52.215-18 Reversion or Adjustment of Plans for Postretirement Benefits (PRB) Other Than Pensions
Source: FAR 52.215-18 on acquisition.gov
Contractors must notify the government of PRB plan changes and ensure the government receives its fair share if PRB assets revert to the contractor.
Overview
FAR 52.215-18 requires contractors to notify the government if they terminate or reduce postretirement benefit (PRB) plans (excluding pensions), and to ensure the government receives its equitable share if PRB assets revert to the contractor. The clause also mandates that contractors flow down these requirements to applicable subcontracts. The regulation aims to protect the government's financial interest in PRB plans funded through government contracts, ensuring that any reversion of assets or reduction in benefits is handled transparently and equitably.
Key Rules
- Notification Requirement
- Contractors must promptly notify the Contracting Officer in writing if they decide to terminate or reduce PRB plan benefits.
- Government’s Equitable Share
- If PRB assets revert to the contractor, the contractor must refund or credit the government its fair share, as outlined in FAR 31.205-6(o)(5). The method for recovery can be negotiated, but if no agreement is reached, the Contracting Officer decides.
- Subcontract Flowdown
- Contractors must include the substance of this clause in all subcontracts subject to FAR 15.408(j).
Responsibilities
- Contracting Officers: Ensure contractors comply with notification and equitable share requirements; designate recovery method if parties cannot agree.
- Contractors: Notify the government of PRB plan changes, refund/credit the government as required, and flow down the clause to applicable subcontracts.
- Agencies: Oversee compliance and enforce recovery of the government’s share.
Practical Implications
- This clause ensures the government is not disadvantaged if PRB plans are terminated or reduced, or if assets revert to the contractor. Contractors must be diligent in tracking PRB plan changes and communicating with the government. Failure to comply can result in financial penalties or contract disputes.
As prescribed in 15.408(j), insert the following clause:
Reversion or Adjustment of Plans for Postretirement Benefits (PRB) Other Than Pensions (July 2005)
(a) The Contractor shall promptly notify the Contracting Officer in writing when the Contractor determines that it will terminate or reduce the benefits of a PRB plan.
(b) If PRB fund assets revert or inure to the Contractor, or are constructively received by it under a plan termination or otherwise, the Contractor shall make a refund or give a credit to the Government for its equitable share as required by 31.205-6(o)(5) of the Federal Acquisition Regulation (FAR). When determining or agreeing on the method for recovery of the Government’s equitable share, the contracting parties should consider the following methods: cost reduction, amortizing the credit over a number of years (with appropriate interest), cash refund, or some other agreed upon method. Should the parties be unable to agree on the method for recovery of the Government’s equitable share, through good faith negotiations, the Contracting Officer shall designate the method of recovery.
(c) The Contractor shall insert the substance of this clause in all subcontracts that meet the applicability requirements of FAR 15.408(j).
(End of clause)