[Federal Register Volume 83, Number 217 (Thursday, November 8, 2018)]
[Proposed Rules]
[Pages 55838-55850]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-24282]


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GENERAL SERVICES ADMINISTRATION

48 CFR Parts 501, 536, and 552

[GSAR Case 2015-G506; Docket No. GSAR-2018-0013; Sequence No. 1]
RIN 3090-AI81


General Services Administration Acquisition Regulation (GSAR); 
Adoption of Construction Project Delivery Method Involving Early 
Industry Engagement--Construction Manager as Constructor (CMc)

AGENCY: Office of Acquisition Policy, General Services Administration 
(GSA).

ACTION: Proposed rule.

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SUMMARY: The General Services Administration (GSA) is issuing a 
proposed rule amending the General Services Administration Acquisition 
Regulation (GSAR) to adopt an additional project delivery method for 
construction, construction manager as constructor (CMc). The private 
sector prevalently uses this type of construction project delivery 
method, which allows for early industry engagement by the construction 
contractor to provide reduced cost growth, reduced schedule growth and 
administrative savings. The current Federal Acquisition Regulation 
(FAR) and GSAR lack detailed coverage differentiating various 
construction project delivery methods. GSA's policies on CMc have been 
previously issued through other means. By incorporating CMc into the 
GSAR and differentiating for various construction methods, the GSAR 
will provide centralized guidance that eases the burden for industry to 
understand and execute CMc construction contracts. Centralized guidance 
will also ensure consistent application of construction project 
principles across GSA. Additionally, integrating these requirements 
into the GSAR will allow industry to provide public comments through 
the rulemaking process.

DATES: Interested parties should submit written comments to the 
Regulatory Secretariat Division on or before January 7, 2019 to be 
considered in the formulation of a final rule.

ADDRESSES: Submit comments identified by GSAR Case 2015-G503 by any of 
the following methods:
     Regulations.gov: http://www.regulations.gov. Submit 
comments via the Federal eRulemaking portal by searching for ``GSAR 
Case 2015-G506''. Select the link ``Comment Now'' that corresponds with 
GSAR Case 2015-G506. Follow the instructions provided on the screen. 
Please include your name, company name (if any), and ``GSAR Case 2015-
G506'' on your attached document.
     Mail: General Services Administration, Regulatory 
Secretariat Division, 1800 F Street NW, ATTN: Lois Mandell Washington, 
DC 20405.
    Instructions: Please submit comments only and cite GSAR Case 2015-
G506 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. To 
confirm receipt of your comment(s), please check www.regulations.gov, 
approximately two to three days after submission to verify posting 
(except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: For clarification about content, 
contact Mr. Tony O. Hubbard, General Services Acquisition Policy 
Division, GSA, by phone at 202-357-5810 or by email at 
tony.hubbard@gsa.gov. For information pertaining to status or 
publication schedules, contact the Regulatory Secretariat by mail at 
1800 F Street NW, Washington, DC 20405, or by phone at 202-501-4755. 
Please cite GSAR Case 2015-G506, Construction Manager as Constructor 
Contracting.

SUPPLEMENTARY INFORMATION: 

I. Background

    CMc refers to a project management and contracting technique that 
is one of three predominant methods used for acquiring construction 
services by GSA (i.e., traditional (design-bid-build), design-build, 
and CMc). The CMc model used by GSA follows industry best practices 
that have been commonly used in the private sector for many years, and 
has worked well for numerous GSA construction procurements. While there 
is ample guidance on traditional and design-build procurements in the 
FAR, there is no guidance on CMc procurement. By providing specific 
contracting guidance on CMc, GSA is adopting a major project delivery 
method used by the private sector and is fundamentally updating the 
practice of buying construction services within the Federal Government. 
This move supports the Government's shift toward category management by 
providing a more robust playbook framework for efficient procurement of 
construction services.
    The General Services Administration (GSA) is amending the General 
Services Administration Acquisition Regulation (GSAR) to revise 
sections of GSAR Part 536, Construction and Architect-Engineer 
Contracts, and corresponding clauses in GSAR Part 552, Solicitation 
Provisions and Contract Clauses to incorporate CMc contracting, an 
industry best practice readily used in the private sector for 
construction. This rule will clarify, update and incorporate existing 
CMc guidance previously implemented through internal Public Building 
Service (PBS) policies.
    Bringing existing policy into the GSAR will allow for greater 
transparency and an opportunity for the public to comment on these 
long-standing procedures. This rule has wide support from industry. In 
response to GSA's request for public input on acquisition regulatory 
reform (82 FR 24653), one leading construction industry association 
requested that GSA put forward GSAR guidance on the CMc project 
delivery method. In addition, bringing these policies into one location 
ensures currency and consistency that will make it easier for companies 
to do business with the Government and will provide better guidance to 
contracting officers. The proposed rule includes a total of two new 
agency unique clauses, three new alternatives to existing clauses, one 
new definition and one new agency unique subpart to prescribe policies 
and procedures for CMc contracting.
    The CMc project delivery method models those used extensively in 
the

[[Page 55839]]

private sector for large complex construction projects. Similar to 
implementation in the private sector, this delivery method for GSA 
engages the construction contractor during the design phase of the 
project and establishes a ceiling on the eventual construction price 
(i.e., the guaranteed maximum price (GMP)) before construction 
documents are prepared. While the private sector and GSA share an 
emphasis on technical qualifications for contractor selection, GSA also 
includes price competition of the GMP before initial contract award and 
provides more detail on the GMP elements. The CMc project delivery 
method creates value through early collaboration between the architect 
and constructor. In addition to the benefits of design phase services, 
CMc offers the opportunity to begin construction prior to full 
completion of the design and to reduce the total project schedule. 
Similar to the private sector, GSA provides a cost incentive under CMc 
contracts. Through the cost incentive approach, the constructor is 
motivated to promote innovation and efficiencies that reduce costs 
through the construction phase of the project.
    A GSAR rewrite initiative was undertaken by GSA to revise the GSAR 
starting in 2008. A proposed rule to update GSAR Part 536, Construction 
and Architect-Engineer Contracts was initially published as GSAR Case 
2008-G509 in the Federal Register at 73 FR 73199, on December 2, 2008. 
Due to the variety of issues addressed in the GSAR 536 rewrite, and 
internal stakeholder interest, the agency re-evaluated the 
implementation plan for the GSAR 536 rewrite and withdrew this initial 
proposed rule. The initial proposed rule withdrawal was published in 
the Federal Register at 80 FR 6944 on February 9, 2015. GSAR Case 2015-
G506 is the third of several GSAR cases to separately address the 
issues and update the GSAR Part 536 text.

II. Discussion and Analysis

    The changes to the GSAR included in this proposed rule are 
summarized below.
    1. Two new clauses for construction contracts previously 
implemented through internal PBS policy and currently in solicitations 
and contracts will be incorporated into GSAR Parts 536 and 552. The new 
clauses and a brief description are as follows:

------------------------------------------------------------------------
         Name and No.              Description            Purpose
------------------------------------------------------------------------
552.236-79 Construction         Agency unique      Clause provides
 Manager as Constructor.         clause to          guidance specific to
                                 address            a CMc project.
                                 requirements
                                 including the
                                 guaranteed
                                 maximum price,
                                 conversion to
                                 firm-fixed-
                                 price, and final
                                 settlement.
552.236-80 Accounting Records   Agency unique      Clause provides
 and Progress Payments.          clause to          guidance specific to
                                 address            a CMc project.
                                 requirements
                                 including
                                 auditing
                                 accounts and
                                 control systems.
------------------------------------------------------------------------

    2. Three new alternates for existing clauses for construction 
contracts previously implemented through internal PBS policy and 
currently in solicitation and contracts will be incorporated into GSAR 
Parts 536 and 552. The clauses and a brief description of the changes 
are as follows:

------------------------------------------------------------------------
         Name and No.              Description            Purpose
------------------------------------------------------------------------
552.236-15 Schedules for        Supplemental       Clause prescription
 Construction Contracts.         clause to FAR      has no dollar
                                 52.236-15 to       threshold, which is
                                 address            more inclusive than
                                 milestone          the FAR clause that
                                 events, cost       is only required at
                                 breakdown, and     above simplified, in
                                 requirements for   order to satisfy GSA
                                 different          specific contracting
                                 project delivery   requirements.
                                 methods.
                                                   The base clause
                                                    provides guidance
                                                    for any type of
                                                    construction
                                                    project. Alternate I
                                                    of the clause
                                                    provides guidance
                                                    specific to a design-
                                                    bid-build
                                                    construction
                                                    project. Alternate
                                                    II of the clause
                                                    provides guidance
                                                    specific to a design-
                                                    build construction
                                                    project. Alternate
                                                    III of the clause
                                                    provides guidance
                                                    specific to a CMc
                                                    project.
552.236-21 Specifications and   Supplemental       Clause prescription
 Drawings for Construction.      clause to FAR      has no dollar
                                 52.236-21 to       threshold, which is
                                 address            more inclusive than
                                 inconsistencies,   the FAR clause that
                                 and clarify        is only required at
                                 definition of      above simplified, in
                                 terms for          order to satisfy GSA
                                 different          specific contracting
                                 project delivery   requirements.
                                 methods.          The base clause
                                Revised title and   provides guidance
                                 clause numbering   for any type of
                                 to better align    construction
                                 with the FAR,      project. Alternate I
                                 previously was     of the clause
                                 GSAR 552.236-77,   provides guidance
                                 Specifications     specific to a design-
                                 and Drawings.      build construction
                                                    project. Alternate
                                                    II of the clause
                                                    provide guidance
                                                    specific to a CMc
                                                    project.
552.236-71 Contractor           Agency unique      The base clause
 Responsibilities.               clause to          provides guidance
                                 address            for any type of
                                 requirements for   construction
                                 different          project. Alternate I
                                 project delivery   of the clause
                                 methods.           provides guidance
                                                    specific to a design-
                                                    build construction
                                                    project. Alternate
                                                    II of the clause
                                                    provide guidance
                                                    specific to a CMc
                                                    project.
------------------------------------------------------------------------

    3. A new definition is incorporated at GSAR Section 536.102 for the 
construction manager as constructor (CMc) project delivery method.
    4. GSAR Subpart 536.71 is added to reflect current practices for 
construction contracting using the construction manager as constructor 
(CMc) project delivery method. The sections and a brief description are 
as follows:

[[Page 55840]]



------------------------------------------------------------------------
              No.                      Name             Description
------------------------------------------------------------------------
536.7101......................  Scope of Subpart.  Clarifies the scope
                                                    as the policies and
                                                    procedures for the
                                                    use of the CMc
                                                    project delivery
                                                    method.
536.7102......................  Definitions......  Provides a definition
                                                    for guaranteed
                                                    maximum price and
                                                    related elements.
536.7103......................  Construction       Provides policies
                                 Contract           relating to
                                 Solicitation       evaluation factors,
                                 Procedures.        price realism, total
                                                    evaluated price, and
                                                    release of the
                                                    Government estimate.
536.7104......................  Construction       Provides procedures
                                 Contract Award.    for award of
                                                    separate line items.
536.7105......................  Construction       Provides policies
                                 Contract           relating to
                                 Administration.    guaranteed maximum
                                                    price, open book
                                                    accounting,
                                                    incentives,
                                                    allowances, early
                                                    work packages, and
                                                    conversion to firm-
                                                    fixed-price.
536.7106......................  Construction       Provides procedures
                                 Contract           regarding final
                                 Closeout.          settlement and audit
                                                    for closeout.
536.7107......................  Contract Clauses.  Prescribes clauses
                                                    when a CMc project
                                                    delivery method will
                                                    be followed.
------------------------------------------------------------------------

III. Specific Questions for the Public

    GSA is seeking public comment on the applicability of Cost 
Accounting Standards (CAS) and the structure of incentives for CMc 
contracts. Feedback from industry and interested parties in Government 
on these issues will be used to help inform revisions to the proposed 
clauses, prescriptions, and other guidance to implement the rule.
    Cost Accounting Standards: FAR Subpart 30.2 requires full CAS 
compliance, which covers 19 cost accounting principles, for negotiated 
contracts over $50 million. Modified CAS compliance, which covers 4 
cost accounting principles, is required for negotiated contracts below 
$50 million. Currently, contracts using the CMc project delivery method 
apply these same CAS requirements as well as open book accounting 
practices for GMP line items. GSA is seeking public comment on industry 
standards for cost accounting as they relate to construction projects 
and the economic impact or cost savings if GSA were to only apply 
modified CAS compliance to all CMc projects regardless of dollar value.
    Incentives: Currently, contracts using the CMc project delivery 
method include a fee for the construction work within the GMP that is a 
fixed amount for all of the contractor's indirect costs. This fee may 
include overhead, profit, and general conditions. Current CMc contracts 
also include a shared savings of the cost reductions realized by the 
contractor as a result of completing the construction work for less 
than the GMP. Public comments are invited on the way the proposed rule 
structures these elements under the CMc project delivery method, and 
the types of structures and incentives common in the construction 
marketplace.

IV. Expected Economic Impact of This Rule

    All three predominant construction project delivery methods have 
merits (i.e., Design-Bid-Build (D-B-B), Design/Build (D-B), and 
Construction Manager as Constructor (CMc)). CMc specifically allows for 
early industry engagement by the construction contractor. A study by 
the Pankow Foundation \1\ as well as GSA's own data analysis have shown 
that this early engagement can provide reduced cost growth, reduced 
schedule growth and administrative savings, resulting in a net economic 
burden reduction compared with the other project delivery methods. GSA 
welcomes comments on all aspects of this section. An Economic Impact 
Analysis (EIA) has been prepared consistent with the principles of OMB 
Circular A-4 and is summarized as follows:
---------------------------------------------------------------------------

    \1\ Leicht, R. M., Molenaar, K. R., Messner, J. I., Franz, B. 
W., and Esmaeili, B. (2015). Maximizing Success in Integrated 
Projects: An Owner's Guide. Version 0.9, May. Available at http://bim.psu.edu/delivery.
---------------------------------------------------------------------------

    1. Unquantified Benefits: There are several important economic 
benefits specific to CMc that are expected to reduce burden that are 
difficult to quantify. Although not easily quantifiable they 
collectively represent meaningful savings to qualify this rule as 
deregulatory.
    Early collaboration between the CMc and architect allow for (a) 
more efficient reviews of architect design submittals, (b) innovation 
during design that leads to fewer change orders during construction, 
and (c) identifications of conflicts or errors before work investments 
are made.
    Early work packages under CMc allow for firm-fixed-price 
conversions and advanced execution of certain elements that provide 
cost and schedule savings, especially in a tight labor or material 
market.
    As compared with D-B projects, CMc projects will reduce sunk costs 
and lower barriers to entry for industry to submit proposals and 
compete in this space.
    Finally, codifying CMc requirements into one publicly-posted 
location, the GSAR, will ease the burden to industry and GSA to 
understand CMc requirements and execute CMc projects.
    2. Reduced Schedule Growth: This rule provides Government 
administrative savings resulting from reduced schedule growth and the 
associated increased project management and acquisition management 
efficiencies.
    3. Final GMP Proposal: This rule adds minimal burden for 
contractors to submit and Government to review a revised proposal to 
establish the final Guaranteed Maximum Price (GMP) of the construction 
work and convert the contract to firm-fixed-price (FFP).
    4. Regulation Familiarization: This rule adds minimal burden for 
contractors and Government to understand new requirements in this GSAR 
Case 2015-G506 that are different from existing CMc policy in GSA Class 
Deviation SPE-2012-04-02.
    To estimate the economic impacts of reduced schedule growth, cost 
to finalize the GMP proposal and regulation familiarization, data was 
analyzed for GSA construction contracts completed between 2009 and 2016 
that used the three predominant construction delivery methods. The 
results of the analysis showed this rule will provide a net 
deregulatory savings of $238,535 annually. A 7 percent discount rate 
was used for the calculations.
    Historic data was gathered and analyzed from GSA's Electronic 
Planning Module (ePM), an internal system which was mandated as a 
project management tool for construction starting in 2009. Historic 
data was also gathered and analyzed from the Federal Procurement Data 
System (FPDS), the authoritative source for government wide contract 
award data. Based on historic data, it is assumed that five new CMc 
projects will be performed each year.
    A copy of the EIA may be obtained from the Regulatory Secretariat. 
GSA invites comments from industry and

[[Page 55841]]

other interested parties on the expected impact of this rule.

Government Economic Impact

    The EIA recognizes that Government will have administrative savings 
from reduced schedule growth. CMc when compared with non-CMc project 
delivery methods historically saves on average 71 calendar days (or 60 
business days). This allows for increased efficiency for a senior 
project manager (PM), senior CO, and journeyman CS. Based on subject 
matter expertise, the PM would save 6 hours per day, the CO would save 
2.5 hours per day, and the CS would save 5 hours per day. From reduced 
schedule growth, the annual Government savings is 810 hours ($275,990).
    The EIA also recognizes that Government will have an added burden 
to review revised proposal submissions from contractors for the final 
GMP. Based on subject matter expertise, a journeyman CS would spend 20 
hours for each proposal review. For the final GMP proposal, the total 
annual burden to the Government is 100 hours ($5,430).
    Finally, the EIA recognizes that Government will have an added 
burden to understand the minor policy changes in this rule from 
existing guidance. The analysis accounts for a senior contracting 
officer (CO) and journeyman contract specialist (CS) for each GSA CMc 
construction project. Based on subject matter expertise, a CO and CS 
would spend one hour annually reviewing the adjusted language for 
understanding. For regulation familiarization, the total annual burden 
to the Government is 10 hours ($653).
    The total annual Government economic impact is a savings of 700 
hours ($269,907), or ($252,250) when annualized at a 7 percent 
discount.

Public Economic Impact

    The EIA recognizes that contractors will have an added burden to 
prepare revised proposal submissions for the final GMP. It is assumed 
that large or small businesses would spend 40 hours for each proposal 
submission. For the final GMP proposal, the total annual burden to the 
public is 200 hours ($10,860).
    Finally, the EIA recognizes that contractors will have an added 
burden to understand the minor policy changes in this rule from 
existing guidance. The analysis accounts for two hours for large or 
small business entities to review and understand the new language 
differences between existing policy. This also assumes that for each of 
the contracts an estimated five entities will spend time reviewing 
language during the solicitation phase in order to provide a 
representative offer. For regulation familiarization, the total annual 
burden to the public is 50 hours ($3,815).
    The total annual public economic impact is a burden of 250 hours 
($14,675), or ($13,715) when annualized at a 7 percent discount.

V. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 supplements E.O. 12866 and emphasizes the importance of 
quantifying both costs and benefits, of reducing costs, of harmonizing 
rules, and of promoting flexibility. This is not a significant 
regulatory action and, therefore, was not subject to review under 
section 6(b) of E.O. 12866, Regulatory Planning and Review, dated 
September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

VI. Executive Order 13771

    This proposed rule is expected to be an E.O. 13771 deregulatory 
action. Details on the estimated cost savings of this proposed rule can 
be found in the rule's economic impact analysis detailed in Section IV 
of this proposed rule.

VII. Executive Order 13777

    This rule has been identified by GSA's Regulatory Reform Task Force 
as a rule that improves efficiency by eliminating procedures with costs 
that exceed the benefits as described in Section IV of this proposed 
rule.

VIII. Regulatory Flexibility Act

    GSA 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, at 5 U.S.C. 601, et seq., 
because the proposed rule will incorporate clauses that are currently 
in use in GSA construction solicitations and contracts and contractors 
are familiar with and are currently complying with these practices. 
However, since this is the first time these existing policies and 
procedures that impact the public are being published, an Initial 
Regulatory Flexibility Analysis (IRFA) has been prepared. The IRFA has 
been prepared consistent with the criteria of 5 U.S.C. 604 and is 
summarized as follows:
    The proposed rule changes will apply to approximately 5 GSA 
construction contracts per year. Of these, approximately 1 (20 percent) 
contracts are held by small businesses. The proposed rule is unlikely 
to affect small businesses awarded GSA CMc construction contracts as it 
implements clauses currently in use in CMc solicitations and contracts. 
The proposed rule does not pose any new reporting, recordkeeping or 
other compliance requirements. The rule does not duplicate or conflict 
with any other Federal rules. The agency determined that alternative 
language is necessary for four FAR clauses. The agency determined that 
supplemental language is necessary for two FAR clauses. No alternatives 
were determined that will accomplish the objectives of the rule. 
Bringing these regulations into the GSAR provides for transparency and 
allows for public comment. Bringing these regulations into the GSAR 
also consolidates policy into one area, allowing for more consistency 
and efficiency in contracting for both businesses and contracting 
officers.
    The Regulatory Secretariat Division has submitted a copy of the 
IRFA to the Chief Counsel for Advocacy of the Small Business 
Administration. A copy of the IRFA may be obtained from the Regulatory 
Secretariat. GSA invites comments from small business concerns and 
other interested parties on the expected impact of this rule on small 
entities.
    GSA will also consider comments from small entities concerning the 
existing regulations in subparts affected by this rule 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 2015-G506), in 
correspondence.

IX. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. Chapter 35) applies because 
the proposed rule contains information collection requirements. 
Accordingly, the Regulatory Secretariat Division has submitted a 
request for approval of a new information collection requirement 
concerning this rule to the Office of Management and Budget under 44 
U.S.C. 3501, et seq.
    The information collected is used by PBS to evaluate contractor's 
proposals and negotiate contract modifications during contract 
administration.
    Total public reporting burden for this collection of information is 
estimated to average 200 total hours annually, including the time for 
reviewing

[[Page 55842]]

instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. The estimated burden hours to the public for 
the below clauses are as follows:
    The new clause at GSAR 552.236-79, Construction-Contractor-as-
Constructor, requires the contractor to submit proposals to establish 
the final estimated cost of the work, to convert the contract to a 
firm-fixed-price, and to determine the final settlement.
    Respondents: 5.
    Responses per Respondent: 1.
    Total Annual Responses: 5.
    Hours per Response: 40.
    Total Response Burden Hours: 200.
    The new clause at GSAR 552.236-80, Accounting Records, contains a 
recordkeeping requirement that is subject to the Paperwork Reduction 
Act (44 U.S.C. 3501, et seq.). The clause requires the contractor to 
keep all relevant documents for a period of three years after the final 
payment. However, the clause does not add burden to what is already 
estimated for the existing FAR clause at 52.215-2, Audit and Records by 
a previous information collection (see OMB Control Number 9000-0034).
    Submit comments, including suggestions for reducing this burden, no 
later than January 7, 2019. Submit comments to the General Services 
Administration, Regulatory Secretariat Division, 1800 F Street NW, 
Washington, DC 20405.
    Public comments are particularly invited on: Whether this 
collection of information is necessary; whether it will have practical 
utility; whether our estimate of the public burden of this collection 
of information is accurate, and based on valid assumptions and 
methodology; ways to enhance the quality, utility, and clarity of the 
information to be collected; and ways in which we can minimize the 
burden of the collection of information on those who are to respond, 
through the use of appropriate technological collection techniques or 
other forms of information technology.
    Requesters may obtain a copy of the information collection 
supporting statement from the General Services Administration, 
Regulatory Secretariat Division, 1800 F Street NW, Washington, DC 
20405.
    Please cite OMB Control No. 3090-XXXX, Construction Manager as 
Constructor; GSAR Case 2015-G506, in all correspondence.

List of Subjects in 48 CFR Parts 501, 536, and 552.

    Government procurement.

    Dated: November 1, 2018.
Jeffrey A. Koses,
Senior Procurement Executive, Office of Acquisition Policy, Office of 
Government-wide Policy.

    Therefore, GSA proposes to amend 48 CFR parts 501, 536, and 552 as 
set forth below:

0
1. The authority citation for 48 CFR parts 501, 536, and 552 continues 
to read as follows:

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

PART 501--GENERAL SERVICES ADMINISTRATION ACQUISITION REGULATION 
SYSTEM


501.106   [Amended]

0
2. Amend part 501.106 by adding to the table, in numerical order, GSAR 
references ``552.236-79'' and ``552.236-80'' and their corresponding 
OMB control numbers ``3090-XXXX'' and ``9000-0034'', respectively.

PART 536--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

0
3. Amend section 536.102 by adding, in alphabetical order, the 
definition of ``Construction-Manager-as-Constructor'' to read as 
follows:


536.102   Definitions.

* * * * *
    ``Construction-Manager-as-Constructor'' (CMc) means the project 
delivery method where design and construction are contracted 
concurrently through two separate contracts and two separate 
contractors. Unlike the traditional design-bid-build delivery method, 
under the CMc delivery method, the Government awards a separate 
contract to a designer (i.e., architect-engineer contractor) and to a 
construction contractor (i.e., CMc contractor) prior to the completion 
of the design documents. The Government retains the CMc contractor 
during design to work with the architect-engineer contractor to provide 
constructability reviews and cost estimating validation. The CMc 
contract includes design phase services at a firm-fixed-price and an 
option for construction at a guaranteed maximum price.
* * * * *
0
4. Add section 536.515 to read as follows:


536.515   Schedules for construction contracts.

    Insert the clause at 552.236-15, Schedules for Construction 
Contracts, in solicitations and contracts if construction, dismantling, 
demolition, or removal of improvements is contemplated. Use the clause:
    (a) With its Alternate I when the contract amount is expected to be 
above the simplified acquisition threshold and a design-bid-build 
project delivery method will be followed.
    (b) With its Alternate II when the contract amount is expected to 
be above the simplified acquisition threshold and a design-build 
project delivery method will be followed.
    (c) With its Alternate III when the contract amount is expected to 
be above the simplified acquisition threshold and a construction-
manager-as-constructor project delivery method will be followed.
0
5. Add section 536.521 to read as follows:


536.521  Specifications and drawings for construction.

    Insert the clause at 552.236-21, Specifications and Drawings for 
Construction, in solicitations and contracts if construction, 
dismantling, demolition, or removal of improvements is contemplated. 
Use the clause--
    (a) With its Alternate I when a design-build project delivery 
method will be followed; or
    (b) With its Alternate II when a construction-manager-as-
constructor project delivery method will be followed.


536.570-1   [Removed]

0
6. Remove section 536.570-1.
0
7. Amend section 536.570-2 by redesignating the heading as 536.570-1 
and revising the section to read as follows:


536.570-1   Authorities and limitations.

    Insert the clause at 552.236-70, Authorities and Limitations, in 
solicitations and contracts if construction, dismantling, demolition, 
or removal of improvements is contemplated.
0
8. Add section 536.571 to read as follows:


536.571   Contractor responsibilities.

    Insert the clause at 552.236-71, Contractor Responsibilities, in 
solicitations and contracts if construction, dismantling, demolition, 
or removal of improvements is contemplated. Use the clause--
    (a) With its Alternate I when a design-build project delivery 
method will be followed; or
    (b) With its Alternate II when a construction-manager-as-
constructor project delivery method will be followed.

[[Page 55843]]

Subpart 536.70--[Reserved]

0
9. Add and reserve Subpart 536.70.
0
10. Add new subpart 536.71 to read as follows:

Subpart 536.71--Construction-Manager-as-Constructor Contracting

Sec.
536.7101 Scope of Subpart.
536.7102 Definitions.
536.7103 Construction Contract Solicitation Procedures.
536.7104 Construction Contract Award.
536.7105 Construction Contract Administration.
536.7105-1 Responsibilities.
536.7105-2 Guaranteed Maximum Price.
536.7105-3 Accounting and Auditing Requirements.
536.7105-4 Value Engineering.
536.7105-5 Shared Savings Incentive.
536.7105-6 Allowances.
536.7105-7 Early Work Packages.
536.7105-8 Conversion to Firm-Fixed-Price.
536.7106 Construction Contract Closeout.
536.7107 Contract Clauses.


536.7101  Scope of Subpart.

    This subpart describes policies and procedures for the use of the 
CMc project delivery method.


536.7102  Definitions.

    As used in this subpart--
    ``CMc Contingency Allowance'' (CCA) is an allowance for the 
exclusive use of the construction contractor to cover reimbursable 
costs during construction that are not the basis of a change order. 
These costs could include estimating and planning errors in the final 
Estimated Cost of the Work (ECW) or other contractor errors.
    ``Early Work Package'' means a set of construction activities that 
can be clearly defined and separately performed from the remainder of 
the construction work. These packages are typically identified toward 
the beginning of the project. Demolition is an example of an early work 
package.
    ``Estimated Cost of the Work'' (ECW) means the estimated direct 
cost of the construction work. The proposed ECW incorporated at 
construction contract award is the target ECW. The final ECW is 
negotiated during the design phase and is incorporated into the 
construction contract through modification.
    ``Fee for the Construction Work'' is a fixed amount established in 
the construction contract for all of the contractor's indirect costs, 
including overhead and profit, for the construction work. The fee may 
be proposed per phase of construction if each phase is a separate 
option.
    ``Guaranteed Maximum Price'' (GMP) is the ceiling price described 
in FAR 16.403-2. At construction contract award, the GMP for the 
construction contract is established as the sum of the target ECW, the 
CCA and the fee for the construction work.


536.7103  Construction Contract Solicitation Procedures.

    (a) Procurement Timing. The request for proposals should be issued 
only when the project design requirements have been developed to a 
sufficient degree of specificity to permit competition with meaningful 
pricing for the ECW. The contracting officer should obtain written 
documentation for the contract file from the project manager that the 
project design requirements satisfy the condition stated in this 
section.
    (b) Proposal Evaluation.
    (1) Evaluation Factors.
    (i) Except as provided in paragraph (ii) of this subsection, the 
solicitation shall provide that the technical evaluation factors, when 
combined, shall be considered significantly more important than cost or 
price.
    (ii) Subject to the approval of the HCA, the weighting of the 
technical evaluation factors and cost or price may be different than 
that required under paragraph (i) of this subsection. Any such written 
approval shall be documented in the contract file.
    (2) Price Realism. The contracting officer shall provide for a 
price realism analysis in the solicitation for the purpose of 
assessing, among others, whether an offeror's price reflects a lack of 
understanding of the contract requirements or risk inherent in an 
offeror's proposal. The solicitation shall provide offerors with notice 
that the agency intends to perform a price realism analysis.
    (3) Total Evaluated Price. For purposes of evaluation, the total 
evaluated price shall include the firm-fixed-price for design phase 
services, the construction work GMP option(s), and any other fixed-
priced line items. If advance pricing elements such as extended 
overhead rates and daily delay rates are proposed, those shall also be 
evaluated as part of the total evaluated price.
    (c) Government Budget (e.g. Prospectus) Information. Subject to the 
approval of the contracting director, the solicitation may include 
information contained or referenced within a prospectus submission to 
Congress for a project.


536.7104  Construction Contract Award.

    In accordance with FAR 4.1001, the contracting officer shall use 
the SF 1442 to identify the services or items to be acquired as 
separately identified line items on a unit price or lump sum basis 
including the design phase services, the construction work GMP 
option(s), and any other work not included in the previously identified 
items.


536.7105  Construction Contract Administration.


536.7105-1  Responsibilities.

    (a) During all phases of the project, the architect-engineer 
contractor that is providing design services under a separate contract 
with GSA is contractually responsible for the design in the same manner 
as under a traditional, design-bid-build project delivery method.
    (b) The design phase services provided by the construction 
contractor can include, but are not limited to, scheduling, systems 
analysis, subcontractor involvement, cost-estimating, constructability 
reviews, cost-reconciliation services, and market analysis.
    (c) The scope of work should task the construction contractor with 
reviewing the design documents and providing pricing information at 
various defined milestones during the design phase.
    (d) During the design phase, the architect-engineer contractor and 
the construction contractor should collaborate on the design and 
constructability issues. The goal of this collaboration is to establish 
a final ECW that does not exceed the original target ECW.
    (e) No discussions between the architect-engineer contractor and 
the construction contractor shall be considered as a change to the 
construction contract or design contract unless incorporated by the 
contracting officer through a modification.


536.7105-2  Guaranteed Maximum Price.

    (a) General.
    (1) GMP. (i) The GMP is established at contract award. The GMP may 
be established as one option or as multiple options through separate 
line items, with a separate GMP amount for each line item.
    (ii) The GMP is subject to adjustment under various standard 
contract clauses, including the changes clause, differing site 
conditions clause, and suspensions clause.
    (iii) The contract file shall contain all documents to support any 
scope changes including a separate analysis to document the rationale 
for any upward or downward adjustment to the GMP.
    (2) ECW. (i) The final ECW should be established prior to 
completion of the design (i.e. 100 percent construction

[[Page 55844]]

documents), generally no earlier than completion of 75 percent 
construction documents.
    (ii) The contracting officer shall negotiate the final ECW and 
incorporate it into the construction contract through a bilateral 
modification prior to exercising the GMP option.
    (3) CCA. (i) The CCA type of allowance may only be used as part of 
the CMc project delivery method and should not be confused with other 
types of allowances that may be used with other construction project 
delivery methods.
    (ii) The CCA is adjusted to provide for a contingency relative to a 
fixed percentage of the ECW set at contract award, except for the 
requirements at paragraph (c)(2) of this subsection.
    (iii) The CCA will cover design errors and omissions that do not 
form the basis of a change order. Design errors and omissions that do 
form the basis for a change order will be settled in accordance with 
GSAR 552.243-71 Equitable Adjustments.
    (iv) Except as provided in paragraph (a)(3)(v) of this subsection, 
the CCA should not exceed 3 percent.
    (v) Subject to the approval of the HCA, the CCA may be different 
than that required under paragraph (a)(3)(iv) of this subsection. Any 
such written approval shall be documented in the contract file.
    (4) Fee for the Construction Work. (i) The fee for the construction 
work may only be adjusted for scope changes that have an impact on 
schedule.
    (ii) The fee for the construction work associated with a scope 
change shall not be driven by a fixed percentage. The contracting 
officer should determine whether the profit included, if any, in a 
contractor's proposal is reasonable for the scope change work.
    (b) Design Phase. (1) The GMP may be bilaterally modified upward 
during the design phase only for approved additions to the scope of 
work.
    (2) The GMP shall be bilaterally modified downward during the 
design phase for deletions to the scope of work.
    (c) Exercising the GMP Option. (1) The GMP option shall not be 
exercised until the final ECW is established.
    (2) If the sum of the final ECW, CCA, and fee for construction work 
is less than the GMP established at contract award, then the 
contracting officer shall adjust the GMP downward accordingly through a 
bilateral modification to exercise the GMP option.
    (3) If the sum of the final ECW, CCA, and fee for the construction 
work is greater than the GMP established at contract award, then the 
contracting officer shall reduce the CCA while keeping the GMP amount 
fixed through a bilateral modification to exercise the GMP option.
    (4) The GMP option shall not be exercised if the final ECW and fee 
for the construction work is greater than the GMP established at 
contract award.
    (d) Construction Phase. (1) After award of the GMP option, changes 
in scope may be issued as an adjustment to the GMP or as a stand-alone 
firm-fixed-price line item.
    (2) Any changes in scope after award of the GMP option shall be 
reflected by a written modification to the construction contract in 
accordance with FAR Part 43.
    (e) Early Work Package. (1) Early work packages (see 536.7105-7) 
may be used in the procurement that are priced separately or included 
in the GMP option.
    (2) If any early work package exercised reduces the scope of the 
construction services under the GMP option, the ECW shall be reduced, 
and the CCA, fee for the construction work, and GMP shall be adjusted 
accordingly.
    (f) GMP Adjustment. (1) Any changes to the total GMP or individual 
parts of the GMP must be incorporated in the contract through a 
modification.
    (2) Any modification that changes the GMP, including modifications 
for early work packages and fixed price conversions, must clearly state 
that it includes a change to the GMP and describe the changes to the 
individual parts of the GMP components in the modification.
    (3) Any modification that changes the total GMP, or individual 
parts of the GMP, is subject to the requirement for a prenegotiation 
objectives memo and price negotiation memo, including fair and 
reasonable price determination, per FAR 15.406.
    (4) The contracting officer should consult other members of the 
acquisition team, including the project manager, to analyze and justify 
any adjustments to the total GMP, or individual parts of the GMP.


536.7105-3  Accounting and Auditing Requirements.

    (a) Cost Accounting Standards.(1) Except as provided in paragraph 
(a)(2) of this subsection or through an exemption at FAR 30.201-1, 
construction contracts under the CMc project delivery method are 
subject to the cost accounting standards (CAS) identified in FAR Part 
30.
    (2) The contracting officer may request a CAS waiver in accordance 
with the requirements at FAR 30.201-5 and 530.201-5.
    (3) If CAS applies, the contract clauses identified at FAR 30.201-4 
shall be included in the contract.
    (4) If a CAS waiver is granted or if CAS does not apply, the 
contract clause identified at 536.7107(b) shall be included in the 
contract.
    (b) GMP Option Accounting.
    (1) Open Book Accounting. Open book accounting shall be followed 
for financial tracking of all contract line items that are awarded on a 
GMP basis. Such financial tracking may be accomplished through an audit 
in accordance with paragraph (c) of this section.
    (2) Payments and Reconciliation. All payments shall be reconciled 
with the open book accounting records and the schedule of values 
adjusted, as appropriate. Reconciliation shall occur each month and 
should be coordinated with monthly progress payments. The 
reconciliation shall be documented in the contract file.
    (c) Auditing Requirements. In accordance with GSAM 542.102(a), for 
any audit services required by this Subpart 536.71, the contracting 
officer shall first request such services be performed by or through 
the Assistant Inspector General for Auditing or the Regional Inspector 
General for Auditing. If the Office of Inspector General declines to 
perform such an audit, the contracting officer may obtain audit 
services from a certified public accountant.


536.7105-4  Value Engineering.

    In accordance with FAR 48.202, the clause at FAR 52.248-3 Value 
Engineering-Construction does not apply to incentive contracts. 
Accordingly, value engineering shall not apply to the CMc project 
delivery method described in this subpart.


536.7105-5  Shared Savings Incentive.

    (a) General. The incentive is a shared portion of the cost 
reductions realized by the construction contractor as a result of 
completing the construction work for less than the GMP. Cost reductions 
may result from innovations and efficiencies during the construction 
phase, such as increased labor productivity or strong material 
subcontract negotiations.
    (b) Share Ratio. (1) Except as provided in paragraph (2) of this 
subsection, the share ratio for the construction contractor shall range 
from 30 percent to 50 percent. The share ratio for the construction 
contractor shall not exceed 50 percent. The complexity of the project 
and the amount of risk to the construction contractor should be 
considered when determining the ratio.

[[Page 55845]]

A project with greater risk to the construction contractor should 
reflect a greater share ratio for the construction contractor.
    (2) Subject to the approval of the HCA, the share ratio may be 
different than that required under paragraph (b)(1) of this subsection. 
Any such written approval shall be documented in the contract file.
    (c) Incentive Calculation. The incentive amount is calculated in 
accordance with the clause at 552.236-78 Construction-Manager-As-
Constructor.


536.7105-6   Allowances.

    (a) Establishing a separate allowance in addition to the CCA is 
only permitted pursuant to a written determination approved by the 
contracting director supporting the use of any such allowance.
    (b) The written determination for a separate allowance in addition 
to the CCA shall consider--
    (1) Alternative contracting structures, such as a separate GMP line 
item or performing the work as part of the GMP option, and
    (2) Ensuring conformance with all applicable rules and procedures 
relating to allowances, including FAR 11.702.


536.7105-7 Early   Work Packages.

    (a) Construction services for an early work package must be within 
the scope of the overall contract.
    (b) Early work packages may be part of the initial procurement as a 
separately priced line item, or the Government and the construction 
contractor may agree to develop an early work package after award.
    (c) Early work packages shall be definitive firm-fixed-price line 
items in the contract.
    (d) Early Work Packages Developed After Award. (1) The parties 
shall bilaterally agree to the scope, schedule, and pricing for any 
such early work package, and the contract shall be modified in 
accordance with FAR Part 43.
    (2) If any such early work package reduces the scope of the 
construction services under the GMP option, the ECW shall be reduced, 
and the CCA, fee for the construction work, and GMP shall be adjusted 
accordingly.
    (3) Any modification to the contract for an early work package is 
subject to the requirement for a prenegotiation objectives memo and 
price negotiation memo, including fair and reasonable price 
determination, per FAR 15.406.
    (e) Early work packages are no longer subject to open book 
accounting, a shared savings incentive, or the need for determination 
of final settlement.


536.7105-8   Conversion to Firm-Fixed-Price.

    (a) At any time after completion of 100 percent construction 
documents, the Government and the construction contractor may 
bilaterally convert the whole contract to firm-fixed-price.
    (b) Conversion to firm-fixed-price may occur after the contingency 
risks, to be covered by the CCA, have been sufficiently reduced in the 
best interest of the Government. See FAR 16.103(b) for additional 
guidance for assessing risk management, profit motive, and timing 
considerations.
    (c) Conversion to firm-fixed-price is only permitted pursuant to a 
written determination from the contracting officer to the contract file 
supporting the conversion. The contracting officer should consult other 
members of the acquisition team, including the project manager, to 
analyze and justify the conversion.
    (d) The contracting officer shall not agree to a firm-fixed-price 
in excess of the GMP.
    (e) In accordance with 536.7105-3(c), the contracting officer shall 
obtain an independent audit of the construction contractor's costs 
incurred in the performance of the contract to date.
    (f) When evaluating the construction contractor's proposal for 
firm-fixed-price definitization, the contracting officer should compare 
the anticipated final cost to the firm-fixed-price being proposed. It 
may be reasonable for the construction contractor to include a 
contingency for assuming the risk associated with agreeing to the firm-
fixed-price. The contracting officer should evaluate this contingency 
to ensure that the proposed amount reasonably reflects the remaining 
risks being assumed by the construction contractor. This evaluation may 
be informed by the history of the project, the balance of the CCA, and 
other factors.
    (g) The modification to convert to a firm-fixed-price is subject to 
the requirement to obtain cost and pricing data unless one of the 
exceptions in FAR 15.403-1 applies.
    (h) The modification to convert to a firm-fixed-price is subject to 
the requirement for a prenegotiation objectives memo and price 
negotiation memo, including fair and reasonable price determination, 
per FAR 15.406.
    (i) Upon converting to a firm-fixed-price, the contract is no 
longer subject to open book accounting, a shared savings incentive, or 
the need for determination of final settlement.


536.7106   Construction Contract Closeout.

    Unless the contract has been converted to a standard firm-fixed-
price contract (see 536.7105-8)--
    (a) The contracting officer shall ensure that the construction 
contractor's proposal for final settlement is accurate and reliable in 
accordance with the open book accounting practices of the contract.
    (b) In accordance with 536.7105-3(c), the contracting officer shall 
obtain an independent audit of the construction contractor's costs.


536.7107   Contract Clauses.

    (a) Insert a clause substantially the same as the clause at 
552.236-79, Construction-Manager-As-Constructor, in solicitations and 
contracts if construction, dismantling, or removal of improvements is 
contemplated when a CMc project delivery method will be followed. This 
clause is in lieu of the clause at FAR 52.216-17 Incentive Price 
Revision--Successive Targets.
    (b) Insert a clause substantially the same as the clause at 
552.236-80, Accounting Records and Progress Payments, in solicitations 
and contracts if construction, dismantling, or removal of improvements 
is contemplated when a CMc project delivery method will be followed and 
cost accounting standards do not apply. This clause is in lieu of the 
clauses at FAR 52.230-2 Cost Accounting Standards, FAR 52.230-3 
Disclosure and Consistency of Cost Accounting Practices, and FAR 
52.230-6 Administration of Cost Accounting Standards.

PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
11. Add section 552.236-15 to read as follows:


552.236-15   Schedules for Construction Contracts.

    As prescribed in 536.515, insert the following clause:

Schedules for Construction Contracts (Date)

    The requirements, of the clause entitled ``Schedules for 
Construction Contracts'' at FAR 52.236-15, are supplemented as 
follows:
    (a) Purpose. The project schedule shall be a rational, 
reasonable, and realistic plan for completing the work, and conform 
to the requirements specified in this clause and elsewhere in the 
contract. The Contractor understands and acknowledges that the 
preparation and proper management of the project schedule is a 
material component of the contract.
    (b) Use of the schedule. The Contracting Officer shall be 
entitled, but not required, to rely upon the project schedule to 
evaluate the Contractor's progress, evaluate entitlement to

[[Page 55846]]

extensions of time, and determine the criticality or float of any 
activities described in such project schedule.
    (c) Submission. Prior to notice to proceed, or such other time 
as may be specified in the contract, the Contractor shall submit the 
project schedule.
    (d) Milestones. The project schedule shall incorporate milestone 
events specified in the contract, including, as applicable, notice 
to proceed, substantial completion, and milestones related to 
specified work phases and site restrictions. The project schedule 
shall also include Contractor-defined milestones to identify target 
dates for critical events, based upon the Contractor's chosen 
sequence of work.
    (e) Activities. The project schedule shall depict all major 
activities necessary to complete the work.
    (f) Schedule of values. (1) The Contractor shall prepare and 
submit for approval a cost breakdown of the Contract price, to be 
referred to as the ``schedule of values'', assigning values to each 
major activity necessary to complete the work.
    (2) Values must include all direct and indirect costs, although 
a separate value for bond costs may be established.
    (3) The schedule of values must contain sufficient detail to 
enable the Contracting Officer to evaluate payment requests (see FAR 
52.232-5 and GSAR 552.232-5).
    (g) Conflicting terms. (1) If at any time the Contracting 
Officer finds that the project schedule does not comply with any 
contract requirement, the Contracting Officer may provide written 
notice to the Contractor.
    (2) Within 30 calendar days of any such written notice, or such 
other time as may be specified, from the Contracting Officer, the 
Contractor shall take one of the following actions--
    (i) Revise the project schedule;
    (ii) Adjust activity progress; or
    (iii) Provide sufficient information demonstrating compliance.
    (3) If the Contractor fails to sufficiently address the 
Contracting Officer's exceptions to the project schedule, the 
Contracting Officer may, in addition to any other remedies set forth 
in the contract--
    (i) Withhold retainage until the project is substantially 
complete or until such time as the Contractor has complied with 
project schedule requirements; or
    (ii) Terminate the contract for default.
    (h) Revisions to the schedule. If the Contractor proposes a 
revision to the project schedule after initial approved submission, 
the Contractor shall provide in writing a narrative describing the 
substance of the revision, the rationale for the revision, and the 
impact of the revision on the projected substantial completion date 
and the available float for all activities.
    (i) Updates. Unless a different period for updates is specified 
elsewhere, the Contractor shall update the project schedule weekly 
to reflect actual progress in completing the work, and submit the 
updated project schedule by the following Monday.


(End of clause)

    Alternate I (DATE). As prescribed in 536.515(a), substitute the 
following paragraphs (c), (e), (h), and (i) for paragraphs (c), (e), 
(h), and (i) of the basic clause:
    (c) Submission. Within 30 calendar days of notice to proceed, or 
such other time as may be specified in the contract, the Contractor 
shall submit the project schedule, together with a written narrative 
describing the major work activities, activities on the critical path, 
and major constraints underlying the sequence and logic of the project 
schedule.
    (e) Activities. (1) The Contractor shall use a critical path method 
project schedule to plan, coordinate, and perform the work.
    (2) The project schedule shall depict all activities necessary to 
complete the work, including, as applicable, all submittal and 
submittal review activities, all procurement activities, and all field 
activities, including mobilization, construction, start-up, testing, 
balancing, commissioning, and punchlist.
    (3) Activities shall be sufficiently detailed and limited in 
duration to enable proper planning and coordination of the work, 
effective evaluation of the reasonableness and realism of the project 
schedule, accurate monitoring of progress, and reliable analysis of 
schedule impacts.
    (4) Activity durations shall be based upon reasonable and realistic 
allocation of the resources required to complete each activity, given 
physical and logistical constraints on the performance of the work. All 
logic shall validly reflect physical or logistical constraints on 
relationships between activities. Except for the first and last 
activities in the project schedule, each activity shall have at least 
one predecessor and one successor relationship to form a logically 
connected network plan from notice to proceed to the contract 
completion date.
    (h) Revisions to the schedule. (1) The Contractor should anticipate 
that the initial submittal of the project schedule will be subject to 
review and may require revision. The Contractor shall devote sufficient 
resources for meetings, revisions, and resubmissions of the project 
schedule to address any exceptions taken to the initial submittal. The 
Contractor understands and acknowledges that the purpose of the initial 
review and resolution of exceptions is to maximize the usefulness of 
the project schedule for contract performance.
    (2) If the Contractor proposes a revision to the project schedule 
after initial approved submission, the Contractor shall provide in 
writing a narrative describing the substance of the revision, the 
rationale for the revision, and the impact of the revision on the 
projected substantial completion date and the available float for all 
activities.
    (i) Updates. Unless a different period for updates is specified 
elsewhere, the Contractor shall update the project schedule monthly to 
reflect actual progress in completing the work, and submit the updated 
project schedule within 5 working days of the end of each month.
    Alternate II (DATE). As prescribed in 536-515(b), substitute the 
following paragraphs (c), (e), and (i) for paragraphs (c), (e), and (i) 
of the basic clause:

    (c) Submission. (1) Within 30 calendar days of notice to 
proceed, or such other time as may be specified in the contract, the 
Contractor shall submit the project schedule, together with a 
written narrative describing the major design and construction 
activities. The project schedule may indicate construction 
activities in summary form prior to completion of final design 
documents.
    (2) Within 30 calendar days of completion of final design 
documents, the Contractor shall submit a revised project schedule 
depicting all activities necessary to complete construction work 
activities, together with a written narrative describing the major 
work activities, activities on the critical path, and major 
constraints underlying the sequence and logic of the project 
schedule.
    (e) Activities. (1) The Contractor shall use a critical path 
method project schedule to plan, coordinate, and perform the work.
    (2) Activities shall be sufficiently detailed and limited in 
duration to enable proper planning and coordination of the work, 
effective evaluation of the reasonableness and realism of the 
project schedule, accurate monitoring of progress, and reliable 
analysis of schedule impacts.
    (3) Activity durations shall be based upon reasonable and 
realistic allocation of the resources required to complete each 
activity, given physical and logistical constraints on the 
performance of the work. All logic shall validly reflect physical or 
logistical constraints on relationships between activities. Except 
for the first and last activities in the project schedule, each 
activity shall have at least one predecessor and one successor 
relationship to form a logically connected network plan from notice 
to proceed to the contract completion date.
    (i) Updates. Unless a different period for updates is specified 
elsewhere, the Contractor shall update the project schedule monthly 
to reflect actual progress in completing the work, and submit the 
updated project schedule within 5 working days of the end of each 
month.

    Alternate III (DATE). As prescribed in 536.515(c), substitute the 
following paragraphs (c), (e), (h), and (i) for paragraphs (c), (e), 
(h), and (i) of the basic clause:
    (c) Submission. (1) Within 30 calendar days of contract award, or 
such other time as may be specified in the contract,

[[Page 55847]]

the Contractor shall submit the design phase project schedule.
    (2) Within 30 calendar days after establishing the final estimated 
cost of work, the Contractor shall submit the construction phase 
project schedule, together with a written narrative describing the 
major work activities, activities on the critical path, and major 
constraints underlying the sequence and logic of the project schedule.
    (e) Activities. (1) The design phase project schedule shall depict 
all activities necessary to complete the design work, including, as 
applicable, all submittal and submittal review activities, cost 
reconciliation, and establishing the estimated cost of work for the 
construction phase.
    (2) The Contractor shall use a critical path method project 
schedule to plan, coordinate, and perform the construction phase work.
    (3) The construction phase project schedule shall depict all 
activities necessary to complete the construction work, including, as 
applicable, all submittal and submittal review activities, all 
procurement activities, and all field activities, including 
mobilization, construction, start-up, testing, balancing, 
commissioning, and punchlist.
    (4) Activities shall be sufficiently detailed and limited in 
duration to enable proper planning and coordination of the work, 
effective evaluation of the reasonableness and realism of the project 
schedule, accurate monitoring of progress, and reliable analysis of 
schedule impacts.
    (5) Activity durations shall be based upon reasonable and realistic 
allocation of the resources required to complete each activity, given 
physical and logistical constraints on the performance of the work. All 
logic shall validly reflect physical or logistical constraints on 
relationships between activities. Except for the first and last 
activities in the project schedule, each activity shall have at least 
one predecessor and one successor relationship to form a logically 
connected network plan from notice to proceed to the contract 
completion date.
    (h) Revisions to the schedule. (1) The Contractor should anticipate 
that the project schedule will be subject to review and may require 
revision. The Contractor shall devote sufficient resources for 
meetings, revisions, and resubmissions of the project schedule to 
address any exceptions taken. The Contractor understands and 
acknowledges that the purpose of the review and resolution of 
exceptions is to maximize the usefulness of the project schedule for 
contract performance.
    (2) If the Contractor proposes a revision to the project schedule 
after initial approved submission, the Contractor shall provide in 
writing a narrative describing the substance of the revision, the 
rationale for the revision, and the impact of the revision on the 
projected substantial completion date and the available float for all 
activities.
    (i) Updates. Unless a different period for updates is specified 
elsewhere, the Contractor shall update the project schedule monthly to 
reflect actual progress in completing the work, and submit the updated 
project schedule within 5 working days of the end of each month.
0
12. Add section 552.236-21 to read as follows:


552.236-21   Specifications and Drawings for Construction.

    As prescribed in 536.521, insert the following clause:

Specifications and Drawings for Construction (Date)

    The requirements of the clause entitled ``Specifications and 
Drawings for Construction'' at FAR 52.236-21, are supplemented as 
follows:
    (a) In case of difference between small and large-scale 
drawings, the large-scale drawings shall govern.
    (b) Schedules on any contract drawing shall take precedence over 
conflicting information on that or any other contract drawing.
    (c) On any of the drawings where a portion of the work is 
detailed or drawn out and the remainder is shown in outline, the 
parts detailed or drawn out shall apply also to all other like 
portions of the work.
    (d) Where the word ``similar'' occurs on the drawings, it shall 
have a general meaning and not be interpreted as being identical, 
and all details shall be worked out in relation to their location 
and their connection with other parts of the work.
    (e) Standard details or specification drawings are applicable 
when listed, bound with the specifications, noted on the drawings, 
or referenced elsewhere in the specifications.
    (1) Where notes on the specification drawings indicate 
alterations, such alterations shall govern.
    (2) In case of difference between standard details or 
specification drawings and the specifications, the specifications 
shall govern.
    (3) In case of difference between the standard details or 
specification drawings and the drawings prepared specifically for 
this contract, the drawings prepared specifically for this contract 
shall govern.
    (f) Different requirements within the contract documents shall 
be deemed inconsistent only if compliance with both cannot be 
achieved.
    (g) Unless otherwise noted, the drawings shall be interpreted to 
provide for a complete construction, assembly, or installation of 
the work, without regard to the detail with which material 
components are shown in the drawings.


(End of clause)

    Alternate I (DATE). As prescribed in 536.521(a), add the following 
paragraph to the basic clause:
    (h) For the purposes of this clause, specifications and drawings 
refer only to those included among the contract documents at time of 
contract award, and not to those produced by the Contractor pursuant to 
its responsibilities under the contract.
    Alternate II (DATE). As prescribed in 536.521(b), add the following 
paragraph to the basic clause:
    (h) For the purposes of this clause, specifications and drawings 
refer only to the construction documents, meaning the 100 percent 
complete specifications and construction drawings developed during the 
design phase.


552.236-70   [Removed]

0
13. Remove section 552.236-70.


552.236-71   [Redesignated as 552.236-70]

0
14. Redesignate section 552.236-71 as 552.236-70.
0
15. Add new section 552.236-71 to read as follows:


552.236-71   Contractor Responsibilities.

    As prescribed in 536.571, insert the following clause:

Contractor Responsibilities (Date)

    (a) The Contractor shall be responsible for compliance with 
applicable codes, standards and regulations pertaining to the health 
and safety of personnel during performance of the contract.
    (b) Unless expressly stated otherwise in the contract, the 
Contractor shall be responsible for all means and methods employed 
in the performance of the contract.
    (c) The Contractor shall immediately bring to the Contracting 
Officer's attention any hazardous materials or conditions not 
disclosed in the contract documents discovered by or made known to 
the Contractor during the performance of the contract.
    (d) The Contractor shall be responsible for providing 
professional design services in connection with performance of the 
work or portions of the work only if this responsibility is 
expressly stated in the contract, and the contract documents provide 
the performance and design criteria that such services will be 
required to satisfy. In the performance of such work, the Contractor 
shall be responsible for retaining licensed design professionals, 
who shall sign and seal all drawings, calculations, specifications 
and other submittals that the licensed professional prepares. The 
Contractor shall be responsible for, and GSA shall be entitled to 
rely upon, the adequacy and completeness of all professional design 
services provided under the contract.
    (e) Where installation of separate work components as shown in 
the contract will

[[Page 55848]]

result in conflict or interference between such components or with 
existing conditions, including allowable tolerances, it is the 
Contractor's responsibility to bring such conflict or interference 
to the attention of the Contracting Officer and seek direction 
before fabrication, construction, or installation of any affected 
work. If the Contractor fabricates, constructs, or installs any work 
prior to receiving such direction, the Contractor shall be 
responsible for all cost and time incurred to resolve or mitigate 
such conflict or interference.
    (f) Where drawings show work without specific routing, 
dimensions, locations, or position relative to other work or 
existing conditions, and such information is not specifically 
defined by reference to specifications or other information supplied 
in the contract, the Contractor is responsible for routing, 
dimensioning, and locating such work in coordination with other work 
or existing conditions in a manner consistent with contract 
requirements.
    (g) It is not the Contractor's responsibility to ensure that the 
contract documents comply with applicable laws, statutes, building 
codes and regulations. If it comes to the attention of the 
Contractor that any of the contract documents do not comply with 
such requirements, the Contractor shall promptly notify the 
Contracting Officer in writing. If the Contractor performs any of 
the work prior to notifying and receiving direction from the 
Contracting Officer, the Contractor shall assume full responsibility 
for correction of such work, and any fees or penalties that may be 
assessed for non-compliance.


(End of clause)

    Alternate I (DATE). As prescribed in 536.571(a), delete paragraphs 
(d), (e), (f), and (g) of the basic clause, and insert paragraphs (d), 
(e), (f), and (g) as follows:
    (d) The Contractor shall be responsible for providing professional 
design services unless this responsibility is expressly excluded from 
the contract. In the performance of such work, the Contractor shall be 
responsible for retaining licensed design professionals, who shall sign 
and seal all drawings, calculations, specifications and other 
submittals that the licensed professional prepares. The Contractor 
shall be responsible for, and GSA shall be entitled to rely upon, the 
adequacy and completeness of all professional design services provided 
under the contract.
    (e) The Contractor's responsibilities include the responsibilities 
of the Architect-Engineer Contractor, as specified in FAR 52.236-23.
    (f) The Contractor shall include in all subcontracts that require 
professional design services express terms establishing GSA as a third 
party beneficiary. No other person shall be deemed a third party 
beneficiary of the contract.
    (g) The Contractor shall determine whether the information 
contained in the contract documents complies with applicable laws, 
statutes, building codes and regulations. If it comes to the attention 
of the Contractor that any of the contract documents do not comply with 
such requirements, the Contractor shall promptly notify the Contracting 
Officer in writing. If the Contractor performs any of the work prior to 
notifying and receiving direction from the Contracting Officer, the 
Contractor shall assume full responsibility for correction of such 
work, and any fees or penalties that may be assessed for non-
compliance.
    Alternate II (DATE). As prescribed in 536.571(b), delete paragraphs 
(d), (e), (f), and (g) of the basic clause, and insert paragraphs (d), 
(e), (f), (g), (h), (i), and (j) as follows:
    (d) The Contractor shall be responsible for performing the design 
phase services in accordance with the statement of work. The Contractor 
shall submit all deliverables and reports in accordance with the 
statement of work.
    (e) The Contractor shall be responsible to review all design 
information (e.g. draft specifications and drawings) provided. The 
Contractor shall be responsible for determining that the project as 
described in the design information is constructible using commercially 
practicable means and methods; that the construction work is described 
in the design documents with sufficient completeness to enable pricing 
of a complete project within the guaranteed maximum price; and that the 
manner of presentation and organization of information in the design 
documents enables accurate estimation of the cost of the work.
    (f) Prior to establishment of the final estimated cost of work, the 
Contractor shall bring to the Contracting Officer's attention all 
instances that it has discovered or has been made aware of where 
omission of design information affects the Contractor's ability to 
accurately estimate the cost of the work.
    (g) Where installation of separate work components as shown in the 
contract will result in conflict or interference between such 
components or with existing conditions, including allowable tolerances, 
it is the Contractor's responsibility to bring such conflict or 
interference to the attention of the Contracting Officer and seek 
direction before fabrication, construction, or installation of any 
affected work. If the Contractor fabricates, constructs, or installs 
any work prior to receiving such direction, the Contractor shall be 
responsible for all cost and time incurred to resolve or mitigate such 
conflict or interference.
    (h) Where drawings show work without specific routing, dimensions, 
locations, or position relative to other work or existing conditions, 
and such information is not specifically defined by reference to 
specifications or other information supplied in the contract, the 
Contractor is responsible for routing, dimensioning, and locating such 
work in coordination with other work or existing conditions in a manner 
consistent with contract requirements.
    (i) It is not the Contractor's responsibility to ensure that the 
contract documents comply with applicable laws, statutes, building 
codes and regulations. If it comes to the attention of the Contractor 
that any of the contract documents do not comply with such 
requirements, the Contractor shall promptly notify the Contracting 
Officer in writing. If the Contractor performs any of the work prior to 
notifying and receiving direction from the Contracting Officer, the 
Contractor shall assume full responsibility for correction of such 
work, and any fees or penalties that may be assessed for non-
compliance.
    (j) The Contractor is responsible to construct the project in 
accordance with the drawings and specifications. The final Estimated 
Cost of the Construction Work (ECW) may be determined based upon 
incomplete design documents. In those instances in which the drawings 
and specifications are not complete at the time the final ECW is 
established, the Contractor shall exercise reasonable care and judgment 
to determine the intent of the design and shall calculate the final ECW 
on the basis of the quality of construction, materials, and finishes 
that can be reasonably inferred from the design documents or other 
specified sources.
0
16. Add sections 552.236-79 and 552.236-80 to read as follows:


552.236-79   Construction-Manager-As-Constructor.

    As prescribed in 536.7107(a), insert the following clause:

Construction-Manager-As-Constructor (Date)

    (a) General. Pricing for the Guaranteed Maximum Price (GMP) for 
the option for construction services shall be subject to the 
requirements of this clause.
    (b) Definitions. The following definitions shall apply to this 
clause:
    ``Construction-Manager-as-Constructor (CMc) Contingency 
Allowance'' (CCA) means an allowance to cover reimbursable costs 
during construction that are not the basis of a change order.
    ``Costs'' means allowable direct costs in accordance with FAR 
Part 31. Marked up costs paid to subcontractors shall be deemed 
direct costs of the Contractor.

[[Page 55849]]

    ``Cost of Performance'' means the final sum of cost of the 
construction work and fee for the construction work.
    ``Estimated Cost of the Work'' (ECW) means the estimated direct 
cost of the construction work.
    ``Fee for the Construction Work'' means a fixed amount for all 
indirect costs, including overhead and profit.
    ``Guaranteed Maximum Price'' (GMP) means the sum of the ECW, 
CCA, and the fee for the construction work.
    (c) Guaranteed Maximum Price. This contract at award includes a 
GMP.
    (d) Estimated Cost of the Work. The proposed ECW incorporated 
into the contract at award is a target ECW. A final ECW is 
negotiated during the design phase and is incorporated into the 
contract prior to exercise of the GMP option.
    (e) Final Estimated Cost of the Work.
    (1) Submission Requirements for Final ECW Proposal. During the 
design phase, and at a time agreed by the Contracting Officer, the 
Contractor shall submit the following:
    (i) A detailed statement of all firm-fixed-price early work 
packages in the performance of the construction work to date.
    (ii) A proposed final ECW.
    (iii) Sufficient data to support the accuracy and reliability of 
the estimate.
    (iv) An explanation of the difference between the proposed final 
ECW and the target ECW used to establish the GMP.
    (v) The Contractor's affirmation that--
    (A) The Contractor is satisfied that the project as described in 
the specifications and construction drawings is constructible using 
commercially practicable means and methods;
    (B) The Contractor is satisfied that the construction work has 
been sufficiently described to enable it to estimate the cost of the 
work with reasonable accuracy;
    (C) The Contractor has disclosed to the Contracting Officer all 
of its actual knowledge relating to omissions of design information 
that may affect the cost of the work; and
    (D) The Contractor acknowledges that the final ECW and time 
established for completion shall not be adjusted on account of cost 
or time attributable to known design omissions disclosed by the 
Contractor pursuant to paragraph (e)(1)(v)(C) of this clause. 
Unknown design errors and omissions that form the basis for a change 
order may still be settled in accordance with GSAR 552.243-71 
Equitable Adjustments.
    (2) Establishment of the Final ECW. The parties shall negotiate 
a final ECW based on the data provided under paragraph (e)(1) of 
this clause. The final ECW shall be established and incorporated 
into the Contract by bilateral modification. The Contracting Officer 
will not accept a final ECW proposal that does not include the 
written affirmation described in this clause. The Contracting 
Officer will not exercise the GMP option for construction work 
unless the final ECW has been incorporated into the contract.
    (f) CMc Contingency Allowance. The CCA shall be __percent of the 
ECW [Contracting Officer insert percentage amount].
    (g) Shared Savings Incentive. The Contractor shall be entitled 
to __percent of any cost reductions realized [Contracting Officer 
insert percentage amount].
    (h) Adjustment of ECW and GMP. The ECW and GMP shall be subject 
to adjustment for changes and any other conditions giving rise to 
entitlement to an adjustment under this contract. The ECW and GMP 
shall be adjusted down for deletions to the scope of the 
construction services through a bilateral modification.
    (i) Adjustment of CCA. If the sum of the final ECW, CCA, and fee 
for the construction work is greater than the GMP established at 
contract award, then the contracting officer will reduce the CCA 
while keeping the GMP amount fixed. Otherwise, the CCA is adjusted 
relative to the percentage of the ECW set in paragraph (f) of this 
clause. Prior to the use of the CCA, the Contractor shall coordinate 
approval following the procedures identified in the contract.
    (j) Adjustment of the Fee for the Construction Work. The fee for 
the construction work may only be adjusted for scope changes that 
have an impact on schedule. The fee for the construction work 
associated with a scope change shall not be driven by a fixed 
percentage.
    (k) Conversion to Firm-Fixed-Price Prior to Final Settlement.
    (1) Submission Requirements for Conversion to Firm-Fixed Price. 
If the parties agree to negotiate and establish a firm-fixed-price 
for construction work prior to the exercise of the GMP option, or at 
the request of the Contracting Officer, the Contractor shall submit 
the following:
    (i) A proposed firm-fixed-price proposal for the completion of 
the construction work, which shall include all markups, including 
profit.
    (ii) A detailed statement of any costs incurred in the 
performance of the contract work to date.
    (2) Establishment of Firm-Fixed-Price.
    (i) Prior to Exercise of GMP Option. The parties may negotiate 
and establish a firm-fixed-price for construction work prior to the 
exercise of the GMP option based on the data provided under 
paragraph (k)(1) of this clause; provided that the firm-fixed-price 
shall not exceed the GMP. The Contracting Officer shall have the 
right, but not the obligation, to bilaterally exercise the GMP 
option at the firm-fixed-price within 120 calendar days of the 
establishment of such price.
    (ii) After Exercise of the GMP Option. At any time prior to 
final settlement, the Contracting Officer may request that the 
Contractor provide a firm-fixed-price proposal for the completion of 
construction work in accordance with paragraph (k)(1) of this 
clause. Within 60 calendar days of such request, the Contractor 
shall provide such data. Within 60 calendar days of receipt of the 
Contractor's proposal, the Contracting Officer shall have the right, 
but not the obligation, to convert the contract to a firm-fixed-
price contract through a bilateral modification at the proposed 
fixed-price or as otherwise negotiated by the parties; provided that 
the firm-fixed-price, plus any costs incurred in the performance of 
the construction work, shall not exceed the GMP.
    (iii) If any portion of the contract is converted to a firm-
fixed-price, then that portion of the contract is no longer subject 
to open book accounting, a shared savings incentive, or the need for 
final settlement. If the contract is not converted to a firm-fixed-
price contract, then the final settlement of the Contractor's 
compensation shall be determined in accordance with paragraph (l) of 
this clause.
    (3) Payments. If this contract is converted to a firm-fixed-
price contract, the Contractor shall submit a revised schedule of 
values for the construction work allocating the unpaid balance of 
the fixed price to the itemized work activities remaining 
uncompleted, which shall be the basis for remaining progress 
payments.
    (l) Final Settlement. The final settlement amount shall consist 
of the cost of performance and the Contractor's shared savings 
incentive, if any, provided that in no event shall the final 
settlement exceed the GMP. The final settlement amount shall be the 
Contractor's total compensation due under the contract.
    (1) Submission Requirements for Final Settlement Proposal. The 
Contractor shall submit a final settlement proposal within 120 days 
of substantial completion to determine the cost of the construction 
work, which shall include the following:
    (i) A detailed statement of all costs incurred by the Contractor 
in performing the construction work.
    (ii) A firm-fixed-price proposal for the performance of the 
remaining work, if any, that may be necessary to complete 
performance of the construction work.
    (iii) An executed release of claims, which shall describe any 
and all exceptions, including a description of any outstanding 
claims.
    (iv) Any other relevant data that the Contracting Officer may 
reasonably require.
    (2) Determination of the Cost of the Work. The cost of the 
construction work shall be the sum of all costs incurred by the 
Contractor in performing the construction work, the proposed fixed 
price for performance of remaining work, if any, less the residual 
value of any Contractor retained inventory. In order to determine 
the cost of the construction work, the Contractor shall be subject 
to an audit of the Contractor's records and/or the Contractor's 
proposal. Establishment of the cost of the construction work shall 
be subject to negotiation between the Government and the Contractor. 
In the event that the parties are unable to reach agreement, the 
Contracting Officer may unilaterally determine the cost of the 
construction work, and such determination shall be subject to FAR 
Clause 52.233-1 Disputes.
    (3) Determination of the Shared Savings Incentive. If the final 
cost of performance is equal to or greater than the final GMP, the 
Contractor is not entitled to any additional compensation. If the 
final cost of performance is less than the final GMP, the Contractor 
is entitled to the percentage specified in paragraph (g) of this 
clause, of the difference between the final GMP and the final cost 
of performance, as the shared savings incentive.
    (m) Subcontracts. No subcontract placed under this contract may 
provide for cost-

[[Page 55850]]

plus-a-percentage of cost. Any costs incurred by the Contractor as a 
result of such a subcontract shall not be included in the cost of 
the construction work or the final settlement.
    (n) Open Book Access. (1) At any time prior to converting to 
firm-fixed-price, the Government and its representatives, including 
designated auditors and accountants, shall have the right, but not 
the obligation, to attend any and all project meetings and shall 
have access to any and all records maintained by the Contractor 
relating to the contract. The Contractor shall include this 
requirement for open book access by the Government in its 
subcontracts for the contract.
    (2) After converting to firm-fixed-price, the Government 
maintains the right to examine records under GSAR Clause 552.215-70.
    (o) Termination. If this Contract is terminated, the Contractor 
shall not be entitled to a shared savings incentive.
    (p) The contractor agrees to incorporate the substance of this 
clause in all subcontracts under this contract.


(End of Clause)


552.236-80   Accounting Records and Progress Payments.

    As prescribed in 536.7107(b), insert the following clause:

Accounting Records and Progress Payments (Date)

    (a) The Contractor shall keep full and detailed accounts and 
exercise such controls as may be necessary for proper financial 
management under this contract. The Contractor's accounting and 
control systems shall meet Generally Accepted Accounting Principles 
(GAAP) and provide for the following:
    (1) There is proper segregation of direct costs and indirect 
costs.
    (2) There is proper identification and accumulation of direct 
costs by contract.
    (3) There is a labor time distribution system that charges 
direct and indirect labor appropriately.
    (b) The Contractor shall afford access to and shall permit any 
authorized representatives of the Government to audit, examine and 
copy any records, documents, books, correspondence, instructions, 
drawings, receipts, subcontracts, purchase orders, vouchers, 
memoranda, and other data relating to this contract. Records subject 
to audit, examination, and copying shall include those records 
necessary to evaluate and verify all direct and indirect costs, 
including overhead and payroll tax and fringe benefit allocations, 
as they may apply to costs associated with the contract. The 
Contractor shall preserve these records for a period of three years 
after the final payment, or for such longer period as may be 
required by law.
    (c) The records identified in paragraphs (b) of this clause 
shall be subject to inspection and audit by the Government or its 
authorized representative for, but limited to, evaluating and 
verifying the following:
    (1) Contractor compliance with contract requirements.
    (2) Compliance with pricing change orders, invoices, 
applications for payment, or claims submitted by the contractor or 
any of its subcontractors at any tier, including vendors and 
suppliers.
    (d) If requested by the Government, the Contractor shall 
promptly deliver to the Government or its designee copies of all 
records related to the contract, in a form acceptable to the 
Government. The Contractor shall provide to the Government or its 
authorized representative such records maintained in an electronic 
format in a computer readable format on data disks or suitable 
alternative computer data exchange formats.
    (e) The Government shall have access to the Contractor's 
facilities, shall be allowed to interview all current and former 
employees to discuss matters pertinent to the contract, and shall be 
provided adequate work space, in order to conduct audits and 
examinations.
    (f) If any audit or examination of the Contractor's records 
discloses total findings resulting in overpricing or overcharges by 
the Contractor to the Government in excess of one-quarter percent of 
the total contract billings, the Contractor shall immediately 
reimburse the Government for the overcharges. The Contractor shall 
also reimburse the Government for the costs of the audit unless 
otherwise agreed to by the Government and the Contractor.
    (g) The Government shall be entitled to audit all modifications, 
including lump-sum modifications, to determine whether the proposed 
costs, as represented by the Contractor and any of its 
subcontractors, are in compliance with the contract. If it is 
determined that the costs proposed under a modification, including 
lump-sum modifications, are not in compliance with the contract, the 
Government reserves the right to adjust the amount previously 
approved and included in the modification.
    (h) If the Contractor fails to comply with any conditions in 
this clause, the Contracting Officer may retain a maximum of 10 
percent of the amount of each payment request submitted until such 
deficiencies are corrected.
    (i) These requirements regarding accounting records shall not 
mitigate, lessen nor change any other requirements in the contract 
regarding audits, payment submissions, records, or records 
retention.
    (j) The contractor agrees to incorporate the substance of this 
clause in all subcontracts under this contract.

[FR Doc. 2018-24282 Filed 11-7-18; 8:45 am]
 BILLING CODE 6820-61-P