Federal Acquisition Regulation (FAR): Contractor's Request for Progress Payments

Federal Register: April 8, 2008 (Volume 73, Number 68)

Proposed Rules

Page 19035-19039

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DOCID:fr08ap08-22

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Parts 32, 43, 52, and 53

FAR Case 2005-032; Docket 2008-0002; Sequence 4

RIN: 9000-AI47

Federal Acquisition Regulation; FAR Case 2005-032, Contractor's

Request for Progress Payments

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

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

ACTION: Proposed rule.

Page 19036

SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council (Councils) are proposing to amend the

Federal Acquisition Regulation (FAR) to implement recommendations to improve the regulations at FAR 32.001, 32.5, and 52.232-16 related to requests for progress payments and the Standard Form (SF) 1443,

Contractor's Request for Progress Payments form used to request those progress payments.

DATES: Interested parties should submit written comments to the FAR

Secretariat on or before June 9, 2008 to be considered in the formulation of a final rule.

ADDRESSES: Submit comments identified by FAR Case 2005-032 by any of the following methods:

Regulations.gov: http://www.regulations.gov. Submit comments via the Federal eRulemaking portal by inputting ``FAR Case 2005-032'' under the heading ``Comment or Submission''. Select the link

``Send a Comment or Submission'' that corresponds with FAR Case 2005- 032. Follow the instructions provided to complete the ``Public Comment and Submission Form''. Please include your name, company name (if any), and ``FAR Case 2005-032'' on your attached document.

Fax: 202-501-4067.

Mail: General Services Administration, Regulatory

Secretariat (VPR), 1800 F Street, NW, Room 4035, ATTN: Diedra Wingate,

Washington, DC 20405.

Instructions: Please submit comments only and cite FAR case 2005- 032 in all correspondence related to this case. All comments received will be posted without change to http://www.regulations.gov, including any personal and/or business confidential information provided.

FOR FURTHER INFORMATION CONTACT Ms. Meredith Murphy, Procurement

Analyst, at (202) 208-6925 for clarification of content. For information pertaining to status or publication schedules, contact the

FAR Secretariat at (202) 501-4755. Please cite FAR case 2005-032.

SUPPLEMENTARY INFORMATION:

1. Background

   The proposed changes to FAR 32.001, 32.501-3, 32.503-6, 52.232-16 and the SF 1443, Contractor's Request for Progress Payments are to (1) address revisions to the paid cost rule, and (2) simplify the form and related regulations, and instructions to improve clarity. These proposed changes originated as a part of a review of the SF 1443 and related regulations by the Department of Defense (DoD). As a part of this review, the DoD requested input from both Department contracting professionals and the general public (see Federal Register 69 FR 67899, dated November 22, 2004). The recommendations resulting from that effort were considered in developing the proposed rule language reported herein.

   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.

2. Discussion

   The Councils are revising the following FAR provisions: 1. FAR 32.001 is revised to add a definition for the term

   ``Liquidate.'' This proposed change is made to ensure that all parties understand what is meant by this term which is used frequently throughout FAR Part 32. 2. FAR 32.501-3(a)(1) is revised to ensure that the term ``contract price'' is used consistently in 32.501-3 and the SF 1443. This change is proposed to clarify that ``contract price'' includes the total amount to be paid for complete performance of the contract, to include the not-to-exceed amounts on unpriced modifications. Related changes are proposed to the instructions for Item 5 of the SF 1443. 3. FAR 32.503-1 is deleted, in its entirety. The language requiring the contractor to use the SF 1443 to request progress payments is moved to 52.232-16(g)(3). This change is made to move the requirement to use the form into the contract clause. New language is added allowing electronic submission of the SF 1443. 4. FAR 32.503-6(f) and (g), and 52.232-16(a)(9) and (c)(5) are revised to clarify the computation of the loss ratio. 5. FAR 52.232-16(g)(2) is added to require that contractors use current estimates to complete when preparing the SF 1443. Related changes are proposed for the SF 1443 Line 12b and related instructions. 6. Various other changes to the SF 1443 and related instructions are also proposed:

   (a) Line 4 ``Contract Number'' is changed to require that the contractor include the Delivery or Task Order number, if applicable, so that the paying office can associate the SF 1443 with the correct order.

   (b) Lines 9--11 are revised to reflect changes made to the ``paid cost rule'' in an earlier Final Rule.

   (c) Line 14 is revised to make the language on the form consist with that of 52.232-16. A related change is also made to Line 20.

   (d) Line 23 is revised to clarify that the amount on this line is the dollars that have been liquidated as well as the dollars to be liquidated.

   (e) Minor editorial changes are proposed for various portions of the SF 1443 and related instructions.

3. 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 this proposed rule will not change the rules for buying or add a new information collection requirement. It will not have a significant economic impact to simplify the SF 1443 and related regulations and instructions. Further, most contracts awarded to small entities use the simplified acquisition procedures or are awarded on a competitive, fixed-price basis; neither of these requires the completion of the SF 1443. 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 32, 43, 52, and 53 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 2005-032), in correspondence.

4. 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 Parts 32, 43, 52, and 53

   Government procurement.

   Dated: April 1, 2008.

   Al Matera,

   Director, Office of Acquisition Policy.

   Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 32, 43, 52, and 53 as set forth below: 1. The authority citation for 48 CFR parts 32, 43, 52, and 53 continues to read as follows:

   Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42

   U.S.C. 2473(c).

   Page 19037

   PART 32--CONTRACT FINANCING 2. Amend Section 32.001 by adding, in alphabetical order, the definition ``Liquidate'' to read as follows: 32.001 Definitions.

   * * * * *

   Liquidate means to decrease a payment for an accepted supply item or service under a contract for the purpose of recouping financing payments previously paid to the contractor.

   * * * * * 3. Amend section 32.501-3 by revising paragraphs (a)(1) and (a)(3) to read as follows: 32.501-3 Contract price.

   (a) * * *

   (1) Under firm-fixed price contracts, the contract price is the current amount fixed by the contract plus the not-to-exceed amount for any unpriced modifications.

   * * * * *

   (3) Under a fixed-price incentive contract, the contract price is the target price plus the not-to-exceed amount of unpriced modifications. However, if the contractor's properly incurred costs exceed the target price, the contracting officer may provisionally increase the price up to the ceiling or maximum price.

   * * * * * 32.503-1 [Reserved] 4. Remove and reserve section 32.503-1. 5. Amend section 32.503-6 by revising paragraphs (a)(3), (f), and

   (g)(1)(i) to read as follows: 32.503-6 Suspension or reduction of payments.

   (a) * * *

   (3) In all cases, the contracting officer shall--

   (i) Act fairly and reasonably.

   (ii) Base decisions on substantial evidence.

   (iii) Document the contract file. Findings made under paragraph (c) of the Progress Payments clause shall be in writing.

   * * * * *

   (f) Fair value of undelivered work. Progress payments must be commensurate with the fair value of work accomplished in accordance with contract requirements. The contracting officer must adjust progress payments when necessary to ensure that the fair value of undelivered work equals or exceeds the amount of unliquidated progress payments. On loss contracts contracts, the application of a loss ratio as provided at paragraph (g) of this section constitutes this adjustment.

   (g) * * *

   (1) * * *

   (i) Revise the current contract price used in progress payment computations (the current ceiling price under fixed-price incentive contracts) to include the not-to-exceed amount for any pending change orders and unpriced orders.

   * * * * *

   PART 43--CONTRACT MODIFICATIONS 43.102 [Amended] 6. Amend section 43.102 by removing from paragraph (b) the word

   ``maximum'' and adding the word ``ceiling'' in its place.

   PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES 7. Amend section 52.232-16 by revising the date of the clause; by adding paragraph (a)(9); and by revising paragraphs (c)(5) and (g) to read as follows: 52.232-16 Progress Payments.

   * * * * *

   PROGRESS PAYMENTS (DATE)

   (a) * * *

   (9) The costs applicable to items delivered, invoiced, and accepted shall not include costs in excess of the contract price of the items.

   * * * * *

   (c) * * *

   (5) The fair value of the undelivered work is less than the amount of unliquidated progress payments for that work.

   * * * * *

   (g) Reports, forms, and access to records. (1) The Contractor shall promptly furnish reports, certificates, financial statements, and other pertinent information (including estimates to complete) reasonably requested by the Contracting Officer for the administration of this clause. Also, the Contractor shall give the

   Government reasonable opportunity to examine and verify the

   Contractor's books, records, and accounts.

   (2) The Contractor shall furnish estimates to complete that have been developed or updated within six months of the date of the progress payment request. The estimates to complete shall represent the Contractor's best estimate of total costs to complete all remaining contract work required under the contract. The estimates shall include sufficient detail to permit Government verification.

   (3) Each Contractor request for progress payment shall:

   (i) Be submitted on Standard Form 1443, Contractor's Request for

   Progress Payment, or the electronic equivalent as required by agency regulations, in accordance with the form instructions and the contract terms; and

   (ii) Include any additional supporting documentation requested by the Contracting Officer.

   * * * * *

   PART 53--FORMS 53.232 [Amended] 8. Amend section 53.232 by removing ``(10/82)'' and adding

   ``(Date)'' in its place; and by removing ``, as specified in 32.503.1''. 9. Revise section 53.301-1443 to read as follows: 53.301-1443 Contractor's Request for Progress Payments and Related

   Instructions.

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