Federal Register / Vol. 77, No. 42 / Friday, March 2, 2012 / Rules and Regulations 12927 

and authorized by the contracting 

officer,’’. 

PART 16—TYPES OF CONTRACTS 

■ 4. Amend section 16.103 by revising 

the second sentence of paragraph (d)(1) 

introductory text to read as follows: 

16.103 Negotiating contract type. 

* * * * * 

(d) * * * 

(1) * * * This shall be documented in 

the acquisition plan, or in the contract 

file if a written acquisition plan is not 

required by agency procedures. 

* * * * * 

16.301–2 [Amended] 

■ 5. Amend section 16.301–2 by 

removing the second sentence from 

paragraph (b). 

■ 6. Amend section 16.301–3 by— 

■ a. Removing from paragraph (a)(3) 

‘‘contract;’’ and adding ‘‘contract or 

order;’’ in its place; and 

■ b. Revising paragraph (a)(4). 

The revised text reads as follows: 

16.301–3 Limitations. 

(a) * * * 

(4) Prior to award of the contract or 

order, adequate Government resources 

are available to award and manage a 

contract other that firm-fixed-priced (see 

7.104(e)). This includes appropriate 

Government surveillance during 

performance in accordance with 

1.602–2, to provide reasonable 

assurance that efficient methods and 

effective cost controls are used. 

* * * * * 

[FR Doc. 2012–4481 Filed 3–1–12; 8:45 am] 

BILLING CODE 6820–EP–P 

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. 

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 multipleaward 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 multipleaward 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-theHeads-of-Executive-Departments-andAgencies-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 indefinitedelivery/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 multipleaward 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 

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12928 Federal Register / Vol. 77, No. 42 / Friday, March 2, 2012 / Rules and Regulations 

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 singleaward 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. 

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Federal Register / Vol. 77, No. 42 / Friday, March 2, 2012 / Rules and Regulations 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 multipleaward 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 

■ 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). 

■ 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] 

BILLING CODE 6820–EP–P 

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