Federal Register / Vol. 66, No. 7 / Wednesday, January 10, 2001 / Rules and Regulations 2137

increase the dollar threshold for full

CAS coverage from $25 million to $50

million; and

• Revises the CAS waiver procedures

and conditions at FAR 30.201–5, as

required by Section 802 of Pub. L. 106–

65.

This is not a significant regulatory

action, and therefore, was not subject to

review under Section 6(b) of Executive

Order 12866, Regulatory Planning and

Review, dated September 30, 1993. This

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

804.

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

contracts and subcontracts with small

businesses are exempt from all CAS

requirements in accordance with 48

CFR 9903.201–1(b)(3).

C. Paperwork Reduction Act

The Paperwork Reduction Act does

not apply because the changes to the

FAR do not impose information

collection requirements that 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 30 and

52

Government procurement.

Dated: December 22, 2000.

Al Matera,

Acting Director, Federal Acquisition Policy

Division

Interim Rule Adopted as Final Without

Change

Accordingly, DoD, GSA, and NASA

adopt the interim rule amending 48 CFR

parts 30 and 52, which was published

in the Federal Register at 65 FR 36028,

June 6, 2000, as a final rule without

change.

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

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

[FR Doc. 01–12 Filed 1–9–01; 8:45 am]

BILLING CODE 6820–EP–P

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Parts 32 and 52

[FAC 97–22; FAR Case 1999–016; Item III]

RIN 9000–AI74

Federal Acquisition Regulation;

Advance Payments for NonCommercial Items

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

(Councils) have agreed on a final rule

amending the Federal Acquisition

Regulation (FAR) to permit federally

insured credit unions to participate in

the maintenance of special accounts for

advance payments.

DATE: Effective Date: March 12, 2001.

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.

Jeremy Olson, at (202) 501–4755. Please

cite FAC 97–22, FAR case 1999–016.

SUPPLEMENTARY INFORMATION:

A. Background

Prior to publication of this final FAR

rule, FAR Subpart 32.4, Advance

Payments for Non-Commercial Items,

required, unless exempted by FAR

32.409–3(e) or (f), that contractors

deposit advance payments in special

accounts separate from their general or

other funds. FAR 32.411 and other FAR

text excluded credit unions from

participating in the maintenance of

these special accounts by requiring that

contractors establish these special

accounts only at banks that are members

of the Federal Reserve System (FRS) or

insured by the Federal Deposit

Insurance Corporation (FDIC). However,

many credit unions are federally

insured through the National Credit

Union Administration (NCUA).

Therefore, these credit unions also are

able to provide the Government a

measure of security for Federal funds

advanced to contractors.

This final rule amends FAR Subpart

32.4 and FAR 52.232–12 to change

certain terminology (e.g., change the

word ‘‘bank’’ to ‘‘financial institution’’)

to provide contractors an additional

option of depositing advance payments

in special accounts maintained by credit

unions that are federally insured by

NCUA. This revision will foster

competition among financial

institutions that are in the business of

providing special accounts for advance

payment funds, without increasing the

risk to the Government.

DoD, GSA, and NASA published a

proposed rule in the Federal Register at

65 FR 25614, May 2, 2000. Two

respondents submitted public

comments on the proposed rule. The

Councils considered all comments

before agreeing to convert the proposed

rule to a final rule without change.

This is not a significant regulatory

action, and therefore, was not subject to

review under Section 6(b) of Executive

Order 12866, Regulatory Planning and

Review, dated September 30, 1993. This

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

804.

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 only applies to the very limited

number of contractors that receive

advance payments and deposit these

payments in special accounts.

C. Paperwork Reduction Act

The Paperwork Reduction Act does

not apply because the changes to the

FAR do not impose information

collection requirements that 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 32 and

52

Government procurement.

Dated: December 22, 2000.

Al Matera,

Acting Director, Federal Acquisition Policy

Division.

Therefore, DoD, GSA, and NASA

amend 48 CFR parts 32 and 52 as set

forth below:

1. The authority citation for 48 CFR

parts 32 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).

2138 Federal Register / Vol. 66, No. 7 / Wednesday, January 10, 2001 / Rules and Regulations

PART 32—CONTRACT FINANCING

2. Revise paragraph (a)(1) of section

32.407 to read as follows:

32.407 Interest.

(a) * * *

(1) The published prime rate of the

financial institution (depository) in

which the special account (see 32.409–

3) is established; or

* * * * *

32.408 [Amended]

3. Amend paragraph (b)(4) of section

32.408 by removing ‘‘bank’’ both times

it appears and adding ‘‘financial

institution’’ in its place.

4. Amend section 32.409–3 as follows:

a. In paragraph (a) remove ‘‘bank’’ and

add ‘‘special’’ in its place;

b. In paragraphs (b)(2), (c)(2), and (e)

remove ‘‘bank’’.

c. Revise paragraph (f)(1); and

d. In paragraph (g) remove ‘‘bank’’

both times it appears.

The revised text reads as follows:

32.409–3 Security, supervision, and

covenants.

* * * * *

(f) * * *

(1) The use under a costreimbursement contract of Federal

funds deposited in the contractor’s

account at a financial institution

(without the contractor acquiring title to

the funds); and

* * * * *

5. In section 32.410, revise the second

sentence in paragraph (a)(4) of the

‘‘Findings, Determination, and

Authorization for Advance Payments

Findings’’ to read as follows:

32.410 Findings, determination, and

authorization.

* * * * *

(a) * * *

(4) * * * The clause requires that all

payments will be deposited in a special

account at the Contractor’s financial

institution and that the Government will

have a paramount lien on (i) the credit

balance in the special account, (ii) any

supplies contracted for, and (iii) any material

or other property acquired for performance of

the contract. * * *

* * * * *

6. Revise 32.411 to read as follows:

32.411 Agreement for special account at a

financial institution.

The contracting officer must use

substantially the following form of

agreement for a special account for

advance payments:

Agreement for Special Account

This agreement is entered into this ll

day of ll, 20ll, between the United

States of America (the Government),

represented by the Contracting Officer

executing this agreement, llll [Insert the

name of the Contractor], a llll [Insert

the name of the State of incorporation]

corporation (the Contractor), and llll, a

financial institution operating under the laws

of llll, located at llll (the financial

institution).

Recitals

(a) Under date of llll, 20llll, the

Government and the Contractor entered into

Contract No. ll, or a related supplemental

agreement, providing for advance payments

to the Contractor. A copy of the advance

payment terms was furnished to the financial

institution.

(b) The contract or supplemental

agreement requires that amounts advanced to

the Contractor be deposited separate from the

Contractor’s general or other funds, in a

Special Account at a member bank of the

Federal Reserve System, any ‘‘insured’’ bank

within the meaning of the Act creating the

Federal Deposit Insurance Corporation (12

U.S.C. 1811), or a credit union insured by the

National Credit Union Administration. The

parties agree to deposit the amounts with the

financial institution, which meets the

requirement.

(c) This Special Account is designated

‘‘llll [Insert the Contractor’s name],

llll [Insert the name of the Government

agency] Special Account.’’

Covenants

In consideration of the foregoing, and for

other good and valuable considerations, the

parties agree to the following conditions:

(a) The Government shall have a lien on

the credit balance in the account to secure

the repayment of all advance payments made

to the Contractor. The lien is paramount to

any lien or claim of the financial institution

regarding the account.

(b) The financial institution is bound by

the terms of the contract relating to the

deposit and withdrawal of funds in the

Special Account, but is not responsible for

the application of funds withdrawn from the

account. The financial institution shall act on

written directions from the Contracting

Officer, the administering office, or a duly

authorized representative of either. The

financial institution is not liable to any party

to this agreement for any action that complies

with the written directions. Any written

directions received by the financial

institution through the Contracting Officer on

llll [Insert the name of the agency]

stationery and purporting to be signed by, or

by the direction of llll or duly

authorized representative, shall be, as far as

the rights, duties, and liabilities of the

financial institution are concerned,

considered as being properly issued and filed

with the financial institution by the llll

[Insert the name of the agency].

(c) The Government, or its authorized

representatives, shall have access to the

books and records maintained by the

financial institution regarding the Special

Account at all reasonable times and for all

reasonable purposes, including (but not

limited to), the inspection or copying of the

books and records and any and all pertinent

memoranda, checks, correspondence, or

documents. The financial institution shall

preserve the books and records for a period

of 6 years after the closing of this Special

Account.

(d) In the event of the service of any writ

of attachment, levy of execution, or

commencement of garnishment proceedings

regarding the Special Account, the financial

institution will promptly notify llll

[Insert the name of the administering office].

(e) While this Special Account exists, the

financial institution shall inform the

Government each month of the financial

institution’s published prime interest rate

and changes to the rate during the month.

The financial institution shall give this

information to the Contracting Officer on the

last business day of the month. [This

covenant will not be included in the Special

Account Agreements covering interest-free

advance payments.]

Each of the parties to this agreement has

executed the agreement on llll, 20ll.

lllllllllllllllllllll

lllllllllllllllllllll

[Signatures and Official Titles]

32.412 [Amended]

7. Amend paragraph (f) of section

32.412 by removing ‘‘bank’’.

PART 52—SOLICITATION PROVISIONS

AND CONTRACT CLAUSES

8. Amend section 52.232–12 as

follows:

a. Revise the date of the clause;

b. Revise paragraph (b);

c. Remove ‘‘bank’’ from paragraphs (c)

and (d);

d. Revise paragraph (f)(3);

e. Revise paragraph (g);

f. Remove ‘‘bank’’ from paragraphs

(h), (k)(1) introductory text, (k)(1)(iv),

(k)(2)(i), and (m)(1) each time it appears;

g. Revise paragraph (p)(11);

h. Amend Alternate II by revising the

date to read ‘‘(Mar 2001) ’’; and

removing ‘‘bank’’ from paragraph (c);

and

i. Amend Alternate V by revising the

date to read ‘‘(Mar 2001)’’; removing

from the introductory paragraph

‘‘bank’’; and revising the heading of the

clause and paragraph (m)(11) of

Alternate V to read as follows:

52.232–12 Advance Payments.

* * * * *

Advance Payments (Mar 2001)

* * * * *

(b) Special account. Until (1) the

Contractor has liquidated all advance

payments made under the contract and

related interest charges and (2) the

administering office has approved in writing

the release of any funds due and payable to

the Contractor, all advance payments and

other payments under this contract shall be

made by check payable to the Contractor

marked for deposit only in the Contractor’s

Federal Register / Vol. 66, No. 7 / Wednesday, January 10, 2001 / Rules and Regulations 2139

special account with the llll [insert the

name of the financial institution]. None of

the funds in the special account shall be

mingled with other funds of the Contractor.

Withdrawals from the special account may be

made only by check of the Contractor

countersigned by the Contracting Officer or a

Government countersigning agent designated

in writing by the Contracting Officer.

* * * * *

(f) * * *

(3) If interest is required under the

contract, the Contracting Officer shall

determine a daily interest rate based on the

higher of (i) the published prime rate of the

financial institution (depository) in which

the special account is established or (ii) the

rate established by the Secretary of the

Treasury under Pub. L. 92–41 (50 U.S.C.

App. 1215(b)(2)). The Contracting Officer

shall revise the daily interest rate during the

contract period in keeping with any changes

in the cited interest rates.

* * * * *

(g) Financial institution agreement. Before

an advance payment is made under this

contract, the Contractor shall transmit to the

administering office, in the form prescribed

by the administering office, an agreement in

triplicate from the financial institution in

which the special account is established,

clearly setting forth the special character of

the account and the responsibilities of the

financial institution under the account. The

Contractor shall select a financial institution

that is a member bank of the Federal Reserve

System, an ‘‘insured’’ bank within the

meaning of the Federal Deposit Insurance

Corporation Act (12 U.S.C. 1811), or a credit

union insured by the National Credit Union

Administration.

* * * * *

(p) * * *

(11) Deposit any of its funds except in a

bank or trust company insured by the Federal

Deposit Insurance Corporation or a credit

union insured by the National Credit Union

Administration;

* * * * *

Advance Payments Without Special Account

(Mar 2001)

* * * * *

(m) * * *

(11) Deposit any of its funds except in a

bank or trust company insured by the Federal

Deposit Insurance Corporation or a credit

union insured by the National Credit Union

Administration;

* * * * *

[FR Doc. 01–13 Filed 1–9–01; 8:45 am]

BILLING CODE 6820–EP–P

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Part 52

[FAC 97–22; FAR Case 1999–021; Item IV]

RIN 9000–AJ05

Federal Acquisition Regulation; Part 12

and Assignment of Claims

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

(Councils) have agreed on a final rule

amending the Federal Acquisition

Regulation (FAR) to add, in the contract

clause addressing terms and conditions

for commercial items, the prohibition

for a contractor to assign its rights to

receive payment in accordance with the

Assignment of Claims Act (31 U.S.C.

3727) when a third party makes

payment under the contract (e.g., use of

the Governmentwide commercial

purchase card). This prohibition is

currently in the contract clause

addressing terms and conditions

required to implement statutes or

Executive orders for commercial items.

DATES: Effective Date: March 12, 2001.

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.

Victoria Moss, Procurement Analyst, at

(202) 501–4764. Please cite FAC 97–22,

FAR case 1999–021.

SUPPLEMENTARY INFORMATION:

A. Background

Paragraph (e) of the clause at FAR

52.232–36, Payment by Third Party,

states that a contractor may not assign

its rights to receive payment under the

assignment of claims terms of the

contract if payment is made by a third

party (e.g., use of the Governmentwide

commercial purchase card). This clause

is included in paragraph (b)(25) of the

clause at FAR 52.212–5, Contract Terms

and Conditions Required to Implement

Statutes or Executive Orders—

Commercial Items.

Paragraph (b) of the clause at FAR

52.212–4, Contract Terms and

Conditions—Commercial Items, states

that a contractor may assign its rights to

receive payments due as a result of

performance of the contract, but

paragraph (b) does not include the

prohibition against the assignment of

claims if payment is made by a third

party (e.g., use of the Governmentwide

commercial purchase card). FAR

12.302(b) further states that the

contracting officer shall not tailor FAR

52.212–4(b).

The purpose of this rule is to correct

the inconsistency between FAR 52.212–

4(b) and FAR 52.212–5(b)(25). The rule

revises FAR 52.212–4(b) to add the

prohibition against the assignment of

claims when payment is made by a third

party.

This is not a significant regulatory

action, and therefore, was not subject to

review under Section 6(b) of Executive

Order 12866, Regulatory Planning and

Review, dated September 30, 1993. This

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

804.

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, the

Councils will consider comments from

small entities concerning the affected

FAR part 52 in accordance with 5 U.S.C.

610. Interested parties must submit such

comments separately and should cite 5

U.S.C. 601, et seq. (FAC 97–22, FAR

case 1999–021), in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does

not apply because the changes to the

FAR do not impose information

collection requirements that 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: December 22, 2000.

Al Matera,

Acting Director, Federal Acquisition Policy

Division.

Therefore, DoD, GSA, and NASA

amend 48 CFR part 52 as set forth

below:

PART 52—SOLICITATION PROVISIONS

AND CONTRACT CLAUSES

1. The authority citation for 48 CFR

part 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).

2. Amend section 52.212–4 by

revising the date of the clause and

paragraph (b) to read as follows: