Federal Acquisition Circular 97-14; Introduction

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Chapter 1

Federal Acquisition Circular 97-14; Introduction

AGENCIES: Department of Defense (DoD), General Services Administration

(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Summary presentation of final and interim rules, and technical

amendments.

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SUMMARY: This document summarizes the Federal Acquisition Regulation

(FAR) rules issued by the Civilian Agency Acquisition Council and the

Defense Acquisition Regulations Council in this Federal Acquisition

Circular (FAC) 97-14. A companion document, the Small Entity Compliance

Guide (SECG), follows this FAC. The FAC, including the SECG, is

available via the Internet at http://www.arnet.gov/far.

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

that follow.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS

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

pertaining to status or publication schedules. For clarification of

content, contact the analyst whose name appears in the table below in

relation to each FAR case or subject area. Please cite FAC 97-14 and

specific FAR case number(s). Interested parties may also visit our

website at http://www.arnet.gov/far.

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Item Subject FAR case Analyst

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I......................... Very Small Business Concerns............... 98-013 Moss.

II........................ Historically Underutilized Business Zone 97-307 Moss.

(HUBZone) Empowerment Contracting Program.

III....................... Use of Competitive Proposals............... 99-001 DeStefano.

IV........................ Javits-Wagner-O'Day Proposed Revisions..... 98-602 DeStefano.

V......................... OMB Circular A-119......................... 98-004 Moss.

VI........................ Determination of Price Reasonableness and 98-300 Olson.

Commerciality (Interim).

VII....................... Conforming Late Offer Treatment............ 97-030 DeStefano.

VIII...................... Evaluation of Proposals for Professional 97-038 Olson.

Services.

IX........................ Option Clause Consistency.................. 98-606 DeStefano.

X......................... Compensation for Senior Executives......... 98-301 Nelson.

XI........................ Interest and Other Financial Costs......... 98-006 Nelson.

XII....................... Cost-Reimbursement Architect-Engineer 97-043 O'Neill.

Contracts.

XIII...................... Conditionally Accepted Items............... 98-002 Klein.

XIV....................... Value Engineering Change Proposals/PAT..... 97-031 Klein.

XV........................ Cost Accounting Standards Post-Award 98-003 Nelson.

Notification.

XVI....................... Technical Amendments.......................

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SUPPLEMENTARY INFORMATION: Summaries for each FAR rule follow. For the

actual revisions and/or amendments to these FAR cases, refer to the

specific item number and subject set forth in the documents following

these item summaries.

Federal Acquisition Circular 97-14 amends the FAR as specified

below:

Item I--Very Small Business Concerns (FAR Case 98-013)

This final rule converts the interim rule published as Item II of

FAC 97-11 to a final rule with changes. The interim rule amended FAR

5.207, 8.404, 12.303, 19.000, 19.001, 19.102, 19.502-2, 19.901 through

19.904, 52.212-5, and 52.219-5, to implement the Small Business

Administration's Very Small Business Pilot Program (13 CFR Parts 121

and 125). This program became effective on January 4, 1999.

Item II--Historically Underutilized Business Zone (HUBZone)

Empowerment Contracting Program (FAR Case 97-307)

This final rule converts the interim rule published as Item I of

FAC 97-10 to a final rule with amendments at FAR 6.201, 19.306, 19.307,

19.800, 19.1303, and the provision at 52.219-1. This final rule amends

the FAR to implement the Small Business Administration's Historically

Underutilized Business (HUBZone) Program. The purpose of the program is

to provide Federal contracting assistance for qualified small business

concerns located in historically underutilized business zones in an

effort to increase employment opportunities, investment, and economic

development in these areas. The program provides for set-asides, sole

source awards, and price evaluation preferences for HUBZone small

business concerns and establishes goals for awards to such concerns.

Item III--Use of Competitive Proposals (FAR Case 99-001)

This final rule amends FAR 6.401 to delete the requirement for

contracting officers to explain in writing their rationale for choosing

to use competitive proposals rather than sealed bidding.

Item IV--Javits-Wagner-O'Day Proposed Revisions (FAR Case 98-602)

This final rule adds a new section, FAR 8.716, and amends paragraph

(a) of FAR 42.1203 to provide procedures for recognizing a name change

or a successor in interest for a Javits-Wagner-O'Day Act participating

nonprofit agency providing supplies or services on the Procurement List

maintained by the Committee for Purchase From People Who Are Blind or

Severely Disabled.

Item V--OMB Circular A-119 (FAR Case 98-004)

This final rule amends FAR 11.101, 11.107, 11.201, and adds a

provision at 52.211-7 to address the use of voluntary consensus

standards in accordance with the requirements of Office of Management

and Budget (OMB) Circular A-119.

Item VI--Determination of Price Reasonableness and Commerciality

(FAR Case 98-300)

This interim rule revises FAR 12.209, 13.106-3(a)(2), and amends

Subpart 15.4 to implement Section 803 of the Strom Thurmond National

Defense Authorization Act for Fiscal Year 1999 (Pub. L. 105-261).

Section 803 requires amending the FAR to provide specific guidance

concerning--

The appropriate application and precedence of various

price analysis tools;

The circumstances under which contracting officers should

require

[[Page 51829]]

offerors of exempt commercial items to provide information other than

cost or pricing data; and

The role and responsibility of support organizations in

determining price reasonableness.

This interim rule also revises FAR 15.403-3(a) to implement Section

808 of the Strom Thurmond National Defense Authorization Act for Fiscal

Year 1999 (Pub. L. 105-261). Section 808 requires amending the FAR to--

Clarify procedures associated with obtaining information

other than cost or pricing data when acquiring commercial items;

Establish that offerors who fail to comply with

requirements to provide the information shall be ineligible for award;

and

Establish exceptions, as appropriate.

Item VII--Conforming Late Offer Treatment (FAR Case 97-030)

This final rule amends FAR 14.201-6, 14.304, and 15.208, the

provisions at 52.212-1, 52.214-7, 52.214-23, and 52.215-1, and removes

52.214-32 and 52.214-33 to provide uniform guidance regarding receipt

of late offers for commercial, sealed bid, and negotiated acquisitions.

Item VIII--Evaluation of Proposals for Professional Services (FAR

Case 97-038)

This final rule amends FAR 15.305(a)(1) and 37.115-2(c) to provide

guidance on the evaluation of proposals that include uncompensated

overtime hours.

Item IX--Option Clause Consistency (FAR Case 98-606)

This final rule amends FAR 17.208(g) to clarify that the time

period for providing a preliminary notice of the Government's intent to

exercise a contract option in the clause at FAR 52.217-9 may be

tailored and amends the clause at FAR 52.217-8 to make the format of

the Option to Extend Services clause consistent with the format of

other option clauses in the FAR.

Item X--Compensation for Senior Executives (FAR Case 98-301)

This final rule coverts the interim rule published as Item VIII of

FAC 97-11 to a final rule without change. The rule amends FAR Part 31

to implement Section 804 of the Strom Thurmond National Defense

Authorization Act for Fiscal Year 1999 (Pub. L. 105-261). Section 804

revises the definition of ``senior executive'' at 10 U.S.C. 2324(1)(5)

and at 41 U.S.C. 256(m)(2) to be ``the five most highly compensated

employees in management positions at each home office and each segment

of the contractor'' even though the home office or segment might not

report directly to the contractor's headquarters.

Item XI--Interest and Other Financial Costs (FAR Case 98-006)

This final rule amends FAR 31.205-20 to make minor changes to the

cost principle concerning ``interest and other financial costs.''

Item XII--Cost-Reimbursement Architect-Engineer Contracts (FAR Case

97-043)

This final rule amends the clause prescriptions at FAR 36.609,

44.204, 49.503, and the clause preface at 52.236-25, Requirements for

Registration of Designers, to include application of certain clauses to

cost-reimbursement architect-engineer contracts.

Item XIII--Conditionally Accepted Items (FAR Case 98-002)

This final rule amends FAR 46.101 to add a definition of

conditional acceptance; and FAR 46.407 to require that, when

conditionally accepting nonconforming items, amounts withheld from

payments should be at least sufficient to cover the cost and related

profit to correct deficiencies and complete unfinished work. FAR 46.407

has also been revised to require that the basis for the amounts

withheld be documented in the contract file.

Item XIV--Value Engineering Change Proposals/PAT (FAR Case 97-031)

This final rule amends the value engineering change proposal (VECP)

guidance in FAR 48.001, 48.102, 48.104, 48.201, and the FAR clause at

52.248-1 to allow the contracting officer to increase the sharing

period from 36 to a range of 36 to 60 months; increase the contractor's

share of instant, concurrent and future savings under the incentive/

voluntary sharing arrangement from 50 to a range of 50 to 75 percent;

and increase the contractor's share of collateral savings from 20 to a

range of 20 to 100 percent on a case-by-case basis for each VECP.

Item XV--Cost Accounting Standards Post-Award Notification (FAR

Case 98-003)

This final rule revises paragraph (e) of the clause at FAR 52.230-

6, Administration of Cost Accounting Standards, to reduce the

subcontractor information that a contractor is required to provide to

its cognizant contract administration office (CAO) when requesting the

CAO to perform administration for Cost Accounting Standards matters.

Item XVI--Technical Amendments

Amendments are being made at 1.106, 15.305, 19.102, 52.211-6, and

52.219-18 in order to update references and make editorial changes.

Dated: September 14, 1999.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Federal Acquisition Circular

Federal Acquisition Circular (FAC) 97-14 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 97-14 are effective

November 23, 1999, except for Items VI and XVI, which are effective

September 24, 1999. Sections 19.102 and 52.219-18, which are included

in Item XVI, are effective November 23, 1999.

Dated: September 10, 1999.

Eleanor R. Spector,

Director, Defense Procurement.

Dated: September 13, 1999.

J. Les Davison,

Acting Deputy Associate Administrator, Office of Acquisition Policy,

General Services Administration.

Dated: September 13, 1999.

Tom Luedtke,

Associate Administrator for Procurement, National Aeronautics and Space

Administration.

[FR Doc. 99-24409 Filed 9-23-99; 8:45 am]

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