Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules 30659

for the State to use voluntary consensus

standards (VCS), EPA has no authority

to disapprove a SIP submission for

failure to use VCS. It would thus be

inconsistent with applicable law for

EPA, when it reviews a SIP submission,

to use VCS in place of a SIP submission

that otherwise satisfies the provisions of

the Clean Air Act. Thus, the

requirements of section 12(d) of the

National Technology Transfer and

Advancement Act of 1995 (15 U.S.C.

272 note) do not apply. As required by

section 3 of Executive Order 12988 (61

FR 4729, February 7, 1996), in issuing

this proposed rule, EPA has taken the

necessary steps to eliminate drafting

errors and ambiguity, minimize

potential litigation, and provide a clear

legal standard for affected conduct. EPA

has complied with Executive Order

12630 (53 FR 8859, March 15, 1988) by

examining the takings implications of

the rule in accordance with the

‘‘Attorney General’s Supplemental

Guidelines for the Evaluation of Risk

and Avoidance of Unanticipated

Takings’’ issued under the executive

order. This proposed rule does not

impose an information collection

burden under the provisions of the

Paperwork Reduction Act of 1995 (44

U.S.C. 3501 et seq.).

List of Subjects in 40 CFR Part 52

Environmental protection, Air

pollution control, Volatile organic

compounds, Ozone.

Authority: 42 U.S.C. 7401 et seq.

Dated: May 30, 2001.

Norman Neidergang,

Acting Regional Administrator, Region 5.

[FR Doc. 01–14377 Filed 6–6–01; 8:45 am]

BILLING CODE 6560–50–U

DEPARTMENT OF VETERANS

AFFAIRS

48 CFR Parts 801, 806, 812, 837, 852,

and 873

RIN 2900–AI71

VA Acquisition Regulation: Simplified

Acquisition Procedures for HealthCare Resources

AGENCY: Department of Veterans Affairs.

ACTION: Withdrawal of proposed rule

and promulgation of a new proposed

rule.

SUMMARY: This document withdraws the

proposed rule concerning simplified

acquisition procedures for health-care

resources published in the Federal

Register on November 9, 1998, and

promulgates a new proposed rule

concerning simplified acquisition

procedures for health-care resources.

This new proposed rule document

would amend the Department of

Veterans Affairs Acquisition Regulation

(VAAR) to establish simplified

procedures for the competitive

acquisition of health-care resources,

consisting of commercial services or the

use of medical equipment or space,

pursuant to 38 U.S.C. 8151–8153. Public

Law 104–262, the Veterans’ Health Care

Eligibility Reform Act of 1996,

authorized VA to prescribe simplified

procedures for the procurement of

health-care resources. This proposed

rule prescribes those procedures.

DATES: Comments on this proposed rule

should be submitted on or before

August 6, 2001 to be considered in the

formulation of the final rule.

ADDRESSES: Mail or hand-deliver

written comments to: Director, Office of

Regulations Management (02D),

Department of Veterans Affairs, 810

Vermont Avenue, NW., Room 1154,

Washington, DC 20420; or fax comments

to (202) 273–9289; or e-mail comments

to ‘‘OGCRegulations@mail.va.gov’’.

Comments should indicate that they are

submitted in response to ‘‘RIN 2900–

AI71.’’ All comments received will be

available for public inspection in the

Office of Regulations Management,

Room 1158, between the hours of 8 a.m.

and 4:30 p.m., Monday through Friday

(except holidays).

FOR FURTHER INFORMATION CONTACT:

Dennis Foley, (202) 273–9225, Office of

the General Counsel, Professional Staff

Group V; or Don Kaliher, (202) 273–

8819, Acquisition Resources Service,

Office of Acquisition and Materiel

Management, Department of Veterans

Affairs, 810 Vermont Avenue, NW.,

Washington, DC 20420.

SUPPLEMENTARY INFORMATION: On

November 9, 1998, we published in the

Federal Register (63 FR 60256) a

proposed rule to amend the Department

of Veterans Affairs Acquisition

Regulation (VAAR), pursuant to 38

U.S.C. 8151–8153, to establish

simplified procedures for the

competitive acquisition of health-care

resources consisting of commercial

services or the use of medical

equipment or space. This document

withdraws the proposed rule of

November 9, 1998. In its place, we are

promulgating a new proposed rule

concerning the same subject matter. The

new proposed rule is changed from the

withdrawn proposed rule as explained

below. Also, this document addresses

the public comments that we received

in response to the withdrawn proposed

rule. Comments were solicited

concerning the November 9, 1998,

proposal for 60 days, ending January 9,

1999.

Based on the public comments

received, we have determined that a

revised proposed rule is necessary to

more fully address the potential impact

of the proposed rule on small business.

In this regard, we have added an initial

regulatory flexibility analysis.

Currently, the acquisition of healthcare resources that consist of

commercial services or the use of

medical equipment or space is governed

by the VAAR and the Federal

Acquisition Regulation (FAR). Statutory

provisions at 38 U.S.C. 8153 (Pub. L.

104–262) specifically authorize the

Secretary of Veterans Affairs, after

consultation with the Administrator for

Federal Procurement Policy, to establish

simplified procedures for the

competitive procurement of such

health-care resources. VA has consulted

with the Administrator for Federal

Procurement Policy and VA proposes to

establish simplified procedures as set

forth in this document. These proposed

simplified procedures are applicable

only to acquisitions conducted by the

Veterans Health Administration (VHA),

one of three administrations that

comprise the Department of Veterans

Affairs.

Under the provisions of Pub. L. 104–

262, procurements under the simplified

procedures may be conducted ‘‘without

regard to any law or regulation that

would otherwise require the use of

competitive procedures.’’ Accordingly,

the competitive procedures of any laws

and regulations (including the

competitive procedures of FAR and

VAAR and their underlying laws) would

be superseded by the simplified

procedures. However, under the

provisions of Pub. L. 104–262, with

certain exceptions, the simplified

procedures are required to ‘‘permit all

responsible sources, as appropriate, to

submit a bid, proposal, or quotation (as

appropriate) for the resources to be

procured and provide for the

consideration by the Department of

bids, proposals, or quotations so

submitted.’’ This allows VA to limit

competition to the extent it determines

reasonable for the circumstances of each

particular acquisition. Consistent with

the principles set forth above, this

document proposes to establish a new

VAAR Part 873 setting forth such

simplified procedures.

Under the provisions of 38 U.S.C.

8153, health-care resources consisting of

commercial services, the use of medical

equipment or space, or research,

acquired from an institution affiliated

with VA in accordance with 38 U.S.C.

30660 Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules

7302, including medical practice groups

and other approved entities associated

with affiliated institutions (entities will

be approved if determined legally to be

associated with affiliated institutions),

blood banks, organ banks, or research

centers, may be procured without regard

to any law or regulation that would

otherwise require the use of competitive

procedures. The provisions at new

VAAR 873.104 contain a statement

explaining this sole source acquisition

authority. This authority, which is in

accordance with statute, is not

dependent upon this rulemaking.

This rule applies only to the

acquisition of health-care resources that

are commercial services or the use of

medical equipment or space. Thus, the

proposed rule would apply only to

acquisitions conducted by VHA in

support of the medical care programs of

VA. It would not apply to acquisitions

of commercial services conducted by

the Veterans Benefits Administration or

the National Cemetery Administration.

The following discussions only apply to

VHA acquisitions of health-care

resources.

Proposed section 873.101, Policy,

would provide that the procedures set

forth in Part 873 would apply to the

acquisition of health-care resources

consisting of commercial services or the

use of medical equipment or space.

These procedures would be used in

conjunction with FAR, but VAAR Part

873 would take precedence over FAR

and other parts of VAAR. Currently,

VAAR implements and supplements

FAR. However, Pub. L. 104–262 grants

VA authority to procure health-care

resources consisting of commercial

services or the use of medical

equipment or space ‘‘without regard to

any other law or regulation that would

require the use of competitive

procedures * * *.’’ Therefore, it is

necessary to have Part 873 of VAAR take

precedence over FAR and any other part

of VAAR.

Proposed section 873.102 would add

definitions for ‘‘commercial service,’’

‘‘health-care providers,’’ and ‘‘healthcare resource.’’ These definitions restate

provisions of 38 U.S.C. 8152 and 8153.

Previously, because of limitations under

38 U.S.C. 8153 which were in effect

prior to Pub. L. 104–262, procurements

under the authority of 38 U.S.C. 8153

were limited to ‘‘specialized medical

resources.’’ Consistent with the new

definitions, the simplified procedures

are more expansive and would govern

procurements of all commercial services

or the use of medical equipment or

space, not just those that are considered

to be ‘‘specialized medical resources.’’

FAR 8.001(a)(2) sets forth four levels

of priority for the acquisition of

services. These are, in descending order

of priority, (i) services available from

the Committee for Purchase from People

who are Blind or Severely Disabled; (ii)

mandatory Federal Supply Schedules

(FSS); (iii) optional use FSS; and (iv)

Federal Prison Industries, Inc., or

commercial sources (including

educational and non-profit institutions).

Proposed section 873.103 would exempt

acquisitions under this proposed rule

from the provisions of FAR 8.001(a)(2)

regarding the lowest three levels of

priority. For VA, there are no longer any

mandatory use FSS (the highest level of

priority of the three levels proposed for

elimination), so elimination of this

priority level has no impact. As to the

second level, optional use FSS, even

without the priority levels, VA

contracting officers would still be able

to place delivery orders against optional

use FSS contracts in accordance with

FAR 8.404 without seeking competition.

However, they would not be required to

do so by the list of priority sources.

Under the proposed rule, it would be at

the contracting officer’s discretion

whether or not to issue a delivery order

against an optional use FSS contract or

to seek competition. This is necessary to

ensure that VA has maximum flexibility

to seek the highest quality services

available, either from optional use FSS

contractors or through a competitive

acquisition. If the contracting officer

does seek competition, contractors

formerly at the lowest level of priority

(i.e., commercial sources) would then be

able to compete for those services. It is

not proposed to affect the priority status

for the acquisition of services available

from the Committee for Purchase from

People who are Blind or Severely

Disabled, as required by the JavitsWagner-O’Day (JWOD) Act. JWOD Act

programs offer a valuable source of

services for VA and have proven to be

highly beneficial for both VA and

program participants. The JWOD Act

programs support VA’s and other

Federal Government agencies’

procurement needs and generate

employment and training opportunities

for people who are blind or have other

severe disabilities. It is in the best

interest of the Government to continue

to support these valuable programs.

Proposed section 873.104, paragraphs

(a) and (b), would restate the authority

provided in the Act to acquire healthcare resources that are commercial

services or the use of medical

equipment or space from entities

affiliated with VA, in accordance with

38 U.S.C. 7302, or approved entities

associated with an affiliate (entities will

be approved if determined legally to be

associated with affiliated institutions),

on a sole source basis without public

notice and without further justification.

Proposed section 873.104, paragraph (c),

would provide that, on VA acquisitions

of commercial services or the use of

medical equipment or space from other

sources, contracting officers would be

required to seek competition to the

maximum extent practicable. This is

consistent with provisions of the Act,

which provide that procurements may

be conducted without regard to any law

or regulation that would otherwise

require use of competitive procedures.

Competition to the maximum extent

practicable is required to ensure that

VA’s acquisitions of commercial

services or the use of medical

equipment or space are conducted in an

efficient and expeditious manner.

Proposed section 873.104, paragraph

(d), restates the requirements of the Act

that sole source acquisitions from

sources other than affiliates or approved

associates of affiliates (entities will be

approved if determined legally to be

associated with affiliated institutions)

be justified and approved.

Proposed section 873.105 would

reiterate the importance of acquisition

planning. The section would impose a

requirement to form an acquisition team

for high dollar value acquisitions

(acquisitions exceeding $100,000). The

team would be required to assure that

the acquisition is properly coordinated

and managed and to conduct market

research. To promote streamlining, the

section would authorize the use of a

simplified process for documenting the

acquisition plan. Under this process,

contracting officers would obtain

approval of and document the

acquisition approach through the

conduct of an acquisition strategy

meeting in lieu of a written acquisition

plan. These changes are necessary to

ensure that high dollar value

acquisitions are properly planned and

coordinated, while still providing a

streamlined process for documenting

the contract file.

Proposed section 873.106 would

exempt VA acquisitions of health-care

resources that are commercial services

or the use of medical equipment or

space from most of the market research

requirements of FAR Part 10 but would

provide optional market research

techniques tailored specifically for use

in acquiring commercial services or the

use of medical equipment or space. This

change is necessary to simplify market

research while ensuring that contracting

officers have a full range of techniques

available specifically tailored for use in

Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules 30661

conducting market research when

acquiring commercial services or the

use of medical equipment or space.

Proposed paragraph (a) of section

873.107 would require the contracting

officer to set aside acquisitions of

health-care resources for small business

concerns if, through market research,

the contracting officer determines that

there is a reasonable expectation that

reasonably priced offers would be

received from two or more responsible

small business concerns. This proposed

section would also provide additional

authority, over and above that found at

FAR 19.502, for waiving the

requirement for small business setasides. FAR 19.502 currently provides

that contracting officers can elect to not

set aside a procurement if, generally, the

contracting officer determines that there

is not a reasonable expectation of

obtaining offers from two or more

responsible small business concerns at

fair market prices. In addition to that

authority in FAR, under this proposed

rule, the head of the contracting activity

would have the authority to approve a

waiver from the requirement to set aside

a procurement of health-care resources,

based on a determination that it is in the

best interest of the Government. This

provision is necessary to ensure that VA

can procure health-care resources

consisting of commercial services or the

use of medical equipment or space from

the highest quality sources while still

supporting small business concerns to

the maximum practicable extent.

The rule would make certain changes

to the administration of VA’s small

business program as it applies to the

acquisition of health-care resources to

reflect the fast-moving health-care

market. For example, proposed

paragraph (b) of section 873.107 would

establish a streamlined process for

handling disagreements between VA

and the Small Business Administration

regarding whether a procurement

should be set aside for small business.

These streamlined procedures would

not alter VA’s ongoing commitment to

small business participation in its

acquisitions of health-care resources.

Nor would they affect efforts to mitigate

any potential negative impacts of

contract consolidations on small

businesses’ ability to secure work. VA’s

Office of Small and Disadvantaged

Business Utilization and Office of

Acquisition and Materiel Management

would jointly monitor the impact of the

new procedures on small business

participation to ensure opportunities are

available for competitive small

businesses.

Paragraph (c) of section 873.107

restates VA’s intent to follow the FAR

regarding the SBA 8(a) program.

Paragraph (d) provides that VA’s Office

of Small and Disadvantaged Business

Utilization and SBA’s Office of

Industrial Assistance shall serve as

ombudsmen to assist VA contracting

officers on any issues relating to

Certificates of Competency.

FAR Part 5 currently requires, with

certain exceptions, that an acquisition

with a value exceeding $25,000 be

synopsized in the Governmentwide

point of entry (GPE) (and, until January

1, 2002, in the Commerce Business

Daily (CBD)) for specified periods of

time and states what must be included

in the announcement. Proposed section

873.108 would: exempt VA acquisitions

of health-care resources consisting of

commercial services or the use of

medical equipment or space below

$100,000 from this requirement; modify

the requirement for publication of

acquisitions above $100,000 to only

require public announcement, utilizing

a medium designed to obtain

competition to the maximum extent

practicable; set the time requirements

for announcement to be a ‘‘reasonable

time’’; and modify what must be

included in the announcement. The

medium to be used for announcements

could be the GPE (FedBizOpps, http://

www.fedbizopps.gov) or any other

means, as appropriate, depending on the

complexity of the acquisition. 38 U.S.C.

8153 authorizes VA to conduct

procurements for health-care resources

that are commercial services or the use

of medical equipment or space without

regard to any law or regulation that

would otherwise require the use of

competitive procedures. In accordance

with that authority, this section also

proposes to exempt acquisitions from

affiliates and entities associated with

affiliates and sole source acquisitions of

medical services from other sources

from the requirement for publication of

notice in the GPE. These provisions

would streamline and simplify VA’s

acquisitions of commercial services or

the use of medical equipment or space.

Proposed paragraphs (a) and (b) of

section 873.109 would emphasize that

the contracting officer (rather than the

team) is the selecting official and would

provide guidance to contracting officers

on statements of work and

specifications. FAR requires certain

documentation in contract files.

Proposed paragraph (c) would provide

simplified documentation requirements

to be used in lieu of the FAR

requirements. FAR requires specific

time frames for announcing solicitations

and procurement opportunities to the

public and provides, for commercial

solicitations, that bids or proposals

received late shall not be considered.

The FAR does not specifically address

late quotations. Proposed paragraph

(d)(1) would replace FAR

announcement time requirements with a

‘‘reasonable’’ time requirement and

paragraph (d)(2) would allow the

contracting officer to accept late

quotations or proposals if late receipt is

determined by the contracting officer to

be in the best interest of the

Government. Late bids received in

response to an invitation for bid (IFB)

would not be considered and the FAR

provisions regarding late bids would

still apply. FAR provides certain

minimum requirements that a

contracting officer must meet before a

solicitation may be canceled. Proposed

paragraph (e) would exempt VA

acquisitions of health-care resources

that are commercial services or the use

of medical equipment or space from

those minimum requirements and

would provide that a contracting officer

could cancel a solicitation if

cancellation is determined to be in the

best interest of the Government. All of

these changes are proposed for the

purpose of streamlining and simplifying

VA’s acquisitions of commercial

services or the use of medical

equipment or space.

Proposed section 873.110, paragraphs

(a) through (e), would provide guidance

to contracting officers on when to use

the provisions and clauses in Part 852

of VAAR in VA acquisitions of healthcare resources that are commercial

services or the use of medical

equipment or space. Paragraph (f) would

propose to require use of FAR clause

52.207–3, Right of First Refusal, and the

VAAR clause at 852.207–70, Report of

employment under commercial

activities, in a solicitation in which

current VA employees might be

displaced as a result of contract award.

The FAR clause ensures that those

employees have a right of first refusal to

any employment openings created with

the contractor as a result of the contract

award. The VAAR clause requires the

contractor to report employment

openings and progress in hiring former

VA employees. These requirements are

necessary to protect VA employees and

to reduce the cost of contract award by

reducing or avoiding unemployment

compensation costs.

FAR places certain restrictions on

when each type of acquisition

procedure can be used. For instance, a

request for quotation (RFQ) can be used

to solicit quotations for non-commercial

service acquisitions costing up to

$100,000 and, until January 1, 2002, for

commercial service acquisitions costing

up to $5 million. Proposed section

30662 Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules

873.111 would allow use of the RFQ

process for any acquisition of

commercial services or the use of

medical equipment or space conducted

under this VAAR part, regardless of

dollar value. This change is necessary to

simplify VA’s acquisition of commercial

services or the use of medical

equipment or space and to provide

maximum flexibility to contracting

officers.

Until January 1, 2002, FAR requires

the use of full and open competition for

commercial service acquisitions

exceeding $5 million unless other

statutory authority exists to limit

competition. If this authority is not

extended, after January 1, 2002, the FAR

requirement to use full and open

competition will apply to such

acquisitions exceeding $100,000.

Paragraph (a)(1) of section 873.111

would provide, for VA acquisitions of

health-care resources that are

commercial services or the use of

medical equipment or space, that

competition to the maximum extent

practicable may be used in lieu of full

and open competition, regardless of the

dollar value of the acquisition. Proposed

paragraph (a)(2) would exempt VA

acquisitions of commercial services or

the use of medical equipment or space

from any dollar value restrictions in

FAR on the use of RFQs, allowing VA

to use the RFQ process for all

acquisitions of health-care resources

that are commercial services or the use

of medical equipment or space,

regardless of the dollar value of the

procurement. These changes are

necessary to simplify and streamline

VA’s acquisition of commercial services

or the use of medical equipment or

space by allowing use of the RFQ

process in any circumstance.

Proposed paragraph (b) of section

873.111 is advisory only and would

provide that the procedures of FAR Part

14 would continue to be used for VA

sealed bid acquisitions of commercial

services or the use of medical

equipment or space. Proposed

paragraph (c) of section 873.111 would

provide that the negotiation procedures

of FAR Parts 12, 13, and 15 would be

used for negotiated acquisitions of

commercial services or the use of

medical equipment or space, except as

modified in VAAR Part 873. This

paragraph is also advisory.

Proposed paragraph (d) of section

873.111 would provide an alternative

negotiation procedure using a

multiphase negotiation technique. This

would supersede current FAR

provisions for an advisory multi-step

process that does not allow the

Government to exclude offerors that are

unlikely to be viable competitors.

Multiphase acquisitions may be

appropriate when the submission of full

proposals at the beginning of an

acquisition would be burdensome for

offerors to prepare and for Government

personnel to evaluate. Under a

multiphase acquisition, VA would seek

limited information with vendors’ first

submissions, make one or more downselects based on the initial information,

and request full proposals only from the

offerors remaining. This technique

would ensure that only those firms most

likely to receive awards would be

required to expend the time and effort

to prepare a full proposal. It would

simplify and streamline the acquisition

process and would save both vendors

and the Government time and money.

Proposed paragraph (e) of section

873.111 would provide two additional

alternative negotiation techniques for

use by VA in acquiring commercial

services or the use of medical

equipment or space under this proposed

rule. The first technique would allow

the contracting officer to indicate to all

offerors, or to one or more offerors, a

price, contract term or condition,

commercially available feature, or other

requirement that the offeror or offerors

will have to improve upon or meet, as

appropriate, in order to remain

competitive. The second technique

would allow contracting officers to post

prices received on offers electronically

or otherwise, without disclosing the

identity of the offerors, and allow

offerors to revise their prices based on

the posted information. These

procedures are necessary to assist

contracting officers in procuring the

highest quality health-care services at

best value prices.

Proposed section 873.112 addresses

the selection of evaluation requirements

that VA contracting officers must place

in solicitations to be issued under this

proposed rule. This proposed section

would allow contracting officers the

flexibility to fashion their own

acquisition-specific evaluation scheme

with whatever information they deem to

be in the best interest of the

Government. However, this proposed

section retains the requirement from

FAR that price or cost to the

Government must be included in any

evaluation and that past performance

must be evaluated in acquisitions

exceeding the simplified acquisition

threshold (SAT) (currently $100,000).

As is currently set forth in the FAR, the

contracting officer would be required,

when not using past performance as an

evaluation factor, to document the

reasons why past performance is not

being considered.

Proposed section 873.113 sets forth a

new standard for exchanges with

offerors in negotiated acquisitions.

Currently, under FAR, any contact with

a vendor about the vendor’s proposal

that goes to the substance of the offer

constitutes ‘‘discussions.’’ This causes a

set of rules to go into effect, including

a requirement that the Government hold

‘‘discussions’’ with every offeror, even if

there is no need for discussions with

those other offerors. Less important

contact is referred to as ‘‘clarification’’

under existing FAR rules. Moreover,

there is another category in the FAR

called ‘‘communications’’ which goes to

establishment of a competitive range.

Under proposed section 873.113, the

Government could have contact, called

‘‘exchanges,’’ at any time with any

vendor, as required. However, as with

the current regulations, the Government

could not improperly disclose

information contained in another

offeror’s proposal (except as proposed at

section 873.111(e), Alternative

negotiation techniques).

Proposed section 873.114 sets forth a

new concept of the ‘‘best value pool.’’

This is the ‘‘pool’’ of offeror(s) that, after

initial evaluation, have the most highly

rated proposals with the greatest

likelihood of award. Although this is

similar in concept to the ‘‘competitive

range’’ of the current rules, the

difference is that the contracting officer

may, in the solicitation, limit the best

value pool to a specific number of

offerors among which an efficient

competition can be conducted. Under

the existing rules of the FAR, the

contracting officer may limit the number

of proposals in the competitive range for

purposes of efficiency, but that number

is not defined and could be a matter of

significant dispute. This proposed rule

would expand on this FAR authority by

defining, in advance in the solicitation,

what constitutes an efficient

solicitation. This is necessary to reduce

the likelihood of disputes and to clarify

how the authority to limit the number

of proposals in the best value pool will

be applied in a solicitation.

Proposed section 873.115 sets forth

new procedures governing proposal

revisions. Currently, under the FAR,

once a ‘‘competitive range’’ has been

developed, all offerors therein must be

given a chance to revise their proposals.

At the close of ‘‘discussions,’’ all

offerors remaining in the competition

must be requested to submit a ‘‘best and

final offer.’’ Under this proposed

section, contracting officers would be

able to request proposal revisions as

often as needed during the acquisition

process. There would be no need for a

requirement to request a ‘‘best and final

Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules 30663

offer’’ from each and every offeror in

every acquisition. The proposed section

would require that proposal

submissions be safeguarded against

improper disclosures.

Proposed section 873.116 would

provide guidance to contracting officers

on source selection. FAR 15.308

contains specific requirements for

documenting the source selection

decision that would continue to apply

to acquisitions under the proposed rule.

Proposed section 873.117 would

provide additional guidance to

contracting officers on contract award,

over and above that contained in FAR

at 15.504, specifically on the differences

between awarding RFQs and requests

for proposals.

FAR 15.505 currently requires the

contracting officer to make every effort

to provide a preaward debriefing if a

written request for a debriefing is

received from the offeror no later than

3 days after receipt by the offeror of

notice of exclusion from the competitive

range. If a preaward debriefing is

delayed, the contracting officer must

provide written documentation for the

contract file on the rationale for

delaying the debriefing. Proposed

section 873.118 would make preaward

debriefings optional on the part of the

contracting officer. Preaward debriefings

may be provided when doing so is

determined by the contracting officer to

be in the best interest of the

Government. Postaward debriefings

would still be provided as required by

the FAR. This is necessary to simplify

and streamline the acquisition process.

Miscellaneous Changes

Currently, VAAR 801.602–70(a)(4)

provides that proposed contracts for the

mutual use or exchange of use of

‘‘specialized medical resources’’ above

specified dollar thresholds be submitted

to VA Central Office for review. This

proposed rule would revise the term

‘‘specialized medical resources’’ to

‘‘health-care resources’’ pursuant to 38

U.S.C. 8152. The review threshold

levels specified in VAAR have been

changed by class deviation in

accordance with section 801.404. This

document proposes to incorporate that

class deviation into VAAR and to raise

the review thresholds for health-care

resources. This is necessary to allow

streamlined and expedited processing of

proposed contracts and to reduce the

administrative burden on contracting

officers.

This proposed rule would make

minor editorial changes to sections

801.602–71 and 801.601–72 to

correspond with the new language used

in this proposed rule.

VAAR 806.302–5(b) currently

provides that contracts for the mutual

use or exchange of use of specialized

medical resources to be acquired from

health-care facilities are approved for

other than full and open competition,

but requires justification and approval

in accordance with FAR 6.303 and

VAAR 806.303. Section 301 of Public

Law 104–262 revised 38 U.S.C.

8153(a)(3)(A), restricting and modifying

this authority. Under this new authority,

only those acquisitions of health-care

resources consisting of commercial

services, the use of medical equipment

or space, or research, to be acquired

from institutions affiliated with the

Department in accordance with 38

U.S.C. 7302, from medical practice

groups and other approved entities

associated with affiliated institutions

(entities will be approved if determined

legally to be associated with affiliated

institutions), or from blood banks, organ

banks, or research centers, are approved

for other than full and open

competition. In addition, 38 U.S.C. 8153

provides that justification and approval

is not required for contracts with these

entities. This rule proposes to revise

paragraph (b) of section 806.302–5 to

incorporate this new authority into

VAAR.

Section 301 of Public Law 104–262

revised 38 U.S.C. 8153(a)(3)(B)(i) to

provide that contracts for the

acquisition of commercial services or

the use of medical equipment or space,

not procured from affiliated institutions

or approved entities associated with

affiliated institutions (entities will be

approved if determined legally to be

associated with affiliated institutions),

may be procured without regard to any

law or regulation that would otherwise

require the use of competitive

procedures, provided the procurement

is conducted in accordance with the

simplified procedures proposed in this

rule. Public Law 104–262 revised 38

U.S.C. 8153(a)(3)(B)(ii) to require that

such acquisitions permit all responsible

sources, as appropriate, to submit a bid,

proposal, or quotation (as appropriate)

and revised 38 U.S.C. 8153(a)(3)(D) to

require that such acquisitions, if

conducted on a sole source basis, must

be justified and approved. This rule

proposes to renumber current paragraph

(c) of section 806.302–5 as paragraph (d)

and to add new paragraph (c) to

incorporate these new authorities into

VAAR.

Currently, VAAR Part 812 addresses

the acquisition of commercial services.

This rule proposes to list the Part

852.273 clauses contained herein in

section 812.302(g) for use in commercial

service acquisitions, as authorized by

FAR 12.301(f). This action is necessary,

and is proposed based on the reasons set

forth below, to permit use of these Part

852.873 clauses in VA’s commercial

service acquisitions.

This rule proposes to add the VAAR

clauses at section 852.207–70, Report of

Employment Under Commercial

Activities, and section 852.237–7,

Indemnification and Medical Liability

Insurance, as shown below in full text,

to section 812.302(c) for use in VA

commercial service solicitations,

including contracts issued under the

authority of 38 U.S.C. 8151–8153. These

VAAR clauses at sections 852.207–70

and 852.237–7 are currently set forth in

48 CFR Part 852. VA acquisitions under

the authority of 38 U.S.C. 8151–8153 are

considered to be for commercial

services and the clauses at sections

852.207–70 and 852.237–7 may be

required for use in such acquisitions,

where applicable. The VAAR clause at

section 852.207–70, as set forth below,

is necessary to ensure that contractors

provide VA employees, who might be

displaced as a result of a competitive

acquisition, with the employee’s right of

first refusal to jobs created by that

acquisition. The VAAR clause at section

852.237–7, as set forth below, is

necessary to ensure that VA contractors

providing nonpersonal health-care

services have adequate medical liability

insurance. This insurance is required to

protect both VA and veterans from

medical malpractice.

Report of Employment Under Commercial

Activities (Oct 1988)

(a) Consistent with the Government postemployment conflict of interest regulations,

the contractor shall give adversely affected

Federal employees the right of first refusal for

all employment openings under this contract

for which they are qualified.

(b) Definitions. (1) An ‘‘adversely affected

Federal employee’’ is:

(i) Any permanent Federal employee who

is assigned to the Government commercial

activity, or (ii) Any employee identified for

release from his or her competitive level or

separated as a result of the contract.

(2) ‘‘Employment openings’’ are position

vacancies created by this contract which the

contractor is unable to fill with personnel in

the contractor’s employ at the time of the

contract award, including positions within a

50-mile radius of the commercial activity

which indirectly arise in the contractor’s

organization as a result of the contractor’s

reassignment of employees due to the award

of this contract.

(3) The ‘‘contract start date’’ is the first day

of contractor performance.

(c) Filling employment openings. (1) For a

period beginning with contract award and

ending 90 days after the contract start date,

no person other than an adversely affected

Federal employee on the current listing

provided by the contracting officer shall be

30664 Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules

offered an employment opening until all

adversely affected and qualified Federal

employees identified by the contracting

officer have been offered the job and refused

it.

(2) The contractor may select any person

for an employment opening when there are

no qualified adversely affected Federal

employees on the latest current listing

provided by the contracting officer.

(d) Contracting reporting requirements. (1)

No later than 5 working days after contract

award the contractor shall furnish the

contracting officer with the following:

(i) A list of employment openings

including salaries and benefits, (ii) Sufficient

job application forms for adversely affected

Federal employees.

(2) By the contract start date, the contractor

shall provide the contracting officer with the

following:

(i) The names of adversely affected Federal

employees offered an employment opening,

(ii) The date the offer was made, (iii) A brief

description of the position, (iv) The date of

acceptance of the offer and the effective date

of employment, (v) The date of rejection of

the offer, if applicable for salary and benefits

contained in the rejected offer, and (vi) The

names of any adversely affected Federal

employees who applied but were not offered

employment and the reason(s) for

withholding an offer.

(3) For the first 90 days after the contract

start date, the contractor shall provide the

contracting officer with the names of all

persons hired or terminated under the

contract within five working days of such

hiring or termination.

(e) Information provided to the contractor.

(1) No later than 10 calendar days after the

contract award, the contracting officer shall

furnish the contractor a current list of

adversely affected Federal employees

exercising the right of first refusal, along with

their completed job application forms.

(2) Between the contract award and start

dates, the contracting officer shall inform the

contractor of any reassignment or transfer of

adversely affected employees to other Federal

positions.

(3) For a period of up to 90 days after

contract start date, the contracting officer will

periodically provide the contractor with an

updated listing of adversely affected Federal

employees reflecting employees recently

released from their competitive levels or

separated as a result of the contract award.

(f) Qualifications determination. The

contractor has a right under this clause to

determine adequacy of the qualifications of

adversely affected Federal employees for any

employment openings. However, an

adversely affected Federal employee who

held a job in the Government commercial

activity which directly corresponds to an

employment opening shall be considered

qualified for the job. Questions concerning

the qualifications of adversely affected

Federal employees for specific employment

openings shall be referred to the contracting

officer for determination. The contracting

officer’s determination shall be final and

binding on all parties.

(g) Relating to other statutes, regulations

and employment policies. The requirements

of this clause shall not modify or alter the

contractor’s responsibilities under statutes,

regulations or other contract clauses

pertaining to the hiring of veterans,

minorities or handicapped persons.

(h) Penalty for noncompliance. Failure of

the contractor to comply with any provision

of the clause may be grounds for termination

for default.

(End of Clause)

Indemnification and Medical Liability

Insurance (Oct 1996)

(a) It is expressly agreed and understood

that this is a nonpersonal services contract,

as defined in Federal Acquisition Regulation

(FAR) 37.101, under which the professional

services rendered by the Contractor or its

health-care providers are rendered in its

capacity as an independent contractor. The

Government may evaluate the quality of

professional and administrative services

provided but retains no control over

professional aspects of the services rendered,

including by example, the Contractor’s or its

health-care providers’ professional medical

judgment, diagnosis, or specific medical

treatments. The Contractor and its healthcare providers shall be liable for their

liability-producing acts or omissions. The

Contractor shall maintain or require all

health-care providers performing under this

contract to maintain, during the term of this

contract, professional liability insurance

issued by a responsible insurance carrier of

not less than the following amount(s) per

specialty per occurrence:

[Contracting Officer insert the dollar amount

value(s) of standard coverage(s) prevailing

within the local community as to the specific

medical specialty, or specialties, concerned,

or such higher amount as the Contracting

Officer deems necessary to protect the

Government’s interests].

However, if the Contractor is an entity or

a subdivision of a State that either provides

for self-insurance or limits the liability or the

amount of insurance purchased by State

entities, then the insurance requirement of

this contract shall be fulfilled by

incorporating the provisions of the applicable

State law.

(b) An apparently successful offeror, upon

request of the Contracting Officer, shall, prior

to contract award, furnish evidence of the

insurability of the offeror and/or of all healthcare providers who will perform under this

contract. The submission shall provide

evidence of insurability concerning the

medical liability insurance required by

paragraph (a) of this clause or the provisions

of State law as to self-insurance, or

limitations on liability or insurance.

(c) The Contractor shall, prior to

commencement of services under the

contract, provide to the Contracting Officer

Certificates of Insurance or insurance policies

evidencing the required insurance coverage

and an endorsement stating that any

cancellation or material change adversely

affecting the Government’s interest shall not

be effective until 30 days after the insurer or

the Contractor gives written notice to the

Contracting Officer. Certificates or policies

shall be provided for the Contractor and/or

each health-care provider who will perform

under this contract.

(d) The Contractor shall notify the

Contracting Officer if it, or any of the healthcare providers performing under this

contract, change insurance providers during

the performance period of this contract. The

notification shall provide evidence that the

Contractor and/or health-care providers will

meet all the requirements of this clause,

including those concerning liability

insurance and endorsements. These

requirements may be met either under the

new policy, or a combination of old and new

policies, if applicable.

(e) The Contractor shall insert the

substance of this clause, including this

paragraph (e), in all subcontracts for healthcare services under this contract. The

Contractor shall be responsible for

compliance by any subcontractor or lowertier subcontractor with the provisions set

forth in paragraph (a) of this clause.

(End of Clause)

VAAR 807.304–77 currently requires

the use of the above clause at section

852.207–70, Report on employment

under commercial activities, in all

contracts that include the FAR clause at

section 52.207–3, Right of First Refusal.

This proposed rule would add this

currently existing clause to the list of

clauses in VAAR Part 812 for use in

commercial item acquisitions. This is

necessary to clarify that this currently

existing clause is authorized for use in

applicable commercial item

solicitations.

VAAR 837.403 currently requires the

use of the above clause at section

852.237–7, Indemnification and Medical

Liability Insurance, in lieu of FAR

clause 52.237–7, in solicitations and

contracts for nonpersonal health-care

services. This proposed rule would

clarify at section 837.403 that this same

VAAR clause must also be used in

solicitations and contracts for

nonpersonal health-care services

awarded under the authority of 38

U.S.C. 8151–8153 and VAAR Part 873.

This proposed rule would also add this

currently existing clause to the list of

clauses in VAAR Part 812 for use in

commercial item acquisitions. This is

necessary to clarify that this currently

existing clause is authorized for use in

applicable commercial item

solicitations. The clause is necessary for

use in VA solicitations and contracts to

ensure that VA contractors providing

nonpersonal health-care services have

adequate medical liability insurance.

This insurance is required to protect

both VA and veterans from medical

malpractice.

VAAR Part 852 does not currently

contain any provisions specifically

relating to the acquisition of commercial

services under the simplified

acquisition authority of 38 U.S.C. 8151–

8153. This rule proposed to add four

Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules 30665

provisions to the VAAR, as set forth

herein in Part 852. The following is an

explanation of these proposed

provisions.

The proposed provision at section

852.273–70, Late offers, would replace

paragraph (f) of FAR provision 52.212–

1 in acquisitions of commercial services

or the use of medical equipment or

space conducted in accordance with

VAAR Part 873. Paragraph (f) of FAR

provision 52.212–1 currently provides

that offers or modifications of offers

received after the exact time specified in

the solicitation for receipt of offers will

not be considered. VAAR provision

852.273–70 proposes to allow

consideration of quotations, proposals,

or modifications of proposals received

after the time set forth in the request for

quotations or request for proposals at

the discretion of the contracting officer,

if determined to be in the best interest

of the Government. This will ensure that

VA will be able to accept the best offer

submitted on a solicitation, even if that

offer is received after the time set forth

in the solicitation.

The provision at section 852.273–71,

Alternative negotiation techniques,

proposes to allow the use of the

alternative negotiation techniques set

forth at section 873.111(e). The

techniques listed therein include (1)

allowing the contracting officer to

indicate to an offeror how the offeror

must improve its offer in order to be

considered for award and (2) allowing

the contracting officer to post prices and

permit revisions of offers based on that

information. We believe these

alternative negotiation techniques will

allow VA to conduct acquisitions on a

basis more in line with commercial

practices and will result in the

acquisition of improved services at

reduced prices. Neither FAR nor VAAR

currently contains provisions expressly

allowing alternative negotiation

techniques.

The proposed provision at section

852.273–72, Alternative evaluation,

would implement the provision at

section 852.273–71, Alternative

negotiation techniques, by advising

offerors how prices would be posted

and by providing guidance to offerors

on how to submit offers. In addition,

this proposed provision would advise

offerors on how options would be

evaluated, i.e., by adding the total price

of all options to the total price for the

basic requirement. It would also advise

offerors that the Government would not

be obligated to exercise the options. The

‘‘options’’ paragraph is included in this

proposed provision because this

provision might be used alone, without

a separate ‘‘options’’ provision.

The proposed provision at section

852.273–73, Evaluation—health-care

resources, would replace FAR provision

52.212–2 in acquisitions for commercial

services conducted in accordance with

VAAR Part 873. FAR provision 52.212–

2 provides guidance to offerors on what

factors the Government will use to

evaluate offers and on how those factors

are weighted. Under proposed VAAR

873, VA would not be required to use

factors, as described in the FAR, to

evaluate offers. Rather, VA would

include ‘‘evaluation information’’ in the

solicitation stating how offers will be

evaluated. In addition, VA would not be

required to state how the evaluation

information is weighted, but would be

required to state the relative importance

of the evaluation information. This

proposed provision is written to replace

FAR 52.212–2 with these authorities in

mind. Also, paragraph (c) has been

drafted to clarify that notice of

acceptance of an offer will create a

binding contract if the solicitation is a

request for proposals. If the solicitation

is a request for quotations, that would

not be the case, as notice of acceptance

would not create a binding contract.

The provision at section 852.273–74,

Award without exchanges, is proposed

to be added to VAAR to advise offerors

that VA intends to evaluate proposals

and award a contract without exchanges

with offerors. This provision is

necessary in order to avoid any

misunderstanding regarding award and

to help ensure that offerors provide their

best prices and terms with their initial

offer.

Consideration of Public Comments

The withdrawn proposed rule

included a certification under the

Regulatory Flexibility Act that it would

not have a significant economic impact

on a substantial number of small

entities. This certification was based on

the finding that costs to comply with the

provisions of the proposed rule would

be minimal. The Office of Advocacy

(Advocacy) of the Small Business

Administration (SBA) commented that,

instead of the certification, we should

have prepared an initial regulatory

flexibility analysis. Advocacy opposed

the degree of discretion that this rule

would afford to contracting officers in

seeking competition and evaluating and

selecting awardees. Advocacy asserted

that the proposed rule would alter the

process of ‘‘full and open competition’’

and also asserted that it would sacrifice

competition at the expense of creating

false efficiencies and short-term savings.

Advocacy further asserted that ‘‘[o]nly

market-based competition can prevent

monopoly practices and the

concentration of federal dollars in the

hands of a few large industry giants.’’

More specifically, Advocacy asserted

that the proposed rule limits

competition, provides the contracting

officer with virtually unilateral

authority to accept proposals, even

when they are submitted after the

closing date of the solicitation, and

provides many other non-competitive

changes.

The Executive Branch has worked

closely with Congress to improve the

Government’s acquisition practices and

productivity. These reforms allow

agencies to structure their contracting

operations in a way that makes sense

and provides increased flexibility for

contracting officials to make and

implement good business decisions. For

all purchases under $100,000 and, on a

test basis until January 1, 2002, for

purchases of commercial items up to $5

million, contracting officers are

authorized to use simplified procedures.

These authorities give contracting

officials flexibility to emulate

commercial practices and use the

procedures they think will work best in

the context of the specific products and

services, market conditions, and other

circumstances involved for using

competition to obtain value. For large

purchases, the revisions to FAR Part 15

help contracting officers, within current

statutory constraints, to better focus the

Government’s resources on obtaining

the best value.

The provisions of this proposed rule

are designed to build on these

acquisition reforms in a manner that, as

envisioned by Pub. L. 104–262,

strengthen the efficiency and

effectiveness by which VA acquires

health care resources on behalf of

America’s veterans. The rule would

require contracting officers to seek

competition to the maximum extent

practicable. In accomplishing this end,

the rule would not sacrifice

competition; nor would it give

contracting officers unfettered

discretion in evaluating sources and

making awards.

With respect to soliciting sources, for

acquisitions over $100,000, the

proposed rule would require

acquisitions to be publicly announced.

Contracting officers would be afforded

greater flexibility in shaping how notice

is published. This flexibility is not

expected to be used to limit

competition. Rather, it is intended to

enable contracting officers to select the

means of notice that will maximize

effective dissemination of information

to interested sources. While contracting

officers would have the option of not

publicizing contracting opportunities

30666 Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules

below $100,000, they would still be

expected to solicit a sufficient number

of sources to promote competition to the

maximum extent practicable and to

ensure the purchase is advantageous to

the Government.

With respect to the evaluation of

sources and awarding of contracts, the

proposed rule would simplify the

procedures associated with the conduct

of negotiations, especially with respect

to that which would otherwise be

required under FAR Part 15. However,

key source selection decision principles

would remain unchanged. Among other

things, contracting officers would be

required to: (1) Make source selection

decisions in a manner consistent with

the solicitation (which would provide

evaluation information to interested

offerors); (2) treat prospective

contractors fairly and impartially; (3)

determine that prices are fair and

reasonable; and (4) document their

decisions.

Of the approximately 6,000

commercial service acquisitions valued

in excess of $25,000 awarded annually

in Fiscal Years (FY) 1998 and 1999 that

might have been covered by this

proposed rule, only a total of three (two

in FY 1998 and one in FY 1999) of those

acquisitions were in excess of $5

million. Less than 2,000 fell between

$100,000 and $5 million. Thus, where

the differences between the proposed

rule and the FAR are greatest (i.e., for

acquisitions over $5 million), the

number of potentially affected entities is

minimal. While there are more entities

seeking to make offers in the lower

dollar range, the differences between the

FAR and the proposed rule are

considerably less extensive in that

range.

In toto, the proposed rule should

ensure that competition is used

effectively, as authorized and

envisioned by Public Law 104–262, and

in a manner that promotes strong

participation by contractors small and

large. As discussed in greater detail

below, VA does not believe that the

ways in which the proposed rule differs

from the FAR would negatively impact

competition. In addition, VA believes

that the proposed rule would not

negatively impact small business

participation and intends to monitor,

through the Federal Procurement Data

System, the use of the procedures

provided in this rule and the impact on

VA’s socioeconomic programs.

For acquisitions exceeding $100,000,

the proposed rule differs from the FAR

in the following major areas:

FAR requirement Proposed rule requirement

a. 8.001: Four levels of priority for acquiring services ............................. 873.103: Only one priority source.

b. 6.101: Prior to 1/1/2002, for negotiated commercial acquisitions exceeding $5 million, promote full and open competition (i.e., use FAR

Part 15).

873.104(c): Promote competition to the maximum extent practicable (i.

e., use simplified procedures similar to FAR Part 13).

c. 6.101: After 1/1/2002, for negotiated commercial acquisitions exceeding $100,000, promote full and open competition (i.e., use FAR

Part 15).

873.104(c): Promote competition to the maximum extent practicable (i.

e., use simplified procedures similar to FAR Part 13).

d. 19.502–2(b): Set aside for small business if two or more. No waiver

provisions.

873.107(a): Set aside for small business if two or more. May be waived

by the head of the contracting activity.

e. 5.201: Transmit notice of acquisitions exceeding $25,000 to the Governmentwide point of entry (GPE).873.108(a): Publicly announce acquisitions exceeding $100,000 using

a medium designed to obtain competition to the maximum extent

practicable.

f. 6.302–1 & 5.101: Synopsize proposed acquisitions where only one

source can satisfy agency needs in the GPE.

873.108(b): Acquisitions from an affiliate or acquisitions of hospital

care, medical services, and other health-care services from a sole

source are exempt from synopsis in the GPE.

g. 15.208 and 52.212–1(f): Late offers will not be considered. Late

quotes not addressed.

873.109(d): Late offers and late quotes may be considered if in the

best interest of the Government.

h. 13.5: Prior to 1/1/2002, use of the simplified procedures of FAR Part

13 is limited to acquisitions of $5 million or less.

873.111(a)(2): Use of simplified procedures similar to FAR Part 13 may

be used regardless of the dollar value of the acquisition. No expiration date for this authority.

i. 13.5: After 1/1/2002, use of the simplified procedures of FAR Part 13

is limited to acquisitions of $100,000 or less.

873.111(a)(2): Use of simplified procedures similar to FAR Part 13 may

be used regardless of the dollar value of the acquisition.

j. 15.202: Allows issuance of an advisory multi-step solicitation. All initial offerors may still submit full offers, even if advised that their offers are unlikely to be viable.873.111(d): Allows multiphase solicitations and rejection of offerors

whose initial offers indicate that they are unlikely to be viable contenders for award.

k. 15.306(d): May bargain with offerors. Extensive limits on what can

be discussed when.

873.111(e)(1): Expands on what can be discussed and on when discussions can be held. Allows the contracting officer to indicate a

price or feature that offeror must meet or improve upon to remain

competitive.

l. No comparable FAR provision .............................................................. 873.111(e)(2): Allows public posting of offer prices and subsequent

submission of revised offers.

m. 15.304: Provides detailed requirements for evaluation factors .......... 873.112(a): Provides agency acq. officials with broad discretion in establishing criteria, factors, and other evaluation information (except

that price or cost must be evaluated in all acquisitions and past performance evaluated in acquisitions over the SAT).

n. 15.304(d): All factors and subfactors affecting award and their relative importance shall be stated.873.112(d): The relative importance of any evaluation information must

be stated.

o. 15.201/15.306: Detailed guidance on exchanges of information with

industry, categorized as pre-receipt of proposals, post-receipt but

prior to establishing a competitive range, and post-establishment of a

competitive range. Must conduct discussions with all offerors in the

competitive range.

873.113: Broad authority for the contracting officer to conduct exchanges with industry throughout the acquisition process. Need not

conduct exchanges with all offerors.

p. 15.306(c): Contracting officer must establish a competitive range if

discussions are to be held.

873.114: Contracting officer may establish a best value pool.

q. 15.306(c)(2): Contracting officer may limit number of proposals to

greatest number that will permit efficient competition.

873.114(b): Contracting officer may state in the solicitation a maximum

number of offerors that will be considered in the best value pool.

Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules 30667

FAR requirement Proposed rule requirement

r. 15.307: Each offeror in the competitive range shall be asked to submit a final proposal revision. Contracting officer shall establish a

common cutoff date for all final proposal revisions.

873.115: Contracting officer may request revisions as often as needed.

Contracting officer is not required to establish a common cutoff date

for all offerors.

s. 15.505: Offerors excluded from the competitive range may request a

debriefing before award. Contracting officer may delay the debriefing

if in the best interest of the Government. Contracting officer must

document the reasons for the delay.

873.118: Offerors excluded from the competition under an RFP may

request a debriefing. Contracting officer may provide a pre-award debriefing if determined to be in the best interest of the Government.

No documentation is required if a pre-award debriefing is not provided.

The following is a discussion of the

above differences and their impact on

competition:

a. As noted in the SUPPLEMENTARY

INFORMATION above, FAR 8.001(a)(2) sets

forth four levels of priority for the

acquisition of services. These are, in

descending order of priority: (i) Services

available from the Committee for

Purchase from People who are Blind or

Severely Disabled; (ii) mandatory

Federal Supply Schedules (FSS); (iii)

optional use FSS; and (iv) Federal

Prison Industries, Inc., or commercial

sources (including educational and nonprofit institutions). Proposed section

873.103 would exempt VA from the

provisions of FAR 8.001(a)(2) regarding

the lowest three levels of priority. For

VA, there are no longer any mandatory

use FSS (the highest level of priority of

the three levels proposed for

elimination), so elimination of this

priority level has no impact. As to the

second level, optional use FSS, even

without the priority levels, VA

contracting officers would still be able

to place delivery orders against optional

use FSS contracts in accordance with

FAR 8.404. However, they would not be

required to do so by the list of priority

sources. Under the proposed rule, it

would be at the contracting officer’s

option whether or not to issue a delivery

order against an optional use FSS

contract or to pursue another

contracting tool. If a contracting officer

issued a solicitation for services instead

of placing a delivery order with an

optional use FSS contractor, optional

use FSS contractors, Federal Prison

Industries, Inc., and commercial sources

would have an opportunity to compete.

This provision of the proposed rule may

provide firms, including small

businesses, which chose not to

participate in the FSS program with

additional opportunities to compete.

The decision on whether or not to use

the FSS program would not affect

whether award was made to a small

business under the optional use FSS

program or to a small business under a

solicitation. We believe that this

provision would result in minimal, if

any, impact on small business and little

change in the number of awards to small

business. However, it does have the

potential to increase, rather than

decrease, competition.

b. Until January 1, 2002, the FAR

allows use of the simplified provisions

of FAR Part 13 for the acquisition of

commercial services not to exceed $5

million in value. For negotiated

acquisitions exceeding $5 million, the

FAR requires use of the more formal

negotiation procedures of FAR Part 15.

The proposed rule differs from the FAR

by allowing use of simplified

procedures similar to those in FAR Part

13 for all acquisitions. However,

competition would still be required

under the proposed rule and all offers

received would have to be considered

(see 873.104(c)). The negotiation

method used for the acquisition,

whether the procedures of the FAR or

the more simplified procedures of this

proposed rule, would not, in our

opinion, have an impact on competition

or on whether or not award would be

made to a small business.

c. The test provisions of FAR 13.5 are

scheduled to expire on January 1, 2002.

If those test provisions are not renewed

or extended, after that date, all

negotiated commercial acquisitions

conducted under the FAR exceeding

$100,000 will have to be conducted

using the formal procedures of FAR Part

15. However, this proposed rule would

allow VA to continue to use simplified

procedures to conduct such

acquisitions. Again, as noted in ‘‘b.’’

immediately above, competition would

still be required under the proposed

rule. As discussed in paragraph ‘‘e.’’

below, the proposed rule would require

public announcement of proposed

contract actions using methods that

maximize effective dissemination and

would require that all offers received be

considered. The proposed rule would

allow contracting officers to use

simplified negotiation procedures rather

than the more formal procedures of FAR

Part 15. The method of negotiation used

should not negatively impact

competition or affect whether or not

award would be made to a small

business.

d. The provisions of section 873.107

regarding the waiver of small business

set-asides are addressed in the Initial

Regulatory Flexibility Analysis.

e. Although the proposed rule differs

from the FAR in not requiring

publication of contracting opportunities

in the Governmentwide point of entry

(GPE), the proposed rule (at 873.108)

would require contracting officers to

publicly announce proposed

procurements over $100,000 using those

means necessary to ensure maximum

effective dissemination of information

on the proposed acquisition. Thus, for

example, if the contracting officer

determined that the GPE was the most

effective tool for advising interested

offerors of an opportunity over

$100,000, contracting officers would be

expected to use the GPE. For

acquisitions under $100,000,

contracting officers would be expected

to solicit a sufficient number of sources

to promote competition to the maximum

extent practicable. These changes

should not reduce competition but

rather improve the efficiency by which

VA solicits interested sources.

Additional discussion of 873.108 can be

found in the Initial Regulatory

Flexibility Analysis.

f. The provisions of section 873.108

regarding announcing acquisitions in

the GPE are addressed in the Initial

Regulatory Flexibility Analysis.

g. The issue regarding acceptance of

late offers is addressed below.

h. and i. The use of simplified

procedures similar to those of FAR Part

13 for commercial service acquisitions,

versus use of the more formal

procedures of FAR Part 15, is addressed

in paragraph b. above.

j. The FAR allows the contracting

officer to issue an advisory multi-step

solicitation. Initial offers are submitted

containing limited information. All

initial offerors can proceed to submit

full offers, even if one or more of those

offerors are advised that, based on their

initial offers, their offers are unlikely to

be viable. This proposed rule contains

similar provisions, with the exception

that, under this proposed rule, offerors

whose initial offers indicate that they

are unlikely to be viable competitors

could be excluded from further

participation in the acquisition. This

30668 Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules

proposed rule would be beneficial to

offerors by relieving them of any burden

to prepare final offers when those offers

are unlikely to receive award and would

be beneficial to the Government by

eliminating a requirement to evaluate

full proposals from firms that are

unlikely to receive award. The proposed

rule would save time and effort on both

the offeror’s and the Government’s part.

Although the procedure would

authorize mandatory ‘‘downselects,’’ the

impact on competition should be

minimal. While downselects under the

multi-step process authorized by FAR

Part 15 are advisory only, we believe

that, in most instances, sources advised

that they are unlikely to receive award

will not compete. The proposed rule

offers the efficiency of being able to

exclude the less than highly competitive

offeror that occasionally may wish to

pursue its offer under the Part 15

process (but would not add significantly

to the overall competitive pressures of

the source selection, given its

comparatively weaker competitive

position).

k. The FAR allows contracting officers

to bargain with offerors, but places

limits on what can be discussed when.

This proposed rule would expand on

when discussions (called ‘‘exchanges’’

in the proposed rule) could take place

and would expand on what could be

discussed. The intent of the proposed

rule is to ensure that there is a complete

understanding between the Government

and the offerors prior to making an

award decision. In addition, the

proposed rule would allow the

contracting officer to indicate a price,

contract term or condition, feature or

requirement the offeror would have to

meet or improve upon in order to stay

competitive. These provisions would

help ensure VA acquires the best value

services available but should have no

impact on the number of offers received

and thus no impact on the amount of

competition.

l. The proposed rule would allow the

contracting officer to publicly post all

prices received on an offer and permit

offerors to subsequently revise their

offers. There are no similar provisions

in the FAR. Since this provision would

apply equally to all offerors and since it

would apply only after offers had been

submitted, we do not expect it to have

a negative impact on the number of

offers received or to thereby limit

competition.

m. The FAR specifies requirements

for evaluation factors. This proposed

rule would provide broad discretion to

agency acquisition officials to establish

evaluation information. How the

factors/information would be structured

and what factors/information the

Government would use to evaluate

offers should have little, if any, impact

on competition. If a firm is capable of,

and interested in, providing the service,

the firm would submit an offer based on

the factors/information provided. We do

not expect any reduction in the number

of offers received based on this

provision.

n. The FAR requires that all

evaluation factors and subfactors and

their relative importance be stated in the

solicitation. This proposed rule would

require that the evaluation information

be stated in the solicitation and that the

relative importance of those evaluation

information items be stated. Under the

proposed rule, the contracting officer

would have broad discretion to

determine what to include as evaluation

information, but this provision should

have no effect on the amount of

competition expected under such

solicitations. There is no reason to

suspect that fewer firms would submit

offers because of this provision.

o. The FAR contains guidance on, and

requirements for, conducting

discussions with vendors. If discussions

are held, the FAR requires that the

contracting officer hold discussions

with all offerors, even if there is nothing

to discuss. The proposed rule at section

873.113 would simplify the negotiation

process by providing the contracting

officer with broad discretion on what to

discuss and on when and how those

discussions are to be conducted. In

addition, the proposed rule provides

that the contracting officer need hold

discussions only if there is something to

discuss. The intent of the proposed rule

is to simplify the negotiation process

while ensuring that there is a firm

understanding between the Government

and the offerors prior to making an

award decision. We believe that these

provisions would have no effect on the

number of firms that submit offers on

any particular solicitation and that these

provisions are neutral as to whether or

not award is made to a small business.

p. The FAR requires the contracting

officer to establish a competitive range

if discussions are to be held, while the

proposed rule at section 873.114 would

provide that the establishment of a best

value pool (similar to a competitive

range) would be optional. This

provision would have no effect on the

number of firms submitting offers on

any particular solicitation. If a best

value pool is not established, then all

offers received would be considered to

be in contention for award.

q. The FAR currently allows the

contracting officer to limit the number

of firms in the competitive range to the

greatest number that will permit an

efficient competition. The proposed rule

at section 873.114 would provide a

similar method for limiting the number

of firms in the competitive range,

allowing the contracting officer to set, in

advance in the solicitation, a maximum

for the number of firms that would be

considered in the best value pool. No

dollar threshold is proposed for use of

this authority. All firms submitting

offers would be evaluated, but only the

top 3 (or whatever number set by the

contracting officer) would be included

in the best value pool. Further

negotiations would then be conducted

with those top 3 firms. Again, we

believe this provision would not have

an impact on whether or not a firm

decides to submit an offer or on whether

or not a small firm versus a large firm

was selected for inclusion in the best

value pool.

r. The FAR requires that each offeror

in the competitive range be requested to

submit a final proposal revision and that

a common cut-of date be established for

receipt of those final proposal revisions.

This proposed rule at section 873.115

would allow the contracting officer to

hold discussions (exchanges) with

offerors as often as needed, but if there

was no need to hold discussions with a

firm that had submitted an outstanding

offer, there would be no requirement to

do so. Offerors could submit revised

offers at any time. Each firm with whom

exchanges were to be held would be

provided a time period during which it

may submit a revised offer. Award

would be made after the last time period

had expired. Again, these procedures

would all be applicable only after initial

offers had been received. We believe the

presence or lack of these procedures

would have no impact on whether a

firm decides to submit an offer or on

whether a small business, versus a large

business, received award.

s. The FAR requires the contracting

officer to make every effort to provide a

pre-award debriefing to offerors

excluded from the competition, if so

requested. The debriefing may be

delayed if the delay is in the best

interest of the Government. The reasons

for the delay must be documented in

writing. This proposed rule at section

873.118 would allow the contracting

officer more discretion in deciding

whether or not to provide a pre-award

debriefing and would remove the

requirement for written justification if

the debriefing is delayed. Post award

debriefings would still be required, as

provided in the FAR. This provision

would simplify and expedite the award

process. We believe the presence or lack

of this provision would have little to no

Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules 30669

effect on whether a firm decided to

submit a bid on any particular

solicitation or on whether a small

business received award. Accordingly,

we believe this provision should have

little effect on competition.

Based on the above, it is our belief

that the proposed rule would not limit

competition.

Advocacy contended that the original

proposed rule’s provisions allowing the

consideration of offers received after the

closing date of a solicitation would

negatively impact competition. No

changes to this new proposed rule have

been made based on this comment.

Current General Accounting Office

(GAO) protest decisions permit an

agency under certain circumstances to

accept a late proposal by extending the

due date for receipt of proposals. Ivey

Mechanical Co., Comp. Gen. Dec. B–

272764, 96–2 CPD ¶ 83. With regard to

quotes, current GAO protest decisions

state that if a request for quotation

(RFQ) does not contain a late quotations

clause, but merely requests quotations

by a certain date, that date is not

considered a firm date for the receipt of

quotations. In such a case, the agency is

not precluded from considering a

quotation received after that date,

provided that no substantial activity has

transpired in evaluating quotes and the

other quoters would not be prejudiced.

Instruments & Controls Serv. Co., 65

Comp. Gen. 685 (1986). Since offers and

quotes are not publicly disclosed,

vendors are not prejudiced by

consideration of offers or quotes

received late. Accordingly, this

proposed rule concerning acceptance of

late quotations or proposals essentially

restates existing Government contract

law and procedure. In our view, this

provision would be neutral regarding

impacts on small business versus large

business. There is no reason to believe

that late quotations or proposals would

more likely be submitted by large

businesses than by small businesses.

Several comments were received from

the Small Business Administration

(SBA).

SBA questioned whether the term

‘‘sole source,’’ as used in section

873.104, accurately reflects a common

understanding of the term ‘‘sole source’’

as there being only one available source.

No changes are made to this revised

proposed rule based on this comment.

In our view, the term ‘‘sole source,’’ as

used in this revised proposed rule, is

consistent with the definition of a ‘‘sole

source acquisition’’ as provided in FAR

6.003, meaning that negotiations are

conducted with only one source. Under

the FAR definition, an acquisition

would be a ‘‘sole source acquisition’’ if

negotiations were conducted with only

one source, as would be the case for a

VA acquisition from an affiliated

institution, even if there were other

sources that could also provide the

service.

Sections 873.104(c) and 873.108(a)

include the term ‘‘as appropriate.’’ SBA

opposed the inclusion of this term in

the rule based on an assertion that it

does not appear in 38 U.S.C.

8153(a)(3)(B)(ii). No changes are made

to this revised proposed rule based on

this comment. The cited statutory

provisions were amended by section

402(e) of Public Law 105–114 to include

this term.

SBA recommended that VA develop

guidelines to define market research in

section 873.107. We agree with the

comment and made a change to section

807.107. The FAR already includes

guidelines to define market research at

section 10.002(b). The applicable

provisions of section 10.002(b) would be

useful in conducting market research for

commercial services. Therefore, we have

incorporated the provisions of FAR

10.002(b) into the guidance on market

research contained in this revised

proposed rule.

SBA suggested that we revise section

873.107 to require the head of the

contracting activity to submit copies of

approved waivers of small business set

asides to the Director, VA Office of

Small and Disadvantaged Business

Utilization, and to the Assistant

Administrator, SBA Office of Prime

Contracting. No change was made to

this revised proposed rule based on this

comment. We believe that if an intergovernmental agreement of this nature

were to be established, it would not

need to be included in regulations.

SBA raised concerns with the

provision at section 873.108(c) making

public announcement optional for

procurement opportunities below the

SAT. No changes were made to this

revised proposed rule based on this

comment. Even though public

announcements are not required by the

rule, contracting officers are expected to

solicit a sufficient number of sources to

promote competition to the maximum

extent practicable and ensure that the

purchase is advantageous to the

Government, based, as appropriate, on

either price alone or price and other

factors. Public Law 104–262 grants VA

authority to ‘‘permit all responsible

sources, as appropriate, to submit a bid,

proposal, or quotation * * *.’’

(emphasis added) and to ‘‘prescribe

simplified procedures for the

procurement of health-care resources.’’

As provided in the proposed rule, VA

contracting officers are required to

obtain competition to the maximum

extent practicable. The ‘‘as appropriate’’

provision of Public Law 104–262

permits VA to determine what is

appropriate regarding announcing the

solicitations valued below the SAT.

Further, Public Law 104–262 states that

acquisitions conducted in accordance

with these simplified procedures ‘‘may

be conducted without regard to any law

or regulation that would otherwise

require the use of competitive

procedures * * *.’’ Accordingly, the

provisions of section 873.108(c) are

consistent with statute.

SBA suggested that VA select one

method to publicize its procurement

opportunities. No change was made to

this revised proposed rule based on this

comment. Changing technology makes

selection of one alternative too limiting.

The intent of this proposed rule is to

maximize the options available for

public announcements and to maximize

the effective distribution of information

on VA solicitations. Contracting officers

should be free to select the methods for

announcing acquisitions that are most

appropriate for the type of acquisition

being conducted.

SBA objected to the provisions at

section 873.111(a)(2) of the original

proposed rule which provide that, for

acquisitions below the simplified

acquisition threshold ($100,000), two

quotations will be considered as

meeting the requirement for competition

to the maximum extent practicable.

Based on subsequent discussions held

with a representative from the SBA

Office of Advocacy, changes have been

made to this section. The provision

providing for two quotations has been

removed. The requirements of FAR

13.104 would thus apply regarding

obtaining competition to the maximum

extent practicable.

SBA pointed out that section 873.118,

Debriefings, only addressed debriefings

for multiphase or best value pool

acquisitions, and did not address

debriefings for requests for quotations

(RFQs), sealed bids, or negotiated

acquisitions that are not multiphase or

best value pools. In this regard, SBA

suggested that debriefings be required

either after an offeror is eliminated from

the competition or after contract award.

Based on this comment, changes are

made to this proposed rule. The FAR

does not require debriefings for RFQs or

sealed bids. In addition, while the FAR

at section 15.505(b) requires that the

contracting officer ‘‘make every effort to

debrief an unsuccessful offeror as soon

as practicable,’’ it allows the contracting

officer to refuse the request for a preaward debriefing if providing the

debriefing is not in the Government’s

30670 Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules

best interest. The reasons for the denial

must be documented in the contract file.

The intent of this proposed rule is to

simply and expedite the award process.

Towards this end, the proposed rule

would remove some of the

administrative burden imposed by the

FAR, eliminate the documentation

requirements of the FAR, and make preaward debriefings clearly optional.

Making pre-award debriefings optional

would help expedite the award process.

Post-award debriefings would still be

required for any firm requesting a

debriefing as currently provided in the

FAR. Where this proposed rule is silent,

existing FAR requirements would apply.

Thus, for RFQs, the ‘‘request for

information’’ requirements of FAR

13.106–3(d) would still apply. For

sealed bids, the ‘‘information to

bidders’’ requirements of FAR 14.409

would still apply. Based on the

comment, the references to multiphase

acquisitions and best value pools have

been replaced with a reference to a

‘‘request for proposals (RFP)’’ to clarify

that this section would apply to all RFPs

conducted under this authority.

A VA contracting officer objected to

the proposed regulatory requirement of

section 873.105 that the contracting

officer form a team for each acquisition

of commercial services or the use of

medical equipment or space conducted

under the authority of 38 U.S.C. 8153.

We have made changes to this revised

proposed rule based on this comment.

Prior to the enactment of Public Law

104–262, 38 U.S.C. 8153 only

authorized VA to acquire specialized

medical services. Public Law 104–262

expanded the types of services that can

be acquired under the authority of 38

U.S.C. 8153 to include any health-care

resource that is a commercial service or

the use of medical equipment or space.

These proposed simplified procedures

have been drafted to cover this

expanded authority. However, we

expect these simplified acquisition

procedures to continue to be used

primarily for the acquisition of medical

services. Such acquisitions are usually

highly complex and of significant dollar

value. It is critical to the success of such

acquisitions that appropriate staff at the

medical center fully cooperate with the

contracting officer in the development

of specifications, the conduct of the

acquisition, as appropriate, and in the

administration of the contract. We

believe this can best be accomplished by

the formation of a team. The

composition of the team is to be

determined by the contracting officer

and the team would not need to be the

same for every acquisition. The team

could consist of as few as two people,

the requestor and the contracting officer.

While we feel a team is necessary for

complex, high dollar value acquisitions,

we agree with the commenter that a

team may not be necessary for simple

acquisitions of low dollar value.

Therefore, based on the comment, we

have proposed to set a dollar threshold

of $100,000 (the SAT) for the

requirement to form a team.

One commenter expressed concern

that, if adopted, the rule would

effectively limit competition and

prevent textile rental companies from

obtaining VA laundry service contracts.

No changes are made to this revised

proposed rule based on this comment.

We do not believe this revised proposed

rule would have an effect on whether

textile rental companies obtain VA

laundry service contracts. We believe

the pertinent issue raised by the

commenter concerns VA decisions on

whether or not to compete laundry

services. Those determinations are

beyond the scope of and not addressed

in the proposed rule.

One commenter objected to the

provisions of the proposed rule

exempting VA from provisions of FAR

and VAAR. No changes are made to this

revised proposed rule based on this

comment. Public Law 104–262

specifically grants VA authority to make

such exemptions.

One commenter alleged that the rule

attempts to waive the Economy Act and

allow VA to buy commercial services

from other Government agencies with

few restrictions. No changes are made to

this revised proposed rule based on this

comment. Acquisitions under the

Economy Act and FAR Subpart 17.5 are

not addressed in this proposed rule. In

addition, this proposed rule does not

cover acquisitions of health-care

resources from the Department of

Defense (DoD). Under 38 U.S.C. 8111,

VA has specific authority to acquire

health-care resources from DoD. This

proposed rule, however, does cover

acquisitions from other Federal

agencies. The statute upon which this

proposed rule is based, 38 U.S.C. 8153,

provides that VA may make

arrangements by contract or other form

of agreement for the mutual use or

exchange of use of health-care resources

with ‘‘any health-care provider, or other

entity or individual.’’ These terms

include other Federal agencies. Thus,

the statute specifically authorizes VA to

acquire commercial services or the use

of medical equipment or space from

other Federal agencies. However, at this

time, we have no reason to believe that

other Federal agencies will submit bids,

proposals, or quotations in response to

VA solicitations for commercial services

or the use of medical equipment or

space.

One commenter expressed concern

regarding the vague language used in

the proposed rule and the potential

negative affects thereof on competition

and suggested that the final rule define

and give examples for the terms ‘‘best

interest of the Government’’ and

‘‘contracting officer’s discretion.’’ No

changes are made to this revised

proposed rule based on this comment.

Circumstances vary widely and it would

be difficult, if not impossible, to

describe all circumstances where a

decision is in the ‘‘best interest of the

Government’’ or to define whether

decisions subject to the ‘‘contracting

officer’s discretion’’ are either

acceptable or not acceptable.

One commenter requested that VA

provide examples of how it intends to

define the term ‘‘reasonable,’’ as used in

the November 9, 1998, SUPPLEMENTARY

INFORMATION portion of the Federal

Register proposed rule notice. No

changes are made to this revised

proposed rule based on this comment.

This term, as used in the

SUPPLEMENTARY INFORMATION, was not a

part of the regulation. Whether or not an

action is ‘‘reasonable’’ depends on the

circumstances. Defining what is

reasonable in one set of circumstances

might restrict action in another set of

circumstances, even when the proposed

action under that new set of

circumstances could also be considered

‘‘reasonable.’’ This notwithstanding,

contracting officers must conduct

business with integrity, fairness, and

openness. Under the proposed rule,

contracting officers would remain

subject to FAR 1.102–2(c)(3), which

states that all contractors and

prospective contractors shall be treated

fairly and impartially but need not be

treated the same.

Two commenters addressed the

provisions of the proposed rule at

sections 801.602–70 and 801.602–71

regarding technical and legal review

requirements for VA sales agreements.

Changes are made to this revised

proposed rule based on these comments.

This proposed rule is not intended to

apply to the sale of VA services.

Therefore, provisions regarding

technical and legal review of proposed

VA sales agreements have been

removed.

One commenter requested

clarification of section 806.302–5

regarding the legal definition of the term

‘‘affiliated institution.’’ No changes are

made to this revised proposed rule

based on this comment. Pursuant to 38

U.S.C. 7302, VA may have affiliations

Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules 30671

with schools of medicine, osteopathy,

dentistry, nursing, pharmacy,

optometry, podiatry, public health, or

allied health professions, other

institutions of higher learning, medical

centers, academic health centers,

hospitals, and such other public or

nonprofit agencies, institutions, or

organizations as the Secretary of

Veterans Affairs considers appropriate.

One commenter expressed concern

with the provisions of the proposed rule

exempting VA from the automatic small

business set-aside provisions of the FAR

for acquisitions between $2,500 and

$100,000, from the FAR notification

requirements for announcing

commercial solicitations in the

Commerce Business Daily (CBD), and

from other FAR acquisition processes

and techniques. The commenter

expressed concern that the proposed

rule gives contracting officers too much

discretion. Changes were made to the

exemption from the automatic set-aside

provisions of FAR 13.003(b)(1) and

19.502–2(a) contained in the November

9, 1998, proposed rule based on these

comments.

We examined the exemption to the

automatic set-aside of acquisitions

between $2,500 and $100,000 for small

business and determined that

elimination of this exemption would not

impact the ability of VA to conduct

simplified acquisitions. Accordingly, we

have removed that exemption from this

revised proposed rule.

Regarding a comment on the broad

discretion given to contracting officers,

that discretion is consistent with the

reforms of the Federal Acquisition

Streamlining Act and the Clinger-Cohen

Act and other acquisition reform efforts.

It provides contracting officers with

authority to conduct acquisitions in a

manner that is in the best interest of the

Government. No changes were made to

this revised proposed rule based on this

comment.

One commenter expressed concern

regarding the statement contained in the

proposed rule that VA is exempt from

laws that require the use of competitive

procedures. No changes were made to

this revised proposed rule based on this

comment. VA has statutory authority for

this exemption. 38 U.S.C. 8153

specifically states that ‘‘[I]f the healthcare resource required is a commercial

service, the use of medical equipment or

space, and is not to be acquired from an

entity described in subparagraph (A),

any procurement of the resource may be

conducted without regard to any law or

regulation that would otherwise require

the use of competitive procedures for

procuring the resource, but only if the

procurement is conducted in

accordance with the simplified

procedures prescribed pursuant to

clause (ii).’’ 38 U.S.C. 8153 goes on to

require, for acquisitions not conducted

with affiliates, that the simplified

procedures permit all responsible

sources, as appropriate, to submit a bid,

proposal, or quotation and that

acquisitions conducted on a sole source

basis be justified in writing. This

proposed rule sets forth those simplified

procedures. The commenter went on to

state a belief that Congress intended that

VA be covered under the newly enacted

Federal Activities Inventory Reform

(FAIR) Act and stated an expectation

that VA will comply with all of the

FAIR Act provisions. No changes are

made to this revised proposed rule

based on this comment. Issues

concerning the FAIR Act are outside of

the scope of and not addressed by this

proposed rule.

One comment from a VA contracting

officer requested clarification of the

distinction between the terms

‘‘weighted,’’ as used in the

SUPPLEMENTARY INFORMATION portion of

the proposed rule notice of November 9,

1998, and ‘‘relative importance,’’ as

used in section 873.112(d). The

proposed rule at section 873.112(d)

states that the relative importance of any

evaluation information included in a

solicitation shall be set forth therein.

The SUPPLEMENTARY INFORMATION

portion of the proposed rule of

November 9, 1998, merely reflected that,

consistent with FAR 15.304(d), the

elements that are distinguished by

‘‘relative importance’’ are not required

to be weighted.

In addition to the changes noted

above, several other changes were made

to the proposed rule document

published in the Federal Register on

November 9, 1998, as follows:

• A statement exempting architectengineer (A/E) services from the rule

has been added to section 873.102. A/

E services are currently acquired in

accordance with 40 U.S.C. 541–544. It is

not the intent of this proposed rule to

change the way VHA acquires A/E

services or to deviate from the

requirements of 40 U.S.C. 541–544.

• Additional provisions have been

added to sections 873.105 and 873.112

regarding acquisition planning and the

evaluation of past performance. These

are important aspects of the acquisition

process and warrant additional

emphasis in the rule.

• A provision has been added to

section 873.107 to clarify that the

section only applies to acquisitions in

excess of the micro-purchase threshold.

The FAR does not require set-aside of

acquisitions below the micro-purchase

threshold and this section was not

intended to be more restrictive than the

FAR.

• Based on comments received from

SBA, the number of days provided in

873.107(b) for SBA to notify the

contracting officer of their intent to

appeal has been changed from 1 day to

2 days to correspond with the number

of days provided in the FAR.

• A provision has been added to

section 873.108(b) to clarify that the

exemption to announcing sole source

acquisitions in the GPE would also

apply to sole source mutual use or

exchange of use contracts. To the extent

that VA would be acquiring services

under such contracts, those contracts

are ‘‘acquisitions,’’ as originally covered

by this paragraph.

• A provision has been added to

section 873.117 to clarify that it is at the

contracting officer’s option, rather than

a requirement, to establish a binding

contract when a request for quotation

process was used to obtain quotes. As

originally proposed in the November 9,

1998, document, this section could have

been interpreted as requiring such

action rather than making it optional.

• A Paperwork Reduction Act notice

has been added to the proposed rule on

a currently existing VAAR clause at

section 852.207–70, Report of

employment under commercial

activities, and the clause has been

added to VAAR Part 812 for use in

commercial item acquisitions.

• Based on updated Federal

Procurement Data System data, the

estimated number of respondents and

total annual reporting and

recordkeeping burden for clause

852.237–7, Indemnification and Medical

Liability Insurance, has been reduced.

Paperwork Reduction Act

Under the Paperwork Reduction Act

of 1995 (44 U.S.C. 3501–3520),

collections of information are contained

in the VAAR clauses at section 852.207–

70, Report of employment under

commercial activities, and section

852.237–7, Indemnification and Medical

Liability Insurance, as set forth in the

SUPPLEMENTARY INFORMATION portion of

this revised proposed rule. Although

this document proposes to add the

clauses at sections 852.207–70 and

852.237–7 for use in commercial item

solicitations and contracts, this

Paperwork Reduction Act notice of this

document seeks approval for collections

of information for both commercial and

non-commercial item and service

contracts for these clauses. These

clauses can be used in both commercial

and non-commercial item and service

solicitations and contracts. As required

30672 Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules

under § 3507(d) of the Act, VA has

submitted a copy of this proposed

rulemaking action to the Office of

Management and Budget (OMB) for its

review of the collection of information.

OMB assigns control numbers to

collections of information it approves.

VA may not conduct or sponsor, and a

person is not required to respond to, a

collection of information unless it

displays a currently valid OMB control

number.

Comments on the collection of

information should be submitted to the

Office of Management and Budget,

Attention: Desk Officer for the

Department of Veterans Affairs, Office

of Information and Regulatory Affairs,

Washington, DC 20503, with copies to

the Director, Office of Regulations

Management (02D), Department of

Veterans Affairs, 810 Vermont Avenue,

NW., Washington, DC 20420. Comments

should indicate that they are submitted

in response to ‘‘RIN 2900–AI71.’’

Title and Provision/Clause Number:

Clause 852.207–70, Report of

employment under commercial

activities.

Summary of collection of information:

This clause would be used in

solicitations for commercial services

where the work is currently being

performed by VA employees and where

those employees might be displaced as

a result of award to a commercial firm.

The clause requires contractors awarded

such contracts to provide, within 5 days

of contract award, a list of employment

openings, including salaries and

benefits, and blank job application

forms. The clause also requires the

contractor, prior to the contract start

date, to report: the names of adversely

affected Federal employees offered

employment openings; the date the offer

was made; a description of the position;

the date of acceptance and the effective

date of employment; the date of

rejection if an employee rejected an

offer; the salary and benefits contained

in any rejected offer; and the names of

employees who applied but were not

offered employment and the reasons for

withholding offers to those employees.

In addition, the clause requires the

contractor, during the first 90 days of

contract performance, to report the

names of all persons hired or terminated

under the contract.

Description of need for information

and proposed use of information: The

information is required to assist the

contracting officer in monitoring the

contractor’s compliance with the

employment requirements of this clause

and FAR clause 52.207–3, Right of First

Refusal.

Description of likely respondents:

Contractors awarded contracts for

commercial services which might result

in the conversion, from in-house to

contract performance, of work currently

being performed by VA employees.

Estimated number of respondents:

200.

Estimated frequency of responses: 5

reports per contract.

Estimated average burden per

collection: 30 minutes per report.

Estimated total annual reporting and

recordkeeping burden: 500 hours.

Title and Provision/Clause Number:

Clause 852.237–7, Indemnification and

Medical Liability Insurance.

Summary of collection of information:

This clause is used in solicitations for

nonpersonal health-care services in lieu

of FAR clause 52.237–7. It requires the

apparent successful bidder/offeror, prior

to contract award, to furnish evidence

that the firm possesses the types and

amounts of insurance required by the

solicitation. Following contract award,

the contractor must notify the

contracting officer if there are any

changes in the firm’s insurance coverage

during the contract period. Prior to

award, this evidence is in the form of a

certificate from the firm’s insurance

company. After award, it is in the form

of a letter or other correspondence, plus

additional certificates.

Description of need for information

and proposed use of information: The

information is required to protect VA by

ensuring that the firm to which award

will be made possesses the types and

amounts of insurance required by the

solicitation. It helps ensure that VA will

not be held liable for any negligent acts

of the contractor and ensures that VA

beneficiaries and the public are

protected by adequate insurance

coverage.

Description of likely respondents:

Apparent successful bidders/offerors on

solicitations for nonpersonal health-care

services.

Estimated number of respondents:

1,500.

Estimated frequency of responses:

Usually just once for each contract

awarded.

Estimated average burden per

collection: 30 minutes.

Estimated total annual reporting and

recordkeeping burden: 750 hours.

The Department considers comments

by the public on proposed collections of

information in—

Evaluating whether the proposed

collections of information are necessary

for the proper performance of the

functions of the Department, including

whether the information will have

practical utility;

Evaluating the accuracy of the

Department’s estimate of the burden of

the proposed collections of information,

including the validity of the

methodology and assumptions used;

Enhancing the quality, usefulness,

and clarity of the information to be

collected; and

Minimizing the burden of the

collections of information on those who

are to respond, including through the

use of appropriate automated,

electronic, mechanical, or other

technological collection techniques or

other forms of information technology,

e.g., permitting electronic submission of

responses.

OMB is required to make a decision

concerning the proposed collection of

information contained in this proposed

rule between 30 and 60 days after

publication of this document in the

Federal Register. Therefore, a comment

to OMB is best assured of having its full

effect if OMB receives it within 30 days

of publication. This does not affect the

deadline for the public to comment on

the proposed regulation.

Regulatory Flexibility Act

Initial Regulatory Flexibility Analysis

This initial regulatory flexibility

analysis is provided to meet the

requirements of the Regulatory

Flexibility Act (5 U.S.C. 601 et seq.).

a. A description of the reasons why

action by the Department is being

considered.

Response: As more fully explained

above, the proposed rule would amend

the VAAR to implement the provisions

of 38 U.S.C. 8151–8153, which

authorize the Secretary of Veterans

Affairs, in consultation with the

Administrator of Federal Procurement

Policy, to prescribe simplified

procedures for the procurement of

health-care resources. We believe the

simplified procedures will allow VA to

become more efficient in procuring

health-care resources.

b. A succinct statement of the

objectives of, and legal basis for, the

proposed rule.

Response: The objective of the

proposed rule is to allow VA to become

more efficient in procuring health-care

resources and thereby strengthen the

medical programs of the Department

and improve the quality of health care

provided to veterans.

The legal basis for the proposed rule

is contained in 38 U.S.C. 8151–8153,

which provide that the Secretary, in

consultation with the Administrator for

Federal Procurement Policy, may

prescribe simplified procedures for the

procurement of health-care resources.

Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules 30673

c. A description of and, where

feasible, an estimate of the number of

small entities to which the proposed

rule will apply.

Response: The description of the

small entities that could be affected by

the proposed rule would be small

entities that provide commercial

services or the use of medical

equipment or space to the health-care

industry.

We do not have precise figures on the

number of small entities that could

potentially be affected by the proposed

rule. Any small entity that provides, or

wishes to provide, commercial services

or the use of medical equipment or

space to VA health-care facilities could

potentially be affected.

However, the proposed rule would

not apply to the majority of VA

acquisitions. The proposed rule would

apply only to competitive acquisitions

of commercial services or the use of

medical equipment or space conducted

by the Veterans Health Administration

(VHA) and which specifically reference

the authority of 38 U.S.C. 8153. The

proposed rule would not apply to

acquisitions of supplies or equipment or

to acquisitions on behalf of the Veterans

Benefits Administration (VBA) or the

National Cemetery Administration

(NCA). Except for section 873.108(b),

the proposed rule would not apply to

VHA sole source acquisitions from

affiliated institutions or entities

associated with affiliated institutions.

The authority for VA to contract on a

sole source basis with an institution

affiliated with VA or with a medical

practice group or other approved entity

associated with an affiliate, addressed in

the proposed rule at 873.108(b), is

authorized by law and is not dependent

upon this rulemaking. The proposed

rule would not apply to acquisitions of

services for which other specific

authorities apply, such as acquisitions

of nursing home care services, which

are acquired under the authority of 38

U.S.C. 1720, or to acquisitions of noncommercial services, such as

construction.

We have no relevant data regarding

commercial service acquisitions below

$25,000. However, we expect little

application of the proposed rule to

acquisitions below $25,000. Existing

FAR provisions for such acquisitions are

already very simple and the provisions

of the revised proposed rule likely

would not provide significant benefit to

the Government to warrant use of this

authority.

In Fiscal Year (FY) 1998, VHA

reported approximately 6,000

individual service transactions

(excluding classification codes C, E,

Q402, Y, and Z (architect/engineer,

purchase of structures, nursing home,

construction, and maintenance of real

property, respectively), all of which we

believe are not covered by the proposed

rule) valued in excess of $25,000 to the

Federal Procurement Data System. Of

those transactions, approximately 3,000

were awarded to small businesses and

approximately 900 were awarded to

non-profit businesses. Similar figures

were reported for FY 1999. Of the total

acquisition dollars associated with these

6,000 annual awards, we estimate that

in FY 1998, approximately 42 percent,

and in FY 1999, approximately 44

percent, were awarded to small

businesses.

d. A description of the projected

reporting, recordkeeping, and other

compliance requirements of the

proposed rule, including an estimate of

the classes of small entities which

would be subject to the requirement,

and the type of professional skills

necessary for preparation of the report

or record.

Response: The reporting or

recordkeeping requirements of the

clauses at section 852.207–70, Report of

employment under commercial

activities, and section 852.237–7,

Indemnification and Medical Liability

Insurance, are discussed in the

Paperwork Reduction Act (PRA) portion

of the proposed rule. The clause at

section 852.207–70 requires the

contractor, on contracts where current

VA employees are displaced, to report

on employment openings and on efforts

to hire displaced VA employees. The

clause at section 852.237–7 requires

contractors, on contracts for

nonpersonal health-care services, to

provide evidence of liability insurance.

The revised proposed rule imposes no

new reporting or recordkeeping

requirements not already required by

the VAAR. Currently, the VAAR

requires that these clauses be included

in all applicable solicitations and

contracts, i.e., contracts where VA

employees might be displaced or

contracts for nonpersonal health-care

services. The rule proposes to provide

clarification that these clauses would

continue to be required in all applicable

service contracts, including commercial

service contracts issued under the

authority of 38 U.S.C. 8153. Small

entities currently holding contracts

where VA employees might be

displaced or for nonpersonal health-care

services are required to provide

employment reports or evidence of

liability insurance, as applicable. Under

the revised proposed rule, there would

be no change to those requirements and

no new added requirements. There

would be no additional small entities

affected by the revised proposed rule

that would not already be affected by

the current regulations. No professional

skills are necessary to comply with

these reporting and recordkeeping

requirements.

e. An identification, to the extent

practicable, of all relevant Federal rules

which may duplicate, overlap or

conflict with the rule.

Response: The provisions of the

proposed rule, if adopted, would take

precedence over currently existing

regulations in the FAR and VAAR. To

the extent that the new rule would

apply, there would be no conflict,

duplication, or overlap with VA or other

Federal rules.

f. A description of any significant

alternatives to the proposed rule which

accomplish the stated objectives of

applicable statutes and which minimize

any significant economic impact of the

proposed rule on small entities.

Response: We believe that, with two

exceptions, the provisions of the

proposed rule, where those provisions

differ from the FAR, are small business/

large business neutral, i.e., they would

have neither a positive nor a negative

impact on small business or large

business. The two exceptions concern

the authority to waive FAR small

business set-aside provisions and

changes concerning the transmission of

solicitation notices to the

Governmentwide point of entry (GPE).

1. The proposed rule at section

873.107 contains a provision allowing

the head of the contracting activity

(HCA) to waive the set-aside of an

acquisition for small business. The HCA

must determine that the waiver is in the

best interest of the Government. The

availability of this authority may result

in acquisitions where small businesses

have to compete against large businesses

rather than compete only against other

small businesses.

The alternatives to this waiver

authority that were considered in order

to limit the impact of waivers on small

businesses included having no waiver

authority or limiting the application of

that authority to specific types of

acquisitions, such as acquisitions for

medical services, or limiting the

authority to acquisitions in excess of a

certain dollar threshold. For the reasons

stated below, we determined to place no

limits, other than those contained in the

revised proposed rule, on the

application of this waiver authority.

As noted above, the revised proposed

rule would only apply to a limited

number of acquisitions. We believe the

waiver authority would be used in very

few of those limited number of

30674 Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules

acquisitions, primarily in acquisitions

where it is critical to broaden the pool

of sources considered in order to obtain

the highest quality patient care services

at reasonable prices. In such cases, it

would not be in VA’s best interest to

exclude non-profit teaching hospitals

and universities and other similar high

quality large businesses from the

competition. Small businesses could

still compete and would have an equal

opportunity to be considered for award.

The availability of this authority, while

most critical to direct patient care

service acquisitions, could be a

necessary element of other commercial

service acquisitions that are critical to

the optimum functioning of the medical

centers.

In some limited circumstances, the

waiver authority of section 873.107 may

have a beneficial impact on small

entities. As noted above, VA has

authority to contract on a sole source

basis with medical schools, hospitals,

and clinics affiliated with VA. Medical

schools, hospitals, and clinics are

almost exclusively large or nonprofit

businesses. Under the FAR, if a VA

medical center wishes to seek

competition for services currently being

acquired from its affiliate, the affiliate

would be excluded from bidding on that

competition if there were two or more

small businesses capable of providing

the services. It is in VA’s best interest

to obtain state-of-the-art medical

services from the highest qualified

sources at reasonable prices. Without

the waiver authority, VA medical

centers would most likely continue to

award sole source contracts to its

affiliates rather than seek competition,

since, under a competitive solicitation,

those affiliates might be excluded as

potential sources for those services.

While VA medical centers might be

willing to consider other sources, they

generally are unwilling to exclude their

affiliate as a potential source. However,

under the waiver procedures of the

proposed rule, VA would no longer be

required to exclude its affiliates from

consideration. Accordingly, VA medical

centers may be more likely to issue

competitive solicitations for highly

technical medical services rather than

acquire such services on a sole source

basis from their affiliates. Rather than

reducing small business access to VA

acquisitions of medical services, the

waiver process could result in increased

access to such acquisitions by small

businesses. In this regard, once this rule

is in place, VA intends to monitor,

through the Federal Procurement Data

System, the use of the procedures

provided in this proposed rule and the

impact on VA’s socioeconomic

programs.

2. The FAR requires that all proposed

acquisitions, including sole source

acquisitions, exceeding $25,000, with

certain exceptions, be transmitted to the

GPE. The revised proposed rule differs

from the FAR in several ways. First, it

provides, at section 873.108(a), that

acquisitions exceeding the simplified

acquisition threshold (SAT) (currently

$100,000) would not have to be

announced in the GPE. Rather, the

revised proposed rule would require

that contracting officers publicly

announce such proposed acquisitions

utilizing a medium designed to obtain

competition to the maximum extent

practicable. The revised proposed rule

lists a number of examples for where the

announcements may be accessed,

including the GPE. The intent of the

revised proposed rule is to maximize

the dissemination of information

regarding such proposed acquisitions,

not to limit dissemination. Most

acquisitions for services are of interest

only to the local community. In many

cases, it is impossible for a firm located

some distance from a VA medical center

to provide coronary bypass operations,

X-ray or oncology services, or other

services necessary to operate the

medical center, on a timely basis. We

believe that both small and large local

service providers of health-care

resources (e.g., hospitals and clinics) are

more likely to be made aware of

acquisition opportunities if the

acquisitions are announced in mediums

that are seen and read by the local

service community or if they are

contacted directly. Accordingly, we

believe this provision of the proposed

rule would tend to increase competition

rather than decrease competition and

provide small businesses with increased

opportunities.

Second, the proposed rule at section

873.108(b) would provide that sole

source acquisitions from institutions

affiliated with VA and from medical

practice groups and other entities

associated with an affiliated institution

are exempt from the requirement for

synopsis in the GPE. 38 U.S.C. 8153

specifically authorizes VA to acquire

health-care resources on a sole source

basis from institutions affiliated with

VA and from medical practice groups

and other entities associated with an

affiliated institution. Exempting such

acquisitions from synopsis in the GPE is

consistent with statute, which imposes

no requirement for VA to solicit and

consider any other offers. Thus, this

provision of the proposed rule would

have no impact on competition, since

competition is not required under any

circumstances.

Section 873.108(b) would also exempt

from publication sole source

acquisitions of hospital care, medical

services, and other health-care services

from any source, whether or not the

source is affiliated with VA. However,

as required by 38 U.S.C. 8153(a)(3)(D),

acquisitions from non-affiliates, if

conducted on a sole source basis, must

still be justified and approved.

Acquisitions for hospital care, medical

services, or other health-care services

would usually be conducted on a sole

source basis only if there was an

emergency need for such services.

Otherwise, the acquisitions would likely

be conducted competitively, if not

acquired from an affiliate. The FAR

provides an exemption from synopsis in

the GPE under conditions of unusual or

compelling urgency and where the

Government would be seriously injured

by any delay due to the publication

requirement. We expect that most of the

sole source acquisitions of hospital care,

medical services, and other health-care

services covered by this provision will

be conducted under conditions of

unusual or compelling urgency. Such

acquisitions would include emergency

hospital care for a veteran in an area not

served by a nearby VA medical center.

Even under the FAR, this type of

acquisition is exempt from synopsis in

the GPE by virtue of its being an urgent

and compelling acquisition. This

provision of the proposed rule would

simplify the acquisition process by

freeing the contracting officer from

having to make individual

determinations regarding publication for

each sole source acquisition of hospital

care, medical services, and other healthcare services. Since we expect most

such acquisitions to already be exempt

under the FAR, we believe this

provision would have little, if any,

impact on competition or on awards to

small businesses.

Third, the proposed rule at section

873.108(c) would exempt acquisitions

below the SAT from the requirement for

public announcement, including

synopsis in the GPE. However, the rule

at section 873.104 would require the

contracting officer to seek competition

to the maximum extent practicable and

to permit all responsible sources, as

appropriate, to submit a bid, proposal,

or quotation. In addition, for

acquisitions below the SAT, section

873.111 states that contracting officers

should solicit a sufficient number of

sources to promote competition to the

maximum extent practicable. Section

873.107 would require that acquisitions

be set aside for small business. These

Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules 30675

provisions would tend to mitigate any

negative impact that section 873.108(c)

would have on small businesses.

The alternatives to the above

provisions regarding public

announcements in the GPE that were

considered were to eliminate these

provisions and follow the provisions of

the FAR or to limit the exemptions to

specific categories of acquisitions, such

as acquisitions for medical services. The

objectives of the proposed rule are to

allow VA to become more efficient in

procuring health-care resources. The

intent of this revised proposed rule is to

provide procurement processes that are

simpler and less time consuming than

those of the FAR. As discussed above,

we believe that the flexibility to select

the public medium that best captures

the awareness of interested sources will

enable the Department to maximize the

effective distribution of information on

VA solicitations and more efficiently

take advantage of competition without

decreasing competition. For this reason,

the provisions regarding publicizing

contract actions have been retained

without change.

List of Subjects

48 CFR Parts 801 and 852

Government Procurement, Reporting

and recordkeeping requirements.

48 CFR Parts 806, 812, 837, and 873

Government procurement.

Approved: February 15, 2001

Anthony J. Principi,

Secretary of Veterans Affairs.

For the reasons set forth in the

preamble, 48 CFR chapter 8 is proposed

to be amended as follows:

PART 801—VETERANS AFFAIRS

ACQUISITION REGULATIONS SYSTEM

1. The authority citations for Part 801

continue to read as follows:

Authority: 38 U.S.C. 501 and 40 U.S.C.

486(c).

801.301–70 [Amended]

2. The chart in paragraph (c) of

section 801.301–70 is amended by

adding two new entries in numerical

order to read as follows:

801.301–70 Paperwork Reduction Act

requirements.

* * * * *

(c) * * *

48 CFR part or section

where identified and described

Current OMB

control No.

**** *

852.207–70 ....................... 2900–[number]

48 CFR part or section

where identified and described

Current OMB

control No.

**** *

852.237–7 ......................... 2900–[number]

**** *

801.602–70 [Amended]

3. In 801.602–70, paragraphs (a)(4)(vi)

and (a)(4)(vii) are revised to read as

follows:

801.602–70 Legal/technical review

requirements to be met prior to contract

execution.

(a)* * *

(4)* * *

(vi) Competitive contracts exceeding

$1.5 million and noncompetitive

contracts exceeding $500,000 for the

acquisition of scarce medical specialist

services acquired under the authority of

38 U.S.C. 7409.

(vii) Competitive contracts exceeding

$1.5 million and noncompetitive

contracts exceeding $500,000 for the

acquisition of health-care resources

acquired under the authority of 38

U.S.C. 8151–8153.

* * * * *

801.602–71 [Amended]

4. In 801.602–71, paragraph (b)(2) is

revised to read as follows:

801.602–71 Processing contracts for legal/

technical review.

* * * * *

(b) * * *

(2) Proposed contracts and agreements

for scarce medical specialist services or

for the mutual use or exchange of use

of health-care resources, as specified in

801.602–70(a)(4)(vi) and (a)(4)(vii), will

be forwarded to Central Office in

accordance with Veterans Health

Administration directives and VA

Manual M–1, Part 1, Chapter 34, for

review and submission to the Office of

the General Counsel (025).

* * * * *

801.602–72 [Amended]

5. In 801.602–72, paragraph (b) is

revised to read as follows:

801.602–72 Documents to be submitted

for legal review.

* * * * *

(b) For proposed contracts and

agreements for scarce medical specialist

services or for the mutual use or

exchange of use of health-care

resources, as specified in 801.602–

70(a)(4)(vi) and (a)(4)(vii), the

documents referred to in VA Manual M–

1, Part 1, Chapter 34.

* * * * *

PART 806—COMPETITION

REQUIREMENTS

6. The authority citations for Part 806

continue to read as follows:

Authority: 38 U.S.C. 501 and 40 U.S.C.

486(c).

806.302–5 [Amended]

7.–8. In 806.302–5, paragraph (b) is

revised, paragraph (c) is redesignated as

paragraph (d), and a new paragraph (c)

is added to read as follows:

806.302–5 Authorized or required by

statute.

* * * * *

(b) Contracts or agreements for the

mutual use or exchange of use of healthcare resources, consisting of commercial

services, the use of medical equipment

or space, or research, negotiated under

the authority of 38 U.S.C. 8151–8153,

are approved for other than full and

open competition only when such

contracts or agreements are with

institutions affiliated with the

Department of Veterans Affairs,

pursuant to 38 U.S.C. 7302, with

medical practice groups or other

approved entities associated with

affiliated institutions (entities will be

approved if determined legally to be

associated with affiliated institutions),

or with blood banks, organ banks, or

research centers. The justification and

approval requirements of FAR 6.303 and

VAAR 806.304 do not apply to such

contracts or agreements.

806.302–5 Authorized or required by

statute.

(c) Contracts or agreements for the

mutual use or exchange of use of healthcare resources, consisting of commercial

services or the use of medical

equipment or space, negotiated under

the authority of 38 U.S.C. 8151–8153,

and not acquired under the authority of

paragraph (b) of this section, may be

conducted without regard to any law or

regulation that would otherwise require

the use of competitive procedures for

procuring resources, provided the

procurement is conducted in

accordance with the simplified

procedures contained in (VAAR) 48 CFR

part 873. The justification and approval

requirements of FAR 6.303 and VAAR

806.304 shall apply to such contracts or

agreements conducted on a sole source

basis.

* * * * *

PART 812—ACQUISITION OF

COMMERCIAL ITEMS

9. The authority citations for Part 812

continue to read as follows:

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Authority: 38 U.S.C. 501 and 40 U.S.C.

486(c).

812.301 [Amended]

10. In 812.301, paragraph (c) is

revised and paragraph (g) is added to

read as follows:

812.301 Solicitation provisions and

contract clauses for the acquisition of

commercial items.

* * * * *

(c) The provisions and clauses in the

following VAAR sections must be used,

when appropriate, in accordance with

the prescriptions contained therein or

elsewhere in the VAAR, in requests for

quotations, solicitations, or contracts for

the acquisition of commercial items:

(1) 852.207–70, Report of employment

under commercial activities.

(2) 852.211–71, Guarantee clause.

(3) 852.211–72, Inspection.

(4) 852.211–73, Frozen processed

foods.

(5) 852.211–74, Telecommunications

equipment.

(6) 852.211–75, Technical industry

standards.

(7) 852.214–70, Caution to bidders-bid

envelopes.

(8) 852.216–70, Estimated quantities

for requirements contracts.

(9) 852.229–70, Purchases from

patient’s funds.

(10) 852.229–71, Purchases for

patients using Government funds and/or

personal funds of patients.

(11) 852.233–70, Protest content.

(12) 852.237–7, Indemnification and

Medical Liability Insurance.

(13) 852.237–70, Contractor

responsibilities.

(14) 852.237–71, Indemnification and

insurance (vehicle and aircraft service

contracts).

(15) 852.252–1, Provisions or clauses

requiring completion by the offeror or

prospective contractor.

(16) 852.270–1, Representatives of

contracting officers.

(17) 852.270–2, Bread and bakery

products.

(18) 852.270–3, Purchase of shellfish.

* * * * *

(g) When soliciting for commercial

services or the use of medical

equipment or space under the authority

of (VAAR) 48 CFR part 873 and 38

U.S.C. 8151–8153, the provisions and

clauses in the following VAAR sections

may be used in accordance with the

prescriptions contained therein or

elsewhere in the VAAR:

(1) 852.273–70, Late offers.

(2) 852.273–71, Alternative

negotiation techniques.

(3) 852.273–72, Alternative

evaluation.

(4) 852.273–73, Evaluation—healthcare resources.

(5) 852.273–74, Award without

exchanges.

PART 837—SERVICE CONTRACTING

11. The authority citations for Part

837 continue to read as follows:

Authority: 38 U.S.C. 501 and 40 U.S.C.

486(c).

837.403 [Amended]

12. Section 837.403 is amended by

adding, at the end of the first sentence,

‘‘, including solicitations and contracts

for nonpersonal health-care services

awarded under the authority of 38

U.S.C. 8151–8153 and (VAAR) 48 CFR

part 873’’.

PART 852—SOLICITATION

PROVISIONS AND CONTRACT

CLAUSES

13. The authority citations for Part

852 continue to read as follows:

Authority: 38 U.S.C. 501 and 40 U.S.C.

486(c).

14. In section 852.207–70, the

introductory text is revised to read as

follows:

852.207–70 Report of employment under

commercial activities.

As prescribed in 807.304–77 and

873.110, the following clause must be

included in A–76 cost comparison

solicitations and solicitations issued

under the authority of 38 U.S.C. 8151–

8153 which may result in the

conversion, from in-house to contract

performance, of work currently being

performed by VA employees:

* * * * *

15. Section 852.273–70 is added to

read as follows:

852.273–70 Late offers.

As prescribed in 873.110(a), insert the

following provision:

LATE OFFERS (Date)

This provision replaces paragraph (f) of

FAR provision 52.212–1. Offers or

modifications of offers received after the time

set forth in a request for quotations or request

for proposals may be considered, at the

discretion of the contracting officer, if

determined to be in the best interest of the

Government. Late bids submitted in response

to an invitation for bid (IFB) will not be

considered.

(End of provision)

16. Section 852.273–71 is added to

read as follows:

852.273–71 Alternative negotiation

techniques.

As prescribed in 873.110(b), insert the

following provision:

ALTERNATIVE NEGOTIATION

TECHNIQUES (Date)

The contracting officer may elect to use the

alternative negotiation techniques described

in section 873.111(e) of 48 Code of Federal

Regulations Chapter 8 in conducting this

procurement. If used, offerors may respond

by maintaining offers as originally submitted,

revising offers, or submitting an alternative

offer. The Government may consider initial

offers unless revised or withdrawn, revised

offers, and alternative offers in making the

award. Revising an offer does not guarantee

an offeror an award.

(End of provision)

17. Section 852.273–72 is added to

read as follows:

852.273–72 Alternative evaluation.

As prescribed in 873.110(c), insert the

following provision:

ALTERNATIVE EVALUATION (Date)

(a) The Government will award a contract

resulting from this solicitation to the

responsible offeror submitting the lowest

priced offer that conforms to the solicitation.

During the specified period for receipt of

offers, the amount of the lowest offer will be

posted and may be viewed by—[Contracting

officer insert description of how the

information may be viewed electronically or

otherwise]—. Offerors may revise offers

anytime during the specified period. At the

end of the specified time period for receipt

of offers, the responsible offeror submitting

the lowest priced offer will be in line for

award.

(b) Except when it is determined not to be

in the Government’s best interest, the

Government will evaluate offers for award

purposes by adding the total price for all

options to the total price for the basic

requirement. The Government may

determine that an offer is unacceptable if the

option prices are materially unbalanced.

Evaluation of options shall not obligate the

Government to exercise the option(s).

(End of provision)

18. Section 852.273–73 is added to

read as follows:

852.273–73 Evaluation—health-care

resources.

As prescribed in 873.110(d), in lieu of

FAR provision 52.212–2, the contracting

officer may insert a provision

substantially as follows:

EVALUATION—HEALTH-CARE

RESOURCES (Date)

(a) The Government will award a contract

resulting from this solicitation to the

responsible offeror whose offer, conforming

to the solicitation, will be most advantageous

to the Government, price and other factors

considered. The following information or

factors shall be used to evaluate offers:—

[Contracting officer insert evaluation

information or factors, such as technical

capability to meet the Government’s

requirements, past performance, or such

other evaluation information or factors as the

contracting officer deems necessary to

Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules 30677

evaluate offers. Price must be evaluated in

every acquisition. The contracting officer

may include the evaluation information or

factors in their relative order of importance,

such as in descending order of importance.

The relative importance of any evaluation

information must be stated in the

solicitation.]—

(b) Except when it is determined not to be

in the Government’s best interest, the

Government will evaluate offers for award

purposes by adding the total price for all

options to the total price for the basic

requirement. The Government may

determine that an offer is unacceptable if the

option prices are materially unbalanced.

Evaluation of options shall not obligate the

Government to exercise the option(s).

(c) If this solicitation is a request for

proposals (RFP), a written notice of award or

acceptance of an offer, mailed or otherwise

furnished to the successful offeror within the

time for acceptance specified in the offer,

shall result in a binding contract without

further action by either party. Before the

offer’s specified expiration time, the

Government may accept an offer (or part of

an offer), whether or not there are

negotiations after its receipt, unless a written

notice of withdrawal is received before

award.

(End of provision)

19. Section 852.273–74 is added to

read as follows:

852.273–74 Award without exchanges.

As prescribed in 873.110(e), insert the

following provision:

AWARD WITHOUT EXCHANGES (Date)

The Government intends to evaluate

proposals and award a contract without

exchanges with offerors. Therefore, each

initial offer should contain the offeror’s best

terms from a cost or price and technical

standpoint. However, the Government

reserves the right to conduct exchanges if

later determined by the contracting officer to

be necessary.

(End of provision)

20. Part 873 is added to read as

follows:

PART 873—SIMPLIFIED ACQUISITION

PROCEDURES FOR HEALTH-CARE

RESOURCES

Sec.

873.101 Policy.

873.102 Definitions.

873.103 Priority sources.

873.104 Competition requirements.

873.105 Acquisition planning.

873.106 Presolicitation exchanges with

industry.

873.107 Socioeconomic programs.

873.108 Publicizing contract actions.

873.109 General requirements for

acquisition of health-care resources.

873.110 Solicitation provisions.

873.111 Acquisition strategies for healthcare resources.

873.112 Evaluation information.

873.113 Exchanges with offerors.

873.114 Best value pool.

873.115 Proposal revisions.

873.116 Source selection decision.

873.117 Award to successful offeror.

873.118 Debriefings.

Authority: 38 U.S.C. 8151–8153.

873.101 Policy.

The simplified acquisition procedures

set forth in this Department of Veterans

Affairs Acquisition Regulation (VAAR)

part apply to the acquisition of healthcare resources consisting of commercial

services or the use of medical

equipment or space. These procedures

shall be used in conjunction with the

Federal Acquisition Regulation (FAR)

and other parts of VAAR. However,

when a policy or procedure in FAR or

another part of VAAR is inconsistent

with the procedures contained in this

part, this part shall take precedence.

These procedures contain more

flexibility than provided in FAR or

elsewhere in VAAR.

873.102 Definitions.

Commercial service means a service,

except construction exceeding $2,000

and architect-engineer services, that is

offered and sold competitively in the

commercial marketplace, is performed

under standard commercial terms and

conditions, and is procured using firmfixed price contracts.

Health-care providers includes

health-care plans and insurers and any

organizations, institutions, or other

entities or individuals who furnish

health-care resources.

Health-care resource includes

hospital care and medical services (as

those terms are defined in section 1701

of title 38 United States Code (U.S.C.),

any other health-care service, and any

health-care support or administrative

resource, including the use of medical

equipment or space.

873.103 Priority sources.

Without regard to FAR 8.001(a)(2),

except for the acquisition of services

available from the Committee for

Purchase From People Who Are Blind

or Severely Disabled, pursuant to the

Javits-Wagner-O’Day Act (41 U.S.C. 46–

48c) and FAR subpart 8.7, there are no

priority sources for the acquisition of

health-care resources consisting of

commercial services or the use of

medical equipment or space.

873.104 Competition requirements.

(a) Without regard to FAR part 6, if

the health-care resource required is a

commercial service, the use of medical

equipment or space, or research, and is

to be acquired from an institution

affiliated with the Department in

accordance with section 7302 of title 38

U.S.C., including medical practice

groups and other approved entities

associated with affiliated institutions

(entities will be approved if determined

legally to be associated with affiliated

institutions), or from blood banks, organ

banks, or research centers, the resource

may be acquired on a sole source basis.

(b) Acquisition of health-care

resources identified in paragraph (a) of

this section are not required to be

publicized as otherwise required by

873.108 or FAR 5.101. In addition,

written justification, as otherwise set

forth in section 303(f) of the Federal

Property and Administration Services

Act of 1949 (41 U.S.C. 253(f)) and FAR

part 6, is not required.

(c) Without regard to FAR 6.101, if the

health-care resource required is a

commercial service or the use of

medical equipment or space, and is to

be acquired from an entity not described

in paragraph (a) of this section,

contracting officers must seek

competition to the maximum extent

practicable and must permit all

responsible sources, as appropriate

under the provisions of this part, to

submit a bid, proposal or quotation (as

appropriate) for the resources to be

procured and provide for the

consideration by the Department of

bids, proposals, or quotations so

submitted.

(d) Without regard to FAR 5.101,

acquisition of health-care resources

identified in paragraph (c) of this

section shall be publicized as otherwise

required by 873.108. Moreover, for any

such acquisition described in paragraph

(c) of this section to be conducted on a

sole source basis, the contracting officer

must prepare a justification that

includes the information and is

approved at the levels prescribed in

section 303(f) of the Federal Property

and Administration Services Act of

1949 (41 U.S.C. 253(f)) and FAR part 6.

873.105 Acquisition planning.

(a) Acquisition planning is an

indispensable component of the total

acquisition process.

(b) For the acquisition of health-care

resources consisting of commercial

services or the use of medical

equipment or space, where the

acquisition is expected to exceed the

simplified acquisition threshold (SAT),

an acquisition team must be assembled.

The team shall be tailored by the

contracting officer for each particular

acquisition expected to exceed the SAT.

The team should consist of a mix of

staff, appropriate to the complexity of

the acquisition, and may include

contracting, fiscal, legal, administrative,

and technical personnel, and such other

30678 Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules

expertise as necessary to assure a

comprehensive acquisition plan. The

team should include the small business

advocate representing the contracting

activity or a higher level designee and

the SBA Procurement Center

Representative (PRC), if available. As a

minimum, the team must include the

contracting officer and a representative

of the requesting service.

(c) Prior to determining whether a

requirement is suitable for acquisition

using these simplified acquisition

procedures, the contracting officer or

the acquisition team, as appropriate,

must conduct market research to

identify interested businesses. It is the

responsibility of the contracting officer

to ensure the requirement is

appropriately publicized and

information about the procurement

opportunity is adequately disseminated

as set forth in 873.108.

(d) In lieu of the requirements of FAR

part 7 addressing documentation of the

acquisition plan, the contracting officer

may conduct an acquisition strategy

meeting with cognizant offices to seek

approval for the proposed acquisition

approach. If a meeting is conducted,

briefing materials shall be presented to

address the acquisition plan topics and

structure in FAR 7.105. Formal written

minutes shall be prepared to summarize

decisions, actions, and conclusions and

included in the contract file, along with

a copy of the briefing materials.

873.106 Presolicitation exchanges with

industry.

(a) This section shall be used in lieu

of FAR part 10, except as provided in

paragraph (b)(3) of this section. In

conducting market research, exchange

of information by all interested parties

involved in an acquisition, from the

earliest identification of a requirement

through release of the solicitation, is

encouraged. Interested parties include

potential offerors, end users,

Government acquisition and support

personnel, and others involved in the

conduct or outcome of the acquisition.

The nature and extent of presolicitation

exchanges between the Government and

industry shall be a matter of the

contracting officer’s discretion (for

acquisitions not exceeding the

simplified acquisition threshold) or the

acquisition team’s discretion, as

coordinated by the contracting officer.

(b) Techniques to promote early

exchange of information include—

(1) Industry or small business

conferences;

(2) Public hearings;

(3) Market research in accordance

with FAR 10.002(b), which shall be

followed to the extent that the

provisions therein would provide

relevant information;

(4) One-on-one meetings with

potential offerors;

(5) Presolicitation notices;

(6) Draft Requests for proposals

(RFPs);

(7) Requests for information (RFIs);

(8) Presolicitation or preproposal

conferences;

(9) Site visits;

(10) Electronic notices (e.g., Internet);

and

(11) Use of the Procurement

Marketing and Access Network (PRO–

NET).

873.107 Socioeconomic programs.

(a) Implementation. This section

provides additional authority, over and

above that found at FAR 19.502, to

waive small business set-asides. For

acquisitions above the micro-purchase

threshold, if, through market research,

the contracting officer determines that

there is reasonable expectation that

reasonably priced bids, proposals, or

quotations will be received from two or

more responsible small businesses, a

requirement for health-care resources

must be reserved for small business

participation. Without regard to FAR

13.003(b)(1), 19.502–2, and 19.502–3,

the head of the contracting activity

(HCA) may approve a waiver from the

requirement for any set-aside for small

business participation when a waiver is

determined to be in the best interest of

the Government.

(b) Rejecting Small Business

Administration (SBA)

recommendations. (1) The contracting

officer (or, if a waiver has been

approved in accordance with paragraph

(a) of this section, the HCA) must

consider and respond to a

recommendation from an SBA

representative to set a procurement

aside for small business within 5

working days. If the recommendation is

rejected by the contracting officer (or, if

a waiver has been approved, by the

HCA) and if SBA intends to appeal that

determination, SBA must, within 2

working days after receipt of the

determination, notify the contracting

officer involved of SBA’s intention to

appeal.

(2) Upon receipt of the notification of

SBA’s intention to appeal and pending

issuance of a final Department appeal

decision to SBA, the contracting officer

involved must suspend action on the

acquisition unless a determination is

made in writing by the contracting

officer that proceeding to contract award

and performance is in the public

interest. The contracting officer must

promptly notify SBA of the

determination to proceed with the

solicitation and/or contract award and

must provide a copy of the written

determination to SBA.

(3) SBA shall be allowed 10 working

days after receiving the rejection notice

from the contracting officer (or the HCA,

if a waiver has been approved) for

acquisitions not exceeding $5 million,

or 15 working days after receiving the

rejection notice for acquisitions

exceeding $5 million, to file an appeal.

SBA must notify the contracting officer

within this 10 or 15 day period whether

an appeal has, in fact, been taken. If

notification is not received by the

contracting officer within the applicable

period, it shall be deemed that an

appeal was not taken.

(4) SBA shall submit appeals to the

Secretary. Decisions shall be made by

the Procurement Executive, whose

decisions shall be final.

(c) Contracting with the Small

Business Administration (the 8(a)

Program). The procedures of FAR 19.8

shall be followed where a responsible

8(a) contractor has been identified.

(d) Certificates of Competency and

determinations of responsibility. The

Director, Office of Small and

Disadvantaged Business Utilization

(OSDBU), Department of Veterans

Affairs (VA), and the Assistant

Administrator, Office of Industrial

Assistance, Small Business

Administration (SBA), shall serve as

ombudsmen to assist VA contracting

officers on any issues relating to

Certificates of Competency (COC).

Copies of all COC referrals to SBA shall

be submitted to the Director, OSDBU

(00SB).

873.108 Publicizing contract actions.

(a) Without regard to FAR 5.101, all

acquisitions under this part 873, except

as provided in paragraph (b) of this

section, for dollar amounts in excess of

the simplified acquisition threshold

(SAT), as set forth in FAR part 13, shall

be publicly announced utilizing a

medium designed to obtain competition

to the maximum extent practicable and

to permit all responsible sources, as

appropriate under the provisions of this

part, to submit a bid, proposal, or

quotation (as appropriate).

(1) The publication medium may

include the Internet, including the

Governmentwide point of entry (GPE),

and local, regional or national

publications or journals, as appropriate,

at the discretion of the contracting

officer, depending on the complexity of

the acquisition.

(2) Without regard to FAR 5.203,

notice shall be published for a

reasonable time prior to issuance of a

Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules 30679

request for quotations (RFQ) or a

solicitation, depending on the

complexity or urgency of the

acquisition, in order to afford potential

offerors a reasonable opportunity to

respond. If the notice includes a

complete copy of the RFQ or

solicitation, a prior notice is not

required, and the RFQ or solicitation

shall be considered to be announced

and issued at the same time.

(3) The notice may include contractor

qualification parameters, such as time

for delivery of service, credentialing or

medical certification requirements,

small business or other socio-economic

preferences, the appropriate small

business size standard, and such other

qualifications as the contracting officer

deems necessary to meet the needs of

the Government.

(b) The requirement for public

announcement does not apply to sole

source acquisitions, described in

873.104(a), from institutions affiliated

with the Department in accordance with

section 7302 of title 38 U.S.C., including

medical practice groups and other

approved entities associated with

affiliated institutions (entities will be

approved if determined legally to be

associated with affiliated institutions),

or from blood banks, organ banks, or

research centers. In addition, the

requirement for public announcement

does not apply to sole source

acquisitions of hospital care and

medical services (as those terms are

defined in section 1701 of title 38

U.S.C.) or any other health-care services,

including acquisitions for the mutual

use or exchange of use of such services.

However, as required by 38 U.S.C.

8153(a)(3)(D), acquisitions from nonaffiliates, if conducted on a sole source

basis, must still be justified and

approved (see 873.104(d)).

(c) For acquisitions below the SAT, a

public announcement is optional.

(d) Each solicitation issued under

these procedures must prominently

identify that the requirement is being

solicited under the authority of 38

U.S.C. 8153 and this part 873.

873.109 General requirements for

acquisition of health-care resources.

(a) Source selection authority.

Contracting officers shall be the source

selection authority for acquisitions of

health-care resources, consisting of

commercial services or the use of

medical equipment or space, utilizing

the guidance contained in this this part

873.

(b) Statement of work/Specifications.

Statements of work or specifications

must define the requirement and

should, in most instances, include

qualifications or limitations such as

time limits for delivery of service,

medical certification or credentialing

restrictions, and small business or other

socio-economic preferences. The

contracting officer may include any

other such terms as the contracting

officer deems appropriate for each

specific acquisition.

(c) Documentation. Without regard to

FAR 13.106–3(b), 13.501(b), or 15.406–

3, the contract file must include:

(1) A brief written description of the

procedures used in awarding the

contract;

(2) The market research, including the

determination that the acquisition

involves health-care resources;

(3) The number of offers received; and

(4) An explanation, tailored to the size

and complexity of the acquisition, of the

basis for the contract award decision.

(d) Time for receipt of quotations or

offers. (1) Without regard to FAR 5.203,

contracting officers shall set a

reasonable time for receipt of quotations

or proposals in requests for quotations

(RFQs) and solicitations.

(2) Without regard to FAR 15.208 or

52.212–1(f), quotations or proposals

received after the time set forth in an

RFQ or request for proposals (RFP) may

be considered at the discretion of the

contracting officer if determined to be in

the best interest of the Government.

Contracting officers must document the

rationale for accepting quotations or

proposals received after the time

specified in the RFQ or RFP. This

paragraph (d)(2) shall not apply to RFQs

or RFPs if alternative evaluation

techniques described in 873.111(e)(1)(ii)

are used. This paragraph (d)(2) does not

apply to invitations for bid (IFBs).

(e) Cancellation of procurements.

Without regard to FAR 14.404–1, any

acquisition may be canceled by the

contracting officer at any time during

the acquisition process if cancellation is

determined to be in the best interest of

the Government.

873.110 Solicitation provisions.

(a) As provided in 873.109(d),

contracting officers shall insert the

provision at 852.273–70, Late offers, in

all requests for quotations (RFQs) and

requests for proposals (RFPs) exceeding

the micro-purchase threshold.

(b) The contracting officer shall insert

a provision in RFQs and solicitations,

substantially the same as the provision

at 852.273–71, Alternative negotiation

techniques, when either of the

alternative negotiation techniques

described in 873.111(e)(1) will be used.

(c) The contracting officer shall insert

the provision at 852.273–72, Alternative

evaluation, in lieu of the provision at

52.212–2, Evaluation—Commercial

Items, when the alternative negotiation

technique described in 873.111(e)(1)(ii)

will be used.

(d) When evaluation information, as

described in 873.112, is to be used to

select a contractor under an RFQ or RFP

for health-care resources consisting of

commercial services or the use of

medical equipment or space, the

contracting officer may insert the

provision at 852.273–73, Evaluation—

health-care resources, in the RFQ or RFP

in lieu of FAR provision 52.212–2.

(e) As provided at 873.113(f), if award

may be made without exchange with

vendors, the contracting officer shall

include the provision at 852.273–74,

Award without exchanges, in the RFQ

or RFP.

(f) The contracting officer shall insert

the clauses at FAR 52.207–3, Right of

First Refusal of Employment, and at

852.207–70, Report of employment

under commercial activities, in all

RFQs, solicitations, and contracts issued

under the authority of 38 U.S.C. 8151–

8153 which may result in a conversion,

from in-house performance to contract

performance, of work currently being

performed by Department of Veterans

Affairs employees.

873.111 Acquisition strategies for healthcare resources.

Without regard to FAR 13.003 or

13.500(a), the following acquisition

processes and techniques may be used,

singly or in combination with others, as

appropriate, to design acquisition

strategies suitable for the complexity of

the requirement and the amount of

resources available to conduct the

acquisition. These strategies should be

considered during acquisition planning.

The contracting officer shall select the

process most appropriate to the

particular acquisition. There is no

preference for sealed bid acquisitions.

(a) Request for quotations. (1) Without

regard to FAR 6.1 or 6.2, contracting

officers must solicit a sufficient number

of sources to promote competition to the

maximum extent practicable and to

ensure that the purchase is

advantageous to the Government, based,

as appropriate, on either price alone or

price and other factors (e.g., past

performance and quality). RFQs must

notify vendors of the basis upon which

the award is to be made.

(2) For acquisitions in excess of the

SAT, the procedures set forth in FAR

part 13 concerning RFQs may be

utilized without regard to the dollar

thresholds contained therein.

(b) Sealed bidding. FAR part 14

provides procedures for sealed bidding.

30680 Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules

(c) Negotiated acquisitions. The

procedures of FAR parts 12, 13, and 15

shall be used for negotiated

acquisitions, except as modified in this

part.

(d) Multiphase acquisition technique.

(1) General. Without regard to FAR

15.202, multiphase acquisitions may be

appropriate when the submission of full

proposals at the beginning of an

acquisition would be burdensome for

offerors to prepare and for Government

personnel to evaluate. Using multiphase

techniques, the Government may seek

limited information initially, make one

or more down-selects, and request a full

proposal from an individual offeror or

limited number of offerors. Provided

that the notice notifies offerors, the

contracting officer may limit the number

of proposals during any phase to the

number that will permit an efficient

competition among proposals offering

the greatest likelihood of award. The

contracting officer may indicate in the

notice an estimate of the greatest

number of proposals that will be

included in the down-select phase. The

contracting officer may down-select to a

single offeror.

(2) First phase notice. In the first

phase, the Government shall publish a

notice (see 873.108) that solicits

responses and that may provide, as

appropriate, a general description of the

scope or purpose of the acquisition and

the criteria that will be used to make the

initial down-select decision. The notice

may also inform offerors of the

evaluation criteria or process that will

be used in subsequent down-select

decisions. The notice must contain

sufficient information to allow potential

offerors to make an informed decision

about whether to participate in the

acquisition. The notice must advise

offerors that failure to participate in the

first phase will make them ineligible to

participate in subsequent phases. The

notice may be in the form of a synopsis

in the Governmentwide point of entry

(GPE) or a narrative letter or other

appropriate method that contains the

information required by this paragraph.

(3) First phase responses. Offerors

shall submit the information requested

in the notice described in paragraph

(d)(2) of this section. Information sought

in the first phase may be limited to a

statement of qualifications and other

appropriate information (e.g., proposed

technical concept, past performance

information, limited pricing

information).

(4) First phase evaluation and downselect. The Government shall evaluate

all offerors’ submissions in accordance

with the notice and make a down-select

decision.

(5) Subsequent phases. Additional

information shall be sought in the

second phase so that a down-select can

be performed or an award made without

exchanges, if necessary. The contracting

officer may conduct exchanges with

remaining offeror(s), request proposal

revisions, or request best and final

offers, as determined necessary by the

contracting officer, in order to make an

award decision.

(6) Debriefing. Without regard to FAR

15.505, contracting officers must debrief

offerors as required by 873.118 when

they have been excluded from the

competition.

(e) Alternative negotiation techniques.

(1) Contracting officers may utilize

alternative negotiation techniques for

the acquisition of health-care resources.

Alternative negotiation techniques may

be used when award will be based on

either price or price and other factors.

Alternative negotiation techniques

include but are not limited to:

(i) Indicating to offerors a price,

contract term or condition,

commercially available feature, and/or

requirement (beyond any requirement or

target specified in the solicitation) that

offerors will have to improve upon or

meet, as appropriate, in order to remain

competitive.

(ii) Posting offered prices

electronically or otherwise (without

disclosing the identity of the offerors)

and permitting revisions of offers based

on this information.

(2) Except as otherwise permitted by

law, contracting officers shall not

conduct acquisitions under this section

in a manner that reveals the identities

of offerors, releases proprietary

information, or otherwise gives any

offeror a competitive advantage (see

FAR 3.104).

873.112 Evaluation information.

(a) Without regard to FAR 15.304

(except for 15.304(c)(1) and (c)(3),

which do apply to acquisitions under

this authority), the criteria, factors, or

other evaluation information that apply

to an acquisition, and their relative

importance, are within the broad

discretion of agency acquisition officials

as long as the evaluation information is

determined to be in the best interest of

the Government.

(b) Price or cost to the Government

must be evaluated in every source

selection. Past performance shall be

evaluated in source selections for

negotiated competitive acquisitions

exceeding the SAT unless the

contracting officer documents that past

performance is not an appropriate

evaluation factor for the acquisition.

(c) The quality of the product or

service may be addressed in source

selection through consideration of

information such as past compliance

with solicitation requirements, technical

excellence, management capability,

personnel qualifications, and prior

experience. The information required

from quoters, bidders, or offerors shall

be included in notices or solicitations,

as appropriate.

(d) The relative importance of any

evaluation information included in a

solicitation must be set forth therein.

873.113 Exchanges with offerors.

(a) Without regard to FAR 15.201 or

15.306, negotiated acquisitions

generally involve exchanges between

the Government and competing offerors.

Open exchanges support the goal of

efficiency in Government by providing

the Government with relevant

information (in addition to that

submitted in the offeror’s initial

proposal) needed to understand and

evaluate the offeror’s proposal. The

nature and extent of exchanges between

the Government and offerors is a matter

of contracting officer judgment.

Clarifications, communications, and

discussions, as provided for in the FAR,

are concepts not applicable to

acquisitions under this part 873.

(b) Exchanges with all potential

offerors may take place throughout the

source selection process. Exchanges

may start in the planning stages and

continue through contract award.

Exchanges should occur most often with

offerors determined to be in the best

value pool (see 873.114). The purpose of

exchanges is to ensure there is mutual

understanding between the Government

and the offerors on all aspects of the

acquisition, including offerors’

submittals/proposals. Information

disclosed as a result of oral or written

exchanges with an offeror may be

considered in the evaluation of an

offeror’s proposal.

(c) Exchanges may be conducted, in

part, to obtain information that explains

or resolves ambiguities or other

concerns (e.g., perceived errors,

perceived omissions, or perceived

deficiencies) in an offeror’s proposal.

(d) Exchanges shall only be initiated

if authorized by the contracting officer

and need not be conducted with all

offerors.

(e) Improper exchanges. Except for

acquisitions based on alternative

negotiation techniques contained in

873.111(e)(1), the contracting officer and

other Government personnel involved

in the acquisition shall not disclose

information regarding one offeror’s

proposal to other offerors without

Federal Register / Vol. 66, No. 110 / Thursday, June 7, 2001 / Proposed Rules 30681

consent of the offeror in accordance

with FAR parts 3 and 24.

(f) Award may be made on initial

proposals without exchanges if the

solicitation states that the Government

intends to evaluate proposals and make

award without exchanges, unless the

contracting officer determines that

exchanges are considered necessary.

873.114 Best value pool.

(a) Without regard to FAR 15.306(c),

the contracting officer may determine

the most highly rated proposals having

the greatest likelihood of award based

on the information or factors and

subfactors in the solicitation. These

vendors constitute the best value pool.

This determination is within the sole

discretion of the contracting officer.

Competitive range determinations, as

provided for in the FAR, are not

applicable to acquisitions under this

part 873.

(b) In planning an acquisition, the

contracting officer may determine that

the number of proposals that would

otherwise be included in the best value

pool is expected to exceed the number

at which an efficient, timely, and

economical competition can be

conducted. In reaching such a

conclusion, the contracting officer may

consider such factors as the results of

market research, historical data from

previous acquisitions for similar

services, and the resources available to

conduct the source selection. Provided

the solicitation notifies offerors that the

best value pool can be limited for

purposes of making an efficient, timely,

and economical award, the contracting

officer may limit the number of

proposals in the best value pool to the

greatest number that will permit an

efficient competition among the

proposals offering the greatest

likelihood of award. The contracting

officer may indicate in the solicitation

the estimate of the greatest number of

proposals that will be included in the

best value pool. The contracting officer

may limit the best value pool to a single

offeror.

(c) If the contracting officer

determines that an offeror’s proposal is

no longer in the best value pool, the

proposal shall no longer be considered

for award. Written notice of this

decision must be provided to

unsuccessful offerors at the earliest

practicable time.

873.115 Proposal revisions.

(a) Without regard to FAR 15.307, the

contracting officer may request proposal

revisions as often as needed during the

proposal evaluation process at any time

prior to award from vendors remaining

in the best value pool. Proposal

revisions shall be submitted in writing.

The contracting officer may establish a

common cutoff date for receipt of

proposal revisions. Contracting officers

may request best and final offers. In any

case, contracting officers and

acquisition team members must

safeguard proposals, and revisions

thereto, to avoid unfair dissemination of

an offeror’s proposal.

(b) If an offeror initially included in

the best value pool is no longer

considered to be among those most

likely to receive award after submission

of proposal revisions and subsequent

evaluation thereof, the offeror may be

eliminated from the best value pool

without being afforded an opportunity

to submit further proposal revisions.

(c) Requesting and/or receiving

proposal revisions do not necessarily

conclude exchanges. However, requests

for proposal revisions should advise

offerors that the Government may make

award without obtaining further

revisions.

873.116 Source selection decision.

(a) An integrated comparative

assessment of proposals should be

performed before source selection is

made. The contracting officer shall

independently determine which

proposal(s) represents the best value,

consistent with the evaluation

information or factors and subfactors in

the solicitation, and that the prices are

fair and reasonable. The contracting

officer may determine that all proposals

should be rejected if it is in the best

interest of the Government.

(b) The source selection team, or

advisory boards or panels, may conduct

comparative analysis(es) of proposals

and make award recommendations, if

the contracting officer requests such

assistance.

(c) The source selection decision must

be documented in accordance with FAR

15.308.

873.117 Award to successful offeror.

(a) The contracting officer shall award

a contract to the successful offeror by

furnishing the contract or other notice of

the award to that offeror.

(b) If a request for proposal (RFP)

process was used for the solicitation and

if award is to be made without

exchanges, the contracting officer may

award a contract without obtaining the

offeror’s signature a second time. The

offeror’s signature on the offer

constitutes the offeror’s agreement to be

bound by the offer. If a request for

quotation (RFQ) process was used for

the solicitation, and if the contracting

officer determines there is a need to

establish a binding contract prior to

commencement of work, the contracting

officer should obtain the offeror’s

acceptance signature on the contract to

ensure formation of a binding contract.

(c) If the award document includes

information that is different than the

latest signed offer, both the offeror and

the contracting officer must sign the

contract award.

(d) When an award is made to an

offeror for less than all of the items that

may be awarded and additional items

are being withheld for subsequent

award, each notice shall state that the

Government may make subsequent

awards on those additional items within

the offer acceptance period.

873.118 Debriefings.

Offerors excluded from a request for

proposals (RFP) may submit a written

request for a debriefing to the

contracting officer. Without regard to

FAR 15.505, preaward debriefings may

be conducted by the contracting officer

when determined to be in the best

interest of the Government. Post-award

debriefings shall be conducted in

accordance with FAR 15.506.

[FR Doc. 01–13988 Filed 6–6–01; 8:45 am]

BILLING CODE 8320–01–P