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

GENERAL SERVICES ADMINISTRATION

48 CFR Parts 538 and 552

[APD 2800.12A CHGE 61]

General Services Administration Acquisition Regulation;

Implementation of Industrial Funding for Federal Supply Schedules

AGENCY: Office of Acquisition Policy, GSA.

ACTION: Final rule.

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SUMMARY: The General Services Administration Acquisition Regulation

(GSAR) is amended to modify the prescription for the Contractor's

Report of Orders Received clause to reflect the new title of the clause

and to add a prescription for the new Industrial Funding Fee clause; to

reflect the new title of the clause in section 552.238-72 and to modify

the clause to delete references to ``orders'' and substitute ``sales,''

and to extend the time for submitting reports from 15 days following

the reporting period to 30 days; and to provide the text of the new

Industrial Funding Fee clause. GSA's Federal Supply Service will

include the new Industrial Funding Fee clause in Federal Supply

Schedule solicitations and contracts. The clause provides instructions

for remittance of an industrial funding fee based on quarterly sales

reported by contractors under Federal Supply Schedule contracts. The

amount of the fee is determined by the Commissioner, Federal Supply

Service. It has been determined that the initial fee will be 1 percent.

Fees will be included in the prices charged to ordering activities

and contract award prices will reflect the total amounts charged.

Federal Supply Schedule contractors will remit fees to the General

Services Administration based on quarterly contract sales. GSA will

recoup its costs from the ordering activities through the contractor's

quarterly remittance.

The General Services Administration will use the industrial funding

fee to fund the cost of providing supplies and services through the

Federal Supply Schedule Program. As solicitations are issued with the

new clause, the program will convert from an operation funded through

congressional appropriations to a reimbursable activity. GSA's fiscal

year 1995 budget reflects a $7.8 million reduction in operating

expenses for the schedules program. The remaining appropriated monies

for the program will be eliminated over the next two fiscal years.

DATES: Effective Date: April 18, 1995.

Compliance Date: Solicitations issued and contracts awarded after

April 18, 1995, shall comply with this change. Existing Federal Supply

Schedule contracts shall be modified over the next 2 years in

accordance with the time schedule established by the Commissioner of

the Federal Supply Service or a designee.

FOR FURTHER INFORMATION CONTACT:

Les Davison, Office of GSA Acquisition Policy, (202) 501-1224.

SUPPLEMENTARY INFORMATION:

A. Public Comments

A notice of proposed rulemaking was published in the Federal

Register on December 27, 1994. Comments received from other Federal

agencies and from vendors were considered in formulating this final

rule. The notice and significant issues and concerns raised during the

comment period are summarized below.

The notice of December 27, 1994, proposed implementation of

industrial funding of the Federal Supply Schedule Program by adjusting

schedule prices upward by 1 percent. Under this concept, published

schedule prices would include the 1 percent adjustment. Agencies would

order from the contractor at the adjusted price; the contractor would

invoice GSA to the award price; GSA would bill agencies the adjusted

price and retain the difference to fund the program.

Twenty-two responses were received from Federal agencies. These

agencies, for the most part, objected to the proposed procedure as

administratively burdensome. Most agencies did not want GSA to become

the centralized billing and payment point for schedules transactions.

Objections were based primarily on potential disruptions of their own

agency accounting systems for agency procedures. Some agencies stated

that they would have to create separate systems just for schedule

purchases if the proposal was adopted. Nearly all agencies perceived

the proposed centralized billing and payment system to be cumbersome,

intrusive and unnecessarily bureaucratic.

Other concerns frequently raised by agencies included payments to

vendors without proper verification of acceptance; payment of the 1

percent fee for nonschedule items included on purchase orders for

schedule items; and problems associated with use of the Governmentwide

credit card under such a system.

Fourteen vendors and associations responded. Their responses for

the most part indicated that they did not wish GSA to assume the role

of centralized billing and payment point; that they did not want to

adjust their agency pricelists to reflect a price other than the

contract award price; and that they found it burdensome that the agency

purchase order would not reflect their invoiced amounts.

Based on these comments received from Federal agencies and

industry, the GSA has determined that implementation of industrial

funding of the Federal Supply Schedule Program must be accomplished in

the least disruptive manner possible to both agencies and contractors

and that the concerns raised must be alleviated.

To accomplish this, GSA has considered a number of alternatives

suggested by both Federal agencies and industry. Many respondents

suggested [[Page 19361]] that the General Services Administration

collect its 1 percent fee on a periodic basis, monthly or quarterly,

based on the value of orders placed. While several agencies suggested

we accomplish this by billing the agencies, GSA, in light of issues

raised regarding centralized payment and billing, does not wish to

impose any additional burden on its customer agencies.

Therefore, in order to implement industrial funding while

addressing the concerns expressed by respondents to the previous

proposal, GSA has determined that the most efficient and least

disruptive method of obtaining the funding is by recouping its costs

from ordering activities through a quarterly remittance from

contractors based on reported sales. This method will require no

changes in agency ordering or paying procedures and will have minimal

impact on schedule contractors.

GSA plans to include an initial 1 percent Industrial Funding Fee

(IFF) in its contract award prices which will be reflected in the total

amount charged to ordering activities. The award price or discount

appearing in schedule pricelists will already include the 1 percent

IFF. The ordering activity will order from the pricelists and pay

contractors in accordance with current procedures. Schedule contractors

will then remit to GSA on a quarterly basis 1 percent of the sales

under schedule contracts.

To facilitate this change in funding the Federal Supply Schedule

Program, the GSA Form 72A, Contractor's Report of Orders Received, will

be clarified regarding procedures for reporting.

B. Executive Order 12866

This rule was submitted to the Office of Management and Budget

under Executive Order 12866.

C. Regulatory Flexibility Act

This final rule will not have a significant economic impact on a

substantial number of small entities under the Regulatory Flexibility

Act (5 U.S.C. 601 et seq.). Contractors awarded Federal Supply Schedule

contracts by GSA's Federal Supply Service will be impacted by this

rule. Currently, the FSS has 4,922 schedule contracts which involve

sales of approximately $2.7 billion per annum. Seventy six (76) percent

of the schedule contracts are held by small business concerns. The

changes to the Report of Orders Received clause are either minor

clarifications or will be beneficial to contractors, including small

business, because they increase the time available to contractors for

submitting the report; allow for quarterly summaries instead of monthly

data; and provide sales rather than orders received which is consistent

with commercial recordkeeping practices. The new clause, which provides

for payment of an industrial funding fee, will not have a significant

economic impact on contractors because the fee will be included in the

contract price(s) and will be taken into account during the negotiation

of the schedule contract. The procedures established in the new clause

for collection of the industrial funding fee represent the least

burdensome alternative to both Federal agencies and contractors.

Therefore, a final regulatory flexibility analysis was not prepared.

D. Paperwork Reduction Act

The revised clause at 552.238-72, Contractor's Report of Sales,

contains an information collection requirement that is subject to the

Paperwork Reduction Act (44 U.S.C. 3501 et sequentia) that has

previously been approved by the Office of Management and Budget (OMB)

under the Paperwork Reduction Act and assigned control number 3090-

0121. The changes made to the clause by this rule do not have an impact

on the information collection requirement which was previously

approved. Therefore, it has not been submitted to OMB for approval

under the Act.

The new clause at 552.238-77, Industrial Funding Fee, contains an

information collection requirement that is subject to the Paperwork

Reduction Act (44 U.S.C. 3501 et sequentia). The clause provides for

certain information to be submitted on the check or with the payment of

the industrial funding fee in order to permit GSA to identify the

payment as an industrial funding fee and match it with the appropriate

contract and reporting period. This information is the same as is

normally required when transmitting payments in the commercial world

and does not represent a Government-unique information collection.

Therefore, the estimated burden for this clause under the Paperwork

Reduction Act is zero. GSA has a blanket approval under control number

3090-0250 from OMB for information collections with a zero burden

estimate.

Comments on the information collections cited above may be

submitted to the Office of Information and Regulatory Affairs of OMB,

Attention: Desk Officer for GSA, Washington, DC 20503 and to the Office

of Acquisition Policy (V), GSA, 18th & F Streets, NW, Washington, DC

20405.

List of Subjects in 48 CFR Parts 538 and 552

Government procurement.

Accordingly, 48 CFR Parts 538 and 552 are amended as follows:

1. The authority citation for 48 CFR Parts 538 and 552 continues to

read as follows:

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

PART 538--GSA SCHEDULE CONTRACTING

2. Section 538.203-71 is amended by revising paragraph (a) and

adding a new paragraph (f) to read as follows:

538.203-71 Solicitation provisions and contract clauses.

(a) The contracting officer shall insert the clause at 552.238-72,

Contractor's Report of Sales, in solicitations issued and contracts

awarded under GSA's schedule program. Paragraph (b) may be modified as

necessary to meet program requirements. If it is necessary to identify

the official responsible for preparing the report, the contracting

officer may use the clause with its Alternate I. When the clause is

used by IRMS the contracting officer shall use the clause with its

Alternate II.

* * * * *

(f) Contracting officers in the Federal Supply Service (FSS) shall

insert the clause at 552.238-77, Industrial Funding Fee, in

solicitations and contracts awarded under the single award schedule and

multiple award schedule programs.

PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

3. Section 552.238-72 is amended by revising the heading and

revising paragraphs (a) and (b) of the basic clause to read as follows:

552.238-72 Contractor's report of sales.

* * * * *

Contractor's Report of Sales (APR 1995)

(a) Contractors shall furnish quarterly the dollar value

(rounded to the nearest whole dollar) of all sales under the

contract during the preceding 3-month period to include any partial

month. A separate report for each National Stock Number (NSN),

Special Item Number (SIN), or subitem shall be prepared and

submitted, unless otherwise specified, on GSA Form 72A.

(b) The report is due in the office specified below or specified

at the time of award 30 days following the completion of the

reporting period. A report is required even when no sales occur

during the reporting period. Sales for orders that extend beyond the

contract period will be reported within 60 days of final delivery.

* * * * * [[Page 19362]]

4. Section 552.238-77 is added to read as follows:

552.238-77 Industrial funding fee.

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

Industrial Funding Fee (APR 1995)

(a) Contractors shall pay the Federal Supply Service, GSA, an

industrial funding fee (IFF) at the end of each contract quarter.

The IFF shall be remitted at the same time the GSA Form 72A,

Contractor's Report of Sales, is submitted under clause 552.238-72,

Contractor's Report of Sales. The IFF equals __________ * of total

sales reported on GSA Form 72A. The IFF reimburses the GSA Federal

Supply Service for the costs of operating the Federal Supply

Schedules Program and recoups its operating costs from ordering

activities. Offerors should include the IFF in the prices submitted

with their offer. The fee will be included in the award price(s) and

reflected in the total amount charged to ordering activities.

(b) The IFF amount due shall be paid by check or electronic

funds transfer to the ``General Services Administration.'' Where

multiple special item numbers and/or contracts are involved, the

IFF's may be consolidation into one payment. To ensure that the

payment is credited properly, the Contractor should identify the

check or electronic transmission as an ``Industrial Funding Fee''

and include the following information: contract number(s); report

amount(s); and report period(s).

(1) If the IFF payment is made by check, it should be forwarded

to the following address:

General Services Administration

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(2) If the IFF payment is made by electronic funds transfer

through the Automated Clearing House (ACH), the Contractor should

provide their financial institution with the following information

for use in making payments: (i) the ACH Transmission Routing Number

of the [Contracting officer to insert the name of the bank]:

[Contracting officer to insert the Routing Number] and (ii) the GSA

Account Number: [Contracting officer to insert the GSA Account

Number]. Contractors may call [Contracting officer to insert the

phone number] (GSA Accounts Receivable) with questions regarding

payments through the ACH.

(c) If the full amount of the IFF is not paid within 30 calendar

days after the end of the applicable reporting period, it shall

constitute a contract debt to the United States Government under the

terms of FAR 32.6. The Government may exercise all rights under the

Debt Collection Act of 1982, including withholding or setting off

payments and interest on the debt (see FAR 52.232-17, Interest).

(d) Failure to submit sales reports, falsification of sales

reports, and/or failure to pay the IFF in a timely manner may result

in termination or cancellation of this contract. Willful failure or

refusal to furnish the required reports, falsification of sales

reports, or failure to make timely payment of the IFF constitutes a

cause for terminating the contractor for default under FAR 52.249-9,

Default (Fixed-Priced Supply and Service).

(End of Clause)

*The percentage amount of the fee to be inserted in the above

clause shall be determined and provided to contracting officers by

the Commissioner, Federal Supply Service, or a designee.

Dated: March 27, 1995.

Ida M. Ustad,

Associate Administrator for Acquisition Policy.

[FR Doc. 95-9353 Filed 4-17-95; 8:45 am]

BILLING CODE 6820-61-M