Federal Acquisition Circular 90-40; Introduction

SUMMARY: This document summarizes the Federal Acquisition Regulation

(FAR) rules which follow it in the order listed below. The FAR Council

is issuing Federal Acquisition Circular (FAC) 90-40 to amend the

Federal Acquisition Regulation (FAR). A companion document, the Small

Entities Compliance Guide, follows this FAC and may be located on the

Internet at http://www.gsa.gov/far/compliance.

DATES: For effective dates and comment dates, see separate documents

which follow. Please cite FAC 90-40 and the appropriate FAR case

number(s) in all correspondence related to the following documents.

FOR FURTHER INFORMATION CONTACT: The analyst whose name appears (in the

table below) in relation to each FAR case or subject area. For general

information, contact the FAR Secretariat, Room 4037, GS Building,

Washington, DC 20405, (202) 501-4755. Please cite FAC 90-40 and

specific FAR case number(s).

SUPPLEMENTARY INFORMATION: Federal Acquisition Circular 90-40 amends

the Federal Acquisition Regulation (FAR) as specified below:

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Item- Subject FAR case Analyst

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I.............. Contingent Fee 93-009 DeStefano.

Representation.

II............. Simplified Acquisition 94-770 Linfield.

Threshold/Federal 94-771

Acquisition Computer

Network; and Micro-

Purchase Procedures.

III............ Gratuities (Interim).. 96-300 DeStefano.

IV............. Disaster Relief Act... 93-303 Klein.

V.............. Responsibility 95-007 DeStefano.

Determinations.

VI............. Task and Delivery 94-711 McAndrew.

Orders.

VII............ Multiyear Contracting. 94-712 McAndrew.

VIII........... Small Business/ 94-782 Moss.

Simplified

Acquisition Threshold.

IX............. Indian-Owned Economic 91-028 DeStefano.

Enterprises.

X.............. General Agreement on 95-308 O'Neill.

Tariffs and Trade

Patent Authorization.

XI............. Performance and 91-027 O'Such.

Payment Bonds.

XII............ Employee Compensation 93-005 Olson.

Costs.

XIII........... Agency Procurement 95-309 O'Neill.

Protests (Interim).

XIV............ Value Engineering..... 96-315 O'Such.

XV............. Termination Inventory 94-003 Klein.

Schedules.

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Item I--Contingent Fee Representation (FAR Case 93-009)

This final rule amends FAR Subpart 3.4 to remove the requirement

for prospective contractors to provide certain information regarding

contingent fee arrangements. Accordingly, the provision at 52.203-4,

Contingent Fee Representation and Agreement, and Standard Form 119,

Statement of Contingent or Other Fees, are also removed. The underlying

policy pertaining to contingent fee arrangements, as set forth in

Subpart 3.4, remains the same.

Item II--Simplified Acquisition Threshold/Federal Acquisition Computer

Network; and Micro-Purchase Procedures (FAR Cases 94-770 and 94-771)

The interim rules published as Item II of FAC 90-24 and Item III of

FAC 90-29 are amended and adopted as final. The rules implement the

micro-purchase, simplified acquisition, and Federal Acquisition

Computer Network (FACNET) provisions of the Federal Acquisition

Streamlining Act of 1994 (Public Law 103-355), and Section 4302(b) of

the Federal Acquisition Reform Act of 1996 (Public Law 104-106). The

final rules differ from the interim rules in that they (1) move

definitions pertaining to micro-purchases, simplified acquisition

procedures, and FACNET from Parts 4 and 13 to Part 2; (2) remove the

requirement for interim FACNET certification before a contracting

office may use simplified acquisition procedures for contract actions

exceeding $50,000; (3) remove the clause at 52.222-40, Service Contract

Act of 1965, as Amended--Contracts of $2,500 or Less, based upon a

change in Department of Labor regulations; and (4) provide a telephone

number for information regarding FACNET at 4.503.

Item III--Gratuities (FAR Case 96-300)

This interim rule amends FAR 3.202 and 52.203-3 to implement

Section 801 of the National Defense Authorization Act for Fiscal Year

1996 (Public Law 104-106). Section 801 amends 10 U.S.C. 2207, generally

referred to as the Gratuities Act, to exempt contracts which do not

exceed the simplified acquisition threshold from application of the

Act. Therefore, the clause at 52.203-3, Gratuities, is now prescribed

for inclusion in only those contracts which exceed the simplified

acquisition threshold.

Item IV--Disaster Relief Act (FAR Case 93-303)

This final rule amends FAR 6.302-5, and adds FAR Subpart 26.2, to

implement the Robert T. Stafford Disaster Relief and Emergency

Assistance Act (42 U.S.C. 5150). Section 5150 establishes a preference

for local sources in the award of contracts for major disaster or

emergency assistance activities.

Item V--Responsibility Determinations (FAR Case 95-007)

This final rule amends FAR Subpart 9.1 to emphasize the use of

commercial sources of information for determining the responsibility of

prospective contractors, and to clarify that preaward surveys normally

should be requested only when information on hand or readily available

is not sufficient.

Item VI--Task and Delivery Orders (FAR Case 94-711)

The interim rule published as Item III of FAC 90-33 is amended and

adopted as final. The interim rule added FAR

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Section 16.500 to define the scope of the multiple award preference

established by Subpart 16.5 for indefinite-quantity contracts. The

final rule differs from the interim rule in that it amends Section

16.500 to clarify that the multiple award preference does not apply to

architect-engineer contracts subject to the procedures in Subpart 36.6.

However, agencies are not precluded from making multiple awards for

architect-engineer services, provided the selection of contractors and

placement of orders is consistent with Subpart 36.6. The rule also

amends Section 16.504 to clarify procedures for determining if multiple

awards are appropriate.

Item VII--Multiyear Contracting (FAR Case 94-712)

This final rule revises FAR Subpart 17.1, removes the clause at

52.217-1, and revises the clause at 52.217-2 to implement Sections 1022

and 1072 of the Federal Acquisition Streamlining Act of 1994 (Public

Law 103-355). Sections 1022 and 1072 provide for use of multiyear

contracting in a manner that will encourage competition or promote

economy in administration, performance, and operation of an agency's

programs.

Item VIII--Small Business/Simplified Acquisition Threshold (FAR Case

94-782)

This final rule amends FAR Part 19 and the clauses at 52.219-6,

52.219-7, and 52.219-18 to implement Section 4004 of the Federal

Acquisition Streamlining Act of 1994 (Public Law 103-355). Section 4004

amends Section 15(j) of the Small Business Act (15 U.S.C. 644(j)) to

reserve each contract for supplies or services that has an anticipated

value greater than $2,500, but not greater than $100,000, for exclusive

participation by small business concerns, unless the contracting

officer is unable to obtain offers from two or more small business

concerns that are competitive with regard to price, quality, and

delivery. This rule also reflects a final rule published by the Small

Business Administration at 13 CFR 121.406, which provides that, where

the procurement of a manufactured item is processed under FAR Part 13

procedures, set aside for small business concerns, and not expected to

exceed $25,000, an offeror need not supply the end product of a small

business concern as long as the product is manufactured or produced in

the United States.

Item IX--Indian-Owned Economic Enterprises (FAR Case 91-028)

The interim rule published as Item VIII of FAC 90-7 is amended and

adopted as final. The rule implements 25 U.S.C. 1544, which provides

for payment of incentives to prime contractors who use Indian

organizations or Indian-owned economic enterprises as subcontractors.

The principal difference between the interim rule and the final rule is

the method of incentive payment contained in each. The interim rule

permitted prime contractors to recover certain costs of subcontracting

with Indian organizations and Indian-owned economic enterprises based

on the difference in price between the acceptable low non-Indian

subcontractor and the acceptable low Indian subcontractor, when the

Indian subcontractor's price exceeded the price of the non-Indian

subcontractor. The final rule instead permits an incentive payment to

the prime contractor in an amount which equals 5 percent of the amount

of the subcontract awarded to the Indian organization or Indian-owned

economic enterprise. The applicable amendments are in Subpart 26.1 and

the clause at 52.226-1.

Item X--General Agreement on Tariffs and Trade Patent Authorization

(FAR Case 95-308)

This final rule adds FAR Section 27.209 to provide guidance

pertaining to the use of patented technology under the General

Agreement on Tariffs and Trade.

Item XI--Performance and Payment Bonds (FAR Case 91-027)

This final rule amends FAR Subpart 28.1 and the clause at 52.228-1,

and adds two clauses at 52.228-15 and 52.228-16, and new SF 1418 to

update, clarify, and standardize policy pertaining to bid guarantees

and performance and payment bonds.

Item XII--Employee Compensation Costs (FAR Case 93-005)

This final rule amends FAR Part 31 to clarify the allowability of

personal services compensation costs. The rule adds definitions at

31.001; clarifies the standard for reasonableness of labor-management

compensation agreements at 31.205-6(b); revises 31.205-6(b)(1)(i) to

clearly allow offsets of allowable elements of employee compensation

packages among jobs of the same grade or level; and revises 31.205-6(i)

to provide a general allowability rule pertaining to corporate

securities.

Item XIII--Agency Procurement Protests (FAR Case 95-309)

This interim rule revises FAR 33.103 to implement Executive Order

12979, Agency Procurement Protests. Executive Order 12979 provides for

inexpensive, informal, procedurally simple, and expeditious resolution

of agency protests, including, where appropriate and permitted by law,

the use of alternative dispute resolution techniques, third party

neutrals, and another agency's personnel.

Item XIV--Value Engineering (FAR Case 96-315)

This final rule amends FAR Part 48 to revise the definition of

value engineering and to require agencies to establish and maintain

cost-effective value engineering procedures and processes. The rule

implements Section 4306 of the Federal Acquisition Reform Act of 1996

(Public Law 104-106).

Item XV--Termination Inventory Schedules (FAR Case 94-003)

This final rule amends FAR Part 49 and the clauses at 52.249-2,

52.249-3, 52.249-5, 52.249-6, and 52.249-11 to require contractors

under terminated contracts to submit termination inventory schedules

within 120 days from the date of termination, unless this period is

extended by the contracting officer.

Dated: July 16, 1996.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

FEDERAL ACQUISITION CIRCULAR

Number 90-40

Federal Acquisition Circular (FAC) 90-40 is issued under the

authority of the Secretary of Defense, the Administrator of General

Services, and the Administrator for the National Aeronautics and Space

Administration.

Unless otherwise specified, all Federal Acquisition Regulation

(FAR) and other directive material contained in FAC 90-40 are effective

September 24, 1996, except for Items III, VI thru VIII, and XIII, which

are effective July 26, 1996, and Items II and XIV, which are effective

August 26, 1996.

[[Page 39188]]

Dated: July 12, 1996.

Eleanor R. Spector,

Director, Defense Procurement.

Dated: July 8, 1996.

Ida M. Ustad,

Deputy Associate Administrator for Acquisition Policy, General Services

Administration.

Dated: July 15, 1996.

Tom Luedtke,

Deputy Associate Administrator for Procurement, National Aeronautics

and Space Administration.

[FR Doc. 96-18497 Filed 7-25-96; 8:45 am]

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