Federal Acquisition Regulation; Federal Supply Schedules Small Business Opportunities

summary: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council (Councils) are proposing to amend the

Federal Acquisition Regulation (FAR) to enhance the participation of

small business concerns under the Federal Supply Schedules Program.

dates: Comments should be submitted on or before November 15, 1999 to

be considered in the formulation of a final rule.

addresses: Interested parties should submit written comments to:

General Services Administration, FAR Secretariat (MVRS), 1800 F Street,

NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405.

Address e-mail comments submitted via the Internet to farcase.98-

[email protected].

Please cite FAR case 98-609 in all correspondence related to this

case.

for further information contact: The FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405, at (202) 501-4755 for information

pertaining to status or publication schedules. For clarification of

content, contact Ms. Linda Nelson, Procurement Analyst, at (202) 501-

1900. Please cite FAR case 98-609.

supplementary information:

A. Background

This proposed rule recommends amending FAR Part 8 to encourage

ordering offices to consider small businesses when conducting

evaluations before placing an order. The rule also recognizes the

recent change made by the Small Business Administration whereby

agencies are required, beginning in fiscal year 1999, to include in

their procurement base and goals, the dollar value of orders expected

to be placed against the General Services Administration's (GSA)

Federal Supply Service (FSS) Schedules, and to report accomplishments

against these goals. The rule also proposes to amend FAR Part 38 to

reaffirm that the General Services Administration and agencies

delegated the authority to establish a Federal Supply Schedule must

comply with all statutory and regulatory requirements before a

solicitation is issued. In addition, the rule proposes several minor

revisions.

This rule was not subject to Office of Management and Budget review

under Section 6(b) of Executive Order 12866, Regulatory Planning and

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

U.S.C. 804.

B. Regulatory Flexibility Act

This proposed rule is expected to 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 more

orders placed against Federal Supply Schedules may be awarded to small

business concerns. Since this may result in a positive impact on small

entities, an Initial Regulatory Flexibility Analysis (IRFA) has been

performed and is summarized as follows:

The objective of the rule is to ensure that small business

concerns have the maximum practicable opportunity to compete in

Federal Supply Schedule acquisitions. According to statistical data

maintained by the General Services Administration's Federal Supply

Service, there are 4,900 Federal Supply Schedule contracts that are

in effect with small business concerns out of a population of 7,000

national scope schedule contracts. Approximately 70 percent of the

schedule contractors are small business concerns. In fiscal year

1998, small business schedule contractors received approximately

$2.5 billion, or 33 percent, of total schedule sales. The proposed

rule encourages ordering offices to consider the availability of

small business concerns under the schedule and encourages the

consideration of such firms when conducting evaluations before

placing an order.

The FAR Secretariat 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 FAR Secretariat. The Councils will

consider comments from small entities concerning the affected FAR

Subparts 8 and 38 in accordance with 5 U.S.C. 610. Comments must be

submitted separately and should cite 5 U.S.C. 601, et seq. (FAR case

98-609), in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to

the FAR do not impose information collection requirements that 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 8 and 38:

Government procurement.

Dated: September 7, 1999.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, DoD, GSA, and NASA propose that 48 CFR Parts 8 and 38 be

amended as set forth below:

1. The authority citation for 48 CFR parts 8 and 38 continues to

read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

2. Revise section 8.402 to read as follows:

8.402 Applicability.

Procedures in this subpart apply to orders placed against Federal

Supply Schedules. Occasionally, GSA may establish special ordering

procedures. The affected Federal Supply Schedules will outline these

procedures.

3. In section 8.404--

a. Revise paragraph (a);

b. Remove from paragraph (b)(1) ``Ordering Offices can place'' and

add ``Place'' in its place;

c. Revise the introductory text of paragraph (b)(2);

d. Revise paragraph (b)(2)(i);

e. Remove from the introductory text of paragraph (b)(3) ``,

ordering offices shall'';

f. Revise paragraph (b)(3)(i);

g. Revise the first sentence in paragraph (b)(3)(iii); and

h. Revise paragraphs (b)(4), (b)(5), and (b)(6) to read as follows:

Sec. 8.404 Using schedules.

(a) General. Parts 13 and 19 do not apply to orders placed against

Federal Supply Schedules, except for the provision at 13.303-2(c)(3).

Orders placed against a Multiple Award Schedule (MAS), using the

procedures in this subpart, are considered to be issued using full and

open competition (see 6.102(d)(3)). Therefore, ordering offices need

not seek further competition, synopsize the requirement, make a

separate determination of fair and reasonable pricing, or consider

[[Page 49949]]

small business programs. GSA has already determined the prices of items

under schedule contracts to be fair and reasonable. By placing an order

against a schedule using the procedures in this section, the ordering

office has concluded that the order represents the best value and

results in the lowest overall cost alternative (considering price,

special features, administrative costs, etc.) to meet the Government's

needs.

(b) * * *

(2) Orders exceeding the micro-purchase threshold but not exceeding

the maximum order threshold. Place orders with the schedule contractor

that can provide the supply or service that represents the best value.

Consider reasonably available information about the supply or service

offered under MAS contracts by using the ``GSA Advantage!'' on-line

shopping service, or by reviewing the catalogs or pricelists of at

least three schedule contractors (see 8.404(b)(6)). Select the delivery

and other options available under the schedule that meet the agency's

needs. When selecting the supply or service representing the best

value, consider--

(i) Special features of the supply or service required for

effective program performance;

* * * * *

(3) * * *

(i) Review additional schedule contractors' catalogs or pricelists,

or use the ``GSA Advantage!'' on-line shopping service;

* * * * *

(iii) After seeking price reductions, place the order with the

schedule contractor that provides the best value and results in the

lowest overall cost alternative (see 8.404(a)). * * *

(4) Blanket purchase agreements (BPAs). Agencies may establish BPAs

(see 13.303-2(c)(3)) when following the ordering procedures in this

subpart. All schedule contracts contain BPA provisions. Ordering

offices may use BPAs to establish accounts with contractors to fill

recurring requirements. BPAs should address ordering frequency,

invoicing, discounts, and delivery locations and times.

(5) Price reductions. In addition to the circumstances in paragraph

(b)(3) of this section, there may be other reasons to request a price

reduction. For example, seek a price reduction when the supply or

service is available elsewhere at a lower price or when establishing a

BPA to fill recurring requirements. The potential volume of orders

under BPAs, regardless of the size of the individual order, offer the

opportunity to secure greater discounts. Schedule contractors are not

required to pass on to all schedule users a price reduction extended

only to an individual agency for a specific order.

(6) Small business. When conducting evaluations and before placing

an order, consider including, if available, one or more small, small

women-owned and or small disadvantaged business schedule contractor(s).

Orders placed against the schedules may be credited toward the ordering

agency's small business goals. For orders exceeding the micro-purchase

threshold, ordering offices should give preference to the items of

small business concerns when two or more items at the same delivered

price will satisfy the requirement.

* * * * *

PART 38--FEDERAL SUPPLY SCHEDULE CONTRACTING

4. Revise section 38.101 to read as follows:

38.101 General.

(a) The Federal Supply Schedule program, pursuant to 41 U.S.C.

259(b)(3), provides Federal agencies with a simplified process of of

acquiring commonly used supplies and services in varying quantities

while obtaining volume discounts. Indenfinite-delivery contracts

(including requirements contracts) are awarded using competitive

procedures to commercial firms. The firms provide supplies and services

at stated prices for given periods of time, for delivery within a

stated geographic area such as the 48 continguous states, the District

of Columbia, Alaska, Hawaii, and overseas. The schedule contracting

office issues Federal Supply Schedules that contain information needed

for placing orders.

(b) Each schedule identifies agencies that are required to use the

contracts as primary sources of supply.

(c) Federal agencies not identified in the schedules as mandatory

users (see 8.404-2) may issue orders under the schedules. Contractors

are encouraged to accept the orders.

(d) Although GSA awards most Federal Supply contracts, it may

authorize other agencies to award schedule contracts and publish

schedules. For example, the Department of Veterans Affairs awards

schedule contracts for certain medical and nonperisable subsistence

items.

(e) When establishing Federal Supply Schedules, GSA, or an agency

delegated that authority, is responsible for complying with all

applicable statutory and regulatory requirements (e.g., parts 5, 6, and

19). The requirements of parts 5, 6, and 19 apply at the acquisition

planning stage prior to issuing the schedule soliciation and do not

apply to orders and BPAs placed under resulting schedule contracts (see

8.404).

[FR Doc. 99-23828 Filed 9-13-99; 8:45 am]

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