[Federal Register Volume 66, Number 204 (Monday, October 22, 2001)]
[Rules and Regulations]
[Pages 53483-53485]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-26297]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 12, 46, and 52
[FAC 2001-01; FAR Case 2000-303; Item II]
RIN 9000-AI88
Federal Acquisition Regulation; Acquisition of Commercial Items
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) have agreed on a final rule
amending the Federal Acquisition Regulation (FAR) to implement two
statutory changes to the definition and application of ``Commercial
Items'': Section 803(a)(2)(D) of the Strom Thurmond National Defense
Authorization Act for Fiscal Year 1999 to revise the definition of
``commercial item'' to provide specific guidance on the meaning and
appropriate application of the terms ``purposes other than government
purposes'' at 41 U.S.C. 403(12)(A); and Section 805 of the National
Defense Authorization Act for Fiscal Year 2000 to clarify the
definition of ``commercial item'' with respect to associated services.
The final rule also makes changes related to the acquisition of
commercial items, including conforming the coverage regarding
contractor liability for property loss or damage to commercial
practice.
DATES: Effective Date: December 21, 2001.
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 Ms. Victoria Moss, Procurement Analyst, at (202) 501-
4764. Please cite FAC 2001-01, FAR case 2000-303.
SUPPLEMENTARY INFORMATION:
A. Background
Federal Acquisition Regulation Part 12, Acquisition of Commercial
Items, was developed to implement Title VIII of the Federal Acquisition
Streamlining Act of 1994 (FASA) (Pub. L. 103-355). The regulations
became effective on October 1, 1995.
The final rule revises--
Paragraph (a) of the ``commercial item'' definition at FAR
2.101 and the corresponding definition in the clause at FAR 52.202-1,
and FAR 12.102 to implement Section 803(a)(2)(D) of the Strom Thurmond
National Defense Authorization Act for Fiscal Year 1999 (Pub. L. 105-
261). Section 803(a)(2)(D) requires that the FAR be revised to provide
specific guidance on the meaning and appropriate application of the
term ``purposes other than government purposes'' in the definition of
``commercial item'' at 41 U.S.C. 403(12)(A);
Paragraph (e) of the ``commercial item'' definition at FAR
2.101 to implement Section 805 of the National Defense Authorization
Act for Fiscal Year 2000 (Pub. L. 106-65) (Clarification of Definition
of Commercial Items with Respect to Associated Services). Section 805
clarifies that services ancillary to a commercial item, such as
installation, maintenance, repair, training, and other support
services, are considered a commercial service, regardless of whether
the service is provided by the same vendor or at the same time as the
item, if the service is provided contemporaneously to the general
public under similar terms and conditions. The FAR clause at 52.202-1,
Definitions, is similarly revised to make the new definition available
to contractors and subcontractors;
Paragraph (f) of the ``commercial item'' definition at FAR
2.101 to add definitions of ``catalog price'' and ``market price''
which provide guidance for identifying services that may be acquired
under FAR Part 12;
FAR 12.209 to add guidance concerning customary commercial
terms and conditions related to the determination of price
reasonableness when pricing commercial items;
Subpart 46.8 to reconcile it with the coverage regarding
contractor liability for property loss or damage with paragraph (p) in
the clause at 52.212-4; and
Paragraph (p) in the clause at 52.212-4 to conform to
commercial practice (i.e., deleting the phrase ``or implied'' permits
industry to take advantage of the latitude provided by the Uniform
Commercial Code which
[[Page 53484]]
allows sellers to exclude the application of an implied warranty
through the terms of an express warranty).
DoD, GSA, and NASA published a proposed rule in the Federal
Register at 65 FR 52284, August 28, 2000. Six sources submitted
comments in response to the proposed rule. The FAR Council considered
all comments in the development of the final rule.
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 Department of Defense, the General Services Administration, and
the National Aeronautics and Space Administration certify that this
final rule will not 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 changes made by the
rule will primarily affect large businesses that are more likely than
small businesses to have separate workforces for Federal contracts and
to be ultimately liable for consequential damages. It clarifies the
definition of commercial item to more closely parallel the statutory
language and provide guidance for identifying services that may be
acquired under FAR Part 12. The rule further conforms language
regarding contractor liability to commercial practice.
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.
List of Subjects in 48 CFR parts 2, 12, 46, and 52
Government procurement.
Dated: October 12, 2001.
Al Matera,
Director, Acquisition Policy Division.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 12, 46, and 52
as set forth below:
1. The authority citation for 48 CFR parts 2, 12, 46, and 52
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).
PART 2--DEFINITIONS OF WORDS AND TERMS
2. In section 2.101, amend the definition ``Commercial item'' by
revising the introductory text of paragraph (1), and paragraphs (5) and
(6) to read as follows:
2.101 Definitions.
* * * * *
Commercial item means--
(1) Any item, other than real property, that is of a type
customarily used by the general public or by non-governmental entities
for purposes other than governmental purposes, and--
* * * * *
(5) Installation services, maintenance services, repair services,
training services, and other services if--
(i) Such services are procured for support of an item referred to
in paragraph (1), (2), (3), or (4) of this definition, regardless of
whether such services are provided by the same source or at the same
time as the item; and
(ii) The source of such services provides similar services
contemporaneously to the general public under terms and conditions
similar to those offered to the Federal Government;
(6) Services of a type offered and sold competitively in
substantial quantities in the commercial marketplace based on
established catalog or market prices for specific tasks performed under
standard commercial terms and conditions. This does not include
services that are sold based on hourly rates without an established
catalog or market price for a specific service performed. For purposes
of these services--
(i) Catalog price means a price included in a catalog, price list,
schedule, or other form that is regularly maintained by the
manufacturer or vendor, is either published or otherwise available for
inspection by customers, and states prices at which sales are
currently, or were last, made to a significant number of buyers
constituting the general public; and
(ii) Market prices means current prices that are established in the
course of ordinary trade between buyers and sellers free to bargain and
that can be substantiated through competition or from sources
independent of the offerors.
* * * * *
PART 12--ACQUISITION OF COMMERCIAL ITEMS
3. Amend section 12.102 by redesignating paragraph (d) as paragraph
(e) and by adding a new paragraph (d) to read as follows:
12.102 Applicability.
* * * * *
(d) The definition of commercial item in section 2.101 uses the
phrase ``purposes other than governmental purposes.'' These purposes
are those that are not unique to a government.
* * * * *
4. Revise section 12.209 to read as follows:
12.209 Determination of price reasonableness.
While the contracting officer must establish price reasonableness
in accordance with 13.106-3, 14.408-2, or subpart 15.4, as applicable,
the contracting officer should be aware of customary commercial terms
and conditions when pricing commercial items. Commercial item prices
are affected by factors that include, but are not limited to, speed of
delivery, length and extent of warranty, limitations of seller's
liability, quantities ordered, length of the performance period, and
specific performance requirements. The contracting officer must ensure
that contract terms, conditions, and prices are commensurate with the
Government's need.
PART 46--QUALITY ASSURANCE
5. In section 46.801, revise the last sentence of paragraph (a) to
read as follows:
46.801 Applicability.
(a) * * * This subpart does not apply to commercial items.
* * * * *
46.804 [Removed and Reserved]
6. Remove and reserve section 46.804.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
7. In section 52.202-1, revise the date of the clause and
paragraphs (c)(1), (c)(5), and (c)(6) to read as follows:
52.202-1 Definitions.
* * * * *
Definitions (Dec 2001)
* * * * *
(c) * * *
(1) Any item, other than real property, that is of a type
customarily used by the general public or by non-governmental
entities for purposes other than governmental purposes, and that--
(i) Has been sold, leased, or licensed to the general public; or
(ii) Has been offered for sale, lease, or license to the general
public;
* * * * *
[[Page 53485]]
(5) Installation services, maintenance services, repair
services, training services, and other services if--
(i) Such services are procured for support of an item referred
to in paragraph (c)(1), (2), (3), or (4) of this definition,
regardless of whether such services are provided by the same source
or at the same time as the item; and
(ii) The source of such services provides similar services
contemporaneously to the general public under terms and conditions
similar to those offered to the Federal Government;
(6) Services of a type offered and sold competitively in
substantial quantities in the commercial marketplace based on
established catalog or market prices for specific tasks performed
under standard commercial terms and conditions. This does not
include services that are sold based on hourly rates without an
established catalog or market price for a specific service
performed. For purposes of these services--
(i) Catalog price means a price included in a catalog, price
list, schedule, or other form that is regularly maintained by the
manufacturer or vendor, is either published or otherwise available
for inspection by customers, and states prices at which sales are
currently, or were last, made to a significant number of buyers
constituting the general public; and
(ii) Market prices means current prices that are established in
the course of ordinary trade between buyers and sellers free to
bargain and that can be substantiated through competition or from
sources independent of the offerors.
* * * * *
52.212-4 [Amended]
8. Amend section 52.212-4 by revising the date in the clause
heading to read ``(Dec 2001)''; and by removing ``or implied'' from
paragraph (p).
[FR Doc. 01-26297 Filed 10-19-01; 8:45 am]
BILLING CODE 6820-EP-P