[Federal Register: June 6, 2000 (Volume 65, Number 109)]
[Rules and Regulations]
[Page 36023-36025]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06jn00-27]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 8 and 38
[FAC 97-18; FAR Case 1998-609 (98-609); Item V]
RIN 9000-AI48
Federal Acquisition Regulation; Federal Supply Schedules Small
Business Opportunities
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) have agreed on a final rule
amending the Federal Acquisition Regulation (FAR) to enhance the
participation of small business concerns under the Federal Supply
Schedules (FSS) program.
DATES: Effective Date: August 7, 2000.
Applicability Date: The FAR, as amended by this rule, is applicable
to solicitations issued on or after August 7, 2000.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS
Building, Washington, DC, 20405, (202) 501-4755, for information
pertaining to status or publication schedules. For clarification of
content, contact Ms. Linda Nelson, Procurement Analyst, at (202) 501-
1900. Please cite FAC 97-18, FAR case 1998-609.
SUPPLEMENTARY INFORMATION:
A. Background
The rule--
Amends FAR subpart 8.4 to encourage ordering offices to
consider the availability of small business concerns under the schedule
and encourages ordering offices to consider small businesses when
conducting evaluations before placing an order;
Amends FAR Part 38 to reaffirm that the General Services
Administration and agencies delegated the authority to establish a
Federal Supply Schedule must comply with all statutory and regulatory
requirements before a solicitation is issued; and
Revises the FSS guidance in accordance with the plain
language guidelines in a White House memorandum, Plain Language in
Government Writing, dated June 1, 1998.
DoD, GSA, and NASA published a proposed rule in the Federal
Register on September 14, 1999 (64 FR 49948). Thirty-two respondents
submitted public comments. We considered all comments and converted the
proposed rule to a final rule with minor changes.
This rule was not subject to Office of Management and Budget 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 prepared a Final Regulatory Flexibility Analysis
(FRFA) consistent with 5 U.S.C. 604. Because this rule may impact small
businesses, we are providing the FRFA in its entirety as follows:
This Final Regulatory Flexibility Analysis has been prepared
consistent with the criteria stated in 5 U.S.C. 604.
1. Statement of need for, and objectives of, the rule.
The purpose of this rule is to promote the growth of Federal
procurement sales opportunities for small business concerns under
the Federal Supply Schedules. The rule amends FAR Subparts 8.4 and
38.1 to encourage ordering offices to consider small business
concerns, if available, when conducting evaluations before placing
an order. The rule also recognizes the recent change made by the
Small Business Administration requiring inclusion of Federal Supply
Schedule orders in agencies' small business goals. Effective fiscal
year 1999, agencies must include the dollar value of orders expected
to be placed against the General Services Administration's (GSA)
Federal Supply Service (FSS) Schedules and report accomplishments
against those goals.
2. Summary of significant issues raised by the public comments
in response to the Initial Regulatory Flexibility Analysis (IRFA), a
summary of the assessment of the agency of such issues, and a
statement of any changes made in the proposed rule as a result of
such comments.
We received one public comment that specifically addressed the
Initial Regulatory Flexibility Analysis. The public comment
expressed concerns that the data presented
[[Page 36024]]
did not adequately detail the impact the rule will have on small
business concerns. Specifically, the respondent stated that although
well represented in the Federal Supply Schedule program, small
Federal Supply Schedule contractors cannot adequately compete with
large Federal Supply Schedule contractors. In response, it is
important to note that while sales under the program have increased
to large businesses, sales to small businesses have increased as
well. The Federal Supply Schedule program recognizes that in certain
instances small business may not have the capability to meet some
requirements of Federal agencies. However, the program permits
schedule contractors to team with other schedule contractors to
provide a solution to meet agency needs. A team can be any
combination of large and small businesses. Therefore, small
businesses can compete against large businesses by forming teams
that can provide supplies and services tailored to address agency
needs. The Federal Supply Schedules program is one of the most
successful Government procurement programs; a program where small
businesses can experience continuous growth.
We did not change the rule as a result of the comment. The rule
encourages ordering offices to consider the availability of small
business concerns under the schedule when conducting evaluations
before placing an order. The preference for awarding an order to a
small business ``when two or more items at the same delivered
price'' will continue to apply. This final rule is intended to be
beneficial by expanding small business consideration under Federal
Supply Schedule orders.
3. Description of, and an estimate of the number of, small
entities to which the rule will apply or an explanation of why no
such estimate is available.
This rule will apply to all small business concerns under the
Federal Supply Schedules program. Although the rule pertains to
internal Government procedures, it is intended to increase the
number of orders for supplies and services placed by the Government
with small business concerns. Based on ``Small Business 'Vital
Statistics''' found on SBA's homepage (http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.sba.gov/aboutsba/), SBA
estimated that there are approximately 23 million small businesses
in the United States that provide 47 percent of all sales in the
country. Clearly, not all of the businesses that are considered
small seek to participate in the Federal Supply Schedules program.
However, according to fiscal year 1999 statistical data maintained
by GSA's Federal Supply Service, small business concerns hold 5,705
national scope schedule contracts out of a total population of 7,431
national scope schedule contracts. Thus, approximately 77 percent of
the schedule contractors are small business concerns. In fiscal year
1999, small business schedule contractors received approximately
$3.2 billion or 31 percent of total schedule sales. This exceeds the
current Governmentwide small business goal. During fiscal year 1998,
4,900 small businesses held contracts out of a total of 7,000
national scope schedule contracts. Small business sales in 1998 were
$2.5 billion or 33 percent of total schedule sales. Between fiscal
year 1998 and fiscal year 1999, the number of small businesses
holding FSS contracts increased 6 percent and small business sales
increased 28 percent. The increased sales to small businesses total
almost \3/4\ of a billion dollars. SBA reports that in 1998 the
small business share of all Federal prime contract dollars dropped
to 20.6 percent. Clearly, small businesses are receiving a greater
market share under the schedules.
The General Services Administration (GSA) has radically
restructured the schedules program over the past 4 years. GSA has
streamlined both contracting and ordering processes for industry and
for Government users of the program. The changes made to the program
over the last 4 years provide small business vendors easy access to
the Federal community and provide users with streamlined procedures.
The pro-cedures give small business contractors the opportunity to
fairly compete within the broader universe of schedule contractors.
These changes ensure that ordering activities have the broad
discretion, and effective and flexible business solutions, to meet
agency requirements. The rule also supports continued increases in
small business sales.
4. Description of the projected reporting, recordkeeping, and
other compliance requirements of the rule, including an estimate of
the classes of small entities which will be subject to the
requirement and the type of professional skills necessary for
preparation of the report or record.
There are no projected reporting, recordkeeping, or other
compliance requirements.
5. Description of the steps the agency has taken to minimize the
significant economic impact on small entities consistent with the
stated objectives of applicable statutes, including a statement of
the factual, policy, and legal reasons for selecting the alternative
adopted in the final rule and why each one of the other significant
alternatives to the rule considered by the agency which affect the
impact on small entities was rejected.
We considered various alternative approaches, as well as the
adverse and beneficial impacts upon large businesses, small
business, and the Government. One alternative that we considered was
to apply small business set-asides to the FSS ordering process,
including mandatory application of the rule of two for orders at
certain dollar thresholds. Another alternative we considered was to
allow agencies, at their discretion, to limit consideration of
schedule orders to small business concerns. A third alternative we
considered was to set-aside a significant number of Federal Supply
Schedules for small businesses by applying the rule of two. However,
contracting officers under the FSS program already issue
solicitations that comply with the re-quirements of FAR Parts 5, 6,
and 19. Determinations regarding small business set-asides are made
during acquisition planning and solicitation preparation. All
schedule solicitations must be reviewed by the Small Business
Administration Procurement Center Representative (PCR) before
issuance. For the reasons provided, we considered these alternatives
inappropriate for adoption.
We determined that the alternatives offered by respondents to
the proposed rule would be detrimental to the effectiveness and
flexibility of the schedules program. We are converting the proposed
rule to a final rule because it enhances the participation of small
business in the Federal Supply Schedules program and provides a
mechanism to increase the sales to small business under the FSS
program.
The rule encourages ordering offices to consider the
availability of small business concerns under the schedule and when
conducting evaluations before placing an order. We expect sales to
small businesses under the Federal Supply Schedules to increase
because agencies are encouraged to include small business when
conducting evaluations for an order and because agencies may credit
small business schedule orders towards agency small business goals.
The rule also ensures that all sectors of the economy may
participate in the Federal Supply Schedules program. After we
publish the final rule, we will track sales to verify if this rule
has a positive impact on small business.
The FAR Secretariat has submitted a copy of the FRFA to the
Chief Counsel for Advocacy of the Small Business Administration.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the 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 8 and 38
Government procurement.
Dated: May 26, 2000.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 8 and 38 as set
forth below:
1. The authority citation for 48 CFR parts 8 and 38 continues to
read as follows:
Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES
2. Revise section 8.402 to read as follows:
8.402 Applicability.
Procedures in this subpart apply to orders placed against Federal
Supply Schedules. Occasionally, GSA may establish special ordering
procedures. The affected Federal Supply Schedules will outline these
procedures.
3. In section 8.404--
a. Revise paragraph (a);
[[Page 36025]]
b. Remove from paragraph (b)(1) ``Ordering Offices can place'' and
add ``Place'' in its place;
c. Revise the introductory text of paragraph (b)(2);
d. Revise paragraph (b)(2)(i);
e. Remove from the last sentence of the introductory text of
paragraph (b)(3) ``, ordering offices shall'';
f. Revise paragraph (b)(3)(i);
g. Revise the first sentence in paragraph (b)(3)(iii); and
h. Revise paragraphs (b)(4), (b)(5), and (b)(6) to read as follows:
8.404 Using schedules.
(a) General. Parts 13 and 19 do not apply to orders placed against
Federal Supply Schedules, except for the provision at 13.303-2(c)(3).
Orders placed against a Multiple Award Schedule (MAS), using the
procedures in this subpart, are considered to be issued using full and
open competition (see 6.102(d)(3)). Therefore, ordering offices need
not seek further competition, synopsize the requirement, make a
separate determination of fair and reasonable pricing, or consider
small business programs. GSA has already determined the prices of items
under schedule contracts to be fair and reasonable. By placing an order
against a schedule using the procedures in this section, the ordering
office has concluded that the order represents the best value and
results in the lowest overall cost alternative (considering price,
special features, administrative costs, etc.) to meet the Government's
needs.
(b) * * *
(2) Orders exceeding the micro-purchase threshold but not exceeding
the maximum order threshold. Place orders with the schedule contractor
that can provide the supply or service that represents the best value.
Before placing an order, consider reasonably available information
about the supply or service offered under MAS contracts by using the
``GSA Advantage!'' on-line shopping service, or by reviewing the
catalogs or pricelists of at least three schedule contractors (see
8.404(b)(6)). Select the delivery and other options available under the
schedule that meet the agency's needs. When selecting the supply or
service representing the best value, the ordering office may consider--
(i) Special features of the supply or service required for
effective program performance;
* * * * *
(3) * * *
(i) Review additional schedule contractors' catalogs or pricelists,
or use the ``GSA Advantage!'' on-line shopping service;
* * * * *
(iii) After seeking price reductions, place the order with the
schedule contractor that provides the best value and results in the
lowest overall cost alternative (see 8.404(a)). * * *
(4) Blanket purchase agreements (BPAs). Agencies may establish BPAs
(see 13.303-2(c)(3)) when following the ordering procedures in this
subpart. All schedule contracts contain BPA provisions. Ordering
offices may use BPAs to establish accounts with contractors to fill
recurring requirements. BPAs should address ordering frequency,
invoicing, discounts, and delivery locations and times.
(5) Price reductions. In addition to the circumstances in paragraph
(b)(3) of this section, there may be other reasons to request a price
reduction. For example, seek a price reduction when the supply or
service is available elsewhere at a lower price or when establishing a
BPA to fill recurring requirements. The potential volume of orders
under BPAs, regardless of the size of the individual order, offer the
opportunity to secure greater discounts. Schedule contractors are not
required to pass on to all schedule users a price reduction extended
only to an individual agency for a specific order.
(6) Small business. When conducting evaluations and before placing
an order, consider including, if available, one or more small, women-
owned small, and/or small disadvantaged business schedule
contractor(s). Orders placed against the schedules may be credited
toward the ordering agency's small business goals. For orders exceeding
the micro-purchase threshold, ordering offices should give preference
to the items of small business concerns when two or more items at the
same delivered price will satisfy the requirement.
* * * * *
PART 38--FEDERAL SUPPLY SCHEDULE CONTRACTING
4. Revise section 38.101 to read as follows:
38.101 General.
(a) The Federal Supply Schedule program, pursuant to 41 U.S.C.
259(b)(3)(A), provides Federal agencies with a simplified process of
acquiring commonly used supplies and services in varying quantities
while obtaining volume discounts. Indefinite-delivery contracts
(including requirements contracts) are awarded using competitive
procedures to commercial firms. The firms provide supplies and services
at stated prices for given periods of time, for delivery within a
stated geographic area such as the 48 contiguous states, the District
of Columbia, Alaska, Hawaii, and overseas. The schedule contracting
office issues Federal Supply Schedules that contain information needed
for placing orders.
(b) Each schedule identifies agencies that are required to use the
contracts as primary sources of supply.
(c) Federal agencies not identified in the schedules as mandatory
users may issue orders under the schedules. Contractors are encouraged
to accept the orders.
(d) Although GSA awards most Federal Supply Schedule contracts, it
may authorize other agencies to award schedule contracts and publish
schedules. For example, the Department of Veterans Affairs awards
schedule contracts for certain medical and nonperishable subsistence
items.
(e) When establishing Federal Supply Schedules, GSA, or an agency
delegated that authority, is responsible for complying with all
applicable statutory and regulatory requirements (e.g., Parts 5, 6, and
19). The requirements of Parts 5, 6, and 19 apply at the acquisition
planning stage prior to issuing the schedule solicitation and do not
apply to orders and BPAs placed under resulting schedule contracts (see
8.404).
[FR Doc. 00-13821 Filed 6-1-00; 4:00 pm]
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