[Federal Register Volume 77, Number 28 (Friday, February 10, 2012)]
[Rules and Regulations]
[Pages 6985-6988]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-3047]
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GENERAL SERVICES ADMINISTRATION
48 CFR Parts 532 and 552
[GSAR Amendment 2012-01; GSAR Case 2010-G509 (Change 53) Docket 2011-
0009; Sequence 1]
RIN 3090-AJ13
General Services Administration Acquisition Regulation;
Reinstatement of Coverage Pertaining to Final Payment Under
Construction and Building Service Contracts
AGENCY: General Services Administration (GSA), Office of Acquisition
Policy.
ACTION: Final rule.
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SUMMARY: The General Services Administration (GSA) is amending the
General Services Administration Acquisition Regulation (GSAR) to
restore guidance on the release of claims after completion of
construction and building service contracts to ensure contractors are
paid in accordance with their contract requirements and for work
performed. This guidance, which prescribed the use of GSA Form 1142,
Release of Claims, for releases of claims under construction and
building service contracts, was inadvertently deleted as part of the
Rewrite of GSAR regulations on Contract Financing. GSA contracting
officers have used this form to achieve uniformity and consistency in
the release of claims process.
DATES: Effective Date: March 12, 2012.
FOR FURTHER INFORMATION CONTACT: For clarification of content, contact
Mr. Edward N. Chambers, Procurement Analyst, at (202) 501-3221, or by
email at [email protected]. For information pertaining to status
or publication schedules, contact the Regulatory Secretariat (MVCB),
1275 First Street, 7th Floor, Washington, DC 20417, (202) 501-4755.
Please cite GSAR Amendment 2012-01, GSAR Case 2010-G509.
SUPPLEMENTARY INFORMATION:
A. Background
GSA issued a proposed rule in the Federal Register at 76 FR 13329,
March 11, 2011 to restore coverage on making final payments under
construction and building service contracts. A release of claims is a
requirement under GSAR clause 552.232-72, Final Payment, precedent to
making final payment under construction and building service contracts.
GSA contracting officers have relied upon GSA Form 1142 to obtain the
release of claims under these contracts. However, GSAR 532.905-71 which
prescribed the use of GSA Form 1142 for releases of claims under
construction and building service contracts was inadvertently deleted
as part of the Rewrite of GSAR Part 532, Contract Financing published
in the Federal Register at 74 FR 54915, October 29, 2009, GSAR Case
2006-G515. GSAR 532.905-71 also provided guidance on deductions to
final payments under construction and building service contracts.
The GSA Form 1142, Release of Claims, uses standard language for
contractors to attest that it has no claims, or no claims except for
those they may set forth where indicated on the form. The form requires
a signature from the contractor and a witness. Additionally, there is a
location for the firm's seal.
GSA believes that GSA Form 1142 provides great value and
accountability in providing uniformity and consistency for the release
of claims process. Without the GSA Form 1142, GSA contracting officers
will be required to verify that contractor release of claims letter
includes appropriate wording before final payment is made, resulting in
their devotion of considerable additional resources to this process.
Further, the coverage on deductions under GSAR 532.905-71 is useful in
preventing overpayments to contractors consistent with the Office of
Management and Budget's efforts to reduce improper payments and the
reissuance of OMB Circular A-123 which implements the Improper Payments
Elimination and Recovery Act (IPERA, Pub. L. 111-204).
Since the referenced GSAR Rewrite of Part 532 in the Federal
Register at 74 FR 54915, October 26, 2009, also deleted GSAR 532.905-
70, this coverage is restored at GSAR 532.905-70 vice GSAR 532.905-71.
B. Public Comments
The public comment period closed on May 10, 2011. Three respondents
submitted comments on the proposed rule. These responses included a
total of 18 comments on 9 issues as stated below:
Comment: The proposed GSAR coverage addresses both construction and
building service contracts, so that each contract type requires the GSA
Form 1142, ``Release of Claims,'' but that the proposed language refers
only to the construction payment clause at FAR 52.232-5, and indicates
that this clause also applies to building services. Revise GSAR
532.905-70(a) to read as follows: ``The Government shall pay the
[[Page 6986]]
final amount due the Contractor under this contract after the
documentation in the payment clauses of the contract is submitted. This
would include the final release required for construction at FAR clause
52.232-5, and for building services at GSAR clause 552.232-72.''
Move the existing coverage on GSAR clause 552.232-72 from its
current location at GSAR 532.904(b) to 532.905, so that it is in the
same place as the proposed language.
Response: The comment regarding the revision to GSAR 532.905-70(a)
has been adopted and this paragraph now largely reflects the suggested
language. However, it was decided not to relocate the prescriptive
language for GSAR clause 552.232-72 from its current location at GSAR
532.904(b) to 532.905.
GSAR 532.904 concerns determining payment due dates and GSAR clause
552.232-72 informs vendors that their final payments may only occur
after their submission of a release of claims. On the other hand, GSAR
532.905 concerns the broad areas of payment documentation and process.
Thus, GSAR clause 552.232-72 better aligns with GSAR 532.904 rather
than GSAR 532.905.
Comment: The term deductions should be clarified to distinguish it
from funds that are just withheld temporarily, such as when a
Department of Labor investigation does not find any labor violations.
GSA should remind contracting officers that a unilateral
deobligation modification at contract close-out can only be
accomplished using the authority of one of the FAR clauses in
accordance with FAR 43.103(b)(3) (e.g. Liquidated Damages, SCA, and
DBA).
How does GSA propose to place ``withheld money'' in a ``deposit
fund'' and transfer ``same'' to Department of Labor (DOL) for labor
violations without a modification against the contract to reduce the
total value to reflect this action? The respondent goes on that
likewise without a formal modification to assess liquidated damages,
authorized under FAR 52.211 clauses, that have accrued against the
contract, in the same way that unilateral change orders are, then the
Government risks having an issue at contract close-out with funds
remaining. Without a formal modification, the respondent contends that
GSA will create problems at contract close-out when the ``withheld
funds'' remain open on the contract.
Response: A sample list of deductions is provided at GSAR 532.905-
70; therefore, there is no need to provide further definitions. The FAR
Subpart 43.1 provides instructions on the use of bilateral and
unilateral modifications. GSA's contracting officers know the limits of
unilateral modifications, and consequently, specific guidance is not
needed in the GSAR on this matter. Because withholding funds is an
established practice under Government contracts in accordance with FAR
section 32.111, GSA does not see the need to create the ``deposit
fund'' suggested by this commenter. Regarding the possibility of
modifications not being executed and the risk of relying on the release
of claims to make such necessary adjustments, modifications are
typically executed in advance of contract closeout to make necessary
adjustments.
Comment: GSA's Form 1142 Release of Claims form contains no OMB
control number indicating it has been approved for the collection of
information.
Response: GSA Form 1142 has been assigned an OMB Control Number of
3090-0080 with an expiration date of 3/31/2012. With this GSAR
correction, the form is available for use.
Comment: One respondent states that there is no indication that a
Regulatory Flexibility Analysis was ever performed to reflect the
burden or impact on contractors, including small businesses, especially
the requirements for a ``witness'' and a ``seal.'' This respondent
states further that the requirement for a hardcopy notary/witness and
seal seems outdated, unreasonable, and that GSA is being overly
restrictive by requiring a ``seal.''
Another respondent affirms that the proposed requirement to have
the form witnessed and include the firm's seal provides a burden to the
contractor. This burden could be greatest on small businesses that do
not have a company seal on hand and are therefore forced to seek out a
notary. The contractor's signature on the GSA Form 1142 is sufficient
to complete the release process. The requirement on the GSA Form 1142
to have a witness and include the firm's seal should be removed when
the form is reinstated.
Response: The costs associated with executing the notary/witness
and seal are considered miniscule, and consequently represent, at most,
a negligible burden on both large and small businesses. Further, notice
is taken that many banking institutions offer notarization as a
complimentary service or for a minor fee. It is customary for firms to
have a company seal to use when conducting government or commercial
business. However, the cost of attaining a company seal is considered
insignificant. The notarization of the document serves to attest to the
importance of this document.
Comment: The GSA Form 1142 fails to advise contractors, especially
small businesses that, by signing the form, they are likely waiving
their rights to submit claims permitted under the Disputes Act. It is
improper for the Government to require an unconditional release from
contractors as a prerequisite for final payment. The form should be
revised to recognize a contractor's right to submit claims ``within 6
years following the release date or notice of final payment date,
whichever is earlier'' as set forth in FAR clause 52.216-7(h)(2)(ii),
and FAR 33.206, when a claim was unknown at the time of executing the
form. Similarly the form should allow contractors the ability to cite
``estimated amounts when the exact amounts are not known'' as permitted
under the same FAR clause.
Response: Instructing contractors on the legal implications under
the Disputes Act of their executing the form, or of their right under
FAR 33.206 to submit claims within 6 years following the release date
or notice of final payment date, whichever is earlier, goes beyond the
purpose of the form. Finally, it is necessary to inform contractors to
cite estimated amounts when exact amounts are not known. The use of
such qualifying terms such as ``estimated'' amounts is implicit in the
existing language.
Comment: Since releases of claims are cited in FAR 52.232-7(g) for
Time & Material/Labor Hour contracts, and in parentheses as an example
(``e.g.'') under 52.232-26 and -27 for architect-engineer (A-E) and
construction contracts, respectively, it would seem more appropriate
for the FAR Council to develop a Standard Form (SF) to be used by all
agencies in accordance with FAR 1.304(c) since it is not just pertinent
to GSA and since releases apply to final payments, it is highly
recommended that GSA and/or the FAR Council consider allowing
contractors to submit the release jointly along with the electronic
submission of a final invoice request.
Response: The development of a Governmentwide standard form for the
release of claims is beyond the scope of this case.
Comment: One respondent states that GSA's allowance for contracting
officers (COs) to make ``repeated attempts'' to obtain a release of
claims from contractors under GSAM 532.904 could be construed as
coercion penalizing contractors by withholding funds ``without cause.''
The GSAM should justify the reasonableness of withholding any funds
from contractors beyond the 30 days authorized by FAR for final
payments. The respondent
[[Page 6987]]
further states that any ``unreasonable delay'' in payment could, by
law, convert invoices into a claim. The respondent recommends that GSA
consider establishing a limit to the number of ``repeated attempts''
and a maximum number of days for GSA COs to withhold final payment from
the date when the invoice is officially received.
Another respondent recommends that the proposed GSAM 532.905-70(c)
should provide further guidance on the documentation the CO should
provide to legal counsel to obtain approval on a release where the CO
was unable to obtain the release after 60 days from the initial
attempt. The process should be standardized within GSAM so that legal
counsel in one GSA region does not require a second or third attempt
before approval is granted, while another region grants approval after
the first 60 day attempt.
Response: The submission of an executed GSA Form 1142 is not an
unreasonable stipulation for a contractor to receive final payment. The
GSA Form 1142 is a necessary tool to allow the Government to obtain a
final settlement of costs. GSA does not believe that a requirement for
a justification for payments in excess of 30 days would be useful, as
this will further delay final payment. Additionally, it would not be
prudent to establish a standard number of attempts to secure an
executed GSA Form 1142 before obtaining approval of assigned legal
counsel to make final payment, but rather the number of attempts should
be a function of the particular circumstances involved in obtaining the
release. The process of submitting documentation to assigned legal, to
support making final payment where the CO was unable to obtain the
release of claims after 60 days from the initial attempt, should not be
standardized, as the documentation requirements may vary by
circumstances.
Comment: GSA Form 1142 may serve to shift the responsibility for
contracting officers to ensure that the Government does not overpay
contractors and ``proper'' payments to contractors are made, only upon
ensuring services have been received and accepted, to contractors. In
what way would a contractor's Release of Claims ensure that a
contracting officer does not overpay a contractor or authorize/approve
``improper payments'' to a contractor? How does GSA support its claim
that clause 532.905-71 was useful in preventing overpayments to
contractors, is it supported by analysis or statistical documentation?
Response: The GSA Form 1142 does not shift to contractors the
responsibility for contracting officers to ensure that the Government
does not overpay contractors, and ``proper'' payments to contractors
are made only upon ensuring services have been received and accepted.
Rather, GSA views the release as another tool for the contracting
officer to ensure that correct payments have been made. To the extent
that GSA Form 1142 requires contractors to identify outstanding claims,
it serves to prevent under payments. The information collected was
determined necessary to ensure the Government issues correct payments
to contractors and the form facilitates that activity; thereby, serving
as GSA's rationale for determining the usefulness of GSAR clause
532.905-71 in preventing overpayments to contractors.
Comment: Has GSA even considered the prospect of obtaining a
release electronically via email in lieu of a hardcopy/form?
Response: This rule was established to reinstate the use of GSA
Form 1142, Release of Claims as a tool for contracting officers to
obtain the release of claims under construction and building service
contracts. At this time, consideration has not been given to a release
electronically via email in lieu of a hardcopy/form.
C. Executive Orders 12866 and 13563
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. In accordance with Executive Order
13563, Improving Regulation and Regulatory Review, dated January 18,
2011, GSA has determined that this rule is not excessively burdensome
to the public, the GSA Form 1142, as prescribed by the rule, is useful
to the Government to make certain that the contractor receives proper
payment for work performed and aids contractors in presenting their
release of claims to the Government.
D. Regulatory Flexibility Act
The General Services Administration certifies 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 the rule requires the contractor to sign a
release of claims form and is considered administrative in nature.
Submission of this information should provide a consistent format that
the contractor can use to report their claims information to the GSA
contracting officer.
E. Paperwork Reduction Act
The Paperwork Reduction Act does apply; however, these changes to
the GSAR do not impose additional information collection requirements
to the paperwork burden previously approved under OMB Control Number
3090-0080. This approval was not rescinded when GSAR 532.905-71, which
prescribed the use of GSA Form 1142 for releases of claims under
construction and building service contracts, was inadvertently deleted
as part of the Rewrite of GSAR Part 532, Contract Financing, published
in the Federal Register at 74 FR 54915, October 29, 2009, GSAR Case
2006-G515.
List of Subjects in 48 CFR Parts 532 and 552
Government procurement.
Dated: February 3, 2012.
Joseph A. Neurauter,
Senior Procurement Executive, Office of Acquisition Policy, General
Services Administration.
Therefore, GSA amends 48 CFR parts 532 and 552 as set forth below:
0
1. The authority citation for 48 CFR parts 532 and 552 continues to
read as follows:
Authority: 40 U.S.C. 121(c).
PART 532--CONTRACT FINANCING
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2. Add section 532.905-70 to read as follows:
532.905-70 Final payment--construction and building service contracts.
The following procedures apply to construction and building service
contracts:
(a) The Government shall pay the final amount due the Contractor
under this contract after the documentation in the payment clauses of
the contract is submitted. This includes the final release prescribed
for construction at FAR 52.232-5, and for building services at GSAR
552.232-72.
(b) Contracting officers may not process the final payment on
construction or building service contracts until the contractor submits
a properly executed GSA Form 1142, Release of Claims, except as
provided in paragraph (c) of this section.
(c) In cases where, after 60 days from the initial attempt, the
contracting officer is unable to obtain a release of claims from the
contractor, the final payment may be processed with the approval of
assigned legal counsel.
(d) The amount of final payment must include, as appropriate,
deductions to cover any of the following:
[[Page 6988]]
(1) Liquidated damages for late completion.
(2) Liquidated damages for labor violations.
(3) Amount withheld for improper payment of labor wages.
(4) The amount of unilateral change orders covering defects and
omissions.
PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
3. Revise section 552.232-72 to read as follows:
552.232-72 Final Payment Under Building Services Contracts.
As prescribed in 532.904(c), insert the following clause:
Final Payment Under Building Services Contracts (MAR 2012)
Before final payment is made, the Contractor shall complete and
furnish the Contracting Officer with GSA Form 1142, Release of
Claims, releasing all claims against the Government relating to this
contract, other than claims in stated amounts that are specifically
excepted by the Contractor from the release. If the Contractor's
claim to amounts payable under the contract has been assigned under
the Assignment of Claims Act of 1940, as amended (31 U.S.C. 3727, 41
U.S.C. 15), a release may also be required of the assignee.
[FR Doc. 2012-3047 Filed 2-9-12; 8:45 am]
BILLING CODE 6820-61-P