14340 Federal Register / Vol. 60, No. 51 / Thursday, March 16, 1995 / Proposed Rules

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Parts 1, 7, 17, 37, 49, and 52

[FAR Case 94–710]

Federal Acquisition Regulation;

Special Contracting Methods

AGENCIES: Department of Defense (DOD),

General Services Administration (GSA),

and National Aeronautics and Space

Administration (NASA).

ACTION: Proposed rule.

SUMMARY: This proposed rule is issued

pursuant to the Federal Acquisition

Streamlining Act of 1994 (the Act),

Sections 1022 and 1072 on multiyear

contracting; Section 1074 on the

Economy Act; Sections 1503, 1504,

1552, and 1553 on the delegation of

procurement functions and

determinations and decisions; and

Section 6002 on contracting functions

performed by Federal personnel. This

regulatory action is subject to Office of

Management and Budget review under

Executive Order 12866, dated

September 30, 1993.

DATES: Comments should be submitted

on or before May 15, 1995 to be

considered in the formulation of a final

rule.

ADDRESSES: Interested parties should

submit written comments to: General

Services Administration, FAR

Secretariat (VRS), 18th & F Streets, NW.,

Room 4037, Washington, DC 20405,

Telephone: (202) 501–4755.

Please cite FAR case 94–710 in all

correspondence related to this case.

FOR FURTHER INFORMATION CONTACT:

Mr. Ed McAndrew, Special Contracting

Team Leader, at (202) 501–1474 in

reference to this FAR case. For general

information, contact the FAR

Secretariat, Room 4037, GSA Building,

Washington, DC 20405, (202) 501–4755.

Please cite FAR case 94–710.

SUPPLEMENTARY INFORMATION:

A. Background

The Federal Acquisition Streamlining

Act of 1994 (Pub. L. 103–355) (the Act)

provides authorities that streamline the

acquisition process and minimize

burdensome government-unique

requirements. Major changes that can be

expected in the acquisition process as a

result of the Act’s implementation

include changes in the areas of

Commercial Item Acquisition,

Simplified Acquisition Procedures, the

Truth in Negotiations Act, and

introduction of the Federal Acquisition

Computer Network (FACNET).

FAR Case 94–710

This notice announces FAR revisions

developed under FAR case 94–710

which was based on provisions in the

Act which provided for multiple awards

under certain circumstances; permitted

civilian agencies to enter into multiyear

contracts under certain circumstances;

and for agencies to use the Economy Act

authority to acquire supplies and

services from another agency. Other

provisions of the statute were minor in

nature and were not as important as the

aforementioned provisions.

The FAR Council is interested in an

exchange of ideas and opinions with

respect to the regulatory

implementation of the Act. For that

reason, the FAR Council is conducting

a series of public meetings. However,

the FAR Council has not scheduled a

public meeting on this rule (FAR case

94–710) because of the clarifying and

non-controversial nature of the rule. If

the public believes such a meeting is

needed with respect to this rule, a letter

requesting a public meeting and

outlining the nature of the requested

meeting shall be submitted to and

received by the FAR Secretariat (see

ADDRESSES caption, above) on or before

April 17, 1995. The FAR Council will

consider such requests in determining

whether a public meeting on this rule

should be scheduled.

B. Regulatory Flexibility Act

The proposed changes may have a

significant economic impact on a

substantial number of small entities

within the meaning of the Regulatory

Flexibility Act, 5 U.S.C. 601, et seq.,

because promulgation of this policy is

expected to improve access to the

procurement process for small and

disadvantaged businesses, and to

broaden the scope of competitive

acquisitions for which small businesses

may be eligible. There is a potential

negative impact resulting from

consolidation of contract requirements

under a multiyear contract; however, it

is expected that this negative impact

could be mitigated by an increase in the

opportunities for small businesses to

receive subcontracts. The rule will place

no limit on small businesses’ ability to

participate. An Initial Regulatory

Flexibility Analysis (IRFA) has been

prepared and will be provided to the

Chief Counsel for Advocacy for the

Small Business Administration.

Comments from small entities

concerning the affected FAR subpart

will be considered in accordance with 5

U.S.C. 610. Such comments must be

submitted separately and should cite 5

U.S.C. 601, et seq. (FAR Case 94–710),

in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does

not apply because the proposed changes

to the FAR do not impose recordkeeping

or information collection requirements,

or collections of information from

offerors, contractors, or members of the

public which require the approval of the

Office of Management and Budget under

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

List of Subjects in 48 CFR Parts 1, 7, 17,

37, 49 and 52

Government procurement.

Dated: March 9, 1995.

Barry Cohen,

Project Manager for the Implementation of

the Federal Acquisition Streamlining Act of

1994.

Therefore, it is proposed that 48 CFR

Parts 1, 7, 17, 37, 49 and 52 be amended

as set forth below:

PART 1—FEDERAL ACQUISITION

REGULATIONS SYSTEM

1. The authority citation for 48 CFR

Parts 1, 7, 17, 37, 49 and 52 continues

to read as follows:

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

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

2. Section 1.601 is revised to read as

follows:

1.601 General.

(a) Unless specifically prohibited by

another provision of law, authority and

responsibility to contract for authorized

supplies and services are vested in the

agency head. The agency head may

establish contracting activities and

delegate broad authority to manage the

agency’s contracting functions in

accordance with agency procedures to

heads of such contracting activities.

Contracts may be entered into and

signed on behalf of the government only

by contracting officers. In some

agencies, a relatively small number of

high level officials are designated

contracting officers solely by virtue of

their positions. Contracting officers

below the level of a head of a

contracting activity shall be selected

and appointed under 1.603.

(b) The heads of two or more agencies

may by agreement—

(1) Delegate acquisition functions and

assign acquisition responsibilities from

one agency to another of those agencies

or to an officer or civilian employee of

those agencies; or
Federal Register / Vol. 60, No. 51 / Thursday, March 16, 1995 / Proposed Rules 14341

(2) Create joint or combined officers to

exercise acquisition functions and

responsibilities.

PART 7—ACQUISITION PLANNING

3. Section 7.103 is amended by

adding paragraph (m) to read as follows:

7.103 Agency-head responsibilities.

* * * * *

(m) Making a determination, prior to

issuance of a solicitation for advisory

and assistance services involving the

analysis and evaluation of proposals

submitted in response to a solicitation,

that a sufficient number of covered

personnel with the training and

capability to perform an evaluation and

analysis of proposals submitted in

response to a solicitation are not readily

available within the agency or from

another Federal agency in accordance

with the guidelines at 48 CFR (FAR)

37.204. Covered personnel who may be

paid for evaluation or analysis are:

(1) An employee means an officer or

an individual who is appointed in the

civil service by one of the following

acting in an official capacity; (i) the

President; (ii) a Member of Congress;

(iii) a member of the uniformed services;

(iv) an individual who is an employee;

(v) the head of a government controlled

corporation; or (vi) an adjutant general

appointed by the Secretary concerned

under the national guard (32 U.S.C.

709(c)).

(2) A member of the Armed Forces of

the United States.

(3) A person assigned to a Federal

agency who has been transferred to

another position in the competitive

service in another agency.

PART 17—SPECIAL CONTRACTING

METHODS

4. Subpart 17.1 is revised to read as

follows:

Subpart 17.1—Multiyear Contracting

Sec.

17.101 Authority.

17.102 Applicability.

17.103 Definitions.

17.104 General.

17.105 Policy.

17.105–1 Uses.

17.105–2 Objectives.

17.106 Procedures.

17.106–1 General.

17.106–2 Solicitations.

17.106–3 Special procedures applicable to

DoD, NASA and the Coast Guard.

17.107 Options.

17.108 Congressional notification.

17.109 Contract clauses.

17.101 Authority.

This subpart implements Section

304B of the Federal Property and

Administrative Services Act of 1949 (41

U.S.C. 254c) and 10 U.S.C. 2306b and

provides policy and procedures for the

use of multiyear contracting.

17.102 Applicability.

For DoD, NASA, and the Coast Guard,

the authorities cited in 17.101 do not

apply to contracts for the purchase of

supplies to which 40 U.S.C. 759 applies

(information resource management

supply contracts).

17.103 Definitions.

Annual funding means appropriations

of which Congress limits obligational

availability to a single fiscal year.

Cancellation means the cancellation

(within a contractually specified time)

of the total requirements of all

remaining program years. Cancellation

results when the contracting officer (a)

notifies the contractor of nonavailability

of funds for contract performance for

any subsequent program year, or (b) fails

to notify the contractor that funds are

available for performance of the

succeeding program year requirement.

Cancellation ceiling means the

maximum amount that the contractor

can receive in the event that

cancellation occurs.

Cancellation charge means the

amount of unrecovered costs which

would have been recouped through

amortization over the full term of the

contract, including the term cancelled.

Multiple year contract, as used in this

subpart, means a contract having a term

of more than one year regardless of the

type of funding that applies.

Multiyear contract means a contract

for the purchase of supplies or services

for more than one, but not more than

five, program years. A multiyear

contract may provide that performance

under the contract during the second

and subsequent years of the contract is

contingent upon the appropriation of

funds, and (if it does so provide) may

provide for a cancellation payment to be

made to the contractor if appropriations

are not made.

Multiyear funding means

appropriated funds covering more than

1 fiscal year.

No-year funding means funding

available for new obligations without

regard to fiscal year and until the

appropriation is either exhausted or

otherwise cancelled.

Nonrecurring costs means those

production costs which are generally

incurred on a one-time basis and

include such costs as plant or

equipment relocation, plant

rearrangement, special tooling and

special test equipment, preproduction

engineering, initial spoilage and rework,

and specialized work force training.

Recurring costs, as used in this

subpart, means production costs that

vary with the quantity being produced

such as labor and materials.

Termination for convenience means

the procedure which may apply to any

Government contract, including

multiyear contracts. As contrasted with

cancellation, termination can be effected

at any time during the life of the

contract (cancellation is effected

between fiscal years) and can be for the

total quantity or a partial quantity

(whereas cancellation must be for all

subsequent fiscal years’ quantities).

17.104 General.

(a) Multiyear contracting is a type of

multiple year contract that employs

special contracting methods to acquire

known requirements in quantities and

total cost not over planned requirements

for up to 5 years unless otherwise

authorized by statute, even though the

total funds ultimately to be obligated

may not be available at the time of

contract award. This method may be

used in sealed bidding or contracting by

negotiation.

(b) Multiyear contracting is a flexible

contracting method applicable to a wide

range of acquisitions. The extent to

which cancellation provisions are used

in multiyear contracts will depend on

the unique circumstances of each

contracting action. Accordingly, for

multiyear contracts, the agency head

may authorize modification of the

requirements of this subpart and the

clauses at 48 CFR (FAR) 52.217–2,

Cancellation Under Multiyear Contracts.

17.105 Policy.

17.105–1 Uses.

(a) The contracting officer may enter

into a multiyear contract if—

(1) Funds are available and obligated

for the contract, for the full period of the

contract or for the first fiscal year in

which the contract is in effect, and for

the estimated costs associated with any

necessary cancellation of the contract;

and

(2) The head of the contracting agency

determines that—

(i) The need for the supplies or

services is reasonably firm and

continuing over the period of the

contract; and

(ii) A multiyear contract will serve the

best interests of the United States by

encouraging full and open competition

or promoting economy in

administration, performance, and

operation of the agency’s programs, and

(3) If for DoD, NASA or the Coast

Guard—
14342 Federal Register / Vol. 60, No. 51 / Thursday, March 16, 1995 / Proposed Rules

(i) The use of such a contract will

result in substantial savings of the total

estimated costs of carrying out the

program through annual contracts;

(ii) With regard to paragraph (a)(2)(i)

of this section, the minimum need to be

purchased is expected to remain

substantially unchanged during the

contemplated contract period in terms

of production rate, procurement rate,

and total quantities;

(iii) There is a stable design for the

supplies to be acquired and the

technical risks associated with such

supplies are not excessive; and

(iv) That the estimates of both the cost

of the contract and the estimated cost

avoidance through the use of a

multiyear contract are realistic.

(b) Multiyear contracting may be used

when no-year, annual, multiple year or

multiyear funding is available.

(c) The multiyear contracting method

may be used for the acquisition of

supplies or services.

(d) If funds are not appropriated to

support the succeeding years’

requirements, the agency must cancel

the contract.

17.105–2 Objectives.

Use of multiyear contracting is

encouraged to take advantage of one or

more of the following:

(a) Lower costs.

(b) Enhancement of standardization.

(c) Reduction of administrative

burden in the placement and

administration of contracts.

(d) Substantial continuity of

production or performance, thus

avoiding annual startup costs,

preproduction testing costs, make ready

expenses, and phaseout costs.

(e) Stabilization of contractor work

forces.

(f) Avoidance of the need for

establishing and ‘‘proving out’’ quality

control techniques and procedures for a

new contractor each year.

(g) Broadening the competitive base

with opportunity for participation by

firms not otherwise willing or able to

compete for lesser quantities,

particularly in cases involving high

startup costs.

(h) Provide incentives to contractors

to improve productivity through

investment in capital facilities,

equipment, and advanced technology.

17.106 Procedures.

17.106–1 General.

(a) Method of contracting. The nature

of the requirement should govern the

selection of the method of contracting,

since the multiyear procedure is

compatible with sealed bidding,

including two-step sealed bidding, and

contract negotiation.

(b) Type of contract. Given the longer

performance period associated with

multiyear acquisition, consideration in

pricing fixed-priced contracts should be

given to the use of economic price

adjustment terms, profit objectives

comparable with contractor risk,

financing arrangements and cash flow

requirements.

(c) Cancellation procedures. (1) All

program years except the first are

subject to cancellation. For each

program year subject to cancellation, the

contracting officer shall establish a

cancellation ceiling. Ceilings must

exclude amounts for items included in

prior program years. The contracting

officer shall reduce the cancellation

ceiling for each program year in direct

proportion to the remaining

requirements subject to cancellation.

For example, consider that the total

nonrecurring costs (see 48 CFR (FAR)

15.804–6) are estimated at ten percent of

the total multiyear price, and the

percentages for each of the program-year

requirements for 5-years are (i) 30 in the

first year, (ii) 30 in the second, (iii) 20

in the third, (iv) 10 in the fourth, and

(v) 10 in the fifth. The cancellation

percentages, after deducting three

percent for the first program year, would

be 7, 4, 2, and 1 percent of the total

price applicable to the second, third,

fourth, and fifth program years,

respectively.

(2) In determining cancellation

ceilings, the contracting officer must

estimate reasonable preproduction or

startup, labor learning, and other

nonrecurring costs to be incurred by an

‘‘average’’ prime contractor or

subcontractor, which would be

applicable to, and which normally

would be amortized over, the items or

services to be furnished under the

multiyear requirements. Nonrecurring

costs include such costs, where

applicable, as plant or equipment

relocation or rearrangement, special

tooling and special test equipment,

preproduction engineering, initial

rework, initial spoilage, pilot runs,

allocable portions of the costs of

facilities to be acquired or established

for the conduct of the work, costs

incurred for the assembly training and

transportation of a specialized work

force to and from the job site, and

unrealized labor learning. Do not

include any costs of labor or materials,

or other expenses (except as indicated

in this paragraph), which might be

incurred for performance of subsequent

program year requirements. The total

estimate of the above costs must then be

compared with the best estimate of the

contract cost to arrive at a reasonable

percentage or dollar figure. To perform

this calculation, the contracting officer

shall obtain in-house engineering cost

estimates identifying detailed recurring

and nonrecurring costs, the effect of

labor learning.

(3) The contracting officer shall

establish cancellation dates for each

program year’s requirements regarding

production lead time and the date by

which funding for these requirements

can reasonably be established. The

contracting officer shall include these

dates in the schedule, as appropriate.

(d) Cancellation ceilings. Cancellation

ceilings and dates may be revised after

issuing the solicitation if necessary. In

sealed bidding, the contracting officer

shall change the ceiling by amending

the solicitation before bid opening. In

two-step sealed bidding, discussions

conducted during the first step may

indicate the need for revised ceilings

and dates which may be incorporated in

step two. In a negotiated acquisition,

negotiations with offerors may provide

information requiring a change in

cancellation ceilings and dates before

final negotiation and contract award.

(e) Funding/payment of cancellation

charges. If cancellation occurs, the

contractor is entitled to payment (see

the clause at 48 CFR (FAR) 52.217–2,

Cancellation Under Multiyear

Contracts).

(f) Presolicitation or pre-bid

conferences. To ensure that all

interested sources of supply are

thoroughly aware of how multiyear

contracting is accomplished, use of

presolicitation or pre-bid conferences

may be advisable.

(g) Payment limit. The contracting

officer shall limit the Government’s

payment obligation to an amount

available for contract performance. The

contracting officer shall insert the

amount for the first program year in the

contract upon award and modify it for

successive program years upon

availability of funds.

(h) Termination payment. If the

contract is terminated for the

convenience of the Government in

whole, including items subject to

cancellation, the Government’s

obligation shall not exceed the amount

specified in the schedule as available for

contract performance, plus the

cancellation ceiling.

17.106–2 Solicitations.

Solicitations for multiyear contracts

shall reflect all the factors to be

considered for evaluation, specifically

including the following—

(a) The requirements, by item of

supply or service, for the—
Federal Register / Vol. 60, No. 51 / Thursday, March 16, 1995 / Proposed Rules 14343

(1) First program year; and

(2) Multiyear contract including the

requirements for each program year.

(b) Criteria for comparing the lowest

evaluated submission on the first

program year’s requirement to the

lowest evaluated submission on the

multiyear requirements.

(c) A provision that, if the

Government determines before award

that only the first program year

requirements are needed, the

Government may evaluate offers and

make award solely on the basis of price,

or estimated cost and fee, offered on that

year’s requirements.

(d) A provision specifying a separate

cancellation ceiling (on a percentage or

dollar basis) and dates applicable to

each program year subject to a

cancellation (see 17.106–1 (c) and (d)).

(e) A statement that award will not be

made on less than the first program year

requirements.

(f) Unless Government administrative

costs incident to annual contracting and

administration can be reasonably

established, they shall not be used as a

factor for evaluation. If so utilized, their

monetary value shall be set forth in the

solicitation.

(g) The cancellation ceiling shall not

be an evaluation factor.

17.106–3 Special procedures applicable to

DoD, NASA and the Coast Guard.

(a) Participation by subcontractors,

suppliers and vendors. In order to

broaden the defense industrial base, to

the maximum extent practicable—

(1) Multiyear contracting shall be

used in such a manner as to seek, retain,

and promote the use under such

contracts of companies that are

subcontractors, vendors and suppliers;

and

(2) Upon accrual of any payment or

other benefit under such a multiyear

contract to any subcontractor, vendor, or

supplier company participating in such

contract, such payment or benefit shall

be delivered to such company in the

most expeditious manner practicable.

(b) Protection of existing authority. To

the extent practicable, multiyear

contracting shall not be carried out in a

manner to preclude or curtail the

existing ability of the department or

agency to—

(1) Provide for competition in the

production of supplies to be delivered

under such a contract; or

(2) Provide for termination of a prime

contract the performance of which is

deficient with respect to cost, quality or

schedule.

(c) Cancellation or termination for

insufficient funding. In the event funds

are not made available for the

continuation of a multiyear contract

awarded using the procedures in this

section, the contract shall be cancelled

or terminated and payment made

from—

(1) Appropriations originally made

available for the performance of the

contract concerned;

(2) Appropriations currently available

for procurement of the type of supplies

concerned and not otherwise obligated;

or

(3) Funds appropriated for these

payments.

17.107 Options.

Benefits may accrue by including

options in a multiyear contract. In that

event, contracting officers must follow

the requirements of subpart 17.2.

Options should not include—

(a) Charges for plant and equipment

already amortized, nor

(b) Other nonrecurring charges which

were included in the basic contract.

17.108 Congressional notification.

(a) Except for DoD, NASA and the

Coast Guard, a multiyear contract which

includes a cancellation ceiling in excess

of $10 million may not be awarded until

the head of the agency gives written

notification of the proposed contract

and of the proposed cancellation ceiling

for that contract to the Congress. The

contract may not be awarded until the

thirty-first day after the date of

notification.

(b) For DoD, NASA, and the Coast

Guard, a multiyear contract which

includes a cancellation ceiling in excess

of $100 million may not be awarded

until the head of the agency gives

written notification of the proposed

contract and of the proposed

cancellation ceiling for that contract to

the Committees on Armed Services and

on Appropriations of the Senate and

House of Representatives. The contract

may not be awarded until the thirty-first

day after the date of notification.

17.109 Contract clauses.

(a) The contracting officer shall insert

the clause at 48 CFR (FAR) 52.217–2,

Cancellation Under Multiyear Contracts,

in solicitations and contracts when a

multiyear contract is contemplated.

(b) Economic price adjustment

clauses. Economic price adjustment

clauses are adaptable to multiyear

contracting needs. When the period of

production is likely to warrant a labor

and material costs contingency in the

contract price, the contracting officer

should normally use an economic price

adjustment clause (see 48 CFR (FAR)

16.203). When contracting for services,

the contracting officer—

(1) Shall add the clause at 48 CFR

(FAR) 52.222–43, Fair Labor Standards

Act and Service Contract Act—Price

Adjustment (Multiyear and Option

Contracts), when the contract includes

the clause at 48 CFR (FAR) 52.222–41,

Service Contract Act of 1965;

(2) May modify the clause at 48 CFR

(FAR) 52.222–43 in overseas contracts

when laws, regulations, or international

agreements require contractors to pay

higher wage rates; or

(3) May use an economic price

adjustment clause authorized by 48 CFR

(FAR) 16.203 when potential

fluctuations require coverage, and are

not included in cost contingencies

provided for by the clause at 48 CFR

(FAR) 52.222–43.

5. Subpart 17.5 is revised to read as

follows:

Subpart 17.5—Interagency Acquisitions

Under the Economy Act

Sec.

17.500 Scope of subpart.

17.501 Definition.

17.502 General.

17.503 Determination requirements.

17.504 Ordering procedures.

17.505 Payment.

17.500 Scope of subpart.

(a) This subpart prescribes policies

and procedures applicable to

interagency acquisitions under the

Economy Act (31 U.S.C. 1535). The

Economy Act also provides authority for

placement of orders between major

organizational units within an agency.

Procedures for such intra-agency

transactions should be addressed in

agency regulations.

(b) The Economy Act applies when

more specific statutory authority does

not exist. Examples of interagency

acquisitions to which the Economy Act

does not apply include acquisitions

from required sources of supplies

prescribed in 48 CFR Part 8, which have

separate statutory authority.

17.501 Definition.

Interagency acquisition means a

procedure by which an agency needing

supplies or services (the requesting

agency) obtains them from another

agency (the servicing agency).

17.502 General.

(a) The Economy Act may not be used

by an agency to circumvent conditions

and limitations imposed on the use of

Government funds appropriated for the

acquisition.

(b) Acquisitions under the Economy

Act are not exempt from the

requirements of 48 CFR (FAR) part 7,

subpart 7.3, Contractor Versus

Government Performance.
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(c) The Economy Act may not be used

to make acquisitions conflicting with

any other agency’s authority or

responsibility (for example, that of the

Administrator of General Services under

the Federal Property and Administrative

Services Act).

17.503 Determination requirements.

(a) An agency may place orders with

another agency for supplies or services

that the servicing agency may be in a

position or equipped to supply, render,

or obtain by contract if it is determined

by the head of the requesting agency

that—

(1) It is in the Government’s best

interest to do so, and

(2) That the ordered supplies or

services cannot be provided by contract

as conveniently or cheaply by the

requesting agency from a commercial

enterprise.

(b) If the Economy Act order requires

contracting action by the servicing

agency, the determination shall include

a finding that one or more of the

following circumstances is applicable—

(1) The acquisition is appropriately

made under an existing contract of the

servicing agency to meet the

requirements of the servicing agency for

the same or similar goods or services;

(2) The servicing agency has

capabilities or expertise to enter into a

contract for such goods or services

which is not available within the

requesting agency; or

(3) The servicing agency is

specifically authorized by law or

regulation to purchase such goods or

services on behalf of other agencies.

(c) Determinations shall be approved

either by the contracting officer of the

requesting agency with authority to

contract for the goods or services to be

ordered, or by another official

designated by agency regulation to do

so, except that if the servicing agency is

not covered by the Federal Acquisition

Regulation, approval of the

determination may not be delegated

below the senior procurement executive

of the requesting agency.

17.504 Ordering procedures.

(a) Before placing an Economy Act

order for supplies or services from

another Government agency, the

requesting agency shall make the

determination required in 17.503. The

servicing agency may require a copy of

the determination to be furnished with

the order.

(b) The order may be placed on any

form or document that is acceptable to

both agencies. The order should

include—

(1) A description of the supplies or

services required;

(2) Delivery requirements;

(3) A funds citation;

(4) A payment provision (see 17.505);

and

(5) Acquisition authority as may be

appropriate (see 17.504(d)).

(c) The requesting and servicing

agencies should agree to procedures for

the resolution of disagreements that may

arise under interagency acquisitions,

including, in appropriate circumstances,

the use of a third-party forum. If a third

party is proposed, consent of the third

party should be obtained in writing.

(d) When an interagency acquisition

requires the servicing agency to award

a contract, the following procedures

apply:

(1) If a justification and approval or a

determination and findings (D&F) (other

than the requesting agency’s

determination required in 17.502) is

required by law or regulation, the

servicing agency shall execute and issue

the justification and approval or D&F.

The requesting agency shall furnish the

servicing agency any information

needed to make the justification and

approval and the D&F.

(2) The requesting agency shall also

be responsible for furnishing other

assistance that may be necessary, such

as providing special contract terms or

other requirements that must comply

with any condition or limitation

applicable to the funds of the requesting

agency.

(3) The servicing agency is

responsible for compliance with all

other legal or regulatory requirements

applicable to the contract, including (i)

having adequate statutory authority for

the contractual action, and (ii)

complying fully with the competition

requirements of 48 CFR part 6 (see

6.002).

(e) Nonsponsoring Federal agencies

may use a Federally Funded Research

and Development Center (FFRDC) only

if the terms of the FFRDC’s sponsoring

agreement permit work from other than

a sponsoring agency. Work placed with

the FFRDC is subject to the acceptance

by the sponsor and must fall within the

purpose, mission, general scope of

effort, or special competency of the

FFRDC. (See 48 CFR (FAR) 35.017; see

also 48 CFR (FAR) 6.302 for procedures

to follow where using less than full and

open competition). The nonsponsoring

agency shall provide to the sponsoring

agency necessary documentation that

the requested work would not place the

FFRDC in direct competition with

domestic private industry.

17.505 Payment.

(a) Under the Economy Act—

(1) The servicing agency may ask the

requesting agency, in writing, for

advance payment for all or part of the

estimated cost of furnishing the supplies

or services; or

(2) If approved by the servicing

agency, payment for actual costs may be

made by the requesting agency after the

supplies or services have been

furnished.

(b) If advance payment is made,

adjustment on the basis of actual costs

shall be made as agreed by the agencies.

(c) Bills rendered or requests for

advance payment shall not be subject to

audit or certification in advance of

payment.

(d) If the Economy Act order requires

contracting action by the servicing

agency, then in no event shall the

servicing agency require, or the

requiring agency pay, any fee or charge

in excess of the actual cost (or estimated

cost if the actual cost is not known) of

entering into and administering the

contract or other agreement under

which the order is filled.

PART 37—SERVICE CONTRACTING

6. Subpart 37.2 is revised to read as

follows:

Subpart 37.2—Advisory and Assistance

Services

Sec.

37.200 Scope of subpart.

37.201 Definition.

37.202 Exclusions.

37.203 Policy.

37.204 Guidelines for determining

availability of personnel.

37.205 Contracting officer responsibilities.

37.200 Scope of subpart.

This subpart prescribes policies and

procedures for acquiring advisory and

assistance services by contract. The

subpart regulates these contracts with

individuals and organizations for both

personal and nonpersonal services.

37.201 Definition.

Advisory and assistance services

means the following services when

provided by nongovernmental sources—

(a) Management and professional

support services;

(b) Studies, analyses and evaluations;

and

(c) Engineering and technical services.

37.202 Exclusions.

The following activities and programs

are excluded or exempted from the

definition of advisory or assistance

services:

(a) Routine automated data processing

and telecommunications services unless

such services are an integral part of a

contract for the procurement of advisory

and assistance services.
Federal Register / Vol. 60, No. 51 / Thursday, March 16, 1995 / Proposed Rules 14345

(b) Architectural and engineering

services as defined in section 901 of the

Brooks Architect-Engineers Act (40

U.S.C. 541).

(c) Research on basic mathematics or

medical, biological, physical, social,

psychological, or other phenomena.

37.203 Policy.

(a) The acquisition of advisory and

assistance services is a legitimate way to

improve Government services and

operations. Accordingly, advisory and

assistance services may be used at all

organizational levels to help managers

achieve maximum effectiveness or

economy in their operations.

(b) Subject to 37.205, agencies may

contract for advisory and assistance

services, when essential to the agency’s

mission, to—

(1) Obtain outside points of view to

avoid too limited judgment on critical

issues;

(2) Obtain advice regarding

developments in industry, university, or

foundation research;

(3) Obtain the opinions, special

knowledge, or skills of noted experts;

(4) Enhance the understanding of, and

develop alternative solutions to,

complex issues;

(5) Support and improve the

operation of organizations; or

(6) Ensure the more efficient or

effective operation of managerial or

hardware systems.

(c) Advisory and assistance services

shall not be—

(1) Used in performing work of a

policy, decisionmaking, or managerial

nature which is the direct responsibility

of agency officials;

(2) Used to bypass or undermine

personnel ceilings, pay limitations, or

competitive employment procedures;

(3) Contracted for on a preferential

basis to former Government employees;

(4) Used under any circumstances

specifically to aid in influencing or

enacting legislation; or

(5) Used to obtain professional or

technical advice which is readily

available within the agency or another

Federal agency.

(d) Limitation on payment for

advisory and assistance services. Except

for Federally-Funded Research and

Development Centers as provided by

Section 23 of the Office of Federal

Procurement Policy (OFPP) Act, (41

U.S.C. 419) as amended, contractors

may be paid for services to conduct

evaluations or analyses of any aspect of

a proposal submitted for an acquisition

only if—

(1) Neither agency personnel, nor

personnel from another agency, with

adequate training and capabilities to

perform the required proposal

evaluation, are readily available, and;

(2) A written determination is made

in accordance with 37.204.

37.204 Guidelines for determining

availability of personnel.

(a) As required by 37.203 for each

evaluation or analysis of proposals, the

head of an agency shall determine if

sufficient personnel with the requisite

training and capabilities are available

within the agency to perform evaluation

or analysis of proposals submitted for

acquisitions.

(b) If, for a specific evaluation or

analysis, such personnel are not

available within the agency, the head of

the agency shall—

(1) Determine which Federal agencies

may have personnel with the required

training and capabilities; and

(2) Consider the administrative cost

and time associated with conducting the

search, the dollar value of the

procurement, other costs, such as travel

costs involved in the use of such

personnel, and the needs of the Federal

agencies to make management decisions

on the best use of available personnel in

performing the agency’s mission.

(c) If the supporting agency agrees to

make the required personnel available,

the agencies shall execute an agreement

for the detail of the supporting agency’s

personnel to the requesting agency.

(d) If the requesting agency, after

reasonable attempts to obtain personnel

with the required training and

capabilities, has been unable to identify

such personnel, the head of the

requesting agency may make the

determination required by 37.203.

37.205 Contracting officer responsibilities.

The contracting officer shall ensure

that the determination required in

accordance with the guidelines at

37.104 is accomplished prior to issuing

a solicitation.

PART 49—TERMINATION OF

CONTRACTS

49.603–1 through 49.603–4 [Amended]

7. Sections 49.603–1(b)(7)(i), 49.603–

2(b)(8)(i), 49.603–3(b)(7)(i), and 49.603–

4(b)(4)(i)) are amended by removing the

phrase ‘‘, and regulations made

implementing 10 U.S.C. 2382, as

amended, and any other’’ and inserting

‘‘any’’ in its place.

PART 52—SOLICITATION PROVISIONS

AND CONTRACT CLAUSES

52.217–1 [Reserved]

8. Section 52.217–1 is removed and

reserved.

9. Section 52.217–2 is amended by

revising the section heading, the

introductory text, the clause heading,

paragraphs (a), (d), (f)(1) and (4), (g)(1)

and (3), (h), and (i), and by removing

Alternate I to read as follows:

52.217–2 Cancellation Under Multiyear

Contracts.

As prescribed in 17.109, insert the

following clause.

CANCELLATION UNDER MULTIYEAR

CONTRACTS (XXX 1995)

(a) Cancellation, as used in this clause,

means that the Government is cancelling its

requirements for all supplies or services in

program years subsequent to that in which

notice of cancellation is provided.

Cancellation shall occur by the date or within

the time period specified in the Schedule,

unless a later date is agreed to, if the

Contracting Officer (1) notifies the Contractor

that funds are not available for contract

performance for any subsequent program

year, or (2) fails to notify the Contractor that

funds are available for performance of the

succeeding program year requirement.

* * * * *

(d) The cancellation charge will cover only

(1) costs (i) incurred by the prime Contractor

and/or subcontractor, (ii) reasonably

necessary for performance of the contract,

and (iii) that would have been equitably

amortized over the entire multiyear contract

period but, because of the cancellation, are

not so amortized, and (2) a reasonable profit

or fee on the costs.

* * * * *

(f) * * *

(i) Reasonable nonrecurring costs (see FAR

subpart 15.8) which are applicable to and

normally would have been amortized in all

supplies or services which are multiyear

requirements;

* * * * *

(4) Costs not amortized solely because the

cancellation had precluded anticipated

benefits of Contractor or subcontractor

learning.

(g) * * *

(1) Labor, material, or other expenses

incurred by the Contractor or subcontractors

for performance of the cancelled work;

* * * * *

(3) Anticipated profit or unearned fee on

the cancelled work; or

* * * * *

(h) This contract may include an ‘‘Option’’

clause with the period for exercising the

option limited to the date in the contract for

notification that funds are available for the

next succeeding program year. If so, the

Contractor agrees not to include in option

quantities any costs of a startup or

nonrecurring nature, that have been fully set

forth in the contract. The Contractor further

agrees that the option quantities will reflect

only those recurring costs, and a reasonable

profit or fee necessary to furnish the

additional option quantities.

(i) Quantities added to the original contract

through the ‘‘Option’’ clause of this contract

shall be included in the quantity cancelled
14346 Federal Register / Vol. 60, No. 51 / Thursday, March 16, 1995 / Proposed Rules

for the purpose of computing allowable

cancellation charges.

(End of clause)

[FR Doc. 95–6438 Filed 3–15–95; 8:45 am]

BILLING CODE 6820–34–P

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Parts 6, 16 and 52

[FAR Case 94–711]

Federal Acquisition Regulation; Task

and Delivery Order Contracts

AGENCIES: Department of Defense (DOD),

General Services Administration (GSA),

and National Aeronautics and Space

Administration (NASA).

ACTION: Proposed rule.

SUMMARY: The Civilian Agency

Acquisition Council and the Defense

Acquisition Regulations Council are

proposing to amend Federal Acquisition

Regulations (FAR) to implement the

statutory requirements of the Federal

Acquisition Streamlining Act with

regard to task and delivery order

contracts. This regulatory action is

subject to Office of Management and

Budget review under Executive Order

12866, dated September 30, 1993.

DATES: Comment Due Date: Comments

should be submitted on or before May

15, 1995 to be considered in the

formulation of a final rule.

Public Meeting: A public meeting will

be held on April 13, 1995, at 1:00 p.m.

Oral/Written Statements: Views to be

presented at the public meeting should

be sent, in writing, to the FAR

Secretariat, at the address given below,

not later than April 10, 1995.

ADDRESSES: Interested parties should

submit written comments to: General

Services Administration, FAR

Secretariat (VRS), 18th & F Streets, NW,

Room 4037, Washington, DC 20405,

Telephone: (202) 501–4755.

The public meeting will be held at:

General Services Administration

Auditorium, 18th & F Streets, NW, First

Floor, Washington, DC 20405.

Please cite FAR case 94–711 in all

correspondence related to this case.

FOR FURTHER INFORMATION CONTACT: Mr.

Ed McAndrew, Special Contracting

Team Leader, at (202) 501–1474 in

reference to this FAR case. For general

information, contact the FAR

Secretariat, Room 4037, GSA Building,

Washington, DC 20405 (202) 501–4755.

Please cite FAR case 94–711.

SUPPLEMENTARY INFORMATION:

A. Background

The Federal Acquisition Streamlining

Act of 1994 (Pub. L. 103–355) (the Act)

provides authorities that streamline the

acquisition process and minimize

burdensome government-unique

requirements. Major changes can be

expected in the acquisition process as a

result of the Act’s implementation.

FAR Case 94–711

This notice announces FAR revisions

developed under FAR case 94–711

which implement the requirements of

sections 1004 and 1054, of the Act. Both

of these sections contain statutory

requirements for the award of task and

delivery order contracts, the issuance of

orders under such contracts and the

award of such contracts for advisory and

assistance services.

Public Meeting. The FAR Council is

interested in an exchange of ideas and

opinions on this rule. For that reason,

the FAR Council is conducting a series

of public meetings. A public meeting

will be held on April 13, 1995, to enable

the public to present its views on this

rule. This rule will only be discussed at

the public meeting session. Any

subsequent public meetings will be

devoted to other revisions to the FAR.

The public is encouraged to furnish its

views; the Council anticipates that

public comments will be very helpful in

formulating final rules.

Persons or organizations wishing to

make presentations will be allowed 10

minutes each, provided they notify the

FAR Secretariat at (202) 501–4755 and

submit written statements of the

presentation by April 10, 1995. Persons

or organizations with similar positions

are encouraged to select a common

spokesman for presentation of their

views. This meeting, in conjunction

with this Federal Register notice

soliciting public comments on the rule,

will be the only opportunity for the

public to present its views.

B. Regulatory Flexibility Act

The proposed changes may have a

significant economic impact on a

substantial number of small entities

within the meaning of the Regulatory

Flexibility Act, 5 U.S.C. 601, et seq.,

because the rule may result in more

opportunities for small businesses to

compete for awards as a result of the

multiple award preference. There is a

potential negative impact resulting from

consolidation of contract requirements

under a task or delivery order contract;

however, it is expected that this

negative impact could be mitigated by

an increase in the opportunities for

small businesses to receive

subcontracts. Small businesses could

also form joint ventures to bid on larger

contract requirements. An Initial

Regulatory Flexibility Analysis (IRFA)

has been prepared and will be provided

to the Chief Counsel for Advocacy for

the Small Business Administration.

Comments from small entities

concerning the affected FAR subpart

will be considered in accordance with 5

U.S.C. 610. Such comments must be

submitted separately and should cite 5

U.S.C. 601, et seq. (FAR Case 94–711),

in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does

not apply because the proposed changes

to the FAR do not impose recordkeeping

or information collection requirements,

or collections of information from

offerors, contractors, or members of the

public which require the approval of the

Office of Management and Budget under

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

List of Subjects in 48 CFR Parts 6, 16

and 52

Government procurement.

Dated: March 9, 1995.

Barry Cohen,

Project Manager for the Implementation of

the Federal Acquisition Streamlining Act of

1994.

Therefore, it is proposed that 48 CFR

Parts 6, 16 and 52 be amended as set

forth below:

PART 6—COMPETITION

REQUIREMENTS

1. The authority citation for 48 CFR

Parts 6, 16 and 52 continues to read as

follows:

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

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

2. Section 6.001 is amended by

adding paragraph (f) to read as follows:

6.001 Applicability.

* * * * *

(f) Orders placed against task order

and delivery order contracts entered

into pursuant to 48 CFR (FAR) part 16,

subpart 16.5.

PART 16—TYPES OF CONTRACTS

3. Section 16.500 is added to read as

follows:

16.500 Scope of subpart.

This subpart prescribes policies and

procedures for making awards of

indefinite delivery contracts and

establishes a preference scheme for