[Federal Register: August 28, 2000 (Volume 65, Number 167)]
[Proposed Rules]
[Page 52283-52286]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28au00-27]
[[Page 52283]]
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Part VII
Department of Defense
General Services Administration
National Aeronautics and Space Administration
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48 CFR Part 2, et al.
Federal Acquisition Regulation; Acquisition of Commercial Items;
Proposed Rule
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 12, 46, 52
[FAR Case 2000-303]
RIN 9000-AI88
Federal Acquisition Regulation; Acquisition of Commercial Items
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: Federal Acquisition Regulatory Council (FARC) is proposing to
amend the Federal Acquisition Regulation (FAR) to implement two
statutory changes relevant to the definition of ``Commercial Items'':
Section 803(a)(2)(D) of the Strom Thurmond National Defense
Authorization Act for Fiscal Year 1999 to revise the definition of
``commercial item'' to provide specific guidance on the meaning and
appropriate application of the term ``purposes other than government
purposes'' at 41 U.S.C. 403(12)(A); and Section 805 of the National
Defense Authorization Act for Fiscal Year 2000 to clarify the
definition of ``commercial item'' with respect to associated services.
In addition, the FAR Council is proposing other changes related to
the acquisition of commercial items, including conforming the coverage
regarding contractor liability for property loss or damage to
commercial practice.
This proposed rule revises and supersedes the proposed rule FAR
case 98-304, Commercial Items--Nongovernmental Purposes, published in
the Federal Register at 64 FR 40694, July 27, 1999. As a result,
proposed rule 98-304 is hereby withdrawn.
DATES: Interested parties should submit comments in writing on or
before October 27, 2000, to be considered in the formulation of a final
rule.
ADDRESSES: Submit written comments to: General Services Administration,
FAR Secretariat (MVRS), 1800 F Street, NW, Room 4035, ATTN: Laurie
Duarte, Washington, DC 20405.
Submit electronic comments via the Internet to: farcase.2000-
303@gsa.gov.
Please submit comments only and cite FAR case 2000-303 in all
correspondence related to this case.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS
Building, Washington, DC, 20405, at (202) 501-4755 for information
pertaining to status or publication schedules. For clarification of
content, contact Ms. Victoria Moss, Procurement Analyst, at (202) 501-
4764. Please cite FAR case 2000-303.
SUPPLEMENTARY INFORMATION:
A. Background
Federal Acquisition Regulation Part 12, Acquisition of Commercial
Items, was developed to implement Title VIII of the Federal Acquisition
Streamlining Act of 1994 (FASA) (Pub. L. 103-355). The regulations
became effective on October 1, 1995. The FAR Council has identified
several areas that need updating and clarification. This rule addresses
a number of those changes.
This proposed rule amends the definition of ``commercial item'' at
FAR 2.101 and the definition in the clause at FAR 52.202-1 to implement
Section 803(a)(2)(D) of the Strom Thurmond National Defense
Authorization Act for Fiscal Year 1999 (Pub. L. 105-261) and Section
805 of the National Defense Authorization Act for Fiscal Year 2000.
Paragraph (a) of the ``commercial item'' definition at FAR 2.101 is
revised to implement Section 803(a)(2)(D) of the Strom Thurmond
National Defense Authorization Act for Fiscal Year 1999 (Pub. L. 105-
261). Section 803(a)(2)(D) requires that the FAR be revised to provide
specific guidance on the meaning and appropriate application of the
term ``purposes other than Government purposes'' in the definition of
``commercial item'' at 41 U.S.C. 403(12)(A). This proposed language
revises and supercedes a proposed rule, published in the Federal
Register at 64 FR 40694, July 27, 1999, under FAR case 98-304, that was
issued to implement Section 803(a)(2)(D). Eight public comments were
received in response to the July 27, 1999, proposed rule. A majority of
the public comments were substantive and had a common theme. In
general, the public believed that the proposed rule exceeded the scope
of the statute, introduced ambiguous terms, created new criteria, and
narrowed the definition of a commercial item. This proposed rule
addresses those concerns by incorporating language from FASA into the
definition.
Paragraph (e) of the commercial item definition at FAR 2.101 has
been revised to implement Section 805 of the National Defense
Authorization Act for Fiscal Year 2000 (Pub. L. 106-65), (Clarification
of Definition of Commercial Items with Respect to Associated Services).
Section 805 clarifies that services ancillary to a commercial item,
such as installation, maintenance, repair, training, and other support
services, are considered a commercial service, regardless of whether
the service is provided by the same vendor or at the same time as the
item, if the service is provided contemporaneously to the general
public under similar terms and conditions. The FAR clause at 52.202-1,
Definitions, is similarly revised to make the new definition available
to contractors and subcontractors.
Paragraph (f) of the ``commercial item'' definition at FAR 2.101 is
revised to add definitions of ``Catalog Price'' and ``Market Price'' to
this rule to provide guidance for identifying services that may be
acquired under FAR Part 12.
Guidance is added at FAR 12.209 to help make contracting officers
aware of customary commercial terms and conditions related to the
determination of price reasonableness when pricing commercial items.
Additionally, the rule proposes to amend language in Part 46 to
reconcile it with the coverage regarding contractor liability for
property loss or damage with paragraph (p) in the clause at 52.212-4,
and to amend the clause at 52.212-4(p) to conform to commercial
practice (i.e., deleting the phrase ``or implied'' permits industry to
take advantage of the latitude provided by the Uniform Commercial Code
which allows sellers to exclude the application of an implied warranty
through the terms of an express warranty).
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 FAR Council does 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 changes made by the rule will primarily affect large
businesses that are more likely than small businesses to have separate
workforces for Federal contracts and to be ultimately liable for
consequential damages. It clarifies the definition of commercial item
to more closely parallel the statutory language and provide guidance
for identifying services that may be acquired under FAR Part 12. The
rule further conforms language regarding contractor liability to
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commercial practice. 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, 12, 46, 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
2000-303), 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, 12, 46, and 52
Government procurement.
Jeremy F. Olson,
Acting Director, Federal Acquisition Policy Division.
Therefore, DoD, GSA, and NASA propose that 48 CFR parts 2, 12, 46,
and 52 be amended as set forth below:
1. The authority citation for 48 CFR parts, 2, 12, 46, and 52
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 2--DEFINITIONS OF WORDS AND TERMS
2. In section 2.101, amend the definition ``Commercial item'' by
revising paragraphs (a), (e), and (f) to read as follows:
2.101 Definitions.
* * * * *
Commercial item means--
(a) Any item, other than real property, that is of a type
customarily used by the general public or by non-governmental entities
for purposes other than governmental purposes, and that--
(1) Has been sold, leased, or licensed to the general public; or
(2) Has been offered for sale, lease, or license to the general
public;
Purposes other than governmental purposes are those that are not
unique to a government.
* * * * *
(e) Installation services, maintenance services, repair services,
training services, and other services if--
(1) Such services are procured for support of an item referred to
in paragraphs (a), (b), (c), or (d) of this definition, regardless of
whether such services are provided by the same source or at the same
time as the item; and
(2) The source of such services provides similar services
contemporaneously to the general public under terms and conditions
similar to those offered to the Federal Government;
(f) Services of a type offered and sold competitively in
substantial quantities in the commercial marketplace based on
established catalog or market prices for specific tasks performed under
standard commercial terms and conditions.
This does not include services that are sold based on hourly rates
without a catalog or market price for a specific service performed. For
purposes of these services--
(1) Catalog Price means a price included in a catalog, price list,
schedule, or other form that is regularly maintained by the
manufacturer or vendor, is either published or otherwise available for
inspection by customers, and states prices at which sales are
currently, or were last, made to a significant number of buyers
constituting the general public; and
(2) Market Prices mean current prices that are established in the
course of ordinary trade between buyers and sellers free to bargain and
that can be substantiated through competition or from sources
independent of the offerors.
* * * * *
PART 12--ACQUISITION OF COMMERCIAL ITEMS
3. Revise section 12.209 to read as follows:
12.209 Determination of price reasonableness.
While the contracting officer must establish price reasonableness
in accordance with 13.106-3, 14.408-2, or subpart 15.4, as applicable,
when contracting by negotiation, the contracting officer should be
aware of customary commercial terms and conditions when pricing
commercial items. Commercial item prices are affected by factors that
include, but are not limited to, speed of delivery, length and extent
of warranty, limitations of seller's liability, quantities ordered,
length of the performance period, and specific performance
requirements. The contracting officer must ensure that contract terms,
conditions and prices are commensurate with the Government's need.
PART 46--QUALITY ASSURANCE
4. In section 46.801, revise the last sentence of paragraph (a) to
read as follows:
46.801 Applicability.
(a) * * * This subpart does not apply to commercial items.
* * * * *
46.804 [Reserved]
5. Remove and reserve section 46.804.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
6. In section 52.202-1, revise the date of the clause and
paragraphs (c)(1), (c)(5), and (c)(6) to read as follows:
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52.202-1 Definitions.
* * * * *
Definitions (Date)
* * * * *
(c) Commercial item means--
(1) Any item, other than real property, that is of a type
customarily used by the general public or by non-governmental
entities for purposes other than governmental purposes, and that--
(i) Has been sold, leased, or licensed to the general public; or
(ii) Has been offered for sale, lease, or license to the general
public:
Purposes other than governmental purposes are those that are not
unique to a government.
* * * * *
(5) Installation services, maintenance services, repair
services, training services, and other services if--
(i) Such services are procured for support of an item referred
to in paragraphs (c)(1), (2), (3), or (4) of this definition,
regardless of whether such services are provided by the same source
or at the same time as the item; and
(ii) The source of such services provides similar services
contemporaneously to the general public under terms and conditions
similar to those offered to the Federal Government;
(6) Services of a type offered and sold competitively in
substantial quantities in the commercial marketplace based on
established catalog or market prices for specific tasks performed
under standard commercial terms and conditions. This does not
include services that we sold based on hourly rates without a
catalog or market price for a specific service performed. For
purposes of these services--
(i) Catalog Price means a price included in a catalog, price
list, schedule, or other form that is regularly maintained by the
manufacturer or vendor, is either published or otherwise available
for inspection by customers, and states prices at which sales are
currently, or were last, made to a significant number of buyers
constituting the general public.
(ii) Market Prices mean current prices that are established in
the course of ordinary trade between buyers and sellers free to
bargain and that can be substantiated through competition or from
sources independent of the offerors.
* * * * *
52.212-4 [Amended]
7. In section 52.212-4, revise the date of the clause and remove
``or implied'' in paragraph (p).
[FR Doc. 00-21855 Filed 8-25-00; 8:45 am]
BILLING CODE 6820-EP-U