Federal Acquisition Regulation; Consolidation and Bundling, 67763-67773 [2016-23199]

Agencies

• DEPARTMENT OF DEFENSE
• General Services Administration
• National Aeronautics and Space Administration

[Federal Register Volume 81, Number 190 (Friday, September 30, 2016)]
[Rules and Regulations]
[Pages 67763-67773]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-23199]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 5, 7, 8, 10, 12, 15, 16, 19, and 52

[FAC 2005-91; FAR Case 2014-015; Item VI; Docket No. 2014-0015, 
Sequence No. 1]
RIN 9000-AM92


Federal Acquisition Regulation; Consolidation and Bundling

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

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule to amend the 
Federal Acquisition Regulation (FAR) to implement sections of the Small 
Business Jobs Act of 2010 and regulatory changes made by the Small 
Business Administration, which provide for a Governmentwide policy on 
consolidation and bundling.

DATES: Effective: October 31, 2016.

FOR FURTHER INFORMATION CONTACT: Ms. Mahruba Uddowla, Procurement 
Analyst, at 703-605-2868, for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat at 202-501-4755. Please cite FAC 2005-91, FAR Case 2014-
015.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 80 FR 31561 on June 3, 2015, to revise the FAR to provide 
for a Governmentwide policy on consolidation and bundling. The proposed 
rule incorporated regulatory changes made by the Small Business 
Administration (SBA) in its final rule which published in the Federal 
Register at 78 FR 61113 on October 2, 2013, concerning contract 
consolidation and bundling.
    SBA's final rule implements the statutory requirements related to 
bundling and consolidation as set forth in sections 1312 and 1313 of 
the Small Business Jobs Act of 2010 (Pub. L. 111-240), as well as 
section 1671 of the National Defense Authorization Act for Fiscal Year 
2013 (Pub. L. 112-239). Eight respondents submitted comments on the FAR 
proposed rule.

II. Discussion and Analysis

    The Civilian Agency Acquisition Council and the Defense Acquisition 
Regulations Council (the Councils) reviewed the comments in the 
development of the final rule. A discussion of the comments and the 
changes made to the rule as a result of those comments are provided as 
follows:

A. Summary of Significant Changes

    This final rule makes the following significant changes from the 
proposed rule:
     FAR 2.101--Amends the definition of ``Small Business 
Teaming Arrangement'' to note the differences applicable to DoD because 
of the DoD Pilot Mentor-Prot[eacute]g[eacute] Program. A similar change 
is made at FAR 52.207-6.
     FAR 7.104(d)--Amends the conditions under which the small 
business specialist must notify the agency Office of Small and 
Disadvantaged Business Utilization or the Office of Small Business 
Programs to be consistent with 13 CFR 125.2(c)(4)(ii).
     FAR 7.105(b)(1)(iv)--The second sentence no longer 
mentions consolidation since SBA's implementing rule does not require 
the identification of incumbent contractors and contracts affected by 
the consolidation.
     FAR 7.107-1(b)--Adds an exception for acquisitions from a 
mandatory source to the requirements at FAR 7.107 for acquisitions 
involving consolidation, bundling, or substantial bundling.
     FAR 7.107-1--The coverage formerly at FAR 7.107-1 on 
necessary and justified bundling for consolidation and bundling has 
been separated and moved to 7.107-2 and 7.107-3, due to differences in 
the statutory and regulatory requirements.
     FAR 7.107-2(e)--Provides procedures for consolidation 
corresponding to those for bundling at FAR 7.107-3(c) (now at 7.107-
3(f)), to address the determination that consolidation is necessary and 
justified when the expected benefits do not meet the quantifiable 
dollar thresholds for a substantial benefit but are critical to the 
agency's mission success.
     FAR 7.107-5(c)--Removes the phrase ``(even if additional 
requirements have been added or some have been deleted)'' and adds a 
subparagraph (4) which requires that the notice to SBA include a list 
of requirements that have been added or deleted for the follow-on 
bundled or consolidated procurement. The changes will facilitate a more 
accurate comparison of savings and benefits from the prior procurement.
     FAR 15.304(c)(3) and (4)--Excludes solicitations that are 
set aside for small business from the requirements relating to small 
business subcontracting-related evaluation factors for solicitations 
involving consolidation.

B. Analysis of Public Comments

1. General
a. Support for the Rule
    Comment: One respondent expressed general support for the rule and 
that the proposed changes are positive which will provide much needed 
transparency and ensure that unnecessary and unjustified bundling do 
not become the contracting standard.
    Response: Noted.
b. Experiences With Consolidation
    Comment: Two respondents commented on their experience with 
consolidation and/or bundling; the adverse impact on small businesses' 
ability to compete in this environment; and expressed, had this rule 
been in effect, their experience very likely could have been different.
    Response: Noted.
c. Need for Table of Thresholds
    Comment: One respondent requested that a table of dollar thresholds 
may be useful to clarify the differences between consolidation and 
bundling.
    Response: With regard to the use of a table to clarify the 
differing dollar thresholds associated with these terms, the preferred 
approach is to provide the guidance for processing a consolidated or 
bundled requirement in the area of the FAR where the respective subject 
matter is addressed. For example, the dollar threshold for triggering 
the Senior Procurement Executive's or Chief Acquisition Officer's 
determination of necessary and justified consolidation is discussed in 
the area of the FAR, 7.107-2, which addresses consolidation. Similarly, 
the dollar thresholds for substantial bundling and the attendant 
requirements for processing these acquisitions are provided at FAR 
7.107-4. The FAR is arranged in this manner to allow contracting 
officers to quickly turn to the area of the FAR where the requisite 
guidance needed for their given situation is provided.

[[Page 67764]]

d. Mixing of Consolidation and Bundling
    Comment: Three respondents commented that the rule appeared to 
incorrectly or unnecessarily use the terms consolidation and bundling 
synonymously, by applying the same requirements to both. The 
respondents identified the following areas in the rule where they 
believed that this occurred:
    [cir] FAR 7.103(u)(2). This paragraph currently urges acquisition 
planners to avoid unnecessary and unjustified bundling that precludes 
participation of small business as prime contractors. The rule proposes 
that planners also avoid unnecessary and unjustified consolidation. One 
respondent believes that a consolidation that precludes participation 
of small business as the prime would automatically be bundling and as 
such, the rule is proposing an unnecessary change.
    [cir] FAR 7.104(d). This paragraph currently requires coordination 
with the small business specialist when an acquisition meets the dollar 
thresholds for substantial bundling, unless the acquisition is set 
aside for small business. The small business specialist is required to 
notify the agency's small business office (e.g., Office of Small and 
Disadvantaged Business Utilization) when the acquisition involves 
unjustified or unnecessary bundling or is not identified as bundling. 
The rule proposes to also require notification when the acquisition 
involves unjustified or unnecessary consolidation or is not identified 
as consolidation. It was pointed out that the coordination exemption 
for set-asides conflicts with the proposed notification requirement in 
cases where consolidation results in a small business set-aside because 
the small business specialist would not be coordinated with in such 
cases so they would not be able to provide the notification.
    [cir] FAR 7.105(b)(1)(iv). The rule proposes to require that for 
consolidated contract requirements, the acquisition plan identify the 
incumbent contractors and contracts affected by the consolidation. The 
FAR currently only requires this for bundled contract requirements. One 
respondent stated the proposed additional burden could result in 
listing thousands of contracts for a strategic sourcing acquisition and 
that there is no statutory requirement for said identification.
    [cir] FAR 7.107-1. This subsection provides guidance on how 
consolidation and bundling could be determined necessary and justified. 
One respondent asked why the same requirements have to be met for both 
consolidation and bundling.
    [cir] FAR 7.107-2(a). One respondent asked why there is a 
requirement for coordination with the Office of Small and Disadvantaged 
Business Utilization (OSDBU) and/or a negative impact analysis on small 
businesses for consolidation if the consolidation results in a small 
business set-aside. The respondent believes that if the acquisition is 
not set aside then it would automatically be bundling and that bundling 
has the same justification process as consolidation.
    [cir] FAR 7.107-5. One respondent pointed out that this subsection 
starts out talking about bundling then in paragraph (c) mixes in 
consolidated requirements, which the respondent believes is mixing two 
completely different situations that are not synonymous.
    [cir] FAR 15.304(c). The rule proposes to require that there be 
evaluation factors related to a small business subcontracting plan for 
consolidated requirements. Currently, the FAR only requires this for 
bundling. Two respondents pointed out that if a consolidated 
requirement is set aside for small business, a small business 
subcontracting plan would not be required.
    [cir] FAR 19.202-1. One respondent asked why the rule is proposing 
to apply the requirement for 30-day notification to incumbent small 
businesses for consolidated requirements. The respondent also stated 
that paragraph (e)(2)(v) is confusing because the requirements of that 
paragraph would not apply if consolidation results in a small business 
set-aside.
    Response: The Councils reviewed the areas of the rule identified by 
the respondents to ensure that the appropriate requirements were being 
applied to consolidation. The final rule has been revised at--
     FAR 7.104(d) to remove ``consolidation'' in several places 
from the conditions under which the small business specialist must 
notify the agency Office of Small and Disadvantaged Business 
Utilization or the Office of Small Business Programs to be consistent 
with 13 CFR 125.2(c)(4)(ii); and
     FAR 7.105(b)(1)(iv) to no longer mention consolidation in 
the second sentence, since sections 1312 and 1313 of the Small Business 
Jobs Act and SBA's implementing regulations at 13 CFR 125.2 do not 
require the small business identification of incumbent contractors for 
consolidated requirements.
    The final rule has also been revised at FAR 15.304(c) to clarify 
that consolidated requirements which are set aside for small business 
will not be required to use the small business subcontracting-related 
evaluation factors. While SBA's regulations at 13 CFR 125.2(d)(4) 
require small business subcontracting plan-related evaluation factors 
be used for all consolidated acquisitions, implementing this 
requirement in the FAR would be problematic. Because FAR 15.305(a)(5) 
requires that small business offerors get the highest rating for these 
factors, every offeror would receive the same rating for such factors 
in the scenario where a consolidated acquisition is set aside for small 
business, which would make use of such evaluation factors conflict with 
FAR 15.304(b)(2), which requires that evaluation factors support 
meaningful comparison and discrimination between and among competing 
proposals.
    The final rule retains the proposed changes (with some further 
edits) to FAR 7.103(u)(2), 7.104(d), 7.107-1, 7.107-2, 7.107-5, and 
19.202-1 as those changes are consistent with sections 1312 and 1313 of 
the Small Business Jobs Act and SBA's implementing regulations at 13 
CFR 125.2. The Councils note that the rule does not have a requirement 
for a 30-day notification to incumbent small business contractors for 
consolidated requirements, as one respondent stated, nor does the rule 
automatically define a consolidated requirement that is not set aside 
for small business as bundling.
2. Applicability
a. AbilityOne
    Comment: One respondent asked whether the requirements for 
consolidation are necessary for acquisition of services from the 
Procurement List maintained by the Committee for Purchase From People 
Who Are Blind or Severely Disabled (also known as the AbilityOne 
Commission), which is considered a mandatory source in accordance with 
FAR 8.002. The respondent requested the rule clarify how the mandatory 
sources relate to the consolidation requirements at FAR 7.107-2.
    Response: For requirements that are on the Procurement List, the 
required source(s) to fulfill that work are already designated by the 
U.S. AbilityOne Commission. There would be no potential impact on small 
business participation or even on AbilityOne nonprofit agency 
participation if multiple Procurement List requirements are 
consolidated, because the sources will remain the same in accordance

[[Page 67765]]

with those listed on the Procurement List. For that reason, it would 
not be necessary to engage in the market research or analysis required 
in FAR 7.107-1 and 7.107-2 if the potential consolidation only involves 
required sources of supply and services such as requirements on the 
Procurement List.
    This same rationale applies to acquisitions from other mandatory 
sources. Therefore, the final rule has been revised at 7.107-1 to 
clarify that the consolidation and bundling requirements at 7.107 do 
not apply to acquisitions for which there are mandatory sources 
pursuant to FAR 8.002, ``Priorities for use of mandatory Government 
sources,'' or FAR 8.003, ``Use of other mandatory sources.'' The 
purpose of section 1313 of the Small Business Jobs Act was to limit the 
use of contract consolidation because of the anticipated negative 
impact of such an acquisition strategy on small business. However, 
requirements for which there is a mandatory source are not available to 
small business and as such, consolidation would result in no impact to 
small business, negative or positive. Further, neither 41 U.S.C. 8504 
(the statutory authority behind the AbilityOne Program) nor 18 U.S.C. 
4124(a) (another mandatory source--Federal Prison Industries) requires 
consolidation analyses for acquisitions done under their programs. 
Since application of the consolidation requirements would only create 
burden for the acquisition process and no benefit to small business, 
the Councils have determined, as a way of harmonizing different 
statutes, to exempt those consolidated contracts that can be met 
through one of the mandatory sources identified in FAR 8.002 or 8.003.
b. Blanket Purchase Agreements (BPAs)
    Comment: One respondent recommended changes to multiple parts of 
the FAR in order to apply the bundling and consolidation analysis 
requirements to BPAs, especially Federal Supply Schedule (FSS) BPAs. 
The recommendation was based on the respondent's assumption that the 
Councils did not intend to exclude BPAs from bundling or consolidation 
analysis. The respondent requested that if the recommended changes were 
not made, that the final rule should address the applicability of 
bundling and consolidation requirements to BPAs.
    Response: The statutory definition of ``bundling of contract 
requirements'' at paragraph (o) of 15 U.S.C. 632, Definitions, and of 
``consolidation of contract requirements'' at 15 U.S.C. 657q, 
Consolidation of contract requirements, and SBA's implementing 
regulations at 13 CFR 125.1(c) and (e), only mention ``contract'' in 
terms of bundling and consolidation. BPAs are not contracts and 
therefore neither statute nor the implementing regulations apply the 
consolidation and bundling analysis requirements to them; however, 
orders under BPAs are treated as contracts in SBA's regulations at 13 
CFR 125.1(d). The FAR definitions of ``consolidation'' and ``bundling'' 
apply to task or delivery orders, including those issued under BPAs.
c. 8(a)
    Comment: One respondent requested that the requirement for a 
consolidation determination and findings (D&F) be waived for 
consolidation affecting or relating to sole source awards under the 
8(a) program, due to concerns over potentially longer procurement lead 
times. Moreover, the respondent suggested that the requirement for a 
consolidation D&F contradicts FAR 6.302-5(b)(4) and the intent of 
paragraph 8(a) of the Small Business Act.
    Response: Neither the statute nor SBA's final rule waived or 
exempted consolidations under or relating to the 8(a) Program; 
therefore, the new requirement is, in fact, applicable to all 
consolidations with an estimated total dollar value exceeding $2 
million, even those where the new consolidated award will be made via 
sole source contract under the 8(a) Program.
3. Definitions
a. ``Acquisition Planning Team'' and ``Planner''
    Comment: One respondent requested definitions of ``acquisition 
planning team'' and ``planner,'' in relation to the requirement at FAR 
7.104 that small business is to be a discipline that is represented on 
the acquisition planning team.
    Response: These are not new terms introduced to the FAR by this 
rule. ``Planner'' is currently defined at FAR 7.101 to mean the 
designated person or the office responsible for developing and 
maintaining a written plan, or for the planning function in those 
acquisitions not requiring a written plan.
    ``Acquisition planning'' is defined in FAR 2.101. FAR 7.104 
addresses the composition of the acquisition planning team, i.e., the 
planner shall form a team consisting of all those who will be 
responsible for significant aspects of the acquisition, such as 
contracting, fiscal, legal, and technical personnel. This rule adds 
small business personnel to this list of functional experts that 
comprise the acquisition planning team.
b. ``Bundling'' and ``Consolidation''
    Comment: One respondent finds the definitions of ``bundling'' and 
``consolidation'' useful to clearly set forth the requirements.
    Response: Noted.
    Comment: One respondent was concerned whether the statement in the 
definition of ``bundling or bundled contract'' that ``this definition 
does not apply to contracts that will be awarded and performed entirely 
outside the United States'' was intended to limit the applicability of 
the rule based on where the contract will be awarded and performed. The 
respondent further noted a potential inconsistency between that 
statement and the statement in the SBA regulations at 13 CFR 125.2(c) 
that the Small Business Act requires each Federal agency to foster the 
participation of small business concerns as prime contractors and 
subcontractors in the contracting opportunities of the Government, 
regardless of the place of performance of the contract. According to 
the respondent, the Court of Federal Claims has concluded that SBA's 
implementation of a provision of the Small Business Act via regulation 
must be viewed as controlling where there is an inconsistent FAR rule 
(C&G Excavating. Inc. v. U.S., 32 Fed. Cl. 231 (Fed. Cl. 1994).
    Response: This issue will be considered under FAR case 2016-002, 
Applicability of Small Business Regulations Outside the United States.
4. Acquisition Planning (FAR 7.104 and 7.105)
    Comment: With regard to the clarification at FAR 7.104(a) that 
small business is to be a discipline that is represented in the 
acquisition planning team, one respondent stated that SBA will be 
working with at least a DD Form 2579 on most actions, so depending on 
the dollar amount is that sufficient? The respondent questioned the 
formality of the SBA involvement.
    Response: The small business specialist on the acquisition planning 
team will probably be a representative of the agency small business 
office, not the SBA. The SBA will be working with, at a minimum, a DoD 
Form 2579, Small Business Coordination Record, or equivalent when 
reviewing acquisitions for consolidation or bundling. Currently, SBA's 
regulations at 13 CFR 125.2(c)(1)(v) require that an agency must notify 
the SBA within 30 days prior to the issuance of a solicitation for a 
bundled or consolidated contract and also requires that the DoD Form 
2579 or

[[Page 67766]]

equivalent must be sent to the SBA procurement center representative.
    The formality of SBA's involvement is expanded upon by FAR 19.202-
1(e)(1)(iii), which further requires agencies to provide a copy of the 
acquisition package to the SBA procurement center representation if the 
proposed requirement is for a bundled requirement. This acquisition 
package includes ``all information relative to the justification of 
contract bundling, including the acquisition plan or strategy.'' This 
rule also requires this information for consolidation. If the 
acquisition involves substantial bundling, the agency must provide the 
requirements listed at FAR 7.107(e), moved in the final rule to 7.107-
4.
    Comment: One respondent commented that the thresholds proposed in 
FAR 7.104(d) for consultation with the cognizant small business 
specialist should be compared to current FAR or Defense Federal 
Acquisition Regulation Supplement (DFARS) thresholds for such review. 
The respondent was concerned that these thresholds would likely result 
in a much larger workload that should be coordinated with SBA.
    Response: The requirements to coordinate with the small business 
specialist when a requirement meets the threshold for substantial 
bundling already exist in the current FAR at 7.104(d)(1). The 
thresholds currently listed in FAR 7.104(d)(2)(i) still exist and are 
the thresholds used to differentiate ``bundling'' from ``substantial 
bundling''. However, FAR 7.104 is being amended to remove the 
substantial bundling thresholds, which will be relocated in a new 
section, FAR 7.107-4 for clarity and consistency purposes. Therefore, 
there is no increase in workload for the small business specialists due 
to the threshold.
    Comment: One respondent stated that most FAR/DFARS language speaks 
to acquisition planning and not strategies.
    Response: Acquisition strategies are heavily considered in both the 
FAR and DFARS. As stated in the acquisition planning definition at FAR 
2.101, acquisition planning includes developing the overall strategy 
for managing the acquisition. FAR 7.107-3(f)(2) in the final rule 
(formerly FAR 7.107(c)(2)) indicates that the acquisition strategy must 
provide for maximum practicable participation by small business 
concerns. FAR 7.107-4(b) in the final rule (formerly FAR 7.107(e)) goes 
further and describes additional elements for the acquisition strategy 
when there is substantial bundling.
5. Additional Requirements--Consolidation, Bundling, or Substantial 
Bundling (FAR 7.107)
a. General Requirements (FAR 7.107-1)
    Comment: One respondent acknowledged numerous benefits to the rule 
and how it will standardize the management of requirements bundling 
across Government agencies. This standardized approach was noted to 
provide more visibility into Government contracting. The respondent 
additionally lauded FAR 7.107-1(b) for its identification of the 
possible benefits that may be attained from bundling or consolidation 
such as cost savings; price-reduction; quality improvements, etc. 
Furthermore, the respondent supported the thresholds in the rule for 
the Government to use to substantiate the benefits of bundling or 
consolidation including the threshold in FAR 7.107-1(e) requiring cost 
savings based on administrative or personnel costs must be at least 10 
percent to prevent potential misleading justifications about 
administrative costs.
    Response: Noted.
    Comment: One respondent commented on the appropriateness of the 
Senior Procurement Executive (SPE) or Chief Acquisition Officer (CAO) 
making the determination of cost savings of consolidated requirements. 
Of particular concern, the respondent felt the determination should be 
the responsibility of the customer/requirements owner.
    Response: Generally, FAR determinations that pertain to the 
acquisition process are made by acquisition professionals (e.g., CAO, 
SPE, contracting officer, etc.). Paragraph (c)(2)(B) of 15 U.S.C. 657q, 
Consolidation of contract requirements, requires the determination of 
cost savings under a consolidated requirement be made by the SPE or 
CAO. The language used in the rule provides flexibility as to who would 
actually write or provide any supporting document as the SPE or CAO are 
only required to make the determination.
    Comment: One respondent commented that Government agencies are 
required to meet 10 percent savings requirement for consolidation, even 
though they are potentially still setting aside for small businesses. 
If they cannot meet that savings objective then they cannot consolidate 
requirements and therefore cannot save the taxpayer money. This 
requirement will also cause the Government to expand its needed 
resources in order to ensure enough personnel to provide proper 
oversight of multiple orders.
    Response: The Councils reviewed the comment and have included in 
FAR 7.107-2(e) the similar authority contained in the final rule for 
FAR 7.107-3(f), which allows specific senior officials under certain 
circumstances to determine that consolidation is necessary and 
justified, even though expected benefits do not meet the quantifiable 
dollar thresholds for a substantial benefit. Section 1313 provides that 
a SPE or CAO may determine that an acquisition strategy involving 
consolidation is necessary and justified if the benefits of the 
acquisition strategy substantially exceed the benefits of each of the 
possible alternative contracting approaches identified that would 
involve a lesser degree of consolidation. In the preamble to the SBA 
final rule, SBA indicated (published in the Federal Register at 78 FR 
61120) that since the Small Business Jobs Act does not define the terms 
``substantially exceed'' or ``benefits'' for contractual consolidation, 
SBA used the definitions for those terms currently set forth in the 
bundling regulations in 13 CFR 125. Therefore, it is reasonable, in 
implementation of these thresholds in the FAR, to provide the same 
procedures set forth at 13 CFR 125.2(d)(2)(iii) with regard to the 
authority to make a determination that consolidation is necessary and 
justified even though the benefits do not meet the thresholds for 
substantial benefits, but in the aggregate are critical to the agency's 
mission success.
b. Consolidation (FAR 7.107-2)
    Comment: One respondent discussed the consolidation of contract 
requirements specified at FAR 7.107-2 and expressed that the $2 million 
dollar threshold which would require a justification is adequate, 
without being overly burdensome. Additionally, the respondent commented 
that the review process and the impact analysis on small businesses 
when contract consolidation is being contemplated are preventive 
measures to ensure consolidation is justified.
    Response: Noted.
c. Bundling (FAR 7.107-3)
    Comment: One respondent recommended additional guidance to be 
provided to clarify the term ``measurably substantial'' when agencies 
are quantifying specific benefits to be achieved from bundling. FAR 
7.107-3(b) requires an agency to quantify the specific benefits 
identified through market research and other techniques to explain how 
their impact would be measurably substantial (see 10.001(a)(2)(iv) and 
(a)(3)(vii)).

[[Page 67767]]

    The respondent is also concerned that after market analysis and 
cost analysis is complete, if the benefits do not meet the thresholds 
for a substantial benefit, the military service acquisition executive, 
Deputy Secretary, or equivalent position may still determine that 
bundling is necessary and justified. The respondent is concerned that 
this section could convert itself to a catch-all for any acquisition 
that does not meet the requirements but the Agency still feels 
compelled to bundle.
    Response: The SBA regulations at 13 CFR 125.2(d)(2)(ii) require the 
benefits to be measurably substantial in order for the bundling to be 
necessary and justified. This requirement is implemented at FAR 7.107-
3(a).
    Benefits of bundling are measurably substantial if individually, in 
combination, or in the aggregate the anticipated financial benefits are 
equivalent to--
    (1) Ten percent of the estimated contract or order value (including 
options) if the value is $94 million or less; or
    (2) Five percent of the estimated contract or order value 
(including options) or $9.4 million, whichever is greater, if the value 
exceeds $94 million.
    The final rule now incorporates at FAR 7.107-3(d) the discussion of 
substantial benefits that was located at FAR 7.107-1(d). The benefits 
are measurably substantial when the agency can quantify the specific 
benefits identified through the use of market research and other 
techniques.
    If the thresholds are not met, FAR 7.107-3(f) requires a high level 
determination, without power of delegation, that the expected benefits 
are critical for the agency's mission success, and that the acquisition 
strategy provides for maximum practicable participation by small 
business concerns. These protections are sufficient to ensure that 
agencies are not able to use this exception as a catch-all for 
acquisitions that do not meet the requirements.
d. Substantial Bundling (FAR 7.107-4)
    Comment: One respondent found the separate definition and 
discussion on substantial bundling at FAR 7.107-4 to be helpful as it 
sets forth and distinguishes the requirements of substantial bundling 
from consolidation and bundling (FAR 7.107-2 and 7.107-3, 
respectively). The respondent further commented that the documentation 
requirements of specific benefits to be derived from substantial 
bundling are a positive protection for small businesses.
    Response: Noted.
6. Notification (FAR 7.107-5)
a. Notification to Small Businesses
    Comment: Two respondents commented on the requirements at FAR 
7.107-5(a) to notify each small business performing a contract that it 
intends to bundle the requirement with one or more other requirements 
at least 30 days prior to the issuance of the solicitation for the 
bundled requirement. Both respondents considered that the 30 day time 
period was insufficient. One respondent stated that the Government must 
know this far in advance of 30 days. The other respondent noted that 30 
days does not provide adequate time for the small business to 
coordinate with the designated SBA Procurement Center representative or 
designated contact. The respondent suggested at least 45 calendar days.
    One respondent asked what the documentation requirements are for 
this in the contract file.
    Response: This final rule implements the SBA regulations (see 13 
CFR 125.2(d)(5)), which specify a time period of least 30 days prior to 
the issuance of the solicitation. Those regulations and FAR 7.107-
5(a)(3) require documentation of the notification in the contract file. 
The contracting officer has discretion on how best to document the 
contract file.
b. Notification to the Public
    Two respondents commented on the requirement at FAR 7.107-5(b) that 
the agency notify the public of the rationale for a bundled 
requirement, via the agency's Web site.
    Comment: One respondent asked whether this reporting duty can be 
delegated to the chief acquisition executive/senior procurement 
executive or head of the contracting activity.
    Response: The statute requires the head of the agency to post this 
information to the agency Web site, but does not prohibit redelegation. 
FAR 1.108(b) states that each authority is delegable unless 
specifically stated otherwise. Therefore, the actual posting can be 
delegated to an appropriate level within the agency.
    Comment: Another respondent supported the proposed amendments to 
require publication on the Web site but noted that the requirement was 
only mandatory for any bundled requirements for which the agency has 
solicited offers or issued an award, whereas the agency is only 
encouraged to provide notification to FedBizOpps before the issuance of 
the solicitation. The respondent recommended that this presolicitation 
notification to the public should be mandatory.
    Response: This FAR rule is implementing the SBA regulations at 13 
CFR 125.2(d)(6) and the statute, which mandate publication of bundled 
requirements on agency Web sites on an annual basis. The SBA 
regulations only encourage providing such notification before issuance 
of the solicitation, and do not specify FedBizOpps or any particular 
Web site as the location of such posting.
c. Notification to SBA
    Comment: One respondent commented that the requirement to notify 
SBA of each follow-on bundled or consolidated contract will provide 
more complete data regarding whether consolidation or bundling actually 
was a positive outcome for the agency. According to the respondent, 
including the historical data of the amount of savings and benefits 
that resulted from the consolidation or bundling and then comparing it 
to whether such benefits will continue in a follow-on contract will 
provide an excellent opportunity for analysis.
    Response: Noted.
7. Provision (FAR 52.207-6)
    Comment: One respondent requested information on the provision in 
the proposed rule to be included in each solicitation for any multiple-
award contract above the substantial bundling threshold. The respondent 
had concerns that this rule appeared to indicate that the normal 
requirement is to set up multiple-award contracts only for large 
business and overlooks the process for set-aside contracts. This 
respondent suggested that the provision should provide for a higher 
evaluation of a large business teaming with a small business, or if it 
has a substantial small business subcontracting plan.
    Response: The provision at FAR 52.207-6 is required by section 
1312(a) of the Small Business Jobs Act of 2010 and the SBA regulations. 
The statute requires ``a provision soliciting bids from any responsible 
source, including responsible small business concerns and teams or 
joint ventures of small business concerns.''

C. Other Changes

    At FAR 2.101 and in the clause at 52.207-6, the definition of 
``Small Business Teaming Arrangement'' has been amended to add a 
subparagraph in paragraph (2) to explain that for DoD, a Small Business 
Teaming Arrangement may include two business concerns in a mentor-
prot[eacute]g[eacute] relationship in the Department of Defense Pilot 
Mentor-Prot[eacute]g[eacute] Program (see section 831 of the National 
Defense Authorization Act for

[[Page 67768]]

Fiscal Year 1991 (Pub. L. 101-510; 10 U.S.C. 2302 note) only so long as 
both the mentor and the prot[eacute]g[eacute] are small. There is no 
exception to joint venture size affiliation for offers received from 
Small Business Teaming Arrangements under the Department of Defense 
Pilot Mentor-Prot[eacute]g[eacute] Program. In addition, a 
clarification is added in paragraph (3) of the definition, that this 
exception to affiliation applies in the case of a solicitation of 
offers for a bundled contract with a reserve (as stated at 13 CFR 
121.103(b)(9)).
    The definition of ``Bundling'' at FAR 2.101 has been amended for 
clarity and to remove the proposed reference to the description of 
substantial bundling in part 7. The definition of ``Consolidation'' has 
been amended to remove redundant terms. The phrase ``contract 
requirements'' is removed for clarity wherever it is associated with 
bundling and consolidation in the final rule, since bundling and 
consolidation apply to orders as well as contracts.
    For consistency, the final rule amends the text at FAR 5.205(g) to 
reflect the specific text at FAR 7.107-5(b)(2), instead of 
paraphrasing.
    The final rule contains a minor editorial correction to the cross-
reference at FAR 7.107-3(b).
    At FAR 7.107-3(f), the identification of officials authorized to 
make the determination in the Department of Defense that bundling is 
necessary and justified, even if the anticipated savings do not meet 
the specified thresholds, has been amended to more closely reflect the 
SBA regulation at 13 CFR 125.2(d)(2)(iii).
    At FAR 7.107-4(a)(1), the final rule adds language which conforms 
to other proposed changes for subpart 7.1, which consists of spelling 
out ``task order or delivery order'' whenever talking about 
requirements associated with bundling or consolidation. The use of this 
distinct terminology is due to FAR subpart 7.1 already having a 
definition for ``order'' which does not accurately describe the orders 
to which bundling and consolidation requirements apply. Consequently, 
because there is no conflicting definition of ``order'' in FAR subparts 
8.4 or 16.5, the final rule has been amended to remove the proposed use 
of the distinct terminology in those subparts.
    The final rule contains a number of editorial changes such as the 
addition of cross-references in FAR 7.107-2, 7.107-3, and 7.107-6, 
removal of redundant text in 7.107-5(a), and the deletion of 
``significant'' from 19.201(c)(5)(i) as there is no definition for 
``significant bundling''.

III. Applicability to Commercial Items, Including Commercially 
Available Off-the-Shelf (COTS) Items

    This rule creates provision FAR 52.207-6, Solicitation of Offers 
from Small Business Concerns and Small Business Teaming Arrangements or 
Joint Ventures (Multiple-Award Contracts), in order to implement 
paragraph (a) of section 1312 of the Small Business Jobs Act of 2010. 
This paragraph concerns 15 U.S.C. 644, Awards or Contracts, and 
therefore applies as a matter of law to COTS items. The Federal 
Acquisition Regulatory Council, pursuant to the authority granted in 41 
U.S.C. 1906, List of laws inapplicable to procurements of commercial 
items, and the Administrator for Federal Procurement Policy, pursuant 
to the authority granted in 41 U.S.C. 1907, List of laws inapplicable 
to procurements of commercially available off-the-shelf items, have 
determined that it would not be in the best interest of the Federal 
Government to exempt solicitations for the acquisition of commercial 
items from the applicability of paragraph (a) of section 1312, entitled 
``Leadership and Oversight,'' of the Small Business Jobs Act, or to 
exempt solicitations for the acquisition of commercial items or for 
COTS from the applicability of paragraph (a) of section 1313, entitled 
``Consolidation of Contract Requirements''. The FAR provision 52.207-6, 
Solicitation of Offers from Small Business Concerns and Small Business 
Teaming Arrangements or Joint Ventures (Multiple-Award Contracts), has 
been written so that the application of the provision is carefully 
tailored, consistent with the statute. The provision is a notice to 
offerors that imposes no burdens, but simply encourages small business 
concerns and small business teaming arrangements or joint ventures of 
small business concerns to submit offers on multiple-award contracts 
above the substantial bundling threshold of the Federal agency. 
Therefore, the potential benefits to small business entities outweigh 
any potential drawback of application to acquisitions of commercial 
items.
    The consolidation requirements of section 1313 should apply to all 
contracts and subcontracts above the threshold(s) specified in the 
statute, including contracts and subcontracts for the acquisition of 
commercial items and COTS. The statute requires agencies to ensure 
increased consideration of small businesses in connection with the 
establishment of multiple award contracts and acquisitions that 
consolidate contracts. Not applying these requirements to the maximum 
extent possible would exclude a significant number of acquisitions 
which would not help to protect the interests of small businesses and 
boost their opportunities in the Federal marketplace. Not applying the 
consolidation requirements to the acquisition of commercial items or 
COTS would limit the full implementation of the Small Business Jobs Act 
of 2010. For all of these reasons, it is in the best interest of the 
Federal Government to apply the consolidation requirements to all 
contracts and subcontracts above the threshold(s) specified in the 
statute.

IV. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is a significant regulatory action and, therefore, was subject to 
review under Section 6(b) of E.O. 12866, Regulatory Planning and 
Review, dated September 30, 1993. This rule is not a major rule under 5 
U.S.C. 804.

V. Regulatory Flexibility Act

    DoD, GSA, and NASA have prepared a Final Regulatory Flexibility 
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 
U.S.C. 601, et seq. The FRFA is summarized as follows:

    The final rule amends the FAR to provide uniform guidance on 
consolidation and bundling consistent with SBA's final rule which 
was published in the Federal Register at 78 FR 61113 on October 2, 
2013, which implements Sections 1312 and 1313 of the Small Business 
Jobs Act of 2010 (Pub. L. 111-240) and section 1671 of Pub. L. 112-
239.
    The rule requires the head of the agency to publish on the 
agency Web site a list and rationale for bundled contracts; requires 
solicitation for multiple-award contracts above the substantial 
bundling threshold to include a provision soliciting bids from any 
responsible source; requires agencies to publish bundling policy on 
agency Web site; provides for a definition of ``consolidation;'' 
and, prohibits an agency from carrying out consolidation of 
requirements over $2 million until certain actions are taken.
    The objective of this rule is to alleviate the adverse effects 
of contract bundling and consolidation on small business concerns 
competing for Federal contracts. This rule

[[Page 67769]]

provides a balance between the benefits of bundling and 
consolidation and the obstacles they create for small businesses.
    There were no significant issues raised by the public in 
response to the Initial Regulatory Flexibility Analysis provided in 
the proposed rule.
    This rule may have a positive economic impact on any small 
business entity that wishes to participate in the Federal 
procurement arena. Analysis of the SAM database indicates there are 
currently approximately 307,846 small business registrants that can 
potentially benefit from the implementation of this rule. This rule 
does not impose any new reporting, recordkeeping or other compliance 
requirements.

    Interested parties may obtain a copy of the FRFA from the 
Regulatory Secretariat. The Regulatory Secretariat has submitted a copy 
of the FRFA to the Chief Counsel for Advocacy of the Small Business 
Administration.

VI. Paperwork Reduction Act

    The rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 2, 5, 7, 8, 10, 12, 15, 16, 19, 
and 52

    Government procurement.

    Dated: September 19, 2016.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.

    Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 5, 7, 8, 10, 
12, 15, 16, 19, and 52 as set forth below:

0
1. The authority citation for 48 CFR parts 2, 5, 7, 8, 10, 12, 15, 16, 
19, and 52 continues to read as follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

PART 2--DEFINITIONS OF WORDS AND TERMS

0
2. Amend section 2.101, in paragraph (b)(2) by--
0
a. Removing the definition ``Bundled contract'';
0
b. Revising the definition ``Bundling''; and
0
c. Adding, in alphabetical order, the definitions ``Consolidation, or 
consolidated requirement'' and ``Small Business Teaming Arrangement''.
    The revision and additions read as follows:


2.101   Definitions.

* * * * *
    (b) * * *
    (2) * * *
    Bundling--
    (1) Means a subset of consolidation that combines two or more 
requirements for supplies or services, previously provided or performed 
under separate smaller contracts (see paragraph (2) of this 
definition), into a solicitation for a single contract, a multiple-
award contract, or a task or delivery order that is likely to be 
unsuitable for award to a small business concern (even if it is 
suitable for award to a small business with a Small Business Teaming 
Arrangement) due to--
    (i) The diversity, size, or specialized nature of the elements of 
the performance specified;
    (ii) The aggregate dollar value of the anticipated award;
    (iii) The geographical dispersion of the contract performance 
sites; or
    (iv) Any combination of the factors described in paragraphs (1)(i), 
(ii), and (iii) of this definition.
    (2) ``Separate smaller contract'' as used in this definition, means 
a contract that has been performed by one or more small business 
concerns or that was suitable for award to one or more small business 
concerns.
    (3) This definition does not apply to a contract that will be 
awarded and performed entirely outside of the United States.
* * * * *
    Consolidation or consolidated requirement--
    (1) Means a solicitation for a single contract, a multiple-award 
contract, a task order, or a delivery order to satisfy--
    (i) Two or more requirements of the Federal agency for supplies or 
services that have been provided to or performed for the Federal agency 
under two or more separate contracts, each of which was lower in cost 
than the total cost of the contract for which offers are solicited; or
    (ii) Requirements of the Federal agency for construction projects 
to be performed at two or more discrete sites.
    (2) Separate contract as used in this definition, means a contract 
that has been performed by any business, including small and other than 
small business concerns.
* * * * *
    Small Business Teaming Arrangement--
    (1) Means an arrangement where--
    (i) Two or more small business concerns have formed a joint 
venture; or
    (ii) A small business offeror agrees with one or more other small 
business concerns to have them act as its subcontractors under a 
specified Government contract. A Small Business Teaming Arrangement 
between the offeror and its small business subcontractor(s) exists 
through a written agreement between the parties that--
    (A) Is specifically referred to as a ``Small Business Teaming 
Arrangement''; and
    (B) Sets forth the different responsibilities, roles, and 
percentages (or other allocations) of work as it relates to the 
acquisition;
    (2)(i) For civilian agencies, may include two business concerns in 
a mentor-prot[eacute]g[eacute] relationship when both the mentor and 
the prot[eacute]g[eacute] are small or the prot[eacute]g[eacute] is 
small and the concerns have received an exception to affiliation 
pursuant to 13 CFR 121.103(h)(3)(ii) or (iii).
    (ii) For DoD, may include two business concerns in a mentor-
prot[eacute]g[eacute] relationship in the Department of Defense Pilot 
Mentor-Prot[eacute]g[eacute] Program (see section 831 of the National 
Defense Authorization Act for Fiscal Year 1991 (Pub. L. 101-510; 10 
U.S.C. 2302 note)) when both the mentor and the prot[eacute]g[eacute] 
are small. There is no exception to joint venture size affiliation for 
offers received from teaming arrangements under the Department of 
Defense Pilot Mentor-Prot[eacute]g[eacute] Program; and
    (3) See 13 CFR 121.103(b)(9) regarding the exception to affiliation 
for offers received from Small Business Teaming Arrangements in the 
case of a solicitation of offers for a bundled contract with a reserve.
* * * * *

PART 5--PUBLICIZING CONTRACT ACTIONS

0
3. Amend section 5.205 by adding paragraph (g) to read as follows.


5.205  Special situations.

* * * * *
    (g) Notification to the public of rationale for bundled 
requirement. The agency is encouraged to provide notification of the 
rationale for any bundled requirement to the GPE before issuing the 
solicitation of any bundled requirement (see 7.107-5(b)(2)).

PART 7--ACQUISITION PLANNING

0
4. Amend section 7.103 by revising paragraph (u)(2) to read as follows:


7.103  Agency-head responsibilities.

* * * * *
    (u) * * *
    (2) Avoid unnecessary and unjustified consolidation or bundling 
(see 7.107) (15 U.S.C. 631(j) and 15 U.S.C. 657q).
* * * * *

0
5. Amend section 7.104 by removing from paragraph (a) ``contracting,'' 
and

[[Page 67770]]

adding ``contracting, small business,'' in its place; and revising 
paragraph (d) to read as follows:


7.104  General procedures.

* * * * *
    (d) The planner shall coordinate the acquisition plan or strategy 
with the cognizant small business specialist when the strategy 
contemplates an acquisition meeting the thresholds in 7.107-4 for 
substantial bundling unless the contract or task order or delivery 
order is entirely reserved or set-aside for small business under part 
19. The small business specialist shall notify the agency Office of 
Small and Disadvantaged Business Utilization or the Office of Small 
Business Programs if the strategy involves--
    (1) Bundling that is unnecessary or unjustified; or
    (2) Bundled or consolidated requirements not identified as such by 
the agency (see 7.107).
* * * * *

0
6. Amend section 7.105 by revising paragraph (b)(1) to read as follows:


7.105  Contents of written acquisition plans.

* * * * *
    (b) Plan of action--(1) Sources. (i) Indicate the prospective 
sources of supplies or services that can meet the need.
    (ii) Consider required sources of supplies or services (see part 8) 
and sources identifiable through databases including the Governmentwide 
database of contracts and other procurement instruments intended for 
use by multiple agencies available at https://www.contractdirectory.gov/contractdirectory/.
    (iii) Include consideration of small business, veteran-owned small 
business, service-disabled veteran-owned small business, HUBZone small 
business, small disadvantaged business, and women-owned small business 
concerns (see part 19).
    (iv) Consider the impact of any consolidation or bundling that 
might affect participation of small businesses in the acquisition (see 
7.107) (15 U.S.C. 644(e) and 15 U.S.C. 657q). When the proposed 
acquisition strategy involves bundling, identify the incumbent 
contractors and contracts affected by the bundling.
    (v) Address the extent and results of the market research and 
indicate their impact on the various elements of the plan (see part 
10).
* * * * *

0
7. Revise section 7.107 to read as follows:


7.107  Additional requirements for acquisitions involving 
consolidation, bundling, or substantial bundling.

0
8. Add sections 7.107-1 through 7.107-6 to read as follows:


7.107-1   General.

    (a) If the requirement is considered both consolidated and bundled, 
the agency shall follow the guidance regarding bundling in 7.107-3 and 
7.107-4.
    (b) The requirements of this section 7.107 do not apply--
    (1) If a cost comparison analysis will be performed in accordance 
with OMB Circular A-76 (except 7.107-4 still applies);
    (2) To orders placed under single-agency task-order contracts or 
delivery-order contracts, when the requirement was considered in 
determining that the consolidation or bundling of the underlying 
contract was necessary and justified; or
    (3) To requirements for which there is a mandatory source (see 
8.002 or 8.003), including supplies and services that are on the 
Procurement List maintained by the Committee for Purchase From People 
Who Are Blind or Severely Disabled or the Schedule of Products issued 
by Federal Prison Industries, Inc. This exception does not apply--
    (i) When the requiring agency obtains a waiver in accordance with 
8.604 or an exception in accordance with 8.605 or 8.706; or
    (ii) When optional acquisitions of supplies and services permitted 
under 8.713 are included.


7.107-2  Consolidation.

    (a) Consolidation may provide substantial benefits to the 
Government. However, because of the potential impact on small business 
participation, before conducting an acquisition that is a consolidation 
of requirements with an estimated total dollar value exceeding $2 
million, the senior procurement executive or chief acquisition officer 
shall make a written determination that the consolidation is necessary 
and justified in accordance with 15 U.S.C. 657q, after ensuring that--
    (1) Market research has been conducted;
    (2) Any alternative contracting approaches that would involve a 
lesser degree of consolidation have been identified;
    (3) The determination is coordinated with the agency's Office of 
Small Disadvantaged Business Utilization or the Office of Small 
Business Programs;
    (4) Any negative impact by the acquisition strategy on contracting 
with small business concerns has been identified; and
    (5) Steps are taken to include small business concerns in the 
acquisition strategy.
    (b) The senior procurement executive or chief acquisition officer 
may determine that the consolidation is necessary and justified if the 
benefits of the acquisition would substantially exceed the benefits 
that would be derived from each of the alternative contracting 
approaches identified under paragraph (a)(2) of this subsection, 
including benefits that are quantifiable in dollar amounts as well as 
any other specifically identified benefits.
    (c) Such benefits may include cost savings or price reduction and, 
regardless of whether quantifiable in dollar amounts--
    (1) Quality improvements that will save time or improve or enhance 
performance or efficiency;
    (2) Reduction in acquisition cycle times;
    (3) Better terms and conditions; or
    (4) Any other benefit.
    (d) Benefits. (1) Benefits that are quantifiable in dollar amounts 
are substantial if individually, in combination, or in the aggregate 
the anticipated financial benefits are equivalent to--
    (i) Ten percent of the estimated contract or order value (including 
options) if the value is $94 million or less; or
    (ii) Five percent of the estimated contract or order value 
(including options) or $9.4 million, whichever is greater, if the value 
exceeds $94 million.
    (2) Benefits that are not quantifiable in dollar amounts shall be 
specifically identified and otherwise quantified to the extent 
feasible.
    (3) Reduction of administrative or personnel costs alone is not 
sufficient justification for consolidation unless the cost savings are 
expected to be at least 10 percent of the estimated contract or order 
value (including options) of the consolidated requirements, as 
determined by the senior procurement executive or chief acquisition 
officer (15 U.S.C. 657q(c)(2)(B)).
    (e)(1) Notwithstanding paragraphs (a) through (d) of this 
subsection, the approving authority identified in paragraph (e)(2) of 
this subsection may determine that consolidation is necessary and 
justified when--
    (i) The expected benefits do not meet the thresholds for a 
substantial benefit at paragraph (d)(1) of this subsection but are 
critical to the agency's mission success; and
    (ii) The procurement strategy provides for maximum practicable 
participation by small business.
    (2) The approving authority is--

[[Page 67771]]

    (i) For the Department of Defense, the senior procurement 
executive; or
    (ii) For the civilian agencies, the Deputy Secretary or equivalent.
    (f) If a determination is made that consolidation is necessary and 
justified, the contracting officer shall include it in the acquisition 
strategy documentation and provide it to the Small Business 
Administration (SBA) upon request.


7.107-3   Bundling.

    (a) Bundling may provide substantial benefits to the Government. 
However, because of the potential impact on small business 
participation, before conducting an acquisition strategy that involves 
bundling, the agency shall make a written determination that the 
bundling is necessary and justified in accordance with 15 U.S.C. 
644(e). A bundled requirement is considered necessary and justified if 
the agency would obtain measurably substantial benefits as compared to 
meeting its agency's requirements through separate smaller contracts or 
orders.
    (b) The agency shall quantify the specific benefits identified 
through the use of market research and other techniques to explain how 
their impact would be measurably substantial (see 10.001(a)(2)(iv) and 
(a)(3)(vii)).
    (c) Such benefits may include, but are not limited to--
    (1) Cost savings;
    (2) Price reduction;
    (3) Quality improvements that will save time or improve or enhance 
performance or efficiency;
    (4) Reduction in acquisition cycle times, or
    (5) Better terms and conditions.
    (d) Benefits are measurably substantial if individually, in 
combination, or in the aggregate the anticipated financial benefits are 
equivalent to--
    (1) Ten percent of the estimated contract or order value (including 
options) if the value is $94 million or less; or
    (2) Five percent of the estimated contract or order value 
(including options) or $9.4 million, whichever is greater, if the value 
exceeds $94 million.
    (e) Reduction of administrative or personnel costs alone is not 
sufficient justification for bundling unless the cost savings are 
expected to be at least ten percent of the estimated contract or order 
value (including options) of the bundled requirements.
    (f)(1) Notwithstanding paragraphs (a) through (e) of this 
subsection, the approving authority identified in paragraph (f)(2) of 
this subsection may determine that bundling is necessary and justified 
when--
    (i) The expected benefits do not meet the thresholds for a 
substantial benefit but are critical to the agency's mission success; 
and
    (ii) The acquisition strategy provides for maximum practicable 
participation by small business concerns.
    (2) The approving authority, without power of delegation, is--
    (i) For the Department of Defense, the senior procurement 
executive; or
    (ii) For the civilian agencies is the Deputy Secretary or 
equivalent.
    (g) In assessing whether cost savings and/or price reduction would 
be achieved through bundling, the agency and SBA shall--
    (1) Compare the price that has been charged by small businesses for 
the work that they have performed; or
    (2) Where previous prices are not available, compare the price, 
based on market research, that could have been or could be charged by 
small businesses for the work previously performed by other than a 
small business.
    (h) If a determination is made that bundling is necessary and 
justified, the contracting officer shall include it in the acquisition 
strategy documentation and provide it to SBA upon request.


7.107-4  Substantial bundling.

    (a)(1) Substantial bundling is any bundling that results in a 
contract task or delivery order with an estimated value of--
    (i) $8 million or more for the Department of Defense;
    (ii) $6 million or more for the National Aeronautics and Space 
Administration, the General Services Administration, and the Department 
of Energy; or
    (iii) $2.5 million or more for all other agencies.
    (2) These thresholds apply to the cumulative estimated dollar value 
(including options) of--
    (i) Multiple-award contracts;
    (ii) Task orders or delivery orders issued against a GSA Schedule 
contract; or
    (iii) Task orders or delivery orders issued against a task-order or 
delivery-order contract awarded by another agency.
    (b) In addition to addressing the requirements for bundling (see 
7.107-3), when the proposed acquisition strategy involves substantial 
bundling, the agency shall document in its strategy--
    (1) The specific benefits anticipated to be derived from 
substantial bundling;
    (2) An assessment of the specific impediments to participation by 
small business concerns as contractors that result from substantial 
bundling;
    (3) Actions designed to maximize small business participation as 
contractors, including provisions that encourage small business 
teaming;
    (4) Actions designed to maximize small business participation as 
subcontractors (including suppliers) at any tier under the contract, or 
order, that may be awarded to meet the requirements;
    (5) The determination that the anticipated benefits of the proposed 
bundled contract or order justify its use; and
    (6) Alternative strategies that would reduce or minimize the scope 
of the bundling, and the rationale for not choosing those alternatives.


7.107-5  Notifications.

    (a) Notifications to current small business contractors of agency's 
intent to bundle. (1) The contracting officer shall notify each small 
business performing a contract that it intends to bundle the 
requirement at least 30 days prior to the issuance of the solicitation 
for the bundled requirement.
    (2) The notification shall provide the name, phone number and 
address of the applicable SBA procurement center representative (PCR), 
or if an SBA PCR is not assigned to the procuring activity, the SBA 
Office of Government Contracting Area Office serving the area in which 
the buying activity is located.
    (3) This notification shall be documented in the contract file.
    (b) Notification to public of rationale for bundled requirement. 
(1) The agency shall publish on its Web site a list and rationale for 
any bundled requirement for which the agency solicited offers or issued 
an award. The notification shall be made within 30 days of the agency's 
data certification regarding the validity and verification of data 
entered in the Federal Procurement Data System to the Office of Federal 
Procurement Policy (see 4.604).
    (2) In addition, the agency is encouraged to provide notification 
of the rationale for any bundled requirement to the GPE, before 
issuance of the solicitation (see 5.201).
    (c) Notification to SBA of follow-on bundled or consolidated 
requirements. For each follow-on bundled or consolidated requirement, 
the contracting officer shall obtain the following from the requiring 
activity and notify the SBA PCR no later than 30 days prior to issuance 
of the solicitation:
    (1) The amount of savings and benefits achieved under the prior 
consolidation or bundling.
    (2) Whether such savings and benefits will continue to be realized 
if the contract remains consolidated or bundled.

[[Page 67772]]

    (3) Whether such savings and benefits would be greater if the 
procurement requirements were divided into separate solicitations 
suitable for award to small business concerns.
    (4) List of requirements that have been added or deleted for the 
follow-on.
    (d) Public notification of bundling policy. In accordance with 15 
U.S.C. 644(q)(2)(A)(ii), agencies shall publish the Governmentwide 
policy regarding contract bundling, including regarding the 
solicitation of teaming and joint ventures, on their agency Web site.


7.107-6  Solicitation provision.

    The contracting officer shall insert the provision at 52.207-6, 
Solicitation of Offers from Small Business Concerns and Small Business 
Teaming Arrangements or Joint Ventures (Multiple-Award Contracts), in 
solicitations for multiple-award contracts above the substantial 
bundling threshold of the agency (see 7.107-4(a)).

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

0
9. Amend section 8.404 by revising paragraph (c)(2) to read as follows:


8.404  Use of Federal Supply Schedules.

* * * * *
    (c) * * *
    (2) Shall comply with all FAR requirements for a consolidated or 
bundled contract when the order meets the definition at 2.101(b) of 
``consolidation'' or ``bundling''; and
* * * * *

PART 10--MARKET RESEARCH

0
10. Amend section 10.001 by--
0
a. Revising the introductory text of paragraph (a);
0
b. Revising paragraphs (a)(2)(iv) and (a)(2)(vi)(B);
0
c. Removing from the end of paragraph (a)(3)(v) ``efficiency; and'' and 
adding ``efficiency;'' in its place;
0
d. Redesignating paragraphs (a)(3)(vi) and (vii) as paragraphs 
(a)(3)(vii) and (viii), respectively;
0
e. Adding a new paragraph (a)(3)(vi);
0
f. Revising the newly designated paragraph (a)(3)(vii); and
0
g. Revising paragraph (c).
    The revisions and addition reads as follows:


10.001  Policy.

    (a) Agencies shall--
* * * * *
    (2) * * *
    (iv) Before soliciting offers for acquisitions that could lead to 
consolidation or bundling (15 U.S.C. 644(e)(2)(A) and 15 U.S.C. 657q);
* * * * *
    (vi) * * *
    (B) Disaster relief to include debris removal, distribution of 
supplies, reconstruction, and other disaster or emergency relief 
activities (see 26.205); and
    (3) * * *
    (vi) Determine whether consolidation is necessary and justified 
(see 7.107-2) (15 U.S.C. 657q);
    (vii) Determine whether bundling is necessary and justified (see 
7.107-3) (15 U.S.C. 644(e)(2)(A)); and
* * * * *
    (c) If an agency contemplates consolidation or bundling, the 
agency--
    (1) When performing market research, should consult with the agency 
small business specialist and the local Small Business Administration 
procurement center representative (PCR). If a PCR is not assigned, see 
19.402(a); and
    (2) Shall notify any affected incumbent small business concerns of 
the Government's intention to bundle the requirement and how small 
business concerns may contact the appropriate Small Business 
Administration procurement center representative (see 7.107-5(a)).
* * * * *

PART 12--ACQUISITION OF COMMERCIAL ITEMS

0
11. Amend section 12.301 by redesignating paragraphs (d)(4) through (8) 
as paragraphs (d)(5) through (9), respectively; and adding a new 
paragraph (d)(4) to read as follows:


12.301   Solicitation provisions and contract clauses for the 
acquisition of commercial items.

* * * * *
    (d) * * *
    (4) Insert the provision at 52.207-6, Solicitation of Offers from 
Small Business Concerns and Small Business Teaming Arrangements or 
Joint Ventures (Multiple-Award Contracts), as prescribed at 7.107-6.
* * * * *

PART 15--CONTRACTING BY NEGOTIATION

0
12. Amend section 15.304 by revising paragraphs (c)(3)(ii) and (c)(4) 
to read as follows:


15.304   Evaluation factors and significant subfactors.

* * * * *
    (c) * * *
    (3) * * *
    (ii) For solicitations that are not set aside for small business 
concerns, involving consolidation or bundling, that offer a significant 
opportunity for subcontracting, the contracting officer shall include a 
factor to evaluate past performance indicating the extent to which the 
offeror attained applicable goals for small business participation 
under contracts that required subcontracting plans (15 U.S.C. 
637(d)(4)(G)(ii)).
* * * * *
    (4) For solicitations, that are not set aside for small business 
concerns, involving consolidation or bundling, that offer a significant 
opportunity for subcontracting, the contracting officer shall include 
proposed small business subcontracting participation in the 
subcontracting plan as an evaluation factor (15 U.S.C. 
637(d)(4)(G)(i)).
* * * * *

PART 16--TYPES OF CONTRACTS

0
13. Amend section 16.505 by revising paragraph (a)(8)(iii) to read as 
follows:


16.505  Ordering.

    (a) * * *
    (8) * * *
    (iii) Shall comply with all FAR requirements for a consolidated or 
bundled contract when the order meets the definition at 2.101(b) of 
``consolidation'' or ``bundling''.
* * * * *

0
14. Amend section 16.506 by adding paragraph (i) to read as follows:


16.506   Solicitation provisions and contract clauses.

* * * * *
    (i) See 7.107-6 for use of 52.207-6, Solicitation of Offers from 
Small Business Concerns and Small Business Teaming Arrangement or Joint 
Ventures (Multiple-Award Contracts) in solicitations for multiple-award 
contracts above the substantial bundling threshold of the agency.

PART 19--SMALL BUSINESS PROGRAMS

0
15. Amend section 19.201 by revising paragraphs (c)(5)(i), (c)(11)(ii), 
and (c)(11)(iii) to read as follows:


19.201   General policy.

* * * * *
    (c) * * *
    (5) * * *
    (i) Identify proposed solicitations that involve bundling and work 
with the agency acquisition officials and SBA to revise the acquisition 
strategies for such

[[Page 67773]]

proposed solicitations to increase the probability of participation by 
small businesses as prime contractors through Small Business Teaming 
Arrangements;
* * * * *
    (11) * * *
    (ii) Adequacy of consolidated or bundled contract documentation and 
justifications; and
    (iii) Actions taken to mitigate the effects of necessary and 
justified consolidation or bundling on small businesses.
* * * * *

0
16. Amend section 19.202-1 by revising paragraph (e)(1)(iii), the 
introductory text of paragraph (e)(2), and paragraphs (e)(2)(v), 
(e)(3), and (e)(4) to read as follows:


19.202-1   Encouraging small business participation in acquisitions.

* * * * *
    (e)(1) * * *
    (iii) The proposed acquisition is for a consolidated or bundled 
requirement. (See 7.107-5(a) for mandatory 30-day notice requirement to 
incumbent small business concerns.) The contracting officer shall 
provide all information relative to the justification for the 
consolidation or bundling, including the acquisition plan or strategy, 
and if the acquisition involves substantial bundling, the information 
identified in 7.107-4. The contracting officer shall also provide the 
same information to the agency Office of Small and Disadvantaged 
Business Utilization.
    (2) Provide a statement explaining why the--
* * * * *
    (v) Consolidation or bundling is necessary and justified.
    (3) Process the 30-day notification concurrently with other 
processing steps required prior to the issuance of the solicitation.
    (4) If the contracting officer rejects the SBA procurement center 
representative's recommendation made in accordance with 19.402(c)(2), 
document the basis for the rejection and notify the SBA procurement 
center representative in accordance with 19.505.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
17. Add section 52.207-6 to read as follows:


52.207-6   Solicitation of Offers from Small Business Concerns and 
Small Business Teaming Arrangements or Joint Ventures (Multiple-Award 
Contracts).

    As prescribed in 7.107-6, insert the following provision:

Solicitation of Offers From Small Business Concerns and Small Business 
Teaming Arrangements or Joint Ventures (Multiple-Award Contracts) (Oct 
2016)

    (a) Definition. ``Small Business Teaming Arrangement,'' as used 
in this provision--
    (1) Means an arrangement where--
    (i) Two or more small business concerns have formed a joint 
venture; or
    (ii) A small business offeror agrees with one or more other 
small business concerns to have them act as its subcontractors under 
a specified Government contract. A Small Business Teaming 
Arrangement between the offeror and its small business 
subcontractor(s) exists through a written agreement between the 
parties that--
    (A) Is specifically referred to as a ``Small Business Teaming 
Arrangement''; and
    (B) Sets forth the different responsibilities, roles, and 
percentages (or other allocations) of work as it relates to the 
acquisition;
    (2)(i) For civilian agencies, may include two business concerns 
in a mentor-prot[eacute]g[eacute] relationship when both the mentor 
and the prot[eacute]g[eacute] are small or the prot[eacute]g[eacute] 
is small and the concerns have received an exception to affiliation 
pursuant to 13 CFR 121.103(h)(3)(ii) or (iii).
    (ii) For DoD, may include two business concerns in a mentor-
prot[eacute]g[eacute] relationship in the Department of Defense 
Pilot Mentor-Prot[eacute]g[eacute] Program (see section 831 of the 
National Defense Authorization Act for Fiscal Year 1991 (Pub. L. 
101-510; 10 U.S.C. 2302 note)) when both the mentor and the 
prot[eacute]g[eacute] are small. There is no exception to joint 
venture size affiliation for offers received from teaming 
arrangements under the Department of Defense Pilot Mentor-
Prot[eacute]g[eacute] Program; and
    (3) See 13 CFR 121.103(b)(9) regarding the exception to 
affiliation for offers received from Small Business Teaming 
Arrangements in the case of a solicitation of offers for a bundled 
contract with a reserve.
    (b) The Government is soliciting and will consider offers from 
any responsible source, including responsible small business 
concerns and offers from Small Business Teaming Arrangements or 
joint ventures of small business concerns.
(End of provision)
[FR Doc. 2016-23199 Filed 9-29-16; 8:45 am]
 BILLING CODE 6820-EP-P