Federal Register / Vol. 63, No. 119 / Monday, June 22, 1998 /Rules and Regulations 34059

Item VIII—Software Copyrights (FAR

Case 97–614)

This final rule amends FAR 27.405 to

add contracts for certain computer

software programs to the list of

examples of contracts for special works

to which the Government may obtain

copyrights.

Item IX—Travel Reimbursement (FAR

Case 97–007)

The interim rule published as Item IX

of FAC 97–03 is converted to a final rule

without change. The rule amends FAR

31.205–46 to increase from $25.00 to

$75.00 the threshold at which contractor

personnel must provide a receipt to

support travel expenditures.

Item X—No-Cost Value Engineering

Change Proposals (FAR Case 96–011)

This interim rule revises FAR 48.104–

3 to clarify that no-cost value

engineering change proposals (VECPs)

may be used when, in the contracting

officer’s judgment, reliance on other

VECP approaches likely would not be

more cost-effective, and the no-cost

settlement would provide adequate

consideration to the Government.

Item XI—Technical Amendments

Amendments are being made at FAR

5.201(b)(2), 8.404(a), 31.002, and

45.607–2(b) to update references and

make editorial changes.

Item XII—Availability of FAR via

Internet

The FAR, along with Federal

Acquisition Circulars and other

informational items, is available on the

Internet at http://www.arnet.gov/far.

Dated: June 11, 1998.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

June 22, 1998.

Federal Acquisition Circular (FAC)

97–05 is issued under the authority of

the Secretary of Defense, the

Administrator of General Services, and

the Administrator for the National

Aeronautics and Space Administration.

Unless otherwise specified, all

Federal Acquisition Regulation (FAR)

and other directive material contained

in FAC 97–05 are effective August 21,

1998, except for Items V, X, and XI,

which are effective June 22, 1998.

Dated: June 11, 1998.

Eleanor R. Spector,

Director, Defense Procurement.

Dated: June 11, 1998.

Ida M. Ustad,

Deputy Associate Administrator, Office of

Acquisition Policy, General Services

Administration.

Dated: June 10, 1998.

Tom Luedtke,

Deputy Associate Administrator for

Procurement, National Aeronautics and

Space Administration.

[FR Doc. 98–16111 Filed 6–19–98; 8:45 am]

BILLING CODE 6820–EP–P

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Parts 4, 22, 35, 36, 44, and 52

[FAC 97–05; FAR Case 95–011; Item I]

RIN 9000–AH57

Federal Acquisition Regulation;

Subcontract Consent

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

reduce requirements for consent to

subcontract. The rule eliminates the

consent requirements for contractors

that have an approved purchasing

system, except when specific

subcontracts requiring consent are

identified by the contracting officer;

eliminates consent requirements for

fixed-price incentive contracts and

fixed-price redeterminable contracts;

and increases, to the simplified

acquisition threshold, the dollar level at

which consent requirements are

included in time-and-materials, laborhour, and letter contracts. 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: August 21, 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 95–011.

SUPPLEMENTARY INFORMATION:

A. Background

A proposed rule was published in the

Federal Register on April 21, 1997 (62

FR 19465). Comments were received

from nine respondents. All comments

were considered in the development of

this 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 the

consent to subcontract requirement has

a very small administrative cost that is

passed along to the Government as part

of the contract price, and this rule

reduces the requirement for consent to

subcontract.

C. Paperwork Reduction Act

The Paperwork Reduction Act (44

U.S.C. 3501, et seq.) is deemed to apply

because the final rule contains

information collection requirements.

Accordingly, a request for approval of

the information collection requirements

was submitted to the Office of

Management and Budget (OMB) and

approved through June 30, 2000, under

OMB Control Number 9000–0149.

Public comments concerning this

request were invited through Federal

Register notice 62 FR 19465, April 21,

1997, and no comments were received.

List of Subjects in 48 CFR Parts 4, 22,

35, 36, 44, and 52

Government procurement.

Dated: June 11, 1998.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Parts 4, 22, 35, 36,

44, and 52 are amended as set forth

below:

1. The authority citation for 48 CFR

Parts 4, 22, 35, 6, 44, and 52 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).
34060 Federal Register / Vol. 63, No. 119 / Monday, June 22, 1998 /Rules and Regulations

PART 4—ADMINISTRATIVE MATTERS

4.705–3 [Amended]

2. Section 4.705–3 is amended in

paragraph (f) by revising the

parenthetical to read ‘‘(see 52.244–2)’’.

PART 22—APPLICATION OF LABOR

LAWS TO GOVERNMENT

ACQUISITIONS

22.810 [Amended]

3. Section 22.810 is amended in

paragraph (g) by removing the phrase

‘‘paragraph (a), (b), or (c) of 44.204’’ and

adding in its place ‘‘44.204(a)’’.

PART 35—RESEARCH AND

DEVELOPMENT CONTRACTING

4. Section 35.009 is amended by

revising the last sentence to read as

follows:

35.009 Subcontracting research and

development effort.

* * * The clause at 52.244–2,

Subcontracts, prescribed for certain

types of contracts at 44.204(a), requires

the contracting officer’s prior approval

for the placement of certain

subcontracts.

PART 36—CONSTRUCTION AND

ARCHITECT-ENGINEER CONTRACTS

5. Section 36.606 is amended by

revising paragraph (e) to read as follows:

36.606 Negotiations.

* * * * *

(e) Because selection of firms is based

upon qualifications, the extent of any

subcontracting is an important

negotiation topic. The clause prescribed

at 44.204(b), Subcontractors and

Outside Associates and Consultants

(Architect-Engineer Services) (see

52.244–4), limits a firm’s subcontracting

to firms agreed upon during

negotiations.

* * * * *

PART 44—SUBCONTRACTING

POLICIES AND PROCEDURES

6. Section 44.000 is revised to read as

follows:

44.000 Scope of part.

(a) This part prescribes policies and

procedures for consent to subcontracts

or advance notification of subcontracts,

and for review, evaluation, and approval

of contractors’ purchasing systems.

(b) The consent and advance

notification requirements of subpart

44.2 are not applicable to prime

contracts for commercial items acquired

pursuant to part 12.

44.102 [Removed]

7. Section 44.102 is removed.

44.201 Consent and advance notification

requirements.

8. The heading of section 44.201 is

revised to read as set forth above.

9. Sections 44.201–1 and 44.201–2 are

revised to read as follows:

44.201–1 Consent requirements.

(a) If the contractor has an approved

purchasing system, consent is required

for subcontracts specifically identified

by the contracting officer in the

subcontracts clause of the contract. The

contracting officer may require consent

to subcontract if the contracting officer

has determined that an individual

consent action is required to protect the

Government adequately because of the

subcontract type, complexity, or value,

or because the subcontract needs special

surveillance. These can be subcontracts

for critical systems, subsystems,

components, or services. Subcontracts

may be identified by subcontract

number or by class of items (e.g.,

subcontracts for engines on a prime

contract for airframes).

(b) If the contractor does not have an

approved purchasing system, consent to

subcontract is required for costreimbursement, time-and-materials,

labor-hour, or letter contracts, and also

for unpriced actions (including

unpriced modifications and unpriced

delivery orders) under fixed-price

contracts that exceed the simplified

acquisition threshold, for—

(1) Cost-reimbursement, time-andmaterials, or labor-hour subcontracts;

and

(2) Fixed-price subcontracts that

exceed—

(i) For the Department of Defense, the

Coast Guard, and the National

Aeronautics and Space Administration,

the greater of the simplified acquisition

threshold or 5 percent of the total

estimated cost of the contract; or

(ii) For civilian agencies other than

the Coast Guard and the National

Aeronautics and Space Administration,

either the simplified acquisition

threshold or 5 percent of the total

estimated cost of the contract.

(c) Consent may be required for

subcontracts under prime contracts for

architect-engineer services.

(d) The contracting officer’s written

authorization for the contractor to

purchase from Government sources (see

part 51) constitutes consent.

44.201–2 Advance notification

requirements.

Under cost-reimbursement contracts,

even if the contractor has an approved

purchasing system and consent to

subcontract is not required under

44.201–1, the contractor is required by

statute (10 U.S.C. 2306(e) or 41 U.S.C.

254(b)) to notify the agency before the

award of—

(a) Any cost-plus-fixed-fee

subcontract; or

(b) Any fixed-price subcontract that

exceeds—

(1) For the Department of Defense, the

Coast Guard, and the National

Aeronautics and Space Administration,

the greater of the simplified acquisition

threshold or 5 percent of the total

estimated cost of the contract; or

(2) For civilian agencies other than

the Coast Guard and the National

Aeronautics and Space Administration,

either the simplified acquisition

threshold or 5 percent of the total

estimated cost of the contract.

44.201–3 and 44.201–4 [Removed]

10. Sections 44.201–3 and 44.201–4

are removed.

11. Section 44.202–1 is amended by

revising paragraphs (b) and (c) to read

as follows:

44.202–1 Responsibilities.

* * * * *

(b) The contracting officer responsible

for consent shall review the contractor’s

notification and supporting data to

ensure that the proposed subcontract is

appropriate for the risks involved and

consistent with current policy and

sound business judgment.

(c) Designation of specific

subcontractors during contract

negotiations does not in itself satisfy the

requirements for advance notification or

consent pursuant to the clause at

52.244–2. However, if, in the opinion of

the contracting officer, the advance

notification or consent requirements

were satisfied for certain subcontracts

evaluated during negotiations, the

contracting officer shall identify those

subcontracts in paragraph (k) of the

clause at 52.244–2.

44.202–2 [Amended]

12. Section 44.202–2 is amended in

the introductory text of paragraph (a) by

adding ‘‘, at a minimum,’’ after the word

‘‘shall’’.

13. Section 44.204 is revised to read

as follows:

44.204 Contract clauses.

(a)(1) The contracting officer shall

insert the clause at 52.244–2,

Subcontracts, in solicitations and

contracts when contemplating—

(i) A cost-reimbursement contract;

(ii) A letter contract that exceeds the

simplified acquisition threshold;
Federal Register / Vol. 63, No. 119 / Monday, June 22, 1998 /Rules and Regulations 34061

(iii) A fixed-price contract that

exceeds the simplified acquisition

threshold under which unpriced

contract actions (including unpriced

modifications or unpriced delivery

orders) are anticipated;

(iv) A time-and-materials contract that

exceeds the simplified acquisition

threshold; or

(v) A labor-hour contract that exceeds

the simplified acquisition threshold.

(2) If a cost-reimbursement contract is

contemplated—

(i) For the Department of Defense, the

Coast Guard, and the National

Aeronautics and Space Administration,

the contracting officer shall use the

clause with its Alternate I; or

(ii) For civilian agencies other than

the Coast Guard and the National

Aeronautics and Space Administration,

the contracting officer shall use the

clause with its Alternate II.

(3) Use of this clause is not required

in—

(i) Fixed-price architect-engineer

contracts; or

(ii) Contracts for mortuary services,

refuse services, or shipment and storage

of personal property, when an agencyprescribed clause on approval of

subcontractors’ facilities is required.

(b) The contracting officer may insert

the clause at 52.244–4, Subcontractors

and Outside Associates and Consultants

(Architect-Engineer Services), in fixedprice architect-engineer contracts.

(c) The contracting officer shall, when

contracting by negotiation, insert the

clause at 52.244–5, Competition in

Subcontracting, in solicitations and

contracts when the contract amount is

expected to exceed the simplified

acquisition threshold, unless—

(1) A firm-fixed-price contract,

awarded on the basis of adequate price

competition or whose prices are set by

law or regulation, is contemplated; or

(2) A time-and-materials, labor-hour,

or architect-engineer contract is

contemplated.

PART 52—SOLICITATION PROVISIONS

AND CONTRACT CLAUSES

52.244–1 [Removed and Reserved]

14. Section 52.244–1 is removed and

reserved.

15. Section 52.244–2 is revised to read

as follows:

52.244–2 Subcontracts.

As prescribed in 44.204(a)(1), insert

the following clause:

SUBCONTRACTS (AUG 1998)

(a) Definitions. As used in this clause—

Approved purchasing system means a

Contractor’s purchasing system that has been

reviewed and approved in accordance with

Part 44 of the Federal Acquisition Regulation

(FAR).

Consent to subcontract means the

Contracting Officer’s written consent for the

Contractor to enter into a particular

subcontract.

Subcontract means any contract, as defined

in FAR Subpart 2.1, entered into by a

subcontractor to furnish supplies or services

for performance of the prime contract or a

subcontract. It includes, but is not limited to,

purchase orders, and changes and

modifications to purchase orders.

(b) This clause does not apply to

subcontracts for special test equipment when

the contract contains the clause at FAR

52.245–18, Special Test Equipment.

(c) When this clause is included in a fixedprice type contract, consent to subcontract is

required only on unpriced contract actions

(including unpriced modifications or

unpriced delivery orders), and only if

required in accordance with paragraph (d) or

(e) of this clause.

(d) If the Contractor does not have an

approved purchasing system, consent to

subcontract is required for any subcontract

that—

(1) Is of the cost-reimbursement, time-andmaterials, or labor-hour type; or

(2) Is fixed-price and exceeds—

(i) For a contract awarded by the

Department of Defense, the Coast Guard, or

the National Aeronautics and Space

Administration, the greater of the simplified

acquisition threshold or 5 percent of the total

estimated cost of the contract; or

(ii) For a contract awarded by a civilian

agency other than the Coast Guard and the

National Aeronautics and Space

Administration, either the simplified

acquisition threshold or 5 percent of the total

estimated cost of the contract.

(e) If the Contractor has an approved

purchasing system, the Contractor

nevertheless shall obtain the Contracting

Officer’s written consent before placing the

following subcontracts:

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

(f)(1) The Contractor shall notify the

Contracting Officer reasonably in advance of

placing any subcontract or modification

thereof for which consent is required under

paragraph (c), (d), or (e) of this clause,

including the following information:

(i) A description of the supplies or services

to be subcontracted.

(ii) Identification of the type of subcontract

to be used.

(iii) Identification of the proposed

subcontractor.

(iv) The proposed subcontract price.

(v) The subcontractor’s current, complete,

and accurate cost or pricing data and

Certificate of Current Cost or Pricing Data, if

required by other contract provisions.

(vi) The subcontractor’s Disclosure

Statement or Certificate relating to Cost

Accounting Standards when such data are

required by other provisions of this contract.

(vii) A negotiation memorandum

reflecting—

(A) The principal elements of the

subcontract price negotiations;

(B) The most significant considerations

controlling establishment of initial or revised

prices;

(C) The reason cost or pricing data were or

were not required;

(D) The extent, if any, to which the

Contractor did not rely on the subcontractor’s

cost or pricing data in determining the price

objective and in negotiating the final price;

(E) The extent to which it was recognized

in the negotiation that the subcontractor’s

cost or pricing data were not accurate,

complete, or current; the action taken by the

Contractor and the subcontractor; and the

effect of any such defective data on the total

price negotiated;

(F) The reasons for any significant

difference between the Contractor’s price

objective and the price negotiated; and

(G) A complete explanation of the

incentive fee or profit plan when incentives

are used. The explanation shall identify each

critical performance element, management

decisions used to quantify each incentive

element, reasons for the incentives, and a

summary of all trade-off possibilities

considered.

(2) The Contractor is not required to notify

the Contracting Officer in advance of entering

into any subcontract for which consent is not

required under paragraph (c), (d), or (e) of

this clause.

(g) Unless the consent or approval

specifically provides otherwise, neither

consent by the Contracting Officer to any

subcontract nor approval of the Contractor’s

purchasing system shall constitute a

determination—

(1) Of the acceptability of any subcontract

terms or conditions;

(2) Of the allowability of any cost under

this contract; or

(3) To relieve the Contractor of any

responsibility for performing this contract.

(h) No subcontract or modification thereof

placed under this contract shall provide for

payment on a cost-plus-a-percentage-of-cost

basis, and any fee payable under costreimbursement type subcontracts shall not

exceed the fee limitations in FAR 15.404–

4(c)(4)(i).

(i) The Contractor shall give the

Contracting Officer immediate written notice

of any action or suit filed and prompt notice

of any claim made against the Contractor by

any subcontractor or vendor that, in the

opinion of the Contractor, may result in

litigation related in any way to this contract,

with respect to which the Contractor may be

entitled to reimbursement from the

Government.

(j) The Government reserves the right to

review the Contractor’s purchasing system as

set forth in FAR Subpart 44.3.

(k) Paragraphs (d) and (f) of this clause do

not apply to the following subcontracts,

which were evaluated during negotiations:

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

(End of clause)

Alternate I (Aug 1998). As prescribed in

44.204(a)(2)(i), substitute the following

paragraph (f)(2) for paragraph (f)(2) of the

basic clause:
34062 Federal Register / Vol. 63, No. 119 / Monday, June 22, 1998 /Rules and Regulations

(f)(2) If the Contractor has an approved

purchasing system and consent is not

required under paragraph (c), (d), or (e) of

this clause, the Contractor nevertheless shall

notify the Contracting Officer reasonably in

advance of entering into any (i) cost-plusfixed-fee subcontract, or (ii) fixed-price

subcontract that exceeds the greater of the

simplified acquisition threshold or 5 percent

of the total estimated cost of this contract.

The notification shall include the

information required by paragraphs (f)(1)(i)

through (f)(1)(iv) of this clause.

Alternate II (Aug 1998). As prescribed in

44.204(a)(2)(ii), substitute the following

paragraph (f)(2) for paragraph (f)(2) of the

basic clause:

(f)(2) If the Contractor has an approved

purchasing system and consent is not

required under paragraph (c), (d), or (e) of

this clause, the Contractor nevertheless shall

notify the Contracting Officer reasonably in

advance of entering into any (i) cost-plusfixed-fee subcontract, or (ii) fixed-price

subcontract that exceeds either the simplified

acquisition threshold or 5 percent of the total

estimated cost of this contract. The

notification shall include the information

required by paragraphs (f)(1)(i) through

(f)(1)(iv) of this clause.

52.244–3 [Removed and reserved]

16. Section 52.244–3 is removed and

reserved.

17. Section 52.244–4 is amended by

revising the section heading,

introductory paragraph, and clause

heading and date to read as follows:

52.244–4 Subcontractors and outside

associates and consultants (Architectengineer services).

As prescribed in 44.204(b), insert the

following clause:

SUBCONTRACTORS AND OUTSIDE

ASSOCIATES AND CONSULTANTS

(ARCHITECT-ENGINEER SERVICES) (AUG

1998)

* * * * *

(End of clause)

52.244–5 [Amended]

18. Section 52.244–5 is amended in

the introductory paragraph by revising

‘‘44.204(e)’’ to read ‘‘44.204(c)’’.

[FR Doc. 98–16112 Filed 6–19–98; 8:45 am]

BILLING CODE 6820–EP–P

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Parts 9, 11, and 52

[FAC 97–05; FAR Case 97–034; Item II]

RIN 9000–AI00

Federal Acquisition Regulation;

Availability of Specifications

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

update information regarding the

availability of specifications, standards,

and item descriptions cited in

Government solicitations and contracts.

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: August 21, 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 Mr.

Ralph DeStefano, Procurement Analyst,

at (202) 501–1758. Please cite FAC 97–

05, FAR case 97–034.

SUPPLEMENTARY INFORMATION:

A. Background

This final rule amends FAR Parts 9

and 11 and the provisions at 52.211–1,

52.211–2, and 52.212–1 to update

information regarding the availability of

specifications, standards, and item

descriptions that may be cited in

Government solicitations and contracts.

New organization names, addresses, and

telephone numbers, and a new method

of obtaining information on the World

Wide Web have been added. In

addition, the rule clarifies the pricing

policy regarding specifications,

standards, and commercial item

descriptions issued by GSA.

B. Regulatory Flexibility Act

The final rule does not constitute a

significant FAR revision within the

meaning of FAR 1.501 and Pub. L. 98–

577, and publication for public

comments is not required. However,

comments from small entities

concerning the affected FAR subparts

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 97–05, FAR

case 97–034), in correspondence.

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 9, 11,

and 52

Government procurement.

Dated: June 11, 1998.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Parts 9, 11, and 52

are amended as set forth below:

1. The authority citation for 48 CFR

Parts 9, 11, and 52 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 9—CONTRACTOR

QUALIFICATIONS

2. Section 9.203 is amended by

revising paragraphs (c)(1) and (d) to read

as follows:

9.203 QPL’s, QML’s, and QBL’s.

* * * * *

(c) * * *

(1) Federal Standardization Manual,

FSPM–0001.

* * * * *

(d) The publications listed in

paragraphs (b) and (c) of this section are

sold to the public. The publications in

paragraphs (b)(1) and (c)(1) of this

section may be obtained from the

addressee in 11.201(d)(1). The

publications in paragraphs (b)(2) and

(c)(2) of this section may be obtained

from the addressee in 11.201(d)(2).

PART 11—DESCRIBING AGENCY

NEEDS

3. Section 11.102 is revised to read as

follows:

11.102 Standardization program.

Agencies shall select existing

requirements documents or develop

new requirements documents that meet

the needs of the agency in accordance