General Services Administration Acquisition Regulation (GSAR); Unenforceable Commercial Supplier Agreement Terms, 34302-34308 [2016-12448]

Agencies

• General Services Administration

[Federal Register Volume 81, Number 104 (Tuesday, May 31, 2016)]
[Proposed Rules]
[Pages 34302-34308]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-12448]


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GENERAL SERVICES ADMINISTRATION

48 CFR Parts 502, 512, 513, 532, and 552

[GSAR Case 2015-G512; Docket No. 2016-0010; Sequence No. 1]
RIN 3090-AJ67


General Services Administration Acquisition Regulation (GSAR); 
Unenforceable Commercial Supplier Agreement Terms

AGENCY: Office of Acquisition Policy, General Services Administration 
(GSA).

ACTION: Proposed rule.

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SUMMARY: The General Services Administration (GSA) is proposing to 
amend the General Services Administration Acquisition Regulation (GSAR) 
to address common Commercial Supplier Agreement terms that are 
inconsistent with or create ambiguity with Federal Law.

DATES: Interested parties should submit written comments to the 
Regulatory Secretariat Division at one of the addresses shown below on 
or before August 1, 2016 to be considered in the formation of the final 
rule.

ADDRESSES: Submit comments in response to GSAR Case 2015-G512 by any of 
the following methods:
     Regulations.gov: https://www.regulations.gov. Submit 
comments via the Federal eRulemaking portal by searching for ``GSAR 
Case 2015-G512''. Select the link ``Comment Now'' that corresponds with 
GSAR Case 2015-G215. Follow the instructions provided on the screen. 
Please include your name, company name (if any), and ``GSAR Case 2015-
G512'' on all attached document(s).
     Mail: General Services Administration, Regulatory 
Secretariat Division (MVCB), 1800 F Street NW., 2nd Floor, ATTN: Ms. 
Flowers, Washington, DC 20405.
    Instructions: Please submit comments only and cite GSAR Case 2015-
G512, in all correspondence related to this case. All comments received 
will generally be posted without change to https://www.regulations.gov, 
including any personal and/or business confidential information 
provided. To confirm receipt of your comment(s), please check 
www.regulations.gov to verify posting (except allow 30 days for posting 
of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: For clarification about content, 
contact Ms. Janet Fry, General Services Acquisition Policy Division, by 
phone at 703-605-

[[Page 34303]]

3167 or by email at Janet.Fry@gsa.gov. For information pertaining to 
status or publication schedules, contact the Regulatory Secretariat 
Division at 202-501-4755. Please cite GSAR Case 2015-G512.

SUPPLEMENTARY INFORMATION: 

I. Background

A. Incompatibility of Commercial Supplier Agreements

    GSA defines Commercial Supplier Agreements as terms and conditions 
that are customarily offered to the public by vendors of supplies or 
services that meet the definition of ``commercial item'' and are 
intended to create a binding legal obligation on the end user. 
Commercial Supplier Agreements are particularly common in information 
technology acquisitions, including acquisitions of commercial computer 
software and commercial technical data, but they may apply to any 
supply or service.
    Customarily, commercial supplies and services are offered to the 
public under standard agreements that may take a variety of forms, 
including license agreements, terms of service (TOS), terms of sale or 
purchase, and similar agreements. These customary, standard Commercial 
Supplier Agreements typically contain terms and conditions that make 
sense when the purchaser is a private party but are inappropriate when 
the purchaser is the Federal Government.
    The existence of Federally-incompatible terms in standard 
Commercial Supplier Agreements has long been recognized in FAR 27.405-
3(b), which is limited to the acquisition of commercial computer 
software. This clause advises contracting officers to exercise caution 
when accepting a contractor's terms and conditions. The use of 
Commercial Supplier Agreements is not limited to information technology 
acquisitions; Commercial Supplier Agreements have become ubiquitous in 
a broad variety of contexts, from travel to telecommunications to 
financial services to building maintenance systems, including purchases 
below the simplified acquisition threshold.
    Discrepancies between Commercial Supplier Agreements and Federal 
law or the Government's needs create recurrent points of inconsistency. 
Below are several examples of incompatible clauses that are commonly 
found in Commercial Supplier Agreements:
     Jurisdiction or venue clauses may require that disputes be 
resolved in a particular state or Federal court. Such clauses conflict 
with the sovereign immunity of the U.S. Government and cannot apply to 
litigation where the U.S. Government is a defendant because those 
disputes must be heard either in U.S. District Court (28 U.S.C. 1346) 
or the U.S. Court of Federal Claims (28 U.S.C. 1491).
     Automatic renewal clauses may automatically renew or 
extend contracts unless affirmative action is taken by the Government. 
Such clauses that require the obligation of funds prior to 
appropriation violate the restrictions of the Anti-Deficiency Act (31 
U.S.C. 1341(a)(1)(B)).
     Termination clauses may allow the contractor to 
unilaterally terminate a contract if the Government is alleged to have 
breached the contract. Government contracts are subject to the Contract 
Disputes Act of 1978 (41 U.S.C. 601-613). The Contract Disputes Act 
requires a certain process for resolving disputes, including 
terminations, and that the ``Contractor shall proceed diligently with 
performance of this contract, pending final resolution'' under the 
terms of the FAR Disputes clause at 52.233-1.
    Additionally, the current order of precedence contained in the 
Commercial Items clause at FAR 52.212-4 is not clear on prevailing 
terms, and potentially allows Commercial Supplier Agreements to 
supersede the terms of Federal contracts, especially in those areas 
where Federal law is implicated indirectly. As a result, industry and 
Government representatives must spend significant time and resources 
negotiating and tailoring Commercial Supplier Agreements to comply with 
Federal law and to ensure both parties have agreement on the contract 
terms.

B. Value of Addressing Incompatible Commercial Supplier Agreements

    GSA has identified common illegal, improper or inappropriate 
Commercial Supplier Agreement terms that constitute the majority of the 
negotiated Commercial Supplier Agreement terms. The outcome of the 
negotiations regarding these identified terms is generally 
predetermined by rule of law, but GSA and contractors must spend 
significant time and resources to negotiate out these terms. By 
explicitly addressing common unenforceable terms within the Commercial 
Items clause at FAR 52.212-4 and clarifying prevailing terms in the 
order of precedence, it eliminates the need for negotiation on these 
identified terms, and makes clear to both parities the precedence of 
terms.
    This approach will decrease the time needed for legal review prior 
to contract formation and will significantly reduce costs to both the 
Government and contractors. GSA believes that such an approach will 
benefit contractors, including small business concerns by (1) 
decreasing proposal costs associated with negotiating the identified 
unenforceable Commercial Supplier Agreement terms; (2) facilitating 
faster procurement and contract lead times, therefore decreasing the 
time it takes for contractors to make a return on their investment; (3) 
reducing administrative costs for companies that maintain alternate 
Federally compliant Commercial Supplier Agreements; and (4) for small 
business concerns it levels the playing field with larger competitors 
since negotiations will only be required if the Commercial Supplier 
Agreements contains objectionable clauses outside of those already 
identified in proposed clause. Additionally, this approach ensures 
consistent application and understanding of these unenforceable terms.

C. GSA Class Deviation

    On July 31, 2015, GSA issued a class deviation to immediately 
address the order of precedence and Commercial Supplier Agreement terms 
that are incompatible with Federal law. The class deviation protects 
GSA and contractors by uniformly addressing common unacceptable terms, 
immediately reducing risk, reducing administrative cost and further 
streamlining the acquisition process for commercial-item supplies and 
services. Additionally the class deviation clarifies the precedence of 
terms to ensure both parties have a mutual understanding of the 
contract terms. For example, bilateral modifications to the commercial 
supplier agreements are only required for material changes to ensure 
the contracting officer is aware of and agrees to the changes.
    A supplement to the class deviation was issued on September 30, 
2015, to (1) reiterate that the change in the order of precedence 
protects GSA in the occasion where unilateral license updates could 
change government rights, and (2) clarify that Commercial Supplier 
Agreement terms can be negotiated except for the improper terms 
addressed in paragraph (w) of the GSAR clause 552.212-4. GSA refined 
the language in the class deviation while developing this proposed rule 
to further clarify (1) unauthorized obligations and other fees; (2) 
unilateral termination provisions; and (3) terms incorporated by 
reference. These issues are discussed in greater detail in Section II 
of this rule.

[[Page 34304]]

II. Discussion and Analysis

    GSA is proposing to amend the General Services Administration 
Acquisition Regulation (GSAR) to implement standard terms and 
conditions for the most common conflicting Commercial Supplier 
Agreement terms to minimize the need for the negotiation of the terms 
of Commercial Supplier Agreements on an individual basis. The proposed 
rule will add provisions to contracts making certain conflicting or 
inconsistent terms in a Commercial Supplier Agreement unenforceable, so 
long as an express exception is not authorized elsewhere by Federal 
statute. GSA is also proposing to amend the GSAR to modify the order of 
precedence contained in the Commercial Items clause (52.212-4) to make 
clear that all of the terms of the GSAR clause control in the event of 
a conflict with a Commercial Supplier Agreement unless both parties 
agree to specific terms during the course of negotiating the contract.
    Both of the above changes will be accomplished by revising guidance 
and clauses contained throughout the GSAR. The specific changes 
contained in the proposed rule are as follows:
     A definition for Commercial Supplier Agreements is added 
at GSAR 502.101.
     GSAR 512.216 is created and clarifies that paragraph (u) 
of the Commercial Items clause at 552.212-4 prevents violation of the 
Anti-Deficiency Act.
     GSAR 512.301 is updated to prescribe the use of the 
deviated Commercial Items clause at 552.212-4 in lieu of FAR 52.212-4.
     GSAR 513.202 is created and will automatically apply the 
clause at 552.232-39 into all purchases below the micro-purchase 
threshold.
     GSAR 513.302-5 is created and requires the inclusion of 
GSAR 552.232-39 and 552.232-78 in all acquisitions for supplies or 
services that are offered under a Commercial Supplier Agreement.
     GSAR 532.705 is created and clarifies the definition of 
supplier license agreements as used in the Unenforceability of 
Unauthorized Obligations clause at FAR 32.705.
     GSAR 532.706-3 is created and directs contracting officers 
to utilize the clause at GSAR 552.232-39 in lieu of FAR 52.232-39 and 
prescribes the use of the clause Commercial Supplier Agreements--
Unenforceable Clauses at 552.232-78.
     The Commercial Items clause at GSAR 552.212-4 is modified 
to include instructions to contracting officers on how to incorporate 
the change in language from FAR 52.212-4.
     The order of precedence contained in paragraph (s) of the 
Commercial Items clause at GSAR 552.212-4 is amended to ensure that all 
of the terms of GSAR 552.212-4 shall control over the terms of a 
Commercial Supplier Agreement by moving ``Addenda to this solicitation 
or contract, including any license agreements for computer software'' 
down two spaces in the order of precedence, behind ``Solicitation 
provisions as awarded if there is a solicitation'' and ``Other 
paragraphs of this clause.''
     Paragraph (u) of the Commercial Items clause at GSAR 
552.212-4 is amended to (1) reflect the new Commercial Supplier 
Agreement definition contained in GSAR 502.101, (2) to expand coverage 
to ``language or provision'' in addition to ``clause'' in order to 
ensure that all Commercial Supplier Agreement terms are covered, 
regardless of terminology utilized, and (3) to include future fees, 
penalties, interest and legal costs as unauthorized obligations in 
addition to indemnification.
     Paragraph (w) of the Commercial Items clause at GSAR 
552.212-4 is created to address the following commonplace unenforceable 
elements found in Commercial Supplier Agreements:
    [cir] Definition of contracting parties: Contract agreements are 
between the commercial supplier or licensor and the U.S. Government. 
Government employees or persons acting on behalf of the Government will 
not be bound in their personal capacity by the Commercial Supplier 
Agreement.
    [cir] Laws and disputes: Clauses that conflict with the sovereign 
immunity of the U.S. Government cannot apply to litigation where the 
U.S. Government is a defendant because those disputes must be heard 
either in U.S. District Court or the U.S. Court of Federal Claims. 
Commercial Supplier Agreement terms that require the resolution of a 
dispute in a forum or time period other than that expressly authorized 
by Federal law are deleted. Statutes of limitation on potential claims 
shall be governed by U.S. Government law.
    [cir] Continued Performance: Commercial suppliers may not 
unilaterally terminate or suspend a contract based upon a suspected 
breach of contract by the Government. Accepting terms that can be 
unilaterally terminated or revoked places the Government at risk of not 
receiving goods or services for money it has obligated on a contract or 
task order, if the price paid by the Government is non-refundable. This 
position is in violation of 31 U.S.C. 3324, which provides that payment 
under a contract may not exceed the value of a service or product 
already delivered. A license that is prematurely terminated outside of 
the regular dispute resolution procedures results in the Government not 
receiving the value of that license because the license is no longer 
delivered. The removal of the contractor's right to unilateral 
termination does not impair the contractor's ability to pursue 
remedies. It preserves all the legal remedies the contractor otherwise 
has under Federal law, including Contract Disputes Act claims. Remedies 
through the Contract Disputes Act or other applicable Federal statutes 
align with the continuing performance requirement set forth in 
subparagraph (d) Disputes.
    [cir] Arbitration; equitable or injunctive relief: A binding 
arbitration may not be enforced unless explicitly authorized by agency 
guidance or statute. Equitable remedies or injunctive relief such as 
attorney fees, cost or interest may only be awarded against the U.S. 
Government when expressly authorized by statute (e.g., Prompt Payment 
Act).
    [cir] Additional Terms: Incorporation of terms by reference is 
allowed provided the full text of terms is provided with the offer. 
Unilateral modifications to the Commercial Supplier Agreement after the 
time of award may be allowed to the extent that the modified terms do 
not materially change the Government's rights or obligations, increase 
the Government's prices, decrease the level of service provided, or 
limit any Government right addressed elsewhere in the contract. A 
bilateral contract modification is required in order for any of the 
above described changes to be enforceable against the Government.
    [cir] Automatic renewals: Due to Anti-Deficiency Act restrictions, 
automatic contract renewal clauses are impermissible. Any such 
Commercial Supplier Agreement clauses are unenforceable.
    [cir] Indemnity (contractor assumes control of proceedings): Any 
clause requiring that the commercial supplier or licensor control any 
litigation arising from the Government's use of the contractor's 
supplies or services is deleted. Such representation when the 
Government is a party is reserved by statute for the U.S. Department of 
Justice.
    [cir] Audits (automatic liability for payment): Discrepancies found 
during an audit must comply with the invoicing procedures from the 
underlying contract. Disputed charges

[[Page 34305]]

must be resolved through the Disputes clause. Any audits requested by 
the commercial supplier or licensor will be performed at supplier or 
licensor's expense.
    [cir] Taxes or surcharges: Any taxes or surcharges that will be 
passed along to the Government will be governed by the terms of the 
underlying contract. The cognizant contracting officer must make a 
determination of applicability of taxes whenever such a request is 
made.
    [cir] Assignment of Commercial Supplier Agreement or Government 
contract by supplier: The contract, Commercial Supplier Agreement, 
party rights and party obligations may not be assigned or delegated 
without express Government approval. Payment to a third party financial 
institution may still be reassigned.
    [cir] Confidentiality of Commercial Supplier Agreement terms and 
conditions: The content of the Commercial Supplier Agreement and the 
Federal Supply Schedule list price (if applicable) may not be deemed 
confidential. The Government may retain other marked confidential 
information as required by law, regulation or agency guidance, but will 
appropriately guard such confidential information.
     GSAR 552.232-78 is created and addresses the same common 
unenforceable Commercial Supplier Agreement terms addressed in GSAR 
552.212-4(w) described above.
     GSAR 552.232-39 is created to amended the language of FAR 
52.232-39 to reflect the definition of Commercial Supplier Agreements 
contained at GSAR 502.101, to expand coverage to ``language or 
provision'' in addition to ``clause'' in order to ensure that all 
Commercial Supplier Agreement terms are covered, regardless of 
terminology utilized, and to include future fees, penalties, interest 
and legal costs as unauthorized obligations in addition to 
indemnification.
    This proposed rule will reduce risk by uniformly addressing common 
unacceptable Commercial Supplier Agreement terms, facilitate efficiency 
and effectiveness in the contracting process by reducing the 
administrative burden for the Government and industry, and promote 
competition by reducing barriers to industry, particularly for small 
businesses.

III. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This rule is not a major rule 
under 5 U.S.C. 804.

IV. Regulatory Flexibility Act

    The change may 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. The analysis is summarized as 
follows:

    This effort is expected to reduce the overall burden on small 
entities by reducing the amount of time and resources required to 
negotiate Commercial Supplier Agreements. GSA believes that such an 
approach will disproportionately benefit small business concerns 
since they are less likely to retain in-house counsel and the GSAR 
revision will reduce or eliminate the costs associated with the 
negotiation of the identified unenforceable elements. Furthermore, 
this approach will allow small businesses that do not have 
Commercial Supplier Agreements tailored to Federal Government 
procurements to potentially utilize their otherwise compliant, 
standard Commercial Supplier Agreements when conducting business 
with the Government.

    The Regulatory Secretariat Division will be submitting a copy of 
the Initial Regulatory Flexibility Analysis (IRFA) to the Chief Counsel 
for Advocacy of the Small Business Administration. A copy of the IRFA 
may be obtained from the Regulatory Secretariat Division. GSA invites 
comments from small business concerns and other interested parties on 
the expected impact of this proposed rule on small entities.
    GSA will also consider comments from small entities concerning the 
existing regulations in subparts affected by this rule in accordance 
with 5 U.S.C. 610. Interested parties must submit such comments 
separately and should cite 5 U.S.C. 610 (GSAR Case 2015-G512) in 
correspondence.

V. Paperwork Reduction Act

    The proposed rule does not contain any information collection 
requirements that require the approval of the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 502, 512, 513, 532, and 552

    Government procurement.

    Dated: May 20, 2016.
Jeffrey A. Koses,
Senior Procurement Executive, Office of Acquisition Policy, Office of 
Government-wide Policy, General Services Administration.
    Therefore, GSA proposes to amend 48 CFR parts 502, 512, 513, 532, 
and 552 as set forth below:

0
1. Add part 502 to read as follows:

PART 502--DEFINITIONS OF WORDS AND TERMS

Subpart 502.1--Definitions
502.101 Definitions.

    Authority: 40 U.S.C. 121(c).

Subpart 502.1--Definitions


502.101   Definitions.

    Commercial supplier agreements means terms and conditions 
customarily offered to the public by vendors of supplies or services 
that meet the definition of ``commercial item'' set forth in FAR 2.101 
and intended to create a binding legal obligation on the end user. 
Commercial supplier agreements are particularly common in information 
technology acquisitions, including acquisitions of commercial computer 
software and commercial technical data, but they may apply to any 
supply or service. The term applies--
    (1) Regardless of the format or style of the document. For example, 
a commercial supplier agreement may be styled as standard terms of sale 
or lease, Terms of Service (TOS), End User License Agreement (EULA), or 
another similar legal instrument or agreement, and may be presented as 
part of a proposal or quotation responding to a solicitation for a 
contract or order;
    (2) Regardless of the media or delivery mechanism used. For 
example, a commercial supplier agreement may be presented as one or 
more paper documents or may appear on a computer or other electronic 
device screen during a purchase, software installation, other product 
delivery, registration for a service, or another transaction.

PART 512--ACQUISITION OF COMMERCIAL ITEMS

0
2. The authority citation for part 512 is revised to read as follows:

    Authority: 40 U.S.C. 121(c).

0
3. Add subpart 512.2, consisting of 512.216, to read as follows:

[[Page 34306]]

Subpart 512.2--Special Requirements for the Acquisition of 
Commercial Items


512.216   Unenforceability of unauthorized obligations.

    GSA has a deviation to FAR 12.216 for this section to read as 
follows:
    For commercial contracts, supplier license agreements are referred 
to as commercial supplier agreements (defined in 502.101). Paragraph 
(u) of clause 552.212-4 prevents violations of the Anti-Deficiency Act 
(31 U.S.C. 1341) for supplies or services acquired subject to a 
commercial supplier agreement.
0
4. Amend section 512.301 by adding paragraph (e) to read as follows:


512.301   Solicitation provisions and contract clauses for the 
acquisition of commercial items.

* * * * *
    (e) GSA has a deviation to revise certain paragraphs of FAR clause 
52.212-4. Use clause 552.212-4 Contract Terms and Conditions--
Commercial Items (FAR DEVIATION), for acquisitions of commercial items 
in lieu of FAR 52.212-4. The contracting officer may tailor this clause 
in accordance with FAR 12.302 and GSAM 512.302.
0
5. Add part 513 to read as follows:

PART 513--SIMPLIFIED ACQUISITION PROCEDURES

Subpart 513.2--Actions At or Below the Micro-Purchase Threshold
513.202 Unenforceability of unauthorized obligations in micro-
purchases.

Subpart 513.3--Simplified Acquisition Methods


513.302-5   Clauses.

    Authority: 40 U.S.C. 121(c).

Subpart 513.2--Actions At or Below the Micro-Purchase Threshold


513.202   Unenforceability of unauthorized obligations in micro-
purchases.

    Clause 552.232-39, Unenforceability of Unauthorized Obligations 
(FAR DEVIATION), will automatically apply to any micro-purchase in lieu 
of FAR 52.232-39 for supplies and services acquired subject to a 
commercial supplier agreement (as defined in 502.101).

Subpart 513.3--Simplified Acquisition Methods


513.302-5   Clauses.

    Where the supplies or services are offered under a commercial 
supplier agreement (as defined in 502.101), the purchase order or 
modification shall incorporate clause 552.232-39, Unenforceability of 
Unauthorized Obligations (FAR DEVIATION), in lieu of FAR 52.232-39, and 
clause 552.232-78, Commercial Supplier Agreements-Unenforceable 
Clauses.

PART 532--CONTRACT FINANCING

0
6. The authority citation for 48 CFR part 532 continues to read as 
follows:

    Authority: 40 U.S.C. 121(c).


0
7. Add subpart 532.7, consisting of 532.705 and 532.706-3, to read as 
follows:

Subpart 532.7--Contract Funding


532.705   Unenforceability of unauthorized obligations.

    Supplier license agreements defined in FAR 32.705 are equivalent to 
commercial supplier agreements defined in 502.101.


532.706-3   Clause for unenforceability of unauthorized obligations.

    (a) The contracting officer shall utilize the clause at 552.232-39, 
Unenforceability of Unauthorized Obligations (FAR DEVIATION) in all 
solicitations and contracts in lieu of FAR 52.232-39.
    (b) The contracting officer shall utilize the clause at 552.232-78, 
Commercial Supplier Agreements--Unenforceable Clauses, in all 
solicitations and contracts (including orders) when not using FAR part 
12.

PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
8. The authority citation for 48 CFR part 552 continues to read as 
follows:

    Authority: 40 U.S.C. 121(c).

0
9. Revise section 552.212-4 to read as follows.


552.212-4   Contract Terms and Conditions--Commercial Items (FAR 
DEVIATION).

    As prescribed in 512.301(e), replace paragraphs (g)(2), (s), and 
(u) of FAR clause 52.212-4. Also, add paragraph (w) to FAR clause 
52.212-4.

Contract Terms and Conditions--Commercial Items (FAR DEVIATION) (Date)

    (g)(2) The due date for making invoice payments by the 
designated payment office is the later of the following two events:
    (i) The 10th day after the designated billing office receives a 
proper invoice from the Contractor. If the designated billing office 
fails to annotate the invoice with the date of receipt at the time 
of receipt, the invoice payment due date shall be the 10th day after 
the date of the Contractor's invoice; provided the Contractor 
submitted a proper invoice and no disagreement exists over quantity, 
quality, or Contractor compliance with contract requirements.
    (ii) The 10th day after Government acceptance of supplies 
delivered or services performed by the Contractor.
    (s) Order of precedence. Any inconsistencies in this 
solicitation or contract shall be resolved by giving precedence in 
the following order:
    (1) The schedule of supplies/services.
    (2) The Assignments, Disputes, Payments, Invoice, Other 
Compliances, Compliance with Laws Unique to Government Contracts, 
Unauthorized Obligations, and Commercial Supplier Agreements-
Unenforceable Clauses paragraphs of this clause.
    (3) The clause at 52.212-5.
    (4) Solicitation provisions if this is a solicitation.
    (5) Other paragraphs of this clause.
    (6) Addenda to this solicitation or contract, including any 
license agreements for computer software.
    (7) The Standard Form 1449.
    (8) Other documents, exhibits, and attachments.
    (9) The specification.
    (u) Unauthorized Obligations. (1) Except as stated in paragraph 
(u)(2) of this clause, when any supply or service acquired under 
this contract is subject to any commercial supplier agreement (as 
defined in 502.101) that includes any language, provision, or clause 
requiring the Government to pay any future fees, penalties, 
interest, legal costs or to indemnify the Contractor or any person 
or entity for damages, costs, fees, or any other loss or liability 
that would create an Anti-Deficiency Act violation (31 U.S.C. 1341), 
the following shall govern:
    (i) Any such language, provision, or clause is unenforceable 
against the Government.
    (ii) Neither the Government nor any Government authorized end 
user shall be deemed to have agreed to such clause by virtue of it 
appearing in the commercial supplier agreement. If the commercial 
supplier agreement is invoked through an ``I agree'' click box or 
other comparable mechanism (e.g., ``click-wrap'' or ``browse-wrap'' 
agreements), execution does not bind the Government or any 
Government authorized end user to such clause.
    (iii) Any such language, provision, or clause is deemed to be 
stricken from the commercial supplier agreement.
    (2) Paragraph (u)(1) of this clause does not apply to 
indemnification or any other payment by the Government that is 
expressly authorized by statute and specifically authorized under 
applicable agency regulations and procedures.
    (w) Commercial supplier agreements--unenforceable clauses. When 
any supply or service acquired under this contract is subject to a 
commercial supplier agreement (as defined in 502.101), the following 
language shall be deemed incorporated into the commercial supplier 
agreement. As used herein, ``this agreement'' means the commercial 
supplier agreement:
    (1) Notwithstanding any other provision of this agreement, when 
the end user is an agency or instrumentality of the U.S. Government, 
the following shall apply:

[[Page 34307]]

    (i) Applicability. This agreement is a part of a contract 
between the commercial supplier and the U.S. Government for the 
acquisition of the supply or service that necessitates a license 
(including all contracts, task orders, and delivery orders under FAR 
Part 12).
    (ii) End user. This agreement shall bind the ordering activity 
as end user but shall not operate to bind a Government employee or 
person acting on behalf of the Government in his or her personal 
capacity.
    (iii) Law and disputes. This agreement is governed by Federal 
law.
    (A) Any language purporting to subject the U.S. Government to 
the laws of a U.S. state, U.S. territory, district, or municipality, 
or a foreign nation, except where Federal law expressly provides for 
the application of such laws, is hereby deleted.
    (B) Any language requiring dispute resolution in a specific 
forum or venue that is different from that prescribed by applicable 
Federal law is hereby deleted.
    (C) Any language prescribing a different time period for 
bringing an action than that prescribed by applicable Federal law in 
relation to a dispute is hereby deleted.
    (iv) Continued performance. The supplier or licensor shall not 
unilaterally revoke, terminate or suspend any rights granted to the 
Government except as allowed by this contract. If the supplier or 
licensor believes the ordering activity to be in breach of the 
agreement, it shall pursue its rights under the Contract Disputes 
Act or other applicable Federal statute while continuing performance 
as set forth in paragraph (d) (Disputes).
    (v) Arbitration; equitable or injunctive relief. In the event of 
a claim or dispute arising under or relating to this agreement, a 
binding arbitration shall not be used unless specifically authorized 
by agency guidance, and equitable or injunctive relief, including 
the award of attorney fees, costs or interest, may be awarded 
against the U.S. Government only when explicitly provided by statute 
(e.g., Prompt Payment Act or Equal Access to Justice Act).
    (vi) Additional terms. (A) This commercial supplier agreement 
may incorporate additional terms by reference, provided that the 
full text of the terms are provided with the offer.
    (B) After award, the contractor may unilaterally revise terms 
provided:
    (1) Terms do not materially change government rights or 
obligations;
    (2) Terms do not increase government prices;
    (3) Terms do not decrease overall level of service; and
    (4) Terms do not limit any other Government right addressed 
elsewhere in this contract.
    (C) The order of precedence clause of this contract is not 
enforceable against the government, notwithstanding any software 
license terms unilaterally revised subsequent to award that is 
inconsistent with any material term or provision of this contract.
    (vii) No automatic renewals. If any license or service tied to 
periodic payment is provided under this agreement (e.g., annual 
software maintenance or annual lease term), such license or service 
shall not renew automatically upon expiration of its current term 
without prior express Government approval.
    (viii) Indemnification. Any clause of this agreement requiring 
the commercial supplier or licensor to defend or indemnify the end 
user is hereby amended to provide that the U.S. Department of 
Justice has the sole right to represent the United States in any 
such action, in accordance with 28 U.S.C. 516.
    (ix) Audits. Any clause of this agreement permitting the 
commercial supplier or licensor to audit the end user's compliance 
with this agreement is hereby amended as follows:
    (A) Discrepancies found in an audit may result in a charge by 
the commercial supplier or licensor to the ordering activity. Any 
resulting invoice must comply with the proper invoicing requirements 
specified in the underlying Government contract or order.
    (B) This charge, if disputed by the ordering activity, will be 
resolved through the Disputes clause at 522.212-4(d); no payment 
obligation shall arise on the part of the ordering activity until 
the conclusion of the dispute process.
    (C) Any audit requested by the contractor will be performed at 
the contractor's expense, without reimbursement by the Government.
    (x) Taxes or surcharges. Any taxes or surcharges which the 
commercial supplier or licensor seeks to pass along to the 
Government as end user will be governed by the terms of the 
underlying Government contract or order and, in any event, must be 
submitted to the Contracting Officer for a determination of 
applicability prior to invoicing unless specifically agreed to 
otherwise in the Government contract.
    (xi) Non-assignment. This agreement may not be assigned, nor may 
any rights or obligations thereunder be delegated, without the 
Government's prior approval, except as expressly permitted under 
subparagraph (b) of this clause at 552.212-4.
    (xii) Confidential information. If this agreement includes a 
confidentiality clause, such clause is hereby amended to state that 
neither the agreement nor the Federal Supply Schedule price list 
shall be deemed ``confidential information.'' Issues regarding 
release of ``unit pricing'' will be resolved consistent with the 
Freedom of Information Act. Notwithstanding anything in this 
agreement to the contrary, the Government may retain any 
confidential information as required by law, regulation or its 
internal document retention procedures for legal, regulatory or 
compliance purposes; provided, however, that all such retained 
confidential information will continue to be subject to the 
confidentiality obligations of this agreement.
    (2) If any language, provision, or clause of this agreement 
conflicts or is inconsistent with the preceding paragraph (w)(1), 
the language, provisions, or clause of paragraph (w)(1) shall 
prevail to the extent of such inconsistency.


(End of clause)

0
10. Add section 552.232-39 to read as follows:


552.232-39   Unenforceability of Unauthorized Obligations (FAR 
DEVIATION).

    As prescribed in 513.302-5 and 532.706-3, insert the following 
clause:

Unenforceability of Unauthorized Obligations (FAR DEVIATION) (Date)

    (a) Except as stated in paragraph (b) of this clause, when any 
supply or service acquired under this contract is subject to any 
commercial supplier agreement (as defined in 502.101) that includes 
any language, provision, or clause requiring the Government to pay 
any future fees, penalties, interest, legal costs or to indemnify 
the Contractor or any person or entity for damages, costs, fees, or 
any other loss or liability that would create an Anti-Deficiency Act 
violation (31 U.S.C. 1341), the following shall govern:
    (1) Any such language, provision, or clause is unenforceable 
against the Government.
    (2) Neither the Government nor any Government authorized end 
user shall be deemed to have agreed to such language, provision, or 
clause by virtue of it appearing in the commercial supplier 
agreement. If the commercial supplier agreement is invoked through 
an ``I agree'' click box or other comparable mechanism (e.g., 
``click-wrap'' or ``browse-wrap'' agreements), execution does not 
bind the Government or any Government authorized end user to such 
clause.
    (3) Any such language, provision, or clause is deemed to be 
stricken from the commercial supplier agreement.
    (b) Paragraph (a) of this clause does not apply to 
indemnification or any other payment by the Government that is 
expressly authorized by statute and specifically authorized under 
applicable agency regulations and procedures.


(End of clause)

0
11. Add section 552.232-78 to read as follows:


552.232-78  Commercial Supplier Agreements--Unenforceable Clauses.

    As prescribed in 513.302-5 and 532.706-3 insert the following 
clause:

Commercial Supplier Agreements--Unenforceable Clauses (Date)

    (a) When any supply or service acquired under this contract is 
subject to a commercial supplier agreement, the following language 
shall be deemed incorporated into the commercial supplier agreement. 
As used herein, ``this agreement'' means the commercial supplier 
agreement:
    (1) Notwithstanding any other provision of this agreement, when 
the end user is an agency or instrumentality of the U.S. Government, 
the following shall apply:
    (i) Applicability. This agreement is part of a contract between 
the commercial supplier and the U.S. Government for the acquisition 
of the supply or service that necessitates a license (including all 
contracts, task orders, and delivery orders under FAR Parts 13, 14 
or 15).
    (ii) End user. This agreement shall bind the ordering activity 
as end user but shall not

[[Page 34308]]

operate to bind a Government employee or person acting on behalf of 
the Government in his or her personal capacity.
    (iii) Law and disputes. This agreement is governed by Federal 
law.
    (A) Any language purporting to subject the U.S. Government to 
the laws of a U.S. state, U.S. territory, district, or municipality, 
or foreign nation, except where Federal law expressly provides for 
the application of such laws, is hereby deleted.
    (B) Any language requiring dispute resolution in a specific 
forum or venue that is different from that prescribed by applicable 
Federal law is hereby deleted.
    (C) Any language prescribing a different time period for 
bringing an action than that prescribed by applicable Federal law in 
relation to a dispute is hereby deleted.
    (iv) Continued performance. The supplier or licensor shall not 
unilaterally revoke, terminate or suspend any rights granted to the 
Government except as allowed by this contract. If the supplier or 
licensor believes the ordering activity to be in breach of the 
agreement, it shall pursue its rights under the Contract Disputes 
Act or other applicable Federal statute while continuing performance 
as set forth in subparagraph (d) (Disputes).
    (v) Arbitration; equitable or injunctive relief. In the event of 
a claim or dispute arising under or relating to this agreement, a 
binding arbitration shall not be used unless specifically authorized 
by agency guidance, and equitable or injunctive relief, including 
the award of attorney fees, costs or interest, may be awarded 
against the U.S. Government only when explicitly provided by statute 
(e.g., Prompt Payment Act or Equal Access to Justice Act).
    (vi) Additional terms. (A) This commercial supplier agreement 
may incorporate additional terms by reference, provided that the 
full text of the terms are provided with the offer.
    (B) After award the contractor may unilaterally revise terms 
provided:
    (1) Terms do not materially change government rights or 
obligations; and
    (2) Terms do not increase government prices; and
    (3) Terms do not decrease overall level of service; and
    (4) Terms do not limit any other Government right addressed 
elsewhere in this contract.
    (C) The order of precedence clause of this contract 
notwithstanding, any software license terms unilaterally revised 
subsequent to award that is inconsistent with any material term or 
provision of this contract is not enforceable against the 
government.
    (vii) No automatic renewals. If any license or service tied to 
periodic payment is provided under this agreement (e.g., annual 
software maintenance or annual lease term), such license or service 
shall not renew automatically upon expiration of its current term 
without prior express Government approval.
    (viii) Indemnification. Any clause of this agreement requiring 
the commercial supplier or licensor to defend or indemnify the end 
user is hereby amended to provide that the U.S. Department of 
Justice has the sole right to represent the United States in any 
such action, in accordance with 28 U.S.C. 516.
    (ix) Audits. Any clause of this agreement permitting the 
commercial supplier or licensor to audit the end user's compliance 
with this agreement is hereby amended as follows:
    (A) Discrepancies found in an audit may result in a charge by 
the commercial supplier or licensor to the ordering activity. Any 
resulting invoice must comply with the proper invoicing requirements 
specified in the underlying Government contract or order.
    (B) This charge, if disputed by the ordering activity, will be 
resolved through the Disputes clause at 52.233-1; no payment 
obligation shall arise on the part of the ordering activity until 
the conclusion of the dispute process.
    (C) Any audit requested by the contractor will be performed at 
the contractor's expense, without reimbursement by the Government.
    (x) Taxes or surcharges. Any taxes or surcharges which the 
commercial supplier or licensor seeks to pass along to the 
Government as end user will be governed by the terms of the 
underlying Government contract or order and, in any event, must be 
submitted to the Contracting Officer for a determination of 
applicability prior to invoicing unless specifically agreed to 
otherwise in the Government contract.
    (xi) Non-assignment. This agreement may not be assigned, nor may 
any rights or obligations thereunder be delegated, without the 
Government's prior approval, except as expressly permitted under the 
clause at 52.232-23, Assignment of Claims.
    (xii) Confidential information. If this agreement includes a 
confidentiality clause, such clause is hereby amended to state that 
neither the agreement nor the Federal Supply Schedule price list 
shall be deemed ``confidential information.'' Issues regarding 
release of ``unit pricing'' will be resolved consistent with the 
Freedom of Information Act. Notwithstanding anything in this 
agreement to the contrary, the Government may retain any 
confidential information as required by law, regulation or its 
internal document retention procedures for legal, regulatory or 
compliance purposes; provided, however, that all such retained 
confidential information will continue to be subject to the 
confidentiality obligations of this agreement.
    (2) If any language, provision or clause of this agreement 
conflicts or is inconsistent with the preceding subparagraph (a)(1), 
the language, provisions, or clause of subparagraph (a)(1) shall 
prevail to the extent of such inconsistency.


(End of clause)

[FR Doc. 2016-12448 Filed 5-27-16; 8:45 am]
 BILLING CODE 6820-61-P