[Federal Register Volume 60, Number 74 (Tuesday, April 18, 1995)]
[Rules and Regulations]
[Pages 19360-19362]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9353]



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GENERAL SERVICES ADMINISTRATION

48 CFR Parts 538 and 552

[APD 2800.12A CHGE 61]


General Services Administration Acquisition Regulation; 
Implementation of Industrial Funding for Federal Supply Schedules

AGENCY: Office of Acquisition Policy, GSA.

ACTION: Final rule.

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SUMMARY: The General Services Administration Acquisition Regulation 
(GSAR) is amended to modify the prescription for the Contractor's 
Report of Orders Received clause to reflect the new title of the clause 
and to add a prescription for the new Industrial Funding Fee clause; to 
reflect the new title of the clause in section 552.238-72 and to modify 
the clause to delete references to ``orders'' and substitute ``sales,'' 
and to extend the time for submitting reports from 15 days following 
the reporting period to 30 days; and to provide the text of the new 
Industrial Funding Fee clause. GSA's Federal Supply Service will 
include the new Industrial Funding Fee clause in Federal Supply 
Schedule solicitations and contracts. The clause provides instructions 
for remittance of an industrial funding fee based on quarterly sales 
reported by contractors under Federal Supply Schedule contracts. The 
amount of the fee is determined by the Commissioner, Federal Supply 
Service. It has been determined that the initial fee will be 1 percent.
    Fees will be included in the prices charged to ordering activities 
and contract award prices will reflect the total amounts charged. 
Federal Supply Schedule contractors will remit fees to the General 
Services Administration based on quarterly contract sales. GSA will 
recoup its costs from the ordering activities through the contractor's 
quarterly remittance.
    The General Services Administration will use the industrial funding 
fee to fund the cost of providing supplies and services through the 
Federal Supply Schedule Program. As solicitations are issued with the 
new clause, the program will convert from an operation funded through 
congressional appropriations to a reimbursable activity. GSA's fiscal 
year 1995 budget reflects a $7.8 million reduction in operating 
expenses for the schedules program. The remaining appropriated monies 
for the program will be eliminated over the next two fiscal years.

DATES: Effective Date: April 18, 1995.
    Compliance Date: Solicitations issued and contracts awarded after 
April 18, 1995, shall comply with this change. Existing Federal Supply 
Schedule contracts shall be modified over the next 2 years in 
accordance with the time schedule established by the Commissioner of 
the Federal Supply Service or a designee.

FOR FURTHER INFORMATION CONTACT:
Les Davison, Office of GSA Acquisition Policy, (202) 501-1224.

SUPPLEMENTARY INFORMATION: 

A. Public Comments

    A notice of proposed rulemaking was published in the Federal 
Register on December 27, 1994. Comments received from other Federal 
agencies and from vendors were considered in formulating this final 
rule. The notice and significant issues and concerns raised during the 
comment period are summarized below.
    The notice of December 27, 1994, proposed implementation of 
industrial funding of the Federal Supply Schedule Program by adjusting 
schedule prices upward by 1 percent. Under this concept, published 
schedule prices would include the 1 percent adjustment. Agencies would 
order from the contractor at the adjusted price; the contractor would 
invoice GSA to the award price; GSA would bill agencies the adjusted 
price and retain the difference to fund the program.
    Twenty-two responses were received from Federal agencies. These 
agencies, for the most part, objected to the proposed procedure as 
administratively burdensome. Most agencies did not want GSA to become 
the centralized billing and payment point for schedules transactions. 
Objections were based primarily on potential disruptions of their own 
agency accounting systems for agency procedures. Some agencies stated 
that they would have to create separate systems just for schedule 
purchases if the proposal was adopted. Nearly all agencies perceived 
the proposed centralized billing and payment system to be cumbersome, 
intrusive and unnecessarily bureaucratic.
    Other concerns frequently raised by agencies included payments to 
vendors without proper verification of acceptance; payment of the 1 
percent fee for nonschedule items included on purchase orders for 
schedule items; and problems associated with use of the Governmentwide 
credit card under such a system.
    Fourteen vendors and associations responded. Their responses for 
the most part indicated that they did not wish GSA to assume the role 
of centralized billing and payment point; that they did not want to 
adjust their agency pricelists to reflect a price other than the 
contract award price; and that they found it burdensome that the agency 
purchase order would not reflect their invoiced amounts.
    Based on these comments received from Federal agencies and 
industry, the GSA has determined that implementation of industrial 
funding of the Federal Supply Schedule Program must be accomplished in 
the least disruptive manner possible to both agencies and contractors 
and that the concerns raised must be alleviated.
    To accomplish this, GSA has considered a number of alternatives 
suggested by both Federal agencies and industry. Many respondents 
suggested [[Page 19361]] that the General Services Administration 
collect its 1 percent fee on a periodic basis, monthly or quarterly, 
based on the value of orders placed. While several agencies suggested 
we accomplish this by billing the agencies, GSA, in light of issues 
raised regarding centralized payment and billing, does not wish to 
impose any additional burden on its customer agencies.
    Therefore, in order to implement industrial funding while 
addressing the concerns expressed by respondents to the previous 
proposal, GSA has determined that the most efficient and least 
disruptive method of obtaining the funding is by recouping its costs 
from ordering activities through a quarterly remittance from 
contractors based on reported sales. This method will require no 
changes in agency ordering or paying procedures and will have minimal 
impact on schedule contractors.
    GSA plans to include an initial 1 percent Industrial Funding Fee 
(IFF) in its contract award prices which will be reflected in the total 
amount charged to ordering activities. The award price or discount 
appearing in schedule pricelists will already include the 1 percent 
IFF. The ordering activity will order from the pricelists and pay 
contractors in accordance with current procedures. Schedule contractors 
will then remit to GSA on a quarterly basis 1 percent of the sales 
under schedule contracts.
    To facilitate this change in funding the Federal Supply Schedule 
Program, the GSA Form 72A, Contractor's Report of Orders Received, will 
be clarified regarding procedures for reporting.

B. Executive Order 12866

    This rule was submitted to the Office of Management and Budget 
under Executive Order 12866.

C. Regulatory Flexibility Act

    This final rule will not have a significant economic impact on a 
substantial number of small entities under the Regulatory Flexibility 
Act (5 U.S.C. 601 et seq.). Contractors awarded Federal Supply Schedule 
contracts by GSA's Federal Supply Service will be impacted by this 
rule. Currently, the FSS has 4,922 schedule contracts which involve 
sales of approximately $2.7 billion per annum. Seventy six (76) percent 
of the schedule contracts are held by small business concerns. The 
changes to the Report of Orders Received clause are either minor 
clarifications or will be beneficial to contractors, including small 
business, because they increase the time available to contractors for 
submitting the report; allow for quarterly summaries instead of monthly 
data; and provide sales rather than orders received which is consistent 
with commercial recordkeeping practices. The new clause, which provides 
for payment of an industrial funding fee, will not have a significant 
economic impact on contractors because the fee will be included in the 
contract price(s) and will be taken into account during the negotiation 
of the schedule contract. The procedures established in the new clause 
for collection of the industrial funding fee represent the least 
burdensome alternative to both Federal agencies and contractors. 
Therefore, a final regulatory flexibility analysis was not prepared.

D. Paperwork Reduction Act

    The revised clause at 552.238-72, Contractor's Report of Sales, 
contains an information collection requirement that is subject to the 
Paperwork Reduction Act (44 U.S.C. 3501 et sequentia) that has 
previously been approved by the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act and assigned control number 3090-
0121. The changes made to the clause by this rule do not have an impact 
on the information collection requirement which was previously 
approved. Therefore, it has not been submitted to OMB for approval 
under the Act.
    The new clause at 552.238-77, Industrial Funding Fee, contains an 
information collection requirement that is subject to the Paperwork 
Reduction Act (44 U.S.C. 3501 et sequentia). The clause provides for 
certain information to be submitted on the check or with the payment of 
the industrial funding fee in order to permit GSA to identify the 
payment as an industrial funding fee and match it with the appropriate 
contract and reporting period. This information is the same as is 
normally required when transmitting payments in the commercial world 
and does not represent a Government-unique information collection. 
Therefore, the estimated burden for this clause under the Paperwork 
Reduction Act is zero. GSA has a blanket approval under control number 
3090-0250 from OMB for information collections with a zero burden 
estimate.
    Comments on the information collections cited above may be 
submitted to the Office of Information and Regulatory Affairs of OMB, 
Attention: Desk Officer for GSA, Washington, DC 20503 and to the Office 
of Acquisition Policy (V), GSA, 18th & F Streets, NW, Washington, DC 
20405.

List of Subjects in 48 CFR Parts 538 and 552

    Government procurement.

    Accordingly, 48 CFR Parts 538 and 552 are amended as follows:
    1. The authority citation for 48 CFR Parts 538 and 552 continues to 
read as follows:

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

PART 538--GSA SCHEDULE CONTRACTING

    2. Section 538.203-71 is amended by revising paragraph (a) and 
adding a new paragraph (f) to read as follows:


538.203-71  Solicitation provisions and contract clauses.

    (a) The contracting officer shall insert the clause at 552.238-72, 
Contractor's Report of Sales, in solicitations issued and contracts 
awarded under GSA's schedule program. Paragraph (b) may be modified as 
necessary to meet program requirements. If it is necessary to identify 
the official responsible for preparing the report, the contracting 
officer may use the clause with its Alternate I. When the clause is 
used by IRMS the contracting officer shall use the clause with its 
Alternate II.
 * * * * *
    (f) Contracting officers in the Federal Supply Service (FSS) shall 
insert the clause at 552.238-77, Industrial Funding Fee, in 
solicitations and contracts awarded under the single award schedule and 
multiple award schedule programs.

PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    3. Section 552.238-72 is amended by revising the heading and 
revising paragraphs (a) and (b) of the basic clause to read as follows:


552.238-72  Contractor's report of sales.

* * * * *

Contractor's Report of Sales (APR 1995)

    (a) Contractors shall furnish quarterly the dollar value 
(rounded to the nearest whole dollar) of all sales under the 
contract during the preceding 3-month period to include any partial 
month. A separate report for each National Stock Number (NSN), 
Special Item Number (SIN), or subitem shall be prepared and 
submitted, unless otherwise specified, on GSA Form 72A.
    (b) The report is due in the office specified below or specified 
at the time of award 30 days following the completion of the 
reporting period. A report is required even when no sales occur 
during the reporting period. Sales for orders that extend beyond the 
contract period will be reported within 60 days of final delivery.
* * * * * [[Page 19362]] 
    4. Section 552.238-77 is added to read as follows:


552.238-77  Industrial funding fee.

    As prescribed in 538.203-71(f), insert the following clause:

Industrial Funding Fee (APR 1995)

    (a) Contractors shall pay the Federal Supply Service, GSA, an 
industrial funding fee (IFF) at the end of each contract quarter. 
The IFF shall be remitted at the same time the GSA Form 72A, 
Contractor's Report of Sales, is submitted under clause 552.238-72, 
Contractor's Report of Sales. The IFF equals __________ * of total 
sales reported on GSA Form 72A. The IFF reimburses the GSA Federal 
Supply Service for the costs of operating the Federal Supply 
Schedules Program and recoups its operating costs from ordering 
activities. Offerors should include the IFF in the prices submitted 
with their offer. The fee will be included in the award price(s) and 
reflected in the total amount charged to ordering activities.
    (b) The IFF amount due shall be paid by check or electronic 
funds transfer to the ``General Services Administration.'' Where 
multiple special item numbers and/or contracts are involved, the 
IFF's may be consolidation into one payment. To ensure that the 
payment is credited properly, the Contractor should identify the 
check or electronic transmission as an ``Industrial Funding Fee'' 
and include the following information: contract number(s); report 
amount(s); and report period(s).
    (1) If the IFF payment is made by check, it should be forwarded 
to the following address:

General Services Administration

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    (2) If the IFF payment is made by electronic funds transfer 
through the Automated Clearing House (ACH), the Contractor should 
provide their financial institution with the following information 
for use in making payments: (i) the ACH Transmission Routing Number 
of the [Contracting officer to insert the name of the bank]: 
[Contracting officer to insert the Routing Number] and (ii) the GSA 
Account Number: [Contracting officer to insert the GSA Account 
Number]. Contractors may call [Contracting officer to insert the 
phone number] (GSA Accounts Receivable) with questions regarding 
payments through the ACH.
    (c) If the full amount of the IFF is not paid within 30 calendar 
days after the end of the applicable reporting period, it shall 
constitute a contract debt to the United States Government under the 
terms of FAR 32.6. The Government may exercise all rights under the 
Debt Collection Act of 1982, including withholding or setting off 
payments and interest on the debt (see FAR 52.232-17, Interest).
    (d) Failure to submit sales reports, falsification of sales 
reports, and/or failure to pay the IFF in a timely manner may result 
in termination or cancellation of this contract. Willful failure or 
refusal to furnish the required reports, falsification of sales 
reports, or failure to make timely payment of the IFF constitutes a 
cause for terminating the contractor for default under FAR 52.249-9, 
Default (Fixed-Priced Supply and Service).

(End of Clause)

    *The percentage amount of the fee to be inserted in the above 
clause shall be determined and provided to contracting officers by 
the Commissioner, Federal Supply Service, or a designee.

Dated: March 27, 1995.
Ida M. Ustad,
Associate Administrator for Acquisition Policy.
[FR Doc. 95-9353 Filed 4-17-95; 8:45 am]
BILLING CODE 6820-61-M