Federal Acquisition Regulation; Use and Charges Clause

SUMMARY: The Civilian Agency Acquisition Council (CAAC) and the Defense

Acquisition Regulations Council (DAR Council) are proposing changes to

the coverage ``Contractor Use and Rental of Government Property,'' and

the clause ``Use and Charges,'' to clarify the Federal Acquisition

Regulation (FAR) coverage pertaining to rental payments for Government-

owned real property and equipment. This regulatory action was not

subject to Office of Management and Budget review pursuant to Executive

Order 12866, dated September 30, 1993.

DATES: Comments should be submitted on or before July 5, 1995 to be

considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to:

General Services Administration, FAR Secretariat (VRS), 18th and F

Streets, NW, Room 4037, Washington, DC 20405.

Please cite FAR case 91-117 in all correspondence related to this

case.

FOR FURTHER INFORMATION CONTACT: Ms. Linda Klein at (202) 501-3775 in

reference to this FAR case. For general information, contact the FAR

Secretariat, Room 4037, GS Building, Washington, DC 20405 (202) 501-

4755. Please cite FAR case 91-117.

SUPPLEMENTARY INFORMATION:

A. Background

The CAAC and the DAR Council have agreed on changes to FAR parts 45

and 52 as a result of a proposal from the DOD Inspector General to

improve and clarify current language relating to rental payments for

Government-owned real property and equipment. The proposed rule

improves the current language by distinguishing between equipment and

real property; clarifying that total equipment costs include such

factors as rehabilitation and rebuild costs; clarifying the role of the

contracting officer; clarifying the use of credits; specifying that

rental rates for real property shall be in accordance with commercial

rates as stated in FAR 45.403; and providing for payment of interest on

late rental payments.

B. Regulatory Flexibility Act

This proposed rule is not expected to have a significant economic

impact on a substantial number of small entities within the meaning of

the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., because only a

small amount of property is accountable to contracts with small

businesses. An Initial Regulatory Flexibility Analysis has, therefore,

not been performed. Comments from small entities concerning the

affected FAR subpart will be considered in accordance with 5 U.S.C. 610

of the Act. Such comments must be submitted separately and should cite

5 U.S.C. 601 et seq. (FAR case 91-117), in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the proposed

changes to the FAR do not impose recordkeeping or information

collection requirements, or collections of information from offerors,

contractors, or members of the public which require the approval of the

Office of Management and Budget under 44 U.S.C. 3501 et seq.

List of Subjects in 48 CFR Parts 45 and 52

Government procurement.

Dated: May 1, 1995.

C. Allen Olson,

Director, Office of Federal Acquisition Policy.

Therefore, it is proposed that 48 CFR parts 45 and 52 be amended as

set forth below:

1. The authority citation for 48 CFR parts 45 and 52 continues to

read as follows:

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

U.S.C. 2473(c).

PART 45--GOVERNMENT PROPERTY

2. Section 45.402 is amended by revising paragraph (a) to read as

follows:

45.402 Authorizing use of Government production and research property.

(a) Contracting officers who believe it to be in the Government's

interest for a prospective contractor or subcontractor to use existing

Government production and research property shall authorize such use in

the contract. The contracting officer shall confirm the availability of

the property and coordinate with the administrative contracting officer

(ACO) before authorizing its use on either a rental or rent-free basis.

The contracting officer shall provide the ACO copies of all

correspondence and approvals authorizing contractors' or

subcontractors' use of Government production and research property.

* * * * *

3. Section 45.403 is revised to read as follows:

45.403 Rental--Use and Charges clause.

(a) The contracting officer shall charge contractors rent for using

Government real property, plant equipment, special tooling, and special

test equipment, except as prescribed in 45.404 and 45.405. Rent shall

be computed in accordance with the clause at 52.245-9, Use and Charges.

(b) Commercial rates for real property shall be established by

using a certified appraisal, if feasible. If such an appraisal is not

economically feasible, commercial rates may be established by using

Industrial Real Estate Surveys, local rental surveys, or information

obtained from the local Chambers of Commerce and local realtors. To

calculate rent for real property, commercial rates should be applied

against the percentage of commercial sales to total sales or some other

equitable basis. The cost of necessary Government-owned support

facilities supporting the real property made available on a rental

basis should be considered when establishing the commercial rate.

(c) If the agency head or designee determines it to be in the

Government's interest, rent for classes of production and research

property may be determined on a basis other than the clause at 52.245-

9, Use and Charges.

(d) The contracting officer shall determine if the contractor may

use Government production and research property on a rental basis and

shall determine the length of the rental authorization. The

administrative contracting officer shall develop the rental agreement

and shall ensure the collection of any rent due the Government from the

contractor's use of Government production and research property.

4. Section 45.407 is amended by revising paragraph (a) to read as

follows:

45.407 Non-Government use of plant equipment.

* * * * *

(a) The contracting officers advance written approval shall be

required for [[Page 22443]] any non-Government use of plant equipment.

Before authorizing non-Government use exceeding 25 percent, the

contracting officer shall obtain approval of the head (or designee) of

the agency that awarded the contract to which the property is

accountable. The contracting officer shall forward to the

administrative contracting officer copies of all approvals for non-

Government use of active plant equipment.

* * * * *

PART 52-- SOLICITATION PROVISIONS AND CONTRACT CLAUSES

5. Section 52.245-9 is revised to read as follows:

52.245-9 Use and Charges.

As prescribed in 45.302-6(c), insert the following clause:

Use and Charges (Date)

(a) For purposes of this clause, the types of Government

property to be rented are divided into two categories, real property

(see 45.101) and equipment. Equipment, as used in this clause,

consists of plant equipment, special test equipment, and special

tooling.

(b) The Contractor may use the real property and equipment

without charge in the performance of--

(1) Contracts with the Government that specifically authorize

such use without charge; and

(2) Subcontracts of any tier under Government prime contracts if

the Contracting Officer having cognizance of the prime contract

specifically authorizes such use in writing.

(c) Unless otherwise directed in writing by the Contracting

Officer, the Contractor shall give priority in the use of the real

property and equipment to performing contracts and subcontracts of

the Contracting Officer having cognizance of the real property and

equipment and shall not undertake any work involving the use of the

real property and equipment that would interfere with performing

existing Government contracts or subcontracts.

(d) If granted written permission by the Contracting Officer, or

if it is specifically provided for in the Schedule, the Contractor

may use the real property and equipment for work other than that

provided in paragraph (b) of this clause, subject to payment of

rental. Authorizing such use of the real property and equipment does

not waive any rights of the Government to terminate the Contractor's

right to use the real property and equipment.

(e) The rental fee for use of real property and equipment shall

be determined in accordance with the following paragraphs:

(1) The basis for computation of the fee shall be established in

writing prior to any use of the real property and equipment on a

rental basis.

(2) Rental rates for real property and associated fixtures,

shall be in accordance with commercial rates as established under

section 45.403 of the Federal Acquisition Regulation.

(3) Rental rates for equipment shall be established in

accordance with paragraph (f) and TABLE I of this clause.

(4) Rental for real property and equipment shall be calculated

on a per month basis. Rental payments shall be made at intervals of

not less than one nor more than six months. The rental agreement

shall specify the frequency of the payment.

(f) The full monthly equipment rental charge is the monthly

rental rate multiplied by the total acquisition cost of the

equipment (as defined in subparagraph (f)(1)). The full equipment

rental charge for each month shall be reduced by a credit for rent-

free use, if applicable. The credit equals the rental amount that

would otherwise be properly allocable to the work for which the

equipment was used without charge under paragraph (b) of this

clause. The credit shall be computed by multiplying the full rental

for the rental period by a fraction in which the numerator is the

amount of use of the equipment by the Contractor without charge

during the period, and the denominator is the total amount of use of

the equipment by the Contractor during the period. If the rent for

an item is excluded from the total rent computations because the

item was used 100 percent of the time for work without charge under

paragraph (b) of this clause, the units of measure for that item

shall also be excluded from the credit calculations.

(1) The acquisition cost of the equipment shall be the total

cost to the Government, including any substantial improvements at

Government expense. The Contracting Officer responsible for the

equipment will determine the total acquisition cost, to include

rebuild, remanufacture or other rehabilitation costs, and

enhancements, as well as, transportation and installation costs, if

borne by the Government. It does not include the cost of normal

maintenance.

(2) For the purpose of computing any credit under this

paragraph, the unit in determining the amount of use of the

equipment shall be direct labor hours, sales, hours of use, or other

unit of measure that will result in an equitable apportionment of

the rental charge, as approved by the cognizant Contracting Officer.

(g) The Contractor shall compute the amount of rentals to be

paid on real property and equipment for each rental period. Within

90 days after the close of each rental period, the Contractor shall

submit to the Contracting Officer a written statement showing the

rental calculations for the real property and equipment and listing

the amount of rental due the Government. The Contractor shall make

available such records and data as are determined by the Contracting

Officer to be necessary to verify the information contained in the

statement.

(h) Concurrently with the submission of the written statement

prescribed by paragraph (g) of this clause, the Contractor shall pay

the rental due the Government under this clause. Payment shall be by

check made payable to the office designated for contract

administration and mailed or delivered to the Administrative

Contracting Officer. Receipt and acceptance by the Government of the

Contractor's check pursuant to this paragraph shall constitute an

accord and satisfaction of the final amount due the Government

hereunder, unless the Contractor is notified in writing within 180

days following receipt that the amount received is not regarded by

the Government as the final amount due.

(i) If the Contractor fails to submit the written statement and

the amount due, as required in paragraphs (g) and (h) of this

clause, the Contractor shall be liable for interest charges on the

amount due, chargeable for each day the statement and rental payment

are late. The interest shall be at the ``Renegotiation Board

Interest Rate'' (published in the Federal Register semiannually on

or about January 1st and July 1st for the period in which the amount

becomes due). Failure to submit timely statements and/or rent

payments may result in the Contracting Officer revoking the

Contractor's right to use the real property and/or equipment for

commercial purposes.

(j) If the Contractor uses any item of the real property and

equipment without authorization, the Contractor shall be liable for

payment of 50 percent more than the amount of rental that would have

been due had prior authorization been obtained.

(k) The acceptance of any rental payment by the Government under

this clause shall not be construed as a waiver or relinquishment of

any rights it may have against the Contractor growing out of the

Contractor's unauthorized use of the real property and/or equipment

or any other failure to perform this contract according to its

terms.

(1) For equipment of the types covered in Federal Supply Group

34, metal cutting and metal forming machine tools, the following

monthly rates shall apply:

Table I.--Equipment Rental Rates

------------------------------------------------------------------------

Monthly rental

Age of equipment rate

------------------------------------------------------------------------

Under 3 years old..................................... 3.0 percent.

Over 3 to 8 years old................................. 1.5 percent.

Over 8 years old...................................... 1.0 percent.

------------------------------------------------------------------------

The age of each item of the equipment shall be based on the year

in which it was substantially improved or, if not improved, the year

of manufacture, with a birthday on January 1 of each year

thereafter. For example, an item of equipment manufactured or

improved on July 15, 1992, will be considered to be ``over 1 year

old'' on and after January 1, 1993, and ``over 2 years old'' on and

after January 1, 1994.

(2) Rental of equipment not covered by (1) above will be

computed at a rate of 2 percent per month of use.

(End of clause)

[FR Doc. 95-11176 Filed 5-4-95; 8:45 am]

BILLING CODE 6820-EP-P