Federal Acquisition Regulation; Review of Award Fee Determinations (Burnside-Ott)

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 16, 48, and 52

[FAC 97-15; FAR Case 98-017; Item IX]

RIN 9000-AI35

Federal Acquisition Regulation; Review of Award Fee

Determinations (Burnside-Ott)

AGENCIES: Department of Defense (DoD), General Services Administration

(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council (Councils) have agreed on a final rule

amending the Federal Acquisition Regulation (FAR). The amendment

implements rulings of the United States Court of Appeals and the United

States Court of Federal Claims. The rulings are that the Contract

Disputes Act applies to all disputes arising under Government

contracts, unless a more specific statute provides for other remedies.

DATES: Effective Date: February 25, 2000.

Applicability Date: The FAR, as amended by this rule, is applicable

to solicitations issued on or after February 25, 2000.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS

Building, Washington, DC, 20405, (202) 501-4755, for information

pertaining to status or publication schedules. For clarification of

content, contact Mr. Ralph De Stefano, Procurement Analyst, at (202)

501-1758. Please cite FAC 97-15, FAR case 98-017.

SUPPLEMENTARY INFORMATION:

A. Background

DoD, GSA, and NASA published a proposed rule in the Federal

Register at 64 FR 24472, May 6, 1999, and received no comments. This

final rule amends the FAR to implement the rulings of the United States

Court of Appeals in Burnside-Ott Aviation Training Center v. Dalton,

Secretary of the Navy, 107 F.3d 854 (Fed. Cir. 1997) and of the United

States Court of Federal Claims in Rig Masters, Inc. v. The United

States, 42 (Fed. Cl. 369 (1998)). The rulings are that the Contract

Disputes Act applies to all disputes arising under Government

contracts, unless a more specific statute provides for other remedies.

The rule amends FAR 16.405-2(a) by deleting the statement that award-

fee determinations are not subject to the disputes clause of the

contract and inserting a statement that such determinations and the

methodology for determining award fee are unilateral decisions made

solely at the discretion of the Government. In addition, the rule

amends--

(a) FAR 16.406 to conform with the newly revised 16.405-2(a);

(b) FAR Part 48 to--

(1) Remove references to the Contract Disputes Act;

(2) State that certain unilateral decisions are made solely at the

discretion of the Government; and

(3) Insert a statement that the contracting officer's determination

of the duration of the sharing period and the contractor's sharing rate

is one such decision;

(c) The clauses at 52.248-1 and 52.248-3 to conform with the newly

revised Part 48; and

(d) The clauses at 52.219-10, 52.219-26, and 52.226-1 to remove

exemptions to the Contract Disputes Act. Also, we made editorial

revisions to all affected sections for plain language purposes.

This rule was not subject to Office of Management and Budget review

under Section 6(b) of Executive Order 12866, Regulatory Planning and

Review, dated September 30, 1993. This rule is not a major rule under 5

U.S.C. 804.

B. Regulatory Flexibility Act

The Department of Defense, the General Services Administration, and

the National Aeronautics and Space Administration certify that this

final rule will not 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 the rule implements

court rulings relating to a statute that has been in effect since 1979.

This final rule retains the government's unilateral decision

[[Page 72449]]

authority in these matters. Therefore, we have not performed a

Regulatory Flexibility Analysis. We did not receive any comments

regarding this determination as a result of publication of the proposed

rule in the Federal Register at 64 FR 24472, May 6, 1999.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to

the FAR do not impose information collection requirements that 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 16, 48, and 52

Government procurement.

Dated: December 20, 1999.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, DoD, GSA, and NASA amend 48 CFR Parts 16, 48, and 52 as

set forth below:

1. The authority citation for 48 CFR Parts 16, 48, 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 16--TYPES OF CONTRACTS

2. Amend section 16.405-2 by revising the last sentence of

paragraph (a) to read as follows:

16.405-2 Cost-plus-award-fee contracts.

(a) * * * This determination and the methodology for determining

the award fee are unilateral decisions made solely at the discretion of

the Government.

* * * * *

3. Amend section 16.406 in paragraphs (a), (b), and the

introductory text of paragraph (e) by removing ``The contracting

officer shall insert'' and adding ``Insert'' in their place; and by

revising paragraph (e)(3) to read as follows:

16.406 Contract clauses.

* * * * *

(e) * * *

(3) Expressly provides that the award amount and the award-fee

determination methodology are unilateral decisions made solely at the

discretion of the Government.

PART 48--VALUE ENGINEERING

4. Amend section 48.103 by revising the introductory text of

paragraph (c); and by adding a new paragraph (c)(4) to read as follows:

48.103 Processing value engineering change proposals.

* * * * *

(c) The following Government decisions are unilateral decisions

made solely at the discretion of the Government:

* * * * *

(4) The contracting officer's determination of the duration of the

sharing period and the contractor's sharing rate.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

5. Amend section 52.219-10 by revising the date of the clause; in

the first sentence of paragraph (b) by adding ``Contracting Officer

to'' following the opening bracket; and by revising the last sentence

of paragraph (b) to read as follows:

52.219-10 Incentive Subcontracting Program.

* * * * *

INCENTIVE SUBCONTRACTING PROGRAM (FEB 2000)

* * * * *

(b) * * * Determinations under this paragraph are unilateral

decisions made solely at the discretion of the Government.

* * * * *

6. Amend section 52.219-26 by revising the date of the clause and

the last sentence of paragraph (b) to read as follows:

52.219-26 Small Disadvantaged Business Participation Program--

Incentive Subcontracting.

* * * * *

SMALL DISADVANTAGED BUSINESS PARTICIPATION PROGRAM--INCENTIVE

SUBCONTRACTING (FEB 2000)

* * * * *

(b) * * * Determinations under this paragraph are unilateral

decisions made solely at the discretion of the Government.

* * * * *

7. Amend section 52.226-1 by revising the date of the clause and

paragraph (d) to read as follows:

52.226-1 Utilization of Indian Organizations and Indian-Owned Economic

Enterprises.

* * * * *

UTILIZATION OF INDIAN ORGANIZATIONS AND INDIAN-OWNED ECONOMIC

ENTERPRISES (FEB 2000)

* * * * *

(d) The Contracting Officer, subject to the terms and conditions

of the contract and the availability of funds, will authorize an

incentive payment of 5 percent of the amount paid to the

subcontractor. The Contracting Officer will seek funding in

accordance with agency procedures.

(End of clause)

8. Amend section 52.248-1--

a. By revising the date of the clause;

b. In paragraphs (e)(1) and (e)(2), by removing ``shall'' each time

it is used (3 times and 1 time, respectively) and adding ``will'' in

its place;

c. By revising the last sentence of paragraph (e)(3);

d. By revising paragraph (j); and

e. In Alternate II, by revising the date and adding a sentence to

the end of paragraph (a) to read as follows:

52.248-1 Value Engineering.

* * * * *

VALUE ENGINEERING (FEB 2000)

* * * * *

(e) * * *

(3) * * * The decision to accept or reject all or part of any

VECP is a unilateral decision made solely at the discretion of the

Contracting Officer.

* * * * *

(j) Collateral savings. If a VECP is accepted, the Contracting

Officer will increase the instant contract amount, as specified in

paragraph (h)(5) of this clause, by a rate from 20 to 100 percent,

as determined by the Contracting Officer, of any projected

collateral savings determined to be realized in a typical year of

use after subtracting any Government costs not previously offset.

However, the Contractor's share of collateral savings will not

exceed the contract's firm-fixed-price, target price, target cost,

or estimated cost, at the time the VECP is accepted, or $100,000,

whichever is greater. The Contracting Officer will be the sole

determiner of the amount of collateral savings.

* * * * *

Alternate II (Feb 2000). * * *

(a) * * * The decision on which rate applies is a unilateral

decision made solely at the discretion of the Government.

* * * * *

9. Amend section 52.248-3 by revising the date of the clause; in

paragraphs (e)(1) and (e)(2) by removing ``shall'' each time it is used

(3 times and 1 time, respectively) and adding ``will'' in its place;

and by revising the last sentence of paragraph (e)(3) and paragraph (g)

to read as follows:

52.248-3 Value Engineering--Construction.

* * * * *

VALUE ENGINEERING--CONSTRUCTION (FEB 2000)

* * * * *

(e) * * *

(3) * * * The decision to accept or reject all or part of any

VECP is a unilateral decision made solely at the discretion of the

Contracting Officer.

* * * * *

(g) Collateral savings. If a VECP is accepted, the Contracting

Officer will increase the instant contract amount by 20

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percent of any projected collateral savings determined to be

realized in a typical year of use after subtracting any Government

costs not previously offset. However, the Contractor's share of

collateral savings will not exceed the contract's firm-fixed-price

or estimated cost, at the time the VECP is accepted, or $100,000,

whichever is greater. The Contracting Officer is the sole determiner

of the amount of collateral savings.

* * * * *

[FR Doc. 99-33438 Filed 12-23-99; 8:45 am]

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