[Federal Register Volume 75, Number 10 (Friday, January 15, 2010)]
[Proposed Rules]
[Pages 2463-2466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-379]


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DEPARTMENT OF DEFENSE

Department of the Army

48 CFR Parts 5132, 5136, and 5152

RIN 0710-AA69


Continuing Contract for Civil Works Project Managed by the United 
States Army Corps of Engineers Clauses

AGENCY: U.S. Army Corps of Engineers, Department of the Army, DoD.

ACTION: Proposed rule; request for comments.

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SUMMARY: The U.S. Army Corps of Engineers (USACE) is proposing an 
interim Continuing Contracts clause for use on specifically authorized 
Civil Works projects only. This proposal is in response to a recurring 
statutory provision that requires a change to the clause USACE had 
previously used.

DATES: Comments must be received by March 16, 2010.

ADDRESSES: You may submit comments, identified by docket number COE-
2009-0065, by any of the following methods:
    Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
instructions for submitting comments.
    E-mail: [email protected]. Include the docket number, 
COE-2009-0065, in the subject line of the message.
    Mail: U.S. Army Corps of Engineers, Attn: CECT-P (Robin A. 
Baldwin), 441 G Street, NW., Washington, DC 20314-1000.
    Hand Delivery/Courier: Due to security requirements, we cannot 
receive comments by hand delivery or courier.
    Instructions: Direct your comments to docket number COE-2009-0065. 
All comments received will be included in the public docket without 
change and may be made available on-line at http://www.regulations.gov, 
including any personal information provided, unless the commenter 
indicates that the comments includes information claimed to be 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute. Do not submit information that you 
consider to be CBI, or otherwise protected, through regulations.gov or 
e-mail. The regulations.gov Web site is an anonymous access system, 
which means we will not know your identity or contact information 
unless you provide it in the body of your comment. If you send an e-
mail directly to the U.S. Army Corps of Engineers without going though 
http://www.regulations.gov, your

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e-mail address will be automatically captured and included as part of 
the comment that is placed in the public docket and made available on 
the Internet. If you submit an electronic comment, we recommend that 
you include your name and other contract information in the body of 
your comment and with any disk or CD-ROM you submit. If we cannot read 
your comment because of technical difficulties and cannot contact you 
for clarification, we may not be able to consider your comment. 
Electronic comments should avoid the use of any special characters, any 
form of encryption, and be free of any defects or viruses.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov. All documents in 
the docket are listed. Although listed in the index, some information 
is not publicly available, such as CBI or other information whose 
disclosure is restricted by statute. Certain other material, such as 
copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy form.

FOR FURTHER INFORMATION CONTACT: Ms. Robin A. Baldwin, Headquarters 
U.S. Army Corps of Engineers, Directorate of Contracting, Policy 
Division, 441 G Street, Washington, DC at 202-761-8645.

SUPPLEMENTARY INFORMATION:

A. Background

    The new funding clause for civil works projects includes alternate 
language and is designed to give USACE officials options for funding 
contracts spanning more than one fiscal year after the enactment of 
statutory restrictions to the Corps' continuing contract authority. The 
new clause allows Congress more oversight over continuing contracts and 
better control over the rate at which funds are spent on projects. The 
end result is contracts that obligate funds in close alignment with 
prerogatives reflected in budget documents and appropriations acts. 
USACE has submitted a report to Congress on the overall effects, both 
positive and negative, of the statutory restriction.
    Continuing contracts are authorized by Section 10 of the River and 
Harbor Act of 1922, 33 U.S.C. 621, which provides as follows: ``Any 
public work on canals, rivers, and harbors adopted by Congress may be 
prosecuted by direct appropriations, by continuing contracts, or by 
both direct appropriations and continuing contracts.'' The use of 
continuing contracts permitted large civil work projects, spanning more 
than one fiscal year, to be accomplished in a comprehensive manner, 
rather than through a series of yearly work units. Implementation of 
continuing contract was covered under Engineers Federal Acquisition 
Regulation Supplement (EFARS) Subpart 32.7--Contract Funding, and 
through the inclusion of either clause EFARS 52.232-5001, Continuing 
Contracts, or EFARS 52.232-5002, Continuing Contracts (Alternate).
    The Energy and Water Development Appropriations Act of 2006 (06 
E&WDA), Public Law 109-103, included provisions that restricted the 
Corps' authority to reprogram funds and award continuing contracts in 
Fiscal Year 2006. Section 108 of the 06 E&WDA prohibited the Corps from 
awarding or modifying an existing continuing contract when doing so 
would commit an amount in excess of the amount appropriated for that 
project pursuant to the 06 E&WDA, plus any amounts available from 
carryover or reprogramming. In light of Section 108 of the 06 E&WDA, 
USACE changed its implementation of continuing contracts, as well as 
the clauses it uses to award new continuing contracts that are not 
fully funded. The restriction in Section 108 has been carried forward 
into all E&WDAAs, and USACE anticipates that Congress will continue to 
include that restriction in future Acts.
    The existing continuing contract clause (EFARS 52.232-5001) permits 
the contractor to work beyond the amount reserved to the contract for a 
fiscal year. Doing so creates a legal liability to pay the contractor 
for such costs, even though--under the existing continuing contract 
clause--the Corps does not have to make the payments until the next 
fiscal year. Accordingly, because the clause permits contractors to 
commit the government in excess of the amount appropriated for that 
project plus available carryover and reprogramming, use of this clause 
runs a high risk of violating the new statutory restriction on 
continuing contracts.
    In order to implement the USACE Civil Works program under the new 
continuing contract restrictions, USACE has drafted a new clause for 
inclusion in the AFARS. The basic clause, ``5152.232-9000 Special 
Continuing Contract for Civil Works Project Managed by the United 
States Army Corps of Engineers,'' permits the Corps to award continuing 
contracts while only obligating the government's estimate of contractor 
earnings for the first fiscal year. This basic clause does not permit 
the contractor to work beyond the amount reserved, and it also 
expressly requires the contractor to stop working when funds are 
exhausted. The alternate language, if appropriate, would limit the 
government's liability for termination costs to the amount reserved on 
the contract. In contrast, under the basic clause, the government is 
responsible for all costs pursuant to the termination for convenience 
clause regardless of the amount reserved on the contract.
    Alternatives to using the new clause include fully funding 
contracts at award; structuring the work into segments that could be 
accomplished through options, using multiple fully-funded contracts 
over multiple years, or using the clause at DFARS 252.232-7007 to 
incrementally fund a contract. Each of these alternatives is still a 
viable alternative and the contracting officer must choose which 
acquisition strategy best suits the requirement. That determination 
shall be based on an analysis of the possible contracting options with 
the intent that the Special Continuing Contract for Civil Works Project 
Managed by the United States Army Corps of Engineers clause be used as 
a least preferred method.
    In light of the legal restrictions on continuing contracts, USACE 
had to change its implementation of existing continuing contracts, as 
well as the terms it uses to award new continuing contracts. USACE 
shall no longer permit the contractor to work beyond the amount 
reserved in the contract without first reprogramming sufficient funds 
to cover the contractor's earnings through the end of the fiscal year. 
The new clause should be used where the true Continuing Contract clause 
(EFARS 52.232-5001) might have been used in the past and alternative 
contract options are not viable.

B. Regulatory Flexibility Act

    This proposed rule may have a significant economic impact upon a 
substantial number of small entities. The clause differs from the true 
continuing contract clause (EFARS 52.232-5001) in that they no longer 
permit the contractor to work beyond the amount reserved to the 
contract. This change may affect a contractor's ability to schedule 
work and equipment effectively. Pursuant to authority contained in 
Section 608(a) of the Act (5 U.S.C. 608(a)) a determination has been 
made that circumstances require delay in preparation of an initial 
Regulatory Flexibility Act analysis to bring the USACE continuing 
contract into compliance with existing statutory authority. Within 
approximately thirty

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days an analysis will be prepared and forwarded to the Chief Counsel 
for Advocacy of the Small Business Administration. Comments from small 
entities concerning the affected AFARS Subpart 5152 will be considered 
in accordance with Section 610 of the Act. Such comments shall be 
submitted separately and cite the AFARS Proposed Rule on Continuing 
Contract for Civil Works Project in the correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
rule does not impose any new information collection burden that 
requires the approval of the Office of Management and Budget under 44 
U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 5132, 5136, and 5152

    Government procurement.

    Dated: January 7, 2010.

    Approved By:
Robin A. Baldwin,
Chief, Contracting Policy Division.
    For the reasons stated in the preamble, the Corps is proposing to 
amend 48 CFR Chapter 51 as set forth below:
    1. Add part 5132 to read as follows:

PART 5132--CONTRACT FINANCING

Subpart 5132.7--Contract Funding
Sec.
5132.703-90 Civil Works Project Appropriations Act Restriction.
5132.705 Contract Clauses [Reserved].
5132.705-90 Clause for Limitation of the Government's Obligation for 
Civil Works Projects.

    Authority: 33 U.S.C. 621, 10 U.S.C. 2202, DOD Directive 5000.35, 
FAR 1.301 and DOD FAR Supplement 201.3.

Subpart 5132.7--Contract Funding


5132.703-90  Civil Works Project Appropriations Act Restriction.

    (a) The U.S. Army Corps of Engineers (USACE) is authorized by 33 
U.S.C. 621 to prosecute its specifically authorized civil works 
projects on canals, rivers and harbors by direct appropriations or by 
continuing contract, or both. A continuing contract permits USACE to 
obligate the government to the entire contract amount at award and fund 
the contract incrementally until completion.


5132.705  Contract Clauses [Reserved].


5132.705-90  Clause for Limitation of the Government's Obligation for 
Civil Works Projects.

    (a) The clause at 5152.232-9000, Special Continuing Contract for 
Civil Works Project Managed by the United States Army Corps of 
Engineers, may be used in solicitations and contracts for civil works 
water resource projects that have been specifically adopted by Congress 
in authorizing legislation and for which future fiscal year funding is 
provided in the budget. This clause shall be used for all civil works 
projects when funds are appropriated for the project from either the 
operation and maintenance (O&M) account in the Energy and Water 
Development Appropriations Act (E&WDAA) or the O&M portion of the 
Mississippi River and Tributaries account in the E&WDAA and sufficient 
funds are not available to complete the contract. The contracting 
officer must insert the sum being reserved in the clause and reserve 
this amount stated in subsection (a) of the clause at contract award 
and modify the contract each fiscal year to reflect the amount 
reserved. This clause is required through 30 September 2010 in 
accordance with Section 103 of the Energy and Water Development 
Appropriations Act, 2010, Public Law 111-85. If future appropriations 
acts continue in the same manner, the requirement will be extended as 
appropriate beyond fiscal year 2010.
    (b) The Alternate language for clause 5152.232-9000 may be used in 
solicitations and contracts for civil works water resource projects 
that have been specifically adopted by Congress in authorizing 
legislation but for which future fiscal year funding is not provided in 
the budget or when use of the 5152.232-9000 clause could be used. The 
contracting officer must insert the sum being reserved in the clause 
and reserve this amount stated in subsection (a) of the clause at 
contract award and modify the contract each fiscal year to reflect the 
amount reserved. Section 103 of the Energy and Water Development 
Appropriations Act, 2010, Public Law 111-85. If future appropriations 
acts continue in the same manner, the requirement will be extended as 
appropriate beyond fiscal year 2010.
    2. Add part 5136 to read as follows:

PART 5136--SPECIAL ASPECTS OF CONTRACTING FOR CONSTRUCTION

Subpart 5136.290--Civil Works Construction Contracts
Sec.
5136.290-1 Policy.
5136.290-2 Definition.

    Authority:  33 U.S.C. 621, 10 U.S.C. 2202, DOD Directive 
5000.35, FAR 1.301 and DOD FAR Supplement 201.3.

Subpart 5136.290--Civil Works Construction Contracts


5136.290-1  Policy.

    The Secretary of the Army, acting through the Chief of Engineers, 
is authorized by 33 U.S.C. 621 to carry out projects for improvement of 
rivers and harbors (other than surveys, estimates, and gaugings) by 
contract or otherwise, in the manner most economical and advantageous 
to the United States. The U.S. Army Corps of Engineers (USACE) is the 
only contracting organization authorized to contract for civil works 
construction projects. See AFARS Part 5132.703-90.


5136.290-2  Definition.

    As used in this subpart--
    ``Civil works'' means authorized civil functions of the Department 
of the Army pertaining to rivers and harbors, flood control, shore 
protection and storm damage reduction, aquatic ecosystem restoration, 
and related purposes.

PART 5152--TEXTS AND PROVISIONS OF CLAUSES

    3. The authority citation for part 5152 is revised to read as 
follows:

    Authority:  10 U.S.C. 2202, 33 U.S.C. 621, DoD Directive 
5000.35, FAR 1.301, DoD FAR Supplement 201.301, and DOD FAR 
Supplement 201.3.

    4. Add 51.232-9000 to read as follows:


5152.232-9000  Special Continuing Contract for Civil Works Project 
Managed by the United States Army Corps of Engineers.

    As prescribed in 5132.290-1 and 5132.705-90(a), use the following 
clause:
    (a) Funds are not available at the inception of this contract to 
cover the entire contract price. The liability of the Government is 
limited by this clause notwithstanding any contrary provision of the 
``Payments to Contractor'' clause or any other clause of this contract, 
except the Termination for Convenience clause. The sum of $-------- 
[Each fiscal year of contract execution, Contracting Officer shall 
insert the specific dollar amount that is reserved for this contract 
and available for payment to the contractor during the current fiscal 
year. The Contracting Officer shall modify that amount to reflect any 
funds added to or subtracted from the contract during a current fiscal 
year.] has been reserved for this contract and is available for payment 
to the Contractor during the current fiscal year. It is expected that 
Congress will make appropriations for future fiscal years from which 
additional funds,

[[Page 2466]]

together with funds provided by one or more non-federal project 
sponsors, will be reserved for this contract.
    (b) Failure to make payments in excess of the amount currently 
reserved, or that may be reserved from time to time, shall not be 
considered a breach of contract and shall not entitle the Contractor to 
a price adjustment under the terms of this contract.
    (c) The Government may at any time reserve additional funds for 
payments under the contract if there are funds available for such 
purpose. The Contracting Officer will promptly notify the Contractor of 
any additional funds reserved for the contract by issuing an 
administrative modification to the contract.
    (d) If earnings will be such that funds reserved for the contract 
will be exhausted before the end of any fiscal year, the Contractor 
shall give written notice to the Contracting Officer of the estimated 
date of exhaustion and the amount of additional funds which will be 
needed to meet payments due or to become due under the contract during 
that fiscal year. This notice shall be given not less than 120 days 
prior to the estimated date of exhaustion. Unless informed in writing 
by the Contracting Officer that additional funds have been reserved for 
payments under the contract, the Contractor shall stop work upon the 
exhaustion of funds.
    (e) No payments will be made after exhaustion of funds except to 
the extent that additional funds are reserved for the contract.
    (f) Any suspension, delay, or interruption of work arising from 
exhaustion or anticipated exhaustion of funds shall not constitute a 
breach of this contract and shall not entitle the Contractor to any 
price adjustment under the ``Suspension of Work'' clause or in any 
other manner under this contract.
    (g) An equitable adjustment in performance time shall be made for 
any increase in the time required for performance of any part of the 
work arising from exhaustion of funds or the reasonable anticipation of 
exhaustion of funds.
    (h) If, upon the expiration of one-hundred (100) days after the 
beginning of the fiscal year following an exhaustion of funds, the 
Government has failed to reserve additional funds for this contract 
sufficient to cover the Government's estimate of funding required for 
the first quarter of that fiscal year, the Contractor, by written 
notice delivered to the Contracting Officer at any time before such 
additional funds are reserved, may elect to treat his right to proceed 
with the work as having been terminated. Such a termination shall be 
considered a termination for the convenience of the Government.
    (i) If at any time it becomes apparent that the funds reserved for 
any fiscal year are in excess of the funds required to meet all 
payments due or to become due the Contractor because of work performed 
and to be performed under the contract during the fiscal year, the 
Government reserves the right, after notice to the Contractor, to 
reduce said reservation by the amount of such excess.
    (j) The term ``Reservation'' means monies that have been set aside 
and made available for payments under this contract. Reservations of 
funds shall be made in writing via an administrative modification 
issued by the Contracting Officer.

Alternate I

    If future funding for the specifically authorized civil works 
project for which use of the continuing contract is contemplated is not 
included in the following year's President's Budget, substitute the 
following paragraphs (a) and (h) for paragraphs (a) and (h) of the 
basic clause:
    (a) Funds are not available at the inception of this contract to 
cover the entire contract price. The liability of the Government is 
limited by this clause notwithstanding any contrary provision of the 
``Payments to Contractor'' clause or any other clause of this contract. 
The sum of $-------- [Each fiscal year of contract execution, 
Contracting Officer shall insert the specific dollar amount that is 
reserved for this contract and available for payment to the contractor 
during the current fiscal year. The Contracting Officer shall modify 
that amount to reflect any funds added to or subtracted from the 
contract during a current fiscal year.] has been reserved for this 
contract and is available for payment to the Contractor during the 
current fiscal year. It is expected that Congress will make 
appropriations for future fiscal years from which additional funds, 
together with funds provided by one or more non-federal project 
sponsors, will be reserved for this contract.
    (h) If, upon the expiration of one-hundred (100) days after the 
beginning of the fiscal year following an exhaustion of funds, the 
Government has failed to reserve additional funds for this contract 
sufficient to cover the Government's estimate of funding required for 
the first quarter of that fiscal year, the Contractor, by written 
notice delivered to the Contracting Officer at any time before such 
additional funds are reserved, may elect to treat his right to proceed 
with the work as having been terminated. The Government will not be 
obligated in any event to reimburse the Contractor for any costs 
incurred after the exhaustion of funds regardless of anything to the 
contrary in the clause entitled ``Termination for Convenience of the 
Government.''

[FR Doc. 2010-379 Filed 1-14-10; 8:45 am]
BILLING CODE 3720-58-P