[Federal Register: December 31, 2007 (Volume 72, Number 249)]
[Proposed Rules]               
[Page 74255-74257]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31de07-23]                         

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 4, 8, 13, 17, 32, and 52

[FAR Case 2006-026; Docket 2007-0001; Sequence 13]
RIN 9000-AK87

 
Federal Acquisition Regulation; FAR Case 2006-026, Governmentwide 
Commercial Purchase Card Restrictions for Treasury Offset Program Debts

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) to restrict the use of the 
Governmentwide commercial purchase card as a method of payment for 
contractors with debts subject to the Treasury Offset Program.

DATES:  Interested parties should submit written comments to the FAR 
Secretariat on or before February 29, 2008 to be considered in the 
formulation of a final rule.

ADDRESSES:  Submit comments identified by FAR case 2006-026 by any of 
the following methods:
    Federal eRulemaking Portal: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov.

     To search for any document, first select under ``Step 1,'' 
``Documents with an Open Comment Period'' and select under ``Optional 
Step 2,'' ``Federal Acquisition Regulation'' as the agency of choice. 
Under ``Optional Step 3,'' select ``Proposed Rules''. Under ``Optional 
Step 4,'' from the drop down list, select ``Document Title'' and type 
the FAR case number ``2006-026''. Click the ``Submit'' button. Please 
include your name and company name (if any) inside the document. You 
may also search for any document by clicking on the ``Search for 
Documents'' tab at the top of the screen. Select from the agency field 
``Federal Acquisition Regulation'', and type ``2006-026'' in the 
``Document Title'' field. Select the ``Submit'' button.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (VPR), 1800 F Street, NW, Room 4035, ATTN: Diedra Wingate, 
Washington, DC 20405.
    Instructions: Please submit comments only and cite FAR case 2006-
026 in all correspondence related to this case. All comments received 
will be posted without change to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov, including 

any personal and/or business confidential information provided.

FOR FURTHER INFORMATION CONTACT:  Mr. Michael Jackson, Procurement 
Analyst, at (202) 208-4949 for clarification of content. For 
information pertaining to status or publication schedules, contact the 
FAR Secretariat at (202) 501-4755. Please cite FAR case 2006-026.

SUPPLEMENTARY INFORMATION:

A. Background

    The Debt Collection Improvement Act of 1996 and other statutes 
provide the tools for administering a centralized program for the 
collection of delinquent, non-tax and tax debts. The Financial 
Management Service (FMS), a bureau of the Department of the Treasury, 
is charged with implementing the Government's delinquent debt 
collection program. Since 1996, FMS has collected more than $24.4 
billion in delinquent debt. In fiscal year 2006, collections of 
delinquent debt remained at a constant $3.1 billion.
    To collect delinquent debts owed to Federal agencies and states, 
FMS uses the Treasury Offset Program (TOP). Information on TOP is 
available at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://fms.treas.gov/debt/index.html. TOP uses both 

``offsets'' and ``continuous levies'' to collect delinquent debts.
    Offset is a process whereby Federal payments are reduced or 
``offset'' to satisfy a person's overdue Federal debt, child support 
obligation, or state tax debt. A payee's name and taxpayer 
identification number are matched against a Treasury/FMS database of 
delinquent debtors for automatic offset of funds. Offset funds are then 
used to satisfy payment of the delinquent debt to the extent allowed by 
law.
    Under the continuous levy program, delinquent Federal tax debts are 
collected by levying non-tax payments until the debt is satisfied, as 
authorized by the 1997 Taxpayer Relief Act. The

[[Page 74256]]

continuous levy program includes levy of some vendor payments (Treasury 
disbursed and non-Treasury disbursed payments), Federal employee salary 
payments, the Office of Personnel Management retirement payments, and 
social security benefit payments. Continuous levy is accomplished 
through a process almost identical to that of offset. FMS matches 
delinquent debtor data with payment record data for automated 
collection of the debt at the time of payment, after the delinquent 
taxpayer has been afforded due process.
    FMS is currently unable to offset or apply a continuous levy to 
payments made to contractors with delinquent debts when the 
Governmentwide commercial purchase card is used as the method of 
payment. When the Governmentwide commercial purchase card is used as 
the method of payment, the Government does not make a direct payment to 
the contractor. Instead, the processing bank for the Governmentwide 
commercial purchase card pays the contractor.
    To assess the significance of the problem, FMS and VISA, one of the 
processing banks, matched VISA payments for Governmentwide purchase 
card transactions for one year. As a result of the match, FMS 
determined that approximately $73.5 million dollars of delinquent debts 
subject to collection under TOP were not collected because the debtors 
were paid using the Governmentwide commercial purchase card. The 
individual payments that would otherwise have been collected were all 
in excess of the micropurchase threshold.
    To help increase the collection of delinquent debts owed to the 
Government, the rule proposes to amend the FAR to require contracting 
officers to determine whether the Central Contractor Registration (CCR) 
indicates that the contractor has delinquent debt that is subject to 
collection under the TOP. If a debt indicator is found, the 
Governmentwide commercial purchase card is not authorized as a method 
of payment. The contracting officer is required to check for the flag 
at the time of contract award, order placement, and again before 
exercising any options. The rule also proposes to amend the applicable 
Governmentwide commercial purchase card payment clause at 52.232-36 to 
advise contractors that the Governmentwide commercial purchase card is 
not authorized as a method of payment if a debt indicator is included 
in the CCR for the contractor. The clause is written to allow 
contracting officers to unilaterally exercise options without having to 
bilaterally negotiate revisions to the original contract terms and 
conditions if the debt indicator is subsequently found during the 
execution of an option. This rule would not apply to individual travel 
charge cards or centrally billed accounts for travel/transportation 
services.
    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 the rule only impacts the method by which a contractor can be 
paid when the contractor has a delinquent debt. 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 4, 8, 13, 17, 32, 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 2006-026), 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 4, 8, 13, 17, 32, and 52

    Government procurement.

    Dated: December 20, 2007.
Al Matera,
Director, Office of Acquisition Policy.
    Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 4, 8, 
13, 17, 32, and 52 as set forth below:
    1. The authority citation for 48 CFR parts 4, 8, 13, 17, 32, and 52 
continues to read as follows:>Authority:
     40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c).

PART 4--ADMINISTRATIVE MATTERS

    2. Amend section 4.1103 by revising paragraph (a)(3) to read as 
follows:


4.1103  Procedures.

    (a) * * *
    (3) Need not verify registration before placing an order or call if 
the contract or agreement includes the clause at 52.204-7, or 52.212-
4(t), or a similar agency clause, except when payment by the 
Governmentwide commercial purchase card is contemplated (see 
32.1108(b)(2)).
* * * * *

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

    3. Revise section 8.405-7 to read as follows:


8.405-7  Payment.

    Agencies may make payments for oral or written orders by any 
authorized means, including the Governmentwide commercial purchase card 
(but see 32.1108(b)(2)).

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

    4. Amend section 13.003 by revising paragraph (e) to read as 
follows:


13.003  Policy.

* * * * *
    (e) Agencies shall use the Governmentwide commercial purchase card 
and electronic purchasing techniques to the maximum extent practicable 
in conducting simplified acquisitions (but see 32.1108(b)(2)).
* * * * *
    5. Amend section 13.301 by revising the first sentence of paragraph 
(a) and paragraph (c)(3) to read as follows:


13.301  Governmentwide commercial purchase card.

    (a) Except as provided in 32.1108(b)(2), the Governmentwide 
commercial purchase card is authorized for use in making and/or paying 
for purchases of supplies, services, or construction. * * *
* * * * *
    (c) * * *
    (3) Make payments, when the contractor agrees to accept payment by 
the card (but see 32.1108(b)(2)).

PART 17--SPECIAL CONTRACTING METHODS

    6. Amend section 17.207 by revising paragraph (f) to read as 
follows:


17.207  Exercise of options.

* * * * *
    (f) Before exercising an option--
    (1) The contracting officer shall make a written determination for 
the contract file that exercise is in accordance with the terms of the 
option, the requirements of this section, and Part 6. To satisfy 
requirements of Part 6

[[Page 74257]]

regarding full and open competition, the option must have been 
evaluated as part of the initial competition and be exercisable at an 
amount specified in or reasonably determinable from the terms of the 
basic contract, e.g.--
    (i) A specific dollar amount;
    (ii) An amount to be determined by applying provisions (or a 
formula) provided in the basic contract, but not including 
renegotiation of the price for work in a fixed-price type contract;
    (iii) In the case of a cost-type contract, if--
    (A) The option contains a fixed or maximum fee; or
    (B) The fixed or maximum fee amount is determinable by applying a 
formula contained in the basic contract (but see 16.102(c));
    (iv) A specific price that is subject to an economic price 
adjustment provision; or
    (v) A specific price that is subject to change as the result of 
changes to prevailing labor rates provided by the Secretary of Labor.
    (2) See 32.1108(b)(2) for restrictions on the use of the 
Governmentwide commercial purchase card as a method of payment when the 
Central Contractor Registration (CCR) shows a delinquent debt flag.
* * * * *

PART 32--CONTRACT FINANCING

    7. Amend section 32.1108 by revising paragraph (b) to read as 
follows:


32.1108  Payment by Governmentwide commercial purchase card.

* * * * *
    (b)(1) Written contracts to be paid by purchase card should include 
the clause at 52.232-36, Payment by Third Party, as prescribed by 
32.1110(d). However, payment by a purchase card also may be made under 
a contract that does not contain the clause to the extent the 
contractor agrees to accept that method of payment.
    (2)(i) Contracting officers are required to verify (by looking in 
CCR) whether the contractor has any delinquent debt subject to 
collection under the Treasury Offset Program (TOP) program at contract 
award, order placement, and prior to any option exercise. Information 
on TOP is available at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://fms.treas.gov/debt/index.html.

    (ii) The contracting officer shall not authorize the Governmentwide 
commercial purchase card as a method of payment when the Central 
Contractor Registration (CCR) indicates that the contractor has 
delinquent debt subject to collection under the TOP. In such cases, the 
contracting officer shall provide alternative payment instructions to 
the contractor. Contracting officers shall not use the presence of the 
delinquent debt indicator to exclude a contractor from receipt of the 
contract, order, or exercised option.
    (iii) If a contractor alerts the contracting officer that the CCR 
debt flag indicator has been changed to no longer show a delinquent 
debt, the contracting officer may take steps to authorize payment by 
Governmentwide commercial purchase card.
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    8. Amend section 52.232-36 by revising the date of the clause and 
paragraphs (a) and (b) to read as follows:


52.232-36  Payment by Third Party.

* * * * *
    PAYMENT BY THIRD PARTY (DATE)

    (a) General. (1) Except as provided in paragraph (a)(2) of this 
clause, the Contractor agrees to accept payments due under this 
contract, through payment by a third party in lieu of payment 
directly from the Government, in accordance with the terms of this 
clause. The third party and, if applicable, the particular 
Governmentwide commercial purchase card to be used are identified 
elsewhere in this contract.
    (2) The Governmentwide commercial purchase card is not 
authorized as a method of payment when the Central Contractor 
Registration (CCR) indicates that the Contractor has delinquent debt 
that is subject to collection under the Treasury Offset Program 
(TOP). Information on TOP is available at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://fms.treas.gov/debt/index.html.
 If the CCR subsequently indicates that the Contractor no 

longer has delinquent debt, the Contractor may request the 
Contracting Officer to authorize payment by Governmentwide 
commercial purchase card.
    (b) Contractor payment request. (1) Except as provided in 
paragraph (b)(2) of this clause, the Contractor shall make such 
payment requests through a charge to the Government account with the 
third party, at the time and for the amount due in accordance with 
those clauses of this contract that authorize the Contractor to 
submit invoices, contract financing requests, other payment 
requests, or as provided in other clauses providing for payment to 
the Contractor.
    (2) When the Contracting Officer has notified the Contractor 
that the Governmentwide commercial purchase card is no longer an 
authorized method of payment, the Contractor shall make such payment 
requests in accordance with instructions provided by the Contracting 
Officer during the period when the purchase card is not authorized.
* * * * *
[FR Doc. E7-25424 Filed 12-28-07; 8:45 am]

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