[Federal Register: October 18, 2001 (Volume 66, Number 202)]
[Proposed Rules]
[Page 53049-53050]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18oc01-15]
[[Page 53049]]
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Part IV
Department of Defense
General Services Administration
National Aeronautics and Space Administration
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48 CFR Part 52
Federal Acquisition Regulation; Payments Under Fixed-Price Construction
Contracts; Proposed Rule
[[Page 53050]]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Part 52
[FAR Case 2001-012]
RIN 9000-AJ22
Federal Acquisition Regulation; Payments Under Fixed-Price
Construction Contracts
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) are proposing to amend the
Federal Acquisition Regulation (FAR) to clarify in the certification
language of the clause entitled Payments under Fixed-Price Construction
Contracts that all payments due to subcontractors and suppliers have
been made by the prime contractor from previous progress payments
received from the Government.
DATES: Interested parties should submit comments in writing on or
before December 17, 2001 to be considered in the formulation of a final
rule.
ADDRESSES: Submit written comments to: General Services Administration,
FAR Secretariat (MVP), 1800 F Street, NW., Room 4035, ATTN: Laurie
Duarte, Washington, DC 20405. Submit electronic comments via the
Internet to: farcase.2001-012@gsa.gov.
Please submit comments only and cite FAR case 2001-012 in all
correspondence related to this case.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS
Building, Washington, DC, 20405, at (202) 501-4755 for information
pertaining to status or publication schedules. For clarification of
content, contact Jeremy Olson, Procurement Analyst, at (202) 501-3221.
Please cite FAR case 2001-012.
SUPPLEMENTARY INFORMATION
A. Background
In 1988, Congress passed the Prompt Payment Act Amendments, in part
to ensure that subcontractors and suppliers were being promptly paid by
the prime contractors. 31 U.S.C. 3903(b)(1)(B)(ii) requires the
contractor to certify, with each progress payment request, that
payments to subcontractors and suppliers have been made from previous
payments received under the contracts. This certification language is
reflected in paragraph (c) of FAR 52.232-5, Payments under Fixed-Price
Construction Contracts.
An ambiguity in FAR 52.232-5 surfaced as a result of a decision
issued on April 2, 1999, by the United States Court of Appeals for the
Sixth Circuit in United States vs. Gatewood, 173 F.3d 983 (6th Cir.
1999). The Court concluded that certifying that the prime contractor
has made payments to subcontractors and suppliers is not the same as
certifying that the prime contractor has made all payments due to
subcontractors and suppliers.
The Government's intention has always been that all payments due to
subcontractors and suppliers be covered by this certification.
Accordingly, the rule amends FAR 52.232-5 to clarify the Government's
intent.
This is not a significant regulatory action and, therefore, was not
subject to 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 Councils do not expect this proposed rule 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 most contracts awarded to small entities have a dollar value
less than the simplified acquisition threshold, and, therefore, do not
have the progress payment type of financing. In addition, this change
is a clarification of existing policy, rather than the addition of new
policy. An Initial Regulatory Flexibility Analysis has, therefore, not
been performed. We invite comments from small businesses and other
interested parties. The Councils will consider comments from small
entities concerning the affected FAR Part in accordance with 5 U.S.C.
610. Interested parties must submit such comments separately and should
cite 5 U.S.C. 601, et seq. (FAR case 2001-012), in correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the proposed
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 Part 52
Government procurement.
Dated: October 10, 2001.
Al Matera,
Director, Acquisition Policy Division.
Therefore, DoD, GSA, and NASA propose amending 48 CFR part 52 as
set forth below:
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
1. The authority citation for 48 CFR part 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).
2. Amend section 52.232-5 by revising the date of the clause and
paragraph (c)(2) to read as follows:
52.232-5 Payments under Fixed-Price Construction Contracts.
* * * * *
Payments Under Fixed-Price Construction Contracts (Date)
* * * * *
(c) * * *
(2) All payments due to subcontractors and suppliers from previous
payments received under the contract have been made, and timely
payments will be made from the proceeds of the payment covered by this
certification, in accordance with subcontract agreements and the
requirements of chapter 39 of Title 31, United States Code;
* * * * *
[FR Doc. 01-26009 Filed 10-17-01; 8:45 am]
BILLING CODE 6820-EP-P