Proposed Rescission of Various Policy Letters

OFFICE OF MANAGEMENT AND BUDGET

Office of Federal Procurement Policy

Proposed Rescission of Various Policy Letters

AGENCY: Office of Management and Budget, Office of Federal Procurement

Policy.

ACTION: Proposed rescission of Office of Federal Procurement Policy

(OFPP) Policy Letters 77-2, 78-2, 78-3, 78-4, 79-1, 79-2, 80-3, 80-6,

80-8, 81-1, 81-2, 82-1, 83-1, 83-2, 83-3, 84-1, 85-1, 89-1, 91-2, 91-4,

92-5, and 95-1.

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SUMMARY: OMB is undertaking a thorough review of its government-wide

procurement issuances. Based on this review, OMB requests comments on

the proposed rescission of the following Office of Federal Procurement

Policy (OFPP) Policy Letters: 77-2, Section 502(c) of P.L. 95-89; 78-2,

Preventing ``Wage Busting'' for Professionals: Procedures for

Evaluating Contractor Proposals for Service Contracts; 78-3, Requests

for Disclosure of Contractor-Supplied Information Obtained in the

Course of a Procurement; 78-4, Field Contract Support Cross-Servicing

Program; 79-1, Implementation of Section 15(k) of the Small Business

Act, as amended: Office of Small and Disadvantaged Business

Utilization; 79-2, Boards of Contract Appeals: Position Allocation

Pursuant to Public Law 95-563; 80-3, Regulatory Guidance on P.L. 95-

563, the Contract Disputes Act of 1978; 80-6, Regulatory Guidance on

Section 221 of Public Law 95-507; 80-8, Establishment of Procurement

Data Reporting Requirements to Comply with Public Law 96-39 (as amended

by Transmittal Memoranda Nos. 1, 2, and 3); 81-1, Procurement

Procedures, Advance Procurement Planning, and Review of End-of-Year

Purchases; 81-2, Policy Guidance for the Labor Surplus Area Programs;

82-1, Policy Guidance Concerning Government-wide

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Debarment, Suspension, and Ineligibility; 83-1, Withholding of Funds

from Construction Contract Progress Payments; 83-2, Publicizing the

Development of Procurement Policies and Regulations; 83-3, Procurement

of Architect-Engineer Services; 84-1, Federally Funded Research and

Development Centers; 85-1, Federal Acquisition Regulations System; 89-

1, Conflict of Interest Policies Applicable to Consultants; 91-2,

Service Contracting; 91-4, Use of Irrevocable Letters of Credit; 92-5,

Past Performance Information; and 95-1, Subcontracting Plans for

Companies Supplying Commercial Items.

There have been substantial changes to the body of acquisition law

and regulations since many of these policy documents were issued. As

indicated in the SUPPLEMENTARY INFORMATION below, the requirements and

provisions of the OFPP Policy Letters listed above have been

incorporated in the Federal Acquisition Regulation (FAR), 48 CFR 1, or

for other reasons have either been superseded or are no longer

necessary.

DATES: Persons who wish to comment on the proposed rescission of any of

the OFPP Policy Letters should submit their comments no later than

November 24, 1999.

ADDRESSES: Comments should be addressed to Michael Gerich, Office of

Federal Procurement Policy, Room 9013, New Executive Office Building,

Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT: Michael Gerich, Office of Federal

Procurement Policy, 202-395-3501. Copies of the OFPP Policy Letters can

be obtained at the ARNet world wide website, http://www.arnet.gov/

References/Fwd__Index.html.

SUPPLEMENTARY INFORMATION: OFPP has been a leader in overall

acquisition reform. One theme of acquisition reform is less reliance on

regulation and more reliance on streamlined, customer-oriented,

acquisition practices to improve support for agency missions. In

keeping with this overall theme, OFPP is reviewing all of its policy

letters, memoranda, and other issuances with the intent to: rescind

those that are essentially covered by other regulations or policy

documents; issue new policy letters and similar documents sparingly and

only when necessary; and issue ``best practices'' instead. There have

been substantial changes to the body of acquisition law and regulations

since many of these policy documents were issued.

OFPP has recently completed a review of all of its policy issuances

for possible rescission, by comparing them with relevant statutory

provisions and sections of the Federal Acquisition Regulation (FAR).

The rescissions proposed in this notice reflect OFPP's preliminary

conclusion that the FAR, as written, contains the current policy. Any

policy embodied in the policy letters proposed for rescission by this

notice that is not reflected in the current FAR has been either

superseded by subsequent statutory changes or is otherwise no longer

necessary. No substantive FAR change is required by this action.

Earlier this year, OFPP rescinded Policy Letter 79-4, Contracting

for Motion Picture Productions and Videotape Productions. 64 FR 8631

(February 22, 1999). On April 2, 1999, OFPP published notice in the

Federal Register requesting comments on two proposed policy letters:

Policy Letter 99-X, Policy on Promoting Subcontracting Opportunities

and Administering Subcontracting Plans (64 FR 16001); and Policy Letter

99-1, Government-Wide Small Business, HUBZone Small Business, Small

Disadvantaged Business, and Women-Owned Small Business Goals for

Procurement Contracts (64 FR 16003). Those two proposed policy letters

would supersede OFPP Policy Letters 80-1, 80-2, 80-4, and 91-1. In this

notice, OFPP is proposing to rescind an additional 22 policy letters,

for the reasons explained below.

OFPP Policy Letter 77-2, Section 502(c) of P.L. 95-89

Section 502(c) of Public Law 95-89 amended the Small Business Act

(15 U.S.C. 631 et seq.) to allow certain nonprofit agencies employing

people who are blind or severely disabled to compete for agency

procurements conducted during fiscal year 1978 that would otherwise

have been reserved exclusively for competition among small businesses.

Policy Letter 77-2 implemented section 502(c). Similar statutory

provisions were enacted in subsequent years. For example, section 133

of Public Law 100-590 (November 3, 1988) (102 Stat. 3005) authorized

such nonprofit agencies to compete in procurements otherwise set aside

for small businesses in fiscal years 1989 through 1993. Section 305 of

Public Law 103-403, the Small Business Administration Reauthorization

and Amendments Act of 1994, revived this authority to compete for

fiscal year 1995. The statutory authority has expired.

OFPP Policy Letter 78-2, Preventing ``Wage Busting'' for

Professionals: Procedures for Evaluating Contractor Proposals for

Service Contracts

OFPP Policy Letter 78-2 addressed ``wage busting'' practices of

government contractors who employ professional employees who

traditionally have not been represented by union collective bargaining

agreements. 78-2 required contracting agencies to evaluate applicable

proposals from offerors by taking into account the cost realism of the

contractor's proposed personnel compensation plan. Unrealistically low

labor rates proposed for professional employees could indicate a lack

of understanding of the resources required to perform high quality

contract work on an uninterrupted basis. 78-2 was superseded, in

purpose, by the provisions of 10 U.S.C. 2331 (Contracts for

professional and technical services) which is implemented in FAR 37.115

(Uncompensated overtime) and FAR 52.237-10 (Identification of

Uncompensated Overtime).

OFPP Policy Letter 78-3, Requests for Disclosure of Contractor-

Supplied Information Obtained in the Course of a Procurement

OFPP Policy Letter 78-3 prescribed a uniform approach to handling

requests filed under the Freedom of Information Act for information

disclosed by government contractors and offerors. 78-3 was superseded,

in purpose, by FAR Subpart 24.2, which implements statutory provisions

at 10 U.S.C. 2305(g) and 41 U.S.C. 253b(m).

OFPP Policy Letter 78-4, Field Contract Support Cross-Servicing

Program

Policy Letter 78-4 encouraged agencies that require contract

support services (e.g., contract administration, audit services) from

field offices to use cross-servicing arrangements with existing

contract administration and contract audit organizations of other

agencies. The Policy Letter was intended to treat contractors more

consistently and, where possible, preclude duplication of effort

attributable to multiple agency reviews, inspections, and examination

of contractor records. The provisions of the Policy Letter were

incorporated in FAR Subpart 42.1.

OFPP Policy Letter 79-1, Implementation of Section 15(k) of the

Small Business Act, as Amended: Office of Small and Disadvantaged

Business Utilization

Section 15(k) of the Small Business Act (15 U.S.C. 644(k))

established an Office of Small and Disadvantaged

[[Page 50110]]

Business Utilization (OSDBU) in each contracting agency to implement

and execute the functions and duties under sections 8 and 15 of the

Small Business Act which relate to such agency. Policy Letter 79-1

provided guidance on the organization and function of the OSDBUs. The

provisions of Policy Letter 79-1 were incorporated in FAR subsections

19.201(c) and (d).

OFPP Policy Letter 79-2, Boards of Contract Appeals: Position

Allocation Pursuant to Public Law 95-563

Policy Letter 79-2 made an initial allocation of positions for

agency boards of contract appeals pursuant to Public Law 95-563, the

Contract Disputes Act of 1978. Section 8(a) of the Contract Disputes

Act of 1978, as amended, (41 U.S.C. 607(a)) states that a board of

contract appeals may be established within an executive agency, when

the agency head, after consultation with the Administrator for Federal

Procurement Policy, determines from a workload study that the volume of

contract claims justifies the establishment of a full-time agency

board. Since issuance of Policy Letter 79-2 over 20 years ago, there

has been little need for guidance in this area. OFPP will issue new

guidance, if necessary.

OFPP Policy Letter 80-3, Regulatory Guidance on P.L. 95-563, the

Contract Disputes Act of 1978

Policy Letter 80-3 provided guidance on developing regulations to

implement provisions of the Contract Disputes Act of 1978, including

resolution of contract claims, contractor certification requirements,

payment of interest on contractor claims, and a contract disputes

clause. The provisions of Policy Letter 80-3 were incorporated in FAR

Subpart 33.2 and the contract disputes clause at FAR 52.233-1.

OFPP Policy Letter 80-6, Regulatory Guidance on Section 221 of

Public Law 95-507

Policy Letter 80-6 provided regulatory guidance on section 15(j) of

the Small Business Act (15 U.S.C. 644(j)), which set aside small

purchase procurements for small businesses. Section 15(j) was amended

to apply the set aside provisions to agency purchase of goods or

services that have an anticipated value greater than $2,500 but not

greater than $100,000. The regulatory guidance in Policy Letter 80-6,

as amended by the statutory changes, is implemented by the provisions

of FAR 19.502-2.

OFPP Policy Letter 80-8, Establishment of Procurement Data

Reporting Requirements to Comply with Public Law 96-39 (as amended

by Transmittal Memoranda Nos. 1, 2, and 3)

Policy Letter 80-8 established procurement data reporting

requirements. Transmittal Memoranda Nos. 1, 2, and 3 amended those

reporting requirements. The provisions of Policy Letter 80-8 and the

Transmittal Memoranda are implemented in FAR Subpart 4.6 and the FPDS

Reporting Manual described therein.

OFPP Policy Letter 81-1, Procurement Procedures, Advance

Procurement Planning, and Review of End-of-Year Purchases

Policy Letter 81-1 required agencies to establish advance

procurement planning procedures to allow sufficient lead time to

prepare procurement solicitations, obtain and evaluate bids or

proposals, audit, negotiate, and make contract awards in an orderly

manner. The Policy Letter also required agencies to develop procedures

for review of procurements, particularly major procurements, made in

the last quarter to assure they are consistent with advance procurement

plans. The provisions of Policy Letter 81-1 were essentially

incorporated in FAR Part 7 and partially superseded by procedures found

in Part 3 of OMB Circular A-11, Planning, Budgeting, and Acquisition of

Capital Assets, and the Capital Programming Guide which further

integrate the budget and procurement processes.

OFPP Policy Letter 81-2, Policy Guidance for the Labor Surplus Area

Programs (as amended by Supplement No. 1)

Policy Letter 81-2, as amended by Supplement No. 1, provided

guidance on implementing subsections 15(d), (e), and (f) of the Small

Business Act (as amended and added by section 117 of Public Law 96-302,

July 2, 1980) that gave priority in awarding contracts and subcontracts

to firms performing in areas of unemployment or underemployment known

as labor surplus areas. Subsection 7101(a) of the Federal Acquisition

Streamlining Act of 1994 (Public Law 103-355, October 13, 1994) deleted

subsections 15(e) and (f) from the Small Business Act, thus removing

the labor surplus area set-aside and subcontracting programs. The

statutory changes were implemented in FAR Part 19. For more

information, see the final rule amendment to the FAR published in the

Federal Register on September 18, 1995 (60 FR 48258).

OFPP Policy Letter 82-1, Policy Guidance Concerning Government-wide

Debarment, Suspension, and Ineligibility

Policy Letter 82-1 established policies and procedures for

debarment and suspension of persons from contracting with Federal

Departments and agencies. The provisions of Policy Letter 82-1 are

implemented in FAR Subpart 9.4.

OFPP Policy Letter 83-1, Withholding of Funds from Construction

Contract Progress Payments

Policy Letter 83-1 provided guidance on retention or withholding of

funds from progress payments made under Federal construction contracts.

The provisions of the Policy Letter are implemented in FAR section

32.103.

OFPP Policy Letter 83-2, Publicizing the Development of Procurement

Policies and Regulations

Policy Letter 83-2 established uniform criteria and procedures for

soliciting the views of all interested parties in the development by

executive Departments and agencies of procurement policies,

regulations, procedures and forms. The provisions of Policy Letter 83-2

were codified in section 22 of the OFPP Act, as amended (41 U.S.C.

418b), and implemented in FAR Subpart 1.5.

OFPP Policy Letter 83-3, Procurement of Architect-Engineer Services

Policy Letter 83-3 provided guidance on procurement of architect-

engineer services under the Brooks Architect-Engineers Act (Public Law

92-582, 40 U.S.C. 541 et seq.). The Policy Letter delineated the type

of services to be procured using source selection procedures prescribed

by the Brooks Architect-Engineers Act versus using standard source

selection procedures. The provisions of Policy Letter 83-3 were

implemented by FAR section 36.601.

OFPP Policy Letter 84-1, Federally Funded Research and Development

Centers

Policy Letter 84-1 established policy for the establishment, use,

periodic review, and termination of sponsorship of Federally Funded

Research and Development Centers (FFRDCs). The provisions of Policy

Letter 84-1 were implemented by FAR section 35.017.

OFPP Policy Letter 85-1, Federal Acquisition Regulations System

Policy Letter 85-1 implemented provisions of the OFPP Act (Public

Law 93-400 as amended, 41 U.S.C. 401 et seq.) concerning the single

system of

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simplified Government-wide procurement regulations now known as the

Federal Acquisition Regulation (FAR) (48 CFR 1). The Policy Letter

covered establishment of the FAR System, FAR maintenance, and

resolution of differences among executive agencies in development of

FAR provisions. The provisions of Policy Letter 85-1 were codified in

sections 6 and 25 of the OFPP Act (41 U.S.C. 405 and 41 U.S.C. 421,

respectively) and incorporated in FAR Subparts 1.1, 1.2, and 1.3.

OFPP Policy Letter 89-1, Conflict of Interest Policies Applicable

to Consultants

Policy Letter 89-1 established policy and procedures on applying

conflict of interest standards to persons who provide consulting

services to the government, pursuant to section 8141 of the 1989

Department of Defense Appropriations Act, Public Law 100-463, 102 Stat.

2270-47 (October 1, 1988). The provisions of Policy Letter 89-1 were

incorporated in FAR Subpart 9.5.

OFPP Policy Letter 91-2, Service Contracting

OFPP Policy Letter 91-2 established policy for acquiring services

by contract. It encouraged the use of ``performance-based

contracting,'' which uses standards to measure quality and timeliness

of contractor performance and surveillance plans to assure that the

standards are met. Policy Letter 91-2 is implemented in FAR Subpart

37.6. For more information on this subject, see OFPP's ``A Guide to

Best Practices for Performance-Based Service Contracting'' (October

1998) at the ARNet world wide website, http://www.arnet.gov/BestP/

PPBSC/BestPPBSC.html.

OFPP Policy Letter 91-4, Use of Irrevocable Letters of Credit

OFPP Policy Letter 91-4 established policy for use of irrevocable

letters of credit in lieu of sureties for Federal construction

contracts requiring Miller Act bonds. The Miller Act (40 U.S.C. 270a et

seq.) requires the use of performance and payment bonds for Federal

construction contracts in excess of $25,000. Policy Letter 91-4

determined that: irrevocable letters of credit serve much of the same

function and provide the same redeemable value as bonds, postal orders,

and certified checks; Federal agencies are authorized to accept such

letters; and their usage in lieu of sureties would help to achieve

greater access by small and small disadvantaged businesses to Federal

construction contracts. The Policy Letter permitted agencies to use

irrevocable letters of credit in lieu of sureties for Federal

construction contracts requiring Miller Act bonds. Policy Letter 91-4

is implemented in FAR section 28.204-3.

OFPP Policy Letter 92-5, Past Performance Information

Policy Letter 92-5 established requirements for evaluating

contractor performance and for using past performance information in

the contractor selection process. The provisions of Policy Letter 92-5

have been implemented in FAR Subpart 42.15 and FAR sections 15.304 and

15.305. For more information on this subject, see ``A Guide to Best

Practices for Past Performance'' (May 1995) at the ARNet world wide

website, http://www.arnet.gov/BestP/BestPract.html.

OFPP Policy Letter 95-1, Subcontracting Plans for Companies

Supplying Commercial Items

Section 8(d) of the Small Business Act (15 U.S.C. 637(d)) requires

that each contract that exceeds $500,000 ($1 million in the case of

construction) and that offers subcontracting opportunities include a

requirement that the apparently successful offeror negotiate a

subcontracting plan which shall become a material part of the contract.

Policy Letter 95-1 revised the policy on subcontracting plans to reduce

the burden of government-unique requirements on prime contractors and

subcontractors that supply commercial items. The Policy Letter allows

such contractors and subcontractors to meet the requirements of Section

8(a) of the Small Business Act by submitting an annual ``commercial

plan'' rather than an individual contract-by-contract or subcontract-

by-subcontract plan. A commercial plan is a subcontracting plan that

covers a contractor's or subcontractor's fiscal year and that applies

to the entire production of commercial items sold by either the entire

company or a portion thereof (e.g., division, plant, or product line).

The provisions of Policy Letter 95-1 were implemented in FAR sections

19.701, 19.704(d), and 19.705-7.

OFPP requests comments on these proposed rescissions.

Deidre A. Lee,

Administrator.

[FR Doc. 99-23998 Filed 9-14-99; 8:45 am]

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