[Federal Register Volume 84, Number 180 (Tuesday, September 17, 2019)]
[Proposed Rules]
[Pages 48856-48866]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19575]


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ENVIRONMENTAL PROTECTION AGENCY

48 CFR Parts 1502, 1512, 1513, 1516, 1532, 1539, and 1552

[EPA-HQ-OARM-2018-0714; FRL-9998-55-OMS]


Environmental Protection Agency Acquisition Regulation; 
Unenforceable Commercial Supplier Agreement Terms, Class Deviations, 
and Update for Fixed Rates for Services--Indefinite Delivery/Indefinite 
Quantity Contract

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing to 
amend the Environmental Protection Agency Acquisition Regulation 
(EPAAR) to address common Commercial Supplier Agreement terms that are 
inconsistent with or create ambiguity with Federal Law, to create a new 
subpart for class deviations, and to update clause Fixed Rates for 
Services--Indefinite Delivery/Indefinite Quantity Contract.

DATES: Comments must be received on or before November 18, 2019.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OARM-2018-0714, at https://www.regulations.gov. Follow the online 
instructions for submitting comments. Once submitted, comments cannot 
be edited or removed from Regulations.gov. The EPA may publish any 
comment received to its public docket. Do not submit electronically any 
information you consider to be Confidential Business Information (CBI) 
or other information whose disclosure is restricted by statute. 
Multimedia submissions (audio, video, etc.) must be accompanied by a 
written comment. The written comment is considered the official comment 
and should include discussion of all points you wish to make. The EPA 
will generally not consider comments or comment contents located 
outside of the primary submission (i.e. on the web, cloud, or other 
file sharing system). For additional submission methods, the full EPA 
public comment policy, information about CBI or multimedia submissions, 
and general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Thomas Valentino, Policy, Training and 
Oversight Division, Acquisition Policy and Training Branch (3802R), 
Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, 
DC 20460; telephone number: (202) 564-4522; email address: 
valentino.thomas@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. General Information

    1. Submitting Classified Business Information. Do not submit CBI to 
EPA website https://www.regulations.gov or email. Clearly mark the part 
or all of the information that you claim to be CBI. For CBI information 
in a disk or CD-ROM that you mail to EPA, mark the outside of the disk 
or CD-ROM as CBI, and then identify electronically within the disk or 
CD-ROM the specific information that is claimed as CBI. In addition to 
one complete version of the comment that includes information claimed 
as CBI, a copy of the comment that does not contain the information 
claimed as CBI must be submitted for inclusion in the public docket. 
Information so marked will not be disclosed except in accordance with 
procedures set forth in 40 CFR part 2.
    2. Tips for Preparing Your Comments. When submitting comments, 
remember to:
    [ssquf] Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
    [ssquf] Follow directions--The Agency may ask you to respond to 
specific questions or organize comments by referencing a Code of 
Federal Regulations (CFR) Part or section number.
    [ssquf] Explain why you agree or disagree, suggest alternatives, 
and substitute language for your requested changes.
    [ssquf] Describe any assumptions and provide any technical 
information and/or data that you used.
    [ssquf] If you estimate potential costs or burdens, explain how you 
arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
    [ssquf] Provide specific examples to illustrate your concerns and 
suggest alternatives.
    [ssquf] Explain your views as clearly as possible, avoiding the use 
of profanity or personal threats.
    [ssquf] Make sure to submit your comments by the comment period 
deadline identified.

II. Background

1. Incompatibility of Commercial Supplier Agreements
    EPA defines Commercial Supplier Agreements (CSAs) as terms and 
conditions that are customarily offered to the public by vendors of 
supplies or services that meet the Federal Acquisition Regulation (FAR) 
definition of ``commercial item'' and are intended to create a binding 
legal obligation on the end user. CSAs are common in information 
technology acquisitions, including acquisitions of commercial computer 
software and commercial technical data, and they may apply to any 
supply or service.
    Commercial supplies and services are offered to the public under 
standard agreements that may take a variety of forms, including but not 
limited to license agreements, terms of service, and terms of sale or 
purchase. These standard CSAs contain terms and conditions that are 
appropriate when the purchaser is a private party, but not when the 
purchaser is the Federal Government.
    The existence of Federally-incompatible terms in standard CSAs is 
recognized in FAR 27.405-3(b), which is limited to the acquisition of 
commercial computer software. This subsection advises contracting 
officers to exercise caution when accepting a

[[Page 48857]]

contractor's terms and conditions. The use of CSAs is not limited to 
information technology acquisitions, as they have become common in a 
broad variety of contexts, from travel to telecommunications to 
financial services to building maintenance systems; including purchases 
below the simplified acquisition threshold.
    Discrepancies between CSAs and Federal law, or the Government's 
needs, create recurrent points of inconsistency. Below are examples of 
incompatible clauses that are commonly found in CSAs:
    [ssquf] Jurisdiction or venue clauses may require that disputes be 
resolved in a particular state or Federal court. Such clauses conflict 
with the sovereign immunity of the U.S. Government and cannot apply to 
litigation where the U.S. Government is a defendant because those 
disputes must be heard either in U.S. District Court (28 U.S.C. 1346) 
or the U.S. Court of Federal Claims (28 U.S.C. 1491).
    [ssquf] Automatic renewal clauses may automatically renew or extend 
contracts unless affirmative action is taken by the Government. Such 
clauses that require the obligation of funds prior to appropriation 
violate the restrictions of the Anti-Deficiency Act (31 U.S.C. 
1341(a)(1)(B)).
    [ssquf] Termination clauses may allow the contractor to 
unilaterally terminate a contract if the Government is alleged to have 
breached the contract. Government contracts are subject to the Contract 
Disputes Act of 1978 (41 U.S.C. 601-613). The Contract Disputes Act 
requires a certain process for resolving disputes, including 
terminations, and that the ``Contractor shall proceed diligently with 
performance of this contract, pending final resolution'' under the 
terms of the FAR Disputes clause at 52.233-1.
    Additionally, the current order of precedence contained in the 
Commercial Items clause at FAR 52.212-4 is not clear on prevailing 
terms, and potentially allows CSAs to supersede the terms of Federal 
contracts, especially in those areas where Federal law is implicated 
indirectly. As a result, industry and Government representatives must 
spend time and resources negotiating and tailoring CSAs to comply with 
Federal law and to ensure both parties have agreement on the contract 
terms.
2. Value of Addressing Incompatible Commercial Supplier Agreements
    EPA has identified common illegal, improper or inappropriate CSA 
terms that constitute the majority of the negotiated CSA terms. The 
outcome of the negotiations regarding these identified terms is 
generally predetermined by rule of law, but EPA and contractors must 
spend time and resources to negotiate these terms. By explicitly 
addressing common unenforceable terms within the Commercial Items 
clause at FAR 52.212-4 and clarifying prevailing terms in the order of 
precedence, it eliminates the need for negotiation of these terms.
    This approach will decrease the time needed for legal review prior 
to contract award, and will reduce costs to both the Government and 
contractors. EPA believes that such an approach will benefit 
contractors, including small business concerns, by: (1) Decreasing 
proposal costs associated with negotiating the identified unenforceable 
CSA terms; (2) facilitating faster procurement and contract lead times, 
therefore decreasing the time it takes for contractors to make a return 
on their investment; (3) reducing administrative costs for companies 
that maintain alternate Federally compliant CSAs; and (4) for small 
business concerns, it levels the playing field with larger competitors 
since negotiations will only be required if the CSA contains 
objectionable clauses outside of those already identified in proposed 
clause. Additionally, this approach ensures consistent application and 
understanding of these unenforceable terms.
3. EPA Class Deviation
    EPA is issuing class deviations for two Federal Acquisition 
Regulation (FAR) clauses to address the order of precedence and CSA 
terms that are incompatible with Federal law. The class deviations not 
only protect EPA and contractors by uniformly addressing common 
unacceptable terms and reducing risk, but also by further streamlining 
the acquisition process and reducing administrative cost for 
commercial-item supplies and services. The class deviations also 
clarify the precedence of terms to ensure parties have a mutual 
understanding of the contract terms; for example, bilateral 
modifications to the CSAs are only required for material changes.
4. Updates to Sec.  1516.505(b) and Sec.  1552.216-73
    The EPA is updating clause 1552.216-73, Fixed Rates for Services-
Indefinite Delivery/Indefinite Quantity Contract, to add Alternate I 
(which had previously been a deviation) to the Basic form. The 
deviation was issued in April 2018 and provides for contractors to be 
paid escalated rates for optional periods of performance. The deviation 
is amended into an alternate version because there is an ongoing need 
for the deviation. The corresponding prescription in Sec.  1516.505(b) 
is being updated accordingly.
5. New Subpart 1552.3
    EPA is creating a new subpart 1552.3, FAR and EPAAR Class 
Deviations, that will contain FAR and EPAAR class deviations initiated 
by the EPA. As discussed in II.3. in this preamble the EPA is creating 
two new FAR class deviations in this proposed rulemaking that will be 
added to the new subpart: Class deviations for 52.212-4, Contract Terms 
and Conditions--Commercial Items (FAR DEVIATION); and 52.232-39, 
Unenforceability of Unauthorized Obligations (FAR DEVIATION).

III. Discussion and Analysis

    EPA is proposing to amend the EPAAR to implement standard terms and 
conditions for the most common conflicting CSA terms and to minimize 
the need for the negotiation of these terms of CSAs on an individual 
basis. The proposed rulemaking will add requirements to contracts 
making certain conflicting or inconsistent terms in a CSA unenforceable 
so long as an express exception is not authorized elsewhere by Federal 
statute. EPA is also proposing to amend the EPAAR to modify the order 
of precedence contained in the Commercial Items clause (FAR 52.212-4) 
to make clear that all of the terms of the EPAAR deviated clause 
control in the event of a conflict with a CSA, unless both parties 
agree to specific terms during the course of negotiating the contract. 
The EPA is also proposing to amend the EPAAR to create new subpart 
1552.3 for class deviations. The EPA also proposes to change the 
deviated version of clause 1552.216-73 into an alternate version 
because of its ongoing need.
    These changes will be accomplished by revising guidance and clauses 
contained throughout the EPAAR as follows:
    [ssquf] EPAAR Sec.  1502.100 is amended to provide a definition for 
Commercial Supplier Agreements.
    [ssquf] EPAAR Sec.  1512.101 is created and clarifies that 
paragraph (u) of the deviated Commercial Items clause at Sec.  
1552.312-4 (FAR DEVIATION) prevents violation of the Anti-Deficiency 
Act.
    [ssquf] EPAAR Sec.  1512.1070 is created to prescribe the use of 
the deviated Commercial Items clause at Sec.  1552.312-4 (FAR 
DEVIATION) in lieu of FAR 52.212-4.
    [ssquf] EPAAR Sec.  1513.507(b) is amended and requires the 
inclusion of

[[Page 48858]]

Sec.  1552.332-39 and Sec.  1552.232-75 in all acquisitions for 
supplies or services that are offered under a CSA.
    [ssquf] EPAAR Subpart 1513.6 is created and will add Sec.  
1552.332-39 to all purchases below the micro-purchase threshold.
    [ssquf] EPAAR Sec.  1516.505(b) is amended to update the 
prescription for Sec.  1552.216-73.
    [ssquf] EPAAR Subpart 1532.10 is created and clarifies the 
definition of ``supplier license agreements'' as used in FAR 32.705, 
Unenforceability of Unauthorized Obligations.
    [ssquf] EPAAR Sec.  1532.1070 is created and directs contracting 
officers to utilize the clause at Sec.  1552.332-39 in lieu of FAR 
52.232-39; and prescribes the use of clause Commercial Supplier 
Agreements--Unenforceable Clauses at 1552.232-75.
    [ssquf] EPAAR Subpart 1539.1 is created and advises contracting 
officers and contract specialists to follow the relevant EPAAR rules 
relating to CSA procurement.
    [ssquf] EPAAR Sec.  1552.216-73 is amended to add an alternate 
clause version.
    [ssquf] EPAAR Sec.  1552.232-75 is created for non-commercial 
contracts and addresses the same common unenforceable CSA terms 
addressed in Sec.  1552.312-4 (FAR DEVIATION) paragraph (w) described 
above.
    [ssquf] EPAAR Subpart 1552.3 is created and adds the class 
deviations for Sec.  1552.312-4 and Sec.  1552.332-39.
    [ssquf] The Commercial Items clause at Sec.  1552.312-4 (FAR 
DEVIATION) in subpart 1552.3 is modified to include instructions to 
contracting officers on how to incorporate the change in language from 
FAR 52.212-4.
    [ssquf] The order of precedence contained in paragraph (s) of the 
Commercial Items clause at Sec.  1552.312-4 (FAR DEVIATION) in subpart 
1552.3 is amended to ensure that all of the terms of Sec.  1552.312-4 
shall control over the terms of a CSA by moving ''Addenda to this 
solicitation or contract, including any license agreements for computer 
software'' down two spaces in the order of precedence, behind 
``Solicitation provisions as awarded if there is a solicitation'' and 
``Other paragraphs of this clause.''
    [ssquf] Paragraph (u) of the Commercial Items clause at Sec.  
1552.312-4 (FAR DEVIATION) in subpart 1552.3 is amended to (1) reflect 
the new Commercial Supplier Agreement definition contained in EPAAR 
1502.100; (2) expand coverage to ``language or provision'' in addition 
to ``clause'' in order to ensure that all CSA terms are covered 
regardless of terminology utilized; and (3) include future fees, 
penalties, interest and legal costs as unauthorized obligations in 
addition to indemnification.
    [ssquf] Paragraph (w) of the Commercial Items clause at Sec.  
1552.312-4 (FAR DEVIATION) in subpart 1552.3 is created to address the 
following commonplace unenforceable elements found in CSAs:
    [cir] Definition of contracting parties: Contract agreements are 
between the commercial supplier or licensor and the U.S. Government. 
Government employees or persons acting on behalf of the Government will 
not be bound in their personal capacity by the CSA.
    [cir] Laws and disputes: Clauses that conflict with the sovereign 
immunity of the U.S. Government cannot apply to litigation where the 
U.S. Government is a defendant because those disputes must be heard 
either in U.S. District Court or the U.S. Court of Federal Claims. CSA 
terms that require the resolution of a dispute in a forum or time 
period other than those expressly authorized by Federal law are 
deleted. Statutes of limitation on potential claims shall be governed 
by U.S. Federal law.
    [cir] Continued Performance: Commercial suppliers may not 
unilaterally terminate or suspend a contract based upon a suspected 
breach of contract by the Government. These types of CSA terms violate 
31 U.S.C. 3324, which provides that payment under a contract may not 
exceed the value of a service or product already delivered. A license 
that is prematurely terminated outside of the regular dispute 
resolution procedures results in the Government not receiving the value 
of that good or service ordered because it is no longer delivered. The 
removal of the contractor's right to unilateral termination does not 
impair the contractor's ability to pursue remedies. It preserves all 
the legal remedies the contractor otherwise has under Federal law, 
including Contract Disputes Act claims. Remedies through the Contract 
Disputes Act or other applicable Federal statutes align with the 
continuing performance requirement set forth in subparagraph (d) 
Disputes.
    [cir] Arbitration; equitable or injunctive relief: A binding 
arbitration may not be enforced unless explicitly authorized by agency 
guidance or statute. Equitable remedies or injunctive relief such as 
attorney fees, cost or interest may only be awarded against the U.S. 
Government when expressly authorized by statute (e.g., Prompt Payment 
Act).
    [cir] Additional Terms: Incorporation of terms by reference is 
allowed provided the full text of terms is provided with the offer. 
Unilateral modifications to the CSA after the time of award may be 
allowed to the extent that the modified terms do not materially change 
the Government's rights or obligations, increase the Government's 
prices, decrease the level of service provided, or limit any Government 
right addressed elsewhere in the contract. A bilateral contract 
modification is required for any of the above described changes to be 
enforceable against the Government.
    [cir] Automatic renewals: Due to Anti-Deficiency Act restrictions, 
automatic contract renewal clauses are impermissible. Any such CSA 
clauses are unenforceable.
    [cir] Indemnity (contractor assumes control of proceedings): Any 
clause requiring that the commercial supplier or licensor control any 
litigation arising from the Government's use of the contractor's 
supplies or services is deleted. Such representation when the 
Government is a party is reserved by statute for the U.S. Department of 
Justice.
    [cir] Audits (automatic liability for payment): Discrepancies found 
during an audit must comply with the invoicing procedures from the 
underlying contract. Disputed charges must be resolved through the 
Disputes clause. Any audits requested by the commercial supplier or 
licensor will be performed at supplier or licensor's expense.
    [cir] Taxes or surcharges: Any taxes or surcharges that will be 
passed along to the Government will be governed by the terms of the 
underlying contract. The cognizant contracting officer must make a 
determination of applicability of taxes whenever such a request is 
made.
    [cir] Assignment of CSA or Government contract by supplier: The 
contract, CSA, party rights and party obligations may not be assigned 
or delegated without express Government approval. Payment to a third 
party financial institution may still be reassigned.
    [cir] Confidentiality of CSA terms and conditions: The content of 
the CSA may not be deemed confidential. The Government may retain other 
marked confidential information as required by law, regulation or 
agency guidance, but will appropriately guard such confidential 
information.
    [ssquf] Sec.  1552.332-39 (FAR DEVIATION) in subpart 1552.3 is 
created to amend the language of FAR 52.232-39 to reflect the 
definition of CSAs contained at EPAAR 1502.100, to expand coverage to 
``language or provision'' in addition to ``clause'' in order to ensure 
that all CSA terms are covered, regardless of terminology utilized; and 
to include future fees, penalties, interest and legal

[[Page 48859]]

costs as unauthorized obligations in addition to indemnification.
    This proposed rule will reduce risk by uniformly addressing common 
unacceptable CSA terms, facilitate efficiency and effectiveness in the 
contracting process by reducing the administrative burden for the 
Government and industry, and promote competition by reducing barriers 
to industry, including small businesses. It will also create a new 
EPAAR subpart for class deviations, and an alternate version for clause 
1552.216-73.

IV. Proposed Rule

    The proposed rule amends Part 1502, Definition of Words and Terms, 
by adding a definition for Commercial Supplier Agreements to Sec.  
1502.100. It adds Part 1512, Acquisition of Commercial Items, Subpart 
1512.1, Special Requirements for the Acquisition of Commercial Items, 
Sec.  1512.101, Unenforceability of Unauthorized Obligations, and Sec.  
1512.1070, Contract Clause. It amends Part 1513, Simplified Acquisition 
Procedures, by adding Subpart 1513.6, Action At or Below the 
Micropurchase Threshold, and amending Sec.  1513.507(b). It amends 
Sec.  1516.505(b) by adding an alternate clause version to the clause 
prescription. It amends Part 1532, Contract Financing, by adding 
Subpart[thinsp]1532.10, Unenforceability of Unauthorized Obligation; 
and Sec.  1532.1070, Contract clause. It adds Part 1539, Acquisition of 
Information Technology, and Subpart 1539.1, Commercial Supplier 
Agreements. It amends Subpart 1552.2, Texts of Provisions and Clauses, 
by adding an alternate clause version to Sec.  1552.216-73, Fixed Rates 
for Services--Indefinite Delivery/Indefinite Quantity Contract; and 
adding Sec.  1552.232-75, Commercial Supplier Agreements--Unenforceable 
Clauses. Finally, it amends Part 1552, Solicitation Provisions and 
Contract Clauses, by adding Subpart 1552.3, FAR and EPAAR Class 
Deviations, and class deviations for clauses 52.212-4 and 52.232-39. 
This proposed rule:
    1. Amends Part 1502, Definition of Words and Terms, by adding a 
definition for Commercial Supplier Agreements to Sec.  1502.100, 
Definitions.
    2. Adds Part 1512, Acquisition of Commercial Items, and Subpart 
1512.1, Special Requirements for the Acquisition of Commercial Items, 
which clarify that paragraph (u) of the Commercial Items clause at 
Sec.  1552.312-4 (FAR DEVIATION) prevents violation of the Anti-
Deficiency Act.
    3. Adds Sec.  1512.101, Unenforceability of Unauthorized 
Obligations, and Sec.  1512.1070, Contract Clause, to prescribe the use 
of the deviated Commercial Items clause at Sec.  1552.312-4 (FAR 
DEVIATION) in lieu of FAR 52.212-4.
    4. Amends Part 1513, Simplified Acquisition Procedures, by adding 
Subpart 1513.6, Action At or Below the Micropurchase Threshold, and 
amending Sec.  1513.507(b), which will automatically apply the clauses 
at Sec.  1552.232-75 and Sec.  1552.332-39 to all purchases below the 
micro-purchase threshold.
    5. Amends the currently designated Sec.  1513.507(a) to become 
Sec.  1513.507(a)(i), and the currently designated Sec.  1513.507(b) to 
become Sec.  1513.507(a)(ii), due to the addition above.
    6. Amends Sec.  1516.505(b) by adding an alternate clause version 
to the prescription.
    7. Adds EPAAR Subpart[thinsp]1532.10, Unenforceability of 
Unauthorized Obligation, that clarifies the definition of supplier 
license agreements.
    8. Adds EPAAR Sec.  1532.1070 and establishes the prescription for 
use of EPAAR clause 1552.232-75 in all procurements where supplies or 
services are offered under a CSA.
    9. Adds Part 1539, Acquisition of Information Technology, and 
Subpart 1539.1, Commercial Supplier Agreements.
    10. Amends Subpart 1552.2, Texts of Provisions and Clauses, to add 
an alternate clause version to Sec.  1552.216-73, Fixed Rates for 
Services--Indefinite Delivery/Indefinite Quantity Contract, that pays 
the contractor escalated rates for optional periods of performance.
    11. Adds EPAAR Sec.  1552.232-75, Commercial Supplier Agreements--
Unenforceable Clauses, that provides the terms and conditions for 
supplies or services offered under a CSA.
    12. Adds EPAAR Subpart 1552.3, FAR and EPAAR Class Deviations, to 
contain Sec.  1552.312-4, Contract Terms and Conditions--Commercial 
Items (FAR DEVIATION); and Sec.  1552.332-39/Unenforceability of 
Unauthorized Obligations (FAR DEVIATION). Sec.  1552.312-4 updates 
paragraphs (s) and (u), and adds paragraph (w). Sec.  1552.332-39 
updates terms from Terms of Sale and End User Licensing Agreement to 
Commercial Supplier Agreement.

V. Statutory and Executive Orders Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review

    This action is not a ``significant regulatory action'' under the 
terms of Executive Order (E.O.) 12866 (58 FR 51735, October 4, 1993) 
and is therefore not subject to review under the E.O.

B. Paperwork Reduction Act

    This action does not impose an information collection burden under 
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. 
Burden is defined at 5 CFR 1320.3(b).

C. Regulatory Flexibility Act (RFA), as Amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et 
seq.

    The Regulatory Flexibility Act generally requires an agency to 
prepare a regulatory flexibility analysis of any rule subject to notice 
and comment rulemaking requirements under the Administrative Procedure 
Act or any other statute; unless the agency certifies that the rule 
will not have a significant economic impact on a substantial number of 
small entities. Small entities include small businesses, small 
organizations, and small governmental jurisdictions. For purposes of 
assessing the impact of this proposed rule on small entities, ``small 
entity'' is defined as: (1) A small business that meets the definition 
of a small business found in the Small Business Act and codified at 13 
CFR 121.201; (2) a small governmental jurisdiction that is a government 
of a city, county, town, school district or special district with a 
population of less than 50,000; or (3) a small organization that is any 
not-for-profit enterprise which is independently owned and operated and 
is not dominant in its field. After considering the economic impacts of 
this rule on small entities, I certify that this action will not have a 
significant economic impact on a substantial number of small entities. 
In determining whether a rule has a significant economic impact on a 
substantial number of small entities, the impact of concern is any 
significant adverse economic impact on small entities, because the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any significant 
economic impact of the proposed rule on small entities'' 5 U.S.C. 503 
and 604. Thus, an agency may certify that a rule will not have a 
significant economic impact on a substantial number of small entities 
if the rule relieves regulatory burden, or otherwise has a positive 
economic effect on all of the small entities subject to the rule. This 
action creates a new EPAAR clause, clause alternate and class 
deviations that will not have a significant economic impact on a 
substantial number of small entities, as

[[Page 48860]]

discussed in Section (II)(B). We continue to be interested in the 
potential impacts of the rule on small entities and welcome comments on 
issues related to such impacts.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 
104-4), establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, Local, and Tribal 
governments and the private sector. This rule contains no Federal 
mandates (under the regulatory provisions of the Title II of the UMRA) 
for State, Local, and Tribal governments or the private sector. The 
rule imposes no enforceable duty on any State, Local or Tribal 
governments or the private sector. Thus, the rule is not subject to the 
requirements of sections 202 and 205 of the UMRA.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and Local officials in the 
development of regulatory policies that have federalism implications. 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.'' This rule 
does not have federalism implications. It will not have substantial 
direct effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government as specified in 
Executive Order 13132.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.'' This rule does not have 
tribal implications as specified in Executive Order 13175.

G. Executive Order 13045: Protection of Children From Environmental 
Health and Safety Risks

    Executive Order 13045, entitled ``Protection of Children from 
Environmental Health and Safety Risks'' (62 FR 19885, April 23, 1997), 
applies to any rule that: (1) Is determined to be economically 
significant as defined under E.O. 12886, and (2) concerns an 
environmental health or safety risk that may have a proportionate 
effect on children. This rule is not subject to E.O. 13045 because it 
is not an economically significant rule as defined by Executive Order 
12866, and because it does not involve decisions on environment health 
or safety risks.

H. Executive Order 13211: Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This action is not subject to Executive Order 13211, ``Actions 
Concerning Regulations That Significantly Affect Energy Supply, 
Distribution or Use'' (66 FR 28335 (May 22, 2001), because it is not a 
significant regulatory action under Executive Order 12866.

I. National Technology Transfer and Advancement Act of 1995 (NTTAA)

    Section 12(d) (15 U.S.C. 272 note) of the National Technology 
Transfer and Advancement Act of 1995, Public Law 104-113, directs EPA 
to use voluntary consensus standards in its regulatory activities 
unless to do so would be inconsistent with applicable law or otherwise 
impractical. Voluntary consensus standards are technical standards 
(e.g., materials specifications, test methods, sampling procedures and 
business practices) that are developed or adopted by voluntary 
consensus standards bodies. The NTTAA directs EPA to provide Congress, 
through OMB, explanations when the Agency decides not to use available 
and applicable voluntary consensus standards. This action does not 
involve technical standards. Therefore, EPA is not considering the use 
of any voluntary consensus standards.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898 (59 FR 7629, February 16, 1994) establishes 
federal executive policy on environmental justice. Its main provision 
directs federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States. EPA has determined that this proposed 
rule will not have disproportionately high and adverse human health or 
environmental effects on minority or low-income populations because it 
does not affect the level of protection provided to human health or the 
environment in the general public.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a major rule may take effect, the agency 
promulgating the rule must submit a rule report, which includes a copy 
of the rule, to each House of the Congress and to the Comptroller 
General of the United States. Section 804(2) defines a ``major rule'' 
as any rule that the Administrator of the Office of Information and 
Regulatory Affairs of the Office of Management and Budget finds has 
resulted in or is likely to result in (1) an annual effect on the 
economy of $100,000,000 or more; (2) a major increase in costs or 
prices for consumers, individual industries, Federal, State, or local 
government agencies, or geographic regions; or (3) significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or on the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic and export markets. 
EPA is not required to submit a rule report regarding this action under 
section 801 as this is not a major rule by definition.

List of Subjects in 48 CFR Parts 1502, 1512, 1513, 1516, 1532, 1539 
and 1552

    Environmental protection, Accounting, Government procurement, 
Reporting and recordkeeping requirements.

    Dated: August 13, 2019.
Kimberly Y. Patrick,
Director, Office of Acquisition Solutions.
    For the reasons stated in the preamble, 48 CFR parts 1502, 1512, 
1513, 1516, 1532, 1539 and 1552 are proposed to be amended as follows:

PART 1502--DEFINITION OF WORDS AND TERMS

0
1. The authority citation for part 1502 continues to read as follows:

    Authority:  5 U.S.C. 301; Sec. 205(c), 63 Stat. 390, as amended, 
40 U.S.C. 486(c); and 41 U.S.C. 418b.


[[Page 48861]]


0
2. Revise 1502.100 to read as follows:


1502.100   Definitions.

    Chief of the Contracting Office (CCO) means the Office of 
Acquisition Solutions Division Directors at Headquarters, Research 
Triangle Park and Cincinnati. For purposes of ratification authority 
only, CCO also includes Regional Acquisition Managers. (See 1501.602-
3(b)(3) for the criteria for this ratification authority).
    Commercial supplier agreements (CSAs) mean terms and conditions 
customarily offered to the public by vendors of supplies or services 
that meet the definition of ``commercial item'' set forth in FAR 2.101 
and intended to create a binding legal obligation on the end user. CSAs 
are common in information technology acquisitions, including 
acquisitions of commercial computer software and commercial technical 
data, and they may apply to any supply or service. CSAs may apply 
regardless of the format or style of the document (for example, a CSA 
may be styled as standard terms of sale or lease, Terms of Service 
(TOS), End User License Agreement (EULA), or another similar legal 
instrument or agreement, and may be presented as part of a proposal or 
quotation responding to a solicitation for a contract or order). CSAs 
may also apply regardless of the media or delivery mechanism used (for 
example, a CSA may be presented as one or more paper documents, or may 
appear on a computer or other electronic device screen during a 
purchase, software installation, product delivery, registration for a 
service, or other transaction).
    Head of the Contracting Activity (HCA) means the Director, Office 
of Acquisition Solutions.
    Senior Procurement Executive (SPE) means the Director, Office of 
Acquisition Solutions.

SUBCHAPTER B--ACQUISITION PLANNING

0
3. Add part 1512 to read as follows:

PART 1512--ACQUISITION OF COMMERCIAL ITEMS

Subpart 1512.1--Special Requirements for the Acquisition of Commercial 
Items
1512.101 Unenforceability of unauthorized obligations.
1512.1070 Contract Clause.

    Authority:  5 U.S.C. 301 and 41 U.S.C. 418b.

Subpart 1512.1--Special Requirements for the Acquisition of 
Commercial Items


1512.101   Unenforceability of unauthorized obligations.

    EPA deviates from FAR 52.212-4 by using the term ``Commercial 
Supplier Agreements'' (defined in 1502.100) for commercial contracts 
instead of ``supplier license agreements''. Paragraph (u) of clause 
1552.332-39 (FAR DEVIATION) prevents violations of the Anti-Deficiency 
Act (31 U.S.C. 1341) for the acquisition of supplies or services 
subject to a Commercial Supplier Agreement.


1512.1070   Contract clause.

    EPA deviates from FAR 52.212-4 by revising paragraphs (s) and (u) 
and adding paragraph (w). Contracting officers shall use clause 
1552.332-39, Contract Terms and Conditions-Commercial Items (FAR 
DEVIATION), for acquisitions of commercial items in lieu of 52.212-4 or 
52.212-4 Alternate I. The contracting officer may tailor this clause in 
accordance with FAR 12.302.

PART 1513--SIMPLIFIED ACQUISITION PROCEDURES

0
4. The authority citation for part 1513 continues to read as follows:

    Authority:  Sec. 205(c), 63 Stat. 390, as amended, 40 U.S.C. 
486(c).

0
5. Revise section 1513.507 to read as follows:


1513.507   Contract clauses.

    (a)(1) It is the general policy of the Environmental Protection 
Agency that contractor or vendor prescribed leases or maintenance 
agreements for equipment shall not be executed.
    (2) The contracting officer shall, where appropriate, insert the 
clause at 1552.213-70, Notice to Suppliers of Equipment, in orders for 
purchases or leases of automatic data processing equipment, word 
processing, and similar types of commercially available equipment for 
which vendors, as a matter of routine commercial practice, have 
developed their own leases and/or customer service maintenance 
agreements.
    (b) Where the supplies or services are offered under a Commercial 
Supplier Agreement (as defined in 1502.100), the purchase order or 
modification shall incorporate clause 1552.332-39, Unenforceability of 
Unauthorized Obligations (FAR DEVIATION), in lieu of nondeviated clause 
52.232-39, and clause 1552.232-75, Commercial Supplier Agreements-
Unenforceable Clauses.
0
6. Add subpart 1513.6, consisting of 1513.6XX, to read as follows:

Subpart 1513.6--Actions at or Below the Micro-Purchase Threshold


1513.6XX   Unenforceability of unauthorized obligations in micro-
purchases.

    Unenforceability of unauthorized obligations in micro-purchases. 
Clause 1552.332-39, Unenforceability of Unauthorized Obligations (FAR 
DEVIATION), will automatically apply to any micro-purchase in lieu of 
nondeviated FAR 52.232-39 for supplies and services acquired subject to 
a commercial supplier agreement (as defined in 1502.100).

PART 1516--TYPES OF CONTRACTS

0
7. The authority citation for part 1516 continues to read as follows:

    Authority:  5 U.S.C. 301 and 41 U.S.C. 418b.

0
8. Amend section 1516.505 by revising paragraph (b) to read as follows:


1516.505   Contract clauses.

* * * * *
    (b) The contracting officer shall insert clause substantially the 
same as 1552.216-73, Fixed Rates for Services--Indefinite Delivery/
Indefinite Quantity Contract, in solicitations and contracts to specify 
fixed rates for services. Contracting officers may use Alternate I for 
procurements that will have order performance periods longer than one 
year. Alternate I has a different paragraph (c) from the Basic form. 
Contracting officers must use the Basic form as prescribed for 
procurements that will have orders with performance periods of one year 
or less. Contracting officers may use both the Basic form and Alternate 
I for procurements that will have mixed-length orders, where some are 
for one year or less, and others are for longer than one year. In such 
cases contracting officers must include procurement language that the 
Basic form applies to orders less than one year, and Alternate I 
applies to orders longer than one year.

PART 1532--CONTRACT FINANCING

0
9. The authority citation for part 1532 continues to read as follows:

    Authority: 5 U.S.C. 301 and 41 U.S.C. 418b.

0
10. Add subpart 1532.10 to read as follows:
Subpart 1532.10--Unenforceability of Unauthorized Obligations
1532.10XX Definitions
1532.1070 Contract clause

[[Page 48862]]

Subpart 1532.10--Unenforceability of Unauthorized Obligations


1532.10XX  Definitions.

    Supplier license agreements defined in FAR 32.705 are equivalent to 
Commercial Supplier Agreements defined in 1502.100.


1532.1070  Contract clause.

    The contracting officer shall utilize the clause at 1552.332-39, 
Unenforceability of Unauthorized Obligations (FAR DEVIATION) in all 
solicitations and contracts in lieu of nondeviated FAR 52.232-39.

Subchapter F--Special Categories of Contracting

0
11. Add part 1539, consisting of subpart 1539.1, to subchapter F to 
read as follows:

PART 1539--ACQUISITION OF INFORMATION TECHNOLOGY

    Authority: 5 U.S.C. 301 and 41 U.S.C. 418b.

Subpart 1539.1--Commercial Supplier Agreements


1539.1XX  History.

    (a) Background--(1) Commercial Supplier Agreements (CSAs) are 
defined at 1502.100 in part as terms and conditions that are 
customarily offered to the public by vendors of supplies or services 
that meet the definition of ``commercial item'' and are intended to 
create a binding legal obligation on the end user. CSAs are common in 
information technology acquisitions, including acquisitions of 
commercial computer software and commercial technical data, and they 
may apply to any supply or service.
    (2) Commercial supplies and services are offered to the public 
under standard agreements that may take a variety of forms, including, 
but not limited to, license agreements, terms of service, and terms of 
sale or purchase. These standard CSAs contain terms and conditions that 
are appropriate when the purchaser is a private party, but not when the 
purchaser is the Federal Government. The existence of Federally-
incompatible terms in standard CSAs is recognized in FAR 27.405-3(b), 
which states contracting officers should exercise caution in accepting 
a vendor's terms and conditions, since they may be written for 
commercial sales and not appropriate for Government contracts. (Note 
that the use of CSAs is not limited to information technology 
acquisitions, as they have become common in a broad variety of 
contexts, from travel to telecommunications to financial services to 
building maintenance systems; including purchases below the simplified 
acquisition threshold.)
    (b) Policy. The EPAAR includes standard terms and conditions for 
the most common conflicting CSA terms, and contracting officers and 
contract specialists must follow the relevant rules in parts 1512, 
1513, and 1532 when purchasing information technology that includes a 
CSA.

PART 1552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
12. The authority citation for part 1552 continues to read as follows:

    Authority: 5 U.S.C. 301 and 41 U.S.C. 418b.

Subpart 1552.2--Texts of Provisions and Clauses

0
13. Revise section 1552.216-73 to read as follows:


1552.216-73  Fixed rates for services-indefinite delivery/indefinite 
quantity contract.

    As prescribed in 1516.505(b), insert the following clause:

Fixed Rates For Services--Indefinite Delivery/Indefinite Quantity 
Contract (Date)

    (a) The following fixed rates shall apply for payment purposes 
for the duration of the contact.

------------------------------------------------------------------------
Personnel classification         Skill level          Fixed hourly rate
------------------------------------------------------------------------
                          ........................  ....................
                          ........................  ....................
                          ........................  ....................
                          ........................  ....................
                          ........................  ....................
                          ........................  ....................
                          ........................  ....................
                          ........................  ....................
                          ........................  ....................
                          ........................  ....................
                          ........................  ....................
------------------------------------------------------------------------

    (b) The rate, or rates, set forth in paragraph (a) of this 
clause, cover all expenses, including report preparation, salaries, 
overhead, general and administrative expenses, and profit.
    (c) The Contractor shall voucher for only the time of the 
personnel whose services are applied directly to the work called for 
in individual Orders and accepted by the EPA Contracting Officer's 
Representative (COR). The Government shall pay the Contractor for 
the life of the Order at rates in effect when the Order was issued, 
even if performance under the Order crosses into another period. The 
Contractor shall maintain time and labor distribution records for 
all employees who work under the contract. These records must 
document time worked and work performed by each individual on all 
Orders.
    (End of clause)

    Alternate I (date). As prescribed in 1515.505(b), modify the Basic 
form of the clause by changing paragraph (c) to the following:
    (c) The Contractor shall voucher for only the time of the personnel 
whose services are applied directly to the work called for in 
individual Orders and accepted by the EPA Contracting Officer's 
Representative (COR). The Government shall pay the Contractor at rates 
in effect when the work is performed by the Contractor. The Contractor 
shall maintain time and labor distribution records for all employees 
who work under the contract. These records must document time worked 
and work performed by each individual on all Orders.
0
14. Add section 1552.232-75 to read as follows:


1552.232-75   Commercial supplier agreements--unenforceable clauses.

    As prescribed in 1513.507(b) and 1532.1070 insert the following 
clause:

Commercial Supplier Agreements--Unenforceable Clauses (Date)

    When any supply or service acquired under this contract is 
subject to a Commercial Supplier Agreement (CSA, as defined in 
1502.100), the following language shall be deemed incorporated into 
the CSA. As used herein, ``this agreement'' means the CSA:

[[Page 48863]]

    (a) Notwithstanding any other provision of this agreement, when 
the end user is an agency or instrumentality of the U.S. Government, 
the following shall apply:
    (1) Applicability. This agreement is part of a contract between 
the commercial supplier and the U.S. Government for the acquisition 
of the supply or service that necessitates a license or other 
similar legal instrument (including all contracts, task orders, and 
delivery orders under FAR parts 13, 14 or 15).
    (2) End user. This agreement shall bind the ordering activity as 
end user but shall not operate to bind a Government employee or 
person acting on behalf of the Government in his or her personal 
capacity.
    (3) Law and disputes. This agreement is governed by Federal law.
    (i) Any language purporting to subject the U.S. Government to 
the laws of a U.S. state, U.S. territory, district, or municipality, 
or foreign nation, except where Federal law expressly provides for 
the application of such laws, is hereby deleted.
    (ii) Any language requiring dispute resolution in a specific 
forum or venue that is different from that prescribed by applicable 
Federal law is hereby deleted.
    (iii) Any language prescribing a different time period for 
bringing an action than that prescribed by applicable Federal law in 
relation to a dispute is hereby deleted.
    (4) Continued performance. The supplier or licensor shall not 
unilaterally revoke, terminate or suspend any rights granted to the 
Government except as allowed by this contract. If the supplier or 
licensor believes the ordering activity to be in breach of the 
agreement, it shall pursue its rights under the Contract Disputes 
Act or other applicable Federal statute while continuing performance 
as set forth in FAR 52.233-1, Disputes.
    (5) Arbitration; equitable or injunctive relief. In the event of 
a claim or dispute arising under or relating to this agreement, a 
binding arbitration shall not be used unless specifically authorized 
by agency guidance, and equitable or injunctive relief, including 
the award of attorney fees, costs or interest, may be awarded 
against the U.S. Government only when explicitly provided by statute 
(e.g., Prompt Payment Act or Equal Access to Justice Act).
    (6) Updating terms. (i) After award, the contractor may 
unilaterally revise terms if they are not material. A material 
change is defined as:
    (A) Terms that significantly change Government rights or 
obligations; and
    (B) Terms that increase Government prices;
    (C) Terms that decrease overall level of service; or
    (D) Terms that limit any other Government right addressed 
elsewhere in this contract.
    (ii) For revisions that will materially change the terms of the 
contract, the revised commercial supplier agreement must be 
incorporated into the contract using a bilateral modification.
    (iii) Any agreement terms or conditions unilaterally revised 
subsequent to award that are inconsistent with any material term or 
provision of this contract shall not be enforceable against the 
Government, and the Government shall not be deemed to have consented 
to them.
    (7) No automatic renewals. If any license or service tied to 
periodic payment is provided under this agreement (e.g., annual 
software maintenance or annual lease term), such license or service 
shall not renew automatically upon expiration of its current term 
without prior express consent by an authorized Government 
representative.
    (8) Indemnification. Any clause of this agreement requiring the 
commercial supplier or licensor to defend or indemnify the end user 
is hereby amended to provide that the U.S. Department of Justice has 
the sole right to represent the United States in any such action, in 
accordance with 28 U.S.C. 516.
    (9) Audits. Any clause of this agreement permitting the 
commercial supplier or licensor to audit the end user's compliance 
with this agreement is hereby amended as follows:
    (i) Discrepancies found in an audit may result in a charge by 
the commercial supplier or licensor to the ordering activity. Any 
resulting invoice must comply with the proper invoicing requirements 
specified in the underlying Government contract or order.
    (ii) This charge, if disputed by the ordering activity, will be 
resolved through the Disputes clause at FAR 52.233-1; no payment 
obligation shall arise on the part of the ordering activity until 
the conclusion of the dispute process.
    (iii) Any audit requested by the contractor will be performed at 
the contractor's expense, without reimbursement by the Government.
    (10) Taxes or surcharges. Any taxes or surcharges which the 
commercial supplier or licensor seeks to pass along to the 
Government as end user will be governed by the terms of the 
underlying Government contract or order and, in any event, must be 
submitted to the Contracting Officer for a determination of 
applicability prior to invoicing unless specifically agreed to 
otherwise in the Government contract.
    (11) Non-assignment. This agreement may not be assigned, nor may 
any rights or obligations thereunder be delegated, without the 
Government's prior approval, except as expressly permitted under the 
clause at FAR 52.232-23, Assignment of Claims.
    (12) Confidential information. If this agreement includes a 
confidentiality clause, such clause is hereby amended to state that 
neither the agreement nor the contract price list, as applicable, 
shall be deemed ``confidential information.'' Issues regarding 
release of ``unit pricing'' will be resolved consistent with the 
Freedom of Information Act. Notwithstanding anything in this 
agreement to the contrary, the Government may retain any 
confidential information as required by law, regulation or its 
internal document retention procedures for legal, regulatory or 
compliance purposes; provided, however, that all such retained 
confidential information will continue to be subject to the 
confidentiality obligations of this agreement.
    (b) If any language, provision or clause of this agreement 
conflicts or is inconsistent with paragraph (a) of this clause, the 
language, provisions, or clause of paragraph (a) of this clause 
shall prevail to the extent of such inconsistency.
    (End of clause)
0
15. Add subpart 1552.3 to read as follows:
Subpart 1552.3--FAR and EPAAR Class Deviations
1552.312-4 Contract terms and conditions-commercial items (FAR 
deviation).
1552.332-39 Unenforceability of unauthorized obligations (FAR 
deviation).

    Authority: 5 U.S.C. 301 and 41 U.S.C. 418b.

Subpart 1552.3--FAR and EPAAR Class Deviations


1552.312-4  Contract terms and conditions-commercial items (FAR 
deviation).

    As prescribed in 1512.1070, the contracting officer shall insert 
clause 1552.332-39, Contract Terms and Conditions-Commercial Items (FAR 
DEVIATION), for acquisitions of commercial items in lieu of 52.212-4 or 
52.212-4 Alternate I. The contracting officer may tailor this clause in 
accordance with FAR 12.302.

Contract Terms and Conditions--Commercial Items (FAR Deviation) (Date)

    (a) Inspection/acceptance. The Contractor shall only tender for 
acceptance those items that conform to the requirements of this 
contract. The Government reserves the right to inspect or test any 
supplies or services that have been tendered for acceptance. The 
Government may require repair or replacement of nonconforming 
supplies or reperformance of nonconforming services at no increase 
in contract price. If repair/replacement or reperformance will not 
correct the defects or is not possible, the Government may seek an 
equitable price reduction or adequate consideration for acceptance 
of nonconforming supplies or services. The Government must exercise 
its post-acceptance rights--
    (1) Within a reasonable time after the defect was discovered or 
should have been discovered; and
    (2) Before any substantial change occurs in the condition of the 
item, unless the change is due to the defect in the item.
    (b) Assignment. The Contractor or its assignee may assign its 
rights to receive payment due as a result of performance of this 
contract to a bank, trust company, or other financing institution, 
including any Federal lending agency in accordance with the 
Assignment of Claims Act (31 U.S.C. 3727). However, when a third 
party makes payment (e.g., use of the Governmentwide commercial 
purchase card), the Contractor may not assign its rights to receive 
payment under this contract.
    (c) Changes. Changes in the terms and conditions of this 
contract may be made only by written agreement of the parties.
    (d) Disputes. This contract is subject to 41 U.S.C. chapter 71, 
Contract Disputes. Failure of the parties to this contract to reach 
agreement on any request for equitable adjustment, claim, appeal or 
action arising under or relating to this contract shall be a dispute 
to be resolved in accordance with the

[[Page 48864]]

clause at FAR 52.233-1, Disputes, which is incorporated herein by 
reference. The Contractor shall proceed diligently with performance 
of this contract, pending final resolution of any dispute arising 
under the contract.
    (e) Definitions. The clause at FAR 52.202-1, Definitions, is 
incorporated herein by reference.
    (f) Excusable delays. The Contractor shall be liable for default 
unless nonperformance is caused by an occurrence beyond the 
reasonable control of the Contractor and without its fault or 
negligence such as, acts of God or the public enemy, acts of the 
Government in either its sovereign or contractual capacity, fires, 
floods, epidemics, quarantine restrictions, strikes, unusually 
severe weather, and delays of common carriers. The Contractor shall 
notify the Contracting Officer in writing as soon as it is 
reasonably possible after the commencement of any excusable delay, 
setting forth the full particulars in connection therewith, shall 
remedy such occurrence with all reasonable dispatch, and shall 
promptly give written notice to the Contracting Officer of the 
cessation of such occurrence.
    (g) Invoice. (1) The Contractor shall submit an original invoice 
and three copies (or electronic invoice, if authorized) to the 
address designated in the contract to receive invoices. An invoice 
must include--
    (i) Name and address of the Contractor;
    (ii) Invoice date and number;
    (iii) Contract number, line item number and, if applicable, the 
order number;
    (iv) Description, quantity, unit of measure, unit price and 
extended price of the items delivered;
    (v) Shipping number and date of shipment, including the bill of 
lading number and weight of shipment if shipped on Government bill 
of lading;
    (vi) Terms of any discount for prompt payment offered;
    (vii) Name and address of official to whom payment is to be 
sent;
    (viii) Name, title, and phone number of person to notify in 
event of defective invoice; and
    (ix) Taxpayer Identification Number (TIN). The Contractor shall 
include its TIN on the invoice only if required elsewhere in this 
contract.
    (x) Electronic funds transfer (EFT) banking information.
    (A) The Contractor shall include EFT banking information on the 
invoice only if required elsewhere in this contract.
    (B) If EFT banking information is not required to be on the 
invoice, in order for the invoice to be a proper invoice, the 
Contractor shall have submitted correct EFT banking information in 
accordance with the applicable solicitation provision, contract 
clause (e.g., 52.232-33, Payment by Electronic Funds Transfer--
System for Award Management, or 52.232-34, Payment by Electronic 
Funds Transfer--Other Than System for Award Management), or 
applicable agency procedures.
    (C) EFT banking information is not required if the Government 
waived the requirement to pay by EFT.
    (2) Invoices will be handled in accordance with the Prompt 
Payment Act (31 U.S.C. 3903) and Office of Management and Budget 
(OMB) prompt payment regulations at 5 CFR part 1315.
    (h) Patent indemnity. The Contractor shall indemnify the 
Government and its officers, employees and agents against liability, 
including costs, for actual or alleged direct or contributory 
infringement of, or inducement to infringe, any United States or 
foreign patent, trademark or copyright, arising out of the 
performance of this contract, provided the Contractor is reasonably 
notified of such claims and proceedings.
    (i) Payment--(1) Items accepted. Payment shall be made for items 
accepted by the Government that have been delivered to the delivery 
destinations set forth in this contract.
    (2) Prompt payment. The Government will make payment in 
accordance with the Prompt Payment Act (31 U.S.C. 3903) and prompt 
payment regulations at 5 CFR part 1315.
    (3) Electronic Funds Transfer (EFT). If the Government makes 
payment by EFT, see 52.212-5(b) for the appropriate EFT clause.
    (4) Discount. In connection with any discount offered for early 
payment, time shall be computed from the date of the invoice. For 
the purpose of computing the discount earned, payment shall be 
considered to have been made on the date which appears on the 
payment check or the specified payment date if an electronic funds 
transfer payment is made.
    (5) Overpayments. If the Contractor becomes aware of a duplicate 
contract financing or invoice payment or that the Government has 
otherwise overpaid on a contract financing or invoice payment, the 
Contractor shall--
    (i) Remit the overpayment amount to the payment office cited in 
the contract along with a description of the overpayment including 
the--
    (A) Circumstances of the overpayment (e.g., duplicate payment, 
erroneous payment, liquidation errors, date(s) of overpayment);
    (B) Affected contract number and delivery order number, if 
applicable;
    (C) Affected line item or subline item, if applicable; and
    (D) Contractor point of contact.
    (ii) Provide a copy of the remittance and supporting 
documentation to the Contracting Officer.
    (6) Interest. (i) All amounts that become payable by the 
Contractor to the Government under this contract shall bear simple 
interest from the date due until paid unless paid within 30 days of 
becoming due. The interest rate shall be the interest rate 
established by the Secretary of the Treasury as provided in 41 
U.S.C. 7109, which is applicable to the period in which the amount 
becomes due, as provided in (i)(6)(v) of this clause, and then at 
the rate applicable for each six-month period as fixed by the 
Secretary until the amount is paid.
    (ii) The Government may issue a demand for payment to the 
Contractor upon finding a debt is due under the contract.
    (iii) Final decisions. The Contracting Officer will issue a 
final decision as required by 33.211 if--
    (A) The Contracting Officer and the Contractor are unable to 
reach agreement on the existence or amount of a debt within 30 days;
    (B) The Contractor fails to liquidate a debt previously demanded 
by the Contracting Officer within the timeline specified in the 
demand for payment unless the amounts were not repaid because the 
Contractor has requested an installment payment agreement; or
    (C) The Contractor requests a deferment of collection on a debt 
previously demanded by the Contracting Officer (see 48 CFR 32.607-
2).
    (iv) If a demand for payment was previously issued for the debt, 
the demand for payment included in the final decision shall identify 
the same due date as the original demand for payment.
    (v) Amounts shall be due at the earliest of the following dates:
    (A) The date fixed under this contract.
    (B) The date of the first written demand for payment, including 
any demand for payment resulting from a default termination.
    (vi) The interest charge shall be computed for the actual number 
of calendar days involved beginning on the due date and ending on--
    (A) The date on which the designated office receives payment 
from the Contractor;
    (B) The date of issuance of a Government check to the Contractor 
from which an amount otherwise payable has been withheld as a credit 
against the contract debt; or
    (C) The date on which an amount withheld and applied to the 
contract debt would otherwise have become payable to the Contractor.
    (vii) The interest charge made under this clause may be reduced 
under the procedures prescribed in 32.608-2 of the Federal 
Acquisition Regulation in effect on the date of this contract.
    (j) Risk of loss. Unless the contract specifically provides 
otherwise, risk of loss or damage to the supplies provided under 
this contract shall remain with the Contractor until, and shall pass 
to the Government upon:
    (1) Delivery of the supplies to a carrier, if transportation is 
f.o.b. origin; or
    (2) Delivery of the supplies to the Government at the 
destination specified in the contract, if transportation is f.o.b. 
destination.
    (k) Taxes. The contract price includes all applicable Federal, 
State, and local taxes and duties.
    (l) Termination for the Government's convenience. The Government 
reserves the right to terminate this contract, or any part hereof, 
for its sole convenience. In the event of such termination, the 
Contractor shall immediately stop all work hereunder and shall 
immediately cause any and all of its suppliers and subcontractors to 
cease work. Subject to the terms of this contract, the Contractor 
shall be paid a percentage of the contract price reflecting the 
percentage of the work performed prior to the notice of termination, 
plus reasonable charges the Contractor can demonstrate to the 
satisfaction of the Government using its standard record keeping 
system, have resulted from the termination. The Contractor shall not 
be required to comply with the cost

[[Page 48865]]

accounting standards or contract cost principles for this purpose. 
This paragraph does not give the Government any right to audit the 
Contractor's records. The Contractor shall not be paid for any work 
performed or costs incurred which reasonably could have been 
avoided.
    (m) Termination for cause. The Government may terminate this 
contract, or any part hereof, for cause in the event of any default 
by the Contractor, or if the Contractor fails to comply with any 
contract terms and conditions, or fails to provide the Government, 
upon request, with adequate assurances of future performance. In the 
event of termination for cause, the Government shall not be liable 
to the Contractor for any amount for supplies or services not 
accepted, and the Contractor shall be liable to the Government for 
any and all rights and remedies provided by law. If it is determined 
that the Government improperly terminated this contract for default, 
such termination shall be deemed a termination for convenience.
    (n) Title. Unless specified elsewhere in this contract, title to 
items furnished under this contract shall pass to the Government 
upon acceptance, regardless of when or where the Government takes 
physical possession.
    (o) Warranty. The Contractor warrants and implies that the items 
delivered hereunder are merchantable and fit for use for the 
particular purpose described in this contract.
    (p) Limitation of liability. Except as otherwise provided by an 
express warranty, the Contractor will not be liable to the 
Government for consequential damages resulting from any defect or 
deficiencies in accepted items.
    (q) Other compliances. The Contractor shall comply with all 
applicable Federal, State and local laws, executive orders, rules 
and regulations applicable to its performance under this contract.
    (r) Compliance with laws unique to Government contracts. The 
Contractor agrees to comply with 31 U.S.C. 1352 relating to 
limitations on the use of appropriated funds to influence certain 
Federal contracts; 18 U.S.C. 431 relating to officials not to 
benefit; 40 U.S.C. chapter 37, Contract Work Hours and Safety 
Standards; 41 U.S.C. chapter 87, Kickbacks; 41 U.S.C. 4712 and 10 
U.S.C. 2409 relating to whistleblower protections; 49 U.S.C. 40118, 
Fly American; and 41 U.S.C. chapter 21 relating to procurement 
integrity.
    (s) Order of precedence. Any inconsistencies in this 
solicitation or contract shall be resolved by giving precedence in 
the following order:
    (1) The schedule of supplies/services.
    (2) Paragraphs (b), (d), (g), (i), (q), (r), (u) and (w) of this 
clause.
    (3) The clause at 52.212-5.
    (4) Addenda to this solicitation or contract, including any 
commercial supplier agreements as amended by the Commercial Supplier 
Agreements--Unenforceable Clauses provision.
    (5) Solicitation provisions if this is a solicitation.
    (6) Other paragraphs of this clause.
    (7) The Standard Form 1449.
    (8) Other documents, exhibits, and attachments.
    (9) The specification.
    (t) [Reserved]
    (u) Unauthorized obligations. (1) Except as stated in paragraph 
(u)(2) of this clause, when any supply or service acquired under 
this contract is subject to any commercial supplier agreement (as 
defined in 1502.100) that includes any language, provision, or 
clause requiring the Government to pay any future fees, penalties, 
interest, legal costs or to indemnify the Contractor or any person 
or entity for damages, costs, fees, or any other loss or liability 
that would create an Anti-Deficiency Act violation (31 U.S.C. 1341), 
the following shall govern:
    (i) Any such language, provision, or clause is unenforceable 
against the Government.
    (ii) Neither the Government nor any Government authorized end 
user shall be deemed to have agreed to such clause by virtue of it 
appearing in the commercial supplier agreement. If the commercial 
supplier agreement is invoked through an ``I agree'' click box or 
other comparable mechanism (e.g., ``click-wrap'' or ``browse-wrap'' 
agreements), execution does not bind the Government or any 
Government authorized end user to such clause.
    (iii) Any such language, provision, or clause is deemed to be 
stricken from the commercial supplier agreement.
    (2) Paragraph (u)(1) of this clause does not apply to 
indemnification or any other payment by the Government that is 
expressly authorized by statute and specifically authorized under 
applicable agency regulations and procedures.
    (v) Incorporation by reference. The Contractor's representations 
and certifications, including those completed electronically via the 
System for Award Management (SAM), are incorporated by reference 
into the contract.
    (w) Commercial Supplier Agreements--unenforceable clauses. When 
any supply or service acquired under this contract is subject to a 
Commercial Supplier Agreement (as defined in 1502.100), the 
following language shall be deemed incorporated into the commercial 
supplier agreement. As used herein, ``this agreement'' means the 
commercial supplier agreement:
    (1) Notwithstanding any other provision of this agreement, when 
the end user is an agency or instrumentality of the U.S. Government, 
the following shall apply:
    (i) Applicability. This agreement is a part of a contract 
between the commercial supplier and the U.S. Government for the 
acquisition of the supply or service that necessitates a license or 
other similar legal instrument (including all contracts, task 
orders, and delivery orders under FAR part 12).
    (ii) End user. This agreement shall bind the ordering activity 
as end user but shall not operate to bind a Government employee or 
person acting on behalf of the Government in his or her personal 
capacity.
    (iii) Law and disputes. This agreement is governed by Federal 
law.
    (A) Any language purporting to subject the U.S. Government to 
the laws of a U.S. state, U.S. territory, district, or municipality, 
or a foreign nation, except where Federal law expressly provides for 
the application of such laws, is hereby deleted.
    (B) Any language requiring dispute resolution in a specific 
forum or venue that is different from that prescribed by applicable 
Federal law is hereby deleted.
    (C) Any language prescribing a different time period for 
bringing an action than that prescribed by applicable Federal law in 
relation to a dispute is hereby deleted.
    (iv) Continued performance. The supplier or licensor shall not 
unilaterally revoke, terminate or suspend any rights granted to the 
Government except as allowed by this contract. If the supplier or 
licensor believes the ordering activity to be in breach of the 
agreement, it shall pursue its rights under the Contract Disputes 
Act or other applicable Federal statute while continuing performance 
as set forth in paragraph (d) of this clause (Disputes).
    (v) Arbitration; equitable or injunctive relief. In the event of 
a claim or dispute arising under or relating to this agreement, a 
binding arbitration shall not be used unless specifically authorized 
by agency guidance, and equitable or injunctive relief, including 
the award of attorney fees, costs or interest, may be awarded 
against the U.S. Government only when explicitly provided by statute 
(e.g., Prompt Payment Act or Equal Access to Justice Act).
    (vi) Updating terms. (A) After award, the contractor may 
unilaterally revise terms if they are not material. A material 
change is defined as:
    (1) Terms that change Government rights or obligations;
    (2) Terms that increase Government prices;
    (3) Terms that decrease overall level of service; or
    (4) Terms that limit any other Government right addressed 
elsewhere in this contract.
    (B) For revisions that will materially change the terms of the 
contract, the revised commercial supplier agreement must be 
incorporated into the contract using a bilateral modification.
    (C) Any agreement terms or conditions unilaterally revised 
subsequent to award that are inconsistent with any material term or 
provision of this contract shall not be enforceable against the 
Government, and the Government shall not be deemed to have consented 
to them.
    (vii) No automatic renewals. If any license or service tied to 
periodic payment is provided under this agreement (e.g., annual 
software maintenance or annual lease term), such license or service 
shall not renew automatically upon expiration of its current term 
without prior express consent by an authorized Government 
representative.
    (viii) Indemnification. Any clause of this agreement requiring 
the commercial supplier or licensor to defend or indemnify the end 
user is hereby amended to provide that the U.S. Department of 
Justice has the sole right to represent the United States in any 
such action, in accordance with 28 U.S.C. 516.
    (ix) Audits. Any clause of this agreement permitting the 
commercial supplier or licensor to audit the end user's compliance 
with this agreement is hereby amended as follows:
    (A) Discrepancies found in an audit may result in a charge by 
the commercial supplier or licensor to the ordering activity. Any

[[Page 48866]]

resulting invoice must comply with the proper invoicing requirements 
specified in the underlying Government contract or order.
    (B) This charge, if disputed by the ordering activity, will be 
resolved in accordance with paragraph (d) (Disputes) of this clause; 
no payment obligation shall arise on the part of the ordering 
activity until the conclusion of the dispute process.
    (C) Any audit requested by the contractor will be performed at 
the contractor's expense, without reimbursement by the Government.
    (x) Taxes or surcharges. Any taxes or surcharges which the 
commercial supplier or licensor seeks to pass along to the 
Government as end user will be governed by the terms of the 
underlying Government contract or order and, in any event, must be 
submitted to the Contracting Officer for a determination of 
applicability prior to invoicing unless specifically agreed to 
otherwise in the Government contract.
    (xi) Non-assignment. This agreement may not be assigned, nor may 
any rights or obligations thereunder be delegated, without the 
Government's prior approval, except as expressly permitted under 
paragraph (b) of this clause.
    (xii) Confidential information. If this agreement includes a 
confidentiality clause, such clause is hereby amended to state that 
neither the agreement nor the contract price list, as applicable, 
shall be deemed ``confidential information.'' Issues regarding 
release of ``unit pricing'' will be resolved consistent with the 
Freedom of Information Act. Notwithstanding anything in this 
agreement to the contrary, the Government may retain any 
confidential information as required by law, regulation or its 
internal document retention procedures for legal, regulatory or 
compliance purposes; provided, however, that all such retained 
confidential information will continue to be subject to the 
confidentiality obligations of this agreement.
    (2) If any language, provision, or clause of this agreement 
conflicts or is inconsistent with paragraph (w)(1) of this clause, 
the language, provisions, or clause of paragraph (w)(1) of this 
clause shall prevail to the extent of such inconsistency.

    (End of clause)


1552.332-39   Unenforceability of unauthorized obligations (FAR 
deviation).

    As prescribed in 1513.507(b) and 1532.1070, use clause 1552.332-39 
(FAR DEVIATION) instead of the nondeviated version for purchase orders, 
modifications and contracts that include commercial supplier 
agreements.

Unenforceability of Unauthorized Obligations (Far Deviation) (Date)

    (a) Except as stated in paragraph (b) of this clause, when any 
supply or service acquired under this contract is subject to any 
commercial supplier agreement (as defined in 1502.100) that includes 
any language, provision, or clause requiring the Government to pay 
any future fees, penalties, interest, legal costs or to indemnify 
the Contractor or any person or entity for damages, costs, fees, or 
any other loss or liability that would create an Anti-Deficiency Act 
violation (31 U.S.C. 1341), the following shall govern:
    (1) Any such language, provision, or clause is unenforceable 
against the Government.
    (2) Neither the Government nor any Government authorized end 
user shall be deemed to have agreed to such language, provision, or 
clause by virtue of it appearing in the commercial supplier 
agreement. If the commercial supplier agreement is invoked through 
an ``I agree'' click box or other comparable mechanism (e.g., 
``click-wrap'' or ``browse-wrap'' agreements), execution does not 
bind the Government or any Government authorized end user to such 
clause.
    (3) Any such language, provision, or clause is deemed to be 
stricken from the commercial supplier agreement.
    (b) Paragraph (a) of this clause does not apply to 
indemnification or any other payment by the Government that is 
expressly authorized by statute and specifically authorized under 
applicable agency regulations and procedures.

    (End of clause)

[FR Doc. 2019-19575 Filed 9-16-19; 8:45 am]
 BILLING CODE 6560-50-P


