[Federal Register Volume 77, Number 1 (Tuesday, January 3, 2012)]
[Rules and Regulations]
[Pages 183-186]
From the Federal Register Online via the Government Printing Office [http://www.gpo.gov/]
[FR Doc No: 2011-33409]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 4, 7, 8, 9, 17, 18, 35, and 41
[FAC 2005-55; FAR Case 2008-032; Item I; Docket 2010-0107, Sequence 1]
RIN 9000-AL69
Federal Acquisition Regulation; Preventing Abuse of Interagency
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 prevent abuse of interagency contracts.
DATES: Effective Date: February 2, 2012.
FOR FURTHER INFORMATION CONTACT: Ms. Lori Sakalos, Procurement Analyst,
at (202) 208-0498 for clarification of content. For information
pertaining to status or publication schedules, contact the Regulatory
Secretariat at (202) 501-4755. Please cite FAC 2005-55, FAR Case 2008-
032.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA published an interim rule in the Federal
Register at 75 FR 77733 on December 13, 2010, to implement paragraphs
(b) and (d) of section 865 of the Duncan Hunter National Defense
Authorization Act (NDAA). The rule is designed to ensure that the
benefits of interagency acquisitions are consistently achieved.
The FAR changes are applicable to all interagency acquisitions
issued under the Economy Act (31 U.S.C. 1535) as well as other
authorities, in recognition that an increasing number of interagency
acquisitions are conducted using authorities other than the Economy
Act. This rule strengthens FAR subpart 17.5, Interagency Acquisitions
by--
Broadening the scope of coverage to address all
interagency acquisitions that result in a contract action, but does not
apply to Federal Supply Schedule (FSS) orders under $500,000;
Requiring agencies to support the decision to use an
interagency acquisition with a determination that such action is the
``best procurement approach;'' and
Directing that assisted acquisitions be accompanied by
written agreements between the requesting agency and the servicing
agency documenting the roles and responsibilities of the respective
parties.
Five respondents submitted comments on the interim rule. Two of the
respondents from the same organization provided duplicate comments.
II. Discussion and Analysis
The Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (Councils) reviewed the public comments in the
development of the final rule. 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
As a result of public comments, changes were made to the interim
rule to--
1. Make it clear that FAR subpart 17.5 applies to interagency
acquisitions
[[Page 184]]
when an agency needing supplies or services obtains them using another
agency's contract; or when an agency uses another agency to provide
acquisition assistance, such as awarding and administering a contract,
a task order, or delivery order. The subpart does not apply to
interagency reimbursable work performed by Federal employees (other
than acquisition assistance), or interagency activities where
contracting is incidental to the purpose of the transaction;
2. Revise FAR 35.017 to permit that when a nonsponsoring agency
requests, under the authority of the Economy Act, the use of a
Federally Funded Research and Development Center (FFRDC), the
nonsponsoring agency may incorporate the determination required by FAR
17.502-1(a) into the determination and finding justification required
by FAR 17.502-2(c);
3. Expand the requirement for business-case analysis when creating
multi-agency contracts (MACs) to include governmentwide acquisition
contracts (GWACs). Therefore, the procedures for establishing MACs and
GWACs have been relocated from FAR 17.502-2(d) to 17.502-1(c) and
hyperlinked to the Office of Federal Procurement Policy (OFPP) Business
Case guidance.
B. Analysis of Public Comments
Respondents submitted comments covering the following seven
categories:
Best procurement approach determination.
``Direct acquisition'' definition.
Written agreement for direct acquisition.
Citing correct statutory authority for an interagency
agreement.
Content of determination and findings.
Federal Supply Schedule orders and open market
procurements.
Business-case analysis.
1. Best Procurement Approach Determination
Comment: One respondent asked if a class/commodity determination
could be used for those products/services that might be ordered
repeatedly from the FSS. Otherwise, according to the respondent, a
determination for each procurement will be necessary.
Response: The best procurement approach determination, as described
at FAR 17.502-1(a), is required by section 865 of the NDAA for Fiscal
Year 2009 for any FSS order exceeding $500,000. The law does not
provide for class or commodity determinations.
Comment: Some respondents expressed concern that an additional
determination is required when agencies are using Schedules. The
amended FAR 8.404(2) has added a requirement for FSS orders over
$500,000 to make a determination that use of FSS is the best
procurement approach. However, FAR 8.002 establishes use of FSS as part
of the ``Priorities for Use of Government Supply Sources.'' It is not
clear why an additional determination is required when agencies are
using the Schedules as intended and as established by the FAR.
Response: The determination is required because it is mandated by
section 865 of the NDAA for Fiscal Year 2009 and applies to FSS orders
over $500,000. Federal Supply Schedules are already priority sources,
although not mandatory.
Comment: One respondent asked for additional guidance for lower
prices when determining the best procurement approach at FAR 17.502-
1(a)(2)(ii)(B). The reference to lower prices does not provide adequate
guidance to contracting officers. Also, according to the respondent, an
additional factor that should be listed under FAR 17.502-1(a)(2) is the
cycle time to award.
Response: Lower price is one of the factors to be considered in
determining the appropriate contract vehicle. Once this analysis is
performed, other factors should be considered while following the
ordering procedures as prescribed in FAR subparts 8.4 and 16.5. The
determination criteria outlined at FAR 17.502-1(a)(2) is not an all
inclusive list and does not preclude the use of other factors.
2. ``Direct Acquisition'' Definition
Comment: One respondent suggested adding to the current definition
of ``direct acquisition'' the following sentence: ``A direct
acquisition is also a type of interagency agreement where the servicing
agency performs work using their own resources.''
One respondent suggested adding the phrase ``or through performance
that uses the servicing agency's resources'' in the text of FAR
17.501(a), after the phrase, ``such as task and delivery-order
contracts.'' Further, the respondent recommended, at FAR 17.502-1,
adding a subsection (a)(3) to require that, prior to placing an order
with another agency, the requesting agency shall make a determination
that the servicing agency is able to provide the required supplies or
services.
Response: A ``direct acquisition,'' as defined in FAR 2.101(b)(2),
is a type of interagency acquisition, not a type of interagency
agreement. An interagency agreement establishes general terms and
conditions governing the relationship between servicing agencies and
requesting agencies as set forth in FAR 17.502-1(b)(1)(i). Interagency
acquisitions may be a product of interagency agreements; the two are
not the same. An interagency agreement whereby a servicing agency
performs work using its own resources is not considered an interagency
acquisition under the FAR.
The second respondent's comment relies on the addition of
interagency agreements in the definition of direct acquisition, which
the Councils did not adopt.
To provide additional clarity that the FAR only covers interagency
transactions that result in a contract action, the rule was revised at
FAR 17.500 and 17.502-2.
3. Written Agreement for Direct Acquisition
Comment: One respondent stated that the current text at FAR 17.502-
1(b)(2) should be deleted and replaced with the requirement for a
written agreement because section 865 of the NDAA for Fiscal Year 2009
applies to all interagency agreements.
Response: The written agreement assigns responsibility for contract
administration and management between the requesting agency and the
servicing agency. The FAR does not require an additional written
agreement for a direct acquisition because the basic contract outlines
administration and management responsibilities; therefore, the
requesting agency should follow ordering procedures/instructions per
the contract vehicle.
4. Citing Correct Statutory Authority for an Interagency Agreement
Comment: One respondent recommended that FAR 17.502-2(b) be revised
by dividing into two parts and adding new text as follows: ``(2)
Agencies are responsible for determining whether statutory authority
other than Economy Act applies to a particular interagency agreement.''
The respondent believed that because interagency agreements result in
the transfer of funds from one agency to another, agencies must choose
the correct authorizing statute for a particular interagency
transaction.
Response: The statutory authority should be cited in the
interagency agreement. Additional guidelines for preparing interagency
agreements, including statutory authorities, are available at FAR
17.502-1(b).
[[Page 185]]
5. Content of Determination and Findings for Economy Act Acquisitions
Comment: One respondent suggested adding a new subsection at FAR
17.502-2(c), to read as follows: ``(3) The D&F should provide factual
information to support the determinations of (c)(2).'' According to the
respondent, without a requirement for factual information, the
requesting agency's determination can be added as a mere unsupported
statement.
Response: Findings are statements of fact or rationale essential to
support the determination and are already required in any determination
and findings (D&F), as defined at FAR 1.701.
Note that the FAR does not require a formal D&F for determinations
of best procurement approach. They are prepared in accordance with FAR
17.501-1(a).
6. Federal Supply Schedule Orders and Open Market Procurements
Comment: One respondent expressed concern that the new rule
requiring a best procurement approach determination for FSS orders
exceeding $500,000, combined with the lack of corresponding
determination for open market commercial item procurements, creates a
presumption of favoring duplicative, open market procurements.
According to the respondent, the rule also creates an incentive to
split FSS orders to avoid exceeding the $500,000 threshold for a
determination.
One respondent suggested that to provide clarity and ensure a level
playing field in the acquisition planning process, the FAR should be
amended to require a best procurement approach determination for open
market procurements as well as FSS orders and other interagency
transactions. Further, according to the respondent, FAR 7.105(b),
Contents of written acquisition plans, should be amended to include the
requirement for a best procurement approach determination for all
transactions requiring an acquisition plan, including open market
procurements.
Response: The best procurement approach determination is required
for FSS orders greater than $500,000 by section 865 of the NDAA for
Fiscal Year 2009. This statute does not encourage the splitting of
orders exceeding the $500,000 threshold. FSS contracts are already
priority sources, although not mandatory. The statute seeks to prevent
abuse and implement controls for the interagency acquisitions process
and is not intended to create barriers to the use of the FSS.
Per FAR 7.102, agencies are required to perform acquisition
planning and conduct market research for all acquisitions to ensure
that the acquisition represents the best interests of the Government.
If the result of acquisition planning is to use either a direct
acquisition or an assisted acquisition, then the contracting officer is
required to prepare a best procurement approach determination.
As for the comment of creating a presumption of favoring
duplicative, open market procurements, FAR case 2009-024, Prioritizing
Sources of Supplies and Services for Use by the Government, which was
published as a proposed rule on June 14, 2011 (76 FR 34634), will
address the priority and consideration of open market sources as part
of acquisition planning. The recommendation for developing a best
procurement approach determination for open market procurements is
outside the scope of this case.
7. Business-Case Analysis
Comment: One respondent suggested that FAR 17.502-2(d) should
require that the business-case analysis address whether any other
interagency contract vehicles, like the Multiple-Award Schedule
program, meet the servicing agency's needs.
Response: Business-case analysis is required by this statute for
multi-agency contracts under the Economy Act. The requirement for the
servicing agency to consider other existing contract vehicles is
already covered under business-case analysis requirements for MACs and
GWACs, which has been relocated to FAR 17.502-1(c).
C. Other Changes
During deliberations, the Councils determined that revisions to FAR
35.017-3 were necessary to clarify and streamline instructions for the
placement of orders with FFRDCs. The FAR text at 35.017-3 has been
revised to permit nonsponsoring agencies desiring to place orders
against an FFRDC contract the option of incorporating the best
procurement approach determination required by FAR 17.502-1(a) into the
D&F required by FAR 17.502-2(c), subject to approval by the sponsoring
agency.
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, the General Services Administration, and
the National Aeronautics and Space Administration 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 the rule does not
impose any requirements on small entities.
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 2, 4, 7, 8, 9, 17, 18, 35, and 41
Government procurement.
Dated: December 21, 2011.
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 2, 4, 7, 8, 9,
17, 18, 35, and 41, which was published in the Federal Register at 75
FR 77733, December 13, 2010, is adopted as final with the following
changes:
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1. The authority citation for 48 CFR parts 17 and 35 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).
PART 17--SPECIAL CONTRACTING METHODS
0
2. Amend section 17.500 by removing from paragraph (a) ``paragraph
(b)'' and adding ``paragraph (c)'' in its place; revising paragraph
(b); and adding paragraph (c) to read as follows:
17.500 Scope of subpart.
* * * * *
(b) This subpart applies to interagency acquisitions, see 2.101 for
definition, when--
[[Page 186]]
(1) An agency needing supplies or services obtains them using
another agency's contract; or
(2) An agency uses another agency to provide acquisition
assistance, such as awarding and administering a contract, a task
order, or delivery order.
(c) This subpart does not apply to--
(1) Interagency reimbursable work performed by Federal employees
(other than acquisition assistance), or interagency activities where
contracting is incidental to the purpose of the transaction; or
(2) Orders of $500,000 or less issued against Federal Supply
Schedules.
0
3. Amend section 17.502-1 by revising the introductory text of
paragraph (a)(2); removing from paragraph (a)(2)(ii)(A) ``already'';
and adding paragraph (c) to read as follows:
17.502-1 General.
(a) * * *
(2) Direct acquisitions. Prior to placing an order against another
agency's indefinite-delivery vehicle, the requesting agency shall make
a determination that use of another agency's contract vehicle is the
best procurement approach and shall obtain the concurrence of the
requesting agency's responsible contracting office. At a minimum, the
determination shall include an analysis, including factors such as:
* * * * *
(c) Business-case analysis requirements for multi-agency contracts
and governmentwide acquisition contracts. In order to establish a
multi-agency or governmentwide acquisition contract, a business-case
analysis must be prepared by the servicing agency and approved in
accordance with the Office of Federal Procurement Policy (OFPP)
business case guidance, available at http://www.whitehouse.gov/sites/default/files/omb/procurement/memo/development-review-and-approval-of-business-cases-for-certain-interagency-and-agency-specific-acquisitions-memo.pdf. The business-case analysis shall--
(1) Consider strategies for the effective participation of small
businesses during acquisition planning (see 7.103(u));
(2) Detail the administration of such contract, including an
analysis of all direct and indirect costs to the Government of awarding
and administering such contract;
(3) Describe the impact such contract will have on the ability of
the Government to leverage its purchasing power, e.g., will it have a
negative effect because it dilutes other existing contracts;
(4) Include an analysis concluding that there is a need for
establishing the multi-agency contract; and
(5) Document roles and responsibilities in the administration of
the contract.
0
4. Amend section 17.502-2 by--
0
a. Revising paragraphs (a) and (c);
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b. Removing paragraph (d);
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c. Redesignating paragraph (e) as paragraph (d); and
0
d. Revising the newly redesignated paragraph (d)(4) to read as follows:
17.502-2 The Economy Act.
(a) The Economy Act (31 U.S.C. 1535) authorizes agencies to enter
into agreements to obtain supplies or services from another agency. The
FAR applies when one agency uses another agency's contract to obtain
supplies or services. If the interagency business transaction does not
result in a contract or an order, then the FAR does not apply. The
Economy Act also provides authority for placement of orders between
major organizational units within an agency; procedures for such intra-
agency transactions are addressed in agency regulations.
* * * * *
(c) Requirements for determinations and findings. (1) Each Economy
Act order to obtain supplies or services by interagency acquisition
shall be supported by a determination and findings (D&F). The D&F
shall--
(i) State that use of an interagency acquisition is in the best
interest of the Government;
(ii) State that the supplies or services cannot be obtained as
conveniently or economically by contracting directly with a private
source; and
(iii) Include a statement that at least one of the following
circumstances applies:
(A) The acquisition will appropriately be made under an existing
contract of the servicing agency, entered into before placement of the
order, to meet the requirements of the servicing agency for the same or
similar supplies or services.
(B) The servicing agency has the capability or expertise to enter
into a contract for such supplies or services that is not available
within the requesting agency.
(C) The servicing agency is specifically authorized by law or
regulation to purchase such supplies or services on behalf of other
agencies.
(2) The D&F shall be approved by a contracting officer of the
requesting agency with authority to contract for the supplies or
services to be ordered, or by another official designated by the agency
head, except that, if the servicing agency is not covered by the FAR,
approval of the D&F may not be delegated below the senior procurement
executive of the requesting agency.
(3) The requesting agency shall furnish a copy of the D&F to the
servicing agency with the request for order.
(d) * * *
(4) In no event shall the servicing agency require, or the
requesting agency pay, any fee or charge in excess of the actual cost
(or estimated cost if the actual cost is not known) of entering into
and administering the contract or other agreement under which the order
is filled.
17.503 [Amended]
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5. Amend section 17.503 by removing from paragraph (b)(4) ``(see
17.502-2(e))'' and adding ``(see 17.502-2(d))'' in its place.
PART 35--RESEARCH AND DEVELOPMENT CONTRACTING
0
6. Amend section 35.017-3 by revising paragraph (b) to read as follows:
35.017-3 Using an FFRDC.
* * * * *
(b) Where the use of the FFRDC by a nonsponsor is permitted by the
sponsor, the sponsor shall be responsible for compliance with paragraph
(a) of this subsection.
(1) The nonsponsoring agency shall prepare a determination in
accordance with 17.502-1(a) and provide the documentation required by
17.503(e) to the sponsoring agency.
(2) When a D&F is required pursuant to 17.502-2(c), the
nonsponsoring agency may incorporate the determination required by
17.502-1(a) into the D&F and provide the documentation required by
17.503(e) to the sponsoring agency.
(3) When permitted by the sponsor, a Federal agency may contract
directly with the FFRDC, in which case that Federal agency is
responsible for compliance with part 6.
[FR Doc. 2011-33409 Filed 12-30-11; 8:45 am]
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