[Federal Register: July 21, 2004 (Volume 69, Number 139)]
[Proposed Rules]
[Page 43711-43714]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21jy04-32]
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Part IV
Department of Defense
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General Services Administration
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National Aeronautics and Space Administration
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48 CFR Parts 2, 7, 11, 16, 37, and 39
Federal Acquisition Regulation; Performance-Based Service Acquisition;
Proposed Rule
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 7, 11, 16, 37, 39
[FAR Case 2003-018]
RIN 9000-AK00
Federal Acquisition Regulation; Performance-Based Service
Acquisition
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule with request for comments.
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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) by: changing the terms
``performance-based contracting (PBC) and performance-based service
contracting (PBSC)'' to ``performance-based acquisition (PBA) or
performance-based service acquisition (PBSA)'' in areas of the FAR
where appropriate; adding applicable PBSA definitions clarifying the
order of precedence for requirements; modifying the regulation to
broaden the scope of PBA and give agencies more flexibility in applying
PBSA methods to contracts and orders of varying complexity and reduce
the burden of force-fitting contracts and orders into PBA, when it is
not appropriate.
DATES: Interested parties should submit comments in writing on or
before September 20, 2004, to be considered in the formulation of a
final rule.
ADDRESSES: Submit comments identified by FAR case 2003-018 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.2003-018@gsa.gov. Include FAR case 2003-
018 in the subject line of the message.
Fax: 202-501-4067.
Mail: General Services Administration, Regulatory
Secretariat (VR), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte,
Washington, DC 20405.
Instructions: Please submit comments only and cite FAR case 2003-
018 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 Ms. Julia Wise, Procurement Analyst,
at (202) 208-1168. Please cite FAR case 2003-018.
SUPPLEMENTARY INFORMATION:
A. Background
Since the 1980s, performance-based contracting (PBC) and
performance-based service contracting (PBSC) (now performance-based
acquisition (PBA) and performance-based service acquisition (PBSA)) has
been articulated in regulation, guidance, and policy. The intent has
always been for agencies to contract for results describing their needs
in terms of what is to be achieved, not how it is to be done. Law and
regulation established a preference for PBA.
There are many laws and policies that impact how PBA methods are
applied to contracts and orders. Among the most important of these
reforms are the Government Performance and Results Act of 1993, the
Federal Acquisition Streamlining Act of 1994 (FASA), and the Clinger-
Cohen Act of 1996, Section 821(a) of the Floyd D. Spence National
Defense Authorization Act for Fiscal Year 2001 (Pub. L. 106-398), and
Section 1431 and 1433 of the National Defense Authorization Act for
Fiscal Year 2004 (P.L. 108-136). All of these laws send an important
message about performance in federal programs and acquisitions and that
is that agencies should: (1) use PBA methods to the maximum extent
practicable when acquiring services, and (2) carefully select
acquisition and contract administration strategies, methods, and
techniques that best accommodate the requirements.
Over the last two decades, agencies have made moderate progress in
implementing PBA methods on service contracts but have experienced
difficulties in applying PBA techniques effectively. In April 2002, the
Office of Federal Procurement Policy (OFPP) convened an interagency
working group to establish a broader understanding of the requirements
of PBSA, and identify ways to increase agency use of PBSA. The group
focused their efforts on three areas of change:
(1) Modifying the Federal Acquisition Regulation (FAR) to give
agencies flexibility in applying PBSA;
(2) Modifying reporting requirements to ensure that PBSA is applied
appropriately; and
(3) Improving the quality, currency, and availability of guidance.
In the interim, General Accounting Office (GAO) conducted an audit
on performance-based service contracting and issued a report dated
September 2002, ``Contract Management: Guidance Needed for Using
Performance-Based Service Contracting (GAO-02-1049),'' that raised
concerns as to whether agencies have a good understanding of
performance-based contracting and how to take full advantage of it. The
audit findings stated, that some agency officials said they would like
better guidance on performance-based contracting, particularly with
respect to how it can be applied in more complex situations. It further
states that agency officials said that there is a need for better
criteria on which contracts should be labeled as performance-based.
In July 2003, OFPP issued a report, ``Performance-Based Service
Acquisition: Contracting for the Future,'' that captured the
interagency working group's PBA concerns, issues, and recommendations.
The report includes recommendations to change current regulations and
guidance to give agencies more flexibility in applying PBSA
effectively, appropriately, and consistently (see http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.acqnet.gov for
the complete report). Most of the recommended FAR revisions are adopted
in this proposed rule because the changes will make PBA more flexible,
thus increasing agency use of PBA methods on services contracts and
orders.
In addition, the OFPP is working with an interagency team to
incorporate current policy, regulations, and vetted samples into the
Governmentwide-PBSA guide, Seven Steps to PBSA (see http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.acqnet.gov for
the online guide); and interagency working group to develop appropriate
guidance for reporting PBAs in the Federal Procurement Data System-Next
Generation (FPDS-NG).
The proposed rule amends the FAR to modify--
FAR Part 2 to include the definitions ``performance work
statement'' and ``statement of objectives'' to support changes to FAR
Part 37;
FAR Parts 2, 7, 11, 16, 37 and 39 to incorporate the new
PBA and PBSA terms, where applicable; and
FAR Parts 11 and 37 to broaden the scope of PBSA, reduce
the burden of
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force-fitting requirements into PBAs when it does not apply, and give
agencies more flexibility in applying PBSA techniques to contracts and
orders of varying complexity.
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 this rule affects the Government's use of PBA methods on
service contracts and intends to give agencies more flexibility in
applying PBA methods to service contracts and orders of varying
complexity. An Initial Regulatory Flexibility Analysis has, therefore,
not been performed. The Councils invite comments from small businesses
and other interested parties. We will consider comments from small
entities concerning the affected FAR Parts 2, 7, 11, 16, 37, and 39 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
2003-018), 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, 7, 11, 16, 37, and 39
Government procurement.
Dated: July 13, 2004.
Laura Auletta,
Director, Contract Policy Division.
Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 2, 7,
11, 16, 37, and 39 as set forth below:
1. The authority citation for 48 CFR parts 2, 7, 11, 16, 37, and 39
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. Amend section 2.101 by revising the definition ``performance-
based contracting,'' and adding in alphabetical order, the definitions
``performance work statement'' and ``statement of work objectives'' to
read as follows:
2.101 Definitions.
* * * * *
Performance-based acquisition (PBA) means structuring all aspects
of an acquisition around the purpose of the work to be performed with
the contract or order requirements set forth in clear, specific, and
objective terms with measurable outcomes as opposed to either the
manner by which the work is to be performed or broad and imprecise
statements of work. For services, a performance-based acquisition is
commonly referred to as a performance-based service acquisition (PBSA).
Performance Work Statement (PWS) means a statement that identifies
the agency's requirements in clear, specific and objective terms that
describe technical, functional and performance characteristics.
* * * * *
Statement of Objectives (SOO) means a statement that identifies the
agency's high-level requirements by summarizing key agency objectives,
desired outcomes, or both.
* * * * *
PART 7--ACQUISITION PLANNING
3. Amend section 7.103 by revising paragraph (r) to read as
follows:
7.103 Agency-head responsibilities.
* * * * *
(r) Ensuring that knowledge gained from prior acquisitions is used
to further refine requirements and acquisition strategies. For
services, greater use of performance-based service acquisition (PBSA)
methods and, therefore, fixed-price contracts (see 37.602-4) should
occur for follow-on acquisitions.
* * * * *
4. Amend section 7.105 by revising the last sentences of the
introductory paragraph and paragraph (b)(4)(i); and by revising
paragraph (b)(6) to read as follows:
7.105 Contents of written acquisition plans.
* * * Acquisition plans for service contracts or orders must
describe the strategies for implementing PBSA methods or must provide
rationale for not using those methods (see Subpart 37.6).
* * * * *
(b) * * *
(4) Acquisition considerations. (i) * * * Provide rationale if a
PBSA will not be used or if a PBSA is contemplated on other than a
firm-fixed-price basis (see 37.102(a), 16.103(d), and 16.505(a)(3)).
* * * * *
(6) Product or service descriptions. Explain the choice of product
or service description types (including PBSA descriptions) to be used
in the acquisition.
* * * * *
PART 11--DESCRIBING AGENCY NEEDS
5. Amend section 11.101 by revising paragraph (a)(2) to read as
follows:
11.101 Order of precedence for requirements documents.
(a) * * *
(2) Performance or function-oriented documents.
* * * * *
PART 16--TYPES OF CONTRACTS
6. Amend section 16.505 by revising paragraph (a)(3) to read as
follows:
16.505 Ordering.
(a) * * *
(3) Performance work statements must be used to the maximum extent
practicable, if the contract or order is for services (see 37.102(a)
and 37.602-1).
* * * * *
PART 37--SERVICE CONTRACTING
7. Amend section 37.000 by revising the third sentence to read as
follows:
37.000 Scope of part.
* * * This part requires the use of performance-based service
acquisition (PBSA) to the maximum extent practicable and prescribes
policies and procedures for use of PBSA methods (see Subpart 37.6). * *
*
8. Amend section 37.102 by revising the introductory text of
paragraphs (a) and (a)(1) to read as follows:
37.102 Policy.
(a) Performance-based service acquisition (see Subpart 37.6) is the
preferred method for acquiring services (Public Law 106-398, section
821). When acquiring services, including those acquired under supply
contracts or orders, agencies must--
(1) Use performance-based service acquisition methods to the
maximum extent practicable, except for--
* * * * *
9. Revise subpart 37.6 to read as follows:
Subpart 37.6--Performance-Based Service Acquisition
Sec.
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37.600 Scope of subpart.
37.601 General.
37.602 Elements of a performance-based service acquisition.
37.602-1 Performance work statements (PWSs) and statements of
objectives (SOOs).
37.602-2 Quality assurance.
37.602-3 Selection procedures.
37.602-4 Contract type.
37.602-5 Follow-on and repetitive requirements.
Subpart 37.6--Performance-Based Service Acquisition
37.600 Scope of subpart.
This subpart prescribes policies and procedures for use of
performance-based service acquisition (PBSA) methods. PBSA includes
performance-based contracts and performance-based task orders.
37.601 General.
(a) The principal objective of PBSA is to obtain optimal
performance by expressing Government needs in terms of required
performance objectives and/or desired outcomes, rather than the method
of performance, to encourage industry-driven, competitive solutions.
(b) Solicitations for PBSA may use either a performance work
statement (PWS) or a statement of objectives (see 37.602-1).
(c) PBSA contracts or orders shall include--
(1) A PWS (see 37.602-1); and
(2) Measurable performance standards. These standards may be
objective (e.g., response time) or subjective (e.g., customer
satisfaction), but shall reflect the level of service required by the
Government to meet mission objectives. Standards shall enable
assessment of contractor performance to determine whether performance
objectives and/or desired outcomes are being met.
(d) PBSA contracts or orders may include performance incentives to
promote contractor achievement of the desired outcomes and/or
performance objectives articulated in the contract or order.
Performance incentives may be of any type, including positive,
negative, monetary, or non-monetary. Performance incentives, if used,
shall correspond to the performance standards set forth in the contract
or order.
37.602 Elements of a performance-based service acquisition.
37.602-1 Performance work statements (PWSs) and statements of
objectives (SOOs).
(a) A PWS may be prepared by the Government or resultfrom a SOO
prepared by the Government where the offeror proposes the PWS.
(b) A PWS shall describe the work in terms of the purpose of the
work to be performed rather than either ``how'' the work is to be
accomplished or the number of hours to be provided (see 11.002(a)(2)
and 11.101);
(c) When a SOO is used in lieu of a PWS in a solicitation, the SOO
shall, at a minimum, include the following information with respect to
the acquisition:
(1) Purpose.
(2) Scope or mission.
(3) Period and place of performance.
(4) Background.
(5) Performance objectives and/or desired outcomes.
(6) Any operating constraints.
37.602-2 Quality assurance.
(a) Quality assurance surveillance plans shall address the means
for assessing contractor accomplishment of the Government's performance
objectives and/or desired outcomes stated in the contract and
compliance with the appropriate inspection clauses. Agencies shall
develop quality assurance surveillance plans when acquiring services
(see 46.103 and 46.401(a)) or, as appropriate, rely on a contractor's
commercial quality assurance system (see 46.102). These plans shall
recognize the responsibility of the contractor (see 46.105) to carry
out its quality control obligations and shall contain measurable
inspection and acceptance criteria corresponding to the performance
standards contained in the contract. The quality assurance surveillance
plans shall focus on the level of performance required by the PWS,
rather than the methodology used by the contractor to achieve that
level of performance.
(b) The level of surveillance described in the plan should be
commensurate with the dollar value, risk, and complexity of the
acquisition and should utilize commercial practices to the maximum
extent practicable. For example, in some simplified acquisitions the
Government may decide that the inspection clauses in the contract or
order provide adequate means of surveillance, without requiring a
detailed quality assurance surveillance plan.
(c) Plans shall enable the contracting officer to take appropriate
action in accordance with the contract or order and 46.407, as
appropriate.
37.602-3 Selection procedures.
Agencies shall use competitive negotiations, when appropriate, to
ensure selection of services that offer the best value to the
Government, cost and other factors considered (see 15.304).
37.602-4 Contract type.
Agencies shall follow the order of precedence set forth in
37.102(a)(2) for selecting contract and order types. Fixed-price
contracts or orders are generally appropriate for services that can be
defined objectively and for which the risk of performance is manageable
(see Subpart 16.1).
37.602-5 Follow-on and repetitive requirements.
When acquiring services that previously have been provided by
contract or order, agencies shall rely on the experience gained from
the prior contract or order to incorporate PBSA methods to the maximum
extent practicable. This will facilitate the use of fixed-price
contracts or orders for such requirements for services. (See 7.105 for
requirement to address PBSA strategies in acquisition plans. See also
16.104(k)).
PART 39--ACQUISITION OF INFORMATION TECHNOLOGY
10. Amend 39.104 by revising paragraph (b) to read as follows:
39.104 Information technology services.
* * * * *
(b) Require the use of other than a performance-based service
acquisition (see Subpart 37.6).
[FR Doc. 04-16534 Filed 7-20-04; 8:45 am]