Federal Register / Vol. 61, No. 122 / Monday, June 24, 1996 / Proposed Rules 32401

Regulatory Flexibility Analysis

(‘‘IRFA’’) of the expected impact on

small entities of the proposals suggested

in this document. The IRFA is set forth

in Appendix A of the NPRM. Written

public comments are requested on the

IRFA. These comments must be filed in

accordance with the same filing

deadlines as comments on the rest of the

NPRM, but they must have a separate

and distinct heading designating them

as responses to the Initial Regulatory

Flexibility Analysis. The Secretary shall

send a copy of this NPRM, including the

Initial Regulatory Flexibility Analysis,

to the Chief Counsel for Advocacy of the

Small Business Administration in

accordance with paragraph 603(a) of the

Regulatory Flexibility Act, Public Law

No. 96–354, 94 Stat. 1164, 5 U.S.C. 601

et seq. (1981).

List of Subjects in 47 CFR Part 25

Satellites

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Rule Changes

Part 25 of the Commission’s Rules and

Regulations, Chapter I of Title 47 of the

Code of Federal Regulations is proposed

to be amended as follows:

PART 25—SATELLITE

COMMUNICATIONS

1. The authority citation for Part 25

continues to read as follows:

Authority: Secs. 25.101 to 25.601 issued

under Sec. 4, 48 Stat. 1066, as amended; 47

U.S.C. 154. Interpret or apply secs. 101–104,

76 Stat. 419–427; 47 U.S.C. 701–744; 47

U.S.C. 554.

2. Section 25.113 is amended by

revising the first sentence of paragraph

(b) to read as follows:

§ 25.113 Construction permits.

* * * * *

(b) Construction permits are not

required for satellite earth stations that

operate with U.S.-licensed or non-U.S.-

licensed space stations. * * *

* * * * *

3. Section 25.115 is amended by

revising the first sentence of paragraph

(c) to read as follows:

§ 25.115 Applications for earth station

authorizations.

* * * * *

(c) Large Networks of Small Antennas

operating in the 12/14 GHz frequency

bands with U.S.-licensed or non-U.S.-

licensed satellites for domestic services.

* * *

* * * * *

4. Section 25.130 is amended by

revising the first sentence of paragraph

(d) to read as follows:

§ 25.130 Filing requirements for

transmitting earth stations.

* * * * *

(d) Transmissions of signals or

programming to non-U.S.-licensed

satellites, and to and/or from foreign

points by means of U.S.-licensed fixed

satellites may be subject to restrictions

as a result of international agreements or

treaties. * * *

* * * * *

5. Section 25.131 is amended by

revising paragraphs (b) and (j) to read as

follows:

§ 25.131 Filing requirements for receiveonly earth stations.

* * * * *

(b) Except as provided in paragraph (j)

of this section, receive-only earth

stations in the fixed-satellite service that

operate with U.S.-licensed satellites

may be registered with the Commission

in order to protect them from

interference from terrestrial microwave

stations in bands shared co-equally with

the fixed service in accordance with the

procedures of §§ 25.203 and 25.251–

25.256.

* * * * *

(j) Receive-only earth stations

operating with non-U.S.-licensed space

stations shall file an FCC Form 493

requesting a license or modification to

operate such station. Receive-only earth

stations used to receive INTELNET I

service from Intelsat space stations need

not file for licenses. See Deregulation of

Receive-Only Satellite Earth Stations

Operating with the INTELSAT Global

Communications Satellite System,

Declaratory Ruling, RM No. 4845, FCC

86–214 (released May 19, 1986).

6. Section 25.137 is added to read as

follows:

§ 25.137 Application requirements for

earth stations operating with non-U.S.-

licensed space stations.

(a) Earth stations requesting authority

to operate with a non-U.S.-licensed

space station to participate in the U.S.

satellite service market must attach an

exhibit with their FCC Form 493

application with information

demonstrating that U.S.-licensed

satellite systems have effective

competitive opportunities to provide

analogous services in:

(1) The country in which the nonU.S.-licensed space station is licensed;

and

(2) All countries in which

communications with the U.S. earth

station will originate or terminate. The

applicant bears the burden of showing

that there are no de jure or legal

constraints that limit or prevent access

of the U.S. satellite system in the

relevant foreign markets. The exhibit

required by this paragraph must also

include a statement of why grant of the

application is in the public interest.

(b) Earth stations requesting authority

to operate with a non-U.S.-licensed

space station must attach to their FCC

Form 493 an exhibit providing legal,

financial, and technical information for

the non-U.S.-licensed space station in

accordance with this Part 25 and Part

100 of this chapter. If the non-U.S.-

licensed space station is in orbit and

operating, the applicant need not

include the financial information.

(c) A non-U.S.-licensed satellite

system seeking to serve the United

States can be considered

contemporaneously with other U.S.

satellite systems if it is:

(1) In orbit and operating;

(2) Has a license from another

administration; or

(3) Has been submitted for

coordination to the International

Telecommunication Union and is

pursuing a license in another

administration.

[FR Doc. 96–15857 Filed 6–21–96; 8:45 am]

BILLING CODE 6712–01–P

OFFICE OF PERSONNEL

MANAGEMENT

48 CFR Parts 1602, 1604, 1615, 1616,

1622, 1631, 1644, 1652, and 1653

RIN 3206–AH45

Federal Employees Health Benefits

Program Acquisition Regulation; Truth

in Negotiations Act and Related

Changes

AGENCY: Office of Personnel

Management.

ACTION: Proposed rule.

SUMMARY: The Office of Personnel

Management (OPM) is issuing a

proposed regulation that would amend

the Federal Employees Health Benefits

Acquisition Regulation (FEHBAR) to

implement those portions of the Federal

Acquisition Streamlining Act of 1994

(FASA) that impact on the FEHB

Program.

DATES: Comments must be received on

or before July 24, 1996.

ADDRESSES: Written comments may be

sent to Lucretia F. Myers, Assistant

Director for Insurance Programs,

Retirement and Insurance Service,

Office of Personnel Management, P.O.
32402 Federal Register / Vol. 61, No. 122 / Monday, June 24, 1996 / Proposed Rules

Box 57, Washington, DC 20044;

delivered to OPM, Room 3451, 1900 E

Street NW., Washington, DC.; or FAXed

to (202) 606–0633.

FOR FURTHER INFORMATION CONTACT:

Mary Ann Mercer, (202) 606–0004.

SUPPLEMENTARY INFORMATION: The

Federal Acquisition Streamlining Act of

1994 (FASA), Public Law 103–355,

effective October 13, 1994, amends

Section 304A of the Truth in

Negotiations Act (TINA) by increasing

the threshold for Federal contractors

and subcontractors submitting cost or

pricing data from $100,000 to $500,000.

FASA also amends other provisions of

TINA affecting the submission of cost or

pricing data.

This proposed regulation would

amend the FEHBAR to conform to

FASA by:

• Increasing the threshold for the

submission of certified cost or pricing

data for FEHB Program community

rated contracts, and for the submission

of certified cost or pricing data for FEHB

Program experience rated contracts,

subcontracts, and contract

modifications, from $100,000 to

$500,000;

• Ensuring uniform treatment of cost

or pricing data as intended by FASA;

and,

• Conforming the FEHBAR to these

and other FASA changes.

Effect of FASA on Community Rated

Contracts

A number of changes made by FASA

and the implementing Federal

Acquisition Regulation (FAR)

provisions impact on the way OPM has

treated FEHB Program community rated

contracts in the past, specifically with

regard to contract type and establishing

the reasonableness of the carriers’ rates.

For example, TINA provides for special

exceptions to the submission of cost or

pricing data for contracts based on

adequate price competition, contracts

based on established catalog or market

price of commercial items, and contracts

for which prices are set by law or

regulation.

FEHB Program contracts do not have

price competition because the contracts

are not subject to the competitive

bidding requirements of Title 41 of the

United States Code; nor are prices set by

law or regulation. However, the

FEHBAR identifies community rated

contracts as contracts based on

established market price. Under TINA,

the contracting officer may not require

a contractor to submit cost or pricing

data for contracts based on established

market prices of commercial items sold

in substantial quantities to the general

public.

The FAR clarifies the standards for

determining an established market price

[48 CFR 15.804–1(b)(1)(ii)] and the

definitions of commercial items [48 CFR

Part 12] and cost or pricing data [48 CFR

15.801]. As a result of these

clarifications, we reevaluated our

treatment of community rated contracts,

as well as the entire process by which

we require cost or pricing data, and the

definitions of terms in the FEHBAR.

The FEHBAR has, since it was

initially published, provided that

community rated contracts are based on

established market price. OPM has

deemed community rated contracts to

be based on market price in the past in

an attempt to fit them neatly into a

standard FAR classification. However,

after reevaluating the concept of

established market price, we do not

believe that it really reflects the way in

which community rates are established;

nor do we believe the contracts can be

considered contracts for commercial

items or services.

Contrary to what many outside the

health insurance industry believe, a

community rate is not a single rate that

an HMO (also known as a

‘‘comprehensive medical plan’’ or

‘‘CMP’’) charges all of its groups. The

theory and practice of community rating

has always been complex. In 1988, the

enactment of the Health Maintenance

Organization (HMO) Amendments of

1988 made community rating even more

complicated. The HMO Amendments of

1988 authorized community rated plans

to use a new rating method called

‘‘Adjusted Community Rating.’’ In spite

of its name, ACR is actually a form of

experience rating (prospective

experience rating). The HMO

Amendments of 1988 so radically

altered the traditional concept of

community rating that it is no longer

appropriate to call the community rate

a ‘‘market price’’ as that term is

intended to apply to Federal

procurement.

In carrying out its responsibility

under the FEHB Program’s statutory

mandate to ensure that the FEHB

Program premium rates ‘‘reasonably and

equitably reflect the cost of the benefits

provided’’ [5 U.S.C. 8902(i)], OPM

requires cost or pricing data. Cost or

pricing data is fundamental to the

development of the FEHB Program

premium rate. The primary purpose of

cost or pricing data as it relates to FEHB

Program contracts is to determine

whether the rating method used for the

FEHB Program is consistent with the

rating methods used for the carrier’s two

similarly sized subscriber groups

(SSSGs). For example, if the rate for an

SSSG is based on experience, if it

incorporates claims and administrative

cost loadings, or any combination of

these and other elements, OPM verifies

that the carrier has used the same

methodology for the FEHB Program rate.

In addition, there are a multiplicity of

requirements specific to the FEHB

Program group that differentiate the

needs of our Program from a carrier’s

other clients and for which we require

cost or pricing data: physical therapy,

infertility, prescription drugs, heart

transplants, coverage for newborns on

self-only enrollments, and no

coinsurance, to name a few.

While the FEHB Program premium

rates are price driven, competition in

the FEHB Program is not based on price,

as it is with competitively bid

procurements. In the FEHB Program,

competition is based on the employees’

choice of health plans, considering their

personal health care needs. The only

way OPM can ensure price

reasonableness in lieu of price

competition is through obtaining cost or

pricing data. Without cost or pricing

data, OPM would be unable to ensure a

fair and reasonable premium rate for

Federal enrollees. The practice of asking

for this cost or pricing data is widely

accepted in the insurance industry.

Although we have required this data for

over 20 years, no FEHB Program carrier

has advised us that it was burdensome.

For a number of years, OPM has been

trying to determine the best way to

apply the FAR cost and pricing

requirements. We have tried to learn

from our experience and understand

how we might apply the FAR

requirements to community rated

contracts, while remaining in

compliance with the FEHB law. We

have modified our acquisition

regulations on a number of occasions in

an attempt to achieve the most

appropriate implementation of the FAR,

given the unique features of community

rated health benefits contracts, as

compared to the more common types of

contracts entered into by Federal

agencies. While we have in the past

defined FEHB Program community

rated contracts as contracts based on

established market price and classified

them as fixed price with economic price

adjustment, we have consistently asked

for cost or pricing data because of our

statutory mandate to ensure that rates

reasonably and equitably reflect the

benefits provided.

In view of the above, and after

evaluating the revised definitions and

cost and pricing data requirements

pursuant to FASA and case law, we

have concluded that the determination

that community rated contracts are

based on established market price is no
Federal Register / Vol. 61, No. 122 / Monday, June 24, 1996 / Proposed Rules 32403

longer appropriate and fails to meet our

current requirements. Similarly, the

exemption of FEHB Program contracts

from competitive bidding requirements,

the fact that the health services under

community rated contracts are not

commercial services, and the fact that

FEHB premiums are not set by law or

regulation have caused OPM to

conclude that none of the FAR

exceptions to the submission of cost or

pricing data contained in FAR 15.804–

1 apply to the community rated

contracts. Accordingly, the cost or

pricing provisions of FASA are

applicable.

To clarify any perceived incongruity

and inconsistency between the

FEHBAR, the FAR, and FASA, we are

withdrawing our determination that the

community rated contracts are based on

established market price, and we will

more closely follow the cost and pricing

data requirements in the FAR.

Community rated contracts in reality fit

neither of the two categories of

negotiated contracts provided in the

FAR, that is, fixed price and cost

reimbursement. Given all the relevant

information, we have made a

determination to classify community

rated contracts simply as ‘‘negotiated

benefits contracts.’’

We are also clarifying an anomaly in

the FEHBAR regarding cost or pricing

data on which community rated carriers

justify their community rate. The

capitation rates, utilization and trend

data, and other information that we

require from health benefits carriers are

not traditional cost or pricing data used

in the more common types of

Government contracting. Traditional

cost and pricing data consists of costs

for raw materials and for processing,

such as, hours worked, overtime rates,

and unit costs.

FASA states that cost or pricing data

are all the facts that a prudent buyer or

seller would reasonably expect to affect

price negotiations significantly. The

term does not include information that

is judgmental, but does include the

factual information from which a

judgment was derived. In the FEHB

Program, we must obtain factual and

verifiable pricing data that can be

reasonably expected to contribute to the

soundness of estimates of future costs

and to the validity of determinations of

costs already incurred in order to set a

fair and reasonable premium rate for

FEHB Program enrollees. We consider

the specialized rating data used by

carriers in computing a rate that is

appropriate for the Federal group and

the similarly sized subscriber groups

(SSSGs) to be relevant cost and pricing

data for the FEHB Program contracts.

Such data includes, but is not limited

to, capitation rates; utilization data for

prescription drug, hospital, and office

visit benefits utilization; trend data;

rating methodologies for other groups;

standardized presentation of the plan’s

rating method (age, sex, etc.) showing

that the factor predicts utilization; tiered

rates information; ‘‘step-up’’ factors

information; demographics such as

family size; special benefit loading

capitations; and adjustment factors for

capitation.

OPM’s approach over the years has

simply been an attempt to fit the

community rated contracts into the

context of the FAR and utilize the

provisions of the FAR requiring cost or

pricing data. OPM has modified the

FEHBAR in this area over time, and at

this point we have concluded that we

should define in regulation ‘‘cost or

pricing data’’ as it relates to FEHB

Program contracts. OPM will not burden

carriers with new FEHBAR

requirements related to cost or pricing

data. We intend to follow the

requirements of the FAR. To clarify

unequivocally that FEHB Program

community rated carriers must comply

with the FASA cost and pricing

provisions, the regulation specifically

defines the data that OPM requires for

community rated contracts of $500,000

and over as ‘‘cost and pricing data.’’

Further, the regulation classifies the

community rated plans into two

categories, large and small, with the

number of enrollee contracts

distinguishing the categories. However,

because FASA sets a threshold of

$500,000 for collecting cost or pricing

data, there are two types of small plans.

Small Plans

(a) Plans having less than 1500

enrollee contracts at the time of the rate

proposal and whose FEHBP premiums

are less than $500,000 for the contract

term.

(b) Plans having less than 1500

enrollee contracts at the time of the rate

proposal and whose FEHBP premiums

are $500,000 or more for the contract

term.

Large Plans

Plans having 1500 or more enrollee

contracts at the time of the rate proposal

and whose FEHBP premiums are

$500,000 or more for the contract term.

The regulation provides that the

amount and nature of the back-up

documentation for small plan rate

proposals differs from the large plan

requirements. All carriers must derive

their Federal group rates according to

OPM community rating principles.

Under FASA, OPM cannot require

community rated carriers with FEHBP

contracts in which the income from the

Federal group will be under $500,000 to

submit cost or pricing data, although

they may submit it voluntarily. Carriers

with small plans in which the Federal

group income is less than $500,000

must submit only a rate proposal and

abbreviated utilization data for the

applicable contract year. Since carriers

of small plans having fewer than 1,500

enrollee contracts will not submit

detailed documentation, OPM will

evaluate the proposed rates by

performing a basic reasonableness test

on the information submitted. Rates

failing this test will be subject to further

review.

Carriers with small plans in which the

Federal group income is $500,000 or

more must submit cost or pricing data

consisting of a rate proposal, a

certificate of accurate pricing, and

utilization data for the applicable

contract year. These carriers must

complete proposed net-to-carrier rate

sheets and the community rate

questionnaire and keep them on file for

OPM review. The OPM auditors will

examine the documents during plan

audits, and OPM may also periodically

review the documents. OPM will

evaluate the proposed rates by

performing a basic reasonableness test

on the information submitted.

Large plan carriers must submit

proposed net-to-carrier rate sheets,

certificate of accurate pricing,

community rate questionnaire, and

detailed utilization data. OPM will

evaluate the information for consistency

with the requirements of 48 CFR

Chapter 16 (FEHBAR).

All contracts for $500,000 or more

will be subject to the interest and

penalty assessments for defective rates

enacted by FASA. Consistent with

FASA and FEHBAR 1652.215–70, OPM

will assess simple interest using the

quarterly rate determinations by the

Secretary of the Treasury under the

authority of 26 U.S.C. 6621(a)(2).

Effect of FASA on Experience Rated

Contracts

OPM has determined that cost or

pricing data are required for FEHB

Program experience rated contracts in

which the income from the Federal

group will be $500,000 or more. Cost or

pricing data are also required for FEHB

Program negotiated subcontracts at any

tier, if the contractor and each higher

tier subcontractor were required to

furnish cost or pricing data, as well as

for the modification of any FEHB

Program contract (whether or not cost or

pricing data were initially required) or

subcontracts if the subcontractor was
32404 Federal Register / Vol. 61, No. 122 / Monday, June 24, 1996 / Proposed Rules

required to submit cost or pricing data,

if the subcontract or modification will

equal or exceed $500,000.

Cost or pricing data for experience

rated plans includes information such

as claims data; actual or negotiated

benefits payments made to providers of

medical services for the provision of

health care such as capitation not

adjusted for specific groups, per diems,

and Diagnostic Related Group (DRG)

payments; cost data; utilization data;

actuarial estimates; and administrative

expenses and retentions.

All contracts for $500,000 or more

will be subject to the interest and

penalty assessments for defective rates

enacted by FASA.

In the past, we have classified

experience rated contracts as a

combination of negotiated fixed-price

contracts with provisions for a form of

retroactive price redetermination. Like

community rated contracts, experience

rated contracts do not fit either of the

two categories of negotiated contracts

provided in the FAR (fixed price and

cost reimbursement). Therefore, for

consistency, we have decided to use the

same contract type for all FEHBP

contracts. Thus, the regulation provides

that both community rated and

experience rated contracts will be

‘‘negotiated benefits contracts.’’ This is

a change in terminology only. OPM has

added no new requirements or clauses

as a result of this change in terminology.

For experience rated contracts, we will

continue to use FAR provisions

applicable to cost analysis; and for

community rated contracts, we will

continue to use FAR provisions

applicable to price analysis. We will

continue to apply the cost principles in

FAR Part 31 to experience rated

contracts.

Miscellaneous Changes

Clarification of SSSGs

We have made a number of

clarifications to the definition of SSSGs

[1602.170–12]. The regulation is

intended to describe the methodology

OPM uses. Specific instructions on

SSSGs will be included in the annual

FEHB Program rate instructions to

community rated carriers.

We have clarified how OPM

determines which SSSGs it will select

as a basis for determining the FEHBP

rate. Specifically, after reviewing the

rating methods used for the SSSGs to

determine whether the rating method

the carrier used for the FEHBP is

appropriate, OPM determines the

FEHBP rate on the basis of the lower of

the rates produced by applying—to the

FEHB Program—rating methods

consistant with those used for the

SSSGs.

In addition, we have clarified that any

group with which a carrier enters into

an agreement to provide health care

services must be considered as a

potential SSSG, and we have listed

examples of groups that the carrier may

not consider as SSSGs. For example,

while health care purchasing alliances

must be considered as potential SSSGs,

OPM will not consider purchasing

alliances mandated by state or local

government which restrict membership

to groups of less than 100 employees as

SSSGs. OPM excludes groups from the

SSSG pool based solely on the types of

alliances.

We have also clarified that groups

having multi-year contracts are potential

SSSGs. Therefore, in selecting SSSGs,

the duration of the contract term is not

a factor. OPM will look at the rate year

by year in determining the rate that will

be applicable to the FEHB group.

These additions to the regulations are

simply clarifications. Although OPM’s

requirements for SSSGs have not

changed, as practices within the

insurance industry have evolved we

find it necessary to clarify our treatment

of SSSGs so that there will be no

question as to OPM’s intent. The annual

FEHB Program rate instructions

incorporate these requirements;

however, we have placed them in

regulation because there appears to be

confusion on the part of some of the

carriers, and we wanted to clear up any

misunderstanding.

The SSSG clarifications in

§ 1602.170–12 of the regulation will be

applicable for the rate instructions for

the 1998 contract year.

Contract Clauses

Because of the many changes to the

FAR brought about by FASA, we have

found it necessary to amend a number

of FEHBAR clauses and certain

references to FAR clauses listed in the

FEHBAR Clause Matrix [FEHBAR Part

1652.3]. We have also made a number

of editorial changes to the Matrix and

conforming changes to the applicable

FAR clauses listed in Part 1652. For

clarity of presentation, we have

reproduced the entire Matrix. The

changes are discussed below.

We have amended the Clause Matrix

in Part 1652.3 to: 1) Add FAR clause

52.242–3, Penalties for Unallowable

Costs, as a result of FASA; and, 2) Drop

the following FAR clauses deleted by

FASA: § 52.203–1, Officials Not to

Benefit; § 52.215–1, Examination of

Records by Comptroller General;

§ 52.219–13, Utilization of WomenOwned Small Businesses; and § 52.220–

3, Utilization of Labor Surplus Area

Concerns.

The names of the following FAR

clauses have been changed to conform

to FASA: § 52.215–2, Audit & Records—

Negotiation; and § 52.219–8, Utilization

of Small, Small Disadvantaged and

Women-Owned Small Business

Concerns. FEHBAR clause 1652.204–70,

‘‘Contractor Records Retention,’’ has

been changed to reflect FASA threshold

and reference changes.

We have added § 1652.204–72, Filing

Health Benefit Claims/Court Review of

Disputed Claims to the Matrix to

conform to OPM’s regulation change of

March 29, 1995 [60 FR 16037].

In light of our new understanding

brought about by FASA, we have

reconsidered the application of the FAR

cost or pricing data clauses in FAR

section 52.215. We have decided to

discontinue using FAR 52.215–23, Price

Reduction For Defective Cost Or Pricing

Data—Modifications, and will rely

solely on FEHBAR 1652.215–70, Price

Reduction for Defective Pricing or

Defective Cost or Pricing Data. FEHBAR

1652.215–70 captures all of the

defective cost or pricing data elements

of the FAR and FASA as they relate to

the FEHB Program. Accordingly, there

will be only one clause on defective cost

or pricing data applicable to community

rated contracts.

We have dropped the requirement for

the following FAR clauses for

community rated carriers: § 52.215–25,

Subcontractor Cost or Pricing Data—

Modifications, § 52.244–5, Competition

in Subcontracting, § 1652.244–70,

Subcontracts. These clauses have no

practical application for community

rated carriers. Subcontracts negotiated

by community rated carriers generally

are applicable to a community of

participants. Any cost for subcontracts

is generally factored into the rates of all

the carrier’s employer groups and

cannot be split out for any single

employer group.

We have added novation and change

of name to the list of events in the

Notice of Significant Events clause at

§ 1652.222–70. While the list of events

in the clause is not exhaustive, OPM

considers a novation or change of name

sufficiently important to include on the

list of events that might reasonably be

expected to have a material effect upon

the carrier’s ability to meet its

obligations under the contract.

We have amended § 1644.170, Policy

for FEHBP Subcontracting Consent, by

stating that the clause applies to

subcontracts or modifications to

subcontracts when the amount charged

against the contract exceeds $100,000

and is 25% of the total cost of the
Federal Register / Vol. 61, No. 122 / Monday, June 24, 1996 / Proposed Rules 32405

subcontract. The inclusion of the 25%

requirement makes the policy statement

consistent with OPM’s long-established

practice and conforms to the contract

clause at § 1652.244–70.

We have changed the method,

frequency, and rate of calculating

interest in FEHBAR clause 1652.215–71,

Investment Income, to simple interest

on lost investment income at the

quarterly rate determined by the

Secretary of the Treasury under the

authority of 16 U.S.C. 6621(a)(2) to

make it consistent with the treatment of

interest under § 1652.215–70, Rate

Reduction for Defective Pricing or

Defective Cost or Pricing Data.

We have dropped the applicability of

the following clauses to community

rated contracts because they apply only

to contracts based on cost analysis:

§ 52.215–27, Termination of Defined

Benefit Pension Plans; § 52.215–39,

Reversion or Adjustment of Plans for

Postretirement Benefits Other Than

Pensions (PRB); § 1652.232–71,

Payments—Contracts With Letter of

Credit Payment Arrangements.

We have dropped the application of

§ 1652.232–70, Payments—Contracts

Without Letter of Credit Payment

Arrangements, to experience rated

contracts because it applies only to

contracts based on price analysis. In

addition, we have dropped the

application of § 1652.232–71,

Payments—Contracts with Letter of

Credit Payment Arrangements, to

community rated contracts because it

applies only to contracts based on cost

analysis.

FEHBAR 1652.216–70, Accounting

and Price Adjustment has been

amended to delete references to market

price and to accommodate new industry

trends in community rating.

In keeping with the spirit of the FAR,

OPM is adopting FAR 52.222–21,

Certification of Nonsegregated Facilities,

and FAR 52.222–25, Affirmative Action

Compliance for the FEHB Program. A

technical change has been made to the

clauses to replace the word ‘‘offeror’’

with the word ‘‘contractor’’ to reflect the

fact that the statutory provisions of 5

U.S.C. chapter 89 obviate the issuance

of solicitations.

We have added the following clauses

because we have determined that they

are applicable to FEHB Program

contracts: § 52.222–37, Employment

Reports on Special Disabled Veterans

and Veterans of the Vietnam Era;

§ 52.227–1, Authorization and Consent;

§ 52.227–2, Notice and Assistance

Regarding Patent and Copyright

Infringement; § 52.232–28, Electronic

Funds Transfer Payment Methods.

To conform with FEHBAR 1632.617,

we have indicated in the Matrix that

FAR 52.232–17, Interest, applies to

experience rated contracts as well as to

community rated contracts.

We have deleted the FAR clause dates

in FEHBAR 1652.000. FAR clauses

become outdated over time and, if the

FAR clause dates are contained in the

FEHBAR, OPM must continually revise

the FEHBAR to keep it up-to-date. It has

always been OPM’s intent to apply to

the contracts the most current FAR

clause in effect at the beginning of each

contract term. The FAR clause dates

will continue to be included in the

contract so that there will be no

question as to which FAR clause version

is applicable.

Three FEHBAR clause dates have

been added in Subpart 1652.2 because

they had been inadvertently omitted.

The clauses are § 1652.232–70,

Payments—community rated contracts,

§ 1652.232–71, Payments—experience

rated contracts, and § 1652.204–72,

Filing Health Benefit Claims/Court

Review of Disputed Claims.

OPM has also updated a number of

references in the proposed regulation.

Regulatory Flexibility Act

I certify that this regulation will not

have a significant economic impact on

a substantial number of small entities

because all of the small plan FEHB

Program contracts fall below the

threshold for submitting cost or pricing

data.

List of Subjects in 48 CFR Parts 1602,

1604, 1615, 1616, 1622, 1631, 1644,

1652, and 1653

Administrative practice and

procedure, Government employees,

Health facilities, Health insurance,

Health professions, Hostages, Iraq,

Kuwait, Lebanon, Reporting and

recordkeeping requirements,

Retirement.

Office of Personnel Management.

James B. King,

Director.

Accordingly, OPM is proposing to

amend Chapter 16 of Title 48, Code of

Federal Regulations, as follows:

CHAPTER 16—OFFICE OF PERSONNEL

MANAGEMENT FEDERAL EMPLOYEES

HEALTH BENEFITS ACQUISITION

REGULATION

1. The authority citation for 48 CFR

Parts 1602, 1604, 1615, 1616, 1622,

1631, 1644, 1652, and 1653 continues to

read as follows:

Authority: 5 U.S.C. 8913; 40 U.S.C. 486(c);

48 CFR 1.301.

PART 1602—DEFINITIONS OF WORDS

AND TERMS

2. In section 1602.170–2 paragraph (a)

is revised to read as follows:

1602.170–2 Community rate.

(a) Community rate means a rate of

payment based on a per member per

month capitation rate or its equivalent

that applies to a combination of the

subscriber groups for a comprehensive

medical plan. References in this

subchapter to ‘‘price analysis’’ relating

to the applicability of policy and

contract clauses refer to comprehensive

medical plan carriers using community

rates.

* * * * *

3. Sections 1602.170–5 through

1602.170–12 are redesignated as

sections 1602.170–6 through 1602.170–

13 respectively, a new section

1602.170–5 is added and newly

redesignated section 1602.170–12 is

revised to read as follows:

1602.170–5 Cost or pricing data.

(a) Experience rated plans. Cost or

pricing data is the data OPM requests in

in the carrier’s rate submission for the

applicable contract period.

(b) Community rated plans. Cost or

pricing data is the specialized rating

data used by carriers in computing a

rate that is appropriate for the Federal

group and the similarly sized subscriber

groups (SSSGs) and requested by OPM

in the rate instructions for the

applicable contract period.

* * * * *

1602.170–12 Similarly sized subscriber

groups.

(a) Similarly sized subscriber groups

(SSSGs) are a comprehensive medical

plan’s two employer groups that:

(1) As of the date specified by OPM

in the rate instructions, have a

subscriber enrollment closest to the

FEHBP subscriber enrollment; and,

(2) Use any rating method other than

retrospective experience rating; and,

(3) Meet the criteria specified in the

rate instructions issued by OPM.

(b) Any group with which an FEHB

carrier enters into an agreement to

provide health care services is a

potential SSSG (including separate lines

of business, government entities, groups

that have multi-year contracts, and

groups having point-of-service

products).

(c) Exceptions to the general rule

stated in paragraph (b) of this section

are (and the following groups must be

excluded from SSSG consideration):

(1) Groups the carrier rates by the

method of retrospective experience

rating;
32406 Federal Register / Vol. 61, No. 122 / Monday, June 24, 1996 / Proposed Rules

* Insert the year for which the rates apply.

Normally, this will be the year for which the rates

are being reconciled.

(2) Groups consisting of the plan’s

own employees;

(3) Medicaid groups, Medicare

groups, and groups that have only a

stand alone benefit (such as dental

only);

(4) A purchasing alliance mandated

by state or local government which

restricts membership to groups of less

than 100 employees.

(d) OPM shall determine the FEHBP

rate by selecting the lower of the two

rates derived by using rating methods

consistent with those used to derive the

SSSG rates.

PART 1604—ADMINISTRATIVE

MATTERS

1604.705 [Amended]

4. In subpart 1604.7, section 1604.705

is amended by removing the words

‘‘Audit—Negotiation,’’ and adding in its

place ‘‘Audit & Records—Negotiation.’’

PART 1615—CONTRACTING BY

NEGOTIATION

5. Section 1615.802 is revised to read

as follows:

1615.802 Policy.

Pricing of FEHB contracts is governed

by 5 U.S.C. 8902(i), 5 U.S.C. 8906, and

other applicable law. FAR subpart 15.8

shall be implemented by applying the

policies and procedures—to the extent

practicable—as follows:

(a) For both experience rated and

community rated contracts for which

the FEHBP premiums for the contract

term will be less than $500,000, OPM

shall not require the carrier to provide

cost or pricing data in the rate proposal

for the following contract term.

(b)(1) Cost analysis shall be used for

contracts where premiums and

subscription income are determined on

the basis of experience rating.

(2) The application of FAR

15.802(b)(2) should not be construed to

prohibit the consideration of preceding

year surpluses or deficits in carrier-held

reserves in the rate adjustments for

subsequent year renewals of contracts

based on cost analysis.

(c)(1) Price analysis for contracts

where premiums and subscription

income are based on community rates.

For contracts for which the FEHBP

premiums for the contract term will be

less than $500,000, OPM shall not

require the carrier to provide cost or

pricing data. The carrier must submit

only a rate proposal and abbreviated

utilization data for the applicable

contract year. OPM will evaluate the

proposed rates by performing a basic

reasonableness test on the information

submitted. Rates failing this test will be

subject to further review.

(2) For contracts with fewer than

1,500 enrollee contracts for which the

FEHBP premiums for the contract term

will be $500,000 or more, OPM shall

require the carrier to submit its rate

proposal, utilization data, and the

certificate of accurate cost or pricing

data required in § 1615.804–70. In

addition, OPM shall require the carrier

to complete the proposed rates form

containing cost and pricing data, and

the Community Rate Questionnaire, but

shall not require the carrier to send

these documents to OPM. The carrier

shall keep the documents on file for

periodic auditor and actuarial review in

accordance with § 1652.204–70. OPM

shall perform a basic reasonableness test

on the data submitted. Rates that do not

pass this test shall be subject to further

OPM review.

(3) For contracts with 1,500 or more

enrollee contracts for which the FEHBP

premiums for the contract term will be

at least $500,000, OPM shall require the

carrier to provide the data and

methodology used to determine the

FEHBP rates. OPM shall also require the

data and methodology used to

determine the rates for the plan’s

similarly sized subscriber groups. The

carrier shall provide cost or pricing data

required by OPM in its rate instructions

for the applicable contract period. OPM

shall evaluate the data to ensure that the

rate is reasonable and consistent with

the requirements in this chapter. If

necessary, OPM may require the carrier

to provide additional documentation.

(4) Contracts shall be subject to a

downward price adjustment if OPM

determines that the Federal group was

charged more than it would have been

charged using a methodology consistent

with that used for the SSSGs. Such

adjustments shall be based on the lower

of the two rates determined by using the

methodology (including discounts) the

Carrier used for the two SSSGs.

(5) FEHBP community rated carriers

shall comply with SSSG criteria

provided by OPM in the rate

instructions for the applicable contract

period.

6. Section 1615.804–70 is revised to

read as follows:

1615.804–70 Certificate of cost or pricing

data for community rated plans.

The contracting officer shall require a

carrier with a contract meeting the

requirements in § 1615.802(c)(2) or

§ 1615.802(c)(3) to execute the

Certificate of Accurate Cost or Pricing

Data contained in this section. A carrier

with a contract meeting the

requirements in § 1615.802(c)(2) shall

complete the Certificate and keep it on

file at the plan in accordance with

§ 1652.204–70. A carrier with a contract

meeting the requirements in

§ 1615.802(c)(3) shall submit the

Certificate to OPM along with its rate

reconciliation, which is submitted

during the first quarter of the applicable

contract year.

Certificate of Accurate Cost and Pricing Data

for Community Rated Plans

This is to certify that, to the best of my

knowledge and belief: (1) the cost or pricing

data submitted (or, if not submitted,

maintained and identified by the carrier as

supporting documentation) to the

Contracting Officer or the Contracting

Officer’s representative or designee, in

support of the llll* FEHBP rates were

developed in accordance with the

requirements of 48 CFR Chapter 16 and the

FEHBP contract and are accurate, complete,

and current as of the date this certificate is

executed; and (2) the FEHBP rates were

developed in a manner consistent with the

methodology used to rate the plan’s similarly

sized subscriber groups and approved by

OPM.

Firm: llllllllllllllllll

Name: lllllllllllllllll

Signature: llllllllllllllll

Date of Execution: llllllllllll

(End of Certificate)

1615.804–71 [Removed and reserved]

7. Section 1615.804–71 is removed

and reserved, and section 1615.804–72

is revised to read as follows:

1615.804–72 Rate reduction for defective

pricing or defective cost or pricing data.

The clause set forth in § 1652.215–70

shall be inserted in FEHBP contracts for

$500,000 or more that are based on price

analysis.

PART 1616—TYPES OF CONTRACTS

8. Section 1616.102, is revised to read

as follows:

1616.102 Policies.

All FEHBP contracts shall be

negotiated benefits contracts.

Subpart 1616.2—[Removed]

9. Subpart 1616.2 is removed and

Subpart 1616.70 is added to read as

follows:

Subpart 1616.70—Negotiated Benefits

Contracts

1616.7001 Clause—contracts based on

price analysis (community rate).

The clause at § 1652.216–70 shall be

inserted in all FEHBP contracts based

on price analysis.
Federal Register / Vol. 61, No. 122 / Monday, June 24, 1996 / Proposed Rules 32407

1616.7002 Clause—contracts based on

cost analysis (experience rate).

The clause at § 1652.216–71 shall be

inserted in all FEHBP contracts based

on cost analysis.

PART 1622—APPLICATION OF LABOR

LAWS TO GOVERNMENT

ACQUISITIONS

10.–11. In subpart 1622.8, sections

1622.810–70 and 1622.810–71 are

added to read as follows:

Subpart 1622.8—Equal Employment

Opportunity.

1622.810–70 Contract clause.

The statutory provisions of 5 U.S.C.

Chapter 89 obviate the issuance of

solicitations. Nevertheless, FAR clause

52.222–21, Certification of

Nonsegregated Facilities, shall be

inserted in all FEHBP contracts, and the

contracting officer shall replace the

word ‘‘offeror’’ with the word

‘‘contractor’’ wherever it appears in the

clause.

1622.810–71 Contract clause.

The statutory provisions of 5 U.S.C.

Chapter 89 obviate the issuance of

solicitations. Nevertheless, FAR clause

52.222–25, Affirmative Action

Compliance shall be inserted in all

FEHBP contracts, and the contracting

officer shall replace the word ‘‘offeror’’

with the word ‘‘contractor’’ wherever it

appears in the clause.

PART 1631—CONTRACT COST

PRINCIPLES AND PROCEDURES

12. In subpart 1631.2, section

1631.205–75, paragraph (b), is revised to

read as follows:

1631.205–75 Selling costs.

* * * * *

(b) Selling costs are allowable costs to

FEHBP contracts to the extent that they

are necessary for conducting annual

contract negotiations with the

Government and for liaison activities

necessary for ongoing contract

administration. Personnel and related

travel costs are allowable for attendance

at Open Season Health fairs and other

similar activities sponsored by

Government agencies (but see FAR

31.205–1 ‘‘Public relations and

advertising costs’’, and The Federal

Employees Health Benefits Handbook

for Personnel and Payroll Offices,

Subchapter S2–3(f) ‘‘Controlling

contacts between employees and

carriers’’).

PART 1644—SUBCONTRACTING

POLICIES AND PROCEDURES

13. In Subpart 1644.1, section

1644.170 is revised to read as follows:

1644.170 Policy for FEHBP subcontracting

consent.

For all experience rated FEHBP

contracts, advance approval shall be

required on subcontracts or

modifications to subcontracts when the

amount charged against the FEHBP

contract exceeds $100,000 and is 25% of

the total cost of the subcontract.

14. In subpart 1644.2, section

1644.270 is revised to read as follows:

1644.270 FEHBP contract clause.

The clause set forth at § 1652.244–70

shall be inserted in all experience rated

FEHBP contracts.

SUBCHAPTER H—CLAUSES AND FORMS

PART 1652—CONTRACT CLAUSES

15. In part 1652, section 1652.000 is

revised to read as follows:

1652.000 Applicable clauses.

The clauses of FAR subpart 52.2 shall

be applicable to FEHBP contracts as

specified in the FEHBAR Clause Matrix

in subpart 1652.3.

Section and Clause Title

52.202–1 Definitions.

52.203–3 Gratuities.

52.203–5 Covenant Against Contingent

Fees.

52.203–7 Anti-Kickback Procedures.

52.203–9 Requirement for Certificate of

Procurement Integrity—Modification.

52.203–12 Limitation on Payments to

Influence Certain Federal Transactions.

52.209–6 Protecting the Government’s

Interest When Subcontracting With

Contractors Debarred, Suspended, or

Proposed for Debarment.

52.215–2 Audit and Records—Negotiation.

52.215–22 Price Reduction for Defective

Cost or Pricing Data.

52.215–24 Subcontractor Cost or Pricing

Data.

52.215–27 Termination of Defined Benefit

Pension Plans.

52.215–30 Facilities Capital Cost of Money.

52.215–31 Waiver of Facilities Capital Cost

of Money.

52.215–39 Reversion or Adjustment of

Plans for Postretirement Benefits Other

Than Pensions (PRB).

52.219–8 Utilization of Small, Small

Disadvantaged and Women-Owned

Small Business Concerns.

52.222–1 Notice to the Government of

Labor Disputes.

52.222–3 Convict Labor.

52.222–4 Contract Work Hours and Safety

Standards Act—Overtime

Compensation—General.

52.222–21 Certification of Nonsegregated

Facilities.

52.222–25 Affirmative Action Compliance.

52.222–26 Equal Opportunity.

52.222–28 Equal Opportunity Preaward

Clearance of Subcontracts.

52.222–29 Notification of Visa Denial.

52.222–35 Affirmative Action for Special

Disabled and Vietnam Era Veterans.

52.222–36 Affirmative Action for

Handicapped Workers.

52.222–37 Employment Reports on Special

Disabled Veterans and Veterans of the

Vietnam Era.

52.223–2 Clean Air and Water.

52.223–6 Drug-Free Workplace.

52.227–1 Authorization and Consent.

52.227–2 Notice and Assistance Regarding

Patent and Copyright Infringement.

52.229–3 Federal, State,and Local Taxes.

52.229–4 Federal, State, and Local Taxes

(Noncompetitive Contract).

52.229–5 Taxes—Contracts Performed in

U.S. Possessions or Puerto Rico.

52.229–6 Taxes—Foreign Fixed-Price

Contracts.

52.230–2 Cost Accounting Standards.

52.230–3 Disclosure and Consistency of

Cost Accounting Practices.

52.230–5 Administration of Cost

Accounting Standards.

52.232–8 Discounts for Prompt Payment.

52.232–17 Interest.

52.232–23 Assignment of Claims.

52.232–28 Electronic Funds Transfer

Payment Methods.

52.233–1 Disputes.

52.242–1 Notice of Intent to Disallow Costs.

52.242–3 Penalties for Unallowable Costs.

52.242–13 Bankruptcy.

52.243–1 Changes—Fixed Price—Alternate

I.

52.244–5 Competition in Subcontracting.

52.245–2 Government Property (Fixed-Price

Contracts).

52.246–25 Limitation of Liability—Services.

52.247–63 Preference for U.S.-Flag Air

Carriers.

52.249–2 Termination for Convenience of

the Government (Fixed-Price).

52.249–8 Default (Fixed-Price Supply and

Service).

52.251–1 Government Supply Sources.

52.232–2 Clauses Incorporated by

Reference.

52.252–4 Alterations in Contract.

52.252–6 Authorized Deviations in Clauses.

16. In subpart 1652.2, sections

1652.204–70 and 1652.215–70 are

revised, and section 1652.204–72 is

amended by adding ‘‘(MAR 1995)’’ in

the title of the clause after the words

‘‘Disputed Claims’’ and before the

period to read as follows:

1652.204–70 Contractor records retention.

As prescribed in 1604.705, the

following clause shall be inserted in all

FEHBP contracts.

Contractor Records Retention (Jan 1997)

Notwithstanding the provisions of section

5.7 (FAR 52.215–2(f)) ‘‘Audit and RecordsNegotiation,’’ the Carrier will retain and

make available all records applicable to a

contract term that support the annual

statement of operations and, for contracts

that exceed the threshold at FAR 15.804–
32408 Federal Register / Vol. 61, No. 122 / Monday, June 24, 1996 / Proposed Rules

2(a)(1), the rate submission for that

contract term for a period of 5 years

after the end of the contract term to

which the records relate, except that

individual enrollee and/or patient claim

records shall be maintained for 3 years

after the end of the contract term to

which the claim records relate.

(End of Clause)

1652.215–70 Rate Reduction for Defective

Pricing or Defective Cost or Pricing Data.

As prescribed in 1615.804–72, the

following clause shall be inserted in

FEHBP contracts exceeding the

threshold at FAR 15.804–2(a)(1) that are

based on price analysis.

Rate Reduction for Defective Pricing or

Defective Cost or Pricing Data (Jan 1997)

(a) If any rate established in connection

with this contract was increased because (1)

the Carrier submitted, or kept in its files in

support of the FEHBP rate, cost or pricing

data that were not complete, accurate, or

current as certified in the Certificate of

Accurate Cost or Pricing Data (FEHBAR

1615.804–70); (2) the Carrier submitted, or

kept in its files in support of the FEHBP rate,

cost or pricing data that were not accurate as

represented in the rate proposal documents;

(3) the Carrier developed FEHBP rates with

a rating methodology and structure

inconsistent with that used to develop rates

for similarly sized subscriber groups (see

FEHBAR 1602.170–12) as certified in the

Certificate of Accurate Cost or Pricing Data

for Community Rated Plans; or (4) the Carrier

submitted or, or kept in its files in support

of the FEHBP rate, data or information of any

description that were not complete, accurate,

and current—then, the rate shall be reduced

in the amount by which the price was

increased because of the defective data or

information.

(b)(1) If the Contracting Officer determines

under paragraph (a) of this clause that a price

or cost reduction should be made, the Carrier

agrees not to raise the following matters as

a defense:

(i) The Carrier was a sole source supplier

or otherwise was in a superior bargaining

position and thus the price of the contract

would not have been modified even if

accurate, complete, and current cost or

pricing data had been submitted or

maintained and identified.

(ii) The Contracting Officer should have

known that the cost or pricing data in issue

were defective even though the Carrier took

no affirmative action to bring the character of

the data to the attention of the Contracting

Officer.

(iii) The contract was based on an

agreement about the total cost of the contract

and there was no agreement about the cost

of each item procured under the contract.

(iv) The Carrier did not submit a Certificate

of Current Cost or Pricing Data.

(2)(i) Except as prohibited by subdivision

(b)(2)(ii) of this clause, an offset in an amount

determined appropriate by the Contracting

Officer based upon the facts shall be allowed

against the amount of a contract price

reduction if—

(A) The Carrier certifies to the Contracting

Officer that, to the best of the Carrier’s

knowledge and belief, the Carrier is entitled

to the offset in the amount requested; and

(B) The Carrier proves that the cost or

pricing data were available before the date of

agreement on the price of the contract (or

price of the modification) and that the data

were not submitted before such date.

(ii) An offset shall not be allowed if—

(A) The understated data was known by

the Carrier to be understated when the

Certificate of Current Cost or Pricing Data

was signed; or

(B) The Government proves that the facts

demonstrate that the contract price would

not have increased in the amount to be offset

even if the available data had been submitted

before the date of agreement on price.

(c) When the Contracting Officer

determines that the rates shall be reduced

and the Government is thereby entitled to a

refund, the Carrier shall be liable to and shall

pay the FEHB Fund at the time the

overpayment is repaid—

(1) Simple interest on the amount of the

overpayment from the date the overpayment

was paid from the FEHB Fund to the Carrier

until the date the overcharge is liquidated. In

calculating the amount of interest due, the

quarterly rate determinations by the

Secretary of the Treasury under the authority

of 26 U.S.C. 6621(a)(2) applicable to the

periods the overcharge was retained by the

Carrier shall be used; and,

(2) A penalty equal to the amount of

overpayment, if the Carrier knowingly

submitted cost or pricing data which was

incomplete, inaccurate, or noncurrent.

(End of Clause)

17. Section 1652.215–71 is amended

by removing ‘‘(JAN 1991)’’ from the

clause heading and adding in its place

‘‘(JAN 1997)’’ and by revising paragraph

(f) to read as follows:

1652.215–71 Investment Income.

* * * * *

(f) The Carrier shall credit the Special

Reserve for income due in accordance with

this clause. All amounts payable shall bear

simple interest on lost investment income at

the quarterly rate determined by the

Secretary of the Treasury under the authority

of 16 U.S.C. 6621(a)(2) applicable to the

periods in which the amount becomes due,

as provided in paragraphs (d) and (e) of this

clause.

* * * * *

18. Section 1652.216–70 is revised to

read as follows:

1652.216–70 Accounting and price

adjustment.

As prescribed in 1616.7001, the

following clause shall be inserted in all

FEHBP contracts based on price

analysis.

Accounting and Price Adjustment (Jan 1997)

(a) Annual Accounting Statement. The

Carrier, not later than 90 days after the end

of each contract period, shall furnish to OPM

for that contract period an accounting of its

operations under the contract. The

accounting shall be in the form prescribed by

OPM.

(b) Adjustment. (1) This contract is

community rated as defined in FEHBAR

1602.170–2.

(2) The subscription rates agreed to in this

contract shall be equivalent to the

subscription rates given to the plan’s

similarly sized subscriber groups (SSSGs).

(3) If, at the time of the rate reconciliation,

the subscription rates are found to be lower

than the equivalent rates for the lower of the

two SSSGs, the carrier may include an

adjustment to the Federal group’s rates for

the next contract period.

(4) If, at the time of the rate reconciliation,

the subscription rates are found to be higher

than the equivalent rates for the lower of the

two SSSGs, the Carrier shall reimburse the

Fund, for example, by reducing the FEHB

rates for the next contract term to reflect the

difference between the estimated rates and

the rates which are derived using the

methodology of the lower rated SSSG.

(5) No upward adjustment in the rate

established for this contract will be allowed

or considered by the Government or will be

made by the Carrier in this or in any other

contract period on the basis of actual costs

incurred, actual benefits provided, or actual

size or composition of the FEHBP group

during this contract period.

(6) In the event this contract is not

renewed, neither the Government nor the

Carrier shall be entitled to any adjustment or

claim for the difference between the

subscription rates prior to rate reconciliation

and the actual subscription rates.

(End of Clause)

18(a). The introductory sentence of

section 1652.216–71 is revised to read

as follows:

1652.216–71 Accounting and Allowable

Cost.

As prescribed in 1616.7002, the

following clause shall be inserted in all

FEHBP contracts based on cost analysis.

* * * * *

19. Section 1652.222–70 is amended

by removing the date ‘‘(JAN 1991)’’ in

the clause heading and adding in its

place ‘‘(JAN 1997)’’ and by adding a

new paragraph (a)(14) to read as follows:

1652.222–70 Notice of significant events.

* * * * *

(a) * * *

(14) A novation or change of name.

20. Sections 1652.232–70 and

1652.232–71 are amended by adding

dates in the clause titles to read as

follows:

1652.232–70 Payments—community rated

contracts.

* * * * *

Payments (Jan 1989)

* * * * *

1652.232–71 Payments—experience rated

contracts.

* * * * *
Federal Register / Vol. 61, No. 122 / Monday, June 24, 1996 / Proposed Rules 32409

Payments (May 1992)

* * * * *

21. Section 1652.244–70 is amended

by revising the introductory paragraph,

clause date, and paragraph (a) of the

clause to read as follows:

1652.244–70 Subcontracts.

As prescribed by 1644.270, the

following clause shall be inserted in all

contracts based on cost analysis:

Subcontracts (Jan 1997)

(a) The Carrier shall notify the Contracting

Officer reasonably in advance of entering into

any subcontract, or any subcontract

modification, or as otherwise specified by

this contract, if both the amount of the

subcontract or modification charged to the

FEHB Program exceeds $100,000 and is 25

percent of the total cost of the subcontract.

* * * * *

Subpart 1652.3—FEHBP Clause Matrix

22. In subpart 1652.3, section

1652.370 paragraph (a) is amended by

removing the words ‘‘established catalog

or market price’’ in the first sentence

and adding in its place the words ‘‘price

analysis;’’ and by revising the FEHBP

Clause Matrix to read as follows:

1652.370 Use of the matix.

* * * * *

FEHBP CLAUSE MATRIX

Clause No. Text Reference Title Use

status

Use with contracts

based on

Cost

analysis

Price

analysis

FAR 52.202–1 ........ FAR 2.2 ................. Definitions ................................................................................... M T T

FAR 52.203–3 ........ FAR 3.202 ............. Gratuities ..................................................................................... M T T

FAR 52.203–5 ........ FAR 3.404(c) ......... Covenant Against Contingent Fees ............................................ M T T

FAR 52.203–7 ........ FAR 3.502–3 ......... Anti-Kickback Procedures ........................................................... M T T

FAR 52.203–9 ........ FAR 3.104–10(b) ... Requirement for Certificate of Procurement Integrity—Modification.M T T

FAR 52.203–12 ...... FAR 3.808 ............. Limitation on Payments to Influence Certain Federal Transactions.M T T

1652.203–70 .......... 1603.703 ................ Misleading, Deceptive, or Unfair Advertising ............................. M T T

1652.204–70 .......... 1604.705 ................ Contractor Records Retention .................................................... M T T

1652.204–71 .......... 1604.7001 .............. Coordination of Benefits ............................................................. M T T

1652.204–72 .......... 1604.7101 .............. Filing Health Benefit Claims/Court Review of Disputed Claims M T T

FAR 52.209–6 ........ FAR 9.409(b) ......... Protecting the Government’s Interest When Subcontracting

With Contractors Debarred, Suspended, or Proposed for Debarment.

M T T

FAR 52.215–2 ........ FAR 15.105–2(b) ... Audit & Records—Negotiation .................................................... M T T

FAR 52.215–22 ...... FAR 15.804–8(a) ... Price Reduction for Defective Cost or Pricing Data ................... M T

FAR 52.215–24 ...... FAR 15.804–8(c) ... Subcontractor Cost or Pricing Data ............................................ M T

FAR 52.215–27 ...... FAR 15.804–8(e) ... Termination of Defined Benefit Pension Plans .......................... M T

FAR 52.215–30 ...... FAR 15.904(a) ....... Facilities Capital Cost of Money ................................................. M T

FAR 52.215–31 ...... FAR 15.904(b) ....... Waiver of Facilities Capital Cost of Money ................................ A T

FAR 52.215–39 ...... FAR 15.804–8(f) .... Reversion or Adjustment of Plans for Post-retirement Benefits

Other Than Pensions (PRB).

M T

1652.215–70 .......... 1615.804–72 .......... Rate Reduction for Defective Pricing or Defective Cost or Pricing Data.M T

1652.215–71 .......... 1615.805–71 .......... Investment Income ..................................................................... M T

1652.216–70 .......... 1616.7001 .............. Accounting and Price Adjustment .............................................. M T

1652.216–71 .......... 1616.7002 .............. Accounting and Allowable Cost .................................................. M T

FAR 52.219–8 ........ FAR 19.708(a) ....... Utilization of Small, Small Disadvantaged and Women-Owned

Small Business Concerns.

M T T

FAR 52.222–1 ........ FAR 22.103–5(a) ... Notice to the Government of Labor Disputes ............................. M T T

FAR 52.222–3 ........ FAR 22.202 ........... Convict Labor .............................................................................. M T T

FAR 52.222–4 ........ FAR 22.305(a) ....... Contract Work Hours and Safety Standards Act—Overtime

Compensation—General.

M T T

FAR 52.222–21 ...... FAR 22.810(a)(1) ...

Modification: ...........

1622.810–70 ..........

Certification of Nonsegregated Facilities .................................... M T T

FAR 52.222–25 ...... FAR 22.810(d) .......

Modification: ...........

1622.810–71 ..........

Affirmative Action Compliance .................................................... M T T

FAR 52.222–26 ...... FAR 22.810(a) ....... Equal Opportunity ....................................................................... M T T

FAR 52.222–28 ...... FAR 22.810(g) ....... Equal Opportunity Preaward Clearance of Subcontracts .......... M T T

FAR 52.222–29 ...... FAR 22.810(h) ....... Notification of Visa Denial .......................................................... A T T

FAR 52.222–35 ...... FAR 22.1308(a) ..... Affirmative Action for Special Disabled and Vietnam Era Veterans.M T T

FAR 52.222–36 ...... FAR 22.1408(a) ..... Affirmative Action for Handicapped Workers ............................. M T T

FAR 52.222–37 ...... FAR 22.1308(b) ..... Employment Reports on Special Disabled Veterans and Veterans of the Vietnam Era.M T T

1652.222–70 .......... 1622.103–70 .......... Notice of Significant Events ........................................................ M T T

FAR 52.223–2 ........ FAR 23.105(b) ....... Clean Air and Water ................................................................... A T T

FAR 52.223–6 ........ FAR 23.505(b) ....... Drug-Free Workplace ................................................................. A T T

1652.224–70 .......... 1624.104 ................ Confidentiality of Records ........................................................... M T T

FAR 52.227–1 ........ FAR 27.201–2(a) ... Authorization and Consent ......................................................... M T T

FAR 52.227–2 ........ FAR 27.202–2 ....... Notice and Assistance Regarding Patent and Copyright Infringement.M T T
32410 Federal Register / Vol. 61, No. 122 / Monday, June 24, 1996 / Proposed Rules

FEHBP CLAUSE MATRIX—Continued

Clause No. Text Reference Title Use

status

Use with contracts

based on

Cost

analysis

Price

analysis

FAR 52.229–3 ........ FAR 29.401–3 ....... Federal, State and Local Taxes ................................................. M T T

FAR 52.229–4 ........ FAR 29.401–4 ....... Federal, State and Local Taxes (Noncompetitive Contract) ...... M T

FAR 52.229–5 ........ FAR 29.401–5 ....... Taxes—Contracts Performed in U.S. Possessions or Puerto

Rico.

A T T

FAR 52.229–6 ........ FAR 29.402–1(a) ... Taxes—Foreign Fixed Price Contracts ...................................... A T T

FAR 52.230–2 ........ FAR 30.201–4(a)(1) Cost Accounting Standards ........................................................ A T T

FAR 52.230–3 ........ FAR 30.201–4(b)(1) Disclosure and Consistency of Cost Accounting Practices ....... A T T

FAR 52.230–5 ........ FAR 30.201–4(d)(1) Administration of Cost Accounting Standards ............................ A T T

FAR 52.232–8 ........ FAR 32.111(c)(1) ... Discounts for Prompt Payment ................................................... M T T

FAR 52.232–17 ...... FAR 32.617(a) .......

Modification: ...........

1632.617 ................

Interest ........................................................................................ M T T

FAR 52.232–23 ...... FAR 32.806(a)(1) ... Assignment of Claims ................................................................. A T T

FAR 52.232–28 ...... FAR 32.908(d) ....... Electronic Funds Transfer Payment Methods ............................ M T T

1652.232–70 .......... 1632.171 ................ Payments—Contracts Without Letter of Credit Payment Arrangements.A T

1652.232–71 .......... 1632.172 ................ Payments—Contracts With Letter of Credit Payment Arrangements.A T

1652.232–72 .......... 1632.772 ................ Non-Commingling of FEHBP Funds ........................................... M T

1652.232–73 .......... 1632.806–70 .......... Approval for Assignment of Claims ............................................ M T T

FAR 52.233–1 ........ FAR 33.215 ........... Disputes ...................................................................................... M T T

FAR 52.242–1 ........ FAR 42.802 ........... Notice of Intent to Disallow Costs .............................................. M T

FAR 52.242–3 ........ FAR 42.709–6 ....... Penalties for Unallowable Costs ................................................. M T

FAR 52.242–13 ...... FAR 42.903 ........... Bankruptcy .................................................................................. M T T

FAR 52.243–1 ........ FAR 43.205(a)(1) ... Changes—Fixed Price—Alternate I ............................................ M T T

FAR 52.244–5 ........ FAR 44.204(e) ....... Competition in Subcontracting .................................................... M T

1652.244–70 .......... 1644.270 ................ Subcontracts ............................................................................... M T

FAR 52.245–2 ........ FAR 45.106(b)(1) ... Government Property (Fixed Price Contracts) ........................... M T T

FAR 52.246–25 ...... FAR 46.805(a)(4) ... Limitation of Liability—Services .................................................. M T

1652.246–70 .......... 1646.301 ................ FEHBP Inspection ...................................................................... M T T

FAR 52.247–63 ...... FAR 47.405 ........... Preference for U.S.-Flag Air Carriers ......................................... M T T

FAR 52.249–2 ........ FAR 49.502(b)(1)(i) Termination for Convenience of the Government—Fixed Price M T T

FAR 52.249–8 ........ FAR 49.504(a)(1) ... Default (Fixed-Price Supply and Service) .................................. M T T

1652.249–70 .......... 1649.101–70 .......... Renewal and Withdrawal of Approval ........................................ M T T

FAR 52.251–1 ........ FAR 51.107 ........... Government Supply Sources ...................................................... A T

FAR 52.252–2 ........ FAR 52.107(b) ....... Clauses Incorporated by Reference ........................................... M T T

FAR 52.252–4 ........ FAR 52.107(d) ....... Alterations in Contract ................................................................ M T T

FAR 52.252–6 ........ FAR 52.107(f) ........ Authorized Deviations in Clauses ............................................... M T T

PART 1653—FORMS [AMENDED]

23. Part 1653 is amended by removing

all references to § 53.215–2(b), § 53.301–

1412, and SF–1412 in the chart.

[FR Doc. 96–15403 Filed 6–21–96; 8:45 am]

BILLING CODE 6325–01–P

GENERAL SERVICES

ADMINISTRATION

48 CFR Part 6101

RIN 3090–AF99

Board of Contract Appeals; Procedure

Rules

AGENCY: Board of Contract Appeals,

General Services Administration.

ACTION: Proposed rule.

SUMMARY: This document announces the

intention of the General Services

Administration Board of Contract

Appeals (the Board) to issue proposed

rules to implement section 5101 of the

National Defense Authorization Act for

Fiscal Year 1996 (Pub. L. 104–106) (the

Act). Section 5101 of the Act, which

becomes effective August 8, 1996,

eliminates the Board’s jurisdiction to

hear and decide bid protests regarding

procurements of automatic data

processing (ADP) equipment and

services. The proposed amendments to

the Board’s rules of procedure, when

final, will implement section 5101 by

eliminating all references to bid protests

in those rules.

The proposed rules also described the

techniques intended to shorten and

simplify, when appropriate, the formal

proceedings normally used by the Board

to resolve contract disputes, and

support the use of alternative dispute

resolution (ADR) in appropriate

circumstances by providing that the

Board will make a Board Neutral

available for an ADR proceeding either

before or after the issuance of a decision

by a contracting officer of any

Government agency if a joint written

request is submitted to the Board by the

parties.

The Board intends to issue final,

revised rules after considering all

comments to the proposed amendments.

The Board anticipates that, in issuing

revised rules, it will provide that the

revisions do not apply to protests

pending on August 8, 1996, or to any

motions or applications resulting from

such protests. Such cases would be

governed by the rules in effect at the

time the underlying protests were filed.

DATES: Written comments must be

submitted on or before July 24, 1996.

ADDRESSES: Copies of the proposed

rules may be obtained from the Office of

the Clerk of the Board, GSA Board of

Contract Appeals, 18th & F Streets,

N.W., Washington, DC 20405, (202)