70 FR 69 pgs. 19051-19052 - General Services Administration Acquisition Regulation; Waiver ofConsequential Damages and “Post Award” Audit Provisions(Correction)
Type: PRORULEVolume: 70Number: 69Pages: 19051 - 19052
Docket number: [GSAR ANPR 2005-N01]
FR document: [FR Doc. 05-7039 Filed 4-11-05; 8:45am]
Agency: General Services Administration
Official PDF Version: PDF Version
GENERAL SERVICES ADMINISTRATION
48 CFR Parts 546 and 552
[GSAR ANPR 2005-N01]
General Services Administration Acquisition Regulation; Waiver ofConsequential Damages and "Post Award" Audit Provisions(Correction)
AGENCY:
Office of the Chief Acquisition Officer, GeneralServices Administration (GSA)
ACTION:
Correction to advance notice of proposedrulemaking and notice of public meeting.
SUMMARY:
The General Services Administration (GSA) isrequesting comments from both Government and industry on whether theGeneral Services Administration Acquisition Regulation (GSAR) should berevised to include a waiver of consequential damages for contracts awardedfor commercial items under the FAR. GSA is also requesting comments onwhether "post award" audit provisions should be included in itsMultiple Award Schedules (MAS) contracts and Governmentwide acquisitioncontracts (GWACs). GSA is further amending the correction notice publishedin the Federal Register at 70 FR 13005, March 17, 2005, toadd the following: In addition, GSA is interested in receiving comments onwhether the Examination of Records clause at GSAR 552.215-71 shouldbe modified to reinstate post-award access to and the right to examinerecords to verify that preaward/modification pricing, sales, or other datarelated to the supplies or services offered under a contract which formedthe basis for an award/modification was accurate, current, and complete.The notice published in the Federal Register at 70 FR 12167,March 11, 2005, is amended to extend the public comment date to May 10,2005, and to allow interested parties to submit presentations by April 7,2005.
DATES:
Comment Date: Interested partiesshould submit comments on or before May 10, 2005, to be considered in theformulation of a proposed rulemaking.
Public Meeting Presentation Date: Interested parties mayregister and submit presentations by April 7, 2005.
ADDRESSES:
Submit written comments to:
General Services Administration, FAR Secretariat (VIR), 1800 F Street,NW, Room 4035, ATTN: Laurieann Duarte, Washington, DC 20405.
Submit electronic comments via the Internet to: gsaranpr.2005-N01@gsa.gov
Submit electronic presentations via the Internet to: meeting.2005-NO1@gsa.gov.
Please submit comments or presentations only and cite GSAR ANPR2005-N01 in all correspondence related to this case. All commentsreceived will be posted without change to http://www.acqnet.gov/far/ProposedRules/proposed.htm, includingany personal information provided.
Public Meeting: The public meeting will be conducted atthe General Services Administration, National Capital Region, 301 7th and DStreet, SW, Washington, DC 20407, Auditorium, starting at 9 a.m. to 4:00p.m. EST., on April 14, 2005, to ensure open dialogue between theGovernment and interested parties on this important topic.
Special Instructions. The submitted presentations will bethe only record of the public meeting. If you intend to have yourpresentation considered as a public comment in the formulation of theproposed rulemaking, the presentation must be submitted separately as apublic comment as instructed above.
Special Accommodations: The public meeting is physicallyaccessible to people with disabilities. Request for sign languageinterpretation or other auxiliary aids should be directed to ErnestWoodson, at 202-501-3775, at least 5 working days prior to themeeting date.
FOR FURTHER INFORMATION CONTACT
Mr. Ernest Woodson, Procurement Analyst, Contract Policy Division,202-501-3775.
SUPPLEMENTARY INFORMATION:
Background
Currently, FAR Part 12, Acquisition of Commercial Items, prescribespolices and procedures unique to the acquisition of commercial items underFAR Part 12. FAR Part 12 implements the Government's preference for theacquisition of commercial items as contained in Title VIII of the FederalAcquisition Streamlining Act of 1994 by establishing policies more closelyresembling those of the commercial marketplace. The clause, FAR52.212-4, Contract Terms and Conditions-Commercial Items, thatincludes terms and conditions applicable to each acquisition procured underFAR Part 12 is, to the maximum extent practicable, consistent withcustomary commercial practices. The clause includes a provision, FAR52.212-4(p), Limitation of liability, that provides; "Except asotherwise provided by an express warranty, the Contractor will not beliable to the Government for consequential damages resulting from anydefect or deficiencies in accepted items." Also, FAR 12.302(b)allows the contracting officer to tailor the clause at FAR 52.212-4to adapt to market conditions for each commercial acquisition. In additionto the limitation of liability clause and the provision at FAR 12.302,Federal contracts typically include a broad range of standard contractclauses such as warranties and liquidated damages that provide exclusiveremedies for nonperformance that limit the Government to the specificremedies set forth in the clause.
Likewise, the Contract Disputes Act of 1978 provides for the resolutionof any failure on the part of the Government and the contractor to reachagreement on any request for equitable adjustment, claim, appeal, or actionarising under or relating to a Government contract to be a dispute to beresolved in accordance with FAR 52.233-1, Disputes.
Notwithstanding specific adjustments and other remedies provided inGovernment contracts for contractor deficiencies or nonperformance,concerns have been raised that-
• FAR clause 52.212-4(p) and the"tailoring" provision at FAR 12.302, do not reach the level ofcommercial standards and that unlimited consequential or other incidentalor special damages are not necessary and are, in fact, counterproductive toefficient procurement, raising costs and establishing barriers tocommercial companies considering whether to do business with the FederalGovernment;
• Although FAR 12.302 permits contracting officers to tailorthe limitation of liability clause at FAR 52.212-4(p), some companiesassert that contracting officers are unwilling to do so, leavingcontractors with a take-it or leave-it option and contracts that deviatefrom the commercial marketplace, making contractors in general less willingto sign on to such contracts;
• The commercial practice, unlike FAR 52.212-4(p),that waives liability for consequential damages resulting from any defector deficiencies in accepted items, provides for a complete wavier ofconsequential damages;
• Contractors would make risk decisions and negotiateGovernment contracts without having to add an uncertainty premium as toliability protection, if FAR Part 12 were appropriately amended to reflectcommercial practices; and
• Contractors also request that we make the waiver ofconsequential damages for commercial products and services available underother provisions of the FAR.
Similarly, the General Accounting Office and periodically GSA's IG raiseconcerns regarding GSA's right to access and examine contractor recordsafter contract award. GSA's primary vehicle for conducting post-awardaudits is GSAR 552.215-70, Examination of Records by GSA, that givesthe Administrator of GSA, or any duly authorized representative, typicallythe GSA Inspector General's Office of Audits, access to and the right toexamine contractor records relating to over billings, billing errors,compliance with the Industrial Funding Fee (IFF) clause of the contract,and compliance with the Price Reduction Clause under MAS contracts.
In addition to the GSA Examination of Records clause, GSA may use anumber of other authorities to conduct a post-award review of acontractor's records. These other authorities include FAR 52.212-5which authorizes the Comptroller General of the United States to access andexamine a contractor's directly pertinent records involving transactionsrelated to the contract; GSAR 515.209-70(b) that permits acontracting officer to modify the GSA Examination of Records Clause todefine the specific area of audit (e.g., the use or disposition ofGovernment-furnished property, compliance with price reductionclause, etc.), and the right of the GSA Inspector General to issuesubpoenas for contractor records under the Inspector General Act of1978.
Contractors' major concerns with GSA's post-award audit authorityinclude complaints that they are too broad and not consistent withcommercial contract practices.
In consideration of the above concerns, we have questions as to how thetaxpayer may benefit from any revisions to the GSAR to address contractorconcerns regarding limitation of liability or post-award audits. Inaddition, we are interested in exploring whether GSA should modify theExamination of Records clause at GSAR 552.215-71 to reinstatepost-award access to and the right to examine records to verify thatpreaward/modification pricing, sales, or other data related to the suppliesor services offered under a contract which formed the basis for anaward/modification was accurate, current, and complete.
We are also interested in learning what, if any, impact the ServicesAcquisition Reform Act of 2002 and 2003 has on the issue of revising theGSAR to address limitations of liability.
In this advance notice of proposed rulemaking and notice of publicmeeting, GSA is seeking input from both Government and industry on whetherthe GSAR should be revised to waive consequential damages in the purchaseof commercial items under FAR Parts 12, 13, 14, and 15, and whether GSAshould modify its policy and practices with regard to the addition of postaward audit clauses into contracts it awards.
Dated: April 4, 2005.
David A. Drabkin,
Senior Procurement Executive, Office of the Chief AcquisitionOfficer, General Services Administration.
[FR Doc. 05-7039 Filed 4-11-05; 8:45am]
BILLING CODE 6820-61-S