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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: October 25, 2000

FROM: Barry McVay, CPCM

SUBJECT: Department of Energy Acquisition Regulation (DEAR); Contractor Legal Management Requirements

SOURCE: Federal Register, October 25, 2000, Vol. 65, No. 207, page 63809

AGENCIES: Department of Energy (DOE)

ACTION: Notice of Proposed Rulemaking

SYNOPSIS: DOE is proposing to amend the DEAR to conform to proposed DOE regulations that would cover reimbursable legal costs incurred by its facility management and operations (M&O) contractors with contracts exceeding $10,000,000.

EDITOR'S NOTE: The DEAR is available on the Internet at http://www.pr.doe.gov/DEAR/dear.html.

DATES: Comments must be received no later than November 24, 2000.

ADDRESSES: Submit three (3) copies of comments to Laura Fullerton, GC-61, U.S. Department of Energy, Office of Procurement and Assistance Management, 1000 Independence Avenue, SW, Washington, DC 20585.

FOR FURTHER INFORMATION CONTACT: Laura Fullerton, 202-586-3420 or e-mail: Laura.Fullerton@hq.doe.gov, or Anne Broker, 202-586-5060 or e-mail: Anne.Broker@hq.doe.gov.

SUPPLEMENTAL INFORMATION: The cost principles and contract clauses in DOE's contracts generally make legal costs, including the cost of litigation, allowable if reasonable and incurred in accordance with the applicable cost principles and contract clauses.

This proposed rulemaking would create a new Part 719, Contractor Legal Management Requirements, in Chapter 10 of the Code of Federal Regulations, Energy, which would consist of regulations intended to monitor and control legal costs and to provide guidance to aid contractors and DOE personnel in making determinations regarding the reasonableness of all outside legal costs, including the costs of litigation. 10 CFR Part 719 would cover all outside legal costs incurred by contractors with contracts exceeding $10,000,000 at facilities owned or leased by DOE.

To conform the DEAR to the new 10 CFR Part 719, the following conforming changes would be made:

• DEAR 928.311-2, Agency Solicitation Provisions and Contract Clauses, would be added, and it would require that proposed DEAR 952.228-1, Insurance -- Litigation and Claims, be included in "cost reimbursement contracts for an amount exceeding $10,000,000, involving work performed at facilities owned or leased by the Department [of Energy]..."
  
  
• DEAR Part 944, Subcontracting Policies and Procedures, would be added. It would consist of DEAR 944.102, Policy, which would state that "contractor purchases of litigation and other legal services are subject to the requirements in 10 CFR Part 719 and this Part 944 of 48 CFR (DEAR)."
  
  
• DEAR 952.228-1, Insurance -- Litigation and Claims, would be added. It would require the contracting officer to substitute paragraphs (e)(2), (h), and (j)(4) of DEAR 970.5204-31, Insurance -- Litigation and Claims.
  
  
  • In paragraph (e)(2), the reference to DEAR 970.5204-15, Obligation of Funds, would be replaced with "the limitation of cost or limitation of funds clause of this contract."
    
    
  • In paragraph (h), the reference to the cost reimbursement limitations contained in DEAR 970.3101-3, General Basis for Reimbursement of Costs, would be replaced with references to the cost reimbursement limitations contained in Federal Acquisition Regulation (FAR) 31.201-3, Determining Reasonableness, and DEAR 931.205-33, Professional and Consultant Service Costs.
    
    
  • In paragraph (j)(4), the reference to DEAR 970.5204-21, Property, would be replaced with "in the Property clause in this contract."
  
  
• A paragraph (m) would be added to DEAR 970.5204-31, Insurance -- Litigation and Claims, to state that "reasonable litigation and other legal expenses are allowable when incurred in accordance with 10 CFR Part 719, Contractor Legal Management Requirements, which includes a requirement to submit a Legal Management Plan within 60 days of execution of a contract, and if not otherwise made unallowable by law or the provisions of this contract."
  
  
• A paragraph (e) would be added to DEAR 970.7103, Contractor Purchasing System, which would state "contractor purchases of litigation and other legal services are subject to the requirements in 10 CFR Part 719, 48 CFR (FAR) Part 44 and this subpart, 48 CFR (DEAR) 970.71 [Management and Operating Contractor Purchasing]."

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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