[Federal Register: October 22, 2001 (Volume 66, Number 204)]
[Rules and Regulations]
[Page 53485-53487]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22oc01-12]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 32 and 52
[FAC 2001-01; FAR Case 2000-308; Item III]
RIN 9000-AJ17
Federal Acquisition Regulation; Prompt Payment Under Cost-
Reimbursement Contracts for Services
AGENCIES: Department of Defense (DoD), General ServicesAdministration
(GSA), and National Aeronautics and SpaceAdministration (NASA).
ACTION: Interim rule with request for comments.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) have agreed on an interim
rule amending the Federal Acquisition Regulation (FAR) to require
agencies to pay an interest penalty whenever they make an interim
payment under a cost-reimbursement contract for services more than 30
days after the agency receives a proper invoice from the contractor.
DATES: Effective Date: October 22, 2001.
Applicability Date: This amendment is applicable to solicitations
issued and contracts awarded on or after October 22, 2001. Any cost
reimbursement solicitations issued or contracts awarded for services on
or after December 15, 2000, but prior to October 22, 2001 must be
amended/modified to incorporate the new Alternate I to 52.232-25. In no
event may agencies pay late payment penalty interest for any delay in
payment that occurred prior to December 15, 2000.
Comment Date: Interested parties should submit comments to the FAR
Secretariat at the address shown below on or before December 21, 2001
to be considered in the formulation of a final rule.
ADDRESSES: Submit written comments to: General Services Administration,
FAR Secretariat (MVP), 1800 F Street, NW, Room 4035, Attn: Ms. Laurie
Duarte, Washington, DC 20405. Submit electronic comments via the
Internet to: farcase.2000-308@gsa.gov
Please submit comments only and cite FAC 2001-01, FAR case 2000-
308, in all correspondence related to this case.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS
Building, Washington, DC 20405, (202) 501-4755, for information
pertaining to status or publication schedules. For clarification of
content, contact Mr. Jeremy Olson at (202) 501-3221. Please cite FAC
2001--01, FAR case 2000-308.
SUPPLEMENTARY INFORMATION:
A. Background
This FAR amendment implements changes in the Office of Management
and Budget's (OMB) Prompt Payment Act regulations at 5 CFR part 1315
that implemented Section 1010 of the National Defense Authorization Act
for Fiscal Year 2001. Those changes were published by OMB as an interim
final rule and became effective on December 15, 2000 (65 FR 78403).
Section 1010 requires agencies to pay an interest penalty, in
accordance with regulations issued, whenever an interim payment under a
cost-reimbursement contract for services is paid more than 30 days
after the agency receives a proper invoice from a contractor. The Act
does not permit payment of late payment interest penalty for any period
prior to December 15, 2000.
This FAR amendment eliminates the prior policy and contract clause
prohibitions on payment of late payment penalty interest for late
interim finance payments under cost reimbursement contracts for
services. It adds new policy and a contract clause, Alternate I to
52.232-25, to provide for those penalty payments. The policy and clause
apply to all covered contracts awarded on or after December 15, 2000.
OMB's regulation states that agencies, at their discretion, may apply
the revisions made by Section 1010 to interim payment requests received
under cost-reimbursement contracts for services awarded prior to
December 15, 2000. Accordingly, agencies may apply the FAR changes made
by this rule to contracts awarded prior to December 15, 2000, at their
discretion provided no late payment interest penalty is paid for any
period prior to December 15, 2000.
This is not a significant regulatory action and, therefore, was not
subject to review under Section 6(b) of Executive Order 12866,
Regulatory Planning and Review, dated September 30, 1993. This rule is
not a major rule under 5 U.S.C. 804.
B. Regulatory Flexibility Act
The interim 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
number of small entities receiving awards of cost-reimbursement
contracts for services is very low compared to the number of fixed-
price-type contracts awarded. Therefore, an Initial Regulatory
Flexibility Analysis has not been performed. The Councils will consider
comments from small entities concerning the affected FAR Parts in
accordance with 5 U.S.C. 610. Interested parties must submit such
comments separately and should cite 5 U.S.C 601, et seq. (FAC 2001-01,
FAR case 2000-308), in correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the FAR do not impose information collection requirements that require
the approval of the Office of Management and Budget under 44 U.S.C.
3501, et seq.
[[Page 53486]]
D. Determination to Issue an Interim Rule
A determination has been made under the authority of the Secretary
of Defense (DoD), the Administrator of General Services (GSA), and the
Administrator of the National Aeronautics and Space Administration
(NASA) that urgent and compelling reasons exist to promulgate this
interim rule without prior opportunity for public comment. This action
is necessary because the amendments to the controlling regulation
issued by OMB (5 CFR part 1315, 65 FR 78403) became effective on
December 15, 2000. (Section 1010 of the National Defense Authorization
Act for Fiscal Year 2001, which required OMB to issue the regulation,
was effective December 15, 2000.) This amendment to the FAR is
necessary to enable agencies to comply with OMB's interim final rule in
the most effective and consistent manner possible.
Pursuant to Public Law 98-577 and FAR 1.501, the Councils will
consider public comments received in response to this interim rule in
the formation of the final rule. In addition, this interim rule will be
revised, as necessary, to reflect any changes OMB may make to its
regulations in promulgating a final rule.
List of Subjects in 48 CFR Parts 2, 32 and 52
Government procurement.
Dated: October 12, 2001.
Al Matera,
Director, Acquisition Policy Division.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 32 and 52 as
set forth below:
1. The authority citation for 48 CFR parts 2, 32 and 52 continues
to read as follows:
Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and42 U.S.C.
2473(c).
PART 2--DEFINITIONS OF WORDS AND TERMS
2.101 [Amended]
2. In section 2.101, amend the definition ``Proper invoice'' by
removing ``32.905(e)'' and adding ``32.905(f)'' in its place.
PART 32--CONTRACT FINANCING
3. Amend section 32.902 in the definition ``Contract financing
payment'' by revising the second sentence; revising the definition
``Invoice payment''; and in the definition ``Receiving report'' by
removing ``32.905(f)'' and adding ``32.905(g)'' in its place. The
revised text reads as follows:
32.902 Definitions.
* * * Contract financing payments include advance payments,
progress payments based on cost under the clause at 52.232-16, Progress
Payments, progress payments based on a percentage or stage of
completion (see 32.102(e)(1)) other than those made under the clause at
52.232-5, Payments Under Fixed-Price Construction Contracts, or the
clause at 52.232-10, Payments Under Fixed-Price Architect-Engineer
Contracts, and interim payments on cost-type contracts other than
contracts for services. * * *
* * * * *
Invoice payment means a Government disbursement of monies to a
contractor under a contract or other authorization for supplies or
services accepted by the Government.
(1) This includes payments for partial deliveries that have been
accepted by the Government and final cost or fee payments where amounts
owed have been settled between the Government and the contractor.
(2) For purposes of this subpart, invoice payments also include all
payments made under the clause at 52.232-5, Payments Under Fixed-Price
Construction Contracts, the clause at 52.232-10, Payments Under Fixed-
Price Architect-Engineer Contracts, or the clause at 52.232-25, Prompt
Payment, when Alternate I is used for interim payments on cost-
reimbursement contracts for services.
(3) Invoice payments do not include contract financing payments.
* * * * *
4. Amend section 32.905 by--
a. Removing from the introductory text of paragraph (a)``paragraphs
(b), (c), and (d)'' and adding ``paragraphs (b) through (e)'' in its
place;
b. Redesignating paragraphs (e) through (j) as (f) through (k),
respectively, and adding a new paragraph (e);
c. Revising the introductory text of newly designated paragraph
(f); and
d. Revising the first sentence of the introductory text of newly
designated paragraph (g) to read as follows:
32.905 Invoice payments.
* * * * *
(e) Cost-reimbursement contracts for services. For purposes of
computing late payment interest penalties that may apply, the due date
for making interim payments on cost-reimbursement contracts for
services is 30 days after the date of receipt of a proper invoice.
(f) Content of invoices. A proper invoice must include the items
listed in paragraphs (f)(1) through (f)(8) of this section, except for
interim payments on cost-reimbursement contracts for services. An
interim payment request under a cost-reimbursement contract for
services constitutes a proper invoice for purposes of this subpart if
it includes all the information required by the contract. If the
invoice does not comply with these requirements, it will be returned
within 7 days after the date the designated billing office received the
invoice (3 days on contracts for meat, meat food products, or fish; 5
days on contracts for perishable agricultural commodities, dairy
products, edible fats or oils, and food products prepared from edible
fats or oils), with a statement of the reasons why it is not a proper
invoice. If such notice is not timely, then an adjusted due date for
the purpose of determining an interest penalty, if any, will be
established in accordance with 32.907-1(b):
* * * * *
(g) Authorization to pay. All invoice payments, with the exception
of interim payments on cost-reimbursement contracts for services, must
be supported by a receiving report or any other Government
documentation authorizing payment. * * *
* * * * *
5. Amend section 32.907-1 by adding paragraph (a)(5); and in
paragraphs (b)(1) and (b)(2) by removing ``32.905(e)'' and adding
``32.905(f)'' in its place. The added text reads as follows:
32.907-1 Late invoice payment.
(a) * * *
(5) In the case of interim payments on cost-reimbursement contracts
for services, when payment is made more than 30 days after the
designated billing office receives a proper invoice.
* * * * *
6. Amend section 32.908 by adding paragraph (c)(4) to read as
follows:
32.908 Contract clauses.
* * * * *
(c) * * *
(4) If the contract is a cost-reimbursement contract for services,
use the clause with its Alternate I.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
7. Amend section 52.232-25 by adding Alternate I to read as
follows:
52.232-25 Prompt Payment.
* * * * *
[[Page 53487]]
Alternate I (Oct 2001). As prescribed in 32.908(c)(4), add the
following paragraph (d) to the basic clause:
(d) Invoices for interim payments. For interim payments under
this cost-reimbursement contract for services--
(1) Paragraphs (a)(2), (a)(3), (a)(4)(ii), (a)(4)(iii), and
(a)(5)(i) do not apply;
(2) For purposes of computing late payment interest penalties
that may apply, the due date for payment is the 30th day after the
designated billing office receives a proper invoice; and
(3) The Contractor shall submit invoices for interim payments in
accordance with paragraph (a) of FAR 52.216-7, Allowable Cost and
Payment. If the invoice does not comply with contract requirements,
it will be returned within 7 days after the date the designated
billing office received the invoice.
[FR Doc. 01-26298 Filed 10-19-01; 8:45 am]
BILLING CODE 6820-EP-P