Equitable Adjustments Under Contracts for Construction, Dismantling, Demolishing, or Removing Improvements

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1843 and 1852

Equitable Adjustments Under Contracts for Construction,

Dismantling, Demolishing, or Removing Improvements

AGENCY: Office of Procurement, Contract Management Division, National

Aeronautics and Space Administration (NASA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: This is a proposed rule amending the NASA Federal Acquisition

Regulation Supplement (NFS) to set forth a clause that may be used for

equitable adjustments under contracts for construction, and

dismantling, demolishing, or removing improvements that are

contemplated to be fixed-price and exceed the simplified acquisition

threshold.

DATES: Comments must be received on or before February 6, 1998.

ADDRESSES: Submit comments to Mr. Joseph Le Cren, NASA Headquarters,

Code HK, Washington, DC 20546.

FOR FURTHER INFORMATION CONTACT:

Mr. Joseph Le Cren, Telephone: (202) 358-0444.

SUPPLEMENTARY INFORMATION:

Background

Some NASA field installations have used clauses containing ceilings

on indirect costs and profit as a means for handling equitable

adjustments under construction contracts. Instead of each installation

using its own clause, there is a consensus that it would be in both

NASA's and the contractors' interests to have a standard clause to

establish greater consistency throughout the agency. The proposed

clause also would reduce the administrative burden associated with the

development of an equitable adjustment clause on an installation-by-

installation or contract-by-contract basis.

Neither the use of the proposed clause nor the language contained

in it would be mandatory. This flexibility is being provided so that

the clause is used only when it is considered appropriate and to allow

for differences, such as in terminology, that exist in the construction

industry in different parts of the United States. The ceiling indirect

cost and profit rates contained in the clause, although not mandatory,

are benchmarks as to what is generally considered reasonable. The rates

are considered reasonable based on NASA's experience with equitable

adjustments for construction. In addition, the ceiling rates contained

in the proposed clause are the same as those that have been used for

many years by both the General Services Administration and the

Department of Veterans Affairs. The rates used by these agencies have

significance since they have much larger construction budgets than

NASA.

Impact

NASA certifies that this proposed regulation will not have a

significant economic effect on a substantial number of small entities

under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). This rule

does not impose any reporting or record keeping requirements subject to

the Paperwork Reduction Act.

List of Subjects in 48 CFR Parts 1843 and 1852

Government procurement.

Tom Luedtke,

Deputy Associate Administrator for Procurement.

Accordingly, 48 CFR Parts 1843 and 1852 are amended as follows:

1. The authority citation for 48 CFR Parts 1843 and 1852 continues

to read as follows:

Authority: 42 U.S.C. 2473(c)(1).

PART 1843--CONTRACT MODIFICATIONS

1843.205-70 [Amended]

2. In section 1843.205-70, the designated paragraphs (a), (b), and

(c) are redesignated as paragraphs (a)(1), (2) and (3), and a new

paragraph (b) is added to read as follows:

1843.205-70 NASA contract clause.

* * * * *

(b) the contracting officer may insert a clause substantially as

stated at 1852.243-72, Equitable Adjustments, in solicitations and

contracts for--

(1) Dismantling, demolishing, or removing improvements; or

(2) Construction, when the contract amount is expected to exceed

the simplified acquisition threshold and a fixed-price contract is

contemplated.

PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

1852.243-72 [Added]

3. Section 1852.243-72 is added to read as follows:

1852.243-72 Equitable Adjustments.

As prescribed in 1843.205-70(b), insert the following clause.

Equitable Adjustments

(a) The provisions of all other clauses contained in this

contract which provide for an equitable adjustment, including those

clauses incorporated by reference with the exception of the

``Suspension of Work'' clause (FAR 52.242-14), are supplemented as

follows:

Upon written request, the Contractor shall submit a proposal for

review by the Government. The proposal shall be submitted to the

contracting officer within the time limit indicated in the request

or any extension thereto subsequently granted. The proposal shall

provide an itemized breakdown of all increases and decreases in the

contract for the Contractor and each subcontractor in at least the

following detail: material quantities and costs; direct labor hours

and rates for each trade; the associated FICA, FUTA, SUTA, and

Workmen's Compensation Insurance; and equipment hours and rates.

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(b) The overhead percentage cited below shall be considered to

include all indirect costs including, but not limited to, field and

office supervisors and assistants, incidental job burdens, small

tools, and general overhead allocations. ``Commission'' is defined

as profit on work performed by others. The percentages for overhead,

profit, and commission are negotiable according to the nature,

extent, and complexity of the work involved, but in no case shall

they exceed the following ceilings:

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

Overhead Profit Commission

(percent) (percent) (percent)

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

To Contractor on work performed by

other than its own forces.......... .......... .......... 10

To first tier subcontractor on work

performed by its subcontractors.... .......... .......... 10

To Contractor and/or subcontractors

on work performed with their own

forces............................. 10 10 ..........

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

(c) Not more than four percentages for overhead, profit, and

commission shall be allowed regardless of the number of

subcontractor tiers.

(d) The Contractor or subcontractor shall not be allowed

overhead or commission on the overhead, profit, and/or commission

received by its subcontractors.

(e) Equitable adjustments for deleted work shall include

credits, limited to the same percentages for overhead, profit, and

commission in paragraph (b) of this clause.

(f) On proposals covering both increases and decreases in the

amount of the contract, the application of the overhead, profit, and

commission shall be on the net change in direct costs for the

Contractor or the subcontractor performing the work.

(g) After receipt of the Contractor's proposal, the contracting

officer shall act within a reasonable period, provided that when the

necessity to proceed with a change does not permit time to properly

check the proposal, or in the event of a failure to reach an

agreement on a proposal, the contracting officer may order the

Contractor to proceed on the basis of the price being determined at

the earliest practicable date. In such a case, the price shall not

be more than the increase or less than the decrease proposed.

(End of clause)

[FR Doc. 97-31935 Filed 12-5-97; 8:45 am]

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