DATE: April 5, 2003

SUBJECT: Federal Acquisition Circular (FAC) 2001-22, Miscellaneous Amendments

SOURCE: Federal Register, April 5, 2004, Vol. 69, No. 65, page 17739

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Final Rules

SYNOPSIS: The Federal Acquisition Secretariat is issuing FAC 2001-22 to amend the Federal Acquisition Regulation (FAR) in the following areas: (1) government property disposal; (2) general provisions of the cost principles; (3) unique contract and order identifier numbers; (4) unsolicited poposals; (5) New Mexico Tax -- United States Missile Defense Agency; and (6) technical amendments.

DATES: All items are effective May 5, 2004, except for items (3), (5), and (6), which are effective April 5, 2004.


      Item (1), Jeritta Parnell, 202-501-4082.

      Items (2) and (5), Edward Loeb, 202-501-0650.

      Item (3), Gerald Zaffos, 202-208-6091.

      Item (4), Julia Wise, 202-208-1168.

For general information, contact the FAR Secretariat, Room 4035, GS Building, Washington, DC 20405, 202-501-4755.

SUPPLEMENTAL INFORMATION: (1) Government Property Disposal: This final rule amends FAR Subpart 45.6, Reporting, Reutilization, and Disposal (formerly "Reporting, Redistribution, and Disposal of Contractor Inventory"), to simplify procedures, reduce recordkeeping, and eliminate requirements related to the disposition of government property in the possession of contractors.

On January 10, 2000, a proposed rule was published to rewrite FAR Part 45, Government Property. Forty-five respondents provided comments, nineteen of them provided comments on the reporting, reutilization, and disposal of government property provisions in the proposed rule. The FAR Council decided to publish a final rule revising FAR Subpart 45.6 while the comments on the other portions of the proposed FAR Part 45 rewrite are still being evaluated (the introduction to the rule states, "The other comments concerning the other subparts of FAR Part 45 were conflicting and a satisfactory resolution of those comments was not attained.") The comments on the reporting, reutilization, and disposal of government property resulted in only minor changes to the rule. (For more on the proposed rewrite of FAR Part 45, see the January 10, 2000, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Rewrite of Part 45, Government Property.")

The following are the most significant changes being made to the FAR by this final rule:

EDITOR'S NOTE: The introduction to this final rule contains the following: "Some terminology found in the FAR, while appearing in the Federal Property Management Regulation (FPMR) and Federal Management Regulation (FMR), may not have the same intended meaning or be used in the same manner (e.g., reutilization, disposal, disposition). For this reason, the Councils [the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council] are committed to the future establishment of a separate case for the purpose of reviewing and resolving possible inconsistent uses of terminology between the FAR and the FMR."

(2) General Provisions of the Cost Principles: This final rule revises certain general provisions of the cost principles in FAR 31.201-1, Composition of Total Cost; FAR 31.201-2, Determining Allowability; FAR 31.202, Direct Costs; and FAR 31.203, Indirect Costs. The rule revises the cost principles by improving clarity and structure, by removing unnecessary and duplicative language, and to reflect the evolution of Generally Accepted Accounting Principles (GAAP), the advent of acquisition reform, and experience gained from implementation of FAR cost principles and procedures. In addition, FAR 2.101 is amended to add the definition of "direct cost," which is removed from FAR 31.202(a), and to revise the definition of "indirect cost" to be consistent with the terminology used in the cost accounting standards (CAS).

A proposed rule to revise the general provisions of the cost principles in FAR Part 31 was published on February 4, 2003 (see the February 4, 2003, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); General Provisions of the Cost Principles"). Four respondents submitted comments. Besides minor and editorial changes, the only significant difference between the proposed and final rules was that the "special allocation" language proposed for addition to FAR 31.106-2, Exceptions to General Rule on Allowability and Allocability, for use with certain facilities contracts was not included in the final rule because the current language is considered adequate to address the unique circumstances when a particular contract requires special treatment.

The introduction to the final rule states, "This rule is of particular interest to contractors and contracting officers who use cost analysis to price contracts and modifications, and who determine or negotiate reasonable costs in accordance with a clause of a contract, e.g., price revision of fixed-price incentive contracts, terminated contracts, or indirect cost rates."

(3) Unique Contract and Order Identifier Numbers: This finalizes, without change, the interim rule in FAC 2001-16 which amended FAR 4.602, Federal Procurement Data System, to add a paragraph (e) requiring each agency to assign a unique procurement instrument identifier (PIID) for every contract, purchase order, basic ordering agreement (BOA), basic agreement, and blanket purchase agreement (BPA) reported to the Federal Procurement Data System -- Next Generation (FPDS-NG). No comments were received on the interim rule, so it is being finalized without change. (For more on the interim rule, see the October 1, 2003, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Circular (FAC) 2001-16, Miscellaneous Amendments," Item (3).)

(4) Unsolicited Proposals: This finalizes, without change, the proposed rule to amend FAR Subpart 15.6, Unsolicited Proposals, to implement Section 834 of the Homeland Security Act of 2002 (Public Law 107-296), which adds new considerations concerning the submission, receipt, evaluation, and acceptance or rejection of unsolicited proposals. These new considerations are in FAR 15.606-1, Receipt and Initial Review, which now requires that unsolicited proposals have sufficient "cost-related or price-related information for evaluation," and requires the agency to determine that the unsolicited proposal "has overall scientific, technical, or socioeconomic merit." (For more on the proposed rule, see the June 3, 2003, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Unsolicited Proposals.")

(5) New Mexico Tax -- United States Missile Defense Agency: This final rule amends paragraph (c) of FAR 29.401-4, New Mexico Gross Receipts and Compensating Tax, to include the U.S. Missile Defense Agency in the list of agencies that "have entered into an agreement with the state of New Mexico to eliminate the double taxation of government cost-reimbursement contracts when contractors and their subcontractors purchase tangible personal property to be used in the performance of services in the state of New Mexico and for which title to such property will subsequently pass to the United States upon delivery of the property to the contractor and its subcontractor by the vendor."

The list in paragraph (c) is further revised to change the name of the "United States Defense Special Weapons Agency" to "United States Defense Threat Reduction Agency."

(6) Technical Amendments: Paragraph (b)(24) of FAR 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders -- Commercial Items, and paragraph (a)(1)(iv) of FAR 52.213-4, Terms and Conditions -- Simplified Acquisitions (Other Than Commercial Items), are amended to change the date of FAR 52.225-13, Restriction on Certain Foreign Purchases, from "(Oct 2003)" to "(Dec 2003)." FAR 52.225-13 was revised by FAC 2001-18 effective December 11, 2003, but these cross-references were not updated to reflect that fact. (For more on the change to FAR 52.225-13, see the December 11, 2003, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Circular (FAC) 2001-18, Miscellaneous Amendments," Item (8).)

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2004 by Panoptic Enterprises. All Rights Reserved.

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