[Federal Register Volume 77, Number 42 (Friday, March 2, 2012)]
[Rules and Regulations]
[Pages 12927-12929]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-4485]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 5, 8, 16, 18, and 38
[FAC 2005-56; FAR Case 2007-012; Item III; Docket 2011-0081, Sequence
1]
RIN 9000-AL93
Federal Acquisition Regulation: Requirements for Acquisitions
Pursuant to Multiple-Award Contracts
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: DoD, GSA, and NASA have adopted as final, with changes, an
interim rule amending the Federal Acquisition Regulation (FAR) to
implement a section of the Duncan Hunter National Defense Authorization
Act for Fiscal Year 2009 to enhance competition in the purchase of
supplies and services by all executive agencies under multiple-award
contracts.
DATES: Effective Date: April 2, 2012.
FOR FURTHER INFORMATION CONTACT: Mr. William Clark, Procurement
Analyst, at 202-219-1813 for clarification of content. For information
pertaining to status or publication schedules, contact the Regulatory
Secretariat at 202-501-4755. Please cite FAC 2005-56, FAR Case 2007-
012.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA published an interim rule in the Federal
Register at 76 FR 14548 on March 16, 2011, to implement section 863 of
the Duncan Hunter National Defense Authorization Act for Fiscal Year
2009 (Pub. L. 110-417), enacted on October 14, 2008. Section 863
mandated the development and publication of regulations in the FAR to
enhance competition for the award of orders placed under multiple-award
contracts. Section 863 specified enhancements that include--
Strengthening competition rules for placing orders under
the Federal Supply Schedules (FSS) program and other multiple-award
contracts to ensure both the provision of fair notice to contract
holders and the opportunity for contract holders to respond (similar to
the procedures implemented for section 803 of the National Defense
Authorization Act for Fiscal Year 2002 (Pub. L. 107-107)); and
Providing notice in FedBizOpps of certain orders placed
under multiple-award contracts, including FSS.
For each individual purchase of supplies or services in excess of
the simplified acquisition threshold (SAT) that is made under a
multiple-award contract, section 863 requires the provision of fair
notice of intent to make a purchase (including a description of the
work to be performed and the basis on which the selection will be made)
to all contractors offering such supplies or services under the
multiple-award contract. In addition, the statute requires that all
contractors responding to the notice be afforded a fair opportunity to
make an offer and have that offer fairly considered by the purchasing
official. A notice may be provided to fewer than all contractors
offering such supplies or services under a multiple-award contract if
the notice is provided to as many contractors as practicable. When
notice is provided to fewer than all the contractors, a purchase cannot
be made unless--
Offers were received from at least three qualified
contractors; or
A contracting officer determines in writing that no
additional qualified contractors were able to be identified despite
reasonable efforts to do so.
These requirements may be waived on the basis of a justification,
including a written determination identifying the statutory basis for
an exception to fair opportunity, that is prepared and approved at the
levels specified in the FAR.
In considering the regulatory changes to strengthen the use of
competition in task and delivery-order contracts, DoD, GSA, and NASA
made changes consistent with the general competition principles
addressed in the President's March 4, 2009, Memorandum on Government
Contracting (available at http://www.whitehouse.gov/the_press_office/Memorandum-for-the-Heads-of-Executive-Departments-and-Agencies-Subject-Government), while still preserving the efficiencies of these contract
vehicles. For this reason, the rule addressed several issues that were
not expressly addressed in section 863, such as competition for the
establishment and placement of orders under FSS blanket purchase
agreements (BPAs).
The FAR changes are applicable to task and delivery orders placed
against multiple-award contracts including FSS and BPAs awarded under
FSS pursuant to FAR subpart 8.4, and indefinite-delivery/indefinite-
quantity contracts awarded pursuant to subpart 16.5. They do not apply
to BPAs awarded pursuant to part 13.
Seven respondents submitted comments on the interim rule.
II. Discussion and Analysis
The Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (the Councils) reviewed the comments in the
development of the final rule. Respondents submitted comments covering
the following nine categories: (1) Conformance with the Small Business
Jobs Act; (2) The $103 million threshold reference; (3) Posting
requirements; (4) Eliminate distinctions between single-award and
multiple-award BPAs; (5) Competition requirements for establishing BPAs
and allowing flexibility in establishing BPA ordering procedures; (6)
BPA requirements and health-care programs; (7) Competition above the
SAT is a
[[Page 12928]]
burden; (8) Seeking price reduction is inconsistent with competition;
and (9) Modify FSS contracts to change the Maximum Order Threshold
(MOT) to the SAT. A discussion of the comments and the changes made to
the rule as a result of those comments are provided as follows:
A. Summary of Significant Changes
FAR 8.405-3(a)(7)(v) was modified to correct an
inadvertent error regarding the threshold amount. The amount should
have read $103 million in the interim rule. The amount has been
corrected to read $103 million in the final rule to reflect inflation.
FAR 8.405-3(c)(3) has been revised to add at the end of
paragraph (3) ``The ordering activity is responsible for considering
the level of effort and the mix of labor proposed to perform a specific
task being ordered, and for determining that the total price is
reasonable through appropriate analysis techniques, and documenting the
file accordingly.'' This was added to ensure the price of an order
requiring a statement of work is being evaluated when placed under a
BPA with hourly rate services. This language is also consistent with
the evaluation of orders requiring a statement of work in FAR 8.405-
2(d).
FAR 8.405-3(e) has been revised to remove paragraph (3),
``If a single-award BPA is established, the ordering activity
contracting officer's annual determination must be approved by the
ordering activity's competition advocate prior to the exercise of an
option to extend the term of the BPA.'' This was determined to be too
stringent a requirement for the exercise of an option, which is
generally within a contracting officer's authority.
B. Analysis of Public Comments
1. Conformance With the Small Business Jobs Act
Comment: One respondent asked how the interim rule reconciles with
the requirements of the Small Business Jobs Act of 2010, part III,
section 1331 (Reservation of Prime Contracts for Small Businesses).
Response: This rule is not impacted by the requirements of section
1331 of the Small Business Jobs Act of 2010.
2. The $103 Million Threshold
Comment: Two respondents made reference to the $100 million
threshold at FAR 8.405-3(a)(7)(v). They stated that it should be $103
million to be consistent with FAR 8.405-3(a)(3)(ii).
Response: The threshold should be $103 million in all places. The
correction has been made to the FAR text.
3. Posting Requirements
Comment: Two respondents submitted comments on the posting
requirements. One of the respondents asked what purpose is served by
posting fair opportunity exemptions to the FedBizOpps Web site. The
respondent noted that fair opportunity exemptions are posted after
orders are placed and will be viewed by many parties that do not hold
contracts under the relevant multiple-award acquisitions. The
respondent suggested that this practice may result in needless
challenges and litigation by parties that do not have standing to
challenge the exemptions. The other respondent stated that it seemed
that the posting requirements provided at FAR 5.301(d) are exactly the
same as those provided at FAR 5.406. The respondent suggested that it
seemed unnecessary to list the requirement in two different places in
the FAR. As such, the respondent recommended removing FAR 5.406.
Response: The requirement to post exceptions to fair opportunity to
FedBizOpps is required by section 863 of the Duncan Hunter National
Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-417).
Further, regarding the duplicative posting requirements at FAR 5.301(d)
and FAR 5.406, the Councils concluded that the multiple references
would provide for clarity in implementation. The Councils also
concluded that posting the justifications for exceptions to the
competition requirements provides transparency into agency purchases.
4. Eliminate Distinctions Between Single-Award and Multiple-Award BPAs
Comment: One respondent stated that FAR 8.405-3(a) of the interim
rule should be revised to place single-award BPAs on par with multiple-
award BPAs. The respondent indicated that FAR 8.405-3 does not limit
multiple-award BPAs to a one-year base and up to four one-year options,
as required for single-award BPAs, nor does it require approval of the
competition advocate to extend a multiple-award BPA. The respondent
further stated the regulation should be revised to provide that the
decision to use a single-award BPA versus a multiple-award BPA be
documented and addressed in the acquisition plan for the BPA with the
factors to be considered.
Response: The rule includes a preference for multiple-award BPAs,
but does not prohibit the establishment of a single-award BPA. A
single-award BPA is appropriate in certain circumstances. The multiple-
award preference is intended to facilitate and enhance competition
involving orders placed under FSS BPAs. The Councils concluded that the
limit on the duration for single-award BPAs supports the preference for
multiple-award BPAs and competition. However, the requirement for
competition advocate approval at the annual review of a single-award
BPA has been removed for the final rule. The contracting officer's
determination whether to establish a single-award BPA or multiple-award
BPAs must be documented in the file in accordance with FAR 8.405-
3(a)(7).
5. Competition Requirements for Establishing BPAs and Allowing
Flexibility in Establishing BPA Ordering Procedures
Comment: One respondent recommended that the interim rule be
revised to provide greater flexibility in the establishment of
multiple-award BPAs and the placement of orders under BPAs. The
respondent noted that the rules previously allowed the agency
establishing a BPA to establish its own BPA ordering procedures, and
that this allowed agencies such as the Department of Veterans Affairs
and the Department of Defense Enterprise Software Initiative to craft
flexible ordering procedures that made good business sense under their
unique circumstances.
Response: This rule provides flexibility in the establishment of
FSS BPAs and the placement of orders under FSS BPAs. The rule includes
the flexibility to justify an exception to the competition requirements
at either the FSS BPA or order level. The procedures provided in the
rule for the establishment of FSS BPAs and placement of the orders
thereunder are intended to enhance competition. This is consistent with
section 863 of the Duncan Hunter National Defense Authorization Act for
Fiscal Year 2009 (Pub. L. 110-417) and the general competition
principles addressed in the President's March 4, 2009, Memorandum on
Government Contracting, while still preserving the efficiencies
provided by these contract vehicles.
6. BPA Requirements and Health-Care Programs
Comment: One respondent recommended that Schedules covering drugs
and medical supplies be excluded from the rule.
Response: The statute does not allow for an exclusion of FSS
covering drugs and medical supplies.
[[Page 12929]]
7. Competition Above the SAT Is a Burden
Comment: Two respondents thought that competition above the SAT
level is too burdensome. One respondent recommended that the threshold
at which formal competition procedures are triggered should be the
greater of the MOT or SAT. The respondent also suggested that this rule
will increase administrative burden and cost to both the Government and
FSS holders. Another respondent noted that multiple-award contracts are
designed to offer agencies a streamlined mechanism for acquiring
services and supplies. The respondent stated that the procedures set
forth in the interim rule would significantly increase the time
required for placing orders in situations where a valid reason exists
to utilize an exception to the fair opportunity requirement. According
to the respondent, it is not clear that adding these requirements will
have the intended effect of meaningfully increasing competition under
multiple-award contracts.
Response: The use of the SAT as the threshold is required by
statute (section 863 of the Duncan Hunter National Defense
Authorization Act for Fiscal Year 2009 (Pub. L. 110-417)).
8. Seeking Price Reduction Is Inconsistent With Competition
Comment: One respondent stated that the requirement that
contracting officers seek a price reduction when placing an order over
the SAT is inconsistent with the requirement that purchase orders over
the SAT be competed. The FAR is built, in part, on the concept that
competition drives a fair and reasonable price. As such, it is unclear,
from the respondent's perspective, why contracting officers should be
required to seek a further price reduction after a competitive
procurement is awarded because the successful contractor has already
provided its best price in order to win the procurement. The respondent
argued that this requirement will likely result in contractors
preparing their original price list in anticipation of multiple layers
of price negotiation during the competitive procurement process and
thereafter.
Response: Pursuant to the Government Accountability Office (GAO)
report number GAO-09-792 entitled ``Agencies are not Maximizing
Opportunities for Competition or Savings Under BPAs Despite Significant
Increase in Usage,'' requesting a price reduction is not inconsistent
with competition. A contracting officer can meet this requirement at
any time via a solicitation, or anytime thereafter. This rule does not
require the contractor to reduce its prices when asked to do so by the
Government.
9. Modify FSS Contracts To Change the MOT to the SAT
Comment: One respondent stated that the old FAR subpart 8.4
ordering procedures and the price reduction clause (PRC) reflected the
balance between competition and price reductions above the MOT versus
compliance with the PRC. The PRC recognized that the PRC remedies were
not necessary above the MOT, where competition and requests for price
reductions were required by the old FAR subpart 8.4. According to the
respondent, the new FAR subpart 8.4 ordering procedures have replaced
the MOT with the simplified acquisition threshold and, as such, there
should be a corresponding change in the contracts.
Response: The respondent's suggestion is out of the scope of this
rule. The suggestion has been forwarded to the GSA Federal Acquisition
Service for consideration.
III. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is a significant regulatory action and, therefore, was subject to
review under section 6(b) of E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This rule is not a major rule under 5
U.S.C. 804.
IV. Regulatory Flexibility Act
The Department of Defense (DoD), the General Services
Administration (GSA), and the National Aeronautics and Space
Administration (NASA) certify that this final rule will not 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 does not revise or change existing regulations
pertaining specifically to small business concerns seeking Government
contracts. DoD, GSA, and NASA believe the final rule should benefit
small entities by encouraging and enhancing competition.
V. Paperwork Reduction Act
The rule does not contain any information collection requirements
that require the approval of the Office of Management and Budget under
the Paperwork Reduction Act (44 U.S.C. chapter 35).
List of Subjects in 48 CFR Parts 5, 8, 16, 18, and 38
Government procurement.
Dated: February 21, 2012.
Laura Auletta,
Director, Office of Governmentwide Acquisition Policy, Office of
Acquisition Policy, Office of Governmentwide Policy.
Interim Rule Adopted As Final With Changes
Accordingly, the interim rule amending 48 CFR parts 5, 8, 16, 18,
and 38 which was published in the Federal Register at 76 FR 14548 on
March 16, 2011, is adopted as final with the following changes:
PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES
0
1. The authority citation for 48 CFR part 8 continues to read as
follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
0
2. Amend section 8.405-3 by removing from paragraph (a)(7)(v) ``$100
million'' and adding ``$103 million'' in its place; adding a new
sentence to the end of paragraph (c)(3); and removing paragraph (e)(3).
The added text reads as follows:
8.405-3 Blanket purchase agreements (BPAs).
* * * * *
(c) * * *
(3) * * * The ordering activity is responsible for considering the
level of effort and the mix of labor proposed to perform a specific
task being ordered, and for determining that the total price is
reasonable through appropriate analysis techniques, and documenting the
file accordingly.
* * * * *
[FR Doc. 2012-4485 Filed 3-1-12; 8:45 am]
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