subchapter h—clauses and forms - gpo.gov office of personnel management 1652.204–71 52.232–23...

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SUBCHAPTER H—CLAUSES AND FORMS

PART 1652—CONTRACT CLAUSES

Sec.1652.000 Applicable clauses.

Subpart 1652.2—Texts of FEHBP Clauses

1652.203–70 Misleading, deceptive, or unfairadvertising.

1652.204–70 Contractor records retention.1652.204–71 Coordination of Benefits.1652.204–72 Filing health benefit claims/

court review of disputed claims.1652.215–70 Rate Reduction for Defective

Pricing or Defective Cost or PricingData.

1652.215–71 Investment Income.1652.216–70 Accounting and price adjust-

ment.1652.216–71 Accounting and Allowable Cost.1652.222–70 Notice of significant events.1652.224–70 Confidentiality of Records.1652.229–70 Taxes—Foreign Negotiated bene-

fits contracts.1652.232–70 Payments—community-rated

contracts.1652.232–71 Payments—experience-rated con-

tracts.1652.232–72 Non-commingling of FEHBP

funds.1652.232–73 Approval for the Assignment of

Claims.1652.243–70 Changes—Negotiated benefits

contracts.1652.244–70 Subcontracts.1652.245–70 Government property (nego-

tiated benefits contracts).1652.246–70 FEHB Inspection.1652.249–70 Renewal and withdrawal of ap-

proval.1652.249–71 FEHBP termination for conven-

ience of the government—negotiatedbenefits contracts.

1652.249–72 FEHBP termination for default—negotiated benefits contracts.

Subpart 1652.3—FEHBP Clause Matrix

1652.370 Use of the matrix.

AUTHORITY: 5 U.S.C. 8913; 40 U.S.C. 486(c); 48CFR 1.301.

SOURCE: 52 FR 16044, May 1, 1987, unlessotherwise noted.

1652.000 Applicable clauses.

The clauses of FAR subpart 52.2 shallbe applicable to FEHBP contracts asspecified in the FEHBAR Clause Matrixin subpart 1652.3.

Section and Clause Title

52.202–1 Definitions.52.203–3 Gratuities.52.203–5 Covenant Against Contingent Fees.52.203–7 Anti-Kickback Procedures.52.203–12 Limitation on Payments to Influ-

ence Certain Federal Transactions.52.209–6 Protecting the Government’s Inter-

est When Subcontracting With Contrac-tors Debarred, Suspended, or Proposedfor Debarment.

52.215–2 Audit and Records—Negotiation.52.215–22 Price Reduction for Defective Cost

or Pricing Data.52.215–24 Subcontractor Cost or Pricing

Data.52.215–27 Termination of Defined Benefit

Pension Plans.52.215–30 Facilities Capital Cost of Money.52.215–31 Waiver of Facilities Capital Cost

of Money.52.215–39 Reversion or Adjustment of Plans

for Postretirement Benefits Other ThanPensions (PRB).

52.219–8 Utilization of Small, Small Dis-advantaged and Women-Owned SmallBusiness Concerns.

52.222–1 Notice to the Government of LaborDisputes.

52.222–3 Convict Labor.52.222–4 Contract Work Hours and Safety

Standards Act—Overtime Compensa-tion—General.

52.222–21 Certification of Nonsegregated Fa-cilities.

52.222–26 Equal Opportunity.52.222–28 Equal Opportunity Preaward

Clearance of Subcontracts.52.222–29 Notification of Visa Denial.52.222–35 Affirmative Action for Special Dis-

abled and Vietnam Era Veterans.52.222–36 Affirmative Action for Handi-

capped Workers.52.222–37 Employment Reports on Special

Disabled Veterans and Veterans of theVietnam Era.

52.223–2 Clean Air and Water.52.223–6 Drug-Free Workplace.52.227–1 Authorization and Consent.52.227–2 Notice and Assistance Regarding

Patent and Copyright Infringement.52.229–3 Federal, State,and Local Taxes.52.229–4 Federal, State, and Local Taxes

(Noncompetitive Contract).52.229–5 Taxes—Contracts Performed in U.S.

Possessions or Puerto Rico.52.230–2 Cost Accounting Standards.52.230–3 Disclosure and Consistency of Cost

Accounting Practices.52.230–5 Administration of Cost Accounting

Standards.52.232–8 Discounts for Prompt Payment.52.232–17 Interest.

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Office of Personnel Management 1652.204–71

52.232–23 Assignment of Claims.52.232–33 Mandatory Information For Elec-

tronic Funds Transfer Payment.52.233–1 Disputes.52.242–1 Notice of Intent to Disallow Costs.52.242–3 Penalties for Unallowable Costs.52.242–13 Bankruptcy.52.244–5 Competition in Subcontracting.52.244–6 Subcontracts for Commercial Items

and Commercial Components.52.246–25 Limitation of Liability—Services.52.247–63 Preference for U.S.-Flag Air Car-

riers.52.251–1 Government Supply Sources.52.232–2 Clauses Incorporated by Reference.52.252–4 Alterations in Contract.52.252–6 Authorized Deviations in Clauses.

[62 FR 47576, Sept. 10, 1997]

Subpart 1652.2—Texts of FEHBPClauses

1652.203–70 Misleading, deceptive, orunfair advertising.

As prescribed in 1603.7003, the follow-ing clause shall be inserted in allFEHBP contracts:

MISLEADING, DECEPTIVE, OR UNFAIRADVERTISING (JAN 1991)

(a) The Carrier agrees that any advertisingmaterial, including that labeled promotionalmaterial, marketing material, or supple-mental literature, shall be truthful and notmisleading.

(b) Criteria to assess compliance with para-graph (a) of this clause are available in theFEHB Supplemental Literature Guidelineswhich are developed by OPM and should beused, along with the additional guidelinesset forth in FEHBAR 1603.702, as the primaryguide in preparing material; further guid-ance is provided in the NAIC ‘‘Rules Govern-ing Advertising of Accident and Sickness In-surance With Interpretive Guidelines.’’Guidelines are periodically updated and pro-vided to the Carrier by OPM.

(c) Failure to conform to paragraph (a) ofthis clause may result in a reduction in theservice charge, if appropriate, and correctiveaction to protect the interest of FederalMembers. Corrective action will be appro-priate to the circumstances and may include,but is not limited to the following actions byOPM:

(1) Directing the Carrier to cease and de-sist distribution, publication, or broadcast ofthe material;

(2) Directing the Carrier to issue correc-tions at the Carrier’s expense and in thesame manner and media as the original ma-terial was made; and

(3) Directing the Carrier to provide, at theCarrier’s expense, the correction in writingby certified mail to all enrollees of the

Plan(s) that had been the subject of theoriginal material.

(d) Egregious or repeated offenses may re-sult in the following action by OPM:

(1) Suspending new enrollments in the Car-rier’s Plan(s);

(2) Providing Enrollees an opportunity totransfer to another plan; and

(3) Terminating the contract in accordancewith Section 1.15, Renewal and Withdrawalof Approval.

(e) Prior to taking action as described inparagraphs (c) and (d) of this clause, theOPM will notify the Carrier and offer an op-portunity to respond.

(f) The Carrier shall incorporate thisclause in subcontracts with its underwriter,if any, and other subcontractors directly in-volved in the preparation or distribution ofsuch advertising material and shall sub-stitute ‘‘Contractor’’ or other appropriatereference for the term ‘‘Carrier.’’

(End of Clause)

[55 FR 27415, July 2, 1990, as amended at 62FR 47576, Sept. 10, 1997]

1652.204–70 Contractor records reten-tion.

As prescribed in 1604.705, the follow-ing clause shall be inserted in allFEHBP contracts.

CONTRACTOR RECORDS RETENTION (JAN 1998)

Notwithstanding the provisions of section5.7 (FAR 52.215–2(f)) ‘‘Audit and Records-Ne-gotiation,’’ the Carrier shall retain andmake available all records applicable to acontract term that support the annual state-ment of operations and, for contracts thatexceed the threshold at FAR 15.804–2(a)(1),the rate submission for that contract termfor a period of 5 years after the end of thecontract term to which the records relate,except that enrollee and/or patient claimrecords shall be maintained for 3 years afterthe end of the contract term to which theclaim records relate.

(End of Clause)

[62 FR 47576, Sept. 10, 1997]

1652.204–71 Coordination of Benefits.

As prescribed in 1604.7001, the follow-ing clause shall be inserted in allFEHBP contracts:

COORDINATION OF BENEFITS (JAN 1991)

(a) The Carrier shall coordinate the pay-ment of benefits under this contract with thepayment of benefits under Medicare, other

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48 CFR Ch. 16 (10–1–98 Edition)§ 1652.204–72

group health benefits coverages, and the pay-ment of medical and hospital costs under no-fault or other automobile insurance thatpays benefits without regard to fault.

(b) The Carrier shall not pay benefits underthis contract until it has determined wheth-er it is the primary carrier or unless per-mitted to do so by the Contracting Officer.

(c) In coordinating benefits between plans,the Carrier shall follow the order of prece-dence established by the NAIC Model Guide-lines for Coordination of Benefits (COB) asspecified by OPM.

(d) Where (1) the Carrier makes paymentsunder this contract which are subject to COBprovisions; (2) the payments are erroneous,not in accordance with the terms of the con-tract, or in excess of the limitations applica-ble under this contract; and (3) the Carrier isunable to recover such COB overpaymentsfrom the Member or the providers of servicesor supplies, the Contracting Officer mayallow such amounts to be charged to the con-tract; the Carrier must be prepared to dem-onstrate that it has made a diligent effort torecover such COB overpayments.

(e) COB savings shall be reported by experi-ence rated carriers each year along with theCarrier’s annual accounting statement in aform specified by OPM.

(f) Changes in the order of precedence es-tablished by the NAIC Model Guidelines im-plemented after January 1 of any given yearshall be required no earlier than the begin-ning of the following contract term.

(End of Clause)

[55 FR 27415, July 2, 1990]

§ 1652.204–72 Filing health benefitclaims/court review of disputedclaims.

As prescribed in 1604.7101 of thischapter, the following clause must beinserted in all FEHB Program con-tracts.

FILING HEALTH BENEFIT CLAIMS/COURTREVIEW OF DISPUTED CLAIMS (MAR 1995)

(a) General. (1) The Carrier resolves claimsfiled under the Plan. All health benefitclaims must be submitted initially to theCarrier. If the Carrier denies a claim (or aportion of a claim), the covered individualmay ask the Carrier to reconsider its denial.If the Carrier affirms its denial or fails to re-spond as required by paragraph (b) of thisclause, the covered individual may ask OPMto review the claim. A covered individualmust exhaust both the Carrier and OPM re-view processes specified in this clause beforeseeking judicial review of the denied claim.

(2) This clause applies to covered individ-uals and to other individuals or entities who

are acting on the behalf of a covered individ-ual and who have the covered individual’sspecific written consent to pursue paymentof the disputed claim.

(b) Time limits for reconsidering a claim.(1) The covered individual has 6 months fromthe date of the notice to the covered individ-ual that a claim (or a portion of a claim) wasdenied by the Carrier in which to submit awritten request for reconsideration to theCarrier. The time limit for requesting recon-sideration may be extended when the coveredindividual shows that he or she was pre-vented by circumstances beyond his or hercontrol from making the request within thetime limit.

(2) The Carrier has 30 days after the date ofreceipt of a timely-filed request for reconsid-eration to:

(i) Affirm the denial in writing to the cov-ered individual;

(ii) Pay the bill or provide the service; or(iii) Request from the covered individual or

provider additional information needed tomake a decision on the claim. The Carriermust simultaneously notify the covered indi-vidual of the information requested if it re-quests additional information from a pro-vider. The Carrier has 30 days after the datethe information is received to affirm the de-nial in writing to the covered individual orpay the bill or provide the service. The Car-rier must make its decision based on the evi-dence it has if the covered individual or pro-vider does not respond within 60 days afterthe date of the Carrier’s notice requestingadditional information. The Carrier mustthen send written notice to the covered indi-vidual of its decision on the claim. The cov-ered individual may request OPM review asprovided in paragraph (b)(3) of this clause ifthe Carrier fails to act within the time limitset forth in this paragraph.

(3) The covered individual may write toOPM and request that OPM review the Car-rier’s decision if the Carrier either affirmsits denial of a claim or fails to respond to acovered individual’s written request for re-consideration within the time limit set forthin paragraph (b)(2) of this clause. The cov-ered individual must submit the request forOPM review within the time limit specifiedin paragraph (e)(1) of this clause.

(4) The Carrier may extend the time limitfor a covered individual’s submission of addi-tional information to the Carrier when thecovered individual shows he or she was notnotified of the time limit or was preventedby circumstances beyond his or her controlfrom submitting the additional information.

(c) Information required to process requestsfor reconsideration. (1) The covered individualmust put the request to the Carrier to recon-sider a claim in writing and give the reasons,in terms of applicable brochure provisions,that the denied claim should have been ap-proved.


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(2) If the Carrier needs additional informa-tion from the covered individual to make adecision, it must:

(i) Specifically identify the informationneeded;

(ii) State the reason the information is re-quired to make a decision on the claim;

(iii) Specify the time limit (60 days afterthe date of the Carrier’s request) for submit-ting the information; and

(iv) State the consequences of failure to re-spond within the time limit specified, as setout in paragraph (b)(2) of this section.

(d) Carrier determinations. The Carrier mustprovide written notice to the covered indi-vidual of its determination. If the Carrier af-firms the initial denial, the notice must in-form the covered individual of:

(1) The specific and detailed reasons for thedenial;

(2) The covered individual’s right to re-quest a review by OPM; and

(3) The requirement that requests for OPMreview must be received within 90 days afterthe date of the Carrier’s denial notice and in-clude a copy of the denial notice as well asdocuments to support the covered individ-ual’s position.

(e) OPM review. (1) If the covered individ-ual seeks further review of the denied claim,the covered individual must make a requestto OPM to review the Carrier’s decision.Such a request to OPM must be made:

(i) Within 90 days after the date of the Car-rier’s notice to the covered individual thatthe denial was affirmed; or

(ii) If the Carrier fails to respond to thecovered individual as provided in paragraph(b)(2) of this clause, within 120 days after thedate of the covered individual’s timely re-quest for reconsideration by the Carrier; or

(iii) Within 120 days after the date the Car-rier requests additional information fromthe covered individual, or the date the cov-ered individual is notified that the Carrier isrequesting additional information from aprovider. OPM may extend the time limit fora covered individual’s request for OPM re-view when the covered individual shows heor she was not notified of the time limit orwas prevented by circumstances beyond hisor her control from submitting the requestfor OPM review within the time limit.

(2) In reviewing a claim denied by the Car-rier, OPM may:

(i) Request that the covered individual sub-mit additional information;

(ii) Obtain an advisory opinion from anindependent physician;

(iii) Obtain any other information as mayin its judgment be required to make a deter-mination; or

(iv) Make its decision based solely on theinformation the covered individual providedwith his or her request for review.

(3) When OPM requests information fromthe Carrier, the Carrier must release the in-

formation within 30 days after the date ofOPM’s written request unless a differenttime limit is specified by OPM in its request.

(4) Within 90 days after receipt of the re-quest for review, OPM will either:

(i) Give a written notice of its decision tothe covered individual and the Carrier; or

(ii) Notify the individual of the status ofthe review. If OPM does not receive re-quested evidence within 15 days after expira-tion of the applicable time limit in para-graph (e)(3) of this clause, OPM may makeits decision based solely on informationavailable to it at that time and give a writ-ten notice of its decision to the covered indi-vidual and to the Carrier.

(f) OPM, upon its own motion, may reopenits review if it receives evidence that was un-available at the time of its original decision.

(g) Court review. (1) A suit to compel enroll-ment under § 890.102 of Title 5, Code of Fed-eral Regulations, must be brought againstthe employing office that made the enroll-ment decision.

(2) A suit to review the legality of OPM’sregulations under this part must be broughtagainst the Office of Personnel Management.

(3) Federal Employees Health Benefits(FEHB) carriers resolve FEHB claims underauthority of Federal statute (chapter 89,title 5, United States Code). A covered indi-vidual may seek judicial review of OPM’sfinal action on the denial of a health benefitsclaim. A legal action to review final actionby OPM involving such denial of health bene-fits must be brought against OPM and notagainst the Carrier or the Carrier’s sub-contractors. The recovery in such a suitshall be limited to a court order directingOPM to require the Carrier to pay theamount of benefits in dispute.

(4) An action under paragraph (3) of thisclause to recover on a claim for health bene-fits:

(i) May not be brought prior to exhaustionof the administrative remedies provided inparagraphs (a) through (f) of this clause;

(ii) May not be brought later than Decem-ber 31 of the 3rd year after the year in whichthe care or service was provided; and

(iii) Will be limited to the record that wasbefore OPM when it rendered its decision af-firming the Carrier’s denial of benefits.

(End of Clause)

[61 FR 15198, Apr. 5, 1996, as amended at 62FR 47576, Sept. 10, 1997]

1652.215–70 Rate Reduction for Defec-tive Pricing or Defective Cost orPricing Data.

As prescribed in 1615.804–72, the fol-lowing clause shall be inserted inFEHBP contracts exceeding the thresh-old at FAR 15.804–2(a)(1) that are based


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48 CFR Ch. 16 (10–1–98 Edition)1652.215–71

on a combination of cost and priceanalysis (community rated):

RATE REDUCTION FOR DEFECTIVE PRICING ORDEFECTIVE COST OR PRICING DATA (JAN 1998)

(a) If any rate established in connectionwith this contract was increased because (1)the Carrier submitted, or kept in its files insupport of the FEHBP rate, cost or pricingdata that were not complete, accurate, orcurrent as certified in the Certificate of Ac-curate Cost or Pricing Data (FEHBAR1615.804–70); (2) the Carrier submitted, orkept in its files in support of the FEHBPrate, cost or pricing data that were not accu-rate as represented in the rate proposal doc-uments; (3) the Carrier developed FEHBPrates with a rating methodology and struc-ture inconsistent with that used to developrates for similarly sized subscriber groups(see FEHBAR 1602.170–13) as certified in theCertificate of Accurate Cost or Pricing Datafor Community Rated Carriers; or (4) theCarrier submitted or, or kept in its files insupport of the FEHBP rate, data or informa-tion of any description that were not com-plete, accurate, and current—then, the rateshall be reduced in the amount by which theprice was increased because of the defectivedata or information.

(b)(1) If the Contracting Officer determinesunder paragraph (a) of this clause that aprice or cost reduction should be made, theCarrier agrees not to raise the followingmatters as a defense:

(i) The Carrier was a sole source supplieror otherwise was in a superior bargaining po-sition and thus the price of the contractwould not have been modified even if accu-rate, complete, and current cost or pricingdata had been submitted or maintained andidentified.

(ii) The Contracting Officer should haveknown that the cost or pricing data in issuewere defective even though the Carrier tookno affirmative action to bring the characterof the data to the attention of the Contract-ing Officer.

(iii) The contract was based on an agree-ment about the total cost of the contractand there was no agreement about the costof each item procured under the contract.

(iv) The Carrier did not submit or keep inits files a Certificate of Current Cost or Pric-ing Data.

(2)(i) Except as prohibited by subdivision(b)(2)(ii) of this clause, an offset in anamount determined appropriate by the Con-tracting Officer based upon the facts shall beallowed against the amount of a contractprice reduction if—

(A) The Carrier certifies to the ContractingOfficer that, to the best of the Carrier’sknowledge and belief, the Carrier is entitledto the offset in the amount requested; and

(B) The Carrier proves that the cost orpricing data were available before the date ofagreement on the price of the contract (orprice of the modification) and that the datawere not submitted before such date.

(ii) An offset shall not be allowed if—(A) The understated data was known by

the Carrier to be understated when the Cer-tificate of Current Cost or Pricing Data wassigned; or

(B) The Government proves that the factsdemonstrate that the contract price wouldnot have increased in the amount to be offseteven if the available data had been submit-ted before the date of agreement on price.

(c) When the Contracting Officer deter-mines that the rates shall be reduced and theGovernment is thereby entitled to a refund,the Carrier shall be liable to and shall paythe FEHB Fund at the time the overpaymentis repaid—

(1) Simple interest on the amount of theoverpayment from the date the overpaymentwas paid from the FEHB Fund to the Carrieruntil the date the overcharge is liquidated.In calculating the amount of interest due,the quarterly rate determinations by theSecretary of the Treasury under the author-ity of 26 U.S.C. 6621(a)(2) applicable to the pe-riods the overcharge was retained by theCarrier shall be used; and,

(2) A penalty equal to the amount of over-payment, if the Carrier knowingly submittedcost or pricing data which was incomplete,inaccurate, or noncurrent.

(End of Clause)

[62 FR 47576, Sept. 10, 1997]

1652.215–71 Investment Income.As prescribed in 1615.805–71, the fol-

lowing clause shall be inserted in allFEHBP contracts based on cost analy-sis:

INVESTMENT INCOME (JAN 1998)

(a) The Carrier shall invest and reinvest allFEHB funds on hand that are in excess of thefunds needed to promptly discharge the obli-gations incurred under this contract. TheCarrier shall seek to maximize investmentincome with prudent consideration to thesafety and liquidity of investments.

(b) All investment income earned on FEHBfunds shall be credited to the Special Re-serve on behalf of the FEHBP.

(c) When the Contracting Officer concludesthat the Carrier failed to comply with para-graph (a) or (b) of this clause, the Carriershall credit the Special Reserve with invest-ment income that would have been earned,at the rate(s) specified in paragraph (f) ofthis clause, had it not been for the Carrier’snoncompliance. ‘‘Failed to comply with


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paragraph (a) or (b)’’ means: (1) Making anycharges against the contract which are notallowable, allocable, or reasonable; or (2)failing to credit any income due the contractand/or failing to place excess funds, includ-ing subscription income and payments fromOPM not needed to discharge promptly theobligations incurred under the contract, re-funds, credits, payments, deposits, invest-ment income earned, uncashed checks, orother amounts owed the Special Reserve, inincome producing investments and accounts.

(d) Investment income lost as a result ofunallowable, unallocable, or unreasonablecharges against the contract shall be paidfrom the 1st day of the contract term follow-ing the contract term in which the unallow-able charge was made and shall end on theearlier of: (1) The date the amounts are re-turned to the Special Reserve (or the Officeof Personnel Management); (2) the date spec-ified by the Contracting Officer; or, (3) thedate of the Contracting Officer’s Final Deci-sion.

(e) Investment income lost as a result offailure to credit income due the contract orfailure to place excess funds in income pro-ducing investments and accounts shall bepaid from the date the funds should havebeen invested or appropriate income was notcredited and shall end on the earlier of: (1)The date the amounts are returned to theSpecial Reserve (or the Office of PersonnelManagement); (2) the date specified by theContracting Officer; or, (3) the date of theContracting Officer’s Final Decision.

(f) The Carrier shall credit the Special Re-serve for income due in accordance with thisclause. All lost investment income payableshall bear simple interest at the quarterlyrate determined by the Secretary of theTreasury under the authority of 26 U.S.C.6621(a)(2) applicable to the periods in whichthe amount becomes due, as provided inparagraphs (d) and (e) of this clause.

(g) The Carrier shall incorporate thisclause into agreements with underwriters ofthe Carrier’s FEHB plan and shall substitute‘‘underwriter’’ or other appropriate referencefor the term ‘‘Carrier.’’

(End of Clause)

[55 FR 27416, July 2, 1990, as amended at 62FR 47577, Sept. 10, 1997]

1652.216–70 Accounting and price ad-justment.

As prescribed in section 1616.7001, thefollowing clause shall be inserted in allFEHBP contracts based on a combina-tion of cost and price analysis (commu-nity rated).

ACCOUNTING AND PRICE ADJUSTMENT (JAN1998)

(a) Annual Accounting Statement. The Car-rier, not later than 90 days after the end ofeach contract period, shall furnish to OPMfor that contract period an accounting of itsoperations under the contract. The account-ing shall be in the form prescribed by OPM.

(b) Adjustment. (1) This contract is commu-nity rated as defined in FEHBAR 1602.170–2.

(2) The subscription rates agreed to in thiscontract shall be equivalent to the subscrip-tion rates given to the carrier’s similarlysized subscriber groups (SSSGs) as defined inFEHBAR 1602.170–13.

(3) If, at the time of the rate reconcili-ation, the subscription rates are found to belower than the equivalent rates for the lowerof the two SSSGs, the carrier may include anadjustment to the Federal group’s rates forthe next contract period.

(4) If, at the time of the rate reconcili-ation, the subscription rates are found to behigher than the equivalent rates for thelower of the two SSSGs, the Carrier shall re-imburse the Fund, for example, by reducingthe FEHB rates for the next contract term toreflect the difference between the estimatedrates and the rates which are derived usingthe methodology of the lower rated SSSG.

(5) No upward adjustment in the rate es-tablished for this contract will be allowed orconsidered by the Government or will bemade by the Carrier in this or in any othercontract period on the basis of actual costsincurred, actual benefits provided, or actualsize or composition of the FEHBP group dur-ing this contract period.

(6) In the event this contract is not re-newed, neither the Government nor the Car-rier shall be entitled to any adjustment orclaim for the difference between the sub-scription rates prior to rate reconciliationand the actual subscription rates.

(End of Clause)

[62 FR 47577, Sept. 10, 1997]

1652.216–71 Accounting and AllowableCost.

As prescribed in section 1616.7002, thefollowing clause shall be inserted in allFEHBP contracts based on cost analy-sis (experience rated).

ACCOUNTING AND ALLOWABLE COST (JAN 1991)

(a) Annual Accounting Statement. (1) TheCarrier, not later than the date specified bythe contract, shall furnish to OPM for thatcontract period an accounting of its oper-ations under the contract. The accountingshall be in the form prescribed by OPM andshall include, among other things, a BalanceSheet and a Summary Statement of FEHBP


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48 CFR Ch. 16 (10–1–98 Edition)1652.216–71

Financial Operations. The Summary State-ment of FEHBP Financial Operations shallinclude the following items for each optionprovided by the contract:

(i) Subscription income received and ac-crued (including amounts received from theContingency Reserve);

(ii) Health benefits charges paid and ac-crued;

(iii) Administrative expenses and othercharges paid and accrued;

(iv) Income on investments;(v) Other adjustments;(vi) Sum of items (i) minus (ii) minus (iii)

plus (iv) plus or minus (v).(2) The Carrier shall have its most recent

financial statement and that of its under-writer, if any, audited by an accounting firmthat ascribes to the standards of the Amer-ican Institute of Certified Public Account-ants. The report shall be submitted to OPMnot later than 180 days after the end of thecontract period.

(3) Based on the results of either the inde-pendent audit or a Government audit, theCarrier’s annual accounting statements maybe (i) adjusted by amounts found not to con-stitute allowable costs; or (ii) adjusted forprior overpayments or underpayments.

(b) Definition of costs. (1) The allowablecosts chargeable to the contract for a con-tract period shall be the actual, necessaryand reasonable amounts incurred with prop-er justification and accounting support, de-termined in accordance with the terms ofthis contract, subpart 31.2 of the Federal Ac-quisition Regulation (FAR) and subpart1631.2 of the Federal Employees Health Bene-fits Acquisition Regulation (FEHBAR) appli-cable on the first day of the contract period.

(2) In the absence of specific contractterms to the contrary, contract costs shallbe classified in accordance with the follow-ing criteria:

(i) Benefits. Benefit costs consist of pay-ments made and liabilities incurred for cov-ered health care services on behalf of FEHBPsubscribers, less any refunds, rebates, allow-ances or other credits received.

(ii) Administrative expenses. Administrativeexpenses consist of all allocable, allowableand reasonable expenses incurred in the ad-judication of subscriber benefit claims or in-curred in the Carrier’s overall operation ofthe business. Unless otherwise stated in thecontract, administrative expenses include, inpart: all taxes (excluding premium taxes, asprovided in section 1631.205–41), insuranceand reinsurance premiums, medical and den-tal consultants used in the adjudicationprocess, concurrent or managed care reviewwhen not billed by a health care provider andother forms of utilization review, the cost ofmaintaining eligibility files, legal expensesincurred in the litigation of benefit pay-ments and bank charges for letters of credit.Administrative expenses exclude the cost of

carrier personnel, equipment, and facilitiesdirectly used in the delivery of health careservices, which are benefit costs, and the ex-pense of managing the FEHBP investmentprogram which is a reduction of investmentincome earned.

(iii) Investment income. The Carrier is re-quired to invest and reinvest all funds onhand, including any in the Special Reserveor any attributable to the reserve for in-curred but unpaid claims, which are in ex-cess of the funds needed to discharge prompt-ly the obligations incurred under the con-tract. Investment income represents the netamount earned by the Carrier after deduct-ing investment expenses as a result of in-vesting the FEHBP funds. The direct or allo-cable indirect expenses incurred in managingthe investment program, such as consultantor management fees are chargeable againstthe investment income earned.

(iv) Other charges—(A) Mandatory statutoryreserves. Charges for mandatory statutory re-serves are not allowable unless specificallyprovided for in the contract. When the term‘‘mandatory statutory reserve’’ is specifi-cally identified as an allowable contractcharge without further definition or expla-nation, it means a requirement imposed byState law upon the Carrier to set aside a spe-cific amount or rate of funds into a re-stricted reserve that is accounted for sepa-rately from all other reserves and surplusesof the Carrier and which may be used onlywith the specific approval of the State offi-cial designated by law to make such approv-als. The amount chargeable to the contractmay not exceed an allocable portion of theamount actually set aside. If the statutoryreserve is no longer required for the purposefor which it was created, and these funds be-come available for the general use of theCarrier, a pro rata share based uponFEHBP’s contribution to the total Carrier’sset aside shall be returned to the FEHBP inaccordance with FAR 31.201–5.

(B) Premium taxes. When the term premiumtaxes is used in this contract without furtherdefinition or explanation, it means a tax, fee,or other monetary payment directly or indi-rectly imposed on FEHB premiums by anyState, the District of Columbia, or the Com-monwealth of Puerto Rico, or by any politi-cal subdivision or other governmental au-thority of those entities, with the sole excep-tion of a tax on net income or profit, if thattax, fee, or payment is applicable to a broadrange of business activity.

(c) Certification of Accounting Statement Ac-curacy. (1) The Carrier shall certify the an-nual accounting statement in the form setforth in paragraph (c)(3) of this clause. Thecertificate shall be signed by the chief execu-tive officer and the chief financial officer ofthe Carrier.


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(2) The Carrier shall require an authorizedagent of its underwriter, if any, also to cer-tify the annual accounting statement.

(3) The certificate required shall be in thefollowing form:

Certification of Accounting Statement Accuracy

This is to certify that I have reviewed thisaccounting statement and to the best of myknowledge and belief:

1. The statement was prepared in conform-ity with the guidelines issued by the Officeof Personnel Management and fairly presentsthe financial results of this contract periodin conformity with those guidelines;

2. The costs included in the statement areallowable and allocable in accordance withthe terms of the contract and with the costprinciples of the Federal Employees HealthBenefits Acquisition Regulation and the Fed-eral Acquisition Regulation;

3. Income, rebates, allowances, refunds andother credits made or owed in accordancewith the terms of the contract and applica-ble cost principles have been included in thestatement;

4. If applicable, the letter of credit accountwas managed in accordance with 5 CFR part890, 48 CFR chapter 16, and OPM guidelines.

Carrier Name: llllllllllllllll

llllllllllllllllllllllll

Name of Chief Executive Officer(Type or Print)llllllllllllllllllllllll

Name of Chief Financial Officer(Type or Print)


Signature of Chief Executive Officerllllllllllllllllllllllll

Signature of Chief Financial Officerllllllllllllllllllllllll

Date Signedllllllllllllllllllllllll

Date Signedllllllllllllllllllllllll

Underwriter: llllllllllllllll

Name and Title of Responsible Corporate

Official (Type or Print): lllllllllll

Signature of Responsible Corporate Official:


Date Signed: llllllllllllllll

(End of Certificate)

(End of Clause)

[55 FR 27416, July 2, 1990, as amended at 56FR 57497, Nov. 12, 1991; 57 FR 14360, Apr. 20,1992; 62 FR 47577, Sept. 10, 1997]

1652.222–70 Notice of significantevents.

As prescribed in 1622.103–70, the fol-lowing clause shall be inserted in allFEHBP contracts.

NOTICE OF SIGNIFICANT EVENTS (JAN 1991)

(a) The Carrier agrees to notify OPM ofany Significant Event within ten (10) work-ing days after the Carrier becomes aware ofit. As used in this section, a SignificantEvent is any occurrence or anticipated oc-currence that might reasonably be expectedto have a material effect upon the Carrier’sability to meet its obligations under thiscontract, including, but not limited to, anyof the following:

(1) Disposal of major assets;(2) Loss of 15% or more of the Carrier’s

overall membership;(3) Termination or modification of any

contract or subcontract if such terminationor modification might have a material effecton the Carrier’s obligations under this con-tract;

(4) Addition or termination of provideragreements;

(5) Any changes in underwriters, reinsur-ers, or participating plans;

(6) The imposition of, or notice of the in-tent to impose, a receivership, conservator-ship, or special regulatory monitoring;

(7) The withdrawal of, or notice of intentto withdraw, State licensing, HHS qualifica-tion, or any other status under Federal orState law;

(8) Default on a loan or other financial ob-ligation;

(9) Any actual or potential labor disputethat delays or threatens to delay timely per-formance or substantially impairs the func-tioning of the Carrier’s facilities or facilitiesused by the Carrier in the performance of thecontract;

(10) Any change in its charter, constitu-tion, or by-laws which affects any provisionof this contract or the Carrier’s participa-tion in the Federal Employees Health Bene-fits Program; or

(11) Any significant changes in policies andprocedures or interpretations of the contractor brochure which would affect the benefitsavailable under the contract or the costscharged to the contract.

(12) Any fraud, embezzlement or misappro-priation of FEHB funds; or

(13) Any written exceptions, reservationsor qualifications expressed by the independ-ent accounting firm (which ascribes to thestandards of the American Institute of Cer-tified Public Accountants) contracted withby the Carrier to provide an opinion on itsannual financial statements.

(b) Upon learning of a Significant EventOPM may institute action, in proportion tothe seriousness of the event, to protect the


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48 CFR Ch. 16 (10–1–98 Edition)1652.224–70

interest of Members, including, but not lim-ited to—

(1) Directing the Carrier to take correctiveaction;

(2) Suspending new enrollments under thiscontract;

(3) Advising Enrollees of the SignificantEvent and providing them an opportunity totransfer to another plan;

(4) Withholding payment of subscriptionincome or restricting access to the Carrier’sLetter of Credit account.

(5) Terminating the enrollment of thoseenrollees who, in the judgment of OPM,would be adversely affected by the Signifi-cant Event; or

(6) Terminating this contract pursuant tosection 1.15, renewal and withdrawal of ap-proval.

(c) Prior to taking action as described inparagraph (b) of this clause, the OPM willnotify the Carrier and offer an opportunityto respond.

(d) The Carrier shall insert this clause inany subcontract or subcontract modificationif both the amount of the subcontract ormodification charged to the FEHBP (or, inthe case of a community rated carrier, appli-cable to the FEHBP) exceeds $100,000 and theamount of the subcontract or modificationto be charged to the FEHBP (or, in the caseof a community rated carrier, applicable tothe FEHBP) exceeds 25 percent of the totalcost of the subcontract or modification. Ifthe Carrier is a CMP, it shall also insert thisclause in all provider agreements over$25,000. If the Carrier is not a CMP, it shallalso insert this clause in the contract withits underwriter, if any. The Carrier shall sub-stitute ‘‘Contractor’’ or other appropriatereference for the term ‘‘Carrier.’’

(End of Clause)

[52 FR 16044, May 1, 1987, as amended at 55FR 27417, July 2, 1990]

1652.224–70 Confidentiality of records.As prescribed in 1624.104, the follow-

ing clause shall be inserted in allFEHBP contracts:

CONFIDENTIALITY OF RECORDS (JAN 1991)

(a) The Carrier shall use the personal dataon employees and annuitants that is pro-vided by agencies and OPM, including socialsecurity numbers, for only those routineuses stipulated for the data and publishedannually in the FEDERAL REGISTER as a partof OPM’s notice of systems of records.

(b) The Carrier shall also hold all medicalrecords, and information relating thereto, ofFederal subscribers and family members con-fidential except as follows:

(1) As may be reasonably necessary for theadministration of this contract;

(2) As authorized by the patient or his orher guardian;

(3) As disclosure is necessary to permitGovernment officials having authority to in-vestigate and prosecute alleged civil orcriminal actions;

(4) As necessary to audit the contract;(5) As necessary to carry out the coordina-

tion of benefits provisions of this contract;and

(6) For bona fide medical research or edu-cational purposes. Release of information formedical research or educational purposesshall be limited to aggregated information ofa statistical nature that does not identifyany individual by name, social security num-ber, or any other identifier unique to an indi-vidual.

(c) If the carrier uses medical records forthe administration of the contract, or forbona fide medical research or educationalpurposes, it shall so state in the plan’s bro-chure.

(End of clause)

[52 FR 16044, May 1, 1987, as amended at 55FR 27417, July 2, 1990]

1652.229–70 Taxes—Foreign Nego-tiated benefits contracts.

As prescribed in section 1629.402, thefollowing clause shall be inserted in allFEHBP contracts performed outsidethe United States, its possessions, andPuerto Rico:

TAXES—FOREIGN NEGOTIATED BENEFITSCONTRACTS (JAN 1998)

(a) To the extent that this contract pro-vides for performing services outside theUnited States, its possessions, and PuertoRico, this clause applies in lieu of any Fed-eral, State, and local taxes clause of the con-tract.

(b) ‘‘Contract date,’’ as used in this clause,means the effective date of this contract ormodification.

‘‘Country concerned,’’ as used in thisclause, means any country, other than theUnited States, its possessions, and PuertoRico, in which expenditures under this con-tract are made.

‘‘Tax’’ and ‘‘taxes,’’ as used in this clause,include fees and charges for doing businessthat are levied by the government of thecountry concerned or by its political subdivi-sions.

‘‘All applicable taxes and duties,’’ as usedin this clause, means all taxes and duties, ineffect on the contract date, that the taxingauthority is imposing and collecting on thetransactions covered by this contract, pursu-ant to written ruling or regulation in effecton the contract date.


133


‘‘After-imposed tax,’’ as used in thisclause, means any new or increased tax orduty, or tax that was exempted or excludedon the contract date but whose exemptionwas later revoked or reduced during the con-tract period, other than excepted tax, on thetransactions covered by this contract thatthe Carrier is required to pay or bear as theresult of legislative, judicial, or administra-tive action taking effect after the contractdate.

‘‘After-relieved tax,’’ as used in this clause,means any amount of tax or duty, other thanan excepted tax, that would otherwise havebeen payable on the transactions covered bythis contract, but which the Carrier is notrequired to pay or bear, or for which the Car-rier obtains a refund, as the result of legisla-tive, judicial, or administrative action tak-ing effect after the contract date.

‘‘Excepted tax,’’ as used in this clause,means social security or other employmenttaxes, net income and franchise taxes, excessprofits taxes, capital stock taxes, transpor-tation taxes, unemployment compensationtaxes, and property taxes. ‘‘Excepted tax’’does not include gross income taxes levied onor measured by sales or receipts from salescovered by this contract, or any tax assessedon the Carrier’s possession of, interest in, oruse of property, title to which is in the U.S.Government.

(c) Unless otherwise provided in this con-tract, the contract price includes all applica-ble taxes and duties, except taxes and dutiesthat the Government of the United Statesand the government of the country con-cerned have agreed shall not be applicable toexpenditures in such country by or on behalfof the United States.

(d) The contract price shall be increased bythe amount of any after-imposed tax or ofany tax or duty specifically excluded fromthe contract price by a provision of this con-tract that the Carrier is required to pay orbear, including any interest or penalty, ifthe Carrier states in writing that the con-tract price does not include any contingencyfor such tax and if liability for such tax, in-terest, or penalty was not incurred throughthe Carrier’s fault, negligence, or failure tofollow instructions of the Contracting Offi-cer or to comply with the provisions of para-graph (i) below.

(e) The contract price shall be decreased bythe amount of any after-relieved tax, includ-ing any interest or penalty. The Governmentof the United States shall be entitled to in-terest received by the Carrier incident to arefund of taxes to the extent that such inter-est was earned after the Carrier was paid bythe Government of the United States forsuch taxes. The Government of the UnitedStates shall be entitled to repayment of anypenalty refunded to the Carrier to the extentthat the penalty was paid by the Govern-ment.

(f) The contract price shall be decreased bythe amount of any tax or duty, other than anexcepted tax, that was included in the con-tract and that the Carrier is required to payor bear, or does not obtain a refund of,through the Carrier’s fault, negligence, orfailure to follow instructions of the Con-tracting Officer or to comply with the provi-sions of paragraph (i) below.

(g) No adjustment shall be made in thecontract price under this clause unless theamount of the adjustment exceeds $250.

(h) If the Carrier obtains a reduction in taxliability under the United States InternalRevenue Code (Title 26, U.S. Code) because ofthe payment of any tax or duty that eitherwas included in the contract price or was thebasis of an increase in the contract price, theamount of the reduction shall be paid orcredited to the Government of the UnitedStates as the Contracting Officer directs.

(i) The Carrier shall take all reasonable ac-tion to obtain exemption from or refund ofany taxes or duties, including interest orpenalty, from which the United States Gov-ernment, the Carrier, any subcontractor, orthe transactions covered by this contract areexempt under the laws of the country con-cerned or its political subdivisions or whichthe governments of the United States and ofthe country concerned have agreed shall notbe applicable to expenditures in such coun-try by or on behalf of the United States.

(j) The Carrier shall promptly notify theContracting Officer of all matters relating totaxes or duties that reasonably may be ex-pected to result in either an increase or de-crease in the contract price and shall takeappropriate action as the Contracting Officerdirects. The contract price shall be equitablyadjusted to cover the costs of action takenby the Carrier at the direction of the Con-tracting Officer, including any interest, pen-alty, and reasonable attorneys’ fees.

(End of clause)

[62 FR 47577, Sept. 10, 1997]

1652.232–70 Payments—community-rated contracts.

As prescribed in 1632.171, the follow-ing clause shall be inserted in all com-munity-rated FEHBP contracts:

PAYMENTS (JAN 1989)

(a) OPM will pay to the Carrier, in full set-tlement of its obligations under this con-tract, subject to adjustment for error orfraud, the subscription charges received forthe plan by the Employees Health BenefitsFund (hereinafter called the Fund) less theamounts set aside by OPM for the Contin-gency Reserve and for the administrative ex-penses of OPM, plus any payments made byOPM from the Contingency Reserve.


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48 CFR Ch. 16 (10–1–98 Edition)1652.232–71

(b) The specific subscription rates, charges,allowances and limitations applicable to thecontract are set forth in Appendix B.

(c) Recurring payments from premiumsshall be due and payable not later than thir-ty days after receipt by the Fund. The Con-tracting Officer may authorize special non-recurring payments from the ContingencyReserve in accordance with OPM’s regula-tions.

(d) In the event this contract between theCarrier and OPM is terminated or not re-newed in accordance with General Provision1.15, RENEWAL and WITHDRAWAL OF AP-PROVAL, the Contingency Reserve of theCarrier held by OPM shall be available to theCarrier to pay the necessary and propercharges against this contract to the extentthat the reserves held by the Carrier are in-sufficient for that purpose.

(End of Clause)

[53 FR 51784, Dec. 23, 1988, as amended at 57FR 14360, Apr. 20, 1992; 62 FR 47578, Sept. 10,1997]

1652.232–71 Payments—experience-rated contracts.

As prescribed in 1632.172, the follow-ing clause shall be inserted in all expe-rience-rated FEHBP contracts:

PAYMENTS (MAY 1992)

(a) OPM will pay to the Carrier, in full set-tlement of its obligations under this con-tract, subject to adjustment for error orfraud, the subscription charges received forthe Plan by the Employees Health BenefitsFund (hereinafter called the Fund) less theamounts set aside by OPM for the Contin-gency Reserve and for the administrative ex-penses of OPM, plus any payments made byOPM from the Contingency Reserve.

(b) The specific subscription rates, charges,allowances and limitations applicable to thecontract are set forth in Appendix B.

(c) Recurring payments from premiumsshall be made available for carrier drawdownnot later than thirty days after receipt bythe Fund. The Contracting Officer may au-thorize special non-recurring payments fromthe Contingency Reserve in accordance withOPM’s regulations.

(d) In the event this contract between theCarrier and OPM is terminated or not re-newed in accordance with General Provision1.15, RENEWAL and WITHDRAWAL OF AP-PROVAL, the Contingency Reserve of theCarrier held by OPM shall be available to theCarrier to pay the necessary and propercharges against this contract to the extentthat the Carrier reserves are insufficient forthat purpose.

(End of Clause)

[53 FR 51784, Dec. 23, 1988, as amended at 57FR 14361, Apr. 20, 1992; 62 FR 47578, Sept. 10,1997]

1652.232–72 Non-commingling ofFEHBP funds.

As prescribed in 1632.772, the follow-ing clause shall be inserted in all con-tracts based on cost analysis.

NON-COMMINGLING OF FUNDS (JAN 1991)

(a) The Carrier and/or its underwriter shallkeep all FEHBP funds for this contract (cashand investments) physically separate fromfunds obtained from other sources. Account-ing for such FEHBP funds shall not be basedon allocations or other sharing mechanismsand shall agree with the Carrier’s accountingrecords.

(b) In certain instances the physical sepa-ration of FEHBP funds may not be practicalor desirable. In such cases, the Carrier mayrequest a waiver from this requirement fromthe Contracting Officer. The waiver shall berequested in advance and the Carrier shalldemonstrate that accounting techniqueshave been established that will clearly meas-ure FEHBP cash and investment income(i.e., subsidiary ledgers). Reconciliations be-tween amounts reported and actual amountsshown in accounting records shall be pro-vided as supporting schedules to the AnnualAccounting Statements.

(c) The Carrier shall incorporate thisclause in all subcontracts that exceed $25,000and shall substitute ‘‘contractor’’ or otherappropriate reference for ‘‘Carrier and/or itsunderwriter.’’

(End of Clause)

[52 FR 16044, May 1, 1987. Redesignated at 53FR 51784, Dec. 23, 1988, and amended at 55 FR27418, July 2, 1990]

1652.232–73 Approval for the Assign-ment of Claims.

As prescribed in 1632.806–70, the fol-lowing clause shall be inserted in allFEHBP contracts:

APPROVAL FOR ASSIGNMENT OF CLAIMS (JAN1991)

(a) Notwithstanding the provisions of sec-tion 5.35, (FAR 52.232–23) Assignment ofClaims, the Carrier shall not make any as-signment under the Assignment of ClaimsAct without the prior written approval ofthe Contracting Officer.

(b) Unless a different period is specified inthe Contracting Officer’s written approval,


135


an assignment shall be in force only for a pe-riod of 1 year from the date of the Contract-ing Officer’s approval. However, assignmentsmay be renewed upon their expiration.

(End of Clause)

[55 FR 27418, July 2, 1990]

1652.243–70 Changes—Negotiated ben-efits contracts.

As prescribed in section 1643.205–70,the following clause shall be insertedin all FEHBP contracts.

CHANGES—NEGOTIATED BENEFITS CONTRACTS(JAN 1998)

(a) The Contracting Officer may at anytime, by written order, and without notice tothe sureties, if any, make changes within thegeneral scope of this contract in any one ormore of the following:

(1) Description of services to be performed.(2) Time of performance (i.e., hours of the

day, days of the week, etc.).(3) Place of performance of the services.(b) If any such change causes an increase

or decrease in the cost of, or the time re-quired for, performance of any part of thework under this contract, whether or notchanged by the order, the Contracting Offi-cer shall make an equitable adjustment inthe contract price, the delivery schedule, orboth, and shall modify the contract.

(c) The Carrier must assert its right to anadjustment under this clause within 30 daysfrom the date of receipt of the written order.However, if the Contracting Officer decidesthat the facts justify it, the Contracting Of-ficer may receive and act upon a proposalsubmitted before final payment of the con-tract.

(d) Failure to agree to any adjustmentshall be a dispute under the Disputes clause.However, nothing in this clause shall excusethe Carrier from proceeding with the con-tract as changed.

(End of clause)

[62 FR 47578, Sept. 10, 1997]

1652.244–70 Subcontracts.As prescribed by 1644.270, the follow-

ing clause shall be inserted in allFEHBP contracts based on cost analy-sis (experience rated):

SUBCONTRACTS (JAN 1998)

(a) The Carrier shall notify the Contract-ing Officer reasonably in advance of enteringinto any subcontract, or any subcontractmodification, or as otherwise specified bythis contract, if both the amount of the sub-

contract or modification charged to theFEHB Program exceeds $100,000 and is atleast 25 percent of the total cost of the sub-contract.

(b) The advance notification required byparagraph (a) of this clause shall include theinformation specified below:

(1) A description of the supplies or servicesto be subcontracted;

(2) Identification of the type of subcontractto be used;

(3) Identification of the proposed sub-contract and an explanation of why and howthe proposed subcontractor was selected, in-cluding the competition obtained;

(4) The proposed subcontract price and theCarrier’s cost or price analysis;

(5) The subcontractor’s current, complete,and accurate cost or pricing data and Certifi-cate of Current Cost or Pricing Data, if re-quired by other contract provisions;

(6) The subcontractor’s Disclosure State-ment or Certificate relating to Cost Ac-counting Standards when such data are re-quired by other provisions of this contract;and

(7) A negotiation memorandum reflect-ing—

(i) The principal elements of the sub-contract price negotiations;

(ii) The most significant considerationcontrolling establishment of initial or re-vised prices;

(iii) The reason cost or pricing data wereor were not required;

(iv) The extent, if any, to which the Car-rier did not rely on the subcontractor’s costor pricing data in determining the price ob-jective and in negotiating the final price;

(v) The extent to which it was recognizedin the negotiation that the subcontractor’scost or pricing data were not accurate, com-plete, or current; the action taken by theCarrier and the subcontractor; and the effectof any such defective data on the total pricenegotiated;

(vi) The reasons for any significant dif-ference between the Carrier’s price objectiveand the price negotiated; and

(vii) A complete explanation of the incen-tive fee or profit plan when incentives areused. The explanation shall identify eachcritical performance element, managementdecisions used to quantify each incentiveelement, reasons for the incentives, and asummary of all trade-off possibilities consid-ered.

(c) The Carrier shall obtain the Contract-ing Officer’s written consent before placingany subcontract for which advance notifica-tion is required under paragraph (a) of thisclause. However, the Contracting Officermay ratify in writing any such subcontract.Ratification shall constitute the consent ofthe Contracting Officer.

(d) The Contracting Officer may waive therequirement for advance notification and


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48 CFR Ch. 16 (10–1–98 Edition)1652.245–70

consent required by paragraphs (a), (b), and(c) of this clause where the Carrier and sub-contractor submit an application or renewalas a contractor team arrangement as definedin FAR subpart 9.6 and—

(1) The Contracting Officer evaluated thearrangement during negotiation of the con-tract or contract renewal; and

(2) The subcontractor’s price and/or costswere included in the plan’s rates that werereviewed and approved by the ContractingOfficer during negotiation of the contract orcontract renewal.

(e) Unless the consent or approval specifi-cally provides otherwise, consent by the Con-tracting Officer to any subcontract shall notconstitute a determination (1) of the accept-ability of any subcontract terms or condi-tions; (2) of the allowability of any costunder this contract; or (3) to relieve the Car-rier of any responsibility for performing thiscontract.

(f) No subcontract placed under this con-tract shall provide for payment on a cost-plus-a-percentage-of-cost basis. Any fee pay-able under cost reimbursement type sub-contracts shall not exceed the fee limita-tions in FAR 15.903(d). Any profit or fee pay-able under a subcontract shall be in accord-ance with the provision of subpart 3.7, Serv-ice charge.

(g) The Carrier shall give the ContractingOfficer immediate written notice of any ac-tion or suit filed and prompt notice of anyclaim made against the Carrier by any sub-contractor or vendor that, in the opinion ofthe Carrier, may result in litigation relatedin any way to this contract with respect towhich the Carrier may be entitled to reim-bursement from the Government.

(End of clause)

[52 FR 16044, May 1, 1987, as amended at 55FR 27418, July 2, 1990; 62 FR 47578, Sept. 10,1997]

1652.245–70 Government property (ne-gotiated benefits contracts).


GOVERNMENT PROPERTY (NEGOTIATEDBENEFITS CONTRACTS) (JAN 1998)

(a) Government-furnished property. (1) TheGovernment shall deliver to the Carrier, foruse in connection with and under the termsof this contract, the Government-furnishedproperty described in this contract togetherwith any related data and information thatthe Carrier may request and is reasonablyrequired for the intended use of the property(hereinafter referred to as ‘‘Government-fur-nished property’’).

(2) The delivery or performance dates forthis contract are based upon the expectationthat Government-furnished property suitablefor use (except for property furnished ‘‘as-is’’) will be delivered to the Carrier at thetimes stated in this contract or, if not sostated, in sufficient time to enable the Car-rier to meet the contract’s performancedates.

(3) If Government-furnished property is re-ceived by the Carrier in a condition not suit-able for the intended use, the Carrier shall,upon receipt of it, notify the Contracting Of-ficer, detailing the facts, and, as directed bythe Contracting Officer and at Governmentexpense, either repair, modify, return, orotherwise dispose of the property. After com-pleting the directed action and upon writtenrequest of the Carrier, the Contracting Offi-cer shall make an equitable adjustment asprovided in paragraph (h) of this clause.

(b) Changes in Government-furnished prop-erty. (1) The Contracting Officer may, bywritten notice, (i) decrease the Government-furnished property provided or to be providedunder this contract, or (ii) substitute otherGovernment-furnished property for the prop-erty to be provided by the Government, or tobe acquired by the Carrier for the Govern-ment, under this contract. The Carrier shallpromptly take such action as the Contract-ing Officer may direct regarding the re-moval, shipment, or disposal of the propertycovered by such notice.

(2) Upon the Carrier’s written request, theContracting Officer shall make an equitableadjustment to the contract in accordancewith paragraph (h) of this clause, if the Gov-ernment has agreed in this contract to makethe property available for performing thiscontract and there is any—

(i) Decrease or substitution in this prop-erty pursuant to subparagraph (b)(1) above;or

(ii) Withdrawal of authority to use thisproperty, if provided under any other con-tract or lease.

(c) Title in Government property. (1) TheGovernment shall retain title to all Govern-ment-furnished property.

(2) All Government-furnished property andall property acquired by the Carrier, title towhich vests in the Government under thisparagraph (collectively referred to as ‘‘Gov-ernment property’’), are subject to the provi-sions of this clause. Title to Governmentproperty shall not be affected by its incorpo-ration into or attachment to any propertynot owned by the Government, nor shallGovernment property become a fixture orlose its identity as personal property bybeing attached to any real property.

(d) Use of Government property. The Gov-ernment property shall be used only for per-forming this contract, unless otherwise pro-vided in this contract or approved by theContracting Officer.


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(e) Property administration. (1) The Car-rier shall be responsible and accountable forall Government property provided under thiscontract and shall comply with Federal Ac-quisition Regulation (FAR) subpart 45.5, asin effect on the date of this contract.

(2) The Carrier shall establish and main-tain a program for the use, maintenance, re-pair, protection, and preservation of Govern-ment property in accordance with sound in-dustrial practice and the applicable provi-sions of subpart 45.5 of the FAR.

(3) If damage occurs to Government prop-erty, the risk of which has been assumed bythe Government under this contract, theGovernment shall replace the items or theCarrier shall make such repairs as the Gov-ernment directs. However, if the Carrier can-not effect such repairs within the time re-quired, the Carrier shall dispose of the prop-erty as directed by the Contracting Officer.When any property for which the Govern-ment is responsible is replaced or repaired,the Contracting Officer shall make an equi-table adjustment in accordance with para-graph (h) of this clause.

(4) The Carrier represents that the con-tract price does not include any amount forrepairs or replacement for which the Govern-ment is responsible. Repair or replacementof property for which the Carrier is respon-sible shall be accomplished by the Carrier atits own expense.

(f) Access. The Government and all its des-ignees shall have access at all reasonabletimes to the premises in which any Govern-ment property is located for the purpose ofinspecting the Government property.

(g) Risk of loss. Unless otherwise providedin this contract, the Carrier assumes therisk of, and shall be responsible for, any lossor destruction of, or damage to, Governmentproperty upon its delivery to the Carrier.However, the Carrier is not responsible forreasonable wear and tear to Governmentproperty or for Government property prop-erly consumed in performing this contract.

(h) Equitable adjustment. When this clausespecifies an equitable adjustment, it shall bemade to any affected contract provision inaccordance with the procedures of theChanges clause. When appropriate, the Con-tracting Officer may initiate an equitableadjustment in favor of the Government. Theright to an equitable adjustment shall be theCarrier’s exclusive remedy. The Governmentshall not be liable to suit for breach of con-tract for—

(1) Any delay in delivery of Government-furnished property;

(2) Delivery of Government-furnished prop-erty in a condition not suitable for its in-tended use;

(3) A decrease in or substitution of Govern-ment-furnished property; or

(4) Failure to repair or replace Governmentproperty for which the Government is re-sponsible.

(i) Final accounting and disposition ofGovernment property. Upon completing thiscontract, or at such earlier dates as may befixed by the Contracting Officer, the Carriershall submit, in a form acceptable to theContracting Officer, inventory schedulescovering all items of Government property(including any resulting scrap) not consumedin performing this contract or delivered tothe Government. The Carrier shall preparefor shipment, deliver f.o.b. origin, or disposeof the Government property as may be di-rected or authorized by the Contracting Offi-cer. The net proceeds of any such disposalshall be credited to the contract price orshall be paid to the Government as the Con-tracting Officer directs.

(j) Abandonment and restoration of Car-rier’s premises. Unless otherwise providedherein, the Government—

(1) May abandon any Government propertyin place, at which time all obligations of theGovernment regarding such abandoned prop-erty shall cease; and

(2) Has no obligation to restore or rehabili-tate the Carrier’s premises under any cir-cumstances (e.g., abandonment, dispositionupon completion of need, or upon contractcompletion). However, if the Government-furnished property is withdrawn or is unsuit-able for the intended use, or if other Govern-ment property is substituted, then the equi-table adjustment under paragraph (h) of thisclause may properly include restoration orrehabilitation costs.

(k) Communications. All communicationsunder this clause shall be in writing.

(l) Overseas contracts. If this contract is tobe performed outside of the United States ofAmerica, its territories, or possessions, thewords ‘‘Government’’ and ‘‘Government-fur-nished’’ (wherever they appear in this clause)shall be construed as ‘‘United States Govern-ment’’ and ‘‘United States Government-fur-nished’’, respectively.

(End of clause)

[62 FR 47578, Sept. 10, 1997]

1652.246–70 FEHB Inspection.As prescribed in 1646.301, the follow-

ing clause shall be inserted in allFEHBP contracts:

FEHB INSPECTION (JAN 1991)

(a) The Government or its agent has theright to inspect and evaluate the work per-formed or being performed under the con-tract, and the premises where the work isbeing performed, at all reasonable times andin a manner that will not unduly delay the


138

48 CFR Ch. 16 (10–1–98 Edition)1652.249–70

work. If the Government or its agent per-forms inspection or evaluation on the prem-ises of the Carrier or a subcontractor, theCarrier shall furnish and require the sub-contractor to furnish all reasonable facilitiesand assistance for the safe and convenientperformance of these duties.

(b) The Carrier shall insert this clause inall subcontracts for underwriting and admin-istrative services and shall substitute ‘‘Con-tractor’’ or other appropriate reference forthe term ‘‘Carrier.’’

(End of Clause)

[55 FR 27418, July 2, 1990]

1652.249–70 Renewal and withdrawalof approval.

As prescribed in 1649.101–70, the fol-lowing clause shall be inserted in allFEHBP contracts:

RENEWAL AND WITHDRAWAL OF APPROVAL(JAN 1991)

(a) Pursuant to 5 U.S.C. 8902(a), the con-tract renews automatically for a term of 1year each January 1st, unless written noticeof intent not to renew is given either byOPM or the Carrier not less than 60 calendardays before the renewal date, or unless modi-fied by mutual agreement.

(b) This contract also may be terminatedat other times by order of OPM pursuant to5 U.S.C. 8902(e). After OPM notifies the Car-rier of its intent to terminate the contract,OPM may take action as it deems necessaryto protect the interests of members, includ-ing but not limited to—

(1) Suspending new enrollments under thecontract;

(2) Advising enrollees of the asserted defi-ciencies; and

(3) Providing enrollees an opportunity totransfer to another Plan.

(c) OPM may, after proper notice, termi-nate the contract at the end of the contractterm if it finds that the Carrier did not haveat least 300 enrollees enrolled in its plan atany time during the two preceding contractterms.

(End of Clause)

[52 FR 16044, May 1, 1987, as amended at 55FR 27418, July 2, 1990; 57 FR 19388, May 6,1992]

1652.249–71 FEHBP termination forconvenience of the government—negotiated benefits contracts.


FEHBP TERMINATION FOR CONVENIENCE OFTHE GOVERNMENT—NEGOTIATED BENEFITSCONTRACTS (JAN 1998)

(a) The Government may terminate per-formance of work under this contract inwhole or, from time to time, in part if theContracting Officer determines that a termi-nation is in the Government’s interest. TheContracting Officer shall terminate by deliv-ering to the Carrier a Notice of Terminationspecifying the extent of terminating and theeffective date.

(b) After receipt of a Notice of Termi-nation, and except as directed by the Con-tracting Officer, the Carrier shall imme-diately proceed with the following obliga-tions, regardless of any delay in determiningor adjusting any amounts due under thisclause:

(1) Stop work as specified in the notice.(2) Place no further subcontracts except as

necessary to complete the continued portionof the contract.

(3) Terminate all subcontracts to the ex-tent they relate to the work terminated.

(4) Assign to the Government, as directedby the Contracting Officer, all right, title,and interest of the Carrier under the sub-contracts terminated, in which case the Gov-ernment shall have the right to settle or topay any termination settlement proposalarising out of those terminations.

(5) With approval or ratification to the ex-tent required by the Contracting Officer, set-tle all outstanding liabilities and termi-nation settlement proposals arising from thetermination of subcontracts; the approval orratification will be final for purposes of thisclause.

(6) As directed by the Contracting Officer,deliver to the Government any data, reports,or studies that, if the contract had beencompleted, would be required to be furnishedto the Government.

(7) Complete performance of the work notterminated.

(c) After termination, the Carrier shallsubmit a final termination settlement pro-posal to the Contracting Officer in the formand with the certification prescribed by theContracting Officer. The Carrier shall sub-mit the proposal promptly, but no later than1 year from the effective date of termi-nation, unless extended in writing by theContracting Officer upon written request ofthe Carrier within this 1-year period. How-ever, if the Contracting Officer determinesthat the facts justify it, a termination set-tlement proposal may be received and actedon after 1 year or any extension. If the Car-rier fails to submit the proposal within thetime allowed, the Contracting Officer maydetermine, on the basis of information avail-able, the amount, if any, due the Carrier be-cause of the termination and shall pay theamount determined.


139


(d) Subject to paragraph (c) of this clause,the Carrier and the Contracting Officer mayagree upon the whole or any part of theamount to be paid or remaining to be paidbecause of the termination. The amount mayinclude a reasonable allowance for profit onwork done. However, the agreed amount,whether under this paragraph (d) or para-graph (e) of this clause, exclusive of costsshown in subparagraph (e)(3) of this clause,may not exceed the total contract price asreduced by (1) the amount of payments pre-viously made and (2) the contract price ofwork not terminated. The contract shall bemodified, and the Carrier paid the agreedamount. Paragraph (e) of this clause shallnot limit, restrict, or affect the amount thatmay be agreed upon to be paid under thisparagraph.

(e) If the Carrier and the Contracting Offi-cer fail to agree on the whole amount to bepaid because of the termination of work, theContracting Officer shall pay the Carrier theamounts determined by the Contracting Offi-cer as follows, but without duplication ofany amounts agreed on under paragraph (d)above:

(1) The contract price for completed serv-ices accepted by the Government not pre-viously paid for.

(2) The total of—(i) The costs incurred in the performance

of the work terminated, including initialcosts and preparatory expense allocablethereto, but excluding any costs attributableto services paid or to be paid under para-graph (e)(1) of this clause;

(ii) The cost of settling and paying termi-nation settlement proposals under termi-nated subcontracts that are properly charge-able to the terminated portion of the con-tract if not included in subdivision (e)(2)(i) ofthis clause; and

(iii) A sum, as profit on subdivision (e)(2)(i)of this clause, determined by the Contract-ing Officer under 49.202 of the Federal Acqui-sition Regulation, in effect on the date ofthis contract, to be fair and reasonable.

(3) The reasonable costs of settlement ofthe work terminated, including—

(i) Accounting, legal, clerical, and otherexpenses reasonably necessary for the prepa-ration of termination settlement proposalsand supporting data;

(ii) The termination and settlement of sub-contracts (excluding the amounts of suchsettlements); and

(f) The cost principles and procedures ofpart 31 of the Federal Acquisition Regula-tion, in effect on the date of this contract,shall govern all costs claimed, agreed to, ordetermined under this clause.

(g) The Carrier shall have the right of ap-peal, under the Disputes clause, from any de-termination made by the Contracting Officerunder paragraph (c), (e), or (i) of this clause,

except that if the Carrier failed to submitthe termination settlement proposal or re-quest for equitable adjustment within thetime provided in paragraph (c) or (i), respec-tively, and failed to request a time exten-sion, there is no right of appeal.

(h) In arriving at the amount due the Car-rier under this clause, there shall be de-ducted—

(1) All unliquidated advance or other pay-ments to the Carrier under the terminatedportion of this contract;

(2) Any claim which the Government hasagainst the Carrier under this contract; and

(i) If the termination is partial, the Carriermay file a proposal with the Contracting Of-ficer for an equitable adjustment of theprice(s) of the continued portion of the con-tract. The Contracting Officer shall makeany equitable adjustment agreed upon. Anyproposal by the Carrier for an equitable ad-justment under this clause shall be requestedwithin 90 days from the effective date of ter-mination unless extended in writing by theContracting Officer.

(j)(1) The Government may, under theterms and conditions it prescribes, makepartial payments and payments againstcosts incurred by the Carrier for the termi-nated portion of the contract, if the Con-tracting Officer believes the total of thesepayments will not exceed the amount towhich the Carrier will be entitled.

(2) If the total payments exceed theamount finally determined to be due, theCarrier shall repay the excess to the Govern-ment upon demand, together with interestcomputed at the rate established by the Sec-retary of the Treasury under 50 U.S.C. App.1215(b)(2). Interest shall be computed for theperiod from the date the excess payment isreceived by the Carrier to the date the excessis repaid.

(k) Unless otherwise provided in this con-tract or by statute, the Carrier shall main-tain all records and documents relating tothe terminated portion of this contract for 3years after final settlement. This includesall books and other evidence bearing on theCarrier’s costs and expenses under this con-tract. The Carrier shall make these recordsand documents available to the Government,at the Carrier’s office, at all reasonabletimes, without any direct charge. If approvedby the Contracting Officer, photographs,microphotographs, or other authentic repro-ductions may be maintained instead of origi-nal records and documents.

(End of clause)

[62 FR 47579, Sept. 10, 1997]


140

48 CFR Ch. 16 (10–1–98 Edition)1652.249–72

1652.249–72 FEHBP termination fordefault—negotiated benefits con-tracts.

As prescribed in § 1649.101–72, the fol-lowing clause shall be inserted in allFEHBP contracts.

FEHBP TERMINATION FOR DEFAULT—NEGOTIATED BENEFITS CONTRACTS (JAN 1998)

(a) (1) The Government may, subject toparagraphs (c) and (d) below, by written no-tice of default to the Carrier, terminate thiscontract in whole or in part if the Carrierfails to—

(i) Perform the services within the timespecified in this contract or any extension;

(ii) Make progress, so as to endanger per-formance of this contract (but see subpara-graph (a)(2) below); or

(iii) Perform any of the other provisions ofthis contract (but see subparagraph (a)(2)below).

(2) The Government’s right to terminatethis contract under subdivisions (1)(ii) and(1)(iii) above, may be exercised if the Carrierdoes not cure such failure within 10 days (ormore if authorized in writing by the Con-tracting Officer) after receipt of the noticefrom the Contracting Officer specifying thefailure.

(b) If the Government terminates this con-tract in whole or in part, it may acquire,under the terms and in the manner the Con-tracting Officer considers appropriate, sup-plies or service similar to those terminated,and the Carrier will be liable to the Govern-ment for any excess costs for those suppliesor services. However, the Carrier shall con-tinue the work not terminated.

(c) Except for defaults of subcontractors atany tier, the Carrier shall not be liable forany excess costs if the failure to perform thecontract arises from causes beyond the con-trol and without the fault or negligence ofthe Carrier. Examples of such causes include(1) acts of God or of the public enemy, (2)acts of the Government in either its sov-ereign or contractual capacity, (3) fires, (4)floods, (5) epidemics, (6) quarantine restric-tions, (7) strikes, (8) freight embargoes, and(9) unusually severe weather. In each in-stance the failure to perform must be beyondthe control and without the fault or neg-ligence of the Carrier.

(d) If the failure to perform is caused bythe default of a subcontractor at any tier,and if the cause of the default is beyond thecontrol of both the Carrier and subcontrac-tor, and without the fault or negligence ofeither, the Carrier shall not be liable for any

excess costs for failure to perform, unless thesubcontracted supplies or services were ob-tainable from other sources in sufficienttime for the Carrier to meet the required de-livery schedule.

(e) If this contract is terminated for de-fault, the Government may require the Car-rier to transfer title and deliver to the Gov-ernment, as directed by the Contracting Offi-cer, any completed or partially completedinformation and contract rights that theCarrier has specifically produced or acquiredfor the terminated portion of this contract.

(f) If, after termination, it is determinedthat the Carrier was not in default, or thatthe default was excusable, the rights and ob-ligations of the parties shall be the same asif the termination had been issued for theconvenience of the Government.

(g) The rights and remedies of the Govern-ment in this clause are in addition to anyother rights and remedies provided by law orunder this contract.

(End of clause)

[62 FR 47580, Sept. 10, 1997]

Subpart 1652.3—FEHBP ClauseMatrix

1652.370 Use of the matrix.(a) The matrix in this section lists

the FAR and FEHBAR clauses to beused with contracts based on cost anal-ysis and contracts based on a combina-tion of cost and price analysis. Carriersshall submit initial applications andrequests for renewals on the basis thatthe new contract or contract renewalwill include the clauses indicated.

(b) Certain contract clauses are man-datory for FEHBP contracts. Otherclauses are to be used only when madeapplicable by pertinent sections of theFAR or FEHBAR. An ‘‘M’’ in the ‘‘UseStatus’’ column indicates that theclause is mandatory. An ‘‘A’’ indicatesthat the clause is to be used only whenthe applicable conditions are met.

(c) Clauses are incorporated in thecontract either in full text or by ref-erence. If the full text is to be used, thematrix indicates a ‘‘T’’. If the clause isincorporated by reference, the matrixindicates an ‘‘R’’.


141

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48 CFR Ch. 16 (10–1–98 Edition)1652.370

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......

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qual

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ract

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TT

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R 5

2.22

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......

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ifica

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1652

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1652

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Man

dato

ry

Info

rmat

ion

for

Ele

c-tr

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Fun

ds T

rans

fer

Pay

men

t.M

TT


143

Office of Personnel Management 1652.370

1652

.232

–70

......

......

......

......

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....

1632

.171

......

......

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ange

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ith

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AT

1652

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T

1652

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1632

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1652

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1652

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1646

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52.

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1652

.249

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......

......

......

......

......

....

1649

.101

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......

......

......

......

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......

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T

1652

.249

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......

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1649

.101

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......

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erm

inat

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1652

.249

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......

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TT

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......

......

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AR

51.

107

......

......

......

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ourc

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R 5

2.25

2–4

......

......

......

......

......

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AR

52.

107(

d)...

......

......

......

......

......

......

......

......

......

.A

ltera

tions

in C

ontr

act

......

......

......

AT

TF

AR

52.

252–

6...

......

......

......

......

.....

FA

R 5

2.10

7(f)

......

......

......

......

......

......

......

......

......

.....

Aut

horiz

ed D

evia

tions

in C

laus

esM

TT


144

48 CFR Ch. 16 (10–1–98 Edition)Pt. 1653

[52 FR 16044, May 1, 1987, as amended at 55 FR 27418, July 2, 1990; 59 FR 14767, Mar. 30, 1994;62 FR 47580, Sept. 10, 1997; 62 FR 50435, Sept.25, 1997]

PART 1653—FORMS

AUTHORITY: 5 U.S.C. 8913; 40 U.S.C. 486(c); 48CFR 1.301.

1653.000 FEHBP forms.The following forms specified in FAR

subparts 53.2 and 53.3 are applicable toFEHBP acquisitions:

Part 53.2 Part 53.3 Form title

53.201–1 53.301–1402 SF 1402–Certificate ofAppointment.

53.203 53.301–119 SF 119—Statement ofContingent or OtherFees.

Part 53.2 Part 53.3 Form title

53.204–2(a) 53.301–279 SF 279 FPDS—IndividualContract Action Report(over $10,000).

53.204–2(b) 53.301–281 SF 281 FPDS—Summaryof Contract Actions of$10,000 or less.

53.229 53.301–1094 SF 1094—U.S. Tax Ex-emption Certificate.

53.229 53.301–1094A SF 1094A—Tax Exemp-tion Certificates Ac-countability Record.

[52 FR 16048, May 1, 1987, as amended at 62FR 47583. Sept. 10, 1997]


subchapter h—clauses and forms - gpo.gov office of personnel management 1652.204–71 52.232–23...

Documents