Federal Acquisition Regulation: Construction Contract Administration, 18181-18184 [2020-05866]

Agencies

• DEPARTMENT OF DEFENSE
• General Services Administration
• National Aeronautics and Space Administration

[Federal Register Volume 85, Number 63 (Wednesday, April 1, 2020)]
[Proposed Rules]
[Pages 18181-18184]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-05866]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 12, 19, 36, 43, and 52

[FAR Case 2018-020; Docket No. FAR-2018-0020, Sequence No. 1]
RIN 9000-AN78


Federal Acquisition Regulation: Construction Contract 
Administration

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

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SUMMARY: DoD, GSA, and NASA are proposing to amend the Federal 
Acquisition Regulation (FAR) to implement a section of the John S. 
McCain National Defense Authorization Act for Fiscal Year 2019, which 
requires agencies to provide a notice along with the solicitation to 
prospective bidders and offerors regarding definitization of requests 
for an equitable adjustment related to change orders under construction 
contracts.

DATES: Interested parties should submit written comments to the 
Regulatory Secretariat Division at one of the addresses shown below on 
or before June 1, 2020 to be considered in the formation of the final 
rule.

ADDRESSES: Submit comments in response to FAR Case 2018-020 by any of 
the following methods:
     Regulations.gov: https://www.regulations.gov. comments via 
the Federal eRulemaking portal by searching for ``FAR Case 2018-020''. 
Select the link ``Comment Now'' that corresponds with FAR Case 2018-
020. Follow the instructions provided at the ``Comment Now'' screen. 
Please include your name, company name (if any), and ``FAR Case 2018-
020'' on your attached document.
     Mail: General Services Administration, Regulatory 
Secretariat Division (MVCB), 1800 F Street NW, 2nd Floor, ATTN: Lois 
Mandell, Washington, DC 20405.
    Instructions: Please submit comments only and cite FAR Case 2018-
020, in all correspondence related to this case. Comments received 
generally will 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, approximately two to three days after submission 
to verify posting (except allow 30 days for posting of comments 
submitted by mail).

FOR FURTHER INFORMATION CONTACT: Ms. Camara Francis, Procurement 
Analyst, at 202-550-0935, or by email at [email protected], for 
clarification of content. For information pertaining to status or 
publication schedules, contact the Regulatory Secretariat Division at 
202-501-4755. Please cite FAR Case 2018-020.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD, GSA, and NASA are proposing to amend the FAR to implement 
section 855 of the John S. McCain National Defense Authorization Act 
(NDAA) for Fiscal Year (FY) 2019 (Pub. L. 115-232, 15 U.S.C. 644(w)). 
Section 855 requires Federal agencies to provide a notice, along with 
solicitations for construction contracts anticipated to be awarded to 
small businesses, to prospective offerors including information about 
the agency's policies or practices in complying with FAR requirements 
related to the timely definitization of requests for equitable 
adjustment on construction contracts. The notice must include data 
regarding the time it took the agency to definitize requests for 
equitable adjustment on construction contracts for the three-year 
period preceding the issuance of the notice.

II. Discussion and Analysis

    The proposed changes to the FAR are summarized in the following 
paragraphs.
    A. Solicitation notice regarding administration of change orders 
for construction. New text is proposed in FAR part 36, Construction and 
Architect-Engineer Contracts, subpart 36.5, Contract Clauses, to add 
coverage of the requirement for a new solicitation notice to be 
included in solicitations for construction. Specifically, new section 
36.524, Notice to offerors regarding administration of change orders 
for construction, contains the prescription for the use of new 
solicitation provision 52.236-XX, Notice Regarding Administration of 
Change Orders for Construction. New section 36.524 also includes 
guidance for contracting officers regarding the information to be 
inserted in the provision. This new solicitation provision, which is 
proposed to be added in FAR part 52, Solicitation Provisions and 
Contract Clauses, will provide a standardized way for contracting 
officers to provide the notice required by section 855 of the NDAA for 
FY 2019.

[[Page 18182]]

    Additional coverage related to the requirement for the new 
solicitation notice is proposed in FAR part 43, Contract Modifications, 
subpart 43.2, Change Orders. A new paragraph is proposed for section 
43.204, Administration, to instruct contracting offices and contract 
administration offices to use a specific Federal system to collect data 
on the time required to definitize unpriced change orders for 
construction contracts. The data will be used in new solicitation 
provision 52.236-XX.
    In FAR part 12, Acquisition of Commercial Items, subpart 12.5, 
Applicability of Certain Laws to the Acquisition of Commercial Items 
and Commercially Available Off-The-Shelf Items, a new paragraph is 
added to note that 15 U.S.C. 644(w), Solicitation Notice Regarding 
Administration of Change Orders for Construction, is not applicable to 
Executive agency contracts for the acquisition of commercial items.
    B. Cross reference to coverage of new solicitation notice.
    Section 19.502, Setting aside acquisitions, is amended to add a 
cross reference to the new section 36.524.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT) and for Commercial Items, Including Commercially 
Available Off-the-Shelf (COTS) Items

    This rule proposes to implement a statutory requirement for Federal 
agencies to provide a notice, along with solicitations for construction 
contracts anticipated to be awarded to small businesses, to prospective 
offerors regarding agency policies or practices, and agency past 
performance, in complying with FAR requirements related to the timely 
definitization of requests for equitable adjustments resulting from 
change orders under construction contracts. The Federal Acquisition 
Regulatory Council (FAR Council) intends to apply the new provision 
52.236-XX, Notice Regarding Administration of Change Orders for 
Construction, to contracts at or below the simplified acquisition 
threshold (SAT), but does not intend to apply the new provision to 
contracts for the acquisition of commercial items including COTS items.
    A. Applicability to Contracts at or below the SAT. Pursuant to 41 
U.S.C. 1905, a provision of law is not applicable to acquisitions at or 
below the SAT unless the law (i) contains criminal or civil penalties; 
(ii) specifically refers to 41 U.S.C. 1905 and states that the law 
applies to acquisitions at or below the SAT; or (iii) the FAR Council 
makes a written determination that it is not in the best interest of 
the Federal Government to exempt contracts or subcontracts at or below 
the SAT. If none of these conditions are met, the FAR is required to 
include the statutory requirement(s) on a list of provisions of law 
that are inapplicable to acquisitions at or below the SAT.
    The purpose of this rule is to implement section 855 of the NDAA 
for FY 2019. Section 855 requires Federal agencies to provide a notice, 
along with solicitations for construction contracts anticipated to be 
awarded to small businesses, to prospective offerors regarding agency 
policies or practices, and agency past performance, in complying with 
FAR requirements related to the timely definitization of requests for 
equitable adjustments resulting from change orders under construction 
contracts. Section 855 is silent on the applicability of these 
requirements for acquisitions at or below the SAT and does not 
independently provide for criminal or civil penalties; nor does it 
include terms making express reference to 41 U.S.C. 1905 and its 
application to acquisitions at or below the SAT. Therefore, it does not 
apply to acquisitions at or below the SAT unless the FAR Council makes 
a written determination as provided at 41 U.S.C. 1905.
    Application of section 855 to acquisitions at or below the SAT will 
maximize the number of small entities who would benefit from the 
information to be provided regarding definitization of requests for 
equitable adjustment resulting from change orders under construction 
contracts. Approximately one third of construction contracts awarded in 
FY 2016 through FY 2018 were valued at or below the SAT. Not applying 
this rule to acquisitions at or below the SAT would exclude 
acquisitions intended to be covered by section 855.
    For these reasons, it is in the best interest of the Federal 
Government to apply the requirements of the rule to acquisitions at or 
below the SAT.
    B. Applicability to Contracts for the Acquisition of Commercial 
Items, Including COTS Items.
    41 U.S.C. 1906 governs the applicability of laws to contracts for 
the acquisition of commercial items, and is intended to limit the 
applicability of laws to contracts for the acquisition of commercial 
items. 41 U.S.C. 1906 provides that if a provision of law contains 
criminal or civil penalties, or if the FAR Council makes a written 
determination that it is not in the best interest of the Federal 
Government to exempt commercial item contracts, the provision of law 
will apply to contracts for the acquisition of commercial items. 
Likewise, 41 U.S.C. governs the applicability of laws to COTS items, 
with the Administrator for Federal Procurement Policy the decision 
authority to determine that it is in the best interest of the 
Government to apply a provision of law to acquisitions of COTS items in 
the FAR. The FAR Council and the Administrator for Federal Procurement 
Policy have not made such determination, therefore this rule does not 
apply to commercial items.

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 proposed rule is not subject to E.O. 13771, Reducing 
Regulation and controlling Regulatory Costs, because this rule is not 
expected to be a significant regulatory action under E.O. 12866.

VI. Regulatory Flexibility Act

    DoD, GSA, and NASA do not expect this change 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. 
However, an Initial Regulatory Flexibility Analysis (IRFA) has been 
performed and is summarized as follows:

    DoD, GSA, and NASA are proposing to amend the Federal 
Acquisition Regulation (FAR) to implement section 855 of the John S. 
McCain National Defense Authorization Act (NDAA) for Fiscal Year 
(FY) 2019, which requires Federal agencies to provide a notice, 
along with solicitations for construction contracts anticipated to 
be awarded to small businesses, to prospective offerors regarding 
agency policies or practices in complying with FAR requirements 
related to the timely definitization of requests for equitable 
adjustment on construction contracts. The notice must include 
information on the

[[Page 18183]]

agency's policies or practices on definitizing equitable adjustments 
on construction contracts and data on the amount of time it took the 
agency to definitize requests for equitable adjustment on 
construction contracts during the three-year period preceding the 
issuance of the notice.
    The objective of this proposed rule is to provide contractors 
with information about an agency's past performance in definitizing 
equitable adjustments under construction contract change orders as 
required by section 855 of the NDAA for FY 2019.
    This rule is primarily aimed at Federal agencies, requiring them 
to provide a notice of their past performance on definitizing 
equitable adjustments for construction contracts. The notice will 
provide potential small business offerors with information that may 
be useful to them as they prepare, or decide whether to prepare and 
submit, a proposal in response to an agency's solicitation for 
construction. For example, if an agency has a poor history of 
definitizing equitable adjustments, potential small business 
offerors may reconsider whether to submit a proposal in response to 
that agency's solicitation. Alternately, when preparing their 
proposals, small business offerors may consider the additional costs 
that could be incurred if it is likely they will experience delays 
in the definitization of equitable adjustments.
    An analysis of the Federal Procurement Data System (FPDS) 
reveals that an average of 2,340 unique entities per year were 
awarded construction contracts during FY 2016, 2017, and 2018. Of 
those, 1,872 were small entities. The number of construction 
contracts awarded in FY 2016, 2017, and 2018 averaged 4,488 per 
year, of which 3,355 were awarded to small entities. Additionally, 
during these same years, an average of 3,939 construction-related 
task orders were awarded each year to approximately 1,069 unique 
entities; 3,254 of those task orders were awarded to 851 small 
entities. On average, over FY 2016, 2017, and 2018, 6,503 
modifications were issued each year to approximately 1,582 entities 
for change orders or definitization of change orders under 
construction contracts. Of those, approximately 3,803 modifications 
were issued to 1,147 small entities.
    This proposed rule does not include any new reporting, 
recordkeeping or other compliance requirements for small entities.
    The proposed rule does not duplicate, overlap, or conflict with 
any other Federal rules.
    There are no known significant alternative approaches that would 
accomplish the stated objectives of the applicable statute.

    The Regulatory Secretariat Division has submitted a copy of the 
IRFA to the Chief Counsel for Advocacy of the SBA. A copy of the IRFA 
may be obtained from the Regulatory Secretariat Division. DoD, GSA, and 
NASA invite comments from small business concerns and other interested 
parties on the expected impact of this rule on small entities.
    DoD, GSA, and NASA 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 
comments separately and should cite 5 U.S.C. 610 (FAR case 2018-020) in 
correspondence.

VII. Paperwork Reduction Act

    The 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 12, 19, 36, 43, and 52

    Government procurement.

William F. Clark,
Director, Office of Governmentwide Acquisition Policy, Office of 
Acquisition Policy, Office of Governmentwide Policy.

    Therefore, DoD, GSA, and NASA are proposing to amend 48 CFR part(s) 
12, 19, 36, 43, and 52 as set forth below:

0
1. The authority citation for 48 CFR part(s) 12, 19, 36, 43, and 52 
continues to read as follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

PART 12--ACQUISITION OF COMMERCIAL ITEMS

0
2. Amend section 12.503 by adding paragraph (a)(10) to read as follows:


12.503   Applicability of certain laws to Executive agency contracts 
for the acquisition of commercial items.

    (a) * * *
    (10) 15 U.S.C. 644(w), Solicitation Notice Regarding Administration 
of Change Orders for Construction (see 36.524).
* * * * *

PART 19--SMALL BUSINESS PROGRAMS

0
3. Add section 19.502-11 to read as follows:


19.502-11   Solicitation notice regarding administration of change 
orders for construction.

    See 36.524 for the requirement to provide a notice to offerors 
regarding definitization of requests for equitable adjustment for 
change orders under construction contracts.

PART 36--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

0
4. Revise subpart 36.5 heading to read as follows:

Subpart 36.5--Solicitation Provisions and Contract Clauses

* * * * *
0
5. Revise section 36.500 to read as follows:


36.500   Scope of subpart.

    (a) This subpart prescribes provisions and clauses for insertion in 
solicitations and contracts for--
    (1) Construction; and
    (2) Dismantling, demolition, or removal of improvements contracts.
    (b) Provisions and clauses prescribed elsewhere in the Federal 
Acquisition Regulation (FAR) shall also be used in such solicitations 
and contracts when the conditions specified in the prescriptions for 
the provisions and clauses are applicable.
0
6. Add section 36.524 to read as follows:


36.524   Notice to offerors regarding administration of change orders 
for construction.

    (a) The contracting officer shall insert the provision at 52.236-
XX, Notice Regarding Administration of Change Orders for Construction, 
in solicitations for construction that are set aside, or will be 
awarded on a sole-source basis, pursuant to part 19. This provision 
does not apply to the acquisition of commercial items using part 12 
procedures.
    (b) The contracting officer shall complete the fill-ins to 
provide--
    (1) Information to offerors about the agency's policies or 
procedures in complying with requirements relating to timely 
definitization of requests for equitable adjustment for change orders 
for construction; and
    (2) Data for the prior 3 fiscal years, available at [website to be 
determined], regarding the time required to definitize requests for 
equitable adjustment for change orders for construction (see 43.204). 
Prior to August 13, 2021, if fewer than 3 fiscal years of data are 
available, provide data for the number of fiscal years that are 
available.

PART 43--CONTRACT MODIFICATIONS

0
7. Amend section 43.204 by redesignating paragraph (b)(3) as paragraph 
(b)(3)(i), and adding paragraph (b)(3)(ii) to read as follows:
* * * * *


43.204   Administration.

* * * * *
    (b) * * *
    (3) * * *
    (ii) Contracting offices and contract administration offices, as 
appropriate,

[[Page 18184]]

shall use [website to be determined] to record and maintain data 
regarding the time required to definitize requests for equitable 
adjustment associated with unpriced change orders for construction. The 
contracting officer shall ensure the data is entered into [website to 
be determined] promptly.
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
8. Add section 52.236-XX to read as follows:


52.236-XX   Notice Regarding Administration of Change Orders for 
Construction.

    As prescribed in 36.524, insert the following provision:

Notice Regarding Administration of Change Orders for Construction 
(DATE)

    (a) As required by 15 U.S.C. 644(w), this provision provides 
information relating to the definitization of requests for equitable 
adjustment for change orders under construction contracts.
    (b) Federal Acquisition Regulation (FAR) 43.204 provides policy 
and guidance relating to definitization of requests for equitable 
adjustment resulting from change orders for contracts, including 
those for construction. In addition to FAR 43.204, the agency 
issuing this solicitation has established the following policies or 
procedures that apply to definitization of requests for equitable 
adjustment for change orders under construction contracts: _. 
[Contracting officer insert description of applicable policies or 
procedures, or address of a publicly accessible website containing 
this information. If no applicable policies or procedures exist, 
insert ``None.'']
    (c) Information on the agency's past performance in definitizing 
requests for equitable adjustment associated with change orders for 
construction for fiscal year(s) _ [Contracting Officer insert the 
prior fiscal years, up to 3, for which information is available] is 
available at _ [Contracting Officer insert address of publicly 
accessible website containing this information] or in the following 
table:

------------------------------------------------------------------------
  Time to definitize after receipt of         Number of requests for
  request for equitable adjustment for         equitable adjustment
              construction                 definitized for construction
------------------------------------------------------------------------
30 days or less........................  ...............................
31 to 60 days..........................  ...............................
61 to 90 days..........................  ...............................
91 to 180 days.........................  ...............................
181 to 365 days........................  ...............................
366 or more days.......................  ...............................
After completion of contract             ...............................
 performance via a contract
 modification addressing all
 undefinitized requests for equitable
 adjustment received during contract
 performance.
------------------------------------------------------------------------

    [Contracting Officer insert number of requests for equitable 
adjustment definitized in each category.]


(End of provision)

[FR Doc. 2020-05866 Filed 3-31-20; 8:45 am]
 BILLING CODE 6820-EP-P