Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Rules and Regulations 47569

longer maintain the public land records

and that those records will no longer be

available for public access in BLM field

offices.

In reality, BLM is required by law and

administrative practice to maintain the

official public land records. This

regulation will neither change our

recordkeeping responsibility nor change

public access to those records in BLM

field offices. This regulation will merely

remove procedural material from the

CFR and place it in more appropriate

alternative sources—public information

releases and the BLM manual system.

For these reasons, the final rule is being

published unchanged from the proposed

rule.

IV. Procedural Matters

National Environmental Policy Act of

1969

BLM has prepared an environmental

assessment (EA), and has found that the

final rule would not constitute a major

Federal action significantly affecting the

quality of the human environment

under section 102(2)(C) of the National

Environmental Policy Act of 1969, 42

U.S.C. 4332(2)(C). BLM has placed the

EA and the Finding of No Significant

Impact on file in the BLM

Administrative Record at the address

specified previously. BLM invites the

public to review these documents by

contacting us at the address listed above

(see ADDRESSES).

Paperwork Reduction Act

This rule does not contain

information collection requirements that

the Office of Management and Budget

must approve under 44 U.S.C. 3501 et

seq.

Regulatory Flexibility Act

Congress enacted the Regulatory

Flexibility Act of 1980 (RFA), 5 U.S.C.

601 et seq., to ensure that Government

regulations do not unnecessarily or

disproportionately burden small

entities. The RFA requires a regulatory

flexibility analysis if a rule would have

a significant economic impact, either

detrimental or beneficial, on a

substantial number of small entities.

Based on the discussion in the preamble

above, that the regulation will remove

unnecessary material from the CFR,

BLM anticipates that this final rule will

have no impact on the public at large.

Therefore, BLM has determined under

the RFA that this final rule would not

have a significant economic impact on

a substantial number of small entities.

Unfunded Mandates Reform Act of 1995

Removal of 43 CFR 1813 will not

result in any unfunded mandate to

State, local, or tribal governments in the

aggregate, or to the private sector, of

$100 million or more in any one year.

Executive Order 12612

The final rule will not have a

substantial direct effect on the States, on

the relationship between the Federal

Government and the States, or on the

distribution of power and

responsibilities among the various

levels of government. Therefore, in

accordance with Executive Order 12612,

BLM has determined that this final rule

does not have sufficient federalism

implications to warrant preparation of a

Federalism Assessment.

Executive Order 12630

The final rule does not represent a

Government action capable of

interfering with constitutionally

protected property rights. Therefore, the

Department of the Interior has

determined that the rule would not

cause a taking of private property or

require further discussion of takings

implications under this Executive

Order.

Executive Order 12866

According to the criteria listed in

section 3(f) of Executive Order 12866,

BLM has determined that the final rule

is not a significant regulatory action. As

such the final rule is not subject to

Office of Management and Budget

review under section 6(a)(3) of the

order.

Executive Order 12988

The Department has determined that

this rule meets the applicable standards

in sections 3(a) and 3(b)(2) of Executive

Order 12988, Civil Justice Reform.

Author: The principal author of this

rule is Frances Watson, Bureau of Land

Management, 1849 C Street, NW,

Washington, D.C. 20240; Telephone:

202–452–5006 (Commercial or FTS).

List of Subjects in 43 CFR Part 1810

Administrative practice and

procedure, Archives and records.

Dated: September 4, 1997.

Bob Armstrong,

Assistant Secretary, Land and Minerals

Management.

For the reasons stated in the

preamble, and under the authority of 43

U.S.C. 1740, part 1810 of Title 43 of the

Code of Federal Regulations is amended

as set forth below:

PART 1810—INTRODUCTION AND

GENERAL GUIDANCE

1. The authority for Part 1810 is

revised to read:

Authority: 43 U.S.C. 1740.

Subpart 1813—[Removed]

2. Subpart 1813 is removed.

[FR Doc. 97–23935 Filed 9–9–97; 8:45 am]

BILLING CODE 4310–84–P

OFFICE OF PERSONNEL

MANAGEMENT

48 CFR Parts 1602, 1603, 1604, 1615,

1616, 1629, 1631, 1643, 1644, 1645,

1649, 1652, and 1653

RIN 3206–AH45

Federal Employees Health Benefits

Program Acquisition Regulation; Truth

in Negotiations Act and Related

Changes

AGENCY: Office of Personnel

Management.

ACTION: Final rulemaking.

SUMMARY: The Office of Personnel

Management (OPM) is issuing a final

regulation amending the Federal

Employees Health Benefits Acquisition

Regulation (FEHBAR) to implement

those portions of the Federal

Acquisition Streamlining Act of 1994

(FASA) that impact on the FEHB

Program.

EFFECTIVE DATE: October 10, 1997.

FOR FURTHER INFORMATION CONTACT:

Mary Ann Mercer, (202) 606–0004.

SUPPLEMENTARY INFORMATION: On June

24, 1996, OPM issued a proposed

regulation in the Federal Register [61

FR 32401] to inform Federal Employees

Health Benefits (FEHB) Program

carriers, Federal agencies, and the

public how it intends to implement

those portions of the Federal

Acquisition Streamlining Act of 1994

(FASA), Public Law 103–355, effective

October 13, 1994, affecting the FEHB

Program. The changes proposed also

reflect how OPM intends to implement

sections 4201 through 4204 of the

Federal Acquisition Reform Act of 1996

(FARA), Public Law 104–106, enacted

on February 10, 1996.

OPM received comments from one

private citizen and five organizations:

Two FEHBP carriers, a trade association

representing health maintenance

organizations (HMOs), preferred

provider organizations (PPOs), and

other network plans, an association that

represents FEHB Program fee-for-service

carriers, and a contract law group. We

appreciate the observations and

suggestions offered and have taken them

into consideration in these regulations.

The majority of the comments were

favorable toward OPM’s efforts to
47570 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Rules and Regulations

implement the provisions of the Truth

in Negotiations Act (TINA) as amended

by FASA to the extent that the

regulation brings the FEHBAR into

conformance with the Federal

Acquisition Regulation (FAR).

Nevertheless, there were a number of

concerns regarding provisions on the

submission of cost or pricing data, as

well as those concerning Similarly

Sized Subscriber Groups (SSSGs).

These, as well as other comments, are

addressed as follows.

Effective Date of the Regulation

One of the comments concerned a

perceived inconsistency in the proposed

effective date and the application of the

regulation with regard to SSSGs. The

regulation will be applicable to the rate

instructions issued for the 1998 FEHB

contract year. In the opinion of the

commenter, however, it appeared that

OPM had already implemented many of

the changes administratively through

the rate instructions for the 1997

contract year. We would like to clarify

any misconception that OPM issues

policy material in the FEHBP rate

instructions. The rate instructions

contain guidance, clarifying information

and examples that elaborate on and

describe how the policy in existing

regulations is to be implemented. The

regulations introduce no changes in

OPM’s policy with respect to SSSGs.

The treatment of multi-year contracts

and the requirement that groups with

point of service (POS) plans and

separate lines of business be included

for consideration as SSSGs have been

the long standing practice under the

SSSG concept.

Intent of FASA/TINA

Two commenters believe OPM has

overlooked the intent of FASA to

minimize burdensome requirements,

such as the requirement to submit cost

or pricing data, placed on Federal

contractors. OPM understands the

commenters’ concerns; however, we

believe they overlook the fact that

Congress continues to recognize the

need for cost or pricing data where

necessary to determine reasonableness

of a price. Accordingly, when the

Government purchases a product or

service that is not a commercial item

offered to the Government without

modification and in the same form in

which it is sold in the commercial

marketplace, it is appropriate under the

FAR and TINA to require cost or pricing

data to establish price reasonableness.

As we stated in the preamble to the

proposed rule, with the complexities of

the FEHB Program carriers’ rating

systems, it is inaccurate to say that OPM

is buying a commercial off-the-shelf

item or that the product that OPM

purchases is purchased at a market or

catalog price. Thus, the FEHB Program

community rated contracts are neither

contracts for commercial items, nor are

they catalog or market price contracts as

those terms are intended by FASA,

FARA, and the FAR.

One commenter noted that the

purchase of insurance and HMO

services is typically governed by State

insurance regulators and that OPM, in

obtaining cost or pricing data, is not

only acting as a purchasing agent, but is

also performing a regulatory function

akin to that of a State insurance

regulator. The commenter believes that

the application of the principles

embodied in the proposed regulation to

the FEHB Program contracts is the

minimum that OPM should require of

contractors given the substantial

responsibilities placed upon OPM to

obtain the best possible terms,

conditions, price and value for the

Government and enrollees in the FEHB

Program.

Cost or Pricing Data

Prior to the enactment of Public Law

100–517, the Health Maintenance

Organization Amendments of 1988,

community rated contracts resembled

market price contracts. Consequently,

for lack of a more precise fit with any

other contract type, OPM identified the

community rated contracts as market

price contracts when it initially

published regulations to implement the

Act. These regulations were effective

January 1, 1990, before OPM had been

able to assess the impact of the 1988

amendments.

Historically, a community rate was

more analogous to a market price and

services under FEHB Program contracts

were more commonly thought of as

commercial items, because the

community rate was often a single rate

that an HMO charged all of its groups.

This is no longer true today. The 1988

HMO amendments introduced a new

level of complexity into the community

rating process. The 1988 HMO

amendments authorized community

rated plans to use a new rating method

called Adjusted Community Rating

(ACR). In spite of its name, ACR is

actually a form of experience rating, that

is, prospective experience rating.

Determining the reasonableness of the

rates under ACR requires cost or pricing

data. Moreover, cost or pricing data is

fundamental to the development of the

FEHB Program premiums. OPM has a

responsibility under the FEHB law to

ensure that the FEHB Program

premiums ‘‘reasonably and equitably

reflect the cost of benefits provided’’ [5

U.S.C. 8902(i)]. In carrying out this

statutory mandate, OPM needs cost or

pricing data to achieve a fair and

reasonable premium rate for Federal

enrollees. There are almost 400 plans in

the Program, and the premium is

divided, with an average of 28% being

paid by enrollees and 72% being paid

from Government funds. Thus, both

parties have a major financial interest in

the reasonableness of the rates.

Furthermore, we would like to point

out that the FEHB Program premiums,

once transmitted to OPM, are placed in

a trust and are trust fund monies which

OPM has a statutory mandate to protect.

OPM places the premium monies

collected in the U.S. Treasury for

payment to the FEHB Program carriers.

The FEHB law authorizes the Secretary

of the Treasury to invest and reinvest

the monies, as well as the interest

earned on their investments. Because of

the nature of these monies, OPM has a

fiduciary responsibility to ensure a

reasonable and equitable rate for Federal

enrollees as well as for the Government.

One of the ways OPM accomplishes this

is to require the same discounts for the

FEHB Program that are enjoyed by the

SSSGs; and analyzing cost or pricing

data is the only way OPM can achieve

accountability. The practice of

requesting the data is widely accepted

in the insurance industry and, although

we have requested this data for over 20

years, no FEHB Program carrier has

advised us that it was burdensome.

By these regulations, we are

implementing FASA, FARA, and the

FAR in the manner which best enables

us to comply with the responsibility

that the FEHB law places on OPM. One

has only to trace the FEHBAR

amendments over the years to

understand that OPM has been trying, to

the maximum extent it could, to

reconcile the Congressional intent

behind the HMO amendments with the

FEHB law. OPM has attempted to fit

FEHB Program contracts into existing

contract types under the FAR, which

lists contract types that were never

entirely appropriate to our situation.

Accordingly, because of the unique

nature of the FEHB Program contracts,

we are categorizing them as negotiated

benefits contracts to reflect more

accurately their actual nature.

One commenter suggested that OPM

require pricing data only, and that cost

analysis is not an aspect of establishing

the price of health benefits coverage

with large group purchasers. We

disagree. Cost data, the most

fundamental of which is claims data,

prescription drug, hospital, and office

visit benefits utilization data, and trend
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Rules and Regulations 47571

data, are essential in evaluating the rate

under ACR (experience rating). The

same commenter believes that,

traditionally, when OPM has asked for

cost information it has generally been to

examine the derivation of the price for

a specific benefit or loading. Prior to the

1988 HMO amendments, this was true.

To a certain extent, OPM’s rate review

was fairly straightforward before the

1988 HMO amendments authorized

alternative methods of community

rating. Before 1981, community rating

was relatively simple, in that a group’s

rates were normally based on the same

underlying capitation rate (i.e., per

member per month rate). But, even

under this early version of community

rating, a group’s rates could not

properly be thought of as a market price.

This is because, from the enactment of

the HMO Act of 1973 onward, the

community rating theory has always

allowed for various demographic

adjustments that caused each group’s

rates to be uniquely related to the

characteristics of the group.

In 1981, when the HMO Act of 1973

was amended to allow Federally

qualified plans to use Community

Rating by Class (CRC), the situation

became much more complex. Under

CRC, the plan could adjust the

community rates by a CRC factor which

was derived by partitioning the group

into classes and applying so-called

utilization factors, which predicted

differences in the use of HMO services

by individuals or families in each class.

But, in 1988, the 1988 HMO

amendments radically altered the nature

of community rating by allowing

Federally qualified plans to use

Adjusted Community Rating (ACR). In

retrospect, we have come to realize that

no rate based on ACR can possibly be

construed to be a market price. After the

legislation was enacted and OPM’s 1990

regulations were published, OPM began

to experience difficulties in verifying

the carriers’ community rate. We

continue to ask for cost and pricing data

for computing the rates under

Traditional Community Rating (TCR)

and CRC. And, for ACR, we ask for all

of the data developed for both the FEHB

Program and the SSSGs, which includes

cost data.

Contrary to the commenter’s beliefs,

these carriers using ACR do not derive

their rates from a single rate. Rather,

these carriers base their rate directly on

the past experience of the Federal

group. In no sense can such a rate be

considered a market price. The Act

stated that, under ACR, the rate for a

particular group could be based on the

organization’s revenue requirements for

providing service to the group. This

means that ACR is a form of experience

rating and, as such, requires cost data.

Thirty-five percent of the FEHB plans

use ACR to rate the Federal group, and

the number of these plans is increasing

each year. Approximately thirty percent

of the plans currently in the FEHB

Program use CRC to rate the Federal

group.

Two commenters were concerned that

proposed FEHBAR 1602.170–5 does not

define cost or pricing data, but simply

refers to the rate instruction package.

One of these commenters believes that

the list of cost or pricing data should be

identified in regulation because the FAR

does not give agencies authority to set

price guidelines outside the scope of the

regulation.

In placing clarifying details in the rate

instructions, OPM was simply

conforming to the principles of the

Administration’s National Performance

Review (NPR). A key element of the

NPR is the replacing of agency rules

with policy directives and instructions,

where appropriate. Nevertheless, to

assist the carriers in understanding what

OPM considers cost or pricing data, we

have decided to cite in the regulation

some examples of the types of data that

OPM considers to be cost or pricing

data. Like the examples listed in the

FAR, the list is illustrative and is not

exhaustive. Additional data may be

requested in the rate instructions as

deemed necessary by OPM for a

particular contract year. Again, this type

of detail is merely clarifying information

and does not represent policy change. It

conforms to the definition of cost or

pricing data in TINA and is information

that OPM has frequently requested in

the past.

One commenter noted that in the

Supplementary Information to the

proposed rule OPM included actuarial

estimates in its description of cost or

pricing data. The commenter stated that

actuarial estimates are judgmental and

not factual and suggested that OPM

remove these from consideration as cost

or pricing data. We are aware that FAR

15.801 defines ‘‘cost or pricing data’’ as

factual and not judgmental, and we

believe that we are in compliance with

the definition. OPM uses actuarial

estimates not to question what judgment

the carrier used in its actuarial

estimates, but to verify, for example,

that if an actuarial estimate of 10%

increase in claims was used for the

FEHBP group, the methodology used to

establish that estimate was also used in

setting the SSSGs rates. In other words,

OPM is not questioning what judgment

the carrier has applied in its projections,

but the facts upon which its projections

are based.

One commenter is concerned that the

regulation will authorize OPM to collect

data that are difficult to collect and

submit and that are not directly related

to OPM’s responsibility to evaluate the

reasonableness of the prices given to the

SSSGs. The respondent noted that the

FAR authorizes agencies to obtain

‘‘other than cost or pricing data,’’ which

the commenter believes is sufficient to

verify prices. We would like to reiterate

that OPM will not ask for different data

than it currently requests in the rate

setting process. However, the kind of

data that we ask for will be determined

by the plan with regard to how it

chooses to rate its SSSGs. We look only

at data directly related to our

responsibility under the FEHB law to

evaluate a proposed rate in order to

ensure that the FEHBP rates accurately

reflect the cost of benefits provided.

OPM neither requests nor desires

information that is irrelevant to this

objective. Further, OPM disagrees with

the commenter that data other than cost

or pricing data are sufficient to verify

prices.

SSSGs

One commenter is concerned that the

legitimacy of a loading can be based on

non-SSSG rating practices. The

commenter believes that this is

inconsistent with the SSSG concept. As

stated in the OPM Reconciliation

Guidelines, the OPM audit staff may

examine the rates and benefit loadings

of non-SSSG groups. The purpose of

such analysis is to make certain that the

Federal group rates are fair in relation

to the SSSG rates. As one example

(given in the guidelines), if an SSSG had

a special benefit not included in the

Federal group benefit package, OPM

would compare what the plan charged

the SSSG with what it charged nonSSSG groups for the benefit. Only by

examining the non-SSSG groups would

we be able to determine if the SSSG had

been given a discount to its overall rates

via a discount to the special loading. We

do, however, agree with the commenter

that another example given in the

guidelines pertaining to late payment

loadings is not a good example to justify

the principle of examining non-SSSG

groups. We will remove this example

from future guideline documents.

Another commenter believes that

OPM fails to consider the contract

requirement that the FEHB rate be

reconciled to the SSSG rates after the

contract period has begun. As part of the

reconciliation process, the contractor

must provide information related to the

rates offered to the five groups closest in

size to the Federal group. The

commenter believes that requiring cost
47572 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Rules and Regulations

or pricing data for these contracts is

entirely inconsistent with the purpose

of the reconciliation process.

For non-SSSGs, OPM simply asks the

carriers to list the plans they did not

select as SSSGs. However, OPM may ask

the carrier to explain why it did not

select one or more as an SSSG. OPM has

stated over the years that it reserves the

right to examine the rate development of

non-SSSG groups. OPM looks at a

carrier’s other groups only if all the

necessary information is not in the

SSSG. For example, verifying that there

is no group closer in size to the Federal

group than the plan’s chosen SSSGs

could require analysis of non-SSSG

groups. OPM will verify such things as

differences in loading and whether the

carrier has hidden a discount in a

loading. We want to emphasize that the

sole purpose of such analysis is to make

certain that the Federal group’s rates are

equivalent to the SSSGs’ rates. However,

if we find that the SSSG is not closest

in size or if an SSSG had a special

benefit (e.g., dental benefit) not

included in the Federal group benefit

package, we would compare what the

carrier charged the SSSG with what it

charged other groups for this benefit.

The purpose would be to verify that the

SSSG received no discount. Carriers

need not be concerned that an OPM

review of a non-SSSG commercial group

makes it a potential SSSG. We would

like to point out, though, that such

comparisons with non-SSSGs could

work to the carrier’s advantage as well

as to its disadvantage if a non-SSSG was

not given a discount.

SSSGs/Regional Rating Areas

One of the commenters noted that a

carrier may have to select an SSSG from

an entirely different area within a State

even if that group has no Federal

employees in the rating area. This

concerned the commenter since the

group rates in one regional rating area

may be significantly different than the

rates in another area. The commenter

stated that it is unclear how OPM would

adjust the rates of an SSSG in one area

to measure the Federal group in another

area and suggests that OPM limit its

SSSG analysis to groups within a single

FEHBP rating area. This type of

situation is not new to us. In such cases,

we focus on whether the carrier gave the

groups a discount and whether it is

applying the rating method consistently.

The rating method or benefit structure

may be entirely different and is, in fact,

irrelevant.

SSSGs/Purchasing Alliances

One commenter suggested that OPM

either remove the limitation on the

maximum number of employees

allowable in a purchasing alliance, or

increase the number to 200, because

some States offer voluntary alliances in

which the State may also dictate the

rates. In addition, two commenters

believe that no State mandated

purchasing alliance should be treated as

an SSSG because the alliances are not

voluntary and are usually a condition of

doing business in the State, which

distinguishes them from the carriers’

normal lines of business. After

considering the comments, we have

adopted the suggestion that all alliances

be excluded from consideration as

SSSGs where the State mandates how

the rate is set.

We are also confirming that POS

plans whose rate-setting is mandated by

the State may be excluded from

consideration as SSSGs. However, a

POS plan whose rate-setting is not Statemandated must be considered as an

SSSG, even though it is primarily

experience rated. Usually the plan uses

ACR and should not be excluded,

regardless of the portion of its services

provided out of plan. We have had

comparable experience with ACR plans

since 1988, and the rate setting for POS

plans with a large percentage of out-ofplan services is no more difficult to

accomplish than ACR. As we have said

before, experience shows that we have

to be inclusive in considering plans as

SSSGs. OPM has always recognized that

the rating method for the Federal group

is not necessarily the same as its SSSGs.

OPM received a few plan-specific

questions about SSSGs, which we are

reluctant to answer without more

information. We will answer these types

of questions on an individual basis at

the time of the rate reconciliation.

One commenter believes that the

regulations should establish audit

standards that restrict OPM’s Inspector

General (IG) auditors to comparing the

prices charged to the SSSGs and to

reviewing the information necessary to

verify that the SSSGs are appropriate.

By statute, OPM’s Inspector General

operates independently of OPM, and

OPM is not authorized to regulate to

restrict its authority. We would like to

point out, however, that the IG looks

only at data directly related to OPM’s

responsibility under the FEHB law to

evaluate a proposed rate in order to

ensure that the rates accurately reflect

the cost of benefits provided. The kind

of data that the auditors would look at

will be determined by the plan with

respect to how it chooses to rate its

SSSGs.

SSSGs/Multi-year contracts

One commenter believes OPM should

not be allowed to isolate a specific year

in a multi-year contract to determine

that a discount occurred. Our intent is

that if a plan’s rates are affected by the

length of time the group signs up with

the plan, then we simply want to be able

to capture that data. If the rates are

affected, then we have to make our

analysis based on all the years that

affect the rate.

A commenter asked that OPM confirm

its understanding that if the aggregate

revenues on a per member per month

(PMPM) basis for the Federal group are

equivalent to or less than the

corresponding aggregate revenues for

the SSSG, the carrier will be in

compliance with its community rating

requirements with respect to that SSSG.

OPM confirms that under this scenario

the carrier would be in compliance with

its community rating requirements.

The same commenter would also like

clarification of OPM’s policy with

regard to multi-year contracts in which

the group has the option of renewing the

agreement in any given year and does

not renew. OPM considers the contracts

to be single-year agreements if the group

terminates the contract.

Miscellaneous

We converted FAR clauses 52.229–6,

Taxes—Foreign Fixed-Price Contracts,

52.243–1, Changes—Fixed Price,

52.245–2, Government Property (FixedPrice Contracts), 52.249–2, Termination

for Convenience of the Government

(Fixed-Price), and 52.249–8, Default

(Fixed-Price Supply and Service) to

FEHBAR clauses and have deleted

language that does not apply to

negotiated benefits contracts.

We have clarified the cost principle at

1631.205–75(b) pertaining to selling

costs to provide that personnel and

related travel costs are allowable for

attendance at Open Season Health Fairs

and other similar activities where

carriers give enrollees information about

their choices among health plans. Such

events are not limited to those

sponsored by Government agencies, but

may be sponsored by other groups as

well.

One comment concerned 1652.215–

70(b)(1)(iii), which states that if the

contracting officer determines that a

price or cost reduction should be made,

the carrier may not raise as a defense the

argument that the contract was based on

an agreement about the total cost of the

contract and there was no agreement

about the cost of each item procured

under the contract. The commenter

states that community rated contracts
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Rules and Regulations 47573

are based on price, not cost, analysis

and cites FAR 15.803(c), which provides

that price negotiation does not require

that agreement be reached on every

element of cost. The commenter

believes, therefore, that individual

components of cost should not be

subject to revision on audit. OPM

classified its review as price analysis

pursuant to the HMO amendments

because it had been working with a

simplified form of price analysis up to

that point, although technically even

these community rated contracts

included an element of cost. But, after

we gained some experience with ACR

(experience rating), we began to look not

only at special benefits loadings, but

also at elements of the basic community

rate, such as demographic factors. Our

approach has been consistent with the

FAR definition of ‘‘price,’’ which states

that price is cost plus any fee or profit

applicable to the contract type. For the

reasons stated earlier, OPM is no longer

classifying FEHB contracts as market

price, and OPM will collect both cost

and pricing data. The new regulations

reflect this fact by clarifying that

community rated contracts are based on

a combination of cost and price

analysis. FEHBAR 1652.216–70(b)(1)(iii)

is taken verbatim from FAR 52.215–

22(c)(1)(iii) and is appropriate when

both cost and pricing data are required.

The same commenter took exception

to the requirement in 1652.215–

70(b)(2)(ii)(A), which restricts a carrier’s

right to claim an offset to an audit

finding when the understated data was

known by the carrier to be understated

at the time the certificate of current cost

or pricing data was signed. The

commenter believes this provision is

inconsistent with FEHBAR 1652.215–

70(b)(2)(i)(B) which allows a carrier to

revise a price following an audit finding

if it proves that the cost or pricing data

were available before the date of

agreement on the price of the contract

and that the data were not submitted

before such date. We would like to point

out that these provisions are not

inconsistent with the FAR. In fact, they

are repeated verbatim from the FAR.

Section 1652.215–70(b)(2)(ii)(A)

prohibits an offset if the carrier

deliberately understated the data at the

time the certificate of current cost or

pricing data was signed. OPM would

not allow an offset under these

circumstances. In FEHBAR 1652.215–

70(b)(2)(i)(B), however, the carrier is

allowed to prove that the data were not

submitted before the date of agreement

on the price because of a mistake on its

part. OPM would allow the offset if the

proof offered by the carrier was clear

and convincing.

One commenter suggested that OPM

increase the threshold for preapproval

of subcontracts to $200,000 to account

for inflation since the FEHBAR was first

published in 1987. OPM has decided

not to increase the threshold at this

time, but will consider doing so in a

future amendment to the FEHBAR.

We are withdrawing our proposal to

insert FAR 52.222–25, Affirmative

Action Compliance, in the Matrix

because the clause is a preaward clause

that is intended to be inserted in

solicitations. FEHB Program contracts,

by law, are exempted from competitive

bidding requirements, and OPM uses

alternative methods of inviting health

benefits carriers to apply for

participation in the FEHB Program.

We are withdrawing our proposal to

add a requirement in 1652.222–70,

Notice of Significant Events, that

carriers should inform OPM at the time

of a novation or change of name, rather

than after the novation or change of

name occurs. OPM has determined that

FEHBAR 1642.1204 and 1642.1205

sufficiently address OPM’s concerns

that carriers are required to notify OPM

of a novation and/or a change of name

in a timely manner.

We have made a technical correction

to 1652.232–71(c) that was

inadvertently omitted from OPM’s

interim regulation of April 20, 1992, and

published as a final rule on November

16, 1992 [57 FR 53981]. That is, we have

removed from the regulation the

reference to the ability of underwriters

to make drawdowns from carriers’ letter

of credit (LOC) accounts. OPM

guidelines allow a carrier to delegate its

authority to make drawdowns from its

LOC account to the underwriter of its

plan.

We have also included in the final

regulations minor technical and

editorial changes and minor changes to

the definitions of ‘‘Carrier’’ and ‘‘Health

benefits plan’’ to more closely align

them with the definitions contained in

the National Association of Insurance

Commissioners (NAIC) guidelines.

Regulatory Flexibility Act

I certify that this regulation will not

have a significant economic impact on

a substantial number of small entities

because all of the small plan FEHB

Program contracts fall below the

threshold for submitting cost or pricing

data.

List of Subjects in 48 CFR Parts 1602,

1603, 1604, 1615, 1616, 1629, 1631,

1643, 1644, 1645, 1649, 1652, and 1653

Administrative practice and

procedure, Government employees,

Health facilities, Health insurance,

Health professions, Hostages, Iraq,

Kuwait, Lebanon, Reporting and

recordkeeping requirements,

Retirement.

Office of Personnel Management.

James B. King,

Director.

Accordingly, OPM is amending

Chapter 16 of Title 48, Code of Federal

Regulations, as follows:

CHAPTER 16—OFFICE OF

PERSONNEL MANAGEMENT

FEDERAL EMPLOYEES HEALTH

BENEFITS ACQUISITION REGULATION

1. The authority citation for 48 CFR

Parts 1602, 1603, 1604, 1615, 1616,

1631, 1644, 1649, 1652, and 1653

continues to read as follows:

Authority: 5 U.S.C. 8913; 40 U.S.C. 486(c);

48 CFR 1.301.

PART 1602—DEFINITIONS OF WORDS

AND TERMS

2. Section 1602.170–1 is revised to

read as follows:

1602.170–1 Carrier.

Carrier means a voluntary association,

corporation, partnership, or other

nongovernmental organization which is

lawfully engaged in providing,

delivering, paying for, or reimbursing

the cost of health care services under

group insurance policies or contracts,

medical or hospital service agreements,

membership or subscription contracts,

including a health maintenance

organization, a nonprofit hospital and

health service corporation, or any other

entity providing a plan of health

insurance, health benefits or health

services, in consideration of premiums

or other periodic charges payable to the

carrier.

3. In § 1602.170–2, paragraph (a) is

revised to read as follows:

1602.170–2 Community rate.

(a) Community rate means a rate of

payment based on a per member per

month capitation rate or its equivalent

that applies to a combination of the

subscriber groups for a comprehensive

medical plan carrier. References in this

subchapter to ‘‘a combination of cost

and price analysis’’ relating to the

applicability of policy and contract

clauses refer to comprehensive medical

plan carriers using community rates.

* * * * *
47574 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Rules and Regulations

4. Sections 1602.170–10 through

1602.170–12 are redesignated as

§§ 1602.170–12 through 1602.170–14

respectively, §§ 1602.170–5 through

1602.170–9 are redesignated as

§§ 1602.170–6 through 1602.170–10,

new §§ 1602.170–5 and 1602.170–11 are

added, and newly redesignated

§§ 1602.170–9 and 1602.170–13 are

revised to read as follows:

1602.170–5 Cost or pricing data.

(a) Experience rated carriers. Cost or

pricing data for experience rated carriers

includes information such as claims

data; actual or negotiated benefits

payments made to providers of medical

services for the provision of health care

such as capitation not adjusted for

specific groups, per diems, and

Diagnostic Related Group (DRG)

payments; cost data; utilization data;

and administrative expenses and

retentions.

(b) Community rated carriers. Cost or

pricing data for community rated

carriers is the specialized rating data

used by carriers in computing a rate that

is appropriate for the Federal group and

the similarly sized subscriber groups

(SSSGs). Such data include, but are not

limited to, capitation rates; prescription

drug, hospital, and office visit benefits

utilization data; trend data; actuarial

data; rating methodologies for other

groups; standardized presentation of the

carrier’s rating method (age, sex, etc.)

showing that the factor predicts

utilization; tiered rates information;

‘‘step-up’’ factors information;

demographics such as family size;

special benefit loading capitations; and

adjustment factors for capitation.

* * * * *

1602.170–9 Health benefits plan.

Health benefits plan means a group

insurance policy, contract, medical or

hospital service agreement, membership

or subscription contract, or similar

group arrangements provided by a

carrier for the purpose of providing,

arranging for, delivering, paying for, or

reimbursing any of the costs of health

care services.

* * * * *

1602.170–11 Negotiated benefits

contracts.

Negotiated benefits contracts are

FEHBP contracts in which benefits

provided and subscription income are

based on either community rating or

experience rating.

* * * * *

1602.170–13 Similarly sized subscriber

groups.

(a) Similarly sized subscriber groups

(SSSGs) are a comprehensive medical

plan carrier’s two employer groups that:

(1) As of the date specified by OPM

in the rate instructions, have a

subscriber enrollment closest to the

FEHBP subscriber enrollment; and,

(2) Use any rating method other than

retrospective experience rating; and,

(3) Meet the criteria specified in the

rate instructions issued by OPM.

(b) Any group with which an FEHB

carrier enters into an agreement to

provide health care services is a

potential SSSG (including separate lines

of business, government entities, groups

that have multi-year contracts, and

groups having point-of-service

products).

(c) Exceptions to the general rule

stated in paragraph (b) of this section

are (and the following groups must be

excluded from SSSG consideration):

(1) Groups the carrier rates by the

method of retrospective experience

rating;

(2) Groups consisting of the carrier’s

own employees;

(3) Medicaid groups, Medicare

groups, and groups that have only a

stand alone benefit (such as dental

only);

(4) A purchasing alliance whose ratesetting is mandated by the State or local

government.

(d) OPM shall determine the FEHBP

rate by selecting the lower of the two

rates derived by using rating methods

consistent with those used to derive the

SSSG rates.

PART 1603—IMPROPER BUSINESS

PRACTICES AND PERSONAL

CONFLICTS OF INTEREST

Subpart 1603.70 [Amended]

5. In subpart 1603.70, sections

1603.701, 1603.702, and 1603.703 are

redesignated as sections 1603.7001,

1603.7002, and 1603.7003 respectively.

PART 1604—ADMINISTRATIVE

MATTERS

1604.705 [Amended]

6. In subpart 1604.7, section 1604.705

is amended by removing the words

‘‘Audit—Negotiation,’’ and adding in its

place ‘‘Audit & Records—Negotiation.’’

PART 1615—CONTRACTING BY

NEGOTIATION

7. Section 1615.802 is revised to read

as follows:

1615.802 Policy.

Pricing of FEHB contracts is governed

by 5 U.S.C. 8902(i), 5 U.S.C. 8906, and

other applicable law. FAR subpart 15.8

shall be implemented by applying the

policies and procedures—to the extent

practicable—as follows:

(a) For both experience rated and

community rated contracts for which

the FEHBP premiums for the contract

term will be less than $500,000, OPM

shall not require the carrier to provide

cost or pricing data in the rate proposal

for the following contract term.

(b) Cost analysis shall be used for

contracts where premiums and

subscription income are determined on

the basis of experience rating.

(c)(1) A combination of cost and price

analysis shall be used for contracts

where premiums and subscription

income are based on community rates.

For contracts for which the FEHBP

premiums for the contract term will be

less than $500,000, OPM shall not

require the carrier to provide cost or

pricing data. The carrier must submit

only a rate proposal and abbreviated

utilization data for the applicable

contract year. OPM will evaluate the

proposed rates by performing a basic

reasonableness test on the information

submitted. Rates failing this test will be

subject to further review.

(2) For contracts with fewer than

1,500 enrollee contracts for which the

FEHBP premiums for the contract term

will be $500,000 or more, OPM shall

require the carrier to submit its rate

proposal, utilization data, and the

certificate of accurate cost or pricing

data required in 1615.804–70. In

addition, OPM shall require the carrier

to complete the proposed rates form

containing cost and pricing data, and

the Community Rate Questionnaire, but

shall not require the carrier to send

these documents to OPM. The carrier

shall keep the documents on file for

periodic auditor and actuarial review in

accordance with 1652.204–70. OPM

shall perform a basic reasonableness test

on the data submitted. Rates that do not

pass this test shall be subject to further

OPM review.

(3) For contracts with 1,500 or more

enrollee contracts for which the FEHBP

premiums for the contract term will be

at least $500,000, OPM shall require the

carrier to provide the data and

methodology used to determine the

FEHBP rates. OPM shall also require the

data and methodology used to

determine the rates for the carrier’s

similarly sized subscriber groups. The

carrier shall provide cost or pricing data

required by OPM in its rate instructions

for the applicable contract period. OPM

shall evaluate the data to ensure that the
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Rules and Regulations 47575

rate is reasonable and consistent with

the requirements in this chapter. If

necessary, OPM may require the carrier

to provide additional documentation.

(4) Contracts shall be subject to a

downward price adjustment if OPM

determines that the Federal group was

charged more than it would have been

charged using a methodology consistent

with that used for the SSSGs. Such

adjustments shall be based on the lower

of the two rates determined by using the

methodology (including discounts) the

Carrier used for the two SSSGs.

(5) FEHBP community rated carriers

shall comply with SSSG criteria

provided by OPM in the rate

instructions for the applicable contract

period.

(d) The application of FAR

15.802(b)(2) should not be construed to

prohibit the consideration of preceding

year surpluses or deficits in carrier-held

reserves in the rate adjustments for

subsequent year renewals of contracts

based, in whole or in part, on cost

analysis.

8. Section 1615.804–70 is revised to

read as follows:

1615.804–70 Certificate of cost or pricing

data for community rated carriers.

The contracting officer shall require a

carrier with a contract meeting the

requirements in 1615.802(c)(2) or

1615.802(c)(3) to execute the Certificate

of Accurate Cost or Pricing Data

contained in this section. A carrier with

a contract meeting the requirements in

1615.802(c)(2) shall complete the

Certificate and keep it on file at the

carrier’s place of business in accordance

with 1652.204–70. A carrier with a

contract meeting the requirements in

1615.802(c)(3) shall submit the

Certificate to OPM along with its rate

reconciliation, which is submitted

during the first quarter of the applicable

contract year.

Certificate of Accurate Cost or Pricing Data

for Community Rated Carriers

This is to certify that, to the best of my

knowledge and belief: (1) The cost or pricing

data submitted (or, if not submitted,

maintained and identified by the carrier as

supporting documentation) to the

Contracting Officer or the Contracting

Officer’s representative or designee, in

support of the lllll* FEHBP rates were

developed in accordance with the

requirements of 48 CFR Chapter 16 and the

FEHBP contract and are accurate, complete,

and current as of the date this certificate is

executed; and (2) the methodology used to

determine the FEHBP rates is consistent with

the methodology used to determine the rates

for the carrier’s Similarly Sized Subscriber

Groups.

Firm: llllllllllllllllll

Name: lllllllllllllllll

Signature: llllllllllllllll

Date of Execution: llllllllllll

* Insert the year for which the rates apply.

Normally, this will be the year for which the

rates are being reconciled.

(End of Certificate)

1615.804–7 [Removed and reserved]

9. Section 1615.804–71 is removed

and reserved.

10. Section 1615.804–72 is revised to

read as follows:

1615.804–72 Rate reduction for defective

pricing or defective cost or pricing data.

The clause set forth in section

1652.215–70 shall be inserted in FEHBP

contracts for $500,000 or more that are

based on a combination of cost and

price analysis (community rated).

11. Paragraph (a) of section 1615.805–

70 is revised to read as follows:

1615.805–70 Carrier investment of FEHB

funds.

(a) This paragraph does not apply to

contracts based on a combination of cost

and price analysis (community rated).

* * * * *

PART 1616—TYPES OF CONTRACTS

12. Section 1616.102, is revised to

read as follows:

1616.102 Policies.

All FEHBP contracts shall be

negotiated benefits contracts.

Subpart 1616.2 [Removed]

13. Subpart 1616.2 is removed and

subpart 1616.70 is added to read as

follows:

Subpart 1616.70—Negotiated Benefits

Contracts

1616.7001 Clause—contracts based on a

combination of cost and price analysis

(community rated).

The clause at section 1652.216–70

shall be inserted in all FEHBP contracts

based on a combination of cost and

price analysis (community rated).

1616.7002 Clause—contracts based on

cost analysis (experience rated).

The clause at section 1652.216–71

shall be inserted in all FEHBP contracts

based on cost analysis (experience

rated).

SUBCHAPTER E—GENERAL

CONTRACTING REQUIREMENTS

14. In Subchapter E, part 1629 is

added to read as follows:

PART 1629—TAXES

Subpart 1629.4—Contract Clauses

Sec.

1629.402 Foreign contracts.

Authority: 5 U.S.C. 8913; 40 U.S.C. 486(c);

48 CFR 1.301.

Subpart 1629.4—Contract Clauses

1629.402 Foreign contracts.

The clause set forth in section

1652.229–70 shall be inserted in all

FEHBP contracts performed outside the

United States, its possessions, and

Puerto Rico.

PART 1631—CONTRACT COST

PRINCIPLES AND PROCEDURES

15. In subpart 1631.2, section

1631.205–75, paragraph (b), is revised to

read as follows:

1631.205–75 Selling costs.

* * * * *

(b) Selling costs are allowable costs to

FEHBP contracts to the extent that they

are necessary for conducting annual

contract negotiations with the

Government and for liaison activities

necessary for ongoing contract

administration. Personnel and related

travel costs are allowable for attendance

at Open Season Health fairs and other

similar activities at which carriers give

enrollees information about their

choices among health plans (but see

FAR 31.205–1 ‘‘Public relations and

advertising costs’’, and The Federal

Employees Health Benefits Handbook

for Personnel and Payroll Offices,

Subchapter S2–3(f) ‘‘Controlling

contacts between employees and

carriers’’).

SUBCHAPTER G—CONTRACT

MANAGEMENT

16. In Subchapter G, part 1643 is

added to read as follows:

PART 1643—CONTRACT

MODIFICATIONS

Subpart 1643.2—Changes

Sec.

1643.205–70 Contract clause.

Authority: 5 U.S.C. 8913; 40 U.S.C. 486(c);

48 CFR 1.301.

Subpart 1643.2—Changes

1643.205–70 Contract clause.

The clause set forth in section

1652.243–70 shall be inserted in all

FEHB Program contracts.

PART 1644—SUBCONTRACTING

POLICIES AND PROCEDURES

17. In Subpart 1644.1, section

1644.170 is revised to read as follows:

1644.170 Policy for FEHBP subcontracting

consent.

For all experience rated FEHBP

contracts, advance approval shall be
47576 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Rules and Regulations

required on subcontracts or

modifications to subcontracts when the

amount charged against the FEHBP

contract exceeds $100,000 and is at least

25 percent of the total cost of the

subcontract.

18. In Subpart 1644.2, section

1644.270 is revised to read as follows:

1644.270 FEHBP contract clause.

The clause set forth at section

1652.244–70 shall be inserted in all

experience rated FEHBP contracts.

19. Part 1645 is added to read as

follows:

PART 1645—GOVERNMENT

PROPERTY

Subpart 1645.3—Providing Equipment

Sec.

1645.303–70 Contract clause.

Authority: 5 U.S.C. 8913; 40 U.S.C. 486(c);

48 CFR 1.301.

Subpart 1645.3—Providing Equipment

1645.303–70 Contract clause.

The clause set forth in section

1652.245–70 shall be inserted in all

FEHB Program contracts.

PART 1649—TERMINATION OF

CONTRACTS

20. In subpart 1649.1, sections

1649.101–71 and 1649.101–72 are

added to read as follows:

1649.101–71 FEHBP termination for

convenience clause.

The clause set forth in 1652.249–71

shall be inserted in all FEHBP contracts.

1649.101–72 FEHBP termination for

default clause.

The clause set forth in 1652.249–72

shall be inserted in all FEHBP contracts.

SUBCHAPTER H—CLAUSES AND

FORMS

PART 1652—CONTRACT CLAUSES

21. In part 1652, section 1652.000 is

revised to read as follows:

1652.000 Applicable clauses.

The clauses of FAR subpart 52.2 shall

be applicable to FEHBP contracts as

specified in the FEHBAR Clause Matrix

in subpart 1652.3.

Section and Clause Title

52.202–1 Definitions.

52.203–3 Gratuities.

52.203–5 Covenant Against Contingent

Fees.

52.203–7 Anti-Kickback Procedures.

52.203–12 Limitation on Payments to

Influence Certain Federal Transactions.

52.209–6 Protecting the Government’s

Interest When Subcontracting With

Contractors Debarred, Suspended, or

Proposed for Debarment.

52.215–2 Audit and Records—Negotiation.

52.215–22 Price Reduction for Defective

Cost or Pricing Data.

52.215–24 Subcontractor Cost or Pricing

Data.

52.215–27 Termination of Defined Benefit

Pension Plans.

52.215–30 Facilities Capital Cost of Money.

52.215–31 Waiver of Facilities Capital Cost

of Money.

52.215–39 Reversion or Adjustment of

Plans for Postretirement Benefits Other

Than Pensions (PRB).

52.219–8 Utilization of Small, Small

Disadvantaged and Women-Owned

Small Business Concerns.

52.222–1 Notice to the Government of

Labor Disputes.

52.222–3 Convict Labor.

52.222–4 Contract Work Hours and Safety

Standards Act—Overtime

Compensation—General.

52.222–21 Certification of Nonsegregated

Facilities.

52.222–26 Equal Opportunity.

52.222–28 Equal Opportunity Preaward

Clearance of Subcontracts.

52.222–29 Notification of Visa Denial.

52.222–35 Affirmative Action for Special

Disabled and Vietnam Era Veterans.

52.222–36 Affirmative Action for

Handicapped Workers.

52.222–37 Employment Reports on Special

Disabled Veterans and Veterans of the

Vietnam Era.

52.223–2 Clean Air and Water.

52.223–6 Drug-Free Workplace.

52.227–1 Authorization and Consent.

52.227–2 Notice and Assistance Regarding

Patent and Copyright Infringement.

52.229–3 Federal, State,and Local Taxes.

52.229–4 Federal, State, and Local Taxes

(Noncompetitive Contract).

52.229–5 Taxes—Contracts Performed in

U.S. Possessions or Puerto Rico.

52.230–2 Cost Accounting Standards.

52.230–3 Disclosure and Consistency of

Cost Accounting Practices.

52.230–5 Administration of Cost

Accounting Standards.

52.232–8 Discounts for Prompt Payment.

52.232–17 Interest.

52.232–23 Assignment of Claims.

52.232–33 Mandatory Information For

Electronic Funds Transfer Payment.

52.233–1 Disputes.

52.242–1 Notice of Intent to Disallow Costs.

52.242–3 Penalties for Unallowable Costs.

52.242–13 Bankruptcy.

52.244–5 Competition in Subcontracting.

52.244–6 Subcontracts for Commercial

Items and Commercial Components.

52.246–25 Limitation of Liability—Services.

52.247–63 Preference for U.S.-Flag Air

Carriers.

52.251–1 Government Supply Sources.

52.232–2 Clauses Incorporated by

Reference.

52.252–4 Alterations in Contract.

52.252–6 Authorized Deviations in Clauses.

22. In subpart 1652.2, section

1652.203–70 is amended by removing

the reference ‘‘1603.703’’ and adding in

its place ‘‘1603.7003,’’ sections

1652.204–70 and 1652.215–70 are

revised, section 1652.204–72 is

amended by adding a date in the clause

title.

1652.204–70 Contractor records retention.

As prescribed in 1604.705, the

following clause shall be inserted in all

FEHBP contracts.

Contractor Records Retention (Jan 1998)

Notwithstanding the provisions of section

5.7 (FAR 52.215–2(f)) ‘‘Audit and RecordsNegotiation,’’ the Carrier shall retain and

make available all records applicable to a

contract term that support the annual

statement of operations and, for contracts

that exceed the threshold at FAR 15.804–

2(a)(1), the rate submission for that contract

term for a period of 5 years after the end of

the contract term to which the records relate,

except that enrollee and/or patient claim

records shall be maintained for 3 years after

the end of the contract term to which the

claim records relate.

(End of Clause)

* * * * *

§ 1652.204–72 Filing Health Benefit

Claims/Court of Disputed Claims

* * * * *

Filing Health Benefit Claims/Court Review of

Disputed Claims (Mar 1995)

* * * * *

1652.215–70 Rate Reduction for Defective

Pricing or Defective Cost or Pricing Data.

As prescribed in 1615.804–72, the

following clause shall be inserted in

FEHBP contracts exceeding the

threshold at FAR 15.804–2(a)(1) that are

based on a combination of cost and

price analysis (community rated):

Rate Reduction for Defective Pricing or

Defective Cost or Pricing Data (Jan 1998)

(a) If any rate established in connection

with this contract was increased because (1)

the Carrier submitted, or kept in its files in

support of the FEHBP rate, cost or pricing

data that were not complete, accurate, or

current as certified in the Certificate of

Accurate Cost or Pricing Data (FEHBAR

1615.804–70); (2) the Carrier submitted, or

kept in its files in support of the FEHBP rate,

cost or pricing data that were not accurate as

represented in the rate proposal documents;

(3) the Carrier developed FEHBP rates with

a rating methodology and structure

inconsistent with that used to develop rates

for similarly sized subscriber groups (see

FEHBAR 1602.170–13) as certified in the

Certificate of Accurate Cost or Pricing Data

for Community Rated Carriers; or (4) the

Carrier submitted or, or kept in its files in

support of the FEHBP rate, data or

information of any description that were not

complete, accurate, and current—then, the

rate shall be reduced in the amount by which

the price was increased because of the

defective data or information.

(b)(1) If the Contracting Officer determines

under paragraph (a) of this clause that a price
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Rules and Regulations 47577

or cost reduction should be made, the Carrier

agrees not to raise the following matters as

a defense:

(i) The Carrier was a sole source supplier

or otherwise was in a superior bargaining

position and thus the price of the contract

would not have been modified even if

accurate, complete, and current cost or

pricing data had been submitted or

maintained and identified.

(ii) The Contracting Officer should have

known that the cost or pricing data in issue

were defective even though the Carrier took

no affirmative action to bring the character of

the data to the attention of the Contracting

Officer.

(iii) The contract was based on an

agreement about the total cost of the contract

and there was no agreement about the cost

of each item procured under the contract.

(iv) The Carrier did not submit or keep in

its files a Certificate of Current Cost or

Pricing Data.

(2)(i) Except as prohibited by subdivision

(b)(2)(ii) of this clause, an offset in an amount

determined appropriate by the Contracting

Officer based upon the facts shall be allowed

against the amount of a contract price

reduction if—

(A) The Carrier certifies to the Contracting

Officer that, to the best of the Carrier’s

knowledge and belief, the Carrier is entitled

to the offset in the amount requested; and

(B) The Carrier proves that the cost or

pricing data were available before the date of

agreement on the price of the contract (or

price of the modification) and that the data

were not submitted before such date.

(ii) An offset shall not be allowed if—

(A) The understated data was known by

the Carrier to be understated when the

Certificate of Current Cost or Pricing Data

was signed; or

(B) The Government proves that the facts

demonstrate that the contract price would

not have increased in the amount to be offset

even if the available data had been submitted

before the date of agreement on price.

(c) When the Contracting Officer

determines that the rates shall be reduced

and the Government is thereby entitled to a

refund, the Carrier shall be liable to and shall

pay the FEHB Fund at the time the

overpayment is repaid—

(1) Simple interest on the amount of the

overpayment from the date the overpayment

was paid from the FEHB Fund to the Carrier

until the date the overcharge is liquidated. In

calculating the amount of interest due, the

quarterly rate determinations by the

Secretary of the Treasury under the authority

of 26 U.S.C. 6621(a)(2) applicable to the

periods the overcharge was retained by the

Carrier shall be used; and,

(2) A penalty equal to the amount of

overpayment, if the Carrier knowingly

submitted cost or pricing data which was

incomplete, inaccurate, or noncurrent.

(End of Clause)

23. Section 1652.215–71 is amended

by removing ‘‘(Jan 1991)’’ from the title

Investment Income and adding in its

place ‘‘(Jan 1998)’’ and by revising

paragraph (f) to read as follows:

1652.215–71 Investment Income.

* * * * *

(f) The Carrier shall credit the Special

Reserve for income due in accordance with

this clause. All lost investment income

payable shall bear simple interest at the

quarterly rate determined by the Secretary of

the Treasury under the authority of 26 U.S.C.

6621(a)(2) applicable to the periods in which

the amount becomes due, as provided in

paragraphs (d) and (e) of this clause.

* * * * *

24. Section 1652.216–70 is revised to

read as follows:

1652.216–70 Accounting and price

adjustment.

As prescribed in section 1616.7001,

the following clause shall be inserted in

all FEHBP contracts based on a

combination of cost and price analysis

(community rated).

Accounting and Price Adjustment (JAN 1998)

(a) Annual Accounting Statement. The

Carrier, not later than 90 days after the end

of each contract period, shall furnish to OPM

for that contract period an accounting of its

operations under the contract. The

accounting shall be in the form prescribed by

OPM.

(b) Adjustment. (1) This contract is

community rated as defined in FEHBAR

1602.170–2.

(2) The subscription rates agreed to in this

contract shall be equivalent to the

subscription rates given to the carrier’s

similarly sized subscriber groups (SSSGs) as

defined in FEHBAR 1602.170–13.

(3) If, at the time of the rate reconciliation,

the subscription rates are found to be lower

than the equivalent rates for the lower of the

two SSSGs, the carrier may include an

adjustment to the Federal group’s rates for

the next contract period.

(4) If, at the time of the rate reconciliation,

the subscription rates are found to be higher

than the equivalent rates for the lower of the

two SSSGs, the Carrier shall reimburse the

Fund, for example, by reducing the FEHB

rates for the next contract term to reflect the

difference between the estimated rates and

the rates which are derived using the

methodology of the lower rated SSSG.

(5) No upward adjustment in the rate

established for this contract will be allowed

or considered by the Government or will be

made by the Carrier in this or in any other

contract period on the basis of actual costs

incurred, actual benefits provided, or actual

size or composition of the FEHBP group

during this contract period.

(6) In the event this contract is not

renewed, neither the Government nor the

Carrier shall be entitled to any adjustment or

claim for the difference between the

subscription rates prior to rate reconciliation

and the actual subscription rates.

(End of Clause)

25. In section 1652.216–71, the

introductory sentence is revised to read

as follows:

1652.216–71 Accounting and Allowable

Cost.

As prescribed in section 1616.7002,

the following clause shall be inserted in

all FEHBP contracts based on cost

analysis (experience rated).

* * * * *

26. Section 1652.229–70 is added to

read as follows:

1652.229–70 Taxes—Foreign Negotiated

benefits contracts.

As prescribed in section 1629.402, the

following clause shall be inserted in all

FEHBP contracts performed outside the

United States, its possessions, and

Puerto Rico:

Taxes—Foreign Negotiated Benefits Contracts

(Jan 1998)

(a) To the extent that this contract provides

for performing services outside the United

States, its possessions, and Puerto Rico, this

clause applies in lieu of any Federal, State,

and local taxes clause of the contract.

(b) ‘‘Contract date,’’ as used in this clause,

means the effective date of this contract or

modification.

‘‘Country concerned,’’ as used in this

clause, means any country, other than the

United States, its possessions, and Puerto

Rico, in which expenditures under this

contract are made.

‘‘Tax’’ and ‘‘taxes,’’ as used in this clause,

include fees and charges for doing business

that are levied by the government of the

country concerned or by its political

subdivisions.

‘‘All applicable taxes and duties,’’ as used

in this clause, means all taxes and duties, in

effect on the contract date, that the taxing

authority is imposing and collecting on the

transactions covered by this contract,

pursuant to written ruling or regulation in

effect on the contract date.

‘‘After-imposed tax,’’ as used in this clause,

means any new or increased tax or duty, or

tax that was exempted or excluded on the

contract date but whose exemption was later

revoked or reduced during the contract

period, other than excepted tax, on the

transactions covered by this contract that the

Carrier is required to pay or bear as the result

of legislative, judicial, or administrative

action taking effect after the contract date.

‘‘After-relieved tax,’’ as used in this clause,

means any amount of tax or duty, other than

an excepted tax, that would otherwise have

been payable on the transactions covered by

this contract, but which the Carrier is not

required to pay or bear, or for which the

Carrier obtains a refund, as the result of

legislative, judicial, or administrative action

taking effect after the contract date.

‘‘Excepted tax,’’ as used in this clause,

means social security or other employment

taxes, net income and franchise taxes, excess

profits taxes, capital stock taxes,

transportation taxes, unemployment

compensation taxes, and property taxes.

‘‘Excepted tax’’ does not include gross

income taxes levied on or measured by sales

or receipts from sales covered by this

contract, or any tax assessed on the Carrier’s

possession of, interest in, or use of property,

title to which is in the U.S. Government.
47578 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Rules and Regulations

(c) Unless otherwise provided in this

contract, the contract price includes all

applicable taxes and duties, except taxes and

duties that the Government of the United

States and the government of the country

concerned have agreed shall not be

applicable to expenditures in such country

by or on behalf of the United States.

(d) The contract price shall be increased by

the amount of any after-imposed tax or of any

tax or duty specifically excluded from the

contract price by a provision of this contract

that the Carrier is required to pay or bear,

including any interest or penalty, if the

Carrier states in writing that the contract

price does not include any contingency for

such tax and if liability for such tax, interest,

or penalty was not incurred through the

Carrier’s fault, negligence, or failure to follow

instructions of the Contracting Officer or to

comply with the provisions of paragraph (i)

below.

(e) The contract price shall be decreased by

the amount of any after-relieved tax,

including any interest or penalty. The

Government of the United States shall be

entitled to interest received by the Carrier

incident to a refund of taxes to the extent that

such interest was earned after the Carrier was

paid by the Government of the United States

for such taxes. The Government of the United

States shall be entitled to repayment of any

penalty refunded to the Carrier to the extent

that the penalty was paid by the Government.

(f) The contract price shall be decreased by

the amount of any tax or duty, other than an

excepted tax, that was included in the

contract and that the Carrier is required to

pay or bear, or does not obtain a refund of,

through the Carrier’s fault, negligence, or

failure to follow instructions of the

Contracting Officer or to comply with the

provisions of paragraph (i) below.

(g) No adjustment shall be made in the

contract price under this clause unless the

amount of the adjustment exceeds $250.

(h) If the Carrier obtains a reduction in tax

liability under the United States Internal

Revenue Code (Title 26, U.S. Code) because

of the payment of any tax or duty that either

was included in the contract price or was the

basis of an increase in the contract price, the

amount of the reduction shall be paid or

credited to the Government of the United

States as the Contracting Officer directs.

(i) The Carrier shall take all reasonable

action to obtain exemption from or refund of

any taxes or duties, including interest or

penalty, from which the United States

Government, the Carrier, any subcontractor,

or the transactions covered by this contract

are exempt under the laws of the country

concerned or its political subdivisions or

which the governments of the United States

and of the country concerned have agreed

shall not be applicable to expenditures in

such country by or on behalf of the United

States.

(j) The Carrier shall promptly notify the

Contracting Officer of all matters relating to

taxes or duties that reasonably may be

expected to result in either an increase or

decrease in the contract price and shall take

appropriate action as the Contracting Officer

directs. The contract price shall be equitably

adjusted to cover the costs of action taken by

the Carrier at the direction of the Contracting

Officer, including any interest, penalty, and

reasonable attorneys’ fees.

(End of clause)

27. Section 1652.232–70 is amended

by adding a date in the clause title to

read as follows:

1652.232–70 Payments—community rated

contracts.

* * * * *

Payments (Jan 1989)

* * * * *

28. In section 1652.232–71, paragraph

(c) is amended by removing ‘‘and/or

underwriter’’ and the clause title is

amended by adding a date to read as

follows:

1652.232–71 Payments—experience rated

contracts.

* * * * *

Payments (May 1992)

* * * * *

29. Section 1652.243–70 is added to

read as follows:

1652.243–70 Changes—Negotiated

benefits contracts.

As prescribed in section 1643.205–70,

the following clause shall be inserted in

all FEHBP contracts.

Changes—Negotiated Benefits Contracts (Jan

1998)

(a) The Contracting Officer may at any

time, by written order, and without notice to

the sureties, if any, make changes within the

general scope of this contract in any one or

more of the following:

(1) Description of services to be performed.

(2) Time of performance (i.e., hours of the

day, days of the week, etc.).

(3) Place of performance of the services.

(b) If any such change causes an increase

or decrease in the cost of, or the time

required for, performance of any part of the

work under this contract, whether or not

changed by the order, the Contracting Officer

shall make an equitable adjustment in the

contract price, the delivery schedule, or both,

and shall modify the contract.

(c) The Carrier must assert its right to an

adjustment under this clause within 30 days

from the date of receipt of the written order.

However, if the Contracting Officer decides

that the facts justify it, the Contracting

Officer may receive and act upon a proposal

submitted before final payment of the

contract.

(d) Failure to agree to any adjustment shall

be a dispute under the Disputes clause.

However, nothing in this clause shall excuse

the Carrier from proceeding with the contract

as changed.

(End of clause)

30. Section 1652.244–70 is amended

by revising the introductory paragraph,

clause date, and paragraph (a) of the

clause to read as follows:

1652.244–70 Subcontracts.

As prescribed by 1644.270, the

following clause shall be inserted in all

FEHBP contracts based on cost analysis

(experience rated):

Subcontracts (Jan 1998)

(a) The Carrier shall notify the Contracting

Officer reasonably in advance of entering into

any subcontract, or any subcontract

modification, or as otherwise specified by

this contract, if both the amount of the

subcontract or modification charged to the

FEHB Program exceeds $100,000 and is at

least 25 percent of the total cost of the

subcontract.

* * * * *

31. Section 1652.245–70 is added to

read as follows:

1652.245–70 Government property

(negotiated benefits contracts).

As prescribed in section 1645.303–70,

the following clause shall be inserted in

all FEHBP contracts.

Government Property (Negotiated Benefits

Contracts) (Jan 1998)

(a) Government-furnished property. (1) The

Government shall deliver to the Carrier, for

use in connection with and under the terms

of this contract, the Government-furnished

property described in this contract together

with any related data and information that

the Carrier may request and is reasonably

required for the intended use of the property

(hereinafter referred to as ‘‘Governmentfurnished property’’).

(2) The delivery or performance dates for

this contract are based upon the expectation

that Government-furnished property suitable

for use (except for property furnished ‘‘as-is’’)

will be delivered to the Carrier at the times

stated in this contract or, if not so stated, in

sufficient time to enable the Carrier to meet

the contract’s performance dates.

(3) If Government-furnished property is

received by the Carrier in a condition not

suitable for the intended use, the Carrier

shall, upon receipt of it, notify the

Contracting Officer, detailing the facts, and,

as directed by the Contracting Officer and at

Government expense, either repair, modify,

return, or otherwise dispose of the property.

After completing the directed action and

upon written request of the Carrier, the

Contracting Officer shall make an equitable

adjustment as provided in paragraph (h) of

this clause.

(b) Changes in Government-furnished

property. (1) The Contracting Officer may, by

written notice, (i) decrease the Governmentfurnished property provided or to be

provided under this contract, or (ii)

substitute other Government-furnished

property for the property to be provided by

the Government, or to be acquired by the

Carrier for the Government, under this

contract. The Carrier shall promptly take

such action as the Contracting Officer may

direct regarding the removal, shipment, or

disposal of the property covered by such

notice.

(2) Upon the Carrier’s written request, the

Contracting Officer shall make an equitable
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Rules and Regulations 47579

adjustment to the contract in accordance

with paragraph (h) of this clause, if the

Government has agreed in this contract to

make the property available for performing

this contract and there is any—

(i) Decrease or substitution in this property

pursuant to subparagraph (b)(1) above; or

(ii) Withdrawal of authority to use this

property, if provided under any other

contract or lease.

(c) Title in Government property. (1) The

Government shall retain title to all

Government-furnished property.

(2) All Government-furnished property and

all property acquired by the Carrier, title to

which vests in the Government under this

paragraph (collectively referred to as

‘‘Government property’’), are subject to the

provisions of this clause. Title to Government

property shall not be affected by its

incorporation into or attachment to any

property not owned by the Government, nor

shall Government property become a fixture

or lose its identity as personal property by

being attached to any real property.

(d) Use of Government property. The

Government property shall be used only for

performing this contract, unless otherwise

provided in this contract or approved by the

Contracting Officer.

(e) Property administration. (1) The Carrier

shall be responsible and accountable for all

Government property provided under this

contract and shall comply with Federal

Acquisition Regulation (FAR) subpart 45.5,

as in effect on the date of this contract.

(2) The Carrier shall establish and maintain

a program for the use, maintenance, repair,

protection, and preservation of Government

property in accordance with sound industrial

practice and the applicable provisions of

subpart 45.5 of the FAR.

(3) If damage occurs to Government

property, the risk of which has been assumed

by the Government under this contract, the

Government shall replace the items or the

Carrier shall make such repairs as the

Government directs. However, if the Carrier

cannot effect such repairs within the time

required, the Carrier shall dispose of the

property as directed by the Contracting

Officer. When any property for which the

Government is responsible is replaced or

repaired, the Contracting Officer shall make

an equitable adjustment in accordance with

paragraph (h) of this clause.

(4) The Carrier represents that the contract

price does not include any amount for repairs

or replacement for which the Government is

responsible. Repair or replacement of

property for which the Carrier is responsible

shall be accomplished by the Carrier at its

own expense.

(f) Access. The Government and all its

designees shall have access at all reasonable

times to the premises in which any

Government property is located for the

purpose of inspecting the Government

property.

(g) Risk of loss. Unless otherwise provided

in this contract, the Carrier assumes the risk

of, and shall be responsible for, any loss or

destruction of, or damage to, Government

property upon its delivery to the Carrier.

However, the Carrier is not responsible for

reasonable wear and tear to Government

property or for Government property

properly consumed in performing this

contract.

(h) Equitable adjustment. When this clause

specifies an equitable adjustment, it shall be

made to any affected contract provision in

accordance with the procedures of the

Changes clause. When appropriate, the

Contracting Officer may initiate an equitable

adjustment in favor of the Government. The

right to an equitable adjustment shall be the

Carrier’s exclusive remedy. The Government

shall not be liable to suit for breach of

contract for—

(1) Any delay in delivery of Governmentfurnished property;

(2) Delivery of Government-furnished

property in a condition not suitable for its

intended use;

(3) A decrease in or substitution of

Government-furnished property; or

(4) Failure to repair or replace Government

property for which the Government is

responsible.

(i) Final accounting and disposition of

Government property. Upon completing this

contract, or at such earlier dates as may be

fixed by the Contracting Officer, the Carrier

shall submit, in a form acceptable to the

Contracting Officer, inventory schedules

covering all items of Government property

(including any resulting scrap) not consumed

in performing this contract or delivered to

the Government. The Carrier shall prepare for

shipment, deliver f.o.b. origin, or dispose of

the Government property as may be directed

or authorized by the Contracting Officer. The

net proceeds of any such disposal shall be

credited to the contract price or shall be paid

to the Government as the Contracting Officer

directs.

(j) Abandonment and restoration of

Carrier’s premises. Unless otherwise

provided herein, the Government—

(1) May abandon any Government property

in place, at which time all obligations of the

Government regarding such abandoned

property shall cease; and

(2) Has no obligation to restore or

rehabilitate the Carrier’s premises under any

circumstances (e.g., abandonment,

disposition upon completion of need, or

upon contract completion). However, if the

Government-furnished property is

withdrawn or is unsuitable for the intended

use, or if other Government property is

substituted, then the equitable adjustment

under paragraph (h) of this clause may

properly include restoration or rehabilitation

costs.

(k) Communications. All communications

under this clause shall be in writing.

(l) Overseas contracts. If this contract is to

be performed outside of the United States of

America, its territories, or possessions, the

words ‘‘Government’’ and ‘‘Governmentfurnished’’ (wherever they appear in this

clause) shall be construed as ‘‘United States

Government’’ and ‘‘United States

Government-furnished’’, respectively.

(End of clause)

32. In Subpart 1652.2, new sections

1652.249–71 and 1652.249–72 are

added to read as follows:

1652.249–71 FEHBP termination for

convenience of the government—

negotiated benefits contracts.

As prescribed in section 1649.101–71,

the following clause shall be inserted in

all FEHBP contracts.

FEHBP Termination for Convenience of the

Government—Negotiated Benefits Contracts

(Jan 1998)

(a) The Government may terminate

performance of work under this contract in

whole or, from time to time, in part if the

Contracting Officer determines that a

termination is in the Government’s interest.

The Contracting Officer shall terminate by

delivering to the Carrier a Notice of

Termination specifying the extent of

terminating and the effective date.

(b) After receipt of a Notice of Termination,

and except as directed by the Contracting

Officer, the Carrier shall immediately

proceed with the following obligations,

regardless of any delay in determining or

adjusting any amounts due under this clause:

(1) Stop work as specified in the notice.

(2) Place no further subcontracts except as

necessary to complete the continued portion

of the contract.

(3) Terminate all subcontracts to the extent

they relate to the work terminated.

(4) Assign to the Government, as directed

by the Contracting Officer, all right, title, and

interest of the Carrier under the subcontracts

terminated, in which case the Government

shall have the right to settle or to pay any

termination settlement proposal arising out

of those terminations.

(5) With approval or ratification to the

extent required by the Contracting Officer,

settle all outstanding liabilities and

termination settlement proposals arising from

the termination of subcontracts; the approval

or ratification will be final for purposes of

this clause.

(6) As directed by the Contracting Officer,

deliver to the Government any data, reports,

or studies that, if the contract had been

completed, would be required to be

furnished to the Government.

(7) Complete performance of the work not

terminated.

(c) After termination, the Carrier shall

submit a final termination settlement

proposal to the Contracting Officer in the

form and with the certification prescribed by

the Contracting Officer. The Carrier shall

submit the proposal promptly, but no later

than 1 year from the effective date of

termination, unless extended in writing by

the Contracting Officer upon written request

of the Carrier within this 1-year period.

However, if the Contracting Officer

determines that the facts justify it, a

termination settlement proposal may be

received and acted on after 1 year or any

extension. If the Carrier fails to submit the

proposal within the time allowed, the

Contracting Officer may determine, on the

basis of information available, the amount, if

any, due the Carrier because of the

termination and shall pay the amount

determined.

(d) Subject to paragraph (c) of this clause,

the Carrier and the Contracting Officer may

agree upon the whole or any part of the
47580 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Rules and Regulations

amount to be paid or remaining to be paid

because of the termination. The amount may

include a reasonable allowance for profit on

work done. However, the agreed amount,

whether under this paragraph (d) or

paragraph (e) of this clause, exclusive of costs

shown in subparagraph (e)(3) of this clause,

may not exceed the total contract price as

reduced by (1) the amount of payments

previously made and (2) the contract price of

work not terminated. The contract shall be

modified, and the Carrier paid the agreed

amount. Paragraph (e) of this clause shall not

limit, restrict, or affect the amount that may

be agreed upon to be paid under this

paragraph.

(e) If the Carrier and the Contracting

Officer fail to agree on the whole amount to

be paid because of the termination of work,

the Contracting Officer shall pay the Carrier

the amounts determined by the Contracting

Officer as follows, but without duplication of

any amounts agreed on under paragraph (d)

above:

(1) The contract price for completed

services accepted by the Government not

previously paid for.

(2) The total of—

(i) The costs incurred in the performance

of the work terminated, including initial

costs and preparatory expense allocable

thereto, but excluding any costs attributable

to services paid or to be paid under

paragraph (e)(1) of this clause;

(ii) The cost of settling and paying

termination settlement proposals under

terminated subcontracts that are properly

chargeable to the terminated portion of the

contract if not included in subdivision

(e)(2)(i) of this clause; and

(iii) A sum, as profit on subdivision

(e)(2)(i) of this clause, determined by the

Contracting Officer under 49.202 of the

Federal Acquisition Regulation, in effect on

the date of this contract, to be fair and

reasonable.

(3) The reasonable costs of settlement of

the work terminated, including—

(i) Accounting, legal, clerical, and other

expenses reasonably necessary for the

preparation of termination settlement

proposals and supporting data;

(ii) The termination and settlement of

subcontracts (excluding the amounts of such

settlements); and

(f) The cost principles and procedures of

part 31 of the Federal Acquisition Regulation,

in effect on the date of this contract, shall

govern all costs claimed, agreed to, or

determined under this clause.

(g) The Carrier shall have the right of

appeal, under the Disputes clause, from any

determination made by the Contracting

Officer under paragraph (c), (e), or (i) of this

clause, except that if the Carrier failed to

submit the termination settlement proposal

or request for equitable adjustment within

the time provided in paragraph (c) or (i),

respectively, and failed to request a time

extension, there is no right of appeal.

(h) In arriving at the amount due the

Carrier under this clause, there shall be

deducted—

(1) All unliquidated advance or other

payments to the Carrier under the terminated

portion of this contract;

(2) Any claim which the Government has

against the Carrier under this contract; and

(i) If the termination is partial, the Carrier

may file a proposal with the Contracting

Officer for an equitable adjustment of the

price(s) of the continued portion of the

contract. The Contracting Officer shall make

any equitable adjustment agreed upon. Any

proposal by the Carrier for an equitable

adjustment under this clause shall be

requested within 90 days from the effective

date of termination unless extended in

writing by the Contracting Officer.

(j)(1) The Government may, under the

terms and conditions it prescribes, make

partial payments and payments against costs

incurred by the Carrier for the terminated

portion of the contract, if the Contracting

Officer believes the total of these payments

will not exceed the amount to which the

Carrier will be entitled.

(2) If the total payments exceed the amount

finally determined to be due, the Carrier shall

repay the excess to the Government upon

demand, together with interest computed at

the rate established by the Secretary of the

Treasury under 50 U.S.C. App. 1215(b)(2).

Interest shall be computed for the period

from the date the excess payment is received

by the Carrier to the date the excess is repaid.

(k) Unless otherwise provided in this

contract or by statute, the Carrier shall

maintain all records and documents relating

to the terminated portion of this contract for

3 years after final settlement. This includes

all books and other evidence bearing on the

Carrier’s costs and expenses under this

contract. The Carrier shall make these

records and documents available to the

Government, at the Carrier’s office, at all

reasonable times, without any direct charge.

If approved by the Contracting Officer,

photographs, microphotographs, or other

authentic reproductions may be maintained

instead of original records and documents.

(End of clause)

1652.249–72 FEHBP termination for

default—negotiated benefits contracts.

As prescribed in § 1649.101–72, the

following clause shall be inserted in all

FEHBP contracts.

FEHBP Termination for Default—Negotiated

Benefits Contracts (Jan 1998)

(a) (1) The Government may, subject to

paragraphs (c) and (d) below, by written

notice of default to the Carrier, terminate this

contract in whole or in part if the Carrier fails

to—

(i) Perform the services within the time

specified in this contract or any extension;

(ii) Make progress, so as to endanger

performance of this contract (but see

subparagraph (a)(2) below); or

(iii) Perform any of the other provisions of

this contract (but see subparagraph (a)(2)

below).

(2) The Government’s right to terminate

this contract under subdivisions (1)(ii) and

(1)(iii) above, may be exercised if the Carrier

does not cure such failure within 10 days (or

more if authorized in writing by the

Contracting Officer) after receipt of the notice

from the Contracting Officer specifying the

failure.

(b) If the Government terminates this

contract in whole or in part, it may acquire,

under the terms and in the manner the

Contracting Officer considers appropriate,

supplies or service similar to those

terminated, and the Carrier will be liable to

the Government for any excess costs for those

supplies or services. However, the Carrier

shall continue the work not terminated.

(c) Except for defaults of subcontractors at

any tier, the Carrier shall not be liable for any

excess costs if the failure to perform the

contract arises from causes beyond the

control and without the fault or negligence of

the Carrier. Examples of such causes include

(1) acts of God or of the public enemy, (2)

acts of the Government in either its sovereign

or contractual capacity, (3) fires, (4) floods,

(5) epidemics, (6) quarantine restrictions, (7)

strikes, (8) freight embargoes, and (9)

unusually severe weather. In each instance

the failure to perform must be beyond the

control and without the fault or negligence of

the Carrier.

(d) If the failure to perform is caused by the

default of a subcontractor at any tier, and if

the cause of the default is beyond the control

of both the Carrier and subcontractor, and

without the fault or negligence of either, the

Carrier shall not be liable for any excess costs

for failure to perform, unless the

subcontracted supplies or services were

obtainable from other sources in sufficient

time for the Carrier to meet the required

delivery schedule.

(e) If this contract is terminated for default,

the Government may require the Carrier to

transfer title and deliver to the Government,

as directed by the Contracting Officer, any

completed or partially completed

information and contract rights that the

Carrier has specifically produced or acquired

for the terminated portion of this contract.

(f) If, after termination, it is determined

that the Carrier was not in default, or that the

default was excusable, the rights and

obligations of the parties shall be the same

as if the termination had been issued for the

convenience of the Government.

(g) The rights and remedies of the

Government in this clause are in addition to

any other rights and remedies provided by

law or under this contract.

(End of clause)

Subpart 1652.3—FEHBP Clause Matrix

33. In subpart 1652.3, § 1652.370

paragraph (a) is amended by removing

the words ‘‘established catalog or

market price’’ in the first sentence and

adding in its place the words ‘‘a

combination of cost and price analysis;’’

and by revising the FEHBP Clause

Matrix to read as follows:

1652.370 Use of the matrix.

* * * * *
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Rules and Regulations 47581

FEHBP CLAUSE MATRIX

Clause No. Text reference Title Use status

Use with experience

rated contracts

Use with

community

rated contracts

FAR 52.202–1 ................. FAR 2.2 ................................................ Definitions ........................ M T T

FAR 52.203–3 ................. FAR 3.202 ............................................ Gratuities ......................... M T T

FAR 52.203–5 ................. FAR 3.404(c) ........................................ Covenant Against Contingent Fees.M T T

FAR 52.203–7 ................. FAR 3.502–3 ........................................ Anti-Kickback Procedures M T T

FAR 52.203–12 ............... FAR 3.808 ............................................ Limitation on Payments to

Influence Certain Federal Transactions.

M T T

1652.203–70 .................... 1603.703 ............................................... Misleading, Deceptive, or

Unfair Advertising.

M T T

1652.204–70 .................... 1604.705 ............................................... Contractor Records Retention.M T T

1652.204–71 .................... 1604.7001 ............................................. Coordination of Benefits .. M T T

1652.204–72 .................... 1604.7101 ............................................. Filing Health Benefit

Claims/Court Review of

Disputed Claims.

M T T

FAR 52.209–6 ................. FAR 9.409(b) ........................................ Protecting the Government’s Interest When

Subcontracting With

Contractors Debarred,

Suspended, or Proposed for Debarment.

M T T

FAR 52.215–2 ................. FAR 15.105–2(b) .................................. Audit & Records—Negotiations.M T T

FAR 52.215–22 ............... FAR 15.804–8(a) .................................. Price Reduction for Defective Cost or Pricing

Data.

M T

FAR 52.215–24 ............... FAR 15.804–8(c) .................................. Subcontractor Cost or

Pricing Data.

M T

FAR 52.215–27 ............... FAR 15.804–8(e) .................................. Termination of Defined

Benefit Pension Plans.

M T

FAR 52.215–30 ............... FAR 15.904(a) ...................................... Facilities Capital Cost of

Money.

M T

FAR 52.215–31 ............... FAR 15.904(b) ...................................... Waiver of Facilities Capital Cost of Money.A T

FAR 52.215–39 ............... FAR 15.804–8(f) ................................... Reversion or Adjustment

of Plans for Post Retirement Benefits Other

Than Pensions (PRB).

M T

FAR 52.215–70 ............... 1615.804–72 ......................................... Rate Reduction for Defective Pricing or Defective

Cost or Pricing Data.

M T

1652.215–71 .................... 1615.805–71 ......................................... Investment Income .......... M T

1652.216–70 .................... 1616.7001 ............................................. Accounting and Price Adjustment.M T

1652.216–71 .................... 1616.7002 ............................................. Accounting and Allowable

Cost.

M T

FAR 52.219–8 ................. FAR 19.708(a) ...................................... Utilization of Small, Small

Disadvantaged and

Women-Owned Small

Business Concerns.

M T T

FAR 52.222–1 ................. FAR 22.103–5(a) .................................. Notice to the Government

of Labor Disputes.

M T T

FAR 52.222–3 ................. FAR 22.202 .......................................... Convict Labor .................. M T T

FAR 52.222–4 ................. FAR 22.305(a) ...................................... Contract Work Hours and

Safety Standards Act—

Overtime Compensation—General.

M T T

FAR 52.222–21 ............... FAR 22.810(a)(1) .................................. Certification of Nonsegregated Facilities.M T T

FAR 52.222–26 ............... FAR 22.810(a) ...................................... Equal Opportunity ............ M T T

FAR 52.222–28 ............... FAR 22.810(g) ...................................... Equal Opportunity

Preaward Clearance of

Subcontracts.

M T T

FAR 52.222–29 ............... FAR 22.810(h) ...................................... Notification of Visa Denial A T T

FAR 52.222–35 ............... FAR 22.1308(a) .................................... Affirmative Action for

Special Disabled and

Vietnam Era Veterans.

M T T
47582 Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Rules and Regulations

FEHBP CLAUSE MATRIX—Continued

Clause No. Text reference Title Use status

Use with experience

rated contracts

Use with

community

rated contracts

FAR 52.222–36 ............... FAR 22.1408(a) .................................... Affirmative Action for

Handicapped Workers.

M T T

FAR 52.222–37 ............... FAR 22.1308(b) .................................... Employment Reports on

Special Disability Veterans of the Vietnam Era.

M T T

1652.222–70 .................... 1622.103–70 ......................................... Notice of Significant

Events.

M T T

FAR 52.223–2 ................. FAR 23.105(b) ...................................... Clean Air and Water ........ A T T

FAR 52.223–6 ................. FAR 23.505(b) ...................................... Drug-Free Workplace ...... A T T

1652.224–70 .................... 1624.104 ............................................... Confidentiality of Records M T T

FAR 52.227–1 ................. FAR 27.201–2(a) .................................. Authorization and Consent.M T T

FAR 52.227–2 ................. FAR 27.202–2 ...................................... Notice and Assistance

Regarding Patent and

Copyright Infringement.

M T T

FAR 52.229–3 ................. FAR 29.401–3 ...................................... Federal, State and Local

Taxes.

M T

FAR 52.229–4 ................. FAR 29.401–4 ...................................... Federal, State and Local

Taxes (Noncompetitive

Contract).

M T

FAR 52.229–5 ................. FAR 29.401–5 ...................................... Taxes—Contracts Performed in U.S. Possessions or Puerto Rico.A T T

1652.229-70 ..................... FEHBAR 1629.402 ............................... Taxes—Foreign Negotiated Benefits Contracts.A T T

FAR 52.230–2 ................. FAR 30.201–4(a)(1) .............................. Cost Accounting Standards.A T T

FAR 52.230–3– ............... FAR 30.201–4(b)(1) .............................. Disclosure and Consistency of Cost Accounting Practices.A T T

FAR 52.230–6 ................. FAR 30.201–4(d)(1) .............................. Administration of Cost Accounting Standards.A T T

FAR 52.232–8 ................. FAR 32.111(c)(1) .................................. Discounts for Prompt

Payment.

M T T

FAR 52.232–17 ............... FAR 32.617(a) Modification: 1632.617 Interest ............................. M T T

FAR 52.232–23 ............... FAR 32.806(a)(1) .................................. Assignment of Claims ..... A T T

FAR 52.232–33 ............... FAR 32.1103(a)&(c) ............................. Mandatory Information for

Electronic Funds Transfer Payment.

M T T

1652.232–70 .................... 1632.171 ............................................... Payments—Contracts

Without Letter of Credit

Payment Arrangements.

A T

1652.323–71 .................... 1632.172 ............................................... Payments—Contracts

With Letter of Credit

Payment Arrangements.

A T

1652.232–72 .................... 1632.772 ............................................... Non-Commingling of

FEHBP Funds.

M T

1652.232–73 .................... 1632.806–70 ......................................... Approval for Assignment

of Claims.

M T T

FAR 52.233–1 ................. FAR 33.215 .......................................... Disputes ........................... M T T

FAR 52.242–1 ................. FAR 42.802 .......................................... Notice of Intent to Disallow Costs.M T T

FAR 52.242–3 ................. FAR 42.709–6 ...................................... Penalties for Unallowable

Costs.

M T

FAR 52.242–13 ............... FAR 42.903 .......................................... Bankruptcy ....................... M T T

1652.243–70 .................... 1643.205–70 ......................................... Changes—Negotiated

Benefits Contracts.

M T T

FAR 52.244–5 ................. FAR 44.204(e) ...................................... Competition in Subcontracting.M T

FAR 52.244–6 ................. FAR 44.403 .......................................... Subcontracts for Commercial Items and

Commercial Components.

M T

1652.244–70 .................... 1644.270 ............................................... Subcontracts .................... M T

1652.245–70 .................... FAR 1645.303–70 ................................ Government Property

(Negotiated Benefits

Contracts).

M T T
Federal Register / Vol. 62, No. 175 / Wednesday, September 10, 1997 / Rules and Regulations 47583

FEHBP CLAUSE MATRIX—Continued

Clause No. Text reference Title Use status

Use with experience

rated contracts

Use with

community

rated contracts

FAR 52.246–25 ............... FAR 46.805(a)(4) .................................. Limitation of Liability—

Services.

M T

1652.246–70 .................... 1646.301 ............................................... FEHB Inspection ............. M T T

FAR 52.247–63 ............... FAR 47.405 .......................................... Preference for U.S.-Flag

Carriers.

M T T

1652.249–70 .................... 1649.101–70 ......................................... Renewal and Withdrawal

of Approval.

M T T

1652.249–71 .................... 1649.101–71 ......................................... FEHBP Termination for

Convenience of the

Government—Negotiated Benefits Contracts.

M T T

1652.249–72 .................... 1649.101–72 ......................................... FEHBP Termination for

Default—Negotiated

Benefits Contracts.

M T T

FAR 52.251–1 ................. FAR 51.107 .......................................... Government Supply

Sources.

M T

FAR 52.252–4 ................. FAR 52.107(d) ...................................... Alterations in Contract ..... M T T

FAR 52.252–6 ................. FAR 52.107(f) ....................................... Authorized Deviations in

Clauses.

M T T

PART 1653—FORMS [AMENDED]

34. Part 1653 is amended by removing

all references to § 53.215–2(b), § 53.301–

1412, and SF–1412 in the chart.

[FR Doc. 97–23883 Filed 9–9–97; 8:45 am]

BILLING CODE 6325–01–P

DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

49 CFR Parts 1121 and 1150

[STB Ex Parte No. 562]

Acquisition of Rail Lines Under 49

U.S.C. 10901 and 10902; Advance

Notice of Proposed Transaction

AGENCY: Surface Transportation Board.

ACTION: Final rule.

SUMMARY: The Surface Transportation

Board (Board), after reviewing public

comments filed pursuant to the notice of

proposed rulemaking, adopts a 60-day

notice requirement for certain

transactions in which rail lines are

transferred to a new owner or operator

under 49 U.S.C. 10901 and 10902. Final

regulations implementing the notice

requirement are set forth below.

EFFECTIVE DATE: October 10, 1997.

FOR FURTHER INFORMATION CONTACT:

Joseph H. Dettmar, (202) 565–1600.

(TDD for the hearing impaired: (202)

565–1695.)

SUPPLEMENTARY INFORMATION: By notice

of proposed rulemaking served and

published in the Federal Register on

May 1, 1997 (62 FR 23742–44), we

sought public comments on our

proposal to amend our exemption

procedures to establish a 60-day notice

to rail employees who work on rail lines

undergoing transfer to a new owner or

operator. We proposed that the notice

requirement would apply to

transactions processed pursuant to the

Board’s exemption authority from: (1)

49 U.S.C. 10902 for Class II rail carriers

to acquire or operate additional lines;

(2) 49 U.S.C. 10902 for Class III rail

carriers to acquire or operate additional

rail lines where the lines to be acquired

or operated, together with the acquiring

carrier’s existing lines, would produce

annual revenue exceeding $5 million; or

(3) 49 U.S.C. 10901 for noncarriers to

acquire or operate rail lines where the

lines to be acquired or operated would

produce annual revenue exceeding $5

million. A number of comments were

filed by interested parties, including

comments from railroads, railroad

associations, rail employee unions, and

members of both Houses of Congress.

Upon reviewing the comments, the

Board is adopting the proposal with

some modifications and clarifications

based on the public comments received.

Additional information is contained in

the Board’s decision served on [date of

service]. To purchase a copy of the

decision, write to, call, or pick up in

person from: DC News & Data, Inc. (202)

289–4357, 1925 K Street, N.W., Room

210, Washington, D.C. 20006.

(Assistance for the hearing impaired is

available through TDD services (202)

565–1695.)

List of Subjects

49 CFR Part 1121

Administrative practice and

procedure, Railroads.

49 CFR Part 1150

Administrative practice and

procedure, Railroads.

Decided: September 2, 1997.

By the Board, Chairman Morgan and Vice

Chairman Owen.

Vernon A. Williams,

Secretary.

For the reasons set forth in the

preamble, the Board amends title 49,

Chapter X, parts 1121 and 1150 of the

Code of Federal Regulations, to read as

follows:

PART 1121—RAIL EXEMPTION

PROCEDURES

1. The authority citation for part 1121

continues to read as follows:

Authority: 5 U.S.C. 553; 49 U.S.C. 10502

and 10704.

2. Section 1121.4 is amended by

adding a new paragraph (h) to read as

follows:

§ 1121.4 Procedures.

* * * * *

(h) In transactions for the acquisition

or operation of rail lines by Class II rail

carriers under 49 U.S.C. 10902, the

exemption may not become effective

until 60 days after applicant certifies to

the Board that it has posted at the

workplace of the employees on the

affected line(s) and served a notice of

the transaction on the national offices of