Federal Acquisition Regulation; Subcontracts for Commercial Items; Correction

SUMMARY: In related actions Federal Acquisition Regulation (FAR) case

94-790 proposed to implement statutory authorities for the acquisition

of commercial items and components by Federal Government agencies as

well as contractors and subcontractors and FAR case 94-791 proposed a

complete list of laws determined to be inapplicable to Executive agency

contracts and subcontracts for commercial items and clauses applicable

to subcontracts for the acquisition of commercial items. Neither of

these cases addressed the statutory authority for the Comptroller

General to examine the records of contractors. This amendment corrects

that omission.

DATES: Comments should be submitted on or before May 22, 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 & F

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

Please cite FAR case 94-791 in all correspondence related to this

case.

FOR FURTHER INFORMATION CONTACT: Colonel Laurence M. Trowel, Commercial

Items Team Leader, at (703) 695-3858 in reference to this correction.

For general information, contact the FAR Secretariat, Room 4037, GS

Building, Washington, DC 20405 (202) 501-4755. Please cite FAR case 94-

791 correction.

SUPPLEMENTARY INFORMATION:

A. Background

FAR cases 94-790, Acquisition of Commercial Items, and 94-791,

Subcontracts for Commercial Items, were published as proposed rules

with request for comment at 60 FR 11198; March 1, 1995 and 60 FR 15220;

March 22, 1995, respectively. In addition to these changes, the Federal

Acquisition Streamlining Act (FASA) of 1994 also consolidated audit

provisions and made other related revisions to the Government's

authority to examine records of contractors by amending 10 U.S.C. 2313

(section 2201(a)) and by adding 41 U.S.C. 254d (section 2251(a)). These

audit related sections were proposed to be implemented by FAR case 94-

740 published at 59 FR 66408; December 23, 1994. The proposed language

contained in FAR case 94-740 includes the authority for both the

Comptroller General and Agency examination of records in a single

clause. However, the clause will only be included in contracts for the

acquisition of commercial items, when an exception to the requirement

for cost or pricing data under FAR 15.804-1(a) does not apply. As a

result, contracts for commercial items that qualify for the exception

to the requirements for cost or pricing data will not contain language

providing the Comptroller General the authority to examine records as

required by 10 U.S.C. 2313(c) and 41 U.S.C. 254d(c). To remedy this

oversight, we propose to make the following amendments to FAR case 94-

791:

Revise the clause at 52.212-5, Contract Terms and

Conditions Required to Implement Statutes or Executive Orders--

Commercial Items, by adding a new paragraph (d) to address the

Comptroller General authority granted in the two statutes. The balance

of the clause remains unchanged from that published in the Federal

Register at 60 FR 11198. This revision will provide the Comptroller

General the authority to examine records when:

(1) The contract was awarded by other than sealed bid;

(2) The contract is above the simplified acquisition threshold; and

(3) The clause at 52.215-2, Audit and Records--Negotiation, is not

included in the contract. When cost or pricing data is required, the

contracting officer will incorporate the appropriate Part 15 clauses,

to include the clause proposed at 52.215-2, Audit and Records--

Negotiation (see FAR Case 94-740). This clause provides for both the

Comptroller General and Agency authority to examine records. The

Commercial Items Team has chosen to revise the clause at 52.212-5 to

add coverage for the Comptroller General specifically tailored to the

acquisition of commercial items rather than cite the applicable

portions of the clause at 52.215-2. This approach will clearly and more

simply establish the Comptroller General's right to examine records for

contracts for commercial items.

Revise FAR 12.403, Applicability of certain laws to

subcontracts for the acquisition of commercial items, to include 10

U.S.C. 2313(c) and 41 U.S.C. 254d(c) in the list of laws not applicable

to subcontracts for commercial items. Paragraph (c) of these laws

(which relate to the Comptroller General's authority) will not be

applicable when the subcontractor is not required to submit cost or

pricing data. When cost or pricing data is required, the clause at

52.215-2 will appear in both the prime and subcontract and authority to

examine records of subcontractors will apply.

B. Corrections

1.At 60 FR 15221; March 22, 1995, in the third column section

12.403 is correctly revised to read as follows:

12.403 Applicability of certain laws to subcontracts for the

acquisition of commercial items.

(a) The following laws are not applicable to subcontracts under

either a contract for the acquisition of commercial items or a

subcontract for the acquisition of commercial items:

(1) 15 U.S.C. 644(d), Requirements relative to labor surplus areas

under the Small Business Act (see 48 CFR (FAR) part 19, subpart 19.2);

(2) 41 U.S.C. 43, Walsh-Healey Act (see 48 CFR (FAR) part 22,

subpart 22.6);

(3) 41 U.S.C. 253d, Validation of Proprietary Data Restrictions

(see 48 CFR (FAR) part 27, subpart 27.4);

(4) 41 U.S.C. 254(a) and 10 U.S.C. 2306(b), Contingent Fees (see 48

CFR (FAR) part 3, subpart 3.4);

(5) 41 U.S.C. 254d(c) and 10 U.S.C. 2313(c), Examination of Records

of Contractor, when a subcontractor is not required to provide cost or

pricing data (see (FAR) part 15, subpart 15.1);

(6) 41 U.S.C. 416(a)(6), Minimum Response Time for Offers under

Office of Federal Procurement Policy Act (see 48 CFR (FAR) part 5,

subpart 5.2);

(7) 41 U.S.C. 418a, Rights in Technical Data (see 48 CFR (FAR) part

27, subpart 27.4);

(8) 41 U.S.C. 701 et seq., Drug-Free Workplace Act of 1988 (see 48

CFR (FAR) 23.5);

(9) 46 U.S.C. 1241(b), Transportation in American Vessels of

Government Personnel and Certain Cargo (see 48 CFR (FAR) part 47,

subpart 47.5);

(10) 49 U.S.C. 40118, Fly American provisions (see 48 CFR (FAR)

part 47, subpart 47.4);

(11) Pub. L. 90-469, William Langer Jewel Bearing Plant Special Act

(see 48 CFR (FAR) part 8, subpart 8.2); [[Page 17185]]

(12) 10 U.S.C. 2301, note, as amended by Section 2091, Pub. L. 103-

355, Payment Protections for Subcontractors and Suppliers (see 48 CFR

(FAR) parts 28 and 32, subparts 28.1 and 32.1);

(13) 10 U.S.C. 2241, note (Pub. L. 102-396, Section 9005, as

amended by Pub. L. 103-139, Section 8005), Limitations on Procurement

of Food, Clothing, and Specialty Metals Not Produced in the United

States (See 48 CFR (DFARS) part 225, subpart 225.70);

(14) 10 U.S.C. 2320, Rights in Technical Data (see 48 CFR (DFARS)

part 227, subpart 227.4);

(15) 10 U.S.C. 2321, Validation of Proprietary Data Restrictions.

(see 48 CFR (DFARS) part 227, subpart 227.4);

(16) 10 U.S.C. 2327, note (Pub. L. 103-160, Section 843), Reporting

Requirement Regarding Dealings with Terrorist Countries (see 48 CFR

(DFARS) part 209, subpart 209.1);

(17) 10 U.S.C. 2391, note (Pub. L. 101-510, Section 4201(a)(1)(B)),

Notification of Substantial Impact on Employment (see 48 CFR (DFARS)

part 249, subpart 249.70);

(18) 10 U.S.C. 2393, Prohibition Against Doing Business with

Certain Offerors or Contractors (see 48 CFR (DFARS) part 209, subpart

209.4);

(19) 10 U.S.C. 2501, note (Pub. L. 103-160, Section 1372),

Notification of Proposed Program Termination (see 48 CFR (DFARS) part

249, subpart 249.70);

(20) 10 U.S.C. 2534, Miscellaneous Limitations on the Procurement

of Goods other than United States Goods (see 48 CFR (DFARS) part 225,

subparts 225.7004, 225.7007, 225.7010, and 225.7016);

(21) 10 U.S.C. 2631, Cargo Preference Act (see 48 CFR (DFARS)

247.5); and

(22) National Defense Authorization Acts, Appropriations Acts, and

Other Statutory Restrictions on Foreign Purchases as follows: Pub. L.

100-202, Section 8088, Polyacrylonitrile Based Carbon Fiber; Pub. L.

101-511, Section 8041, Anchor and Mooring Chain; Pub. L. 102-172,

Section 8111, Carbon, Alloy and Armor Steel Plates; Pub. L. 102-396,

Section 9108, Four Ton Dolly Jacks; Pub. L. 102-484, Section 832, Anti

friction Bearings; Pub. L. 103-139, Section 8090, Aircraft Fuel Cells;

Pub. L. 103-139, Section 8124, Totally Enclosed Lifeboat Survival

Systems; Pub. L. 103-335, Section 8023, Supercomputers; Pub. L. 103-

335, Section 8050, Multibeam Sonar Mapping Systems; Pub. L. 103-335,

Section 8115, Ship Propellers; and Pub. L. 103-335, Section 8120, 120

mm Mortars and Ammunition.

(b) Certain requirements of the following laws have been eliminated

for subcontracts under either a contract for the acquisition of

commercial items or subcontract for the acquisition of commercial

items:

(1) 33 U.S.C. 1368, Requirement for a certificate and clause under

the Federal Water Pollution Control Act (see 48 CFR (FAR) part 23,

subpart 23.1);

(2) 40 U.S.C. 327 et seq., Requirement for a certificate and clause

under the Contract Work Hours and Safety Standards Act (see 48 CFR

(FAR) part 22, subpart 22.3);

(3) 41 U.S.C. 423e(1)(B), Requirement for certain certifications

under the Procurement Integrity Act (see 48 CFR (FAR) part 3, subpart

3.1); and

(4) 42 U.S.C. 7606, Requirements for a certificate and clause under

the Clean Air Act (see 48 CFR (FAR) part 23, subpart 23.1).

(c) The applicability of the following laws have been modified in

regards to subcontracts under either a contract for the acquisition of

commercial items or a subcontract for the acquisition of commercial

items:

(1) 41 U.S.C. 253g and 10 U.S.C. 2402, Prohibition on Limiting

Subcontractor Direct Sales to the United States (see 48 CFR (FAR) part

3, subpart 3.5);

(2) 41 U.S.C. 254(d) and 10 U.S.C. 2306a, Truth in Negotiations Act

(see 48 CFR (FAR) part 15, subpart 15.8); and

(3) 41 U.S.C. 422, Cost Accounting Standards (see 48 CFR (FAR) part

99).

(d) The FAR prescription, provision or clause for each of these

statutes has been revised in the appropriate part to reflect their

proper application to the acquisition of commercial items.

2. At 60 FR 15222; March 22, 1995, in the second column section

52.212-5 is correctly revised to read as follows:

52.212-5 Contract Terms and Conditions Required To Implement Statutes

or Executive Orders--Commercial Items.

As prescribed in 12.302(b)(4), insert the following clause:

Contract Terms and Conditions Required to Implement Statutes or

Executive Orders--Commercial Items (Date)

(a) The Contractor agrees to comply with the following FAR

clauses, which are incorporated in this contract by reference, to

implement provisions of law or executive orders applicable to

acquisitions of commercial items:

(1) 52.219-8, Utilization of Small Business Concerns and Small

Disadvantaged Business Concerns (15 U.S.C. 637 (d)(2) and (3));

(2) 52.222-3, Convict Labor (E.O. 11755); and

(3) 52.233-3, Protest After Award (31 U.S.C 3553 and 40 U.S.C.

759).

(b) The Contractor agrees to comply with the following FAR and

FIRMR clauses in this paragraph (b) that are indicated as being

incorporated in this contract by reference to implement provisions

of law or executive orders applicable to acquisitions of commercial

items or components:

______ (1) 52.203-6, Restrictions on Subcontractor Sales to the

Government, with Alternate I (41 U.S.C. 253g and 10 U.S.C. 2402).

______ (2) 52.203-10, Price or Fee Adjustment for Illegal or

Improper Activity (41 U.S.C. 423).

______ (3) 52.219-14, Limitation on Subcontracting (15 U.S.C.

637(a)(14)).

______ (4) 52.222-26, Equal Opportunity (E.O. 11246).

______ (5) 52.222-35, Affirmative Action for Special Disabled

and Vietnam Era Veterans (38 U.S.C. 2012).

______ (6) 52.222-36, Affirmative Action for Handicapped Workers

(29 U.S.C. 793).

______ (7) 52.222-37, Employment Reports on Special Disabled

Veterans and Veterans of the Vietnam Era (38 U.S.C. 2012).

______ (8) 52.225-3, Buy American Act--Supplies (41 U.S.C. 10).

______ (9) 52.225-9, Buy American Act--Trade Agreements Act--

Balance of Payments Program (41 U.S.C. 10, 19 U.S.C. 2501-2582).

______ (10) 52.225-17, Buy American Act--Supplies Under European

Community Sanctions for End Products (E.O. 12849).

______ (11) 52.225-18, European Community Sanctions for End

Products (E.O. 12849).

______ (12) 52.225-19, European Community Sanctions for Services

(E.O. 12849).

______ (13) 52.225-21, Buy American Act--North American Free

Trade Agreement Implementation Act--Balance of Payments Program (41

U.S.C 10, Pub. L. 103-187).

______ (14) 52.247-64, Preference for Privately Owned US Flagged

Commercial Vessels (46 U.S.C. 1241).

______ (15) 201-39.5202-3, Procurement Authority (FIRMR). (This

acquisition is being conducted under ______ delegation of GSA's

exclusive procurement authority for FIP resources. The specific GSA

DPA case number is ______).

(c) The Contractor agrees to comply with the following FAR

clauses in this paragraph (c), applicable to commercial services,

that are indicated as being incorporated in this contract by

reference to implement provisions of law or executive orders

applicable to acquisitions of commercial items or components:

______ (1) 52.222-41, Service Contract Act of 1965, As amended

(41 U.S.C. 351, et seq.).

______ (2) 52.222-42, Statement of Equivalent Rates for Federal

Hires (29 U.S.C. 206 and 41 U.S.C. 351, et seq.).

______ (3) 52.222-43, Fair Labor Standards Act and Service

Contract Act--Price Adjustment (Multiple Year and Option Contracts)

(29 U.S.C. 206 and 41 U.S.C. 351 et seq.).

______ (4) 52.222-44, Fair Labor Standards Act and Service

Contract Act--Price Adjustment (29 U.S.C. 206 and 41 U.S.C. 351 et

seq.).

______ (5) 52.222-47, SCA Minimum Wages and Fringe Benefits

Applicable to Successor Contract Pursuant to Predecessor Contractor

Collective Bargaining Agreement (CBA) (41 U.S.C. 351 et seq.).

(d) Comptroller General Examination of Record. The Contractor

agrees to comply [[Page 17186]] with the provisions of this

paragraph (d) if this contract was awarded using other than sealed

bid, is in excess of the simplified acquisition threshold, and does

not contain the clause at 52.215-2, Audit and Records--Negotiation:

(1) The Comptroller General of the United States, or an

authorized representative of the Comptroller General, shall have

access to and right to examine any of the Contractor's directly

pertinent records involving transactions related to this contract.

(2) The Contractor shall make available at its offices at all

reasonable times the records, materials, and other evidence for

examination, audit, or reproduction, until 3 years after final

payment under this contract or for any shorter period specified in

Subpart 4.7, Contractor Records Retention, of the Federal

Acquisition Regulation, or for any longer period required by statute

or by other clauses of this contract. If this contract is completely

or partially terminated, the records relating to the work terminated

shall be made available for 3 years after any resulting final

termination settlement. Records relating to appeals under the

disputes clause or to litigation or the settlement of claims arising

under or relating to this contract shall be made available until

such appeals, litigation, or claims are finally resolved.

(3) As used in this clause, records include books, documents,

accounting procedures and practices, and other data, regardless of

type and regardless of form. This does not require the Contractor to

create or maintain any record that the Contractor does not maintain

in the ordinary course of business or pursuant to a provision of

law.

(e) Notwithstanding the requirements of the clauses in

paragraphs (a), (b), (c) or (d) of this clause, the Contractor is

not required to include any FAR clause, other than those listed

below, in a subcontract for commercial items or commercial

components--

(1) 52.222-26, Equal Opportunity (E.O. 11246);

(2) 52.222-35, Affirmative Action for Special Disabled and

Vietnam Era Veterans (38 U.S.C. 2012(a)); and

(3) 52.222-36, Affirmative Action for Handicapped Workers (29

U.S.C. 793).

(End of clause)

Dated: March 29, 1995.

Edward C. Loeb,

Deputy Project Manager for Implementation of the Federal Acquisition

Streamlining Act of 1994.

[FR Doc. 95-8145 Filed 4-3-95; 8:45 am]

BILLING CODE 6820-34-P