[Federal Register Volume 62, Number 244 (Friday, December 19, 1997)]
[Rules and Regulations]
[Pages 66527-66529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33200]


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COMMITTEE FOR PURCHASE FROM PEOPLE WHO ARE BLIND OR SEVERELY DISABLED

41 CFR Parts 51-2, 51-4, and 51-6


Miscellaneous Amendments to Committee Regulations

AGENCY: Committee for Purchase From People Who Are Blind or Severely 
Disabled.

ACTION: Final rule.

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SUMMARY: The Committee is changing five sections of its regulations to 
clarify them and improve the efficiency of operation of the Committee's 
Javits-Wagner-O'Day (JWOD) Program. The changes are necessary to 
clarify and expand earlier regulation changes and to eliminate 
unnecessary regulatory language.

EFFECTIVE DATE: January 20, 1998.

ADDRESSES: Committee for Purchase From People Who Are Blind or Severely 
Disabled, Crystal Gateway 3, Suite 310, 1215 Jefferson Davis Highway, 
Arlington, Virginia 22202-4302.

FOR FURTHER INFORMATION CONTACT: G. John Heyer (703) 603-0665. Copies 
of this notice will be made available on request in computer diskette 
format.

SUPPLEMENTARY INFORMATION: The Committee is amending Sec. 51-2.4 of its 
regulations to clarify further that its authorizing statute, the JWOD 
Act, 41 U.S.C. 46--48c, treats addition of commodities and services to 
the Procurement List and the establishment by the Committee of a fair 
market price as two separate functions and applies the requirement for 
notice and comment rulemaking only to the addition function. This area 
was first addressed in 1994 (59 FR 59338, Nov. 16, 1994) with the 
removal of fair market price from the list of suitability criteria for 
Procurement List additions, in accordance with a 1992 court decision, 
McGregor Printing Corporation v. Kemp, 802 F. Supp. 519, 527 (D.D.C), 
rev'd on other grounds, 20 F.3d 1188 (D.C. Cir. 1994). The amendment 
states that the Committee does not consider comments on proposed fair 
market prices for commodities and services proposed for addition to the 
Procurement List to be pertinent to a suitability determination. 
Accordingly, they will not be addressed when the Committee makes an 
addition decision. This amendment will not affect the ability of 
Government and other appropriate parties to comment on proposed fair 
market prices and price changes in connection with the Committee's fair 
market pricing process. The Committee is also removing paragraph 51-
2.4(a)(4)(C) of its regulations to eliminate one of two essentially 
redundant statements in Sec. 51-2.4 to the effect that the Committee 
considers pertinent comments when making its addition decisions.
    The Committee also amended paragraphs (b)(6) and (c)(1) of Sec. 51-
4.3 of its regulations in 1994 (59 FR 59343) to allow the acceptance of 
State certifications of blindness or other severe disabilities as 
documentation of disability, in addition to reports by individual 
health professionals. Many of these certifications, however, are done 
by health professionals at local governmental bodies, such as public 
schools. The new amendment to this section will allow acceptance of 
these certifications.
    Paragraph (c) of Sec. 51-4.4 of the Committee's regulations permits 
nonprofit agencies participating in the JWOD Program to subcontract a 
portion of the process for providing a commodity on the Procurement 
List. The amendment will extend this permission to services on the 
Procurement List, and would specify how the Committee will oversee 
routine subcontracting of a part of the production process.
    Paragraph (c) of Sec. 51-6.12 of the Committee's regulations 
requires Government contracting activities to provide a 90-day notice 
when changing the scope of work of a service on the Procurement List. 
The amendment will make it clear that this notice requirement also 
applies to situations where the contracting activity converts a service 
to performance by Government personnel.
    Prior to the 1991 revision of the Committee's regulations (56 FR 
48974, Sept. 26, 1991), the matters contained in current parts 51-5 and 
51-6 were in a single part 51-5, which had a disputes provision 
applicable to the entire part of the Committee's regulations. The 
amendment clarifies the disputes provision, Sec. 51-6.14, to state its 
applicability to both parts 51-5 and 51-6.

Public Comments on the Proposed Rule

    The Committee published the proposed rule in the Federal Register 
of September 26, 1997 (62 FR 50547). One comment was received, from 
counsel for a manufacturer which is objecting to a recently proposed 
addition to the Procurement List. The comment addressed only the 
proposed changes to 41 CFR 51-2.4, which contains the Committee's 
criteria for making additions to the Procurement List. No comments were 
received on the other proposed regulatory changes announced by the 
Committee at that time.
    As noted above, the changes to 41 CFR 51-2.4 were intended to 
emphasize the Committee's conclusion that its authorizing statute 
treats the Committee's addition of commodities and services to the 
Procurement List and its establishment of fair market prices for these 
commodities and services as two separate Committee functions. The 
statutory requirement for notice and comment rulemaking, in the 
Committee's view, applies only to the first of these functions.
    The commenter challenged the Committee's conclusion that the 
holding cited from the 1992 McGregor decision in support of the 
Committee's view was not reversed by the 1994 appeals court decision. 
While unable to point to specific language in the later decision 
reversing the lower court's holding, the commenter indicated that the 
holding was reversed ``by implication'' because the later decision 
discussed the Committee's shortcomings on its fair market price 
determination in the rulemaking at issue. If the appeals court did not 
intend to reverse the lower court's holding, the commenter argued, this 
discussion would be a mere waste of space in the appeals court's 
opinion.
    The McGregor appellate decision set aside the Committee's 
rulemaking, and reversed the lower court, because the appellate court 
concluded that the Committee's rulemaking record did not support the 
Committee's conclusions and the Committee did not adequately explain 
the basis for its conclusions. The regulation stating the Committee's 
criteria for Procurement List additions which was in effect when the 
contested rulemaking took place included fair market price among the 
criteria. Accordingly, the discussion cited by the commenter from the 
appellate court opinion noted the shortcomings in the Committee's 
administrative record and Federal Register notice which pertained to 
the Committee's explanation of its rationale for deciding that the 
pricing criterion had been met, as a part of its longer discussion of 
the Committee's

[[Page 66528]]

shortcomings in documenting and explaining its conclusions on all the 
addition criteria. Because the regulation made fair market price an 
addition criterion, and thus subject to the rulemaking requirement, the 
appellate court did not have to address the lower court's holding that 
pricing determinations are reserved to the Committee alone because the 
JWOD Act makes price determinations a separate function from additions 
to the Procurement List.
    The Committee's 1994 regulatory change (59 FR 59338, Nov. 16, 1994) 
removed fair market price from the addition criteria to restore the 
separation of functions established by the JWOD Act. The current 
revisions to 41 CFR 51-2.4 merely make the separation clearer, in light 
of subsequent failures by commenting parties, notably this commenter, 
to see the distinction. The Committee does not believe that the current 
revision to this regulation, and the 1994 revision, which the commenter 
also challenged, are legally improper, as the commenter claimed.
    The commenter also objected to the Committee's reliance on the 
lower court opinion in McGregor on the grounds that the McGregor 
decisions did not address a situation in which a commenter made 
specific allegations about information supporting proposed prices 
submitted for Committee consideration by central nonprofit agencies. 
Because McGregor did not address this situation, the commenter claims 
that it cannot be used as a basis for excluding comments on a proposed 
addition merely because they concern pricing issues.
    The Committee does not believe that the commenter's claim on this 
point is relevant to the Committee's legal authority to revise 41 CFR 
51-2.4 as it did in 1994 and is doing now. As noted below, the 
Committee does not intend to ignore significant comments on its fair 
market prices. It will consider them in connection with the process for 
establishing a fair market price, not in connection with the rulemaking 
process required for a Procurement List addition.
    The commenter also advanced several legal and policy arguments for 
his position that comments on a fair market price must be addressed in 
connection with a Procurement List addition. The commenter claimed that 
a fair market price is set before the corresponding addition decision 
is made, so if the price is incorrect, the addition would be legally 
defective unless the price is corrected. The commenter also claimed 
that a correct fair market price is the only restraint on addition to 
the Procurement List of commodities and services on which little direct 
labor is performed by people with severe disabilities, and that it 
would do no good for a commenter to question a fair market price after 
the decision is made, because the Government would contract for the 
commodity or service and the price could not be corrected. The 
commenter indicated that resolving these price questions at the time of 
addition would not be unduly burdensome for the Committee staff.
    The Committee does not agree with the commenter's contention that a 
fair market price is established before a commodity or service is added 
to the Procurement List. While a proposed fair market price is 
calculated in accordance with the Committee's pricing policies, and the 
nonprofit agency agrees to produce at that price, before the proposal 
is sent to the Committee for an addition decision, the Committee must 
make the actual pricing decision once it has made its addition 
decision. The Committee may exercise its discretion to reject the 
proposed price and set another which falls within its pricing 
guidelines. The addition decision function, including the rulemaking 
requirement, precedes the pricing function in the JWOD Act, and the 
Committee's decision format was revised in 1994 to be consistent with 
the statute.
    The Committee also disagrees with the commenter's contention that a 
fair market price ensures that sufficient qualifying direct labor is 
being performed by the nonprofit agency. Direct labor was a separate 
addition criterion from fair market price before the 1994 regulatory 
revision, and the two had to be independently satisfied before a 
commodity or service could be added to the Procurement List. Direct 
labor remains an addition criterion since the removal of fair market 
price from the criteria list.
    The commenter's contention that fair market price cannot be changed 
after a Procurement List addition is made is not consistent with either 
the Committee's pricing policy or its practice in the pricing area. The 
Committee has a long history of making price changes as appropriate, 
including changes made as a result of informed comments. The very 
document in which the commenter made his comments on this rulemaking 
also contains information submitted to demonstrate to the Committee 
that some of its prices are not correct, and this document supplements 
earlier and more detailed information on that same subject which the 
Committee staff is analyzing with a view toward correcting the prices 
at issue if appropriate.
    The burden on the Committee staff of reviewing comments on prices 
as part of an addition would not greatly exceed the burden of 
considering them as part of the pricing process. The Committee 
believes, however, that it would not be appropriate to burden the 
addition process with a matter more logically belonging to the pricing 
process. As indicated above, there is now no statutory or regulatory 
requirement to confuse these two processes as the commenter would have 
the Committee do.
    Finally, the commenter claimed that the Committee must allow 
comments on fair market price ``at some point in the process.'' That 
point is the pricing process, which includes both the establishment of 
an initial fair market price and changes in the price. As indicated 
above, the Committee will entertain significant comments on specific 
prices from affected parties in connection with that process. The 
Committee will not, however, allow commenters to use the addition 
process to raise issues not covered by the addition criteria, or to 
delay the addition process with larger policy questions such as the 
nature of a fair market price, as has occurred in the past.

Regulatory Flexibility Act

    I certify that this revision of the Committee regulations will not 
have a significant economic impact on a substantial number of small 
entities because the revision clarifies program policies and does not 
essentially change the impact of the regulations on small entities.

Paperwork Reduction Act

    The Paperwork Reduction Act does not apply to this rule because it 
contains no new information collection or recordkeeping requirements as 
defined in that Act and its regulations.

Executive Order No. 12866

    The Committee has been exempted from the regulatory review 
requirements of the Executive Order by the Office of Information and 
Regulatory Affairs. Additionally, the rule is not a significant 
regulatory action as defined in the Executive Order.

List of Subjects

41 CFR Part 51-2

    Organization and functions (Government agencies).

[[Page 66529]]

41 CFR Part 51-4

    Reporting and recordkeeping requirements.

41 CFR Part 51-6

    Government procurement, Handicapped.

    For the reasons set out in the preamble, Parts 51-2, 51-4, and 51-6 
of Title 41, Chapter 51 of the Code of Federal Regulations are amended 
as follows:
    1. The authority citation for Parts 51-2, 51-4, and 51-6 continues 
to read as follows:

    Authority: 41 U.S.C. 46-48c.

PART 51-2--COMMITTEE FOR PURCHASE FROM PEOPLE WHO ARE BLIND OR 
SEVERELY DISABLED

    2. Section 51-2.4 is amended by removing paragraph (a)(4)(C) and 
adding a sentence to paragraph (b), to read as follows:


Sec. 51-2.4  Determination of suitability.

* * * * *
    (b) * * * Because the Committee's authority to establish fair 
market prices is separate from its authority to determine the 
suitability of a commodity or service for addition to the Procurement 
List, the Committee does not consider comments on proposed fair market 
prices for commodities and services proposed for addition to the 
Procurement List to be pertinent to a suitability determination.

PART 51-4--NONPROFIT AGENCIES

    3. Section 51-4.3 is amended by revising paragraphs (b)(6) and 
(c)(1), to read as follows:


Sec. 51-4.3  Maintaining qualification.

* * * * *
    (b) * * *
    (6) Maintain a file for each blind individual performing direct 
labor which contains a written report reflecting visual acuity and 
field of vision of each eye, with best correction, signed by a person 
licensed to make such an evaluation, or a certification of blindness by 
a State or local governmental entity.
* * * * *
    (c) * * *
    (1) A written report signed by a licensed physician, psychiatrist, 
or qualified psychologist, reflecting the nature and extent of the 
disability or disabilities that cause such person to qualify as a 
person with a severe disability, or a certification of the disability 
or disabilities by a State or local governmental entity.
* * * * *
    4. Section 51-4.4 is amended by revising paragraph (c), to read as 
follows:


Sec. 51-4.4  Subcontracting.

* * * * *
    (c) Nonprofit agencies may subcontract a portion of the process for 
producing a commodity or providing a service on the Procurement List 
provided that the portion of the process retained by the prime 
nonprofit agency generates employment for persons who are blind or have 
other severe disabilities. Subcontracting intended to be a routine part 
of the production of a commodity or provision of a service shall be 
identified to the Committee at the time the commodity or service is 
proposed for addition to the Procurement List and any significant 
changes in the extent of subcontracting must be approved in advance by 
the Committee.
* * * * *

PART 51-6--PROCUREMENT PROCEDURES

    5. Section 51-6.12 is amended by revising paragraph (c), to read as 
follows:


Sec. 51-6.12  Specification changes and similar actions.

* * * * *
    (c) For services on the Procurement List, the contracting activity 
shall notify the nonprofit agency furnishing the service and the 
central nonprofit agency concerned at least 90 days prior to the date 
that any changes in the statement of work or other conditions of 
performance will be required, including assumption of performance of 
the service by the contracting activity.
* * * * *
    6. Section 51-6.14 is revised to read as follows:


Sec. 51-6.14  Disputes.

    Disputes between a nonprofit agency and a contracting activity 
arising out of matters covered by parts 51-5 and 51-6 of this chapter 
shall be resolved, where possible, by the contracting activity and the 
nonprofit agency, with assistance from the appropriate central 
nonprofit agency. Disputes which cannot be resolved by these parties 
shall be referred to the Committee for resolution.

    Dated: December 16, 1997.
Beverly L. Milkman,
Executive Director.
[FR Doc. 97-33200 Filed 12-18-97; 8:45 am]
BILLING CODE 6353-01-P