Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / Rules and Regulations 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. Quickcloseout 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. Quickcloseout procedures are applicable when the

conditions in FAR 42.708(a) are satisfied.

* * * * *

[FR Doc. 96–14541 Filed 6–19–96; 8:45 am]

BILLING CODE 6820–EP–P

48 CFR Part 46

[FAC 90–39; FAR Case 92–031; Item XXVII]

RIN 9000–AG06

Federal Acquisition Regulation;

Quality Assurance Actions—Electronic

Screening

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 have

agreed on a final rule to amend the

Federal Acquisition Regulation (FAR) to

include definitions of the terms ‘‘latent

defect’’ and ‘‘patent defect.’’ 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 92–

031.

SUPPLEMENTARY INFORMATION:

A. Background

On June 8, 1992, the Department of

Defense Inspector General issued Audit

Report 92–099, Quality Assurance

Actions Resulting from Electronic

Component Screening, which included

a recommendation that the Defense FAR

Supplement be revised to include

definitions of the terms ‘‘latent defect’’

and ‘‘patent defect.’’ Since both terms

are used in the FAR, Part 46 of the FAR

is being revised to include uniform

definitions for use by all acquiring

agencies. A proposed rule was

published in the Federal Register at 59

FR 46386 on September 8, 1994. After

evaluation of public comments, the

Councils agreed to convert the proposed

rule to a final rule without change.
31662 Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / Rules and Regulations

B. Regulatory Flexibility Act

The Department of Defense, the

General Services Administration, and

the National Aeronautics and Space

Administration certify that this final

rule will not have a significant

economic impact on a substantial

number of small entities within the

meaning of the Regulatory Flexibility

Act, 5 U.S.C. 601, et seq., because the

revision merely provides uniform

definitions for existing FAR terms. 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 Part 46

Government procurement.

Dated: June 4, 1996.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Part 46 is amended

as set forth below:

PART 46—QUALITY ASSURANCE

1. The authority citation for 48 CFR

Part 46 continues to read as follows:

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

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

2. Section 46.101 is amended by

adding in alphabetical order the

definitions ‘‘Latent defect’’ and ‘‘Patent

defect’’ to read as follows:

46.101 Definitions.

* * * * *

Latent defect means a defect which

exists at the time of acceptance but

cannot be discovered by a reasonable

inspection.

* * * * *

Patent defect means any defect which

exists at the time of acceptance and is

not a latent defect.

* * * * *

[FR Doc. 96–14542 Filed 6–19–96; 8:45 am]

BILLING CODE 6820–EP–P

48 CFR Part 46

[FAC 90–39; FAR Case 92–027; Item XXVIII]

RIN 9000–AF80

Federal Acquisition Regulation;

Quality Assurance Nonconformances

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 have

agreed on a final rule to amend the

Federal Acquisition Regulation (FAR) to

provide standardized definitions of the

terms ‘‘critical nonconformance,’’

‘‘major nonconformance,’’ and ‘‘minor

nonconformance,’’ and make other

conforming amendments as a result of

recommendations made by the

Department of Defense Inspector

General. 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 92–

027.

SUPPLEMENTARY INFORMATION:

A. Background

On September 27, 1990, the

Department of Defense Inspector

General (DoDIG) issued Audit Report

90–113, Nonconforming Products

Procured by the Defense Industrial

Supply Center. The report included

recommendations that the DoD should

use standardized terminology for a

nonconformance, and that the DoD

definition of a nonconformance should

be in agreement with the FAR. On

March 28, 1994 (59 FR 14466), the

Civilian Agency Acquisition Council

and the Defense Acquisition Regulations

Council published a proposed rule

implementing the DoDIG’s

recommendation.

As a result of evaluating the

comments received, changes were made

to the proposed rule. The changes

included deleting the words ‘‘judgment

and experience indicate’’ from the

definition of ‘‘critical nonconformance;’’

and adding the words ‘‘of the supplies

or services,’’ to the definition of ‘‘major

nonconformance’’ after the word

‘‘failure.’’

B. Regulatory Flexibility Act

The Department of Defense, the

General Services Administration, and

the National Aeronautics and Space

Administration certify that this final

rule will not have a significant

economic impact on a substantial

number of small entities within the

meaning of the Regulatory Flexibility

Act, 5 U.S.C. 601, et seq., because the

rule merely provides standard

terminology and definitions and

guidance to contracting officers

pertaining to nonconforming supplies

and services. 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 Part 46

Government procurement.

Dated: June 4, 1996.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Part 46 is amended

as set forth below:

PART 46—QUALITY ASSURANCE

1. The authority citation for 48 CFR

Part 46 continues to read as follows:

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

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

2. Section 46.101 is amended by

adding in alphabetical order the

definitions ‘‘Critical nonconformance’’,

‘‘Major nonconformance’’, and ‘‘Minor

nonconformance’’ to read as follows:

46.101 Definitions.

* * * * *

Critical nonconformance means a

nonconformance that is likely to result

in hazardous or unsafe conditions for

individuals using, maintaining, or

depending upon the supplies or

services; or is likely to prevent

performance of a vital agency mission.

* * * * *

Major nonconformance means a

nonconformance, other than critical,

that is likely to result in failure of the

supplies or services, or to materially

reduce the usability of the supplies or

services for their intended purpose.