[Federal Register Volume 62, Number 175 (Wednesday, September 10, 1997)]
[Rules and Regulations]
[Pages 47569-47583]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-23883]


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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.

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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

[[Page 47570]]

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

[[Page 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 non-
SSSG 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

[[Page 47572]]

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 State-mandated 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-of-plan 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 (Fixed-Price 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

[[Page 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 Sec. 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.
* * * * *

[[Page 47574]]

    4. Sections 1602.170-10 through 1602.170-12 are redesignated as 
Secs. 1602.170-12 through 1602.170-14 respectively, Secs. 1602.170-5 
through 1602.170-9 are redesignated as Secs. 1602.170-6 through 
1602.170-10, new Secs. 1602.170-5 and 1602.170-11 are added, and newly 
redesignated Secs. 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 rate-setting 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

[[Page 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 __________* 
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:------------------------------------------------------------------
Name:------------------------------------------------------------------
Signature:-------------------------------------------------------------
Date of Execution:-----------------------------------------------------
    *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

[[Page 47576]]

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 Records-Negotiation,'' 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)
* * * * *


Sec. 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

[[Page 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.

[[Page 47578]]

    (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 ``Government-
furnished 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 
Government-furnished 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

[[Page 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 Government-furnished 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 ``Government-furnished'' 
(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

[[Page 47580]]

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 Sec. 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, Sec. 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.

* * * * *

[[Page 47581]]



                                                                   FEHBP Clause Matrix                                                                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            Use with experience     Use with community  
            Clause No.                  Text reference             Title                Use status            rated contracts         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       M                       T                       T                     
                                                            Contingent Fees.                                                                            
FAR 52.203-7......................  FAR 3.502-3..........  Anti-Kickback          M                       T                       T                     
                                                            Procedures.                                                                                 
FAR 52.203-12.....................  FAR 3.808............  Limitation on          M                       T                       T                     
                                                            Payments to                                                                                 
                                                            Influence Certain                                                                           
                                                            Federal Transactions.                                                                       
1652.203-70.......................  1603.703.............  Misleading,            M                       T                       T                     
                                                            Deceptive, or Unfair                                                                        
                                                            Advertising.                                                                                
1652.204-70.......................  1604.705.............  Contractor Records     M                       T                       T                     
                                                            Retention.                                                                                  
1652.204-71.......................  1604.7001............  Coordination of        M                       T                       T                     
                                                            Benefits.                                                                                   
1652.204-72.......................  1604.7101............  Filing Health Benefit  M                       T                       T                     
                                                            Claims/Court Review                                                                         
                                                            of Disputed Claims.                                                                         
FAR 52.209-6......................  FAR 9.409(b).........  Protecting the         M                       T                       T                     
                                                            Government's                                                                                
                                                            Interest When                                                                               
                                                            Subcontracting With                                                                         
                                                            Contractors                                                                                 
                                                            Debarred, Suspended,                                                                        
                                                            or Proposed for                                                                             
                                                            Debarment.                                                                                  
FAR 52.215-2......................  FAR 15.105-2(b)......  Audit & Records--      M                       T                       T                     
                                                            Negotiations.                                                                               
FAR 52.215-22.....................  FAR 15.804-8(a)......  Price Reduction for    M                       T                                             
                                                            Defective Cost or                                                                           
                                                            Pricing Data.                                                                               
FAR 52.215-24.....................  FAR 15.804-8(c)......  Subcontractor Cost or  M                       T                                             
                                                            Pricing Data.                                                                               
FAR 52.215-27.....................  FAR 15.804-8(e)......  Termination of         M                       T                                             
                                                            Defined Benefit                                                                             
                                                            Pension Plans.                                                                              
FAR 52.215-30.....................  FAR 15.904(a)........  Facilities Capital     M                       T                                             
                                                            Cost of Money.                                                                              
FAR 52.215-31.....................  FAR 15.904(b)........  Waiver of Facilities   A                       T                                             
                                                            Capital Cost of                                                                             
                                                            Money.                                                                                      
FAR 52.215-39.....................  FAR 15.804-8(f)......  Reversion or           M                       T                                             
                                                            Adjustment of Plans                                                                         
                                                            for Post Retirement                                                                         
                                                            Benefits Other Than                                                                         
                                                            Pensions (PRB).                                                                             
FAR 52.215-70.....................  1615.804-72..........  Rate Reduction for     M                       ......................  T                     
                                                            Defective Pricing or                                                                        
                                                            Defective Cost or                                                                           
                                                            Pricing Data.                                                                               
1652.215-71.......................  1615.805-71..........  Investment Income....  M                       T                                             
1652.216-70.......................  1616.7001............  Accounting and Price   M                                               T                     
                                                            Adjustment.                                                                                 
1652.216-71.......................  1616.7002............  Accounting and         M                       T                                             
                                                            Allowable Cost.                                                                             
FAR 52.219-8......................  FAR 19.708(a)........  Utilization of Small,  M                       T                       T                     
                                                            Small Disadvantaged                                                                         
                                                            and Women-Owned                                                                             
                                                            Small Business                                                                              
                                                            Concerns.                                                                                   
FAR 52.222-1......................  FAR 22.103-5(a)......  Notice to the          M                       T                       T                     
                                                            Government of Labor                                                                         
                                                            Disputes.                                                                                   
FAR 52.222-3......................  FAR 22.202...........  Convict Labor........  M                       T                       T                     
FAR 52.222-4......................  FAR 22.305(a)........  Contract Work Hours    M                       T                       T                     
                                                            and Safety Standards                                                                        
                                                            Act--Overtime                                                                               
                                                            Compensation--Genera                                                                        
                                                            l.                                                                                          
FAR 52.222-21.....................  FAR 22.810(a)(1).....  Certification of       M                       T                       T                     
                                                            Nonsegregated                                                                               
                                                            Facilities.                                                                                 
FAR 52.222-26.....................  FAR 22.810(a)........  Equal Opportunity....  M                       T                       T                     
FAR 52.222-28.....................  FAR 22.810(g)........  Equal Opportunity      M                       T                       T                     
                                                            Preaward Clearance                                                                          
                                                            of Subcontracts.                                                                            
FAR 52.222-29.....................  FAR 22.810(h)........  Notification of Visa   A                       T                       T                     
                                                            Denial.                                                                                     
FAR 52.222-35.....................  FAR 22.1308(a).......  Affirmative Action     M                       T                       T                     
                                                            for Special Disabled                                                                        
                                                            and Vietnam Era                                                                             
                                                            Veterans.                                                                                   

[[Page 47582]]

                                                                                                                                                        
FAR 52.222-36.....................  FAR 22.1408(a).......  Affirmative Action     M                       T                       T                     
                                                            for Handicapped                                                                             
                                                            Workers.                                                                                    
FAR 52.222-37.....................  FAR 22.1308(b).......  Employment Reports on  M                       T                       T                     
                                                            Special Disability                                                                          
                                                            Veterans of the                                                                             
                                                            Vietnam Era.                                                                                
1652.222-70.......................  1622.103-70..........  Notice of Significant  M                       T                       T                     
                                                            Events.                                                                                     
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     M                       T                       T                     
                                                            Records.                                                                                    
FAR 52.227-1......................  FAR 27.201-2(a)......  Authorization and      M                       T                       T                     
                                                            Consent.                                                                                    
FAR 52.227-2......................  FAR 27.202-2.........  Notice and Assistance  M                       T                       T                     
                                                            Regarding Patent and                                                                        
                                                            Copyright                                                                                   
                                                            Infringement.                                                                               
FAR 52.229-3......................  FAR 29.401-3.........  Federal, State and     M                                               T                     
                                                            Local Taxes.                                                                                
FAR 52.229-4......................  FAR 29.401-4.........  Federal, State and     M                       T                                             
                                                            Local Taxes                                                                                 
                                                            (Noncompetitive                                                                             
                                                            Contract).                                                                                  
FAR 52.229-5......................  FAR 29.401-5.........  Taxes--Contracts       A                       T                       T                     
                                                            Performed in U.S.                                                                           
                                                            Possessions or                                                                              
                                                            Puerto Rico.                                                                                
1652.229-70.......................  FEHBAR 1629.402......  Taxes--Foreign         A                       T                       T                     
                                                            Negotiated Benefits                                                                         
                                                            Contracts.                                                                                  
FAR 52.230-2......................  FAR 30.201-4(a)(1)...  Cost Accounting        A                       T                       T                     
                                                            Standards.                                                                                  
FAR 52.230-3-.....................  FAR 30.201-4(b)(1)...  Disclosure and         A                       T                       T                     
                                                            Consistency of Cost                                                                         
                                                            Accounting Practices.                                                                       
FAR 52.230-6......................  FAR 30.201-4(d)(1)...  Administration of      A                       T                       T                     
                                                            Cost Accounting                                                                             
                                                            Standards.                                                                                  
FAR 52.232-8......................  FAR 32.111(c)(1).....  Discounts for Prompt   M                       T                       T                     
                                                            Payment.                                                                                    
FAR 52.232-17.....................  FAR 32.617(a)          Interest.............  M                       T                       T                     
                                     Modification:                                                                                                      
                                     1632.617.                                                                                                          
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  M                       T                       T                     
                                                            for Electronic Funds                                                                        
                                                            Transfer Payment.                                                                           
1652.232-70.......................  1632.171.............  Payments--Contracts    A                                               T                     
                                                            Without Letter of                                                                           
                                                            Credit Payment                                                                              
                                                            Arrangements.                                                                               
1652.323-71.......................  1632.172.............  Payments--Contracts    A                       T                                             
                                                            With Letter of                                                                              
                                                            Credit Payment                                                                              
                                                            Arrangements.                                                                               
1652.232-72.......................  1632.772.............  Non-Commingling of     M                       T                                             
                                                            FEHBP Funds.                                                                                
1652.232-73.......................  1632.806-70..........  Approval for           M                       T                       T                     
                                                            Assignment of Claims.                                                                       
FAR 52.233-1......................  FAR 33.215...........  Disputes.............  M                       T                       T                     
FAR 52.242-1......................  FAR 42.802...........  Notice of Intent to    M                       T                       T                     
                                                            Disallow Costs.                                                                             
FAR 52.242-3......................  FAR 42.709-6.........  Penalties for          M                       T                                             
                                                            Unallowable Costs.                                                                          
FAR 52.242-13.....................  FAR 42.903...........  Bankruptcy...........  M                       T                       T                     
1652.243-70.......................  1643.205-70..........  Changes--Negotiated    M                       T                       T                     
                                                            Benefits Contracts.                                                                         
FAR 52.244-5......................  FAR 44.204(e)........  Competition in         M                       T                       ......................
                                                            Subcontracting.                                                                             
FAR 52.244-6......................  FAR 44.403...........  Subcontracts for       M                       T                                             
                                                            Commercial Items and                                                                        
                                                            Commercial                                                                                  
                                                            Components.                                                                                 
1652.244-70.......................  1644.270.............  Subcontracts.........  M                       T                                             
1652.245-70.......................  FAR 1645.303-70......  Government Property    M                       T                       T                     
                                                            (Negotiated Benefits                                                                        
                                                            Contracts).                                                                                 

[[Page 47583]]

                                                                                                                                                        
FAR 52.246-25.....................  FAR 46.805(a)(4).....  Limitation of          M                       T                                             
                                                            Liability--Services.                                                                        
1652.246-70.......................  1646.301.............  FEHB Inspection......  M                       T                       T                     
FAR 52.247-63.....................  FAR 47.405...........  Preference for U.S.-   M                       T                       T                     
                                                            Flag Carriers.                                                                              
1652.249-70.......................  1649.101-70..........  Renewal and            M                       T                       T                     
                                                            Withdrawal of                                                                               
                                                            Approval.                                                                                   
1652.249-71.......................  1649.101-71..........  FEHBP Termination for  M                       T                       T                     
                                                            Convenience of the                                                                          
                                                            Government--Negotiat                                                                        
                                                            ed Benefits                                                                                 
                                                            Contracts.                                                                                  
1652.249-72.......................  1649.101-72..........  FEHBP Termination for  M                       T                       T                     
                                                            Default--Negotiated                                                                         
                                                            Benefits Contracts.                                                                         
FAR 52.251-1......................  FAR 51.107...........  Government Supply      M                       T                                             
                                                            Sources.                                                                                    
FAR 52.252-4......................  FAR 52.107(d)........  Alterations in         M                       T                       T                     
                                                            Contract.                                                                                   
FAR 52.252-6......................  FAR 52.107(f)........  Authorized Deviations  M                       T                       T                     
                                                            in Clauses.                                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------

PART 1653--FORMS [AMENDED]

    34. Part 1653 is amended by removing all references to Sec. 53.215-
2(b), Sec. 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