[Federal Register: March 17, 2005 (Volume 70, Number 51)]
[Proposed Rules]
[Page 13005-13006]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17mr05-17]
[[Page 13005]]
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GENERAL SERVICES ADMINISTRATION
48 CFR Parts 546 and 552
[GSAR ANPR 2005-N01]
General Services Administration Acquisition Regulation; Waiver of
Consequential Damages and ``Post Award'' Audit Provisions (Correction)
AGENCY: Office of the Chief Acquisition Officer, General Services
Administration (GSA).
ACTION: Correction to advance notice of proposed rulemaking and notice
of public meeting.
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SUMMARY: The General Services Administration (GSA) is requesting
comments from both Government and industry on whether the General
Services Administration Acquisition Regulation (GSAR) should be revised
to include a waiver of consequential damages for contracts awarded for
commercial item under the FAR. GSA is also requesting comments on
whether ``post award'' audit provisions should be included its Multiple
Award Schedules (MAS) contracts and Governmentwide acquisition
contracts (GWACs). The notice published in the Federal Register at 70
FR 12167, March 11, 2005, is amended to extend the public comment date
to May 10, 2005, and to allow interested parties to submit
presentations by April 7, 2005.
DATES: Comment Date: Interested parties should submit comments on or
before May 10, 2005 to be considered in the formulation of a proposed
rulemaking.
Public Meeting Presentation Date: Interested parties may register
and submit presentations by April 7, 2005.
ADDRESSES: Submit written comments to: General Services Administration,
FAR Secretariat (MVA), 1800 F Street, NW., Room 4035, ATTN: Laurie
Duarte, Washington, DC 20405.
Submit electronic comments via the Internet to:
gsaranpr.2005-N01@gsa.gov
Submit electronic presentations via the Internet to:
meeting.2005-N01@gsa.gov.
Please submit comments or presentations only and cite GSAR ANPR
2005-N01 in all correspondence related to this case. All comments
received will be posted without change to http://www.acqnet.gov/far/ProposedRules/proposed.htm
, including any personal information
provided.
Public Meeting: The public meeting will be conducted at the General
Services Administration, National Capital Region, 301 7th and D street,
SW., Washington, DC 20407, Auditorium, starting at 9 a.m. to 4 p.m.
EST., on April 14, 2005, to ensure open dialogue between the Government
and interested parties on this important topic.
Special Instructions. The submitted presentations will be the only
record of the public meeting. If you intend to have your presentation
considered as a public comment in the formulation of the proposed
rulemaking, the presentation must be submitted separately as a public
comment as instructed above.
Special Accommodations: The public meeting is physically accessible
to people with disabilities. Request for sign language interpretation
or other auxiliary aids should be directed to Ernest Woodson, at 202-
501-3775, at least 5 working days prior to the meeting date.
FOR FURTHER INFORMATION CONTACT: Mr. Ernest Woodson, Procurement
Analyst, Contract Policy Division, 202-501-3775.
SUPPLEMENTARY INFORMATION:
Background
Currently, FAR Part 12, Acquisition of Commercial Items, prescribes
polices and procedures unique to the acquisition of commercial items
under FAR Part 12. FAR Part 12 implements the Government's preference
for the acquisition of commercial items as contained in Title VIII of
the Federal Acquisition Streamlining Act of 1994 by establishing
policies more closely resembling those of the commercial marketplace.
The clause, FAR 52.212-4, Contract Terms and Conditions--Commercial
Items, that includes terms and conditions applicable to each
acquisition procured under FAR Part 12 is, to the maximum extent
practicable, consistent with customary commercial practices. The clause
includes a provision, FAR 52.212-4(p), Limitation of liability, that
provides; ``Except as otherwise provided by an express warranty, the
Contractor will not be liable to the Government for consequential
damages resulting from any defect or deficiencies in accepted items.''
Also, FAR 12.302(b) allows the contracting officer to tailor the clause
at FAR 52.212-4 to adapt to market conditions of reach commercial
acquisition. In addition to the limitation of liability clause and the
provision at FAR 12.302, Federal contracts typically include a broad
range of standard contract clauses such as warranties and liquidated
damages that provide exclusive remedies for nonperformance that limit
the Government to the specific remedies set forth in the clause.
Likewise, the Contract Disputes Act of 1978 provides for the
resolution of any failure on the part of the Government and the
contractor to reach agreement on any request for equitable adjustment,
claim, appeal, or action arising under or relating to a Government
contract to be a dispute to be resolved in accordance with FAR 52.233-
1, disputes.
Notwithstanding specific adjustments and other remedies provided in
Government contracts for contractor deficiencies or nonperformance,
concerns have been raised that--
FAR clause 52.212-4(p) and the ``tailoring'' provision at
FAR 12.302, do not reach the level of commercial standards and that
unlimited consequential or other incidental or special damages are not
necessary and are, in fact, counterproductive to efficient procurement,
raising costs and establishing barriers to commercial companies
considering whether to do business with the Federal Government;
Although FAR 12.302 permits contracting officers to tailor
the limitation of liability clause at FAR 52.212-4(p), some companies
assert that contracting officers are unwilling to do so, leaving
contractors with a take-it or leave-it option and contracts that
deviate from the commercial marketplace, making contractors in general
less willing to sign on to such contracts;
The commercial practice, unlike FAR 52.212-4(p), that
waives liability for consequential damages resulting from any defect or
deficiencies in accepted items, provides for a complete wavier of
consequential damages;
Contractors would make risk decisions and negotiate
Government contracts without having to add an uncertainty premium as to
liability protection, if FAR Part 12 were appropriately amended to
reflect commercial practices; and
Contractors also request that we make the waiver of
consequential damages for commercial products and services available
under other provisions of the FAR.
Similarly, the General Accounting Office and periodically GSA's IG
raise concerns regarding GSA's right to access and examine contractor
records after contract award. GSA's primary vehicle for conducting
post-award audits is GSAR 552.215-70, Examination of Records by GSA,
that gives the Administrator of GSA, or any duly authorized
representative, typically the GSA Inspector General's Office of Audits,
access to and the right to examine contractor records relating to over
billings, billing errors, compliance with the Industrial Funding Fee
(IFF)
[[Page 13006]]
clause of the contract, and compliance with the Price Reduction Clause
under MAS contracts.
In addition to the GSA Examination of Records clause, GSA may use a
number of other authorities to conduct a post-award review of a
contractor's records. These other authorities include FAR 52.212-5
which authorizes the Comptroller General of the United States to access
and examine a contractor's directly pertinent records involving
transactions related to the contract; GSAR 515.209-70(b) that permits a
contracting officer to modify the GSA Examination of Records Clause to
define the specific area of audit (e.g., the use or disposition of
Government-furnished property, compliance with price reduction clause,
etc.), and the right of the GSA Inspector General to issue subpoenas
for contractor records under the Inspector General Act of 1978.
Contractors' major concerns with GSA's post-award audit authority
include complaints that they are too broad and not consistent with
commercial contract practices.
In consideration of the above concerns, we have questions as to how
the taxpayer may benefit from any revisions to the GSAR to address
contractor concerns regarding limitation of liability or post-award
audits. We are also interested in learning what, if any, impact the
Services Acquisition Reform Act of 2002 and 2003 has on the issue of
revising the GSAR to address limitations of liability.
In this advance notice of proposed rulemaking and notice of public
meeting, GSA is seeking input from both Government and industry on
whether the GSAR should be revised to waive consequential damages in
the purchase of commercial items under FAR Parts 12, 13, 14, and 15 and
whether GSA should modify its policy and practices with regard to the
addition of post award audit clauses into contracts it awards.
Dated: March 11, 2005.
David A. Drabkin,
Senior Procurement Executive, Office of the Chief Acquisition Officer,
General Services Administration.
[FR Doc. 05-5273 Filed 3-16-05; 8:45 am]
BILLING CODE 6820-61-M