[Federal Register: October 28, 1998 (Volume 63, Number 208)] [Proposed Rules] [Page 57877-57879] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr28oc98-40] [[Page 57877]] _______________________________________________________________________ Part III Department of Defense General Services Administration National Aeronautics and Space Administration _______________________________________________________________________ 48 CFR Part 46 Federal Acquisition Regulation: Conditionally Accepted Items; Proposed Rule [[Page 57878]] DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Part 46 [FAR Case 98-002] RIN 9000-A117 Federal Acquisition Regulation; Conditionally Accepted Items AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Proposed rule with request for comments. ----------------------------------------------------------------------- SUMMARY: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council are proposing to amend the Federal Acquisition Regulation (FAR) to require that, when conditionally accepting nonconforming items, amounts withheld from payments should be at least sufficient to cover the cost and related profit to correct deficiencies and complete unfinished work; and that the basis for the amounts withheld shall be documented in the contract file. This regulatory action was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. This is not a major rule under 5 U.S.C. 804. DATES: Comments should be submitted on or before December 28, 1998 to be considered in the formulation of a final rule. ADDRESSES: Interested parties should submit written comments to: General Services Administration, FAR Secretariat (MVR), Attn: Ms Laurie Duarte 1800 F Street, NW, Room 4035, Washington, DC 20405. E-mail comments submitted over Internet should be addressed to: farcase.98-002@gsa.gov. Please cite FAR case 98-002 in all correspondence related to this case. FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, 1800 F Street, NW, Washington, DC 20405, (202) 501-4755, for information pertaining to status or publication schedules. For clarification of content, contact Ms. Linda Klein, Procurement Analyst, at (202) 501- 3775. Please cite FAR case 98-002. SUPPLEMENTARY INFORMATION: A. Background This proposed rule implements the recommendation of General Accounting Office Report GAO/NSIAD-98-20 Defense Acquisition, Guidance Is Needed On Payments For Conditionally Accepted Items, dated December 12, 1997. The rule amends FAR 46.101 to add a definition of ``conditional acceptance,'' and amends FAR 46.407 to provide procedures for the conditional acceptance of supplies and services. B. Regulatory Flexibility Act This proposed rule is not expected 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., because the use of conditional acceptance is not widespread. Therefore, an Initial Regulatory Flexibility Analysis has not been performed. Comments from small entities concerning the affected FAR subpart will be considered in accordance with 5 U.S.C. 610 of the Act. Such comments must be submitted separately and should cite 5 U.S.C. 601, et seq. (FAR case 98-002), in correspondence. C. Paperwork Reduction Act The Paperwork Reduction Act does not apply because the proposed changes to the FAR do not impose recordkeeping or information collection requirements, or collections of information from offerors, contractors, or members of the public which require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq. List of Subjects in 48 CFR Part 46 Government procurement. Dated: October 22, 1998. Edward C. Loeb, Director, Federal Acquisition Policy Division. Therefore, it is proposed that 48 CFR Part 46 be amended as set forth below: PART 46--QUALITY ASSURANCE 1. The authority citation for 48 CFR Part 46 continues to read as follows: Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c). 2. Section 46.101 is amended by adding, in alphabetical order, the definition ``Conditional acceptance'' to read as follows: 46.101 Definitions. * * * * * Conditional acceptance means acceptance of supplies or services that do not conform to contract quality requirements, or are otherwise incomplete, that the contractor is required to correct or otherwise complete by a specified date. * * * * * 3. Section 46.407 is amended by revising paragraphs (c)(1) and (f) to read as follows: 46.407 Nonconforming supplies or services. * * * * * (c)(1) In situations not covered by paragraph (b) of this section, the contracting officer shall ordinarily reject supplies or services when the nonconformance is critical or major, or the supplies or services are otherwise incomplete. However, there may be circumstances (e.g., reasons of economy or urgency) when acceptance or conditional acceptance of such supplies or services is determined by the contracting officer to be in the best interest of the Government. The contracting officer shall make this determination based upon-- (i) Advice of the technical activity that the item is safe to use and will perform its intended purpose; (ii) Information regarding the nature and extent of the nonconformance or otherwise incomplete supplies or services; (iii) A request from the contractor for acceptance of the nonconforming or otherwise incomplete supplies or services (if feasible); (iv) A recommendation for acceptance, conditional acceptance, or rejection, with supporting rationale; and (v) The contract adjustment considered appropriate, including any adjustment offered by the contractor. * * * * * (f) When supplies or services are accepted with critical or major nonconformances as authorized in paragraph (c) of this section, the contract shall be modified to provide for an equitable price reduction or other consideration. In the case of conditional acceptance, amounts withheld from payments generally should be at least sufficient to cover the estimated cost and related profit to correct deficiencies and complete unfinished work. The basis for the amounts withheld shall be documented in the contract file. For services, the contracting officer can consider identifying the value of the individual work requirements or tasks (subdivisions) that may be subject to price or fee reduction. This value may be used to determine an equitable adjustment for nonconforming services. However, when supplies or services involving minor nonconformances are accepted, the contract need not be modified unless it appears that the [[Page 57879]] savings to the contractor in fabricating the nonconforming supplies or performing the services will exceed the cost to the Government of processing the modification. * * * * * [FR Doc. 98-28782 Filed 10-27-98; 8:45 am] BILLING CODE 6820-EP-P