Federal Acquisition Regulation; FAR Case 2008-006, Enhanced Competition for Task- and Delivery-Order Contracts-Section 843 of the Fiscal Year 2008 National Defense Authorization Act, 13416-13421 [2010-5989]

Download as PDF 13416 Federal Register / Vol. 75, No. 53 / Friday, March 19, 2010 / Rules and Regulations Dated: March 15, 2010. Al Matera, Director, Acquisition Policy Division. ACTION: Therefore, DoD, GSA, and NASA amend 48 CFR parts 15 and 53 as set forth below: ■ 1. The authority citation for 48 CFR parts 15 and 53 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 15—CONTRACTING BY NEGOTIATION 15.509 [Amended] 2. Amend section 15.509 by removing from the first sentence ‘‘appropriate.’’ and adding ‘‘appropriate. Note however, if using the SF 26 for a negotiated procurement, block 18 is not to be used.’’ in its place. ■ PART 53—FORMS 53.214 [Amended] 3. Amend section 53.214 by removing from the second sentence in paragraph (a) the phrase ‘‘Pending issuance of a new edition of the form, the reference in ‘‘block 1’’ should be amended to read ‘‘15 CFR 700.’’’’ and adding ‘‘Block 18 may only be used for sealed-bid procurements.’’ in its place. ■ 53.215–1 [Amended] 4. Amend section 53.215–1 by removing from paragraph (a) ‘‘15.509.’’ and adding ‘‘15.509. Block 18 may not be used for negotiated procurements.’’ in its place. ■ [FR Doc. 2010–5987 Filed 3–18–10; 8:45 am] BILLING CODE 6820–EP–S DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Part 16 [FAC 2005–39; FAR Case 2008–006; Item IV; Docket 2008–0001, Sequence 25] erowe on DSK5CLS3C1PROD with RULES_2 RIN 9000–AL05 Federal Acquisition Regulation; FAR Case 2008–006, Enhanced Competition for Task- and Delivery-Order Contracts—Section 843 of the Fiscal Year 2008 National Defense Authorization Act AGENCIES: Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). VerDate Nov<24>2008 14:19 Mar 18, 2010 Jkt 220001 Final rule. SUMMARY: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) have adopted as final with changes the interim rule amending the Federal Acquisition Regulation (FAR) to implement Section 843, Enhanced Competition for Task and Delivery Order Contracts, of the National Defense Authorization Act (NDAA) for Fiscal Year 2008 (FY08) (Pub. L. 110–181). Section 843 of the FY08 NDAA stipulates several requirements regarding enhancing competition within Federal contracting. DATES: Effective Date: April 19, 2010. FOR FURTHER INFORMATION CONTACT: For clarification of content, contact Mr. William Clark, Procurement Analyst, at (202) 219–1813. For information pertaining to status or publication schedules, contact the FAR Secretariat at (202) 501–4755. Please cite FAC 2005–39, FAR case 2008–006. SUPPLEMENTARY INFORMATION: A. Background Section 843, Enhanced Competition for Task and Delivery Order Contracts, of the FY08 NDAA includes several requirements regarding enhancing competition within the Federal contracting framework. The provisions of section 843 include: (1) Limitation on single-award taskand delivery-order contracts greater than $100 million; (2) Enhanced competition for task and delivery orders in excess of $5 million; and (3) Restriction on protests in connection with issuance or proposed issuance of a task- or delivery-order except for a protest on the grounds that the order increases the scope, period, or maximum value of the contract under which the order is issued, or a protest of an order valued in excess of $10 million. The interim rule was published in the Federal Register at 73 FR 54008 on September 17, 2008. The majority of the amendments to the FAR were made at publication of the interim rule. The Councils believe that, as a result of the interim rule, contracting offices will need more time to: carefully consider single versus multiple awards for taskor delivery-order contracts valued in excess of $100 million; perform debriefings for orders over $5 million; and respond to and defend against additional protests for orders over $10 million. The public comments received resulted in several changes to the interim rule. PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 Requirements contracts. The Councils amended the language at FAR 16.503(a) to clarify that a requirements contract is awarded to one contractor. This change is made to dispel the implication at FAR 16.503(b)(2) that a requirements contract may be awarded to multiple sources. IDIQ contracts. The Councils also added language at FAR 16.504(c)(1)(ii)(D)(3)(i) to read that the requirement for a determination for a single-award IDIQ contract greater than $100 million is in addition to any applicable requirements of FAR subpart 6.3. This change is made to clarify that the determination for a single-award task- or delivery-order contract greater than $100 million is required in addition to the justification and approval (J&A) required by FAR subpart 6.3 when a procurement will be conducted as other than full and open competition. The language in the interim rule appears to suggest that a J&A pursuant to FAR subpart 6.3 is required whenever you have a single award greater than $100 million, which is not true when the procurement provides for full and open competition. This change is not considered significant but merely a clarification of the interim rule. Architect-engineer contracts. Lastly, the Councils added language at FAR 16.504(c)(1)(ii)(D)(3)(ii) to clarify that the agency-head determination does not apply to architect-engineer task- or delivery-order contracts awarded pursuant to FAR subpart 36.6. Eight respondents submitted comments on the interim rule. The comments are summarized below, with the corresponding responses. Comment 1. ‘‘Architect-Engineer Services Exception.’’FAR 16.500(d) states that the statutory multiple-award preference is not applicable to the procurement of architect-engineer (A-E) services when such services are procured in accordance with the procedures of FAR subpart 36.6. The FAR subpart 36.6 procedures will result in a single award to the most highly qualified firm and it seems moot to obtain the head of agency determination when procuring A-E services. The commenter requests revision of FAR 16.504(c)(1)(ii)(D)(1) to add procurement of an A-E contract pursuant to FAR subpart 36.3 as a fifth reason for an agency-head determination to award a single-award contract that exceeds $100 million. Response: The Councils do not agree that a fifth reason should be added to FAR 16.504(c)(1)(ii)(D)(1), as the list of conditions is statutory. However, the Councils added language at FAR 16.504(c)(1)(ii)(D)(3)(ii) to clarify that E:\FR\FM\19MRR2.SGM 19MRR2 erowe on DSK5CLS3C1PROD with RULES_2 Federal Register / Vol. 75, No. 53 / Friday, March 19, 2010 / Rules and Regulations the requirement for an agency-head determination to award a single-award task- or delivery-order contract over $100 million does not apply to A-E taskor delivery-order contracts awarded in accordance with FAR subpart 36.6. Comment 2. ‘‘Delegation of Determination.’’ FAR 16.504(c)(1)(ii)(D)(1) requires the head of the agency to execute a written determination for an award to a single source for a task- or delivery-order contract in an amount estimated to exceed $100 million. The commenter suggests that requiring the head of the agency to make the determination, without allowing for any designee to perform the function, is too high a level of approval than is necessary. Response: The statute does not prohibit the delegation of this authority. In accordance with FAR 1.108(b), delegation of authority, each authority is delegable unless specifically stated otherwise. Each agency can determine whether to establish an internal policy to delegate the head of agency authority. Comment 3. ‘‘Competitive but only One Offer Received.’’ One commenter expresses concern that solicitations, which were issued using competitive procedures where only one offer or one acceptable offer is received, will also have to obtain a determination by the head of the agency before award can be made. According to the commenter, if there is no allowance for a designee to the agency-head approval, the respondent recommends that the agency-head approval be required before issuing solicitations for which the Government intends to make a single award over $100 million. Another commenter recommends another possible exception under FAR 16.504(c)(1)(ii)(D) would be when the competitive process, even though conducted allowing for multiple awards, results in only one offer or when a FAR part 15 style best value acquisition process results in only one offeror remaining in the competitive range after discussions or negotiations are concluded and/or when there is an indisputable best-value winner as the result of an effective competitive process. Response: The law requires that no task- or delivery-order contract in an amount estimated to exceed $100 million (including all options) may be awarded to a single source unless there is a written determination by the head of the agency. The agency-head determination is required when the single-source contract estimated to exceed $100 million will be awarded under competitive or non-competitive procedures. As such, the Councils do VerDate Nov<24>2008 14:19 Mar 18, 2010 Jkt 220001 not agree with the recommendation to add another possible exception under FAR 16.504(c)(1)(ii)(D) for when the competitive process results in only one offer or offeror. Further, the rule neither prohibits the delegation of the agency determination nor does it preclude the agency from making the determination before issuing the solicitation. Comment 4. ‘‘Congressional Notification.’’ According to one commenter, getting the agency-head approval early in the process (and dealing with associated congressional concerns early in the process) is highly preferable to going through the time and expense of soliciting offers, evaluating proposal(s), and then possibly having approval withheld. The commenter states that refusing to make award to a vendor who submits an acceptable proposal after it has put significant expense into preparing a proposal may open up the Government to litigation and additional bid and proposal costs, as well. Additionally, the commenter states that requiring congressional notification (see FAR 16.504(c)(l)(ii)(D)(2)) under such conditions seems to be excessive for a circumstance in which multiple awards were contemplated, but only one award can be made. Response: It is the agency’s responsibility to determine when to obtain the determination. Congressional notification is only required within 30 days after the determination when citing public interest due to exceptional circumstances as the reason for awarding a single-source task- or delivery-order contract estimated to exceed $100 million. Timely congressional notification should be included in agency approval procedures under these circumstances. Comment 5. ‘‘Unusual and Compelling Urgency.’’ In the event of a FAR subpart 6.3 exception for a single contract award over $100 million including an unusual and compelling urgency exception, the commenter expresses concern about the time required and the burden to get the head of agency determination. Response: The agency-head determination for a single-award task- or delivery-order contract over $100 million is required by law. In instances where such a contract will be made using one of the exceptions to full and open competition at FAR subpart 6.3, both the applicable J&A and the agencyhead determination are required. In certain situations, an agency may consider establishing procedures to process the J&A and the determination together. PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 13417 Comment 6. ‘‘Agency-Head Approval before Solicitation Issuance.’’ Furthermore, if the determination is not delegable, the commenter recommends that agency-head approval be required before issuing a solicitation for which the Government intends to make a single award over $100 million. The commenter states that early approval is preferable prior to issuing the solicitation, thus saving significant expense for bid and proposal costs and possible litigation if an award is not made from the solicitation because the head of agency does not approve a single-source award. Response: The law requires that the head of the agency must make a determination before award. It is the agency’s responsibility to determine at which stage prior to award this determination should be accomplished. Comment 7. ‘‘Court of Federal Claims Override.’’ One commenter states that ‘‘The rule should provide clear notice that the Government Accountability Office (GAO) has sole jurisdiction over any bid protest of task and delivery orders valued at more than $10 million under multiple award indefinitedelivery indefinite-quantity (IDIQ) contracts and that the bid protest limitations applicable to these orders extend to agency decisions to invoke exceptions under the Competition in Contract Act’s (CICA) mandatory stay provisions (sometimes referred to as a ‘CICA override’) in connection with the award of a task- or delivery-order.’’ The commenter expresses concern that, regardless of the section 843 provision giving the Comptroller General of the United States exclusive jurisdiction over orders in excess of $10 million, the Court of Federal Claims (COFC) may conclude that it has jurisdiction. Response: The Councils do not have authority to circumscribe the jurisdiction of the COFC. The rule does provide a notice that protest of an order in excess of $10 million may only be filed with GAO in accordance with the procedures at FAR 33.104. Comment 8. ‘‘Rule of Two for Small Business.’’ Two commenters request a clarification of this rule against the recent GAO decision in Delex Systems, Inc. The commenters believe that the GAO decision is based on a misinterpretation of the FAR and fails to adequately consider that neither Congress nor the FAR Council provided any indication in the detailed task- and delivery-order rules and procedures that the rule of two for small business setasides applies to task and delivery orders. The commenters request a revision to FAR 16.505 to state explicitly that awards of task and E:\FR\FM\19MRR2.SGM 19MRR2 erowe on DSK5CLS3C1PROD with RULES_2 13418 Federal Register / Vol. 75, No. 53 / Friday, March 19, 2010 / Rules and Regulations delivery orders under multiple-award IDIQ contracts are not subject to the rule of two set out at FAR 19.502–2(b). Response: The issue regarding the ‘‘Rule of Two’’ is considered to be outside the scope of this case. Comment 9. ‘‘Part 16 Should Not Be Subject to Part 15 Standards.’’ One commenter states that ‘‘The rule should state explicitly that task- and deliveryorders issued under IDIQ contracts are subject only to FAR 16.505 standards and procedures and not to FAR Part 15 standards.’’ The commenter requests a revision to clarify that the ordering processes under FAR 16.505, as amended by the interim rule, are intended to be streamlined and subject only to the procedures in that section. Also, the commenter wants the FAR revised to explicitly state that evaluations must satisfy those standards set out in FAR 16.505 and that FAR part 15 standards do not apply. The commenter suggests that these clarifications will prevent the use of the bid protest process to conduct end runs around the clear regulatory intent of FAR subpart 16.5. Response: The Councils do not agree. Where it is appropriate and avoids repetition, references to the applicable FAR part 15 are stated in FAR 16.505. Also, the Councils do not believe it is necessary to revise FAR 16.505 to explicitly state that FAR part 15 standards do not apply, as the statement at FAR 16.505(b)(1)(ii) that the competition requirements in FAR subpart 15.3 do not apply to the ordering process is sufficient. Comment 10. ‘‘Greater Flexibility and Exceptions Needed for Single-Award IDIQ.’’ Two commenters recommend that the rule’s one-size-fits-all approach should be revised to provide greater flexibility for agencies to use singleaward IDIQ contracts when appropriate. IDIQ contracts are used for system-ofsystem efforts, performance-based acquisitions, and other similar acquisitions because they provide flexibility to fund the contracts incrementally or on a per-order basis, as the performance term proceeds and/or to account for inclusion of progressively more detailed technical requirements in the prospective order’s statement of work as the technology matures or the term progresses. Response: The law provides the conditions for awarding a single-source task- or delivery-order contract in an amount estimated to exceed $100 million. FAR 16.504(c)(1)(ii)(D) implements these statutory conditions. Comment 11. ‘‘Eliminate 6.3 Procedures - Sole Source Justification.’’ Two commenters recommend that the VerDate Nov<24>2008 14:19 Mar 18, 2010 Jkt 220001 interim rule should be amended to delete FAR 16.504(c)(1)(ii)(D)(3) because the reference to FAR subpart 6.3 does not explain why it is necessary in the rule. Response: The Councils do not agree to delete FAR 16.504(c)(1)(ii)(D)(3). If a single-source task- or delivery-order contract estimated to exceed $100 million will be awarded using other than full and open competition, the contracting officer must comply with FAR subpart 6.3 and FAR 16.504(c)(1)(ii)(D). FAR 16.504(c)(1)(ii)(D)(3) is amended to read that the requirement for a determination for a single-award contract greater than $100 million is in addition to any applicable requirements of FAR subpart 6.3. This change is made to clarify that the determination for a single-award task- or-delivery order contract greater than $100 million is required in addition to the J&A required by FAR subpart 6.3 when a procurement will be conducted as other than full and open competition. The language in the interim rule could have been read to require that a J&A pursuant to FAR subpart 6.3 is needed whenever there is a single-award greater than $100 million, which is not true when the procurement provides for full and open competition. Comment 12. ‘‘Eliminate Limitation on Single-Award Requirements Contract.’’ One commenter states that the rule should be revised to eliminate the limitation on single-award requirements contracts because this restriction is not mandated by section 843 and is inconsistent with requirements contracts. Response: The Councils do not agree that requirements contracts should be excluded from the rule. Section 843 of FY08 NDAA applies to task- or deliveryorder contracts in an amount estimated to exceed $100 million (including all options). FAR 16.501–2(a) states: ‘‘Pursuant to 10 U.S.C. 2304d and section 303K of the Federal Property and Administrative Services Act of 1949, requirements contracts and indefinite-quantity contracts are also known as delivery order contracts or task order contracts.’’ Per FAR 16.501– 2(a), the Councils applied the section 843 provisions to requirements contracts. Comment 13. ‘‘Use of Single-Award Approach when in Government’s Best Interest.’’ The commenter recommends the use of a single-award IDIQ whenever it would be in the Government’s best interests. According to the commenter, there are situations in which, although a second contractor may be nominally capable of performing the task- and PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 delivery-orders under the IDIQ contract, the Government determines that one contractor is superior both in technical merit and cost/price in all areas under the anticipated scope of work. In those situations, it does not make sense in terms of costs and efficiency to require the contracting officer to issue two contracts when there will be no actual competition for the task- and deliveryorders. The commenter states that the contracting officer may be forced to make multiple awards because the situation does not fit within any of the exceptions in FAR 16.504(c)(1)(ii)(D)(1). Response: The condition at FAR 16.504(c)(1)(ii)(D)(1)(iv) allowing the head of the agency to award a singlesource contract estimated to exceed $100 million because it is ‘‘in the public interest’’ due to exceptional circumstances equates to the ‘‘Government’s best interests’’. Similar to the authority at FAR 6.302–7, public interest may be cited when none of the other conditions at FAR 16.504(c)(1)(ii)(D)(1) applies. Congress wants to be informed when this exception is used. The conditions in FAR 16.504(c)(1)(ii)(D)(1) do not prevent an agency from making a single award. If the agency cannot cite FAR 16.504(c)(1)(ii)(D)(1)(iii) where only one source is qualified and capable of performing the work at a reasonable price to the Government, then nothing prevents the Government from making the determination to award the contract pursuant to FAR 16.504 (c)(1)(ii)(D)(1)(iv), provided Congress is subsequently notified. However, the commenter is not describing a situation where the second contractor has an unreasonable price, but a situation where the second contractor has a price higher than the first contractor. Because the situation is not a firm-fixed-price situation (or FAR 16.504 (c)(1)(ii)(D)(1)(ii) would be used) the second contractor’s prices on a particular order could be lower than the first contractor’s prices; also the presence of the second contractor will encourage the first contractor to keep its prices lower. Comment 14. ‘‘Clarify Requirements Clause.’’ The commenter states that, without additional implementation language, it is assumed that without a determination under FAR 16.504(c)(1)(ii)(D), it will be a violation of FAR to issue requirements contracts over $100 million. The commenter further states that it is assumed that all contracts over $100 million will be multiple-award IDIQ contracts under FAR 16.504(c)(1)(ii)(D). If the assumptions are correct, the commenter requests additional clarifying language E:\FR\FM\19MRR2.SGM 19MRR2 erowe on DSK5CLS3C1PROD with RULES_2 Federal Register / Vol. 75, No. 53 / Friday, March 19, 2010 / Rules and Regulations in FAR 16.503 to state that requirements contracts are not authorized over $100 million unless a determination is granted. In addition, if the intent is to allow multiple-award ‘‘requirements’’ contracts, the commenter requests that an alternate to FAR 52.216–21 be added to the ruling that defines how a multiple-award requirements contract will be implemented. Response: The Councils do not believe a change to FAR 52.216–21 is required as a result of this rule. The FAR does not preclude single-award task- or delivery-order requirements contracts over $100 million, it just requires a written determination by the head of the agency. FAR 16.503(b)(2) already states that requirements contracts are not authorized over $100 million unless a determination is granted. The Councils amended the language at FAR 16.503(a) to clarify that requirements contracts are awarded to one contractor. This change is made to dispel the implication at FAR 16.503(b)(2) that a multiple-award requirements contract may be awarded. See also response to Comment 12. Comment 15. ‘‘Expand Coverage to all Indefinite-Delivery Contracts.’’ The commenter states that task- or deliveryorder contracts include all types of indefinite-delivery contracts (See FAR 16.501–1 and FAR 16.501–2(a)). Therefore, the commenter recommends the rule apply to all three types of indefinite-delivery contracts. Response: FAR 16.501–1 defines a ‘‘delivery order contract’’ and ‘‘task order contract’’ as one that does not procure or specify a firm quantity of supplies or services, respectively. FAR 16.501–2(a) specifies that requirements and indefinite-quantity contracts are also known as task or delivery order contracts. IDIQ contracts are not included. Accordingly, the rule is applied only to requirements and indefinite-quantity contracts. Comment 16. ‘‘Change Terminology.’’ The commenter states that it appears the intent of the law is to require the determination to use a single source on an indefinite-delivery contract as part of the initial acquisition planning. To avoid confusion concerning when the determination is required, the reference to ‘‘task or delivery order contract’’ could be changed to either ‘‘indefinite delivery contract’’, or ‘‘basic indefinite delivery contract’’. Response: The Councils do not concur. The rule implements section 843 of Pub. L. 110–181, which applies to task- or delivery-order contracts in an amount estimated to exceed $100 million (including all options). The changes to FAR 16.503 and 16.504 do VerDate Nov<24>2008 14:19 Mar 18, 2010 Jkt 220001 not apply to the task- or delivery-orders issued under such contracts. Comment 17. ‘‘Clarify Grammar as a Result of Use of Semicolons.’’ The commenter requests that FAR 16.504(a)(1)(ii)(D)(1) be clarified by inserting either ‘‘and’’ or ‘‘or’’ after each semicolon. Several interpretations exist because of the semicolons. One contracting activity believes one of four exceptions must be met, while other contracting activities require some combination of the exceptions to be met. Response: The listing of the subparagraphs at FAR 16.504(a)(1)(ii)(D)(1) uses a semicolon with an ‘‘or’’ before the last subparagraph, which is consistent with FAR drafting conventions. Either one or a combination of the items can be cited in the agency-head determination. Comment 18. ‘‘Fair Opportunity Clarification.’’ The commenter recommends inserting ‘‘the requirements in 16.505(b)(1)(ii), and’’ in 16.505(b)(1)(iii) between ‘‘shall include,’’ and ‘‘at a minimum ....’’ to ensure that the user does not ignore the mandatory policy for orders exceeding $3,000. Response: The requirements at FAR 16.505(b)(1)(iii) cover actions above $5 million. The procedures at 16.505(b)(1)(iii) build on the requirements at 16.505(b)(1)(ii) and are not mutually exclusive. Comment 19. ‘‘Clarify Applicability to Cost-Type Contracts.’’ The commenter asks whether FAR 16.504(c)(1)(ii)(D)(1)(ii) means that single-award cost-type task- or deliveryorder contracts over $100 million are abolished. Response: Cost-type single-award task- or delivery-order contracts over $100 million are not abolished by this rule, but must be supported by an agency-head determination in accordance with FAR 16.504(c)(1)(ii)(D)(1)(i), 16.504(c)(1)(ii)(D)(1)(iii), or 16.504(c)(1)(ii)(D)(1)(iv). Comment 20. ‘‘Agency-Head Exception Process.’’ One commenter states that this agency-head exception process is not needed because there is already an existing regulatory process for deciding on the efficacy of multiple awards and because this added process bears no relationship to any problem identified with task-order competitions. According to the commenter, the interim rule only adds to the confusion in agencies over the task-order competition process, including blurring the authority of the contracting officer as a gatekeeper to decide what acquisitions should not be multiple awards at the outset. PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 13419 Response: Section 843 of the FY08 NDAA establishes the requirement for the head of the agency to make a written determination when awarding a singlesource contract greater than $100 million. This rule implements the law. Individual agency regulations or procedures may delegate this authority. The law did not change the contracting officer’s determination during acquisition planning as to whether multiple awards are appropriate. Therefore, the Councils did not make such a change in the rule. Comment 21. ‘‘Use of Exception Terms.’’ One commenter states that the interim rule is unclear because the existing exception terms of art are inconsistent with the new exceptions. According to the commenter, it is instructive that the exception factors listed in 16.504(c)(1)(ii)(B) for contracting officer planning purposes and those listed under 16.504(c)(1)(ii)(D) for head of the contracting activity (HCA) purposes at the award stage are not identical. In the interests of clarity, the Government should consolidate the terms of art used for exceptions at different stages of the acquisition and create a definitional section for consistency and to explain those terms of art. Response: The Councils do not concur with the commenter’s recommendation to ‘‘consolidate the terms of art’’ in FAR 16.504(c)(1)(ii)(B) and FAR 16.504(c)(1)(ii)(D). Each of the terms used in FAR 16.504(c)(1)(ii)(B) represents the unique character of the actions required by the contracting officer in determining whether multiple awards are appropriate based on criteria established in the regulatory implementation of the Federal Acquisition Streamlining Act (see 41 U.S.C. 253h(d)(3)(B) and 10 U.S.C. 2304a(d)(3)(B)). The terms used in FAR 16.504(c)(1)(ii)(D) list the criteria for the head of the agency to make a determination in accordance with section 843 of the FY08 NDAA. Congress could have used the terms in FAR 16.504(c)(1)(ii)(B) to mirror the terms in section 843, but it chose not to do so. Instead, the Congress tailored selected criteria in FAR 16.504(c)(1)(ii)(B) to include in section 843. Comment 22. ‘‘Regulatory Flexibility Analysis.’’ The interim rule states that a Regulatory Flexibility Analysis (RFA) ‘‘is unnecessary because the rule does not change any existing regulations affecting small businesses.’’ One respondent disagrees with this assessment. According to the commenter, since it is reasonable to conclude that many small businesses E:\FR\FM\19MRR2.SGM 19MRR2 erowe on DSK5CLS3C1PROD with RULES_2 13420 Federal Register / Vol. 75, No. 53 / Friday, March 19, 2010 / Rules and Regulations will be impacted by this rule, especially insofar as the bid protest and debriefing rights are concerned, it appears careless to ignore the requirements of the RFA. Among other things, an RFA requires an analysis of alternatives and a discussion of overlapping and duplicative rules. Given that there are already a number of rules governing the fair opportunity to compete for task- and delivery-orders on multiple-award contracts in the FAR and other agency FAR supplements, the commenter believes that ‘‘it would make sense to conduct due diligence on those existing regulations if only to eliminate those that may no longer be required and to shed light on the need for the prohibition of a single award of a task order contract over $100 million in the first place.’’ Response: The interim rule did not ignore the requirements of the Regulatory Flexibility Act (RFA). The Councils obtained review of the statements under the RFA by the Small Business Administration Office of Advocacy. The rule is not expected to have a significant economic impact on a substantial number of small entities. The rule encourages and enhances competition equally for both small and other than small businesses. Insofar as the bid protests are concerned, the GAO did not change its Bid Protest Regulations (See Federal Register at 73 FR 32427 published on June 9, 2008) as a result of section 843; the Councils have not modified the protest procedures in FAR part 33 to impact small businesses either way. The debriefing procedures cited to follow at FAR 15.506 for orders exceeding $5 million provide information to offerors so they may improve its future offers, which is a benefit for both small and large businesses. Further, the Councils sought comments from small businesses on the affected FAR part 16. Only this comment was received. Comment 23. ‘‘Sunset Provision.’’ One commenter believes that, because the single-award prohibition may not add continuing value to the acquisition process over time, a sunset provision that parallels the protest sunset (three years) should be inserted to account for the possibility that, in the future, either no single-award exceptions are being processed or, conversely, too many single-award exceptions are being processed. Factually and legally, that would indicate that the single-award prohibition is either unnecessary because none are being processed, or conversely, that it is too restrictive and/ or being applied too broadly by agency personnel leading to a proliferation of agency-head determinations to make a single task-order contract award. In VerDate Nov<24>2008 14:19 Mar 18, 2010 Jkt 220001 either case, the commenter believes that it would only serve to emphasize that prohibiting single awards does not address any of the goals of the interim rule and thus should be sunset. Response: The Councils do not concur with adding such a sunset provision. The commenter’s recommendation goes beyond the provisions as enacted by section 843 of the FY08 NDAA. Comment 24. ‘‘Override.’’ The commenter requests that the final rule clarify that a protest of a solicitation for, or award of, a task- or delivery-order timely filed in accordance with the Competition in Contracting Act, 31 U.S.C. 3551 et seq.; should trigger an automatic stay of performance. Response: This rule implements section 843. Section 843 did not address ‘‘stay of performance’’ under the Competition in Contracting Act, 31 U.S.C. 3551 et seq. Comment 25. ‘‘Monetary Threshold for Protests.’’ The commenter states that ‘‘section 843 does not provide any express guidance on how the parties should value task or delivery orders when determining whether an order exceeds the threshold value for purposes of protest jurisdiction. This lack of clarity could lead to challenges to GAO’s authority to hear a protest.’’ The commenter requests that the final rule clarify how the monetary threshold for a task- or delivery-order protest will be calculated. The commenter offers that the Councils could consider clarifying the rule to indicate the $10 million threshold is based upon the offers received by the agency so that agencies cannot avoid protest jurisdiction by valuing a solicitation slightly under the statutory threshold and so that protest jurisdiction is not affected by adjustments made to offers during the course of the evaluation. Response: The Councils believe GAO will handle issues concerning its jurisdiction. Comment 26. ‘‘Section 843 Restricts Use of Single-Award IDIQ.’’ The commenter states that, in anticipation of the issuance of the interim rules pursuant to guidance from the Office of the Secretary of Defense in May 2008, several Department of Defense commands had already stated informally (and anecdotally had begun to act on their belief) that section 843 (in the form of FAR 16.504) effectively prohibits them from concluding either during the planning process or at time of award that a single-award task- or delivery-order contract estimated over $100 million dollars would ever be justifiable, preemptively cutting off any thoughtful analysis of the facts and PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 foreclosing any exceptions at the planning stages, in effect pushing the decisions upstream to the HCA at time of award where acquisition law and regulation may not be as well known as at the contracting officer level and where the timing of any such decision will become less of an acquisition decision and more of a political one. Response: The contracting officer determination, at the acquisitionplanning stage, on whether multiple awards are appropriate is required by statute. This determination is separate from the determination by the agency head to award a task- or delivery-order single contract over $100 million, which is required by a different statute. Each agency is responsible for ensuring it meets the requirements of both determinations when applicable. As such, questions or concerns regarding agency implementation of section 843 should be directed to that agency. Comment 27. ‘‘Determination to Use Multiple-Award Contracts.’’ This contract-type ‘‘gap’’ is recognized in the existing regulation, and the FAR currently has a regime where the contracting officer is required to examine the efficacy of multiple awards as part of a stepped planning process. There are several process points at which conditions or exceptions to multiple awards can be applied per the contracting officer’s discretion. Response: It is incumbent upon the contracting officer, as required by FAR 16.504, to determine the feasibility of establishing single- or multiple-award contracts. In the instance where a single-award task- or delivery-order contract over $100 million will be made, the requirements of FAR 16.504(c)(1)(ii)(D) must be addressed. Comment 28. ‘‘Use of Mandatory Exceptions for Multiple-Award Contracts.’’ This list of mandatory exceptions appears to cover just about any contingency affecting the requirements and, at one time, is both comprehensive and broad enough to allow a contracting officer great flexibility to judge the merits of making multiple awards. The commenter states that a contracting officer may determine that a class of acquisitions is not appropriate for multiple awards, but that exception appears to be rarely, if ever, used. In fact, according to the commenter, there is scant data on the use of any of the contracting officer multiple-award contract exception processes whatsoever, so it is difficult to determine whether the contracting officers actually perform such a decisional function. Conversely, though there has been no report that those authorities have been abused one way or E:\FR\FM\19MRR2.SGM 19MRR2 erowe on DSK5CLS3C1PROD with RULES_2 Federal Register / Vol. 75, No. 53 / Friday, March 19, 2010 / Rules and Regulations the other, the interim rule would render moot any planning-stage decision the contracting officer would make if the award were over $100 million. Response: The acquisition planning team (e.g., contracting officer, program office, customers) is tasked to define the exact strategy to support the acquisition requirement. The rule does not render moot the contracting officer’s decision in the acquisition-planning process. The contracting officer is still required by FAR 16.504 to determine the feasibility of establishing single- or multiple-award contracts. Comment 29. ‘‘Head of Agency Override of Contracting Officer Determination.’’ According to one commenter, although the interim rule may be designed to facilitate a proper level of quality assurance over certain Government actions designed to increase competition for task orders, and is not reflective of any failure by the private sector in its transactional conduct, it is wholly possible and very likely that an agency head could veto a single IDIQ award at time of award, presumably long after a contracting officer may have determined that multiple awards are not in the Government’s best interest and for reasons that the head of the agency may not be held accountable to explain. The commenter suggests that one way to deal with that lack of transparency would be to allow any contracting officer’s written determination that a multiple-award contract is not appropriate made at the acquisition planning stages to have great presumptive weight in any internal agency deliberations for the agencyhead exception process or require that the agency-head determination be published if contrary to the contracting officer’s initial determination. Response: The Councils do not agree that the written determination by the head of the agency should be published when it differs from the contracting officer’s initial determination to award a single IDIQ contract. This is not required by section 843. Further, the purpose of the rule is to encourage competition and to make the highest levels of the agency aware of the use of a single-award task- or delivery-order contract greater than $100 million. If a contracting officer’s initial determination to award a single IDIQ contract is later overturned, this decision would need to be substantiated and justified and would be completely in line with the rule’s goal of encouraging competition and the use of multiple awards under IDIQ contracts valued over $100 million. Whether these determinations are releasable to VerDate Nov<24>2008 14:19 Mar 18, 2010 Jkt 220001 the public/private sector is determined by the Freedom of Information Act. Lastly, the approval authority to award a single-award task- or delivery-order contract greater than $100 million rests with the head of the agency per FAR 16.504(c)(1)(ii)(D) and, to the extent the head of the agency considers the acquisition-planning determination on whether multiple awards are appropriate by the contracting officer is within his or her discretion; however, the law does not require such consideration. Contracting officers should be fully engaged or involved in the decision-making process. This is a significant regulatory action and, therefore, was 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. The Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration certify that this final rule will not 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 enhances competition for small and large business, and the information that will be provided in debriefings on procurements over $5 million will benefit firms by enabling them to improve future offers. In addition, the Councils sought comments from small businesses on the affected FAR part 16 at the publication of the interim rule in the Federal Register at 73 FR 54008 on September 17, 2008. One comment was received and is discussed at Comment 22. 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. chapter 35, et seq. List of Subjects in 48 CFR Part 16 Government procurement. Dated: March 15, 2010. Al Matera, Director, Acquisition Policy Division. Accordingly, the interim rule published in the Federal Register at 73 FR 54008 on September 17, 2008, is adopted as a final rule with the following changes: Frm 00011 Fmt 4701 Sfmt 4700 1. The authority citation for 48 CFR part 16 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). 16.501–1 [Amended] 2. Amend section 16.501–1 by adding ‘‘-’’ between the words ‘‘Delivery’’ and ‘‘order’’ in the definition of ‘‘Delivery order contract’’ and between the words ‘‘Task’’ and ‘‘order’’ in the definition of ‘‘Task order contract’’. ■ 16.501–2 [Amended] 3. Amend section 16.501–2 in the last sentence of paragraph (a) by adding ‘‘-’’ between the words ‘‘delivery’’ and ‘‘order’’ and between the words ‘‘task’’ and ‘‘order’’. ■ 16.503 [Amended] 4. Amend section 16.503 by removing from paragraph (a) introductory text ‘‘period’’ and adding ‘‘period (from one contractor)’’ in its place. ■ 5. Amend section 16.504 by revising paragraph (c)(1)(ii)(D)(3) to read as follows: 16.504 Indefinite-quantity contracts. * * * * * (c) * * * (1) * * * (ii) * * * (D) * * * (3) The requirement for a determination for a single-award contract greater than $100 million: (i) Is in addition to any applicable requirements of Subpart 6.3. (ii) Is not applicable for architectengineer services awarded pursuant to Subpart 36.6. * * * * * [FR Doc. 2010–5989 Filed 3–18–10; 8:45 am] BILLING CODE 6820–EP–S C. Paperwork Reduction Act PO 00000 PART 16—TYPES OF CONTRACTS ■ B. Regulatory Flexibility Act ■ 13421 DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Parts 25 and 52 [FAC 2005–39; FAR Case 2008–036; Item V; Docket 2009–019, Sequence 1] RIN 9000–AL23 Federal Acquisition Regulation; FAR Case 2008–036, Trade Agreements— Costa Rica, Oman, and Peru AGENCIES: Department of Defense (DoD), General Services Administration (GSA), E:\FR\FM\19MRR2.SGM 19MRR2

Agencies

[Federal Register Volume 75, Number 53 (Friday, March 19, 2010)]
[Rules and Regulations]
[Pages 13416-13421]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-5989]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 16

[FAC 2005-39; FAR Case 2008-006; Item IV; Docket 2008-0001, Sequence 
25]
RIN 9000-AL05


Federal Acquisition Regulation; FAR Case 2008-006, Enhanced 
Competition for Task- and Delivery-Order Contracts--Section 843 of the 
Fiscal Year 2008 National Defense Authorization Act

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 adopted as final with 
changes the interim rule amending the Federal Acquisition Regulation 
(FAR) to implement Section 843, Enhanced Competition for Task and 
Delivery Order Contracts, of the National Defense Authorization Act 
(NDAA) for Fiscal Year 2008 (FY08) (Pub. L. 110-181). Section 843 of 
the FY08 NDAA stipulates several requirements regarding enhancing 
competition within Federal contracting.

DATES: Effective Date: April 19, 2010.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact 
Mr. William Clark, Procurement Analyst, at (202) 219-1813. For 
information pertaining to status or publication schedules, contact the 
FAR Secretariat at (202) 501-4755. Please cite FAC 2005-39, FAR case 
2008-006.

SUPPLEMENTARY INFORMATION:

A. Background

    Section 843, Enhanced Competition for Task and Delivery Order 
Contracts, of the FY08 NDAA includes several requirements regarding 
enhancing competition within the Federal contracting framework. The 
provisions of section 843 include:
    (1) Limitation on single-award task- and delivery-order contracts 
greater than $100 million;
    (2) Enhanced competition for task and delivery orders in excess of 
$5 million; and
    (3) Restriction on protests in connection with issuance or proposed 
issuance of a task- or delivery-order except for a protest on the 
grounds that the order increases the scope, period, or maximum value of 
the contract under which the order is issued, or a protest of an order 
valued in excess of $10 million.
    The interim rule was published in the Federal Register at 73 FR 
54008 on September 17, 2008. The majority of the amendments to the FAR 
were made at publication of the interim rule. The Councils believe 
that, as a result of the interim rule, contracting offices will need 
more time to: carefully consider single versus multiple awards for 
task- or delivery-order contracts valued in excess of $100 million; 
perform debriefings for orders over $5 million; and respond to and 
defend against additional protests for orders over $10 million. The 
public comments received resulted in several changes to the interim 
rule.
    Requirements contracts. The Councils amended the language at FAR 
16.503(a) to clarify that a requirements contract is awarded to one 
contractor. This change is made to dispel the implication at FAR 
16.503(b)(2) that a requirements contract may be awarded to multiple 
sources.
    IDIQ contracts. The Councils also added language at FAR 
16.504(c)(1)(ii)(D)(3)(i) to read that the requirement for a 
determination for a single-award IDIQ contract greater than $100 
million is in addition to any applicable requirements of FAR subpart 
6.3. This change is made to clarify that the determination for a 
single-award task- or delivery-order contract greater than $100 million 
is required in addition to the justification and approval (J&A) 
required by FAR subpart 6.3 when a procurement will be conducted as 
other than full and open competition. The language in the interim rule 
appears to suggest that a J&A pursuant to FAR subpart 6.3 is required 
whenever you have a single award greater than $100 million, which is 
not true when the procurement provides for full and open competition. 
This change is not considered significant but merely a clarification of 
the interim rule.
    Architect-engineer contracts. Lastly, the Councils added language 
at FAR 16.504(c)(1)(ii)(D)(3)(ii) to clarify that the agency-head 
determination does not apply to architect-engineer task- or delivery-
order contracts awarded pursuant to FAR subpart 36.6.
    Eight respondents submitted comments on the interim rule. The 
comments are summarized below, with the corresponding responses.
    Comment 1. ``Architect-Engineer Services Exception.''FAR 16.500(d) 
states that the statutory multiple-award preference is not applicable 
to the procurement of architect-engineer (A-E) services when such 
services are procured in accordance with the procedures of FAR subpart 
36.6. The FAR subpart 36.6 procedures will result in a single award to 
the most highly qualified firm and it seems moot to obtain the head of 
agency determination when procuring A-E services. The commenter 
requests revision of FAR 16.504(c)(1)(ii)(D)(1) to add procurement of 
an A-E contract pursuant to FAR subpart 36.3 as a fifth reason for an 
agency-head determination to award a single-award contract that exceeds 
$100 million.
    Response: The Councils do not agree that a fifth reason should be 
added to FAR 16.504(c)(1)(ii)(D)(1), as the list of conditions is 
statutory. However, the Councils added language at FAR 
16.504(c)(1)(ii)(D)(3)(ii) to clarify that

[[Page 13417]]

the requirement for an agency-head determination to award a single-
award task- or delivery-order contract over $100 million does not apply 
to A-E task- or delivery-order contracts awarded in accordance with FAR 
subpart 36.6.
    Comment 2. ``Delegation of Determination.'' FAR 
16.504(c)(1)(ii)(D)(1) requires the head of the agency to execute a 
written determination for an award to a single source for a task- or 
delivery-order contract in an amount estimated to exceed $100 million. 
The commenter suggests that requiring the head of the agency to make 
the determination, without allowing for any designee to perform the 
function, is too high a level of approval than is necessary.
    Response: The statute does not prohibit the delegation of this 
authority. In accordance with FAR 1.108(b), delegation of authority, 
each authority is delegable unless specifically stated otherwise. Each 
agency can determine whether to establish an internal policy to 
delegate the head of agency authority.
    Comment 3. ``Competitive but only One Offer Received.'' One 
commenter expresses concern that solicitations, which were issued using 
competitive procedures where only one offer or one acceptable offer is 
received, will also have to obtain a determination by the head of the 
agency before award can be made. According to the commenter, if there 
is no allowance for a designee to the agency-head approval, the 
respondent recommends that the agency-head approval be required before 
issuing solicitations for which the Government intends to make a single 
award over $100 million.
    Another commenter recommends another possible exception under FAR 
16.504(c)(1)(ii)(D) would be when the competitive process, even though 
conducted allowing for multiple awards, results in only one offer or 
when a FAR part 15 style best value acquisition process results in only 
one offeror remaining in the competitive range after discussions or 
negotiations are concluded and/or when there is an indisputable best-
value winner as the result of an effective competitive process.
    Response: The law requires that no task- or delivery-order contract 
in an amount estimated to exceed $100 million (including all options) 
may be awarded to a single source unless there is a written 
determination by the head of the agency. The agency-head determination 
is required when the single-source contract estimated to exceed $100 
million will be awarded under competitive or non-competitive 
procedures. As such, the Councils do not agree with the recommendation 
to add another possible exception under FAR 16.504(c)(1)(ii)(D) for 
when the competitive process results in only one offer or offeror. 
Further, the rule neither prohibits the delegation of the agency 
determination nor does it preclude the agency from making the 
determination before issuing the solicitation.
    Comment 4. ``Congressional Notification.'' According to one 
commenter, getting the agency-head approval early in the process (and 
dealing with associated congressional concerns early in the process) is 
highly preferable to going through the time and expense of soliciting 
offers, evaluating proposal(s), and then possibly having approval 
withheld. The commenter states that refusing to make award to a vendor 
who submits an acceptable proposal after it has put significant expense 
into preparing a proposal may open up the Government to litigation and 
additional bid and proposal costs, as well. Additionally, the commenter 
states that requiring congressional notification (see FAR 
16.504(c)(l)(ii)(D)(2)) under such conditions seems to be excessive for 
a circumstance in which multiple awards were contemplated, but only one 
award can be made.
    Response: It is the agency's responsibility to determine when to 
obtain the determination. Congressional notification is only required 
within 30 days after the determination when citing public interest due 
to exceptional circumstances as the reason for awarding a single-source 
task- or delivery-order contract estimated to exceed $100 million. 
Timely congressional notification should be included in agency approval 
procedures under these circumstances.
    Comment 5. ``Unusual and Compelling Urgency.'' In the event of a 
FAR subpart 6.3 exception for a single contract award over $100 million 
including an unusual and compelling urgency exception, the commenter 
expresses concern about the time required and the burden to get the 
head of agency determination.
    Response: The agency-head determination for a single-award task- or 
delivery-order contract over $100 million is required by law. In 
instances where such a contract will be made using one of the 
exceptions to full and open competition at FAR subpart 6.3, both the 
applicable J&A and the agency-head determination are required. In 
certain situations, an agency may consider establishing procedures to 
process the J&A and the determination together.
    Comment 6. ``Agency-Head Approval before Solicitation Issuance.'' 
Furthermore, if the determination is not delegable, the commenter 
recommends that agency-head approval be required before issuing a 
solicitation for which the Government intends to make a single award 
over $100 million. The commenter states that early approval is 
preferable prior to issuing the solicitation, thus saving significant 
expense for bid and proposal costs and possible litigation if an award 
is not made from the solicitation because the head of agency does not 
approve a single-source award.
    Response: The law requires that the head of the agency must make a 
determination before award. It is the agency's responsibility to 
determine at which stage prior to award this determination should be 
accomplished.
    Comment 7. ``Court of Federal Claims Override.'' One commenter 
states that ``The rule should provide clear notice that the Government 
Accountability Office (GAO) has sole jurisdiction over any bid protest 
of task and delivery orders valued at more than $10 million under 
multiple award indefinite-delivery indefinite-quantity (IDIQ) contracts 
and that the bid protest limitations applicable to these orders extend 
to agency decisions to invoke exceptions under the Competition in 
Contract Act's (CICA) mandatory stay provisions (sometimes referred to 
as a `CICA override') in connection with the award of a task- or 
delivery-order.'' The commenter expresses concern that, regardless of 
the section 843 provision giving the Comptroller General of the United 
States exclusive jurisdiction over orders in excess of $10 million, the 
Court of Federal Claims (COFC) may conclude that it has jurisdiction.
    Response: The Councils do not have authority to circumscribe the 
jurisdiction of the COFC. The rule does provide a notice that protest 
of an order in excess of $10 million may only be filed with GAO in 
accordance with the procedures at FAR 33.104.
    Comment 8. ``Rule of Two for Small Business.'' Two commenters 
request a clarification of this rule against the recent GAO decision in 
Delex Systems, Inc. The commenters believe that the GAO decision is 
based on a misinterpretation of the FAR and fails to adequately 
consider that neither Congress nor the FAR Council provided any 
indication in the detailed task- and delivery-order rules and 
procedures that the rule of two for small business set-asides applies 
to task and delivery orders. The commenters request a revision to FAR 
16.505 to state explicitly that awards of task and

[[Page 13418]]

delivery orders under multiple-award IDIQ contracts are not subject to 
the rule of two set out at FAR 19.502-2(b).
    Response: The issue regarding the ``Rule of Two'' is considered to 
be outside the scope of this case.
    Comment 9. ``Part 16 Should Not Be Subject to Part 15 Standards.'' 
One commenter states that ``The rule should state explicitly that task- 
and delivery-orders issued under IDIQ contracts are subject only to FAR 
16.505 standards and procedures and not to FAR Part 15 standards.'' The 
commenter requests a revision to clarify that the ordering processes 
under FAR 16.505, as amended by the interim rule, are intended to be 
streamlined and subject only to the procedures in that section. Also, 
the commenter wants the FAR revised to explicitly state that 
evaluations must satisfy those standards set out in FAR 16.505 and that 
FAR part 15 standards do not apply. The commenter suggests that these 
clarifications will prevent the use of the bid protest process to 
conduct end runs around the clear regulatory intent of FAR subpart 
16.5.
    Response: The Councils do not agree. Where it is appropriate and 
avoids repetition, references to the applicable FAR part 15 are stated 
in FAR 16.505. Also, the Councils do not believe it is necessary to 
revise FAR 16.505 to explicitly state that FAR part 15 standards do not 
apply, as the statement at FAR 16.505(b)(1)(ii) that the competition 
requirements in FAR subpart 15.3 do not apply to the ordering process 
is sufficient.
    Comment 10. ``Greater Flexibility and Exceptions Needed for Single-
Award IDIQ.'' Two commenters recommend that the rule's one-size-fits-
all approach should be revised to provide greater flexibility for 
agencies to use single-award IDIQ contracts when appropriate. IDIQ 
contracts are used for system-of-system efforts, performance-based 
acquisitions, and other similar acquisitions because they provide 
flexibility to fund the contracts incrementally or on a per-order 
basis, as the performance term proceeds and/or to account for inclusion 
of progressively more detailed technical requirements in the 
prospective order's statement of work as the technology matures or the 
term progresses.
    Response: The law provides the conditions for awarding a single-
source task- or delivery-order contract in an amount estimated to 
exceed $100 million. FAR 16.504(c)(1)(ii)(D) implements these statutory 
conditions.
    Comment 11. ``Eliminate 6.3 Procedures - Sole Source 
Justification.'' Two commenters recommend that the interim rule should 
be amended to delete FAR 16.504(c)(1)(ii)(D)(3) because the reference 
to FAR subpart 6.3 does not explain why it is necessary in the rule.
    Response: The Councils do not agree to delete FAR 
16.504(c)(1)(ii)(D)(3). If a single-source task- or delivery-order 
contract estimated to exceed $100 million will be awarded using other 
than full and open competition, the contracting officer must comply 
with FAR subpart 6.3 and FAR 16.504(c)(1)(ii)(D). FAR 
16.504(c)(1)(ii)(D)(3) is amended to read that the requirement for a 
determination for a single-award contract greater than $100 million is 
in addition to any applicable requirements of FAR subpart 6.3. This 
change is made to clarify that the determination for a single-award 
task- or-delivery order contract greater than $100 million is required 
in addition to the J&A required by FAR subpart 6.3 when a procurement 
will be conducted as other than full and open competition. The language 
in the interim rule could have been read to require that a J&A pursuant 
to FAR subpart 6.3 is needed whenever there is a single-award greater 
than $100 million, which is not true when the procurement provides for 
full and open competition.
    Comment 12. ``Eliminate Limitation on Single-Award Requirements 
Contract.'' One commenter states that the rule should be revised to 
eliminate the limitation on single-award requirements contracts because 
this restriction is not mandated by section 843 and is inconsistent 
with requirements contracts.
    Response: The Councils do not agree that requirements contracts 
should be excluded from the rule. Section 843 of FY08 NDAA applies to 
task- or delivery-order contracts in an amount estimated to exceed $100 
million (including all options). FAR 16.501-2(a) states: ``Pursuant to 
10 U.S.C. 2304d and section 303K of the Federal Property and 
Administrative Services Act of 1949, requirements contracts and 
indefinite-quantity contracts are also known as delivery order 
contracts or task order contracts.'' Per FAR 16.501-2(a), the Councils 
applied the section 843 provisions to requirements contracts.
    Comment 13. ``Use of Single-Award Approach when in Government's 
Best Interest.'' The commenter recommends the use of a single-award 
IDIQ whenever it would be in the Government's best interests. According 
to the commenter, there are situations in which, although a second 
contractor may be nominally capable of performing the task- and 
delivery-orders under the IDIQ contract, the Government determines that 
one contractor is superior both in technical merit and cost/price in 
all areas under the anticipated scope of work. In those situations, it 
does not make sense in terms of costs and efficiency to require the 
contracting officer to issue two contracts when there will be no actual 
competition for the task- and delivery-orders. The commenter states 
that the contracting officer may be forced to make multiple awards 
because the situation does not fit within any of the exceptions in FAR 
16.504(c)(1)(ii)(D)(1).
    Response: The condition at FAR 16.504(c)(1)(ii)(D)(1)(iv) allowing 
the head of the agency to award a single-source contract estimated to 
exceed $100 million because it is ``in the public interest'' due to 
exceptional circumstances equates to the ``Government's best 
interests''. Similar to the authority at FAR 6.302-7, public interest 
may be cited when none of the other conditions at FAR 
16.504(c)(1)(ii)(D)(1) applies. Congress wants to be informed when this 
exception is used. The conditions in FAR 16.504(c)(1)(ii)(D)(1) do not 
prevent an agency from making a single award. If the agency cannot cite 
FAR 16.504(c)(1)(ii)(D)(1)(iii) where only one source is qualified and 
capable of performing the work at a reasonable price to the Government, 
then nothing prevents the Government from making the determination to 
award the contract pursuant to FAR 16.504 (c)(1)(ii)(D)(1)(iv), 
provided Congress is subsequently notified. However, the commenter is 
not describing a situation where the second contractor has an 
unreasonable price, but a situation where the second contractor has a 
price higher than the first contractor. Because the situation is not a 
firm-fixed-price situation (or FAR 16.504 (c)(1)(ii)(D)(1)(ii) would be 
used) the second contractor's prices on a particular order could be 
lower than the first contractor's prices; also the presence of the 
second contractor will encourage the first contractor to keep its 
prices lower.
    Comment 14. ``Clarify Requirements Clause.'' The commenter states 
that, without additional implementation language, it is assumed that 
without a determination under FAR 16.504(c)(1)(ii)(D), it will be a 
violation of FAR to issue requirements contracts over $100 million. The 
commenter further states that it is assumed that all contracts over 
$100 million will be multiple-award IDIQ contracts under FAR 
16.504(c)(1)(ii)(D). If the assumptions are correct, the commenter 
requests additional clarifying language

[[Page 13419]]

in FAR 16.503 to state that requirements contracts are not authorized 
over $100 million unless a determination is granted. In addition, if 
the intent is to allow multiple-award ``requirements'' contracts, the 
commenter requests that an alternate to FAR 52.216-21 be added to the 
ruling that defines how a multiple-award requirements contract will be 
implemented.
    Response: The Councils do not believe a change to FAR 52.216-21 is 
required as a result of this rule. The FAR does not preclude single-
award task- or delivery-order requirements contracts over $100 million, 
it just requires a written determination by the head of the agency. FAR 
16.503(b)(2) already states that requirements contracts are not 
authorized over $100 million unless a determination is granted. The 
Councils amended the language at FAR 16.503(a) to clarify that 
requirements contracts are awarded to one contractor. This change is 
made to dispel the implication at FAR 16.503(b)(2) that a multiple-
award requirements contract may be awarded. See also response to 
Comment 12.
    Comment 15. ``Expand Coverage to all Indefinite-Delivery 
Contracts.'' The commenter states that task- or delivery-order 
contracts include all types of indefinite-delivery contracts (See FAR 
16.501-1 and FAR 16.501-2(a)). Therefore, the commenter recommends the 
rule apply to all three types of indefinite-delivery contracts.
    Response: FAR 16.501-1 defines a ``delivery order contract'' and 
``task order contract'' as one that does not procure or specify a firm 
quantity of supplies or services, respectively. FAR 16.501-2(a) 
specifies that requirements and indefinite-quantity contracts are also 
known as task or delivery order contracts. IDIQ contracts are not 
included. Accordingly, the rule is applied only to requirements and 
indefinite-quantity contracts.
    Comment 16. ``Change Terminology.'' The commenter states that it 
appears the intent of the law is to require the determination to use a 
single source on an indefinite-delivery contract as part of the initial 
acquisition planning. To avoid confusion concerning when the 
determination is required, the reference to ``task or delivery order 
contract'' could be changed to either ``indefinite delivery contract'', 
or ``basic indefinite delivery contract''.
    Response: The Councils do not concur. The rule implements section 
843 of Pub. L. 110-181, which applies to task- or delivery-order 
contracts in an amount estimated to exceed $100 million (including all 
options). The changes to FAR 16.503 and 16.504 do not apply to the 
task- or delivery-orders issued under such contracts.
    Comment 17. ``Clarify Grammar as a Result of Use of Semicolons.'' 
The commenter requests that FAR 16.504(a)(1)(ii)(D)(1) be clarified by 
inserting either ``and'' or ``or'' after each semicolon. Several 
interpretations exist because of the semicolons. One contracting 
activity believes one of four exceptions must be met, while other 
contracting activities require some combination of the exceptions to be 
met.
    Response: The listing of the subparagraphs at FAR 
16.504(a)(1)(ii)(D)(1) uses a semicolon with an ``or'' before the last 
subparagraph, which is consistent with FAR drafting conventions. Either 
one or a combination of the items can be cited in the agency-head 
determination.
    Comment 18. ``Fair Opportunity Clarification.'' The commenter 
recommends inserting ``the requirements in 16.505(b)(1)(ii), and'' in 
16.505(b)(1)(iii) between ``shall include,'' and ``at a minimum ....'' 
to ensure that the user does not ignore the mandatory policy for orders 
exceeding $3,000.
    Response: The requirements at FAR 16.505(b)(1)(iii) cover actions 
above $5 million. The procedures at 16.505(b)(1)(iii) build on the 
requirements at 16.505(b)(1)(ii) and are not mutually exclusive.
    Comment 19. ``Clarify Applicability to Cost-Type Contracts.'' The 
commenter asks whether FAR 16.504(c)(1)(ii)(D)(1)(ii) means that 
single-award cost-type task- or delivery-order contracts over $100 
million are abolished.
    Response: Cost-type single-award task- or delivery-order contracts 
over $100 million are not abolished by this rule, but must be supported 
by an agency-head determination in accordance with FAR 
16.504(c)(1)(ii)(D)(1)(i), 16.504(c)(1)(ii)(D)(1)(iii), or 
16.504(c)(1)(ii)(D)(1)(iv).
    Comment 20. ``Agency-Head Exception Process.'' One commenter states 
that this agency-head exception process is not needed because there is 
already an existing regulatory process for deciding on the efficacy of 
multiple awards and because this added process bears no relationship to 
any problem identified with task-order competitions. According to the 
commenter, the interim rule only adds to the confusion in agencies over 
the task-order competition process, including blurring the authority of 
the contracting officer as a gatekeeper to decide what acquisitions 
should not be multiple awards at the outset.
    Response: Section 843 of the FY08 NDAA establishes the requirement 
for the head of the agency to make a written determination when 
awarding a single-source contract greater than $100 million. This rule 
implements the law. Individual agency regulations or procedures may 
delegate this authority. The law did not change the contracting 
officer's determination during acquisition planning as to whether 
multiple awards are appropriate. Therefore, the Councils did not make 
such a change in the rule.
    Comment 21. ``Use of Exception Terms.'' One commenter states that 
the interim rule is unclear because the existing exception terms of art 
are inconsistent with the new exceptions. According to the commenter, 
it is instructive that the exception factors listed in 
16.504(c)(1)(ii)(B) for contracting officer planning purposes and those 
listed under 16.504(c)(1)(ii)(D) for head of the contracting activity 
(HCA) purposes at the award stage are not identical. In the interests 
of clarity, the Government should consolidate the terms of art used for 
exceptions at different stages of the acquisition and create a 
definitional section for consistency and to explain those terms of art.
    Response: The Councils do not concur with the commenter's 
recommendation to ``consolidate the terms of art'' in FAR 
16.504(c)(1)(ii)(B) and FAR 16.504(c)(1)(ii)(D). Each of the terms used 
in FAR 16.504(c)(1)(ii)(B) represents the unique character of the 
actions required by the contracting officer in determining whether 
multiple awards are appropriate based on criteria established in the 
regulatory implementation of the Federal Acquisition Streamlining Act 
(see 41 U.S.C. 253h(d)(3)(B) and 10 U.S.C. 2304a(d)(3)(B)). The terms 
used in FAR 16.504(c)(1)(ii)(D) list the criteria for the head of the 
agency to make a determination in accordance with section 843 of the 
FY08 NDAA. Congress could have used the terms in FAR 
16.504(c)(1)(ii)(B) to mirror the terms in section 843, but it chose 
not to do so. Instead, the Congress tailored selected criteria in FAR 
16.504(c)(1)(ii)(B) to include in section 843.
    Comment 22. ``Regulatory Flexibility Analysis.'' The interim rule 
states that a Regulatory Flexibility Analysis (RFA) ``is unnecessary 
because the rule does not change any existing regulations affecting 
small businesses.'' One respondent disagrees with this assessment. 
According to the commenter, since it is reasonable to conclude that 
many small businesses

[[Page 13420]]

will be impacted by this rule, especially insofar as the bid protest 
and debriefing rights are concerned, it appears careless to ignore the 
requirements of the RFA. Among other things, an RFA requires an 
analysis of alternatives and a discussion of overlapping and 
duplicative rules. Given that there are already a number of rules 
governing the fair opportunity to compete for task- and delivery-orders 
on multiple-award contracts in the FAR and other agency FAR 
supplements, the commenter believes that ``it would make sense to 
conduct due diligence on those existing regulations if only to 
eliminate those that may no longer be required and to shed light on the 
need for the prohibition of a single award of a task order contract 
over $100 million in the first place.''
    Response: The interim rule did not ignore the requirements of the 
Regulatory Flexibility Act (RFA). The Councils obtained review of the 
statements under the RFA by the Small Business Administration Office of 
Advocacy. The rule is not expected to have a significant economic 
impact on a substantial number of small entities. The rule encourages 
and enhances competition equally for both small and other than small 
businesses. Insofar as the bid protests are concerned, the GAO did not 
change its Bid Protest Regulations (See Federal Register at 73 FR 32427 
published on June 9, 2008) as a result of section 843; the Councils 
have not modified the protest procedures in FAR part 33 to impact small 
businesses either way. The debriefing procedures cited to follow at FAR 
15.506 for orders exceeding $5 million provide information to offerors 
so they may improve its future offers, which is a benefit for both 
small and large businesses. Further, the Councils sought comments from 
small businesses on the affected FAR part 16. Only this comment was 
received.
    Comment 23. ``Sunset Provision.'' One commenter believes that, 
because the single-award prohibition may not add continuing value to 
the acquisition process over time, a sunset provision that parallels 
the protest sunset (three years) should be inserted to account for the 
possibility that, in the future, either no single-award exceptions are 
being processed or, conversely, too many single-award exceptions are 
being processed. Factually and legally, that would indicate that the 
single-award prohibition is either unnecessary because none are being 
processed, or conversely, that it is too restrictive and/or being 
applied too broadly by agency personnel leading to a proliferation of 
agency-head determinations to make a single task-order contract award. 
In either case, the commenter believes that it would only serve to 
emphasize that prohibiting single awards does not address any of the 
goals of the interim rule and thus should be sunset.
    Response: The Councils do not concur with adding such a sunset 
provision. The commenter's recommendation goes beyond the provisions as 
enacted by section 843 of the FY08 NDAA.
    Comment 24. ``Override.'' The commenter requests that the final 
rule clarify that a protest of a solicitation for, or award of, a task- 
or delivery-order timely filed in accordance with the Competition in 
Contracting Act, 31 U.S.C. 3551 et seq.; should trigger an automatic 
stay of performance.
    Response: This rule implements section 843. Section 843 did not 
address ``stay of performance'' under the Competition in Contracting 
Act, 31 U.S.C. 3551 et seq.
    Comment 25. ``Monetary Threshold for Protests.'' The commenter 
states that ``section 843 does not provide any express guidance on how 
the parties should value task or delivery orders when determining 
whether an order exceeds the threshold value for purposes of protest 
jurisdiction. This lack of clarity could lead to challenges to GAO's 
authority to hear a protest.'' The commenter requests that the final 
rule clarify how the monetary threshold for a task- or delivery-order 
protest will be calculated. The commenter offers that the Councils 
could consider clarifying the rule to indicate the $10 million 
threshold is based upon the offers received by the agency so that 
agencies cannot avoid protest jurisdiction by valuing a solicitation 
slightly under the statutory threshold and so that protest jurisdiction 
is not affected by adjustments made to offers during the course of the 
evaluation.
    Response: The Councils believe GAO will handle issues concerning 
its jurisdiction.
    Comment 26. ``Section 843 Restricts Use of Single-Award IDIQ.'' The 
commenter states that, in anticipation of the issuance of the interim 
rules pursuant to guidance from the Office of the Secretary of Defense 
in May 2008, several Department of Defense commands had already stated 
informally (and anecdotally had begun to act on their belief) that 
section 843 (in the form of FAR 16.504) effectively prohibits them from 
concluding either during the planning process or at time of award that 
a single-award task- or delivery-order contract estimated over $100 
million dollars would ever be justifiable, preemptively cutting off any 
thoughtful analysis of the facts and foreclosing any exceptions at the 
planning stages, in effect pushing the decisions upstream to the HCA at 
time of award where acquisition law and regulation may not be as well 
known as at the contracting officer level and where the timing of any 
such decision will become less of an acquisition decision and more of a 
political one.
    Response: The contracting officer determination, at the 
acquisition-planning stage, on whether multiple awards are appropriate 
is required by statute. This determination is separate from the 
determination by the agency head to award a task- or delivery-order 
single contract over $100 million, which is required by a different 
statute. Each agency is responsible for ensuring it meets the 
requirements of both determinations when applicable. As such, questions 
or concerns regarding agency implementation of section 843 should be 
directed to that agency.
    Comment 27. ``Determination to Use Multiple-Award Contracts.'' This 
contract-type ``gap'' is recognized in the existing regulation, and the 
FAR currently has a regime where the contracting officer is required to 
examine the efficacy of multiple awards as part of a stepped planning 
process. There are several process points at which conditions or 
exceptions to multiple awards can be applied per the contracting 
officer's discretion.
    Response: It is incumbent upon the contracting officer, as required 
by FAR 16.504, to determine the feasibility of establishing single- or 
multiple-award contracts. In the instance where a single-award task- or 
delivery-order contract over $100 million will be made, the 
requirements of FAR 16.504(c)(1)(ii)(D) must be addressed.
    Comment 28. ``Use of Mandatory Exceptions for Multiple-Award 
Contracts.'' This list of mandatory exceptions appears to cover just 
about any contingency affecting the requirements and, at one time, is 
both comprehensive and broad enough to allow a contracting officer 
great flexibility to judge the merits of making multiple awards. The 
commenter states that a contracting officer may determine that a class 
of acquisitions is not appropriate for multiple awards, but that 
exception appears to be rarely, if ever, used. In fact, according to 
the commenter, there is scant data on the use of any of the contracting 
officer multiple-award contract exception processes whatsoever, so it 
is difficult to determine whether the contracting officers actually 
perform such a decisional function. Conversely, though there has been 
no report that those authorities have been abused one way or

[[Page 13421]]

the other, the interim rule would render moot any planning-stage 
decision the contracting officer would make if the award were over $100 
million.
    Response: The acquisition planning team (e.g., contracting officer, 
program office, customers) is tasked to define the exact strategy to 
support the acquisition requirement. The rule does not render moot the 
contracting officer's decision in the acquisition-planning process. The 
contracting officer is still required by FAR 16.504 to determine the 
feasibility of establishing single- or multiple-award contracts.
    Comment 29. ``Head of Agency Override of Contracting Officer 
Determination.'' According to one commenter, although the interim rule 
may be designed to facilitate a proper level of quality assurance over 
certain Government actions designed to increase competition for task 
orders, and is not reflective of any failure by the private sector in 
its transactional conduct, it is wholly possible and very likely that 
an agency head could veto a single IDIQ award at time of award, 
presumably long after a contracting officer may have determined that 
multiple awards are not in the Government's best interest and for 
reasons that the head of the agency may not be held accountable to 
explain. The commenter suggests that one way to deal with that lack of 
transparency would be to allow any contracting officer's written 
determination that a multiple-award contract is not appropriate made at 
the acquisition planning stages to have great presumptive weight in any 
internal agency deliberations for the agency-head exception process or 
require that the agency-head determination be published if contrary to 
the contracting officer's initial determination.
    Response: The Councils do not agree that the written determination 
by the head of the agency should be published when it differs from the 
contracting officer's initial determination to award a single IDIQ 
contract. This is not required by section 843. Further, the purpose of 
the rule is to encourage competition and to make the highest levels of 
the agency aware of the use of a single-award task- or delivery-order 
contract greater than $100 million. If a contracting officer's initial 
determination to award a single IDIQ contract is later overturned, this 
decision would need to be substantiated and justified and would be 
completely in line with the rule's goal of encouraging competition and 
the use of multiple awards under IDIQ contracts valued over $100 
million. Whether these determinations are releasable to the public/
private sector is determined by the Freedom of Information Act. Lastly, 
the approval authority to award a single-award task- or delivery-order 
contract greater than $100 million rests with the head of the agency 
per FAR 16.504(c)(1)(ii)(D) and, to the extent the head of the agency 
considers the acquisition-planning determination on whether multiple 
awards are appropriate by the contracting officer is within his or her 
discretion; however, the law does not require such consideration. 
Contracting officers should be fully engaged or involved in the 
decision-making process.
    This is a significant regulatory action and, therefore, was 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 Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not 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 enhances 
competition for small and large business, and the information that will 
be provided in debriefings on procurements over $5 million will benefit 
firms by enabling them to improve future offers. In addition, the 
Councils sought comments from small businesses on the affected FAR part 
16 at the publication of the interim rule in the Federal Register at 73 
FR 54008 on September 17, 2008. One comment was received and is 
discussed at Comment 22.

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. 
chapter 35, et seq.

List of Subjects in 48 CFR Part 16

    Government procurement.

    Dated: March 15, 2010.
Al Matera,
Director, Acquisition Policy Division.

0
Accordingly, the interim rule published in the Federal Register at 73 
FR 54008 on September 17, 2008, is adopted as a final rule with the 
following changes:

PART 16--TYPES OF CONTRACTS

0
1. The authority citation for 48 CFR part 16 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).


16.501-1  [Amended]

0
2. Amend section 16.501-1 by adding ``-'' between the words 
``Delivery'' and ``order'' in the definition of ``Delivery order 
contract'' and between the words ``Task'' and ``order'' in the 
definition of ``Task order contract''.


16.501-2  [Amended]

0
3. Amend section 16.501-2 in the last sentence of paragraph (a) by 
adding ``-'' between the words ``delivery'' and ``order'' and between 
the words ``task'' and ``order''.


16.503  [Amended]

0
4. Amend section 16.503 by removing from paragraph (a) introductory 
text ``period'' and adding ``period (from one contractor)'' in its 
place.

0
5. Amend section 16.504 by revising paragraph (c)(1)(ii)(D)(3) to read 
as follows:


16.504  Indefinite-quantity contracts.

* * * * *
    (c) * * *
    (1) * * *
    (ii) * * *
    (D) * * *
    (3) The requirement for a determination for a single-award contract 
greater than $100 million:
    (i) Is in addition to any applicable requirements of Subpart 6.3.
    (ii) Is not applicable for architect-engineer services awarded 
pursuant to Subpart 36.6.
* * * * *
[FR Doc. 2010-5989 Filed 3-18-10; 8:45 am]
BILLING CODE 6820-EP-S