Federal Acquisition Regulation; Application of Special Simplified Procedures to Certain Commercial Items

SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council are proposing to amend the Federal

Acquisition Regulation (FAR) to implement section 4202 of the Federal

Acquisition Reform Act of 1996 (Pub. L. 104-106). Section 4202 requires

revisions to the FAR to incorporate special simplified procedures for

the acquisition of certain commercial items with a value greater than

the simplified acquisition threshold ($100,000) but not greater than $5

million. The purpose of this revision is to vest contracting officers

with additional procedural discretion and flexibility, so that

commercial item acquisitions in this dollar range may be solicited,

offered, evaluated, and awarded in a simplified manner that maximizes

efficiency and economy and minimizes burden and administrative costs

for both the Government and industry. This regulatory action was not

subject to Office of Management and Budget review under Executive Order

12866, dated September 30, 1993. This is not a major rule under 5

U.S.C. 804.

DATES: Comments should be submitted on or before November 5, 1996 to be

considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to:

General Services Administration, FAR Secretariat (VRS), 18th and F

Streets NW., Room 4037, Washington, DC 20405.

Please cite FAR case 96-307 in all correspondence related to this

case.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4037, GS

Building, Washington, DC 20405 (202) 501-4755. Please cite FAR case 96-

307.

SUPPLEMENTARY INFORMATION:

A. Background

This proposed rule amends the Federal Acquisition Regulation to

implement section 4202 of the Federal Acquisition Reform Act of 1996

(Pub. L. 104-106). Section 4202 authorizes special simplified

procedures for acquisitions of commercial items at amounts greater than

the simplified acquisition threshold ($100,000) but not greater than $5

million when the contracting officer reasonably expects, based on the

nature of the commercial items sought and on market research, that

offers will include only commercial items. The authority to use the

special simplified procedures under this section expires on January 1,

2000. Section 4202 also amends 10 U.S.C. 2305, 41 U.S.C. 253a, and 41

U.S.C. 416 to permit issuance of solicitations for commercial items in

fewer than 15 days after the synopsis notice is published.

Pursuant to section 4202 of Pub. L. 104-106, acquisitions of

commercial items using special simplified procedures are exempt from

many of the Competition in Contracting Act (CICA) requirements that

otherwise apply to acquisitions over the simplified acquisition

threshold. Solicitations are not required to state the relative

importance assigned to each evaluation factor and subfactor, nor are

they required to include subfactors at all. Contracting officers have

the flexibility to, among other things--

(1) Forego formal evaluation plans, scoring of quotes or offers, or

a competitive range determination;

(2) Negotiate with one or more offerors, as appropriate, but not

necessarily all offerors;

(3) Conduct comparative evaluations of offers; and

(4) Evaluate past performance based on such information as the

contracting officer's knowledge and previous experience with the item

or service being purchased, customer surveys, or other reasonable

basis, without the existence of a formal database.

Synopsis requirements still apply, and all responsible sources must

be permitted to submit a quote or offer which the contracting officer

must consider. Sole-source acquisitions must be justified and approved

consistent with existing CICA requirements. Otherwise, except for those

procedures specifically limited to the simplified acquisition threshold

or a lower threshold, this proposed rule authorizes use of procedures

in FAR Part 13, Simplified Acquisition Procedures, for acquisitions of

commercial items exceeding the simplified acquisition threshold but not

exceeding $5,000,000 (including options) if the conditions apply that

permit use of the special simplified procedures (see new subpart 13.6).

The special simplified procedures for commercial items also include

guidance at 13.604 that expressly gives contracting officers the

flexibility to indicate to an offeror a price the contracting officer

anticipates offerors will have to meet or better to remain competitive;

and/or a consideration other than price (e.g., a contract term, a

commercially-available feature) the offeror will have to meet or

better, as appropriate, to remain competitive. These techniques are

used in the commercial marketplace to increase and sustain competitive

pressures throughout the negotiation process and are expected to help

improve the efficiency of negotiations and reduce bid and proposal

preparation costs by reducing the guesswork currently required to

remain competitive.

The Federal Acquisition Streamlining Act (FASA) of 1994 (Pub. L.

103-355) amended the publicizing and response time requirements for

acquisitions of commercial items to allow less than a 30-day response

time for receipt of offers after the date of issuance of a

solicitation, provided the contracting officer establishes a response

time that will afford potential offerors a reasonable opportunity to

respond. Section 4202 further increases the contracting officer's

latitude when acquiring commercial items by permitting a period of less

than 15 days between publication of a synopsis notice and issuance of a

solicitation. To bring these changes into compliance with the minimum

time frames established in the North American Free Trade Agreement

(NAFTA) and the Trade Agreements Act (TAA), this proposed rule adds new

coverage at 5.203(h). For acquisitions subject to NAFTA or TAA, the

period of time between synopsis and receipt of offers must be at least

40 days. However, the contracting officer can reduce this time period

to as few as 10 days if the acquisition falls within a general category

that is identified in an annual forecast, the availability of which is

published in the Commerce Business Daily.

This proposed rule also includes additional changes that are

intended to help further promote the Government's effective use of

proven commercial buying practices. These changes include:

(1) Clarifying that an agency may identify its requirements in

terms of

[[Page 47385]]

desired features or targets that do not have to be expressed as ranges;

(2) Changing the application of the Standard Form (SF) 1449,

Solicitation/Contract/Order for Commercial Items (a form intended to

emphasize the ``cultural shift'' to the use of commercial items and

practices and which is currently mandatory for all paper solicitations

or contracts for commercial items), so that, for acquisitions under the

simplified acquisition threshold, use of the form is encouraged but is

not mandatory; and

(3) Replacing references to ``minimum needs'' with ``needs.'' (The

term ``minimum'' has historically been misinterpreted, and its removal

is consistent with 10 U.S.C. 2305(a)(1)(B), which states, ``Each

solicitation * * * shall include specifications which include

restrictive provisions or conditions only to the extent necessary to

satisfy the needs of the agency or as authorized by law.'' ``Minimum

needs'' has inaccurately been considered to require that the Government

describe its needs in terms of the lowest level of technical

capabilities or features that will address the requirement. However,

the Government actually has substantial latitude to describe its needs

in the manner that reflects an optimum acquisition strategy, e.g.,

considering which item(s) represent the best value in terms of quality,

expected life of item, vendor past performance; making use of

capabilities in the marketplace, such as those for ensuring reliability

and distributing products; requiring offerors to have a ``track

record'' of previous production for a length of time appropriate to the

item being acquired, when such a requirement can be shown to reasonably

relate to helping ensure that the agency will acquire an item that

meets its need.)

It is clear that the drafters of this legislation intended for

commercial items to be purchased in as simplified a manner as possible.

A report by the House Committee on Government Reform and Oversight (No.

104-222) on H.R. 1670 noted that, ``The purchase of a commercial item

logically lends itself to simplified procedures because there exists a

yardstick in the commercial marketplace against which to measure price

and product quality and to serve as a surrogate for Government-unique

procedures.'' The intent of this proposed rule is to ensure the

benefits of this new authority can be fully realized by giving

contracting officers a clear understanding of the procedural discretion

and flexibility they have, so that acquisitions of commercial items

conducted under these regulations may be solicited, offered, evaluated,

and awarded in a simplified manner that maximizes efficiency and

economy and minimizes burden and administrative costs for both the

Government and its suppliers.

B. Regulatory Flexibility Act

The proposed changes 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, et seq., because the rule

implements the requirements of section 4202 of the Federal Acquisition

Reform Act of 1996 and applies to all businesses, large or small,

offering to sell commercial items to the Federal Government for amounts

greater than the simplified acquisition threshold but not greater than

$5,000,000. Statistics indicate that a majority of commercial sales to

the Government come from small businesses. The rule imposes no new

reporting or recordkeeping requirements, and it does not duplicate,

overlap, or conflict with any other Federal rules. These new simplified

procedures would enable small and large entities to conduct business

with the Government in a simpler manner, similar to the business they

conduct with their commercial counterparts. The rule is expected to

have a beneficial impact on industry and, therefore, applies equally to

both large and small entities. However, existing preferences for small

businesses, in accordance with FAR Part 19, remain unchanged by this

rule.

An Initial Regulatory Flexibility Analysis (IRFA) has been prepared

and will be provided to the Chief Counsel for Advocacy for the Small

Business Administration. A copy of the IRFA may be obtained from the

FAR Secretariat. Comments are invited. Comments from small entities

concerning the affected FAR subpart will be considered in accordance

with 5 U.S.C. 610. Such comments must be submitted separately and

should cite 5 U.S.C. 601, et seq. (FAR Case 96-307), in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the proposed

changes to the FAR do not impose recordkeeping or information

collection requirements, or collections of information from offerors,

contractors, or members of the public which require the approval of the

Office of Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 5, 11, 12, 13, and 52

Government procurement.

Dated: August 30, 1996.

Jeremy Olson,

Acting Director, Office of Federal Acquisition Policy.

Therefore, it is proposed that 48 CFR Parts 5, 11, 12, 13, and 52

be amended as set forth below:

1. The authority citation for 48 CFR Parts 5, 11, 12, 13, and 52

continues to read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. 2301 to 2331; and 42

U.S.C. 2473(c).

PART 5-PUBLICIZING CONTRACT ACTIONS

2. Section 5.203 is amended by revising paragraph (a) and adding

paragraph (h) to read as follows:

5.203 Publicizing and response time.

(a) A notice of contract action shall be published in the Commerce

Business Daily at least 15 days before issuance of a solicitation

except that for acquisitions of commercial items, the contracting

officer may--

(1) Establish a shorter period for issuance of the solicitation; or

(2) Use the combined CBD synopsis/solicitation procedure (see

12.603).

* * * * *

(h) For acquisitions subject to NAFTA or the Trade Agreements Act

(see Subpart 25.4), the period of time between publication of the

synopsis notice and receipt of offers shall be no less than 40 days.

However, if the acquisition falls within a general category identified

in an annual forecast, the availability of which is published in the

CBD, the contracting officer may reduce this time period to as few as

10 days.

3. Section 5.207 is amended by revising paragraph (e)(3) to read as

follows:

5.207 Preparation and transmittal of synopses.

* * * * *

(e) * * *

(3) Except for contract actions equal to or less than the

simplified acquisition threshold or acquisitions of commercial items,

the synopsis shall refer to Numbered Note 22 for noncompetitive

contract actions. If it is anticipated that award will be made via a

delivery order to an existing basic ordering agreement, the synopsis

shall so state.

* * * * *

PART 11-DESCRIBING AGENCY NEEDS

4. Section 11.002 is amended by revising paragraph (a)(1)(ii) and

adding paragraph (e) to read as follows:

[[Page 47386]]

11.002 Policy.

(a) * * *

(1) * * *

(ii) Only include restrictive provisions or conditions to the

extent necessary to satisfy the needs of the agency or as authorized by

law.

* * * * *

(e) Some or all of the performance levels or performance

specifications in a solicitation may be identified as targets rather

than as fixed or minimum requirements.

5. Section 11.104 is amended by revising paragraph (a) to read as

follows:

11.104 Items peculiar to one manufacturer.

* * * * *

(a) 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

minimum needs; and

* * * * *

PART 12-ACQUISITION OF COMMERCIAL ITEMS

6. Section 12.202 is amended by revising paragraph (b) to read as

follows:

12.202 Market research and description of agency need.

* * * * *

(b) The description of agency need must contain sufficient detail

for potential offerors of commercial items to know which commercial

products or services may be suitable. Generally, for acquisitions in

excess of the simplified acquisition threshold, an agency's statement

of need for a commercial item will describe the type of product or

service to be acquired and explain how the agency intends to use the

product or service in terms of function to be performed, performance

requirement or essential physical characteristics. Describing the

agency's needs in these terms allows offerors to propose methods that

will best meet the needs of the Government.

* * * * *

7. Section 12.203 is amended by adding a sentence to the end of the

paragraph to read as follows:

12.203 Procedures for solicitation, evaluation, and award.

* * * The contracting officer may use the simplified acquisition

procedures in Part 13 for acquisitions of commercial items up to

$5,000,000, including options, other than those procedures specifically

limited to the simplified acquisition threshold or a lower threshold

(see Subpart 13.6).

8. Section 12.204 is revised to read as follows:

12.204 Solicitation/contract form.

(a) The contracting officer shall use the Standard Form 1449,

Solicitation/Contract/Order for Commercial Items, if: (1) the

acquisition is expected to exceed the simplified acquisition threshold;

(2) a paper solicitation or contract is being issued; and (3)

procedures at 12.603 are not being used. Use of the SF 1449 is

nonmandatory but encouraged for commercial acquisitions not exceeding

the simplified acquisition threshold.

(b) Consistent with the requirements at 5.203 (a) and (h), the

contracting officer may allow fewer than 15 days before issuance of the

solicitation.

9. Section 12.205 is amended by revising paragraph (c) to read as

follows:

12.205 Offers.

* * * * *

(c) Consistent with the requirements at 5.203 (b) and (h), the

contracting officer may allow fewer than 30 days response time for

receipt of offers for commercial items.

10. Section 12.213 is revised to read as follows:

12.213 Other commercial practices.

It is a common practice in the commercial marketplace for both the

buyer and seller to propose terms and conditions written from their

particular perspectives. The terms and conditions prescribed in this

Part 12 seek to balance the interests of both the buyer and seller.

These terms and conditions are generally appropriate for use in a wide

range of acquisitions. However, market research may indicate other

commercial practices that are appropriate for the acquisition of the

particular item. These practices should be considered for incorporation

into the solicitation and contract if the contracting officer

determines them appropriate in concluding a business arrangement

satisfactory to both parties and not otherwise precluded by law or

Executive order.

11. Section 12.302(a) is revised to read as follows:

12.302 Tailoring of provisions and clauses for the acquisition of

commercial items.

(a) General. The provisions and clauses established in this subpart

are intended to address, to the maximum extent practicable, commercial

market practices for a wide range of potential Government acquisitions

of commercial items.

However, because of the broad range of commercial items acquired by

the Government, variations in commercial practices, and the relative

volume of the Government's acquisitions in the specific market,

contracting officers may, within the limitations of this subpart, and

after conducting appropriate market research, tailor the provision at

52.212-1, Instructions to Offerors--Commercial Items, and the clause at

52.212-4, Contract Terms and Conditions--Commercial Items, to adapt to

the market conditions for each acquisition.

* * * * *

12. Section 12.602 is amended by revising paragraph (a) to read as

follows:

12.602 Streamlined evaluation of offers.

(a) When evaluation factors are used, the contracting officer may

insert a provision substantially the same as the provision at 52.212-2,

Evaluation--Commercial Items, in solicitations for commercial items or

comply with the procedures in 13.106-2 if the acquisition is being made

using the simplified acquisition procedures. When the provision at

52.212-2 is used, paragraph (a) of the provision shall be tailored to

the specific acquisition to describe the evaluation factors and

relative importance of those factors. However, contracting officers are

not required to describe the relative importance of evaluation factors

when using the simplified acquisition procedures in Part 13.

* * * * *

13. Section 12.603 is amended by revising paragraph (c)(3)(ii) to

read as follows:

12.603 Streamlined solicitation for commercial items.

(c) * * *

(3) * * *

(ii) When using the combined CBD synopsis/solicitation, contracting

officers shall establish a response time in accordance with 5.203(b).

* * * * *

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

14. Section 13.000 is revised to read as follows:

13.000 Scope of part.

This part prescribes policies and procedures for the acquisition of

supplies and services, including construction, research and

development, and commercial items, the aggregate amount of which does

not exceed the simplified acquisition threshold (see 2.101). (However,

when the conditions in 13.602 are met, the contracting officer is

authorized to use the procedures in this part, other than those

specifically limited to the

[[Page 47387]]

simplified acquisition threshold or a lower threshold, for acquisitions

of commercial items exceeding the simplified acquisition threshold but

not greater than $5,000,000, including options.) See Part 12,

Acquisition of Commercial Items, for policies applicable to the

acquisition of commercial items exceeding the micro-purchase threshold.

See 36.602-5 for simplified procedures to be used when acquiring

architect-engineering services.

15. Section 13.103 is amended by revising paragraphs (b), (c) and

(j) to read as follows:

13.103 Policy.

* * * * *

(b) The contracting office shall not use simplified acquisition

procedures for contract actions exceeding $50,000 after December 31,

1999, unless the office's cognizant agency has certified full FACNET

capability in accordance with 4.505-2. This limitation does not apply

to acquisitions of commercial items conducted using Subpart 13.6.

(c) Simplified acquisition procedures shall not be used in the

acquisition of supplies and services initially estimated to exceed the

simplified acquisition threshold (or $5,000,000, including options, for

acquisitions of commercial items using Subpart 13.6), even though

resulting awards do not exceed that threshold. Requirements aggregating

more than the simplified acquisition threshold (or $5,000,000,

including options, if using Subpart 13.6) or the micro-purchase

threshold shall not be broken down into several purchases that are less

than the applicable threshold merely to permit use of simplified

acquisition procedures, or to avoid any requirements that apply to

purchases exceeding the micro-purchase threshold.

* * * * *

(j) Contracting officers are encouraged to use innovative

approaches in awarding contracts using the simplified acquisition

procedures under the authority of this part. For commercial items,

contracting officers have the flexibility to use any combination of the

procedures in Subpart 12.6 or Parts 13, 14, 15, 35, or 36, as

applicable. For other than commercial items, the procedures in other

FAR parts may be appropriate. Other FAR parts that may be used include,

but are not limited to Parts 14, 15, 35, or 36, including the use of

Standard Form (SF) 1442, Solicitation, Offer, and Award (Construction,

Alteration, or Repair), for construction contracts (see 36.701(b)).

16. Section 13.104 is amended by revising paragraph (b) to read as

follows:

13.104 Procedures.

* * * * *

(b) Related items (such as small hardware items or spare parts for

vehicles) may be included in one solicitation and the award made on an

``all-or none'' or ``multiple award'' basis if suppliers are so advised

when quotations or offers are requested.

* * * * *

17. Section 13.106-2 is amended by revising paragraphs (a)(1)

through (a)(3) and the introductory text of paragraph (a)(4), (a) (5)

and (6), (b)(1), (b)(3), (c) (1) and (2), (d)(3), and (d)(4)(ii) to

read as follows:

13.106-2 Purchases exceeding the micro-purchase threshold.

(a) Soliciting competition. (1) Contracting officers shall promote

competition to the maximum extent practicable to obtain supplies and

services from the source whose offer is the most advantageous to the

Government, based, as appropriate, on either price alone or price and

other factors (e.g., past performance, quality) including the

administrative cost of the purchase. Contracting officers are

encouraged to use best value. Solicitations shall notify suppliers of

the basis upon which award is to be made.

(2) For acquisitions not exceeding the simplified acquisition

threshold where FACNET is not available, or an exemption set forth in

4.506 applies, quotations may be solicited through other appropriate

means (e.g., orally, or in writing). The contracting officer shall

comply with the requirements of 5.101 when not soliciting via FACNET.

Sufficient information to permit vendors to develop quotations may be

incorporated into the combined synopsis/solicitation. In such cases,

the contracting officer is not required to issue a separate

solicitation. For commercial item acquisitions, see 12.603.

(3) For acquisitions not exceeding $25,000, requests for quotations

should be solicited orally to the maximum extent practicable when

FACNET is not available or a written determination has been made that

it is not practicable or cost-effective to purchase via FACNET.

Sufficient information to permit suppliers to develop quotations may be

incorporated into a combined synopsis/solicitation. In such cases, the

contracting officer is not required to issue a separate solicitation.

Paper solicitations for contract actions not expected to exceed $25,000

should only be issued when obtaining electronic or oral quotations is

not considered economical or practicable. Written solicitations shall

be issued for construction contracts over $2,000.

(4) If synopsizing is not required (e.g., the acquisition does not

exceed $25,000 or an exemption to the synopsis requirement applies) and

FACNET is not being used, solicitation of at least three sources

generally may be considered to promote competition to the maximum

practicable extent. In such circumstances, maximum practicable

competition ordinarily can be obtained without soliciting quotations or

offers from sources outside the local trade area. If practicable, two

sources not included in the previous solicitation should be requested

to furnish quotations or offers. The following factors influence the

number of quotations or offers required in connection with any

particular purchase:

* * * * *

(5) For purchases not exceeding the simplified acquisition

threshold, contracting officers may solicit from one source if the

contracting officer determines that the circumstances of the contract

action deem only one source reasonably available. For acquisitions of

commercial items in excess of the simplified acquisition threshold

conducted pursuant to Subpart 13.6, the requirements at 13.603(a)

apply.

(6) Contracting officers shall not limit competition to suppliers

of well-known and widely distributed makes or brands (see 11.104), or

solicit quotations on a personal preference basis.

* * * * *

(b) Evaluation of quotations or offers. (1) When evaluating

quotations or offers, the evaluation must be performed based on any

criteria established in the solicitation. All quotations or offers must

be considered. However, the contracting officer has broad discretion in

fashioning suitable evaluation procedures. The procedures prescribed in

Parts 14 and 15 are not mandatory. At the contracting officer's

discretion, one or more but not necessarily all of the evaluation

procedures in Parts 14 or 15 may be used.

* * * * *

(3) Contracting officers shall evaluate quotations or offers

inclusive of transportation charges from the shipping point of the

supplier to the delivery destination.

* * * * *

(c) Award. (1) Occasionally an item can be obtained only from a

supplier whothat quotes a minimum order price or quantity that either

unreasonably exceeds stated quantity requirements or results in an

unreasonable price for the quantities required. In these instances,

[[Page 47388]]

the contracting officer should inform the requiring activity of all

facts regarding the quotation or offer and ask it to confirm or alter

its requirement. The file shall be documented to support the final

action taken.

(2) For acquisitions not exceeding the simplified acquisition

threshold (other than those conducted through FACNET), Except for

awards conducted through FACNET, notification to unsuccessful suppliers

shall be given only if requested.

* * * * *

(d) * * *

(3) If only one source is solicited and the acquisition does not

exceed the simplified acquisition threshold, an additional notation

shall be made to explain the absence of competition, except for

acquisition of utility services available only from one source.

(4) * * *

(ii) Written solicitations (see 2.101). For acquisitions not

exceeding the simplified acquisition threshold, wWritten records of

solicitations/offers may be limited to notes or abstracts to show

prices, delivery, references to printed price lists used, the supplier

or suppliers contacted, and other pertinent data.

* * * * *

18. Section 13.107 is amended by revising paragraph (a) to read as

follows:

13.107 Solicitation forms.

(a) For use of the SF 1449, Solicitation/Contract/Order for

Commercial Items, see 12.204

* * * * *

19. Section 13.202 is amended by revising paragraph (b)(2) to read

as follows:

13.202 Establishment of blanket purchase agreements (BPAs).

* * * * *

(b) * * *

(2) Consider suppliers whose past performance has shown them to be

dependable, and who offer good quality supplies or services at

consistently lower prices

* * * * *

20. Section 13.204 is amended by revising paragraphs (a) and (b) to

read as follows:

13.204 Purchases under blanket purchase agreements.

(a) The use of a BPA does not authorize purchases that are not

otherwise authorized by law or regulation. For example, the BPA, being

a method of simplifying the making of individual purchases, shall not

be used to avoid the simplified acquisition threshold (or the

$5,000,000 threshold, including options, on acquisitions using Subpart

13.6).

(b) Unless otherwise specified in agency regulations, individual

purchases under BPAs, except those under BPAs established in accordance

with 13.202(c)(3), shall not exceed $100,000 , or $5,000,000, including

options, for acquisitions using Subpart 13.6).

* * * * *

21. Subpart 13.6, consisting of sections 13.601 through 13.604-4,

is added to read as follows:

Subpart 13.6--Use of Simplified Acquisition Procedures for the

Purchase of Commercial Items in Amounts Greater Than the Simplified

Acquisition Threshold But Not Exceeding $5 Million

13.601 General.

This subpart authorizes, as a test program, use of the simplified

acquisition procedures in Part 13 for the acquisition of commercial

items in amounts greater than the simplified acquisition threshold but

not exceeding $5,000,000, including options, if the condition in 13.602

is met. The purpose of this test program is to vest contracting

officers with additional procedural discretion and flexibility, so that

commercial item acquisitions in this dollar range may be solicited,

offered, evaluated, and awarded in a simplified manner that maximizes

efficiency and economy and minimizes burden and administrative costs

for both the Government and industry (see section 4202 of Public Law

104-106). For the period of this test, contracting activities shall

employ the simplified procedures authorized by the test to the maximum

practicable extent. The authority to issue solicitations under this

subpart shall expire on January 1, 2000. Contracts may be awarded after

the expiration of this authority for solicitations issued before the

expiration of the authority.

13.602 Condition for use.

(a) At the contracting officer's option, any procedure in Part 13,

other than those whose use is specifically limited to the simplified

acquisition threshold or a lower threshold, may be used for a

commercial item acquisition in an amount greater than the simplified

acquisition threshold but not exceeding $5,000,000, including options,

if the contracting officer reasonably expects, based on the nature of

the commercial items sought and on market research, that offers will

include only commercial items.

(b) Circumstances under which the contracting officer may

reasonably expect that offers will include only commercial items

include, but are not limited to, the following:

(1) No sources of items other than commercial items are known to

exist;

(2) Sources of items other than commercial items are known to exist

but are not expected to submit offers; or

(3) The agency has specified that only offers of commercial items

will be considered. (This is likely to occur when the agency has

determined that utilizing the capabilities of the commercial market is

the optimum means of meeting its needs.)

(c) If the contracting officer reasonably expected that offers

would only include commercial items but receives one or more offers of

other than commercial items, the contracting officer may proceed with

the acquisition under the procedures in Part 13.

(d) Contracts for commercial items awarded using the procedures of

Part 13 remain subject to the requirements of Part 12 and other parts

of the FAR pursuant to the order of precedence provided at 12.102(c).

This includes use of the provisions and clauses at Subpart 12.3.

13.603 Additional requirements.

(a) Sole source acquisitions. The acquisition may not be conducted

on a sole source basis, unless the need to do so is justified in

writing and approved at the levels as specified in subparagraphs (a)(1)

and (a)(2) of this section. Full and open competition is not required;

therefore, Part 6 does not apply; however, contracting officers shall

prepare sole source justifications. When the types of conditions

described at 6.302-2 occur (i.e., urgency), the justification may be

made and approved within a reasonable time after contract award when

preparation and approval prior to award would unreasonably delay the

acquisition.

(1) For a proposed contract exceeding $100,000 but not exceeding

$500,000, the contracting officer's certification that the

justification is accurate and complete to the best of the contracting

officer's knowledge and belief will serve as approval, unless a higher

approval level is established in agency procedures.

(2) For a proposed contract exceeding $500,000, the waiver must be

approved by the competition advocate for the procuring activity

designated pursuant to 6.501; or an official described in 6.304(a)(3)

or (a)(4). This authority is not delegable; and

(b) Documentation. The contract file shall include--

[[Page 47389]]

(1) A brief written description of the procedures used in awarding

the contract;

(2) The number of offers received; and

(3) An explanation, tailored to the size and complexity of the

acquisition, of the basis for the contract award decision.

13.604 Alternative negotiation techniques.

13.604-1 General.

In addition to other procedures authorized by this subpart,

notwithstanding 15.610, the contracting officer may use the negotiation

techniques described in this section.

13.604-2 Awards based on price and price-related factors only.

(a) The contracting officer may provide prospective offerors with a

description of the Government's requirements and invite the submission

of offers on a specified date, during a specified time period. During

the specified time period, the amount of the lowest offer shall be

posted electronically or otherwise on an auction board for viewing by

interested parties. The identity of offerors shall not be disclosed

during the period specified for receipt of offers. During the specified

time period, offerors may revise offers at anytime. At the end of the

specified period, the contracting officer awards the contract to the

responsible offeror submitting the lowest priced acceptable offer.

(b) As an alternative to the approach outlined in paragraph (a) of

this subsection, the contracting officer may indicate to offerors

during negotiations a price that the offeror will have to meet or

better in order to be considered further. The same price must be

communicated to all offerors. The price established by the contracting

officer may be based on offers received or information from other

sources as they may relate to the total acquisition or to any contract

line item(s). A reasonable response time shall be established for the

submission of revised offers. The contracting officer may repeat the

process as necessary to conduct negotiations that will result in the

submission of lower priced acceptable offers that will satisfy the

Government's requirements. Revising an offer to meet or better a price

established by the contracting officer does not guarantee any offeror

an award. Offerors eliminated from the competition shall be promptly

notified that their offer is no longer being considered.

(c) Use of the technique described in paragraphs (a) and (b) of

this subsection, may be appropriate when the contracting officer--

(1) Can provide prospective offerors with a purchase description

that clearly defines the Government's requirements;

(2) Reasonably expects to receive more than one offer, and

(3) Does not expect discussions with offerors regarding non-price

aspects of the offer will be necessary.

13.604-3 Awards based on price and other factors.

(a) When conducting negotiations, the contracting officer may

indicate to all offerors a price, contract term or condition,

commercially-available feature, and/or requirement (beyond any

requirement or target specified in the solicitation) that an offeror

will have to improve upon or meet, as appropriate, in order to remain

competitive.

(b) The price or other requirement identified to an offeror by the

contracting officer as an area needing improvement or as a condition

for further consideration for award--

(1) May be based on an evaluation of offers received or information

from other sources;

(2) May relate to the total acquisition or to any contract line

item(s);

(3) Shall be based on an evaluation of individual offers and need

not be the same for all offerors; and

(4) Shall not disclose proprietary information.

(c) The contracting officer may consider alternative offers. A

reasonable response time shall be established for the submission of

revised offers. The contracting officer may repeat the process as

necessary to conduct negotiations that will result in increasing the

value of acceptable offers that will satisfy the Government's

requirements.

(d) Revising an offer to meet or better a price or other

consideration established by the contracting officer does not guarantee

any offeror an award.

(e) Offerors eliminated from the competition shall be promptly

notified that their offer is no longer being considered.

(f) When an offeror's price is used as the basis for negotiating

with other offerors, the identify of that offeror shall not be

disclosed during negotiations.

13.604-4 Solicitation provisions.

(a) The contracting officer shall insert the provision at 52.213-4,

Alternative Evaluation--Commercial Items, in lieu of the provision at

52.212-2, Evaluation--Commercial Items, when the procedures described

in 13.604-2(a) will be used.

(b) The contracting officer shall insert a provision in

solicitations, substantially the same as the provision at 52.213-5,

Alternative Negotiation Techniques, when either the technique described

in 13.604-2(b) or in 13.604-3 may be used.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

22. Sections 52.213-4 and 52.213-5 are added to read as follows:

52.213-4 Alternative Evaluation--Commercial Items.

As prescribed in 13.604-4(a), insert the following provision:

Alternative Evaluation--Commercial Items (Date)

(a) The Government will award a contract resulting from this

solicitation to the responsible offeror submitting the lowest priced

offer that conforms to the solicitation. Offers shall be submitted

on [Contracting Officer inserts the date] beginning at [Contracting

Officer inserts the time] and ending at [Contracting Officer inserts

the time or date and time]. During the specified time frame, the

amount of the lowest offer will be posted and may be viewed by

[Contracting Officer describes how the information may be viewed

electronically or otherwise]. Offerors may revise offers anytime

during the specified period. At the end of the specified time

period, the responsible Offeror submitting the lowest priced offer

will be in line for award.

(b) Options. The Government will evaluate offers for award

purposes by adding the total price for all options to the total

price for the basic requirement. The Government may determine that

an offer is unacceptable if the option prices are significantly

unbalanced. Evaluation of options shall not obligate the Government

to exercise the options(s).

(c) A written notice of award or acceptance of an offer, mailed

or otherwise furnished to the successful offeror within the time for

acceptance specified in the offer, shall result in a binding

contract without further action by either party. Before the offer's

specified expiration time, the Government may accept an offer (or

part of an offer) unless a written notice of withdrawal is received

before award.

(End of provision)

52.213-5 Alternative Negotiation Techniques.

As prescribed in 13.604-4(b), insert the following provision:

Alternative Negotiation Techniques (Date)

The Contracting Officer may elect to use the alternative

negotiation techniques described in section 13.604-2(b) or 13.604-3

of the Federal Acquisition Regulation in conducting this

procurement. If used, offerors may respond by maintaining offers as

originally submitted, revising offers, or by submitting an

alternative offer. The Government may consider initial offers unless

revised or withdrawn, revised offers, and alternative offers in

making the award. Revising an offer does not guarantee an offeror an

award.

[[Page 47390]]

(End of provision)

[FR Doc. 96-22745 Filed 9-5-96; 8:45 am]

BILLING CODE 6820-EP-P