DEPARTMENT OF THE AIR FORCE AFAC 92-51

Headquarters US Air Force

Washington DC 20330 October 30, 1995

AIR FORCE ACQUISITION CIRCULAR

This Air Force Acquisition Circular (AFAC) is issued pursuant to the authority of FAR 1.301. Reproduction is authorized.

POLICY CHANGES/INFORMATION

Item Title Pages

Section B, DFARS Changes

B1 Payment Protection in Construction Contracts

between $25,000 and $100,000 (DDP Memo,

31 August 1995; D.L. 95-018) B-1

Section D, FAR Changes

D1 No-setoff Provision (Alternate I) Under the

Clause at FAR 52.232-23, Assignment of Claims

Clause (DDP Memo, 29 September 1995) D-1

D2 Extension to Class Deviation - Special

Tooling (DDP Memo, 20 September 1995;

DAR Tracking Number. 95-O0007) n/a

INSTRUCTION

GENERAL--

File this AFAC 92-51 Index (2 pages) with the AFACs.

ITEM B1--

GENERAL: This AFAC item disseminates a Departmental Letter that amends the Defense Federal Acquisition Regulation Supplement (DFARS) to provide alternative payment protections for construction contracts between $25,000 and $100,000, pending implementation of Section 4104(b)(2) of the Federal Acquisition Streamlining Act of 1994 (FASA) in the Federal Acquisition Regulation. Section 4104(b)(2) of FASA requires FAR revisions to provide alternatives to payment bonds as payment protections for suppliers of labor and material under construction contracts between $25,000 and $100,000. Federal Acquisition Circular 90-29 revised FAR Part 13 to exclude construction contracts and subcontracts at or below the simplified acquisition threshold ($100,000) from Miller Act bond requirements, in accordance with Section 4104(b)(1) of FASA.

FILING INSTRUCTION: File AFAC pages B-1 and B-1.1 through B-1.3 with the AFACs.

MARKING INSTRUCTIONS: Annotate "AFAC 92-51, B1" in the margin at each of the following locations in the DFARS:

(i) The Table of Contents for Part 228 at 228.170;

(ii) Page 228.1-2 below 228.170;

No. of Printed Pages: 7

OPR: SAF/AQCF

Distribution: F (Same as FAR)

2 October 30, 1995 AFAC 92-51

(iii) Table of Contents Part 252 at 252.228-7006; and

(iv) Page 252.223-10 below 252.228-7006.

EFFECTIVITY INSTRUCTIONS: This AFAC item is effective from 31 Aug 95 until the change is included in a Defense Acquisition Circular (DAC).

ITEM D1--

GENERAL: Beginning 1 October 1995, and until further notice, Alternate I to 52.232-23 shall not be included in solicitations and resulting contracts. The Federal Acquisition Streamlining Act of 1994 changed the basis for use of Alternate I to a Presidential Determination of Need. This provision has been implemented in FAC 90-33 dated September 27, 1995. At this time no determination of need has been made. Until such time as a determination is made, the Alternate I shall not be used. Changes to the Defense Federal Acquisition Regulation Supplement will follow shortly.

FILING INSTRUCTIONS: File AFAC page D-1 with the AFACs.

MARKING INSTRUCTIONS: Annotate "AFAC 92-51, D1" in the margin at each of the following locations in the FAR:

(I) Page 32-29 at 32.806(a)(2);

(ii) Page 52-179 at 52.232-23, Alternate I.

EFFECTIVITY INSTRUCTIONS: This AFAC item is effective from 29 Sep 95 until FAC 90-33 is received.

ITEM D2--

GENERAL: This AFAC item extends for one year the deviation previously published under AFAC 92-43, D1.

FILING INSTRUCTIONS: None.

MARKING INSTRUCTIONS: Annotate "Extended by AFAC 92-51, D2" below the annotated reference to "AFAC 92-43, D1" at each of the following locations in the FAR:

(i) Page 45-7 at 45.306-1;

(ii) Page 45-8 at 45.306-5;

(iii) Page 52-211 at 52.245-2; and

(iv) Page 52.233 at 52.247-17.

EFFECTIVITY INSTRUCTIONS: This AFAC item is effective from 20 Sep 95 until 16 Oct 96, or until the FAR is revised, whichever occurs first.

AFAC 92-51 October 30, 1995 B-1

OFFICE OF THE UNDER SECRETARY OF DEFENSE

3000 DEFENSE PENTAGON

WASHINGTON DC 20301-3000

August 31, 1995

DP(DAR)

In reply refer to

DFARS Case: 95-D305

D. L. 95-018

MEMORANDUM FOR DIRECTORS OF DEFENSE AGENCIES

DEPUTY FOR ACQUISITION AND BUSINESS MANAGEMENT,

ASN(RD&A)/ABM

DEPUTY ASSISTANT SECRETARY OF THE AIR FORCE

(CONTRACTING), SAF/AQC

DIRECTOR, PROCUREMENT POLICY, ASA(RD&A)/SARD-PP

DEPUTY DIRECTOR (ACQUISITION), DEFENSE LOGISTICS AGENCY

SUBJECT: Payment Protections in Construction Contracts between $25,000 and $100,000

We have amended the Defense Federal Acquisition Regulation Supplement (DFARS) to provide alternative payment protections for construction contracts between $25,000 and $100,000, pending implementation of Section 4104(b)(2) of the Federal Acquisition Streamlining Act of 1994 (FASA) in the Federal Acquisition Regulation. Section 4104(b)(2) of FASA requires FAR revisions to provide alternatives to payment bonds as payment protections for suppliers of labor and material under construction contracts between $25,000 and $100,000. Federal Acquisition Circular 90-29 revised FAR Part 13 to exclude construction contracts and subcontracts at or below the simplified acquisition threshold ($100,000) from Miller Act bond requirements, in accordance with Section 4104(b)(1) of FASA.

This interim DFARS rule is effective immediately and will be included in a future Defense Acquisition Circular.

Elenor R. Spector

Director, Defense Procurement

Attachment

cc: DSMC, Ft. Belvoir

AFAC 92-51 October 27, 1995 B-1.1

DEFENSE FEDERAL ACQUISITION REGULATION SUPPLEMENT

PART 228--BONDS AND INSURANCE

* * * * *

228.171 Alternative payment protections in construction contracts between $25,000 and $100,000.

228.171-1 General.

For construction contracts greater than $25,000, but not greater than $100,000, the contracting officer shall select one or more of the following payment protections which the contractor may submit to the Government for the protection of suppliers of labor and material:

(a) A payment bond.

(b) An irrevocable letter of credit.

(c) A tripartite escrow agreement. The prime contractor establishes an escrow account in a Federally insured financial institution and enters into a tripartite escrow agreement with the financial institution, as escrow agent, and all of the suppliers of labor and material. The escrow agreement shall establish the terms of payment under the contract and of resolution of disputes among the parties. The Government makes payments to the contractor's escrow account, and the escrow agent distributes the payments in accordance with the agreement, or triggers the disputes resolution procedures if required.

(d) Certificates of deposit. The contractor deposits certificates of deposit with the contracting officer, in an acceptable form, executable by the contracting officer, and immediately refundable in an amount equal to the penal amount of the payment bond waived.

(e) A deposit of the types of security listed in 28.204.

228.171-2 Amount required.

(a) The requirements at FAR 28.102-2(b), for the amount of payment bonds, also apply to the alternative payment protections described in 228.171-1. In addition, the payment protection must provide protection for the full contract performance period plus one year, and must authorize the contracting officer to immediately access funds at any time within the contracting officer's discretion.

B-1.2 October 27, 1995 AFAC 92-51

(b) The requirements at FAR 28.102-2(c), for the penal sum of bonds for requirements and indefinite-quantity contracts, also apply to the alternative payment protections described in 228.171-1.

228.171-3 Contract clause.

Use the clause at 252.228-7007, Alternative Payment Protections, in solicitations and contracts for construction, when the estimated or actual value exceeds $25,000 but does not exceed $100,000. Complete the clause by specifying the payment protection or protections selected (see 228.171-1), the penal amount required, and the deadline for submission.

* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

* * * * *

252.228-7007 Alternative Payment Protections.

As prescribed in 228.171-3, use the following clause:

ALTERNATIVE PAYMENT PROTECTIONS (AUG 1995)

(a) The Contractor shall submit one of the following payment protections:

(b) The penal sum of the payment protection shall be in the amount of $ .

(c) The submission of the payment protection is required by .

(d) The payment protection shall provide protection for the full contract performance period plus a one-year period, and shall authorize the Contracting Officer to immediately access funds at any time and withhold funds pending resolution by administrative or judicial proceedings or mutual agreement of the parties, except for escrow agreements which provide for a disputes resolution procedure.

AFAC 92-51 October 27, 1995 B-1.3

(e) Except for escrow agreements which provide their own protection procedures, the Contracting Officer is authorized to access funds under the payment protection when it has been alleged in writing by a supplier of labor or material that a nonpayment has occurred.

(f) When a tripartite escrow agreement is used, the Contractor shall utilize only suppliers of labor and material who signed the escrow agreement.

(End of clause)

* * * * *

AFAC 92-51 October 30, 1995 D-1

OFFICER OF THE UNDER SECRETARY OF DEFENSE

3000 DEFENSE PENTAGON

WASHINGTON DC 20301-3000

SEP 29, 1995

DP/CPF

MEMORANDUM FOR DIRECTORS OF DEFENSE AGENCIES

DEPUTY FOR ACQUISITION AND BUSINESS MANAGEMENT,

ASN(RD&A)/ABM

DEPUTY ASSISTANT SECRETARY OF THE AIR FORCE

(CONTRACTING), SAF/AQC

DIRECTOR, PROCUREMENT POLICY, ASA(RD&A)/SARD-PP

DEPUTY DIRECTOR (ACQUISITION), DEFENSE LOGISTICS

AGENCY

SUBJECT: No-setoff Provision (Alternate I) Under the Clause at FAR 52.232-23, Assignment of Claims Clause

You are to immediately notify all contracting officers that, beginning 1 October 1995, and until further notice, Alternate I to 52.232-23 shall not be included in solicitations and resulting contracts.

The Federal Acquisition Streamlining Act of 1994 changed the basis for use of Alternate I to a Presidential Determination of Need. This provision is effective October 1, 1995 and has been implemented in Federal Acquisition Circular 90-33 dated September 27, 1995. At this time no determination of need has been made. Until such time as a determination is made, the Alternate I shall not be used. Changes to the Defense Federal Acquisition Regulation Supplement will follow shortly.

Eleanor R. Spector

Director of Defense Procurement