[Federal Register: July 26, 2005 (Volume 70, Number 142)]
[Proposed Rules]               
[Page 43107-43109]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26jy05-33]                         

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 5, 7, 14, 37, and 52

[FAR Case 2004-021]
RIN 9000-AK25

 
Federal Acquisition Regulation; OMB Circular A-76

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) are proposing to amend the 
Federal Acquisition Regulation (FAR) to provide language that is 
consistent with OMB Circular A-76 (Revised), Performance of Commercial 
Activities, dated May 29, 2003.

DATES: Interested parties should submit comments in writing on or 
before September 26, 2005 to be considered in the formulation of a 
final rule.

ADDRESSES: Submit comments identified by FAR case 2004-021 by any of 
the following methods:
     Federal eRulemaking Portal: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov. 

Follow the instructions for submitting comments.
     Agency Web Site: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.acqnet.gov/far/ProposedRules/proposed.htm.
 Click on the FAR case number to submit comments.     E-mail: farcase.2004-021@gsa.gov. Include FAR case 2004-

021 in the subject line of the message.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann 
Duarte, Washington, DC 20405.
    Instructions: Please submit comments only and cite FAR case 2004-
021 in all correspondence related to this case. All comments received 
will be posted without change to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.acqnet.gov/far/ProposedRules/proposed.htm
, including any personal information 

provided.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat at (202) 501-4755 
for information pertaining to status or publication schedules. For 
clarification of content, contact Mr. Gerald Zaffos, Procurement 
Analyst, at (202) 208-6091. Please cite FAR case 2004-021.

SUPPLEMENTARY INFORMATION:

A. Background

    OMB Circular A-76 (Revised), Performance of Commercial Activities, 
was issued in May 2003. The language at FAR Subpart 7.3, and elsewhere, 
reflects the policies contained in the previous version of the Circular 
and in Office of Federal Procurement Policy (OFPP) Policy Letter 92-1, 
Inherently Governmental Functions, which was superseded by the revised 
Circular.
    To implement the policies of the revised Circular, the Councils 
propose to delete the language at FAR Subpart 7.3 and replace it with 
clear and concise information that does not duplicate the Circular. 
Accordingly, the following changes are proposed:
     Delete the reference to a list of commercial activities 
contained in an attachment to the previous Circular A-76 in the 
definition of inherently governmental functions at FAR 2.101.
     Revise FAR 5.205(e) to reflect the procedure contracting 
officers must follow when issuing public announcements of public-
private competitions through the Government Point of Entry.
     Replace the reference to OFPP Policy Letter 91-2 in FAR 
7.105(b)(9) with a reference to Subpart 7.5.
     Delete the title and contents of FAR 7.300 and reserve the 
section for future use.
     Rename FAR 7.301 as Definitions, and state that the terms 
used in the subpart are defined by the Circular.
     Rename FAR 7.302 and concisely set forth the general 
policy purposes of the Circular. Consistent with section 326 of the 
Ronald W. Reagan National

[[Page 43108]]

Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108-375), 
specifically naming the Agency Tender Official as an interested party 
for purposes of filing a protest with the Government Accountability 
Office (GAO) under FAR 33.103. GAO published a final rule to amend its 
Bid Protest Regulations on April 14, 2005 (70 FR 19680).
     Add a statement at FAR 7.302(c) precluding the use of 
discussions to permit correction of deficiencies in sealed bids in 
public-private competitions. During the development of the rule, some 
members of the Councils questioned whether the ``special 
considerations'' language addressing the source selection process in 
Attachment B of Circular A-76 was intended to permit discussions to 
correct deficiencies under sealed bidding. Officials from the Office of 
Federal Procurement Policy (OFPP) advised the Councils that the 
Circular should not be read to permit discussions in sealed bidding. 
Rather, sealed bidding under A-76 is to be conducted consistent with 
FAR Part 14, as stated in paragraph D.5.a of Attachment B of Circular 
A-76. OFPP further clarified that the Circular's special considerations 
coverage on deficiencies was directed at negotiated source selection 
procedures, where the FAR provides for exchanges under FAR 15.306. To 
avoid confusion on this point, the Councils, with OFPP concurrence, 
propose to add a statement at FAR 7.302(c) to make clear that 
contracting officers shall not hold discussions to correct deficiencies 
when using sealed bidding in public-private competitions under OMB 
Circular A-76. This will ensure that the Circular and the FAR are 
applied in a consistent manner.
     Delete the contents of FAR 7.303, 7.304, 7.306, and 7.307 
and reserve FAR 7.303 and 7.304 for future use.
     Revise the language in FAR 7.305 to reflect the 
terminology used in the Circular.
     Amend FAR 7.500 to delete the reference to OFPP Policy 
Letter 92-1.
     Delete FAR 14.203-2(b) so that information dissemination 
requirements are consistent with the revised Circular.
     Revise FAR 37.503(c) to delete the reference to OFPP 
Policy Letter 92-1 and replace it with language stating that agency 
heads, before contracting for services, must ensure that specific 
policies are in place to ensure that inherently governmental functions 
are performed by Government personnel.
     Rename and revise the provision at 52.207-1 to reflect the 
current procedures that are to be followed in a standard public-private 
competition.
     Rename and revise the provision at 52.207-2 to reflect the 
current procedures that are to be followed in a streamlined public-
private competition.
     Amend the clause at 52.207-3, Right of First Refusal of 
Employment, to cover the group of people directly affected by public-
private competitions under new definitions in the Circular. The 
Circular uses the term ``Government personnel'' instead of the more 
narrow ``Government employees.'' The clause will be consistent with the 
Circular.
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    The Councils do not expect this proposed 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., 
because the rule does not impose any costs on either small or large 
businesses. An Initial Regulatory Flexibility Analysis has, therefore, 
not been performed. We invite comments from small businesses and other 
interested parties. The Councils will consider comments from small 
entities concerning the affected FAR Parts 2, 5, 7, 14, 37, and 52 in 
accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 601, et seq. (FAR case 
2004-021), in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
changes to the FAR do not impose information collection requirements 
that require the approval of the Office of Management and Budget under 
44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 2, 5, 7, 14, 37, and 52

    Government procurement.

    Dated: July 18, 2005.
Julia B. Wise,
Director, Contract Policy Division.
    Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 2, 5, 
7, 14, 37, and 52 as set forth below:
    1. The authority citation for 48 CFR parts 2, 5, 7, 14, 37, and 52 
is revised to read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 2--DEFINITIONS OF WORDS AND TERMS


2.101  [Amended]

    2. Amend section 2.101 in paragraph (b), in the definition 
``Inherently governmental function'', by removing the last sentence in 
paragraph (2).

PART 5--PUBLICIZING CONTRACT ACTIONS

    3. Amend section 5.205 by revising paragraph (e) to read as 
follows:


5.205  Special situations.

* * * * *
    (e) Public-private competitions under OMB Circular A-76. (1) The 
contracting officer shall make a formal public announcement for each 
streamlined or standard competition. The public announcement shall 
include, at a minimum, the agency, agency component, location, type of 
competition (streamlined or standard), activity being competed, 
incumbent service providers, number of Government personnel performing 
the activity, name of the Competitive Sourcing Official, name of the 
contracting officer, name of the Agency Tender Official, and projected 
end date of the competition.
    (2) The contracting officer shall announce the end of the 
streamlined or standard competition by making a formal public 
announcement of the performance decision. (See OMB Circular A-76.)
* * * * *

PART 7--ACQUISITION PLANNING

    4. Amend section 7.105 by revising paragraph (b)(9) to read as 
follows:


7.105  Contents of written acquisition plans.

* * * * *
    (b) * * *
    (9) Inherently governmental functions. Address the consideration 
given to Subpart 7.5.
* * * * *
    5. Revise Subpart 7.3 to read as follows:
Subpart 7.3--Contractor Versus Government Performance
Sec.
7.300 [Reserved]
7.301 Definitions.
7.302 Policy.
7.303 [Reserved]
7.304 [Reserved]
7.305 Solicitation provisions and contract clause.

[[Page 43109]]

7.300  [Reserved]


7.301  Definitions.

    Definitions of ``inherently governmental activity'' and other terms 
applicable to this subpart are set forth at Attachment D of the Office 
of Management and Budget Circular No. A-76 (Revised), Performance of 
Commercial Activities, dated May 29, 2003 (the Circular).


7.302  Policy.

    (a) The Circular provides that it is the policy of the Government 
to--
    (1) Perform inherently governmental activities with Government 
personnel; and
    (2) Subject commercial activities to the forces of competition.
    (b) As provided in the Circular, agencies shall--
    (1) Not use contractors to perform inherently governmental 
activities;
    (2) Conduct public-private competitions in accordance with the 
provisions of the Circular and, as applicable, these regulations;
    (3) Give appropriate consideration relative to cost when making 
performance decisions between agency and contractor performance in 
public-private competitions;
    (4) Consider the Agency Tender Official an interested party in 
accordance with 31 U.S.C. 3551 to 3553 for purposes of filing a protest 
at the Government Accountability Office; and
    (5) Hear contests in accordance with OMB Circular A-76, Attachment 
B, paragraph F.
    (c) When using sealed bidding in public-private competitions under 
OMB Circular A-76, contracting officers shall not hold discussions to 
correct deficiencies.


7.303  [Reserved]


7.304  [Reserved]


7.305  Solicitation provisions and contract clause.

    (a) The contracting officer shall, when soliciting offers and 
tenders, insert in solicitations issued for standard competitions the 
provision at 52.207-1, Notice of Standard Competition.
    (b) The contracting officer shall, when soliciting offers, insert 
in solicitations issued for streamlined competitions the provision at 
52.207-2, Notice of Streamlined Competition.
    (c) The contracting officer shall insert the clause at 52.207-3, 
Right of First Refusal of Employment, in all solicitations which may 
result in a conversion from in-house performance to contract 
performance of work currently being performed by the Government and in 
contracts that result from the solicitations, whether or not a public-
private competition is conducted. The 10-day period in the clause may 
be varied by the contracting officer up to a period of 90 days.


7.500  [Amended]

    6. Amend section 7.500 by removing the last sentence.

PART 14--SEALED BIDDING


14.203-2  [Amended]

    7. Amend section 14.203-2 by removing the paragraph designation 
``(a)'' and by removing paragraph (b).

PART 37--SERVICE CONTRACTING

    8. Amend section 37.503 by revising paragraph (c) to read as 
follows:


37.503  Agency-head responsibilities.

* * * * *
    (c) Specific procedures are in place before contracting for 
services to ensure that inherently governmental functions are performed 
by Government personnel; and
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    9. Revise the section heading and text of section 52.207-1 to read 
as follows:


52.207-1  Notice of Standard Competition.

    As prescribed in 7.305(a), insert the following provision:

NOTICE OF STANDARD COMPETITION (DATE)

    (a) This solicitation is part of a standard competition under 
Office of Management and Budget Circular No. A-76 (Revised), 
Performance of Commercial Activities, dated May 29, 2003 (hereafter 
``the Circular''), to determine whether to accomplish the specified 
work under contract or by Government performance.
    (b) The Government will evaluate private sector offers, the 
agency tender, and public reimbursable tenders, as provided in this 
solicitation and the Circular.
    (c) A performance decision resulting from this standard 
competition will be publicly announced in accordance with the 
Circular. If the performance decision favors a private sector 
offeror, a contract will be awarded. If the performance decision 
favors an agency or a public reimbursable tender, the Contracting 
Officer shall establish, respectively, either a Most Efficient 
Organization letter of obligation or a fee-for-service agreement, as 
those terms are defined in the Circular.
    (d) As provided in the Circular, directly interested parties may 
file contests, which are governed by the procedures in FAR 33.103. 
Until resolution of any contest, or the expiration of the time for 
filing a contest, only legal agents for directly interested parties 
shall have access to the certified standard competition form, the 
agency tender, and public reimbursable tenders.
    (End of provision)

    10. Revise section 52.207-2 to read as follows:


52.207-2  Notice of Streamlined Competition.

    As prescribed in 7.305(b), insert the following provision:

NOTICE OF STREAMLINED COMPETITION (DATE)

    (a) This solicitation is part of a streamlined competition under 
Office of Management and Budget Circular No. A-76 (Revised), 
Performance of Commercial Activities, dated May 29, 2003 (hereafter 
``the Circular''), to determine whether to accomplish the specified 
work under contract or by Government performance.
    (b) The Government will evaluate the cost of private sector and 
Agency or public reimbursable performance, as provided in this 
solicitation and the Circular.
    (c) A performance decision resulting from this streamlined 
competition will be publicly announced in accordance with the 
Circular. If the performance decision favors private sector 
performance, the Contracting Officer shall either award a contract 
or issue a competitive solicitation for private sector offers. If 
the performance decision favors Agency or public reimbursable 
performance, the Agency shall establish, respectively, either a 
letter of obligation or a fee-for-service agreement, as those terms 
are defined in the Circular.
    (End of provision)


52.207-3  [Amended]

    11. Amend section 52.207-3 by revising the date of the clause to 
read ``(DATE)''; and by removing from paragraphs (a) and (b) of the 
clause the word ``employees'' and adding ``personnel'' in its place.

[FR Doc. 05-14569 Filed 7-25-05; 8:45 am]

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