government within 30 calendar days (or 
such longer period as the Contracting Officer may authorize in writing) 
after receipt of notice to replace or correct. The Contractor shall 
remove, at its own expense, supplies rejected or required to be 
replaced, repaired, or corrected. When the nature of the defect affects 
an entire batch or lot of supplies, and the Contracting Officer 
determines that correction can best be accomplished by retaining the 
nonconforming supplies, and reducing the contract price by an equitable 
amount under the circumstances, then the equitable price adjustment 
shall apply to the entire batch or lot of supplies from which the 
nonconforming item was taken.
    (2) The Contractor may be issued a Quality Deficiency Notice (QDN) 
    (i) Supplies in process, shipped, or awaiting shipment to fill 
Government orders are found not to comply with contract requirements; 
    (ii) Deficiencies in either plant quality or process controls are 
found. Upon receipt of a QDN, the Contractor shall take immediate 
corrective action and shall suspend shipment of the supplies covered by 
the QDN until such time as corrective action has been completed. The 
Contractor shall notify the Government representative, within 5 
workdays, of the action plan or the corrective action taken. The 
Government may elect to verify the corrective action at the Contractor 
location(s). Shipments of nonconforming supplies will be returned at 
the Contractor's expense and may constitute cause for termination of 
the contract. Delays due to the insurance of a QDN do not constitute 
excusable delay under the default clause of this contract. Failure to 
complete corrective action in a timely manner may result in termination 
of the contract.
    (3) This contract may be terminated for default if subsequent 
Government inspection discloses that plant quality or process controls 
are not being maintained, supplies that do not meet the requirements of 
the contract are being shipped, or if the contractor fails to comply 
with any other requirement of this clause.
    (e) Additional cost for inspection and testing. The Contractor 
shall be charged for any additional cost of inspection/testing or 
reinspecting/retesting supplies for the reasons stated in paragraph (e) 
of FAR 52.246--2, Inspection of Supplies--Fixed Price. When inspection 
or testing is performed by or under the direction of GSA, charges will 
be at the rate of $------[star17]------ per man-hour or fraction 
thereof if the inspection is at a GSA distribution center; $------
[star17]------ per man-hour or fraction thereof, plus travel costs 
incurred, if the inspection is at any other location; and $------
[star17]------ per man-hour or fraction thereof for laboratory testing, 
except that when a testing facility other than a GSA laboratory 
performs all or part of the required tests, the Contractor shall be 
assessed the actual cost incurred by the Government as a result of 
testing at such facility. When inspection is performed by or under the 
direction of any agency other than GSA, the charges indicated above may 
be used, or the agency may assess the actual cost of performing the 
inspection and testing.
    (f) Responsibility for rejected supplies. When the Contractor fails 
to remove or provide instructions for the removal of rejected supplies 
under paragraph (d) of this clause, pursuant to the Contracting 
Officer's instructions, the Contractor shall be liable for all costs 
incurred by the Government in taking such measures as are expedient to 
avoid unnecessary loss to the Contractor. In addition to the remedies 
provided in FAR 52.246--2, supplies may be--
    (1) Stored and charged against the Contractor's account;
    (2) Reshipped to the Contractor at its expense (any additional 
expense incurred by the Government or the freight carrier caused by the 
refusal of the Contractor to accept their return shall also be charged 
against the Contractor's account);
    (3) Sold to the highest bidder on the open market and the proceeds 
applied against the accumulated storage and other costs, including the 
cost of the sale; or
    (4) Otherwise disposed of by the Government.
    (g) Subcontracting requirements. The Contractor shall insert in any 
subcontracts the inspection or testing provisions set forth in 
paragraphs (a) through (d) of this clause and the Inspection of 
Supplies--Fixed Price clause of this contract. The Contractor shall be 
responsible for compliance by any subcontractor with the provisions set 
forth in paragraphs (a) through (d) of this clause and the Inspection 
of Supplies--Fixed Price clause.
    (End of clause)

[[Page 45383]]

    [star17]Normally insert 12 months as the period during which 
defective or otherwise nonconforming supplies must be replaced. 
However, when the supplies being bought have a shelf life of less than 
1 year, you should use the shelf-life period, or in the instance where 
you reasonably expect a longer period to be available, you should use 
the longer period.
    [star17][star17]The rates to be inserted are established by the 
Commissioner of the Federal Acquisition Service or a designee.

552.246-71  [Amended]

    11. Amend section 552.246-71 by--
    a. Revising the date of the clause to read ``(Date)'';
    b. Removing from paragraph (c)(3) ``Virgin Islands'' and adding 
``U.S. Virgin Islands'' in its place; and
    c. Removing from the end of the section, at the footnote, 
``Supply'' and adding ``Acquisition'' in its place.

552.246-72 through 552.246-76   [Reserved]

    12. Remove and reserve sections 552.246-72 through 552.246-76.
    13. Add sections 552.246-77 and 552.246-78 to read as follows:

552.246-77   Additional Contract Warranty Provisions for Supplies of a 
Noncomplex Nature.

    As prescribed in 546.710(a), insert the following clause in 
solicitations and contracts that include FAR 52.246-17, Warranty of 
Supplies of a Noncomplex Nature.

Additional Contract Warranty Provisions For Supplies of a Noncomplex 
Nature (Date)

    (a) Definition. Correction, as used in this clause, means the 
elimination of a defect.
    (b) Contractor's obligations. When return, correction, or 
replacement is required, the Contractor shall be responsible for all 
costs attendant to the return, correction, or replacement of the 
nonconforming supplies. Any removal in connection with the above shall 
be done by the Contractor at its expense.
    (c) Remedies available to the Government. When the nature of the 
defect in the nonconforming item is such that the defect affects an 
entire batch or lot of material, then the equitable price adjustment 
shall apply to the entire batch or lot of material from which the 
nonconforming item was taken.
    (End of clause)

552.246-78   Inspection at Destination.

    As prescribed in 546.302-72 insert the following clause:


    Inspection of all purchases under this contract will be made at 
destination by an authorized government representative.
    (End of clause)
[FR Doc. E8-17902 Filed 8-4-08; 8:45 am]