Federal Acquisition Regulation: Construction Contract Administration, 58227-58232 [2022-20341]
Download as PDF
<![CDATA[
Federal Register / Vol. 87, No. 184 / Friday, September 23, 2022 / Rules and Regulations
Alternate I (OCT 2022). If the competition
is to be limited to 8(a) participants within
one or more specific SBA regions or districts,
add the following paragraph (a)(1)(iii) to
paragraph (a) of the clause:
(iii) The offeror’s approved business plan
is on the file and serviced by
ll[Contracting Officer completes by
inserting the appropriate SBA District and/or
Regional Office(s) as identified by the SBA].
22. Amend section 52.219–27 by
revising the date of the clause and
paragraph (d) and adding paragraph (e)
to read as follows:
■
52.219–27 Notice of Service-Disabled
Veteran-Owned Small Business Set-Aside.
*
*
*
*
*
Notice of Service-Disabled Veteran-Owned
Small Business Set-Aside (OCT 2022)
*
*
*
*
*
(d) A joint venture may be considered a
service-disabled veteran owned small
business concern if—
(1) At least one party to the joint venture
complies with the criteria defined in
paragraph (a) of this clause and 13 CFR
125.18(b)(2); and
(2) Each party to the joint venture is small
under the size standard corresponding to the
NAICS code assigned to the procurement, or
the prote´ge´ is small under the size standard
corresponding to the NAICS code assigned to
the procurement in a joint venture comprised
of a mentor and prote´ge´ with an approved
mentor-prote´ge´ agreement under an SBA
mentor-prote´ge´ program.
(e) In a joint venture that complies with
paragraph (f) of this clause, the servicedisabled veteran-owned small business party
or parties to the joint venture shall perform
at least 40 percent of the work performed by
the joint venture. Work performed by the
service-disabled veteran-owned small
business party or parties to the joint venture
must be more than administrative functions.
*
*
*
*
*
23. Amend section 52.219–28 by
revising the date of the clause, and in
paragraph (a) revising paragraph (1) of
the definition of ‘‘Small business
concern’’ to read as follows:
■
lotter on DSK11XQN23PROD with RULES3
*
*
*
Post-Award Small Business Program
Rerepresentation (OCT 2022)
(a) * * *
Small business concern—
(1) Means a concern, including its
affiliates, that is independently owned and
operated, not dominant in its field of
operation, and qualified as a small business
under the criteria in 13 CFR part 121 and the
size standard in paragraph (d) of this clause.
*
*
*
*
24. Amend section 52.219–29 by—
a. Revising the date of the clause;
b. In paragraph (a), in the definition
‘‘Economically disadvantaged women-
■
■
■
VerDate Sep<11>2014
18:23 Sep 22, 2022
Jkt 256001
*
*
*
*
or parties to the joint venture shall perform
at least 40 percent of the work performed by
the joint venture. Work performed by the
WOSB party or parties to the joint venture
must be more than administrative functions.
*
*
*
*
*
26. Amend section 52.244–6 by—
a. Revising the date of the clause; and
b. Removing from paragraph (c)(1)(vii)
the date ‘‘(OCT 2018)’’ and adding the
date ‘‘(OCT 2022)’’ in its place.
The revision reads as follows:
■
■
■
52.244–6 Subcontracts for Commercial
Products and Commercial Services.
*
Notice of Set-Aside for, or Sole-Source
Award to, Economically Disadvantaged
Women-Owned Small Business Concerns
(OCT 2022)
*
*
*
*
*
*
*
(d) Joint Venture. A joint venture may be
considered an EDWOSB concern if—
(1) At least one party to the joint venture
complies with the criteria defined in
paragraph (a) and paragraph (c)(3) of this
clause, and 13 CFR 127.506(c); and
(2) Each party to the joint venture qualifies
as small under the size standard for the
solicitation, or the prote´ge´ is small under the
size standard for the solicitation in a joint
venture comprised of a mentor and prote´ge´
with an approved mentor-prote´ge´ agreement
under the SBA mentor-prote´ge´ program.
(e) In a joint venture that complies with
paragraph (d) of this clause, the EDWOSB
party or parties to the joint venture shall
perform at least 40 percent of the work
performed by the joint venture. Work
performed by the EDWOSB party or parties
to the joint venture must be more than
administrative functions.
*
*
*
*
*
25. Amend section 52.219–30 by
revising the date of the clause and
paragraph (d) and adding paragraph (e)
to read as follows:
*
*
*
*
*
*
*
*
(d) Joint Venture. A joint venture may be
considered a WOSB concern eligible under
the WOSB Program if—
(1) At least one party to the joint venture
complies with the criteria defined in
paragraph (a) and (c)(3) of this clause, and 13
CFR 127.506(c); and
(2) Each party to the joint venture qualifies
as small under the size standard for the
solicitation, or the prote´ge´ is small under the
size standard for the solicitation in a joint
venture comprised of a mentor and prote´ge´
with an approved mentor-prote´ge´ agreement
under the SBA mentor-prote´ge´ program.
(e) In a joint venture that complies with
paragraph (d) of this clause, the WOSB party
PO 00000
Frm 00011
Fmt 4701
Sfmt 4700
*
*
*
DEPARTMENT OF DEFENSE
GENERAL SERVICES
ADMINISTRATION
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
48 CFR Parts 5, 12, 19, 36, and 43
[FAC 2022–08; FAR Case 2018–020; Item
II; Docket No. FAR–2018–0020, Sequence
No. 1]
RIN 9000–AN78
Federal Acquisition Regulation:
Construction Contract Administration
Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Final rule.
SUMMARY:
*
*
BILLING CODE 6820–EP–P
52.219–30 Notice of Set-Aside for, or SoleSource Award to, Women-Owned Small
Business Concerns Eligible Under the
Women-Owned Small Business Program.
*
*
[FR Doc. 2022–20340 Filed 9–22–22; 8:45 am]
AGENCY:
*
*
Subcontracts for Commercial Products and
Commercial Services (OCT 2022)
■
Notice of Set-Aside for, or Sole-Source
Award to, Women-Owned Small Business
Concerns Eligible Under the Women-Owned
Small Business Program (OCT 2022)
*
*
52.219–29 Notice of Set-Aside for, or SoleSource Award to, Economically
Disadvantaged Women-Owned Small
Business Concerns.
*
52.219–28 Post-Award Small Business
Program Rerepresentation.
*
owned small business (EDWOSB)’’
removing the phrase ‘‘It automatically’’
and adding the phrase ‘‘An EDWOSB
concern automatically’’ in its place;
■ c. Revising paragraph (d); and
■ d. Adding paragraph (e).
The revisions and addition read as
follows:
58227
DoD, GSA, and NASA are
issuing a final rule amending the
Federal Acquisition Regulation (FAR) to
implement a section of the John S.
McCain National Defense Authorization
Act for Fiscal Year 2019, to require
agencies to provide a notice along with
the solicitation to prospective bidders
and offerors regarding definitization of
requests for equitable adjustment related
to change orders under construction
contracts.
DATES: Effective October 28, 2022.
FOR FURTHER INFORMATION CONTACT: Ms.
Dana Bowman, Procurement Analyst, at
202–803–3188, or by email at
dana.bowman@gsa.gov, for clarification
of content. For information pertaining to
status or publication schedules, contact
the Regulatory Secretariat Division at
202–501–4755 or GSARegSec@gsa.gov.
Please cite FAC 2022–08, FAR Case
2018–020.
E:\FR\FM\23SER3.SGM
23SER3
58228
Federal Register / Vol. 87, No. 184 / Friday, September 23, 2022 / Rules and Regulations
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA published a
proposed rule at 85 FR 18181 on April
1, 2020, to implement section 855 of the
John S. McCain National Defense
Authorization Act (NDAA) for Fiscal
Year (FY) 2019 (Pub. L. 115—232),
codified at 15 U.S.C. 644(w) in the
Small Business Act.
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 that
includes 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.
Definitization of requests for equitable
adjustment occurs after the contracting
officer receives, reviews, and conducts
an analysis and audit of the information
contained in a change order proposal,
and results in an executed contractual
action. The notice must also 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.
FAR 36.211 requires agencies to
furnish data for the three fiscal years
preceding the issuance of the
solicitation notice.
Six respondents submitted public
comments in response to the proposed
rule.
II. Discussion and Analysis
The Civilian Agency Acquisition
Council and the Defense Acquisition
Regulations Council (the Councils)
reviewed the public comments in the
development of the final rule. A
discussion of the comments received,
and any changes made to the rule as a
result of the public comments are
provided as follows:
lotter on DSK11XQN23PROD with RULES3
A. Summary of Significant Changes
From the Proposed Rule
The following significant changes
from the proposed rule are made in the
final rule:
(1) Removal of Provision 52.236–XX;
Replaced by Solicitation Notice
The final rule FAR text removes the
proposed solicitation provision 52.236–
XX, Notice Regarding Administration of
Change Orders for Construction. The
provision is replaced with an
instruction to the contracting officer at
FAR subpart 5.2, Synopses of Proposed
Contract Actions. Specifically, 5.205(h),
Special situations, requires contracting
VerDate Sep<11>2014
18:23 Sep 22, 2022
Jkt 256001
officers to transmit a notice in the
solicitation notice on the
Governmentwide point of entry (GPE) to
meet the requirements of section 855 (15
U.S. C. 644(w)).
The final rule FAR text removes the
proposed text at FAR subpart 36.5,
Contract Clauses, and replaces it with
text at subpart 36.2, Special Aspects of
Contracting for Construction.
Specifically, paragraph (b) is added to
FAR section 36.211 to coincide with
FAR 5.205(h) and to provide specifics
on the information required in the
solicitation notice. This change will
allow agencies more flexibility to share
their specific guidance or to provide
explanatory commentary. The text from
the removed provision, 52.236–XX, is
converted into the text for the
solicitation notice.
(2) Removal of ‘‘publicly accessible
website’’ and ‘‘website to be
determined’’; Replaced with ‘‘agency
specific, publicly accessible website’’
and ‘‘follow agency procedures’’
FAR 36.211(b) requires contracting
officers to provide a description of
applicable policies or procedures in the
notice or through ‘‘an address of an
agency-specific, publicly accessible
website’’ containing this information
rather than through a provision to be
filled in or a ‘‘publicly accessible
website.’’ The agency’s past
performance data will be included in
the table format provided at FAR
36.211(b) or on an agency-specific,
publicly accessible website in lieu of a
‘‘website to be determined’’ as stated in
the proposed rule.
This change will allow agencies more
flexibility in how to share their specific
guidance, and to provide explanatory
commentary when appropriate.
(3) Clarifications
The final rule makes revisions at FAR
part 43, Contract Modifications.
Specifically, FAR 43.204(b)(3)(ii),
regarding recording and maintaining
data for definitizing equitable
adjustments, is moved to paragraph
(b)(1)(ii) to clarify that the requirement
applies to all change orders. This
paragraph replaces in two places the
phrase ‘‘shall use [website to be
determined]’’ with a reference to agency
procedures to allow more flexibility in
recording and maintaining the required
data.
(4) Measurement of the Definitization of
Equitable Adjustments
The final rule revises FAR
43.204(b)(1)(ii), previously FAR
43.204(b)(3)(ii) in the proposed rule, to
identify the measurement of the
PO 00000
Frm 00012
Fmt 4701
Sfmt 4700
definitization of equitable adjustments
by including the following sentence:
‘‘The definitization of an equitable
adjustment begins upon receipt of an
adequate change order definitization
proposal by the contracting officer and
ends upon the contracting officer’s
execution of a contractual action to
definitize the change order.’’
B. Analysis of Public Comments
1. Applicability/Authority for
Appropriations
Comment: One respondent stated that
NDAA appropriations are not applicable
to non-DoD agencies. The respondent
stated that the law should be
incorporated into the Defense Federal
Acquisition Regulation Supplement
(DFARS) instead of the FAR.
Response: Congress often uses the
annual NDAA as a vehicle for making
Governmentwide acquisition law
changes. In this instance, Congress
amended section 15 of the Small
Business Act (15 U.S.C. 644) in section
855 of the John S. McCain NDAA for FY
2019 (Pub. L. 115–232). The new
requirements are codified at 15 U.S.C.
644(w). Since section 15 of the Small
Business Act (15 U.S.C. 644) has
Governmentwide applicability, it is
appropriate for the requirements to be
implemented in the FAR. No changes
were made to the final rule as a result
of this comment.
2. Past Performance Data
Comment: One respondent stated that
the rule should allow agencies an
opportunity to explain factors
contributing to the time required to
resolve equitable adjustments as the
reasons are often beyond the
Government’s control. The respondent
stated that historical data without
context is irrelevant to predicting future
time frames and otherwise makes the
data meaningless.
Another respondent noted that
construction contracts are usually
administered by individual construction
contract administration offices near the
project site. The respondent stated that
collecting agency-wide past
performance data is not indicative of
future time frames and cannot be
correlated to accurately anticipate future
conduct of an administering office. The
respondent stated that the rule should
be amended to allow agencies an
opportunity to account for a contract
change’s specific facts and
circumstances; otherwise, the data is
meaningless.
A third respondent stated that
allowing an ‘‘explanatory commentary’’
section in either the solicitation or a
E:\FR\FM\23SER3.SGM
23SER3
Federal Register / Vol. 87, No. 184 / Friday, September 23, 2022 / Rules and Regulations
public website for agencies to explain
the metric or means used to compile or
report the types of equitable
adjustments included or excluded from
the metrics would be helpful.
Response: While primary data
without context has value, the Councils
acknowledge context could enhance the
value of historical data in some
situations and that agencies should have
the opportunity to provide additional
relevant information. The FAR text is
revised to remove the proposed
provision 52.236–XX, Notice Regarding
Administration of Change Orders for
Construction, and replace it with a
requirement for contracting officers to
transmit a notice on the GPE in the
solicitation notice as required by FAR
part 5 to meet the requirements of
section 855 (15 U.S.C. 644(w)).
Additional text is added at FAR 5.205(h)
to include the requirement for a
solicitation notice on the GPE. Also,
FAR 36.524 is replaced by FAR 36.211
to coincide with FAR 5.205(h) and to
provide specifics on the information
required in the solicitation notice
(previously in the removed provision).
As previously included in paragraph
(b) of the removed provision,
contracting officers will include in the
notice a description of the agency’s
applicable policies and procedures or
the address of an agency-specific,
publicly accessible website containing
the information that applies to
definitization of equitable adjustments
for change orders under construction
contracts. Additionally, the final rule
revises ‘‘publicly accessible website’’
from paragraph (b) of the now removed
provision to ‘‘an agency-specific,
publicly accessible website’’ at
36.211(b)(1) and (2) to allow more
flexibility for agencies to share their
specific guidance or to provide
explanatory commentary.
Also, the proposed rule text at FAR
43.204(b)(3)(ii) regarding recording and
maintaining data for definitizing
requests for equitable adjustment is
moved to FAR 43.204(b)(1)(ii) to clarify
that the requirement applies to all
change orders. This paragraph replaces
in two places ‘‘[website to be
determined]’’ with a reference to
‘‘agency procedures’’ to allow more
flexibility in recording and maintaining
the required data.
lotter on DSK11XQN23PROD with RULES3
3. Definitizing Equitable Adjustments
a. Equitable Adjustments in General
Versus Unpriced Change Orders
Comment: One respondent stated that
it was unclear if the intent was to
disclose all equitable adjustments in
general or only those for unpriced
VerDate Sep<11>2014
18:23 Sep 22, 2022
Jkt 256001
change orders. The respondent stated
that the rule should be limited to
disclosing past performance data
accounting for the time associated with
definitization of equitable adjustments
for unpriced change orders and not the
time associated with the resolution of
equitable adjustments in general. The
respondent indicated section 855
discusses the definitization process but
is not applicable to undefinitized
equitable adjustments and stated that
the FAR rule should be revised to
clearly and precisely reflect the
definitization process.
Response: This final rule implements
section 855 of the John S. McCain
NDAA for FY 2019, which requires
notification to prospective bidders and
offerors regarding administration of
change orders for construction and does
not exclude any type of change order.
For clarification purposes, the final rule
moves the proposed text at
43.204(b)(3)(ii) to 43.204(b)(1)(ii) to
clarify that applicability is to all change
orders.
b. Incorporate Broader Definition for
Clarification
Comment: One respondent stated that
agencies have different standards for
definitizing equitable adjustments and
the FAR does not adequately define
‘‘equitable adjustment;’’ therefore, any
resultant data reporting from Federal
agencies will differ. The respondent
stated that the rule should require
agencies to incorporate the ‘‘broadest
possible definition’’ in reporting the
time to definitize an equitable
adjustment. A second respondent stated
that broadening the definition of a
request for equitable adjustment to
include contract modifications that
result from either unilateral or bilateral
changes would be helpful.
Response: FAR 43.204 and agency
supplements provide the standard for
definitizing equitable adjustments,
while this rule adds the requirement for
providing a notice to prospective
bidders or offerors regarding
definitization of change orders for
construction. Also, the notice
requirements at FAR 36.211(b)(1)
(previously at FAR 36.524 and the
removed provision) allows the agency
issuing the solicitation to share the
policies and procedures that apply to
definitization of equitable adjustments
for change orders under construction
contracts. With this information all
offerors will have the same
understanding of each solicitation. A
broader definition is not necessary
considering the guidance that is already
available in the FAR, agency
PO 00000
Frm 00013
Fmt 4701
Sfmt 4700
58229
supplements, and agency policies and
procedures.
For clarification purposes, the final
rule includes at FAR 43.204(b)(1)(ii)
(previously at FAR 43.204(b)(3)(ii)) the
parameter, per section 855 of the John
S. McCain NDAA for FY 2019, that the
measurement of definitizing equitable
adjustments begins upon receipt of an
adequate change order definitization
proposal by the contracting officer and
ends upon the contracting officer’s
execution of a contractual action to
definitize the change order.
c. Measurement of Change Order
Process
Comment: One respondent stated that
measurement of the change order
process should start when the contractor
provides the contracting officer with an
estimate of cost or provides schedule
impacting decisions and the cost or
changes are validated by the contracting
officer as being within the scope of the
contract.
Response: This FAR rule implements
section 855 of the John S. McCain
NDAA for FY 2019, which requires that
measurement of the change order
process begin upon receipt of a request
for an equitable adjustment. For
clarification purposes, the final rule
identifies at FAR 43.204(b)(1)(ii)
(previously at FAR 43.204(b)(3)(ii)) the
measurement of the definitization of
requests for equitable adjustment by
including the following sentence, ‘‘The
definitization of an equitable adjustment
begins upon receipt of an adequate
change order definitization proposal by
the contracting officer and ends upon
the contracting officer’s execution of a
contractual action to definitize the
change order.’’
4. Cost/Administrative Burden
a. Collection Process Without
Corresponding Benefits
Comment: One respondent stated that
the transparency required by the FAR
rule places undue costs and
administrative burdens on agencies
without corresponding benefits. The
respondent also stated that by requiring
disclosure of historical past
performance data, the FAR rule will
serve as a deterrent to some small
business offerors and may cause small
business offerors to inflate construction
prices to mitigate possible lengthy
equitable adjustment timeframes.
Response: The FAR rule is not
intended to place undue costs and
administrative burden on agencies or to
deter small business contractors. In
contrast, the rule provides small
business contractors with useful
E:\FR\FM\23SER3.SGM
23SER3
58230
Federal Register / Vol. 87, No. 184 / Friday, September 23, 2022 / Rules and Regulations
information that will allow them to
make informed decisions and to
properly plan and prepare proposals,
thus providing agencies with
corresponding benefits. Also, the
disclosure of an agency’s historical past
performance data on the timeliness of
definitization of equitable adjustments
will provide potential small business
offerors with data that can be used in
deciding whether to submit a proposal
and the knowledge to plan financially
for possible incurred costs if delays are
experienced in the definitization of
equitable adjustments. As with the
initial contract, contracting officers are
required to negotiate equitable
adjustments resulting from change
orders to ensure the Government
receives fair and reasonable pricing.
Therefore, the final rule is unchanged as
a result of this comment.
b. Centralized Tracking Website
Comment: One respondent stated that
agencies are unlikely to have a
centralized tool to track the required
past performance data. The respondent
stated that the rule should not be
finalized until adequate funding is
identified and a tracking tool can be
designed, constructed, implemented,
operated, and maintained.
Response: The Government does not
intend to develop a centralized tool to
track the past performance data required
under this rule. Instead, the final rule,
at FAR 43.204(b)(1)(ii) (previously at
FAR 43.204 (b)(3)(ii)), replaces
‘‘[website to be determined]’’ with
‘‘follow agency procedures’’ to clarify
the recording and maintenance of data;
and revises the next to last sentence of
FAR 43.204(b)(1)(ii) to state, ‘‘The
contracting officer shall ensure the data
is recorded promptly in accordance
with agency procedures.’’ Additionally,
the data (previously required by the
removed provision) to be disclosed to
offerors is required in the table provided
at FAR 36.211(b)(2).
lotter on DSK11XQN23PROD with RULES3
5. Support for the Rule
Comment: Two respondents
expressed support for the rule.
Response: The Councils acknowledge
the respondents’ support for the rule.
III. Applicability to Contracts at or
Below the Simplified Acquisition
Threshold (SAT) and for Commercial
Products (Including Commercially
Available Off-the-Shelf (COTS) Items)
or for Commercial Services
This rule implements a statutory
requirement for Federal agencies to
provide a notice, along with
solicitations for construction contracts
anticipated to be awarded to small
VerDate Sep<11>2014
18:23 Sep 22, 2022
Jkt 256001
businesses, to prospective offerors
regarding agency policies or practices
related to, and agency past performance
in, complying with FAR requirements
related to the timely definitization of
requests for equitable adjustment
resulting from change orders under
construction contracts.
This rule does not create new
solicitation provisions or contract
clauses or impact any existing
provisions or clauses.
A. Applicability to Contracts at or Below
the Simplified Acquisition Threshold
41 U.S.C. 1905 governs the
applicability of laws to acquisitions at
or below the SAT. Section 1905
generally limits the applicability of new
laws when agencies are making
acquisitions at or below the SAT, but
provides that such acquisitions will not
be exempt from a provision of law
under certain circumstances, including
when the Federal Acquisition
Regulatory Council (FAR Council)
makes a written determination and
finding that it would not be in the best
interest of the Federal Government to
exempt contracts and subcontracts in
amounts not greater than the SAT from
the provision of law. The FAR Council
has made a determination to apply 41
U.S.C 1905 to acquisitions at or below
the SAT.
B. Applicability to Contracts for the
Acquisition of Commercial Products,
Including Commercially Available OffThe-Shelf (COTS) Items, or for
Commercial Services
41 U.S.C. 1906 governs the
applicability of laws to contracts for the
acquisition of commercial products or
services and is intended to limit the
applicability of laws to those contracts.
Section 1906 provides that if the FAR
Council makes a written determination
that it is not in the best interest of the
Federal Government to exempt
commercial product or commercial
service contracts and subcontracts, the
provision of law will apply to those
contracts and subcontracts.
41 U.S.C. 1907 states that acquisitions
of COTS items will be exempt from
certain provisions of law unless the
Administrator for Federal Procurement
Policy makes a written determination
and finds that it would not be in the best
interest of the Federal Government to
exempt contracts for the procurement of
COTS items.
The FAR Council did not make a
determination to apply 41 U.S.C. 1906
to acquisitions for commercial products
or commercial services. The
Administrator for Federal Procurement
Policy did not make a determination to
PO 00000
Frm 00014
Fmt 4701
Sfmt 4700
apply 41 U.S.C. 1907 to acquisitions of
COTS items.
IV. Expected Impact of the Rule
This rule requires agencies to provide
a notice that includes information about
the agency’s policies or practices in
complying with FAR requirements
related to the timely definitization of
equitable adjustments under
construction contracts, along with
solicitations for construction contracts
anticipated to be awarded to small
businesses. 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 they were to experience
delays in the timely definitization of
equitable adjustments. Additionally,
contracting offices and contract
administration offices are required to
collect data on the time required to
definitize change orders for construction
contracts. There will be no cost impact
to the public other than a de minimis
cost to read the notice. The notice is for
informational purposes and does not
require any action on the part of the
public.
V. 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.
VI. Congressional Review Act
As required by the Congressional
Review Act (5 U.S.C. 801–808) before an
interim or final rule takes effect, DoD,
GSA, and NASA will send the rule and
the ‘‘Submission of Federal Rules Under
the Congressional Review Act’’ form to
E:\FR\FM\23SER3.SGM
23SER3
Federal Register / Vol. 87, No. 184 / Friday, September 23, 2022 / Rules and Regulations
each House of the Congress and to the
Comptroller General of the United
States. A major rule cannot take effect
until 60 days after it is published in the
Federal Register. The Office of
Information and Regulatory Affairs
(OIRA) in the Office of Management and
Budget has determined that this is not
a major rule under 5 U.S.C. 804.
lotter on DSK11XQN23PROD with RULES3
VII. Regulatory Flexibility Act
DoD, GSA, and NASA have prepared
a final regulatory flexibility analysis
(FRFA) consistent with the Regulatory
Flexibility Act, 5 U.S.C. 601–612. The
FRFA is summarized as follows:
This rule is necessary to implement section
855 of the John S. McCain National Defense
Authorization Act (NDAA) for Fiscal Year
(FY) 2019 (Pub. L. 115–232, codified at 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 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 also include 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.
FAR 36.211 requires agencies to furnish data
for the three fiscal years preceding the
issuance of the solicitation notice.
The objective of this 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.
There were no significant issues raised by
the public comments in response to the
initial regulatory flexibility analysis.
DoD, GSA, and NASA do not expect this
change to have a significant economic impact
on a substantial number of small entities
because this rule is aimed primarily at
Federal agencies, requiring them to provide
a notice of their past performance on
definitizing equitable adjustments for change
orders under 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 they
were to experience delays in the timely
definitization of equitable adjustments.
An analysis of the Federal Procurement
Data System reveals that an average of 2,280
unique entities per year were awarded
construction contracts during FY 2017, FY
2018, and FY 2019. Of those, 1,797 were
VerDate Sep<11>2014
18:23 Sep 22, 2022
Jkt 256001
small entities. The number of construction
contracts awarded in FY 2017, FY 2018, and
FY 2019 averaged 4,349 per year, of which
3,323 were awarded to small entities.
Additionally, during these same years, an
average of 3,659 construction-related task
orders were awarded each year to
approximately 1,054 unique entities; 2,991 of
those task orders were awarded to 838 small
entities. On average, over FY 2017, FY 2018,
and FY 2019, 6,422 modifications were
issued each year to approximately 1,542
entities for change orders or definitization of
change orders under construction contracts.
Of those, approximately 3,702 modifications
were issued to 1,125 small entities.
This final rule does not include any new
reporting, recordkeeping or other compliance
requirements for small entities.
There are no known significant alternative
approaches that would accomplish the stated
objectives of the applicable statute.
Interested parties may obtain a copy
of the FRFA from the Regulatory
Secretariat Division. The Regulatory
Secretariat Division has submitted a
copy of the FRFA to the Chief Counsel
for Advocacy of the Small Business
Administration.
VIII. 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.
3501–3521).
List of Subjects in 48 CFR Parts 5, 12,
19, 36, and 43
Government procurement.
William F. Clark,
Director, Office of Government-wide
Acquisition Policy, Office of Acquisition
Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA
amend 48 CFR parts 5, 12, 19, 36, and
43 as set forth below:
■ 1. The authority citation for 48 CFR
parts 5, 12, 19, 36, and 43 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 5—PUBLICIZING CONTRACT
ACTIONS
2. Amend section 5.205 by adding
paragraph (h) to read as follows:
■
5.205
Special situations.
*
*
*
*
*
(h) Notice regarding timely
definitization of equitable adjustments
for change orders under construction
contracts. When the contracting officer
anticipates award of a contract to a
small business pursuant to a solicitation
for construction, the contracting officer
must transmit in the solicitation notice
PO 00000
Frm 00015
Fmt 4701
Sfmt 4700
58231
on the GPE information regarding
definitization of equitable adjustments
for change orders under construction
contracts (see 36.211).
PART 12—ACQUISITION OF
COMMERCIAL PRODUCTS AND
COMMERCIAL SERVICES
3. 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 products and
commercial services.
(a) * * *
(10) 15 U.S.C. 644(w), Solicitation
Notice Regarding Administration of
Change Orders for Construction (see
36.211).
*
*
*
*
*
PART 19—SMALL BUSINESS
PROGRAMS
4. Add section 19.502–11 to read as
follows:
■
19.502–11 Solicitation notice regarding
administration of change orders for
construction.
See 36.211 for the requirement to
provide a notice to offerors regarding
definitization of equitable adjustments
for change orders under construction
contracts.
PART 36—CONSTRUCTION AND
ARCHITECT-ENGINEER CONTRACTS
5. Revise section 36.211 to read as
follows:
■
36.211 Distribution of advance notices and
solicitations.
(a) Advance notices and solicitations
should be distributed to reach as many
prospective offerors as practicable.
Contracting officers may send notices
and solicitations to organizations that
maintain, without charge to the public,
display rooms for the benefit of
prospective offerors, subcontractors, and
material suppliers. If requested by such
organizations, this may be done for all
or a stated class of construction projects
on an annual or semiannual basis.
Contracting officers may determine the
geographical extent of distribution of
advance notices and solicitations on a
case-by-case basis.
(b) As required by 15 U.S.C. 644(w),
the contracting officer shall transmit to
the Governmentwide point of entry
(GPE) a notice (see 5.205(h), in
solicitation notices posted at the GPE for
construction contracts anticipated to be
awarded to a small business pursuant to
part 19. The notice shall include certain
information regarding the agency’s
E:\FR\FM\23SER3.SGM
23SER3
58232
Federal Register / Vol. 87, No. 184 / Friday, September 23, 2022 / Rules and Regulations
definitization of equitable adjustments
for change orders under construction
contracts. This information includes:
(1) A description of agency policies or
procedures, in addition to that outlined
in FAR 43.204, that apply to
definitization of equitable adjustments
for change orders under construction
contracts. This description may be
provided in a notice by including an
address of an agency-specific, publicly
accessible website containing this
information. If no agency-specific
additional policies and procedures
exist, the notice shall include a
statement to that effect.
(2) Data on the agency’s past
performance, for the prior 3 fiscal years,
regarding the time required to definitize
equitable adjustments for change orders
under construction contracts (see
43.204). If fewer than 3 fiscal years of
data are available, agencies shall
provide data for the number of fiscal
years that are available. Data shall be
provided in the solicitation notice as
shown in the following table, or provide
the address of an agency-specific,
publicly accessible website containing
this information. An adequate change
order definitization proposal shall
contain sufficient information to enable
the contracting officer to conduct
meaningful analyses and audits of the
information contained in the proposal.
TABLE 1 TO PARAGRAPH (b)(2)
Time to definitize after receipt of an adequate change order definitization proposal under
construction contracts
Number of change order proposals definitized
under construction contracts
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
equitable adjustments received during contract performance.
promptly in accordance with agency
procedures. See 36.211(b).
*
*
*
*
*
6. 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.
PART 43—CONTRACT
MODIFICATIONS
7. Amend section 43.204 by
redesignating paragraph (b)(1) as
paragraph (b)(1)(i) and adding paragraph
(b)(1)(ii) to read as follows:
■
lotter on DSK11XQN23PROD with RULES3
43.204
Administration.
18:23 Sep 22, 2022
BILLING CODE 6820–EP–P
DEPARTMENT OF DEFENSE
GENERAL SERVICES
ADMINISTRATION
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
48 CFR Parts 2, 5, 6, 13, 19, and 52
[FAC 2022–08; FAR Case 2019–007; Item
III; Docket No. FAR–2019–0007, Sequence
No. 1]
RIN 9000–AN90
Federal Acquisition Regulation:
Update of Historically Underutilized
Business Zone Program
Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Final rule.
AGENCY:
(b) * * *
(1)(i) * * *
(ii) Agencies shall, in accordance with
agency procedures, record and maintain
data regarding the time required to
definitize equitable adjustments
associated with change orders for
construction. The definitization of an
equitable adjustment begins upon
receipt of an adequate change order
definitization proposal by the
contracting officer, and ends upon the
contracting officer’s execution of a
contractual action to definitize the
change order. The contracting officer
shall ensure the data is recorded
VerDate Sep<11>2014
[FR Doc. 2022–20341 Filed 9–22–22; 8:45 am]
Jkt 256001
DoD, GSA, and NASA are
issuing a final rule amending the
Federal Acquisition Regulation (FAR) to
implement changes to the Small
Business Administration’s regulations
for the Historically Underutilized
Business Zone Program to reflect
current policies, eliminate ambiguities,
and reduce burdens on small businesses
and procuring agencies.
DATES: Effective October 28, 2022.
SUMMARY:
PO 00000
Frm 00016
Fmt 4701
Sfmt 4700
Ms.
Malissa Jones, Procurement Analyst, at
703–605–2815 or by email at
Malissa.Jones@gsa.gov for clarification
of content. For information pertaining to
status or publication schedules, contact
the Regulatory Secretariat Division at
202–501–4755 or GSARegSec@gsa.gov.
Please cite FAC 2022–08, FAR Case
2019–007.
SUPPLEMENTARY INFORMATION:
FOR FURTHER INFORMATION CONTACT:
I. Background
DoD, GSA, and NASA published a
proposed rule in the Federal Register at
86 FR 31468 on June 14, 2021, to
implement regulatory changes made by
the Small Business Administration
(SBA) to the Historically Underutilized
Business Zone (HUBZone) Program.
Following a review of its HUBZone
program regulations, SBA issued a final
rule on November 26, 2019, at 84 FR
65222, to update its regulations to
reflect current policies, eliminate
ambiguities, and reduce burdens on
small businesses and procuring
agencies. For details see the proposed
rule and Section IV below.
Two respondents submitted public
comments in response to the proposed
rule.
II. Discussion and Analysis
The Civilian Agency Acquisition
Council and the Defense Acquisition
Regulations Council (the Councils)
reviewed the public comments in the
development of the final rule; however,
no changes were made as a result of the
public comments received. A discussion
E:\FR\FM\23SER3.SGM
23SER3
]]>Agencies
[Federal Register Volume 87, Number 184 (Friday, September 23, 2022)]
[Rules and Regulations]
[Pages 58227-58232]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20341]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 5, 12, 19, 36, and 43
[FAC 2022-08; FAR Case 2018-020; Item II; 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: Final rule.
-----------------------------------------------------------------------
SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the
Federal Acquisition Regulation (FAR) to implement a section of the John
S. McCain National Defense Authorization Act for Fiscal Year 2019, to
require agencies to provide a notice along with the solicitation to
prospective bidders and offerors regarding definitization of requests
for equitable adjustment related to change orders under construction
contracts.
DATES: Effective October 28, 2022.
FOR FURTHER INFORMATION CONTACT: Ms. Dana Bowman, Procurement Analyst,
at 202-803-3188, 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
or [email protected]. Please cite FAC 2022-08, FAR Case 2018-020.
[[Page 58228]]
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA published a proposed rule at 85 FR 18181 on
April 1, 2020, to implement section 855 of the John S. McCain National
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019 (Pub. L.
115--232), codified at 15 U.S.C. 644(w) in the Small Business Act.
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 that includes 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. Definitization of
requests for equitable adjustment occurs after the contracting officer
receives, reviews, and conducts an analysis and audit of the
information contained in a change order proposal, and results in an
executed contractual action. The notice must also 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.
FAR 36.211 requires agencies to furnish data for the three fiscal
years preceding the issuance of the solicitation notice.
Six respondents submitted public comments in response to the
proposed rule.
II. Discussion and Analysis
The Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (the Councils) reviewed the public comments in the
development of the final rule. A discussion of the comments received,
and any changes made to the rule as a result of the public comments are
provided as follows:
A. Summary of Significant Changes From the Proposed Rule
The following significant changes from the proposed rule are made
in the final rule:
(1) Removal of Provision 52.236-XX; Replaced by Solicitation Notice
The final rule FAR text removes the proposed solicitation provision
52.236-XX, Notice Regarding Administration of Change Orders for
Construction. The provision is replaced with an instruction to the
contracting officer at FAR subpart 5.2, Synopses of Proposed Contract
Actions. Specifically, 5.205(h), Special situations, requires
contracting officers to transmit a notice in the solicitation notice on
the Governmentwide point of entry (GPE) to meet the requirements of
section 855 (15 U.S. C. 644(w)).
The final rule FAR text removes the proposed text at FAR subpart
36.5, Contract Clauses, and replaces it with text at subpart 36.2,
Special Aspects of Contracting for Construction. Specifically,
paragraph (b) is added to FAR section 36.211 to coincide with FAR
5.205(h) and to provide specifics on the information required in the
solicitation notice. This change will allow agencies more flexibility
to share their specific guidance or to provide explanatory commentary.
The text from the removed provision, 52.236-XX, is converted into the
text for the solicitation notice.
(2) Removal of ``publicly accessible website'' and ``website to be
determined''; Replaced with ``agency specific, publicly accessible
website'' and ``follow agency procedures''
FAR 36.211(b) requires contracting officers to provide a
description of applicable policies or procedures in the notice or
through ``an address of an agency-specific, publicly accessible
website'' containing this information rather than through a provision
to be filled in or a ``publicly accessible website.'' The agency's past
performance data will be included in the table format provided at FAR
36.211(b) or on an agency-specific, publicly accessible website in lieu
of a ``website to be determined'' as stated in the proposed rule.
This change will allow agencies more flexibility in how to share
their specific guidance, and to provide explanatory commentary when
appropriate.
(3) Clarifications
The final rule makes revisions at FAR part 43, Contract
Modifications. Specifically, FAR 43.204(b)(3)(ii), regarding recording
and maintaining data for definitizing equitable adjustments, is moved
to paragraph (b)(1)(ii) to clarify that the requirement applies to all
change orders. This paragraph replaces in two places the phrase ``shall
use [website to be determined]'' with a reference to agency procedures
to allow more flexibility in recording and maintaining the required
data.
(4) Measurement of the Definitization of Equitable Adjustments
The final rule revises FAR 43.204(b)(1)(ii), previously FAR
43.204(b)(3)(ii) in the proposed rule, to identify the measurement of
the definitization of equitable adjustments by including the following
sentence: ``The definitization of an equitable adjustment begins upon
receipt of an adequate change order definitization proposal by the
contracting officer and ends upon the contracting officer's execution
of a contractual action to definitize the change order.''
B. Analysis of Public Comments
1. Applicability/Authority for Appropriations
Comment: One respondent stated that NDAA appropriations are not
applicable to non-DoD agencies. The respondent stated that the law
should be incorporated into the Defense Federal Acquisition Regulation
Supplement (DFARS) instead of the FAR.
Response: Congress often uses the annual NDAA as a vehicle for
making Governmentwide acquisition law changes. In this instance,
Congress amended section 15 of the Small Business Act (15 U.S.C. 644)
in section 855 of the John S. McCain NDAA for FY 2019 (Pub. L. 115-
232). The new requirements are codified at 15 U.S.C. 644(w). Since
section 15 of the Small Business Act (15 U.S.C. 644) has Governmentwide
applicability, it is appropriate for the requirements to be implemented
in the FAR. No changes were made to the final rule as a result of this
comment.
2. Past Performance Data
Comment: One respondent stated that the rule should allow agencies
an opportunity to explain factors contributing to the time required to
resolve equitable adjustments as the reasons are often beyond the
Government's control. The respondent stated that historical data
without context is irrelevant to predicting future time frames and
otherwise makes the data meaningless.
Another respondent noted that construction contracts are usually
administered by individual construction contract administration offices
near the project site. The respondent stated that collecting agency-
wide past performance data is not indicative of future time frames and
cannot be correlated to accurately anticipate future conduct of an
administering office. The respondent stated that the rule should be
amended to allow agencies an opportunity to account for a contract
change's specific facts and circumstances; otherwise, the data is
meaningless.
A third respondent stated that allowing an ``explanatory
commentary'' section in either the solicitation or a
[[Page 58229]]
public website for agencies to explain the metric or means used to
compile or report the types of equitable adjustments included or
excluded from the metrics would be helpful.
Response: While primary data without context has value, the
Councils acknowledge context could enhance the value of historical data
in some situations and that agencies should have the opportunity to
provide additional relevant information. The FAR text is revised to
remove the proposed provision 52.236-XX, Notice Regarding
Administration of Change Orders for Construction, and replace it with a
requirement for contracting officers to transmit a notice on the GPE in
the solicitation notice as required by FAR part 5 to meet the
requirements of section 855 (15 U.S.C. 644(w)). Additional text is
added at FAR 5.205(h) to include the requirement for a solicitation
notice on the GPE. Also, FAR 36.524 is replaced by FAR 36.211 to
coincide with FAR 5.205(h) and to provide specifics on the information
required in the solicitation notice (previously in the removed
provision).
As previously included in paragraph (b) of the removed provision,
contracting officers will include in the notice a description of the
agency's applicable policies and procedures or the address of an
agency-specific, publicly accessible website containing the information
that applies to definitization of equitable adjustments for change
orders under construction contracts. Additionally, the final rule
revises ``publicly accessible website'' from paragraph (b) of the now
removed provision to ``an agency-specific, publicly accessible
website'' at 36.211(b)(1) and (2) to allow more flexibility for
agencies to share their specific guidance or to provide explanatory
commentary.
Also, the proposed rule text at FAR 43.204(b)(3)(ii) regarding
recording and maintaining data for definitizing requests for equitable
adjustment is moved to FAR 43.204(b)(1)(ii) to clarify that the
requirement applies to all change orders. This paragraph replaces in
two places ``[website to be determined]'' with a reference to ``agency
procedures'' to allow more flexibility in recording and maintaining the
required data.
3. Definitizing Equitable Adjustments
a. Equitable Adjustments in General Versus Unpriced Change Orders
Comment: One respondent stated that it was unclear if the intent
was to disclose all equitable adjustments in general or only those for
unpriced change orders. The respondent stated that the rule should be
limited to disclosing past performance data accounting for the time
associated with definitization of equitable adjustments for unpriced
change orders and not the time associated with the resolution of
equitable adjustments in general. The respondent indicated section 855
discusses the definitization process but is not applicable to
undefinitized equitable adjustments and stated that the FAR rule should
be revised to clearly and precisely reflect the definitization process.
Response: This final rule implements section 855 of the John S.
McCain NDAA for FY 2019, which requires notification to prospective
bidders and offerors regarding administration of change orders for
construction and does not exclude any type of change order. For
clarification purposes, the final rule moves the proposed text at
43.204(b)(3)(ii) to 43.204(b)(1)(ii) to clarify that applicability is
to all change orders.
b. Incorporate Broader Definition for Clarification
Comment: One respondent stated that agencies have different
standards for definitizing equitable adjustments and the FAR does not
adequately define ``equitable adjustment;'' therefore, any resultant
data reporting from Federal agencies will differ. The respondent stated
that the rule should require agencies to incorporate the ``broadest
possible definition'' in reporting the time to definitize an equitable
adjustment. A second respondent stated that broadening the definition
of a request for equitable adjustment to include contract modifications
that result from either unilateral or bilateral changes would be
helpful.
Response: FAR 43.204 and agency supplements provide the standard
for definitizing equitable adjustments, while this rule adds the
requirement for providing a notice to prospective bidders or offerors
regarding definitization of change orders for construction. Also, the
notice requirements at FAR 36.211(b)(1) (previously at FAR 36.524 and
the removed provision) allows the agency issuing the solicitation to
share the policies and procedures that apply to definitization of
equitable adjustments for change orders under construction contracts.
With this information all offerors will have the same understanding of
each solicitation. A broader definition is not necessary considering
the guidance that is already available in the FAR, agency supplements,
and agency policies and procedures.
For clarification purposes, the final rule includes at FAR
43.204(b)(1)(ii) (previously at FAR 43.204(b)(3)(ii)) the parameter,
per section 855 of the John S. McCain NDAA for FY 2019, that the
measurement of definitizing equitable adjustments begins upon receipt
of an adequate change order definitization proposal by the contracting
officer and ends upon the contracting officer's execution of a
contractual action to definitize the change order.
c. Measurement of Change Order Process
Comment: One respondent stated that measurement of the change order
process should start when the contractor provides the contracting
officer with an estimate of cost or provides schedule impacting
decisions and the cost or changes are validated by the contracting
officer as being within the scope of the contract.
Response: This FAR rule implements section 855 of the John S.
McCain NDAA for FY 2019, which requires that measurement of the change
order process begin upon receipt of a request for an equitable
adjustment. For clarification purposes, the final rule identifies at
FAR 43.204(b)(1)(ii) (previously at FAR 43.204(b)(3)(ii)) the
measurement of the definitization of requests for equitable adjustment
by including the following sentence, ``The definitization of an
equitable adjustment begins upon receipt of an adequate change order
definitization proposal by the contracting officer and ends upon the
contracting officer's execution of a contractual action to definitize
the change order.''
4. Cost/Administrative Burden
a. Collection Process Without Corresponding Benefits
Comment: One respondent stated that the transparency required by
the FAR rule places undue costs and administrative burdens on agencies
without corresponding benefits. The respondent also stated that by
requiring disclosure of historical past performance data, the FAR rule
will serve as a deterrent to some small business offerors and may cause
small business offerors to inflate construction prices to mitigate
possible lengthy equitable adjustment timeframes.
Response: The FAR rule is not intended to place undue costs and
administrative burden on agencies or to deter small business
contractors. In contrast, the rule provides small business contractors
with useful
[[Page 58230]]
information that will allow them to make informed decisions and to
properly plan and prepare proposals, thus providing agencies with
corresponding benefits. Also, the disclosure of an agency's historical
past performance data on the timeliness of definitization of equitable
adjustments will provide potential small business offerors with data
that can be used in deciding whether to submit a proposal and the
knowledge to plan financially for possible incurred costs if delays are
experienced in the definitization of equitable adjustments. As with the
initial contract, contracting officers are required to negotiate
equitable adjustments resulting from change orders to ensure the
Government receives fair and reasonable pricing. Therefore, the final
rule is unchanged as a result of this comment.
b. Centralized Tracking Website
Comment: One respondent stated that agencies are unlikely to have a
centralized tool to track the required past performance data. The
respondent stated that the rule should not be finalized until adequate
funding is identified and a tracking tool can be designed, constructed,
implemented, operated, and maintained.
Response: The Government does not intend to develop a centralized
tool to track the past performance data required under this rule.
Instead, the final rule, at FAR 43.204(b)(1)(ii) (previously at FAR
43.204 (b)(3)(ii)), replaces ``[website to be determined]'' with
``follow agency procedures'' to clarify the recording and maintenance
of data; and revises the next to last sentence of FAR 43.204(b)(1)(ii)
to state, ``The contracting officer shall ensure the data is recorded
promptly in accordance with agency procedures.'' Additionally, the data
(previously required by the removed provision) to be disclosed to
offerors is required in the table provided at FAR 36.211(b)(2).
5. Support for the Rule
Comment: Two respondents expressed support for the rule.
Response: The Councils acknowledge the respondents' support for the
rule.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT) and for Commercial Products (Including Commercially
Available Off-the-Shelf (COTS) Items) or for Commercial Services
This rule implements 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 related to, and agency
past performance in, complying with FAR requirements related to the
timely definitization of requests for equitable adjustment resulting
from change orders under construction contracts.
This rule does not create new solicitation provisions or contract
clauses or impact any existing provisions or clauses.
A. Applicability to Contracts at or Below the Simplified Acquisition
Threshold
41 U.S.C. 1905 governs the applicability of laws to acquisitions at
or below the SAT. Section 1905 generally limits the applicability of
new laws when agencies are making acquisitions at or below the SAT, but
provides that such acquisitions will not be exempt from a provision of
law under certain circumstances, including when the Federal Acquisition
Regulatory Council (FAR Council) makes a written determination and
finding that it would not be in the best interest of the Federal
Government to exempt contracts and subcontracts in amounts not greater
than the SAT from the provision of law. The FAR Council has made a
determination to apply 41 U.S.C 1905 to acquisitions at or below the
SAT.
B. Applicability to Contracts for the Acquisition of Commercial
Products, Including Commercially Available Off-The-Shelf (COTS) Items,
or for Commercial Services
41 U.S.C. 1906 governs the applicability of laws to contracts for
the acquisition of commercial products or services and is intended to
limit the applicability of laws to those contracts. Section 1906
provides that if the FAR Council makes a written determination that it
is not in the best interest of the Federal Government to exempt
commercial product or commercial service contracts and subcontracts,
the provision of law will apply to those contracts and subcontracts.
41 U.S.C. 1907 states that acquisitions of COTS items will be
exempt from certain provisions of law unless the Administrator for
Federal Procurement Policy makes a written determination and finds that
it would not be in the best interest of the Federal Government to
exempt contracts for the procurement of COTS items.
The FAR Council did not make a determination to apply 41 U.S.C.
1906 to acquisitions for commercial products or commercial services.
The Administrator for Federal Procurement Policy did not make a
determination to apply 41 U.S.C. 1907 to acquisitions of COTS items.
IV. Expected Impact of the Rule
This rule requires agencies to provide a notice that includes
information about the agency's policies or practices in complying with
FAR requirements related to the timely definitization of equitable
adjustments under construction contracts, along with solicitations for
construction contracts anticipated to be awarded to small businesses.
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 they were to experience delays in the timely
definitization of equitable adjustments. Additionally, contracting
offices and contract administration offices are required to collect
data on the time required to definitize change orders for construction
contracts. There will be no cost impact to the public other than a de
minimis cost to read the notice. The notice is for informational
purposes and does not require any action on the part of the public.
V. 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.
VI. Congressional Review Act
As required by the Congressional Review Act (5 U.S.C. 801-808)
before an interim or final rule takes effect, DoD, GSA, and NASA will
send the rule and the ``Submission of Federal Rules Under the
Congressional Review Act'' form to
[[Page 58231]]
each House of the Congress and to the Comptroller General of the United
States. A major rule cannot take effect until 60 days after it is
published in the Federal Register. The Office of Information and
Regulatory Affairs (OIRA) in the Office of Management and Budget has
determined that this is not a major rule under 5 U.S.C. 804.
VII. Regulatory Flexibility Act
DoD, GSA, and NASA have prepared a final regulatory flexibility
analysis (FRFA) consistent with the Regulatory Flexibility Act, 5
U.S.C. 601-612. The FRFA is summarized as follows:
This rule is necessary to implement section 855 of the John S.
McCain National Defense Authorization Act (NDAA) for Fiscal Year
(FY) 2019 (Pub. L. 115-232, codified at 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 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 also include 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. FAR 36.211 requires
agencies to furnish data for the three fiscal years preceding the
issuance of the solicitation notice.
The objective of this 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.
There were no significant issues raised by the public comments
in response to the initial regulatory flexibility analysis.
DoD, GSA, and NASA do not expect this change to have a
significant economic impact on a substantial number of small
entities because this rule is aimed primarily at Federal agencies,
requiring them to provide a notice of their past performance on
definitizing equitable adjustments for change orders under
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 they were to experience delays in the timely
definitization of equitable adjustments.
An analysis of the Federal Procurement Data System reveals that
an average of 2,280 unique entities per year were awarded
construction contracts during FY 2017, FY 2018, and FY 2019. Of
those, 1,797 were small entities. The number of construction
contracts awarded in FY 2017, FY 2018, and FY 2019 averaged 4,349
per year, of which 3,323 were awarded to small entities.
Additionally, during these same years, an average of 3,659
construction-related task orders were awarded each year to
approximately 1,054 unique entities; 2,991 of those task orders were
awarded to 838 small entities. On average, over FY 2017, FY 2018,
and FY 2019, 6,422 modifications were issued each year to
approximately 1,542 entities for change orders or definitization of
change orders under construction contracts. Of those, approximately
3,702 modifications were issued to 1,125 small entities.
This final rule does not include any new reporting,
recordkeeping or other compliance requirements for small entities.
There are no known significant alternative approaches that would
accomplish the stated objectives of the applicable statute.
Interested parties may obtain a copy of the FRFA from the
Regulatory Secretariat Division. The Regulatory Secretariat Division
has submitted a copy of the FRFA to the Chief Counsel for Advocacy of
the Small Business Administration.
VIII. 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. 3501-3521).
List of Subjects in 48 CFR Parts 5, 12, 19, 36, and 43
Government procurement.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of
Acquisition Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 5, 12, 19, 36, and
43 as set forth below:
0
1. The authority citation for 48 CFR parts 5, 12, 19, 36, and 43
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 5--PUBLICIZING CONTRACT ACTIONS
0
2. Amend section 5.205 by adding paragraph (h) to read as follows:
5.205 Special situations.
* * * * *
(h) Notice regarding timely definitization of equitable adjustments
for change orders under construction contracts. When the contracting
officer anticipates award of a contract to a small business pursuant to
a solicitation for construction, the contracting officer must transmit
in the solicitation notice on the GPE information regarding
definitization of equitable adjustments for change orders under
construction contracts (see 36.211).
PART 12--ACQUISITION OF COMMERCIAL PRODUCTS AND COMMERCIAL SERVICES
0
3. 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 products and commercial services.
(a) * * *
(10) 15 U.S.C. 644(w), Solicitation Notice Regarding Administration
of Change Orders for Construction (see 36.211).
* * * * *
PART 19--SMALL BUSINESS PROGRAMS
0
4. Add section 19.502-11 to read as follows:
19.502-11 Solicitation notice regarding administration of change
orders for construction.
See 36.211 for the requirement to provide a notice to offerors
regarding definitization of equitable adjustments for change orders
under construction contracts.
PART 36--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS
0
5. Revise section 36.211 to read as follows:
36.211 Distribution of advance notices and solicitations.
(a) Advance notices and solicitations should be distributed to
reach as many prospective offerors as practicable. Contracting officers
may send notices and solicitations to organizations that maintain,
without charge to the public, display rooms for the benefit of
prospective offerors, subcontractors, and material suppliers. If
requested by such organizations, this may be done for all or a stated
class of construction projects on an annual or semiannual basis.
Contracting officers may determine the geographical extent of
distribution of advance notices and solicitations on a case-by-case
basis.
(b) As required by 15 U.S.C. 644(w), the contracting officer shall
transmit to the Governmentwide point of entry (GPE) a notice (see
5.205(h), in solicitation notices posted at the GPE for construction
contracts anticipated to be awarded to a small business pursuant to
part 19. The notice shall include certain information regarding the
agency's
[[Page 58232]]
definitization of equitable adjustments for change orders under
construction contracts. This information includes:
(1) A description of agency policies or procedures, in addition to
that outlined in FAR 43.204, that apply to definitization of equitable
adjustments for change orders under construction contracts. This
description may be provided in a notice by including an address of an
agency-specific, publicly accessible website containing this
information. If no agency-specific additional policies and procedures
exist, the notice shall include a statement to that effect.
(2) Data on the agency's past performance, for the prior 3 fiscal
years, regarding the time required to definitize equitable adjustments
for change orders under construction contracts (see 43.204). If fewer
than 3 fiscal years of data are available, agencies shall provide data
for the number of fiscal years that are available. Data shall be
provided in the solicitation notice as shown in the following table, or
provide the address of an agency-specific, publicly accessible website
containing this information. An adequate change order definitization
proposal shall contain sufficient information to enable the contracting
officer to conduct meaningful analyses and audits of the information
contained in the proposal.
Table 1 to Paragraph (b)(2)
------------------------------------------------------------------------
Number of change order
Time to definitize after receipt of an proposals definitized
adequate change order definitization proposal under construction
under construction contracts contracts
------------------------------------------------------------------------
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 equitable adjustments received
during contract performance.
------------------------------------------------------------------------
0
6. 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.
PART 43--CONTRACT MODIFICATIONS
0
7. Amend section 43.204 by redesignating paragraph (b)(1) as paragraph
(b)(1)(i) and adding paragraph (b)(1)(ii) to read as follows:
43.204 Administration.
(b) * * *
(1)(i) * * *
(ii) Agencies shall, in accordance with agency procedures, record
and maintain data regarding the time required to definitize equitable
adjustments associated with change orders for construction. The
definitization of an equitable adjustment begins upon receipt of an
adequate change order definitization proposal by the contracting
officer, and ends upon the contracting officer's execution of a
contractual action to definitize the change order. The contracting
officer shall ensure the data is recorded promptly in accordance with
agency procedures. See 36.211(b).
* * * * *
[FR Doc. 2022-20341 Filed 9-22-22; 8:45 am]
BILLING CODE 6820-EP-P
