[Federal Register Volume 60, Number 64 (Tuesday, April 4, 1995)]
[Proposed Rules]
[Pages 17184-17186]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-8145]




[[Page 17183]]

_______________________________________________________________________

Part VI

Department of Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________



48 CFR Parts 12 and 52



Federal Acquisition Regulation, Subcontracts for Commercial Items; 
Proposed Rule; Correction

Federal Register / Vol. 60, No. 64 / Tuesday, April 4, 1995 / 
Proposed Rules 
[[Page 17184]] 

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 12 and 52

[FAR Case 94-791]


 Federal Acquisition Regulation; Subcontracts for Commercial 
Items; Correction

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

ACTION: Proposed rule correction.

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SUMMARY: In related actions Federal Acquisition Regulation (FAR) case 
94-790 proposed to implement statutory authorities for the acquisition 
of commercial items and components by Federal Government agencies as 
well as contractors and subcontractors and FAR case 94-791 proposed a 
complete list of laws determined to be inapplicable to Executive agency 
contracts and subcontracts for commercial items and clauses applicable 
to subcontracts for the acquisition of commercial items. Neither of 
these cases addressed the statutory authority for the Comptroller 
General to examine the records of contractors. This amendment corrects 
that omission.

DATES: Comments should be submitted on or before May 22, 1995 to be 
considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to: 
General Services Administration, FAR Secretariat (VRS), 18th & F 
Streets, NW, Room 4037, Washington, DC 20405.
    Please cite FAR case 94-791 in all correspondence related to this 
case.

FOR FURTHER INFORMATION CONTACT: Colonel Laurence M. Trowel, Commercial 
Items Team Leader, at (703) 695-3858 in reference to this correction. 
For general information, contact the FAR Secretariat, Room 4037, GS 
Building, Washington, DC 20405 (202) 501-4755. Please cite FAR case 94-
791 correction.

SUPPLEMENTARY INFORMATION:

A. Background

    FAR cases 94-790, Acquisition of Commercial Items, and 94-791, 
Subcontracts for Commercial Items, were published as proposed rules 
with request for comment at 60 FR 11198; March 1, 1995 and 60 FR 15220; 
March 22, 1995, respectively. In addition to these changes, the Federal 
Acquisition Streamlining Act (FASA) of 1994 also consolidated audit 
provisions and made other related revisions to the Government's 
authority to examine records of contractors by amending 10 U.S.C. 2313 
(section 2201(a)) and by adding 41 U.S.C. 254d (section 2251(a)). These 
audit related sections were proposed to be implemented by FAR case 94-
740 published at 59 FR 66408; December 23, 1994. The proposed language 
contained in FAR case 94-740 includes the authority for both the 
Comptroller General and Agency examination of records in a single 
clause. However, the clause will only be included in contracts for the 
acquisition of commercial items, when an exception to the requirement 
for cost or pricing data under FAR 15.804-1(a) does not apply. As a 
result, contracts for commercial items that qualify for the exception 
to the requirements for cost or pricing data will not contain language 
providing the Comptroller General the authority to examine records as 
required by 10 U.S.C. 2313(c) and 41 U.S.C. 254d(c). To remedy this 
oversight, we propose to make the following amendments to FAR case 94-
791:
    <bullet> Revise the clause at 52.212-5, Contract Terms and 
Conditions Required to Implement Statutes or Executive Orders--
Commercial Items, by adding a new paragraph (d) to address the 
Comptroller General authority granted in the two statutes. The balance 
of the clause remains unchanged from that published in the Federal 
Register at 60 FR 11198. This revision will provide the Comptroller 
General the authority to examine records when:
    (1) The contract was awarded by other than sealed bid;
    (2) The contract is above the simplified acquisition threshold; and
    (3) The clause at 52.215-2, Audit and Records--Negotiation, is not 
included in the contract. When cost or pricing data is required, the 
contracting officer will incorporate the appropriate Part 15 clauses, 
to include the clause proposed at 52.215-2, Audit and Records--
Negotiation (see FAR Case 94-740). This clause provides for both the 
Comptroller General and Agency authority to examine records. The 
Commercial Items Team has chosen to revise the clause at 52.212-5 to 
add coverage for the Comptroller General specifically tailored to the 
acquisition of commercial items rather than cite the applicable 
portions of the clause at 52.215-2. This approach will clearly and more 
simply establish the Comptroller General's right to examine records for 
contracts for commercial items.
    <bullet> Revise FAR 12.403, Applicability of certain laws to 
subcontracts for the acquisition of commercial items, to include 10 
U.S.C. 2313(c) and 41 U.S.C. 254d(c) in the list of laws not applicable 
to subcontracts for commercial items. Paragraph (c) of these laws 
(which relate to the Comptroller General's authority) will not be 
applicable when the subcontractor is not required to submit cost or 
pricing data. When cost or pricing data is required, the clause at 
52.215-2 will appear in both the prime and subcontract and authority to 
examine records of subcontractors will apply.

B. Corrections

    1.At 60 FR 15221; March 22, 1995, in the third column section 
12.403 is correctly revised to read as follows:


12.403  Applicability of certain laws to subcontracts for the 
acquisition of commercial items.

    (a) The following laws are not applicable to subcontracts under 
either a contract for the acquisition of commercial items or a 
subcontract for the acquisition of commercial items:
    (1) 15 U.S.C. 644(d), Requirements relative to labor surplus areas 
under the Small Business Act (see 48 CFR (FAR) part 19, subpart 19.2);
    (2) 41 U.S.C. 43, Walsh-Healey Act (see 48 CFR (FAR) part 22, 
subpart 22.6);
    (3) 41 U.S.C. 253d, Validation of Proprietary Data Restrictions 
(see 48 CFR (FAR) part 27, subpart 27.4);
    (4) 41 U.S.C. 254(a) and 10 U.S.C. 2306(b), Contingent Fees (see 48 
CFR (FAR) part 3, subpart 3.4);
    (5) 41 U.S.C. 254d(c) and 10 U.S.C. 2313(c), Examination of Records 
of Contractor, when a subcontractor is not required to provide cost or 
pricing data (see (FAR) part 15, subpart 15.1);
    (6) 41 U.S.C. 416(a)(6), Minimum Response Time for Offers under 
Office of Federal Procurement Policy Act (see 48 CFR (FAR) part 5, 
subpart 5.2);
    (7) 41 U.S.C. 418a, Rights in Technical Data (see 48 CFR (FAR) part 
27, subpart 27.4);
    (8) 41 U.S.C. 701 et seq., Drug-Free Workplace Act of 1988 (see 48 
CFR (FAR) 23.5);
    (9) 46 U.S.C. 1241(b), Transportation in American Vessels of 
Government Personnel and Certain Cargo (see 48 CFR (FAR) part 47, 
subpart 47.5);
    (10) 49 U.S.C. 40118, Fly American provisions (see 48 CFR (FAR) 
part 47, subpart 47.4);
    (11) Pub. L. 90-469, William Langer Jewel Bearing Plant Special Act 
(see 48 CFR (FAR) part 8, subpart 8.2); [[Page 17185]] 
    (12) 10 U.S.C. 2301, note, as amended by Section 2091, Pub. L. 103-
355, Payment Protections for Subcontractors and Suppliers (see 48 CFR 
(FAR) parts 28 and 32, subparts 28.1 and 32.1);
    (13) 10 U.S.C. 2241, note (Pub. L. 102-396, Section 9005, as 
amended by Pub. L. 103-139, Section 8005), Limitations on Procurement 
of Food, Clothing, and Specialty Metals Not Produced in the United 
States (See 48 CFR (DFARS) part 225, subpart 225.70);
    (14) 10 U.S.C. 2320, Rights in Technical Data (see 48 CFR (DFARS) 
part 227, subpart 227.4);
    (15) 10 U.S.C. 2321, Validation of Proprietary Data Restrictions. 
(see 48 CFR (DFARS) part 227, subpart 227.4);
    (16) 10 U.S.C. 2327, note (Pub. L. 103-160, Section 843), Reporting 
Requirement Regarding Dealings with Terrorist Countries (see 48 CFR 
(DFARS) part 209, subpart 209.1);
    (17) 10 U.S.C. 2391, note (Pub. L. 101-510, Section 4201(a)(1)(B)), 
Notification of Substantial Impact on Employment (see 48 CFR (DFARS) 
part 249, subpart 249.70);
    (18) 10 U.S.C. 2393, Prohibition Against Doing Business with 
Certain Offerors or Contractors (see 48 CFR (DFARS) part 209, subpart 
209.4);
    (19) 10 U.S.C. 2501, note (Pub. L. 103-160, Section 1372), 
Notification of Proposed Program Termination (see 48 CFR (DFARS) part 
249, subpart 249.70);
    (20) 10 U.S.C. 2534, Miscellaneous Limitations on the Procurement 
of Goods other than United States Goods (see 48 CFR (DFARS) part 225, 
subparts 225.7004, 225.7007, 225.7010, and 225.7016);
    (21) 10 U.S.C. 2631, Cargo Preference Act (see 48 CFR (DFARS) 
247.5); and
    (22) National Defense Authorization Acts, Appropriations Acts, and 
Other Statutory Restrictions on Foreign Purchases as follows: Pub. L. 
100-202, Section 8088, Polyacrylonitrile Based Carbon Fiber; Pub. L. 
101-511, Section 8041, Anchor and Mooring Chain; Pub. L. 102-172, 
Section 8111, Carbon, Alloy and Armor Steel Plates; Pub. L. 102-396, 
Section 9108, Four Ton Dolly Jacks; Pub. L. 102-484, Section 832, Anti 
friction Bearings; Pub. L. 103-139, Section 8090, Aircraft Fuel Cells; 
Pub. L. 103-139, Section 8124, Totally Enclosed Lifeboat Survival 
Systems; Pub. L. 103-335, Section 8023, Supercomputers; Pub. L. 103-
335, Section 8050, Multibeam Sonar Mapping Systems; Pub. L. 103-335, 
Section 8115, Ship Propellers; and Pub. L. 103-335, Section 8120, 120 
mm Mortars and Ammunition.
    (b) Certain requirements of the following laws have been eliminated 
for subcontracts under either a contract for the acquisition of 
commercial items or subcontract for the acquisition of commercial 
items:
    (1) 33 U.S.C. 1368, Requirement for a certificate and clause under 
the Federal Water Pollution Control Act (see 48 CFR (FAR) part 23, 
subpart 23.1);
    (2) 40 U.S.C. 327 et seq., Requirement for a certificate and clause 
under the Contract Work Hours and Safety Standards Act (see 48 CFR 
(FAR) part 22, subpart 22.3);
    (3) 41 U.S.C. 423e(1)(B), Requirement for certain certifications 
under the Procurement Integrity Act (see 48 CFR (FAR) part 3, subpart 
3.1); and
    (4) 42 U.S.C. 7606, Requirements for a certificate and clause under 
the Clean Air Act (see 48 CFR (FAR) part 23, subpart 23.1).
    (c) The applicability of the following laws have been modified in 
regards to subcontracts under either a contract for the acquisition of 
commercial items or a subcontract for the acquisition of commercial 
items:
    (1) 41 U.S.C. 253g and 10 U.S.C. 2402, Prohibition on Limiting 
Subcontractor Direct Sales to the United States (see 48 CFR (FAR) part 
3, subpart 3.5);
    (2) 41 U.S.C. 254(d) and 10 U.S.C. 2306a, Truth in Negotiations Act 
(see 48 CFR (FAR) part 15, subpart 15.8); and
    (3) 41 U.S.C. 422, Cost Accounting Standards (see 48 CFR (FAR) part 
99).
    (d) The FAR prescription, provision or clause for each of these 
statutes has been revised in the appropriate part to reflect their 
proper application to the acquisition of commercial items.
    2. At 60 FR 15222; March 22, 1995, in the second column section 
52.212-5 is correctly revised to read as follows:


52.212-5  Contract Terms and Conditions Required To Implement Statutes 
or Executive Orders--Commercial Items.

    As prescribed in 12.302(b)(4), insert the following clause:

Contract Terms and Conditions Required to Implement Statutes or 
Executive Orders--Commercial Items (Date)

    (a) The Contractor agrees to comply with the following FAR 
clauses, which are incorporated in this contract by reference, to 
implement provisions of law or executive orders applicable to 
acquisitions of commercial items:
    (1) 52.219-8, Utilization of Small Business Concerns and Small 
Disadvantaged Business Concerns (15 U.S.C. 637 (d)(2) and (3));
    (2) 52.222-3, Convict Labor (E.O. 11755); and
    (3) 52.233-3, Protest After Award (31 U.S.C 3553 and 40 U.S.C. 
759).
    (b) The Contractor agrees to comply with the following FAR and 
FIRMR clauses in this paragraph (b) that are indicated as being 
incorporated in this contract by reference to implement provisions 
of law or executive orders applicable to acquisitions of commercial 
items or components:
    ______ (1) 52.203-6, Restrictions on Subcontractor Sales to the 
Government, with Alternate I (41 U.S.C. 253g and 10 U.S.C. 2402).
    ______ (2) 52.203-10, Price or Fee Adjustment for Illegal or 
Improper Activity (41 U.S.C. 423).
    ______ (3) 52.219-14, Limitation on Subcontracting (15 U.S.C. 
637(a)(14)).
    ______ (4) 52.222-26, Equal Opportunity (E.O. 11246).
    ______ (5) 52.222-35, Affirmative Action for Special Disabled 
and Vietnam Era Veterans (38 U.S.C. 2012).
    ______ (6) 52.222-36, Affirmative Action for Handicapped Workers 
(29 U.S.C. 793).
    ______ (7) 52.222-37, Employment Reports on Special Disabled 
Veterans and Veterans of the Vietnam Era (38 U.S.C. 2012).
    ______ (8) 52.225-3, Buy American Act--Supplies (41 U.S.C. 10).
    ______ (9) 52.225-9, Buy American Act--Trade Agreements Act--
Balance of Payments Program (41 U.S.C. 10, 19 U.S.C. 2501-2582).
    ______ (10) 52.225-17, Buy American Act--Supplies Under European 
Community Sanctions for End Products (E.O. 12849).
    ______ (11) 52.225-18, European Community Sanctions for End 
Products (E.O. 12849).
    ______ (12) 52.225-19, European Community Sanctions for Services 
(E.O. 12849).
    ______ (13) 52.225-21, Buy American Act--North American Free 
Trade Agreement Implementation Act--Balance of Payments Program (41 
U.S.C 10, Pub. L. 103-187).
    ______ (14) 52.247-64, Preference for Privately Owned US Flagged 
Commercial Vessels (46 U.S.C. 1241).
    ______ (15) 201-39.5202-3, Procurement Authority (FIRMR). (This 
acquisition is being conducted under ______ delegation of GSA's 
exclusive procurement authority for FIP resources. The specific GSA 
DPA case number is ______).
    (c) The Contractor agrees to comply with the following FAR 
clauses in this paragraph (c), applicable to commercial services, 
that are indicated as being incorporated in this contract by 
reference to implement provisions of law or executive orders 
applicable to acquisitions of commercial items or components:
    ______ (1) 52.222-41, Service Contract Act of 1965, As amended 
(41 U.S.C. 351, et seq.).
    ______ (2) 52.222-42, Statement of Equivalent Rates for Federal 
Hires (29 U.S.C. 206 and 41 U.S.C. 351, et seq.).
    ______ (3) 52.222-43, Fair Labor Standards Act and Service 
Contract Act--Price Adjustment (Multiple Year and Option Contracts) 
(29 U.S.C. 206 and 41 U.S.C. 351 et seq.).
    ______ (4) 52.222-44, Fair Labor Standards Act and Service 
Contract Act--Price Adjustment (29 U.S.C. 206 and 41 U.S.C. 351 et 
seq.).
    ______ (5) 52.222-47, SCA Minimum Wages and Fringe Benefits 
Applicable to Successor Contract Pursuant to Predecessor Contractor 
Collective Bargaining Agreement (CBA) (41 U.S.C. 351 et seq.).
    (d) Comptroller General Examination of Record. The Contractor 
agrees to comply [[Page 17186]] with the provisions of this 
paragraph (d) if this contract was awarded using other than sealed 
bid, is in excess of the simplified acquisition threshold, and does 
not contain the clause at 52.215-2, Audit and Records--Negotiation:
    (1) The Comptroller General of the United States, or an 
authorized representative of the Comptroller General, shall have 
access to and right to examine any of the Contractor's directly 
pertinent records involving transactions related to this contract.
    (2) The Contractor shall make available at its offices at all 
reasonable times the records, materials, and other evidence for 
examination, audit, or reproduction, until 3 years after final 
payment under this contract or for any shorter period specified in 
Subpart 4.7, Contractor Records Retention, of the Federal 
Acquisition Regulation, or for any longer period required by statute 
or by other clauses of this contract. If this contract is completely 
or partially terminated, the records relating to the work terminated 
shall be made available for 3 years after any resulting final 
termination settlement. Records relating to appeals under the 
disputes clause or to litigation or the settlement of claims arising 
under or relating to this contract shall be made available until 
such appeals, litigation, or claims are finally resolved.
    (3) As used in this clause, records include books, documents, 
accounting procedures and practices, and other data, regardless of 
type and regardless of form. This does not require the Contractor to 
create or maintain any record that the Contractor does not maintain 
in the ordinary course of business or pursuant to a provision of 
law.
    (e) Notwithstanding the requirements of the clauses in 
paragraphs (a), (b), (c) or (d) of this clause, the Contractor is 
not required to include any FAR clause, other than those listed 
below, in a subcontract for commercial items or commercial 
components--
    (1) 52.222-26, Equal Opportunity (E.O. 11246);
    (2) 52.222-35, Affirmative Action for Special Disabled and 
Vietnam Era Veterans (38 U.S.C. 2012(a)); and
    (3) 52.222-36, Affirmative Action for Handicapped Workers (29 
U.S.C. 793).

(End of clause)

    Dated: March 29, 1995.
Edward C. Loeb,
Deputy Project Manager for Implementation of the Federal Acquisition 
Streamlining Act of 1994.
[FR Doc. 95-8145 Filed 4-3-95; 8:45 am]
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