[Federal Register Volume 61, Number 120 (Thursday, June 20, 1996)]
[Rules and Regulations]
[Pages 31660-31661]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-14541]



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DEPARTMENT OF DEFENSE
48 CFR Parts 42 and 52

[FAC 90-39; FAR Case 95-009; Item XXVI]
RIN 9000-AG57


Federal Acquisition Regulation; Quick-Closeout Procedures

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

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council have agreed on a final rule to amend 
the Federal Acquisition Regulation (FAR) to ensure maximum use of the 
quick-closeout procedures. This regulatory action was not subject to 
Office of Management and Budget review under Executive Order 12866, 
dated September 30, 1993, and is not a major rule under 5 U.S.C. 804.

EFFECTIVE DATE: August 19, 1996.

FOR FURTHER INFORMATION CONTACT: Ms. Linda Klein at (202) 501-3775 in 
reference to this FAR case. For general information, contact the FAR 
Secretariat, Room 4037, GS Building, Washington, DC 20405 (202) 501-
4755. Please cite FAC 90-39, FAR case 95-009.

SUPPLEMENTARY INFORMATION:

A. Background

    This final rule amends FAR 42.708, Quick-closeout procedure, the 
clause at FAR 52.216-7, Allowable Cost and Payment, and the clause at 
FAR 52.216-13, Allowable Cost and Payment--Facilities, to ease the 
restrictions and maximize the use of the quick-closeout procedure. This 
rule was based on the recommendations of the Interagency Process Action 
Team (PAT) sponsored by the Air Force Materiel Command. The PAT's 
rationale was that, by raising the dollar limitation of quick-closeout 
procedures to those contracts with total unsettled indirect costs not 
exceeding $1 million in lieu of $500,000, the number of contracts which 
could be closed using quick-closeout procedures would increase. Use of 
this procedure would benefit contractors by allowing them to invoice 
earlier and avoid the administrative costs which would otherwise be 
incurred for tracking these

[[Page 31661]]

contracts until final indirect cost rates are negotiated. In addition, 
the use of quick-closeout procedures is voluntary on the part of the 
contractor to ensure that the contractor does not suffer any loss. The 
final rule (1) revises FAR 42.708(a) by substituting the word ``shall'' 
for ``may''; (2) raises the limitation in FAR 42.708(a)(2)(i) for total 
unsettled indirect costs allocable to any one contract from $500,000 to 
$1 million; and (3) revises FAR 42.708(a)(2)(ii) to permit the 
contracting officer to waive the 15 percent restriction based upon a 
risk assessment that considers contractor's accounting, estimating, and 
purchasing systems; other concerns of the cognizant contract auditors; 
and any other pertinent information. Paragraph (f) of the clause at FAR 
52.216-7 and paragraph (e) of the clause at 52.216-13 have also been 
revised to be consistent with the revisions to 42.708 as outlined 
above.
    A proposed rule was published in the Federal Register on July 25, 
1995 (60 FR 38196). Five comments from two sources were received in 
response to the proposed rule. All comments were considered in the 
development of the final rule.

B. Regulatory Flexibility Act

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not have a significant economic impact on a substantial 
number of small entities within the meaning of the Regulatory 
Flexibility Act, 5 U.S.C. 601, et seq., because most contracts awarded 
to small business are awarded on the basis of a firm-fixed price, and 
settlement of final indirect cost rates is, therefore, not an issue. No 
comments were received on the impact of this rule on small entities 
during the public comment period.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the FAR do not impose recordkeeping or information collection 
requirements, or collections of information from offerors, contractors, 
or members of the public which require the approval of the Office of 
Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 42 and 52

    Government procurement.

    Dated: June 4, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, 48 CFR Parts 42 and 52 are amended as set forth below:
    1. The authority citation for 48 CFR Parts 42 and 52 continues to 
read as follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 42--CONTRACT ADMINISTRATION

    2. Section 42.708 is amended in the introductory text of paragraph 
(a) by removing ``may'' and inserting ``shall''; and by revising 
paragraph (a)(2) (i) and (ii) to read as follows:


42.708   Quick-closeout procedure.

    (a) * * *
    (2) * * *
    (i) The total unsettled indirect cost to be allocated to any one 
contract does not exceed $1,000,000; and
    (ii) Unless otherwise provided in agency procedures, the cumulative 
unsettled indirect costs to be allocated to one or more contracts in a 
single fiscal year do not exceed 15 percent of the estimated, total 
unsettled indirect costs allocable to cost-type contracts for that 
fiscal year. The contracting officer may waive the 15 percent 
restriction based upon a risk assessment that considers the 
contractor's accounting, estimating, and purchasing systems; other 
concerns of the cognizant contract auditors; and any other pertinent 
information; and
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    3. Section 52.216-7 is amended by revising the date of the clause 
and paragraph (f) to read as follows:


52.216-7   Allowable Cost and Payment.

* * * * *

ALLOWABLE COST AND PAYMENT (AUG 1996)

* * * * *
    (f) Quick-closeout procedures. Quick-closeout procedures are 
applicable when the conditions in FAR 42.708(a) are satisfied.
* * * * *
    4. Section 52.216-13 is amended by revising the introductory 
paragraph, the date in the clause heading, and paragraph (e) to read as 
follows:


52.216-13   Allowable Cost and Payment--Facilities.

    As prescribed in 16.307(g), insert the following clause:

ALLOWABLE COST AND PAYMENT--FACILITIES (AUG 1996)

* * * * *
    (e) Quick-closeout procedures. Quick-closeout procedures are 
applicable when the conditions in FAR 42.708(a) are satisfied.
* * * * *
[FR Doc. 96-14541 Filed 6-19-96; 8:45 am]
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