64934 Federal Register / Vol. 62, No. 236 / Tuesday, December 9, 1997 / Rules and Regulations

file that may be necessary to determine

the merits of the protest; and

* * * * *

(h) Award of costs. (1) If the GAO

determines that a solicitation for a

contract, a proposed award, or an award

of a contract does not comply with a

statute or regulation, the GAO may

recommend that the agency pay to an

appropriate protester the cost, exclusive

of profit, of filing and pursuing the

protest, including reasonable attorney,

consultant, and expert witness fees, and

bid and proposal preparation costs. The

agency shall use funds available for the

procurement to pay the costs awarded.

(2) The protester shall file its claim for

costs with the contracting agency within

60 days after receipt of the GAO’s

recommendation that the agency pay the

protester its costs. Failure to file the

claim within that time may result in

forfeiture of the protester’s right to

recover its costs.

(3) The agency shall attempt to reach

an agreement on the amount of costs to

be paid. If the agency and the protester

are unable to agree on the amount to be

paid, the GAO may, upon request of the

protester, recommend to the agency the

amount of costs that the agency should

pay.

(4) Within 60 days after the GAO

recommends the amount of costs the

agency should pay the protester, the

agency shall notify the GAO of the

action taken by the agency in response

to the recommendation.

(5) No agency shall pay a party, other

than a small business concern within

the meaning of section 3(a) of the Small

Business Act (see 19.001, ‘‘Small

business concern’’), costs under

paragraph (h)(2) of this section

(i) For consultant and expert witness

fees that exceed the highest rate of

compensation for expert witnesses paid

by the Government pursuant to 5 U.S.C.

3109 and 5 CFR 304.105; or

(ii) For attorney’s fees that exceed

$150 per hour, unless the agency

determines, based on the

recommendation of the Comptroller

General on a case-by-case basis, that an

increase in the cost of living or a special

factor, such as the limited availability of

qualified attorneys for the proceedings

involved, justifies a higher fee. The cap

placed on attorneys’ fees for businesses,

other than small businesses, constitutes

a benchmark as to a ‘‘reasonable’’ level

for attorney’s fees for small businesses.

(6) Before paying a recommended

award of costs, agency personnel should

consult legal counsel. Section 33.104(h)

applies to all recommended awards of

costs that have not yet been paid.

(7) Any costs the contractor receives

under this section shall not be the

subject of subsequent proposals,

billings, or claims against the

Government, and those exclusions

should be reflected in the cost

agreement.

(8) If the Government pays costs, as

provided in paragraph (h)(1) of this

section, where a postaward protest is

sustained as the result of an awardee’s

intentional or negligent misstatement,

misrepresentation, or miscertification,

the Government may require the

awardee to reimburse the Government

the amount of such costs. In addition to

any other remedy available, and

pursuant to the requirements of subpart

32.6, the Government may collect this

debt by offsetting the amount against

any payment due the awardee under

any contract between the awardee and

the Government.

[FR Doc. 97–31823 Filed 12–8–97; 8:45 am]

BILLING CODE 6820–EP–P

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Parts 42 and 53

[FAC 97–03; FAR Case 95–034; Item XI]

RIN 9000–AH18

Federal Acquisition Regulation;

Novation and Related Agreements

AGENCIES: Department of Defense (DoD),

General Services Administration (GSA),

and National Aeronautics and Space

Administration (NASA).

ACTION: Final rule.

SUMMARY: The Civilian Agency

Acquisition Council and the Defense

Acquisition Regulations Council have

agreed on a final rule amending the

Federal Acquisition Regulation (FAR) to

facilitate the processing of novation and

related agreements. This regulatory

action was not subject to Office of

Management and Budget review under

Executive Order 12866, dated

September 30, 1993, and is not a major

rule under 5 U.S.C. 804.

EFFECTIVE DATE: February 9, 1998.

FOR FURTHER INFORMATION CONTACT: The

FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405, (202)

501–4755, for information pertaining to

status or publication schedules. For

clarification of content, contact Ms.

Linda Klein, Procurement Analyst, at

(202) 501–3775. Please cite FAC 97–03,

FAR case 95–034.

SUPPLEMENTARY INFORMATION:

A. Background

The purpose of this rule is to facilitate

the process of novating contracts and to

provide guidelines for contracting

officers, while preserving the

Government’s interests in business

combinations affecting its contracts. A

proposed rule was published in the

Federal Register on August 21, 1996 (61

FR 43294). Eighteen comments were

received from six respondents. All

comments were considered in the

development of the final rule.

B. Regulatory Flexibility Act

The Department of Defense, the

General Services Administration, and

the National Aeronautics and Space

Administration certify that this final

rule will not have a significant

economic impact on a substantial

number of small entities within the

meaning of the Regulatory Flexibility

Act, 5 U.S.C. 601, et seq., because

novation agreements generally affect

only a relatively small number of large

and small business entities.

C. Paperwork Reduction Act

The Paperwork Reduction Act does

not apply because the changes to the

FAR do not impose recordkeeping or

information collection requirements, or

collections of information from offerors,

contractors, or members of the public

which require the approval of the Office

of Management and Budget under 44

U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 42 and

53

Government procurement.

Dated: December 1, 1997.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR parts 42 and 53 are

amended as set forth below:

1. The authority citation for 48 CFR

parts 42 and 53 continues to read as

follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C.

chapter 137; and 42 U.S.C. 2473(c).

PART 42—CONTRACT

ADMINISTRATION

2. Section 42.1203 is amended by

revising paragraphs (b) and (c);

redesignating paragraphs (d) through (f)

as (f) through (h), respectively; and

adding new paragraphs (d) and (e) to

read as follows:

42.1203 Processing agreements.

* * * * *

(b) The responsible contracting officer

shall—
Federal Register / Vol. 62, No. 236 / Tuesday, December 9, 1997 / Rules and Regulations 64935

(1) Identify and request that the

contractor submit the information

necessary to evaluate the proposed

agreement for recognizing a successor in

interest or a name change. This

information should include the items

identified in 42.1204 (e) and (f) or

42.1205(a), as applicable;

(2) Notify each contract

administration office and contracting

office affected by a proposed agreement

for recognizing a successor in interest,

and provide those offices with a list of

all affected contracts; and

(3) Request submission of any

comments or objections to the proposed

transfer within 30 days after

notification. Any submission should be

accompanied by supporting

documentation.

(c) Upon receipt of the necessary

information, the responsible contracting

officer shall determine whether or not it

is in the Governments interest to

recognize the proposed successor in

interest on the basis of—

(1) The comments received from the

affected contract administration offices

and contracting offices;

(2) The proposed successor’s

responsibility under subpart 9.1,

Responsible Prospective Contractors;

and

(3) Any factor relating to the proposed

successor’s performance of contracts

with the Government that the

Government determines would impair

the proposed successor’s ability to

perform the contract satisfactorily.

(d) The execution of a novation

agreement does not preclude the use of

any other method available to the

contracting officer to resolve any other

issues related to a transfer of contractor

assets, including the treatment of costs.

(e) Any separate agreement between

the transferor and transferee regarding

the assumption of liabilities (e.g., longterm incentive compensation plans, cost

accounting standards noncompliances,

environmental cleanup costs, and final

overhead costs) should be referenced

specifically in the novation agreement.

* * * * *

3. Section 42.1204 is amended by—

a. Revising the section heading and

paragraph (a) introductory text, (a)(1),

and the introductory text of (a)(2);

b. Redesignating paragraphs (b), (c),

(d), and (e) as (c), (e), (h), and (i),

respectively;

c. Adding new paragraphs (b), (d), (f),

and (g); and

d. Revising newly redesignated

paragraph (e) to read as follows:

42.1204 Applicability of novation

agreements.

(a) 41 U.S.C. 15 prohibits transfer of

Government contracts from the

contractor to a third party. The

Government may, when in its interest,

recognize a third party as the successor

in interest to a Government contract

when the third party’s interest in the

contract arises out of the transfer of—

(1) All the contractor’s assets; or

(2) The entire portion of the assets

involved in performing the contract.

(See 14.404–2(l) for the effect of

novation agreements after bid opening

but before award.) Examples of such

transactions include, but are not limited

to—

* * * * *

(b) A novation agreement is

unnecessary when there is a change in

the ownership of a contractor as a result

of a stock purchase, with no legal

change in the contracting party, and

when that contracting party remains in

control of the assets and is the party

performing the contract. However,

whether there is a purchase of assets or

a stock purchase, there may be issues

related to the change in ownership that

appropriately should be addressed in a

formal agreement between the

contractor and the Government (see

42.1203(e)).

* * * * *

(d) When considering whether to

recognize a third party as a successor in

interest to Government contracts, the

responsible contracting officer shall

identify and evaluate any significant

organizational conflicts of interest in

accordance with subpart 9.5. If the

responsible contracting officer

determines that a conflict of interest

cannot be resolved, but that it is in the

best interest of the Government to

approve the novation request, a request

for a waiver may be submitted in

accordance with the procedures at

9.503.

(e) When a contractor asks the

Government to recognize a successor in

interest, the contractor shall submit to

the responsible contracting officer three

signed copies of the proposed novation

agreement and one copy each, as

applicable, of the following:

(1) The document describing the

proposed transaction, e.g., purchase/sale

agreement or memorandum of

understanding.

(2) A list of all affected contracts

between the transferor and the

Government, as of the date of sale or

transfer of assets, showing for each, as

of that date, the—

(i) Contract number and type;

(ii) Name and address of the

contracting office;

(iii) Total dollar value, as amended;

and

(iv) Approximate remaining unpaid

balance.

(3) Evidence of the transferee’s

capability to perform.

(4) Any other relevant information

requested by the responsible contracting

officer.

(f) Except as provided in paragraph (g)

of this section, the contractor shall

submit to the responsible contracting

officer one copy of each of the following

documents, as applicable, as the

documents become available:

(1) An authenticated copy of the

instrument effecting the transfer of

assets; e.g., bill of sale, certificate of

merger, contract, deed, agreement, or

court decree.

(2) A certified copy of each resolution

of the corporate parties’ boards of

directors authorizing the transfer of

assets.

(3) A certified copy of the minutes of

each corporate party’s stockholder

meeting necessary to approve the

transfer of assets.

(4) An authenticated copy of the

transferee’s certificate and articles of

incorporation, if a corporation was

formed for the purpose of receiving the

assets involved in performing the

Government contracts.

(5) The opinion of legal counsel for

the transferor and transferee stating that

the transfer was properly effected under

applicable law and the effective date of

transfer.

(6) Balance sheets of the transferor

and transferee as of the dates

immediately before and after the

transfer of assets, audited by

independent accountants.

(7) Evidence that any security

clearance requirements have been met.

(8) The consent of sureties on all

contracts listed under paragraph (e)(2)

of this section if bonds are required, or

a statement from the transferor that

none are required.

(g) If the Government has acquired the

documents during its participation in

the pre-merger or pre-acquisition review

process, or the Government’s interests

are adequately protected with an

alternative formulation of the

information, the responsible contracting

officer may modify the list of documents

to be submitted by the contractor.

NOVATION AGREEMENT

* * * * *

PART 53—FORMS

53.242–1 [Amended]

4. Section 53.242–1 is amended by

revising ‘‘42.1203(f)’’ to read

‘‘42.1203(h)’’.
64936 Federal Register / Vol. 62, No. 236 / Tuesday, December 9, 1997 / Rules and Regulations

53.243 [Amended]

5. Section 53.243 is amended by

revising ‘‘42.1203(f)’’ to read

‘‘42.1203(h)’’.

[FR Doc. 97–31824 Filed 12–8–97; 8:45 am]

BILLING CODE 6820–EP–P

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Part 47

[FAC 97–03; FAR Case 97–017; Item XII]

RIN 9000–AH78

Federal Acquisition Regulation;

Commercial Bills of Lading, Small

Package Shipments

AGENCIES: Department of Defense (DoD),

General Services Administration (GSA),

and National Aeronautics and Space

Administration (NASA).

ACTION: Final rule.

SUMMARY: The Civilian Agency

Acquisition Council and the Defense

Acquisition Regulations Council have

agreed on a final rule amending the

Federal Acquisition Regulation (FAR) to

raise the threshold for requiring

receipted freight bills for small package

shipments, and the maximum amount

that the Government may pay for

invoiced but unsupported

transportation charges. This regulatory

action was not subject to Office of

Management and Budget review under

Executive Order 12866, dated

September 30, 1993, and is not a major

rule under 5 U.S.C. 804.

EFFECTIVE DATE: February 9, 1998.

FOR FURTHER INFORMATION CONTACT: The

FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405, (202)

501–4755, for information pertaining to

status or publication schedules. For

clarification of content, contact Ms.

Linda Klein, Procurement Analyst, at

(202) 501–3775. Please cite FAC 97–03,

FAR case 97–017.

SUPPLEMENTARY INFORMATION:

A. Background

Based upon the benefits encountered

during a 6-month test conducted by the

Defense Finance and Accounting

Service, Denver Center, this rule

amends FAR 47.303–17 to raise the

threshold for requiring receipted freight

bills for small package shipments from

$25 to $100, and the maximum amount

that the Government may pay for

invoiced but unsupported

transportation charges from $100 to

$250. These increased amounts are

considered to more accurately reflect

shipping costs in today’s business

environment.

B. Regulatory Flexibility Act

The final rule does not constitute a

significant FAR revision within the

meaning of FAR 1.501 and Public Law

98–577, and publication for public

comments is not required. However,

comments from small entities

concerning the affected FAR subpart

will be considered in accordance with 5

U.S.C. 610. Such comments must be

submitted separately and should cite 5

U.S.C. 601, et seq. (FAC 97–03, FAR

case 97–017), in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act (Pub.

L. 96–511) is deemed to apply because

the final rule contains information

collection requirements. Accordingly, a

revised paperwork burden reflecting a

decrease in burden as a result of the

increase to thresholds will be forwarded

to the Office of Management and Budget

under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 47:

Government procurement.

Dated: December 1, 1997.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Part 47 is amended

as set forth below:

PART 47—TRANSPORTATION

1. The authority citation for 48 CFR

part 47 continues to read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C.

chapter 137; and 42 U.S.C. 2473(c).

47.303–17 [Amended]

2. Section 47.303–17 is amended in

paragraph (d)(1) by removing ‘‘$25’’ and

inserting ‘‘$100’’; in (d)(2) by removing

‘‘$100’’ and inserting ‘‘$250’’; and in the

second sentence of paragraph (e) by

replacing ‘‘47.303–17(d)(1)’’ with

‘‘paragraph (d)(2) of this subsection’’

and ‘‘$25’’ with ‘‘$250’’.

[FR Doc. 97–31825 Filed 12–8–97; 8:45 am]

BILLING CODE 6820–EP–P

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Part 53

[FAC 97–05; FAR Case 96–022; Item XIII]

RIN 9000–AH74

Federal Acquisition Regulation;

Standard Form 1406, Preaward Survey

of Prospective Contractor—Quality

Assurance

AGENCIES: Department of Defense (DoD),

General Services Administration (GSA),

and National Aeronautics and Space

Administration (NASA).

ACTION: Final rule.

SUMMARY: The Civilian Agency

Acquisition Council and the Defense

Acquisition Regulations Council have

agreed on a final rule amending the

Federal Acquisition Regulation (FAR) to

revise Standard Form 1406, Preaward

Survey of Prospective Contractor—

Quality Assurance, to delete references

to canceled specifications and to

conform the language in the form to the

current quality assurance guidance in

the FAR. This regulatory action was not

subject to Office of Management and

Budget review under Executive Order

12866, dated September 30, 1993, and is

not a major rule under 5 U.S.C. 804.

EFFECTIVE DATE: February 9, 1998.

FOR FURTHER INFORMATION CONTACT: The

FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405, (202)

501–4755, for information pertaining to

status or publication schedules. For

clarification of content, contact Ms.

Linda Klein, Procurement Analyst, at

(202) 501–3775. Please cite FAC 97–05,

FAR case 96–022.

SUPPLEMENTARY INFORMATION:

A. Background

Revision of the Standard Form 1406 is

necessary due to the cancellation of

military specifications, such as MIL–Q–

9858 and MIL–I–45208, which are cited

in the form, and to conform the

language in the form to the current

language in FAR Part 46.

B. Regulatory Flexibility Act

The final rule does not constitute a

significant FAR revision within the

meaning of FAR 1.501 and Public Law

98–577, and publication for public

comments is not required. However,

comments from small entities

concerning the affected FAR subpart