[Federal Register Volume 80, Number 92 (Wednesday, May 13, 2015)]
[Rules and Regulations]
[Pages 27266-27268]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-10620]



48 CFR Parts 1328 and 1352

[Document No.: 150129094-5094-01]
RIN 0605-AA37

Commerce Acquisition Regulation (CAR); Waiver of Bond Requirement 
for Contracts To Repair, Alter or Construct Certain Research and Survey 
Vessels for the National Oceanic and Atmospheric Administration

AGENCY: Department of Commerce (Commerce).

ACTION: Interim final rule.


SUMMARY: We, the Department of Commerce (Commerce), issue an interim 
final rule to provide procedures for waiving performance and payment 
bonds required under U.S. law, associated with contracts for the 
repair, alteration and construction of the National Atmospheric and 
Oceanographic Administration's (NOAA) fleet of research and survey 
vessels operated by the Office of Marine and Aviation Operations 
(OMAO). The regulations implement the authority provided to the 
Secretary of Commerce in Section 111 of the ``Department of Commerce 
Appropriations Act, 2015,'' and comport with language in the 
Appropriation Committee's report instructing NOAA to promulgate 
regulations prior to implementing the waiver authority. This final rule 
amends the CAR by inserting a section and amending a part to add the 
contract language for the waivers.

DATES: This action is effective on May 13, 2015. However, Commerce will 
accept comments on this interim final rule until June 12, 2015.

ADDRESSES: The final rule is available at www.regulations.gov, or by 
contacting the Department of Commerce: Room 1854, 1401 Constitution 
Avenue NW., Washington, DC 20230.
    You may submit comments on this interim final rule on 
regulations.gov, search for RIN 0605-AA37, click the ``Comment Now!'' 
icon, complete the required fields, and enter or attach your comments.
    Comments sent by any other method, to any other address or 
individual, or received after the end of the comment period, may not be 
considered. All comments received are a part of the public record and 
will generally be posted for public viewing on www.regulations.gov 
without change. All personal identifying information (e.g., name, 
address, etc.) submitted voluntarily by the sender will be publicly 
accessible. Do not submit confidential business information, or 
otherwise sensitive or protected information. The Department of 
Commerce will accept anonymous comments (enter ``N/A'' in the required 
fields if you wish to remain anonymous). Attachments to electronic 
comments will be accepted in Microsoft Word or Excel, WordPerfect, or 
Adobe PDF file formats only.

FOR FURTHER INFORMATION CONTACT: Virna Winters, 202-482-3483.



    Section 111 of the ``Department of Commerce Appropriations Act, 
2015,'' Division B, Title I of Public Law 113-235 (Dec. 16, 2014) 
(Appropriations Act) granted the Secretary of Commerce the authority to 
waive the performance and payment bond requirement under 40 U.S.C. 3131 
et seq., for the construction, alteration, or repair of ships in NOAA's 
fleet of vessels. 40 U.S.C. 3131 et seq. requires prime contractors to 
furnish performance and payment bonds for contracts in excess of 
$150,000, for the construction, alteration, or repair of any public 
building or public work of the Federal government including ship 
construction, alteration, and repairs. NOAA's Office of Marine and 
Aviation Operations (OMAO) operates a fleet of hydrographic survey, 
oceanographic research and fisheries survey vessels, consistent with 
its mission to perform offshore and deep-sea survey operations, coastal 
mapping, oceanographic research, and other functions that ensures 
public safety and the preservation of the Nation's property and natural 
resources. The waiver authority will align the Commerce's authorities 
with those of other Federal agencies, including the U.S. Department of 
the Navy and the U.S. Coast Guard, and is expected to address 
significant difficulties NOAA has experienced in obtaining competitive 
bids for ship repairs. The authorization for this waiver lasts as long 
as it is included in appropriations measures, or authorizing 
legislation, enacted by Congress.
    Commerce publishes this action to amend the CAR to provide guidance 
for implementing the authority granted to the Secretary of Commerce in 
the Appropriations Act. The following is a summary of the procedures 
which will be in the amendment to the CAR.
    NOAA ships enter into either a dry docking or dockside repair 
period every fiscal year, typically in the first or second quarter of 
the fiscal year. Each vessel is equipped with highly advanced survey 
instruments, state of the art electronics, computers, and navigational 
and communications systems, which must be kept operational to ensure 
the safety of the crew and the ship's schedule. It also is often 
necessary for emergency repairs to

[[Page 27267]]

be made to NOAA's vessels without delay for safety purposes and to 
ensure that the ships can carry on their missions involving the 
collection of mission sensitive data, as well as immediate response 
capabilities for extreme weather-related events involving hurricanes. 
As noted above, prime contractors performing those maintenance 
activities on NOAA's vessels have been required to provide performance 
and payment bonds for that work. These bonding requirements have placed 
an undue burden on smaller shipyards that have limited financial 
resources and have hindered their ability to bid on NOAA's 
requirements. This has resulted in inadequate competition for repairs 
to the Atlantic and Pacific fleets, delays to ship schedules, inferior 
quality and increased costs to the Government.
    The Appropriations Act gives the Secretary of Commerce the 
authority to waive the bonding requirement for the alteration, repair 
and construction of NOAA's vessels to encourage contractors, especially 
small shipyards, to bid on NOAA's vessel projects. In order to 
implement the authority in an efficient manner and consistent with the 
congressional mandate, this action allows NOAA to waive bond 
requirements for ship construction, alteration and repairs.
    Contracting Officers (CO) may not issue solicitations waiving the 
requirements for bonds until the waiver request is approved. The CO 
will retain the discretion to require bonds if the complexity of the 
work and the level of competition in the region warrant them. All 
solicitations for ship construction, alteration, or repairs where bonds 
are not required will include a provision informing potential offerors 
that the failure to pay subcontractors could adversely affect their 
past performance and have an impact on their eligibility for award of 
future contracts. Contractors will provide written confirmation that 
all subcontractors have been properly paid prior to submission of final 


    Executive Orders 12866 and 13563: This interim final rule has been 
drafted according to the requirements of Executive Orders 12866 and 
13563, and has been determined to be ``not significant'' under those 
    The Department of Commerce finds good cause under 5 U.S.C. 
553(b)(3) and (d) to waive the notice and comment and 30-day delay in 
effectiveness periods for this action. Congress granted the Secretary 
of Commerce the authority to waive the bonding requirements involved in 
this action in the Appropriations Act. That authority lasts the 
duration of fiscal year 2015 and carries through any years in which 
Congress reauthorizes the authority. Because the waiver authority may 
be of limited duration, it is impracticable and contrary to the 
public's interest to submit this rule to the ordinary notice and 
comment timeframe. Doing so would restrict the time limit for the 
authority, contrary to Congressional intent, and thereby reduce or 
eliminate the benefits to the public and to the Government of waiving 
the bonding requirements. Use of the waiver will benefit the public by 
allowing greater competition for shipbuilding and ship repair 
activities, and helps NOAA's vessels maintain working operation for 
more days out of the year. Because allowing public comment and delaying 
the effectiveness of this rule for 30 days is impracticable and 
contrary to the public's interest, Commerce hereby waives those 
    Although this interim rule will become effective upon publication 
in the Federal Register, Commerce is nonetheless seeking public 
comments on this rule and plans on publishing a final rule in the 
future that takes into account and responds to public comments.
    Regulatory Flexibility Act: Because notice and comment under 5 
U.S.C. 553 are not required for this rule, the requirements of the 
Regulatory Flexibility Act do not apply. 5 U.S.C. 603. Accordingly, no 
regulatory flexibility analysis is required, and none has been 
    Paperwork Reduction Act (PRA): This rule does not impose any new 
information collections subject to review and approval by the Office of 
Management and Budget (OMB) under the PRA. Notwithstanding any other 
provision of the law, no person is required to respond to, nor shall 
any person be subject to a penalty for failure to comply with, a 
collection of information subject to the requirements of the PRA, 
unless that collection of information displays a currently valid OMB 
control number.

List of Subjects

48 CFR Part 1328

    Government procurement, Insurance, Reporting and recordkeeping 
requirements, Surety bonds.

48 CFR Part 1352

    Government procurement, Matrix, Reporting and recordkeeping 

Ellen Herbst,
Chief Financial Officer and Assistant Secretary of Administration, U.S. 
Department of Commerce.

    For the reasons set out in the preamble, the Department of Commerce 
amends 48 CFR parts 1328 and 1352 as follows:


1. The authority citation for part 1328 continues to read as follows:

    Authority:  41 U.S.C. 414; 48 CFR 1.301-1.304.

2. Add sections 1328.102, 1328.102-1, 1328.102-2, and 1328.102-3 to 
subpart 1328.1 to read as follows:

1328.102  Waiver of performance and payment bonds for contracts 
involving the construction, alteration, and repair of NOAA's fleet of 

1328.102-1  Waiver policy.

    (a) Pursuant to the authority vested in the Secretary of Commerce, 
the requirements of 40 U.S.C. 3131 through 3133 may be waived by virtue 
of the authority vested in him or her pursuant to the Consolidated and 
Further Continuing Appropriations Act, 2015, Public Law 113-235, 128 
Stat. 2130, Div. B, Title I, Sec. 111 (2014), with respect to contracts 
for the repair, alteration, and construction of NOAA's hydrographic 
survey, oceanographic research, and fisheries survey vessels operated 
by NOAA Office of Marine and Aviation Operations in the Atlantic and 
Pacific regions including the Pacific Islands. The Department's policy 
and procedures for use of the waiver authority is set forth in CAM 
    (b) Contracting officers are required to consider any unusual 
circumstances that may arise in which either payment or performance 
bonds, or both, will be advantageous to the Government in connection 
with these contracts prior to issuing solicitations.

1328.102-2  Waiver authority.

    The designee authorized to approve bond waivers is set forth in CAM 

1328.102-3  Contract clause.

    The contracting officer shall insert the clause at 1352.228-77, 
Contractor Assurance of Subcontractor Payments, in solicitations and 
contracts when performance and payment bonds are waived.

[[Page 27268]]


3. The authority for part 1352 continues to read as follows:

    Authority:  41 U.S.C. 414; 48 CFR 1.301-1.304.

4. Add section 1352.228-77 to subpart 1352.2 to read as follows:

1352.228-77  Contractor assurance of subcontractor payments.

    As prescribed in 48 CFR 1328.102-3, insert the following clause:
Contractor Assurance of Subcontractor Payments May 2015
    (a) To protect the interests of subcontractors participating in the 
performance of this contract, the Government requires the assurance 
that all monies due to subcontractors is timely and properly made prior 
to the submission of the contractor's final invoice.
    (b) By accepting this award, in writing or by performance, the 
offeror/contractor represents that--it will provide full payment to all 
subcontractors utilized in the performance of the resultant contract 
prior to the submission of its final invoice.
    (c) No later than five (5) days after contract award the contractor 
shall provide the Contracting Officer with a list of all subcontractors 
to be utilized in the performance of this contract. The contractor must 
provide updates to the Contracting Officer throughout the contract, 
should changes be made.
    (d) The following shall be completed and provided accordingly:

                                   Subcontractor List--Contract No.__________
                                        Subcontractor point of
                                        contact with  contact    Contract line item(s)       Applicable trade
    Name of subcontractor business      information (number/e-    to which subcontract         (electrical,
                                                mail)                 work is tied          mechanical, etc.)

    (e) Reports by subcontractors of delayed or non-payment during the 
performance of the contract may impact the Government's continued 
payment of contractor invoices on a percentage of completion basis. 
(CAR clause, 1352.271-71, Method of Payment and Invoicing Instructions 
for Ship Repair).
    (f) The contractor shall include the following statement on its 
final invoice--``By submission of this invoice, assurance is herein 
provided that all monies due to any and all subcontractors used in the 
performance of this contract have been paid in full prior to the 
submission of this final invoice.''
    (g) Failure to pay subcontractors could adversely affect the 
contractor's past performance evaluation for this contract and have a 
negative impact on its eligibility for future contract awards.
    (h) The Government may seek any available remedies in the event the 
contractor fails to comply with the provisions of this clause.

[FR Doc. 2015-10620 Filed 5-12-15; 8:45 am]