Federal Acquisition Regulation: Revolutionary Federal Acquisition Regulation Overhaul Parts 6, 7, 10, 18, 26, 37, and 41

Federal RegisterJun 23, 2026

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OFFICE OF MANAGEMENT AND BUDGET

Office of Federal Procurement Policy

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 6, 7, 10, 18, 26, 37, 41, and 52

[FAR Case 2026-002, Docket No. FAR-2026-0002, Sequence No. 1]

RIN 9000-AO87

Federal Acquisition Regulation: Revolutionary Federal Acquisition Regulation Overhaul Parts 6, 7, 10, 18, 26, 37, and 41

AGENCY:

Office of Federal Procurement Policy (OFPP), Office of Management and Budget (OMB); Department of Defense (DoD); General Services Administration (GSA); and National Aeronautics and Space Administration (NASA).

ACTION:

Proposed rule.

SUMMARY:

OFPP, DoD, GSA, and NASA (collectively referred to as the Federal Acquisition Regulatory Council or FAR Council) are proposing to amend the Federal Acquisition Regulation (FAR) to implement Executive Order (E.O.) 14275, Restoring Common Sense to Federal Procurement. The E.O. directs the elimination of excessive acquisition regulations to stop the inefficient use of American taxpayer dollars. The FAR Council is issuing twelve proposed rules that collectively will streamline the FAR in its entirety. This rule proposes revisions to FAR parts 6, 7, 10, 18, 26, 37, 41, and 52.

DATES:

Interested parties should submit written comments to the Regulatory Secretariat Division at the address shown below on or before July 23, 2026, to be considered in the formation of the final rule.

ADDRESSES:

Submit comments in response to FAR Case 2026-002 to the Federal eRulemaking portal at

https://www.regulations.gov.

Follow the instructions for sending comments.

Instructions:

Please submit comments only and cite “FAR Case 2026-002” in all correspondence related to this case. Include your name, company name (if any), and “FAR Case 2026-002” on any attached document. Comments received generally will be posted without change to

https://www.regulations.gov,

including any personal and/or business confidential information provided. Public comments may be submitted as an individual, as an organization, or anonymously (see frequently asked questions at

https://www.regulations.gov/faq

). To confirm receipt of your comment(s), please check

https://www.regulations.gov,

approximately two to three days after submission to verify posting.

Docket:

For access to the docket to read background documents or comments received, go to

https://www.regulations.gov/FAR-2026-0002.

FOR FURTHER INFORMATION CONTACT:

For clarification of content, contact

FARpolicy@gsa.gov

or call 202-969-4075 and cite “FAR Case 2026-002.” For information pertaining to status, publication schedules, or alternate instructions for submitting comments if

https://www.regulations.gov

cannot be used, contact the Regulatory Secretariat Division at 202-501-4755 or

GSARegSec@gsa.gov.

Please cite “FAR Case 2026-002.”

SUPPLEMENTARY INFORMATION:

I. Background

E.O. 14275, Restoring Common Sense to Federal Procurement (April 15, 2025), resets the foundation for Federal buying by requiring the FAR Council to produce a streamlined FAR that is simpler, clearer, and structured for speed. According to the E.O., the FAR has evolved from its original purpose (

i.e.,

to establish uniform procedures across executive departments and agencies), into an excessive and overcomplicated regulatory framework and bureaucracy. While meant to “deliver, on a timely basis, the best value product or service to the customer, while maintaining the public's trust and fulfilling public policy objectives,” the FAR has become an expensive barrier to achieving those objectives. As a result, the E.O. directed the FAR Council and OMB to create an agile, effective, and efficient regulation that contains only provisions required by statute or essential to sound procurement.

To implement E.O. 14275, OMB issued Memorandum M-25-26, Overhauling the Federal Acquisition Regulation, which announced the “Revolutionary FAR Overhaul” (RFO) and created a roadmap for producing simpler regulations aligned to statute, rewritten in plain language, and including nonstatutory requirements that are necessary to conducting a sound procurement. The memorandum described a new streamlined vision for the FAR, to be maintained alongside nonregulatory governmentwide guidance to provide a common-sense authoritative foundation for nimble response and delivery of mission capability.

This new vision represents a paradigm shift where over-engineered regulations designed for paperwork and compliance are replaced with streamlined regulations focused on core stewardship principles and nonregulatory guidance that will be used in concert with the streamlined FAR focused on proven buying strategies, critical thinking, market awareness (including to expand awareness of goods, products, and materials offered in the United States), and risk literacy to enhance workforce problem-solving. The significant reduction of unnecessary mandates is intended to clarify and reinforce the contracting officer's discretion to determine the best way to apply policies and practices. The newly established, nonregulatory guidance, which has been inspired by acquisition innovation advocates, category managers, other experienced practitioners, and many years of feedback from the contractor community—is expected to facilitate contracting officers' use of their discretion more efficiently and effectively to make smarter buying decisions.

OMB Memorandum M-25-26 also directed the FAR Council to complete the regulatory overhaul in two phases, each with robust public input. The FAR Council conducted its phase one effort in fiscal year 2025 by issuing model class deviations to replace each part in the FAR until such time as formal rulemaking occurred. This proposed rule is one of a series that constitute the FAR Council's phase two effort to obtain public comment through formal rulemaking.

II. Discussion and Analysis

A summary of proposed changes to existing FAR parts 6, 7, 10, 18, 26, 37, 41, and their corresponding provisions and clauses in part 52 follows:

A. General

General RFO updates.

This proposed rule generally reorganizes the FAR parts into phases of acquisition and simplifies the text into plain language, where possible. The plain language efforts include changes to active voice, edits to improve readability, and reorganization to present information more logically. None of the plain language edits are intended to change existing FAR requirements. The rewriting of the entire FAR also required edits to harmonize the changes being

proposed such as updating the cross-references. This aligns with the Federal plain language guidelines as directed by the Plain Writing Act of 2010 (5 U.S.C. 301 note).

Standardization of prescriptions.

This rule proposes revisions to standardize prescriptions for provisions and clauses. These changes are intended to provide better clarity around the applicability of provisions and clauses such as whether they apply to commercial products and services.

3. Use of “must” instead of “shall”.

Additional revisions are being proposed throughout the FAR text and FAR provisions and clauses to replace the use of the term “shall” with “must” or “will,” as appropriate, to impose requirements.

4. Non-statutory requirements.

Section 4 of the E.O. required amendments to the FAR to ensure it contains only provisions that are required by statute or that are otherwise necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security. The FAR Council reviewed all non-statutory requirements to determine if they are still relevant and essential to sound procurement in today's contracting environment based on the criteria from section 4 of the E.O. The proposed rule retains non-statutory requirements that further one or more of the elements of sound procurements, including those requirements that serve as guardrails to protecting taxpayer interests and promote taxpayer confidence in the procurement system. Non-statutory requirements that were beneficial but not essential were retained in the non-regulatory guidance documents. Other non-statutory requirements that did not meet these standards, were removed. The Council considered the extent to which regulation is the most efficient means for capturing the benefit of the policy. For example, most “how to” requirements were found to be more appropriately suited for non-regulatory coverage which better enables a contracting officer to use discretion in determining the application of a strategy to a given situation and limits the risk of overapplication, which can create wasteful burden on the contracting parties.

As part of the RFO, the FAR Council has created a number of non-regulatory resources, including the FAR Companion, which provides insight from experienced practitioners across the government on using more streamlined practices and processes. The migration of significant coverage to non-regulatory guidance is intended to ensure that the benefits of the policy are not outweighed by the compliance burden of a more rigidly written regulation that is prone to application in an overly broad manner. This approach was explained to the public in a set of “frequently asked questions” that were posted on the Revolutionary FAR Overhaul homepage shortly after the initiative was launched.

B. FAR Part 6

This proposed rule revises FAR part 6 to simplify and streamline the policies and procedures pertaining to competition. These revisions align with the broader RFO initiatives and do not substantively change the policy or procedures in the part. Several types of streamlining are highlighted below with specific examples for further illustration.

1. Eliminating redundancy.

The proposed rule captures existing FAR subpart 6.2, Full and Open Competition After Exclusion of Sources, content at FAR section 6.102. The proposed text significantly streamlines the content through several simple adjustments. For example, where existing text repeats “No separate justification or determination and findings is required under this part to . . .” before each specific authority, the proposed rule simply states one time, upfront: “Acquisitions under this section do not require J&As.” This change alone significantly reduces repetitive text and improves readability.

Another example is the advocate for competition coverage at existing FAR subpart 6.5, which merely repeats statutory requirements. Regulations do not need to repeat statutes. The coverage for advocates for competition is streamlined and moved to FAR 6.003.

2. Focusing on essential policy.

The existing FAR 6.302 section includes extensive “application” paragraphs for each authority (FAR 6.302-1(b)

et seq.

). These paragraphs generally expound on the underlying authorities with duplicative, nonstatutory, or non-exhaustive example listings that are better left to agency discretion and may unintentionally constrain field flexibility.

Another example is the conditional language regarding justifications for the public interest authority for other than full and open competition at existing FAR 6.302-7(c)(3). This statutory authority requires an agency head determination and expressly does not require a justification. The elective treatment creates ripple effects and adds complexity to other sections in part 6. For example, existing FAR 6.303-1(d) adds nuance by informing contracting officers that justifications using the public interest authority may not be made on a class basis. The proposed rule simplifies this by simply stating no justification is required (proposed FAR 6.103-7(d)), clearly stating the agency head determination responsibility for public interest (proposed FAR 6.103-7(c)), and clearly stating that justifications generally may be made on an individual or class basis (proposed FAR 6.104(c)).

The proposed revisions significantly streamline the content by focusing on the core statutory authorities for using other than full and open competition. These changes do not fundamentally alter policy and provide a more focused treatment of underlying statutory authorities.

3. Threshold adjustments.

This rule proposes adjusting the justification approval thresholds to align with Section 1804 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2026 (Pub. L. 119-60). The NDAA language addresses threshold changes for the use of procedures other than competitive procedures at 10 U.S.C. 3204 for DoD, NASA, and United States Coast Guard. Additionally, this rule proposes to revise the way the thresholds and corresponding approval authorities are displayed by presenting them in an enhanced table format (see Table 6-1 in FAR 6.104-2).

C. FAR Part 7

1. General.

This proposed rule revises FAR part 7 to emphasize thoughtful acquisition planning based on the complexity and circumstance of each procurement and clarifies that the acquisition planning process is not merely the act of creating an acquisition plan document.

The proposed rule establishes the fundamental requirement for acquisition planning in all acquisitions. Having a plan is key to ensuring the guiding principles of the acquisition system are met. Revisions at FAR 7.102 now mandate that agencies establish procedures for determining when a written or oral plan is needed and list high-level outcomes that planning must promote: acquisition of commercial products or services; full and open competition; selection of appropriate contract type; and use of existing contracts.

2. Agency-head Responsibilities.

The proposed rule revises agency-head responsibilities from a long list of specific tasks to a list of high-level responsibilities, such as creating streamlined procedures for different acquisition types (

e.g.,

orders, commercial products and services),

establishing criteria for high-risk contracts, and ensuring small business opportunities are considered. This proposed rule emphasizes the responsibility for heads of contracting agencies to establish streamlined acquisition planning thresholds and criteria. For example, the revisions make clear distinctions between task orders and delivery orders and the award of new contracts, requiring appropriate acquisition planning for each. The placing of task orders and delivery orders is a faster and more streamlined process with significantly fewer pre-award actions required than in awarding new contracts.

Additionally, this proposed rule outlines general procedures for acquisition planning and moves the specific contents of written acquisition plans to the FAR companion guide.

3. Consolidation and Bundling.

Proposed edits at FAR 7.107 also unify the sections related to consolidation, bundling, and substantial bundling which adds simplicity to training, processes, and timeframes. The proposed rule streamlines and standardizes the analysis, determination, and notification requirements for consolidation and bundling—there are no longer separate requirements for each.

4. Restructuring and Eliminating Redundancy.

This proposed rule removes or relocates FAR content that is outdated, redundant, or otherwise unnecessary such as: major systems acquisition planning which is in existing FAR part 34, Major System Acquisition; Contractor Versus Government Performance and its underlying sections as Congress has consistently placed a statutory hold on A-76 competitions since 2008; and FAR 52.207-1, Notice of Standard Competition, FAR 52.207-2, Notice of Streamlined Competition, and FAR 52.207-3, Right of First Refusal of Employment.

5. Relocation of FAR subpart 7.5.

The inherently governmental functions policy is relocated from existing FAR subpart 7.5 to subpart 37.3. For more details, see Discussion and Analysis section II.G.3.

6. Relocation of FAR part 10.

This proposed rule relocates and streamlines existing FAR part 10 content to FAR subpart 7.2, because market research is fundamentally an integral component of acquisition planning. The acquisition community cannot effectively plan an acquisition without first understanding the marketplace, available solutions, and industry capabilities. This reorganization reflects the reality that market research is the foundation upon which sound acquisition strategies are built, making it more logical to address these interconnected activities within a single part devoted to the planning phase of the acquisition process.

The proposed FAR 7.201(f) requires agencies to procure commercial products and commercial services to the maximum extent practicable by following a specified order of available solutions in Federal contracts for efficient use.

The proposed FAR subpart 7.2 provides more flexibility for acquisition professionals conducting market research for given agency requirements, freeing agencies to implement best approaches rather than follow an overly prescriptive process regardless of the marketplace for a given requirement. The FAR no longer lists specific market research considerations or techniques that must be used. Agencies will have the flexibility to choose the market research method that best fits their needs. Acquisition professionals must still comply with the Competition in Contracting Act of 1984 (Title VII of Pub. L. 98-369), which may necessitate market research. While existing FAR clause 52.210-1, Market Research, is not required by statute for civilian agencies, it has been retained as essential to the acquisition process and relocated to FAR 52.207-7.

7. Relocation of FAR 15.201.

Additionally, this rule relocates the industry engagement requirements previously found in FAR 15.201 to FAR 7.105.

D. FAR Part 10

FAR part 10 is now marked reserved and does not contain any policy. Its content is relocated to FAR subpart 7.2. For more details, see Discussion and Analysis section II.C.6.

E. FAR Part 18

FAR part 18 is now marked reserved and does not contain any policy. The content is relocated to a website and FAR subpart 26.2. For more details, see Discussion and Analysis section II.F.3.

F. FAR Part 26

This proposed rule revises FAR part 26 to simplify and streamline the policies and procedures pertaining to other socioeconomic programs. These revisions align with the broader RFO initiatives, and do not substantively change fundamental policy or procedures in the part. Several types of streamlining are highlighted below with specific examples for further illustration.

1. Eliminating redundancy.

Existing FAR 26.103 content on the Indian Incentive Program is relocated to FAR 26.303. The proposed text, however, significantly streamlines content. For example, the existing policy contains extensive nonstatutory procedural detail involving contractor engagement. This content is already captured in FAR contract clause 52.226-1, Utilization of Indian Organizations and Indian-Owned Economic Enterprises. The intricate policy detail provided negligible value, and the streamlined approach reduces relevant text significantly while improving readability.

2. Focusing on essential policy.

Existing FAR subpart 26.4, Food Donations to Nonprofit Organizations, is relocated to subpart 26.5. The subpart includes essential policy to comply with statutory requirements at 42 U.S.C. 1792, Promoting Federal food donation. The policy includes the prescription for contract clause FAR 52.226-6, Promoting Excess Food Donation to Nonprofit Organizations. The existing contract clause, however, includes a paragraph (e) requiring the flowdown of the clause to subcontractors. Upon review of the underlying statute, no flowdown is required by statute and provides minimal benefit, as the liability protections for food donation are granted by the Bill Emerson Good Samaritan Food Donation Act (41 U.S.C. 1791) and apply to all entities, including subcontractors, regardless of the clause's presence. To reduce administrative burden, this nonstatutory flowdown is removed in the proposed revision to FAR 52.226-6.

3. Part 18 streamlining and incorporation.

Given the alignment in content in existing FAR part 26, Other Socioeconomic Programs, and existing FAR part 18, Emergency Acquisitions, FAR subpart 18.2 is incorporated at FAR subpart 26.2. Additionally, the static list of general acquisition flexibilities in existing FAR subpart 18.1 is replaced with a link to a more dynamic repository. These flexibilities have been consolidated into a single reference point for existing authorities now available by clicking on the link which takes the reader to an Emergency Procurement List. Replacing the regulatory text with a URL [

https://acquisition.gov/emergency-procurement

] provides Government users a more dynamic resource summarizing flexibilities already codified in disparate sections of the FAR.

Additionally, duplicative references to the micro-purchase threshold, the simplified acquisition threshold, and the Presidential declaration of a major disaster or emergency, that appeared in existing FAR parts 18 and 26 are

consolidated in the proposed rule's FAR part 26 to eliminate redundancy.

4. Definition relocation.

With the consolidation of emergency contracting content into FAR part 26, the definition of disaster response registry is relocated from existing FAR 2.101 to FAR 26.101. Additionally, definitions for historically black college or university and minority institutions are moved from existing FAR 2.101 to the proposed FAR 26.401. While these inclusions are addressed in this proposed rule, the removal of the definition from existing FAR part 2 is addressed in a parallel RFO proposed rule (FAR Case 2026-001) which more holistically addresses part 2 proposed revisions.

G. FAR Part 37

This proposed rule revises FAR part 37 to simplify and streamline the policies and procedures pertaining to service contracting. These revisions align with the broader RFO initiatives and do not substantively change policy or procedures in the part. Several types of streamlining are highlighted below with specific examples for further illustration.

1. Eliminating extraneous content.

Several areas within existing FAR part 37 were extraneous or were addressed in multiple locations across the existing FAR. For example, the scope section in existing FAR 37.000 contains nonessential text, when the part title is reasonably descriptive as to the contents of the part.

Several areas within existing FAR part 37 contained definitions that were unnecessary. For example, existing FAR 37.101 provides a definition of “nonpersonal services contract.” The definition of a “nonpersonal services contract” simply means those services contracts which are not a “personal services contract,” which is already a defined term at FAR 2.101. Accordingly, the extraneous definition is deleted.

Similarly, FAR 37.101 includes a definition for “performance-based contracting.” The definition is largely duplicative of the existing FAR 2.101 definition of “performance-based acquisition.” Accordingly, the term is deleted in the proposed revision to further simplify and streamline.

Another example at existing FAR 37.501 is the term “best practices,” a ubiquitous term with context and understanding beyond simply services contracting. Furthermore, this rule proposes to remove the entire FAR subpart 37.5, Management Oversight of Service Contracts, as it addresses nonstatutory, and rather generic, policy not specifically limited to services contracting.

2. Restructuring.

In addition to the acquisition lifecycle phasing, the proposed rule includes extensive restructuring to improve readability. For example, performance-based acquisition appears as both a general policy matter at existing FAR 37.102 and in a dedicated subpart at existing FAR 37.6. The proposed revision consolidates performance-based acquisition policy to one subpart at FAR 37.1. This provides a single reference point for essential guidance on a core statutory requirement.

Another structural peculiarity in the existing text is the inclusion of myriad miscellaneous policies within FAR subpart 37.1, Service Contracts-General. The proposed revision shifts most of these policies that do not apply to services contracts generally, and did not necessarily warrant a dedicated subpart, to a newly established FAR subpart 37.8, Other Service Considerations.

This reshuffling brings parity to additional structural peculiarities. For example, treatment of nonpersonal health care services holds a dedicated policy subpart at existing FAR subpart 37.4, despite being nonstatutory because it is policy considered essential for sound procurement. Meanwhile, statutory requirements for background checks in child care service contracts were relegated to a seemingly random subparagraph at FAR 37.103 under miscellaneous contracting officer responsibilities. Accordingly, a new subpart in the proposed revision at FAR subpart 37.5, Child Care Services, is established to bring parity and ensure the responsibilities are understood and shared by the agency's acquisition community when developing contracts and overseeing contracts and not solely a contracting officer's responsibility.

3. Inherently governmental functions.

The inherently governmental functions policy is relocated from existing FAR subpart 7.5 to subpart 37.3 because determining which functions must remain governmental is a critical component of acquisition planning specifically for service contracts. Acquisition planners cannot properly plan a services acquisition without first understanding what work can legally be performed by contractors versus what must be performed by Government personnel. This reorganization recognizes that inherently governmental determinations are integral to service contract planning and should be addressed alongside other service contracting considerations.

H. FAR Part 41

FAR part 41 is being revised to simplify and streamline the policies and procedures pertaining to the acquisition of utilities. This change more clearly directs civilian agencies to GSA for their procurements of utilities.

These revisions align with the broader RFO initiatives, and do not substantively change the policy or procedures in the part. General changes include plain-language and grammar changes (

e.g.,

using acronyms and consistency for number references) and clarifying the location of guidance from GSA to civilian agencies. Clauses and provisions have been updated for plain-language and consistent use of acronyms. The FAR clause at 52.241-13 is revised to more broadly speak to the Government and contractors complying with the terms of utility cooperatives in general, instead of speaking solely to the application of capital credits specifically.

I. FAR Part 52

Discussion and analysis for provisions and clauses updated in this rule.

Provisions and clauses associated with a particular FAR part are discussed within the relevant FAR part's analysis (

e.g.,

the proposed removal of FAR clauses 52.207-1, 52.207-2, and 52.207-3 is addressed at Discussion and Analysis section II.C.4).

FAR part 52 renumbering of provisions and clauses.

As a result of the RFO, the FAR Council is considering establishing a new subpart in part 52 and relocating and renumbering all provisions and clauses under this new subpart. This means, if FAR subpart 52.4 was used, all provisions and clauses would begin with 52.4 instead of 52.2. This change is anticipated to prevent confusion and increase compliance by creating a clear distinction between versions of a provision or clause prior to the RFO. Other benefits include avoiding potential clause numbering conflicts and information system and data collection impacts. The FAR Council welcomes comments on the potential impact of such a change on contractors, Government personnel, and other stakeholders.

III. Applicability to Contracts and Subcontracts Valued at or Below the Simplified Acquisition Threshold and for Commercial Products and Commercial Services

The following sections address the applicability of provisions and clauses prescribed in FAR parts 7, 26, 37, and 41 to solicitations and contracts valued at or below the simplified acquisition threshold (SAT) and those for the acquisition of commercial products, commercially available off-the-shelf

(COTS) items, and commercial services. Prescriptions for provisions and clauses in these parts have been updated to reflect applicability to commercial acquisitions.

A. Contracts and Subcontracts Valued at or Below the Simplified Acquisition Threshold

This proposed rule, if finalized, does not alter the prescriptions of provisions and clauses included in this proposed rule to change their applicability to contracts and subcontracts valued at or below the SAT.

B. Contracts and Subcontracts for Commercial Products, Commercially Available Off-The-Shelf Items, and Commercial Services

41 U.S.C. 1906 governs the applicability of laws to contracts for the acquisition of commercial products and commercial services and gives the FAR Council the authority to determine to apply a law to contracts or subcontracts for the acquisition of commercial products and commercial services. 41 U.S.C. 1907 exempts contracts for commercially available off-the-shelf (COTS) items from certain provisions of law unless the Administrator for Federal Procurement Policy determines that doing so would not be in the best interest of the Federal Government.

Section 839 of the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019 (Pub. L. 115-232) required the FAR Council and the Administrator of Federal Procurement Policy to review prior determinations under 41 U.S.C. 1906 and 41 U.S.C. 1907, as well as the applicability of provisions and clauses to contracts and subcontracts for commercial products, COTS items, and commercial services that do not implement statute or Executive order, and propose amendments to the FAR to eliminate or exempt such requirements from commercial acquisitions, unless there are specific reasons to retain particular requirements.

In accordance with section 839 of the NDAA for FY 2019 and their authorities under 41 U.S.C. 1906 and 1907, the FAR Council reviewed the applicability of the provisions and clauses associated with the FAR parts covered by this proposed rule. The following table reflects the FAR Council and Administrator of Federal Procurement Policy's proposed determination regarding the applicability of the provisions and clauses to solicitations and contracts for commercial products, COTS items, and/or commercial services. In making proposed applicability determinations, the FAR Council considered factors such as whether the provision or clause advances national security or economic security, contributes to the resilience of contractors and subcontractors in the federal marketplace, or advances uniformity and clarity in the performance of basic functions that are essential to sound procurement.

Accordingly, this proposed rule, if finalized, would revise provision and clause prescriptions to clearly reflect applicability to commercial acquisitions as outlined in the table. An “X” in the following table indicates the provision or clause will apply to that category of commercial acquisition, as prescribed:

Provision/clause number

Title

Commercial products

Commercial services

COTS items

52.207-4

Economic Purchase Quantity-Supplies

52.207-5

Option to Purchase Equipment

52.207-6

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

52.207-7

Market Research

52.226-1

Utilization of Indian Organizations and Indian-Owned Economic Enterprises

52.226-2

Historically Black College or University and Minority Institution Representation

52.226-3

Disaster or Emergency Area Representation

52.226-4

Notice of Disaster or Emergency Area Set-Aside

52.226-5

Restrictions on Subcontracting Outside Disaster or Emergency Area

52.226-6

Promoting Excess Food Donation to Nonprofit Organizations

52.226-7

Drug-Free Workplace

52.226-8

Encouraging Contractor Policies to Ban Text Messaging While Driving

52.237-1

Site Visit

52.237-2

Protection of Government Buildings, Equipment, and Vegetation

52.237-3

Continuity of Services

52.237-4

Payment by Government to Contractor

52.237-4 Alt I

Payment by Government to Contractor

52.237-5

Payment by Contractor to Government

52.237-6

Incremental Payment by Contractor to Government

52.237-7

Indemnification and Medical Liability Insurance

52.237-8

Restriction on Severance Payments to Foreign Nationals

52.237-9

Waiver of Limitation on Severance Payments to Foreign Nationals

52.237-10

Identification of Uncompensated Overtime

52.241-1

Electric Service Territory Compliance Representation

52.241-2

Order of Precedence-Utilities

52.241-3

Scope and Duration of Contract

52.241-4

Change in Class of Service

52.241-5

Contractor's Facilities

52.241-6

Service Provisions

52.241-7

Change in Rates or Terms and Conditions of Service for Regulated Services

52.241-8

Change in Rates or Terms and Conditions of Service for Unregulated Services

52.241-9

Connection Charge

52.241-9 Alt I

Connection Charge

52.241-10

Termination Liability

52.241-11

Multiple Service Locations

52.241-12

Nonrefundable, Nonrecurring Service Charge

52.241-13

Capital Credits

The FAR Council also reviewed subcontract flow down requirements in clauses associated with the FAR parts covered by this proposed rule. The following table reflects the FAR Council and Administrator of Federal Procurement Policy's proposal regarding whether those clauses flow down to subcontracts for commercial products, COTS items, and/or commercial services. This proposed rule, if finalized, would revise the subcontract paragraphs in these clauses to clearly state whether the clause flows down to commercial subcontracts, as outlined in the table. An “X” in the following table indicates the provision or clause will apply to subcontracts for that category of commercial subcontracts, as described in the clause:

Clause no.

Title

Commercial products

Commercial services

COTS items

52.226-8

Encouraging Contractor Policies to Ban Text Messaging While Driving

52.237-9

Waiver of Limitation on Severance Payments to Foreign Nationals

IV. Expected Impact of the Rule

The intended impact of the RFO, as stated in E.O. 14275, is to restore the Government's ability to “deliver on a timely basis the best value product or service to the customer, while maintaining the public's trust and fulfilling public policy objectives.” Each of the RFO rulemakings is designed to contribute to this impact by emphasizing mission first, by aligning acquisition activities directly to achieving the agency's overarching objectives and serving the public interest and elevating the importance of fiscal responsibility. The proposed RFO rules focus on three goals in particular: (1) timely acquisition and delivery, (2) lower cost and accountability in all spending, and (3) increased competition.

Timeliness.

Timely acquisition and delivery are essential for mission success. To this end, RFO rules propose to eliminate mandates that unnecessarily interfere with agency discretion to determine the best way to procure products and services. The proposed RFO rules highlight more clearly streamlined and simplified authorities that allow buyers to use their time more efficiently and are expected to reduce time between solicitation and award. The proposed RFO rules are expected to make it easier for contracting officers to leverage commercial practices that are familiar to the commercial marketplace. This is expected to make it easier for sellers to engage and respond to Government solicitations more rapidly.

Lower cost.

E.O. 14271, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts (April 15, 2025), directs the Government to utilize, to the maximum extent practicable, the commercial marketplace and the innovations of private enterprise to provide better, more cost-effective services to taxpayers, as envisioned by the Federal Acquisition Streamlining Act. The procurement of custom products and services where a suitable or superior commercial solution would have fulfilled the Government's needs has resulted in avoidable waste to the detriment of American taxpayers.

To address these concerns, consistent with associated responsibilities in section 839 of the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019 (Pub. L. 115-232), the FAR Council reviewed prescriptions for provisions and clauses to ensure all prescriptions are clear regarding their applicability to acquisitions for commercial products and services. Currently, many prescriptions do not specify applicability to commercial acquisitions and leave the applicability determination to contracting officer interpretation. By specifically stating when a provision or clause can be applied to commercial acquisitions, proposed RFO rules should decrease the likelihood of inclusion of provisions and clauses in commercial acquisitions that are not required by law and drive greater consistency in the terms and conditions used in these contracts. In turn, these changes should increase the participation of commercial sellers, who are unwilling or unable to manage the cost of complying with noncommercial requirements, and also improve taxpayer access to affordable commercial solutions.

Some RFO rules propose to delete requirements placed on commercial or noncommercial sellers that are not related to performance of the contract, drive up cost without attendant performance benefits, and may misdirect efforts away from innovation, investment and economic growth. Greater emphasis on timeliness should reduce bidders' carrying costs, enabling them to pass those savings on to customers through lower prices.

Increased competition.

Since enactment of the Competition in Contracting Act of 1984 (Title VII of Pub. L. 98-369), competition has been the cornerstone of the Federal acquisition system. The benefits of competition are well established: competition saves money for the taxpayer, improves contractor performance, curbs fraud, and promotes accountability for results. Competition also drives contractor resilience and positions the U.S. market to develop a strategic advantage for the nation.

According to data in the SAM Contracts Awards Management, roughly 45 percent of contract dollars were awarded in FY 2025 either without competition or with competition that received only one offer. Of equal concern, the Federal marketplace has seen a significant decline over the past 20 years in the number of businesses—especially small businesses—participating in the Federal supplier base. Studies suggest that high compliance costs lead to the misallocation of resources away from more profitable activities and

discourage innovation, investment, and economic growth (Council of Economic Advisers, Executive Office of the President. June 2025. The Economic Benefits of Current Deregulatory Policies.

https://www.whitehouse.gov/wp-content/uploads/2025/03/The-Economic-Benefits-of-Current-Deregulatory-Efforts.pdf

)). This may shelter incumbent contractors and stifle competition, reducing startup activity and job formation.

The RFO rules seek to increase participation in agency competitions and the resilience of the Federal supplier base, which includes commercial entities, small businesses, manufacturers, and nontraditional suppliers. The RFO will achieve this outcome by removing regulatory mandates that are not rooted in statute or essential to sound procurement, promoting greater reliance on practices that reduce transaction costs, and improving the quality of communications with offerors and potential offerors. Access to a broader range of solutions in a more dynamic marketplace will drive better return for each taxpayer dollar spent and increase taxpayer confidence in the Federal acquisition system.

The Government has conducted a regulatory impact analysis (RIA) for the RFO rulemaking inclusive of this proposed rule for FAR parts 6, 7, 10, 18, 26, 37 and 41. The RIA includes a discussion of the anticipated effects of the rulemakings as follows:

1. FAR part 6.

This proposed rule simplifies and streamlines competition requirements and policies without changing fundamental requirements. The consolidation of content and elimination of redundant text will reduce the time contracting officers spend navigating regulations. For example, clearly stating where a justification and approval is required for other than full and open competition aids in clarity for the field. Additionally, removing numerous duplicative and nonstatutory “application” paragraphs not only reduces regulatory footprint, it lifts potentially unintended constraints the field may have read into such nonexhaustive examples. The rewrite makes core statutory competition requirement policies clear while freeing contracting officers and other acquisition professionals to exercise their judgment to fulfill mission requirements.

Benefits to the Government include reduced administrative burden through clearer, more concise regulations; potentially faster processing of competition determinations; and reduced risk of procedural errors. Changes are primarily internal to the Government, but industry may experience ancillary benefits associated with Government process improvements (

e.g.,

increased shared understanding through plain language adjustments, faster processing with improved clarity).

2. FAR part 7.

This proposed rule significantly revises FAR part 7 to stress the importance of tailored acquisition planning that is appropriate for the complexity and circumstances of each procurement. The revisions clarify that acquisition planning is a comprehensive process, not merely the creation of a formal document. The revisions focus on achieving key outcomes like using commercial products/services, promoting full and open competition, selecting the right contract type, and utilizing existing contracts. Specific contents of written acquisition plans are moved to a companion guide. The proposed rule stresses that heads of contracting agencies must establish streamlined planning thresholds and criteria, distinguishing planning for task orders and delivery orders (a faster process) from new contract awards, establishing high-risk contract criteria and ensuring small business opportunities. The distinction between planning for task orders and delivery orders versus new contracts will improve efficiency by aligning planning efforts with acquisition complexity. Additionally, the proposed rule integrates market research as a fundamental component of planning. See section II. C. of the preamble for additional information.

Consolidation and bundling.

The rewrite unifies previously distinct procedures for consolidation, bundling, and substantial bundling into a streamlined process. This unified approach offers several key benefits, including simplified training, reduced processing time, and standardized analysis, determination, and notification requirements. This not only reduces the overall regulatory footprint, it eliminates sources of confusion that can obfuscate efficiency and compliance.

Market research integration.

Moving market research from Part 10 to Part 7 recognizes it as integral to acquisition planning, reducing duplicative efforts and improving acquisition outcomes. The proposed FAR 7.201(f) requires agencies to procure commercial products and commercial services to the maximum extent practicable. This refocus into commercial buying should result in improved outcomes including potential savings benefitting the American people.

Contractor versus Government Performance, OMB Circular A-76.

Since fiscal year 2008, a continuous congressional moratorium, enacted through various appropriations acts, has prohibited executive agencies from initiating new public-private competitions under OMB Circular A-76. This statutory prohibition prevents the use of taxpayer funds to competitively convert civilian employee positions into jobs performed by private contractors. Based on this statutory hold, Contractor Versus Government Performance and its underlying sections have been removed from the FAR, including FAR clauses 52.207-1, 52.207-2, and 52.207-3. Removal of these clauses eliminates contractor reporting requirements for hiring displaced Federal employees, reducing administrative burden on both contractors and Government personnel because of the statutory hold.

These changes are expected to reduce acquisition lead times and improve the quality of acquisition planning without imposing additional costs.

3. FAR part 10.

The relocation of market research content to FAR Part 7 has no independent impact. See FAR Part 7 discussion above.

4. FAR part 18.

The relocation of emergency acquisition content to FAR Part 26 and a web resource has no independent impact. See FAR Part 26 discussion below.

5. FAR part 26.

This rule consolidates emergency acquisition flexibilities with other socioeconomic programs, creating a more logical organization. The significant reduction in regulatory text while maintaining all requirements demonstrates the efficiency gains possible through elimination of regulatory duplication.

Emergency acquisitions.

Replacing static regulatory text with a dynamic URL for emergency procurement flexibilities ensures contracting officers have access to current authorities without waiting for regulatory updates. This change is particularly beneficial during emergency responses when speed is critical.

Elimination of nonstatutory flowdowns.

Removing the flowdown requirement from FAR 52.226-6 reduces contractor compliance burden without affecting statutory obligations. See Section II.F.2. of the preamble for additional information. These changes reduce administrative burden while maintaining all statutory protections and requirements.

6. FAR part 37.

The reorganization of service contracting policies improves accessibility and reduces confusion. Consolidating performance-based acquisition into a single subpart

eliminates redundant text and the need to cross-reference multiple sections. Additionally, moving inherently governmental function details from part 7 to part 37 creates a logical home for this service-specific requirement.

Benefits to the Government include clear, but more flexible, language implementing performance based acquisition in ways that are less prescriptive, yet better facilitate contracts focused on mission outcomes. Additionally, the general improvements in structural clarity and simplicity should aid in reducing training time and improving compliance for the contracting workforce. While the focus of changes is primarily internal to the Government, industry may experience ancillary benefits associated with Government process improvements (

e.g.,

increased shared understanding through plain language adjustments, faster processing with improved clarity).

7. FAR part 41.

The part has been revised to more directly route most agencies to GSA for utility procurements. This text at the outset of the part is anticipated to reduce confusion and streamline the acquisition process, while still including useful policies and procedures for agencies such as DoD and DoE, which possesses unique statutory authorities for utility acquisition. Other changes include plain language revisions to improve readability without changing requirements. FAR 52.241-13 has been revised and streamlined to better align with common practice and address general compliance with utility cooperative terms, rather than focusing solely on capital credits.

V. Executive Orders 12866 and 13563

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess the 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.

VI. Executive Order 14192

This rule is subject to E.O. 14192, Unleashing Prosperity Through Deregulation. This proposed rule, if finalized as proposed, is anticipated to be an E.O. 14192 deregulatory action. See discussion in the “Expected Impact of the Rule” section of this preamble.

VII. Regulatory Flexibility Act

This proposed rule, if finalized, may have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601-612. However, an Initial Regulatory Flexibility Analysis (IRFA) has been performed and is as follows:

1. Reasons for the action.

Executive Order (E.O.) 14275, Restoring Common Sense to Federal Procurement, directs the elimination of excessive acquisition regulations to stop the inefficient use of American taxpayer dollars. The E.O. directs the first comprehensive end-to-end overhaul of the FAR in its 40-year history. The E.O. establishes the policy that the FAR should “contain only provisions that are required by statute or that are otherwise necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests.” In response to E.O. 14275, the Office of Management and Budget issued memorandum M-25-26, Overhauling the Federal Acquisition Regulation. The Memo directed the FAR Council to complete a “revolutionary overhaul” of the FAR. Therefore, the FAR Council is issuing twelve proposed rules that collectively will streamline the FAR in its entirety.

2. Objectives of, and legal basis for, the rule.

The revolutionary FAR overhaul (RFO) rewrite represents a paradigm shift in Federal acquisition. It emphasizes streamlining, clarity, and accessibility, while ensuring that the regulation focuses only on statutory mandates and foundational procurement principles. The RFO is designed to simplify compliance for contracting professionals, improve acquisition speed and agility, and reinforce mission outcomes over process formalities.

The basis for the RFO is E.O. 14275. The authority for promulgation of the FAR is 41 U.S.C. 1121(b); 40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C. chapter 137 legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C. 20113.

3. Description of and an estimate of the number of small entities to which the rule will apply.

All small entities who want to contract with the Federal Government will have to familiarize themselves with the reorganized, streamlined, and revised FAR, including the content of this rulemaking. As of January 2026, there are 401,196 entities registered in the System for Award Management that were small for at least one North American Industry Classification System code they had selected.

This proposed rule may have a positive impact on small entities by simplifying and streamlining acquisition regulations.

4. Description of projected reporting, recordkeeping, and other compliance requirements of the rule.

This proposed rule does not create any new reporting or recordkeeping, or other compliance requirements. Instead, this proposed rule will remove the following existing reporting requirements:

• Contractors will no longer be required to provide the contracting officer with the names of personnel who were adversely affected or separated from Government employment as a result of the contract award; and subsequently hired by the contractor to perform under the contract within 90 days after contract performance began.

For more information about the changes to the reporting requirements, see section VIII of the preamble.

5. Relevant Federal rules which may duplicate, overlap, or conflict with the rule.

The proposed rule, if finalized, would not duplicate, overlap, or conflict with other Federal rules.

6. Description of any significant alternatives to the rule which accomplish the stated objectives of applicable statutes, and which minimize any significant economic impact of the rule on small entities.

There are no significant alternatives that would minimize the impact of the rule on small entities.

The Regulatory Secretariat Division has submitted a copy of the IRFA to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the IRFA may be obtained from the Regulatory Secretariat Division. The FAR Council invites comments from small business concerns and other interested parties on the expected impact of this proposed rule on small entities.

The FAR Council will also consider comments from small entities concerning the existing regulations in subparts affected by the rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite “5 U.S.C. 610 (FAR Case 2026-002)” in correspondence.

VIII. Paperwork Reduction Act

This rule includes information collections under the Paperwork Reduction Act (44 U.S.C. 3501-3521). Following are the specific collections associated with each FAR part in this rule as previously approved by OMB followed by how each collection would be affected by the proposed rule. If a FAR part is not listed below, then there are no information collections associated with the part.

A. FAR Part 7

OMB Control No. 9000-0082, Federal Acquisition Regulation Part 7 Requirements. The changes under this proposed rule, if finalized, would revise this information collection and the paperwork burden previously approved by OMB. The public reporting burden

for this collection of information will be revised to reflect the removal of the requirements under the clause at FAR 52.207-3, Right of First Refusal of Employment. The revised annual reporting burden is estimated as follows:

Respondents:

14,500.

Total Annual Responses:

14,500.

Total Burden Hours:

14,500.

B. FAR Part 26

OMB Control No. 9000-0207, Federal Acquisition Regulation (FAR) Part 26 Requirements; FAR Section affected: 52.226-7. The changes under this proposed rule, if finalized, would not affect the information collection or the paperwork burden previously approved by OMB. The collection would remain unchanged.

C. FAR Part 37

OMB Control No. 9000-0152, Service Contracting; FAR Section Affected: 52.237-10. The changes under this proposed rule, if finalized, would not affect the information collection or the paperwork burden previously approved by OMB. The collection would remain unchanged.

D. Comments Regarding Paperwork Burden.

The FAR Council will publish a separate first notice in accordance with the Paperwork Reduction Act seeking comments on the changes to these collections of information.

IX. Severability

If any portion (

e.g.,

section, clause, sentence) of this rule is held to be invalid or unenforceable facially, or as applied to any entity or circumstance, it shall be severable from the remainder of this rule, and shall not affect the remainder thereof, or its application to entities not similarly situated or to other dissimilar circumstances. The various portions of this rule are independent and serve distinct purposes. Even if one aspect were rendered invalid, the other benefits of the rule would still be applicable.

List of Subjects in 48 CFR Parts 6, 7, 10, 18, 26, 37, 41, and 52

Government procurement.

William F. Clark,

Director, Office of Government-wide Acquisition Policy, Office of Acquisition Policy, Office of Government-wide Policy.

Therefore, OFPP, DoD, GSA, and NASA propose amending 48 CFR parts 6, 7, 10, 18, 26, 37, 41, and 52 as set forth below:

1. Revise parts 6 and 7 to read as follows:

PART 6—COMPETITION REQUIREMENTS

Sec.

6.001

Applicability.

6.002

Limitations.

6.003

Advocates for competition.

Subpart 6.1—Presolicitation

6.101

Full and open competition.

6.102

Full and open competition after excluding sources.

6.102-1

Establishing or maintaining alternative sources.

6.102-2

Set-asides for small business concerns.

6.102-3

Set-asides for local firms during a major disaster or emergency.

6.103

Other than full and open competition.

6.103-1

Only one responsible source and no other supplies or services will satisfy agency requirements.

6.103-2

Unusual and compelling urgency.

6.103-3

Industrial mobilization; engineering, developmental, or research capability; or expert services.

6.103-4

International agreement.

6.103-5

Authorized or required by statute.

6.103-6

National security.

6.103-7

Public interest.

6.104

Justification and approval.

6.104-1

Justification content.

6.104-2

Approval of justification.

Subpart 6.2—Postaward

6.201

Availability of the justification.

Authority:

41 U.S.C. 1121(b); 40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C. chapter 137 legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C. 20113.

6.001

Applicability.

This part applies to all acquisitions except—

(a) Contracts awarded using simplified acquisition procedures of subpart 12.201-1 and part 13;

(b) Contracts awarded using contracting procedures (other than those addressed in this part) that are expressly authorized by statute;

(c) Contract modifications that are within the scope of the contract, including exercising priced options that were evaluated as part of the original competition (see part 17);

(d) Orders placed under requirements contracts or definite-quantity contracts;

(e) Orders placed under indefinite-quantity contracts that were entered into according to this part when—

(1) The contract was awarded under 6.101 or 6.102, and the order was placed according to the procedures in subpart 16.6; or

(2) The contract was awarded under 6.103, and the justification and approval (J&A), if required, adequately covers the requirements contained in the order.

6.002

Limitations.

Agencies must not contract for supplies or services from another agency to avoid the requirements of this part.

6.003

Advocates for competition.

(a) 41 U.S.C. 1705 requires the head of each executive agency to designate and resource an advocate for competition for the agency and for each contracting activity of the agency.

(b) The advocate promotes full and open competition, promotes the acquisition of commercial products and services, and challenges barriers to acquisition. The advocate reports actions taken to increase competition to the senior procurement executive (SPE) and chief acquisition officer.

Subpart 6.1—Presolicitation

6.101

Full and open competition.

(a) Except as authorized by 6.102 and 6.103, obtain full and open competition by using competitive procedures to solicit offers and award Government contracts (see 10 U.S.C. 3201 and 41 U.S.C. 3301).

(b) Use the competitive procedure, or combination of procedures, best suited to efficiently fulfill the Government's requirements. Competitive procedures include sealed bids, competitive proposals, and other procedures explicitly authorized by statute.

(1)

Sealed bids.

For sealed bidding procedures, see part 14. Use sealed bids only when the contracting officer has found that all of the following apply:

(i) Time permits the solicitation, submission and evaluation of sealed bids.

(ii) Award will be made on the basis of price and other price-related factors.

(iii) Negotiations with bidders are unnecessary.

(iv) Contracting officers reasonably expect to receive more than one sealed bid.

(2)

Competitive proposals.

For competitive proposal procedures, see part 15.

(3)

Other competitive procedures.

The following procedures are also considered competitive procedures (see 41 U.S.C. 152):

(i) Selection of sources for architect-engineer contracts according to the provisions of 40 U.S.C. 1102

et seq.

(ii) Competitive selection of basic and applied research, as well as that part of development not related to developing a specific system or hardware procurement, if award results from—

(A) Proposals in response to a general solicitation or broad agency announcement (see 35.102); and

(B) A peer review or scientific review of such proposals.

(iii) Use of procedures established by the Administrator of General Services for the multiple award schedule program of GSA.

6.102

Full and open competition after excluding sources.

(a) Agencies may contract by providing for full and open competition after excluding one or more sources under authorities specified in this section. See 10 U.S.C. 3203 and 41 U.S.C. 3303.

(b) Acquisitions made pursuant to this section require use of the competitive procedures outlined in 6.101(b).

6.102-1

Establishing or maintaining alternative sources.

(a) Agencies may exclude a particular source from a contract action to establish or maintain an alternative source of supply or service if the agency head determines that to do so would—

(1) Increase or maintain competition and likely result in reduced overall costs for the acquisition, or anticipated acquisition of the supplies or services;

(2) Serve the interests of national defense to have a facility (or a producer, manufacturer, or other supplier) available for furnishing the supplies or services in case of a national emergency or industrial mobilization;

(3) Serve the interests of national defense by establishing or maintaining an essential engineering, research, or development capability provided by an educational or other nonprofit institution or a federally funded research and development center;

(4) Ensure the continuous availability of a reliable source of supplies or services;

(5) Satisfy projected needs based on a history of high demand for the supplies or services; or

(6) Satisfy a critical need for medical, safety, or emergency supplies.

(b)(1) Support every proposed contract action under the authority of paragraph (a) of this section by a determination and findings (D&F) (see subpart 1.5) signed by the head of the agency or designee. This D&F must not be made on a class basis.

(2) Technical and requirements personnel are responsible for providing all necessary data to support their recommendation to exclude a particular source.

(3) When the authority in (a)(1) of this section is cited, the findings must include a description of the estimated reduction in overall costs and how the estimate was derived.

6.102-2

Set-asides for small business concerns.

Contracting officers may set aside acquisitions for small business concerns (see 19.104). This authority also includes—

(a) Contract actions conducted under the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.

(b) Contract actions set aside under the following small business socioeconomic programs:

(1) Historically Underutilized Business Zone (HUBZone) Program (see 19.105).

(2) Service-Disabled Veteran-Owned Small Business (SDVOSB) Program (see 19.106).

(3) Women-Owned Small Business (WOSB) or Economically Disadvantaged WOSB eligible under the WOSB Program (see 19.107).

(4) 8(a) Program (see 19.108).

6.102-3

Set-asides for local firms during a major disaster or emergency.

Contracting officers may set aside solicitations for offerors residing or doing business primarily in the area affected by a major disaster or emergency (see subpart 26.1).

6.103

Other than full and open competition.

(a) Agencies may contract without providing for full and open competition under authorities specified in this section (see 10 U.S.C. 3204 for DoD, United States Coast Guard (USCG), and NASA and 41 U.S.C. 3304 for other civilian agencies).

(b) Contracting without providing for full and open competition must not be justified on the basis of—

(1) A lack of planning by the requiring activity; or

(2) Concerns related to the amount of funds available to the agency or activity for acquisition.

6.103-1

Only one responsible source and no other supplies or services will satisfy agency requirements.

(a)

Authority.

10 U.S.C. 3204(a)(1) or 41 U.S.C. 3304(a)(1).

(b)

One responsible source.

Agencies may contract without providing for full and open competition when the supplies or services required by the agency are available from only one responsible source and no other type of supplies or services will satisfy agency requirements. For DoD, NASA, and USCG, this authority extends to situations where only a limited number of responsible sources can satisfy agency requirements.

(c)

Application.

Supplies and services may be deemed as available from only one source under this authority under the following circumstances, including but not limited to:

(1)

Unsolicited research proposals.

(i) When an unsolicited research proposal—

(A) Demonstrates a unique and innovative concept;

(B) Provides an offering not otherwise available to the Federal Government; and

(ii) For DoD, NASA, and USCG, this authority extends to unsolicited research proposals demonstrating unique capabilities to provide services.

(iii) Unsolicited proposals that do not meet these criteria, including those for non-research activities, may still be considered for a sole-source award if justified using other rationale.

(2)

Follow-on contracts.

When awarding a follow-on contract for the continued development or production of a major system or highly specialized equipment and, for DoD, NASA, and USCG, for the continued provision of highly specialized services, and award to any other source would result in—

(i) Substantial duplication of cost to the Government that is not expected to be recovered through competition; or

(ii) Unacceptable delays in fulfilling the agency's requirements.

(3)

Agency standardization program.

When the agency head has determined in accordance with the agency's standardization program that only specified makes and models of technical equipment and parts will satisfy the agency's needs for additional units or replacement items, and only one source is available.

(d)

Application for brand-name descriptions.

(1) Restricting consideration to an item peculiar to one manufacturer (

e.g.,

a particular brand-name, product, or a feature of a product that is peculiar to one manufacturer) prevents full and open competition regardless of the number of sources solicited. Except as authorized at 6.103-5(d), brand-name specifications must not be used unless the particular brand-name, product, or feature is essential to the Government's requirements and market research indicates other companies' similar products, or products lacking the particular feature, do not meet, or cannot be modified to meet, the agency's needs.

(2)(i) Brand name specifications require a J&A as described in 6.104, modified to show the brand name justification.

(ii) If only a portion of the acquisition is for an item peculiar to one

manufacturer, the J&A should state it is covering only the portion of the acquisition, and the approval level requirements will apply only to that portion.

(iii) The approved brand-name justification must be posted along with the solicitation (see 5.201 and 12.102).

(3) The requirements at paragraphs (d)(1) through (d)(2) do not apply to “brand name or equal” descriptions.

(e)

Limitations.

Agencies must publish the notices required by 5.101 and 12.202 and ensure that any bids, proposals, quotations, or capability statements received in response to that notice have been considered.

(f)

Justification.

Contracts using this authority require a J&A as described in 6.104.

6.103-2

Unusual and compelling urgency.

(a)

Authority.

10 U.S.C. 3204(a)(2) or 41 U.S.C. 3304(a)(2).

(b)

Urgency.

Agencies may contract without providing for full and open competition when the agency's need for the supplies or services is of such an unusual and compelling urgency that the Government would be seriously injured unless the agency is permitted to limit the number of sources from which it solicits bids or proposals.

(c)

Period of performance.

The total period of performance of a contract greater than the simplified acquisition threshold awarded or modified using this authority—

(1) May not exceed the time necessary—

(i) To meet the unusual and compelling requirements of the work to be performed under the contract; and

(ii) For the agency to enter into another contract for the required goods and services through competitive procedures; and

(2) May not exceed one year, including all options, unless the head of the agency determines that exceptional circumstances apply. This determination—

(i) Is separate from the J&A for the use of the unusual and compelling urgency authority and must be documented in the contract file; and

(ii) Does not cover any subsequent modification that further extends the period of performance, except for options included in the original determination. Such extensions must be approved at the same level as the original determination.

(d)

Limitations.

Although unusual and compelling urgency considerations may justify other than full and open competition, agencies must still ensure offers are solicited from as many potential sources as is practicable under the circumstances.

(e)

Justification.

Contracts using this authority require a J&A as described in 6.104.

(f)

Documentation after award.

The J&A for the use of this authority, as well as the determination described in paragraph (c)(2) of this section, may be made after contract award when making the determination before award would unreasonably delay the acquisition.

6.103-3

Industrial mobilization; engineering, developmental, or research capability; or expert services.

(a)

Authority.

10 U.S.C. 3204(a)(3) or 41 U.S.C. 3304(a)(3).

(b)

Application.

Agencies may contract without providing for full and open competition when it is necessary to award the contract to a particular source or sources in order—

(1) To maintain a facility, producer, manufacturer, or other supplier available for furnishing supplies or services in case of a national emergency or to achieve industrial mobilization;

(2) To establish or maintain an essential engineering, research, or development capability provided by an educational or other nonprofit institution or a federally funded research and development center; or

(3) To acquire the services of an expert or neutral person for use in any current or anticipated—

(i) Litigation or dispute; or

(ii) Alternative dispute resolution or negotiated rulemaking processes.

(c)

Justification.

Contracts using this authority require a J&A as described in 6.104.

6.103-4

International agreement.

(a)

Authority.

10 U.S.C. 3204(a)(4) or 41 U.S.C. 3304(a)(4).

(b)

International agreement.

Agencies may contract without providing for full and open competition when precluded by the—

(1) Terms of an international agreement or a treaty between the United States and a foreign government or international organization; or

(2) The written directions of a foreign government reimbursing the agency for the cost of acquiring the supplies or services for such a government.

(c)

Justification.

Except for contracts awarded by DoD, NASA, and USCG, contracts using this authority require a J&A described in 6.104.

6.103-5

Authorized or required by statute.

(a)

Authority.

10 U.S.C. 3204(a)(5) or 41 U.S.C. 3304(a)(5).

(b)

Authorized by statute.

Agencies may contract without providing for full and open competition when a statute expressly authorizes, but does not require, that the acquisition be made through another agency or from a specified source. Examples of such authorities include, but are not limited to, sole source awards under the following small business programs:

(1) HUBZone Program (see 19.105).

(2) SDVOSB Program(see 19.106).

(3) WOSB Program (see 19.107).

(4) 8(a) Program (see 19.108).

(5) SBIR or STTR Program follow-on Phase II.

(6) SBIR or STTR Program Phase III.

(c)

Required by statute.

Agencies may contract without providing for full and open competition when a statute expressly requires the acquisition be made through another agency or from a specified source. Examples of such authorities include, but are not limited to awards to—

(1) Federal Prison Industries, Inc. (see subpart 8.3);

(2) AbilityOne participating nonprofit agencies (see subpart 8.2); or

(3) Government Publishing Office (see subpart 8.5).

(d)

Brand-name commercial product for authorized resale.

Agencies may contract without providing for full and open competition when the agency's need is for a brand-name commercial product for authorized resale (

e.g.,

commercial products for resale through commissaries). This authority does not include other uses of brand name descriptions that generally preclude full and open competition and must be addressed in accordance with 6.103-1(d).

(e)

Limitations.

(1) Do not use this authority when a provision of law requires an agency to award a new contract to a specified non-Federal Government entity unless the provision of law specifically—

(i) Identifies the entity involved; and

(ii) States that award must be made to that entity despite the merit-based selection procedures in 10 U.S.C. 3201(e) (for DoD, NASA, and USCG) or 41 U.S.C. 3105 (for other civilian agencies).

(2) This limitation does not apply—

(i) When the work provided for in the contract continues the work performed by the specified entity under a preceding contract; or

(ii) To any contract requiring the National Academy of Sciences to investigate, examine, or experiment upon any subject of science or art of significance to an executive agency and to report on those matters to the Congress or any agency of the Federal Government.

(f)

Justification.

Contracting officers must prepare a J&A, as described in 6.104, for contracts awarded under the

authority of this section, except those awarded under the authorities at—

(1) Paragraph (c) of this section;

(2) Paragraph (d) of this section; and

(3) Paragraph (b) of this section, if statute specifies that such awards may be made without justification. Example of such statutory exceptions include—

(i) SBIR or STTR Program Phase III awards (see 15 U.S.C. 638(r)(4)(B)); and

(ii) 8(a) awards under $30 million (section 811 of Pub. L. 111-84, 41 U.S.C. 3304 note).

6.103-6

National security.

(a)

Authority.

10 U.S.C. 3204(a)(6) or 41 U.S.C. 3304(a)(6).

(b)

National security.

Full and open competition is not required when disclosing the agency's needs would compromise national security unless the agency can limit the number of sources from which it solicits bids or proposals.

(c)

Limitations.

Although national security considerations may justify other than full and open competition, agencies must still—

(1) Publish the notices required by 5.101 and 12.202 and ensure that any bids, proposals, quotations, or capability statements received in response to that notice have been considered.

(2) Ensure offers are solicited from as many potential sources as is practicable under the circumstances.

(d)

Justification.

Contracts using this authority require a J&A as described in 6.104.

6.103-7

Public interest.

(a)

Authority.

10 U.S.C. 3204(a)(7) or 41 U.S.C. 3304(a)(7).

(b)

Public interest.

Full and open competition is not required when the agency head determines it is not in the public interest for that particular acquisition.

(c)

Limitations.

(1) The head of the agency must make a written determination to use this authority in accordance with subpart 1.5. The authority may not be delegated and the determination cannot be on a class basis.

(2) Agencies must notify Congress, in writing, of such determination not fewer than 30 days before awarding the contract.

(d)

Justification.

Contracts using this authority do not require a J&A as described in 6.104.

6.104

Justification and approval.

(a) A J&A must support procedures under 6.103, except as outlined at 6.103-5(f) and 6.103-7(d). Agencies must obtain required J&As, prior to commencing negotiations for a sole source contract, commencing negotiations for a contract resulting from an unsolicited proposal, or awarding any other contract without providing for full and open competition.

(b) Contracting officers require the support of the broader acquisition team when making decisions regarding competition. Technical and requirements personnel are responsible for providing, and certifying as accurate and complete, necessary data to support their recommendation for other than full and open competition.

6.104-1

Justification content.

(a) At a minimum, each justification must include the following information; however, see paragraph (b) for sole-source 8(a) contracts over $30 million:

(1) Identification of the agency and the contracting activity, and specific identification of the document as a “Justification for other than full and open competition.”

(2) Brief summary of the action being approved.

(3) A description of the supplies or services required to meet the agency's needs (including the estimated value).

(4) An identification of the statutory authority permitting other than full and open competition.

(5) A demonstration that the proposed contractor's unique qualifications or the nature of the acquisition requires using the authority cited.

(6) A description of efforts to ensure that offers are solicited from as many potential sources as practicable, including whether a notice was or will be publicized as required by 5.101 or 12.202 and, if not, which exception applies. Presolicitation notice requirements do not apply to acquisitions under the authorities at 6.103-2, 6.103-3, 6.103-4, 6.103-5, and 6.103-7.

(7) A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable.

(8) The market research conducted (see subpart 7.2) and the results or a statement of the reason market research was not conducted.

(9) Any other facts supporting using other than full and open competition, such as:

(i) When 6.103-1 is cited for follow-on acquisitions as described in 6.103-1(c)(2), an estimate of the cost to the Government that would be duplicated and how the estimate was derived.

(ii) When 6.103-2 is cited, data, estimated cost, or other rationale as to whether and how much the Government would be harmed.

(10) A listing of the sources, if any, that expressed an interest in the acquisition in writing.

(11) A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisition for the supplies or services required.

(12) Contracting officer certification that the justification is accurate and complete to the best of the contracting officer's knowledge and belief.

(b) For sole-source 8(a) contracts over $30 million, the justification must include, at a minimum, the contents described at paragraphs (a)(3), (a)(4), and (a)(7) of this section. It should also include a determination that using a sole-source contract is in the best interest of the agency concerned and any other matters specified by agency procedures.

6.104-2

Approval of justification.

(a) The justification for other than full and open competition must be approved in writing. Officials at a higher authority level may approve lower dollar justifications. For example, the SPE as well as the head of the contracting activity (HCA) may approve a $60 million justification. Approval levels are as follows:

Table 6-1—Approval Authorities for Other Than Full and Open Competition

Value

(including options)

Approval authority

(1) $900,000 or below. ($10,000,000 or below for DoD, NASA, and USCG.)

Contracting officer. Accomplished by certification required at 6.104-1(a)(12).

(2) >$900,000-$20,000,000. (>$10,000,000-$100,000,000 for DoD, NASA, and USCG.)

Advocate for competition for the contracting activity. Not delegable.

(3) >$20,000,000-$90,000,000. (>$100,000,000-$500,000,000 for DoD, NASA, and USCG.)

HCA. May be delegated to a member of the armed services at the general or flag officer level or a civilian in a grade above the GS-15 (or equivalent) level.

(4) >$90,000,000. (>$500,000,000 for DoD, NASA, and USCG.)

SPE. Not delegable, except in the case of the Under Secretary of Defense for Acquisition and Sustainment, acting as the SPE for the DoD.

(b) A class justification for other than full and open competition must be approved in writing in accordance with agency procedures. The estimated total value of the class will determine the approval level.

Subpart 6.2—Postaward

6.201

Availability of the justification.

(a) Make the approved justification publicly available within 14 days after contract award, except—

(1) Justifications under 6.103-2, which must be posted within 30 days after contract award; and

(2) Justifications for brand-name descriptions that were posted with the solicitation under the authority at 6.103-1(d), which do not need to be re-posted after award.

(b) Make the justifications publicly available—

(1) At the Government Point of Entry (GPE);

(2) On the website of the agency, which may provide access to the justifications by linking to the GPE; and

(3) For a minimum of 30 days.

(c) Carefully screen all justifications for contractor proprietary data and remove such data, and such references and citations as are necessary to protect the proprietary data, before making the justifications available for public inspection. Use the exemptions to disclosure of information contained in the Freedom of Information Act (FOIA) (5 U.S.C. 552) and the prohibitions against disclosure in part 24 to determine whether the justification, or portions of it, are exempt from posting.

(d) The requirements of paragraphs (a) and (b) do not apply if posting the justification would compromise national security or create other security risks.

PART 7—ACQUISITION PLANNING

Sec.

7.000

Scope of part.

Subpart 7.1—Acquisition Plans

7.101

Definitions.

7.102

Requirements.

7.103

Agency-head responsibilities.

7.104

General procedures.

7.105

Early exchanges with industry.

7.106

[Reserved]

7.107

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

7.107-1

General.

7.107-2

Policy.

7.107-3

Notifications.

7.107-4

Solicitation provision.

7.108

Additional requirements for teleworking.

Subpart 7.2—Market Research

7.200

Scope of subpart.

7.201

Market research requirements.

7.202

Clause.

Subpart 7.3—Planning for the Purchase of Supplies in Economic Quantities

7.300

[Reserved]

7.301

[Reserved]

7.302

Policy.

7.303

Solicitation provision.

Subpart 7.4—Equipment Acquisition

7.400

Scope of subpart.

7.401

Acquisition considerations.

7.402

Acquisition methods.

7.403

OMB guidance.

7.404

Contract clause.

7.000

Scope of part.

This part provides policies and procedures for—

(a) Acquisition planning and developing acquisition plans;

(b) Determining whether to use commercial or Government resources to acquire supplies or services; and

Subpart 7.1—Acquisition Plans

7.101

Definitions.

As used in this subpart—

Design-to-cost

means a concept that establishes cost elements as management goals to achieve the best balance between life-cycle cost, acceptable performance, and schedule. Under this concept, cost is a design constraint during the design and development phases, and a management discipline throughout the acquisition and operation of the system or equipment.

Life-cycle cost

means the total cost to the Government of acquiring, operating, supporting, and (if applicable) disposing of the items being acquired.

Order

means an order placed under a—

(1) Federal Supply Schedule contract; or

(2) Task-order contract or delivery-order contract.

Planner

means the person or office responsible for developing and maintaining a plan, whether written or not.

7.102

Requirements.

(a) Agencies must perform acquisition planning for all acquisitions. Agencies should establish procedures to determine when a written or oral acquisition plan is required (see 7.103). The record of the acquisition plan must be appropriate for the type of acquisition and document decisions and actions to ensure—

(1) Information is available for making informed decisions at each step in the acquisition process;

(2) There is clear support for all actions taken;

(3) Necessary information is available for reviews or investigations; and

(4) Essential facts are available in case litigation arises.

(b) Acquisition plans must promote and provide for:

(1) Acquisition of commercial products or commercial services, whenever feasible (see 7.201(f)).

(2) Full and open competition (see part 6). When using an exception to full and open competition, obtain competition to the maximum extent practicable for the procurement.

(3) Selection of the appropriate contract type to fulfill the agency's needs (see part 16).

(4) Use of existing contracts, if appropriate, including interagency and intra-agency contracts, to fulfill the requirement, before awarding new contracts (see subparts 8.1 and 17.5).

(c) Planning must integrate the efforts of agency personnel responsible for significant aspects of the acquisition to ensure that the Government meets its needs in the most effective, economical, and timely manner.

(d) A written plan is required for cost reimbursement and other high-risk contracts other than firm-fixed-price contracts. Agencies may require written plans for firm-fixed-price contracts as appropriate.

7.103

Agency-head responsibilities.

(a) The agency head must establish agency acquisition planning criteria and thresholds for when increasingly greater detail and formality in the planning process is required. The agency procedures must—

(1) Create streamlined acquisition planning procedures for using Governmentwide acquisition contracts (GWACs) or multi-agency contracts for requirements that are not complex, including for orders, particularly for repetitive orders;

(2) Create streamlined acquisition planning procedures when an acquisition plan has been developed for a single indefinite delivery indefinite quantity (IDIQ) contract to allow the resulting orders to be covered by and reference the same acquisition plan;

(3) Allow for acquisition planning at the program level that covers multiple procurement actions. Acquisition plans may be on a system basis, individual contract basis, or individual order basis depending on the acquisition;

(4) Consider streamlined acquisition planning procedures for procurements for commercial products, including commercially available off-the-shelf items, and commercial services;

(5) Establish criteria for identifying high-risk contracts;

(6) Identify when design-to-cost and life-cycle-cost techniques will be used; and

(7) Provide procedures to waive planning requirements for acquisitions because of an urgent need.

(b) The agency head or designee are responsible for ensuring:

(1) Market research (see subpart 7.2) is conducted to define requirements and that the statement of work, statement of objectives, or performance work statement closely aligns with needed outcomes and cost estimates.

(2) The principles of this subpart are used, as appropriate, for all acquisitions, whether a written plan is required or not.

(3) Small business opportunities are considered in acquisitions to the maximum extent practicable (see 7.107 and part 19).

(4) No purchase request is started or contract entered into that would result in the performance of an inherently governmental function by a contractor, and that all contracts or orders are adequately managed to ensure effective official control over contract or order performance (see subpart 37.3).

(5) Effective agency responsiveness to disaster and emergencies using the authorities and flexibilities at part 26.

(6) Information security and supply chain security requirements (see part 40) and information and communication technology (ICT) accessibility standards (see part 39) are considered, as appropriate.

(7) Before issuing a solicitation for advisory and assistance services (A&AS) for analyzing and evaluating solicitation proposals, a determination is made that there are insufficient covered personnel within the agency or from another Federal agency with the training and capability to do the analyzing and evaluating (see part 37).

(8) Agency planners on information technology acquisitions comply with the capital planning and investment control requirements in 40 U.S.C. 11312 and OMB Circular A-130.

(9) Acquisition plans and revisions to these plans are reviewed and approved to ensure compliance with FAR requirements.

7.104

General procedures.

(a) Start acquisition planning as soon as an agency need is identified. Early planning can create opportunities to structure the procurement approach in a way that promotes competition and innovation, and considers capabilities of domestic sources.

(b) In developing the plan, the planner must do the following:

(1) Form a team consisting of all those who will be responsible for significant aspects of the acquisition, such as contracting, small business, fiscal, legal, and technical personnel. If contract performance is to be in a designated operational area or supporting a diplomatic or consular mission, the planner must also consider inclusion of the combatant commander or chief of mission, as appropriate.

(2) Review previous plans for similar acquisitions and discuss them with the key personnel involved.

(3) Review and revise the plan at key dates specified in the plan or whenever significant changes occur, and no less often than annually.

(4) If the plan proposes using other than full and open competition when awarding a contract, coordinate the plan with the appropriate advocate for competition.

(5) Coordinate the plan with the appropriate small business specialist from the agency Office of Small and Disadvantaged Business Utilization (OSDBU) or the Office of Small Business Programs when the plan strategy involves consolidation or bundling (see 7.107).

(6) Ensure that a Contracting Officer`s Representative is nominated, if required, as early as possible in the acquisition process by the requirements official or according to agency procedures.

(7) Consult with requirements and logistics personnel who determine type, quality, quantity, and delivery requirements. Requirements and logistics personnel should consider ways to promote participation by domestic sources to the maximum extent practicable and avoid issuing requirements on an urgent basis or with unrealistic delivery or performance schedules, since it generally restricts competition and increases prices.

(8) Coordinate and reach agreement on the plan with the contracting officer.

(c) The specific content of plans will vary, depending on the nature, circumstances, and stage of the acquisition. In preparing the plan, the planner should follow the agency's implementing procedures and address the elements relevant to the specific procurement to achieve the acquisition objectives (

e.g.,

technical, cost, risks). For additional requirements pertaining to major systems, see subpart 34.1. For additional requirements pertaining to inherently governmental functions, see subpart 37.3.

7.105

Early exchanges with industry.

(a)

General.

Exchanges of information and communication among all interested parties are encouraged and can occur at any time between the identification of a requirement through the receipt of proposals. Interested parties may include potential offerors such as current major subcontractors, end users, Government acquisition and supporting personnel, and others involved in the conduct or outcome of the acquisition. These exchanges can improve both the Government's understanding of industry capabilities and the industry's understanding of the Government's needs. Any exchange of information must be consistent with procurement integrity requirements in part 3, protected in accordance with part 24, and marked in accordance with 40.304.

(b)

Draft requests for proposal (RFPs).

Agencies are encouraged to release draft RFPs and conduct conferences with industry before issuing competitive RFPs.

(c)

Requests for information (RFI).

Agencies are encouraged to release RFIs when the Government does not currently intend to award a contract, but wants to obtain price, delivery, market, or capabilities information for planning purposes.

(1) There is no required format for RFIs.

(2) Responses to RFIs are not offers and cannot be accepted by the Government to form a binding contract.

(3) RFIs must state that—

(i) The Government does not intend to award a contract on the basis of the RFI or otherwise pay for the information requested; and

(ii) Responses will be treated as information only and not as a proposal.

(4) Information received in response to an RFI must be safeguarded adequately from unauthorized disclosure. Contracting officers should mark the information with date and time of receipt and provide the information to designated officials.

(d)

Mission needs and requirements.

General information on an agency's current or anticipated needs and requirements may be disclosed at any time. When information about a proposed acquisition is disclosed to one or more potential offerors and that information is necessary for the preparation of proposals, the information should be made available to the public as soon as practicable, but no later than the next general release of information, in order to avoid creating an unfair competitive advantage.

7.106

Reserved.

7.107

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

7.107-1

General.

(a) Consolidation and bundling may provide substantial benefits to the Government. However, because of the potential impact on small business participation, before conducting an acquisition that consolidates or bundles requirements the agency must—

(1) Conduct market research;

(2) Identify any alternative contracting approaches that would involve a lesser degree of consolidation or bundling (

e.g.,

separate smaller contracts or orders);

(3) Coordinate with the agency's OSDBU or the Office of Small Business Programs;

(4) Identify any negative impact by the acquisition strategy on contracting with small business concerns;

(5) Take steps to include small business concerns in the acquisition strategy; and

(6) Unless excepted in paragraph (b), make a written determination that requirements are necessary and justified for consolidation (15 U.S.C. 657q) or bundling (15 U.S.C. 644(e)).

(b) The requirements of section 7.107 (including 7.107-1 through 7.107-4) do not apply—

(1) 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

(2) To requirements for which there is a mandatory source (see part 8). This exception does not apply—

(i) When the requiring agency obtains a waiver or an exception according to part 8; or

(ii) When optional acquisitions of supplies and services permitted under part 8 are included.

(c) Agencies must publish the Governmentwide policy regarding contract bundling, including regarding the solicitation of teaming and joint ventures, on their agency's website. (15 U.S.C. 644(q)(2)(A)(ii)).

7.107-2

Policy.

(a) The Senior Procurement Executive (SPE) or Chief Acquisition Officer may determine that consolidation or bundling is necessary and justified if the benefits of that approach would substantially exceed the benefits that would be derived from each of the alternative contracting approaches identified under 7.107-1(a)(2), including benefits that are quantifiable in dollar amounts as well as any other specifically identified benefits.

(b) If a determination is made that consolidation or bundling is necessary and justified, the contracting officer must include the justification in the acquisition strategy documentation and provide it to the Small Business Administration (SBA) upon request.

(c)(1) The agency must quantify and document in its strategy the specific benefits identified through the use of market research and other techniques to explain how their impact would be substantial.

(2) Benefits may include cost savings, price reduction, or, regardless of whether quantifiable in dollar amounts—

(i) Quality improvements that will save time or improve or enhance performance or efficiency;

(ii) Reduction in acquisition cycle times;

(iii) Better terms and conditions; or

(iv) Any other benefit.

(3) Benefits are substantial if quantified in dollar amounts individually, in combination, or in the aggregate if 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.

(4) Benefits that are not quantifiable in dollar amounts must be specifically identified and otherwise quantified to the extent feasible.

(5) In assessing whether cost savings and/or price reduction would be achieved through consolidation or bundling, the agency and SBA must—

(i) Compare the price that has been charged by small businesses for the work that they have performed; or

(ii) 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.

(6) For a consolidated or bundled contract or task or delivery order with a cumulative estimated dollar value (including options) above the substantial bundling thresholds of $8 million or more for the Department of Defense, $6 million or more for the National Aeronautics and Space Administration, the General Services Administration, and the Department of Energy, and $2.5 million or more for all other agencies, the agency must also document in its strategy—

(i) The specific benefits expected to be derived from consolidation or bundling;

(ii) An assessment of the specific barriers to participation by small business concerns as contractors that result from consolidation or bundling;

(iii) Actions designed to maximize small business participation as contractors, including provisions that encourage small business teaming;

(iv) 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;

(v) The determination that the anticipated benefits of the proposed consolidated or bundled contract or order justify its use; and

(vi) Alternative strategies that would reduce or minimize the scope of the consolidation or bundling, and the reason for not choosing those alternatives.

(d) Reduction of administrative or personnel costs alone is not enough justification for consolidation or bundling unless the cost savings are expected to be substantial.

(e) When the expected benefits are not substantial but the requirements are critical to the agency's mission success, and the procurement strategy provides for maximum practicable participation by small business, the Deputy Secretary or equivalent (or for DoD the SPE), on

a non-delegable basis, may determine that consolidation or bundling is necessary and justified.

7.107-3

Notifications.

(a)

Notifications to current small business contractors of the agency's intent to consolidate or bundle.

(1) The contracting officer must notify each small business performing a contract that it intends to consolidate or bundle the requirement at least 30 days before issuing the solicitation for the consolidated or bundled requirement.

(2) The notification must 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.

(b)

Notification to the public.

The SPE or Chief Acquisition Officer must publish in the GPE—

(1) A notice that the agency has determined consolidation or bundling of contract requirements is necessary and justified (see 7.107-2) no later than 7 days after making the determination; the solicitation may not be publicized prior to 7 days after publication of the notice of the agency determination; and

(2) The determination that consolidation or bundling is necessary and justified with the publication of the solicitation. See 7.107-2 for the required content of the determination.

(c)

Notification to SBA of follow-on consolidated or bundled requirements.

For each follow-on consolidated or bundled requirement, the contracting officer must obtain the following from the requiring activity and notify the SBA PCR no later than 30 days before issuing 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.

(3) Whether such savings and benefits would be greater if the procurement requirements were divided into separate solicitations suitable for awarding to small business concerns.

(4) List of requirements that have been added or deleted for the follow-on.

(d)

Annual notification to the public of the reason for consolidated or bundled requirements.

The agency must publish on its website a list and reason for any consolidated or bundled requirement for which the agency solicited offers or issued an award. The notification must be made annually 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 part 4).

7.107-4

Solicitation provision.

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 including those for commercial products and commercial services that exceed the substantial bundling threshold of the agency (see 7.107-2(c)(6)).

7.108

Additional requirements for teleworking.

(a) According to 41 U.S.C. 3306(f), an agency must not discourage a contractor from allowing its employees to telework while performing Government contracts, unless—

(1) The contracting officer has determined that the requirements of the agency, including security requirements, cannot be met if teleworking is permitted;

(2) The basis of the determination is documented in writing; and

(3) The prohibition is specified in the solicitation.

(b) When a teleworking prohibition is stated in a solicitation, the contracting officer will unfavorably evaluate an offer that includes teleworking.

Subpart 7.2—Market Research

7.200

Scope of subpart.

This subpart prescribes minimum requirements for conducting market research, an essential component of acquisition planning, before procuring supplies and services. See section 887 of Public Law 114-92 (41 U.S.C. 1703 note), 41 U.S.C. 3306(a)(1), 41 U.S.C. 3307, and 10 U.S.C. 3453.

7.201

Market research requirements.

(a) Agencies must describe their legitimate needs.

(b) Agencies must conduct market research appropriate to the circumstances before—

(1) Developing new requirements documents;

(2) Soliciting offers for acquisitions with an estimated value over the simplified acquisition threshold; or

(3) Awarding a task or delivery order under an IDIQ contract (

e.g.,

GWACs, MACs) for other than a commercial product or commercial service when the order is over the simplified acquisition threshold.

(c) Agencies should engage in responsible and constructive exchanges with industry (see 7.105). Agencies may use different strategies and methods to gather information, so long as they comply with existing law and regulation and do not provide an unfair competitive advantage to particular firms or violate the procurement integrity requirements (see 3.104).

(d) When conducting market research, agencies must not ask potential sources to submit more than the minimum information necessary to make the determinations required in paragraph (f).

(e) Agencies must document the results of market research in a manner that suits the acquisition's size and complexity. Market research conducted within 18 months before an award is acceptable if the information is still current, accurate, and relevant.

(f) Agencies must procure commercial products and commercial services to the maximum extent practicable. Using the results of market research, agencies will determine, in the following order of priority, whether—

(1) A commercial product or commercial service on an existing governmentwide contract can meet the agency's requirements;

(2) The requirements could be modified so the agency could use an existing governmentwide contract;

(3) A commercial product or commercial service is available from another source;

(4) A commercial product or commercial service could be modified to meet the agency's requirements; or

(5) The requirement can only be satisfied by a nondevelopmental item.

7.202

Clause.

Insert the clause at 52.207-7, Market Research, in solicitations and contracts, other than those for commercial products and commercial services, if the acquisition value exceeds $7.5 million.

Subpart 7.3—Planning for the Purchase of Supplies in Economic Quantities

7.300

[Reserved]

7.301

[Reserved]

7.302

Policy.

Agencies are required by 10 U.S.C. 3242 and 41 U.S.C. 3310 to procure supplies in such quantity as—

(a) Will result in the total cost and unit cost most advantageous to the Government, where practicable; and

(b) Does not exceed the quantity reasonably expected to be required by the agency.

7.303

Solicitation provision.

Insert the provision at 52.207-4, Economic Purchase Quantity—Supplies, in solicitations for supplies other than those for commercial products or commercial services. The provision may not be necessary if the solicitation is for a contract under the General Services Administration's multiple award schedule contract program, or if the contracting officer determines that—

(a) The Government already has the relevant information required by the provision;

(b) Such information is otherwise readily available; or

Subpart 7.4—Equipment Acquisition

7.400

Scope of subpart.

This subpart—

(a) Implements section 555 of the FAA (Federal Aviation Administration) Reauthorization Act of 2018 (Pub. L. 115-254);

(b) Provides guidance when acquiring equipment and more than one method of acquisition is available for use; and

(c) Applies to both the initial acquisition of equipment and the renewal or extension of existing equipment leases or rental agreements.

7.401

Acquisition considerations.

(a)(1) Agencies must acquire equipment using the method of acquisition most advantageous to the Government based on a case-by-case analysis of comparative costs and other factors according to this subpart and agency procedures.

(2) The methods of acquisition to be compared in the analysis must include, at a minimum—

(i) Purchase;

(ii) Short-term rental or lease;

(iii) Long-term rental or lease;

(iv) Interagency acquisition (see part 2); and

(v) Agency acquisition agreements, if applicable, with a State or local government.

(b)(1) The factors to be compared in the analysis must include, at a minimum:

(i) Estimated length of the period the equipment is to be used and the extent of use within that period;

(ii) Financial and operating advantages of alternative types and makes of equipment;

(iii) Cumulative rent, lease, or other periodic payments, however described, for the estimated period of use;

(iv) Net purchase price;

(v) Transportation, installation, and storage costs;

(vi) Maintenance, repair, and other service costs; and

(vii) Potential for the equipment to become outdated because of upcoming technological improvements.

(2) The following additional factors should be considered, as appropriate, depending on the type, cost, complexity, and estimated period of use of the equipment:

(i) Availability of purchase options.

(ii) Cancellation, extension, and early return conditions and fees.

(iii) Ability to swap out or exchange equipment.

(iv) Available warranties.

(v) Insurance, environmental, or licensing requirements.

(vi) Potential for use of the equipment by other agencies after its use by the acquiring agency is ended.

(vii) Trade-in or salvage value.

(viii) Imputed interest.

(ix) Availability of a servicing capability, especially for highly complex equipment;

e.g.,

can the equipment be serviced by the Government or other sources if it is purchased?

(1) When the President has issued an emergency declaration or a major disaster declaration pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121

et seq.

);

(2) In other emergency situations if the agency head makes a determination that obtaining such equipment is necessary to protect human life or property; or

(3) When otherwise authorized by law.

7.402

Acquisition methods.

(a)

Purchase method.

(1) If the equipment will be used beyond the point in time when cumulative rental or leasing costs exceed the purchase costs, use the purchase method if appropriate.

(2) The mere possibility that future technological advances might make the selected equipment less desirable, alone, is not a reason to rule out the purchase method.

(b)

Rent or lease method.

(1) The rent or lease method may serve as a short-term measure when the circumstances—

(i) Require immediate use of equipment to meet program or system goals; but

(ii) Do not currently support acquisition by purchase.

(2) If a rent or lease method is selected, the inclusion of an evaluated purchase option is preferable.

(3) Generally, a long-term rental or lease agreement should be avoided unless there is an option to purchase or other favorable terms.

(4) If a rental or lease agreement with option to purchase is used, the contract must state the purchase price or provide a formula that shows how the purchase price will be established at the time the option to purchase is exercised.

7.403

OMB guidance.

For additional OMB guidance, see—

(a) Section 13, Special Guidance for Lease-Purchase Analysis, and paragraph 8.c.(2), Lease-Purchase Analysis, of OMB Circular A-94, Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs, (1992 OMB Circular A-94 at

https://obamawhitehouse.archives.gov/sites/default/files/omb/assets/omb/circulars/a094/a094.html

but use Appendix C from 2025 at

https://bidenwhitehouse.archives.gov/wp-content/uploads/2023/12/CircularA-94AppendixC.pdf

); and

(b) Appendix B, Budgetary Treatment of Lease-Purchases and Leases of Capital Assets, of OMB Circular A-11, Preparation, Submission, and Execution of the Budget, (

https://bidenwhitehouse.archives.gov/wp-content/uploads/2023/12/CircularA-94AppendixC.pdf

7.404

Contract clause.

Insert a clause substantially the same as the clause in 52.207-5, Option to Purchase Equipment, in solicitations and contracts, other than those for commercial products and commercial services, involving a rental or lease agreement with option to purchase.

PART 10 [Removed and Reserved]

2. Remove and reserve part 10, consisting of sections 10.000, 10.001, 10.002, and 10.003.

PART 18 [Removed and Reserved]

3. Remove and reserve part 18, consisting of sections 18.000, 18.001, subparts 18.1 and 18.2.

4. Revise parts 26, 37, and 41 to read as follows:

PART 26—EMERGENCY ASSISTANCE AND OTHER SOCIOECONOMIC PROGRAMS

Sec.

Subpart 26.1—Local Area Preference for Disaster Response Contracts

26.101

Definitions.

26.102

Presolicitation.

26.102-1

Policy.

26.102-2

Procedures.

26.102-3

Solicitation provision and contract clauses.

Subpart 26.2—Emergency Acquisition Flexibilities

26.201

Presolicitation.

Subpart 26.3—Indian Incentive Program

26.301

Definitions.

26.302

Presolicitation.

26.302-1

Policy.

26.302-2

Contract clause.

26.303

Postaward.

Subpart 26.4—Historically Black Colleges and Universities and Minority Institutions

26.401

Definitions.

26.402

Presolicitation.

26.402-1

General.

26.402-2

Solicitation provision.

Subpart 26.5—Food Donations to Nonprofit Organizations

26.501

Definitions.

26.502

Presolicitation.

26.502-1

Policy.

26.502-2

Contract clause.

Subpart 26.6—Drug-Free Workplace

26.601

Applicability.

26.602

Definitions.

26.603

Presolicitation.

26.603-1

Contract clause.

26.604

Evaluation and award.

26.604-1

Policy.

26.605

Postaward.

26.605-1

Suspension of payments, contract termination, and debarment and suspension actions.

Subpart 26.7—Texting While Driving

26.701

Presolicitation.

26.701-1

Policy.

26.701-2

Contract clause.

Subpart 26.1—Local Area Preference for Disaster Response Contracts

26.101

Definitions.

As used in this subpart—

Disaster Response Registry

means a voluntary registry of contractors who are willing to perform debris removal, distribution of supplies, reconstruction, and other disaster or emergency relief activities established in accordance with 6 U.S.C. 796, Registry of Disaster Response Contractors. The Registry is accessed via

https://www.sam.gov.

Emergency response contract

means a contract with private entities that provide assistance activities in a major disaster or emergency area, such as debris clearance, distribution of supplies, or reconstruction.

Local firm

means a private organization, firm, or individual residing or doing business primarily in a major disaster or emergency area.

Major disaster or emergency area

means the area included in the official Presidential declaration(s) and any additional areas identified by the DHS. Major disaster declarations and emergency declarations are published in the

Federal Register

and are available at

https://www.fema.gov/disasters/disaster/declarations.

26.102

Presolicitation.

26.102-1

Policy.

(a)

Local area preference.

When practicable, award emergency response contracts to local firms (see 42 U.S.C. 5150). To support this policy, contracting officers may—

(1) Set aside acquisitions to allow only local firms within a specific geographic area to compete (see 6.102-3); or

(2) Use an evaluation preference.

(b)

Transition of work.

(1) Agencies may award emergency response contracts before a major disaster or emergency occurs to ensure immediate relief is available. Structure such contracts to support timely transition of work to local firms after a major disaster or emergency area has been established.

(2) Agencies must transition emergency response contracts to local firms after the President declares a major disaster or emergency, unless the head of the agency determines that it is not practicable on an individual or class basis. However, agencies are not required to terminate or renegotiate existing contracts to make the transition.

26.102-2

Procedures.

(a)

Non-local justification requirements.

After the President declares a major disaster or emergency, agencies must justify spending any Federal funds on emergency response contracts not awarded to a local firm. Agencies must document such justification in writing, and contracting officers must keep it in the contract file.

(b)

Area.

A major disaster or emergency area may span counties in several neighboring States. When establishing a geographic area for a local firm set-aside, stay within the declared area(s) but it is not required to include all the counties within the declared areas(s).

(c)

Disaster response registry.

Consult the Disaster Response Registry via

https://www.sam.gov

to determine contractor availability for emergency response activities inside the United States and outlying areas.

26.102-3

Solicitation provision and contract clauses.

(a) Insert the provision at 52.226-3, Disaster or Emergency Area Representation, and fill in the geographic area in paragraph (a), in solicitations involving local area set-asides, including those for commercial products and commercial services.

(b) Insert the clause at 52.226-4, Notice of Disaster or Emergency Area Set-aside, and fill in the geographic area in paragraph (a), in solicitations and contracts involving local area set-asides, including those for commercial products and commercial services.

(c) Insert the clause at 52.226-5, Restrictions on Subcontracting Outside Disaster or Emergency Area, in solicitations and contracts involving local area set-asides, including those for commercial products and commercial services.

Subpart 26.2—Emergency Acquisition Flexibilities

26.201

Presolicitation.

The FAR includes acquisition flexibilities available for emergency acquisitions, in addition to the local area preference in subpart 26.1.

(a)

General flexibilities.

Use the flexibilities included in the FAR to respond quickly for an emergency or urgent need. See the list of FAR flexibilities available at

https://acquisition.gov/emergency-procurement.

The acquisition flexibilities in this subpart are not exempt from the requirements and limitations set forth in part 3, Improper Business Practices and Personal Conflicts of Interest.

(b)

Micro-purchase threshold and simplified acquisition threshold.

The definitions of micro-purchase threshold and simplified acquisition threshold at part 2 describe the circumstances and new thresholds to which they may be raised when, as determined by the head of an executive agency, they are used to—

(1) Support a contingency operation;

(2) Help defend against or recover from cyber, nuclear, biological, chemical, or radiological attack against the United States;

(3) Support a request from the Secretary of State or the Administrator of the United States Agency for International Development to help provide international disaster assistance as described in 22 U.S.C. 2292

et seq.;

(4) Support response to an emergency or major disaster, or

(5) Support a humanitarian or peacekeeping operation using a contract to be awarded and performed, or purchase to be made, outside the United States. The simplified acquisition threshold may be changed, but not the micro-purchase threshold.

(c)

Simplified acquisition procedures for certain commercial products and commercial services.

See part 12 for increased thresholds that may be used in acquiring commercial products or

commercial services when the acquisition supports activities described in paragraphs (b)(1) through (b)(4) of this section. These increased thresholds for using simplified acquisition procedures may also be used when the acquisition is treated as a commercial product or commercial service in accordance with paragraph (d) of this section.

(d)

Commercial product or commercial service treatment.

Contracting officers may treat any acquisition of supplies or services as an acquisition of commercial products or commercial services if the head of the agency determines the acquisition is to be used to help defend against or recover from cyber, nuclear, biological, chemical, or radiological attack. (See part 12.)

(e)

Ocean transportation by U.S. flag vessels.

In emergency situations, the provisions of the Cargo Preference Act of 1954 may be waived (see part 47.)

Subpart 26.3—Indian Incentive Program

26.301

Definitions.

As used in this subpart—

Indian

means any person who is a member of any Indian tribe, band, group, pueblo, or community that is recognized by the Federal Government as eligible for services from the Bureau of Indian Affairs (BIA) (see 25 U.S.C. 1452) and any “Native” as defined in the Alaska Native Claims Settlement Act (see 43 U.S.C. 1602).

Indian organization

means the governing body of any Indian tribe or entity established or recognized by the governing body of an Indian tribe for the purposes of 25 U.S.C., chapter 17.

Indian-owned economic enterprise

means any Indian-owned (as determined by the Secretary of the Interior) commercial, industrial, or business activity established or organized for the purpose of profit, provided that Indian ownership constitutes not less than 51 percent of the enterprise.

Indian tribe

means any Indian tribe, band, group, pueblo, or community, including native villages and native groups (including corporations organized by Kenai, Juneau, Sitka, and Kodiak) as defined in the Alaska Native Claims Settlement Act, that is recognized by the Federal Government as eligible for services from BIA (see 25 U.S.C. 1452).

Interested party

means a prime contractor or an actual or prospective offeror whose direct economic interest would be affected by the award of a subcontract or by the failure to award a subcontract.

26.302

Presolicitation.

26.302-1

Policy.

Agencies may allow an incentive payment to prime contractors equal to 5 percent of the amount paid to a subcontractor that is an Indian organization or Indian-owned economic enterprise (see 25 U.S.C. 1544).

26.302-2

Contract clause.

Contracting officers in civilian agencies may insert the clause at 52.226-1, Utilization of Indian Organizations and Indian-Owned Economic Enterprises, in solicitations and contracts, including those for commercial products (other than commercially available off-the-shelf items) or commercial services, if—

(a) In the opinion of the contracting officer, subcontracting possibilities exist for Indian organizations or Indian-owned economic enterprises; and

(b) Funds are available for any increased costs as described in paragraph (b)(2) of the clause at 52.226-1.

26.303

Postaward.

(a) Contracting officers and prime contractors may rely on the representation of an Indian organization or Indian-owned economic enterprise as to its eligibility, unless an interested party challenges its status, or the contracting officer has independent reason to question that status.

(b) Contracting officers must refer challenges to the U.S. Department of the Interior, BIA, Acquisition Management Director (available at

https://www.bia.gov/as-ia/ocfo/acquisitions

). BIA will determine the eligibility and notify the contracting officer.

Subpart 26.4—Historically Black Colleges and Universities and Minority Institutions

26.401

Definitions.

As used in this subpart—

Historically black college or university

means an institution determined by the Secretary of Education to meet the requirements of 34 CFR 608.2.

Minority institution

means an institution of higher education meeting the requirements of Section 365(3) of the Higher Education Act of 1965 (20 U.S.C. 1067k), including a Hispanic-serving institution of higher education, as defined in Section 502(a) of the Act (20 U.S.C. 1101a).

26.402

Presolicitation.

26.402-1

General.

(a) As established in Executive Order 12928 of September 16, 1994, Promoting Procurement With Small Businesses Owned and Controlled By Socially and Economically Disadvantaged Individuals, Historically Black Colleges and Universities, and Minority Institutions, agencies should promote participation of Historically Black Colleges and Universities and Minority Institutions in Federal procurement.

(b) This subpart does not apply to contracts performed entirely outside the United States and its outlying areas.

26.402-2

Solicitation provision.

Insert the provision at 52.226-2, Historically Black College or University and Minority Institution Representation, in solicitations that exceed the micro-purchase threshold, and that are for research, studies, supplies, or services of the type normally acquired from higher educational institutions, including those for commercial products (other than commercially available off-the-shelf items) and commercial services.

Subpart 26.5—Food Donations to Nonprofit Organizations

26.501

Definitions.

As used in this subpart—

Apparently wholesome food

means food that meets all quality and labeling standards imposed by Federal, State, and local laws and regulations even though the food may not be readily marketable due to appearance, age, freshness, grade, size, surplus, or other conditions.

Excess food

means food that—

(1) Is not required to meet the needs of the agencies; and

(2) Would otherwise be discarded.

Food-insecure

means inconsistent access to sufficient, safe, and nutritious food.

Nonprofit organization

means any organization that is—

(1) Described in section 501(c) of the Internal Revenue Code of 1986; and

(2) Exempt from tax under section 501(a) of that Code.

26.502

Presolicitation.

26.502-1

Policy.

(a) The Government encourages agencies and their contractors to donate excess, apparently wholesome food to nonprofit organizations helping food-insecure people in the United States (see 42 U.S.C. 1792).

(b) The following limitations apply:

(1)

Costs.

Agencies may not assume responsibility for the costs and logistics

of collecting, transporting, maintaining the safety of, or distributing excess food donations.

(2)

Liability.

An agency (including an agency that enters into a contract with a contractor) and any contractor making food donations following this policy is exempt from civil and criminal liability to the extent provided under 42 U.S.C. 1791.

26.502-2

Contract clause.

Insert the clause at 52.226-6, Promoting Excess Food Donation to Nonprofit Organizations, in solicitations and contracts greater than $35,000 for providing, serving, or selling food in the United States, other than those for commercial products and commercial services.

Subpart 26.6—Drug-Free Workplace.

26.601

Applicability.

This subpart implements 41 U.S.C. chapter 81, Drug-Free Workplace, and applies to contracts, except those—

(a) At or below the simplified acquisition threshold; however, the requirements of this subpart apply to all contracts of any value awarded to an individual;

(b) For commercial products and commercial services (see part 12);

(c) Performed outside the United States and its outlying areas or any part of a contract performed outside the United States and its outlying areas;

(d) Awarded by law enforcement agencies, if the head of the law enforcement agency involved determines that applying this subpart would be inappropriate in connection with the law enforcement agency's undercover operations; or

(e) Where application would be inconsistent with the international obligations of the United States or with the laws and regulations of a foreign country.

26.602

Definitions.

As used in this subpart—

Controlled substance

means a controlled substance in schedules I through V of section 202 of the Controlled Substances Act (21 U.S.C. 812), and as further defined in regulation at 21 CFR 1308.11-1308.15.

Conviction

means a finding of guilt (including a plea of nolo contendere) or imposition of sentence, or both, by any judicial body charged with the responsibility to determine violations of the Federal or State criminal drug statutes.

Criminal drug statute

means a Federal or non-Federal criminal statute involving the manufacture, distribution, dispensing, possession, or use of any controlled substance.

Employee

means an employee of a contractor directly engaged in performing work under a Government contract. “Directly engaged” includes all direct cost employees and any other contractor employee who has other than a minimal impact or involvement in contract performance.

Individual

means an offeror or contractor that has no more than one employee including the offeror or contractor.

26.603

Presolicitation.

26.603-1

Contract clause.

Insert the clause at 52.226-7, Drug-Free Workplace, in solicitations and contracts, other than those for commercial products and commercial services, except as provided in 26.601.

26.604

Evaluation and award.

26.604-1

Policy.

(a) Contracting officers may not consider an offeror, other than an individual, a responsible source unless it agrees to provide a drug-free workplace according to the clause at 52.226-7.

(b) Contracting officers may not award a contract of any dollar value to an individual unless that individual agrees to not engage in the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance while performing the contract.

26.605

Postaward.

26.605-1

Suspension of payments, contract termination, and debarment and suspension actions.

(a) Contracting officers may suspend contract payments when they determine in writing that there is adequate evidence of any of the causes at paragraph (d) of this section.

(b) Contracting officers may terminate contracts for default when they determine in writing any of the causes at paragraph (d) of this section exist.

(c) When a contracting officer initiates action under paragraph (a) or (b) of this section, they must refer the case to the agency suspending and debarring official (see part 9).

(d) The specific causes for suspension of contract payments, termination of a contract for default, or suspension and debarment are—

(1) The contractor has failed to comply with the requirements of the clause at 52.226-7, Drug-Free Workplace; or

(2) The number of contractor employees convicted of violations of criminal drug statutes occurring in the workplace indicates that the contractor has failed to make a good faith effort to provide a drug-free workplace.

(e) An agency head may waive a suspension of payments, termination of contract, or suspension or debarment of a contractor under this section, if considered necessary to prevent a severe disruption of the agency operation to the detriment of the Government or the general public. The agency head cannot delegate the waiver authority.

Subpart 26.7—Texting While Driving

26.701

Presolicitation.

26.701-1

Policy.

This subpart implements the requirements of the Executive Order (E.O.) 13513, dated October 1, 2009 (74 FR 51225, October 6, 2009), Federal Leadership on Reducing Text Messaging while Driving. Agencies must encourage contractors and subcontractors to adopt and enforce policies that ban text messaging while driving—

(a) Company-owned or rented vehicles or Government-owned vehicles; or

(b) Privately-owned vehicles when on official Government business or when performing any work for or on behalf of the Government.

26.701-2

Contract clause.

Insert the clause at 52.226-8, Encouraging Contractor Policies to Ban Text Messaging While Driving, in all solicitations and contracts, including those for commercial products and commercial services.

PART 37—SERVICE CONTRACTING

Sec.

37.001

Definition.

Subpart 37.1—Performance-Based Acquisition

37.101

Presolicitation.

37.101-1

Policy.

37.102

Evaluation and award.

37.102-1

Procedures.

Subpart 37.2—Personal Services

37.201

Presolicitation.

37.201-1

Policy.

37.201-2

Characteristics of personal services contracts.

37.202

Postaward.

37.202-1

Avoiding personal services contracts.

Subpart 37.3—Inherently Governmental Functions

37.301

Presolicitation.

37.301-1

Policy.

37.301-2

Specific inherently governmental functions.

37.301-3

Functions that may cross into inherently governmental functions.

37.302

Evaluation and Award.

37.302-1

Policy.

37.303

Postaward.

37.303-1

Contractor support to inherently governmental functions.

Subpart 37.4—Advisory and Assistance Services

37.401

Definition.

37.402

Presolicitation.

37.402-1

Policy.

37.402-2

Prohibitions.

37.402-3

A&AS contracts for the evaluation of proposals.

37.402-4

Exclusions.

37.403

Evaluation and award.

37.403-1

Treatment of former Government employees.

37.403-2

Avoiding A&AS use in evaluation of proposals.

37.404

Postaward.

37.404-1

Performance monitoring in A&AS contracts.

Subpart 37.5—Child Care Services

37.501

Definition.

37.502

Presolicitation.

37.502-1

Policy.

Subpart 37.6—Nonpersonal Health Care Services

37.601

Presolicitation.

37.601-1

Policy.

37.601-2

Procedures.

37.601-3

Contract clause.

37.602

Evaluation and award.

37.602-1

Evidence of insurability.

37.603

Postaward.

37.603-1

Evidence of insurance.

Subpart 37.7—Dismantling, Demolition, or Removal of Improvements

37.701

Presolicitation.

37.701-1

Labor standards.

37.701-2

Bonds or other security.

37.701-3

Payments and title.

37.701-4

Contract clauses.

Subpart 37.8—Other Service Considerations

37.801

Definitions.

37.802

Presolicitation.

37.802-1

Uncompensated overtime.

37.802-2

Services of quasi-military armed forces.

37.802-3

Foreign national severance cost limitations.

37.802-4

Use of private sector temporaries.

37.802-5

Solicitation provisions and contract clauses.

37.803

Evaluation and award.

37.803-1

Evaluating uncompensated overtime.

37.803-2

Funding and term of service contracts.

37.001

Definition.

Service contract,

as used in this part, means a contract that directly engages the time and effort of a contractor for the primary purpose of obtaining services rather than furnishing an end item of supply. A service contract may be either a nonpersonal or personal contract. It can also cover services performed by either professional or nonprofessional personnel whether on an individual or organizational basis.

Subpart 37.1—Performance-Based Acquisition

37.101

Presolicitation.

37.101-1

Policy.

When acquiring services, including acquisition of commercial services using the procedures in part 12, agencies must—

(a) Use performance-based acquisition methods, including outcome-focused approaches, to the maximum extent practicable, except for—

(1) Architect-engineer services acquired in accordance with 40 U.S.C. 1101

et seq.

(see part 36);

(2) Construction (see part 36);

(3) Utility services (see part 41); or

(4) Services that are incidental to supply purchases; and

(b) Use the following order of precedence (Public Law 106-398, section 821(a)):

(1) A firm-fixed price performance-based contract or task order.

(2) A performance-based contract or task order that is not firm-fixed price.

(3) A contract or task order that is not performance-based.

37.102

Evaluation and award.

37.102-1

Procedures.

(a) Performance-based contracts must include a performance work statement (PWS).

(1) The PWS may be prepared by the Government or proposed by an offeror in response to a statement of objectives (SOO) and included in the contract.

(2) The PWS must describe the outcome required rather than “how” that outcome is to be achieved or the estimated level of effort anticipated.

(3) The PWS must, to the maximum extent practicable, define the basis by which successful achievement of outcomes will be determined. This basis can be specific performance standards, a performance management framework, or a combination thereof, provided the approach includes clear, specific, and objective terms with measurable outcomes. The approach may be established by the Government or proposed by the offeror.

(b) When an offeror proposes an approach to achieving outcomes in response to a SOO, agencies must—

(1) Evaluate whether the proposed approach meets agency needs;

(2) Identify methods for assessing progress toward, and achievement of, the desired outcomes; and

(3) Incorporate both the accepted approach and assessment methods into the contract.

Subpart 37.2—Personal Services

37.201

Presolicitation.

37.201-1

Policy.

Agencies must not contract for personal services unless specifically authorized by statute (

e.g.,

5 U.S.C. 3109).

37.201-2

Characteristics of personal services contracts.

(a) A personal services contract exists when the Government supervises or controls contractor employees, or appears to do so, as if they were Government employees. This type of contract circumvents civil service laws that require the Government to competitively hire and appoint its own employees.

(b) The Government exercising relatively continuous supervision and control over multiple contractor personnel is frequently a key indicator of a personal services contract. However, service contracts often involve interaction with contractor employees—such as ordering and reviewing specific work—that do not constitute the type of supervision or control that would convert a contractor employee into a Government employee.

37.202

Postaward.

37.202-1

Avoiding personal services contracts.

When administering contracts, agencies must avoid making contractor personnel appear to be, in effect, Government employees, unless a statute provides otherwise.

Subpart 37.3—Inherently Governmental Functions

37.301

Presolicitation.

37.301-1

Policy.

(a) Agencies must ensure requirements are carefully developed to make certain none of the functions to be performed are inherently governmental functions.

(b) Service contracts require special oversight if the contract work:

(1) Supports an inherently governmental function, including contracts providing recommendations, analyses, reports, or similar work products that can influence government decision-making; or

(2) May approach becoming inherently governmental because of the nature of the function, the manner in which the contractor performs the contract, or the manner in which the Government administers contractor performance (see 37.301-3).

(c) Agency implementation must include procedures requiring a written determination whenever a statement of work (SOW) or SOO (or any modification thereof) is submitted to the contracting officer. This determination must confirm that none of the functions to be performed are inherently governmental. This assessment should emphasize the degree to which conditions and facts restrict the discretionary authority, decision-making responsibility, or accountability of Government officials using contractor services or work products. Disagreements regarding the determination will be resolved according to agency procedures before issuing a solicitation.

37.301-2

Specific inherently governmental functions.

(a) The following is a non-exclusive list of inherently governmental functions or functions which must be treated as such.

(1) Directly conducting criminal investigations.

(2) Controlling prosecutions and performance of adjudicatory functions other than those relating to arbitration or other methods of alternative dispute resolution.

(3) Commanding military forces, especially the leadership of military personnel who are members of the combat, combat support, or combat service support role.

(4) Conducting foreign relations and determining foreign policy.

(5) Determining agency policy, such as deciding the content and application of regulations.

(6) Determining Federal program priorities for budget requests.

(7) Directing and controlling Federal employees.

(8) Directing and controlling intelligence and counter-intelligence operations.

(9) Selecting or not selecting individuals for Federal Government employment, including interviewing individuals for employment.

(10) Approving position descriptions and performance standards for Federal employees.

(11) Determining what Government property is to be disposed of and on what terms (although an agency may give contractors authority to dispose of property at prices within specified ranges and subject to other reasonable conditions deemed appropriate by the agency).

(12) In Federal procurement activities with respect to prime contracts—

(i) Determining what supplies or services are to be acquired by the Government (although an agency may give contractors authority to acquire supplies at prices within specified ranges and subject to other reasonable conditions deemed appropriate by the agency);

(ii) Participating as a voting member on any source selection boards;

(iii) Approving any contractual documents, to include documents defining requirements, incentive plans, and evaluation criteria;

(iv) Awarding contracts;

(v) Administering contracts (including ordering changes in contract performance or contract quantities, taking action based on evaluations of contractor performance, and accepting or rejecting contractor products or services);

(vi) Terminating contracts;

(vii) Determining whether contract costs are reasonable, allocable, and allowable; and

(viii) Participating as a voting member on performance evaluation boards.

(13) Approving agency responses to Freedom of Information (FOIA) requests (other than routine responses that, because of statute, regulation, or agency policy, do not require the exercise of judgment in determining whether documents are to be released or withheld), and approving agency responses to the administrative appeals of denials of FOIA requests.

(14) Conducting administrative hearings to determine the eligibility of any person for a security clearance, or involving actions that affect matters of personal reputation or eligibility to participate in Government programs.

(15) Approving Federal licensing actions and inspections.

(16) Determining budget policy, guidance, and strategy.

(17) Collecting, controlling, and disbursing fees, royalties, duties, fines, taxes, or other public funds, unless authorized by statute, such as 31 U.S.C. 3718 (relating to private collection contractors and private attorney collection services), but not including—

(i) Collecting fees, fines, penalties, costs, or other charges from visitors to or patrons of mess halls, post or base exchange concessions, national parks, and similar entities or activities, or from other persons, where the amount to be collected is easily calculated or predetermined and the funds collected can be easily controlled using standard case management techniques; and

(ii) Routinely examining vouchers and invoices.

(18) Controlling treasury accounts.

(19) Administering public trusts.

(20) Drafting Congressional testimony, responses to Congressional correspondence, or agency responses to audit reports from OIG, GAO, or other Federal audit entity.

(b) Agency decisions that determine whether a function is or is not an inherently governmental function may be reviewed and modified by appropriate OMB officials.

37.301-3

Functions that may cross into inherently governmental functions.

(a) The following is a non-exclusive list of functions generally not considered inherently governmental but may, depending on contractor or Government approach, cross the line into that category.

(1) Services that involve or relate to budget preparation, including workload modeling, fact finding, efficiency studies, and should-cost analyses, etc.

(2) Services that involve or relate to reorganization and planning activities.

(3) Services that involve or relate to analyses, feasibility studies, and strategy options to be used by agency personnel in developing policy.

(4) Services that involve or relate to developing regulations.

(5) Services that involve or relate to evaluating another contractor's performance.

(6) Services that support acquisition planning.

(7) Contract management support including:

(i) Assistance in technical evaluation of proposals.

(ii) Assistance in developing SOWs or SOOs.

(iii) Assistance in providing responses to FOIA inquiries.

(iv) Working in situations that might provide access to confidential business information or other sensitive information (other than situations covered by the National Industrial Security Program (NISP) described in 40.302-1).

(v) Providing information regarding agency policies or regulations, such as attending conferences on behalf of an agency, conducting community relations campaigns, or conducting agency training courses.

(vi) Participating in any situation where it might be assumed that they are agency employees or representatives.

(vii) Participating as technical advisors to a source selection board or participating as voting or nonvoting members of a source evaluation board.

(viii) Serving as arbitrators or providing alternative methods of dispute resolution.

(ix) Constructing buildings or structures intended to be secure from electronic eavesdropping or other penetration by foreign governments.

(x) Providing inspection services.

(xi) Providing legal advice and interpretations of regulations and statutes to Government officials.

(xii) Providing special non-law enforcement, security activities that do not directly involve criminal investigations, such as prisoner detention or transport and non-military national security details.

(b) Agencies must carefully develop requirements for such work to ensure contracted functions do not expand into inherently governmental functions.

37.302

Evaluation and award.

37.302-1

Policy.

Agencies must not award a contract for the performance of an inherently governmental function.

37.303

Postaward.

37.303-1

Contractor support to inherently governmental functions.

Agencies must actively administer contracts to ensure contract functions do not expand into inherently governmental functions, including—

(a) Assigning sufficient qualified Government employees to actively oversee contractor work and monitor for potential encroachment on inherently governmental functions, particularly when the work supports Government policy- or decision-making;

(b) Requiring contractor personnel to identify themselves as contractors when attending meetings, answering government phones, or in any situation where their status might be unclear to the public or Congress, unless the agency determines no confusion or harm would result; and

(c) Ensuring contractor-produced documents are clearly marked as contractor products or include appropriate disclosure of contractor involvement.

Subpart 37.4—Advisory and Assistance Services

37.401

Definition.

Covered personnel,

as used in this subpart, means—

(1) An officer or an individual who is appointed in the civil service by one of the following acting in an official capacity:

(i) The President.

(ii) A Member of Congress.

(iii) A member of the uniformed services.

(iv) An individual who is an employee under 5 U.S.C. 2105.

(v) The head of a Government-controlled corporation.

(vi) An adjutant general appointed by the Secretary concerned under 32 U.S.C. 709(c).

(2) A member of the Armed Services of the United States.

(3) A person assigned to a Federal agency who has been transferred to another position in the competitive service in another agency.

37.402

Presolicitation.

37.402-1

Policy.

Agencies may leverage advisory and assistance services (A&AS) as a way to improve Government services and operations. When essential to the agency's mission, agencies may contract for A&AS to obtain certain—

(a) Management and professional support services;

(b) Studies, analyses, and evaluations (see 37.402-3 for limitations on evaluative work); or

37.402-2

Prohibitions.

A&AS contracts must not be awarded for purposes of—

(a) Performing work of a policy-making, decision-making, or managerial nature which is the direct responsibility of agency officials;

(b) Bypassing or undermining personnel ceilings, pay limitations, or competitive employment procedures;

(d) Obtaining professional or technical advice which is readily available within the agency or another Federal agency.

37.402-3

A&AS contracts for the evaluation of proposals.

Agencies must not contract for A&AS to conduct evaluations or analyses of any aspect of a proposal submitted for an initial contract award unless—

(a) The head of the agency has determined covered personnel with the required training and capabilities to perform the evaluation or analysis are not readily available in the agency or from another Federal agency (41 U.S.C. 1709).

(1) The head of the agency may consider the associated administrative burden when assessing the feasibility of using covered personnel from other agencies. Such considerations may include—

(i) The time and cost associated with searching for suitable personnel;

(ii) Potential travel costs;

(iii) The amount of such costs in relation to the acquisition value; and

(iv) Potential competing demands for the personnel in meeting the agency's mission.

(2) The contracting officer must ensure, to the maximum extent practicable, the head of the agency makes any such determination prior to issuing the solicitation and in accordance with agency procedures. Once the contracting officer releases the solicitation, the head of the agency must make a determination of a need for A&AS support in analyzing proposals for the initial contract award prior to granting the A&AS contractor access to any proposal material.

(b) The contractor is a Federally-Funded Research and Development Center (FFRDC) as authorized in 41 U.S.C. 1709(c) and the work placed under the FFRDC's contract meets the criteria of part 35; or

37.402-4

Exclusions.

The following activities and programs are excluded or exempted from the definition of A&AS:

(a) Routine information technology services unless they are an integral part of a contract for the acquisition of A&AS.

(b) Architectural and engineering services as defined in 40 U.S.C. 1102.

(c) Research on theoretical mathematics and basic research involving medical, biological, physical, social, psychological, or other phenomena.

37.403

Evaluation and award.

37.403-1

Treatment of former Government employees.

Agencies must ensure A&AS is not contracted for on a preferential basis to former Government employees.

37.403-2

Avoiding A&AS use in evaluation of proposals.

When evaluating proposals for initial contract award, agencies must not use A&AS to support evaluation unless the conditions at 37.402-3 are satisfied.

37.404

Postaward.

37.404-1

Performance monitoring in A&AS contracts.

(a) Agencies must administer A&AS contracts with sufficient oversight to ensure A&AS contractors do not perform prohibited practices at 37.402-2.

(b) Agencies must not pay for A&AS evaluations or analyses of any aspect of a proposal submitted for an initial contract award unless the agency satisfies the conditions at 37.402-3.

Subpart 37.5—Child Care Services

37.501

Definition.

Child care services,

as used in this subpart, means child protective services (including the investigation of child abuse and neglect reports), social services, health and mental health care, child (day) care, education (whether or not directly involved in teaching), foster care, residential care, recreational or rehabilitative programs, and detention, correctional, or treatment services.

37.502

Presolicitation.

37.502-1

Policy.

Agencies must ensure that contracts for nonpersonal child care services include requirements for criminal history background checks on employees who will perform child care services under the contract in accordance with 34 U.S.C. 20351 and agency procedures.

Subpart 37.6—Nonpersonal Health Care Services

37.601

Presolicitation.

37.601-1

Policy.

Agencies must ensure nonpersonal health care services contracts with physicians, dentists and other health care providers include indemnification and medical liability insurance.

37.601-2

Procedures.

To ensure adequate medical liability insurance is obtained, insert the necessary value(s) in paragraph (a) of contract clause 52.237-7. Agencies determine the value(s) by considering the standard coverage prevailing within the local community for the specific medical specialty, or a higher amount if necessary to protect the Government's interests.

37.601-3

Contract clause.

Insert the clause at 52.237-7, Indemnification and Medical Liability Insurance, in solicitations and contracts for nonpersonal health care services, including those for commercial services.

37.602

Evaluation and award.

37.602-1

Evidence of insurability.

Before making award, obtain proof that the apparent successful offeror will be able to obtain the required medical liability insurance (

e.g.,

letter of intent from a reputable insurer, underwriting approval letter).

37.603

Postaward.

37.603-1

Evidence of insurance.

After contract award, but before performance begins, the contracting officer must obtain proof that the contractor holds an active policy for the required medical liability insurance.

Subpart 37.7—Dismantling, Demolition, or Removal of Improvements

37.701

Presolicitation.

37.701-1

Labor standards.

Contracts for dismantling of buildings, ground improvements, and other real property structures and for the removal of such structures or a portion of them (hereafter referred to as

dismantling, demolition, or removal of improvements

) must comply with one of two labor standards statutes. Service Contract Labor Standards (41 U.S.C. chapter 67) apply when the contract is solely for dismantling, demolition, or removal. However, if the Government plans any follow-on construction, alteration, or repair work of a public building or public work at the same location—even under a separate contract—then the Construction Wage Rate Requirements (40 U.S.C. chapter 31, subchapter IV) apply (see part 22).

37.701-2

Bonds or other security.

The standard bonding requirements (see part 28) in 40 U.S.C. chapter 31, subchapter III do not apply to contracts solely for dismantling, demolition, or removal of improvements. However, the contracting officer may require the contractor to furnish a performance bond or other security in an amount that the contracting officer considers adequate to—

(a) Ensure completion of the work;

(b) Protect property to be retained by the Government;

(d) Protect the Government against damage to adjoining property.

37.701-3

Payments and title.

Agencies must structure contracts to carefully balance payment terms and title rights to protect the Government's interests.

(a) Contracts for dismantling or demolition may be structured so that either the Government pays the contractor for performing the work, or the contractor pays the Government for the right to salvage and remove the resulting materials.

(b) Evaluate all salvageable property to determine its usefulness to the Government. When property is worth more to the Government than its salvage value to the contractor, the contract must specifically designate it for Government retention. For all other property, which the contractor will own, determine its fair market value. This valuation affects both payment structure and any potential termination compensation.

37.701-4

Contract clauses.

(a) Insert the clause at 52.237-4, Payment by Government to Contractor, in solicitations and contracts for services, including those for commercial services, solely for dismantling, demolition, or removal of improvements whenever the contracting officer determines that the Government must make payment to the contractor in addition to any title to property that the contractor may receive under the contract. Use the clause with its Alternate I if the contracting officer determines that all material resulting from the dismantling or demolition work is to be retained by the Government.

(b) Insert the clause at 52.237-5, Payment by Contractor to Government in solicitations and contracts for services, including those for commercial services, for dismantling, demolition, or removal of improvements whenever the contractor is to receive title to dismantled or demolished property and a net amount of compensation is due to the Government, except if the contracting officer determines that it would be advantageous to the Government for the contractor to pay in increments and the Government to transfer title to the contractor for increments of property only upon receipt of those payments.

(c) Insert the clause at 52.237-6,Incremental Payment by Contractor to Government, in solicitations and contracts for services, including those for

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