General Services Administration Acquisition Regulation; Unenforceable Commercial Supplier Agreement Terms, 7631-7636 [2018-03350]
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Federal Register / Vol. 83, No. 36 / Thursday, February 22, 2018 / Rules and Regulations
station at least 30 days prior to either
deleting from carriage or repositioning
that station. Such notification shall also
be provided to subscribers of the cable
system.
20. Amend § 76.1602 by revising the
introductory text to paragraph (b) to
read as follows:
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notification shall be made on FCC Form
321. Such notification shall include:
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Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2018–03547 Filed 2–21–18; 8:45 am]
BILLING CODE 6712–01–P
§ 76.1602 Customer service—general
information.
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(b) The cable operator shall provide
written information on each of the
following areas at the time of
installation of service, at least annually
to all subscribers, and at any time upon
request:
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GENERAL SERVICES
ADMINISTRATION
§ 76.1610
General Services Administration
Acquisition Regulation; Unenforceable
Commercial Supplier Agreement
Terms
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[Amended]
21. Amend § 76.1610 by removing
paragraphs (f) and (g).
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22. Revise § 76.1701(d) to read as
follows:
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§ 76.1701
Political file.
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(d) Where origination cablecasting
material is a political matter or matter
involving the discussion of a
controversial issue of public importance
and a corporation, committee,
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furnishing the matter, the system
operator shall, in addition to making the
announcement required by § 76.1615,
require that a list of the chief executive
officers or members of the executive
committee or of the board of directors of
the corporation, committee, association
or other unincorporated group, or other
entity shall be made available for public
inspection at the local office of the
system. Such lists shall be kept and
made available for two years.
23. Revise the introductory text to
§ 76.1804 to read as follows:
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§ 76.1804 Aeronautical frequencies
notification: leakage monitoring (CLI).
An MVPD shall notify the
Commission before transmitting any
digital signal with average power
exceeding 10¥5 watts across a 30 kHz
bandwidth in a 2.5 millisecond time
period, or for other signal types, any
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period equal to or greater than 10¥4
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distribution system on any new
frequency or frequencies in the
aeronautical radio frequency bands
(108–137 MHz, 225–400 MHz). The
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[GSAR Change 83; GSAR Case 2015–G512;
Docket No. 2016–0010; Sequence No. 2]
RIN 3090–AJ67
Office of Acquisition Policy,
General Services Administration (GSA).
ACTION: Final rule.
AGENCY:
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VerDate Sep<11>2014
48 CFR Parts 502, 512, 513, 532, and
552
GSA is amending 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: Effective: February 22, 2018.
FOR FURTHER INFORMATION CONTACT: Ms.
Janet Fry, Senior Policy Advisor, GSA
Acquisition Policy Division, at 703–
605–3167 or janet.fry@gsa.gov. For
information pertaining to status or
publication schedules, contact the
Regulatory Secretariat at 202–501–4755.
Please cite GSAR Case 2015–G512.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Background
GSA published a proposed rule in the
Federal Register at 81 FR 34302 on May
31, 2016, to amend the GSAR and
address common commercial supplier
agreement terms that are inconsistent
with or create ambiguity with Federal
Law.
Standard commercial supplier
agreements contain terms and
conditions that make sense when the
purchaser is a private party but are
inappropriate when the purchaser is the
Federal Government. Discrepancies
between commercial supplier
agreements and Federal law or the
Government’s needs create recurrent
points of inconsistency. As a result,
industry and Government
representatives must spend significant
time and resources negotiating and
tailoring commercial supplier
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agreements to comply with Federal law
and to ensure both parties have
agreement on the contract terms.
Explicitly addressing common
unenforceable terms eliminates the need
for negotiation on these identified
terms.
This approach will: (1) Decrease
proposal costs associated with
negotiating the identified unenforceable
commercial supplier agreement terms;
(2) facilitate faster procurement and
contract lead times, therefore decreasing
the time it takes for contractors to make
a return on their investment; (3) reduce
administrative costs for companies that
maintain alternate Federally compliant
commercial supplier agreements; and
(4) for small business concerns, level the
playing field with larger competitors
since negotiations will only be required
if the commercial supplier agreements
contain objectionable clauses outside of
those already identified in the GSAR
clause. Lastly, this approach ensures
consistent application and
understanding of these unenforceable
terms, potentially reducing unnecessary
legal costs.
II. Discussion of Proposed Rule
Two respondents submitted
comments on the proposed rule. The
General Services Administration has
reviewed the comments in the
development of the final rule. A
discussion of the comments and the
changes made to the rule as a result of
those comments are provided as
follows:
A. Summary of Significant Changes
This final rule makes the following
significant changes from the proposed
rule:
• GSAR 552.212–4(s)—Reverts the
order of precedence to move ‘‘Addenda
to the solicitation or contract, including
any license agreements for computer
software’’ back to number 4, and
‘‘Solicitation provisions of the
solicitation’’ and ‘‘Other paragraphs of
the clause’’ back to number 5 and 6,
respectively. Additionally, language was
added to clarify the Commercial
Supplier Agreements—Unenforceable
Clauses provision takes precedence over
the commercial supplier agreement
terms and conditions.
• GSAR 552.212–4(w)(1)(vi)—Deletes
the requirement for providing full text
terms with the offer, adds a definition
of a material change, and adds
clarification on when a commercial
supplier agreement must be bilaterally
modified in the contract.
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B. Analysis of Public Comments
Public comments are grouped into
categories in order to provide
clarification and to better respond to the
issues raised.
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1. Order of Precedence
Comment: Both respondents
addressed concerns with the change to
the order of precedence in paragraph(s)
of GSAR clause 552.212–4 which places
commercial supplier agreements in a
lower position. The commenters stated
that this could result in terms, which
are not required by law or regulation,
taking precedence over the standard
commercial terms in a commercial
supplier agreement. The commenters
provided the example of a non-standard
warranty contained in a solicitation
provision or in 552.212–4 paragraph (o),
Warranty, taking precedence over a
company’s standard commercial
warranty contained in their commercial
supplier agreement. Additional
examples included title and ownership
of software intellectual property (‘‘IP’’),
warranty and exclusion of implied
warranties, limitations of liability and
exclusive remedies, and IP
indemnification. One respondent stated
the change in precedence creates a
preference for Government terms and
conditions that appears to contradict the
language of existing statute (Federal
Acquisition Streamlining Act) and
regulation (Federal Acquisition
Regulation (FAR) part 12).
Response: The intent of the change in
the order of precedence was (1) to
ensure the Commercial Supplier
Agreement—Unenforceable Clauses
provisions take precedence over the
standard commercial supplier
agreements and (2) to provide clarity
that awarded terms (i.e. those agreed to
by both parties during contract
formation), including the negotiated and
awarded commercial supplier
agreement, take precedence to unilateral
changes to commercial supplier
agreements made by the contractor. GSA
reviewed the unintended impacts
identified by the respondents and agrees
that there are better ways to solve the
problem.
Instead, GSA addressed intent (1) by
adding language to 552.212–4(s)(4)to
clarify that the Commercial Supplier
Agreement—Unenforceable Clauses
provisions take precedence over any
commercial supplier agreement.
GSA addressed intent (2) by adding a
new subparagraph to 552.212–
4(w)(1)(vi) to clearly state that material
changes to a commercial supplier
agreement after award must be
bilaterally modified into the contract to
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be enforceable against the Government.
Additionally, subparagraph (C) was
updated to more clearly state that
unilateral revisions that are found to be
inconsistent with a material term of the
contract are not enforceable against the
Government (i.e., awarded commercial
supplier terms will take precedence
over terms updated unilaterally).
Equivalent changes were made to the
language at GSAR 552.232–78.
2. Full Text Terms
Comment: Both respondents voiced
concerns about the burden on
contractors to provide full text for all
terms. Commercial supplier agreements
may include terms by reference which
can be voluminous. The terms may
change at any time and providing full
text would unduly delay awards and
modifications. One respondent stated
the requirement to submit the terms in
writing seemed to imply they will be
fixed terms, and that providing full text
terms is not a commercial practice.
Response: The intent of this language
was to ensure that the Government fully
understands the terms and conditions
agreed upon during contract formation.
As stated in the public comments,
referenced terms on a website can be
changed at any time, which is
problematic during contract formation
for the Government. The time between
an offer and award of a contract could
be several weeks. There is no assurance
that the referenced terms reviewed early
in contract formation have not changed.
When awarding contracts, contracting
officers must be fully aware of the terms
that will bind the Government, which is
why static full text terms were
proposed.
After consideration of the public
comments, GSA decided that
maintaining the commercial practice of
providing the commercial supplier
agreement with referenced terms and by
improving internal controls for intake
and management of commercial
supplier agreements could reduce
Government risk and accomplish the
intended outcome.
For this reason, GSA has deleted the
language in 552.212–4(w)(1)(vi)(A)
which required full text for all terms.
An equivalent change was made to the
language at GSAR 552.232–78. GSA will
add supplementary guidance in the
General Services Acquisition Manual to
clarify the contracting officer’s
responsibilities regarding commercial
supplier agreement reviews,
negotiations and documentation.
3. Enforceability of Unilateral Revisions
Comment: One respondent stated the
intent of 552.212–4(w)(1)(vi)(C) is
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unclear. If the intent is the order of
precedence clause of the contract is not
enforceable with respect to any software
license terms unilaterally revised
subsequent to award, then the
respondent recommends the Paragraph
be revised for purposes of clarity.
Response: The intent of the clause is
to ensure material changes to the term
of the contract are agreed to by both
parties. 552.212–4(w)(1)(vi)(C) has been
revised to more clearly state the intent,
and an additional paragraph has been
added to require bilateral modifications
for material changes to commercial
supplier agreements after contract
award.
4. Significant Regulatory Action
Comment: One respondent stated ‘‘the
proposed rule is a significant action,
due to the change in the order of
precedence, which should be subject to
OMB review’’ pursuant to Executive
Order 12866.
Response: As previously addressed,
the order of precedence will be reverted
back to the order enumerated in the
FAR 52.212–4 based on the unintended
impacts brought to light by the
respondents. Therefore, this rule is not
a significant change, and is not subject
to Office of Management and Budget
(OMB) review pursuant to Executive
Order 12866.
5. Burdensome Information Collection
Comment: One respondent believes
the requirement to provide full text of
terms is an unnecessary and
burdensome information collection and
subject to the Paperwork Reduction Act
(PRA).
Response: GSA has removed the
requirement to provide all full text
terms and therefore this rule is not
subject to the PRA.
C. Other Changes
This final rule makes the following
additional changes from the proposed
rule:
• GSAR 512.301, Solicitation
provisions and contract clauses for the
acquisition of commercial items, a
conforming change is made to
subparagraph (e) to clarify the
applicability of the deviated language to
FAR 52.212–4 Alternate I.
• GSAR 552.212–4(w)(1)(ix), Audits,
a typographical error in the disputes
clause reference was fixed.
• GSAR 552.232–78, Commercial
Supplier Agreements—Unenforceable
Clauses, is renumbered and amended to
make conforming changes.
• GSAR 552.232–78(a)(4), previously
(a)(1)(iv), Continued performance, is
revised to correct the reference of the
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disputes clause from ‘‘subparagraph (d)
(Disputes)’’ to ‘‘FAR 52.233–1,
Disputes.’’
• GSAR 552.232–78(a)(6), Updating
terms, previously (a)(1)(vi), Additional
terms, is updated to reflect equivalent
text changes previously described for
subparagraph (w)(1)(vi) of 552.212–4.
IV. Executive Orders 12866 and 13563
Information was gathered from GSA’s
Information Technology Category (ITC)
business line and GSA’s Office of
General Counsel (OGC) to estimate total
annualized cost savings associated with
reviewing and negotiating the 15
incompatible CSA terms for both
industry and Government. A 7 percent
discount rate was used for all
calculations.
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.
Government Cost Savings
V. Executive Order 13771
Based on the ITC CSA data for Fiscal
Year 2016 (FY16), GSA estimates
approximately 600 CSAs will be
reviewed each year. CSAs must be
reviewed for each procurement because
terms of CSAs are updated often.
Therefore, the review of a CSA for a new
procurement is not eliminated by a
previous review of a CSA for the same
item purchased previously.
GSA ITC subject matter experts and
GSA OGC were consulted to identify the
activities associated with the review of
CSAs and the hourly estimates for the
activities in relation to the 15 CSA
terms. It is estimated that on average
OGC review takes 0.9 hours and
contracting officer review and
negotiation takes 2.7 hours for each
CSA. Using the 2017 General Schedule,
average pay rates were identified for
attorneys and contracting officers and
fringe benefits were included. The
estimated annualized cost savings for
the Government is $119,103.
This final rule is considered an E.O.
13771 deregulatory action. Details on
the estimated cost savings can be found
in Section III–Expected Cost Savings of
this Final Rule.
III. Expected Cost Savings of This Final
Rule
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Public Cost Savings
Apparent successful offerors have at
least a negotiator and an attorney
participate in the review and
negotiation of a CSA prior to award. It
is assumed, at a minimum, the time
required by an offeror’s attorney and
negotiator to review the 15 CSA terms
are equivalent to the Government legal
and contracting officer hours; 0.9 and
2.7 hours respectively. Fully burdened
labor rates equivalent to the
Government were used to estimate
industry cost savings. Therefore for
industry the estimated annualized cost
savings is $119,103.
The total annualized cost savings of
this rule is estimated at $238,206.
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VI. Executive Order 13777
This final rule was identified by
GSA’s Regulatory Reform Task Force as
a rule that improves efficiency by
eliminating procedures with costs that
exceed the benefits as described in
Section IV.
VII. Regulatory Flexibility Act
GSA does not expect this 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.
GSA has prepared a Final Regulatory
Flexibility Analysis (FRFA) consistent
with the Regulatory Flexibility Act, 5
U.S.C. 601, et seq. The FRFA 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 in
GSA contracts. 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.
No comments were received on the Initial
Regulatory Flexibility Analysis (IRFA) from
the Chief Counsel for Advocacy of the Small
Business Administration.
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7633
Interested parties may obtain a copy
of the FRFA from the Regulatory
Secretariat. The Regulatory Secretariat
has submitted a copy of the FRFA to the
Chief Counsel for Advocacy of the Small
Business Administration.
VII. Paperwork Reduction Act
The final 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: February 14, 2018.
Jeffrey A. Koses,
Senior Procurement Executive, Office of
Acquisition Policy.
Therefore, GSA is amending 48 CFR
parts 502, 512, 513, 532, and 552 as set
forth below:
■ 1. Add part 502 to read as follows:
PART 502—DEFINITIONS OF WORDS
AND TERMS
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—
(a) 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;
(b) 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,
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52.232–39 for supplies and services
acquired subject to a commercial
supplier agreement (as defined in
502.101).
registration for a service, or another
transaction.
PART 512—ACQUISITION OF
COMMERCIAL ITEMS
Subpart 513.3—Simplified Acquisition
Methods
2. The authority citation for part 512
is revised to read as follows:
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513.302–5
Authority: 40 U.S.C. 121(c).
3. Add subpart 512.2, consisting of
section 512.216, to read as follows:
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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. 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 AntiDeficiency Act (31 U.S.C. 1341) for
supplies or services acquired subject to
a commercial supplier agreement.
■ 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.
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(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 or 52.212–4
Alternate I. The contracting officer may
tailor this clause in accordance with
FAR 12.302 and GSAM 512.302.
■ 5. Add part 513 to read as follows:
PART 513—SIMPLIFIED ACQUISITION
PROCEDURES
Subpart 513.2—Actions at or Below the
Micro-Purchase Threshold
Sec.
513.202 Unenforceability of unauthorized
obligations in micro-purchases.
Subpart 513.3—Simplified Acquisition
Methods
513.302 Purchase orders.
513.302–5 Clauses.
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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
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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
6. The authority citation for part 532
continues to read as follows:
■
Authority: 40 U.S.C. 121(c).
7. Add subpart 532.7 to read as
follows:
■
Subpart 532.7—Contract Funding
Sec.
532.705 Unenforceability of unauthorized
obligations.
532.706–3 Clause for unenforceability of
unauthorized obligations.
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
8. The authority citation for 48 CFR
552 continues to read as follows:
■
Authority: 40 U.S.C. 121(c).
9. Amend section 552.212–4 by—
a. Revising the section heading,
introductory text, and date of the clause;
and
■
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b. Adding paragraphs (s), (u), and (w).
The revisions and additions read as
follows:
■
552.212–4 Contract Terms and ConditionsCommercial Items (FAR DEVIATION).
As prescribed in 512.301(e), replace
subparagraph (g)(2), paragraph (s), and
paragraph (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)
(Feb. 2018)
*
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*
*
*
(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) Addenda to this solicitation or contract,
including any commercial supplier
agreements as amended by the Commercial
Supplier Agreements—Unenforceable
Clauses provision.
(5) Solicitation provisions if this is a
solicitation.
(6) Other paragraphs of this clause.
(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 AntiDeficiency 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 ‘‘browsewrap’’ 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.
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(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:
(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 or other similar legal
instrument (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 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) Updating terms. (A) After award, the
contractor may unilaterally revise terms if
they are not material. A material change is
defined as:
(1) Terms that change Government rights or
obligations;
(2) Terms that increase Government prices;
(3) Terms that decrease overall level of
service; or
(4) Terms that limit any other Government
right addressed elsewhere in this contract.
(B) For revisions that will materially
change the terms of the contract, the revised
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commercial supplier agreement must be
incorporated into the contract using a
bilateral modification.
(C) Any agreement terms or conditions
unilaterally revised subsequent to award that
are inconsistent with any material term or
provision of this contract shall not be
enforceable against the Government, and the
Government shall not be deemed to have
consented to them.
(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 consent by an
authorized Government representative.
(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 in accordance with
subparagraph (d) (Disputes); 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.
(xii) Confidential information. If this
agreement includes a confidentiality clause,
such clause is hereby amended to state that
neither the agreement nor the contract price
list, as applicable, 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
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7635
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)
■ 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) (Feb. 2018)
(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)
■ 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 (Feb. 2018)
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:
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(a) 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:
(1) 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 or other similar legal instrument
(including all contracts, task orders, and
delivery orders under FAR Parts 13, 14 or
15).
(2) 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.
(3) Law and disputes. This agreement is
governed by Federal law.
(i) 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.
(ii) Any language requiring dispute
resolution in a specific forum or venue that
is different from that prescribed by
applicable Federal law is hereby deleted.
(iii) 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.
(4) 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 FAR 52.233–1, Disputes.
(5) 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).
(6) Updating terms. (i) After award, the
contractor may unilaterally revise terms if
they are not material. A material change is
defined as:
(A) Terms that significantly change
Government rights or obligations; and
(B) Terms that increase Government prices;
(C) Terms that decrease overall level of
service; or
(D) Terms that limit any other Government
right addressed elsewhere in this contract.
(ii) For revisions that will materially
change the terms of the contract, the revised
commercial supplier agreement must be
incorporated into the contract using a
bilateral modification.
(iii) Any agreement terms or conditions
unilaterally revised subsequent to award that
are inconsistent with any material term or
provision of this contract shall not be
enforceable against the Government, and the
Government shall not be deemed to have
consented to them.
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17:01 Feb 21, 2018
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(7) 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 consent by an
authorized Government representative.
(8) 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.
(9) 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:
(i) 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.
(ii) This charge, if disputed by the ordering
activity, will be resolved through the
Disputes clause at FAR 52.233–1; no
payment obligation shall arise on the part of
the ordering activity until the conclusion of
the dispute process.
(iii) Any audit requested by the contractor
will be performed at the contractor’s expense,
without reimbursement by the Government.
(10) 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.
(11) 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 FAR
52.232–23, Assignment of Claims.
(12) Confidential information. If this
agreement includes a confidentiality clause,
such clause is hereby amended to state that
neither the agreement nor the contract price
list, as applicable, 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.
(b) If any language, provision or clause of
this agreement conflicts or is inconsistent
with the preceding paragraph (a), the
language, provisions, or clause of paragraph
(a) shall prevail to the extent of such
inconsistency.
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[FR Doc. 2018–03350 Filed 2–21–18; 8:45 am]
BILLING CODE 6820–61–P
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric
Administration
50 CFR Part 622
[Docket No. 160426363–7275–02]
RIN 0648–XG034
Coastal Migratory Pelagic Resources
of the Gulf of Mexico and Atlantic
Region; 2017–2018 Commercial Hookand-Line Closure for King Mackerel in
the Gulf of Mexico Southern Zone
National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA),
Commerce.
ACTION: Temporary rule; closure.
AGENCY:
NMFS implements an
accountability measure (AM) to close
the hook-and-line component of the
commercial sector for king mackerel in
the Gulf of Mexico (Gulf) southern zone.
This closure is necessary to protect the
Gulf king mackerel resource.
DATES: This temporary rule is effective
from 12:01 a.m., local time, February 20,
2018, through June 30, 2018.
FOR FURTHER INFORMATION CONTACT:
Kelli O’Donnell, NMFS Southeast
Regional Office, telephone: 727–824–
5305, email: kelli.odonnell@noaa.gov.
SUPPLEMENTARY INFORMATION: The
fishery for coastal migratory pelagic fish
includes king mackerel, Spanish
mackerel, and cobia, and is managed
under the Fishery Management Plan for
the Coastal Migratory Pelagic Resources
of the Gulf of Mexico and Atlantic
Region (FMP). The FMP was prepared
by the Gulf of Mexico and South
Atlantic Fishery Management Councils
and is implemented by NMFS under the
authority of the Magnuson-Stevens
Fishery Conservation and Management
Act (Magnuson-Stevens Act) by
regulations at 50 CFR part 622. All
weights for Gulf migratory group king
mackerel (Gulf king mackerel) below
apply as either round or gutted weight.
On April 11, 2017, NMFS published
a final rule to implement Amendment
26 to the FMP in the Federal Register
(82 FR 17387). That final rule adjusted
the management boundaries, zones, and
annual catch limits for Gulf king
mackerel. King mackerel in the Gulf is
divided into western, northern, and
southern zones, which have separate
commercial quotas.
SUMMARY:
E:\FR\FM\22FER1.SGM
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]]>Agencies
[Federal Register Volume 83, Number 36 (Thursday, February 22, 2018)]
[Rules and Regulations]
[Pages 7631-7636]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-03350]
=======================================================================
-----------------------------------------------------------------------
GENERAL SERVICES ADMINISTRATION
48 CFR Parts 502, 512, 513, 532, and 552
[GSAR Change 83; GSAR Case 2015-G512; Docket No. 2016-0010; Sequence
No. 2]
RIN 3090-AJ67
General Services Administration Acquisition Regulation;
Unenforceable Commercial Supplier Agreement Terms
AGENCY: Office of Acquisition Policy, General Services Administration
(GSA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: GSA is amending 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: Effective: February 22, 2018.
FOR FURTHER INFORMATION CONTACT: Ms. Janet Fry, Senior Policy Advisor,
GSA Acquisition Policy Division, at 703-605-3167 or [email protected].
For information pertaining to status or publication schedules, contact
the Regulatory Secretariat at 202-501-4755. Please cite GSAR Case 2015-
G512.
SUPPLEMENTARY INFORMATION:
I. Background
GSA published a proposed rule in the Federal Register at 81 FR
34302 on May 31, 2016, to amend the GSAR and address common commercial
supplier agreement terms that are inconsistent with or create ambiguity
with Federal Law.
Standard commercial supplier agreements contain terms and
conditions that make sense when the purchaser is a private party but
are inappropriate when the purchaser is the Federal Government.
Discrepancies between commercial supplier agreements and Federal law or
the Government's needs create recurrent points of inconsistency. 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. Explicitly addressing common
unenforceable terms eliminates the need for negotiation on these
identified terms.
This approach will: (1) Decrease proposal costs associated with
negotiating the identified unenforceable commercial supplier agreement
terms; (2) facilitate faster procurement and contract lead times,
therefore decreasing the time it takes for contractors to make a return
on their investment; (3) reduce administrative costs for companies that
maintain alternate Federally compliant commercial supplier agreements;
and (4) for small business concerns, level the playing field with
larger competitors since negotiations will only be required if the
commercial supplier agreements contain objectionable clauses outside of
those already identified in the GSAR clause. Lastly, this approach
ensures consistent application and understanding of these unenforceable
terms, potentially reducing unnecessary legal costs.
II. Discussion of Proposed Rule
Two respondents submitted comments on the proposed rule. The
General Services Administration has reviewed the comments in the
development of the final rule. A discussion of the comments and the
changes made to the rule as a result of those comments are provided as
follows:
A. Summary of Significant Changes
This final rule makes the following significant changes from the
proposed rule:
GSAR 552.212-4(s)--Reverts the order of precedence to move
``Addenda to the solicitation or contract, including any license
agreements for computer software'' back to number 4, and ``Solicitation
provisions of the solicitation'' and ``Other paragraphs of the clause''
back to number 5 and 6, respectively. Additionally, language was added
to clarify the Commercial Supplier Agreements--Unenforceable Clauses
provision takes precedence over the commercial supplier agreement terms
and conditions.
GSAR 552.212-4(w)(1)(vi)--Deletes the requirement for
providing full text terms with the offer, adds a definition of a
material change, and adds clarification on when a commercial supplier
agreement must be bilaterally modified in the contract.
[[Page 7632]]
B. Analysis of Public Comments
Public comments are grouped into categories in order to provide
clarification and to better respond to the issues raised.
1. Order of Precedence
Comment: Both respondents addressed concerns with the change to the
order of precedence in paragraph(s) of GSAR clause 552.212-4 which
places commercial supplier agreements in a lower position. The
commenters stated that this could result in terms, which are not
required by law or regulation, taking precedence over the standard
commercial terms in a commercial supplier agreement. The commenters
provided the example of a non-standard warranty contained in a
solicitation provision or in 552.212-4 paragraph (o), Warranty, taking
precedence over a company's standard commercial warranty contained in
their commercial supplier agreement. Additional examples included title
and ownership of software intellectual property (``IP''), warranty and
exclusion of implied warranties, limitations of liability and exclusive
remedies, and IP indemnification. One respondent stated the change in
precedence creates a preference for Government terms and conditions
that appears to contradict the language of existing statute (Federal
Acquisition Streamlining Act) and regulation (Federal Acquisition
Regulation (FAR) part 12).
Response: The intent of the change in the order of precedence was
(1) to ensure the Commercial Supplier Agreement--Unenforceable Clauses
provisions take precedence over the standard commercial supplier
agreements and (2) to provide clarity that awarded terms (i.e. those
agreed to by both parties during contract formation), including the
negotiated and awarded commercial supplier agreement, take precedence
to unilateral changes to commercial supplier agreements made by the
contractor. GSA reviewed the unintended impacts identified by the
respondents and agrees that there are better ways to solve the problem.
Instead, GSA addressed intent (1) by adding language to 552.212-
4(s)(4)to clarify that the Commercial Supplier Agreement--Unenforceable
Clauses provisions take precedence over any commercial supplier
agreement.
GSA addressed intent (2) by adding a new subparagraph to 552.212-
4(w)(1)(vi) to clearly state that material changes to a commercial
supplier agreement after award must be bilaterally modified into the
contract to be enforceable against the Government. Additionally,
subparagraph (C) was updated to more clearly state that unilateral
revisions that are found to be inconsistent with a material term of the
contract are not enforceable against the Government (i.e., awarded
commercial supplier terms will take precedence over terms updated
unilaterally). Equivalent changes were made to the language at GSAR
552.232-78.
2. Full Text Terms
Comment: Both respondents voiced concerns about the burden on
contractors to provide full text for all terms. Commercial supplier
agreements may include terms by reference which can be voluminous. The
terms may change at any time and providing full text would unduly delay
awards and modifications. One respondent stated the requirement to
submit the terms in writing seemed to imply they will be fixed terms,
and that providing full text terms is not a commercial practice.
Response: The intent of this language was to ensure that the
Government fully understands the terms and conditions agreed upon
during contract formation.
As stated in the public comments, referenced terms on a website can
be changed at any time, which is problematic during contract formation
for the Government. The time between an offer and award of a contract
could be several weeks. There is no assurance that the referenced terms
reviewed early in contract formation have not changed. When awarding
contracts, contracting officers must be fully aware of the terms that
will bind the Government, which is why static full text terms were
proposed.
After consideration of the public comments, GSA decided that
maintaining the commercial practice of providing the commercial
supplier agreement with referenced terms and by improving internal
controls for intake and management of commercial supplier agreements
could reduce Government risk and accomplish the intended outcome.
For this reason, GSA has deleted the language in 552.212-
4(w)(1)(vi)(A) which required full text for all terms. An equivalent
change was made to the language at GSAR 552.232-78. GSA will add
supplementary guidance in the General Services Acquisition Manual to
clarify the contracting officer's responsibilities regarding commercial
supplier agreement reviews, negotiations and documentation.
3. Enforceability of Unilateral Revisions
Comment: One respondent stated the intent of 552.212-4(w)(1)(vi)(C)
is unclear. If the intent is the order of precedence clause of the
contract is not enforceable with respect to any software license terms
unilaterally revised subsequent to award, then the respondent
recommends the Paragraph be revised for purposes of clarity.
Response: The intent of the clause is to ensure material changes to
the term of the contract are agreed to by both parties. 552.212-
4(w)(1)(vi)(C) has been revised to more clearly state the intent, and
an additional paragraph has been added to require bilateral
modifications for material changes to commercial supplier agreements
after contract award.
4. Significant Regulatory Action
Comment: One respondent stated ``the proposed rule is a significant
action, due to the change in the order of precedence, which should be
subject to OMB review'' pursuant to Executive Order 12866.
Response: As previously addressed, the order of precedence will be
reverted back to the order enumerated in the FAR 52.212-4 based on the
unintended impacts brought to light by the respondents. Therefore, this
rule is not a significant change, and is not subject to Office of
Management and Budget (OMB) review pursuant to Executive Order 12866.
5. Burdensome Information Collection
Comment: One respondent believes the requirement to provide full
text of terms is an unnecessary and burdensome information collection
and subject to the Paperwork Reduction Act (PRA).
Response: GSA has removed the requirement to provide all full text
terms and therefore this rule is not subject to the PRA.
C. Other Changes
This final rule makes the following additional changes from the
proposed rule:
GSAR 512.301, Solicitation provisions and contract clauses
for the acquisition of commercial items, a conforming change is made to
subparagraph (e) to clarify the applicability of the deviated language
to FAR 52.212-4 Alternate I.
GSAR 552.212-4(w)(1)(ix), Audits, a typographical error in
the disputes clause reference was fixed.
GSAR 552.232-78, Commercial Supplier Agreements--
Unenforceable Clauses, is renumbered and amended to make conforming
changes.
GSAR 552.232-78(a)(4), previously (a)(1)(iv), Continued
performance, is revised to correct the reference of the
[[Page 7633]]
disputes clause from ``subparagraph (d) (Disputes)'' to ``FAR 52.233-1,
Disputes.''
GSAR 552.232-78(a)(6), Updating terms, previously
(a)(1)(vi), Additional terms, is updated to reflect equivalent text
changes previously described for subparagraph (w)(1)(vi) of 552.212-4.
III. Expected Cost Savings of This Final Rule
Information was gathered from GSA's Information Technology Category
(ITC) business line and GSA's Office of General Counsel (OGC) to
estimate total annualized cost savings associated with reviewing and
negotiating the 15 incompatible CSA terms for both industry and
Government. A 7 percent discount rate was used for all calculations.
Government Cost Savings
Based on the ITC CSA data for Fiscal Year 2016 (FY16), GSA
estimates approximately 600 CSAs will be reviewed each year. CSAs must
be reviewed for each procurement because terms of CSAs are updated
often. Therefore, the review of a CSA for a new procurement is not
eliminated by a previous review of a CSA for the same item purchased
previously.
GSA ITC subject matter experts and GSA OGC were consulted to
identify the activities associated with the review of CSAs and the
hourly estimates for the activities in relation to the 15 CSA terms. It
is estimated that on average OGC review takes 0.9 hours and contracting
officer review and negotiation takes 2.7 hours for each CSA. Using the
2017 General Schedule, average pay rates were identified for attorneys
and contracting officers and fringe benefits were included. The
estimated annualized cost savings for the Government is $119,103.
Public Cost Savings
Apparent successful offerors have at least a negotiator and an
attorney participate in the review and negotiation of a CSA prior to
award. It is assumed, at a minimum, the time required by an offeror's
attorney and negotiator to review the 15 CSA terms are equivalent to
the Government legal and contracting officer hours; 0.9 and 2.7 hours
respectively. Fully burdened labor rates equivalent to the Government
were used to estimate industry cost savings. Therefore for industry the
estimated annualized cost savings is $119,103.
The total annualized cost savings of this rule is estimated at
$238,206.
IV. 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.
V. Executive Order 13771
This final rule is considered an E.O. 13771 deregulatory action.
Details on the estimated cost savings can be found in Section III-
Expected Cost Savings of this Final Rule.
VI. Executive Order 13777
This final rule was identified by GSA's Regulatory Reform Task
Force as a rule that improves efficiency by eliminating procedures with
costs that exceed the benefits as described in Section IV.
VII. Regulatory Flexibility Act
GSA does not expect this 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.
GSA has prepared a Final Regulatory Flexibility Analysis (FRFA)
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.
The FRFA 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 in GSA contracts. 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. No comments were received on the
Initial Regulatory Flexibility Analysis (IRFA) from the Chief
Counsel for Advocacy of the Small Business Administration.
Interested parties may obtain a copy of the FRFA from the
Regulatory Secretariat. The Regulatory Secretariat has submitted a copy
of the FRFA to the Chief Counsel for Advocacy of the Small Business
Administration.
VII. Paperwork Reduction Act
The final 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: February 14, 2018.
Jeffrey A. Koses,
Senior Procurement Executive, Office of Acquisition Policy.
Therefore, GSA is amending 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
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--
(a) 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;
(b) 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,
[[Page 7634]]
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 section 512.216, to read as
follows:
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. 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 or 52.212-4 Alternate I. 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
Sec.
513.202 Unenforceability of unauthorized obligations in micro-
purchases.
Subpart 513.3--Simplified Acquisition Methods
513.302 Purchase orders.
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 part 532 continues to read as follows:
Authority: 40 U.S.C. 121(c).
0
7. Add subpart 532.7 to read as follows:
Subpart 532.7--Contract Funding
Sec.
532.705 Unenforceability of unauthorized obligations.
532.706-3 Clause for unenforceability of unauthorized obligations.
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 552 continues to read as follows:
Authority: 40 U.S.C. 121(c).
0
9. Amend section 552.212-4 by--
0
a. Revising the section heading, introductory text, and date of the
clause; and
0
b. Adding paragraphs (s), (u), and (w).
The revisions and additions read as follows:
552.212-4 Contract Terms and Conditions-Commercial Items (FAR
DEVIATION).
As prescribed in 512.301(e), replace subparagraph (g)(2), paragraph
(s), and paragraph (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) (Feb.
2018)
* * * * *
(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) Addenda to this solicitation or contract, including any
commercial supplier agreements as amended by the Commercial Supplier
Agreements--Unenforceable Clauses provision.
(5) Solicitation provisions if this is a solicitation.
(6) Other paragraphs of this clause.
(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.
[[Page 7635]]
(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:
(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 or
other similar legal instrument (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 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) Updating terms. (A) After award, the contractor may
unilaterally revise terms if they are not material. A material
change is defined as:
(1) Terms that change Government rights or obligations;
(2) Terms that increase Government prices;
(3) Terms that decrease overall level of service; or
(4) Terms that limit any other Government right addressed
elsewhere in this contract.
(B) For revisions that will materially change the terms of the
contract, the revised commercial supplier agreement must be
incorporated into the contract using a bilateral modification.
(C) Any agreement terms or conditions unilaterally revised
subsequent to award that are inconsistent with any material term or
provision of this contract shall not be enforceable against the
Government, and the Government shall not be deemed to have consented
to them.
(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 consent by an authorized Government
representative.
(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 in accordance with subparagraph (d) (Disputes); 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.
(xii) Confidential information. If this agreement includes a
confidentiality clause, such clause is hereby amended to state that
neither the agreement nor the contract price list, as applicable,
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) (Feb.
2018)
(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 (Feb. 2018)
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:
[[Page 7636]]
(a) 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:
(1) 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 or other
similar legal instrument (including all contracts, task orders, and
delivery orders under FAR Parts 13, 14 or 15).
(2) 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.
(3) Law and disputes. This agreement is governed by Federal law.
(i) 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.
(ii) Any language requiring dispute resolution in a specific
forum or venue that is different from that prescribed by applicable
Federal law is hereby deleted.
(iii) 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.
(4) 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 FAR 52.233-1, Disputes.
(5) 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).
(6) Updating terms. (i) After award, the contractor may
unilaterally revise terms if they are not material. A material
change is defined as:
(A) Terms that significantly change Government rights or
obligations; and
(B) Terms that increase Government prices;
(C) Terms that decrease overall level of service; or
(D) Terms that limit any other Government right addressed
elsewhere in this contract.
(ii) For revisions that will materially change the terms of the
contract, the revised commercial supplier agreement must be
incorporated into the contract using a bilateral modification.
(iii) Any agreement terms or conditions unilaterally revised
subsequent to award that are inconsistent with any material term or
provision of this contract shall not be enforceable against the
Government, and the Government shall not be deemed to have consented
to them.
(7) 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 consent by an authorized Government
representative.
(8) 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.
(9) 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:
(i) 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.
(ii) This charge, if disputed by the ordering activity, will be
resolved through the Disputes clause at FAR 52.233-1; no payment
obligation shall arise on the part of the ordering activity until
the conclusion of the dispute process.
(iii) Any audit requested by the contractor will be performed at
the contractor's expense, without reimbursement by the Government.
(10) 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.
(11) 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 FAR 52.232-23, Assignment of Claims.
(12) Confidential information. If this agreement includes a
confidentiality clause, such clause is hereby amended to state that
neither the agreement nor the contract price list, as applicable,
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.
(b) If any language, provision or clause of this agreement
conflicts or is inconsistent with the preceding paragraph (a), the
language, provisions, or clause of paragraph (a) shall prevail to
the extent of such inconsistency.
(End of clause)
[FR Doc. 2018-03350 Filed 2-21-18; 8:45 am]
BILLING CODE 6820-61-P
