Federal Register / Vol. 62, No. 51 / Monday, March 17, 1997 / Rules and Regulations 12719

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 the

rule applies to only those contractors

whose sales (excluding sales under

sealed bid procedures and sales of

commercial items) are expected to

exceed $25 million during the

subsequent year.

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 Part 44

Government procurement.

Dated: March 7, 1997.

Edward C. Loeb

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Part 44 is amended

as set forth below:

PART 44—SUBCONTRACTING

POLICIES AND PROCEDURES

1. The authority citation for 48 CFR

Part 44 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).

2. Section 44.302 is revised to read as

follows:

44.302 Requirements.

(a) Determine the need for a CPSR

based on, but not limited to, the past

performance of the contractor, and

volume, complexity and dollar value of

the subcontracting activity. If a

contractor’s sales to the Government

(excluding sales under sealed bid

procedures and sales of commercial

items pursuant to part 12) are expected

to exceed $25 million during the next

year, perform a review to determine if

a CPSR is needed. Such sales include

those represented by prime contracts,

subcontracts under Government prime

contracts, and modifications. Generally,

a CPSR is not performed for a specific

contract. The head of the agency

responsible for contract administration

may raise or lower the $25 million

review level if such action is considered

to be in the Government’s best interest.

(b) Once an initial determination has

been made under paragraph (a) of this

section, at least every 3 years the

cognizant contract administration

activity will determine whether a

purchasing system review is necessary.

If necessary, the cognizant contract

administration activity will conduct a

purchasing system review. 3. Section 44.303 is amended by

revising the introductory text to read as

follows:

44.303 Extent of review.

A CPSR requires an evaluation of the

contractor’s purchasing system. This

evaluation shall not include

subcontracts awarded by the contractor

exclusively in support of Government

contracts awarded to the contractor that

used sealed bid procedures or that are

for commercial items pursuant to part

12. The considerations listed in 44.202–

2 for consent evaluation of particular

subcontracts also shall be used to

evaluate the contractor’s purchasing

system, including the contractor’s

policies, procedures, and performance

under that system. Special attention

shall be given to—

* * * * *

4. Section 44.304 is amended by

revising paragraph (a) to read as follows:

44.304 Surveillance.

(a) The ACO shall maintain a

sufficient level of surveillance to ensure

that the contractor is effectively

managing its purchasing program.

* * * * *

5. Section 44.305–1 is revised to read

as follows:

44.305–1 Responsibilities.

The cognizant ACO is responsible for

granting, withholding, or withdrawing

approval of a contractor’s purchasing

system. The ACO shall— (a) Approve a purchasing system only

after determining that the contractor’s

purchasing policies and practices are

efficient and provide adequate

protection of the Government’s

interests; and

(b) Promptly notify the contractor in

writing of the granting, withholding, or

withdrawal of approval. 6. Section 44.305–2 is amended by

revising paragraph (a) to read as follows:

44.305–2 Notification.

(a) The notification granting system

approval shall include— (1) Identification of the plant or plants

covered by the approval; (2) The effective date of approval; and

(3) A statement that system

approval— (i) Applies to all Federal Government

contracts at that plant to the extent that

cross-servicing arrangements exist;

(ii) Waives the contractual

requirement for advance notification in

fixed-price contracts, but not for costreimbursement contracts;

(iii) Waives the contractual

requirement for consent to subcontracts

in fixed-price contracts and for specified

subcontracts in cost-reimbursement

contracts but not for those subcontracts,

if any, selected for special surveillance

and identified in the contract Schedule;

and

(iv) May be withdrawn at any time at

the ACO’s discretion.

* * * * *

7. Sections 44.306 and 44.307 are

revised to read as follows:

44.306 Disclosure of approval status.

Upon request, the ACO may inform a

contractor that the purchasing system of

a proposed subcontractor has been

approved or disapproved, but shall

caution that the Government will not

keep the contractor advised of any

changes in the approval status. If the

proposed subcontractor’s purchasing

system has not been reviewed, the

contractor shall be so advised.

44.307 Reports.

The ACO shall distribute copies of

CPSR reports; notifications granting,

withholding, or withdrawing system

approval; and Government

recommendations for improvement of

an approved system, including the

contractor’s response, to at least—

(a) The cognizant contract audit

office;

(b) Activities prescribed by the

cognizant agency; and

(c) The contractor (except that

furnishing copies of the contractor’s

response is optional).

[FR Doc. 97–6321 Filed 3–14–97; 8:45 am]

BILLING CODE 6820–EP–P

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Part 52

[FAC 90–46; FAR Case 96–005; Item XIII]

RIN 9000–AH22

Federal Acquisition Regulation;

Performance-Based Payments

AGENCIES: Department of Defense (DOD),

General Services Administration (GSA),

and National Aeronautics and Space

Administration (NASA).
12720 Federal Register / Vol. 62, No. 51 / Monday, March 17, 1997 / Rules and Regulations

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

address title to residual material and

certain liability provisions concerning

performance-based payments. 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: May 16, 1997.

FOR FURTHER INFORMATION CONTACT: Mr.

Jeremy Olson at (202) 501–3221 in

reference to this FAR case. For general

information, contact the FAR

Secretariat, Room 4035, GS Building,

Washington, DC 20405, (202) 501–4755.

Please cite FAC 90–46, FAR case 96–

005.

SUPPLEMENTARY INFORMATION:

A. Background

The clause at 52.232–32,

Performance-Based Payments, addresses

a method of contract financing, and was

printed in Federal Acquisition Circular

90–33, and published in the Federal

Register at 60 FR 49707, September 26,

1995. Paragraph (f), Title, of the clause

was intended to be functionally

equivalent to paragraph (d) of FAR

clause 52.232–16, Progress Payments,

which addresses another type of

contract financing. However, the topics

of title to residual material and liability

for Government-furnished property

acquired under the contract, addressed

in paragraphs (d) (6) and (7) of the

Progress Payments clause, were

inadvertently omitted from the

Performance-Based Payments clause.

This rule amends FAR 52.232–32 by

adding paragraphs (f) (6) and (7) to

address these topics.

A proposed rule was published in the

Federal Register at 61 FR 47798,

September 10, 1996. Two sources

submitted public comments. All

comments were considered in

developing 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 most

contracts awarded to small entities use

simplified acquisition procedures or are

awarded on a competitive basis, and,

therefore, do not use the performancebased method of contract financing.

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 Part 52

Government procurement.

Dated: March 7, 1997.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Part 52 amended as

set forth below:

PART 52—SOLICITATION PROVISIONS

AND CONTRACT CLAUSES

1. The authority citation for 48 CFR

Part 42 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).

2. Section 52.232–32 is amended by

revising the clause date; redesignating

the heading of paragraph (f)(1) as the

heading of paragraph (f), and adding

new paragraphs (f) (6) and (7) to read as

follows:

52.232–32 Performance-Based Payments.

* * * * *

PERFORMANCE-BASED PAYMENTS (MAY

1997)

* * * * *

(f) Title. * * *

* * * * *

(6) When the Contractor completes all of

the obligations under this contract, including

liquidation of all performance-based

payments, title shall vest in the Contractor

for all property (or the proceeds thereof)

not—

(i) Delivered to, and accepted by, the

Government under this contract; or

(ii) Incorporated in supplies delivered to,

and accepted by, the Government under this

contract and to which title is vested in the

Government under this clause.

(7) The terms of this contract concerning

liability for Government-furnished property

shall not apply to property to which the

Government acquired title solely under this

clause.

* * * * *

[FR Doc. 97–6322 Filed 3–14–97; 8:45 am]

BILLING CODE 6820–EP–P

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Parts 13 and 52

[FAC 90–46; Item XIV]

Federal Acquisition Regulation;

Technical Corrections

AGENCIES: Department of Defense (DOD),

General Services Administration (GSA),

and National Aeronautics and Space

Administration (NASA).

ACTION: Corrections.

SUMMARY: The Civilian Agency

Acquisition Council and the Defense

Acquisition Regulations Council are

issuing corrections to documents

previously published in the Federal

Register.

EFFECTIVE DATE: May 16, 1997.

FOR FURTHER INFORMATION CONTACT: FAR

Secretariat, Room 4037, GS Building,

Washington, DC 20405, (202) 501–4755.

Please cite FAC 90–46, Technical

Corrections.

Corrections

PART 13—SIMPLIFIED ACQUISITION

PROCEDURES

13.602 [Corrected]

1. At 62 FR 266, January 2, 1997, in

the third column, 13.602 is corrected in

the introductory text of paragraph (a) by

removing from the parenthetical

‘‘section 4202 of the Clinger-Cohen Act’’

and inserting ‘‘10 U.S.C. 2304 or 41

U.S.C. 253’’.

PART 52—SOLICITATION PROVISIONS

AND CONTRACT CLAUSES

2. At 61 FR 67408, December 20,

1996, in the first column of page 67422,

amendatory instruction 15 is corrected

to read as follows:

52.219–18 [Amended]

15. 52.219–18 is amended by

removing Alternate II and redesignating

Alternate III as Alternate II; and by

revising the date of the newly

designated Alternate II to read as

follows:

52.219–18 Notification of Competition

Limited to Eligible 8(a) Concerns.

* * * * *

Alternate II (DEC 1996). * * *

* * * * *