Source: https://www.federalregister.gov/documents/2019/09/17/2019-19575/environmental-protection-agency-acquisition-regulation-unenforceable-commercial-supplier-agreement
Timestamp: 2019-10-17 15:13:43
Document Index: 145824728

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Federal Register :: Environmental Protection Agency Acquisition Regulation; Unenforceable Commercial Supplier Agreement Terms, Class Deviations, and Update for Fixed Rates for Services-Indefinite Delivery/Indefinite Quantity Contract
Environmental Protection Agency Acquisition Regulation; Unenforceable Commercial Supplier Agreement Terms, Class Deviations, and Update for Fixed Rates for Services-Indefinite Delivery/Indefinite Quantity Contract
A Proposed Rule by the Environmental Protection Agency on 09/17/2019
48856-48866 (11 pages)
EPA-HQ-OARM-2018-0714
FRL-9998-55-OMS
1. Incompatibility of Commercial Supplier Agreements
2. Value of Addressing Incompatible Commercial Supplier Agreements
3. EPA Class Deviation
4. Updates to § 1516.505(b) and § 1552.216-73
5. New Subpart 1552.3
List of Subjects in 48 CFR Parts 1502, 1512, 1513, 1516, 1532, 1539 and 1552
PART 1502—DEFINITION OF WORDS AND TERMS
PART 1512—ACQUISITION OF COMMERCIAL ITEMS
Subpart 1512.1—Special Requirements for the Acquisition of Commercial Items
Subpart 1513.6—Actions at or Below the Micro-Purchase Threshold
Subpart 1532.10—Unenforceability of Unauthorized Obligations
Subpart 1539.1—Commercial Supplier Agreements
Fixed Rates For Services—Indefinite Delivery/Indefinite Quantity Contract (Date)
Subpart 1552.3—FAR and EPAAR Class Deviations
https://www.federalregister.gov/d/2019-19575 https://www.federalregister.gov/d/2019-19575
The Environmental Protection Agency (EPA) is proposing to amend the Environmental Protection Agency Acquisition Regulation (EPAAR) to address common Commercial Supplier Agreement terms that are inconsistent with or create ambiguity with Federal Law, to create a new subpart for class deviations, and to update clause Fixed Rates for Services—Indefinite Delivery/Indefinite Quantity Contract.
Submit your comments, identified by Docket ID No. EPA-HQ-OARM-2018-0714, at https://www.regulations.gov. Follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov. The EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission (i.e. on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit https://www.epa.gov/​dockets/​commenting-epa-dockets.
EPA defines Commercial Supplier Agreements (CSAs) as terms and conditions that are customarily offered to the public by vendors of supplies or services that meet the Federal Acquisition Regulation (FAR) definition of “commercial item” and are intended to create a binding legal obligation on the end user. CSAs are common in information technology acquisitions, including acquisitions of commercial computer software and commercial technical data, and they may apply to any supply or service.
Commercial supplies and services are offered to the public under standard agreements that may take a variety of forms, including but not limited to license agreements, terms of service, and terms of sale or purchase. These standard CSAs contain terms and conditions that are appropriate when the purchaser is a private party, but not when the purchaser is the Federal Government.
The existence of Federally-incompatible terms in standard CSAs is recognized in FAR 27.405-3(b), which is limited to the acquisition of commercial computer software. This subsection advises contracting officers to exercise caution when accepting a Start Printed Page 48857contractor's terms and conditions. The use of CSAs is not limited to information technology acquisitions, as they have become common in a broad variety of contexts, from travel to telecommunications to financial services to building maintenance systems; including purchases below the simplified acquisition threshold.
Discrepancies between CSAs and Federal law, or the Government's needs, create recurrent points of inconsistency. Below are examples of incompatible clauses that are commonly found in CSAs:
Additionally, the current order of precedence contained in the Commercial Items clause at FAR 52.212-4 is not clear on prevailing terms, and potentially allows CSAs to supersede the terms of Federal contracts, especially in those areas where Federal law is implicated indirectly. As a result, industry and Government representatives must spend time and resources negotiating and tailoring CSAs to comply with Federal law and to ensure both parties have agreement on the contract terms.
EPA has identified common illegal, improper or inappropriate CSA terms that constitute the majority of the negotiated CSA terms. The outcome of the negotiations regarding these identified terms is generally predetermined by rule of law, but EPA and contractors must spend time and resources to negotiate these terms. By explicitly addressing common unenforceable terms within the Commercial Items clause at FAR 52.212-4 and clarifying prevailing terms in the order of precedence, it eliminates the need for negotiation of these terms.
This approach will decrease the time needed for legal review prior to contract award, and will reduce costs to both the Government and contractors. EPA believes that such an approach will benefit contractors, including small business concerns, by: (1) Decreasing proposal costs associated with negotiating the identified unenforceable CSA terms; (2) facilitating faster procurement and contract lead times, therefore decreasing the time it takes for contractors to make a return on their investment; (3) reducing administrative costs for companies that maintain alternate Federally compliant CSAs; and (4) for small business concerns, it levels the playing field with larger competitors since negotiations will only be required if the CSA contains objectionable clauses outside of those already identified in proposed clause. Additionally, this approach ensures consistent application and understanding of these unenforceable terms.
EPA is issuing class deviations for two Federal Acquisition Regulation (FAR) clauses to address the order of precedence and CSA terms that are incompatible with Federal law. The class deviations not only protect EPA and contractors by uniformly addressing common unacceptable terms and reducing risk, but also by further streamlining the acquisition process and reducing administrative cost for commercial-item supplies and services. The class deviations also clarify the precedence of terms to ensure parties have a mutual understanding of the contract terms; for example, bilateral modifications to the CSAs are only required for material changes.
The EPA is updating clause 1552.216-73, Fixed Rates for Services-Indefinite Delivery/Indefinite Quantity Contract, to add Alternate I (which had previously been a deviation) to the Basic form. The deviation was issued in April 2018 and provides for contractors to be paid escalated rates for optional periods of performance. The deviation is amended into an alternate version because there is an ongoing need for the deviation. The corresponding prescription in § 1516.505(b) is being updated accordingly.
EPA is creating a new subpart 1552.3, FAR and EPAAR Class Deviations, that will contain FAR and EPAAR class deviations initiated by the EPA. As discussed in II. 3. in this preamble the EPA is creating two new FAR class deviations in this proposed rulemaking that will be added to the new subpart: Class deviations for 52.212-4, Contract Terms and Conditions—Commercial Items (FAR DEVIATION); and 52.232-39, Unenforceability of Unauthorized Obligations (FAR DEVIATION).
EPA is proposing to amend the EPAAR to implement standard terms and conditions for the most common conflicting CSA terms and to minimize the need for the negotiation of these terms of CSAs on an individual basis. The proposed rulemaking will add requirements to contracts making certain conflicting or inconsistent terms in a CSA unenforceable so long as an express exception is not authorized elsewhere by Federal statute. EPA is also proposing to amend the EPAAR to modify the order of precedence contained in the Commercial Items clause (FAR 52.212-4) to make clear that all of the terms of the EPAAR deviated clause control in the event of a conflict with a CSA, unless both parties agree to specific terms during the course of negotiating the contract. The EPA is also proposing to amend the EPAAR to create new subpart 1552.3 for class deviations. The EPA also proposes to change the deviated version of clause 1552.216-73 into an alternate version because of its ongoing need.
These changes will be accomplished by revising guidance and clauses contained throughout the EPAAR as follows:
EPAAR § 1502.100 is amended to provide a definition for Commercial Supplier Agreements.
EPAAR § 1512.101 is created and clarifies that paragraph (u) of the deviated Commercial Items clause at § 1552.312-4 (FAR DEVIATION) prevents violation of the Anti-Deficiency Act.
EPAAR § 1512.1070 is created to prescribe the use of the deviated Commercial Items clause at § 1552.312-4 (FAR DEVIATION) in lieu of FAR 52.212-4.
EPAAR § 1513.507(b) is amended and requires the inclusion of Start Printed Page 48858§ 1552.332-39 and § 1552.232-75 in all acquisitions for supplies or services that are offered under a CSA.
EPAAR Subpart 1513.6 is created and will add § 1552.332-39 to all purchases below the micro-purchase threshold.
EPAAR § 1516.505(b) is amended to update the prescription for § 1552.216-73.
EPAAR Subpart 1532.10 is created and clarifies the definition of “supplier license agreements ” as used in FAR 32.705, Unenforceability of Unauthorized Obligations.
EPAAR § 1532.1070 is created and directs contracting officers to utilize the clause at § 1552.332-39 in lieu of FAR 52.232-39; and prescribes the use of clause Commercial Supplier Agreements—Unenforceable Clauses at 1552.232-75.
EPAAR Subpart 1539.1 is created and advises contracting officers and contract specialists to follow the relevant EPAAR rules relating to CSA procurement.
EPAAR § 1552.216-73 is amended to add an alternate clause version.
EPAAR § 1552.232-75 is created for non-commercial contracts and addresses the same common unenforceable CSA terms addressed in § 1552.312-4 (FAR DEVIATION) paragraph (w) described above.
EPAAR Subpart 1552.3 is created and adds the class deviations for § 1552.312-4 and § 1552.332-39.
The Commercial Items clause at § 1552.312-4 (FAR DEVIATION) in subpart 1552.3 is modified to include instructions to contracting officers on how to incorporate the change in language from FAR 52.212-4.
The order of precedence contained in paragraph (s) of the Commercial Items clause at § 1552.312-4 (FAR DEVIATION) in subpart 1552.3 is amended to ensure that all of the terms of § 1552.312-4 shall control over the terms of a CSA by moving ”Addenda to this solicitation or contract, including any license agreements for computer software” down two spaces in the order of precedence, behind “Solicitation provisions as awarded if there is a solicitation” and “Other paragraphs of this clause.”
Paragraph (u) of the Commercial Items clause at § 1552.312-4 (FAR DEVIATION) in subpart 1552.3 is amended to (1) reflect the new Commercial Supplier Agreement definition contained in EPAAR 1502.100; (2) expand coverage to “language or provision” in addition to “clause” in order to ensure that all CSA terms are covered regardless of terminology utilized; and (3) include future fees, penalties, interest and legal costs as unauthorized obligations in addition to indemnification.
Paragraph (w) of the Commercial Items clause at § 1552.312-4 (FAR DEVIATION) in subpart 1552.3 is created to address the following commonplace unenforceable elements found in CSAs:
○ Definition of contracting parties: Contract agreements are between the commercial supplier or licensor and the U.S. Government. Government employees or persons acting on behalf of the Government will not be bound in their personal capacity by the CSA.
○ Laws and disputes: Clauses that conflict with the sovereign immunity of the U.S. Government cannot apply to litigation where the U.S. Government is a defendant because those disputes must be heard either in U.S. District Court or the U.S. Court of Federal Claims. CSA terms that require the resolution of a dispute in a forum or time period other than those expressly authorized by Federal law are deleted. Statutes of limitation on potential claims shall be governed by U.S. Federal law.
○ Continued Performance: Commercial suppliers may not unilaterally terminate or suspend a contract based upon a suspected breach of contract by the Government. These types of CSA terms violate 31 U.S.C. 3324, which provides that payment under a contract may not exceed the value of a service or product already delivered. A license that is prematurely terminated outside of the regular dispute resolution procedures results in the Government not receiving the value of that good or service ordered because it is no longer delivered. The removal of the contractor's right to unilateral termination does not impair the contractor's ability to pursue remedies. It preserves all the legal remedies the contractor otherwise has under Federal law, including Contract Disputes Act claims. Remedies through the Contract Disputes Act or other applicable Federal statutes align with the continuing performance requirement set forth in subparagraph (d) Disputes.
○ Additional Terms: Incorporation of terms by reference is allowed provided the full text of terms is provided with the offer. Unilateral modifications to the CSA after the time of award may be allowed to the extent that the modified terms do not materially change the Government's rights or obligations, increase the Government's prices, decrease the level of service provided, or limit any Government right addressed elsewhere in the contract. A bilateral contract modification is required for any of the above described changes to be enforceable against the Government.
○ Automatic renewals: Due to Anti-Deficiency Act restrictions, automatic contract renewal clauses are impermissible. Any such CSA clauses are unenforceable.
○ Audits ( automatic liability for payment): Discrepancies found during an audit must comply with the invoicing procedures from the underlying contract. Disputed charges must be resolved through the Disputes clause. Any audits requested by the commercial supplier or licensor will be performed at supplier or licensor's expense.
○ Assignment of CSA or Government contract by supplier: The contract, CSA, party rights and party obligations may not be assigned or delegated without express Government approval. Payment to a third party financial institution may still be reassigned.
○ Confidentiality of CSA terms and conditions: The content of the CSA may not be deemed confidential. The Government may retain other marked confidential information as required by law, regulation or agency guidance, but will appropriately guard such confidential information.
§ 1552.332-39 (FAR DEVIATION) in subpart 1552.3 is created to amend the language of FAR 52.232-39 to reflect the definition of CSAs contained at EPAAR 1502.100, to expand coverage to “language or provision” in addition to “clause” in order to ensure that all CSA terms are covered, regardless of terminology utilized; and to include future fees, penalties, interest and legal Start Printed Page 48859costs as unauthorized obligations in addition to indemnification.
This proposed rule will reduce risk by uniformly addressing common unacceptable CSA terms, facilitate efficiency and effectiveness in the contracting process by reducing the administrative burden for the Government and industry, and promote competition by reducing barriers to industry, including small businesses. It will also create a new EPAAR subpart for class deviations, and an alternate version for clause 1552.216-73.
The proposed rule amends Part 1502, Definition of Words and Terms, by adding a definition for Commercial Supplier Agreements to § 1502.100. It adds Part 1512, Acquisition of Commercial Items, Subpart 1512.1, Special Requirements for the Acquisition of Commercial Items, § 1512.101, Unenforceability of Unauthorized Obligations, and § 1512.1070, Contract Clause. It amends Part 1513, Simplified Acquisition Procedures, by adding Subpart 1513.6, Action At or Below the Micropurchase Threshold, and amending § 1513.507(b). It amends § 1516.505(b) by adding an alternate clause version to the clause prescription. It amends Part 1532, Contract Financing, by adding Subpart 1532.10, Unenforceability of Unauthorized Obligation; and § 1532.1070, Contract clause. It adds Part 1539, Acquisition of Information Technology, and Subpart 1539.1, Commercial Supplier Agreements. It amends Subpart 1552.2, Texts of Provisions and Clauses, by adding an alternate clause version to § 1552.216-73, Fixed Rates for Services—Indefinite Delivery/Indefinite Quantity Contract; and adding § 1552.232-75, Commercial Supplier Agreements—Unenforceable Clauses. Finally, it amends Part 1552, Solicitation Provisions and Contract Clauses, by adding Subpart 1552.3, FAR and EPAAR Class Deviations, and class deviations for clauses 52.212-4 and 52.232-39. This proposed rule:
1. Amends Part 1502, Definition of Words and Terms, by adding a definition for Commercial Supplier Agreements to § 1502.100, Definitions.
2. Adds Part 1512, Acquisition of Commercial Items, and Subpart 1512.1, Special Requirements for the Acquisition of Commercial Items, which clarify that paragraph (u) of the Commercial Items clause at § 1552.312-4 (FAR DEVIATION) prevents violation of the Anti-Deficiency Act.
3. Adds § 1512.101, Unenforceability of Unauthorized Obligations, and § 1512.1070, Contract Clause, to prescribe the use of the deviated Commercial Items clause at § 1552.312-4 (FAR DEVIATION) in lieu of FAR 52.212-4.
4. Amends Part 1513, Simplified Acquisition Procedures, by adding Subpart 1513.6, Action At or Below the Micropurchase Threshold, and amending § 1513.507(b), which will automatically apply the clauses at § 1552.232-75 and § 1552.332-39 to all purchases below the micro-purchase threshold.
5. Amends the currently designated § 1513.507(a) to become § 1513.507(a)(i), and the currently designated § 1513.507(b) to become § 1513.507(a)(ii), due to the addition above.
6. Amends § 1516.505(b) by adding an alternate clause version to the prescription.
7. Adds EPAAR Subpart 1532.10, Unenforceability of Unauthorized Obligation, that clarifies the definition of supplier license agreements.
8. Adds EPAAR § 1532.1070 and establishes the prescription for use of EPAAR clause 1552.232-75 in all procurements where supplies or services are offered under a CSA.
9. Adds Part 1539, Acquisition of Information Technology, and Subpart 1539.1, Commercial Supplier Agreements.
10. Amends Subpart 1552.2, Texts of Provisions and Clauses, to add an alternate clause version to § 1552.216-73, Fixed Rates for Services—Indefinite Delivery/Indefinite Quantity Contract, that pays the contractor escalated rates for optional periods of performance.
11. Adds EPAAR § 1552.232-75, Commercial Supplier Agreements—Unenforceable Clauses, that provides the terms and conditions for supplies or services offered under a CSA.
12. Adds EPAAR Subpart 1552.3, FAR and EPAAR Class Deviations, to contain § 1552.312-4, Contract Terms and Conditions—Commercial Items (FAR DEVIATION); and § 1552.332-39/Unenforceability of Unauthorized Obligations (FAR DEVIATION). § 1552.312-4 updates paragraphs (s) and (u), and adds paragraph (w). § 1552.332-39 updates terms from Terms of Sale and End User Licensing Agreement to Commercial Supplier Agreement.
The Regulatory Flexibility Act generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute; unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impact of this proposed rule on small entities, “small entity” is defined as: (1) A small business that meets the definition of a small business found in the Small Business Act and codified at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; or (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field. After considering the economic impacts of this rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. In determining whether a rule has a significant economic impact on a substantial number of small entities, the impact of concern is any significant adverse economic impact on small entities, because the primary purpose of the regulatory flexibility analyses is to identify and address regulatory alternatives “which minimize any significant economic impact of the proposed rule on small entities” 5 U.S.C. 503 and 604. Thus, an agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, or otherwise has a positive economic effect on all of the small entities subject to the rule. This action creates a new EPAAR clause, clause alternate and class deviations that will not have a significant economic impact on a substantial number of small entities, as Start Printed Page 48860discussed in Section (II)(B). We continue to be interested in the potential impacts of the rule on small entities and welcome comments on issues related to such impacts.
Executive Order 12898 (59 FR 7629, February 16, 1994) establishes federal executive policy on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States. EPA has determined that this proposed rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it does not affect the level of protection provided to human health or the environment in the general public.
For the reasons stated in the preamble, 48 CFR parts 1502, 1512, 1513, 1516, 1532, 1539 and 1552 are proposed to be amended as follows:
1. The authority citation for part 1502 continues to read as follows:
End Authority Start Printed Page 48861 Start Amendment Part
2. Revise 1502.100 to read as follows:
Chief of the Contracting Office (CCO) means the Office of Acquisition Solutions Division Directors at Headquarters, Research Triangle Park and Cincinnati. For purposes of ratification authority only, CCO also includes Regional Acquisition Managers. (See 1501.602-3(b)(3) for the criteria for this ratification authority).
Commercial supplier agreements (CSAs) mean terms and conditions customarily offered to the public by vendors of supplies or services that meet the definition of “commercial item” set forth in FAR 2.101 and intended to create a binding legal obligation on the end user. CSAs are common in information technology acquisitions, including acquisitions of commercial computer software and commercial technical data, and they may apply to any supply or service. CSAs may apply regardless of the format or style of the document (for example, a CSA may be styled as standard terms of sale or lease, Terms of Service (TOS), End User License Agreement (EULA), or another similar legal instrument or agreement, and may be presented as part of a proposal or quotation responding to a solicitation for a contract or order). CSAs may also apply regardless of the media or delivery mechanism used (for example, a CSA may be presented as one or more paper documents, or may appear on a computer or other electronic device screen during a purchase, software installation, product delivery, registration for a service, or other transaction).
Head of the Contracting Activity (HCA) means the Director, Office of Acquisition Solutions.
Senior Procurement Executive (SPE) means the Director, Office of Acquisition Solutions.
3. Add part 1512 to read as follows:
1512.101
1512.1070
EPA deviates from FAR 52.212-4 by using the term “Commercial Supplier Agreements” (defined in 1502.100) for commercial contracts instead of “supplier license agreements”. Paragraph (u) of clause 1552.332-39 (FAR DEVIATION) prevents violations of the Anti-Deficiency Act (31 U.S.C. 1341) for the acquisition of supplies or services subject to a Commercial Supplier Agreement.
EPA deviates from FAR 52.212-4 by revising paragraphs (s) and (u) and adding paragraph (w). Contracting officers shall use clause 1552.332-39, Contract Terms and Conditions-Commercial Items (FAR DEVIATION), for acquisitions of commercial items in lieu of 52.212-4 or 52.212-4 Alternate I. The contracting officer may tailor this clause in accordance with FAR 12.302.
4. The authority citation for part 1513 continues to read as follows:
5. Revise section 1513.507 to read as follows:
1513.507
(a)(1) It is the general policy of the Environmental Protection Agency that contractor or vendor prescribed leases or maintenance agreements for equipment shall not be executed.
(2) The contracting officer shall, where appropriate, insert the clause at 1552.213-70, Notice to Suppliers of Equipment, in orders for purchases or leases of automatic data processing equipment, word processing, and similar types of commercially available equipment for which vendors, as a matter of routine commercial practice, have developed their own leases and/or customer service maintenance agreements.
(b) Where the supplies or services are offered under a Commercial Supplier Agreement (as defined in 1502.100), the purchase order or modification shall incorporate clause 1552.332-39, Unenforceability of Unauthorized Obligations (FAR DEVIATION), in lieu of nondeviated clause 52.232-39, and clause 1552.232-75, Commercial Supplier Agreements-Unenforceable Clauses.
6. Add subpart 1513.6, consisting of 1513.6XX, to read as follows:
1513.6XX
Unenforceability of unauthorized obligations in micro-purchases. Clause 1552.332-39, Unenforceability of Unauthorized Obligations (FAR DEVIATION), will automatically apply to any micro-purchase in lieu of nondeviated FAR 52.232-39 for supplies and services acquired subject to a commercial supplier agreement (as defined in 1502.100).
7. The authority citation for part 1516 continues to read as follows:
8. Amend section 1516.505 by revising paragraph (b) to read as follows:
1516.505
(b) The contracting officer shall insert clause substantially the same as 1552.216-73, Fixed Rates for Services—Indefinite Delivery/Indefinite Quantity Contract, in solicitations and contracts to specify fixed rates for services. Contracting officers may use Alternate I for procurements that will have order performance periods longer than one year. Alternate I has a different paragraph (c) from the Basic form. Contracting officers must use the Basic form as prescribed for procurements that will have orders with performance periods of one year or less. Contracting officers may use both the Basic form and Alternate I for procurements that will have mixed-length orders, where some are for one year or less, and others are for longer than one year. In such cases contracting officers must include procurement language that the Basic form applies to orders less than one year, and Alternate I applies to orders longer than one year.
9. The authority citation for part 1532 continues to read as follows:
10. Add subpart 1532.10 to read as follows:
1532.10XX
1532.1070
Supplier license agreements defined in FAR 32.705 are equivalent to Commercial Supplier Agreements defined in 1502.100.
The contracting officer shall utilize the clause at 1552.332-39, Unenforceability of Unauthorized Obligations (FAR DEVIATION) in all solicitations and contracts in lieu of nondeviated FAR 52.232-39.
11. Add part 1539, consisting of subpart 1539.1, to subchapter F to read as follows:
1539.1XX
(a) Background—(1) Commercial Supplier Agreements (CSAs) are defined at 1502.100 in part as terms and conditions that are customarily offered to the public by vendors of supplies or services that meet the definition of “commercial item ” and are intended to create a binding legal obligation on the end user. CSAs are common in information technology acquisitions, including acquisitions of commercial computer software and commercial technical data, and they may apply to any supply or service.
(2) Commercial supplies and services are offered to the public under standard agreements that may take a variety of forms, including, but not limited to, license agreements, terms of service, and terms of sale or purchase. These standard CSAs contain terms and conditions that are appropriate when the purchaser is a private party, but not when the purchaser is the Federal Government. The existence of Federally-incompatible terms in standard CSAs is recognized in FAR 27.405-3(b), which states contracting officers should exercise caution in accepting a vendor's terms and conditions, since they may be written for commercial sales and not appropriate for Government contracts. (Note that the use of CSAs is not limited to information technology acquisitions, as they have become common in a broad variety of contexts, from travel to telecommunications to financial services to building maintenance systems; including purchases below the simplified acquisition threshold.)
(b) Policy. The EPAAR includes standard terms and conditions for the most common conflicting CSA terms, and contracting officers and contract specialists must follow the relevant rules in parts 1512, 1513, and 1532 when purchasing information technology that includes a CSA.
12. The authority citation for part 1552 continues to read as follows:
13. Revise section 1552.216-73 to read as follows:
1552.216-73
Fixed rates for services-indefinite delivery/indefinite quantity contract.
As prescribed in 1516.505(b), insert the following clause:
(a) The following fixed rates shall apply for payment purposes for the duration of the contact.
(b) The rate, or rates, set forth in paragraph (a) of this clause, cover all expenses, including report preparation, salaries, overhead, general and administrative expenses, and profit.
(c) The Contractor shall voucher for only the time of the personnel whose services are applied directly to the work called for in individual Orders and accepted by the EPA Contracting Officer's Representative (COR). The Government shall pay the Contractor for the life of the Order at rates in effect when the Order was issued, even if performance under the Order crosses into another period. The Contractor shall maintain time and labor distribution records for all employees who work under the contract. These records must document time worked and work performed by each individual on all Orders.
Alternate I (date). As prescribed in 1515.505(b), modify the Basic form of the clause by changing paragraph (c) to the following:
(c) The Contractor shall voucher for only the time of the personnel whose services are applied directly to the work called for in individual Orders and accepted by the EPA Contracting Officer's Representative (COR). The Government shall pay the Contractor at rates in effect when the work is performed by the Contractor. The Contractor shall maintain time and labor distribution records for all employees who work under the contract. These records must document time worked and work performed by each individual on all Orders.
14. Add section 1552.232-75 to read as follows:
1552.232-75
As prescribed in 1513.507(b) and 1532.1070 insert the following clause:
When any supply or service acquired under this contract is subject to a Commercial Supplier Agreement (CSA, as defined in 1502.100), the following language shall be deemed incorporated into the CSA. As used herein, “this agreement” means the CSA:Start Printed Page 48863
(b) If any language, provision or clause of this agreement conflicts or is inconsistent with paragraph (a) of this clause, the language, provisions, or clause of paragraph (a) of this clause shall prevail to the extent of such inconsistency.
15. Add subpart 1552.3 to read as follows:
1552.312-4
1552.332-39
As prescribed in 1512.1070, the contracting officer shall insert clause 1552.332-39, Contract Terms and Conditions-Commercial Item s (FAR DEVIATION), for acquisitions of commercial items in lieu of 52.212-4 or 52.212-4 Alternate I. The contracting officer may tailor this clause in accordance with FAR 12.302.
(d) Disputes. This contract is subject to 41 U.S.C. chapter 71, Contract Disputes. Failure of the parties to this contract to reach agreement on any request for equitable adjustment, claim, appeal or action arising under or relating to this contract shall be a dispute to be resolved in accordance with the Start Printed Page 48864clause at FAR 52.233-1, Disputes, which is incorporated herein by reference. The Contractor shall proceed diligently with performance of this contract, pending final resolution of any dispute arising under the contract.
(i) Payment—(1) Items accepted. Payment shall be made for items accepted by the Government that have been delivered to the delivery destinations set forth in this contract.
(6) Interest. (i) All amounts that become payable by the Contractor to the Government under this contract shall bear simple interest from the date due until paid unless paid within 30 days of becoming due. The interest rate shall be the interest rate established by the Secretary of the Treasury as provided in 41 U.S.C. 7109, which is applicable to the period in which the amount becomes due, as provided in (i)(6)(v) of this clause, and then at the rate applicable for each six-month period as fixed by the Secretary until the amount is paid.
(C) The Contractor requests a deferment of collection on a debt previously demanded by the Contracting Officer (see 48 CFR 32.607-2).
(l) Termination for the Government's convenience. The Government reserves the right to terminate this contract, or any part hereof, for its sole convenience. In the event of such termination, the Contractor shall immediately stop all work hereunder and shall immediately cause any and all of its suppliers and subcontractors to cease work. Subject to the terms of this contract, the Contractor shall be paid a percentage of the contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges the Contractor can demonstrate to the satisfaction of the Government using its standard record keeping system, have resulted from the termination. The Contractor shall not be required to comply with the cost Start Printed Page 48865accounting standards or contract cost principles for this purpose. This paragraph does not give the Government any right to audit the Contractor's records. The Contractor shall not be paid for any work performed or costs incurred which reasonably could have been avoided.
(2) Paragraphs (b), (d), (g), (i), (q), (r), (u) and (w) of this clause.
(u) Unauthorized obligations. (1) Except as stated in paragraph (u)(2) of this clause, when any supply or service acquired under this contract is subject to any commercial supplier agreement (as defined in 1502.100) that includes any language, provision, or clause requiring the Government to pay any future fees, penalties, interest, legal costs or to indemnify the Contractor or any person or entity for damages, costs, fees, or any other loss or liability that would create an Anti-Deficiency Act violation (31 U.S.C. 1341), the following shall govern:
(w) Commercial Supplier Agreements—unenforceable clauses. When any supply or service acquired under this contract is subject to a Commercial Supplier Agreement (as defined in 1502.100), the following language shall be deemed incorporated into the commercial supplier agreement. As used herein, “this agreement” means the commercial supplier agreement:
(iv) Continued performance. The supplier or licensor shall not unilaterally revoke, terminate or suspend any rights granted to the Government except as allowed by this contract. If the supplier or licensor believes the ordering activity to be in breach of the agreement, it shall pursue its rights under the Contract Disputes Act or other applicable Federal statute while continuing performance as set forth in paragraph (d) of this clause (Disputes).
(A) Discrepancies found in an audit may result in a charge by the commercial supplier or licensor to the ordering activity. Any Start Printed Page 48866resulting invoice must comply with the proper invoicing requirements specified in the underlying Government contract or order.
(B) This charge, if disputed by the ordering activity, will be resolved in accordance with paragraph (d) (Disputes) of this clause; no payment obligation shall arise on the part of the ordering activity until the conclusion of the dispute process.
(xi) Non-assignment. This agreement may not be assigned, nor may any rights or obligations thereunder be delegated, without the Government's prior approval, except as expressly permitted under paragraph (b) of this clause.
(2) If any language, provision, or clause of this agreement conflicts or is inconsistent with paragraph (w)(1) of this clause, the language, provisions, or clause of paragraph (w)(1) of this clause shall prevail to the extent of such inconsistency.
As prescribed in 1513.507(b) and 1532.1070, use clause 1552.332-39 (FAR DEVIATION) instead of the nondeviated version for purchase orders, modifications and contracts that include commercial supplier agreements.
(a) Except as stated in paragraph (b) of this clause, when any supply or service acquired under this contract is subject to any commercial supplier agreement (as defined in 1502.100) that includes any language, provision, or clause requiring the Government to pay any future fees, penalties, interest, legal costs or to indemnify the Contractor or any person or entity for damages, costs, fees, or any other loss or liability that would create an Anti-Deficiency Act violation (31 U.S.C. 1341), the following shall govern:
[FR Doc. 2019-19575 Filed 9-16-19; 8:45 am]