[Federal Register Volume 59, Number 165 (Friday, August 26, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21047]
[[Page Unknown]]
[Federal Register: August 26, 1994]
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DEPARTMENT OF DEFENSE
Department of the Army
48 CFR Part 52
Engineer Federal Acquisition Regulation Supplement (EFARS);
Variation in Estimated Quantity
AGENCY: U.S. Army Corps of Engineers, DOD.
ACTION: Proposed deviation with request for comments.
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SUMMARY: The Corps of Engineers is requesting a deviation from the FAR
Variation in Estimated Quantity (VEQ) clause at 52.212-11 to revise the
method for computing price adjustments under the clause (for quantity
overruns and underruns) to be more equitable both for the Government
and for the contractor.
DATES: Comments on the proposed deviation, to be included in the EFARS
clause, should be submitted in writing to the address shown below on or
before November 1, 1994, to be considered in the formulation of a
deviation.
ADDRESSES: U.S. Army Corps of Engineers, Principal Assistant
Responsible for Contracting, ATTN: CEPR-P, 20 Massachusetts Avenue NW.,
Washington, DC 20314-1000.
FOR FURTHER INFORMATION CONTACT:
Ms. Patricia B. Paianton, (202) 272-0961 or 0566. Telefax number: (202)
504-4752.
SUPPLEMENTARY INFORMATION:
A. Background
Typical, in the Corps of Engineers, the VEQ clause is used in
contracts for dredging or construction excavation. When the VEQ clause
is used, the Government estimates the quantity of units of work to be
performed, and the solicitation and contract provide a unit price for
the work. The clause provides that, if the actual quantity is between
85 percent and 115 percent of the original estimated quantity, the
original contract unit price will be paid by the Government to the
contractor, but, if the actual quantity is below 85 percent or above
115 percent, the unit price may be revised for the underrun or overrun
quantity only, but not for the quantities within the 85-115 percent
range of the estimated quantity. The clause states that ``The equitable
adjustment shall be based upon any increase or decrease in costs due
solely to the variation above 115 percent or below 85 percent of the
estimated quantity. * * * (Emphasis added.) Because the FAR VEQ clause
limits unit price adjustment so those ``due solely to'' the variations
in costs, it freezes the results of a ``bad bargain'' for the
Government or the contractor in computing a unit price for increased
work above 115 percent of the estimated quantity. The revised EFARS
clause proposed by the Corps provides for repricing based on the
contractor's profit or loss position as well as changes in costs. This
will compensate the contractor fairly, but eliminate windfalls for
either the contractor or the Government.
The Corps of Engineers is interested in receiving comments on the
following issues:
1. Should contracting officers have discretion to use figures
different from 85 percent and 115 percent?
2. Should the use of this clause (and its repricing mechanism) be
limited to ``major'' work items under the contract? How would a major
work item be defined?
(3) Should implementing guidance make it clear that issuance of a
request for repricing by the contracting officer is a discretionary
decision to be issued only when it is expected that the reduction in
contract price will exceed the administrative cost involved or is
otherwise in the Government's interest?
B. Regulatory Flexibility Act
A Regulatory Analysis is not required by the Regulatory Flexibility
Act (5 U.S.C. 601-611). The proposed change would not impose a new
burden on any small businesses. It is estimated that the revised method
would increase the price paid to a contractor about half the time and
decrease the price paid to the contractor about half the time and that
the instances when the clauses would allow reporting the work above 115
percent or below 85 percent would be few.
C. Paperwork Reduction Act
The provisions of the Paperwork Reduction Act (44 U.S.C., Ch. 35)
do not apply. This deviation would not impose a new requirement on ten
or more offerors or contractors to submit, maintain, retain or disclose
information.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
The USACE would be granted a deviation from FAR 52.212-11 to use a
new clause to read as follows:
Variation in Estimated Quantity (Deviation)
As prescribed at __________, insert the following clause in
solicitations and contracts for fixed-price construction contracts when
subdivided items are to be separately priced for payment purpose.
Variation in Estimated Quantity (Deviation) (XXX 1994)--EFARS
(a) If the quantity of a unit-priced item in this contract is an
estimated quantity and the actual quantity is at least 85 percent
but not more than 115 percent of the estimated quantity, payment for
the actual quantity shall be made at the contract unit price.
(b) If the actual quantity of a unit-priced quantity varies more
than 15 percent above or below the original estimated quantity:
(1) Either party may request an equitable adjustment in the
contract price as set forth in (2) and (3) below. The party
requesting the equitable adjustment must establish the basis for the
equitable adjustment; if no basis is established, payment for actual
quantity shall be made at the original contract unit price.
(2) If the actual quantity exceeds 115 percent, payment for 115
percent shall be made at the original contract unit price, and an
equitable adjustment may be made in the unit price for the quantity
above 115 percent. The equitable adjustment in the unit price for
the balance of the actual quantity above 115 percent shall be based
on the reasonable costs for that part of the work. Such reasonable
costs may include reasonable various costs and a reasonable profit;
additional fixed costs may be included, if incurred and reasonable.
(3) If the actual quantity is less than 85 percent of the
original estimated quantity, payment for the actual quantity shall
be made at the original contract unit price, and an equitable
adjustment may be made to compensate the contractor for incurred
reasonable fixed costs that would otherwise be unrecovered.
(c) If a quantity variation causes an increase in the time
necessary for completion, the Contractor may request in writing an
extension of time. The written request must be received by the
Contracting Officer within 10 days from the beginning of the delay,
or with such further period as may be granted by the Contracting
Officer before the date of final settlement of the contract. Upon
receipt of the written request, the Contracting Officer shall
ascertain the facts and make an adjustment for extending the
completion date as, in the judgment of the Contracting Officer, is
justified.
(end of clause)
Kenneth L. Denton,
Army Federal Register Liaison Officer.
[FR Doc. 94-21047 Filed 8-25-94; 8:45 am]
BILLING CODE 3710-92-M
