14756 Federal Register / Vol. 62, No. 59 / Thursday, March 27, 1997 / Proposed Rules

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Part 39

[FAR Case 96–605]

RIN 9000–AH55

Federal Acquisition Regulation;

Modular Contracting

AGENCIES: Department of Defense (DOD),

General Services Administration (GSA),

and National Aeronautics and Space

Administration (NASA).

ACTION: Proposed rule with request for

comment and notice of public meeting.

SUMMARY: The Civilian Agency

Acquisition Council and the Defense

Acquisition Regulations Council are

issuing a proposed amendment to the

Federal Acquisition Regulation (FAR) to

address the requirements of Public Law

104–106, the Information Technology

Management Reform Act (ITMRA) of

1996, regarding acquisition of

information technology (IT) using

modular contracting techniques. This

regulatory action was not subject to

Office of Management and Budget

review under Executive Order 12866,

dated September 30, 1993. This is not a

major rule under 5 U.S.C. 804.

DATES: Public Meeting: April 28, 1997,

9:00 a.m. until 12:00 p.m.

Written Statements Due: April 22,

1997.

Comments Due: Comments should be

submitted on or before May 27, 1997 to

be considered in the formulation of a

final rule.

ADDRESSES: Comments: Interested

parties should submit written comments

and copies of their oral presentations to:

General Services Administration, FAR

Secretariat (MVR), 1800 F Street, NW,

Room 4035, Washington, DC 20405.

Internet: E-mail comments should be

addressed to: 96–605@www.arnet.gov.

Public Meeting: GSA Auditorium,

1800 F Street, NW (First Floor),

Washington, DC 20405.

Please cite FAR case 96–605 in all

correspondence related to this case.

FOR FURTHER INFORMATION CONTACT: Mr.

Jack O’Neill at (202) 501–3856 in

reference to this FAR case. For general

information, contact the FAR

Secretariat, Room 4035, GS Building,

Washington, DC 20405 (202) 501–4755.

Please cite FAR case 96–605.

SUPPLEMENTARY INFORMATION:

A. Background

Division E of Public Law 104–106,

ITMRA, at Section 5202, enacted new

policies and procedures for the

acquisition of IT and directed that they

be implemented in the FAR.

Specifically, ITMRA requires that

coverage for modular contracting be

included in the FAR.

The following coverage addresses that

ITMRA requirement by proposing to

provide guidance to Federal agencies

about using modular contracting, to the

maximum extent practicable, when

acquiring major systems of information

technology. When using a modular

contracting approach, agencies acquire

major IT acquisitions by dividing them

into smaller, more manageable

increments. ITMRA indicates that

agencies should complete the award of

each successive module in a shorter

time frame, preferably within 180 days

from the date when a solicitation is

issued. In addition to more rapid

acquisition of modules, other potential

benefits that may be realized as a result

of modular contracting include delivery

and testing of systems in discrete

increments that are not dependent on

other increments, and the opportunity

in subsequent increments to take

advantage of any evolution in

technology.

The FAR Council, the Chief

Information Officers (CIO) Council, and

the Interagency FAR Information

Technology Committee are interested in

an exchange of ideas and opinions with

respect to this rule and, accordingly,

have scheduled a public meeting at the

GSA Auditorium, Washington, DC, on

April 28, 1997, at 9:00 a.m. The public

is encouraged to furnish its views.

Written statements for presentation

should be submitted to the FAR

Secretariat by April 22, 1997. Persons or

organizations with similar positions are

encouraged to select a common

spokesperson for presentation of their

views.

B. Regulatory Flexibility Act

The proposed rule is not expected 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. The

rule would not impose any specific cost

burden on small entities, over and above

what burden the marketplace demands

for modular contracting compliance.

The modular contracting approach

should slightly benefit small entities

because use of modular contracting

techniques should increase the number

of business opportunities available to

them. When a modular contracting

approach is used, large complex IT

systems will be divided into smaller,

discrete increments that may

subsequently be made available to small

business entities to bid and manage. The

proposed rule would provide needed

coverage to ensure that ITMRA is

implemented regarding use of modular

contracting for the acquisition of IT

systems. An Initial Regulatory

Flexibility Analysis has, therefore, not

been performed. Comments from small

entities concerning the affected FAR

part will be considered in accordance

with 5 U.S.C. 610 of the Act. Such

comments must be submitted separately

and should cite 5 U.S.C. 601, et seq.

(FAR case 96–605), in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does

not apply because the proposed changes

to the FAR do not impose recordkeeping

or information collection requirements,

or collections of information from

offerors, contractors, or members of the

public which require the approval of the

Office of Management and Budget under

44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 39

Government procurement.

Dated: March 20, 1997.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, it is proposed that 48 CFR

Part 39 be amended as set forth below:

PART 39—ACQUISITION OF

INFORMATION TECHNOLOGY

1. The authority citation for 48 CFR

Part 39 continues to read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C.

chapter 137; and 42 U.S.C. 2473(c).

2. Section 39.002 is amended by

adding in alphabetical order the

definition of ‘‘Modular contracting’’ to

read as follows:

39.002 Definitions.

Modular contracting, as used in this

part, means use of one or more contracts

to acquire information technology

systems in successive, interoperable

increments.

* * * * *

3. Section 39.103 is added to read as

follows:

39.103 Modular contracting.

(a) This section implements Section

5202, Incremental Acquisition of

Information Technology, of the ClingerCohen Act of 1996 (Public Law 104–

106). Modular contracting is intended to

reduce program risk and to incentivize
Federal Register / Vol. 62, No. 59 / Thursday, March 27, 1997 / Proposed Rules 14757

contractor performance while meeting

the Government’s need for timely access

to rapidly changing technology.

Consistent with the agency’s

information technology architecture,

agencies should, to the maximum extent

practicable, use modular contracting to

acquire major systems (see FAR 2.101)

of information technology. Agencies

may also use modular contracting to

acquire non-major systems of

information technology.

(b) When using modular contracting,

an acquisition of a system of

information technology may be divided

into several smaller acquisition

increments that—

(1) Are easier to manage individually

than would be possible in one

comprehensive acquisition;

(2) Address complex information

technology objectives incrementally in

order to enhance the likelihood of

achieving workable systems or solutions

for attainment of those objectives;

(3) Provide for delivery,

implementation, and testing of workable

systems or solutions in discrete

increments, each of which comprises a

system or solution that is not dependent

on any subsequent increment in order to

perform its principal functions; and

(4) Provide an opportunity for

subsequent increments to take

advantage of any evolution in

technology or needs that occur during

implementation and use of the earlier

increments.

(5) Reduce risk of potential adverse

consequences on the overall project by

isolating and avoiding custom-designed

components of the system.

(c) The characteristics of an increment

may vary depending upon the type of

information technology being acquired

and the nature of the system being

developed. The following factors may be

considered:

(1) To promote compatibility, the

information technology acquired

through modular contracting for each

increment should comply with common

or commercially acceptable information

technology standards when available

and appropriate, and shall conform to

the agency’s master information

technology architecture.

(2) The performance requirements of

each increment should be consistent

with the performance requirements of

the completed, overall system within

which the information technology will

function and should address interface

requirements with succeeding

increments.

(d) For each increment, contracting

officers shall choose an appropriate

contracting technique that facilitates the

acquisition of subsequent increments.

Pursuant to parts 16 and 17, contracting

officers shall select the contract type

and method appropriate to the

circumstances (e.g., indefinite delivery,

indefinite quantity contracts, single

contract with options, successive

contracts, multiple awards). Contract(s)

shall be structured to ensure that the

Government is not required to procure

additional increments.

(e) To avoid obsolescence, a modular

contract for information technology

should, to the maximum extent

practicable, be awarded within 180 days

after the date on which the solicitation

is issued. If award cannot be made

within 180 days, agencies should

consider cancellation of the solicitation

in accordance with FAR 14.209 or

15.606(b)(4). To the maximum extent

practicable, deliveries under the

contract should be scheduled to occur

within 18 months after issuance of the

solicitation.

[FR Doc. 97–7606 Filed 3–26–97; 8:45 am]

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