Common use of Comment Clause in Contracts

Comment. In opposing the proposed rule, one respondent also asserted that the use of lump-sum payments for travel and temporary lodging related relocation costs ‘‘is not a predominant industry practice at this time.’’ The respondent explained that it recently reviewed the current relocation policies in place at four large contractor locations and found that three of these four contractors use a single corporate- wide policy for their employee relocation reimbursement programs. Even though one of these three companies claims it is a predominantly commercial company and the other two companies also have a substantial commercial business base, the respondent pointed out that none of the three has established a lump-sum option for its commercial business segments. In addition, the respondent cited an August 2003 news release from a relocation management firm which stated that only 30 percent of the companies it had recently surveyed said they were using lump-sums to cover travel and temporary lodging expenses. Finally, the respondent pointed out that it had recently been advised by a relocation management firm that, shortly before Dr. Xxxx Xxxxx left the Department of Defense, he ‘‘shut down’’ an effort by the relocation management firm and the Defense Integrated Travel and Relocation Solutions (DITRS) office to put together a plan for using lump- sums for DoD civilian relocations. After reviewing the responses to the October 24, 2002, Federal Register Notice of Request for Comments (67 FR 65468), a respondent questioned ‘‘whether the FAR Council has obtained sufficient information to support its assertion that it is now common commercial practice to reimburse relocating employees on a lump-sum basis for their house-hunting, final move, and temporary lodging expenses.’’ The respondent observed that of the eight respondents who responded to that notice, one respondent’s letter gave no specifics on the number of companies using lump- sum reimbursements, and another respondent stated that its 2001 survey showed that 55 companies out of 109 contacted were using lump-sum reimbursements. In supporting the proposed rule, one respondent agreed ‘‘with the Councils’ statement that the use of lump-sum payments is a common commercial practice’’ and expressed the belief ‘‘that the proposed rule will help align relocation cost reimbursement policies with commercial best practices.’’ Another respondent also agreed that the proposed changes ‘‘are in keeping with current commercial business practice’’ and explained that ‘‘beginning in 1993 with the Revenue Reconciliation Act, many companies moved to lump-sum allowances for what became taxable reimbursements to the home-finding, temporary living, and final move portions of relocation policy.’’ The respondent concluded with its opinion that ‘‘the recommended revision will enable Government contractors to implement this best practice and take advantage of a tested and proven process efficiency that has been an accepted part of the commercial sector’s relocation programs for over a decade.’’ lump-sum reimbursements for selected relocation expenses may not be the predominant commercial practice at this time, the Councils believe there is ample evidence that the use of such payments is a common and growing commercial practice. The survey data cited by the respondents support this assessment. In addition, a relocation management firm that has been in business for more than 70 years stated at the February 6, 2003, public meeting and in its subsequent public comments that lump-sum reimbursement is now a common commercial practice for house- hunting, final move, and temporary lodging costs. The Councils do not find it surprising that contractors who wish to maintain a single, corporate-wide policy for reimbursing relocation costs continue to apply a policy which parallels the current cost principle, even though they may have significant commercial business. The revised relocation cost principle will give such firms an additional option for the first time on Government contracts that could well become their corporate-wide standard in the future. Finally, it is the Councils’ understanding that DoD terminated its two-year initiative to reengineer relocation policies and procedures and disbanded the DITRS office which oversaw that effort due to a lack of funds and interest from the military departments. And while the relocation management firm stated during its presentation at the February 6, 2003, public meeting that the Federal Deposit Insurance Corporation is currently using lump-sum reimbursements for its employees’ relocation costs, this appears to be an exception within the Federal Government. However, even if lump-sum reimbursements for Federal employee relocation expenses are relatively rare, the purpose of this case is to recognize a common and growing commercial best practice in the relocation cost principle that should benefit both contractors and the Government.

Comment. In opposing Seller’s counsel may argue that an opinion as to due incorporation or due organi- zation, valid existence and good standing is inappropriate in an asset sale because the proposed ruleselling company itself is not being sold. This opinion is commonly given in a variety of transactions other than the sale of a company, one respondent also asserted that however, and the use buyer would be justifiably concerned about the effectiveness of lump-sum payments for travel and temporary lodging related relocation costs the transfer of the Assets if the seller was not validly existing as a corporation. Buyers often accept a more limited corporate status opinion, such as ‘‘is a corporation validly existing,’’ rather than the broader ‘‘duly incorporated’’ or ‘‘duly organized’’ opinion more appropriate in a stock purchase agreement. In addition to the opinion that Seller has the ‘‘corporate power and authority to execute and deliver the Agreement and consumate the Contemplated Transaction,’’ buyers sometimes ask for an opinion that the selling corporation has the corporate power and authority ‘‘to own its properties and engage in its business as presently conducted . . . ’’ Although this opinion is usually relatively easy to give, it technically is not necessary in asset sales and often is omitted at the request of the seller’s counsel. Buyers sometime request an opinion from the seller’s counsel that the selling com- pany is qualified to do business as a predominant industry practice at foreign corporation in all jurisdictions where the nature of its business or the location of its assets would require such qualification. Giving this time.’’ The respondent explained that it recently reviewed the current relocation policies in place at four large contractor locations and found that three of these four contractors use a single corporate- wide policy for their employee relocation reimbursement programs. Even though one of these three companies claims opinion is strongly discouraged because it is time consuming, difficult and largely fact driven. Certain Guidelines for the Negotiation and Preparation of Third- Party Legal Opinions, published in the Third-Party Legal Opinion Report along with the Accord, concluded that a predominantly commercial comprehensive foreign qualification opinion will ‘‘gen- erally not be cost-effective’’ and may be an inappropriate request. Sometimes the for- mulation that the selling company and is qualified in all jurisdictions ‘‘where the other two companies also failure to so qualify would have a substantial commercial business basematerial adverse effect on Seller and its operations’’ is re- quested as a compromise, the respondent pointed out that none of the three has established a lump-sum option for its commercial business segments. In addition, the respondent cited an August 2003 news release from a relocation management firm which stated that only 30 percent of the companies it had recently surveyed said they were using lump-sums to cover travel and temporary lodging expenses. Finally, the respondent pointed out that it had recently been advised by a relocation management firm that, shortly before Dr. Xxxx Xxxxx left the Department of Defense, he ‘‘shut down’’ an effort by the relocation management firm and the Defense Integrated Travel and Relocation Solutions (DITRS) office to put together a plan for using lump- sums for DoD civilian relocations. After reviewing the responses to the October 24, 2002, Federal Register Notice of Request for Comments (67 FR 65468), a respondent questioned ‘‘whether the FAR Council has obtained sufficient information to support its assertion that but it is now common commercial practice inappropriate for lawyers to reimburse relocating employees on a lump-sum basis for their house-hunting, final movemake materiality judg- ments, and temporary lodging expenses.’’ The respondent observed that of the eight respondents who responded to that notice, one respondent’s letter gave no specifics on the number of companies using lump- sum reimbursements, and another respondent stated that its 2001 survey showed that 55 companies out of 109 contacted were using lump-sum reimbursements. In supporting the proposed rule, one respondent agreed ‘‘with the Councils’ statement that the use of lump-sum payments this opinion is a common commercial practice’’ and expressed the belief ‘‘that the proposed rule will help align relocation cost reimbursement policies with commercial best practices.’’ Another respondent also agreed that the proposed changes ‘‘are in keeping with current commercial business practice’’ and explained that ‘‘beginning in 1993 with the Revenue Reconciliation Act, many companies moved to lump-sum allowances for what became taxable reimbursements to the home-finding, temporary living, and final move portions of relocation policy.’’ The respondent concluded with its opinion that ‘‘the recommended revision will enable Government contractors to implement this best practice and take advantage of a tested and proven process efficiency that has been an accepted part of the commercial sector’s relocation programs for over a decade.’’ lump-sum reimbursements for selected relocation expenses may not be the predominant commercial practice at this time, the Councils believe there is ample evidence that the use of such payments is a common and growing commercial practicediscouraged. The survey data cited by the respondents support this assessment. In addition, a relocation management firm that has been preferred alternative is to address qualification in business for more than 70 years stated at the February 6, 2003, public meeting and in its subsequent public comments that lump-sum reimbursement is now a common commercial practice for house- hunting, final move, and temporary lodging costs. The Councils do not find it surprising that contractors who wish to maintain a single, corporate-wide policy for reimbursing relocation costs continue to apply a policy which parallels the current cost principle, even though they may have significant commercial business. The revised relocation cost principle will give such firms an additional option for the first time on Government contracts that could well become their corporate-wide standard specifically identified jurisdictions as in the future. Finally, it is the Councils’ understanding that DoD terminated its two-year initiative to reengineer relocation policies and procedures and disbanded the DITRS office which oversaw that effort due to a lack of funds and interest from the military departments. And while the relocation management firm stated during its presentation at the February 6, 2003, public meeting that the Federal Deposit Insurance Corporation is currently using lump-sum reimbursements for its employees’ relocation costs, this appears to be an exception within the Federal Government. However, even if lump-sum reimbursements for Federal employee relocation expenses are relatively rare, the purpose of this case is to recognize a common and growing commercial best practice in the relocation cost principle that should benefit both contractors and the Governmentform opinion above.