Federal Acquisition Regulation; Purchases From Federal Prison Industries-Requirement for Market Research, 221-223 [05-24551]

Download as PDF Federal Register / Vol. 71, No. 1 / Tuesday, January 3, 2006 / Rules and Regulations Business Pilot Program;’’ and adding ‘‘[Reserved]’’ in its place. 19.001 DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION [Amended] 5. Amend section 19.001 by removing the definition ‘‘Very small business concern’’. NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 19.102 48 CFR Parts 8, 19, 25, 42, and 52 ■ [Amended] 6. Amend section 19.102 by removing paragraph (g) and redesignating paragraph (h) as paragraph (g). [FAC 2005–07; FAR Case 2003–023; Item VI] 19.502–2 Federal Acquisition Regulation; Purchases From Federal Prison Industries—Requirement for Market Research ■ [Amended] 7. Amend section 19.502–2 by removing from the first sentence of paragraph (a) ‘‘Except for those acquisitions set aside for very small business concerns (see Subpart 19.9), each’’ and adding ‘‘Each’’ in its place. ■ AGENCIES: Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Final rule. Subpart 19.9—[Removed] 8. Subpart 19.9 is removed and reserved. ■ PART 52—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 9. Amend section 52.212–5 by revising the date of the clause and paragraph (b)(4) of the clause to read as follows: ■ 52.212–5 Contract Terms and Conditions Required to Implement Statutes or Executive Orders—Commercial Items. * * * * * CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR EXECUTIVE ORDERS—COMMERCIAL ITEMS (JAN 2006) * * * * (b) * * * (4) [Removed] * * * * 52.219–5 * * [Removed] 10. Section 52.219–5 is removed and reserved. ■ [FR Doc. 05–24550 Filed 12–30–05; 8:45 am] BILLING CODE 6820–EP–S RIN 9000–AJ91 SUMMARY: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) have agreed on a final rule amending the Federal Acquisition Regulation (FAR) to implement Section 637 of Division H of the Consolidated Appropriations Act, 2005. Section 637 provides that no funds made available under the Consolidated Appropriations Act for fiscal year 2005, or under any other Act for fiscal year 2005 and each fiscal year thereafter, shall be expended for purchase of a product or service offered by Federal Prison Industries, Inc., unless the agency making the purchase determines that the offered product or service provides the best value to the buying agency. DATES: Effective Date: January 3, 2006. FOR FURTHER INFORMATION CONTACT: For clarification of content, contact Ms. Linda Nelson, Procurement Analyst, at (202) 501–1900. The TTY Federal Relay Number for further information is 1– 800–877–8973. Please cite FAC 2005– 07, FAR case 2003–023. For information pertaining to status or publication schedules, contact the FAR Secretariat at (202) 501–4755. SUPPLEMENTARY INFORMATION: rmajette on DSK29S0YB1PROD with RULES6 A. Background Section 637 of Division H of the Consolidated Appropriations Act, 2005 (Public Law 108–447) provides that none of the funds made available under that or any other Act for fiscal year 2005 and each fiscal year thereafter shall be expended for the purchase of a product or service offered by Federal Prison Industries, Inc. (FPI), unless the agency making the purchase determines that the offered product or service provides VerDate Mar<15>2010 16:03 Nov 10, 2010 Jkt 223001 PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 221 the best value to the buying agency pursuant to Governmentwide procurement regulations issued pursuant to 41 U.S.C. 421(c)(1) that impose procedures, standards, and limitations of 10 U.S.C. 2410n. Section 637 of Division F of the Consolidated Appropriations Act, 2004 (Public Law 108–199), contained a similar requirement that applied only to fiscal year 2004 funds. DoD, GSA, and NASA published an interim rule in the Federal Register at 70 FR 18954, April 11, 2005, with a request for comments. Five respondents submitted comments. A discussion of the comments is provided below. As a result of comment 1 below, the final rule contains changes at FAR 8.602 to clarify that the requirements of the rule do not apply to items for which FPI has eliminated its mandatory source status. 1. Comment: In the preamble to the interim rule published on April 11, 2005, the response to Comment 3 states that, if an agency chooses to make a purchase at or below $2,500 from FPI, the agency must first conduct market research to comply with Section 637 of Public Law 108–447. This is inconsistent with the statement under SUPPLEMENTARY INFORMATION that FAR 8.602(b) (market research) does not apply to the purchase of any service or item of supply that FPI has been authorized by its Board of Directors to offer exclusively on a competitive (non-mandatory) basis. Since the FPI Board of Directors has eliminated its mandatory source status for purchases of $2,500 or less, it would logically follow that purchases from FPI up to $2,500 should also be exempt from market research requirements. Councils’ response: The Councils agree that the rule should provide equal treatment for all items for which FPI has eliminated its mandatory source status. The final rule amends FAR 8.602 to state that its procedures do not apply to the ‘‘non-mandatory’’ items identified in FAR 8.605(b)–(g). These items, therefore, will be acquired using the policies and procedures otherwise specified in the FAR. 2. Comment: There appears to be confusion as to whether the requirement for market research applies to services as well as supplies provided by FPI. This confusion stems from the inclusion of FPI as a mandatory source at FAR 8.002(a), which applies to both supplies and services. Councils’ response: FPI is not a mandatory source for services and, therefore, market research in accordance with FAR 8.602(b) is not required for services, as indicated at FAR 8.602(c). This is consistent with the order of E:\FR\FM\03JAR2.SGM 03JAR2 rmajette on DSK29S0YB1PROD with RULES6 222 Federal Register / Vol. 71, No. 1 / Tuesday, January 3, 2006 / Rules and Regulations priorities at FAR 8.002(a)(2), which places FPI on an equal footing with commercial sources with regard to services. The policy at FAR 8.002(a)(1), which lists FPI as a mandatory source, applies only to supplies. 3. Comment: There may be a need in the future to provide more clarification of the definition of the term ‘‘comparability’’ and to further emphasize that the competitive solicitation process must occur after completion of the required comparability determination; and only in cases where FPI is deemed to be not comparable. FPI is still seeing instances where agencies are inappropriately combining comparability determinations with competitive procedures. Councils’ response: Further clarification of these issues is considered unnecessary at this time. However, as suggested by the respondent, the Councils will reevaluate the need for clarification in the future if implementation problems persist. 4. Comment: While FAR 8.607 prohibits agencies from requiring a contractor to use FPI as a subcontractor, this language cannot be interpreted to circumvent an agency’s obligation where a product made by FPI could be used in a project if it is deemed to be comparable. Regardless of whether the product is provided to the agency directly or indirectly, the same comparability determination and competitive procedures are required any time products offered for sale by FPI are purchased by or for Government agencies. Councils’ response: Do not agree that the comparability determination and competitive procedures of FAR 8.602(b) are required any time products offered for sale by FPI are purchased for the Government. 10 U.S.C. 2410n (e) specifically prohibits the Government from requiring a contractor to use FPI as a subcontractor or supplier. The rule is clear with regard to an agency’s obligation when purchasing FPI products directly. Purchasing items through a prime contractor merely to circumvent the requirements of the rule clearly would be inappropriate. Therefore, it is the responsibility of the acquiring agency to ensure compliance with the requirements of the rule if the acquisition involves items of supply on FPI’s Schedule. 5. Comment: FPI should not be permitted to participate in small business set-asides. Councils’ response: FPI may participate in small business set-asides in only those situations where an FPI VerDate Mar<15>2010 16:03 Nov 10, 2010 Jkt 223001 ‘‘mandatory’’ item has been found to be non-comparable to private sector items and the subsequent competition is limited to FPI and small business concerns. This policy is actually intended to increase opportunities for small business concerns since (1) prior to this policy, FPI was the sole source provider of items that are now being acquired competitively; and (2) given the current statutory requirement to include FPI in the competition if an FPI item is determined to be noncomparable to private sector items, the alternative to FPI’s participation in a small business set-aside would be an unrestricted (non-set-aside) competition that includes FPI. 6. Comment: In FAR 8.601(e), remove ‘‘and services’’ from the statement ‘‘Agencies are encouraged to purchase FPI supplies and services to the maximum extent practicable.’’ FPI does not have mandatory source status for services, nor has it ever been given the statutory right to branch out into services. Councils’ response: The rule makes it clear that FPI is not a mandatory source for services. The statement at 8.601(e) is consistent with the policy previously included at FAR 8.602(b), which encouraged agencies to use the facilities of FPI to the maximum extent practicable in purchasing both supplies and services. This text was inadvertently excluded from the revision to FAR Subpart 8.6 published at 69 FR 16147 on March 26, 2004, and was reinstated in the interim rule published on April 11, 2005. This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804. make an individual purchase under a multiple award contract. In conducting such a competition or making such a purchase, the agency must consider a timely offer from FPI. The rule is expected to benefit small business concerns that offer products comparable to those listed in the FPI catalog, by permitting those concerns to compete for federal contract awards. However, the rule could also have a negative impact on those small business concerns that supply goods or services to FPI. B. Regulatory Flexibility Act The Regulatory Flexibility Act, 5 U.S.C. 601, et seq., applies to this final rule. The Councils prepared a Final Regulatory Flexibility Analysis (FRFA), and it is summarized as follows: Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c). The rule implements the Consolidated Appropriations Act, 2005, Division H, Section 637 (Public Law No: 108–447). The Act imposes the procedures, standards, and limitation of 10 U.S.C. 2410n on all federal agencies. 10 U.S.C. 2410n requires market research before purchasing a product listed in the Federal Prison Industries catalog, to determine whether the FPI product is comparable to products available from the private sector that best meet the agency’s needs in terms of price, quality, and time of delivery. If the FPI product is not comparable, the agency must use competitive procedures to acquire the product or must PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 Interested parties may obtain a copy of the FRFA from the FAR Secretariat. The FAR Secretariat has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration. C. Paperwork Reduction Act The Paperwork Reduction Act does not apply because the changes to the FAR do not impose information collection requirements that 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 8, 19, 25, 42, and 52 Government procurement. Dated: December 22, 2005. Gerald Zaffos, Director, Contract Policy Division. Interim Rule Adopted as Final with Changes ■ Accordingly, DoD, GSA, and NASA adopt the interim rule amending 48 CFR parts 8, 19, 42, and 52, which was published in the Federal Register at 69 FR 16148, March 26, 2004, and the interim rule amending 48 CFR parts 8 and 25, which was published in the Federal Register at 70 FR 18954, April 11, 2005, as a final rule with the following changes: ■ 1. The authority citation for 48 CFR parts 8, 19, 25, 42, and 52 continues to read as follows: ■ PART 8—REQUIRED SOURCES OF SUPPLIES AND SERVICES 2. Amend section 8.602 by— a. Removing paragraph (a); b. Redesignating paragraphs (b), (c), (d), and (e) as (a), (b), (c), and (d) respectively; ■ c. Revising the introductory text of the newlydesignated paragraph (a); ■ d. Revising the newly designated paragraph (b); ■ e. Removing from the newly designated paragraph (c)(2) ‘‘paragraph (b)’’ and adding ‘‘paragraph (a)’’ in its place; and ■ f. Removing from the newly designated paragraph (d) ‘‘paragraph ■ ■ ■ E:\FR\FM\03JAR2.SGM 03JAR2 Federal Register / Vol. 71, No. 1 / Tuesday, January 3, 2006 / Rules and Regulations (b)(1)’’ and adding ‘‘paragraph (a)(1)’’ in its place. ■ The revised text reads as follows: [FAC 2005–07; FAR Case 2005–022; Item VII] Comment Date: Interested parties should submit written comments to the FAR Secretariat on or before March 6, 2006 to be considered in the formulation of a final rule. ADDRESSES: Submit comments identified by FAC 2005–07, FAR case 2005–022, by any of the following methods: • Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments. • Agency Web Site: http:// www.acqnet.gov/far/ProposedRules/ proposed.htm. Click on the FAR case number to submit comments. • E-mail: farcase.2005–022@gsa.gov. Include FAC 2005–07, FAR case 2005– 022, in the subject line of the message. • Fax: 202–501–4067. • Mail: General Services Administration, Regulatory Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann Duarte, Washington, DC 20405. Instructions: Please submit comments only and cite FAC 2005–07, FAR case 2005–022, in all correspondence related to this case. All comments received will be posted without change to http:// www.acqnet.gov/far/ProposedRules/ proposed.htm, including any personal and/or business confidential information provided. FOR FURTHER INFORMATION CONTACT: The FAR Secretariat at (202) 501–4755, for information pertaining to status or publication schedules. For clarification of content, contact Ms. Kimberly Marshall, Procurement Analyst, at (202) 219–0986. Please cite FAC 2005–07, FAR case 2005–022. SUPPLEMENTARY INFORMATION: RIN 9000–AK34 A. Background Federal Acquisition Regulation; Exception from Buy American Act for Commercial Information Technology This interim rule amends FAR 25.103 and FAR Subpart 25.11 to implement Section 517 of Division H, Title V of the Consolidated Appropriations Act, 2005 (Pub. L. 108–447). Section 517 authorizes exemption from the Buy American Act for acquisitions of information technology that are commercial items. This applies only to the use of FY 2005 funds. This same exemption appeared last year in section 535(a) of Division F, Title V, Consolidated Appropriations Act, 2004 (Pub. L. 108–199). The FY 04 exemption was implemented through deviations by the individual agencies. The interim rule is based on the estimation that the exemption of commercial information technology is likely to continue. If the exception does not appear in a future appropriations act, a prompt change to the FAR will be made to limit applicability of the 8.602 Policy. (a) In accordance with 10 U.S.C. 2410n and Section 637 of Division H of the Consolidated Appropriations Act, 2005 (Pub. L. 108–447), and except as provided in paragraph (b) of this section, agencies shall— * * * * * (b) The procedures in paragraph (a) of this section do not apply if an exception in 8.605(b) through (g) applies. * * * * * 8.605 [Amended] 3. Amend section 8.605 by removing from paragraph (a)(2) ‘‘8.602(b)(4)’’ and adding ‘‘8.602(a)(4)’’ in its place. ■ PART 19—SMALL BUSINESS PROGRAMS 19.504 [Amended] 4. Amend section 19.504 by removing ‘‘8.602(b)(4)’’ and adding ‘‘8.602(a)(4)’’ in its place. ■ [FR Doc. 05–24551 Filed 12–30–05; 8:45 am] BILLING CODE 6820–EP–S DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Part 25 Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Interim rule with request for comments. rmajette on DSK29S0YB1PROD with RULES6 AGENCIES: SUMMARY: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) have agreed on an interim rule to implement Section 517 of Division H, Title V of the Consolidated Appropriations Act, 2005 (Pub. L. 108– 447). Section 517 authorizes exemption from the Buy American Act for acquisitions of information technology that are commercial items. DATES: Effective Date: January 3, 2006. VerDate Mar<15>2010 16:03 Nov 10, 2010 Jkt 223001 PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 223 exemption to the fiscal years to which it applies. The effect of this exemption is that the following clauses are no longer applicable in acquisition of commercial information technology: • FAR 52.225–1, Buy American Act— Supplies. • FAR 52.225–2, Buy American Act Certificate. • FAR 52.225–3, Buy American Act— Free Trade Agreements—Israeli Trade Act. • FAR 52.225–4, Buy American Act— Free Trade Agreements—Israeli Trade Act Certificate. This is because the Buy American Act no longer applies; and the Free Trade Agreement non-discriminatory provisions are no longer necessary, since all products now are treated without the restrictions of the Buy American Act. The Trade Agreements provision and clause at FAR 52.225–5 and FAR 52.225–6 are still necessary when the Trade Agreements Act applies (acquisitions above $175,000). The Trade Agreements provision and clause already waive applicability of the Buy American Act for eligible products, and are needed to implement the restrictions on procurement of noneligible end products. Section 535 and subsequent similar sections waived only the Buy American Act, not all restrictions on the purchase of foreign information technology. ‘‘Information technology’’ and ‘‘Commercial item’’ are already defined in FAR Part 2. This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804. B. Regulatory Flexibility Act The 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 increases the exceptions to the Buy American Act to include the acquisitions of information technology that are commercial items. An Initial Regulatory Flexibility Analysis (IRFA) has been prepared and is summarized as follows: The objective of the interim rule is to add the exemption to the Buy American Act for acquisitions of commercial information technology. As a result of the additional exception, the Buy American Act will no longer apply to those acquisitions and the Free Trade Agreement non-discriminatory E:\FR\FM\03JAR2.SGM 03JAR2

Agencies

[Federal Register Volume 71, Number 1 (Tuesday, January 3, 2006)]
[Rules and Regulations]
[Pages 221-223]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-24551]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 8, 19, 25, 42, and 52

[FAC 2005-07; FAR Case 2003-023; Item VI]
RIN 9000-AJ91


Federal Acquisition Regulation; Purchases From Federal Prison 
Industries--Requirement for Market Research

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

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed on a final rule 
amending the Federal Acquisition Regulation (FAR) to implement Section 
637 of Division H of the Consolidated Appropriations Act, 2005. Section 
637 provides that no funds made available under the Consolidated 
Appropriations Act for fiscal year 2005, or under any other Act for 
fiscal year 2005 and each fiscal year thereafter, shall be expended for 
purchase of a product or service offered by Federal Prison Industries, 
Inc., unless the agency making the purchase determines that the offered 
product or service provides the best value to the buying agency.

DATES: Effective Date: January 3, 2006.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact 
Ms. Linda Nelson, Procurement Analyst, at (202) 501-1900. The TTY 
Federal Relay Number for further information is 1-800-877-8973. Please 
cite FAC 2005-07, FAR case 2003-023. For information pertaining to 
status or publication schedules, contact the FAR Secretariat at (202) 
501-4755.

SUPPLEMENTARY INFORMATION:

A. Background

    Section 637 of Division H of the Consolidated Appropriations Act, 
2005 (Public Law 108-447) provides that none of the funds made 
available under that or any other Act for fiscal year 2005 and each 
fiscal year thereafter shall be expended for the purchase of a product 
or service offered by Federal Prison Industries, Inc. (FPI), unless the 
agency making the purchase determines that the offered product or 
service provides the best value to the buying agency pursuant to 
Governmentwide procurement regulations issued pursuant to 41 U.S.C. 
421(c)(1) that impose procedures, standards, and limitations of 10 
U.S.C. 2410n. Section 637 of Division F of the Consolidated 
Appropriations Act, 2004 (Public Law 108-199), contained a similar 
requirement that applied only to fiscal year 2004 funds.
    DoD, GSA, and NASA published an interim rule in the Federal 
Register at 70 FR 18954, April 11, 2005, with a request for comments. 
Five respondents submitted comments. A discussion of the comments is 
provided below. As a result of comment 1 below, the final rule contains 
changes at FAR 8.602 to clarify that the requirements of the rule do 
not apply to items for which FPI has eliminated its mandatory source 
status.
    1. Comment: In the preamble to the interim rule published on April 
11, 2005, the response to Comment 3 states that, if an agency chooses 
to make a purchase at or below $2,500 from FPI, the agency must first 
conduct market research to comply with Section 637 of Public Law 108-
447. This is inconsistent with the statement under SUPPLEMENTARY 
INFORMATION that FAR 8.602(b) (market research) does not apply to the 
purchase of any service or item of supply that FPI has been authorized 
by its Board of Directors to offer exclusively on a competitive (non-
mandatory) basis. Since the FPI Board of Directors has eliminated its 
mandatory source status for purchases of $2,500 or less, it would 
logically follow that purchases from FPI up to $2,500 should also be 
exempt from market research requirements.
    Councils' response: The Councils agree that the rule should provide 
equal treatment for all items for which FPI has eliminated its 
mandatory source status. The final rule amends FAR 8.602 to state that 
its procedures do not apply to the ``non-mandatory'' items identified 
in FAR 8.605(b)-(g). These items, therefore, will be acquired using the 
policies and procedures otherwise specified in the FAR.
    2. Comment: There appears to be confusion as to whether the 
requirement for market research applies to services as well as supplies 
provided by FPI. This confusion stems from the inclusion of FPI as a 
mandatory source at FAR 8.002(a), which applies to both supplies and 
services.
    Councils' response: FPI is not a mandatory source for services and, 
therefore, market research in accordance with FAR 8.602(b) is not 
required for services, as indicated at FAR 8.602(c). This is consistent 
with the order of

[[Page 222]]

priorities at FAR 8.002(a)(2), which places FPI on an equal footing 
with commercial sources with regard to services. The policy at FAR 
8.002(a)(1), which lists FPI as a mandatory source, applies only to 
supplies.
    3. Comment: There may be a need in the future to provide more 
clarification of the definition of the term ``comparability'' and to 
further emphasize that the competitive solicitation process must occur 
after completion of the required comparability determination; and only 
in cases where FPI is deemed to be not comparable. FPI is still seeing 
instances where agencies are inappropriately combining comparability 
determinations with competitive procedures.
    Councils' response: Further clarification of these issues is 
considered unnecessary at this time. However, as suggested by the 
respondent, the Councils will re-evaluate the need for clarification in 
the future if implementation problems persist.
    4. Comment: While FAR 8.607 prohibits agencies from requiring a 
contractor to use FPI as a subcontractor, this language cannot be 
interpreted to circumvent an agency's obligation where a product made 
by FPI could be used in a project if it is deemed to be comparable. 
Regardless of whether the product is provided to the agency directly or 
indirectly, the same comparability determination and competitive 
procedures are required any time products offered for sale by FPI are 
purchased by or for Government agencies.
    Councils' response: Do not agree that the comparability 
determination and competitive procedures of FAR 8.602(b) are required 
any time products offered for sale by FPI are purchased for the 
Government. 10 U.S.C. 2410n (e) specifically prohibits the Government 
from requiring a contractor to use FPI as a subcontractor or supplier. 
The rule is clear with regard to an agency's obligation when purchasing 
FPI products directly. Purchasing items through a prime contractor 
merely to circumvent the requirements of the rule clearly would be 
inappropriate. Therefore, it is the responsibility of the acquiring 
agency to ensure compliance with the requirements of the rule if the 
acquisition involves items of supply on FPI's Schedule.
    5. Comment: FPI should not be permitted to participate in small 
business set-asides.
    Councils' response: FPI may participate in small business set-
asides in only those situations where an FPI ``mandatory'' item has 
been found to be non-comparable to private sector items and the 
subsequent competition is limited to FPI and small business concerns. 
This policy is actually intended to increase opportunities for small 
business concerns since (1) prior to this policy, FPI was the sole 
source provider of items that are now being acquired competitively; and 
(2) given the current statutory requirement to include FPI in the 
competition if an FPI item is determined to be non-comparable to 
private sector items, the alternative to FPI's participation in a small 
business set-aside would be an unrestricted (non-set-aside) competition 
that includes FPI.
    6. Comment: In FAR 8.601(e), remove ``and services'' from the 
statement ``Agencies are encouraged to purchase FPI supplies and 
services to the maximum extent practicable.'' FPI does not have 
mandatory source status for services, nor has it ever been given the 
statutory right to branch out into services.
    Councils' response: The rule makes it clear that FPI is not a 
mandatory source for services. The statement at 8.601(e) is consistent 
with the policy previously included at FAR 8.602(b), which encouraged 
agencies to use the facilities of FPI to the maximum extent practicable 
in purchasing both supplies and services. This text was inadvertently 
excluded from the revision to FAR Subpart 8.6 published at 69 FR 16147 
on March 26, 2004, and was reinstated in the interim rule published on 
April 11, 2005.
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601, et seq., applies to 
this final rule. The Councils prepared a Final Regulatory Flexibility 
Analysis (FRFA), and it is summarized as follows:
    The rule implements the Consolidated Appropriations Act, 2005, 
Division H, Section 637 (Public Law No: 108-447). The Act imposes 
the procedures, standards, and limitation of 10 U.S.C. 2410n on all 
federal agencies. 10 U.S.C. 2410n requires market research before 
purchasing a product listed in the Federal Prison Industries 
catalog, to determine whether the FPI product is comparable to 
products available from the private sector that best meet the 
agency's needs in terms of price, quality, and time of delivery. If 
the FPI product is not comparable, the agency must use competitive 
procedures to acquire the product or must make an individual 
purchase under a multiple award contract. In conducting such a 
competition or making such a purchase, the agency must consider a 
timely offer from FPI.
    The rule is expected to benefit small business concerns that 
offer products comparable to those listed in the FPI catalog, by 
permitting those concerns to compete for federal contract awards. 
However, the rule could also have a negative impact on those small 
business concerns that supply goods or services to FPI.
    Interested parties may obtain a copy of the FRFA from the FAR 
Secretariat. The FAR Secretariat has submitted a copy of the FRFA to 
the Chief Counsel for Advocacy of the Small Business Administration.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the FAR do not impose information collection requirements that 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 8, 19, 25, 42, and 52

    Government procurement.

    Dated: December 22, 2005.
Gerald Zaffos,
Director, Contract Policy Division.

0
Interim Rule Adopted as Final with Changes
0
Accordingly, DoD, GSA, and NASA adopt the interim rule amending 48 CFR 
parts 8, 19, 42, and 52, which was published in the Federal Register at 
69 FR 16148, March 26, 2004, and the interim rule amending 48 CFR parts 
8 and 25, which was published in the Federal Register at 70 FR 18954, 
April 11, 2005, as a final rule with the following changes:
0
1. The authority citation for 48 CFR parts 8, 19, 25, 42, and 52 
continues to read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

0
2. Amend section 8.602 by--
0
a. Removing paragraph (a);
0
b. Redesignating paragraphs (b), (c), (d), and (e) as (a), (b), (c), 
and (d) respectively;
0
c. Revising the introductory text of the newlydesignated paragraph (a);
0
d. Revising the newly designated paragraph (b);
0
e. Removing from the newly designated paragraph (c)(2) ``paragraph 
(b)'' and adding ``paragraph (a)'' in its place; and
0
f. Removing from the newly designated paragraph (d) ``paragraph

[[Page 223]]

(b)(1)'' and adding ``paragraph (a)(1)'' in its place.
0
The revised text reads as follows:


8.602  Policy.

    (a) In accordance with 10 U.S.C. 2410n and Section 637 of Division 
H of the Consolidated Appropriations Act, 2005 (Pub. L. 108-447), and 
except as provided in paragraph (b) of this section, agencies shall--
* * * * *
    (b) The procedures in paragraph (a) of this section do not apply if 
an exception in 8.605(b) through (g) applies.
* * * * *


8.605  [Amended]

0
3. Amend section 8.605 by removing from paragraph (a)(2) 
``8.602(b)(4)'' and adding ``8.602(a)(4)'' in its place.

PART 19--SMALL BUSINESS PROGRAMS


19.504  [Amended]

0
4. Amend section 19.504 by removing ``8.602(b)(4)'' and adding 
``8.602(a)(4)'' in its place.
[FR Doc. 05-24551 Filed 12-30-05; 8:45 am]
BILLING CODE 6820-EP-S