[Federal Register Volume 62, Number 51 (Monday, March 17, 1997)]
[Rules and Regulations]
[Pages 12693-12695]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-6312]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 9, 35, and 37

[FAC 90-46; FAR Case 94-008; Item III]
RIN 9000-AG86


Federal Acquisition Regulation; Office of Federal Procurement 
Policy Letter 93-1, Management Oversight of Service Contracting

AGENCIES: Department of Defense (DOD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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[[Page 12694]]

SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council have agreed on a final rule amending 
the Federal Acquisition Regulation (FAR) to provide agency guidance on 
the management of service contracts. 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: Effective May 16, 1997.

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 4037, GS Building, Washington, DC 20405 (202) 501-
4755. Please cite FAC 90-46, FAR case 94-008.

SUPPLEMENTARY INFORMATION:

A. Background

    On May 24, 1994, the Office of Federal Procurement Policy (OFPP) 
reissued, as a final policy letter, and published in the Federal 
Register at 59 FR 26818, Policy Letter 93-1, Management Oversight of 
Service Contracting. The policy letter provides Governmentwide guiding 
principles which are intended to improve the acquisition, management, 
and administration of service contracts.
    A proposed rule was published in the Federal Register at 61 FR 
14946, April 3, 1996, to address FAR implementation of OFPP Policy 
Letter 93-1. Two sources submitted comments in response to the proposed 
rule. All comments were considered in the development of the final 
rule.

B. Regulatory Flexibility Act

    A Final Regulatory Flexibility Analysis (FRFA) has been performed 
and will be provided to the Chief Counsel for Advocacy of the Small 
Business Administration. A copy of the FRFA may be obtained from the 
FAR Secretariat. The analysis is summarized as follows:

    There were no public comments in response to the Initial 
Regulatory Flexibility Analysis. There were approximately 16,662 
small businesses with service contracts valued at $25,000 or more in 
fiscal year 1996. The rule does not impose any reporting, 
recordkeeping, or other compliance requirements upon small entities. 
This rule is expected to have a beneficial impact on small and large 
entities because the rule emphasizes the need for good Government 
management practices. Although this rule does not specifically 
propose different procedures for small versus large entities, it 
should reduce the economic and administrative burden on small 
entities. Consistent with the stated objectives of OFPP Policy 
Letter 93-1, routine services, frequently provided by small 
entities, will require less oversight than services that tend to 
affect Government decision-making, influence policy development, or 
affect program management, which are more susceptible to abuse and 
require a greater level of scrutiny.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the 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 Parts 9, 35, and 37

    Government procurement.

    Dated: March 7, 1997.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, 48 CFR Parts 9, 35, and 37 are amended as set forth 
below:
    1. The authority citation for 48 CFR Parts 9, 35, and 37 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).

PART 9--CONTRACTOR QUALIFICATIONS

    2. Section 9.505-3 is revised to read as follows:


9.505-3  Providing evaluation services.

    Contracts for the evaluation of offers for products or services 
shall not be awarded to a contractor that will evaluate its own offers 
for products or services, or those of a competitor, without proper 
safeguards to ensure objectivity to protect the Government's interests.

PART 35--RESEARCH AND DEVELOPMENT CONTRACTING

    3. Section 35.017-2 is amended by revising paragraph (i) to read as 
follows:


35.017-2  Establishing or changing an FFRDC.

* * * * *
    (i) Quantity production or manufacturing is not performed unless 
authorized by legislation.
* * * * *

PART 37--SERVICE CONTRACTING

    4. Section 37.000 is revised to read as follows:


37.000  Scope of part.

    This part prescribes policy and procedures that are specific to the 
acquisition and management of services by contract. This part applies 
to all contracts for services regardless of the type of contract or 
kind of service being acquired. Additional guidance for research and 
development services is in part 35; architect-engineering services is 
in part 36; information technology is in part 39; and transportation 
services is in part 47. Parts 35, 36, 39, and 47 take precedence over 
this part in the event of inconsistencies. This part includes, but is 
not limited to, contracts for services to which the Service Contract 
Act of 1965, as amended, applies (see subpart 22.10).
    5. Section 37.102 is amended by adding paragraphs (d) through (g) 
to read as follows:


37.102  Policy.

* * * * *
    (d) Agency program officials are responsible for accurately 
describing the need to be filled, or problem to be resolved, through 
service contracting in a manner that ensures full understanding and 
responsive performance by contractors and, in so doing, should obtain 
assistance from contracting officials, as needed.
    (e) Agencies shall establish effective management practices in 
accordance with Office of Federal Procurement Policy (OFPP) Policy 
Letter 93-1, Management Oversight of Service Contracting, to prevent 
fraud, waste, and abuse in service contracting.
    (f) Services are to be obtained in the most cost-effective manner, 
without barriers to full and open competition, and free of any 
potential conflicts of interest.
    (g) Agencies shall ensure that sufficiently trained and experienced 
officials are available within the agency to manage and oversee the 
contract administration function.
    6. Subpart 37.5 is added to read as follows:

Subpart 37.5--Management Oversight of Service Contracts

Sec.
37.500  Scope of subpart.
37.501  Definition.
37.502  Exclusions.
37.503  Agency-head responsibilities.
37.504  Contracting officials' responsibilities.


37.500  Scope of subpart.

    This subpart establishes responsibilities for implementing Office 
of Federal Procurement Policy (OFPP) Policy Letter 93-1, Management 
Oversight of Service Contracting.

[[Page 12695]]

37.501  Definition.

    Best practices, as used in this subpart, means techniques that 
agencies may use to help detect problems in the acquisition, 
management, and administration of service contracts. Best practices are 
practical techniques gained from experience that agencies may use to 
improve the procurement process.


37.502  Exclusions.

    (a) This subpart does not apply to services that are
    (1) Obtained through personnel appointments and advisory 
committees;
    (2) Obtained through personal service contracts authorized by 
statute;
    (3) For construction as defined in 36.102; or
    (4) Obtained through interagency agreements where the work is being 
performed by in-house Federal employees.
    (b) Services obtained under contracts below the simplified 
acquisition threshold and services incidental to supply contracts also 
are excluded from the requirements of this subpart. However, good 
management practices and contract administration techniques should be 
used regardless of the contracting method.


37.503  Agency-head responsibilities.

    The agency head or designee should ensure that--
    (a) Requirements for services are clearly defined and appropriate 
performance standards are developed so that the agency's requirements 
can be understood by potential offerors and that performance in 
accordance with contract terms and conditions will meet the agency's 
requirements;
    (b) Service contracts are awarded and administered in a manner that 
will provide the customer its supplies and services within budget and 
in a timely manner;
    (c) Specific procedures are in place before contracting for 
services to ensure compliance with OFPP Policy Letters 92-1, Inherently 
Governmental Functions, 91-2, Service Contracting, and 89-1, Conflicts 
of Interest Policies Applicable to Consultants; and
    (d) Strategies are developed and necessary staff training is 
initiated to ensure effective implementation of the policies in 37.102.


37.504  Contracting officials' responsibilities.

    Contracting officials should ensure that ``best practices'' 
techniques are used when contracting for services and in contract 
management and administration (see OFPP Policy Letter 93-1).

[FR Doc. 97-6312 Filed 3-14-97; 8:45 am]
BILLING CODE 6820-EP-P