83 FR 7631 - General Services Administration Acquisition Regulation; Unenforceable Commercial Supplier Agreement Terms

GENERAL SERVICES ADMINISTRATION

Federal Register Volume 83, Issue 36 (February 22, 2018)

GSA is amending the General Services Administration Acquisition Regulation (GSAR) to address common commercial supplier agreement terms that are inconsistent with or create ambiguity with Federal Law.

[Federal Register Volume 83, Number 36 (Thursday, February 22, 2018)]
[Rules and Regulations]
[Pages 7631-7636]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-03350]


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GENERAL SERVICES ADMINISTRATION

48 CFR Parts 502, 512, 513, 532, and 552

[GSAR Change 83; GSAR Case 2015-G512; Docket No. 2016-0010; Sequence 
No. 2]
RIN 3090-AJ67


 General Services Administration Acquisition Regulation; 
Unenforceable Commercial Supplier Agreement Terms

AGENCY: Office of Acquisition Policy, General Services Administration 
(GSA).

ACTION: Final rule.

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SUMMARY: GSA is amending the General Services Administration 
Acquisition Regulation (GSAR) to address common commercial supplier 
agreement terms that are inconsistent with or create ambiguity with 
Federal Law.

DATES: Effective: February 22, 2018.

FOR FURTHER INFORMATION CONTACT: Ms. Janet Fry, Senior Policy Advisor, 
GSA Acquisition Policy Division, at 703-605-3167 or [email protected]. 
For information pertaining to status or publication schedules, contact 
the Regulatory Secretariat at 202-501-4755. Please cite GSAR Case 2015-
G512.

SUPPLEMENTARY INFORMATION: 

I. Background

    GSA published a proposed rule in the Federal Register at 81 FR 
34302 on May 31, 2016, to amend the GSAR and address common commercial 
supplier agreement terms that are inconsistent with or create ambiguity 
with Federal Law.
    Standard commercial supplier agreements contain terms and 
conditions that make sense when the purchaser is a private party but 
are inappropriate when the purchaser is the Federal Government. 
Discrepancies between commercial supplier agreements and Federal law or 
the Government's needs create recurrent points of inconsistency. As a 
result, industry and Government representatives must spend significant 
time and resources negotiating and tailoring commercial supplier 
agreements to comply with Federal law and to ensure both parties have 
agreement on the contract terms. Explicitly addressing common 
unenforceable terms eliminates the need for negotiation on these 
identified terms.
    This approach will: (1) Decrease proposal costs associated with 
negotiating the identified unenforceable commercial supplier agreement 
terms; (2) facilitate faster procurement and contract lead times, 
therefore decreasing the time it takes for contractors to make a return 
on their investment; (3) reduce administrative costs for companies that 
maintain alternate Federally compliant commercial supplier agreements; 
and (4) for small business concerns, level the playing field with 
larger competitors since negotiations will only be required if the 
commercial supplier agreements contain objectionable clauses outside of 
those already identified in the GSAR clause. Lastly, this approach 
ensures consistent application and understanding of these unenforceable 
terms, potentially reducing unnecessary legal costs.

II. Discussion of Proposed Rule

    Two respondents submitted comments on the proposed rule. The 
General Services Administration has reviewed the comments in the 
development of the final rule. A discussion of the comments and the 
changes made to the rule as a result of those comments are provided as 
follows:

A. Summary of Significant Changes

    This final rule makes the following significant changes from the 
proposed rule:
     GSAR 552.212-4(s)--Reverts the order of precedence to move 
``Addenda to the solicitation or contract, including any license 
agreements for computer software'' back to number 4, and ``Solicitation 
provisions of the solicitation'' and ``Other paragraphs of the clause'' 
back to number 5 and 6, respectively. Additionally, language was added 
to clarify the Commercial Supplier Agreements--Unenforceable Clauses 
provision takes precedence over the commercial supplier agreement terms 
and conditions.
     GSAR 552.212-4(w)(1)(vi)--Deletes the requirement for 
providing full text terms with the offer, adds a definition of a 
material change, and adds clarification on when a commercial supplier 
agreement must be bilaterally modified in the contract.

[[Page 7632]]

B. Analysis of Public Comments

    Public comments are grouped into categories in order to provide 
clarification and to better respond to the issues raised.
1. Order of Precedence
    Comment: Both respondents addressed concerns with the change to the 
order of precedence in paragraph(s) of GSAR clause 552.212-4 which 
places commercial supplier agreements in a lower position. The 
commenters stated that this could result in terms, which are not 
required by law or regulation, taking precedence over the standard 
commercial terms in a commercial supplier agreement. The commenters 
provided the example of a non-standard warranty contained in a 
solicitation provision or in 552.212-4 paragraph (o), Warranty, taking 
precedence over a company's standard commercial warranty contained in 
their commercial supplier agreement. Additional examples included title 
and ownership of software intellectual property (``IP''), warranty and 
exclusion of implied warranties, limitations of liability and exclusive 
remedies, and IP indemnification. One respondent stated the change in 
precedence creates a preference for Government terms and conditions 
that appears to contradict the language of existing statute (Federal 
Acquisition Streamlining Act) and regulation (Federal Acquisition 
Regulation (FAR) part 12).
    Response: The intent of the change in the order of precedence was 
(1) to ensure the Commercial Supplier Agreement--Unenforceable Clauses 
provisions take precedence over the standard commercial supplier 
agreements and (2) to provide clarity that awarded terms (i.e. those 
agreed to by both parties during contract formation), including the 
negotiated and awarded commercial supplier agreement, take precedence 
to unilateral changes to commercial supplier agreements made by the 
contractor. GSA reviewed the unintended impacts identified by the 
respondents and agrees that there are better ways to solve the problem.
    Instead, GSA addressed intent (1) by adding language to 552.212-
4(s)(4)to clarify that the Commercial Supplier Agreement--Unenforceable 
Clauses provisions take precedence over any commercial supplier 
agreement.
    GSA addressed intent (2) by adding a new subparagraph to 552.212-
4(w)(1)(vi) to clearly state that material changes to a commercial 
supplier agreement after award must be bilaterally modified into the 
contract to be enforceable against the Government. Additionally, 
subparagraph (C) was updated to more clearly state that unilateral 
revisions that are found to be inconsistent with a material term of the 
contract are not enforceable against the Government (i.e., awarded 
commercial supplier terms will take precedence over terms updated 
unilaterally). Equivalent changes were made to the language at GSAR 
552.232-78.
2. Full Text Terms
    Comment: Both respondents voiced concerns about the burden on 
contractors to provide full text for all terms. Commercial supplier 
agreements may include terms by reference which can be voluminous. The 
terms may change at any time and providing full text would unduly delay 
awards and modifications. One respondent stated the requirement to 
submit the terms in writing seemed to imply they will be fixed terms, 
and that providing full text terms is not a commercial practice.
    Response: The intent of this language was to ensure that the 
Government fully understands the terms and conditions agreed upon 
during contract formation.
    As stated in the public comments, referenced terms on a website can 
be changed at any time, which is problematic during contract formation 
for the Government. The time between an offer and award of a contract 
could be several weeks. There is no assurance that the referenced terms 
reviewed early in contract formation have not changed. When awarding 
contracts, contracting officers must be fully aware of the terms that 
will bind the Government, which is why static full text terms were 
proposed.
    After consideration of the public comments, GSA decided that 
maintaining the commercial practice of providing the commercial 
supplier agreement with referenced terms and by improving internal 
controls for intake and management of commercial supplier agreements 
could reduce Government risk and accomplish the intended outcome.
    For this reason, GSA has deleted the language in 552.212-
4(w)(1)(vi)(A) which required full text for all terms. An equivalent 
change was made to the language at GSAR 552.232-78. GSA will add 
supplementary guidance in the General Services Acquisition Manual to 
clarify the contracting officer's responsibilities regarding commercial 
supplier agreement reviews, negotiations and documentation.
3. Enforceability of Unilateral Revisions
    Comment: One respondent stated the intent of 552.212-4(w)(1)(vi)(C) 
is unclear. If the intent is the order of precedence clause of the 
contract is not enforceable with respect to any software license terms 
unilaterally revised subsequent to award, then the respondent 
recommends the Paragraph be revised for purposes of clarity.
    Response: The intent of the clause is to ensure material changes to 
the term of the contract are agreed to by both parties. 552.212-
4(w)(1)(vi)(C) has been revised to more clearly state the intent, and 
an additional paragraph has been added to require bilateral 
modifications for material changes to commercial supplier agreements 
after contract award.
4. Significant Regulatory Action
    Comment: One respondent stated ``the proposed rule is a significant 
action, due to the change in the order of precedence, which should be 
subject to OMB review'' pursuant to Executive Order 12866.
    Response: As previously addressed, the order of precedence will be 
reverted back to the order enumerated in the FAR 52.212-4 based on the 
unintended impacts brought to light by the respondents. Therefore, this 
rule is not a significant change, and is not subject to Office of 
Management and Budget (OMB) review pursuant to Executive Order 12866.
5. Burdensome Information Collection
    Comment: One respondent believes the requirement to provide full 
text of terms is an unnecessary and burdensome information collection 
and subject to the Paperwork Reduction Act (PRA).
    Response: GSA has removed the requirement to provide all full text 
terms and therefore this rule is not subject to the PRA.

C. Other Changes

    This final rule makes the following additional changes from the 
proposed rule:
     GSAR 512.301, Solicitation provisions and contract clauses 
for the acquisition of commercial items, a conforming change is made to 
subparagraph (e) to clarify the applicability of the deviated language 
to FAR 52.212-4 Alternate I.
     GSAR 552.212-4(w)(1)(ix), Audits, a typographical error in 
the disputes clause reference was fixed.
     GSAR 552.232-78, Commercial Supplier Agreements--
Unenforceable Clauses, is renumbered and amended to make conforming 
changes.
     GSAR 552.232-78(a)(4), previously (a)(1)(iv), Continued 
performance, is revised to correct the reference of the

[[Page 7633]]

disputes clause from ``subparagraph (d) (Disputes)'' to ``FAR 52.233-1, 
Disputes.''
     GSAR 552.232-78(a)(6), Updating terms, previously 
(a)(1)(vi), Additional terms, is updated to reflect equivalent text 
changes previously described for subparagraph (w)(1)(vi) of 552.212-4.

III. Expected Cost Savings of This Final Rule

    Information was gathered from GSA's Information Technology Category 
(ITC) business line and GSA's Office of General Counsel (OGC) to 
estimate total annualized cost savings associated with reviewing and 
negotiating the 15 incompatible CSA terms for both industry and 
Government. A 7 percent discount rate was used for all calculations.

Government Cost Savings

    Based on the ITC CSA data for Fiscal Year 2016 (FY16), GSA 
estimates approximately 600 CSAs will be reviewed each year. CSAs must 
be reviewed for each procurement because terms of CSAs are updated 
often. Therefore, the review of a CSA for a new procurement is not 
eliminated by a previous review of a CSA for the same item purchased 
previously.
    GSA ITC subject matter experts and GSA OGC were consulted to 
identify the activities associated with the review of CSAs and the 
hourly estimates for the activities in relation to the 15 CSA terms. It 
is estimated that on average OGC review takes 0.9 hours and contracting 
officer review and negotiation takes 2.7 hours for each CSA. Using the 
2017 General Schedule, average pay rates were identified for attorneys 
and contracting officers and fringe benefits were included. The 
estimated annualized cost savings for the Government is $119,103.

Public Cost Savings

    Apparent successful offerors have at least a negotiator and an 
attorney participate in the review and negotiation of a CSA prior to 
award. It is assumed, at a minimum, the time required by an offeror's 
attorney and negotiator to review the 15 CSA terms are equivalent to 
the Government legal and contracting officer hours; 0.9 and 2.7 hours 
respectively. Fully burdened labor rates equivalent to the Government 
were used to estimate industry cost savings. Therefore for industry the 
estimated annualized cost savings is $119,103.
    The total annualized cost savings of this rule is estimated at 
$238,206.

IV. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This rule is not a major rule 
under 5 U.S.C. 804.

V. Executive Order 13771

    This final rule is considered an E.O. 13771 deregulatory action. 
Details on the estimated cost savings can be found in Section III-
Expected Cost Savings of this Final Rule.

VI. Executive Order 13777

    This final rule was identified by GSA's Regulatory Reform Task 
Force as a rule that improves efficiency by eliminating procedures with 
costs that exceed the benefits as described in Section IV.

VII. Regulatory Flexibility Act

    GSA does not expect this rule to have a significant economic impact 
on a substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq.
    GSA has prepared a Final Regulatory Flexibility Analysis (FRFA) 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
The FRFA is summarized as follows:

    This effort is expected to reduce the overall burden on small 
entities by reducing the amount of time and resources required to 
negotiate commercial supplier agreements in GSA contracts. GSA 
believes that such an approach will disproportionately benefit small 
business concerns since they are less likely to retain in-house 
counsel and the GSAR revision will reduce or eliminate the costs 
associated with the negotiation of the identified unenforceable 
elements. Furthermore, this approach will allow small businesses 
that do not have commercial supplier agreements tailored to Federal 
Government procurements to potentially utilize their otherwise 
compliant, standard commercial supplier agreements when conducting 
business with the Government. No comments were received on the 
Initial Regulatory Flexibility Analysis (IRFA) from the Chief 
Counsel for Advocacy of the Small Business Administration.

    Interested parties may obtain a copy of the FRFA from the 
Regulatory Secretariat. The Regulatory Secretariat has submitted a copy 
of the FRFA to the Chief Counsel for Advocacy of the Small Business 
Administration.

VII. Paperwork Reduction Act

    The final rule does not contain any information collection 
requirements that require the approval of the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 502, 512, 513, 532, and 552

    Government procurement.

    Dated: February 14, 2018.
Jeffrey A. Koses,
Senior Procurement Executive, Office of Acquisition Policy.

    Therefore, GSA is amending 48 CFR parts 502, 512, 513, 532, and 552 
as set forth below:

0
1. Add part 502 to read as follows:

PART 502--DEFINITIONS OF WORDS AND TERMS

    Authority:  40 U.S.C. 121(c).

Subpart 502.1--Definitions


502.101   Definitions.

    Commercial supplier agreements means terms and conditions 
customarily offered to the public by vendors of supplies or services 
that meet the definition of ``commercial item'' set forth in FAR 2.101 
and intended to create a binding legal obligation on the end user. 
Commercial supplier agreements are particularly common in information 
technology acquisitions, including acquisitions of commercial computer 
software and commercial technical data, but they may apply to any 
supply or service. The term applies--
    (a) Regardless of the format or style of the document. For example, 
a commercial supplier agreement may be styled as standard terms of sale 
or lease, Terms of Service (TOS), End User License Agreement (EULA), or 
another similar legal instrument or agreement, and may be presented as 
part of a proposal or quotation responding to a solicitation for a 
contract or order;
    (b) Regardless of the media or delivery mechanism used. For 
example, a commercial supplier agreement may be presented as one or 
more paper documents or may appear on a computer or other electronic 
device screen during a purchase, software installation, other product 
delivery,

[[Page 7634]]

registration for a service, or another transaction.

PART 512--ACQUISITION OF COMMERCIAL ITEMS

0
2. The authority citation for part 512 is revised to read as follows:

    Authority:  40 U.S.C. 121(c).

0
3. Add subpart 512.2, consisting of section 512.216, to read as 
follows:

Subpart 512.2--Special Requirements for the Acquisition of 
Commercial Items


512.216  Unenforceability of unauthorized obligations.

    GSA has a deviation to FAR 12.216 for this section. For commercial 
contracts, supplier license agreements are referred to as commercial 
supplier agreements (defined in 502.101). Paragraph (u) of clause 
552.212-4 prevents violations of the Anti-Deficiency Act (31 U.S.C. 
1341) for supplies or services acquired subject to a commercial 
supplier agreement.

0
4. Amend section 512.301 by adding paragraph (e) to read as follows:


512.301  Solicitation provisions and contract clauses for the 
acquisition of commercial items.

* * * * *
    (e) GSA has a deviation to revise certain paragraphs of FAR clause 
52.212-4. Use clause 552.212-4 Contract Terms and Conditions-Commercial 
Items (FAR DEVIATION), for acquisitions of commercial items in lieu of 
FAR 52.212-4 or 52.212-4 Alternate I. The contracting officer may 
tailor this clause in accordance with FAR 12.302 and GSAM 512.302.

0
5. Add part 513 to read as follows:

PART 513--SIMPLIFIED ACQUISITION PROCEDURES

Subpart 513.2--Actions at or Below the Micro-Purchase Threshold
Sec.
513.202 Unenforceability of unauthorized obligations in micro-
purchases.
Subpart 513.3--Simplified Acquisition Methods
513.302 Purchase orders.
513.302-5 Clauses.

    Authority:  40 U.S.C. 121(c).

Subpart 513.2--Actions at or Below the Micro-Purchase Threshold


513.202  Unenforceability of unauthorized obligations in micro-
purchases.

    Clause 552.232-39, Unenforceability of Unauthorized Obligations 
(FAR DEVIATION), will automatically apply to any micro-purchase in lieu 
of FAR 52.232-39 for supplies and services acquired subject to a 
commercial supplier agreement (as defined in 502.101).

Subpart 513.3--Simplified Acquisition Methods


513.302-5  Clauses.

    Where the supplies or services are offered under a commercial 
supplier agreement (as defined in 502.101), the purchase order or 
modification shall incorporate clause 552.232-39, Unenforceability of 
Unauthorized Obligations (FAR DEVIATION), in lieu of FAR 52.232-39, and 
clause 552.232-78, Commercial Supplier Agreements-Unenforceable 
Clauses.

PART 532--CONTRACT FINANCING

0
6. The authority citation for part 532 continues to read as follows:

    Authority:  40 U.S.C. 121(c).


0
7. Add subpart 532.7 to read as follows:
Subpart 532.7--Contract Funding
Sec.
532.705 Unenforceability of unauthorized obligations.
532.706-3 Clause for unenforceability of unauthorized obligations.

Subpart 532.7--Contract Funding


532.705  Unenforceability of unauthorized obligations.

    Supplier license agreements defined in FAR 32.705 are equivalent to 
commercial supplier agreements defined in 502.101.


532.706-3  Clause for unenforceability of unauthorized obligations.

    (a) The contracting officer shall utilize the clause at 552.232-39, 
Unenforceability of Unauthorized Obligations (FAR DEVIATION) in all 
solicitations and contracts in lieu of FAR 52.232-39.
    (b) The contracting officer shall utilize the clause at 552.232-78, 
Commercial Supplier Agreements--Unenforceable Clauses, in all 
solicitations and contracts (including orders) when not using FAR part 
12.

PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
8. The authority citation for 48 CFR 552 continues to read as follows:

    Authority:  40 U.S.C. 121(c).


0
9. Amend section 552.212-4 by--
0
a. Revising the section heading, introductory text, and date of the 
clause; and
0
b. Adding paragraphs (s), (u), and (w).
    The revisions and additions read as follows:


552.212-4  Contract Terms and Conditions-Commercial Items (FAR 
DEVIATION).

    As prescribed in 512.301(e), replace subparagraph (g)(2), paragraph 
(s), and paragraph (u) of FAR clause 52.212-4. Also, add paragraph (w) 
to FAR clause 52.212-4.

Contract Terms and Conditions--Commercial Items (FAR DEVIATION) (Feb. 
2018)

* * * * *
    (s) Order of precedence. Any inconsistencies in this 
solicitation or contract shall be resolved by giving precedence in 
the following order:
    (1) The schedule of supplies/services.
    (2) The Assignments, Disputes, Payments, Invoice, Other 
Compliances, Compliance with Laws Unique to Government Contracts, 
Unauthorized Obligations, and Commercial Supplier Agreements-
Unenforceable Clauses paragraphs of this clause.
    (3) The clause at 52.212-5.
    (4) Addenda to this solicitation or contract, including any 
commercial supplier agreements as amended by the Commercial Supplier 
Agreements--Unenforceable Clauses provision.
    (5) Solicitation provisions if this is a solicitation.
    (6) Other paragraphs of this clause.
    (7) The Standard Form 1449.
    (8) Other documents, exhibits, and attachments.
    (9) The specification.
    (u) Unauthorized Obligations. (1) Except as stated in paragraph 
(u)(2) of this clause, when any supply or service acquired under 
this contract is subject to any commercial supplier agreement (as 
defined in 502.101) that includes any language, provision, or clause 
requiring the Government to pay any future fees, penalties, 
interest, legal costs or to indemnify the Contractor or any person 
or entity for damages, costs, fees, or any other loss or liability 
that would create an Anti-Deficiency Act violation (31 U.S.C. 1341), 
the following shall govern:
    (i) Any such language, provision, or clause is unenforceable 
against the Government.
    (ii) Neither the Government nor any Government authorized end 
user shall be deemed to have agreed to such clause by virtue of it 
appearing in the commercial supplier agreement. If the commercial 
supplier agreement is invoked through an ``I agree'' click box or 
other comparable mechanism (e.g., ``click-wrap'' or ``browse-wrap'' 
agreements), execution does not bind the Government or any 
Government authorized end user to such clause.
    (iii) Any such language, provision, or clause is deemed to be 
stricken from the commercial supplier agreement.
    (2) Paragraph (u)(1) of this clause does not apply to 
indemnification or any other payment by the Government that is 
expressly authorized by statute and specifically authorized under 
applicable agency regulations and procedures.

[[Page 7635]]

    (w) Commercial supplier agreements--unenforceable clauses. When 
any supply or service acquired under this contract is subject to a 
commercial supplier agreement (as defined in 502.101), the following 
language shall be deemed incorporated into the commercial supplier 
agreement. As used herein, ``this agreement'' means the commercial 
supplier agreement:
    (1) Notwithstanding any other provision of this agreement, when 
the end user is an agency or instrumentality of the U.S. Government, 
the following shall apply:
    (i) Applicability. This agreement is a part of a contract 
between the commercial supplier and the U.S. Government for the 
acquisition of the supply or service that necessitates a license or 
other similar legal instrument (including all contracts, task 
orders, and delivery orders under FAR Part 12).
    (ii) End user. This agreement shall bind the ordering activity 
as end user but shall not operate to bind a Government employee or 
person acting on behalf of the Government in his or her personal 
capacity.
    (iii) Law and disputes. This agreement is governed by Federal 
law.
    (A) Any language purporting to subject the U.S. Government to 
the laws of a U.S. state, U.S. territory, district, or municipality, 
or a foreign nation, except where Federal law expressly provides for 
the application of such laws, is hereby deleted.
    (B) Any language requiring dispute resolution in a specific 
forum or venue that is different from that prescribed by applicable 
Federal law is hereby deleted.
    (C) Any language prescribing a different time period for 
bringing an action than that prescribed by applicable Federal law in 
relation to a dispute is hereby deleted.
    (iv) Continued performance. The supplier or licensor shall not 
unilaterally revoke, terminate or suspend any rights granted to the 
Government except as allowed by this contract. If the supplier or 
licensor believes the ordering activity to be in breach of the 
agreement, it shall pursue its rights under the Contract Disputes 
Act or other applicable Federal statute while continuing performance 
as set forth in subparagraph (d) (Disputes).
    (v) Arbitration; equitable or injunctive relief. In the event of 
a claim or dispute arising under or relating to this agreement, a 
binding arbitration shall not be used unless specifically authorized 
by agency guidance, and equitable or injunctive relief, including 
the award of attorney fees, costs or interest, may be awarded 
against the U.S. Government only when explicitly provided by statute 
(e.g., Prompt Payment Act or Equal Access to Justice Act).
    (vi) Updating terms. (A) After award, the contractor may 
unilaterally revise terms if they are not material. A material 
change is defined as:
    (1) Terms that change Government rights or obligations;
    (2) Terms that increase Government prices;
    (3) Terms that decrease overall level of service; or
    (4) Terms that limit any other Government right addressed 
elsewhere in this contract.
    (B) For revisions that will materially change the terms of the 
contract, the revised commercial supplier agreement must be 
incorporated into the contract using a bilateral modification.
    (C) Any agreement terms or conditions unilaterally revised 
subsequent to award that are inconsistent with any material term or 
provision of this contract shall not be enforceable against the 
Government, and the Government shall not be deemed to have consented 
to them.
    (vii) No automatic renewals. If any license or service tied to 
periodic payment is provided under this agreement (e.g., annual 
software maintenance or annual lease term), such license or service 
shall not renew automatically upon expiration of its current term 
without prior express consent by an authorized Government 
representative.
    (viii) Indemnification. Any clause of this agreement requiring 
the commercial supplier or licensor to defend or indemnify the end 
user is hereby amended to provide that the U.S. Department of 
Justice has the sole right to represent the United States in any 
such action, in accordance with 28 U.S.C. 516.
    (ix) Audits. Any clause of this agreement permitting the 
commercial supplier or licensor to audit the end user's compliance 
with this agreement is hereby amended as follows:
    (A) Discrepancies found in an audit may result in a charge by 
the commercial supplier or licensor to the ordering activity. Any 
resulting invoice must comply with the proper invoicing requirements 
specified in the underlying Government contract or order.
    (B) This charge, if disputed by the ordering activity, will be 
resolved in accordance with subparagraph (d) (Disputes); no payment 
obligation shall arise on the part of the ordering activity until 
the conclusion of the dispute process.
    (C) Any audit requested by the contractor will be performed at 
the contractor's expense, without reimbursement by the Government.
    (x) Taxes or surcharges. Any taxes or surcharges which the 
commercial supplier or licensor seeks to pass along to the 
Government as end user will be governed by the terms of the 
underlying Government contract or order and, in any event, must be 
submitted to the Contracting Officer for a determination of 
applicability prior to invoicing unless specifically agreed to 
otherwise in the Government contract.
    (xi) Non-assignment. This agreement may not be assigned, nor may 
any rights or obligations thereunder be delegated, without the 
Government's prior approval, except as expressly permitted under 
subparagraph (b) of this clause.
    (xii) Confidential information. If this agreement includes a 
confidentiality clause, such clause is hereby amended to state that 
neither the agreement nor the contract price list, as applicable, 
shall be deemed ``confidential information.'' Issues regarding 
release of ``unit pricing'' will be resolved consistent with the 
Freedom of Information Act. Notwithstanding anything in this 
agreement to the contrary, the Government may retain any 
confidential information as required by law, regulation or its 
internal document retention procedures for legal, regulatory or 
compliance purposes; provided, however, that all such retained 
confidential information will continue to be subject to the 
confidentiality obligations of this agreement.
    (2) If any language, provision, or clause of this agreement 
conflicts or is inconsistent with the preceding paragraph (w)(1), 
the language, provisions, or clause of paragraph (w)(1) shall 
prevail to the extent of such inconsistency.


(End of clause)


0
10. Add section 552.232-39 to read as follows:


552.232-39  Unenforceability of Unauthorized Obligations (FAR 
DEVIATION).

    As prescribed in 513.302-5 and 532.706-3, insert the following 
clause:

Unenforceability of Unauthorized Obligations. (FAR DEVIATION) (Feb. 
2018)

    (a) Except as stated in paragraph (b) of this clause, when any 
supply or service acquired under this contract is subject to any 
commercial supplier agreement (as defined in 502.101) that includes 
any language, provision, or clause requiring the Government to pay 
any future fees, penalties, interest, legal costs or to indemnify 
the Contractor or any person or entity for damages, costs, fees, or 
any other loss or liability that would create an Anti-Deficiency Act 
violation (31 U.S.C. 1341), the following shall govern:
    (1) Any such language, provision, or clause is unenforceable 
against the Government.
    (2) Neither the Government nor any Government authorized end 
user shall be deemed to have agreed to such language, provision, or 
clause by virtue of it appearing in the commercial supplier 
agreement. If the commercial supplier agreement is invoked through 
an ``I agree'' click box or other comparable mechanism (e.g., 
``click-wrap'' or ``browse-wrap'' agreements), execution does not 
bind the Government or any Government authorized end user to such 
clause.
    (3) Any such language, provision, or clause is deemed to be 
stricken from the commercial supplier agreement.
    (b) Paragraph (a) of this clause does not apply to 
indemnification or any other payment by the Government that is 
expressly authorized by statute and specifically authorized under 
applicable agency regulations and procedures.


(End of clause)


0
11. Add section 552.232-78 to read as follows:


552.232-78  Commercial Supplier Agreements--Unenforceable Clauses.

    As prescribed in 513.302-5 and 532.706-3 insert the following 
clause:

Commercial Supplier Agreements-Unenforceable Clauses (Feb. 2018)

    When any supply or service acquired under this contract is 
subject to a commercial supplier agreement (as defined in 502.101), 
the following language shall be deemed incorporated into the 
commercial supplier agreement. As used herein, ``this agreement'' 
means the commercial supplier agreement:

[[Page 7636]]

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


(End of clause)

[FR Doc. 2018-03350 Filed 2-21-18; 8:45 am]
 BILLING CODE 6820-61-P