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[Federal Register Volume 62, Number 59 (Thursday, March 27, 1997)]
[Proposed Rules]
[Pages 14756-14757]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-7606]

[[Page 14755]]

_______________________________________________________________________

Part III

Department of Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________

48 CFR Part 39

Federal Acquisition Regulation; Modular Contracting; Proposed Rule

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

[[Page 14756]]

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.

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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: www.arnet.gov">96-
[email protected]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 Clinger-Cohen Act of 1996 (Public Law 
104-106). Modular contracting is intended to reduce program risk and to 
incentivize

[[Page 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]
BILLING CODE 6820-EP-P
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