[Federal Register Volume 75, Number 10 (Friday, January 15, 2010)]
[Proposed Rules]
[Pages 2463-2466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-379]
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DEPARTMENT OF DEFENSE
Department of the Army
48 CFR Parts 5132, 5136, and 5152
RIN 0710-AA69
Continuing Contract for Civil Works Project Managed by the United
States Army Corps of Engineers Clauses
AGENCY: U.S. Army Corps of Engineers, Department of the Army, DoD.
ACTION: Proposed rule; request for comments.
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SUMMARY: The U.S. Army Corps of Engineers (USACE) is proposing an
interim Continuing Contracts clause for use on specifically authorized
Civil Works projects only. This proposal is in response to a recurring
statutory provision that requires a change to the clause USACE had
previously used.
DATES: Comments must be received by March 16, 2010.
ADDRESSES: You may submit comments, identified by docket number COE-
2009-0065, by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov. Follow the
instructions for submitting comments.
E-mail: [email protected]. Include the docket number,
COE-2009-0065, in the subject line of the message.
Mail: U.S. Army Corps of Engineers, Attn: CECT-P (Robin A.
Baldwin), 441 G Street, NW., Washington, DC 20314-1000.
Hand Delivery/Courier: Due to security requirements, we cannot
receive comments by hand delivery or courier.
Instructions: Direct your comments to docket number COE-2009-0065.
All comments received will be included in the public docket without
change and may be made available on-line at http://www.regulations.gov,
including any personal information provided, unless the commenter
indicates that the comments includes information claimed to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit information that you
consider to be CBI, or otherwise protected, through regulations.gov or
e-mail. The regulations.gov Web site is an anonymous access system,
which means we will not know your identity or contact information
unless you provide it in the body of your comment. If you send an e-
mail directly to the U.S. Army Corps of Engineers without going though
http://www.regulations.gov, your
[[Page 2464]]
e-mail address will be automatically captured and included as part of
the comment that is placed in the public docket and made available on
the Internet. If you submit an electronic comment, we recommend that
you include your name and other contract information in the body of
your comment and with any disk or CD-ROM you submit. If we cannot read
your comment because of technical difficulties and cannot contact you
for clarification, we may not be able to consider your comment.
Electronic comments should avoid the use of any special characters, any
form of encryption, and be free of any defects or viruses.
Docket: For access to the docket to read background documents or
comments received, go to http://www.regulations.gov. All documents in
the docket are listed. Although listed in the index, some information
is not publicly available, such as CBI or other information whose
disclosure is restricted by statute. Certain other material, such as
copyrighted material, is not placed on the Internet and will be
publicly available only in hard copy form.
FOR FURTHER INFORMATION CONTACT: Ms. Robin A. Baldwin, Headquarters
U.S. Army Corps of Engineers, Directorate of Contracting, Policy
Division, 441 G Street, Washington, DC at 202-761-8645.
SUPPLEMENTARY INFORMATION:
A. Background
The new funding clause for civil works projects includes alternate
language and is designed to give USACE officials options for funding
contracts spanning more than one fiscal year after the enactment of
statutory restrictions to the Corps' continuing contract authority. The
new clause allows Congress more oversight over continuing contracts and
better control over the rate at which funds are spent on projects. The
end result is contracts that obligate funds in close alignment with
prerogatives reflected in budget documents and appropriations acts.
USACE has submitted a report to Congress on the overall effects, both
positive and negative, of the statutory restriction.
Continuing contracts are authorized by Section 10 of the River and
Harbor Act of 1922, 33 U.S.C. 621, which provides as follows: ``Any
public work on canals, rivers, and harbors adopted by Congress may be
prosecuted by direct appropriations, by continuing contracts, or by
both direct appropriations and continuing contracts.'' The use of
continuing contracts permitted large civil work projects, spanning more
than one fiscal year, to be accomplished in a comprehensive manner,
rather than through a series of yearly work units. Implementation of
continuing contract was covered under Engineers Federal Acquisition
Regulation Supplement (EFARS) Subpart 32.7--Contract Funding, and
through the inclusion of either clause EFARS 52.232-5001, Continuing
Contracts, or EFARS 52.232-5002, Continuing Contracts (Alternate).
The Energy and Water Development Appropriations Act of 2006 (06
E&WDA), Public Law 109-103, included provisions that restricted the
Corps' authority to reprogram funds and award continuing contracts in
Fiscal Year 2006. Section 108 of the 06 E&WDA prohibited the Corps from
awarding or modifying an existing continuing contract when doing so
would commit an amount in excess of the amount appropriated for that
project pursuant to the 06 E&WDA, plus any amounts available from
carryover or reprogramming. In light of Section 108 of the 06 E&WDA,
USACE changed its implementation of continuing contracts, as well as
the clauses it uses to award new continuing contracts that are not
fully funded. The restriction in Section 108 has been carried forward
into all E&WDAAs, and USACE anticipates that Congress will continue to
include that restriction in future Acts.
The existing continuing contract clause (EFARS 52.232-5001) permits
the contractor to work beyond the amount reserved to the contract for a
fiscal year. Doing so creates a legal liability to pay the contractor
for such costs, even though--under the existing continuing contract
clause--the Corps does not have to make the payments until the next
fiscal year. Accordingly, because the clause permits contractors to
commit the government in excess of the amount appropriated for that
project plus available carryover and reprogramming, use of this clause
runs a high risk of violating the new statutory restriction on
continuing contracts.
In order to implement the USACE Civil Works program under the new
continuing contract restrictions, USACE has drafted a new clause for
inclusion in the AFARS. The basic clause, ``5152.232-9000 Special
Continuing Contract for Civil Works Project Managed by the United
States Army Corps of Engineers,'' permits the Corps to award continuing
contracts while only obligating the government's estimate of contractor
earnings for the first fiscal year. This basic clause does not permit
the contractor to work beyond the amount reserved, and it also
expressly requires the contractor to stop working when funds are
exhausted. The alternate language, if appropriate, would limit the
government's liability for termination costs to the amount reserved on
the contract. In contrast, under the basic clause, the government is
responsible for all costs pursuant to the termination for convenience
clause regardless of the amount reserved on the contract.
Alternatives to using the new clause include fully funding
contracts at award; structuring the work into segments that could be
accomplished through options, using multiple fully-funded contracts
over multiple years, or using the clause at DFARS 252.232-7007 to
incrementally fund a contract. Each of these alternatives is still a
viable alternative and the contracting officer must choose which
acquisition strategy best suits the requirement. That determination
shall be based on an analysis of the possible contracting options with
the intent that the Special Continuing Contract for Civil Works Project
Managed by the United States Army Corps of Engineers clause be used as
a least preferred method.
In light of the legal restrictions on continuing contracts, USACE
had to change its implementation of existing continuing contracts, as
well as the terms it uses to award new continuing contracts. USACE
shall no longer permit the contractor to work beyond the amount
reserved in the contract without first reprogramming sufficient funds
to cover the contractor's earnings through the end of the fiscal year.
The new clause should be used where the true Continuing Contract clause
(EFARS 52.232-5001) might have been used in the past and alternative
contract options are not viable.
B. Regulatory Flexibility Act
This proposed rule may have a significant economic impact upon a
substantial number of small entities. The clause differs from the true
continuing contract clause (EFARS 52.232-5001) in that they no longer
permit the contractor to work beyond the amount reserved to the
contract. This change may affect a contractor's ability to schedule
work and equipment effectively. Pursuant to authority contained in
Section 608(a) of the Act (5 U.S.C. 608(a)) a determination has been
made that circumstances require delay in preparation of an initial
Regulatory Flexibility Act analysis to bring the USACE continuing
contract into compliance with existing statutory authority. Within
approximately thirty
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days an analysis will be prepared and forwarded to the Chief Counsel
for Advocacy of the Small Business Administration. Comments from small
entities concerning the affected AFARS Subpart 5152 will be considered
in accordance with Section 610 of the Act. Such comments shall be
submitted separately and cite the AFARS Proposed Rule on Continuing
Contract for Civil Works Project in the correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the proposed
rule does not impose any new information collection burden that
requires the approval of the Office of Management and Budget under 44
U.S.C. 3501, et seq.
List of Subjects in 48 CFR Parts 5132, 5136, and 5152
Government procurement.
Dated: January 7, 2010.
Approved By:
Robin A. Baldwin,
Chief, Contracting Policy Division.
For the reasons stated in the preamble, the Corps is proposing to
amend 48 CFR Chapter 51 as set forth below:
1. Add part 5132 to read as follows:
PART 5132--CONTRACT FINANCING
Subpart 5132.7--Contract Funding
Sec.
5132.703-90 Civil Works Project Appropriations Act Restriction.
5132.705 Contract Clauses [Reserved].
5132.705-90 Clause for Limitation of the Government's Obligation for
Civil Works Projects.
Authority: 33 U.S.C. 621, 10 U.S.C. 2202, DOD Directive 5000.35,
FAR 1.301 and DOD FAR Supplement 201.3.
Subpart 5132.7--Contract Funding
5132.703-90 Civil Works Project Appropriations Act Restriction.
(a) The U.S. Army Corps of Engineers (USACE) is authorized by 33
U.S.C. 621 to prosecute its specifically authorized civil works
projects on canals, rivers and harbors by direct appropriations or by
continuing contract, or both. A continuing contract permits USACE to
obligate the government to the entire contract amount at award and fund
the contract incrementally until completion.
5132.705 Contract Clauses [Reserved].
5132.705-90 Clause for Limitation of the Government's Obligation for
Civil Works Projects.
(a) The clause at 5152.232-9000, Special Continuing Contract for
Civil Works Project Managed by the United States Army Corps of
Engineers, may be used in solicitations and contracts for civil works
water resource projects that have been specifically adopted by Congress
in authorizing legislation and for which future fiscal year funding is
provided in the budget. This clause shall be used for all civil works
projects when funds are appropriated for the project from either the
operation and maintenance (O&M) account in the Energy and Water
Development Appropriations Act (E&WDAA) or the O&M portion of the
Mississippi River and Tributaries account in the E&WDAA and sufficient
funds are not available to complete the contract. The contracting
officer must insert the sum being reserved in the clause and reserve
this amount stated in subsection (a) of the clause at contract award
and modify the contract each fiscal year to reflect the amount
reserved. This clause is required through 30 September 2010 in
accordance with Section 103 of the Energy and Water Development
Appropriations Act, 2010, Public Law 111-85. If future appropriations
acts continue in the same manner, the requirement will be extended as
appropriate beyond fiscal year 2010.
(b) The Alternate language for clause 5152.232-9000 may be used in
solicitations and contracts for civil works water resource projects
that have been specifically adopted by Congress in authorizing
legislation but for which future fiscal year funding is not provided in
the budget or when use of the 5152.232-9000 clause could be used. The
contracting officer must insert the sum being reserved in the clause
and reserve this amount stated in subsection (a) of the clause at
contract award and modify the contract each fiscal year to reflect the
amount reserved. Section 103 of the Energy and Water Development
Appropriations Act, 2010, Public Law 111-85. If future appropriations
acts continue in the same manner, the requirement will be extended as
appropriate beyond fiscal year 2010.
2. Add part 5136 to read as follows:
PART 5136--SPECIAL ASPECTS OF CONTRACTING FOR CONSTRUCTION
Subpart 5136.290--Civil Works Construction Contracts
Sec.
5136.290-1 Policy.
5136.290-2 Definition.
Authority: 33 U.S.C. 621, 10 U.S.C. 2202, DOD Directive
5000.35, FAR 1.301 and DOD FAR Supplement 201.3.
Subpart 5136.290--Civil Works Construction Contracts
5136.290-1 Policy.
The Secretary of the Army, acting through the Chief of Engineers,
is authorized by 33 U.S.C. 621 to carry out projects for improvement of
rivers and harbors (other than surveys, estimates, and gaugings) by
contract or otherwise, in the manner most economical and advantageous
to the United States. The U.S. Army Corps of Engineers (USACE) is the
only contracting organization authorized to contract for civil works
construction projects. See AFARS Part 5132.703-90.
5136.290-2 Definition.
As used in this subpart--
``Civil works'' means authorized civil functions of the Department
of the Army pertaining to rivers and harbors, flood control, shore
protection and storm damage reduction, aquatic ecosystem restoration,
and related purposes.
PART 5152--TEXTS AND PROVISIONS OF CLAUSES
3. The authority citation for part 5152 is revised to read as
follows:
Authority: 10 U.S.C. 2202, 33 U.S.C. 621, DoD Directive
5000.35, FAR 1.301, DoD FAR Supplement 201.301, and DOD FAR
Supplement 201.3.
4. Add 51.232-9000 to read as follows:
5152.232-9000 Special Continuing Contract for Civil Works Project
Managed by the United States Army Corps of Engineers.
As prescribed in 5132.290-1 and 5132.705-90(a), use the following
clause:
(a) Funds are not available at the inception of this contract to
cover the entire contract price. The liability of the Government is
limited by this clause notwithstanding any contrary provision of the
``Payments to Contractor'' clause or any other clause of this contract,
except the Termination for Convenience clause. The sum of $--------
[Each fiscal year of contract execution, Contracting Officer shall
insert the specific dollar amount that is reserved for this contract
and available for payment to the contractor during the current fiscal
year. The Contracting Officer shall modify that amount to reflect any
funds added to or subtracted from the contract during a current fiscal
year.] has been reserved for this contract and is available for payment
to the Contractor during the current fiscal year. It is expected that
Congress will make appropriations for future fiscal years from which
additional funds,
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together with funds provided by one or more non-federal project
sponsors, will be reserved for this contract.
(b) Failure to make payments in excess of the amount currently
reserved, or that may be reserved from time to time, shall not be
considered a breach of contract and shall not entitle the Contractor to
a price adjustment under the terms of this contract.
(c) The Government may at any time reserve additional funds for
payments under the contract if there are funds available for such
purpose. The Contracting Officer will promptly notify the Contractor of
any additional funds reserved for the contract by issuing an
administrative modification to the contract.
(d) If earnings will be such that funds reserved for the contract
will be exhausted before the end of any fiscal year, the Contractor
shall give written notice to the Contracting Officer of the estimated
date of exhaustion and the amount of additional funds which will be
needed to meet payments due or to become due under the contract during
that fiscal year. This notice shall be given not less than 120 days
prior to the estimated date of exhaustion. Unless informed in writing
by the Contracting Officer that additional funds have been reserved for
payments under the contract, the Contractor shall stop work upon the
exhaustion of funds.
(e) No payments will be made after exhaustion of funds except to
the extent that additional funds are reserved for the contract.
(f) Any suspension, delay, or interruption of work arising from
exhaustion or anticipated exhaustion of funds shall not constitute a
breach of this contract and shall not entitle the Contractor to any
price adjustment under the ``Suspension of Work'' clause or in any
other manner under this contract.
(g) An equitable adjustment in performance time shall be made for
any increase in the time required for performance of any part of the
work arising from exhaustion of funds or the reasonable anticipation of
exhaustion of funds.
(h) If, upon the expiration of one-hundred (100) days after the
beginning of the fiscal year following an exhaustion of funds, the
Government has failed to reserve additional funds for this contract
sufficient to cover the Government's estimate of funding required for
the first quarter of that fiscal year, the Contractor, by written
notice delivered to the Contracting Officer at any time before such
additional funds are reserved, may elect to treat his right to proceed
with the work as having been terminated. Such a termination shall be
considered a termination for the convenience of the Government.
(i) If at any time it becomes apparent that the funds reserved for
any fiscal year are in excess of the funds required to meet all
payments due or to become due the Contractor because of work performed
and to be performed under the contract during the fiscal year, the
Government reserves the right, after notice to the Contractor, to
reduce said reservation by the amount of such excess.
(j) The term ``Reservation'' means monies that have been set aside
and made available for payments under this contract. Reservations of
funds shall be made in writing via an administrative modification
issued by the Contracting Officer.
Alternate I
If future funding for the specifically authorized civil works
project for which use of the continuing contract is contemplated is not
included in the following year's President's Budget, substitute the
following paragraphs (a) and (h) for paragraphs (a) and (h) of the
basic clause:
(a) Funds are not available at the inception of this contract to
cover the entire contract price. The liability of the Government is
limited by this clause notwithstanding any contrary provision of the
``Payments to Contractor'' clause or any other clause of this contract.
The sum of $-------- [Each fiscal year of contract execution,
Contracting Officer shall insert the specific dollar amount that is
reserved for this contract and available for payment to the contractor
during the current fiscal year. The Contracting Officer shall modify
that amount to reflect any funds added to or subtracted from the
contract during a current fiscal year.] has been reserved for this
contract and is available for payment to the Contractor during the
current fiscal year. It is expected that Congress will make
appropriations for future fiscal years from which additional funds,
together with funds provided by one or more non-federal project
sponsors, will be reserved for this contract.
(h) If, upon the expiration of one-hundred (100) days after the
beginning of the fiscal year following an exhaustion of funds, the
Government has failed to reserve additional funds for this contract
sufficient to cover the Government's estimate of funding required for
the first quarter of that fiscal year, the Contractor, by written
notice delivered to the Contracting Officer at any time before such
additional funds are reserved, may elect to treat his right to proceed
with the work as having been terminated. The Government will not be
obligated in any event to reimburse the Contractor for any costs
incurred after the exhaustion of funds regardless of anything to the
contrary in the clause entitled ``Termination for Convenience of the
Government.''
[FR Doc. 2010-379 Filed 1-14-10; 8:45 am]
BILLING CODE 3720-58-P