[Federal Register Volume 72, Number 215 (Wednesday, November 7, 2007)]
[Rules and Regulations]
[Pages 63027-63040]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-5477]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 7, 18, 28, 32, 33, 43, 50, and 52

[FAC 2005-21; FAR Case 2006-023; Item I; Docket 2007-0001, Sequence 8]
RIN 9000-AK75


Federal Acquisition Regulation; FAR Case 2006-023, SAFETY Act: 
Implementation of DHS Regulations

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Interim rule with request for comments.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed on an interim 
rule amending the Federal Acquisition Regulation (FAR) to implement the 
Department of Homeland Security (DHS) regulations on the SAFETY Act.

DATES: Effective Date: November 7, 2007.
    Comment Date: Interested parties should submit written comments to 
the FAR Secretariat on or before January 7, 2008 to be considered in 
the formulation of a final rule.

ADDRESSES: Submit comments identified by FAC 2005-21, FAR case 2006-
023, by any of the following methods:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. To 
search for any document, first select under ``Step 1,'' ``Documents 
with an Open Comment Period'' and select under ``Optional Step 2,'' 
``Federal Acquisition Regulation'' as the agency of choice. Under 
``Optional Step 3,'' select ``Rules''. Under ``Optional Step 4,'' from 
the drop down list, select ``Document Title'' and type the FAR case 
number ``2006-023''. Click the ``Submit'' button. Please include your 
name and company name (if any) inside the document.
    You may also search for any document by clicking on the ``Search 
for Documents'' tab at the top of the screen. Select from the agency 
field ``Federal Acquisition Regulation'', and type ``2006-023'' in the 
``Document Title'' field. Select the ``Submit'' button.
    <bullet> Fax: 202-501-4067.
    <bullet> Mail: General Services Administration, Regulatory 
Secretariat

[[Page 63028]]

(VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann Duarte, 
Washington, DC 20405.
    Instructions: Please submit comments only and cite FAC 2005-21, FAR 
case 2006-023, in all correspondence related to this case. All comments 
received will be posted without change to http://www.regulations.gov. 
Please include your name and company name (if any) inside the document.

FOR FURTHER INFORMATION CONTACT Mr. Edward Loeb, Procurement Analyst, 
at (202) 501-0650 for clarification of content. Please cite FAC 2005-
21, FAR case 2006-023. For information pertaining to status or 
publication schedules, contact the FAR Secretariat at (202) 501-4755.

SUPPLEMENTARY INFORMATION:

A. Background

    1. The SAFETY Act and the Department of Homeland Security 
Regulations.
    As part of the Homeland Security Act of 2002, Public Law 107--296, 
Congress enacted liability protections for providers of certain anti-
terrorism technologies. (The Support Anti-terrorism by Fostering 
Effective Technologies Act of 2002 (SAFETY Act), 6 U.S.C. 441-444). The 
SAFETY Act provides incentives for the development and deployment of 
anti-terrorism technologies by creating a system of ``risk management'' 
and a system of ``litigation management.'' The purpose of the SAFETY 
Act is to ensure that the threat of liability does not deter potential 
manufacturers or sellers of anti-terrorism technologies from 
developing, deploying, and commercializing technologies that could save 
lives.
    The Department of Homeland Security (DHS) published a final rule 
(71 FR 33147, June 8, 2006, effective July 10, 2006), at 6 CFR Part 25. 
Liability limitations are conferred by DHS issuing the seller either a 
``SAFETY Act designation'' or ``SAFETY Act certification'' that their 
technology is Qualified Anti-Terrorism Technology (QATT). Sellers must 
submit an application to be considered by DHS.
    The DHS SAFETY Act certification of a technology as an ``approved 
product'' (proven to be safe and effective) confers a critical 
additional benefit over SAFETY Act designation. It confers a rebuttable 
presumption that sellers are entitled to the ``government contractor 
defense'' (Sec.  442(d)). In essence, the ``government contractor 
defense'' means that any seller of an ``approved product'' cannot be 
held liable for design defects.
    The SAFETY Act applies to a broad range of technologies, including 
products, services, and software, or combinations thereof, as long as 
DHS determines that a technology merits Designation. DHS may designate 
a system containing many component technologies (including products and 
services) or may designate specific component technologies 
individually. Further, as the statutory criteria suggest, a QATT need 
not be newly developed - it may have already been employed (e.g., 
``prior United States government use'') or may be a new application of 
an existing technology.
    In DHS's final rule implementing the SAFETY Act, DHS established a 
streamlined review procedure for providing SAFETY Act coverage for 
qualified sellers of certain categories of technologies. Those 
designations or certifications are known as ``block designations'' or 
``block certifications.''
    DHS also established another streamlined procedure where a 
contracting agency can seek a preliminary determination of SAFETY Act 
applicability, a ``pre-qualification designation notice,'' with respect 
to a technology to be procured by the Government.
    2. FAR Subpart 50.1, Extraordinary contractual actions.
    Existing Part 50 is renumbered as Subpart 50.1, with conforming 
changes in Parts 1, 18, 28, 32, 33, and 43. The additional coverage at 
50.101-1(b) and 50.102-3(f) reflects the transfer and delegation of 
certain functions to, and other responsibilities vested in, the 
Secretary of DHS, including the DHS's SAFETY Act responsibilities, 
based on E.O. 13286.
    3. FAR Subpart 50.2, SAFETY Act.
    The coverage for the SAFETY Act will be new Subpart 50.2.
    Policy. One of the most significant sections is new section 50.204. 
This section provides the overarching policy for implementing the 
SAFETY Act in Government acquisitions. For example, paragraph (a) 
provides that agencies should--
    <bullet> Determine whether the technology to be procured is 
appropriate for SAFETY Act protections;
    <bullet> Encourage offerors to seek SAFETY Act protections for 
their offered technologies, even in advance of the issuance of a 
solicitation; and
    <bullet> Not mandate SAFETY Act protections for acquisitions 
because applying for SAFETY Act protections for a particular technology 
is the choice of the offeror.
    SAFETY Act considerations. New section 50.205-1 ensures that SAFETY 
Act considerations are made an integral part of each agency's 
acquisition planning procedures, and that contracting officers give 
adequate lead time in their acquisition plans to account for DHS's 
review process of SAFETY Act applications. A reference to the SAFETY 
Act was also added at 7.105, Contents of written acquisition plan.
    Block designation and block certification. In 50.205-1(a), this 
case includes coverage for block designations and block certifications. 
The requiring activity must check with DHS as to whether a block 
designation or block certification exists. If one does, then the 
requiring activity must inform the contracting officer. The contracting 
officer will then incorporate the block designations and block 
certifications, as applicable, in any solicitation or advanced public 
notice to inform potential offerors.
    Pre-qualification designation notice. In accordance with 50.205-2, 
if a block designation or block certification does not exist, then the 
requiring activity must request DHS to issue a pre-qualification 
designation notice and inform the contracting officer if DHS issues the 
notice. The contracting officer will then incorporate the pre-
qualification designation notice in any solicitation or advanced public 
notice to inform potential offerors of the notice.
    4. New provisions and clause.
    Provisions and a clause have been added to assist agencies and 
contracting officers in interfacing with DHS on SAFETY Act matters, 
including coverage concerning block designations and block 
certifications, and pre-qualification designation notices.
    SAFETY Act Coverage Not Applicable. Contracting officers are 
required to insert FAR 52.250-2, SAFETY Act Coverage Not Applicable, 
if, after consultation with DHS, the agency has determined that SAFETY 
Act protection is not applicable for the acquisition, or DHS denies 
approval of a pre-qualification designation notice.
    Basic Provisions. Contracting officers are required to insert 
52.250-3, SAFETY Act Block Designation/ Certification, or 52.250-4, 
SAFETY Act Pre-qualification Designation Notice, in solicitations when 
DHS has issued a block designation/certification or a pre-qualification 
designation notice, respectively, for the solicited technologies. These 
provisions inform offerors of the terms of the block designation/block 
certification or pre-qualification designation notice. These basic 
provisions do not permit submission of offers contingent upon SAFETY 
Act designation or certification of the proposed product(s) or 
service(s).
    Alternate I - Contingent Offers. Alternate I of each basic 
provision

[[Page 63029]]

permits offerors to submit offers contingent on DHS issuing a SAFETY 
Act designation or certification. Under this first alternate, 
contracting officers may permit such contingent offers only if--
    <bullet> DHS has issued, for offers contingent upon SAFETY Act 
designation, a pre-qualification designation notice or a block 
designation, or for offers contingent upon SAFETY Act certification, a 
block certification;
    <bullet> The Government has not provided advance notice so that 
potential offerors could have obtained SAFETY Act designations/
certifications for their offered technologies before release of any 
solicitation; and
    <bullet> Market research shows that there will be insufficient 
competition without SAFETY Act protections or the subject technology 
would be sold to the Government only with SAFETY Act protections.
    Offerors may also submit an alternate offer that is not contingent 
on obtaining SAFETY Act protections.
    Alternate II - Presumption of SAFETY Act Protections After Award. 
Alternate II of each basic provision permits offerors to submit offers 
that presume that DHS will issue a SAFETY Act Designation or 
Certification after award. Contracting officers may only use this 
alternate if--
    <bullet> All of the conditions for permitting contingent offers are 
met;
    <bullet> The chief of the contracting office (or other official 
designated in agency procedures) approves the action; and
    <bullet> The contracting officer advises DHS of the timelines for 
potential award and consults DHS as to when DHS could reasonably 
complete evaluations of offerors' applications for SAFETY Act 
designations or certifications.
    If DHS does not issue a SAFETY Act designation or SAFETY Act 
certification to the successful offeror by the time of contract award, 
the contracting officer is then permitted to award the contract with 
the clause at 52.250-5, SAFETY Act-Equitable Adjustment, which allows 
for an equitable adjustment in the event DHS denies the contractor's 
SAFETY Act application.
    If DHS has issued a SAFETY Act designation or certification to the 
successful offeror, then the contracting officer will award the 
contract without the clause at 52.250-5.
    5. Public Meeting.
    A decision has not been made whether to hold a public meeting. If 
you would like to request a meeting, please contact Mr. Edward Loeb at 
(202) 501-0650, within three weeks of the publication of this interim 
rule.
    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 interim rule is not expected to 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 this 
rule imposes no burdens on businesses. Instead, it allows businesses to 
more easily take advantage of a Department of Homeland Security 
regulation published June 8, 2006, at 6 CFR 25. The Department of 
Homeland Security certified in their rule that there would be no 
significant impact on a substantial number of small entities. 
Therefore, an Initial Regulatory Flexibility Analysis has not been 
performed. The Councils will consider comments from small entities 
concerning the affected FAR Parts 1, 7, 18, 28, 32, 33, 43, 50, and 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 2005-21, 
FAR case 2006-023), in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does apply; however, these changes to 
the FAR do not impose additional information collection requirements to 
the paperwork burden previously approved under OMB Control Numbers 
1640-0001 through 1640-0006, under applications made to OMB by the 
Department of Homeland Security.

D. Determination to Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DoD), the Administrator of General Services (GSA), and the 
Administrator of the National Aeronautics and Space Administration 
(NASA) that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comment. This action 
is necessary because the SAFETY Act was signed into law on November 25, 
2002 (Pub. L. 107-296). The primary implementing regulations were 
promulgated by the Department of Homeland Security on June 8, 2006, 
effective July 10, 2006 (71 FR 33147). Unless DHS's final rule is 
integrated into the Federal acquisition system and the SAFETY Act's 
benefits are made available to contractors, the Government will not be 
able to procure the necessary technologies to protect the nation from 
acts of terrorism. These amendments to the Federal Acquisition 
Regulation are therefore necessary to integrate the benefits of the 
SAFETY Act into the Federal acquisition system and promote effective 
acquisition of anti-terrorism technologies and services.
    However, pursuant to Public Law 98-577 and FAR 1.501, the Councils 
will consider public comments received in response to this interim rule 
in the formation of the final rule.

List of Subjects in 48 CFR Parts 1, 7, 18, 28, 32, 33, 43, 50, and 
52

    Government procurement.

    Dated: October 31, 2007.
Al Matera,
Director, Office of Acquisition Policy.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 1, 7, 18, 28, 32, 33, 
43, 50, and 52 as set forth below:
0
1. The authority citation for 48 CFR parts 1, 7, 18, 28, 32, 33, 43, 
50, and 52 continues to read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM


1.602   [Amended]

0
2. Amend section 1.602-3 by removing from paragraph (d) ``part 50'' and 
adding ``Subpart 50.1'' in its place.

PART 7--ACQUISITION PLANNING

0
3. Amend section 7.105 by revising paragraph (b)(19) to read as 
follows:


7.105  Contents of written acquisition plans.

* * * * *
    (b) * * *
    (19) Other considerations. Discuss, as applicable:
    (i) Standardization concepts;
    (ii) The industrial readiness program;
    (iii) The Defense Production Act;
    (iv) The Occupational Safety and Health Act;
    (v) Support Anti-terrorism by Fostering Effective Technologies Act 
of 2002 (SAFETY Act) (see Subpart 50.2);
    (vi) Foreign sales implications; and
    (vii) Any other matters germane to the plan not covered elsewhere.
* * * * *

PART 18--EMERGENCY ACQUISITIONS


18.121   [Amended]

0
4. Amend section 18.121 by removing ``Part 50'' and adding ``Subpart 
50.1'' in its place.

[[Page 63030]]

18.126   [Amended]

0
5. Amend section 18.126 by--
0
a. Removing from the introductory text ``Part 50'' and adding ``Subpart 
50.1'' in its place;
0
b. Removing from paragraph (a) ``50.302-1'' and adding ``50.103-2(a)'' 
in its place;
0
c. Removing from paragraph (b) ``50.302-2'' and adding ``50.103-2(b)'' 
in its place; and
0
d. Removing from paragraph (c) ``50.302-3'' and adding ``50.103-2(c)'' 
in its place.

PART 28--BONDS AND INSURANCE


28.308  [Amended]

0
6. Amend section 28.308 by removing from paragraph (e) ``50.403'' and 
adding ``50.104-3'' in its place.

PART 32--CONTRACT FINANCING


32.401  [Amended]

0
7. Amend section 32.401 by removing from paragraph (c) ``part 50 of the 
Federal Acquisition Regulation (FAR)'' and adding ``Subpart 50.1'' in 
its place.


32.402  [Amended]

0
8. Amend section 32.402 by--
0
a. Removing from paragraph (a) ``FAR 50.203(b)(4)'' and adding 
``50.102-3(b)(4)'' in its place;
0
b. Removing from paragraph (e)(1) ``50.201(b)'' and adding ``50.102-
1(b)'' in its place; and
0
c. Removing from paragraph (f) ``FAR 50.307'' and adding ``50.103-7'' 
in its place.


32.405   [Amended]

0
9. Amend section 32.405 by removing from paragraph (a) ``50.101(a)'' 
and adding ``50.101-1(a)'' in its place.

PART 33--PROTESTS, DISPUTES, AND APPEALS

0
10. Amend section 33.205 by removing from paragraphs (a) and (c) ``part 
50'' and adding ``Subpart 50.1'', each time it appears (three times), 
in its place.

PART 43--CONTRACT MODIFICATIONS


43.000   [Amended]

0
11. Amend section 43.000 by removing from paragraph (b) ``part 50'' and 
adding ``Subpart 50.1'' in its place.

0
12. Revise Part 50 to read as follows:

PART 50--EXTRAORDINARY CONTRACTUAL ACTIONS AND THE SAFETY ACT

Sec.
50.000 Scope of part.
Subpart 50.1--Extraordinary Contractual Actions
50.100 Definitions.
50.101 General.
50.101-1 Authority.
50.101-2 Policy.
50.101-3 Records.
50.102 Delegation of and limitations on exercise of authority.
50.102-1 Delegation of authority.
50.102-2 Contract adjustment boards.
50.102-3 Limitations on exercise of authority.
50.103 Contract adjustments.
50.103-1 General.
50.103-2 Types of contract adjustment.
50.103-3 Contract adjustment.
50.103-4 Facts and evidence.
50.103-5 Processing cases.
50.103-6 Disposition.
50.103-7 Contract requirements.
50.104 Residual powers.
50.104-1 Standards for use.
50.104-2 General.
50.104-3 Special procedures for unusually hazardous or nuclear 
risks.
50.104-4 Contract clause.
Subpart 50.2--Support Anti-terrorism by Fostering Effective 
Technologies Act of 2002
50.200 Scope of subpart.
50.201 Definitions.
50.202 Authorities.
50.203 General.
50.204 Policy.
50.205 Procedures.
50.205-1 SAFETY Act considerations.
50.205-2 Pre-qualification designation notice.
50.205-3 Authorization of offers contingent upon SAFETY Act 
designation or certification before contract award.
50.205-4 Authorization of awards made presuming SAFETY Act 
designation or certification after contract award.
50.206 Solicitation provisions and contract clause.

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).


50.000   Scope of part.

    This part--
    (a)(1) Prescribes policies and procedures for entering into, 
amending, or modifying contracts in order to facilitate the national 
defense under the extraordinary emergency authority granted by Public 
Law 85-804 (50 U.S.C. 1431--1434) and Executive Order 10789, dated 
November 14, 1958. It does not cover advance payments (see Subpart 
32.4); and
    (2) Implements indemnification authority granted by Pub. L. 85-804 
and paragraph 1A of E.O. 10789 with respect to any matter that has 
been, or could be, designated by the Secretary of Homeland Security as 
a qualified anti-terrorism technology as defined in the Support Anti-
terrorism by Fostering Effective Technologies Act of 2002 (SAFETY Act); 
and
    (b) Implements SAFETY Act liability protections to promote 
development and use of anti-terrorism technologies.

Subpart 50.1--Extraordinary Contractual Actions


50.100   Definitions.

    As used in this part--
    Approving authority means an agency official or contract adjustment 
board authorized to approve actions under Pub. L. 85-804 and E.O. 
10789.
    Secretarial level means a level at or above the level of a deputy 
assistant agency head, or a contract adjustment board.


50.101   General.


50.101-1   Authority.

    (a) Pub. L. 85-804 empowers the President to authorize agencies 
exercising functions in connection with the national defense to enter 
into, amend, and modify contracts, without regard to other provisions 
of law related to making, performing, amending, or modifying contracts, 
whenever the President considers that such action would facilitate the 
national defense.
    (b) E.O. 10789 authorizes the heads of the following agencies to 
exercise the authority conferred by Pub. L. 85-804 and to delegate it 
to other officials within the agency: the Government Printing Office; 
the Department of Homeland Security; the Tennessee Valley Authority; 
the National Aeronautics and Space Administration; the General Services 
Administration; the Defense, Army, Navy, Air Force, Treasury, Interior, 
Agriculture, Commerce, and Transportation Departments; the Department 
of Energy for functions transferred to that Department from other 
authorized agencies; and any other agency that may be authorized by the 
President.


50.101-2   Policy.

    (a) The authority conferred by Pub. L. 85-804 may not--
    (1) Be used in a manner that encourages carelessness and laxity on 
the part of persons engaged in the defense effort; or
    (2) Be relied upon when other adequate legal authority exists 
within the agency.
    (b) Actions authorized under Pub. L. 85-804 shall be accomplished 
as expeditiously as practicable, consistent with the care, restraint, 
and exercise of sound judgment appropriate to the use of such 
extraordinary authority.
    (c) Certain kinds of relief previously available only under Pub. L. 
85-804; e.g., rescission or reformation for mutual mistake, are now 
available under the

[[Page 63031]]

authority of the Contract Disputes Act of 1978. In accordance with 
paragraph (a)(2) of this subsection, Part 33 must be followed in 
preference to Subpart 50.1 for such relief. In case of doubt as to 
whether Part 33 applies, the contracting officer should seek legal 
advice.


50.101-3  Records.

    Agencies shall maintain complete records of all actions taken under 
this Subpart 50.1. For each request for relief processed, these records 
shall include, as a minimum--
    (a) The contractor's request;
    (b) All relevant memorandums, correspondence, affidavits, and other 
pertinent documents;
    (c) The Memorandum of Decision (see 50.103-6 and 50.104-2); and
    (d) A copy of the contractual document implementing an approved 
request.


50.102   Delegation of and limitations on exercise of authority.


50.102-1   Delegation of authority.

    An agency head may delegate in writing authority under Pub. L. 85-
804 and E.O. 10789, subject to the following limitations:
    (a) Authority delegated shall be to a level high enough to ensure 
uniformity of action.
    (b) Authority to approve requests to obligate the Government in 
excess of $55,000 may not be delegated below the secretarial level.
    (c) Regardless of dollar amount, authority to approve any amendment 
without consideration that increases the contract price or unit price 
may not be delegated below the secretarial level, except in 
extraordinary cases or classes of cases when the agency head finds that 
special circumstances clearly justify such delegation.
    (d) Regardless of dollar amount, authority to indemnify against 
unusually hazardous or nuclear risks, including extension of such 
indemnification to subcontracts, shall be exercised only by the 
Secretary or Administrator of the agency concerned, the Public Printer, 
or the Chairman of the Board of Directors of the Tennessee Valley 
Authority (see 50.104-3).


50.102-2   Contract adjustment boards.

    An agency head may establish a contract adjustment board with 
authority to approve, authorize, and direct appropriate action under 
this Subpart 50.1 and to make all appropriate determinations and 
findings. The decisions of the board shall not be subject to appeal; 
however, the board may reconsider and modify, correct, or reverse its 
previous decisions. The board shall determine its own procedures and 
have authority to take all action necessary or appropriate to conduct 
its functions.


50.102-3  Limitations on exercise of authority.

    (a) Pub. L. 85-804 is not authority for--
    (1) Using a cost-plus-a-percentage-of-cost system of contracting;
    (2) Making any contract that violates existing law limiting profit 
or fees;
    (3) Providing for other than full and open competition for award of 
contracts for supplies or services; or
    (4) Waiving any bid bond, payment bond, performance bond, or other 
bond required by law.
    (b) No contract, amendment, or modification shall be made under 
Pub. L. 85-804's authority--
    (1) Unless the approving authority finds that the action will 
facilitate the national defense;
    (2) Unless other legal authority within the agency concerned is 
deemed to be lacking or inadequate;
    (3) Except within the limits of the amounts appropriated and the 
statutory contract authorization (however, indemnification agreements 
authorized by an agency head (50.104-3) are not limited to amounts 
appropriated or to contract authorization); and
    (4) That will obligate the Government for any amount over $28.5 
million, unless the Senate and House Committees on Armed Services are 
notified in writing of the proposed obligation and 60 days of 
continuous session of Congress have passed since the transmittal of 
such notification. However, this paragraph (b)(4) does not apply to 
indemnification agreements authorized under 50.104-3.
    (c) No contract shall be amended or modified unless the contractor 
submits a request before all obligations (including final payment) 
under the contract have been discharged. No amendment or modification 
shall increase the contract price to an amount higher than the lowest 
rejected bid of any responsible bidder, if the contract was negotiated 
under 10 U.S.C. 2304(a)(15) or 41 U.S.C. 252(c)(14), or FAR 14.404-
1(f).
    (d) No informal commitment shall be formalized unless--
    (1) The contractor submits a written request for payment within 6 
months after furnishing, or arranging to furnish, supplies or services 
in reliance upon the commitment; and
    (2) The approving authority finds that, at the time the commitment 
was made, it was impracticable to use normal contracting procedures.
    (e) The exercise of authority by officials below the secretarial 
level is subject to the following additional limitations:
    (1) The action shall not--
    (i) Release a contractor from performance of an obligation over 
$55,000;
    (ii) Result in an increase in cost to the Government over $55,000;
    (iii) Deal with, or directly affect, any matter that has been 
submitted to the Government Accountability Office; or
    (iv) Involve disposal of Government surplus property.
    (2) Mistakes shall not be corrected by an action obligating the 
Government for over $1,000, unless the contracting officer receives 
notice of the mistake before final payment.
    (3) The correction of a contract because of a mistake in its making 
shall not increase the original contract price to an amount higher than 
the next lowest responsive offer of a responsible offeror.
    (f) No executive department or agency shall exercise the 
indemnification authority granted under paragraph 1A of E.O. 10789 with 
respect to any supply or service that has been, or could be, designated 
by the Secretary of Homeland Security as a qualified anti-terrorism 
technology unless--
    (1) For the Department of Defense, the Secretary of Defense has 
determined that the exercise of authority under E.O. 10789 is necessary 
for the timely and effective conduct of the United States military or 
intelligence activities, after consideration of the authority provided 
under the SAFETY Act (Subtitle G of title VIII of the Homeland Security 
Act of 2002, 6 U.S.C. 441-444); or
    (2) For other departments and agencies that have authority under 
E.O. 10789--
    (i) The Secretary of Homeland Security has advised whether the use 
of the authority under the SAFETY Act would be appropriate; and
    (ii) The Director of the Office of Management and Budget has 
approved the exercise of authority under the Executive order.


50.103   Contract adjustments.

    This section prescribes standards and procedures for processing 
contractors' requests for contract adjustment under Pub. L. 85-804 and 
E.O. 10789.


50.103-1  General.

    The fact that losses occur under a contract is not sufficient basis 
for exercising the authority conferred by Pub. L. 85-804. Whether 
appropriate action will facilitate the national defense is a judgment 
to be made on the

[[Page 63032]]

basis of all of the facts of the case. Although it is impossible to 
predict or enumerate all the types of cases in which action may be 
appropriate, examples are included in 50.103-2. Even if all of the 
factors in any of the examples are present, other considerations may 
warrant denying a contractor's request for contract adjustment. The 
examples are not intended to exclude other cases in which the approving 
authority determines that the circumstances warrant action.


50.103-2  Types of contract adjustment.

    (a) Amendments without consideration. (1) When an actual or 
threatened loss under a defense contract, however caused, will impair 
the productive ability of a contractor whose continued performance on 
any defense contract or whose continued operation as a source of supply 
is found to be essential to the national defense, the contract may be 
amended without consideration, but only to the extent necessary to 
avoid such impairment to the contractor's productive ability.
    (2) When a contractor suffers a loss (not merely a decrease in 
anticipated profits) under a defense contract because of Government 
action, the character of the action will generally determine whether 
any adjustment in the contract will be made, and its extent. When the 
Government directs its action primarily at the contractor and acts in 
its capacity as the other contracting party, the contract may be 
adjusted in the interest of fairness. Thus, when Government action, 
while not creating any liability on the Government's part, increases 
performance cost and results in a loss to the contractor, fairness may 
make some adjustment appropriate.
    (b) Correcting mistakes. (1) A contract may be amended or modified 
to correct or mitigate the effect of a mistake. The following are 
examples of mistakes that may make such action appropriate:
    (i) A mistake or ambiguity consisting of the failure to express, or 
express clearly, in a written contract, the agreement as both parties 
understood it.
    (ii) A contractor's mistake so obvious that it was or should have 
been apparent to the contracting officer.
    (iii) A mutual mistake as to a material fact.
    (2) Amending contracts to correct mistakes with the least possible 
delay normally will facilitate the national defense by expediting the 
contracting program and assuring contractors that mistakes will be 
corrected expeditiously and fairly.
    (c) Formalizing informal commitments. Under certain circumstances, 
informal commitments may be formalized to permit payment to persons who 
have taken action without a formal contract; for example, when a 
person, responding to an agency official's written or oral instructions 
and relying in good faith upon the official's apparent authority to 
issue them, has furnished or arranged to furnish supplies or services 
to the agency, or to a defense contractor or subcontractor, without 
formal contractual coverage. Formalizing commitments under such 
circumstances normally will facilitate the national defense by assuring 
such persons that they will be treated fairly and paid expeditiously.


50.103-3   Contract adjustment.

    (a) Contractor requests. A contractor seeking a contract adjustment 
shall submit a request in duplicate to the contracting officer or an 
authorized representative. The request, normally a letter, shall state 
as a minimum--
    (1) The precise adjustment requested;
    (2) The essential facts, summarized chronologically in narrative 
form;
    (3) The contractor's conclusions based on these facts, showing, in 
terms of the considerations set forth in 50.103-1 and 50.103-2, when 
the contractor considers itself entitled to the adjustment; and
    (4) Whether or not--
    (i) All obligations under the contracts involved have been 
discharged;
    (ii) Final payment under the contracts involved has been made;
    (iii) Any proceeds from the request will be subject to assignment 
or other transfer, and to whom; and
    (iv) The contractor has sought the same, or a similar or related, 
adjustment from the Government Accountability Office or any other part 
of the Government, or anticipates doing so.
    (b) Contractor certification. A contractor seeking a contract 
adjustment that exceeds the simplified acquisition threshold shall, at 
the time the request is submitted, submit a certification by a person 
authorized to certify the request on behalf of the contractor that--
    (1) The request is made in good faith; and
    (2) The supporting data are accurate and complete to the best of 
that person's knowledge and belief.


50.103-4   Facts and evidence.

    (a) General. When it is appropriate, the contracting officer or 
other agency official shall request the contractor to support any 
request made under 50.103-3(a) with any of the following information:
    (1) A brief description of the contracts involved, the dates of 
execution and amendments, the items being acquired, the price or 
prices, the delivery schedules, and any special contract provisions 
relevant to the request.
    (2) A history of performance indicating when work under the 
contracts or commitments began, the progress made to date, an exact 
statement of the contractor's remaining obligations, and the 
contractor's expectations regarding completion.
    (3) A statement of payments received, due, and yet to be received 
or to become due, including advance and progress payments; amounts 
withheld by the Government; and information as to any obligations of 
the Government yet to be performed under the contracts.
    (4) A detailed analysis of the request's monetary elements, 
including precisely how the actual or estimated dollar amount was 
determined and the effect of approval or denial on the contractor's 
profits before Federal income taxes.
    (5) A statement of the contractor's understanding of why the 
request's subject matter cannot now, and could not at the time it 
arose, be disposed of under the contract terms.
    (6) The best supporting evidence available to the contractor, 
including contemporaneous memorandums, correspondence, and affidavits.
    (7) Relevant financial statements, cost analyses, or other such 
data, preferably certified by a certified public accountant, as 
necessary to support the request's monetary elements.
    (8) A list of persons connected with the contracts who have factual 
knowledge of the subject matter, including, when possible, their names, 
offices or titles, addresses, and telephone numbers.
    (9) A statement and evidence of steps taken to reduce losses and 
claims to a minimum.
    (10) Any other relevant statements or evidence that may be 
required.
    (b) Amendments without consideration--essentiality a factor. When a 
request involves possible amendment without consideration, and 
essentiality to the national defense is a factor (50.103-2(a)(1)), the 
contractor may be asked to furnish, in addition to the facts and 
evidence listed in paragraph (a) of this subsection, any of the 
following information:
    (1) A statement and evidence of the contractor's original breakdown 
of estimated costs, including contingency allowances, and profit.
    (2) A statement and evidence of the contractor's present estimate 
of total costs under the contracts involved if it is enabled to 
complete them, broken down between costs accrued to date and

[[Page 63033]]

completion costs, and between costs paid and those owed.
    (3) A statement and evidence of the contractor's estimate of the 
final price of the contracts, taking into account all known or 
contemplated escalation, changes, extras, and the like.
    (4) A statement of any claims known or contemplated by the 
contractor against the Government involving the contracts, other than 
those stated in response to paragraph (b)(3) of this subsection.
    (5) An estimate of the contractor's total profit or loss under the 
contracts if it is enabled to complete them at the estimated final 
contract price, broken down between profit or loss to date and 
completion profit or loss.
    (6) An estimate of the contractor's total profit or loss from other 
Government business and all other sources, from the date of the first 
contract involved to the estimated completion date of the last contract 
involved.
    (7) A statement of the amount of any tax refunds to date, and an 
estimate of those anticipated, for the period from the date of the 
first contract involved to the estimated completion date of the last 
contract involved.
    (8) A detailed statement of efforts the contractor has made to 
obtain funds from commercial sources to enable contract completion.
    (9) A statement of the minimum amount the contractor needs as an 
amendment without consideration to enable contract completion, and the 
detailed basis for that amount.
    (10) A estimate of the time required to complete each contract if 
the request is granted.
    (11) A statement of the factors causing the loss under the 
contracts involved.
    (12) A statement of the course of events anticipated if the request 
is denied.
    (13) Balance sheets, preferably certified by a certified public 
accountant, (i) for the contractor's fiscal year immediately preceding 
the date of the first contract, (ii) for each subsequent fiscal year, 
(iii) as of the request date, and (iv) projected as of the completion 
date of all the contracts involved (assuming the contractor is enabled 
to complete them at the estimated final prices), together with income 
statements for annual periods subsequent to the date of the first 
balance sheet. Balance sheets and income statements should be both 
consolidated and broken down by affiliates. They should show all 
transactions between the contractor and its affiliates, stockholders, 
and partners, including loans to the contractor guaranteed by any 
stockholder or partner.
    (14) A list of all salaries, bonuses, and other compensation paid 
or furnished to the principal officers or partners, and of all 
dividends and other withdrawals, and of all payments to stockholders in 
any form since the date of the first contract involved.
    (c) Amendments without consideration--essentiality not a factor. 
When a request involves possible amendment without consideration 
because of Government action, and essentiality to the national defense 
is not a factor (50.103-2(a)(2)), the contractor may be asked to 
furnish, in addition to the facts and evidence listed in paragraph (a) 
of this subsection, any of the following information:
    (1) A clear statement of the precise Government action that the 
contractor considers to have caused a loss under the contract, with 
evidence to support each essential fact.
    (2) A statement and evidence of the contractor's original breakdown 
of estimated costs, including contingency allowances, and profit.
    (3) The estimated total loss under the contract, with detailed 
supporting analysis.
    (4) The estimated loss resulting specifically from the Government 
action, with detailed supporting analysis.
    (d) Correcting mistakes. When a request involves possible 
correction of a mistake (50.103-2(b)), the contractor may be asked to 
furnish, in addition to the facts and evidence listed in paragraph (a) 
of this subsection, any of the following information:
    (1) A statement and evidence of the precise error made, ambiguity 
existing, or misunderstanding arising, showing what it consists of, how 
it occurred, and the intention of the parties.
    (2) A statement explaining when the mistake was discovered, when 
the contracting officer was given notice of it, and whether this notice 
was given before completion of work under, or the effective termination 
date of, the contract.
    (3) An estimate of profit or loss under the contract, with detailed 
supporting analysis.
    (4) An estimate of the increase in cost to the Government resulting 
from the adjustment requested, with detailed supporting analysis.
    (e) Formalizing informal commitments. When a request involves 
possible formalizing of an informal commitment (50.103-2(c)), the 
contractor may be asked to furnish, in addition to the facts and 
evidence listed in paragraph (a) of this subsection, any of the 
following information:
    (1) Copies of any written instructions or assurances (or a sworn 
statement of any oral instructions or assurances) given the contractor, 
and identification of the Government official who gave them.
    (2) A statement as to when the contractor furnished or arranged to 
furnish the supplies or services involved, and to whom.
    (3) Evidence that the contractor relied upon the instructions or 
assurances, with a full description of the circumstances that led to 
this reliance.
    (4) Evidence that, when performing the work, the contractor 
expected to be compensated directly for it by the Government and did 
not anticipate recovering the costs in some other way.
    (5) A cost breakdown supporting the amount claimed as fair 
compensation for the work performed.
    (6) A statement and evidence of the impracticability of providing, 
in an appropriate contractual instrument, for the work performed.


50.103-5   Processing cases.

    (a) In response to a contractor request made in accordance with 
50.103-3(a), the contracting officer or an authorized representative 
shall make a thorough investigation to establish the facts necessary to 
decide a given case. Facts and evidence, including signed statements of 
material facts within the knowledge of individuals when documentary 
evidence is lacking, and audits if considered necessary to establish 
financial or cost facts, shall be obtained from contractor and 
Government personnel.
    (b) When a case involves matters of interest to more than one 
Government agency, the interested agencies should maintain liaison with 
each other to determine whether joint action should be taken.
    (c) When additional funds are required from another agency, the 
contracting agency may not approve adjustment requests before receiving 
advice that the funds will be available. The request for this advice 
shall give the contractor's name, the contract number, the amount of 
proposed relief, a brief description of the contract, and the 
accounting classification or fund citation. If the other agency makes 
additional funds available, the agency considering the adjustment 
request shall be solely responsible for any action taken on the 
request.
    (d) When essentiality to the national defense is an issue (50.103-
2(a)(1)), agencies considering requests for amendment without 
consideration

[[Page 63034]]

involving another agency shall obtain advice on the issue from the 
other agency before making the final decision. When this advice is 
received, the agency considering the request for amendment without 
consideration shall be responsible for taking whatever action is 
appropriate.


50.103-6   Disposition.

    When approving or denying a contractor's request made in accordance 
with 50.103-3(a), the approving authority shall sign and date a 
Memorandum of Decision containing--
    (a) The contractor's name and address, the contract identification, 
and the nature of the request;
    (b) A concise description of the supplies or services involved;
    (c) The decision reached and the actual cost or estimated potential 
cost involved, if any;
    (d) A statement of the circumstances justifying the decision;
    (e) Identification of any of the foregoing information classified 
``Confidential'' or higher (instead of being included in the 
memorandum, such information may be set forth in a separate classified 
document referenced in the memorandum); and
    (f) If some adjustment is approved, a statement in substantially 
the following form: ``I find that the action authorized herein will 
facilitate the national defense.'' The case files supporting this 
statement will show the derivation and rationale for the dollar amount 
of the award. When the dollar amount exceeds the amounts supported by 
audit or other independent reviews, the approving authority will 
further document the rationale for deviating from the recommendation.


50.103-7   Contract requirements.

    (a) Pub. L. 85-804 and E.O. 10789 require that every contract 
entered into, amended, or modified under this Subpart 50.1 shall 
contain--
    (1) A citation of Pub. L. 85-804 and E.O. 10789;
    (2) A brief statement of the circumstances justifying the action; 
and
    (3) A recital of the finding that the action will facilitate the 
national defense.
    (b) The authority in 50.101-1(a) shall not be used to omit from 
contracts, when otherwise required, the clauses at 52.203-5, Covenant 
Against Contingent Fees; 52.215-2, Audit and Records--Negotiation; 
52.222-4, Contract Work Hours and Safety Standards Act--Overtime 
Compensation; 52.222-6, Davis-Bacon Act; 52.222-10, Compliance With 
Copeland Act Requirements; 52.222-20, Walsh-Healey Public Contracts 
Act; 52.222-26, Equal Opportunity; and 52.232-23, Assignment of Claims.


50.104   Residual powers.

    This section prescribes standards and procedures for exercising 
residual powers under Pub. L. 85-804. The term ``residual powers'' 
includes all authority under Pub. L. 85-804 except--
    (a) That covered by section 50.103; and
    (b) The authority to make advance payments (see Subpart 32.4).


50.104-1   Standards for use.

    Subject to the limitations in 50.102-3, residual powers may be used 
in accordance with the policies in 50.101-2 when necessary and 
appropriate, all circumstances considered. In authorizing the inclusion 
of the clause at 52.250-1, Indemnification Under Public Law 85-804, in 
a contract or subcontract, an agency head may require the indemnified 
contractor to provide and maintain financial protection of the type and 
amount determined appropriate. In deciding whether to approve use of 
the indemnification clause, and in determining the type and amount of 
financial protection the indemnified contractor is to provide and 
maintain, an agency head shall consider such factors as self-insurance, 
other proof of financial responsibility, workers' compensation 
insurance, and the availability, cost, and terms of private insurance. 
The approval and determination shall be final.


50.104-2  General.

    (a) When approving or denying a proposal for the exercise of 
residual powers, the approving authority shall sign and date a 
Memorandum of Decision containing substantially the same information 
called for by 50.103-6.
    (b) Every contract entered into, amended, or modified under 
residual powers shall comply with the requirements of 50.103-7.


50.104-3   Special procedures for unusually hazardous or nuclear risks.

    (a) Indemnification requests. (1) Contractor requests for the 
indemnification clause to cover unusually hazardous or nuclear risks 
should be submitted to the contracting officer and shall include the 
following information:
    (i) Identification of the contract for which the indemnification 
clause is requested.
    (ii) Identification and definition of the unusually hazardous or 
nuclear risks for which indemnification is requested, with a statement 
indicating how the contractor would be exposed to them.
    (iii) A statement, executed by a corporate official with binding 
contractual authority, of all insurance coverage applicable to the 
risks to be defined in the contract as unusually hazardous or nuclear, 
including--
    (A) Names of insurance companies, policy numbers, and expiration 
dates;
    (B) A description of the types of insurance provided (including the 
extent to which the contractor is self-insured or intends to self-
insure), with emphasis on identifying the risks insured against and the 
coverage extended to persons or property, or both;
    (C) Dollar limits per occurrence and annually, and any other 
limitation, for relevant segments of the total insurance coverage;
    (D) Deductibles, if any, applicable to losses under the policies;
    (E) Any exclusions from coverage under such policies for unusually 
hazardous or nuclear risks; and
    (F) Applicable workers' compensation insurance coverage.
    (iv) The controlling or limiting factors for determining the amount 
of financial protection the contractor is to provide and maintain, with 
information regarding the availability, cost, and terms of additional 
insurance or other forms of financial protection.
    (v) Whether the contractor's insurance program has been approved or 
accepted by any Government agency; and whether the contractor has an 
indemnification agreement covering similar risks under any other 
Government program, and, if so, a brief description of any limitations.
    (vi) If the contractor is a division or subsidiary of a parent 
corporation--
    (A) A statement of any insurance coverage of the parent corporation 
that bears on the risks for which the contractor seeks indemnification; 
and
    (B) A description of the precise legal relationship between parent 
and subsidiary or division.
    (2) If the dollar value of the contractor's insurance coverage 
varies by 10 percent or more from that stated in an indemnification 
request submitted in accordance with paragraph (a)(1) of this 
subsection, or if other significant changes in insurance coverage occur 
after submission and before approval, the contractor shall immediately 
submit to the contracting officer a brief description of the changes.
    (b) Action on indemnification requests. (1) The contracting 
officer, with assistance from legal counsel and cognizant program 
office personnel, shall review the indemnification request

[[Page 63035]]

and ascertain whether it contains all required information. If the 
contracting officer, after considering the facts and evidence, denies 
the request, the contracting officer shall notify the contractor 
promptly of the denial and of the reasons for it. If recommending 
approval, the contracting officer shall forward the request (as 
modified, if necessary, by negotiation) through channels to the 
appropriate official specified in 50.102-1(d). The contracting 
officer's submission shall include all information submitted by the 
contractor and--
    (i) All pertinent information regarding the proposed contract or 
program, including the period of performance, locations, and facilities 
involved;
    (ii) A definition of the unusually hazardous or nuclear risks 
involved in the proposed contract or program, with a statement that the 
parties have agreed to it;
    (iii) A statement by responsible authority that the indemnification 
action would facilitate the national defense;
    (iv) A statement that the contract will involve unusually hazardous 
or nuclear risks that could impose liability upon the contractor in 
excess of financial protection reasonably available;
    (v) A statement that the contractor is complying with applicable 
Government safety requirements;
    (vi) A statement of whether the indemnification should be extended 
to subcontractors; and
    (vii) A description of any significant changes in the contractor's 
insurance coverage (see 50.104-3(a)(2)) occurring since submission of 
the indemnification request.
    (2) Approval of a request to include the indemnification clause in 
a contract shall be by a Memorandum of Decision executed by the 
appropriate official specified in 50.102-1(d).
    (3) When use of the indemnification clause is approved under 
paragraph (b)(2) of this subsection, the definition of unusually 
hazardous or nuclear risks (see paragraph (b)(1)(ii) of this 
subsection) shall be incorporated into the contract, along with the 
clause.
    (4) When approval is--
    (i) Authorized in the Memorandum of Decision; and
    (ii) Justified by the circumstances, the contracting officer may 
approve the contractor's written request to provide for indemnification 
of subcontractors, using the same procedures as those required for 
contractors.


50.104-4   Contract clause.

    The contracting officer shall insert the clause at 52.250-1, 
Indemnification Under Public Law 85-804, in contracts whenever the 
approving official determines that the contractor shall be indemnified 
against unusually hazardous or nuclear risks (also see 50.104-3(b)(3)). 
In cost-reimbursement contracts, the contracting officer shall use the 
clause with its Alternate I.

Subpart 50.2--Support Anti-terrorism by Fostering Effective 
Technologies Act of 2002


50.200   Scope of subpart.

    This subpart implements the Support Anti-terrorism by Fostering 
Effective Technologies Act of 2002 (SAFETY Act) liability protections 
to promote development and use of anti-terrorism technologies.


50.201  Definitions.

    Act of terrorism means any act determined to have met the following 
requirements or such other requirements as defined and specified by the 
Secretary of Homeland Security:
    (1) Is unlawful.
    (2) Causes harm, including financial harm, to a person, property, 
or entity, in the United States, or in the case of a domestic United 
States air carrier or a United States-flag vessel (or a vessel based 
principally in the United States on which United States income tax is 
paid and whose insurance coverage is subject to regulation in the 
United States), in or outside the United States.
    (3) Uses or attempts to use instrumentalities, weapons or other 
methods designed or intended to cause mass destruction, injury or other 
loss to citizens or institutions of the United States.
    Pre-qualification designation notice means a notice in a 
procurement solicitation or other publication by the Government stating 
that the technology to be procured either affirmatively or 
presumptively satisfies the technical criteria necessary to be deemed a 
qualified anti-terrorism technology. A pre-qualification designation 
notice authorizes successful offeror(s) to submit streamlined SAFETY 
Act applications for SAFETY Act designation and receive expedited 
processing of those applications.
    Qualified Anti-Terrorism Technology (QATT) means any technology 
designed, developed, modified, procured, or sold for the purpose of 
preventing, detecting, identifying, or deterring acts of terrorism or 
limiting the harm such acts might otherwise cause, for which a SAFETY 
Act designation has been issued. For purposes of defining a QATT, 
technology means any product, equipment, service (including support 
services), device, or technology (including information technology) or 
any combination of the foregoing. Design services, consulting services, 
engineering services, software development services, software 
integration services, threat assessments, vulnerability studies, and 
other analyses relevant to homeland security may be deemed a 
technology.
    SAFETY Act certification means a determination by Department of 
Homeland Security (DHS) pursuant to 6 U.S.C. 442, as further delineated 
in 6 CFR 25.8 and 25.9, that a QATT for which a SAFETY Act designation 
has been issued is an approved product for homeland security, i.e., it 
will perform as intended, conforms to the seller's specifications, and 
is safe for use as intended. ``Block certification'' refers to a 
technology class that DHS has determined to be an approved class of 
approved products for homeland security.
    SAFETY Act designation means a determination by DHS pursuant to 6 
U.S.C. 443, as further delineated in 6 CFR 25.4, that a particular 
Anti-Terrorism Technology constitutes a QATT under the SAFETY Act. 
``Block designation'' refers to a technology class that DHS has 
determined to be a QATT.


50.202   Authorities.

    The following authorities apply:
    (a) Support Anti-terrorism by Fostering Effective Technologies Act 
of 2002 (SAFETY Act), 6 U.S.C. 441-444.
    (b) Executive Order 13286 of February 28, 2003, Amendment of 
Executive Orders, and Other Actions, in Connection With the Transfer of 
Certain Functions to the Secretary of Homeland Security.
    (c) Executive Order 10789 of November 14, 1958, Contracting 
Authority of Government Agencies in Connection with National Defense 
Functions.
    (d) 6 CFR Part 25.


50.203   General.

    (a) As part of the Homeland Security Act of 2002, Pub. L. 107-296, 
Congress enacted the SAFETY Act to--
    (1) Encourage the development and use of anti-terrorism 
technologies that will enhance the protection of the nation; and
    (2) Provide risk management and litigation management protections 
for sellers of QATTs and others in the supply and distribution chain.
    (b) The SAFETY Act's liability protections are complementary to the 
Terrorism Risk Insurance Act of 2002.
    (c) Questions concerning the SAFETY Act may be directed to DHS 
Office of

[[Page 63036]]

SAFETY Act Implementation (OSAI). Additional information about the 
SAFETY Act may be found at http://www.SAFETYAct.gov.


50.204   Policy.

    (a) Agencies should--
    (1) Determine whether the technology to be procured is appropriate 
for SAFETY Act protections;
    (2) Encourage offerors to seek SAFETY Act protections for their 
offered technologies, even in advance of the issuance of a 
solicitation; and
    (3) Not mandate SAFETY Act protections for acquisitions because 
applying for SAFETY Act protections for a particular technology is the 
choice of the offeror.
    (b) Agencies shall not solicit offers contingent upon SAFETY Act 
designation or certification before contract award unless authorized in 
accordance with 50.205-3.
    (c) Agencies shall not solicit offers or award contracts presuming 
DHS will issue a SAFETY Act designation or certification after contract 
award unless authorized in accordance with 50.205-4.
    (d) The DHS determination to extend SAFETY Act protections for a 
particular technology is not a determination that the technology meets, 
or fails to meet, the requirements of a solicitation.


50.205   Procedures.


50.205-1  SAFETY Act Considerations.

    (a) SAFETY Act applicability. Requiring activities shall review 
requirements to identify potential technologies that prevent, detect, 
identify, or deter acts of terrorism or limit the harm such acts might 
cause, and may be appropriate for SAFETY Act protections. In 
questionable cases, the agency shall consult with DHS. For acquisitions 
involving such technologies, the requiring activity should address 
through preliminary discussions with DHS whether a block designation or 
block certification exists for the technology being acquired.
    (1) If one does exist, the requiring activity shall inform the 
contracting officer to notify offerors.
    (2) If one does not exist, see 50.205-2, Pre-qualification 
designation notice.
    (b) Early consideration of the SAFETY Act. Acquisition officials 
shall consider SAFETY Act issues as early in the acquisition cycle as 
possible. Normally, this would be at the point where the required 
capabilities or performance characteristics are addressed. This is 
important because the processing times for issuing determinations on 
all types of SAFETY Act applications vary depending on many factors, 
including the influx of applications to DHS and the technical 
complexity of individual applications.
    (c) Industry outreach. When applicable, acquisition officials 
should include SAFETY Act considerations in all industry outreach 
efforts including, but not limited to, requests for information, draft 
requests for proposal, and industry conferences.
    (d) Reciprocal waiver of claims. For purposes of 6 CFR 25.5(e), the 
Government is not a customer from which a contractor must request a 
reciprocal waiver of claims.


50.205-2  Pre-qualification designation notice.

    (a) Requiring activity responsibilities. (1) If the requiring 
activity determines that the technology to be acquired may qualify for 
SAFETY Act protection, the requiring activity is responsible for 
requesting a pre-qualification designation notice from DHS. DHS will 
then determine whether the technology identified in the request either 
affirmatively or presumptively satisfies the technical criteria for 
SAFETY Act designation. An affirmative determination means the 
technology described in the pre-qualification designation notice 
satisfies the technical criteria for SAFETY Act designation as a QATT. 
A presumptive determination means that the technology is a good 
candidate for SAFETY Act designation as a QATT. In either case, the 
notice will authorize offerors to--
    (i) Submit a streamlined application for SAFETY Act designation; 
and
    (ii) Receive expedited review of their application for SAFETY Act 
designation.
    (2) The requiring activity shall make requests using the 
procurement pre-qualification request form available at http://www.SAFETYAct.gov. The website includes instructions for completing and 
submitting the form.
    (3) The requiring activity shall provide a copy of the request, as 
well as a copy of the resulting pre-qualification designation notice or 
DHS denial, to the contracting officer.
    (b) Contracting officer responsibilities. Upon receipt of the 
documentation specified in paragraph (a)(3) of this subsection, the 
contracting officer shall--
    (1) Include in any pre-solicitation notice (Subpart 5.2) that a 
pre-qualification designation notice has been--
    (i) Requested and is under review by DHS;
    (ii) Denied by DHS; or
    (iii) Issued and a copy will be included with the solicitation; and
    (2) Incorporate the pre-qualification designation notice into the 
solicitation.


50.205-3   Authorization of offers contingent upon SAFETY Act 
designation or certification before contract award.

    (a) Contracting officers may authorize such contingent offers, only 
if--
    (1) DHS has issued--
    (i) For offers contingent upon SAFETY Act designation, a pre-
qualification designation notice or a block designation; or
    (ii) For offers contingent upon SAFETY Act certification, a block 
certification;
    (2) To the contracting officer's knowledge, the Government has not 
provided advance notice so that potential offerors could have obtained 
SAFETY Act designations/ certifications for their offered technologies 
before release of any solicitation; and
    (3) Market research shows that there will be insufficient 
competition without SAFETY Act protections or the subject technology 
would be sold to the Government only with SAFETY Act protections.
    (b) Contracting officers shall not authorize offers contingent upon 
obtaining a SAFETY Act certification (as opposed to a SAFETY Act 
designation), unless a block certification applies to the solicitation.


50.205-4   Authorization of awards made presuming SAFETY Act 
designation or certification after contract award.

    (a) When necessary to award a contract prior to DHS issuing SAFETY 
Act protections, contracting officers may award contracts presuming 
that DHS will issue a SAFETY Act designation/certification to the 
contractor after contract award only if--
    (1) The criteria of 50.205-3(a) are met;
    (2) The chief of the contracting office (or other official 
designated in agency procedures) approves the action; and
    (3) The contracting officer advises DHS of the timelines for 
potential award and consults DHS as to when DHS could reasonably 
complete evaluations of offerors' applications for SAFETY Act 
designations or certifications.
    (b) Contracting officers shall not authorize offers presuming that 
SAFETY Act certification will be obtained (as opposed to a SAFETY Act 
designation), unless a block certification applies to the solicitation.


50.206   Solicitation provisions and contract clause.

    (a) Insert the provision at 52.250-2, SAFETY Act Coverage Not 
Applicable, in solicitations if--
    (1) The agency consulted with DHS on a questionable case of SAFETY 
Act

[[Page 63037]]

applicability to an acquisition in accordance with 50.205-1(a), and 
after the consultation, the agency has determined that SAFETY Act 
protection is not applicable for the acquisition; or
    (2) DHS has denied approval of a pre-qualification designation 
notice.
    (b)(1) Insert the provision at 52.250-3, SAFETY Act Block 
Designation/Certification, in a solicitation when DHS has issued a 
block designation/certification for the solicited technologies.
    (2) Use the provision at 52.250-3 with its Alternate I when 
contingent offers are authorized in accordance with 50.205-3.
    (3) Use the provision at 52.250-3 with its Alternate II when offers 
presuming SAFETY Act designation or certification are authorized in 
accordance with 50.205-4. If this alternate is used, the contracting 
officer may alter the number of days within which offerors must submit 
their SAFETY Act designation or certification application.
    (c)(1) Insert the provision at 52.250-4, SAFETY Act Pre-
qualification Designation Notice, in a solicitation for which DHS has 
issued a pre-qualification designation notice.
    (2) Use the provision at 52.250-4 with its Alternate I when 
contingent offers are authorized in accordance with 50.205-3.
    (3) Use the provision at 52.250-4 with its Alternate II when offers 
presuming SAFETY Act designation or certification are authorized in 
accordance with 50.205-4. If this alternate is used, the contracting 
officer may alter the number of days within which offerors must submit 
their SAFETY Act designation or certification application.
    (d) Insert the clause at 52.250-5, SAFETY Act--Equitable 
Adjustment--
    (1) In the solicitation, if the provision at 52.250-3 or 52.250-4 
is used with its Alternate II; and
    (2) In any resultant contract, if DHS has not issued SAFETY Act 
designation or certification to the successful offeror before contract 
award.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
13. Amend section 52.250-1 by revising the introductory paragraph to 
read as follows:


52.250-1   Indemnification Under Public Law 85-804.

    As prescribed in 50.104-4, insert the following clause:
* * * * *
0
14. Add sections 52.250-2 through 52.250-5 to read as follows:


52.250-2   SAFETY Act Coverage Not Applicable.

    As prescribed in 50.206(a), insert the following provision:
    SAFETY ACT COVERAGE NOT APPLICABLE (Nov 2007)
    The Government has determined that the product(s) or service(s) 
being acquired by this action is not an anti-terrorism technology as 
that term is defined by the Support Anti-terrorism by Fostering 
Effective Technologies Act of 2002 (SAFETY Act), 6 U.S.C. 441-444. 
Proposals in which either acceptance or pricing is made contingent upon 
SAFETY Act designation as a qualified anti-terrorism technology or 
SAFETY Act certification as an approved product for homeland security 
of the proposed product or service will not be considered for award. 
See FAR Subpart 50.2.
    (End of provision)


52.250-3   SAFETY Act Block Designation/Certification.

    As prescribed in 50.206(b)(1), insert the following provision:
    SAFETY ACT BLOCK DESIGNATION/CERTIFICATION (Nov 2007)
    (a) Definitions. As used in this provision--
    Act of terrorism means any act determined to have met the following 
requirements or such other requirements as defined and specified by the 
Secretary of Homeland Security:
    (1) Is unlawful.
    (2) Causes harm, including financial harm, to a person, property, 
or entity, in the United States, or in the case of a domestic United 
States air carrier or a United States-flag vessel (or a vessel based 
principally in the United States on which United States income tax is 
paid and whose insurance coverage is subject to regulation in the 
United States), in or outside the United States.
    (3) Uses or attempts to use instrumentalities, weapons or other 
methods designed or intended to cause mass destruction, injury or other 
loss to citizens or institutions of the United States.
    Qualified Anti-Terrorism Technology (QATT) means any technology 
designed, developed, modified, procured, or sold for the purpose of 
preventing, detecting, identifying, or deterring acts of terrorism or 
limiting the harm such acts might otherwise cause, for which a SAFETY 
Act designation has been issued. For purposes of defining a QATT, 
technology means any product, equipment, service (including support 
services), device, or technology (including information technology) or 
any combination of the foregoing. Design services, consulting services, 
engineering services, software development services, software 
integration services, threat assessments, vulnerability studies, and 
other analyses relevant to homeland security may be deemed a 
technology.
    SAFETY Act certification means a determination by Department of 
Homeland Security (DHS) pursuant to 6 U.S.C. 442, as further delineated 
in 6 CFR 25.9, that a QATT for which a SAFETY Act designation has been 
issued is an approved product for homeland security, i.e., it will 
perform as intended, conforms to the seller's specifications, and is 
safe for use as intended. ``Block certification'' refers to a 
technology class that DHS has determined to be an approved class of 
approved products for homeland security.
    SAFETY Act designation means a determination by DHS pursuant to 6 
U.S.C. 443, as further delineated in 6 CFR 25.4, that a particular 
Anti-Terrorism Technology constitutes a QATT under the SAFETY Act. 
``Block designation'' refers to a technology class that DHS has 
determined to be a QATT.
    (b) The Support Anti-terrorism by Fostering Effective Technologies 
Act of 2002 (SAFETY Act), 6 U.S.C. 441-444, creates certain liability 
limitations for claims arising out of, relating to, or resulting from 
an act of terrorism where QATTs have been deployed. It also confers 
other important benefits. SAFETY Act designation and SAFETY Act 
certification are designed to support effective technologies aimed at 
preventing, detecting, identifying, or deterring acts of terrorism, or 
limiting the harm that such acts might otherwise cause, and which also 
meet other prescribed criteria. For some classes of technologies, DHS 
may issue a block designation/certification in order to lessen the 
burdens for filing for SAFETY Act designation or SAFETY Act 
certifications by not requiring applicants to provide certain 
information otherwise required and in order to offer expedited review 
of any application submitted pursuant to a block designation/
certification. Block designations/certifications will be issued only 
for technologies that rely on established performance standards or 
defined technical characteristics.
    (c)(1) DHS has issued a block designation or block certification 
for the technology to be acquired under this solicitation.
    (2) This block designation or block certification is attached to 
this solicitation and contains essential information, including--

[[Page 63038]]

    (i) A detailed description of and specification for the technology 
covered by the block designation or block certification;
    (ii) A listing of those portions of the SAFETY Act application kit 
that must be completed and submitted by applicants;
    (iii) The date of its expiration; and
    (iv) Any other terms and conditions.
    (3) Offerors should read this block designation or block 
certification carefully to make sure they comply with its terms if they 
plan to take advantage of SAFETY Act coverage for their 
technology(ies).
    (d) A determination by DHS to issue a SAFETY Act designation or 
SAFETY Act certification based on this block designation/certification 
is not a determination that the technology meets, or fails to meet, the 
requirements of this solicitation. All determinations by DHS are based 
on factors set forth in the SAFETY Act, and are made independent of, 
and without regard to, the specific terms, conditions, specifications, 
statements of work, or evaluation factors set forth in the 
solicitation.
    (e) Neither SAFETY Act designation nor certification is in any way 
a requirement of this action. Whether to seek the benefits of the 
SAFETY Act for a proposed product or service is entirely up to the 
offeror. Additional information about the SAFETY Act and this block 
designation/certification may be found at the SAFETY Act website at 
http://www.SAFETYAct.gov or requests may be mailed to: Directorate of 
Science and Technology, SAFETY Act/room 4320, Department of Homeland 
Security, Washington, DC 20528.
    (f) Proposals in which pricing or any other terms or conditions are 
offered contingent upon SAFETY Act designation or SAFETY Act 
certification of the proposed product(s) or service(s) will not be 
considered for award.
    (End of provision)
    Alternate I (Nov 2007). As prescribed in 50.206(b)(2), substitute 
the following paragraph (f):
    (f)(1) Offerors are authorized to submit proposals made 
contingent upon SAFETY Act designation (or SAFETY Act certification, 
if a block certification exists) before award. When an offer is made 
contingent upon SAFETY Act designation or certification, the offeror 
also may submit an alternate offer without the contingency.
    (2) The Government may award a contract based on a contingent 
offer only if the offeror demonstrates that DHS has issued a SAFETY 
Act designation (or SAFETY Act certification, if a block 
certification exists) for the offeror's proposed technology prior to 
contract award.
    (3) The Government reserves the right to award the contract 
prior to DHS resolution of the offeror's application for SAFETY Act 
designation (or SAFETY Act certification, if a block certification 
exists).
    Alternate II (Nov 2007). As prescribed in 50.206(b)(3), substitute 
the following paragraph (f):
    (f)(1) Offerors are authorized to submit offers presuming that 
SAFETY Act designation (or SAFETY Act certification, if a block 
certification exists) will be obtained before or after award.
    (2) An offeror is eligible for award only if the offeror--
    (i) Files a SAFETY Act designation (or SAFETY Act certification) 
application, limited to the scope of the applicable block 
designation (or block certification), within 15 days after 
submission of the proposal;
    (ii) Pursues its SAFETY Act designation (or SAFETY Act 
certification) application in good faith; and
    (iii) Agrees to obtain the amount of insurance DHS requires for 
issuing any SAFETY Act designation (or SAFETY Act certification).
    (3) If DHS has not issued a SAFETY Act designation (or SAFETY 
Act certification) to the successful offeror before contract award, 
the contracting officer will include the clause at 52.250-5 in the 
resulting contract.


52.250-4   SAFETY Act Pre-qualification Designation Notice.

    As prescribed in 50.206(c)(1), insert the following provision:
    SAFETY ACT PRE-QUALIFICATION DESIGNATION NOTICE (Nov 2007)
    (a) Definitions. As used in this provision--
    Act of terrorism means any act determined to have met the following 
requirements or such other requirements as defined and specified by the 
Secretary of Homeland Security:
    (1) Is unlawful.
    (2) Causes harm, including financial harm, to a person, property, 
or entity, in the United States, or in the case of a domestic United 
States air carrier or a United States-flag vessel (or a vessel based 
principally in the United States on which United States income tax is 
paid and whose insurance coverage is subject to regulation in the 
United States), in or outside the United States.
    (3) Uses or attempts to use instrumentalities, weapons or other 
methods designed or intended to cause mass destruction, injury or other 
loss to citizens or institutions of the United States.
    Pre-qualification designation notice means a notice in a 
procurement solicitation or other publication by the Government stating 
that the technology to be procured either affirmatively or 
presumptively satisfies the technical criteria necessary to be deemed a 
qualified anti-terrorism technology. A pre-qualification designation 
notice authorizes successful offeror(s) to submit streamlined SAFETY 
Act applications for SAFETY Act designation and receive expedited 
processing of those applications.
    Qualified Anti-Terrorism Technology (QATT) means any technology 
designed, developed, modified, procured, or sold for the purpose of 
preventing, detecting, identifying, or deterring acts of terrorism or 
limiting the harm such acts might otherwise cause, for which a SAFETY 
Act designation has been issued. For purposes of defining a QATT, 
technology means any product, equipment, service (including support 
services), device, or technology (including information technology) or 
any combination of the foregoing. Design services, consulting services, 
engineering services, software development services, software 
integration services, threat assessments, vulnerability studies, and 
other analyses relevant to homeland security may be deemed a 
technology.
    SAFETY Act certification means a determination by Department of 
Homeland Security (DHS) pursuant to 6 U.S.C. 442, as further delineated 
in 6 CFR 25.9, that a QATT for which a SAFETY Act designation has been 
issued is an approved product for homeland security, i.e., it will 
perform as intended, conforms to the seller's specifications, and is 
safe for use as intended. ``Block certification'' refers to a 
technology class that DHS has determined to be an approved class of 
approved products for homeland security.
    SAFETY Act designation means a determination by DHS pursuant to 6 
U.S.C. 443, as further delineated in 6 CFR 25.4, that a particular 
Anti-Terrorism Technology constitutes a QATT under the SAFETY Act. 
``Block designation'' refers to a technology class that DHS has 
determined to be a QATT.
    (b) The Support Anti-terrorism by Fostering Effective Technologies 
Act of 2002 (SAFETY Act), 6 U.S.C. 441-444, creates certain liability 
limitations for claims arising out of, relating to, or resulting from 
an act of terrorism where QATTs have been deployed. It also confers 
other important benefits. SAFETY Act designation and SAFETY Act 
certification are designed to support effective technologies aimed at 
preventing, detecting, identifying, or deterring acts of terrorism, or 
limiting the harm that such acts might otherwise cause, and which also 
meet other prescribed criteria.
    (c)(1) DHS has issued a SAFETY Act pre-qualification designation 
notice for the technology to be acquired under this solicitation.

[[Page 63039]]

    (2) This notice is attached to this solicitation and contains 
essential information, including--
    (i) A detailed description of and specification for the technology 
covered by the notice;
    (ii) A statement that the technology described and specified in the 
notice satisfies the technical criteria to be deemed a QATT and the 
offeror's proposed technology either may presumptively or will qualify 
for the issuance of a designation provided the offeror complies with 
terms and conditions in the notice and its application is approved;
    (iii) The period of time within which DHS will take action upon 
submission of a SAFETY Act application submitted pursuant to the 
notice;
    (iv) A listing of those portions of the application that must be 
completed and submitted by selected awardees and the time periods for 
such submissions;
    (v) The date of expiration of the notice; and
    (vi) Any other terms and conditions concerning the notice.
    (3) Offerors should read this notice carefully to make sure they 
comply with the terms of the notice if they plan on taking advantage of 
SAFETY Act coverage for their technologies.
    (d) A determination by DHS to designate, or not designate, a 
particular technology as a QATT is not a determination that the 
technology meets, or fails to meet, the requirements of this 
solicitation. All determinations by DHS are based on factors set forth 
in the SAFETY Act, and are made independent of, and without regard to, 
the specific terms, conditions, specifications, statements of work, or 
evaluation factors set forth in the solicitation.
    (e) Neither SAFETY Act designation nor certification is in any way 
a requirement of this action. Whether to seek the benefits of the 
SAFETY Act for a proposed product or service is entirely up to the 
offeror. Additional information about the SAFETY Act may be found at 
the SAFETY Act website at http://www.SAFETYAct.gov.
    (f) Proposals in which pricing or any other terms or conditions are 
offered contingent upon SAFETY Act designation or certification of the 
proposed product(s) or service(s) will not be considered for award.
    (End of provision)
    Alternate I (Nov 2007). As prescribed in 50.206(c)(2), substitute 
the following paragraph (f):
    (f)(1) Offerors are authorized to submit proposals made 
contingent upon SAFETY Act designation before award. When an offer 
is made contingent upon SAFETY Act designation, the offeror also may 
submit an alternate offer without the contingency.
    (2) The Government may award a contract based on a contingent 
offer only if the offeror demonstrates that DHS has issued a SAFETY 
Act designation for the offeror's proposed technology prior to 
contract award.
    (3) The Government reserves the right to award the contract 
prior to DHS resolution of the offeror's application for SAFETY Act 
designation.
    Alternate II (Nov 2007). As prescribed in 50.206(c)(3), substitute 
the following paragraph (f):
    (f)(1) Offerors are authorized to submit proposals presuming 
SAFETY Act designation before or after award.
    (2) An offeror is eligible for award only if the offeror--
    (i) Files a SAFETY Act designation application, limited to the 
scope of the applicable prequalification designation notice, within 
15 days after submission of the proposal;
    (ii) Pursues its SAFETY Act designation application in good 
faith; and
    (iii) Agrees to obtain the amount of insurance DHS requires for 
issuing any SAFETY Act designation.
    (3) If DHS has not issued a SAFETY Act designation to the 
successful offeror before contract award, the contracting officer 
will include the clause at 52.250-5 in the resulting contract.


52.250-5   SAFETY Act--Equitable Adjustment.

    As prescribed in 50.206(d), insert the following clause:
    SAFETY ACT--EQUITABLE ADJUSTMENT (Nov 2007)
    (a) Definitions. As used in this clause--
    Act of terrorism means any act determined to have met the following 
requirements or such other requirements as defined and specified by the 
Secretary of Homeland Security:
    (1) Is unlawful.
    (2) Causes harm, including financial harm, to a person, property, 
or entity, in the United States, or in the case of a domestic United 
States air carrier or a United States-flag vessel (or a vessel based 
principally in the United States on which United States income tax is 
paid and whose insurance coverage is subject to regulation in the 
United States), in or outside the United States.
    (3) Uses or attempts to use instrumentalities, weapons or other 
methods designed or intended to cause mass destruction, injury or other 
loss to citizens or institutions of the United States.
    Qualified Anti-Terrorism Technology (QATT) means any technology 
designed, developed, modified, procured, or sold for the purpose of 
preventing, detecting, identifying, or deterring acts of terrorism or 
limiting the harm such acts might otherwise cause, for which a SAFETY 
Act designation has been issued. For purposes of defining a QATT, 
technology means any product, equipment, service (including support 
services), device, or technology (including information technology) or 
any combination of the foregoing. Design services, consulting services, 
engineering services, software development services, software 
integration services, threat assessments, vulnerability studies, and 
other analyses relevant to homeland security may be deemed a 
technology.
    SAFETY Act certification means a determination by Department of 
Homeland Security (DHS) pursuant to 6 U.S.C. 442, as further delineated 
in 6 CFR 25.9, that a QATT for which a SAFETY Act designation has been 
issued is an approved product for homeland security, i.e., it will 
perform as intended, conforms to the seller's specifications, and is 
safe for use as intended. ``Block certification'' refers to a 
technology class that DHS has determined to be an approved class of 
approved products for homeland security.
    SAFETY Act designation means a determination by DHS pursuant to 6 
U.S.C. 443, as further delineated in 6 CFR 25.4, that a particular 
Anti-Terrorism Technology constitutes a QATT under the SAFETY Act. 
``Block designation'' refers to a technology class that DHS has 
determined to be a QATT.
    (b) Prices for the items covered by the pre-qualification 
designation notice, block designation, or block certification in the 
contract were established presuming DHS will issue a SAFETY Act 
designation (or SAFETY Act certification) for those items.
    (c) In order to qualify for an equitable adjustment in accordance 
with paragraph (d) of this clause the Contractor shall in good faith 
pursue obtaining--
    (1) SAFETY Act designation (or SAFETY Act certification); and
    (2) The amount of insurance DHS requires for issuing any SAFETY Act 
designation (or SAFETY Act certification).
    (d)(1) If DHS denies the Contractor's SAFETY Act designation (or 
certification) application, the Contractor may submit a request for an 
equitable adjustment within 30 days of DHS's notification of denial.
    (2) The Contracting Officer shall either--
    (i) Make an equitable adjustment to the contract price based on 
evidence of the resulting increase or decrease in the Contractor's 
costs and/or an equitable adjustment to other terms and

[[Page 63040]]

conditions based on lack of SAFETY Act designation (or certification); 
or
    (ii) At the sole option of the Government, terminate this contract 
for the convenience of the Government in place of an equitable 
adjustment.
    (3) A failure of the parties to agree on the equitable adjustment 
will be considered to be a dispute in accordance with the ``Disputes'' 
clause of this contract.
    (4) Unless first terminated, the Contractor shall continue contract 
performance during establishment of any equitable adjustment.
    (End of clause)
[FR Doc. 07-5477 Filed 11-6-07; 8:45 am]
BILLING CODE 6820-EP-S