Government Contracts Proposed EPAAR Rule Addresses Conflicting Commercial Terms
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Thursday, October 17, 2019

Proposed EPAAR Rule Addresses Conflicting Commercial Terms

By Government Contracts Editorial Staff

A proposed rule would amend the Environmental Protection Agency Acquisition Regulation to address common commercial supplier agreement terms that are inconsistent with federal law. CSAs are terms and conditions that are customarily offered to the public by vendors of supplies or services that meet the Federal Acquisition Regulation definition of “commercial item” and are intended to create a binding legal obligation on the end user. CSAs are common in information technology acquisitions, but they may apply to any supply or service. Standard CSAs contain terms and conditions that are appropriate when the purchaser is a private party, but not when the purchaser is the government. Although FAR 27.405-3(b) recognizes that incompatibility of CSAs with federal law and advises contracting officers to exercise caution when accepting a contractor’s terms and conditions, this subsection is limited to acquisitions of commercial computer software. CSAs have become common in a broad variety of contexts, and discrepancies between CSAs and federal law, or the government’s needs, create recurrent points of inconsistency. Moreover, the order of precedence in the FAR 52.212-4 commercial items clause is unclear on prevailing terms. Jurisdiction or venue clauses requiring disputes to be resolved in a particular state or federal court, automatic renewal clauses, and clauses allowing the contractor to unilaterally terminate are examples of incompatible clauses commonly found in CSAs.

Commercial Items Deviation. The rule proposes to amend the EPAAR to implement standard terms and conditions for the most common conflicting CSA terms and minimize the need for negotiation of these terms on an individual basis. The rule also proposes to add requirements to contracts making certain conflicting or inconsistent CSA terms unenforceable if no express exception is authorized elsewhere by federal statute. A proposed new class deviation at EPAAR 1552.312-4 explicitly addresses common unenforceable terms and clarifies prevailing terms in the order of precedence. The clause would be used in commercial items acquisitions in lieu of FAR 52.212-4 or its Alternate I. The CO could tailor the clause in accordance with FAR 12.302. A similar new clause, EPAAR 1552.232-75, Commercial supplier agreements—unenforceable clauses, would be used in all procurements where supplies or services are offered under a CSA.

Second Deviation Clause. Another proposed deviation clause, EPAAR 1552.332-39, Unenforceability of unauthorized obligations, addresses potential Anti-Deficiency Act (31 USC 1341) violations and would be used in lieu of FAR 52.232-39. Finally, the rule would amend the existing clause at EPAAR 1552.216-73, Fixed Rates for Services—Indefinite Delivery/Indefinite Quantity Contract, based on ongoing need. EPA believes the rule’s approach will decrease the time needed for legal review prior to contract award and reduce costs to both the government and contractors. A complete listing of the regulations impacted by the rule appears in the regulation table below. Submit comments by November 18, 2019. For the text of the proposed rule, see ¶70,053.31.

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