Federal Register / Vol. 72, No. 215 / Wednesday, November 7, 2007 / Rules and Regulations 63027 

Item IV—Federal Computer Network 

(FACNET) Architecture (FAR Case 

2006–015) 

This final rule amends the Federal 

Acquisition Regulation (FAR) to remove 

FACNET references and provide the 

opportunity to recognize the evolution 

of alternative technologies, processes, 

etc. that Federal agencies are using and 

will use to satisfy their acquisition 

needs without removing the use of 

FACNET for Federal agencies that may 

use the system. Where necessary in the 

FAR, the term has been replaced with a 

more appropriate term that incorporates 

various electronic data interchange 

systems. The proposed rule published 

February 1, 2007 is adopted as final 

without change. 

Item V—Exemption of Certain Service 

Contracts from the Service Contract Act 

(SCA) (2001–004) (Interim) 

This interim rule amends Federal 

Acquisition Regulation (FAR) Parts 4, 

15, 17, 22, and 52 to implement the U.S. 

Department of Labor’s (DoL) final rule 

issued January 18, 2001 (66 FR 5327) 

amending the regulations at 29 CFR part 

4 to exempt certain contracts for 

services meeting specific criteria from 

coverage under the Service Contract 

Act. This rule imposes the DoL criteria 

and does not utilize the term 

‘‘commercial services.’’ The rule 

incorporates slight revisions to the 

current exemption for consistency with 

the current DoL regulations and 

clarification of appropriate course of 

action for the contracting officer. 

Item VI—Local Community Recovery 

Act of 2006 (FAR Case 2006–014) 

(Interim) 

The Civilian Agency Acquisition 

Council and the Defense Acquisition 

Regulations Council (Councils) have 

agreed on a second interim rule 

amending the Federal Acquisition 

Regulation (FAR) to implement 

legislative amendments to the Stafford 

Act at 42 U.S.C. 5150. 

The first rule implemented The Local 

Community Recovery Act of 2006, 

Pub.L. 109–218, which addressed setasides for major disaster or emergency 

assistance acquisitions to businesses 

that reside or primarily do business in 

the geographic area affected by the 

disaster or emergency. This local area 

set-aside could be done along with a 

small business set-aside. 

After the first rule was published for 

comments in August, 2006, Congress 

further amended the same area of the 

Stafford Act in the Department of 

Homeland Security Appropriations Act, 

2007, Public Law 109–295. The 

amended statute contains requirements 

for transitioning work to local firms in 

the geographic area affected by the 

disaster or emergency and for 

justifications for expenditures to entities 

outside the major disaster or emergency 

area. This second interim rule 

encompasses all of these changes. 

Item VII—Labor Standards for 

Contracts Containing Construction 

Requirements-Contract Pricing Method 

References (FAR Case 2007–001) 

This final rule amends the Federal 

Acquisition Regulation (FAR) to revise 

references to published pricing sources 

available to the contracting officer in 

FAR 22.404–12(c)(2). The rule removes 

the reference to ‘‘R.S. Means Cost 

Estimating System’’ as a commercial 

source for pricing data. The revision 

will provide greater flexibilities for 

contracting officers when selecting 

sources of pricing data. 

Item VIII—Technical Amendments 

Editorial changes are made at FAR 

1.106, 25.003, 52.212–5, 52.219-9, 

52.225–5, 52.225–17, 53.213, 53.302–

347, and 53.302–348 in order to update 

references. 

Dated: October 31, 2007. 

Al Matera, 

Director, Office of Acquisition Policy. 

Federal Acquisition Circular 

Federal Acquisition Circular (FAC) 

2005–21 is issued under the authority of 

the Secretary of Defense, the 

Administrator of General Services, and 

the Administrator for the National 

Aeronautics and Space Administration. 

Unless otherwise specified, all 

Federal Acquisition Regulation (FAR) 

and other directive material contained 

in FAC 2005–21 is effective November 

7, 2007, except for Items II, III, IV, and 

VII which are effective December 7, 

2007. 

Dated: October 26, 2007. 

Shay D. Assad, 

Director, Defense Procurement and 

Acquisition Policy. 

Dated: October 26, 2007. 

Molly A. Wilkinson, 

Chief Acquisition Officer, Office of Chief 

Acquisition Officer, General Services 

Administration. 

Dated: October 18, 2007. 

Harold V. Jefferson, 

Acting Assistant Administrator for 

Procurement, National Aeronautics and 

Space Administration. 

[FR Doc. 07–5476 Filed 11–6–07; 8:45 am] 

BILLING CODE 6820–EP–S 

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. 

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: 

• 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. 

• Fax: 202–501–4067. 

• Mail: General Services 

Administration, Regulatory Secretariat 

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63028 Federal Register / Vol. 72, No. 215 / Wednesday, November 7, 2007 / Rules and Regulations 

(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 Antiterrorism 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 antiterrorism 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’’ (§ 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—

• Determine whether the technology 

to be procured is appropriate for 

SAFETY Act protections; 

• Encourage offerors to seek SAFETY 

Act protections for their offered 

technologies, even in advance of the 

issuance of a solicitation; and 

• 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 prequalification designation notice and 

inform the contracting officer if DHS 

issues the notice. The contracting officer 

will then incorporate the prequalification 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 prequalification 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 prequalification designation notice, 

respectively, for the solicited 

technologies. These provisions inform 

offerors of the terms of the block 

designation/block certification or prequalification 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 

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Federal Register / Vol. 72, No. 215 / Wednesday, November 7, 2007 / Rules and Regulations 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—

• 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; 

• 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 

• 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—

• All of the conditions for permitting 

contingent offers are met; 

• The chief of the contracting office 

(or other official designated in agency 

procedures) approves the action; and 

• 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. 

■ Therefore, DoD, GSA, and NASA 

amend 48 CFR parts 1, 7, 18, 28, 32, 33, 

43, 50, and 52 as set forth below: 

■ 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] 

■ 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 

■ 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] 

■ 4. Amend section 18.121 by removing 

‘‘Part 50’’ and adding ‘‘Subpart 50.1’’ in 

its place. 

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63030 Federal Register / Vol. 72, No. 215 / Wednesday, November 7, 2007 / Rules and Regulations 

18.126 [Amended] 

■ 5. Amend section 18.126 by—

■ a. Removing from the introductory 

text ‘‘Part 50’’ and adding ‘‘Subpart 

50.1’’ in its place; 

■ b. Removing from paragraph (a) 

‘‘50.302–1’’ and adding ‘‘50.103–2(a)’’ in 

its place; 

■ c. Removing from paragraph (b) 

‘‘50.302–2’’ and adding ‘‘50.103–2(b)’’

in its place; and 

■ 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] 

■ 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] 

■ 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] 

■ 8. Amend section 32.402 by—

■ a. Removing from paragraph (a) ‘‘FAR 

50.203(b)(4)’’ and adding ‘‘50.102–

3(b)(4)’’ in its place; 

■ b. Removing from paragraph (e)(1) 

‘‘50.201(b)’’ and adding ‘‘50.102–1(b)’’

in its place; and 

■ c. Removing from paragraph (f) ‘‘FAR 

50.307’’ and adding ‘‘50.103–7’’ in its 

place. 

32.405 [Amended] 

■ 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 

■ 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] 

■ 11. Amend section 43.000 by 

removing from paragraph (b) ‘‘part 50’’

and adding ‘‘Subpart 50.1’’ in its place. 

■ 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 antiterrorism 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 

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Federal Register / Vol. 72, No. 215 / Wednesday, November 7, 2007 / Rules and Regulations 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-ofcost 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 antiterrorism 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 

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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 

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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 

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63034 Federal Register / Vol. 72, No. 215 / Wednesday, November 7, 2007 / Rules and Regulations 

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 selfinsured 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 

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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 AntiTerrorism 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 

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63036 Federal Register / Vol. 72, No. 215 / Wednesday, November 7, 2007 / Rules and Regulations 

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 prequalification 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 prequalification 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 prequalification 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 

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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 prequalification 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 prequalification 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 

■ 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: 

* * * * * 

■ 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 antiterrorism 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 AntiTerrorism 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—

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63038 Federal Register / Vol. 72, No. 215 / Wednesday, November 7, 2007 / Rules and Regulations 

(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 AntiTerrorism 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. 

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(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 AntiTerrorism 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 

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63040 Federal Register / Vol. 72, No. 215 / Wednesday, November 7, 2007 / Rules and Regulations 

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 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Parts 2, 4, 7, 11, 12, 13, 23, 42, 

45, and 52 

[FAC 2005–21; FAR Case 2004–032; Item 

II; Docket 2006–020; Sequence 13] 

RIN 9000–AK65 

Federal Acquisition Regulation; FAR 

Case 2004–032, Biobased Products 

Preference Program 

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 implement 7 U.S.C. 

8102, as enacted by section 9002 of the 

Farm Security and Rural Investment Act 

of 2002 (FSRIA) (Pub. L. 107–171), and 

amended by sections 205 and 943 of the 

Energy Policy Act of 2005 (Pub. L. 109–

58). Entitled ‘‘Federal Procurement of 

Biobased Products,’’ 7 U.S.C. 8102 

requires that a procurement preference 

be afforded biobased products within 

items designated by the Secretary of 

Agriculture. 

DATES: Effective Date: December 7, 2007. 

FOR FURTHER INFORMATION CONTACT: Mr. 

William Clark, Procurement Analyst, at 

(202) 219–1813 for clarification of 

content. For information pertaining to 

status or publication schedules, contact 

the FAR Secretariat at (202) 501–4755. 

Please cite FAC 2005–21, FAR case 

2004–032. 

SUPPLEMENTARY INFORMATION: 

A. Background 

The United States Department of 

Agriculture (USDA) published 

regulations at 7 CFR 2902: 70 FR 1792, 

January 11, 2005; 71 FR 13686, March 

16, 2006; 71 FR 42572, July 27, 2006; 

and 71 FR 67031, November 20, 2006. 

DoD, GSA, and NASA published a 

proposed rule in the Federal Register at 

71 FR 77360, December 26, 2006. The 

comment period closed on February 26, 

2007. Six respondents submitted 

comments on the proposed rule. The 

comments are available at http:// 

www.regulations.gov. A discussion of 

the comments and the changes made to 

the rule are provided below. 

Public Comments 

Provide coverage for products that 

use biobased products. 

Comment: One respondent 

recommends that the FAR should 

include a preference for products that 

use biobased products. The example 

proffered was diesel engine generator 

sets that perform with biobased fuels. 

Response: Extending coverage as 

suggested would exceed the 

congressional mandate, codified at 7 

U.S.C. 8102, to procure designated 

biobased items. The comment is 

therefore beyond the scope of this case. 

It applies to the scope of the biobased 

product program, which was established 

by Congress. 

Interface between the proposed 

contract clause and the order of 

precedence clause. 

Comment: One respondent expresses 

concern with the interface between the 

contract clause and the order of 

precedence clause (FAR 52.215–8). The 

subject proposed rule includes a 

requirement to use a contract clause, 

specifically FAR 52.223–XX (now FAR 

52.223–2), to make maximum use of 

biobased products in contracts for 

services, rather than the normal needs 

analysis and specification process 

embodied in Part 11, Describing Agency 

Needs. The subject clause is proposed to 

go into all service contracts (as well as 

construction), unless the contract will 

not involve the use of USDA-designated 

items. The respondent believes this 

unusual approach to describing 

contractual requirements is 

inappropriate in contracts for services 

because it creates a potential ambiguity. 

The respondent is concerned that in the 

order of precedence clause, contract 

clauses take precedence over 

specifications. As stated by the 

respondent, ‘‘It is not clear that the 

exemption in the clause regarding 

‘meeting contract performance 

requirements’ in paragraph (a)(2) 

applies to named products such as those 

on qualified product lists (QPLs), 

because of the order of precedence 

clause, 52.215–8, that already goes into 

all negotiated contracts. ’’ The 

respondent is concerned that, according 

to this rule of interpretation, the clause 

requirement to use a designated 

biobased hydraulic fluid or lubricant, 

for example, might be required over a 

QPL or other contractually specified 

product. This is a matter of concern to 

the respondent when acquiring services 

in support of complex systems, 

engineering services, and other 

contracts for services when multi-tiered 

subcontracting is involved. 

The respondent suggests two 

alternatives—

• Include the requirement for 

biobased products in FAR Part 11 rather 

than in a contract clause; or 

• Exempt products on QPLs. 

Response: Review of the proposed 

contract clause and FAR 52.215–8 

reveals that the two clauses can be 

harmonized in a manner that furthers 

the Congressional objective when read 

together. In accordance with the 

proposed contract clause and the 

provisions of 7 U.S.C. 8102, any entity 

contracting with any Federal agency is 

required to use designated biobased 

items (absent one of the statutory 

exemptions) in performance of the 

contract. As mandated in 7 U.S.C. 

8102(d), Federal agencies have one year 

after designation of a product to modify 

specifications which they have the 

responsibility for drafting or reviewing, 

in order to ensure that such 

specifications require the use of 

biobased products unless an exemption 

applies. The proposed alternatives are 

addressed as follows: 

• Put the requirement in Part 11. 

Regardless of where the requirement is 

incorporated into the FAR, the 

requirement must be incorporated into 

the contract to bind a contractor. The 

statute mandates: ‘‘Except as provided 

in subsection (c), each procuring agency 

shall comply with the requirements set 

forth in this section and any regulations 

issued under this section...’’ (7 U.S.C. 

8102(a)). ‘‘Procuring agency’’ is defined 

in 7 U.S.C. 8101(4) as—

—Any Federal agency that is using 

Federal funds for procurement; or 

—Any person contracting with any 

Federal agency with respect to work 

performed under the contract. 

To implement 7 U.S.C. 8102, a 

contract clause is required. Absent a 

contract clause, the contractor is not 

bound to follow the mandates of 7 

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