[Federal Register Volume 73, Number 195 (Tuesday, October 7, 2008)]
[Proposed Rules]
[Pages 58515-58520]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23660]



48 CFR Parts 532 and 552

[GSAR Case 2006-G515; Docket 2008-0007; Sequence 22]
RIN 3090-AI75

General Services Acquisition Regulation; GSAR Case 2006-G515; 
Rewrite of Part 532, Contract Financing

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 and 
update the agency's implementation of Federal Acquisition Regulation 
(FAR) contract financing policies. GSA has taken this opportunity to 
implement coverage for incremental funding of fixed-price, time-and-
materials, and labor-hour contracts.

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

[[Page 58516]]

ADDRESSES: Submit comments identified by GSAR Case 2006-G515 by any of 
the following methods:
     Regulations.gov: http://www.regulations.gov.
    Submit comments via the Federal eRulemaking portal by inputting 
``GSAR Case 2006-G515'' under the heading ``Comment or Submission''. 
Select the link ``Send a Comment or Submission'' that corresponds with 
GSAR Case 2006-G515. Follow the instructions provided to complete the 
``Public Comment and Submission Form''. Please include your name, 
company name (if any), and ``GSAR Case 2006-G515'' on your attached 
     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 2006-
G515 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. Meredith Murphy at (202) 208-6925, or by e-mail at 
[email protected]. 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 2006-G515.


A. Background

    This is part of the GSAM Rewrite Project, which was initiated in 
2006 to revise, update, and simplify the GSAM. An Advance Notice of 
Proposed Rulemaking (ANPR), with a request for comments, was published 
February 15, 2006. Three comments on Part 532 were received in response 
and are discussed below. Prior to publication of this proposed rule, 
the draft coverage was circulated within GSA to the Services and 
regions. A total of 114 comments were received from 17 commenters. This 
proposed rule incorporates those recommendations where appropriate. The 
current GSAM Part 532 implements nine of the FAR Part 32 subparts and 
includes three supplementary subparts and 17 clauses. The proposed rule 
contains seven FAR Part 32 implementing subparts and two supplementary 
subparts, retains four clauses, and creates two new clauses. Of the 13 
clauses that are omitted from Part 532, eight were moved to other parts 
of the GSAM (five to Part 538, two to Part 570, and one to Part 512), 
one was converted to FAR coverage, and four were cancelled.
    In Subpart 532.1, Non-Commercial Item Purchase Financing, two of 
the three clauses prescribed were cancelled as redundant to the FAR 
and/or Standard Form 26. The clause at 552.232-72 was renamed ``Final 
Payment Under Building Services Contracts'' and the prescription was 
relocated to 532.904, ``Determining payment due dates.'' There is no 
FAR clause covering final payment for service contracts. The GSA Form 
2419, Certification of Progress Payments Under Fixed-Price Construction 
Contracts, was made mandatory at the request of the Office of General 
Counsel and Office of Inspector General, and the form's prescription 
was moved to Subpart 532.1. The certification language in the GSA form 
was modified to match the current required certification language in 
the clause at FAR 52.232-5(c).
    The four clauses prescribed in Subpart 532.2 are for Schedules 
only, so Subpart 532.2 and clauses 552.232-8, 552.232-81, 552.232-82, 
and 552.232-83 were deleted in their entirety.
    Subpart 532.7, Contract Funding, has been substantially revised to 
authorize the use of incremental funding for fixed-price, time-and-
materials, and labor-hour contracts and provide a contract clause, 
552.232-7007, Limitation of Government's Obligation. The FAR provides 
clauses for incremental funding of cost-type contracts, but not for the 
above contract types--although the use of incremental funding for such 
contracts is not prohibited by the FAR. The clause at 552.232-73, 
Availability of Funds, was cancelled because the use of such 
contingency-type clauses is inappropriate in circumstances other than 
those authorized by the FAR.
    Subpart 532.8 included procedures for the contracting officer to 
follow when an assignment of claims was received under FAR 52.232-23, 
Assignment of Claims. It also included the prescription for GSAR 
552.232-23, Assignment of Claims. The clause was used only for 
requirements or indefinite quantity contracts under which more than one 
agency could place orders. In such cases, the GSAR clause is required 
to be substituted for paragraph (a) of the FAR clause at 52.232-23, 
thus limiting the assignment of claims capability to an individual 
order, rather than to the contract as a whole. The GSAR prescription 
and clause at 552.232-23 provided an important protection for GSA, and 
one that should be available to other Government agencies that award 
contracts used by more than one agency and for the various Government 
agencies that issue orders under such contracts. Therefore, the clause 
is removed from the GSAR and has been proposed for inclusion in the FAR 
as Alternate 1 to FAR 52.232-23.
    In Subpart 532.9, the definition of ``full cycle electronic 
commerce'' was deleted because the term is not used in the GSAM text. 
It is used in paragraph (a)(2) of the GSAR clause at 552.232-25 where 
the associated requirements are fully described. GSA has an approved 
deviation to use GSAR 552.232-25, Prompt Payment, in lieu of FAR 
52.232-25, Prompt Payment. The effect of this is to waive Prompt 
Payment Act requirements for certain situations and types of contracts 
to allow GSA to pay its contractors more quickly than would be the case 
under the Prompt Payment Act. A related clause, GSAM 552.232-74, 
Invoice Payments, is used only in accordance with the FAR deviation to 
reduce payment times for commercial items when EFT is used (per FAR 
52.232-33 instructions). Because this is the only difference from 
normal payment terms, the team determined that it was not necessary to 
have a separate clause that repeated much of other clauses. For this 
reason, 552.232-74 was converted to Alternate II of GSAR 552.212.4, 
prescribed at 532.908(c)(2).
    The FAR does not cover contracting for leasehold interests, while 
the GSAM has a separate part, Part 570, devoted to the subject. Two 
clauses, GSAM 552.232-75 and 552.232-76, and their associated clause 
prescriptions, have been transferred to the Part 570 Review Team 
because they apply only to contracts for leasehold interests.
    GSAR clause 552.232-78, Payment Information, has no FAR equivalent. 
All this GSAM clause does is direct contractors to a GSA-unique site 
which they can use to monitor the status of their payments. It is not 
necessary to use a clause to inform contractors of this web site. The 
web site can be included in section G, Contract Administration Data, in 
the body of the contract itself. This is the appropriate location for 
information relating to contract financing payments. The GSAR clause is 
therefore deleted.
    In Subpart 532.70, Authorizing Payment of Governmentwide Commercial 
Purchase Card, the definition of ``Governmentwide commercial purchase 
card'' was deleted because it merely refers to the FAR definition. 
Section 532.7002, which contains the solicitation requirements for use 
of the purchase card, and section

[[Page 58517]]

532.7003, which prescribes the use of the contract clause entitled 
Payment By Governmentwide Commercial Purchase Card, have been 
renumbered and edited, as has the clause at 552.232-77. Personnel in 
the Office of the Chief Financial Officer (OCFO) provided counsel on 
updated terminology and recommended deletion of references to ``the 
credit card clearing house.''
    Subpart 532.71 defines ``fixed-roll payments'' and the 
circumstances in which they may be used. Since the implementation of 
Pegasys, GSA no longer uses the fixed-roll payment process; therefore, 
GSA has deleted Subpart 532.71 in its entirety, as well as the related 
clause, 552.232-71, Adjusting Payments.
    Only minor edits were made to Subpart 532.72, Payments Under 
Contracts Subject to Audit.
    Three public comments on Part 532 were received in response to the 
Advance Notice of Public Rulemaking.
    Comment: Two commenters stated that mandatory acceptance of 
Governmentwide credit cards (see GSAR 532.7003, 552.232-79, and clause 
552.232-77) below the micro purchase threshold was inconsistent with 
the commercial practices for some Schedule contractors and should be 
made voluntary.
    Response: The Governmentwide charge card is a critical element in 
the Government's electronic funds transfer system. FAR Part 13 directs 
Government agencies to use the Governmentwide credit card for purchases 
under the micropurchase threshold. Over the micropurchase threshold, 
contractors may, or may not, accept the card. Although GSA has changed 
portions of these clauses, the commenter's suggestion was not accepted.
    Comment: One commenter requested that advanced payments be 
permitted for commercial items in the schedule program, stating 
``(t)here is no statutory or regulatory prohibition from application of 
advanced payments to the MAS schedules.'' The Federal Acquisition 
Streamlining Act (FASA), Section 41.255(f), permitted advanced payment 
for commercial items at the discretion of the contracting officer when 
a series of conditions have been met. These conditions are delineated 
in FAR 32.202-1(b).
    Response: The advance payments permitted by FAR 32.202 are a 
maximum of 15 percent of the contract price. The GSAR does not prohibit 
the types of advance payments authorized by FAR Subpart 32.2. Advance 
payments for services remain a violation of GAO guidelines. No change 
was made.
    Comment: One commenter recommended that the GSAR be revised to 
clarify that subcontractor labor hours under a T&M contract are paid at 
the rates established in the prime contract or task order.
    Response: This is not a GSA issue, but rather an issue for the FAR. 
There is no reason for GSA to have separate or different coverage than 
other Government agencies for this subject. No change was made to the 
GSAM as a result of this comment.
    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 a number of contract clauses and 
requirements are being eliminated from the current regulation. 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 532 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 2006-G515), in 

C. Paperwork Reduction Act

    The Paperwork Reduction Act applies; however, these changes to the 
GSAR do not impose additional information collection requirements to 
the paperwork burden previously approved under OMB Control Number 9000-

List of Subjects in 48 CFR Parts 532 and 552

    Government procurement.

    Dated: September 25, 2008.
Al Matera,
Director, Office of Acquisition Policy, General Services 
    Therefore, GSA proposes to amend 48 CFR parts 532 and 552 as set 
forth below:


    1. The authority citation for 48 CFR part 532 continues to read as 

    Authority: 40 U.S.C. 121(c).
    2. Revise section 532.111 to read as follows:

532.111  Contract clauses for non-commercial purchases.

    For contracts that include the clause at FAR 52.232-5, Payments 
Under Fixed-Price Construction Contracts, the contracting officer shall 
provide the contractor with GSA Form 2419, Certification of Progress 
Payments Under Fixed-Price Construction Contracts, to be used to make 
the certification required by FAR 52.232-5(c).

Subpart 532.2--[Removed]

    3. Remove Subpart 532.2.
    4. Revise section 532.705-1 to read as follows:

532.705-1  Clauses for contracting in advance of funds.

    (a) In most circumstances, contracting officers should be able to 
use either--
    (1) FAR 52.232-18, Availability of Funds (i.e., for any contract 
type when the funds will not be appropriated until the next fiscal 
year); or
    (2) FAR 52.232-19, Availability of Funds for the Next Fiscal Year 
(i.e., for a one-year ID/IQ or requirements contract for services).
    (b) Contracting officers may only use 552.232-73, Availability of 
Funds, when all of the following conditions apply:
    (1) The acquisition is for severable services.
    (2) The contract, or a portion of the contract, will be chargeable 
to funds of the new fiscal year.
    (3) The circumstances described in the prescriptions for FAR 
52.232-18 or 52.232-19 do not apply.
    (c) Contracting officers may use the clause at 552.232-7007, 
Limitation of Government's Obligation, or its Alternate I, in clauses 
that are incrementally funded.

Subpart 532.8--[Removed]

    5. Remove subpart 532.8.

532.902  [Removed]

    6. Remove section 532.902.
    7. Add section 532.904 to read as follows:

532.904  Determining payment due dates.

    Payment due dates for construction contracts are addressed at FAR 
32.904(d). The following procedures apply to construction and building 
service contracts:
    (a) The final payment on construction or building service contracts 
shall not be processed until the contractor submits a properly executed 
GSA Form 1142,

[[Page 58518]]

Release of Claims. If, after repeated attempts, a release of claims 
cannot be obtained from the contractor, the contracting officer may 
process the final payment with the approval of assigned legal counsel.
    (b) The amount of final payment must include, as appropriate, 
deductions to cover any of the following:
    (1) Liquidated damages for late completion.
    (2) Liquidated damages for labor violations.
    (3) Amounts withheld for improper payment of labor wages.
    (4) The amount of unilateral change orders covering defects and 
    (5) The agreed-upon dollar amount in a Deficiency Report, which is 
included in all applicable Operation and Maintenance (O&M) service 
    (c) When the contract is for the performance of building services, 
the contracting officer shall include the clause at 552.232-72, Final 
Payment Under Building Services Contracts.
    8. Revise section 532.905 to read as follows:

532.905  Payment documentation and process.

    For contracts of the type shown in 532.7201(a)(1) through (4)--
    (a) Contractors are to submit invoices or vouchers concurrently to 
the Office of the Chief Financial Officer and to the contracting 
officer for approval. Invoices must be annotated with the date of 
receipt, as required by FAR 32.905. That date will be used to determine 
interest penalties for late payments. The contracting officer or 
designee must review the processing of invoices or vouchers before 
payment to determine if the items and amounts claimed are consistent 
with the contract terms and represent prudent business transactions. 
The contracting officer must ensure that these payments are 
commensurate with physical and technical progress under the contract. 
If the contractor has not deducted questionable amounts from the 
invoice or amounts required to be withheld, the contracting officer 
must make the required deduction, except as provided in 532.7203. 
Subject to 532.7201, the contracting officer must note approval of any 
payment on (or attached to) the invoice or voucher submitted by the 
contractor and forward the invoice or voucher to the appropriate 
contract finance office for retention after certification and 
scheduling for payment by a disbursing office.
    (b) See GSAM 532.7203 for the handling of audit findings.

532.905-70 and 532.905-71  [Removed]

    9. Remove sections 532.905-70 and 532.905-71.
    10. Revise section 532.908 to read as follows:

532.908  Contract clauses.

    (a) General and architect-engineer contracts. Before exercising the 
authority to modify the date for constructive acceptance or 
constructive approval of progress payments in the clauses listed below, 
the contracting officer must prepare a written justification explaining 
why a longer period is necessary. An official one level above the 
contracting officer must approve the justification. The time needed 
should be determined on a case-by-case basis.
    (1) In paragraph (a)(6)(i) of the clause at FAR 52.232-25, Prompt 
Payment, the specified constructive acceptance period shall not exceed 
30 days.
    (2) In paragraph (a)(4)(i)(A) of the clause at FAR 52.232-26, 
Prompt Payment for Fixed-Price Architect-Engineer Contracts, the 
specified constructive acceptance period shall not exceed 30 days.
    (3) In paragraph (a)(4)(i)(B) of the clause at FAR 52.232-26, 
Prompt Payment for Fixed-Price Architect-Engineer Contracts, the 
specified period for constructive approval of progress payments shall 
not exceed seven days.
    (b) Construction contracts. (1) The contracting officer shall 
determine on a case-by-case basis the time specified for payment of 
progress payments as described in paragraph (a)(1)(i)(A) of the clause 
at FAR 52.232-27, Prompt Payment for Construction Contracts. The 
contracting officer shall justify in writing periods longer than 14 
days. An official one level above the contracting officer must approve 
the justification. Under no circumstances may more than 30 days be 
specified for payment of progress payments.
    (2) The contracting officer shall determine the time to be 
specified in paragraph (a)(4)(i) of FAR clause 52.232-27, for 
constructive acceptance or approval, on a case-by-case basis. This time 
may not exceed seven days unless the contracting officer justifies in 
writing a longer period and obtains the approval of an official one 
level above the contracting officer. Under no circumstances may more 
than 30 days be specified for constructive acceptance or approval.
    (c) Stock, Special Order, and Schedules Programs. (1) GSA has 
obtained a FAR Deviation to authorize payment within 10 days of receipt 
of a proper invoice. The authority applies only to--
    (i) Orders placed by GSA under the referenced programs;
    (ii) That include FAR 52.232-33, Mandatory Information for 
Electronic Funds Transfer Payment, and;
    (iii) For which the order is placed, and the contractor submits 
invoices, using EDI in accordance with the Trading Partner Agreement.
    (2) If the contract is for commercial items and will include FAR 
52.212-4, use the clause with its Alternate II. If the contract is not 
for commercial items, use the clause at 552.232-25, Prompt Payment, 
instead of FAR 52.232-25.

532.7001  [Removed]

    11. Remove section 532.7001.
    12. Revise section 532.7003 to read as follows:

532.7003  Contract clause.

    For indefinite-delivery, indefinite-quantity (IDIQ) contracts other 
than Schedules, insert the clause at 552.232-77, Payment By Government 
Charge Card, if the contract will provide for payment by Government 
charge card as an alternative method of payment for orders. For 
Schedule contracts that provide for payment using the Government charge 
card, use the clause(s) prescribed at Part 538.

Subpart 532.71--[Removed]

    13. Remove Subpart 532.71.


    14. The authority citation for 48 CFR part 552 continues to read as 

    Authority: 40 U.S.C. 121(c).
    15. Add section 552.212-4 to read as follows:

552.212-4  Contract Terms and Conditions--Commercial Items.

    Alternate II (FAR Deviation) (DATE). When a commercial item 
contract is contemplated and the contract will include the clause at 
FAR 52.212-4, insert this Alternate II instead of paragraph (g)(2) of 
the FAR clause.
    (g)(2) The due date for making invoice payments by the designated 
payment office is the later of the following two events:
    (i) The 10th day after the designated billing office receives a 
proper invoice from the Contractor. If the designated billing office 
fails to annotate the invoice with the date of receipt at the time of 
receipt, the invoice payment due date shall be the 10th day after the 
date of the Contractor's invoice; provided the Contractor submitted a 
proper invoice and no disagreement exists over

[[Page 58519]]

quantity, quality, or Contractor compliance with contract requirements.
    (ii) The 10th day after Government acceptance of supplies delivered 
or services performed by the Contractor.
    16. Amend section 552.232-1 by revising the date of the clause and 
paragraph (c) to read as follows:

552.232-1  Payments.

* * * * *
* * * * *
    (c) When processing payment, GSA's Finance Office will 
automatically generate the 12 digit invoice number using the PDN 
assigned to the contract, followed by an abbreviated month and year of 
service (e.g., 84261554JUN7, for June 2007). The PDN appears on the 
contract award document.
    (End of clause)

552.232-8 and 552.232-23  [Removed]

    17. Remove sections 552.232-8 and 552.232-23.

552.232-25  Prompt Payment.

    18. Amend section 552.232-25 by removing from the introductory text 
of the prescription ``532.908(a)(2)'' and adding ``532.908(c)(2)'' in 
its place; revising the date of the clause to read ``(Date)''; and 
removing from paragraph (a)(1)(i) ``Supply Service (FSS)'' and adding 
``Acquisition Service (FAS)'' in its place.

552.232-70 and 552.232-71  [Removed]

    19. Remove sections 552.232-70 and 552.232-71.
    20. Amend section 552.232-72 by revising the section heading, the 
introductory text of the prescription, and the heading and date of the 
clause to read as follows:

552.232-72  Final Payment Under Building Services Contracts.

    As prescribed in 532.904(c), insert the following clause:
* * * * *

552.232-74 through 552.232-76  [Removed]

    21. Remove sections 552.232-74 through 552.232-76.
    22. Revise section 552.232-77 to read as follows:

552.232-77  Payment By Government Charge Card.

    As prescribed in 532.7003, insert the following clause:
    (a) Definitions.
    Governmentwide commercial purchase card means a uniquely numbered 
charge card issued by a contractor under the GSA SmartPay[reg]program 
contract for Fleet, Travel, and Purchase Card Services to named 
individual Government employees or entities to pay for official 
Government purchases.
    Oral order means an order placed orally either in person or by 
    (b) At the option of the Government and if agreeable to the 
Contractor, payments of ---- *---- or less for oral or written orders 
may be made using the Governmentwide commercial purchase card.
    (c) The Contractor shall not process a transaction for payment 
using the charge card until the purchased supplies have been shipped or 
services performed. Unless the cardholder requests correction or 
replacement of a defective or faulty item under other contract 
requirements, the Contractor must immediately credit a cardholder's 
account for items returned as defective or faulty.
    (d) Payments made using the Governmentwide commercial purchase card 
are not eligible for any negotiated prompt payment discount. Payment 
made using a Government debit card will receive the applicable prompt 
payment discount.
    (End of clause)
    * Enter amount not to exceed $100,000.

552.232-78 through 552.232-83  [Removed]

    23. Remove sections 552.232-78 through 552.232-83.
    24. Add section 552.232-7007 to read as follows:

552.232-7007  Limitation of Government's Obligation.

    As prescribed in 532.705-1(c), use the following clause:
    (a) Contract line item(s) ----*---- through ----*---- are 
incrementally funded. For these item(s), the sum of $----*---- of the 
total price is presently available for payment and allotted to this 
contract. An allotment schedule is set forth in paragraph (j) of this 
    (b) For item(s) identified in paragraph (a) of this clause, the 
Contractor agrees to perform up to the point at which the total amount 
payable by the Government, including reimbursement in the event of 
termination of those item(s) for the Government's convenience, 
approximates, but does not exceed, the total amount currently allotted 
to the contract. The Contractor is not authorized to continue work on 
those item(s) beyond that point. The Government will not be obligated 
in any event to reimburse the Contractor in excess of the amount 
allotted to the contract for those item(s) regardless of anything to 
the contrary in the clause entitled ``Termination for Convenience of 
the Government'' or paragraph (l) entitled ``Termination for the 
Government's Convenience'' of the clause at FAR 52.212-4, ``Commercial 
Terms and Conditions-Commercial Items.'' As used in this clause, the 
total amount payable by the Government in the event of termination of 
applicable contract line item(s) for convenience includes costs, 
profit, and estimated termination settlement costs for those item(s).
    (c) Notwithstanding the dates specified in the allotment schedule 
in paragraph (j) of this clause, the Contractor will notify the 
Contracting Officer in writing at least 90 days prior to the date when, 
in the Contractor's best judgment, the work will reach the point at 
which the total amount payable by the Government, including any cost 
for termination for convenience, will approximate 85 percent of the 
total amount then allotted to the contract for performance of the 
applicable item(s). The notification will state: (1) the estimated date 
when that point will be reached; and (2) an estimate of additional 
funding, if any, needed to continue performance of applicable line 
items up to the next scheduled date for allotment of funds identified 
in paragraph (j) of this clause, or to a mutually agreed upon 
substitute date. The notification will also advise the Contracting 
Officer of the estimated amount of additional funds that will be 
required for the timely performance of the item(s) funded pursuant to 
this clause, for a subsequent period as may be specified in the 
allotment schedule in paragraph (j) of this clause or otherwise agreed 
to by the parties. If after such notification additional funds are not 
allotted by the date identified in the Contractor's notification, or by 
an agreed substitute date, the Contracting Officer will terminate any 
item(s) for which additional funds have not been allotted, pursuant to 
the clause of this contract entitled ``Termination for Convenience of 
the Government'' or paragraph (l) entitled ``Termination for the 
Government's Convenience'' of the clause at FAR 52.212-4, ``Commercial 
Terms and Conditions-Commercial Items.''
    (d) When additional funds are allotted for continued performance of 
the contract line item(s) identified in paragraph (a) of this clause, 
the parties

[[Page 58520]]

will agree as to the period of contract performance which will be 
covered by the funds. The provisions of paragraphs (b) through (d) of 
this clause will apply in like manner to the additional allotted funds 
and agreed substitute date, and the contract will be modified 
    (e) If, solely by reason of failure of the Government to allot 
additional funds, by the dates indicated below, in amounts sufficient 
for timely performance of the contract line item(s) identified in 
paragraph (a) of this clause, the Contractor incurs additional costs or 
is delayed in the performance of the work under this contract and if 
additional funds are allotted, an equitable adjustment will be made in 
the price or prices (including appropriate target, billing, and ceiling 
prices where applicable) of the item(s), or in the time of delivery, or 
both. Failure to agree to any such equitable adjustment hereunder will 
be a dispute concerning a question of fact within the meaning of the 
clause entitled ``Disputes.''
    (f) The Government may at any time prior to termination allot 
additional funds for the performance of the contract line item(s) 
identified in paragraph (a) of this clause.
    (g) The termination provisions of this clause do not limit the 
rights of the Government under the clause entitled ``Default'' or 
``Termination for Cause.'' The provisions of this clause are limited to 
the work and allotment of funds for the contract line item(s) set forth 
in paragraph (a) of this clause. This clause no longer applies once the 
contract is fully funded except with regard to the rights or 
obligations of the parties concerning equitable adjustments negotiated 
under paragraphs (d) and (e) of this clause.
    (h) Nothing in this clause affects the right of the Government to 
terminate this contract pursuant to the clause of this contract 
entitled ``Termination for Convenience of the Government'' or paragraph 
(l) entitled ``Termination for the Government's Convenience'' of the 
clause at FAR 52.212-4, ``Commercial Terms and Conditions-Commercial 
    (i) Nothing in this clause shall be construed as authorization of 
voluntary services whose acceptance is otherwise prohibited under 31 
U.S.C. 1342.
    (j) The parties contemplate that the Government will allot funds to 
this contract in accordance with the following schedule:
    On execution of contract $ ----
    (month) (day), (year) $ ----
    (month) (day), (year) $ ----
    (month) (day), (year) $ ----
    (End of clause)
    ALTERNATE I (DATE). If only a certain line item(s) will be 
incrementally funded, substitute the following paragraph (a) for 
paragraph (a) of the basic clause:
    (a) Contract line item(s) ---- is incrementally funded. The sum of 
$----*---- is presently available for payment and allotted to this 
contract. An allotment schedule is contained in paragraph (j) of this 
    * To be inserted after negotiation.
[FR Doc. E8-23660 Filed 10-6-08; 8:45 am]