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

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1843 and 1852

Suitable Adjustments Under Contracts for Construction,

Dismantling, Demolishing, or Removing Improvements

AGENCY: Office of Procurement, Contract Management Division, National

Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: This document amends NASA's Federal Acquisition Regulation

Supplement (NFS) to set forth an agency-wide clause that may be used

for equitable adjustments under contracts for construction,

dismantling, demolishing, or removing improvements that are

contemplated to be fixed-price and exceed the simplified acquisition

threshold.

EFFECTIVE DATE: April 9, 1998.

FOR FURTHER INFORMATION CONTACT: Mr. Joseph Le Cren, Telephone:

(202) 358-0444.

SUPPLEMENTARY INFORMATION:

Background

On December 8, 1997, a proposed rule to amend the NFS to establish

an agency-wide clause to handle equitable adjustments under fixed-price

contracts in excess of the simplified acquisition threshold for

construction, dismantling, demolishing, or removing improvements was

published in the Federal Register (62 FR 64545-64546) for comment.

Comments were submitted by only one commenter who took exception to

several aspects of the proposed rule. The comments were reviewed and

considered; however, no changes were made to the proposed rule as a

result of them.

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 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. 2743(c)(1).

PART 1843--CONTRACT MODIFICATIONS

1843.205-70 [Amended]

2. In section 1843.205-70, the heading is revised, paragraphs (a),

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

paragraph (b) is added to read as follows:

1843.205-70 NASA contract clauses.

* * * * *

(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

1852.243-70 [Amended]

3. In section 1852.243-70, introductory text, the prescription

``1843.205-70(a)'' is revised to read ``1843.205-70(a)(1)''.

4. In Alternate I to section 1852.243-70, the prescription

``1843.205-70(b)'' is revised to read ``1843.205-70(a)(2).

5. In Alternate II to section 1852.243-70, the prescription

``1843.205-70(c)'' is revised to read ``1843.205-70(a)(3)''.

6. 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 April 1998

(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.

(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:

[[Page 17340]]

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Overhead Profit

(percent) (percent) Commission

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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 -----

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(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. 98-9431 Filed 4-8-98; 8:45 am]

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