[Federal Register: June 3, 2003 (Volume 68, Number 106)]
[Proposed Rules]
[Page 33325-33327]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03jn03-40]
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Part V
Department of Defense
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General Services Administration
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National Aeronautics and Space Administration
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48 CFR Parts 31 and 52
Federal Acquisition Regulation; Deferred Compensation and
Postretirement Benefits Other Than Pensions; Proposed Rule
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 31 and 52
[FAR Case 2001-031]
RIN 9000-AJ67
Federal Acquisition Regulation; Deferred Compensation and
Postretirement Benefits Other Than Pensions
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) are proposing to amend the
Federal Acquisition Regulation (FAR) by revising the paragraphs of the
``compensation for personal services'' cost principle relating to
deferred compensation and postretirement benefits other than pensions.
DATES: Interested parties should submit comments in writing on or
before August 4, 2003, to be considered in the formulation of a final
rule.
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--farcase.2001-
031@gsa.gov. Please submit comments only and cite FAR case 2001-031 in all
correspondence related to this case.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS
Building, Washington, DC 20405, at (202) 501-4755 for information
pertaining to status or publication schedules. For clarification of
content, contact Mr. Edward Loeb, Procurement Analyst, at (202) 501-
0650. Please cite FAR case 2001-031.
SUPPLEMENTARY INFORMATION:
A. Background
The Councils propose the following changes:
1. FAR 31.205-6, at paragraph (k), Deferred compensation other than
pensions, amend the cost principle by--
a. Deleting the first two sentences of paragraph (k)(l) which
duplicate the definition of deferred compensation at FAR 31.001, the
third sentence of paragraph (k)(l) which duplicates requirements at FAR
31.205-6(a), and paragraph (k)(3) which is obsolete;
b. Moving the fourth sentence of paragraph (k)(l) to (k)(2); and
c. Changing the phrase ``measured, allocated, and accounted for''
in paragraph (k)(2) to ``measured, assigned, and allocated'' to be
consistent with the language used in cost accounting standards; and
d. Making related editorial changes.
2. FAR 31.205-6, at paragraph (o), Postretirement benefits other
than pensions, amend the cost principle by--
a. Moving (and revising) the language in paragraphs (o)(3) through
(o)(5) to paragraph (o)(2)(iii) because these requirements only apply
to accrual costing other than terminal funding;
b. Adding language to the current paragraph (o)(6) (new paragraph
(o)(3)) specifying how the contractor must handle refunds and credits;
and
c. Making related editorial changes.
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 Councils do not expect this proposed rule 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 most contracts awarded to small entities use simplified
acquisition procedures or are awarded on a competitive, fixed-price
basis, and do not require application of the cost principle discussed
in this rule. An Initial Regulatory Flexibility Analysis has,
therefore, not been performed. We invite comments from small businesses
and other interested parties. The Councils will consider comments from
small entities concerning the affected FAR Parts 31 and 52 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. (FAR case
2001-031), in correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the proposed
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.
List of Subjects in 48 CFR Parts 31 and 52
Government procurement.
Dated: May 28, 2003.
Laura G. Smith,
Director, Acquisition Policy Division.
Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 31 and
52 as set forth below:
PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES
1. The authority citation for 48 CFR parts 31 and 52 is revised to
read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
2. Amend section 31.205-6 by revising paragraphs (k) and (o) to
read as follows:
31.205-6 Compensation for personal services.
* * * * *
(k) Deferred compensation other than pensions. The costs of
deferred compensation awards are allowable subject to the following
limitations:
(1) The costs shall be measured, assigned, and allocated in
accordance with 48 CFR 9904.415, Accounting for the Cost of Deferred
Compensation.
(2) The costs of deferred compensation awards are unallowable if
the awards are made in periods subsequent to the period when the work
being remunerated was performed.
* * * * *
(o) Postretirement benefits other than pensions (PRB). (1) PRB
covers all benefits, other than cash benefits and life insurance
benefits paid by pension plans, provided to employees, their
beneficiaries, and covered dependents during the period following the
employees' retirement. Benefits encompassed include, but are not
limited to, postretirement health care; life insurance provided outside
a pension plan; and other welfare benefits such as tuition assistance,
day care, legal services, and housing subsidies provided after
retirement
(2) To be allowable, PRB costs shall be incurred pursuant to law,
employer-employee agreement, or an established policy of the
contractor, and shall comply with paragraph (o)(2)(i), (ii), or (iii)
of this subsection.
(i) Cash basis. Costs recognized as benefits when they are actually
provided, must be paid to an insurer, provider, or other recipient for
current year benefits or premiums.
(ii) Terminal funding. If a contractor uses terminal funding the
contractor shall--
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(A) Accrue and pay the entire PRB liability to an insurer or
trustee in a lump sum payment upon the termination of employees (or
upon conversion to such a terminal-funded plan) to establish and
maintain a fund or reserve for the sole purpose of providing PRB to
retirees; and
(B) Amortize the lump sum over a period of 15 years.
(iii) Accrual basis. If a contractor uses accrual costing other
than terminal funding, the PRB costs shall be--
(A) Measured and assigned in accordance with generally accepted
accounting principles. However, the portion of PRB costs attributable
to past service (``transition obligation'') as defined in Financial
Accounting Standards Board Statement 106, paragraph 110, cannot exceed
the amount assignable under the delayed recognition methodology
described in paragraphs 112 and 113 of Statement 106;
(B) Paid to an insurer or trustee to establish and maintain a fund
or reserve for the sole purpose of providing PRB to retirees;
(C) Calculated in accordance with generally accepted actuarial
principles and practices as promulgated by the Actuarial Standards
Board; and
(D) Funded by the time set for filing the Federal income tax return
or any extension. PRB costs assigned to the current year, but not
funded or otherwise liquidated by the tax return time, are not
allowable in any subsequent year. Increased PRB costs caused by delay
in funding beyond 30 days after each quarter of the year to which they
are assignable are unallowable.
(3) The Government shall receive an equitable share of any amount
of previously funded PRB costs which revert or inure to the contractor.
Such equitable share shall reflect the Government's previous
participation in PRB costs through those contracts for which cost or
pricing data were required or which were subject to subpart 31.2. The
contractor shall credit the equitable share to the Government either as
a cost reduction or by cash refund at the option of the Government.
* * * * *
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
3. Revise section 52.215-18 to read as follows:
52.215-18 Reversion or Adjustment of Plans for Postretirement Benefits
(PRB) Other Than Pensions.
As prescribed in 15.408(j), insert the following clause:
Reversion or Adjustment of Plans for Postretirement Benefits (PRB)
Other Than Pensions (Date)
The Contractor shall promptly notify the Contracting Officer in
writing when the Contractor determines that it will terminate or
reduce a PRB plan. If PRB fund assets revert or inure to the
Contractor, or are constructively received by it under a plan
termination or otherwise, the Contractor shall make a refund or give
a credit to the Government, at the option of the Government, for its
equitable share as required by FAR 31.205-6(o)(3). The Contractor
shall insert the substance of this clause in all subcontracts that
meet the applicability requirements of FAR 15.408(j).
(End of clause)
[FR Doc. 03-13859 Filed 6-2-03; 8:45 am]