Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / Rules and Regulations 31651

currency. In unusual circumstances, the

contracting officer may permit

submission of offers in other than a

specified currency.

(b) To ensure a fair evaluation of

offers, solicitations should generally

require all offers to be priced in the

same currency. However, if submission

of offers in other than a specified

currency is permitted, the contracting

officer shall convert the offered prices to

U.S. currency for evaluation purposes.

The contracting officer shall use the

current market exchange rate from a

commonly used source in effect on the

(1) Date of bid opening for sealed bid

acquisitions,

(2) Closing date for negotiated

acquisitions when award is based on

initial offers, or

(3) Due date for receipt of best and

final offers, for other negotiated

acquisitions.

(c) If contracts are priced in foreign

currency, agencies must ensure that

adequate funds are available to cover

currency fluctuations in order to avoid

a violation of the Anti-Deficiency Act.

4. Section 25.502 is added to read as

follows:

25.502 Solicitation provision.

The contracting officer shall insert the

provision at 52.225–4, Evaluation of

Foreign Currency Offers, in solicitations

if the use of other than a specified

currency is permitted. The contracting

officer shall insert the source of the rate

to be used in the evaluation of offers.

PART 52—SOLICITATION PROVISIONS

AND CONTRACT CLAUSES

5. Section 52.225–4 is added to read

as follows:

52.225–4 Evaluation of Foreign Currency

Offers.

As prescribed in 25.502, insert the

following provision:

EVALUATION OF FOREIGN CURRENCY

OFFERS (AUG 1996)

If offers are received in more than one

currency, offers shall be evaluated by

converting the foreign currency to United

States currency using (insert source of rate)

in effect on the (a) date of bid opening for

sealed bid acquisitions, (b) closing date for

negotiated acquisitions when award is based

on initial offers, or (c) due date for receipt of

best and final offers, for other acquisitions.

(End of provision)

[FR Doc. 96–14531 Filed 6–19–96; 8:45 am]

BILLING CODE 6820–EP–P

48 CFR Parts 28 and 52

[FAC 90–39, FAR Case 95–301, Item XVII]

RIN 9000–AG99

Federal Acquisition Regulation;

Irrevocable Letters of Credit and

Alternatives to Miller Act Bonds

AGENCIES: Department of Defense (DOD),

General Services Administration (GSA),

and National Aeronautics and Space

Administration (NASA).

ACTION: Interim rule with request for

comment.

SUMMARY: The Civilian Agency

Acquisition Council and the Defense

Acquisition Regulations Council have

agreed to an interim rule to amend the

Federal Acquisition Regulation (FAR) to

implement OFPP Policy Letter 91–4

(previously considered under FAR case

91–113, Irrevocable Letters of Credit)

and provide alternatives to Miller Act

Bonds, as required by Section 4104(b) of

the Federal Acquisition Streamlining

Act of 1994 (FASA) (Pub. L. 103–355).

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.

DATES: Effective Date: June 20,1996.

Comment Date: Comments should be

submitted to the FAR Secretariat at the

address shown below on or before

August 19, 1996 to be considered in the

formulation of a final rule.

ADDRESSES: Interested parties should

submit written comments to: General

Services Administration, FAR

Secretariat (MVRS), 18th & F Streets,

NW, Room 4035, Attn: Ms. Beverly

Fayson, Washington, DC 20405.

Please cite FAC 90–39, FAR case 95–

301 in all correspondence related to this

case.

FOR FURTHER INFORMATION CONTACT: Jack

O’Neill at (202) 501–3856 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 95–301.

SUPPLEMENTARY INFORMATION:

A. Background

This interim rule amends FAR Parts

28 and 52 to provide for use of

Irrevocable Letters of Credit as an

alternative to corporate or individual

sureties as security for Miller Act bonds,

and provides alternatives to Miller Act

bonds for construction contracts valued

at $25,000 to $100,000, which are no

longer subject to the Miller Act, in

accordance with Section 4104(b)(1) of

FASA.

B. Regulatory Flexibility Act

The interim rule may 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 provides alternatives to

Miller Act bonds for construction

contracts valued at $25,000 to $100,000.

In addition, it offers Irrevocable Letters

of Credit as an alternative to surety on

Miller Act bonds for construction

contracts over $100,000. These

alternatives may be helpful to both large

and small construction contractors. An

Initial Regulatory Flexibility Analysis

(IRFA) has been prepared and will be

provided to the Chief Counsel for

Advocacy for the Small Business

Administration. A copy of the IRFA may

be obtained from the FAR Secretariat.

Comments are invited. Comments from

small entities concerning the affected

FAR subpart will be considered in

accordance with 5 U.S.C. 610. Such

comments must be submitted separately

and cite 5 U.S.C 601, et seq. (FAR Case

95–301), in correspondence.

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 OMB

under 44 U.S.C. 3501, et seq.

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 compelling

reasons exist to promulgate this interim

rule without prior opportunity for

public comment. This action is

necessary because Section 4104(b) of the

Federal Acquisition Streamlining Act of

1994 (Public Law 103–355), regarding

Irrevocable Letters of Credit and

alternatives to Miller Act Bonds,

requires immediate implementation.

However, pursuant to Public Law 98–

577 and FAR 1.501, public comments

received in response to this interim rule

will be considered in the formation of

the final rule.

List of Subjects in 48 CFR Parts 28 and

52

Government procurement.
31652 Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / Rules and Regulations

Dated: June 4, 1996.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR parts 28 and 52 are

amended as set forth below:

1. The authority citation for 48 CFR

parts 28 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 28—BONDS AND INSURANCE

2. Section 28.001 is amended in the

definition of ‘‘Bond’’ by revising the

first sentence; and adding, in

alphabetical order, the definition

‘‘Irrevocable letter of credit’’ to read as

follows:

28.001 Definitions.

* * * * *

Bond means a written instrument

executed by a bidder or contractor (the

‘‘principal’’), and a second party (‘‘the

surety’’ or ‘‘sureties’’) (except as

provided in 28.204), to assure

fulfillment of the principal’s obligations

to a third party (the ‘‘obligee’’ or

‘‘Government’’), identified in the bond.

* * *

* * * * *

Irrevocable letter of credit (ILC) means

a written commitment by a federally

insured financial institution to pay all

or part of a stated amount of money on

demand to the Government (the

beneficiary) until the expiration date of

the letter. The letter of credit cannot be

revoked or conditioned.

* * * * *

28.102 Performance and payment bonds

and alternative payment protections for

construction contracts.

3. The heading at section 28.102 is

revised as set forth above.

4. Section 28.102–1 is amended in

paragraph (a) introductory text by

revising ‘‘$25,000’’ to read ‘‘$100,000’’;

redesignating paragraph (b) as (c) and

adding after the word ‘‘bonds’’ the

phrase ‘‘or alternative payment

protection’’; and adding (b)(1) and

(b)(2). The revised text reads as follows:

28.102–1 General.

* * * * *

(b)(1) Pursuant to Section 4104(b)(2)

of the Federal Acquisition Streamlining

Act of 1994 (Public Law 103–355), for

construction contracts greater than

$25,000, but not greater than $100,000,

the contracting officer shall select two

or more of the following payment

protections, giving particular

consideration to inclusion of an

irrevocable letter of credit as one of the

selected alternatives:

(i) A payment bond.

(ii) An irrevocable letter of credit

(ILC).

(iii) A tripartite escrow agreement.

The prime contractor establishes an

escrow account in a federally insured

financial institution and enters into a

tripartite escrow agreement with the

financial institution, as escrow agent,

and all of the suppliers of labor and

material. The escrow agreement shall

establish the terms of payment under

the contract and of resolution of

disputes among the parties. The

Government makes payments to the

contractor’s escrow account, and the

escrow agent distributes the payments

in accordance with the agreement, or

triggers the disputes resolution

procedures if required.

(iv) Certificates of deposit. The

contractor deposits certificates of

deposit from a federally insured

financial institution with the

contracting officer, in an acceptable

form, executable by the contracting

officer.

(v) A deposit of the types of security

listed in 28.204–1 and 28.204–2.

(2) The contractor shall submit to the

Government one of the payment

protections selected by the contracting

officer.

* * * * *

5. Section 28.102–2 is amended by—

(a) Revising the heading of paragraph

(b) and (b)(1) introductory text;

(b) In the last sentence of paragraph

(b)(2) by removing ‘‘subparagraph (1)

immediately above’’ and inserting

‘‘paragraph (b)(1) of this subsection’’ in

its place;

(c) At the end of paragraph (b)(3) by

removing the period and inserting ‘‘, or

to furnish additional alternative

payment protection.’’ in its place;

(d) In paragraph (c)(1) and the first

sentence of (c)(2) by inserting after the

word ‘‘bonds’’ the phrase ‘‘or alternative

payment protection’’;

(e) In the second sentence of

paragraph (c)(2) by removing the word

‘‘above’’ and inserting ‘‘of this

subsection’’ in its place;

(f) Adding paragraph (d). The revised

text reads as follows:

28.102–2 Amount required.

* * * * *

(b) Payment bonds or alternative

payment protection. (1) The penal

amount of payment bonds or alternative

payment protection shall equal—

* * * * *

(d) Reducing amounts. The

contracting officer has the discretion to

reduce the amount of security to

support a bond, subject to the

conditions of 28.203–5(c) or 28.204(b).

6. Section 28.102–3 is amended by

revising the section heading;

redesignating paragraphs (a), (b) and (c)

as (a)(1), (a)(2) and (a)(3), respectively;

redesignating the undesignated

introductory paragraph as paragraph (a);

and adding paragraph (b) to read as

follows:

28.102–3 Solicitation requirements and

contract clause.

* * * * *

(b) Insert the clause at 52.228–13,

Alternative Payment Protections, in

solicitations and contracts for

construction, when the estimated or

actual value exceeds $25,000 but does

not exceed $100,000. Complete the

clause by specifying the payment

protection or protections selected (see

28.102–1(b)(1)), the penal amount

required, and the deadline for

submission.

7. Section 28.106–3 is amended by

revising the section heading and adding

paragraph (c) to read as follows:

28.106–3 Additional bond or security.

* * * * *

(c) When an ILC is used as an

alternative to corporate or individual

sureties as security for a performance or

payment bond and the contract

performance period is extended, the

contracting officer shall require the

contractor to provide an ILC with an

appropriately extended maturity that

meets the requirements of 28.204–3(f).

8. Section 28.106–5 is amended by

redesignating paragraph (b) as (c); and

adding a new paragraph (b) to read as

follows:

§ 28.106–5 Consent of surety.

* * * * *

(b) When a contract for which

performance or payment is secured by

any of the types of security listed in

28.204 is modified as described in

paragraph (a) of this subsection, no

consent of surety is required.

* * * * *

9. Section 28.106–8 is added to read

as follows:

28.106–8 Payment to subcontractors or

suppliers.

The contracting officer will only

authorize payment from an ILC (or any

other cash equivalent security) upon a

judicial determination of the rights of

the parties, a signed notarized statement

by the contractor that the payment is

due and owed, or a signed agreement

between the parties as to amount due

and owed.

10. Section 28.203–5 is amended by

redesignating paragraph (a)(2) as (a)(3)

and revising the heading; adding a new
Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / Rules and Regulations 31653

paragraph (a)(2); and in the second

sentence of paragraph (c) by removing

‘‘and (2)’’ and inserting in its place

‘‘through (3)’’. The revised text reads as

follows:

28.203–5 Release of lien.

* * * * *

(a) * * *

(2) Contracts subject to alternative

payment protection (28.102–1(b)(1)).

The security interest shall be

maintained for the full contract

performance period plus one year.

(3) Other contracts not subject to the

Miller Act. * * *

* * * * *

11. Section 28.204 is revised to read

as follows:

28.204 Alternatives in lieu of corporate or

individual sureties.

(a) Any person required to furnish a

bond to the Government may furnish

any of the types of security listed in

28.204–1 through 28.204–3 instead of a

corporate or individual surety for the

bond. When any of those types of

security are deposited, a statement shall

be incorporated in the bond form

pledging the security. The contractor

shall execute the bond forms as the

principal. Agencies shall establish

safeguards to protect against loss of the

security and shall return the security or

its equivalent to the contractor when the

bond obligation has ceased.

(b) Upon written request by any

contractor securing a performance or

payment bond by any of the types of

security listed in 28.204–1 through

28.204–3, the contracting officer may

release a portion of the security only

when the conditions allowing the

partial release of lien in 28.203–5(c) are

met. The contractor shall, as a condition

of the partial release, furnish an

affidavit agreeing that the release of

such security does not relieve the

contractor of its obligations under the

bond(s).

(c) The contractor may satisfy a

requirement for bond security by

furnishing a combination of the types of

security listed in 28.204–1 through

28.204–3 or a combination of bonds

supported by these types of security and

additional surety bonds under 28.202 or

28.203. During the period for which a

bond supported by security is required,

the contractor may substitute one type

of security listed in 28.204–1 through

28.204–3 for another, or may substitute,

in whole or combination, additional

surety bonds under 28.202 or 28.203.

12. Sections 28.204–3 and 28.204–4

are added to read as follows:

28.204–3 Irrevocable letter of credit (ILC).

(a) Any person required to furnish a

bond has the option to furnish a bond

secured by an ILC in an amount equal

to the penal sum required to be secured

(see 28.204). A separate ILC is required

for each bond.

(b) The ILC shall be irrevocable,

unconditional, expire only as provided

in paragraph (f) of this subsection, and

be issued by an acceptable federally

insured financial institution as provided

in paragraph (g) of this subsection. ILCs

over $5 million must be confirmed by

another acceptable financial institution

that had letter of credit business of at

least $25 million in the past year.

(c) To draw on the ILC, the

contracting officer shall use the sight

draft set forth in the clause at 52.228–

14 and present it with the ILC to the

issuing financial institution or the

confirming financial institution (if any).

(d) If the contractor does not furnish

an acceptable replacement ILC, or other

acceptable substitute, at least 30 days

before an ILC’s scheduled expiration,

the contracting officer shall immediately

draw on the ILC.

(e) If, after the period of performance

of a contract where ILCs are used to

support payment bonds, there are

outstanding claims against the payment

bond, the contracting officer shall draw

on the ILC prior to the expiration date

of the ILC to cover these claims.

(f) Expiration dates shall be

established as follows:

(1) If used as a bid guarantee, the ILC

should expire no earlier than 60 days

after the close of the bid acceptance

period.

(2) If used as an alternative to

corporate or individual sureties as

security for a performance or payment

bond, the offeror/contractor may submit

an ILC to cover the entire period of

performance or an ILC with an initial

expiration date which is a minimum

period of one year from the date of

issuance, with a provision which states

that the ILC is automatically extended

without amendment for one year from

the expiration date, or any future

expiration date, until the period of

performance is completed. The final

expiration date shall be:

(i) For contracts subject to the Miller

Act, the later of—

(A) One year following the expected

date of final payment;

(B) For performance bonds only, until

completion of any warranty period; or

(C) For payment bonds only, until

resolution of all claims filed against the

payment bond during the one-year

period following final payment.

(ii) For contracts not subject to the

Miller Act, the later of—

(A) 90 days following final payment;

or

(B) Until completion of any warranty

period for performance bonds only.

(g) The ILC shall be issued or

confirmed by a federally insured

financial institution rated investment

grade or higher.

(1) The offeror/contractor shall

provide the contracting officer a credit

rating that indicates the financial

institution has the required rating(s) as

of the date of issuance of the ILC.

(2) If the contracting officer learns that

a financial institution’s rating has

dropped below the required level, the

contracting officer shall give the

contractor 30 days to substitute an

acceptable ILC or shall draw on the ILC

using the sight draft in paragraph (g) of

the clause at 52.228–14.

(h) Additional information on credit

rating services and investment grade

ratings, and a copy of the Uniform

Customs and Practice (UCP) for

Documentary Credits, 1983 Revision,

International Chamber of Commerce

Publication No. 400, is contained within

the Office of Federal Procurement

Policy Pamphlet No. 7, Use of

Irrevocable Letters of Credit. This

pamphlet may be obtained by calling

the Office of Management and Budget’s

publications office at (202) 395–7332.

28.204–4 Contract clause.

Insert the clause at 52.228–14,

Irrevocable Letter of Credit, in

solicitations and contracts for services,

supplies, or construction, when a bid

guarantee, or performance bonds, or

performance and payment bonds are

required.

PART 52—SOLICITATION PROVISIONS

AND CONTRACT CLAUSES

13. Section 52.228–2 is amended by

revising the introductory text, the date

in the clause heading, and paragraph (a)

of the clause; in paragraph (b) by

removing ‘‘or’’; at the end of paragraph

(c) by removing the period and

replacing it with ‘‘; or’’; and adding

paragraph (d) to read as follows:

52.228–2 Additional Bond Security.

As prescribed in 28.106–4, insert the

following clause:

ADDITIONAL BOND SECURITY (JUN 1996)

* * * * *

(a) Any surety upon any bond, or issuing

financial institution for other security,

furnished with this contract becomes

unacceptable to the Government;

* * * * *

(d) The contract performance period is

extended and an irrevocable letter of credit

(ILC) is used as security. If the Contractor
31654 Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / Rules and Regulations

does not furnish an acceptable extension or

replacement ILC, or other acceptable

substitute, at least 30 days before an ILC’s

scheduled expiration, the Contracting Officer

has the right to immediately draw on the ILC.

(End of clause)

14. Sections 52.228–13 and 52.228–14

are added to read as follows:

52.228–13 Alternative Payment

Protections.

As prescribed in 28.102–3(b), insert

the following clause:

ALTERNATIVE PAYMENT PROTECTIONS

(JUN 1996)

(a) The Contractor shall submit one of the

following payment protections:

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

(b) The penal sum of the payment

protection shall be in the amount of

$lllll.

(c) The submission of the payment

protection is required by

llllllllll.

(d) The payment protection shall provide

protection for the full contract performance

period plus a one-year period.

(e) Except for escrow agreements and

payment bonds, which provide their own

protection procedures, the Contracting

Officer is authorized to access funds under

the payment protection when it has been

alleged in writing by a supplier of labor or

material that a nonpayment has occurred,

and to withhold such funds pending

resolution by administrative or judicial

proceedings or mutual agreement of the

parties.

(f) When a tripartite escrow agreement is

used, the Contractor shall utilize only

suppliers of labor and material who signed

the escrow agreement.

(End of clause)

52.228–14 Irrevocable Letter of Credit.

As prescribed in 28.204–4, insert the

following clause:

IRREVOCABLE LETTER OF CREDIT (JUN

1996)

(a) Irrevocable letter of credit (ILC), as used

in this clause, means a written commitment

by a federally insured financial institution to

pay a stated amount of money on demand to

the Government (the beneficiary), until the

expiration date of the letter. Neither the

financial institution nor the offeror/

Contractor can revoke or condition the letter

of credit.

(b) If the offeror intends to use an ILC in

lieu of a bid bond, or to support other types

of bonds such as performance and payment

bonds, the letter of credit and letter of

confirmation formats in paragraphs (e) and (f)

of this clause shall be used.

(c) The letter of credit shall be irrevocable,

unconditional, issued by an acceptable

federally insured financial institution as

provided in paragraph (d) of this clause,

and—

(1) If used as a bid guarantee, the ILC shall

expire no earlier than 60 days after the close

of the bid acceptance period;

(2) If used to secure a performance or

payment bond, the offeror/Contractor may

submit an ILC to cover the entire period of

performance or may submit an ILC with an

initial expiration date which is a minimum

period of one year from the date of issuance,

with a provision which states that the ILC is

automatically extended without amendment

for one year from the expiration date, or any

future expiration date, until the period of

performance is completed. The final

expiration date shall be:

(i) For contracts subject to the Miller Act,

the later of—

(A) One year following the expected date

of final payment;

(B) For performance bonds only, until

completion of any warranty period; or

(C) For payment bonds only, until

resolution of all claims filed against the

payment bond during the one-year period

following final payment.

(ii) For contracts not subject to the Miller

Act, the later of—

(A) 90 days following final payment; or

(B) Until completion of any warranty

period for performance bonds only.

(d) The ILC shall be issued or confirmed

by a federally insured financial institution

rated investment grade or higher. The offeror/

Contractor shall provide the Contracting

Officer a credit rating that indicates the

financial institution has the required rating(s)

as of the date of issuance of the ILC. ILCs

over $5 million must be confirmed by

another acceptable financial institution that

had letter of credit business of at least $25

million in the past year.

(e) The following format shall be used by

the issuing financial institution to create an

ILC:

lllllllllllllllllllll

[Issuing Financial Institution’s Letterhead or

Name and Address]

Issue Date llllllllllllllll

Irrevocable Letter of Credit No. llllll

Account party’s name llllllllll

Account party’s address lllllllll

For Solicitation No. lllllllllll

(For reference only)

TO: [U.S. Government agency]

[U.S. Government agency’s address]

1. We hereby establish this irrevocable,

unconditional, and transferable Letter of

Credit in your favor for one or more drawings

up to United States $lllll. This Letter

of Credit is payable at [issuing financial

institution’s and, if any, confirming financial

institution’s] office at [issuing financial

institution’s address and, if any, confirming

financial institution’s address] and expires

with our close of business on lllll, or

any automatically extended expiration date.

2. We hereby undertake to honor your or

transferee’s sight draft(s) drawn on issuing

and, if any, confirming financial institution,

for all or any part of this credit that is

presented at the office specified in paragraph

1 of this Letter of Credit on or before the

expiration date or any automatically

extended expiration date.

3. [This paragraph is omitted if used as a

bid guarantee, and subsequent paragraphs are

renumbered.] It is a condition of this Letter

of Credit that it is deemed to be automatically

extended without amendment for one year

from the expiration date hereof, or any future

expiration date, unless at least 60 days prior

to any expiration date, we notify you or the

transferee by registered mail, or other

receipted means of delivery, that we elect not

to consider this Letter of Credit renewed for

any such additional period. At the time we

notify you, we also agree to notify the

account party (and confirming financial

institution, if any) by the same means of

delivery.

4. This Letter of Credit is transferable.

Transfers and assignments of proceeds are to

be effected without charge to either the

beneficiary or the transferee/assignee of

proceeds.

5. This Letter of Credit is subject to the

Uniform Customs and Practice (UCP) for

Documentary Credits, 1983 Revision,

International Chamber of Commerce

Publication No. 400, and to the extent not

inconsistent therewith, to the laws of

llllll [state of confirming financial

institution, if any, otherwise state of issuing

financial institution].

6. If this credit expires during an

interruption of business of this financial

institution as described in Article 19 of the

UCP, the financial institution specifically

agrees to effect payment if this credit is

drawn against within 30 calendar days after

the resumption of our business.

Sincerely,

[Issuing financial institution]

(f) The following format shall be used by

the financial institution to confirm an ILC:

[Confirming Financial Institution’s Letterhead or Name and Address] lllllll

llllllllll, 19lll

Our Letter of Credit

Advice Number lllllllllllll

Beneficiary: lllllllllllllll

[U.S. Government agency]

Issuing Financial Institution: lllllll

Issuing Financial Institution’s LC No.: lll

Gentlemen:

1. We hereby confirm the above indicated

Letter of Credit, the original of which is

attached, issued by lllll [name of

issuing financial institution] for drawings of

up to United States dollars lllll/U.S.

$lllll and expiring with our close of

business on lllll [the expiration date],

or any automatically extended expiration

date.

2. Draft(s) drawn under the Letter of Credit

and this Confirmation are payable at our

office located at llllll.

3. We hereby undertake to honor sight

draft(s) drawn under the Letter of Credit and

this Confirmation if presented at our offices

as specified herein.

4. [This paragraph is omitted if used as a

bid guarantee, and subsequent paragraphs

are renumbered.] It is a condition of this

confirmation that it be deemed automatically

extended without amendment for one year

from the expiration date hereof, or any

automatically extended expiration date,

unless:

(a) At least sixty (60) days prior to any such

expiration date we shall notify the
Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / Rules and Regulations 31655

Contracting Officer, or the transferee and the

issuing financial institution, by registered

mail or other receipted means of delivery,

that we elect not to consider this

confirmation extended for any such

additional period; or

(b) The issuing financial institution shall

have exercised its right to notify you or the

transferee, the account party, and ourselves,

of its election not to extend the expiration

date of the Letter of Credit.

5. This confirmation is subject to the

Uniform Customs and Practice (UCP) for

Documentary Credits, 1983 Revision,

International Chamber of Commerce

Publication No. 400, and to the extent not

inconsistent therewith, to the laws of

lllll [state of confirming financial

institution].

6. If this confirmation expires during an

interruption of business of this financial

institution as described in Article 19 of the

UCP, we specifically agree to effect payment

if this credit is drawn against within 30

calendar days after the resumption of our

business.

Sincerely,

lllllllllllllllllllll

[Confirming financial institution]

(g) The following format shall be used by

the Contracting Officer for a sight draft to

draw on the Letter of Credit:

SIGHT DRAFT

lllllllllllllllllllll

[City, State]

llllllllll, 19lll

[Name and address of financial institution]

Pay to the order of llllllllllll

[Beneficiary Agency] lllll

the sum of United States $ llllla ll

This draft is drawn under llllllll

Irrevocable Letter of Credit No. llllll

lllllllllllllllllllll

[Beneficiary Agency]

By: llllllllll

(End of clause)

[FR Doc. 96–14532 Filed 6–19–96; 8:45 am]

BILLING CODE 6820–EP–P

48 CFR Part 31

[FAC 90–39; FAR Case 94–606; Item XVIII]

RIN 9000–AG93

Federal Acquisition Regulation; Part 31

Agency Supplements

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

remove the requirement for Civilian

Agency Acquisition Council approval

for agency supplements to FAR Part 31.

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: Mr.

Jeremy F. Olson at (202) 501–3221 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 94–

606.

SUPPLEMENTARY INFORMATION:

A. Background

The Department of Transportation

recommended that FAR 31.101 be

amended to remove the requirement for

Civilian Agency Acquisition Council

approval for agency supplements to

FAR Part 31. The change does not

amend the requirement for approval of

class deviations. Accordingly,

supplementary coverage will be

consistent with the FAR Part 31

coverage, unless a class deviation is

approved. Therefore, advance approval

of supplements is considered to be

unnecessary.

B. Regulatory Flexibility Act

The final rule does not constitute a

significant FAR revision within the

meaning of FAR 1.501 and Public Law

98–577, and publication for public

comments is not required. Therefore,

the Regulatory Flexibility Act does not

apply. However, comments from small

entities concerning the affected subpart

will be considered in accordance with 5

U.S.C. 610. Such comments must be

submitted separately and cite 5 U.S.C.

601, et seq. (FAC 90–39, FAR case 94–

606), in correspondence.

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 31

Government procurement.

Dated: June 4, 1996.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Part 31 is amended

as set forth below:

1. The authority citation for 48 CFR

Part 31 continues to read as follows:

PART 31—CONTRACT COST

PRINCIPLES AND PROCEDURES

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

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

2. Section 31.101 is amended by

removing the third and fourth sentences

and replacing them with the following

text to read as follows:

31.101 Objectives.

* * * To achieve this uniformity,

individual deviations concerning cost

principles require advance approval of

the agency head or designee. Class

deviations for the civilian agencies

require advance approval of the Civilian

Agency Acquisition Council. Class

deviations for the National Aeronautics

and Space Administration require

advance approval of the Associate

Administrator for Procurement. Class

deviations for the Department of

Defense require advance approval of the

Director of Defense Procurement, Office

of the Under Secretary of Defense for

Acquisition and Technology.

[FR Doc. 96–14533 Filed 6–19–96; 8:45 am]

BILLING CODE 6820–EP–P

48 CFR Part 31

[FAC 90–39; FAR Case 93–020; Item XIX]

RIN 9000–AF99

Federal Acquisition Regulation;

Records Retention

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

explicitly state that contractors must

maintain adequate cost records in order

to be reimbursed for all claimed costs.

This regulatory action was subject to

Office of Management and Budget

review under Executive Order 12866,

dated September 30, 1993. It is not a

major rule under 5 U.S.C. 804.

EFFECTIVE DATE: August 19, 1996.

FOR FURTHER INFORMATION CONTACT: Mr.

Jeremy F. Olson at (202) 501–3221 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 93–

020.